Document ID: SEC-2019-0561-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2019-04-24T04:00Z

[Federal Register Volume 84, Number 79 (Wednesday, April 24, 2019)]
[Notices]
[Pages 17213-17214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08210]

[[Page 17213]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85692; File No. SR-Phlx-2019-16]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot 
Period for the Listing of P.M.-Settled Nasdaq-100 Index Options 
Expiring on the Third Friday of the Month

April 18, 2019.
    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 April 12, 2019, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the pilot period for the listing of 
P.M.-settled Nasdaq-100 Index Options expiring on the third Friday of 
the month (``NDXPM'').
    The text of the proposed rule change is available on the Exchange's 
website 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
    In August 2017, the Commission approved a proposed rule change for 
the listing on the Exchange of NDXPM options on a pilot basis, with the 
pilot to terminate on the earlier to occur of (i) 12 months following 
the date of the first listing of the NDXPM options, or (ii) December 
29, 2018 pursuant to Phlx Rule 1101A Commentary .05.\3\ Thereafter, the 
Exchange amended Commentary .05 to Phlx Rule 1101A to extend the pilot 
through May 6, 2019 because P.M.-settled options on the NASDAQ-100 
Index (``NASDAQ-100'') had not yet been listed by Phlx.\4\
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    \3\ See Securities Exchange Act Release No. 81293 (August 2, 
2017), 82 FR 37138 (August 8, 2017) (approving SR-Phlx-2017-04) 
(Order Granting Approval of a Proposed Rule Change, as Modified by 
Amendment Nos. 1 and 2, To Permit the Listing and Trading of P.M.-
Settled Nasdaq-100 Index Options on a Pilot Basis) (``Pilot'').
    \4\ See Securities Exchange Act Release No. 84685 (November 29, 
2019 [sic]), 83 FR 62942 (December 6, 2018) (SR-Phlx-2018-76) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend the Pilot Period for the Listing of P.M.-Settled 
Nasdaq-100 Index Options Expiring on the Third Friday of the Month).
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    By way of background, the Pilot permits the listing and trading, on 
a pilot basis, of NASDAQ-100 options with third-Friday-of-the month 
expiration dates, whose exercise settlement value will be based on the 
closing index value, symbol XQC, of the NASDAQ-100 on the expiration 
day (``P.M.-settled''). In particular, NDXPM uses a $100 multiplier, 
and the minimum trading increment will be $0.05 for options trading 
below $3.00 and $0.10 for all other series. Strike price intervals are 
set at no less than $5.00. Consistent with existing rules for index 
options, the Exchange allows up to nine near term expiration months, as 
well as LEAPS. The product will have European-style exercise and will 
not be subject to position limits, though there would be enhanced 
reporting requirements.
    The Exchange now proposes to amend Commentary .05 to Phlx Rule 
1101A to extend the duration of the pilot program for these nonstandard 
expirations through November 4, 2019. The Exchange continues to 
experience technical programming delays related to P.M.-settled options 
on the NASDAQ-100 and as a result, these option series have not yet 
been listed by the Exchange. In order to allow sufficient time to 
realize the benefits of a pilot program for NDXPM options, the Exchange 
proposes the extension. By extending the outer limit of the pilot 
period, the Exchange believes it will have adequate time to resolve the 
programming issues, implement the listing of NDXPM options, and provide 
the pilot reports associated with the initial approval order over a 
meaningful period of time.\5\ Without the amendment, the pilot period 
would end on May 6, 2019 and would not afford the Exchange or 
Commission a sufficient period of time within which NDXPM options may 
trade in order to be meaningfully evaluated by the Exchange as provided 
in the August 2017 approval order.\6\ The Exchange will make public on 
its website any data and analysis it submits to the Commission under 
the pilot program.
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    \5\ The Exchange will issue an Options Trader Alert notifying 
Members when NDXPM options are listed.
    \6\ See note 4 above.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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 the proposed rule change will protect investors 
and the public interest by extending the pilot period for listing NDXPM 
options until November 4, 2019, providing the Exchange, the Commission 
and investors the benefit of a pilot program of sufficient duration to 
yield meaningful information concerning the impact of NDXPM options on 
the market.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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. NDXPM options would be 
available for trading to all market participants. The proposed rule 
change will facilitate the listing and trading of a novel option 
product that will enhance competition among market participants, to the 
benefit of investors and the marketplace. The listing of NDXPM will 
enhance competition by providing investors with an additional 
investment vehicle, in a fully-electronic trading environment, through 
which

[[Page 17214]]

investors can gain and hedge exposure to NASDAQ-100 stocks. Further, 
this product could offer a competitive alternative to other existing 
investment products that seek to allow investors to gain broad market 
exposure. Also, the Exchange notes that it is possible for other 
exchanges to develop or license the use of a new or different index to 
compete with the NASDAQ-100 and seek Commission approval to list and 
trade options on such an index.

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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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 so that the proposed 
rule change may become effective and operative immediately upon filing. 
The Exchange states that such waiver would allow the Exchange to extend 
the pilot period for listing NDXPM options prior to the Pilot's 
scheduled expiration, providing the Exchange, the Commission, and 
investors the benefit of a pilot program of sufficient duration to 
yield meaningful information concerning the impact of NDXPM options on 
the market. For this reason, the Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest. Therefore, the Commission hereby waives the 
30-day operative delay requirement and designates the proposed rule 
change as operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 change 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 [email protected]. Please include 
File Number SR-Phlx-2019-16 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-2019-16. 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 website (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 website 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-2019-16 and should be submitted on 
or before May 15, 2019.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08210 Filed 4-23-19; 8:45 am]
BILLING CODE 8011-01-P