52082 Federal Register / Vol. 82, No. 216 / Thursday, November 9, 2017 / Notices 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

appropriately conservative haircuts and 

concentration limits. The framework 

further requires that a review of the 

sufficiency of OCC’s collateral haircuts 

and concentration limits be performed 

not less than annually. Under this 

framework, and as provided for in its 

By-Laws and Rules, all Clearing 

Members are subject to the same 

limitations on acceptable collateral as 

well as to the same haircuts and 

concentration limits. Consequently, no 

Clearing Member is provided a 

competitive advantage over any other 

Clearing Member. Further, the proposed 

rule change would not affect Clearing 

Member’s access to OCC’s services or 

impose any direct burdens on Clearing 

Members. Accordingly, the proposed 

rule change would not unfairly inhibit 

access to OCC’s services or disadvantage 

or favor any particular user in 

relationship to another user. 

For the foregoing reasons, OCC 

believes that the proposed rule change 

is in the public interest, would be 

consistent with the requirements of the 

Act applicable to clearing agencies, and 

would not impact or impose a burden 

on competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments on the proposed 

rule change were not and are not 

intended to be solicited with respect to 

the proposed rule change and none have 

been 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 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self- regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

the 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– 

OCC–2017–008 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–OCC–2017–008. 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 such 

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s Web site at 

http://www.theocc.com/components/ 

docs/legal/rules_and_bylaws/sr_occ_17_

008.pdf. All comments received will be 

posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–OCC– 

2017–008 and should be submitted on 

or before November 30, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

Authority.31

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–24369 Filed 11–8–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82012; File No. SR–Phlx– 

2017–93] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 

1080(p)(2) To Enhance AntiInternalization Functionality 

November 3, 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 November 

2, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘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 

Rule 1080(p)(2) to enhance antiinternalization functionality. 

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 enhance the antiinternalization (‘‘AIQ’’) functionality 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 82, No. 216 / Thursday, November 9, 2017 / Notices 52083 

3Specialists and ROTs are considered market 

makers on Phlx. See Rule 1014. 

4See Rule 1080(p). 

5 Id. A quote or order entered by a market maker 

only triggers AIQ when it would trade with other 

quotes or orders from the same market maker. Thus, 

an incoming quote or order entered by a market 

maker may interact with other interest with priority 

on the book prior to triggering AIQ. After AIQ is 

triggered, the incoming quote or order may continue 

to trade with resting interest from other 

participants. 

6See NOM Chapter VI, Sec. 10. See also 

Securities Exchange Act Release No. 81171 (July 19, 

2017), 82 FR 34557 (July 25, 2017) (SR–Nasdaq– 

2017–069). 

7See BZX Rule 21.1(g). 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

provided to Specialists and Registered 

Options Traders (‘‘ROTs’’) (collectively, 

‘‘market makers’’) 3 on the Exchange by 

giving members the flexibility to choose 

to have this protection apply at the 

badge level (i.e., existing functionality), 

at the Exchange account level, or at the 

member firm level. The Exchange 

believes that this enhancement will 

provide helpful flexibility for market 

making firms that wish to prevent 

trading against all quotes and orders 

entered by their firm, or Exchange 

account, instead of just quotes and 

orders that are entered under the same 

badge. 

Currently, the Exchange provides 

mandatory AIQ functionality whereby 

quotes and orders entered by market 

makers using the same Phlx badge are 

not executed against quotes and orders 

entered on the opposite side of the 

market using the same badge.4 When a 

quote or order entered by a market 

maker would trade with other quotes or 

orders from the same badge, the trading 

system cancels the resting quote or 

order back to the entering party prior to 

execution.5 AIQ assists market makers 

in reducing trading costs from 

unwanted executions potentially 

resulting from the interaction of 

executable buy and sell trading interest 

from the same firm when performing the 

same market making function. 

Today, this protection prevents 

market makers from trading against their 

own quotes and orders at the badge 

level. The proposed enhancement to 

this functionality would allow members 

to choose to have this protection 

applied at the badge level as 

implemented today, at the Exchange 

account level, or at the member firm 

level. If members choose to have this 

protection applied at the Exchange 

account level, AIQ would prohibit 

quotes and orders from different badges 

associated with the same Exchange 

account from trading against one 

another. Similarly, if the members 

choose to have this protection applied at 

the member firm level, AIQ would 

prohibit quotes and orders from 

different badges within the member firm 

from trading against one another. 

Members that do not select to have this 

protection applied at the Exchange 

account level or member firm level will 

have their AIQ protection defaulted to 

the badge level protection applied 

today. The Exchange believes that the 

proposed AIQ enhancement will 

provide members with more tailored 

self-trade functionality that allows them 

to manage their trading as appropriate 

based on the members’ business needs. 

While the Exchange believes that some 

firms will want to restrict AIQ to trading 

against interest from the same badge— 

i.e., as implemented today—the 

Exchange believes that other firms will 

find it helpful to be able to configure 

AIQ to apply at the Exchange account 

level or at the member firm level so that 

they are protected regardless of which 

badge the order or quote originated 

from. Similar flexibility is offered on the 

Exchange’s affiliate, the Nasdaq Options 

Market (‘‘NOM’’),6 and also on the 

BATS BZX Exchange (‘‘BZX’’), which 

provides members the ability to apply 

Match Trade Prevention (‘‘MTP’’) 

modifiers—i.e., BZX’s version of selftrade protection—based on MPID, 

Exchange Member, trading group, or 

Exchange Sponsored Participant 

identifiers.7

The examples below illustrate how 

AIQ would operate based on the badge 

level protection, the Exchange account 

level, or for members that choose to 

apply AIQ at the member firm level: 

Example 1 

1. Member ABC (badge 123A & 555B) 

with AIQ configured at the badge level. 

