[Federal Register Volume 84, Number 182 (Thursday, September 19, 2019)]
[Notices]
[Pages 49362-49370]
[FR Doc No: 2019-20223]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86959; File No. SR-Phlx-2019-33]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to
Specialists and Registered Options Traders

September 13, 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 September 10, 2019, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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 Phlx Rule 1000, titled
``Applicability, Definitions and References,'' Rule 1014, titled
``Obligations and Restrictions Applicable to Specialists and Registered
Options Traders,'' Rule 1020, titled ``Registration and Functions of
Options Specialists,'' Rule 1082, titled ``Firm Quotations,'' Rule
1087, titled ``Price Improvement XL (``PIXL''), Options 8, Section 2,
titled ``Definitions,'' Section 11, titled ``Specialist Appointment,''
Section 39, titled ``Options Minor Rule Violations and Order and
Decorum Regulations'' at E-16, titled ``Communications and Equipment.''
The Exchange also proposes to relocate Rule 1064, titled ``Crossing
Facilitation and Solicited Orders'' to Options 8, Section 30. The
Exchange also proposes to relocate other rules, update cross-references
and make various other technical amendments.
    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
    Phlx proposes to: (1) Amend certain descriptions within Rule 1000,
titled ``Applicability, Definitions and References''; (2) amend Rule
1014, titled ``Obligations and Restrictions Applicable to Specialists
and Registered Options Traders'' to amend the bid/ask differentials
within current Rule 1014(c), relocate rule text within the rule and
delete certain obsolete rule text; (3) amend Rule 1020, ``Registration
and Functions of Options Specialists'' so that a Specialist is not
required to be appointed to an option series; (4) relocate other rules,
update cross references in various rules, and make other technical
amendments. Each change will be described below.
Rule 1000
    The Exchange proposes to amend Rule 1000, titled ``Applicability,
Definitions and References'' in several ways. First, the Exchange
proposes some technical amendments to Rule 1000 to format the rule
consistently by placing a title prior to each description where no
title appears. This is a non-substantive change to make the rule
consistent. The Exchange also proposes to update the name of The
Options Clearing Corporation to add a ``The'' before the name. Second,
the Exchange proposes to add a definition for ``Public Customer''
within the Rule 1000(b)(56) to provide, ``Public Customer shall mean a
person or entity that is not a broker or dealer in securities and is
not a professional as defined within Phlx Rule 1000(b)(14).'' With the
addition of this definition, the Exchange proposes to amend the
description of a Professional within Rule 1000(b)(14) to remove the
following rule text, ``A professional will be treated in the same
manner as an off-floor broker-dealer for purposes of Rules 1014(g),
1033(e), 1064, Commentary .02 (except professional orders will be
considered customer orders subject to facilitation), 1087 and 1098, as
well as Options Floor Procedure Advices B-6 and F-5.'' Because the
Exchange will be separately utilizing the terms ``Public Customer'' and
``Professional'' \3\ throughout the Rulebook, the Exchange believes
that the citations to other rules within the definition of
``Professional'' in Rule 1000(b)(14) are not necessary because each
rule will distinguish whether it pertains to a Public Customer or a
Professional. Today, the professional rule distinguishes where
professional orders will be treated as an off-floor broker-dealer's
orders and other instances where professional orders will be considered
customer orders. The Exchange proposes, similar to other Rulebooks,\4\
to make clear within the

