Document ID: SEC-2018-1736-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2018-11-13T05:00Z

[Federal Register Volume 83, Number 219 (Tuesday, November 13, 2018)]
[Notices]
[Pages 56385-56387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24636]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84542; File No. SR-Phlx-2018-67]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to New 
Derivative Securities Products

November 6, 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 October 24, 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 Phlx Rule 803 related to derivative

[[Page 56386]]

securities traded under unlisted trading privileges (``UTP'') to remove 
the requirement in Rule 803(o)(3) for the Exchange to file with the 
Commission a Form 19b-4(e) for each ``new derivative securities 
product'' as defined in Rule 19b-4(e) under the Act \3\ (``Derivative 
Security'') traded under UTP and renumber the remaining provisions of 
Rule 803(o) to maintain an organized rule structure. The Exchange has 
designated this rule change as ``non-controversial'' under Section 
19(b)(3)(A) of the Act \4\ and provided the Commission with the notice 
required by Rule 19b-4(f)(6) thereunder.\5\
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    \3\ 17 CFR 240.19b-4(e)
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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    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
    The purpose of the proposed rule change is to amend Rule 803 
related to derivative securities traded under UTP by removing the 
requirement in Rule 803(o)(3) for the Exchange to file with the 
Commission a Form 19b-4(e) for each Derivative Security, and 
renumbering the remaining rules of Rule 803(o) to maintain an organized 
rule structure, as described below.
    Rule 803(o)(3) sets forth the requirement for Phlx to file with the 
Commission a Form 19b-4(e) with respect to each Derivative Security 
that is traded under UTP. However, Phlx believes that it should not be 
necessary to file a Form 19b-4(e) with the Commission if it begins 
trading a Derivative Security on a UTP basis, because Rule 19b- 4(e)(1) 
under the Act refers to the ``listing and trading'' of a ``new 
derivative securities product.''
    The Exchange believes that the requirements of that rule refers 
[sic] to when an exchange lists and trades a Derivative Security, and 
not when an exchange seeks only to trade such product on a UTP basis 
pursuant to Rule 12f-2 under the Act.\6\ Therefore, Phlx proposes to 
delete the requirement in current Rule 803(o)(3) for Phlx to file a 
Form 19b-4(e) with the Commission with respect to each Derivative 
Security it begins trading on a UTP basis. In addition, as a result of 
the deletion of current Rule 803(a)(1) Phlx proposes to renumber 
current Rule 803(o)(4), as Rule 803(o)(3).
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    \6\ 17 CFR 240.12f-2.
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2. Statutory Basis
    Phlx believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \7\ of the Act in general, and furthers the 
objectives of Section 6(b)(5) of the Act \8\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
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, eliminating the requirement to file a 
Form 19b-4(e) for each Derivative Security the Exchange begins trading 
on a UTP basis removes an unnecessary regulatory requirement thereby 
providing for a more efficient process for adding Derivative Securities 
to trading on the Exchange on a UTP basis.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    In addition, the Exchange notes that a substantially identical 
proposed rule change by NYSE National, Inc. (``NYSE National'') was 
recently approved by the Commission.\9\ In particular, the Commission 
noted in the approval order that it ``believes that the filing of a 
Form 19b-4(e) is not required when an Exchange is trading a new 
derivative securities product on a UTP basis only'' \10\ and also found 
that the NYSE National's proposed rule change is ``consistent with the 
requirements of Section 6(b)(5) of the Act.'' \11\
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    \9\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (Order Approving File No. SR-
NYSENAT-2018-02).
    \10\ See supra note 9 at page 23975 at footnote 149.
    \11\ See supra note 9 at page 23975-6.
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    With respect to the renumbering of current Rule 803(o)(4) as Rule 
803(o)(3), the Exchange believes that this change is consistent with 
the Act because they [sic] will allow the Exchange to maintain a clear 
and organized rule structure, thus preventing investor confusion.
    For these reasons, Phlx believes the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act.

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

    Phlx does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, removing the 
requirement to file a Form 19b-4(e) will serve to enhance competition 
by providing for the efficient addition of Derivative Securities for 
trading under UTP on Phlx. To the extent that a competitor marketplace 
believes that the proposed rule change places it at a competitive 
disadvantage, it may file with the Commission a proposed rule change to 
adopt the same or similar rule.
    In addition, the proposal to renumber the current Rules [sic] 
803(o)(4) as Rule 803(o)(3) does not impact competition in any respect 
since it merely maintains a clear and organized rule structure.

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; or (iii) become operative prior to 
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 \12\ and Rule 19b-4(f)(6) 
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give 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, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. Waiving the 30-day delay would permit the Exchange to more 
efficiently add Derivative Securities to the

[[Page 56387]]

Exchange under UTP without the unnecessary requirement to file a 19b-
4(e) with the Commission. The Commission also notes that because Phlx 
is adopting a rule that is substantially identical to a similar NYSE 
National rule, the proposed change does not present any new or novel 
issues. Thus, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest and hereby waives the 30-day operative delay and 
designates the proposed rule change to be operative upon filing.\14\
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    \14\ 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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-2018-67 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-2018-67. 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-2018-67 and should be submitted on 
or before December 4, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-24636 Filed 11-9-18; 8:45 am]
BILLING CODE 8011-01-P