Document ID: SEC-2018-0336-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX LLC
Posted Date: 2018-02-27T05:00Z

[Federal Register Volume 83, Number 39 (Tuesday, February 27, 2018)]
[Notices]
[Pages 8557-8558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03892]

[[Page 8557]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82753; File No. SR-Phlx-2018-17]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Section 
VI.A. of the Exchange's Pricing Schedule To Clarify the Exchange's 
Billing Practices With Respect to Permit Fees

February 21, 2018.
    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 February 13, 2018, 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 amend Section VI.A. of the Exchange's 
Pricing Schedule to clarify the Exchange's billing practices with 
respect to permit fees when a member organization must transfer a 
permit due to the fact that the individual who is designated as the 
permit holder on the existing permit ceases to be primarily affiliated 
with the member organization.
    The text of the proposed rule change is set forth below. Proposed 
new language is italicized; deleted text is in brackets.
* * * * *

NASDAQ PHLX LLC Pricing Schedule

    THE EXCHANGE CALCULATES FEES ON A TRADE DATE BASIS.
    POLICY FOR AMENDING BILLING INFORMATION: CORRECTIONS SUBMITTED 
AFTER TRADE DATE AND PRIOR TO THE ISSUANCE OF AN INVOICE BY THE 
EXCHANGE MUST BE SUBMITTED TO THE EXCHANGE IN WRITING AND MUST BE 
ACCOMPANIED BY SUPPORTING DOCUMENTATION. ONLY MEMBERS MAY SUBMIT TRADE 
CORRECTIONS.
    ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING 
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST 
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING 
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ PSX FEES, PROPRIETARY 
DATA FEED FEES AND CO-LOCATION SERVICES FEES. THE EXCHANGE CALCULATES 
FEES ON A TRADE DATE BASIS. ONLY MEMBERS MAY SUBMIT BILLING DISPUTES.
* * * * *

VI. Membership Fees

A. Permit and Registration Fees

* * * * *
     Permit Fees: The Exchange has established the date of 
notification of termination of a permit as the date that permit fee 
billing will cease. The Exchange will not bill a member organization 
for more than one monthly permit fee if the member organization 
transfers an existing permit to another valid permit holder that is 
primarily affiliated with the member organization, as set forth in 
Rules 908(f) and 910, provided that the transfer from one permit holder 
to another occurs within the same business day. Additionally, a permit 
holder will be billed only one monthly permit fee if the holder 
transfers from one member organization to another previously unrelated 
member organization as a result of a merger, partial sale or other 
business combination during a monthly permit fee period in order to 
avoid double billing in the month the merger or business combination 
occurred.
* * * * *

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 proposal is to clarify the Exchange's practices 
with respect to the billing of permit fees when a member organization 
must transfer a permit due to the fact that the individual who is 
designated as the permit holder ceases to be primarily affiliated with 
the member organization.
    Rule 910(f)(1) of the Exchange's Rules states that an organization 
wishing to obtain and maintain its status on the Exchange as a member 
organization must, among other things, be ``duly qualified by a permit 
holder who is primarily affiliated with such organization for purposes 
of nominating as provided in the By-Laws.'' If the individual who is 
designated as the permit holder ceases to be primarily affiliated with 
the member organization, then the member organization's permit 
terminates. If the member organization wishes to maintain its trading 
privileges on the Exchange, it must apply to transfer the permit to 
another affiliated individual as the permit holder, as is permitted by 
Rule 908(h).\3\
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    \3\ Rule 908(h) provides that ``[a] permit may not be 
transferred by lease, sale, gift, involuntary transfer, or any other 
means or as collateral to secure any obligation, except that a 
permit may be transferred within the permit holder's member 
organization . . . .''
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    Section VI.A. of the Exchange's Pricing Schedule, which sets forth 
the fees that the Exchange charges for permits, does not state whether 
the Exchange will bill a member organization for one or two monthly 
permit fees in the foregoing scenario. The existing practice of the 
Exchange is to bill the member organization for only one permit fee, 
provided that the member organization applies to transfer its permit 
between permit holders on the same business day. The Exchange believes 
that this billing practice is fair because the number of permits that 
the member organization maintains does not change as the result of the 
transfer. Instead, the transfer occurs due to the Exchange's 
requirement in its membership rules that the permit holder be an 
individual who is primarily affiliated with the member organization. 
The Exchange proposes to codify its billing practice in Section VI.A. 
of its Pricing Schedule so as to eliminate any ambiguity and confusion 
on this issue going forward.\4\
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    \4\ To avoid being billed for a second monthly permit fee, the 
Exchange proposes to require member organizations to apply to 
transfer their permits between permit holders on the same business 
day as a means of differentiating the pertinent scenario from others 
in which member organizations apply for new or additional permits 
long after certain of its other permits terminate.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the

[[Page 8558]]

objectives of Section 6(b)(5) of the Act,\6\ 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. Specifically, the proposal codifies 
the Exchange's existing billing practices so as to clarify that the 
Exchange will bill a member organization for only one monthly permit 
fee when the organization transfers one of its permits during a month 
to a new permit holder within its organization if the individual then 
listed as the permit holder ceases to be primarily affiliated with the 
organization. This clarification is just and equitable and it protects 
investors and the public interest because it prohibits the Exchange 
from double billing when a member organization applies to transfer a 
permit between affiliated individuals to maintain the validity of that 
permit in accordance with the Exchange's membership rules. The proposed 
change will also apply to all member organizations equally.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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. The proposal is not intended to 
nor will it have any discernable impact on competition. The Exchange 
merely intends to codify its existing billing practices and to clarify 
them in a manner that prevents double billing of member organizations 
for monthly permit fees.

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 \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 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 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \10\ 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 proposal 
may become operative immediately upon filing. The Exchange states that 
waiving the operative delay will allow it to immediately dispel any 
confusion that may exist among member organizations regarding the 
Exchange's billing practices for transferred permits. The Exchange also 
notes that the proposed rule change will ensure that member 
organizations are billed fairly for their permits and for maintaining 
their permits in accordance with the Exchange's membership rules. Based 
on the foregoing, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the operative 
delay and designates the proposed rule change as operative upon 
filing.\11\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For 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).
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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: (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 [email protected]. Please include 
File Number SR-Phlx-2018-17 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-2018-17. 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-2018-17 and should be submitted on 
or before March 20, 2018.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03892 Filed 2-26-18; 8:45 am]
BILLING CODE 8011-01-P