Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 42203 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6)(iii). 

4See Securities Exchange Act Release No. 80295 

(March 22, 2017), 82 FR 15564 (March 29, 2017) 

(Securities Transaction Settlement Cycle) (File No. 

S7–22–16) (stating that, as amended, SEA Rule 

15c6–1(a) will prohibit broker-dealers from 

effecting or entering into a contract for the purchase 

or sale of a security (other than an exempted 

security, government security, municipal security, 

commercial paper, bankers’ acceptances or 

commercial bills) that provides for payment of 

funds and delivery of securities later than the 

second business day after the date of the contract, 

unless otherwise expressly agreed to by the parties 

at the time of the transaction). 

5See id. 

6See, e.g., Securities Exchange Act Release No. 

34–80640 (May 16, 2017), 82 FR 22598 (May 10, 

2017) (Order Approving File No. SR–NASDAQ– 

2017–13). 

the proposed transaction is consistent 

with the general purposes of the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–18777 Filed 9–5–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81501; File No. SR–Phlx– 

2017–71] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change to Rules 431, 

432, and 835 To Conform Them to 

Securities Exchange Act Rule 15c6– 

1(a), Which Shortens the Settlement 

Cycle to Two Dates After the Trade 

Date, and To Interpret the Amended 

Rules To Exclude September 5, 2017 

as the First Ex-Dividend Date 

Thereunder 

August 30, 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 

22, 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 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 Rules 431, 432, and 825 to 

conform them to SEA Rule 15c6–1(a) to 

shorten the standard settlement cycle 

for most broker-dealer transactions from 

three business days after the trade date 

(‘‘T+3’’) to two business days after the 

trade date (‘‘T+2’’) and the industry-led 

initiative to shorten the settlement cycle 

from T+3 to T+2. The proposal also 

addresses the application of these Rules 

as they relate to establishing exdividend dates in connection with the 

implementation of the T+2 settlement 

cycle on September 5, 2017. 

The Exchange requests that the 

Commission waive the five-day prefiling requirement and the 30-day 

operative delay period contained in 

Exchange Act Rule 19b–4(f)(6)(iii).3

While these amendments are effective 

upon filing, the Exchange has 

designated the proposed amendments to 

be operative on September 5, 2017. 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Background 

On March 22, 2017, the SEC adopted 

amendments to SEA Rule 15c6–1(a) to 

shorten the standard settlement cycle 

for U.S. secondary market transactions 

in equities, corporate and municipal 

bonds, unit investment trusts and 

financial instruments composed of these 

products, from T+3 to T+2.4 The 

industry-wide initiative is designed to 

reduce a number of risks, including 

credit risk, market risk, and liquidity 

risk and, as a result, reduce systemic 

risk for U.S. market participants.5 The 

compliance date for the rule 

amendments is September 5, 2017. 

The Exchange [sic] proposing changes 

to its Rules pertaining to securities 

settlement to conform them to SEA Rule 

15c6–1(a), as amended, and to conform 

them to similar changes that other 

exchanges have made.6

Specifically, the Exchange proposes to 

amend Rule 431 (Ex-dividend, Exrights), which presently provides that 

transactions in stocks (except for those 

made for cash) shall be ex-dividend or 

ex-rights on the second business day 

preceding the record date fixed by the 

corporation or the date of the closing of 

transfer books thereof. It also provides 

that if the record date or closing of 

transfer books occurs on a day other 

than a business day, the transaction will 

be ex-dividend or ex-rights on the third 

preceding business day. The Exchange 

proposes to amend this Rule to provide 

that: (1) The transactions shall be exdividend or ex-rights on the first 

business day preceding the record date 

fixed by the corporation or the date of 

the closing of transfer books thereof; and 

(2) the transaction will be ex-dividend 

or ex-rights on the second preceding 

business day if the record date or 

closing of transfer books occurs on a day 

other than a business day. 

Similarly, the Exchange proposes to 

amend Rule 432 (Ex-warrants), which 

presently provides that transactions in 

securities which have subscription 

warrants attached (except those made 

for cash) shall be ex-warrants on the 

second business day preceding the date 

of expiration of the warrants, except that 

when the date of expiration occurs on 

a day other than a business day, the 

transactions will be ex-warrants on the 

third business day preceding the date of 

expiration. The proposal will amend 

this Rule to provide that transactions in 

securities which have subscription 

warrants attached (except those made 

for cash) shall be ex-warrants on the 

first business day preceding the date of 

expiration of the warrants, except that 

when the date of expiration occurs on 

a day other than a business day, the 

transactions will be ex-warrants on the 

second business day preceding the date 

of expiration. 

Third, the Exchange proposes to 

amend Rule 825 (Ex-dividend 

Procedure), which sets forth the exdividend rules for transactions in 

securities subject to unlisted trading 

privileges. The Rule presently provides 

that transactions in stocks (except those 

made for cash) are ex-dividend on the 

second business day preceding the 

record date and that, if the record date 

selected is not a business day, then the 

stock will be quoted ex-dividend on the 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
42204 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 

7See Nasdaq Equity Trader Alert 2017–174 (July 

28, 2017). 

