Federal Register / Vol. 82, No. 163 / Thursday, August 24, 2017 / Notices 40197 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Specialist’’ applies to transactions for 

the account of a Specialist (as defined in Exchange 

Rule 1020(a)). 

4See MRX Rule 701. 

5See Rule 1017(d)(i)(A)–(C). 

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

7 15 U.S.C. 78f(b)(5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81433; File No. SR–Phlx– 

2017–69] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Related to 

Quoting at the Opening 

August 18, 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 

16, 2017, NASDAQ PHLX LLC (‘‘Phlx’’ 

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 to amend 

Phlx Rule 1017, entitled ‘‘Openings in 

Options.’’ 

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 this rule change is to 

amend Phlx Rule 1017, entitled 

‘‘Openings in Options’’ to specifically 

amend opening obligations for 

Specialists.3 The Exchange notes that 

the proposed rule change is similar to a 

Nasdaq MRX, LLC (‘‘MRX’’) rule.4

Today, Phlx Rule 1017(d)(iii) states 

that the Specialist assigned in a 

particular equity option must enter a 

Valid Width Quote not later than one 

minute following the dissemination of a 

quote or trade by the market for the 

underlying security or, in the case of 

index options, following the receipt of 

the opening price in the underlying 

index. The Specialist assigned in a 

particular U.S. dollar-settled FCO must 

enter a Valid Width Quote not later than 

30 seconds after the announced market 

opening. 

First, the Exchange proposes to add 

the words ‘‘or index’’ to further clarify 

that the requirement applies to equities 

and index options. The Exchange 

proposes this addition to further clarify 

the requirement in Rule 1017(d)(iii) 

clearly applies to equity and index 

options. 

Second, the Exchange proposes to 

modify the Specialist’s current 

obligation to enter Valid Width Quotes 

not later than one minute following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in the 

underlying index for all assigned 

options, or in the case of a U.S. dollarsettled FCO after the announced market 

opening. The Exchange believes that the 

current requirement is very burdensome 

and instead proposes to add ‘‘in 90% of 

their assigned series’’ to require a 

Specialist to enter a Valid Width Quote 

not later than one minute following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in 90% of 

their assigned series, or in the case of 

U.S. dollar-settled FCOs in 90% of their 

assigned series not later than 30 seconds 

after the announced market opening. 

Further, the Exchange proposes to 

require Specialists to promptly enter a 

Valid Width Quote in the remainder of 

their assigned series, which did not 

open within one minute following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in the 

underlying index or, with respect to a 

U.S. dollar-settled FCO, following the 

announced market opening. The 

Exchange’s proposal is intended to 

account for market conditions which 

may prevent a Specialist from opening 

all assigned series, for example an 

extremely volatile market which may 

impact the Specialist’s ability to enter 

aggressive quotes. Another example 

would be that news pertaining to a 

specific security is causing the 

underlying price to fluctuate rapidly 

and significantly, thereby causing the 

Specialist to await the underlying equity 

price to settle before entering a Valid 

Width Quote. The Exchange’s 

surveillance staff would monitor to 

ensure that Specialists are complying 

with these requirements during the 

Opening Process. 

Today, the Opening Process for an 

options series will be conducted on or 

after 9:30 a.m. if the system has 

received, within two minutes (or such 

shorter time as determined by the 

Exchange and disseminated to 

membership on the Exchange’s Web 

site) of the opening trade or quote on the 

market for the underlying security in the 

case of equity options or, in the case of 

index options, within two minutes of 

the receipt of the opening price in the 

underlying index (or such shorter time 

as determined by the Exchange and 

disseminated to membership on the 

Exchange’s Web site), or within two 

minutes of market opening for the 

underlying currency in the case of a 

U.S. dollar-settled FCO (or such shorter 

time as determined by the Exchange and 

disseminated to membership on the 

Exchange’s Web site) the Specialist’s 

Valid Width Quote, the Valid Width 

Quotes of two Phlx Electronic Market 

Makers other than the Specialist or if 

neither the Specialist or two Phlx 

Electronic Market Makers have 

submitted Valid Width Quotes, within 

the specified timeframe then one Phlx 

Electronic Market Maker’s Valid Width 

Quote.5

The Exchange is also proposing to 

amend existing rule text in Phlx Rule 

1017(d)(iii) to lowercase a reference to 

the ‘‘Opening Price’’ as that reference 

refers to the underlying security’s 

opening price, not the defined Opening 

Price in Rule 1017(a)(iii). 

Implementation 

The Exchange proposes to implement 

this rule change on September 29, 2017. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,6 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,7


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40198 Federal Register / Vol. 82, No. 163 / Thursday, August 24, 2017 / Notices 

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 for the 

reasons stated below. 