rule text whether the reference to customer is to a Professional,
Public Customer or both. This proposal is technical in nature because
it more specifically explains how the term ``customer'' or ``public
customer'' is applied today. Where the terms ``customer'' or ``public
customer'' are utilized the Exchange is proposing to replace those
terms with more specific defined terms such as Public Customer, as that
definition is proposed, or Professional, as that term in defined
instead of citing applications of the term Professional in Rule 1000.
The Exchange believes that a market participant reading a rule would
benefit from the term ``customer'' or ``public customer'' being more
specifically denoted within the actual rule text of each rule to make
clear which type of participant applies today. The Exchange is not
proposing to amend its rules or functionality with this change of
terms, rather the Exchange is proposing to add defined terms within the
rule text and eliminating the cross references within the Professional
definition. Today, the term ``customer'' or ``public customer'' are not
defined. The Exchange proposes the actual defined terms as they are
utilized within the System.
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    \3\ The following rules add both the terms ``Public Customer''
and ``Professional'' in place of ``customer'' or ``public
customer'': Rule 1017, 1087, 1093 and Options 8, Section 28.
    \4\ Nasdaq ISE, LLC (``ISE''), Nasdaq GEMX, LLC (``GEMX'') and
Nasdaq MRX, LLC (``MRX''), Nasdaq BX, Inc.(``BX'') and NOM Rules
separately define Professional and Priority Customer and Public
Customer, respectively within Options 1, Section 1(a)(36) and (39)
(see definitions for Professional and Priority Customer).
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    As noted, the Exchange is adopting the term ``Public Customer'' at
proposed Rule 1000(b)(56) and already has the term ``professional''
defined in the Rulebook. The Exchange is not amending any
functionality, rather the Exchange is substantively retaining the same
meaning as today for the term ``customer'' but substituting the proper
defined term.\5\ The Exchange proposes to specifically amend the term
``customer'' in certain rules to the defined term ``Public Customer.''
\6\
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    \5\ The Exchange defined the term Public Customer and is now
removing that definition. See Phlx Rules 1087, 1089 and 1093.
    \6\ The Exchange proposes to capitalize the term
``professional'' in Rule 1000(b)(14) and 1093. The Exchange proposes
to capitalize the term ``public customer'' in Rules 1000(b)(41),
1010, 1087, 1088 and Options 8, Sections 24, 28. relocated rule 30
and 34. The Exchange proposes to amend the term ``customer'' within
Rule 1017, 1087 and Options 8, Section 22 to refer to ``Public
Customer'' and ``Professional.'' The Exchange proposes to replace
the term ``non-broker-dealer customers'' with the terms ``Public
Customer'' and/or ``Professional.'' The current definition of
Professional, which is proposed to be deleted, states that
Professionals would be treated like broker-dealers for the rules
cited. The Exchange proposes to capitalize the term ``customer''
within the term ``Public Customer'' within Rule 1098, Options 8,
Sections 24, 28, 33 and 34. Further Rules 1087, 1089, 1093 define a
Public Customer today. With the introduction of the defined term
``Public Customer'' within Phlx Rule 1000, these definitions, which
are the same as the new defined term, are being deleted because the
Phlx Rule 1000 definition will apply to the options rules.
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    The Exchange proposes to define ``Registered Options Trader'' or
``ROT'' within proposed Rule 1000(b)(57). The Exchange will continue to
describe how a ROT is permitted to transact business within Rule 1014.
Rule 1014 is described below in more detail. Since, the term ROT is
utilized throughout the options Rules, it is being defined within Rule
1000 for ease of reference. Currently, Rule 1014(b) provides, ``A ROT
is a regular member or a foreign currency options participant of the
Exchange located on the trading floor who has received permission from
the Exchange to trade in options for his own account. For purposes of
this Rule 1014, the term ``ROT'' shall include a Streaming Quote
Trader, and a Remote Streaming Quote Trader, as defined below.'' The
Exchange proposes to provide that a Registered Options Trader ``shall
mean a Streaming Quote Trader or a Remote Streaming Quote Trader who
enters quotations for his own account electronically into the System.''
Phlx no longer has a separate ``foreign currency options
participation.'' Those participations were eliminated.\7\ Today, the
Exchange has separately defined a ``Floor Market Maker'' within Options
8, Section 2(7) as a ROT who is neither an SQT or an RSQT so the
reference to the floor is no longer necessary. This rule change also
updates references to ``non-SQT ROTs'' to the ``Floor Market Maker.''
\8\ Finally, this definition of ROT is utilized throughout the Rules,
not simply for Rule 1014, so it is better placed among the other
definitions.
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    \7\ See Securities Exchange Act Release No. 63981 (February 25,
2011), 76 FR 12180 (March 4, 2011) (SR-Phlx-2011-13) (Approving
Proposed Rule Change, as Modified by Amendment No. 1, Relating to
Amendments to NASDAQ OMX PHLX LLC's Limited Liability Company
Agreement, By-Laws, Rules, Advices and Regulations).
    \8\ See Securities Exchange Act Release No. 85740 (April 29,
2019), 86 FR 19136 (May 3, 2019) (SR-Phlx-2019-17) (Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Relocate the
Floor Trading Rules to Options 8). This rule change proposes to
replace the term ``non-SQT ROT'' with ``Floor Market Maker.'' The
Exchange is replacing that term in Phlx Rules 1087 and 1098. Options
8 contains all Floor related rules including definitions.
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    The Exchange proposes to define a Specialist within Rule
1000(b)(58). Phlx Rule 1020 provides for the registration and functions
of option specialists, however the term is not defined for purposes of
the Rulebook, The Exchange proposes to state that a Specialist is ``. .
. a member who is registered as an options Specialist pursuant to Rule
1020(a). A Specialist includes a Remote Specialist which is defined as
a Specialist in one or more classes that does not have a physical
presence on an Exchange's trading floor and is approved by the Exchange
pursuant to Rule 501.'' Phlx Rule 1020(a)(ii) provides, ``A Remote
Specialist is an options specialist in one or more classes that does
not have a physical presence on an Exchange floor and is approved by
the Exchange pursuant to Rule 501.'' The Exchange proposes to define a
Specialist within Rule 1000 for ease of reference.
    The Exchange proposes to relocate current Rule 1014(b)(ii)(A) which
provides, ``An SQT is an ROT 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 floor of the
Exchange. An SQT may only trade in a market making capacity in classes
of options in which the SQT is assigned.'' The Exchange proposes to
relocate this description to proposed Rule 1000(b)(59) without
amendment. The Exchange proposes to relocate current Rule
1014(b)(ii)(B) which provides, ``An RSQT is an ROT that is a member
affiliated with and RSQTO 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 Specialist upon
Exchange approval.'' The Exchange proposes to relocate this description
to proposed Rule 1000(b)(60) and add the following reference to certain
acronyms that are utilized in the Rulebook, ``A Remote Streaming Quote
Organization (``RSQTO'') or Remote Market Maker Organization (``RMO'')
are Exchange member organizations that have qualified pursuant to Rule
507.'' Today, Phlx Rule 507 provides that RSQTOs may also be referred
to as Remote Market Maker Organizations (``RMOs'') and RSQTs may also
be referred to as Remote Market Markers (``RMMs''). The Exchange
proposes to add these terms to the definition for ease of reference in
understanding the acronyms. The Exchange believes that relocating these
definitions from Rule 1014 to Rule 1000 will bring greater transparency
to the Rules. Also, adding a definition for a Specialist and describing
an RSQTO and RMO within Rule 1000 will make it easier for market
participants to understand the various registrations that exist on
Phlx. The Exchange also proposes to amend Rule 501(f) to add a
reference to the definition for ease of