2. 123A Quote: $1.00 (5) × $1.10 (20). 

3. 555B Buy Order entered for 10 

contracts at $1.10. 

4. 555B Buy Order executes 10 

contracts against 123A Quote. 123A and 

555B are permitted trade against one 

another because Member ABC has 

configured AIQ to apply at the badge 

level. This is the same as existing 

functionality. 

Example 2 

1. Member ABC (Account 999 with 

badges 123A and 555B, and Account 

888 with badge 789A) with AIQ 

configured at the Exchange account 

level. 

2. 123A Quote: $1.00 (5) × $1.10 (20). 

3. 789A Quote: $1.05(10) × $1.10 (20). 

4. 555B Buy Order entered for 30 

contracts at $1.10. 

5. 555B Buy Order executes against 

789A Quote but 555B Buy Order does 

not execute against 123A Quote. AIQ 

purges the 123A Quote and the 

remaining contracts of the 555B Buy 

Order rests on the book at $1.10. 123A 

and 555B are not permitted trade against 

one another because Member ABC has 

configured AIQ to apply at the Exchange 

account level. This is new functionality 

as the member has opted to have AIQ 

operate at the Exchange account level. 

Example 3 

1. Same as Example 2 above but 

Member ABC has AIQ configured at the 

member level. 

2. AIQ purges the 123A Quote and the 

789A Quote and the 555B Buy Order 

rests on the book at $1.10. This is new 

functionality as the member has opted 

to have AIQ operate at the member 

level. 

Implementation 

The Exchange proposes to launch the 

AIQ functionality described in this 

proposed rule change in either Q4 2017 

or Q1 2018. The Exchange will 

announce the implementation date of 

this functionality in an Options Trader 

Alert issued to members prior to the 

launch date. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the Act.8

In particular, the proposal is consistent 

with Section 6(b)(5) of the Act,9 because 

it is designed to promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanisms 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 is consistent with 

the protection of investors and the 

public interest as it is designed to 

provide Phlx market makers with 

additional flexibility with respect to 

how to implement self-trade protections 

provided by AIQ. Currently, all market 

makers are provided functionality that 

prevents quotes and orders from one 

badge from trading with quotes and 

orders from the same badge. This allows 

market makers to better manage their 

order flow and prevent undesirable 

executions where the market maker, 

using the same badge, would be on both 

sides of the trade. While this 

functionality is helpful to our members, 

some members would prefer not to trade 


sradovich on DSK3GMQ082PROD with NOTICES
52084 Federal Register / Vol. 82, No. 216 / Thursday, November 9, 2017 / Notices 

10See supra notes 6–7. 

11 15 U.S.C. 78f(b)(8). 

12 15 U.S.C. 78s(b)(3)(A)(iii). 

13 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 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. 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

with quotes and orders entered by 

different badges within the same 

Exchange account or member. Thus, the 

Exchange is proposing to provide 

members with flexibility with respect to 

how AIQ is implemented. While 

members that like the current 

functionality can continue to use it, 

members who would prefer to prevent 

self-trades across different badges 

within the same Exchange account or at 

the member level will now be provided 

with functionality that lets them do this. 

Similar flexibility is offered on both 

NOM and BZX.10 The Exchange 

believes that flexibility to apply AIQ at 

the Exchange account or member firm 

level would be useful for Phlx members 

too. The Exchange believes that the 

proposed rule change is designed to 

promote just and equitable principles of 

trade and will remove impediments to 

and perfect the mechanisms of a free 

and open market as it will further 

enhance self-trade protections provided 

to market makers similar to those 

protections provided on other markets. 

This functionality does not relieve or 

otherwise modify the duty of best 

execution owed to orders received from 

public customers. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,11 the Exchange does not believe 

that the proposed rule change will 

impose any burden on intermarket or 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is designed to 

enhance AIQ functionality provided to 

Exchange market makers, and will 

benefit members that wish to protect 

their quotes and orders against trading 

with other quotes and orders within the 

same Exchange account or member, 

rather than the more limited badge 

standard applied today. The new 

functionality, which provides similar 

flexibility to that offered on both NOM 

and BZX, is also completely voluntary, 

and members that wish to use the 

current functionality can also continue 

to do so. The Exchange does not believe 

that providing more flexibility to 

members will have any significant 

impact on competition. In fact, the 

Exchange believes that the proposed 

rule change is evidence of the 

competitive environment in the options 

industry where exchanges must 

continually improve their offerings to 

maintain competitive standing. 

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 12 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.13

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–2017–93 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2017–93. 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. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–Phlx–2017–93 and should 

be submitted on or before November 30, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–24370 Filed 11–8–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82008; File No. SR–Phlx– 

2017–88] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Pricing Schedule at 

Section IV, Entitled ‘‘Other Transaction 

Fees’’ 

November 3, 2017. 

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

Securities Exchange Act of 1934 

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


sradovich on DSK3GMQ082PROD with NOTICES