[Federal Register Volume 84, Number 86 (Friday, May 3, 2019)]
[Notices]
[Pages 19136-19141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09019]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85740; File No. SR-Phlx-2019-17]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Relocate the 
Floor Trading Rules to Options 8

April 29, 2019.
    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 16, 2019, 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 and II below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit

[[Page 19137]]

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 relocate rules related to the trading floor 
into the new Rulebook shell at Options 8, entitled ``Options Floor 
Trading.''
    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 this rule change is to relocate all rules that 
relate to the Exchange's trading floor into the new Rulebook shell at 
Options 8, titled ``Floor Trading.'' The Exchange proposes to relocate 
the various rules or portion of rules into sections with titles within 
Options 8. Each rule in the new Options 8 will be described in greater 
detail below. The Exchange notes that cross-references within the 
relocated rules have been amended where appropriate to reflect 
relocations. Also, with respect to the relocation of a portion of a 
rule, a reference was added to the original rule. The Exchange is not 
substantively amending rule text unless noted otherwise within this 
rule change.
General Provisions
    The Exchange proposes to add a title ``General Provisions'' into 
Options 8 along with two sections, Section 1, titled ``Applicability'' 
and Section 2, titled ``Definitions.'' The Exchange's new proposed 
Section 1 seeks to clarify the interplay between Options 8 and the 
remainder of the Phlx Rulebook. A member may execute a transaction on 
Phlx electronically or from the trading floor. The Exchange seeks to 
identify which rules are applicable to the trading floor within Options 
8. To the extent that a portion of a rule applied to the trading floor, 
the Exchange relocated only that portion of the rule to Options 8. The 
Exchange proposes to provide at Section 1,

    (a) The Options 8 Rules shall apply to Exchange options 
transactions by and among members and member organizations 
physically located on the Exchange's options trading floor, 
including the trading crowds, and shall govern all activity that 
occurs in the physical space designated by the Exchange as ``trading 
floor'' as well as trading conducted through the Options Floor Based 
Management. All executions that occur automatically within the 
electronic system operated by the Exchange that receives and 
disseminates quotes, executes orders and reports transactions 
(``System'' or ``Electronic System'') shall be governed by all other 
Options Rules except for the Options 8 Rules.
    (b) All Options Rules shall apply to Exchange Floor Trading, in 
addition to the Options 8 Rules, however where the Options 8 Rules 
disagree with another Options Rule not within Options 8 a conflict 
shall be resolved in favor of the Options 8 Rule as it applies to 
the Exchange Trading Floor.

The Exchange seeks to make clear that the Options 8 Rules should be 
read together with rules in the remainder of the Rulebook and makes 
clear that in the event of a conflict, the Options 8 rules apply to the 
trading floor.
    Today, Rules Applicable to Trading of Options on Indices are 
drafted in a similar fashion. With respect to the Rules Applicable to 
Trading of Options on Indices (Rules 1000A--1109A), Phlx Rule 1000A, 
``Applicability and Definitions,'' currently provides:

    The Rules in this Section are applicable only to index options 
(options on indices of securities as defined below). In addition, 
except to the extent that specific rules in this Section govern, or 
unless the context otherwise requires, the provisions of the Option 
Rules applicable to stock options and of the By-Laws and all other 
Rules and Policies of the Board of Directors shall be applicable to 
the trading on the Exchange of index options.

Similarly, Cboe Exchange, Inc. (``Cboe'') Rule 6.1A. Global Trading 
Hours has an applicability rule that is similarly drafted. The rule 
provides,

    (a) Applicability of Rules. All Rules of the Exchange apply to 
trading during Global Trading Hours except as set forth in this Rule 
and except for Rules that by their terms are inapplicable during 
Global Trading Hours or where the context otherwise requires.\3\
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    \3\ Cboe Rule 613, Cboe Options Hybrid System Automatic 
Execution Feature, similarly has an applicability rule that 
provides, ``. . . This rule is applicable only to those classes 
specifically designated for trading on the Cboe Options Hybrid 
System. The Cboe Options Hybrid System is a trading platform that 
allows automatic executions to occur electronically and open outcry 
trades to occur on the floor of the Exchange pursuant to the 
priority and allocation principles contained in Rule 6.45.''

