Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39925 

6We also note that timely compliance with Rule 

10b–17(b)(1)(v)(a) and (b) would be impractical 

because it is not possible for the Fund to accurately 

project ten days in advance what dividend, if any, 

would be paid on a particular record date. Further, 

the Commission finds, based upon the 

representations in the Letter, that the provision of 

the notices as described in the Letter would not 

constitute a manipulative or deceptive device or 

contrivance comprehended within the purpose of 

Rule 10b–17. 

7 17 CFR 200.30–3(a)(6) and (9). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A Registered Options Trader or ROT is a regular 

member of the Exchange located on the trading 

floor who has received permission from the 

Exchange to trade in options for his own account. 

See Exchange Rule 1014(b)(i). 

Rule 102 of Regulation M 

Rule 102 of Regulation M prohibits 

issuers, selling security holders, or any 

affiliated purchaser of such person from 

bidding for, purchasing, or attempting to 

induce any person to bid for or purchase 

a covered security during the applicable 

restricted period in connection with a 

distribution of securities effected by or 

on behalf of an issuer or selling security 

holder. 

Based on the representations and facts 

presented in the Letter, particularly that 

the Trust is a registered open-end 

management investment company that 

will redeem at the NAV Creation Units 

of Shares of the Fund and that a close 

alignment between the market price of 

Shares and the Fund’s NAV is expected, 

the Commission finds that it is 

appropriate in the public interest, and 

consistent with the protection of 

investors, to grant the Trust an 

exemption under paragraph (e) of Rule 

102 of Regulation M with respect to 

Shares of the Fund, thus permitting the 

Fund to redeem Shares of the Fund 

during the continuous offering of such 

Shares. 

Rule 10b–17 

Rule 10b–17, with certain exceptions, 

requires an issuer of a class of publicly 

traded securities to give notice of certain 

specified actions (for example, a 

dividend distribution) relating to such 

class of securities in accordance with 

Rule 10b–17(b). Based on the 

representations and facts presented in 

the Letter, and subject to the conditions 

below, we find that it is appropriate in 

the public interest, and consistent with 

the protection of investors, to grant the 

Trust a conditional exemption from 

Rule 10b–17 because market 

participants will receive timely 

notification of the existence and timing 

of a pending distribution, and thus the 

concerns that the Commission raised in 

adopting Rule 10b–17 will not be 

implicated.6

Conclusion 

It is hereby ordered, pursuant to Rule 

101(d) of Regulation M, that the Trust, 

based on the representations and the 

facts presented in the Letter, is exempt 

from the requirements of Rule 101 with 

respect to Shares of the Fund, thus 

permitting persons who may be deemed 

to be participating in a distribution of 

Shares of the Fund to bid for or 

purchase such Shares during their 

participation in such distribution. 

It is further ordered, pursuant to Rule 

102(e) of Regulation M, that the Trust, 

based on the representations and the 

facts presented in the Letter, is exempt 

from the requirements of Rule 102 with 

respect to Shares of the Fund, thus 

permitting the Fund to redeem Shares of 

the Fund during the continuous offering 

of such Shares. 

It is further ordered, pursuant to Rule 

10b–17(b)(2), that the Trust, based on 

the representations and the facts 

presented in the Letter, and subject to 

the conditions below, is exempt from 

the requirements of Rule 10b–17 with 

respect to transactions in the Shares of 

the Fund. 

This exemptive relief is subject to the 

following conditions: 

• The Trust will comply with Rule 

10b–17 except for Rule 10b– 

17(b)(1)(v)(a) and (b); and 

• The Trust will provide the 

information required by Rule 10b– 

17(b)(1)(v)(a) and (b) to the Exchange as 

soon as practicable before trading begins 

on the ex-dividend date, but in no event 

later than the time when the Exchange 

last accepts information relating to 

distributions on the day before the exdividend date. 