The Exchange’s first proposal at Rule 

701(c)(3) to clarify that the requirement 

applies to equities and index options 

will make clear the applicability of the 

Specialist’s requirement to enter Valid 

Width Quotes. This proposed 

amendment is non-substantive and is 

intended to add clarity to the rules. 

The second proposal to amend a 

Specialist’s requirement to enter Valid 

Width Quotes during the Opening 

Process is consistent with the Act 

because the 90% requirement to provide 

a Valid Width Quote in a series to 

which the Specialist is assigned will 

continue to ensure that options series 

are opened in a timely manner, while 

not imposing a burdensome requirement 

on market participants. Specialists 

would be required to promptly enter a 

Valid Width Quote in the remainder of 

their assigned series, which did not 

open within one minute of the 

dissemination of a quote or trade by the 

market for the underlying security or in 

the case of index options, following the 

receipt of the opening price or, with 

respect to U.S. dollar-settled FCOs, 

following the announced market 

opening. The Exchange would monitor 

Specialists to ensure that they promptly 

provided a Valid Width Quote for the 

remainder of the series within a 

reasonable amount of time. The 

Exchange notes that market conditions 

could cause a Specialist to experience 

circumstances where opening 100% of 

all of their assigned series within one 

minute of the dissemination of a quote 

or trade by the market for the 

underlying security or, in the case of 

index options, following the receipt of 

the opening price in the underlying 

index or, with respect to U.S. dollarsettled FCOs, following the announced 

market opening, is not feasible. 

The Exchange believes that the 

proposed 90% Valid Width Quoting 

obligation, not later than one minute 

following the dissemination of a quote 

or trade by the market for the 

underlying security or, in the case of 

index options, following the receipt of 

the opening price in the underlying 

index or, with respect to U.S. dollarsettled FCOs, following the announced 

market opening, along with the 

‘‘prompt’’ standard for the remaining 

10% of their assigned series will ensure 

all series are opened in a timely manner. 

The Exchange’s proposal accounts for 

market conditions which may prevent a 

Specialist from opening all assigned 

series, for example an extremely volatile 

market which may impact the 

Specialist’s ability to enter aggressive 

quotes. Another example would be that 

news pertaining to a specific security is 

causing the underlying price to fluctuate 

rapidly and significantly, thereby 

causing the Specialist to await the 

underlying equity price to settle before 

entering a Valid Width Quote. The 

Exchange believes that the time frame 

for Specialists to provide a Valid Width 

Quote in 90% of their assigned series 

not later than one minute following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in the 

underlying index or, with respect to 

U.S. dollar-settled FCOs, following the 

announced market opening, will ensure 

liquidity on Phlx during the Opening 

Process. 

The Exchange desires to encourage 

Specialists to continue to make markets 

on Phlx at the Opening. The Exchange 

believes that requiring Specialists to 

provide a Valid Width Quote in 90% of 

their assigned options not later than one 

minute following the dissemination of a 

quote or trade by the market for the 

underlying security or, in the case of 

index options, following the receipt of 

the opening price in the underlying 

index or, with respect to U.S. dollarsettled FCOs, following the announced 

market opening along with the 

‘‘prompt’’ standard for the remaining 

10% will enhance the market making 

functions for Specialists and serve to 

maintain a fair and orderly market 

thereby promoting the protection of 

investors and the public interest. 

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. The proposal 

does not change the intense competition 

that exists among the options markets 

for options business including on the 

opening. Nor does the Exchange believe 

that the proposal will impose any 

burden on intra-market competition; the 

Opening Process involves many types of 

participants and interest. 

The Exchange’s proposal to require a 

Specialist to enter a Valid Width Quote 

in 90% of their assigned series not later 

than one minute time following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in the 

underlying index or, with respect to 

U.S. dollar-settled FCOs, following the 

announced market opening and 

promptly enter a Valid Width quote for 

the remaining 10% their assigned series 

does not create an undue burden on 

competition. The proposal will continue 

to ensure that options series are opened 

in a timely manner, while not imposing 

a burdensome requirement on market 

participants. Specialists would be 

required to promptly enter a Valid 

Width Quote in the remainder of their 

assigned series which were not open 

within one minute following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in the 

underlying index or, with respect to 

U.S. dollar-settled FCOs, following the 

announced market opening. The 

Exchange would monitor Specialists to 

ensure that they promptly entered a 

Valid Width Quote for the remainder of 

their assigned series within a reasonable 

amount of time. The Exchange notes 

that market conditions could cause a 

Specialist to experience circumstances 

where entering a Valid Width Quote for 

100% of all of their assigned series 

within one minute following the 

dissemination of a quote or trade by the 

market for the underlying security or, in 

the case of index options, following the 

receipt of the opening price in the 

underlying index or with respect to U.S. 

dollar-settled FCOs within one minute 

after the announced market opening, is 

not feasible. The Exchange believes that 

the proposed 90% obligation to enter a 

Valid Width Quote not later than one 

minute following the dissemination of a 

quote or trade by the market for the 

underlying security or, in the case of 

index options, following the receipt of 

the opening price in the underlying 

index or, with respect to U.S. dollarsettled FCOs, following the announced 

market opening for the underlying 

security along with the ‘‘prompt’’ 

standard for the remaining series will 

ensure all series are opened in a timely 

manner. 