    Proposed Section 2 contains definitions applicable to the trading 
floor. Unless otherwise stated, the proposed relocations do not modify 
the existing definition. The term ``floor'' at proposed Section 2(1) is 
relocated from Rule 1(n). The term ``Floor Broker'' at proposed Section 
2(2) is relocated from Rule 1060. The term is being modified to ``Floor 
Broker'' instead of ``Options Floor Broker'' because these rules appear 
in the Options section of the Phlx Rulebook. The term ``Inactive 
Nominee'' at proposed Section 2(3) is being relocated from Rule 1(p). 
The term ``Presiding Exchange Officials'' at proposed Section 2(4) is 
being relocated from Rule 1000(e). The term ``Permit'' at proposed 
Section 2(5) references Rule 1(z) and also relocates portions of Rule 
908(b)(i). The term ``Public Outcry'' at proposed Section 2(6) is being 
relocated in part from Rule 1000(g). The term ``Non-SQT ROT'' at 
proposed Section 2(7) is being relocated from Rule 1014(b)(ii)(C) and 
renamed ``Floor Market Maker.'' The Exchange proposes to rename the 
term ``Non-SQT ROT'' throughout Options 8 as ``Floor Market Maker.''
Administration
    The Exchange proposes a new title ``Administration'' into new 
Options 8 along with new proposed Sections 3-10. Proposed Section 3, 
titled ``Imposition'' is being relocated from Rule 714. Proposed 
Section 4, titled ``Rights and Privileges of A-1 Permits'' is relocated 
in part from Rule 908(b)(i) \4\ with the addition of the sentence, ``A 
Series A-1 permit holder shall be subject to Rule 908.'' Proposed 
Section 5, titled ``Qualification as a Member Organization'' is 
relocated in part from Rule 910(f)(3) \5\ with the addition of the 
phrase, ``In addition to the requirements of Rule 910.'' Proposed 
Section 6, titled ``Registration of Floor Brokers'' is being relocated 
from Rule 1061. Proposed Section 7, titled ``Inactive Nominees'' is 
being relocated from Rule 925. Proposed Section 8, ``Trading Floor 
Registration'' is being relocated from Rule 1260. Proposed Section 9, 
``Trading Floor Admittance'' is being relocated from Rule 443. Proposed 
Section 10, ``Training'' is being relocated from Rule

[[Page 19138]]

