Document ID: SEC-2021-0821-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2021-06-10T04:00Z

[Federal Register Volume 86, Number 110 (Thursday, June 10, 2021)]
[Notices]
[Pages 30995-30999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12120]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92107; File No. SR-Phlx-2021-32]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Various 
Phlx Rules

June 4, 2021.
    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 24, 2021, 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 Rules at Options 1, Section 1, 
Applicability, Definitions and References; Options 2, Section 4, 
Obligations of Market Makers; Options 2, Section 12, Registration and 
Functions of Options Lead Market Makers; Options 3, Section 7, Types of 
Orders and Order and Quote Protocols; Options 3, Section 15, Simple 
Order Risk Protections; and Options 3, Section 16, Complex Order Risk 
Protections. The Exchange also proposes to add a new Equity 3A, which 
will be reserved, to the Rulebook Shell.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, 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

[[Page 30996]]

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 amend Phlx Rules at Options 1, Section 1, 
Applicability, Definitions and References; Options 2, Section 4, 
Obligations of Market Makers; Options 2, Section 12, Registration and 
Functions of Options Lead Market Makers; Options 3, Section 7, Types of 
Orders and Order and Quote Protocols; Options 3, Section 15, Simple 
Order Risk Protections; and Options 3, Section 16, Complex Order Risk 
Protections. The Exchange also proposes to add and reserve a new Equity 
3A to the Rulebook Shell. Each change is described below.
Options 2, Section 4
    The Exchange proposes to amend Options 2, Section 4, Obligations of 
Market Makers. First, the Exchange proposes some technical amendments. 
The Exchange proposes to amend Options 2, Section 4(b) and 4(b)(1) to 
change the term ``an'' to ``a''. The Exchange also proposes to 
capitalize the term ``market maker'' within Options 2, Section 4(b)(4). 
Finally, the Exchange proposes to amend the term ``is'' to ``are'' 
within Options 2, Section 4(c). These corrections are non-substantive 
and intended to make the rule text clearer.
    Second, the Exchange proposes to amend the current rule text within 
Options 2, Section 4(b)(5) which states,
    An RSQT electing to engage in Exchange options transactions is 
designated as a Lead Market Maker on the Exchange for all purposes 
under the Exchange Act and the rules and regulations thereunder with 
respect to options transactions initiated and effected by him in his 
capacity as a Market Maker.
    The Exchange proposes to amend the rule to replace the term 
``RSQT'' with the broader term ``Market Maker'' and replace the term 
``Lead Market Maker'' with the term ``specialist.'' Phlx filed a rule 
change \3\ to amend certain rules, the rule text previously at 
Commentary .01 of Rule 1014, which is now located at Options 2, Section 
4(b)(5) stated,
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    \3\ See Securities Exchange Act Release No. 51126 (February 9, 
2005), 70 FR 6915 (February 9, 2005) (SR-Phlx-2004-90) (Order 
Approving Proposed Rule Change by the Philadelphia Stock Exchange, 
Inc., Relating to Remote Streaming Quote Traders).
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    An ROT electing to engage in Exchange Options transactions is 
designated as a specialist on the Exchange for all purposes under the 
Securities Exchange Act of 1934 and the rules and regulations 
thereunder with respect to options transactions initiated and effected 
by him on the floor in his capacity as an ROT. For purposes of this 
commentary, the term ``transactions initiated and effected on the 
floor'' shall not include transactions initiated by an ROT off the 
floor, but which are considered ``on-floor'' pursuant to Commentaries 
.07 and .08 of Rule 1014. Similarly, an RSQT electing to engage in 
Exchange Options transactions is designated as a specialist on the 
Exchange for all purposes under the Securities Exchange Act of 1934 and 
the rules and regulations thereunder with respect to options 
transactions initiated and effected by him in his capacity as an ROT.
    At this time, the Exchange proposes to revert the rule text back to 
a part of original language and state, ``A Market Maker electing to 