This exemptive relief is subject to 

modification or revocation at any time 

the Commission determines that such 

action is necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act. This exemption is based 

on the facts presented and the 

representations made in the Letter. Any 

different facts or representations may 

require a different response. Persons 

relying upon this exemptive relief shall 

discontinue transactions involving the 

Shares of the Fund, pending 

presentation of the facts for the 

Commission’s consideration, in the 

event that any material change occurs 

with respect to any of the facts or 

representations made by the Requestors 

and, as is the case with all preceding 

letters, particularly with respect to the 

close alignment between the market 

price of Shares and the Fund’s NAV. In 

addition, persons relying on this 

exemptive relief are directed to the antifraud and anti-manipulation provisions 

of the Exchange Act, particularly 

Sections 9(a) and 10(b), and Rule 10b– 

5 thereunder. Responsibility for 

compliance with these and any other 

applicable provisions of the federal 

securities laws must rest with the 

persons relying on this exemptive relief. 

This Order should not be considered 

a view with respect to any other 

question that the proposed transactions 

may raise, including, but not limited to 

the adequacy of the disclosure 

concerning, and the applicability of 

other federal or state laws to, the 

proposed transactions. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17688 Filed 8–21–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81409; File No. SR–Phlx– 

2017–67)] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing of 

Proposed Rule Change Related to the 

Floor Requirements 

August 16, 2017. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 3, 

2017, NASDAQ PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Commentary .01 of Rule 1014, 

Obligations and Restrictions Applicable 

to Specialists and Registered Options 

Traders, to change quarterly trading 

requirements applicable to Registered 

Options Traders (‘‘ROTs’’), as described 

below.3

The text of the proposed rule change 

is set forth below. Proposed new 

language is italicized; deletions are 

bracketed. 

* * * * * 


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4A Specialist is an Exchange member who is 

registered as an options specialist pursuant to Rule 

501(a). An options specialist includes a Remote 

Specialist which is defined as an options specialist 

in one or more classes that does not have a physical 

presence on an Exchange floor and is approved by 

the Exchange pursuant to Rule 501. 

5An SQT is an ROT who has received permission 

from the Exchange to generate and submit option 

quotations electronically in options to which such 

SQT is assigned. An SQT may only submit such 

quotations while such SQT is physically present on 

the floor of the Exchange. An SQT may only trade 

in a market making capacity in classes of options 

in which the SQT is assigned. See Rule 

1014(b)(ii)(A). 

6An RSQT is an ROT that is a member affiliated 

with and RSQTO with no physical trading floor 

presence who has received permission from the 

Exchange to generate and submit option quotations 

electronically in options to which such RSQT has 

been assigned. A qualified RSQT may function as 

a Remote Specialist upon Exchange approval. See 

Rule 1014(b)(ii)(B). 

7A non-SQT ROT is an ROT who is neither an 

SQT nor an RSQT. See Rule 1014(b)(ii)(C). 

8 In addition to the trading requirement being 

amended herein, the ‘‘in assigned’’ quarterly trading 

requirement in Commentary .03 requires that, 

except for unusual circumstances, at least 50% of 

the trading activity in any quarter (measured in 

terms of contract volume) of an ROT (other than an 

RSQT) shall ordinarily be in classes of options to 

which he is assigned. Temporarily undertaking the 

obligations of paragraph (c) at the request of a 

member of the Exchange in non-assigned classes of 

options is not deemed trading in non-assigned 

option contracts. Furthermore, Commentary .13 

further provides that, within each quarter, an ROT 

must execute in person, and not through the use of 

orders, a specified number of contracts, such 

number to be determined from time to time by the 

Exchange. Options Floor Procedure Advice 

(‘‘Advice’’) B–3, Trading Requirements, establishes 

a quarterly requirement to trade the greater of 1,000 

contracts or 50% of contract volume in person; 

pursuant to the Exchange’s minor rule violation and 

enforcement plan, it establishes a fine schedule for 

violations thereof, as well as for violations of the 

quarterly trading requirement in assigned options 

contained in Commentary .03. Commentary .01 also 

requires that in order for an ROT (other than an 

RSQT or a Remote Specialist) to receive specialist 

margin treatment for off-floor orders in any calendar 

quarter, the ROT must execute the greater of 1,000 

contracts or 80% of his total contracts that quarter 

in person (not through the use of orders, except that 

non-streaming ROTs can use orders entered in 

person) and 75% of his total contracts that quarter 

in assigned options (excluding transactions 

executed in the trading crowd where the contra-side 

is an ROT). None of these trading requirements are 

changing. 

