Document ID: SEC-2016-0715-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ PHLX, LLC
Posted Date: 2016-04-25T04:00Z

[Federal Register Volume 81, Number 79 (Monday, April 25, 2016)]
[Notices]
[Pages 24148-24149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09453]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77650; File No. SR-Phlx-2016-49]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Delete Obsolete 
Rules

April 19, 2016.
    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 8, 2016, 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, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to delete Rule 971, entitled ``Termination of 
Memberships and Equity Trading Permits and Leases and A-B-C Agreements 
Relating to Memberships and ETP Use Agreements,'' to delete Rule 972, 
entitled ``Continuation of Status After the NASDAQ OMX Merger,'' and to 
make conforming changes to other rules. The text of the proposed rule 
change is available on the Exchange's Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 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 Exchange proposes to delete certain Phlx rules in order to 
remove outdated material from the Exchange's Rulebook. Specifically, 
the Exchange proposes to delete Rule 971, entitled ``Termination of 
Memberships and Equity Trading Permits and Leases and A-B-C Agreements 
Relating to Memberships and ETP Use Agreements''; and Rule 972, 
entitled ``Continuation of Status After the NASDAQ OMX Merger.'' The 
Exchange also proposes to make conforming changes to rules that 
reference the rules that are being deleted.
    Rule 971 pertained to the demutualization of the Exchange in 2004. 
As provided in the rule, demutualization resulted in the termination of 
memberships and equity trading permits (``ETP''),\3\ as well as leases 
and ``A-B-C Agreements'' relating to memberships and ``ETP Use 
Agreements.'' \4\ As a result of demutualization, the Exchange moved 
from a seat-based model of membership, under which memberships were 
limited in number, to a model under which status as a member 
organization and associated trading privileges were available to any 
broker-dealer qualified under the Exchange's rules. To assist in the 
effectuation of this change, Rule 971 made it clear that all rights 
existing under the former model were being terminated. Since the rule 
fully achieved its purpose at the time of demutualization 2004, the 
Exchange believes that maintaining the rule in the Exchange's rulebook 
is no longer necessary.
---------------------------------------------------------------------------

    \3\ ETPs were rights created by the rules of the Exchange that 
provided the ability to transact cash equities through the exchange 
but without having the ownership rights associated with membership.
    \4\ Leases reflected the ownership interest of a member in the 
exchange prior to demutualization. A-B-C Agreements allowed a member 
of the exchange, a natural person associated with the broker-dealer, 
to contribute the use of the membership to the broker-dealer with 
which he or she was associated. Similarly, ETP Use Agreements 
allowed an individual ETP holder to contribute its use to the 
broker-dealer with which he or she was associated.
---------------------------------------------------------------------------

    Rule 972 pertains to the merger in 2008 through which The NASDAQ 
OMX Group, Inc. (since, renamed Nasdaq, Inc.) acquired ownership of the 
Exchange. The rule provides that the status of members, inactive 
nominees, and member organizations under Exchange rules would not be 
affected by the acquisition, and that likewise any existing suspension 
would not be affected. Since the rule fully achieved its purpose at the 
time of the acquisition of the Exchange in 2008, the Exchange believes 
that maintaining the rule in the Exchange's rulebook is no longer 
necessary.
    The Exchange is also amending Rules 908 (``Rights and Privileges of 
A-1 Permits'') and 3202 (``Application of Other Rules of the 
Exchange'') to remove references to Rule 972, and amending Rule 900 
(``Administration of Rules by Membership Department'') to remove 
references to Rules 971 and 972.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\6\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to and perfect the

[[Page 24149]]

mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that Rules 971 and 972 are no longer 
necessary, since they were fully effective [sic] at the time of the 
Exchange's demutualization and its acquisition by The NASDAQ OMX Group, 
Inc., respectively. Accordingly, removing the rules from the Exchange's 
rulebook will perfect the mechanism of a free and open market by 
eliminating rules that are unnecessary and potentially confusing to 
member organizations.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange's proposed amendments seek to delete certain 
obsolete rules. Because the change will not alter the rights or 
obligations of member organizations in any respect, the Exchange 
believes that the change will not affect competition in any respect.

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\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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. The Exchange has 
provided 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.

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-2016-49 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-2016-49. 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-2016-49 and should be 
submitted on or before May 16, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Robert W. Errett,
Deputy Secretary.
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2016-09453 Filed 4-22-16; 8:45 am]
 BILLING CODE 8011-01-P