Document ID: SEC-2016-1012-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ PHLX LLC
Posted Date: 2016-06-13T04:00Z

[Federal Register Volume 81, Number 113 (Monday, June 13, 2016)]
[Notices]
[Pages 38230-38232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13824]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78004; File No. SR-Phlx-2016-61]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Certain 
Rules Governing Trading of Index Options

June 7, 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 May 25, 2016, NASDAQ PHLX LLC (``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.
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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 certain rules governing trading of 
index options.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.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 Exchange is amending various rules regarding index options. The 
amendments delete certain outdated language relating primarily to index 
options which the Exchange no longer lists. The amendments also conform 
certain language in the Phlx rules to that of Chapter XIV, Index Rules, 
of the NASDAQ Options Market LLC (``NOM''), and make a number of 
grammatical and technical corrections.
Deletions of Obsolete Rule Text
    The Exchange is deleting references to the following in Rule 1001A, 
Position Limits, Rule 1009A, Designation of the Index, Sections (g) and 
(h), and Rule 1101A, Terms of Options Contracts, Section (a) and 
Commentary .01, as applicable, relating to indexes on which the 
Exchange no longer lists options: SIG Energy MLP Index, NASDAQ China 
Index, MSCI EM Index, MSCI EAFE Index, PHLX Computer Box Maker Index, 
PHLX Defense Index, PHLX Drug Index, PHLX Europe Index, PHLX World 
Energy Index, SIG Investment Managers Index, SIG Cable, Media & 
Entertainment Index, SIG Semiconductor Equipment Index, SIG 
Semiconductor Device Index, SIG Specialty Retail Index, SIG Steel

[[Page 38231]]

Producers Index, SIG Footwear and Athletic Index, SIG Education Index, 
SIG Restaurant Index, SIG Coal Producers Index, U.S. Top 100 Index, the 
OTC Industrial Average Index, TheStreet.com Internet Sector Index, 
Wellspring Bioclinical Trials Index, Hapoalim American Israeli Index, 
Hapoalim Index, SIG KCI Coal Index, NASDAQ Internet Index, Full Value 
MSCI EM Index, Full Value MSCI EAFE Index, Value Line Composite Index, 
National Over-the-Counter Index and the SIG Casino Gaming Index.
    The Exchange is also deleting obsolete language from Rule 
1000A(14), the definition of ``expiration date'' regarding index 
options expiring prior to February 1, 2015. It is also deleting Rule 
1101A(b)(iv), Quarterly Expiring Index Options, and is also amending 
the definition of ``expiration date'' in Rule 1000A(b)(14) because the 
Exchange no longer lists quarterly expiring index options.
Rules Amended To Conform to NOM Rules
    The Exchange has amended certain rules to conform more closely to 
NOM rules governing the same subject matter. In Rule 1000A(b)(5) the 
word ``securities'' replaces the word ``stocks'' in the definition of 
``underlying security'' or ``underlying securities''.\3\ In Rule 
1000A(b)(13), the definition of European options is amended to take 
into account the case of an option expiring on a day that is not a 
business day.\4\ The Exchange has also added to Rule 1000A(b) in 
section (17) a new definition of ``American option'' or ``American-
style index option''.\5\
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    \3\ See NOM Chapter XIV, Section 2(q).
    \4\ See NOM Chapter XIV, Section 2(h).
    \5\ See NOM Chapter XIV, Section 2(b).
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Rules Amended To Correct Cross References or Provide Clarity
    The Exchange has rewritten Rule 1001A, Position Limits, subsection 
(a) solely for clarity. No change in meaning is intended. As revised, 
the rule states that ``[t]he position limit for a broad-based (market) 
index option shall be 25,000 contracts on the same side of the market 
except as provided below. Certain positions must be aggregated in 
accordance with paragraph (d) or (e) below''.
    Rule 1001A, Commentary .04, Delta-Based Index Hedge Exemption is 
amended at section (C) in the definition of ``permitted pricing model'' 
by replacing an incorrect reference to ``Commentary .09(c)(3), Exchange 
Rule 1001'', which was recently deleted, with a reference to ``Exchange 
Rule 1001(n)'' which replaced it. For the same reason, in Section 
(D)(2)(i) of that Commentary, an incorrect reference to ``Commentary 
.06 to Exchange Rule 1001'' is replaced with a reference to Exchange 
Rule 1001(k). Rule 1000A(b)(14) which defines ``expiration date'' is 
amended by the deletion of a reference to the Exchange ``on which such 
option is listed,'' since the rule applies only to options listed on 
Phlx.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ 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, 
by updating and clarifying outdated rules relating to index options 
trading. The proposed rule change is also consistent with Section 
6(b)(1) of the Act \8\ in that it enables the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Act and to comply, and to enforce compliance by its exchange 
members and persons associated with its exchange members, with the 
provisions of the Act, the rules and regulations thereunder, and the 
rules of the Exchange. The amendments should enable Phlx members to 
better understand the Exchange's index options rules and the Exchange 
to better enforce compliance with those rules.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(1).
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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 because the rule merely updates 
and clarifies outdated rules relating to index options and conforms 
certain Phlx rules to NOM rules.

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 \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \10\ 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.
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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 rule-comments@sec.gov. Please include 
File Number SR-Phlx-2016-61 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-2016-61. 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/

[[Page 38232]]

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-2016-61 and should be submitted on or before July 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-13824 Filed 6-10-16; 8:45 am]
 BILLING CODE 8011-01-P