625, in part \6\ with the addition of the phrase, ``In addition to Rule 
625 requirements.'' The proposed rule changes are non-substantive rule 
changes that simply seek to relocate and add transparency to the 
current rule text.
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    \4\ Specifically, the Exchange is relocating Rule 908(b)(i) and 
deleting (c)(i) which is now highlighted with proposed new Section 
4.
    \5\ Specifically, the Exchange is relocating a portion of Rule 
910(f)(3).
    \6\ Specifically, the last sentence of Rule 625 is being 
relocated.
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Market Participants
    The Exchange proposes a new title ``Market Participants'' into new 
Options 8 along with new proposed Sections 11 and 12. Proposed Section 
11 titled ``Specialist Appointment'' is being relocated in part from 
Rule 501 \7\ with the addition of the phrase, ``In addition to the 
requirements specified in Rule 501 related to the appointment of a 
Specialist, each Specialist unit . . . .'' Proposed Section 12, titled 
``Clerks'' is being relocated from Rule 1090. The proposed rule changes 
are non-substantive rule changes that simply seek to relocate and add 
transparency to the current rule text.
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    \7\ Specifically, rule text is being relocated from Rule 501(d) 
and (f).
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Regulation
    The Exchange proposes a new title ``Regulation'' into new Options 8 
along with new proposed Sections 13-19. Proposed Section 13, titled 
``Acts Detrimental to the Interest or Welfare of the Exchange'' is 
being relocated, in part, from Rule 708 \8\ and adds the phrase, ``In 
addition to Rule 708, acts which could be deemed detrimental to the 
interest or welfare of the Exchange include, but are not limited to.'' 
Proposed Section 14, titled, ``Financial Responsibility and Reporting'' 
is being relocated, in part, from Rule 703 and adding the phrase, ``In 
addition to the obligations specified within Rule 703.'' \9\ Proposed 
Section 15, titled ``Stopping'' An Option'' is being relocated from 
Rule 1018. Proposed Section 16, titled ``Trading for Joint Account'' is 
being relocated from Rule 772. Proposed Section 17, titled 
``Limitations on Members Trading Because of Customers' Orders'' is 
being relocated, in part, from Rule 452 \10\ and adding phrase, ``In 
addition to the limitations in Rule 452.'' Proposed Section 18, titled 
``General Responsibility of Floor Brokers'' is being relocated from 
Rule 155. Proposed Section 19, titled ``Responsibilities of Floor 
Brokers--Treasury Securities Options'' is being relocated from Rule 
1017D. The proposed rule changes are non-substantive rule changes that 
simply seek to relocate and add transparency to the current rule text.
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    \8\ Specifically, Commentary .01(e) to Rule 708 is being 
relocated.
    \9\ Specifically, sections of Rule 703(c)(vi) are being 
relocated.
    \10\ Specifically, rule text is being relocated from 
Supplementary Material .03 to Rule 452.
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Floor Trading Rules
    The Exchange proposes a new title ``Floor Trading Rules'' into new 
Options 8 along with new proposed Sections 20-35. Proposed Section 20, 
titled ``Dealings on Floor--Hours'' is being relocated from Rule 102. 
Proposed Section 21, titled ``Dealings on Floor--Persons'' is being 
relocated from Rule 104. Proposed Section 22, titled ``Execution of 
Options Transactions on the Trading Floor'' is being relocated, in 
part, from Rule 1000(f) and (g). Proposed Section 23, titled 
``Precedence of Highest Bid'' is being relocated, in part, from Rule 
119.\11\ The Exchange proposes to replicate the first part of that 
rule, ``The highest bid shall have precedence in all cases pursuant to 
Rule 119. Where bids are made at the same price, the priority and 
precedence shall be determined in accordance with the following 
rules:'' before the relocated sections of Rule 119(e) and (f). Proposed 
Section 24, titled ``Bids And Offers--Premium'' is being relocated from 
Rule 1033.\12\
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    \11\ Specifically, rule text is being relocated from Rule 119(e) 
and (f).
    \12\ The Exchange is capitalizing the ``The'' before ``Options 
Clearing Corporation'' to properly represent the name.