8See, e.g., Nasdaq Issuer Alert 2017–001, Changes 

to Ex-dividend Procedures Effective September 5, 

2017 to Accommodate T+2 Settlement, http://

nasdaq.cchwallstreet.com/nasdaq/pdf/nasdaqissalerts/2017/2017-001.pdf; NYSE, NYSE MKT, 

NYSE ARCA: Changes Related to the Shortened 

Settlement Cycle (T+2) (July 11, 2017), https://

www.nyse.com/trader-update/ 

history#110000069618. 

9The last day of the T+3 settlement cycle. 

10The first day of the T+2 settlement cycle. 

11Monday, September 4, 2017 is Labor Day, a 

Federal holiday. 

12See id. 

13The date on which previous trades settling on 

a T+3 settlement cycle and current trades on the 

T+2 settlement cycle will be processed. 

14 15 U.S.C. 78f(b). 

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

16As a result of the September 5, 2017 transition 

date for regular-way settlement from T+3 to T+2, 

September 7, 2017 will be a ‘‘double’’ settlement 

date for trades that occur on September 1, 2017 

(under T+3 and reflecting the Labor Day holiday on 

September 4, 2017) and trades that occur on 

September 5, 2017 (under T+2). 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s 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 Commission 

has waived this requirement. 

19 17 CFR 240.19b–4(f)(6). 

20 17 CFR 240.19b–4(f)(6)(iii). 

21See supra note 4. 

third preceding business day. The 

proposal would amend this Rule by 

providing instead that that transactions 

in stocks (except those made for cash) 

are ex-dividend on the first business day 

preceding the record date and that, if 

the record date selected is not a 

business day, then the stock will be 

quoted ex-dividend on the second 

preceding business day. 

Lastly, the Exchange proposes to 

implement the foregoing Rules in a 

manner that avoids confusion and 

accords with the proposals of other 

exchanges and self-regulatory 

organizations (‘‘SROs’’). Consistent with 

the compliance date of the amendments 

to SEA Rule 15c6–1(a), the industry 

adopted Tuesday, September 5, 2017 as 

the transition date to the T+2 settlement 

cycle.7 In the lead-up to this transition 

date, however, the industry and SROs, 

including The Depository Trust 

Company (‘‘DTC’’), have raised concern 

that the September 5, 2017 industrywide transition date from T+3 to T+2 

will result in September 7, 2017 being 

a ‘‘double’’ settlement date for trades 

that occur on September 1, 2017 (under 

T+3 and reflecting the Labor Day 

holiday on September 4, 2017) and 

trades that occur on September 5, 2017 

(under T+2), which generally will result 

in investors who trade on either date 

being deemed a record holder of 

September 7, 2017.8 In order to avoid 

this confusion about the proper 

settlement date, the Exchange proposes 

to interpret its Rules so that the first 

record date to which the new exdividend date determination will be 

applied will be Thursday, September 7, 

2017. The ex-dividend dates for 

‘‘regular’’ distributions during the 

transition to T+2 will be as follows: 

Record date Ex-date 

Friday, September 1, 

2017 9.

Wednesday, August 30, 

2017. 

Tuesday, September 5, 

2017 10.

Thursday, August 31, 

2017.11

Wednesday, September 

6, 2017.

Friday, September 1, 

2017.12

Thursday, September 7, 

2017 13.

Wednesday, September 

6, 2017. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,14 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,15

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. 

The Exchange believes that the 

proposed rule change supports the [sic] 

supports [sic] the industry-led initiative 

to shorten the settlement cycle to two 

business days. Moreover, the proposed 

rule change is consistent with the SEC’s 

amendment to SEA Rule 15c6–1(a) to 

require standard settlement no later 

than T+2. The Exchange believes that 

the proposed rule change will provide 

the regulatory certainty to facilitate the 

industry-led move to a T+2 settlement 

cycle. 

Similarly, the Exchange believes that 

the proposal to address the application 

of Rules 341 [sic], 342 [sic], and 825 to 

exclude September 5, 2017 as an exdividend date for distributions supports 

the collective effort among the industry 

and SROs to mitigate the potential 

confusion concerning proper settlement 

during the transition from the T+3 

settlement cycle to the T+2 settlement 

cycle. 

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 

proposed rule change makes changes to 

rules pertaining to securities settlement 

and is intended to facilitate the 

implementation of the industry-led 

transition to a T+2 settlement cycle. 

Moreover, the proposed rule changes are 

consistent with the SEC’s amendment to 

SEA Rule 15c6–1(a) to require standard 

settlement no later than T+2. 