reference as this rule discusses an RSQT.
    The Exchange proposes to add a new term ``Non-Public Customer''
into the Rulebook. The Exchange proposes to define the term ``Non-
Public Customer'' as a person or entity that is a broker or dealer in
securities, or is a Professional.'' This term is utilized within Phlx
Rule 1089, ``Electronic Execution Priority and Processing in the
System.'' The Exchange believes that defining this term will bring
greater transparency to the term's usage. Defining this term does not
substantively amend the meaning of the term within Phlx Rule 1089 but
further provides context to the current usage of the term.
    The Exchange is deleting Rule 1000(e), which is reserved.
Rule 1014
    The Exchange proposes to amend the title of Rule 1014 from
``Obligations and Restrictions Applicable to Specialists and Registered
Options Traders'' to ``Obligations of Market Makers.'' The Exchange
proposes to relocate text from Rule 1014 to Rule 1000 as described
herein. The Exchange proposes to relocate descriptive terms of market
participants in order to describe each type of market participant
within the definition section of Rule 1000. The Exchange proposes to
retain text within Rule 1014 which describes the manner in which a ROT
or Specialist may transact options on the Exchange.
    The Exchange proposes to add an ``(i)'' before the current text
which provides, ``Each ROT electing to engage in Exchange options
transactions shall be assigned by the Exchange one or more classes of
options, and Exchange options transactions initiated by such ROT on the
Floor for any account in which he had an interest shall to the extent
prescribed by the Exchange be in such assigned classes.'' The Exchange
proposes to relocate Commentary .04 of Rule 1014 to the end of proposed
Rule 1014(a)(i), without amendment.\9\ The Exchange proposes to
relocate the second paragraph of Commentary .01 of Rule 1014 to
proposed Rule 1014(a)(i)(A), without amendment. The Exchange proposes
to modify the current paragraph at Rule 1014(b)(ii)(B) which provides,
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    \9\ Commentary .04 to Rule 1014 provides, ``The obligations of
an ROT with respect to those classes of options to which he is
assigned shall take precedence over his other ROT activities.''

    Notwithstanding the provisions of sub-paragraph (b)(i) above, an
RSQT may only submit such quotations electronically from off the
floor of the Exchange. An RSQT shall not submit option quotations in
eligible options to which such RSQT is assigned to the extent that
the RSQT is also approved as a Remote Specialist in the same
options. An RSQT may only trade in a market making capacity in
classes of options in which he is assigned or approved as a Remote
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Specialist.