Rule 1014 Obligations and 

Restrictions Applicable to Specialists 

and Registered Options Traders 

(a)–(g) No change. 

Commentary 

.01 An ROT electing to engage in 

Exchange options transactions is 

designated as a specialist on the 

Exchange for all purposes under the 

Securities Exchange Act of 1934 and the 

rules and regulations thereunder with 

respect to options transactions initiated 

and effected by him on the floor in his 

capacity as an ROT. For purposes of this 

commentary, the term ‘‘transactions 

initiated and effected on the floor’’ shall 

not include transactions initiated by an 

ROT off the floor, but which are 

considered ‘‘on-floor’’ pursuant to 

Commentaries .07 and .08 of Rule 1014. 

Similarly, an RSQT electing to engage in 

Exchange options transactions is 

designated as a specialist on the 

Exchange for all purposes under the 

Securities Exchange Act of 1934 and the 

rules and regulations thereunder with 

respect to options transactions initiated 

and effected by him in his capacity as 

an ROT. 

[An ROT (other than an RSQT or a 

Remote Specialist)] A non-SQT ROT is 

required to trade either (a) 1,000 

contracts and 300 transactions, or (b) 

10,000 contracts and 100 transactions, 

on the Exchange each quarter. 

Transactions executed in the trading 

crowd where the contra-side is an ROT 

are not included. 

In addition, in order for an ROT (other 

than an RSQT or a Remote Specialist) to 

receive specialist margin treatment for 

off-floor orders in any calendar quarter, 

the ROT must execute the greater of 

1,000 contracts or 80% of his total 

contracts that quarter in person (not 

through the use of orders, except that 

non-streaming ROTs can use orders 

entered in person) and 75% of his total 

contracts that quarter in assigned 

options. Transactions executed in the 

trading crowd where the contra-side is 

an ROT are not included. 

The off-floor orders for which an ROT 

receives specialist margin treatment 

shall be subject to the obligations of 

Rule 1014(a) and, in general, be effected 

for the purpose of hedging, reducing 

risk of, or rebalancing positions of the 

ROT. An ROT is responsible for 

evidencing compliance with these 

provisions. The Exchange may exempt 

one or more classes of options from this 

calculation. 

.02–.19 No change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to add flexibility to one of the 

Exchange’s quarterly trading 

requirements to encourage liquidityproviding activity by market makers on 

the Exchange’s trading floor. Phlx 

imposed this trading requirement 

initially to require market makers to 

ensure available liquidity on the trading 

floor. Liquidity provided by market 

makers is a key ingredient to ensuring 

a competitive trading floor. Market 

maker liquidity benefits all market 

participants by providing more trading 

opportunities. The Exchange’s proposal 

is intended to ensure that market 

makers on the trading floor are ready 

and able to participate to provide a 

reasonable pool of liquidity on the floor 

trading. The Exchange also notes that 

other options exchanges with physical 

trading floors do not have a minimum 

trading requirement similar to Phlx. 

The general term ‘‘market makers’’ on 

the Exchange includes Specialists 4 and 

ROTs. ROTs can be either Streaming 

Quote Traders 5 (‘‘SQTs’’), Remote 

SQTs 6 (‘‘RSQTs’’) or non-SQT ROTs.7

Today, quarterly trading requirements 

apply to two types of ROTs: SQTs and 

non-SQT ROTs. Specialists and RSQTs 

are subject to different requirements. By 

definition, non-SQT ROTs do not 

‘‘stream’’ quotes, meaning send quotes 

electronically to the Exchange; instead, 

pursuant to Commentary .18 of Rule 

1014, they submit limit orders 

electronically and respond to Floor 

Brokers verbally. 