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    Proposed Section 25, titled ``Floor Allocation'' is being 
relocated, in part, from Rule 1014(g)(i)-(vi) into Options 8, Section 
25.\13\ The Exchange proposes to add a sentence at the beginning of 
this rule as ``a'', which states, ``The following applies to the 
allocation of orders on the Trading Floor'' to introduce the 
information which follows. The Exchange proposes to relocate the first 
paragraph of Commentary .01 to Rule 1014.\14\ Commentary .05(c) of Rule 
1014 will be relocated to Options 8, Section 25(f). Commentary .07 and 
.08 of Rule 1014 are being relocated to Options 8, Section 25(d)(1) and 
(e). Commentary .09 of Rule 1014 is being relocated to Options 8, 
Section 25(g). Commentary .11, .12, .13 and .14 of Rule 1014 are being 
relocated to Options 8, Section 25(h)-(k). Commentary .17 of Rule 1014 
is being relocated to Options 8, Section 25(l). Commentary .19 of Rule 
1014 is being relocated to Options 8, Section 25(m).
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    \13\ The term ``Options Floor Broker System'' is being amended 
to ``Options Floor Based System'' to conform to the remainder of the 
rulebook. This term was amended in a prior rule change. See 
Securities Exchange Act Release No. 83656 (July 17, 2018), 83 FR 
34899 (July 23, 2018) (SR-Phlx-2018-40). The same change was made to 
E-1, ``Use of Identification Letters and Numbers.''
    \14\ The paragraph of Commentary .01 of Rule 1014 will remain 
within this rule. Commentary .02-.04 and .06 of Rule 1014 rule text 
will remain within Rule 1014. Commentary .05(b) will remain within 
Rule 1014, except that ``(a) RESERVED and (b)'' will be deleted. 
Commentary .10 of Rule 1014 is being renumbered as ``.07''. 
Commentary .15 and .16 of Rule 1014 are being renumbered as ``.08'' 
and ``.09'' respectively. Commentary .18 of Rule 1014 is being 
renumbered as ``.10''.
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    Proposed Section 26, titled ``Trading Halts'' is being relocated in 
part from Rule 1047 \15\ and 1047A.\16\ Proposed Section 27, titled 
``Quoting Obligations and Required Transactions'' is being relocated, 
in part, from Rule 1014 to Options 8, Section 27. Specifically, current 
Rule 1014(b)(ii)(E) and (c)(i)(A)(1) are being relocated.\17\ The 
Exchange proposes to add this sentence ``Without limiting the 
foregoing, a Specialist and an ROT is expected to perform the following 
activities in the course of maintaining a fair and orderly market:'' 
prior to the current text within Rule 1014(c)(i)(A)(2). The Exchange 
also proposes to relocate Rule 1014(d), in part, and to replicate the 
phrase ``Furthermore, an ROT should not:'' in relocating Rule 
1014(d)(ii) to proposed Options 8, Section 27(d). The Exchange proposes 
to renumber current Rule 1014(d)(iii) as (ii). The Exchange proposes to 
relocate Rule 1014(e) to proposed Options 8, Section 27(e). The 
Exchange proposes to amend Rule 1014(g) to reserve the rule text in 
(i)-(vi).\18\ The Exchange proposes to relocate rule text from the 
second and third paragraphs of Commentary .01 to Rule 1014 into 
proposed Options 8, Section 27(f).
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    \15\ Specifically, the Commentary to Rule 1047 is being 
relocated.
    \16\ Specifically, the Exchange proposes to relocate Rule 
1047A(f)(ii) and renumber the remaining paragraphs in Rule 1047A(f). 
The Exchange proposes to add the phrase ``in addition to Rule 
1047A.''
    \17\ The Exchange noted above that the term ``non-SQT ROT'' is 
being amended to Floor Market Maker throughout these rules.
    \18\ As noted above, Rule 1014(g)(i)-(vi) as well as 
Commentaries .01 (in part), .05 (in part), .07, .08, .09, .11-.14, 
.17 and .19 is being relocated to Options 8, Section 25 and no 
changes are proposed for Rule 1014(g)(vii) and (viii).
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    Proposed Section 28, titled ``Responsibilities of Floor Brokers'', 
similar to current Rule 1063, is being relocated from ``General 
Responsibility of Floor Brokers'' in Rule 155, Rule 1063 and Rule 1069, 
titled ``Snapshot Feature.'' Current Rule 155 is relocated within 
Options 8, Section 28(a) in the first sentence. Current Rule 1069 is 
relocated at Options 8, Section 28(i). Proposed Section 29, titled 
``Use of Floor Based Management System by Registered Options Traders 
and Specialists'' is being relocated from Rule