Meanwhile, the proposal to interpret 

the Rules to exclude an ex-dividend 

date of September 5, 2017 will minimize 

potential confusion about proper 

settlement that may arise during the 

transition to the T+2 settlement cycle.16

The Exchange believes that the proposal 

would not impose any additional costs 

on the industry. 

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 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, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 17 and Rule 19b–4(f)(6) 

thereunder.18

A proposed rule change filed under 

Rule 19b–4(f)(6) 19 normally does not 

become operative for 30 days after the 

date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),20 the Commission 

may 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 so that 

the proposal may become operative in 

time for the compliance date of 

September 5, 2017 for the T+2 

settlement cycle. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest so that the proposed rule change 

and interpretation will be operative as 

the industry moves to a T+2 settlement 

cycle on September 5, 2017. The 

Commission notes that the proposed 

rule change would amend Exchange 

rules to conform to the amendment that 

the Commission has adopted to Rule 

15c6–1(a) under the Act 21 and support 

a move to a T+2 standard settlement 

cycle. The Commission further notes 

that the interpretation regarding the 


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Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 42205 

22See Securities Exchange Act Release Nos. 

81448 (August 21, 2017), 82 FR 40610 (August 25, 

2017) (SR–FINRA–2017–026) and 81446 (August 

21, 2017), 82 FR 40604 (August 25, 2017) (SR– 

NASDAQ–2017–084). 

23For 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). 24 17 CFR 200.30–3(a)(12). 

1The written records are required to set forth a 

description of the security purchased or sold, the 

identity of the person on the other side of the 

transaction, and the information or materials upon 

which the board of directors’ determination that the 

transaction was in compliance with the procedures 

was made. 

2Unless stated otherwise, these estimates are 

based on conversations with the examination and 

inspections staff of the Commission and fund 

representatives. 

3Based on our reviews and conversations with 

fund representatives, we understand that funds 

rarely, if ever, need to make changes to these 

policies and procedures once adopted, and 

therefore we do not estimate a paperwork burden 

for such updates. 

proper settlement date in connection 

with the transition to the T+2 settlement 

cycle on September 5, 2017 would help 

to avoid the confusion that could arise 

if ‘‘regular’’ distributions were to be exdividend on that date and is consistent 

with the rules of other self-regulatory 

organizations.22 Accordingly, the 

Commission hereby waives the 30-day 

operative delay requirement and 

designates the proposed rule change as 

operative upon filing.23

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 necessary or appropriate in the 

public interest, for the protection of 

investors, or 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–2017–71 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–2017–71. 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– 

2017–71, and should be submitted on or 

before September 27, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–18795 Filed 9–5–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE., Washington, DC 

20549–2736. 

Extension: 

Rule 17a–7, SEC File No. 270–238, OMB 

Control No. 3235–0214. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collections of information 

summarized below. The Commission 

plans to submit the existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Rule 17a–7 (17 CFR 270.17a–7) (the 

‘‘rule’’) under the Investment Company 

Act of 1940 (15 U.S.C. 80a–1 et seq.) 

(the ‘‘Act’’) is entitled ‘‘Exemption of 

certain purchase or sale transactions 

between an investment company and 

certain affiliated persons thereof.’’ It 

provides an exemption from section 

17(a) of the Act for purchases and sales 

of securities between registered 

investment companies (‘‘funds’’), that 

are affiliated persons (‘‘first-tier 

affiliates’’) or affiliated persons of 

affiliated persons (‘‘second-tier 

affiliates’’), or between a fund and a 

first- or second-tier affiliate other than 

another fund, when the affiliation arises 

solely because of a common investment 

adviser, director, or officer. Rule 17a–7 

requires funds to keep various records 

in connection with purchase or sale 

transactions effected in reliance on the 

rule. The rule requires the fund’s board 

of directors to establish procedures 

reasonably designed to ensure that the 

rule’s conditions have been satisfied. 

The board is also required to determine, 

at least on a quarterly basis, that all 

affiliated transactions effected during 

the preceding quarter in reliance on the 

rule were made in compliance with 

these established procedures. If a fund 

enters into a purchase or sale 

transaction with an affiliated person, the 

rule requires the fund to compile and 

maintain written records of the 

transaction.1 The Commission’s 

examination staff uses these records to 

evaluate for compliance with the rule. 

While most funds do not commonly 

engage in transactions covered by rule 

17a–7, the Commission staff estimates 

that nearly all funds have adopted 

procedures for complying with the 

rule.2 Of the approximately 3,243 

currently active funds, the staff 

estimates that virtually all have already 

adopted procedures for compliance with 

rule 17a–7. This is a one-time burden, 

and the staff therefore does not estimate 

an ongoing burden related to the 

policies and procedures requirement of 

the rule for funds.3 The staff estimates 

that there are approximately 97 new 

funds that register each year, and that 

each of these funds adopts the relevant 

policies and procedures. The staff 

estimates that it takes approximately 4 

hours to develop and adopt these 

policies and procedures. Therefore, the 


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