    The Exchange proposes to remove the words ``Notwithstanding the
provisions of sub-paragraph (b)(i) above'' and ``such'' as unnecessary
terms that related to rule text that existed previously but is no
longer part of the rule text.
    The Exchange proposes to relocate rule text from Commentary .05 of
Rule 1014 to proposed Rule 1014(a)(iii), without amendment. The
Exchange proposes to relocate the rule text of Commentary .06 to Rule
1014 to proposed Rule 1014(a)(iv), without amendment. The Exchange
proposes to relocate rule text from the first paragraph of Commentary
.01 of Rule 1014 to proposed Rule 1014(a)(v). The Exchange notes that
the word ``similarly'' was removed as unnecessary. As noted herein, the
Exchange proposes to relocate the second paragraph of Commentary .01 of
Rule 1014 to proposed Rule 1014(a)(i)(A), without amendment.
Bid/Ask Differential
    The Exchange proposes to amend the title of Rule 1014(c) from ``In
Classes of Option Contracts to Which Assigned--Affirmative'' to
``Appointment.'' The Exchange proposes to amend the current
requirements for quoting which provides,

    (1) Options on equities (including Exchange-Traded Fund Shares),
and on index options may be quoted electronically with a difference
not to exceed $5 between the bid and offer regardless of the price
of the bid. The $5 bid/ask differentials only apply to electronic
quotations and only following the opening rotation in each security
(i.e., the bid/ask differentials specified in sub-paragraph
(c)(i)(A)(1) above shall apply during opening rotation).
    (2) Options on U.S. dollar-settled FCO may be quoted
electronically with a difference not to exceed $5.00 between the bid
and offer regardless of the price of the bid. The bid/ask
differentials set forth in this subparagraph (c)(i)(A)(2) (b) only
apply to electronic quotations and only following the opening
rotation in each security (i.e., the bid/ask differentials specified
in sub-paragraph (c)(i)(A)(1) above shall apply during opening
rotation).

    The Exchange also proposes to amend current Options 8, Section 27,
Quoting Obligations and Required Transactions, which provides at
Section 27(c)(1)(A),

    (A) Quote Spread Parameters (Bid/Ask Differentials)--
    (i) Options on equities and index options bidding and/or
offering so as to create differences of no more than $.25 between
the bid and the offer for each option contract for which the
prevailing bid is less than $2; no more than $.40 where the
prevailing bid is $2 or more but less than $5; no more than $.50
where the prevailing bid is $5 or more but less than $10; no more
than $.80 where the prevailing bid is $10 or more but less than $20;
and no more than $1 where the prevailing bid is $20 or more,
provided that, in the case of equity options, the bid/ask
differentials stated above shall not apply to in-the-money series
where the market for the underlying security is wider than the
differentials set forth above. For such series, the bid/ask
differentials may be as wide as the spread between the national best
bid and offer in the underlying security, or its decimal equivalent
rounded down to the nearest minimum increment. The Exchange may
establish differences other than the above for one or more series or
classes of options.
    (ii) Options on U.S. dollar-settled FCO. With respect to all
U.S. dollar-settled FCO bidding and/or offering so as to create
differences of no more than $.25 between the bid and the offer for
each option contract for which the prevailing bid is less than
$2.00; no more than $.40 where the prevailing bid is $2.00 or more
but less than $5.00; no more than $.50 where the prevailing bid is
$5.00 or more but less than $10.00; no more than $.80 where the
prevailing bid is $10.00 or more but less than $20.00; and no more
than $1.00 where the prevailing bid is $20.00 or more. The Exchange
may establish differences other than the above for one or more
series or classes of options.

    The Exchange proposes to align the bid/ask requirements for in-the-
money series for the trading floor with electronic bid/ask
differentials for in-the-money series. Within Rule 1014(c), the
Exchange proposes to capitalize ``Opening Process'' and remove rule
text relating to rotations to make the rule text clear that the
reference to differentials in Rule 1014(c) are intra-day differentials.
Phlx has separate Valid Width Quote requirements for the Opening
Process within Rule 1017.
    Further, the Exchange proposes to align in-the-money \10\ bid/ask
differentials for options on equities (including Exchange-Traded Fund
Shares), index options and options on U.S. dollar-settled FCOs within
Rule 1014(c) and Options 8, Section 27(c). The Exchange proposes within
Rule 1014(c) to provide for in-the-money series, where the market for
the underlying security is wider than the differentials currently set
forth, the bid/ask differentials may be as wide as the