engage in Exchange Options transactions is designated as a specialist 
on the Exchange for all purposes under the Securities Exchange Act of 
1934 and the rules and regulations thereunder with respect to options 
transactions initiated and effected by him on the floor in his capacity 
as an Market Maker.'' Pursuant to Options 1, Section 1(b)(28), the term 
'' Market Maker'' means a Streaming Quote Trader (``SQT'') or a Remote 
Streaming Quote Trader (``RSQT'') who enters quotations for his own 
account electronically into the System. An RSQT is only one type of 
Market Maker, the other is an SQT. In 2020, the Exchange amended the 
term ``ROT'' to ``Market Maker.'' \4\ The original term ``ROT'' 
included both SQTs and RSQTs and therefore the broader term ``Market 
Maker'' should replace ``RSQT.'' While the Rulebook Relocation amended 
the term ``specialist'' to '' Lead Market Maker,'' the Exchange notes 
that the term ``specialist'' within prior Rule 1014, which is now 
Options 2, Section 4(b)(5), did not refer to a Phlx participant also 
known as a ``specialist,'' rather the term referred to an individual 
that engages in market making pursuant to the Act. The Exchange 
proposes to replace the term ``Lead Market Maker'' with the term 
``specialist'' which shall mean, for purposes of this rule, an 
individual that engages in market making. The term ``specialist'' is 
broader than the term ``Lead Market Maker.'' This proposal reverts back 
to language previously used and should capture the universe of market 
makers the rule was originally intended to capture.
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    \4\ See Securities Exchange Act 88213 (February 14, 2020), 85 FR 
9859 (February 20, 2020) (SR-Phlx-2020-03)(Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Relocate Rules 
From Its Current Rulebook Into Its New Rulebook Shell) (``Rulebook 
Relocation'').
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Options 3, Section 15 and Options 3, Section 16
    The Exchange proposes to add provisions within Options 3, Section 
15 at paragraph (b)(2), related to Simple Order Risk Protections, and 
Options 3, Section 16 at paragraph (e), related to Complex Order Risk 
Protections, to describe a current limitation that exists within its 
rules today as to the number of contracts an incoming order or quote 
may specify. Specifically, for simple orders, the maximum number of 
contracts, which shall not be less than 10,000 contracts, is 
established by the Exchange from time-to-time. For Complex Orders, the 
maximum number of contracts (or shares), which shall not be less than 
10,000 contracts (or 100,000 shares), is established by the Exchange 
from time-to-time. Orders or quotes that exceed the maximum number of 
contracts/shares are rejected. This System limitation is the same on 
all Nasdaq affiliated exchanges.\5\ Today, Nasdaq ISE, LLC (``ISE''), 
Nasdaq GEMX, LLC (``GEMX'') and Nasdaq MRX, LLC (``MRX'') describe this 
limitation within their rules at Options 3, Section 15(a)(2)(B). ISE 
and MRX also describe the Size Limitation within Options 3, Section 
16(c)(2). Phlx proposes to similarly describe this limitation in its 
rules.
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    \5\ The Exchange recently filed to add Size Limitation to BX and 
The Nasdaq Stock Market LLC. See Securities Exchange Act Release 
Nos. 91838 (May 11, 2021), 86 FR 26750 (May 17, 2021) (SR-BX-2021-
020) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend BX Rules at Options 3, Section 7, Types of Orders 
and Order and Quote Protocols, and Options 3, Section 15, Risk 
Protections); and 91841 (May 11, 2021), 86 FR 26753 (May 17, 2021) 
(SR-NASDAQ-2021-030) (Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change To Amend the Nasdaq Options Market LLC Rules 
at Options 3, Section 7, Types of Orders and Order and Quote 
Protocols, and Options 3, Section 15, Risk Protections).
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Options 3, Section 7
    The Exchange also proposes to amend Options 3, Section 7(c)(2), 
Types of Orders and Order and Quote Protocols, which describes 
Immediate-or-Cancel Orders or ``IOC'' Orders. Today, the Exchange 
describes an IOC order as a Market Order or Limit Order to be executed 
in whole or in part upon receipt. Any portion not so executed is 
cancelled.\6\ Options 3, Section 7(c)(2)(B) provides that IOC orders 
may be entered

