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Federal Register / Vol. 86, No. 172 / Thursday, September 9, 2021 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Release No. 3492873; File No. SRPhlx 202148

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Various Phlx Rules September 2, 2021.

Pursuant to Section 19b1 of the Securities Exchange Act of 1934
Act,1 and Rule 19b4 thereunder,2
notice is hereby given that on August 23, 2021, 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 comments on the proposed rule change from interested persons.
I. Self-Regulatory Organizations Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Options 2, Section 5, Electronic Market Maker Obligations and Quoting Requirements, Options 2, Section 10, Directed Orders, Options 3, Section 13, Price Improvement XL PIXL, and Options 3, Section 26, Message Traffic Mitigation.
The text of the proposed rule change is available on the Exchanges website at https listingcenter.nasdaq.com/
rulebook/phlx/rules, at the principal office of the Exchange, and at the Commissions Public Reference Room.

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II. Self-Regulatory Organizations 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.
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A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Phlx Rules at Options 2, Section 5, Electronic Market Maker Obligations and Quoting Requirements, Options 2, Section 10, Directed Orders, Options 3, Section 13, Price Improvement XL
PIXL, and Options 3, Section 26, Message Traffic Mitigation. Each change is described below.
Options 2, Section 5
The Exchange proposes to amend Options 2, Section 5, which describes quoting obligations for Market Makers 3
and Lead Market Makers,4 to conform the description of a LEAP for index options with Options 4A, Section 12b2. Today, SQTs and RSQTs are not required to make two-sided markets in any Quarterly Option Series, any adjusted option series, and any option series with an expiration of nine months or greater, otherwise known as longterm options series or LEAPs. Current Options 2, Section 5c2A describes a LEAP as any option series with an expiration of nine months or greater, while Options 4A, Section 12b2
describes a LEAP on an index option as a series of options having not less than 3 A Market Maker means a Streaming Quote Trader or a Remote Streaming Quote Trader who enters quotations for his own account electronically into the System. See Options 1, Section 1b28. A
Streaming Quote Trader or SQT means a Market Maker who has received permission from the Exchange to generate and submit option quotations electronically in options to which such SQT is assigned. An SQT may only submit such quotations while such SQT is physically present on the trading floor of the Exchange. An SQT may only submit quotes in classes of options in which the SQT is assigned. See Options 1, Section 1b54. A
Remote Streaming Quote Trader or RSQT
means a Market Maker that is a member affiliated with an Remote Streaming Quote Trader Organization with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically in options to which such RSQT has been assigned. A qualified RSQT may function as a Remote Lead Market Maker upon Exchange approval. An RSQT is also known as a Remote Market Maker RMM pursuant to Options 2, Section 11. A Remote Streaming Quote Organization RSQTO or Remote Market Maker Organization RMO are Exchange member organizations that have qualified pursuant to Options 2, Section 1. See Options 1, Section 1b49.
4 A Lead Market Maker means a member who is registered as an options Lead Market Maker pursuant to Options 2, Section 12a. A Lead Market Maker includes a Remote Lead Market Maker which is defined as a Lead Market Maker in one or more classes that does not have a physical presence on an Exchanges trading floor and is approved by the Exchange pursuant to Options 2, Section 11. See Options 1, Section 1b27.

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twelve and up to 60 months to expiration.5 The Exchange proposes to amend Options 2, Section 5c2A to explicitly define a LEAP by product.
Specifically, the Exchange proposes to add the following phrase to end of the paragraph, for options on equities and exchange-traded funds ETFs or with an expiration of twelve months or greater for index options to distinguish LEAPs for options on equities and ETFs, which have an opening month of 9
months, from LEAPS for index options, which have an opening month of 12
months. This proposal is nonsubstantive as Options 4A, Section 12b2 already defines a LEAP on an index option. The Exchange is simply conforming Options 2, Section 5c2A to Options 4A, Section 12b2.
Similar changes to distinguish terms for LEAPs on index options are proposed for Options 2, Section 5c2B and C which are applicable to Lead Market Makers,6 and Directed SQTs and Directed RSQTs.7 Also, a similar change is proposed to be added to Options 2, Section 5c2D which generally describes the manner in which the Exchange calculates quoting obligations. This amendment will bring greater clarity to the Exchanges rules.
Options 2, Section 10
The Exchange proposes to correct an improper citation within Options 2, Section 10aiii to Options 10, Section 11a1C. The citation should refer to the allocation rule at Options 3, Section 10a1.
Options 3, Section 13
The Exchange proposes to amend Options 3, Section 13, Price Improvement XL PIXL. Specifically, the Exchange proposes to update rule citations within Options 3, Section 5 Phlx previously amended its Options 4A, Section 12, Terms of Option Contracts, to change the number of expirations that the Exchange may open for trading in series of options related to LongTerm Options Series of index options. See Securities Exchange Act Release No. 88460 March 23, 2020, 85 FR 17146 March 26, 2020 SRPhlx 202010 Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 4A, Section 12, Terms of Option Contracts.
This proposal amended Phlxs current expiration for long-term index options from those series not having less than nine and up to 60 months to expirations to a number of expirations not having less than twelve and up to 60 months to expiration with respect to Long-Term Options Series.
6 Lead Market Makers are required to make twosided markets in any Quarterly Option Series, any Adjusted Option Series, and any LEAP. See Options 2, Section 5c2B.
7 Directed SQTs and Directed RSQTs are not required to make two-sided markets in any Quarterly Option Series, any Adjusted Option Series, and any LEAP. See Options 2, Section 5c2C.

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