spread between the national best bid and offer in the underlying
security, or its decimal equivalent rounded down to the nearest minimum
increment. The Exchange may establish differences other than the above
for one or more series or classes of options.\11\ The Exchange is
proposing a similar change to Options 8, Section 27(c)(1)(A)(ii) for
U.S. dollar-settled FCOs. The Exchange proposes to align the language
to make clear that options on equities applies to Exchange-Traded Fund
Shares within Options 8, Section 27(c)(1)(A)(i). The Exchange believes
that aligning the bid/ask differentials for all in-the-money options
would cause the Exchange to have a single standard regardless of the
product. Today, Options 8, Section 27(c)(1)(A)(i) provides, ``the bid/
ask differentials stated above shall not apply to in-the-money series
where the market for the underlying security is wider than the
differentials set forth above. For such series, the bid/ask
differentials may be as wide as the spread between the national best
bid and offer in the underlying security, or its decimal equivalent
rounded down to the nearest minimum increment.'' The Exchange is
amending Options 8, Section 27(c)(1)(A)(i) to expand the provision to
apply to equities (including Exchange-Traded Fund Shares) and index
options. The Exchange also proposes to amend Options 8, Section
27(c)(1)(A)(ii), which applies to U.S. dollar-settled FCOs, similar to
Rule 1014(c). Aligning the requirements for all in-the-money options
across the Exchange will avoid confusion for Specialists and ROTs in
submitting quotes on both the trading floor and electronically on Phlx.
The Exchange is not amending bid/ask differentials for options which
are not in-the-money.
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    \10\ The term ``in-the-money'' shall mean the following: For
call options, all strike prices at or below the offer in the
underlying security on the primary listing market; for put options,
all strike prices at or above the bid in the underlying security on
the primary listing market. This definition shall only apply for
purposes of quoting obligations in Rules 1014 and 1017. See Rule
1000(b)(51).
    \11\ The Exchange is proposing to combine Rule 1014(c)(1) and
(2) into one paragraph.
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    The Exchange believes that amending the bid/ask differentials for
in-the-money series for options on equities (including Exchange-Traded
Fund Shares), index options and options on U.S. dollar-settled FCOs on
the trading floor and electronically, to a spread which may be as wide
as the spread between the national best bid and offer in the underlying
security, or its decimal equivalent rounded down to the nearest minimum
increment, where the market for the underlying security is wider than
the $5 allowance already provided for within the rule, will allow
Specialists and ROTs to obtain the same flexibility in quoting as they
experience on other options markets today.\12\ A Specialist or ROT
quoting an in-the-money options series can hedge its position by
trading in the underlying security at the NBBO, which may be narrower
than the quotation on the primary market.
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    \12\ See ISE, GEMX and MRX Options 2, Section 4. Options 2,
Section 4 provides, ``(4) To price options contracts fairly by,
among other things, bidding and offering so as to create differences
of no more than $5 between the bid and offer following the opening
rotation in an equity or index options contract. The Exchange may
establish differences other than the above for one or more series or
classes of options. (i) The bid/offer differentials stated in
subparagraph (b)(4) of this Rule shall not apply to in-the-money
options series where the underlying securities market is wider than
the differentials set forth above. For these series, the bid/ask
differential may be as wide as the spread between the national best
bid and offer in the underlying security.''
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    The Exchange also proposes to note that it may establish
differences other than the above for one or more series or classes of
options. The Exchange proposes to add the following rule text to Rule
1014(c)(1), ``The Exchange may establish differences other than the
above for one or more series or classes of options.'' The Exchange is
proposing this amendment to align the in-the-money intra-day bid/ask
differentials with the requirements for the trading floor.\13\ Today,
the Exchange establishes differences as do all options markets.\14\ The
Exchange previously had rule text which allowed the difference.\15\ In
relocating text to Options 8 as part of the floor relocation, which
stated, ``The Exchange may establish differences other than the above
for one or more series or classes of options'' the Exchange
inadvertently did not amend the text for electronic markets. The floor
rule text was part of the Rule 1014 initially before the relocation.
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    \13\ Phlx Options 8, Section 27(c) which states, ``Options on
equities and index options bidding and/or offering so as to create
differences of no more than $.25 between the bid and the offer for
each option contract for which the prevailing bid is less than $2;
no more than $.40 where the prevailing bid is $2 or more but less
than $5; no more than $.50 where the prevailing bid is $5 or more
but less than $10; no more than $.80 where the prevailing bid is $10
or more but less than $20; and no more than $1 where the prevailing
bid is $20 or more, provided that, in the case of equity options,
the bid/ask differentials stated above shall not apply to in-the-
money series where the market for the underlying security is wider
than the differentials set forth above. For such series, the bid/ask
differentials may be as wide as the spread between the national best
bid and offer in the underlying security, or its decimal equivalent
rounded down to the nearest minimum increment. The Exchange may
establish differences other than the above for one or more series or
classes of options.''
    \14\ See ISE and GEMX at Options 2, Section 5, Miami
International Securities Exchange LLC Rule 503(e)(2), BOX Exchange
LLC Rule 8040 and NYSE American LLC Rule 925NY(b)(5) and (c).
    \15\ See note 8 above.
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    The Exchange also proposes to amend Rule 1014(d) to amend the title
from ``In Classes of Option Contracts Other Than Those Which
Appointed'' to ``Classes of Options To Which Not Appointed.'' The
Exchange proposes to add the following sentence, ``With respect to
classes of options to which an ROT is not appointed, it should not
engage in transactions for an account in which it has an interest that
are disproportionate in relation to, or in derogation of, the
performance of his obligations as specified in paragraph (c) above with
respect to those classes of options to which it is appointed,'' before
the phrase ``an ROT should not.'' The Exchange believes that adding
this sentence will provide more context to the information which
follows. This rule text is similar to rule text within ISE Options 2,
Section 5(d).
    The Exchange proposes to amend some lettering within Rule 1014(d)
and amend Rule 1014(d)(ii) from ``Be conspicuous in the general market
or in the market in a particular option'' to ``effect purchases or
sales on the Exchange except in a reasonable and orderly manner'' which
is the same rule text within ISE Rules at Options 2, Section 5(d). The
Exchange believes that the current rule text is ambiguous. The Exchange
proposes to revise the requirements for market makers similar to other
options markets.\16\ The Exchange proposes to delete Rule 1014(f) as
the rule is unnecessary. Rule 1014(f)(1) provides that Rule 1014(d),
which applies to classes of options in which a Specialist is not
appointed in, shall not apply to ``any transaction by a registered
Specialist in an option in which he is so registered to contribute to
the maintenance of a fair and orderly market in an option, or any
purchase or sale to reverse any such transaction; or any transaction to
offset a transaction made in error.'' The Exchange notes that Rule
1014(d) does not govern options in which the Specialist is registered.
The caveat does not need to be noted within the Rule. Specialists may
transact options in classes in which they are appointed to contribute
to the maintenance of a fair and orderly market in an option, or any
purchase or sale to reverse any such transaction; or any transaction to
offset a transaction made in error. Further, the Exchange proposes to
delete Rule 1014(f)(ii) which provides, ``. . . any transaction, other
than a transaction for an account in which an ROT has an interest, made
with the prior approval of an Options Exchange Official to permit a
member to contribute to the maintenance of a fair and orderly market in
an option, or any