[[Page 30997]]

through FIX \7\ or SQF,\8\ provided that an IOC order entered by a 
Market Maker \9\ through SQF is not subject to the Order Price 
Protection or the Market Order Spread Protection in Options 3, Section 
15(a)(1) and (a)(2), respectively. With the proposed addition of the 
Size Limitation to proposed new Options 3, Section 15(b)(2) and Options 
3, Section 16(e), the Exchange also proposes to note that Size 
Limitation does not apply to IOC orders entered through SQF.
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    \6\ See Options 3, Section 7(c)(2). The Exchange also notes that 
IOC orders entered with a TIF of IOC are not eligible for routing.
    \7\ ``Financial Information eXchange'' or ``FIX'' is an 
interface that allows members and their Sponsored Customers to 
connect, send, and receive messages related to orders and auction 
orders and responses to and from the Exchange. Features include the 
following: (1) Execution messages; (2) order messages; and (3) risk 
protection triggers and cancel notifications. See Options 3, Section 
7(a)(i)(A).
    \8\ ``Specialized Quote Feed'' or ``SQF'' is an interface that 
allows Lead Market Makers, RSQTs, SQTs to connect, send, and receive 
messages related to quotes, Immediate-or-Cancel Orders, and auction 
responses into and from the Exchange. Features include the 
following: (1) Options symbol directory messages (e.g underlying and 
complex instruments); (2) system event messages (e.g., start of 
trading hours messages and start of opening); (3) trading action 
messages (e.g., halts and resumes); (4) execution messages; (5) 
quote messages; (6) Immediate-or-Cancel Order messages; (7) risk 
protection triggers and purge notifications; (8) opening imbalance 
messages; (9) auction notifications; and (10) auction responses. The 
SQF Purge Interface only receives and notifies of purge requests 
from the Lead Market Maker, SQT or RSQT. Lead Market Makers, SQTs 
and RSQTs may only enter interest into SQF in their assigned options 
series.
    \9\ The Exchange notes that Lead Market Makers are also Market 
Makers for purposes of the Options 3, Section 7 discussion.
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    Today, orders that are entered as IOC by a Market Maker through SQF 
are subject to the protections in Options 3, Section 15, except for 
Order Price Protection and Market Order Spread Protection. The Exchange 
proposes to add Size Limitation to the list of protections that are 
available for IOC orders entered through FIX, but not SQF. In addition, 
the Exchange proposes to note within Options 3, Section 7(c)(2), that, 
``IOC orders may be entered through FIX or SQF, provided that an IOC 
order entered by a Market Maker through SQF is not subject to the Order 
Price Protection, the Market Order Spread Protection, or the Size 
Limitation in Options 3, Section 15(a)(1), (a)(2) and (b)(2), 
respectively, or Size Limitation within Options 3, Section 16(e).'' The 
addition of this rule text will bring greater clarity to the order 
type.
    The Exchange notes that while only orders are entered into FIX, SQF 
is a quote protocol that also permits Market Makers to enter IOC orders 
that do not rest on the order book. The Exchange has not elected to 
utilize Size Limitation on SQF as it did for FIX because Market Makers 
only utilize SQF to enter IOC orders and Market Makers are professional 
traders with their own risk settings. FIX, on the other hand, is 
utilized by all market participants who may not have their own risk 
settings, unlike Market Makers.
    Market Makers utilize IOC orders to trade out of accumulated 
positions and manage their risk when providing liquidity on the 
Exchange. Proper risk management, including using these IOC orders to 
offload risk, is vital for Market Makers, and allows them to maintain 
tight markets and meet their quoting and other obligations to the 
market. Market Makers handle a large amount of risk when quoting and in 
addition to the risk protections required by the Exchange. Market 