[[Page 19139]]

1085. The Exchange is not relocating the following outdated rule text: 
\19\
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    \19\ This feature was made available in 2018 as per Options 
Trader Alert #2018-20.

    The Exchange anticipates that it will make FBMS available to 
Registered Options Traders and Specialists during the Second Quarter 
of 2018. To facilitate the transition to FBMS, the Exchange will not 
require Registered Options Traders or Specialists to utilize FBMS 
until one month after the date on which the Commission approves the 
Exchange's proposal. The Exchange will notify members via an Options 
Trader Alert, to be posted on the Exchange's website, at least seven 
calendar days prior to the date when FBMS will be available for use 
by Registered Options Traders and Specialists. The alert will also 
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contain the mandatory start date.

Proposed Section 30 is being ``Reserved.'' The Exchange will relocate 
Rule 1064, titled ``Crossing, Facilitation and Solicited Orders'' to 
Section 30 at a later date. Proposed Section 31, titled ``Discretionary 
Transactions'' is being relocated from 1065. Proposed Section 32 
titled, ``Certain Types of Floor-Based (Non-System) Orders Defined'' is 
being relocated from Rule 1066 and retitled from ``Certain Types of 
Floor Based (Non-PHLX XL) Orders Defined.'' Proposed Section 33 titled, 
``Accommodation Transactions'' is being relocated from Rule 1059. 
Proposed Section 34 is proposed to be reserved. The Exchange proposes 
to relocate current Rule 1079, titled ``FLEX Index, Equity and Currency 
Options'' into proposed Section 34. Proposed Section 35, titled 
``Disputes'' is being relocated from Rule 124 and renamed from 
``Disputes-Options.'' The proposed rule changes are non-substantive 
rule changes that simply seek to relocate and add transparency to the 
current rule text.
Floor Trade Administration
    The Exchange proposes a new title ``Floor Trade Administration'' 
into new Options 8 along with new proposed Sections 36-38. Proposed 
Section 36 is titled, ``Resolution of Uncompared Trade'' is being 
relocated from Rule 1039. Proposed Section 37, titled ``Letters of 
Authorization'' is being relocated from Rule 1062. Proposed Section 38 
titled, ``Communications and Equipment'' is being relocated from Rule 
606. The proposed rule changes are non-substantive rule changes that 
simply seek to relocate and add transparency to the current rule text.
Option Floor Procedure Advices and Order and Decorum Regulations
    The currently titled ``Option Floor Procedure Advices and Order and 
Decorum Regulations'' within the Rulebook is proposed to be renamed 
``Options Minor Rule Violations and Order and Decorum Regulations'' and 
numbered Section 39.\20\ The Options Floor Procedure Advices related to 
the trading floor are being relocated to proposed Section 39 and all 
Order and Decorum Regulations are also being relocated within Section 
39. The Exchange proposes to re-letter and re-number the rules within 
the current Rulebook that will continue to be located within the 
section proposed to be renamed ``Options Minor Rule Violations.''
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    \20\ The Exchange proposes to also retitle ``Equity Floor 
Procedure Advices'' as ``Minor Rule Violations.''
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    The Exchange proposes to delete reserved rules from this section. 
The following Option Floor Procedure Advices are proposed to be 