Specifically, the Exchange is 

proposing to amend a quarterly trading 

requirement set forth in Commentary 

.01.8 Phlx Rule 1014 at Commentary .01 

currently requires a ROT (other than an 

RSQT or Remote Specialist) to trade 

1,000 contracts and 300 transactions on 

the Exchange each quarter (excluding 

transactions executed in the trading 

crowd where the contra-side is an ROT). 

This proposal seeks to amend this 

quarterly requirement of Commentary 

.01 in two ways: (1) By limiting the 

trading requirement to non-SQT ROTs; 

and (2) by adding a new test as an 

alternative. The Exchange proposes to 

amend Commentary .01 to require a 

non-SQT ROT (other than an RSQT or 


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9See Rule 1014(b)(ii)(D). 

10The Exchange already excludes from the 

contracts and transactions required by the current 

1000/300 Alternative, in each quarter, any 

transactions executed in the trading crowd where 

the contra-side is an ROT in order to focus market 

making efforts on providing the sort of liquidity that 

will attract customers (including broker-dealers and 

professionals) to the Exchange, and is extending 

this exclusion to the New Alternative for the same 

reason. As with the 1000/300 Alternative currently 

in effect, ROTs will continue to be able to 

participate in crowd trades, and those crowd trades 

will count towards the new trading requirement, 

unless the contra-side is another ROT. ROT-to-ROT 

trades in the crowd are certainly permissible on the 

Exchange, but the Exchange seeks to better target 

liquidity and attract order flow by designing the 

trading requirement to exclude them. 

11See Rule 1014.03. 

12See Rule 1014.01. 

13See Securities Exchange Act Release No. 65644 

(October 27, 2011), 76 FR 67786 (November 2, 2011) 

(SR–Phlx–2011–123). 

14See Securities Exchange Act Release No. 64249 

(April 7, 2011), 76 FR 20773 (April 13, 2011) (SR– 

Phlx–2011–47) (a rule change to establish a QCC 

Order to facilitate the execution of stock/option 

Qualified Contingent Trades (‘‘QCTs’’) that satisfy 

the requirements of the trade through exemption in 

connection with Rule 611(d) of the Regulation 

NMS). 

a Remote Specialist) to trade either (a) 

1,000 contracts and 300 transactions 

(the ‘‘1000/300 Alternative,’’ which is 

the current requirement) or (b) 10,000 

contracts and 100 transactions (the 

‘‘New Alternative’’), on the Exchange 

each quarter. 

With respect to limiting the 

requirement to non-SQT ROTs, the 

Exchange notes that today, SQTs and 

RSQTs are obligated to continuous 

quoting requirements when trading 

electronically in their assigned options 

series.9 Non-SQT ROTs are not subject 

to similar continuous quoting 

requirements today on the trading floor. 

If a non-SQT ROT trades electronically, 

that market maker would be required to 

continuously quote in his or her 

assigned option pursuant to the 

requirement in Rule 1014(b)(ii)(D), 

whereas if that market maker was on the 

trading floor in the capacity of a nonSQT ROT, the market maker would be 

required to separately meet the 

requirements of Phlx Rule 1014 at 

Commentary .01. With this proposal, the 

Exchange is proposing a separate 

requirement for market makers that 

conduct business on the trading floor as 

compared to market makers who 

transact business electronically on the 

Exchange. 

With respect to adding the alternative, 

similar to the requirement today, 

transactions executed in the trading 

crowd where the contra-side is an ROT 

would not be included.10 Similar to the 

current 1000/300 Alternative, the New 

Alternative is a pure trading 

requirement, not limited, like the other 

trading requirements, to assigned 

options 11 and in person trading.12

Accordingly, the New Alternative 

requirement can be fulfilled with trades 

and contracts that are not in assigned 

options and not executed in person, 

although, of course, the existing trading 

requirements respecting ‘‘in assigned’’ 

options and ‘‘in person’’ trading must 

still be met. Also, limit orders can 

continue to be counted toward either 

minimum trading requirement. The 

Exchange recognizes that floor trading is 

a competitive space and that Phlx is the 

only floor trading venue requiring its 

market makers on the trading floor to 

transact a minimum amount of 

contracts. The Exchange is not seeking 

to burden these market participants by 

limiting the type of qualifying 

transactions to meet the requirement. 

