39636 Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 

4Applicants state that the obligation to repay an 

interfund loan could be deemed to constitute a 

security for the purposes of sections 17(a)(1) and 

12(d)(1) of the Act. 

5Applicants state that any pledge of securities to 

secure an interfund loan could constitute a 

purchase of securities for purposes of section 

17(a)(2) of the Act. 

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

2 17 CFR 240.19b–4. 

4. Applicants assert that the facility 

does not raise the concerns underlying 

section 12(d)(1) of the Act given that the 

Funds are part of the same group of 

investment companies and there will be 

no duplicative costs or fees to the 

Funds.4 Applicants also assert that the 

proposed transactions do not raise the 

concerns underlying sections 17(a)(1), 

17(a)(3), 17(d) and 21(b) of the Act as 

the Funds would not engage in lending 

transactions that unfairly benefit 

insiders or are detrimental to the Funds. 

Applicants state that the facility will 

offer both reduced borrowing costs and 

enhanced returns on loaned funds to all 

participating Funds and each Fund 

would have an equal opportunity to 

borrow and lend on equal terms based 

on an interest rate formula that is 

objective and verifiable. With respect to 

the relief from section 17(a)(2) of the 

Act, applicants note that any collateral 

pledged to secure an interfund loan 

would be subject to the same conditions 

imposed by any other lender to a Fund 

that imposes conditions on the quality 

of or access to collateral for a borrowing 

(if the lender is another Fund) or the 

same or better conditions (in any other 

circumstance).5

5. Applicants also believe that the 

limited relief from section 18(f)(1) of the 

Act that is necessary to implement the 

facility (because the lending Funds are 

not banks) is appropriate in light of the 

conditions and safeguards described in 

the application and because the openend Funds would remain subject to the 

requirement of section 18(f)(1) that all 

borrowings of the open-end Fund, 

including combined interfund loans and 

bank borrowings, have at least 300% 

asset coverage. 

6. Section 6(c) of the Act permits the 

Commission to exempt any persons or 

transactions from any provision of the 

Act if such exemption is necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Section 17(b) of the Act authorizes the 

Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

Rule 17d–1(b) under the Act provides 

that in passing upon an application filed 

under the rule, the Commission will 

consider whether the participation of 

the registered investment company in a 

joint enterprise, joint arrangement or 

profit sharing plan on the basis 

proposed is consistent with the 

provisions, policies and purposes of the 

Act and the extent to which such 

participation is on a basis different from 

or less advantageous than that of the 

other participants. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17540 Filed 8–18–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81403; File No. SR–ISE– 

2017–79] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend 

Supplementary Material .14 of Rule 

504, Entitled ‘‘Series of Options 

Contracts Open for Trading’’ 

August 15, 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 

10, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) 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 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 a proposal to 

amend Supplementary Material .14 of 

Rule 504, entitled ‘‘Series of Options 

Contracts Open for Trading.’’ 

The text of the proposed rule change 

is set forth below. Proposed new 

language is italicized; deleted text is in 

brackets. 

* * * * * 

Rule 504. Series of Options Contracts 

Open for Trading 

(a)–(h) No change. 

Supplementary Material to Rule 504 

.01–.13 No change. 

.14 Notwithstanding any other 

provision regarding the interval of strike 

prices of series of options on ExchangeTraded Fund Shares in this rule, the 

interval of strike prices on SPDR S&P 

500 ETF (‘‘SPY’’), iShares Core S&P 500 

ETF (‘‘IVV’’), and the SPDR Dow Jones 

Industrial Average ETF (‘‘DIA’’) options 

will be $1 or greater. 

* * * * * 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 504 by modifying the strike setting 

regime for the iShares Core S&P 500 

ETF (‘‘IVV’’) options. Specifically, the 

Exchange proposes to modify the 

interval setting regime for IVV options 

to allow $1 strike price intervals above 

$200. 

The Exchange believes that the 

proposed rule change would make IVV 

options easier for investors and traders 

to use and more tailored to their 

investment needs. Additionally, the 

interval setting regime the Exchange 

proposes to apply to IVV options is 

currently applied to options on units of 


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Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 39637 

3 15 U.S.C. 78f(b). 

4 15 U.S.C. 78f(b)(5). 

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

6 15 U.S.C. 78f(b)(5). 

the Standard & Poor’s Depository 

Receipts Trust (‘‘SPY’’), which is an 

exchange-traded fund (‘‘ETF’’) that is 

identical in all material respects to the 

IVV ETF. 