Makers utilize their own risk management parameters when entering 
orders, minimizing the likelihood of a Market Maker's erroneous order 
from being entered. The Exchange believes that Market Makers, unlike 
other market participants, have the ability to manage their risk when 
submitting IOC orders through SQF and should be permitted to elect this 
method of order entry to obtain efficiency and speed of order entry, 
particularly in light of the continuous quoting obligations the 
Exchange imposes on these participants.
    The Exchange believes that allowing Market Makers to submit IOC 
orders through their preferred protocol increases their efficiency in 
submitting such orders and thereby allows them to maintain quality 
markets to the benefit of all market participants that trade on the 
Exchange. Further, unlike other market participants, Market Makers 
provide liquidity to the market place and have obligations.\10\ Thus, 
the Exchange opted to not offer Size Limitation for IOC orders entered 
through SQF because Market Makers have more sophisticated 
infrastructures than other market participants and are able to manage 
their risk.
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    \10\ Lead Market Makers have quoting obligations during the 
Opening Process as specified in Options 3, Section 8 and Market 
Makers and Lead Market Makers have intra-day quoting obligations as 
specified in Options 2, Section 5.
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    Similarly, the Exchange also proposes to amend Options 3, Section 
7(c)(3) which describes an Opening Only or ``OPG'' order. Today, an OPG 
order can only be executed in the Opening Process pursuant to Options 
3, Section 8. The rule currently states that this order type is not 
subject to any protections listed in Options 3, Section 15 describing 
risk protections. With the proposed addition of Size Limitation to 
proposed new Options 3, Section 15(b)(2) and Options 3, Section 16(e), 
the Exchange proposes to note within Options 3, Section 7(c)(3) that 
OPG orders are subject to Size Limitation. OPG orders are entered 
during the Opening Process ``Financial Information eXchange'' or 
``FIX''. Also, any participant may enter an OPG order and be subject to 
Size Limitation protections.
Non-Substantive Amendments
    The Exchange proposes to amend the Rulebook shell to add a new 
Equity 3A and reserve that section. Equity 3A will be utilized by the 
Nasdaq BX, Inc. (``BX'') Rulebook and the Exchange proposes to reserve 
that section in this Rulebook to demonstrate the section does not exist 
for the Exchange's equity market.
    The Exchange proposes to make minor technical amendments to Options 
1, Section 1(b)(27) which describes a Lead Market Maker. The Exchange 
proposes to change an ``an'' to ``the'' and capitalize the term 
``Trading Floor.''
    The Exchange proposes to amend Options 2, Section 12(a)(1), 
Registration and Functions of Options Lead Market Makers, to add a 
parenthetical and space that were missing.
    Finally, the Exchange proposes to amend the description of a 
Specialized Quote Feed within Options 3, Section 7(a)(i)(B) to make 
plural the word ``request'' and also add an ``.,'' after an e.g to 
conform the punctuation in the paragraph.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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Options 2, Section 4
    The Exchange's proposal to amend Options 2, Section 4(b)(5) is 
consistent with the Act because the paragraph will read as intended. In 
the Rulebook Relocation, the Exchange amended the term ``ROT'' to 
``Market Maker.'' \13\ Pursuant to Options 1, Section 1(b)(28), the 
term ``Market Maker'' means an SQT or an RSQT who enters quotations for 
his own account electronically into the System. An RSQT is only one 
type of Market Maker, the other is an SQT. The original term ``ROT'' 
included both SQTs and RSQTs and therefore the Exchange proposes to 
revert back to the broader term ``Market Maker.'' While