By way of background, the Exchange 

adopted the 1000/300 Alternative, the 

existing requirement, in 2011.13 At that 

time the Exchange believed this 

quarterly requirement would be a 

reasonable and fair measure to ensure 

ROTs were actively providing liquidity. 

Since that time the Exchange has 

observed that larger order sizes continue 

to seek liquidity on the trading floor, 

drawing regular responses from nonSQT ROTs whose business is centered 

around larger sized transactions, but not 

always resulting in transactions for 

these larger non-SQT ROT firms 

providing liquidity. 

The Exchange has observed that 

certain non-SQT ROTs, who trade larger 

sized orders and who only trade a 

handful of underlying stocks are making 

markets on a daily basis but are having 

less opportunity because larger orders 

are often placed into the Qualified 

Contingent Cross (QCC) mechanism.14

Consequently there are fewer 

opportunities for some non-SQT ROTs 

to make certain trades. The Exchange 

notes that ROTs may not enter 

responses to QCC Orders which are 

paired orders entered into the QCC 

Mechanism and are not exposed. While 

the introduction of QCC accounts for a 

portion of the types of qualifying orders 

that a non-SQT ROT can transact to 

fulfill the floor requirement, lower 

volumes on the trading floor has also 

contributed to the desire among market 

participants to fulfill the trading 

requirement in an alternative fashion. 

The Exchange is now proposing to 

address this issue by modifying the 

1000/300 Alternative trading 

requirement to include the New 

Alternative as an additional metric, one 

that could be satisfied by fewer 

transactions but more traded contracts, 

such that the overall trading 

requirement originally contemplated by 

the 1000/300 Alternative is not diluted. 

After discussing this issue with the 

larger non-SQT ROTs who are very 

active on a daily basis, the Exchange 

determined that 100 transactions per 

quarter was a reasonable number to 

measure whether an non-SQT ROT is 

providing liquidity to the market. The 

Exchange concluded that a reduced 

number of 100 transactions per quarter 

would permit non-SQT ROTs to make 

their trading decisions without undue 

influence of quoting [sic] obligations 

alone, and instead choose whether to 

participate in trades based on factors 

independent of the actual quoting [sic] 

obligation. 

The Exchange believes that the value 

of a non-SQT ROT is not limited to only 

whether they actually execute 

transactions, but as important is that 

they are actively quoting markets and 

providing pricing information. Since 

100 transactions is only 33% of the 

current requirement, the Exchange 

determined to increase the total 

executed contracts number by 900 

percent to 10,000 contracts, to ensure 

that the Exchange did not diminish the 

trading requirement when viewed from 

an overall perspective. The Exchange 

believes this alternative requirement is 

a good measure that improves the 

analysis of whether the larger non-SQT 

ROT’s are participating in an expected 

manner, and providing liquidity to the 

market. 

The Exchange notes that in order to 

meet the floor trading requirements a 

non-SQT ROT may either continue to 

comply with the current requirement or 

may voluntarily comply with the New 

Alternative. The existing requirement is 

based on the ability to trade 1,000 

contracts and 300 transactions on the 

Exchange each quarter, more contracts 

but of a smaller size. The New 

Alternative permits compliance with the 

quoting [sic] rules by transacting fewer 

transactions (100 transactions) but larger 

sized volume (10,000 contracts). The 

two options to comply with the floor 

trading rule do not vary in terms of 

benefits or obligations. 

The Exchange believes the combined 

test of ‘‘10,000 contracts’’ and ‘‘100 

transactions’’ would be a fair measure of 

liquidity as an alternative to 

complement the current requirement, 

and is a fair and balanced way to 

measure whether a non-SQT ROT is 

providing liquidity to the marketplace. 