The SPY and IVV ETFs are identical 

in all material respects. The SPY and 

IVV ETFs are designed to roughly track 

the performance of the S&P 500 Index 

with the price of SPY and IVV designed 

to roughly approximate 1/10th of the 

price of the S&P 500 Index. 

Accordingly, SPY and IVV strike 

prices—having a multiplier of $100— 

reflect a value roughly equal to 1/10th 

of the value of the S&P 500 Index. For 

example, if the S&P 500 Index is at 

1972.56, SPY and IVV options might 

have a value of approximately 197.26 

with a notional value of $19,726. In 

general, SPY and IVV options provide 

retail investors and traders with the 

benefit of trading the broad market in a 

manageably sized contract. As options 

with an ETP underlying, SPY and IVV 

options are listed in the same manner as 

equity options under the Rules. 

IVV options currently trade at $5 

intervals above a $200 strike price, 

whereas IVV options at or below a $200 

strike price trade in $1 intervals. 

Further, pursuant to Supplementary 

Material .12 of Rule 504, the Exchange 

may open for trading Short Term Option 

Series on the Short Term Option 

Opening Date that expire on the Short 

Term Option Expiration Date at strike 

price intervals of (i) $0.50 or greater 

where the strike price is less than $100, 

and $1 or greater where the strike price 

is between $100 and $150 for all option 

classes that participate in the Short 

Term Options Series Program; (ii) $0.50 

for option classes that trade in one 

dollar increments and are in the Short 

Term Option Series Program; or (iii) 

$2.50 or greater where the strike price 

is above $150. 

The Exchange’s proposal seeks to 

narrow the strike price intervals to $1 

for IVV options above $200, in effect 

matching the strike setting regime for 

strike intervals in IVV options below 

$200 and matching the strike setting 

regime applied to SPY options. 

Currently, the S&P 500 Index is above 

2000. The S&P 500 Index is widely 

regarded as the best single gauge of large 

cap U.S. equities and is widely quoted 

as an indicator of stock prices and 

investor confidence in the securities 

market. As a result, individual investors 

often use S&P 500 Index-related 

products to diversify their portfolios 

and benefit from market trends. 

Accordingly, the Exchange believes that 

offering a wide range of S&P 500 Indexbased options affords traders and 

investors important hedging and trading 

opportunities. The Exchange believes 

that not having the proposed $1 strike 

price intervals above $200 in IVV 

significantly constricts investors’ 

hedging and trading possibilities. 

The Exchange proposes to amend 

Supplementary Material .14 of Rule 504 

to allow IVV options to trade in $1 

increments above a strike price of $200. 

Specifically, the Exchange proposes to 

amend Supplementary Material .14 of 

Rule 504 to state that the interval 

between strike prices of series of options 

on Units of IVV will be $1 or greater. 

The Exchange believes that by having 

smaller strike intervals in IVV, investors 

would have more efficient hedging and 

trading opportunities due to the lower 

$1 interval ascension. The proposed $1 

intervals, particularly above the $200 

strike price, will result in having at-themoney series based upon the underlying 

IVV moving less than 1%. 

The Exchange believes that the 

proposed strike setting regime is in line 

with the slower movements of broadbased indices. Furthermore, the 

proposed $1 intervals would allow 

option trading strategies (such as, for 

example, risk reduction/hedging 

strategies using IVV weekly options), to 

remain viable. Considering the fact that 

$1 intervals already exist below the 

$200 price point and that IVV is above 

the $200 level, the Exchange believes 

that continuing to maintain the artificial 

$200 level (above which intervals 

increase 500% to $5), would have a 

negative effect on investing, trading and 

hedging opportunities, and volume. 

The Exchange believes that the 

investing, trading, and hedging 

opportunities available with IVV 

options far outweighs any potential 

negative impact of allowing IVV options 

to trade in more finely tailored intervals 

above the $200 price point. The 

proposed strike setting regime would 

permit strikes to be set to more closely 

reflect values in the underlying S&P 500 

Index and allow investors and traders to 

roll open positions from a lower strike 

to a higher strike in conjunction with 

the price movement of the underlying. 

Pursuant to the strike price intervals 

established pursuant to Rule 504(h), 

where the next higher available series 

would be $5 away above a $200 strike 

price, the ability to roll such positions 

is effectively negated. Accordingly, to 

move a position from a $200 strike to a 

$205 strike pursuant to the current rule, 

an investor would need for the 

underlying product to move 2.5%, and 

would not be able to execute a roll up 

until such a large movement occurred. 

With the proposed rule change, 

however, the investor would be in a 

significantly safer position of being able 

to roll his open options position from a 

$200 to a $201 strike price, which is 

only a 0.5% move for the underlying. 

