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Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
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.
I. Self-Regulatory Organizations Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rules at Options 8, Section 2
Definitions; Section 8 Trading Floor Registration; Section 12 Clerks;
Section 22 Execution of Options Transactions on the Trading Floor;
Section 28 Responsibilities of Floor Brokers; and Section 39 Option Minor Rule Violations and Order and Decorum Regulations at C2 Options Floor Based Management System.
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.
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.
A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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1. Purpose The Exchange proposes to amend Phlx Rules at Options 8, Section 2
Definitions; Section 8 Trading Floor Registration; Section 12 Clerks;
Section 22 Execution of Options Transactions on the Trading Floor;
Section 28 Responsibilities of Floor Brokers; and Section 39 Option Minor Rule Violations and Order and Decorum Regulations at C2 Options Floor Based Management System. Each change is described below.
The Exchange also proposes a technical amendment to Options 10, Section 20 Options Communications.

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Options 8, Section 2
The Exchange proposes to amend Options 8, Section 2, Definitions, to alphabetize the existing definitions. The Exchange proposes to relocate and renumber the current definitions without change, with one exception which is described below. The Exchange proposes to amend the definition of a Presiding Exchange Official at current Options 8, Section 2a4 to add /her next to his in two places. The amendment to this rule will bring greater clarity to the defined term.
The Exchange proposes to add two new definitions, Floor Transaction and Remote FBMS Transaction to Options 8, Section 2. The Exchange proposes to define Floor Transaction as a transaction that is effected in open outcry on the Exchanges Trading Floor.
This term is currently defined within Phlx Options 7, Section 1 for the purposes of pricing. The Exchange also proposes to define Remote FBMS
Transaction. The Exchange recently amended Options 8, Section 28, Responsibilities of Floor Brokers at subsection g and Section 30, Crossing, Facilitation and Solicited Orders at subsection e to permit Floor Brokers to utilize the Options Floor Based Management System FBMS,3
remotely,4 to enter certain orders that do not require exposure in open outcry.5 At this time the Exchange proposes to define a Remote FBMS Transaction as a transaction that is effected by a Floor Broker, while not physically present on the Trading Floor, by submitting limit, market or stop orders pursuant to Options 8, Section 28g and Floor Qualified Contingent Cross Orders pursuant to Options 8, Section 30e to the electronic order book, through FBMS, pursuant to Options 8, Sections 3 FBMS, an order management system, is the gateway for the electronic execution of equity, equity index and U.S. dollar-settled foreign currency option orders represented by Floor Brokers on the Exchanges Options Floor. Floor Brokers contemporaneously upon receipt of an order and prior to the representation of such an order in the trading crowd, record all options orders represented by such Floor Broker to FBMS, which creates an electronic audit trail. The execution of orders to Phlxs electronic trading system also occurs via FBMS. The FBMS application is available on hand-held tablets and stationary desktops.
4 Utilizing FBMS while not physically present on the Trading Floor would be considered remote access.
5 See Securities Exchange Act Release No. 90909
January 13, 2021, 86 FR 6389 January 21, 2021
SRPhlx202102 Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Phlx Options 8, Section 28, Responsibilities of Floor Brokers and Section 30, Crossing, Facilitation and Solicited Orders Prior Rule Change.

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28 and 30, respectively, in accordance with the Prior Rule Change. Further, the Exchange proposes to specify that members and member organizations must comply with certain regulatory requirements, unless the member or member organization is otherwise exempt from the requirements in accordance with Supplementary Material .08 to Options 10, Section 6 6
or Phlx General 4, Rule 1230.7 The Exchange proposes to state that in order to conduct remote FBMS transactions, unless exempt from such requirements, Floor Brokers are subject to the following regulatory requirements: 1
Compliance with branch office requirements as described in Supplementary Material .08 to Options 10, Section 6, as well as supervision of such branch office as described in Phlx General 9, Section 20; and 2
compliance with applicable registration requirements described in Phlx General 4.8 Finally, the Exchange proposes to make clear that all uses of FBMS
involving open outcry must be conducted while physically present on the Trading Floor. The proposed definition would describe and cite to the types of orders that may be submitted remotely by a Floor Broker for ease of location in the Options 8
Rules. Further, the proposed rule indicates the various existing Phlx Rules that are relevant today for regulatory compliance when transacting Remote FBMS Transactions. The last sentence of the proposed rule indicates that open outcry transactions may only be effected while physically present on the Exchanges Trading Floor and therefore uses of FBMS involving open outcry must be conducted while physically present on the Trading Floor. Today, Floor Brokers must comply with these regulatory requirements. This proposed rule would serve as a guide for Floor Brokers conducting Remote FBMS
Transactions.
6 Supplementary Material .08ivii to Options 10, Section 6 describe branch office exclusions.
7 Phlx General 4 Rules are incorporated by reference to the General 4 Rules of The Nasdaq Stock Market LLC. General 4, Rule 1230 describes associated persons exempt from registration.
8 General 4 Rules describe registration, qualification and continuing education requirements. Phlx floor members are required to comply with Phlx General 4 Rules. If a member is no longer present on a trading floor, the member would not be subject to the exemption associated with effecting transactions on the floor of another national securities exchange. A Floor Broker conducting a Remote FBMS Transaction would therefore need to comply with General 4
registration requirements, including but not limited to, the Series 57 registration.

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