[[Page 30998]]

the Rulebook Relocation amended the term ``specialist'' to ``Lead 
Market Maker,'' the Exchange notes that the term ``specialist'' within 
prior Rule 1014, which is now Options 2, Section 4(b)(5), did not refer 
to a Phlx participant also known as a ``specialist,'' rather the term 
referred to an individual that engages in market making pursuant to the 
Act. The Exchange proposes to replace the term ``Lead Market Maker'' 
with the term ``specialist'' which shall mean, for purposes of this 
rule, an individual that engages in market making. The term 
``specialist'' is broader than the term ``Lead Market Maker.'' This 
proposal reverts back to language previously used and should capture 
the universe of market makers the rule was originally intended to 
capture.
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    \13\ See supra note 4.
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    The remainder of the proposed amendments to Options 2, Section 4 
are non-substantive technical amendments that are intended to bring 
greater clarity to the Exchange's Rules.
Options 3, Section 15 and Options 3, Section 16
    The Exchange's proposal to add provisions within Options 3, Section 
15 at paragraph (b)(2), related to Simple Order Risk Protections, and 
Options 3, Section 16 at paragraph (e), related to Complex Order Risk 
Protections, to describe a current limitation that exists within its 
rules today as to the number of contracts an incoming order or quote 
may specify is consistent with the Act. The proposal is intended to 
describe a current limitation that exists today as to the number of 
contracts an incoming order or quote may specify. Specifically, for 
simple orders, the maximum number of contracts, which shall not be less 
than 10,000 contracts, is established by the Exchange from time-to-
time. For Complex Orders, the maximum number of contracts (or shares), 
which shall not be less than 10,000 contracts (or 100,000 shares), is 
established by the Exchange from time-to-time. Orders or quotes that 
exceed the maximum number of contracts/shares are rejected. This System 
limitation is the same on all Nasdaq affiliated exchanges.\14\ Today, 
ISE, GEMX and MRX describe this limitation within its rules at Options 
3, Section 15(a)(2)(B) and ISE and MRX describe the limitation in 
Options 3, Section 16(c)(2). Phlx proposes to similarly describe this 
limitation in its rules.
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    \14\ See supra note 5.
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Options 3, Section 7
    The Exchange's proposal to amend Options 3, Section 7(c)(2) with 
respect to IOC orders is consistent with the Act. Today, the Exchange 
describes an IOC order as a Market Order or Limit Order to be executed 
in whole or in part upon receipt. Any portion not so executed is 
cancelled.\15\ Options 3, Section 7(c)(2)(B) provides that IOC orders 
may be entered through FIX or SQF, provided that an IOC order entered 
by a Market Maker through SQF is not subject to the Order Price 
Protection or the Market Order Spread Protection in Options 3, Section 
15(a)(1) and (a)(2) respectively. With the proposed additions of the 
Size Limitation within Options 3, Section 15(b)(2) and Options 3, 
Section 16(e), the Exchange also proposes to note that Size Limitation 
does not apply to IOC orders entered through SQF. The Exchange notes 
these exceptions within this rule to make clear that this information 
is available to market participants within the description of IOC.
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    \15\ See Options 3, Section 7(c)(2).
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    The Exchange notes that while only orders are entered into FIX, SQF 
is a quote protocol that also permits Market Makers to enter IOC orders 
that do not rest on the order book. The Exchange has not elected to 
utilize Size Limitation on SQF as it did for FIX because Market Makers 
only utilize SQF to enter IOC orders and Market Makers are professional 
traders with their own risk settings. FIX, on the other hand, is 
utilized by all market participants who unlike Market Makers may not 
have their own risk settings. Market Makers utilize IOC orders to trade 
out of accumulated positions and manage their risk when providing 
liquidity on the Exchange. Proper risk management, including using 
these IOC orders to offload risk, is vital for Market Makers, and 
allows them to maintain tight markets and meet their quoting and other 
obligations to the market. Market Makers handle a large amount of risk 
when quoting and in addition to the risk protections required by the 
Exchange. Market Makers utilize their own risk management parameters 
when entering orders, minimizing the likelihood of a Market Maker's 
erroneous order from being entered. The Exchange believes that Market 
Makers, unlike other market participants, have the ability to manage 
their risk when submitting IOC orders through SQF and should be 
permitted to elect this method of order entry to obtain efficiency and 
speed of order entry, particularly in light of the continuous quoting 
obligations the Exchange imposes on these participants.
    The Exchange believes that allowing Market Makers to submit IOC 
orders through their preferred protocol increases their efficiency in 
submitting such orders and thereby allows them to maintain quality 
markets to the benefit of all market participants that trade on the 
Exchange. Further, unlike other market participants, Market Makers 
provide liquidity to the market place and have obligations.\16\ The 
Exchange believes not offering Size Limitation for IOC orders entered 
through SQF is consistent with the Act because Market Makers have more 
sophisticated infrastructures than other market participants and are 
able to manage their risk.
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    \16\ See supra note 10.
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    The Exchange's proposal to amend OPG orders within Options 3, 
Section 7(c)(3) to make clear that Size Limitation applies to OPG 
orders is consistent with the Act as this rule text will clarify the 
existing language and make clear that Size Limitation is applicable to 
the order type. OPG orders are entered during the Opening Process 
utilizing FIX. Any participant may enter an OPG order. The Exchange's 
proposal to amend Options 3, Section 7(c)(3) to make clear that Size 
Limitation applies to OPG orders is consistent with the Act as this 
rule text will clarify the existing language and make clear that Size 
Limitation is applicable to this order type.
Non-Substantive Amendments
    The Exchange's proposal to add a new Equity 3A and reserve that 
section, and amend Options 1, Section 1(b)(27), Options 2, Section 12 
and Options 3, Section 7(a)(i)(B) to make technical changes, are 
consistent with the Act as these changes will add clarity to the 
Exchange's rules.