This proposed new measure will be a 

fairer measure for market makers on the 

trading floor in that it considers another 

perspective of liquidity—specifically, 

the offering of deep liquid markets 


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15 15 U.S.C. 78f(b). 

16 15 U.S.C. 78f(b)(5). 

17See Rule 1014(b)(ii)(D). 18See Rule 1014(b)(ii)(D). 

which result in fewer executions, but of 

greater size. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,15 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,16

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest, by 

adopting a new alternative trading 

requirement which will narrow the 

requirement for ROTs, who have other 

quoting obligations, while also 

providing flexibility to non-SQT ROTs 

to encourage market making which 

should enhance liquidity on the 

Exchange. It would be unjust and 

inequitable to continue to impose the 

1000/300 Alternative trading 

requirement without also offering nonSQT ROTs this New Alternative given 

the recent availability of QCC to handle 

large orders that previously may have 

been executed by certain non-SQT ROTs 

in satisfaction of the 1000/300 

Alternative test along with lower 

volumes on the trading floor. 

The Exchange believes that removing 

the requirement that SQTs and RSQTs 

[sic] are required to meet the trading 

requirement is consistent with just and 

equitable principles of trade because 

these market participants are subject to 

continuous quoting requirements 

today.17 The Exchange intends to 

separate the two requirements. If a nonSQT ROT trades electronically, that 

market maker would be required to 

continuously quote in his or her 

assigned option pursuant to the 

requirement in Rule 1014(b)(ii)(D), 

whereas if that market maker was on the 

trading floor in the capacity of a nonSQT ROT, the market maker would be 

required to separately meet the 

requirements of Phlx Rule 1014 at 

Commentary .01. Non-SQT ROTs are 

not subject to continuous quoting 

requirements today and therefore the 

Exchange proposes to separately 

applying a standard consistent with 

their business model and exclude other 

ROTs from this floor-based requirement. 

The proposal will remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

providing a new alternative to an 

existing requirement that today nonSQT ROTs have difficulty meeting given 

the current trading environment, thus 

enabling them to continue making 

markets to the benefit of investors by 

requiring ample liquidity. Investors and 

the public interest are protected by the 

proposal in that it should help preserve 

the number of non-SQT ROTs making 

markets and providing liquidity to the 

benefit of users of the Exchange’s 

market. 

It is important to note that a non-SQT 

ROT cannot control the size and 

frequency of crowd trades, even less so 

crowd trades where the contra-side is 

not an ROT. The Exchange represents 

that the only other way to participate in 

trades other than through the use of 

orders is by quoting; while SQTs quote 

electronically by ‘‘streaming’’ quotations 

into the Exchange, non-SQT ROTs may 

only quote verbally in response to floor 

brokers representing orders in the 

trading crowd. The Exchange believes 

that it has become difficult for such 

ROTs to comply with the trading 

requirements. The Exchange believes 

that this new trading requirement 

should increase the likelihood that an 

ROT is actively providing liquidity on 

Phlx. The Exchange believes that the 

proposed new trading requirement 

should enhance the market making 

functions for non-SQT ROTs and serve 

to maintain a fair and orderly market 

thereby promoting the protection of 

investors and the public interest. 

The Exchange notes that non-SQT 

ROTs may meet the proposed 

requirement by entering limits orders, 

but the Exchange notes that the 

Exchange is not seeking to burden these 

market participants by limiting the type 

of qualifying transactions to meet the 

requirement. The Exchange recognizes 

that floor trading is a competitive space 

and that Phlx is the only floor trading 

venue requiring its market makers on 

the trading floor to transact a minimum 

amount of contracts. The Exchange is 

not proposing to remove the ability to 

enter limit orders to meet the New 

Alternative because it seeks to 

encourage market makers to transact 

business on Phlx. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. With respect 

to intra-market competition, limiting the 

trading requirement to non-SQT ROTS, 

the Exchange does not believe this 

imposes an undue burden on 

competition because SQTs and RSQTs 

are subject to continuous quoting 

requirements today,18 while non-SQT 

ROTs are not subject to continuous 

quoting obligations. 