The proposed rule change will allow 

the Exchange to better respond to 

customer demand for IVV strike prices 

more precisely aligned with current S&P 

500 Index values. The Exchange 

believes that the proposed rule change, 

like the other strike price programs 

currently offered by the Exchange, will 

benefit investors by providing investors 

the flexibility to more closely tailor their 

investment and hedging decisions using 

IVV options. By allowing series of IVV 

options to be listed in $1 intervals 

between strike prices over $200, the 

proposal will moderately augment the 

potential total number of options series 

available on the Exchange. However, the 

Exchange believes it and the Options 

Price Reporting Authority (‘‘OPRA’’) 

have the necessary systems capacity to 

handle any potential additional traffic 

associated with this proposed rule 

change. The Exchange also believes that 

members will not have a capacity issue 

due to the proposed rule change. 

In addition, the Exchange represents 

that it does not believe that this 

expansion will cause fragmentation of 

liquidity. In addition, the interval 

setting regime the Exchange proposes to 

apply to IVV options is currently 

applied to options on SPY, which is an 

ETF that is identical in all material 

respects to the IVV ETF. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,3 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,4

in particular, the requirements of 

Section 6(b) of the Act.5 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 6 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 


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39638 Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 

7 Id. 

8See Securities Exchange Act Release No. 72998 

(September 4, 2014), 79 FR 53813 (September 10, 

2014) (Notice of Filing of Proposed Rule Change, 

Regarding Strike Price Intervals for SPY and DIA 

Options) (SR–ISE–2014–42). 

9See Supplementary Material .14 to Rule 504. 

10 Id. 

11 15 U.S.C. 78s(b)(3)(A)(iii). 

12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

13 17 CFR 240.19b–4(f)(6). 

14 17 CFR 240.19b–4(f)(6)(iii). 

15See Securities Exchange Act Release No. 80913 

(June 13, 2017), 82 FR 27907 (June 19, 2017) (SR– 

CBOE–2017–048). 

16See NASDAQ PHLX LLC Rule 

1012.05(a)(iv)(C); The Nasdaq Options Market LLC 

Rules, Chapter IV, Section 6, Supplementary 

Material .01(c); Miami International Securities 

Exchange, LLC Rule 404, Interpretations and 

Policies .10. 

17For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

the Section 6(b)(5) 7 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the proposed rule 

change will allow investors to more 

easily use IVV options. Moreover, the 

proposed rule change would allow 

investors to better trade and hedge 

positions in IVV options where the 

strike price is greater than $200, and 

ensure that IVV options investors are 

not at a disadvantage simply because of 

the strike price. 

The Exchange also believes the 

proposed rule change is consistent with 

Section 6(b)(1) of the Act, which 

provides that the Exchange be organized 

and have the capacity to be able to carry 

out the purposes of the Act and the 

rules and regulations thereunder, and 

the rules of the Exchange. The rule 

change proposal allows the Exchange to 

respond to customer demand to allow 

IVV options to trade in $1 intervals 

above a $200 strike price. The Exchange 

does not believe that the proposed rule 

would create additional capacity issues 

or affect market functionality. 

As noted above, IVV options currently 

trade in wider $5 intervals above a $200 

strike price, whereas these options at or 

below a $200 strike price trade in $1 

intervals. This creates a situation where 

contracts on IVV options effectively may 

not be able to execute certain strategies 

such as, for example, rolling to a higher 

strike price, simply because of the 

arbitrary $200 strike price above which 

IVV options intervals increase by 500%. 

This proposal remedies the situation by 

establishing an exception to the current 

interval regime for IVV options to allow 

such options to trade in $1 or greater 

intervals at all strike prices. 

The Exchange believes that the 

proposed rule change, like other strike 

price programs currently offered by the 

Exchange, will benefit investors by 

giving them increased flexibility to more 

closely tailor their investment and 

hedging decisions. Moreover, the 

proposed rule change is consistent with 

a prior rule change.8

With regard to the impact of this 

proposal on system capacity, the 

Exchange believes it and OPRA have the 

necessary systems capacity to handle 

any potential additional traffic 

associated with this proposed rule 

change. The Exchange believes that its 

members will not have a capacity issue 

as a result of this proposal. 

In addition, the interval setting regime 

the Exchange proposes to apply to IVV 

options is currently applied to options 

on SPY,9 which is an ETF that is 

identical in all material respects to the 

IVV ETF. 