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.
Options 2, Section 4
    The Exchange's proposal to amend Options 2, Section 4(b)(5) does 
not impose an undue burden on competition because the paragraph will 
read as intended. The Exchange's proposal will make clear that all 
participants engaged in market making activities are specialists 
pursuant to the Act.\17\
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    \17\ 15 U.S.C. 78s(b)(1).
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    The remainder of the proposed amendments to Options 2, Section 4 
are non-substantive technical amendments.

[[Page 30999]]

Options 3, Section 15 and Options 3, Section 16
    The Exchange's proposal to add provisions within Options 3, Section 
15 at paragraph (b)(2), related to Simple Order Risk Protections, and 
Options 3, Section 16 at paragraph (e), related to Complex Order Risk 
Protections, to describe a current limitation that exists within its 
rules today as to the number of contracts an incoming order or quote 
may specify does not impose an undue burden on competition. The 
proposal is intended to describe a current limitation that exists today 
as to the number of contracts an incoming order or quote may specify. 
This System limitation is the same on all Nasdaq affiliated 
exchanges.\18\ Today, ISE, GEMX and MRX describe this limitation within 
its rules at Options 3, Section 15(a)(2)(B) and ISE and MRX describe 
this limitation within Options 3, Section 16(c)(2). Phlx proposes to 
similarly describe this limitation in its rules.
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    \18\ See supra note 5.
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Options 3, Section 7
    The Exchange's proposal to amend Options 3, Section 7(c)(2) with 
respect to IOC orders does not impose an undue burden on competition. 
With the proposed additions of the Size Limitation within Options 3, 
Section 15(b)(2) and Options 3, Section 16(e), the Exchange also 
proposes to note that Size Limitation does not apply to IOC orders 
entered through SQF. Unlike other market participants, Market Makers 
provide liquidity to the market place and have obligations.\19\
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    \19\ See supra note 10.
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    The Exchange's proposal to amend Options 3, Section 7(c)(3) to make 
clear that Size Limitation applies to OPG orders does not impose an 
undue burden on competition as this rule text will clarify the existing 
language and make clear that Size Limitation is applicable to this 
order type. OPG orders are entered during the Opening Process utilizing 
FIX.
Non-Substantive Amendments
    The Exchange's proposal to add a new Equity 3A and reserve that 
section, and amend Options 1, Section 1(b)(27), Options 2, Section 12 
and Options 3, Section 7(a)(i)(B) to make technical changes, do not 
impose an undue burden on competition as these changes will add clarity 
to the Exchange's 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) of the Act \20\ and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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 requested that the Commission waive the 30-day 
operative delay. The Commission notes that other exchanges have 
substantively similar rules regarding size limitation for certain 
incoming orders or quotes.\22\ The Exchange's proposal will also revert 
a rule unintentionally modified to its original intention. Finally, the 
non-substantive amendments should clarify the Exchange's rules. Thus, 
the Commission believes waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Commission therefore waives the 30-day operative delay and 
designates this proposal operative upon filing.\23\
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    \22\ See supra note 5.
    \23\ 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 rule-comments@sec.gov. Please include 
File Number SR-PHLX-2021-32 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-2021-32. 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-2021-32 and should be submitted on 
or before July 1, 2021.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12120 Filed 6-9-21; 8:45 am]
BILLING CODE 8011-01-P