Further, with respect to inter-market 

competition, the Exchange also notes 

that other options exchanges with 

physical trading floors do not have a 

minimum trading requirement similar to 

Phlx. The New Alternative trading 

requirement would be available to nonSQT ROTs without distinction, as an 

alternative to the existing 1000/300 

Alternative trading requirement. The 

Exchange’s proposal to permit non-SQT 

ROTs to comply with the trading 

requirement in one of two ways 

provides these market participants a 

means to compete in a space which has 

witnessed lower trading volumes. Also, 

the Exchange does not seek to 

disadvantage these market participants 

who compete with other trading floors 

who do not have trading requirements, 

as noted above, and also who do not 

have the automated compliance checks. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) By order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2017–67 on the subject line. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39929 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 80189 

(March 9, 2017), 82 FR 13889 (March 15, 2017) (SR– 

NYSEArca–2017–01). 

5See, for example, Letter, dated July 11, 2017, 

from Dorothy Donohue, Acting General Counsel, 

Investment Company Institute to Brent J. Fields, 

Secretary, Securities and Exchange Commission, 

available at https://www.sec.gov/comments/srnasdaq-2016-135/nasdaq2016135-1846208- 

5175.pdf. [sic] 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2017–67. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2017–67, and should be submitted on or 

before September 12, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17685 Filed 8–21–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81411; File No. SR– 

NYSEArca–2017–84] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To Extend the 

Implementation Date for Certain 

Changes to the NYSE Arca Rule 5 and 

Rule 8 Series 

August 16, 2017. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on August 3, 

2017, NYSE Arca, Inc. (‘‘Exchange’’ or 

‘‘NYSE Arca’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

date on which certain changes to the 

NYSE Arca Rule 5 and Rule 8 series are 

implemented. The proposed change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On January 6, 2017, the Exchange 

filed a proposed rule change, as 

subsequently amended by Amendments 

No. 1 and 2 thereto (as amended, the 

‘‘Proposed Rule Change’’), to adopt 

certain changes to the NYSE Arca Rules 

5 and 8 series to add additional 

continued listing standards for 

exchange-traded funds (‘‘ETFs’’) as well 

as clarify the procedures that the 

Exchange will undertake when an ETF 

is noncompliant with applicable rules. 

Given the scope of the amendments 

specified in the Proposed Rule Change, 

the Exchange proposed that such 

amendments not be implemented until 

October 1, 2017. On March 9, 2017, the 

Commission granted accelerated 

approval of the Proposed Rule Change, 

including the October 1, 2017 

implementation date.4 The Exchange 

now proposes to extend the 

implementation date of the amendments 

specified in the Proposed Rule Change 

to July 1, 2018. 

Since the Proposed Rule Change was 

approved, the Exchange has engaged in 

extensive conversations with issuers of 

listed ETFs, industry advocacy groups 

and index providers to discuss the new 

rule requirements and offer guidance on 

rule interpretation and application. As a 

result of these conversations, ETF 

issuers have expressed concern about 

their ability to have in place systems 

and procedures to ensure compliance by 

the current October 1, 2017 

implementation date. In particular, 

listed ETF issuers, and industry 

advocacy groups on their behalf, have 

explained that issuers will require time 

to design and test new compliance 

systems as well as engage in discussions 

with third-party providers to source and 

track new data elements required for 

rule compliance.5

The Exchange believes it is 

appropriate to extend the 

implementation date of the Proposed 

Rule Change to July 1, 2018 to provide 

listed ETF issuers with the time needed 

to develop and test their compliance 

procedures. In support of its proposal, 

the Exchange notes that the Proposed 

Rule Change imposes significant new 

compliance requirements on issuers that 

they have not been subject to 

previously. To meet these new 

compliance requirements, issuers must 

develop internal systems as well as 

coordinate with third-party service 

providers, such as index providers, to 


sradovich on DSK3GMQ082PROD with NOTICES