relocated into Section 39:
     A-2 ``Options Floor Based Management System'' (re-numbered 
as A-1);
     A-3 ``Requesting Market Quotations'' (re-numbered as A-2);
     A-9 ``All-or-None Options Orders'' (re-numbered as A-3);
     B-1 ``Responsibility to Make Markets'';
     B-2 ``Crowd Courtesy'';
     B-3 ``Trading Requirements'';
     B-4 ``Entering Orders from On-Floor and Off-Floor for 
Execution on the Exchange'';
     B-5 ``Agency-Principal Restrictions'';
     B-6 ``Priority of Options Orders for Equity Options, Index 
Options and U.S. Dollar-Settled Foreign Currency Options by Account 
Type (EQUITY OPTION, INDEX OPTION AND U.S. DOLLAR-SETTLED FOREIGN 
CURRENCY OPTION ONLY)'';
     B-7 ``Options Floor Based Management System''
     B-8 ``Use of Floor Brokers by an ROT While on the Floor'' 
(renumbered as B-7);
     B-9 ``Use of Tickets'' (renumbered as B-8);
     B-10 ``Responsibility for Mismatched or ``Out'' Trades
     B-11 ``ROTs and Specialists Entering Orders for Execution 
on Other Exchanges in Multiply Traded Options'' (renumbered as B-9);
     B-12 ``ROTs and Specialists Entering Orders for Execution 
on Other Exchanges in Multiply Traded Options'' (renumbered as B-11);
     C-1'' Ascertaining the Presence of Registered Options 
Traders in a Trading Crowd'';
     C-2 ``Options Floor Broker Management System'';
     C-3 ``Handling Orders of ROTs and Other Registered Options 
Market Makers'';  C-4 ``Floor Brokers Handling Orders for Same 
Firm'';
     C-5 ``ROTs Acting as Floor Brokers'';
     C-7 ``Responsibility to Represent Orders to the Trading 
Crowd'' (re-numbered as C-6);
     C-9 ``Floor Brokers and Clerks Trading in their Customer 
Accounts'' (renumbered as C-7);
     Staffing is re-lettered from ``E'' to ``D'';
     E-1 ``Required Staffing of Options Floor'' (re-lettered as 
D-1);
     Miscellaneous is re-lettered from ``F'' to ``E'';
     F-1 Use of Identification Letters and Numbers (re-lettered 
and re-numbered to E-1);
     F-2 Allocation, Time Stamping, Matching and Access to 
Matched Trades (re-lettered and re-numbered to E-2);
     F-4 ``Orders Executed as Spreads, Straddles, Combinations 
or Synthetics and Other Order Ticket Marking Requirements'' (re-
lettered and re-numbered to E-3);
     F-5 ``Changes or Corrections to Material Terms of a 
Matched Trade'' (re-lettered and re-numbered to E-4);
     F-6 ``Option Quote Parameters,'' in part, (re-lettered and 
re-numbered as E-5);
     F-8 ``Failure to Comply with an Exchange Inquiry,'' in 
part, (re-lettered and renumbered as E-6);
     F-9 ``Affiliations,'' in part, (re-lettered and renumbered 
as E-7);
     F-11 ``Splitting Orders'' (re-lettered and renumbered as 
E-8);
     F-12 ``Responsibility for Assigning Participation'' (re-
lettered and renumbered as E-9);
     F-14 Executing Multi-leg and Synthetic Option Orders'' 
(re-lettered and renumbered as E-10);
     F-16 Two-Way, Three Way and Multi-Spread Transactions 
(FOREIGN CURRENCY OPTION ONLY (re-lettered and renumbered as E-11);
     F-22 Intra-Day Addition of Strike Prices (re-lettered and 
renumbered as E-12);
     F-23 Clerks in the Crowd (re-lettered and renumbered as E-
13);
     F-25 Fingerprinting Floor Personnel (re-lettered and 
renumbered as E-14);
     F-30 Options Trading Floor Training (re-lettered and 
renumbered as E-15);
     F-31 Communications and Equipment (re-lettered and 
renumbered as E-16);
     F-32 Solicitation of Quotations (re-lettered and 
renumbered as E-17);

[[Page 19140]]