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 


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Federal Register / Vol. 82, No. 163 / Thursday, August 24, 2017 / Notices 40199 

8 15 U.S.C. 78s(b)(3)(A)(iii). 

9 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. 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 81060 

(June 30, 2017) (the ‘‘Notice of Filing’’), 82 FR 

31644 (July 7, 2017). 

4See Letter to Secretary, Commission, from 

Michael Koffler, Eversheds Sutherland (US) LLP 

(‘‘Eversheds Sutherland’’), dated July 28, 2017 (the 

‘‘Eversheds Sutherland Letter’’); and, Letter to 

Secretary, Commission, from Robin Traxler, Esq., 

Vice President, Regulatory Affairs & Associate 

General Counsel, Financial Services Institute 

(‘‘FSI’’), dated July 28, 2017 (the ‘‘FSI Letter’’). 

5See Letter to Secretary, Commission, from 

Pamela K. Ellis, Associate General Counsel, MSRB, 

dated August 9, 2017 (the ‘‘MSRB Response 

Letter’’), available at https://www.sec.gov/ 

comments/sr-msrb-2017-04/msrb201704-2205630- 

160509.pdf. 

6 Id. In Amendment No. 1, the MSRB proposed to 

amend the proposed rule change to Rule G– 

21(e)(i)(A)(2)(c) to make a minor technical change 

to clarify that the proposed rule change to that 

provision would apply to an advertisement of a 

municipal fund security ‘‘that has an investment 

option that invests solely in a money market fund.’’ 

7See Notice of Filing and Amendment No. 1. 

8See Notice of Filing. 

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 8 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.9

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 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2017–69 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–Phlx–2017–69. 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– 

2017–69 and should be submitted on or 

before September 14, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17906 Filed 8–23–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81432; File No. SR–MSRB– 

2017–04] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of Amendment 

No. 1 and Order Granting Accelerated 

Approval of a Proposed Rule Change, 

as Modified by Amendment No. 1, 

Consisting of Proposed Amendments 

to MSRB Rule G–21(e), on Municipal 

Fund Security Product Advertisements 

August 18, 2017. 

I. Introduction 

On June 22, 2017, the Municipal 

Securities Rulemaking Board (the 

‘‘MSRB’’ or ‘‘Board’’) filed with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change consisting of proposed 

amendments to MSRB Rule G–21(e), on 

municipal fund security product 

advertisements, to address important 

regulatory developments and to enhance 

investor protection in connection with 

municipal fund securities (the 

‘‘proposed rule change’’). The proposed 

rule change was published for comment 

in the Federal Register on July 7, 2017.3

The Commission received two 

comment letters on the proposed rule 

change.4 On August 9, 2017, the MSRB 

responded to those comments 5 and 

filed Amendment No. 1 to the proposed 

rule change (‘‘Amendment No. 1’’).6 The 

Commission is publishing this notice to 

solicit comments on Amendment No. 1 

to the proposed rule change from 

interested parties and is approving the 

proposed rule change, as modified by 

Amendment No. 1, on an accelerated 

basis. 

II. Description of Proposed Rule Change 

In the Notice of Filing and 

Amendment No. 1, the MSRB stated that 

the purpose of the proposed rule change 

is to reflect relevant regulatory 

developments; enhance the ‘‘out-of-state 

disclosure obligation’’ about the 

potential other benefits an investor may 

be provided by investing in a 529 

college savings plan offered by the home 

state of the investor or of the designated 

beneficiary; clarify that certain 

advertisements that contain 

performance data may include a 

hyperlink to a Web site that contains 

more recent performance data; and 

include several revisions that are 

designed to promote understanding of 

and compliance with the rule.7 The 

MSRB stated that the proposed rule 

change would amend Rule G–21(e) to 

reflect two regulatory developments— 

the SEC’s money market reforms and the 

formation of the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’).8

As further described by the MSRB in 

the Notice of Filing, Rule G– 

21(e)(i)(A)(2)(c) currently requires that a 

municipal fund security advertisement 


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