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. Rather, the 

Exchange believes that the proposed 

rule change will result in additional 

investment options and opportunities to 

achieve the investment and trading 

objectives of market participants seeking 

efficient trading and hedging vehicles, 

to the benefit of investors, market 

participants, and the marketplace in 

general. Specifically, the Exchange 

believes that IVV options investors and 

traders will significantly benefit from 

the availability of finer strike price 

intervals above a $200 price point. In 

addition, the interval setting regime the 

Exchange proposes to apply to IVV 

options is currently applied to options 

on SPY,10 which is an ETF that is 

identical in all material respects to the 

IVV ETF. Thus, applying the same strike 

setting regime to SPY and IVV options 

will help level the playing field for 

options on similar, competing ETFs. 

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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 11 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.12

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 13 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 14

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay because this proposal 

permits listing IVV options in a manner 

permitted by the Chicago Board Options 

Exchange, Incorporated,15 and will 

provide investors with an alternative 

venue for trading IVV options. The 

Commission also notes that the 

proposed rule change is consistent with 

the strike price intervals in IVV options 

that is permitted on other exchanges 

and thus raises no new novel or 

substantive issues.16 Accordingly, the 

Commission hereby waives the 

operative delay and designates the 

proposal operative upon filing.17

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 


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Federal Register / Vol. 82, No. 160 / Monday, August 21, 2017 / Notices 39639 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘inactive nominee’’ shall mean a 

natural person associated with and designated as 

such by a member organization and who has been 

approved for such status and is registered as such 

with the Membership Department. An inactive 

nominee shall have no rights or privileges under a 

permit unless and until said inactive nominee 

becomes admitted as a member of the Exchange 

pursuant to the By-Laws and Rules of the Exchange. 

An inactive nominee merely stands ready to 

exercise rights under a permit upon notice by the 

member organization to the Membership 

Department on an expedited basis. See Rule 1(l). 

4The Exchange currently charges an Inactive 

Nominee Fee of $600 for a six month period, which 

will be assessed to the member organization at a 

rate of $100 per month for the applicable six month 

period unless the member organization provides 

proper notice of its intent to terminate an inactive 

nominee prior to the first day of the next billing 

month. An inactive nominee’s status expires after 

six months unless it has been reaffirmed in writing 

by the member organization or is sooner terminated. 

A member organization will be assessed the 

Inactive Nominee Fee every time the status is 

reaffirmed. See the Exchange’s Pricing Schedule at: 

http://nasdaqphlx.cchwallstreet.com/

NASDAQPHLXTools/

PlatformViewer.asp?selectednode=chp_1_4_

10&manual=%2Fnasda

qomxphlx%2Fphlx%2Fphlx-rulesbrd%2F. 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

ISE–2017–79 on the subject line. 

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–ISE–2017–79. 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–ISE– 

2017–79 and should be submitted on or 

before September 11, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–17550 Filed 8–18–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81401; File No. SR–Phlx– 

2017–68] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend Rule 

925 To Create a Limited Exception to 

the Exchange’s Procedures To 

Designate an Inactive Nominee as an 

Effective Permit Holder Intra-Day and 

Make a Non-Substantive Change to the 

Pricing Schedule 

August 15, 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 7, 

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 (i) amend 

Rule 925 to create a limited exception 

to the Exchange’s existing procedures to 

designate an Inactive Nominee as an 

effective permit holder and (ii) make a 

non-substantive change to its Pricing 

Schedule related to the fees assessed to 

Inactive Nominees. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqphlx.cchwallstreet. 

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 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to (i) amend Rule 925 to create 

a limited exception to the Exchange’s 

existing procedures to designate an 

Inactive Nominee 3 as an effective 

permit holder and (ii) make a nonsubstantive change to its Pricing 

Schedule related to the fees assessed to 

Inactive Nominees. 

Rule 925 

Today, the Exchange allows members 

on the Exchange’s trading floor to 

designate an ‘‘Inactive Nominee’’ 

pursuant to Rule 925. Rule 925(i) 

requires, among other criteria, that an 

individual must be approved as eligible 

to hold a permit in accordance with the 

Exchange’s By-Laws and Rules in order 

to be eligible for Inactive Nominee 

status. Additionally, the member 

organization with whom an Inactive 

Nominee is affiliated must pay an 

Inactive Nominee Fee for the privilege 

of maintaining the Inactive Nominee 

status.4 Furthermore, the Rule stipulates 

that an Inactive Nominee does not have 

any rights or privileges of a permit 

holder unless and until the Inactive 

Nominee becomes an effective permit 

holder and all applicable Exchange fees 

are paid. 

When a member organization desires 

to designate an Inactive Nominee as an 

effective permit holder, Rule 925(ii)(a) 

states that the member organization is 

required to notify the Exchange’s 


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