    Finally, all Regulations are being relocated to Section 41 and re-
lettered from ``H'' to ``F''.
    The Exchange is retaining the following rules in the new Options 
Minor Rule Plan Section:
     A-4 ``Specialist as ROT'' (re-numbered as A-1);
     F-6 ``Option Quote Parameters'' (re-numbered as F-1);
     F-8 ``Failure to Comply with an Exchange Inquiry (re-
numbered as (F-2);
     F-9 ``Affiliations'' (re-numbered as (F-3);
     F-10 ``Unusual Market Conditions'' (re-numbered as (F-4);
     F-13 ``Supervisory Procedures Relating to ITSFEA'' (re-
numbered as (F-5);
     F-19 ``Clearing Agents' Responsibility for Carrying 
Positions in Market Maker Accounts'' (re-numbered as (F-6);
     F-27 ``Options Exchange Official Rulings'' (re-numbered as 
(F-7);
     F-33 ``Failure to Provide Notification of Changes in 
Business Operations'' (re-numbered as (F-9);
     F-34 ``Failure to Timely Submit Amendments to Form U4, 
Form U5 and Form BD'' (re-numbered as (F-10); and
     F-35 Violations of Exercise and Exercise Advice Rules for 
Noncash-Settled Equity Option Contracts (re-numbered as (F-11).
    The Exchange notes that were a rule applied to both the electronic 
market and floor trading, the rule was replicated in both the Options 
Minor Rule Violations and the options Floor Procedure Advice with the 
applicable parts.\21\ The proposed rule changes are non-substantive 
rule changes that simply seek to relocate and add transparency to the 
current rule text.
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    \21\ The following Options Floor Procedure Advices were 
replicated: F-6, ``Option Quote Parameters;'' F-8, ``Failure to 
Comply with an Exchange Inquiry;'' and F-9, ``Affiliations.''
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Other Administrative Changes
    The Exchange proposes to amend references to ``XL'' or ``Phlx XL'' 
to ``System'' as the terms ``XL'' and ``Phlx XL'' are obsolete terms. 
The Exchange has removed ``reserved'' sections throughout the rules and 
also re-numbered and re-lettered various rules to bring conformity to 
the Rulebook. Finally, the Exchange proposes to capitalize the term 
``specialist'' throughout the new proposed rules.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\22\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\23\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest by bringing greater transparency to its rules. 
The Exchange is not substantively amending rule text unless noted 
otherwise within this rule change. The Exchange's proposal to relocate 
trading floor rules to new Options 8 will make clear which rules are 
applicable to the trading floor. The renaming of the term ``Non-ROT 
SQT'' as ``Floor Market Maker'' is a non-substantive rule change. 
Finally, renumbering, re-lettering, deleting reserved rules and 
obsolete rule text and amending cross-references and other minor 
technical changes will bring greater transparency to Phlx's Rules.
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    \22\ 15 U.S.C. 78f(b).
    \23\ 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 Exchange believes that the 
proposed amendments do not impose an undue burden on competition 
because the amendments to relocate the floor trading rules are non-
substantive. This rule change is intended to bring greater clarity to 
the Exchange's Rules. The renaming of the term ``Non-ROT SQT'' as 
``Floor Market Maker'' is a non-substantive rule change. Finally, 
renumbering, re-lettering, deleting reserved rules and obsolete rule 
text and amending cross-references will bring greater transparency to 
Phlx's Rules. The Exchange is not substantively amending rule text 
unless noted otherwise within this rule change.

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 \24\ and Rule 19b-
4(f)(6) thereunder.\25\
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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \26\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \27\ 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 requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. Waiver 
of the operative delay would allow the Exchange to promptly relocate 
rules relating to the Exchange's trading floor, which the Exchange 
believes will improve the organization and readability of the 
Exchange's Rulebook. Therefore, the Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission hereby 
waives the operative delay and designates the proposed rule change 
operative upon filing.\28\
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    \26\ 17 CFR 240.19b-4(f)(6).
    \27\ 17 CFR 240.19b-4(f)(6)(iii).
    \28\ For purposes only of waiving the 30-day operative delay, 
the Commission also has 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change 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:

[[Page 19141]]

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-2019-17 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-2019-17. 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-2019-17 and should be submitted on 
or before June 3, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09019 Filed 5-2-19; 8:45 am]
 BILLING CODE 8011-01-P