purchase or sale to reverse any such transaction''. The Exchange
proposes to remove this exception because it is no longer necessary.
The Exchange would not approve a market making transaction that is not
done by a Specialist or ROT because these are the only two types of
market participants that may act in a market making capacity on Phlx.
No other market participant may submit quotes on Phlx or is subject to
the requirements to contribute to the maintenance of a fair and orderly
market as provided for in Rule 1014. This rule has been in existence
for some time and the Exchange does not believe it has relevance.
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    \16\ See ISE, GEMX and MRX Rules at Options 2, Section 5(d) and
NOM and BX Chapter VII, Section 5(b).
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    The Exchange is deleting Rule 1014(g), which is currently reserved.
    The Exchange proposes to delete Commentary .02 \17\ of Rule 1014
which refers to a paragraph (c)(i)(B) which was deleted in a prior
filing.\18\ The Exchange proposes to renumber Commentary .03 \19\ of
Rule 1014 as ``.01.''
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    \17\ Commentary .02 to Rule 1014 provides, ``The Exchange has
determined that the limitations of paragraph (c)(i)(B) of this Rule
should not be carried over from one day to the next and, therefore,
are not applicable to the opening of stock or Exchange-Traded Fund
Share option contracts on the Exchange.''
    \18\ See Securities Exchange Act Release No. 76441 (November 16,
2015), 80 FR 72773 (November 20, 2015) (SR-Phlx-2015-91).
    \19\ Commentary .03 to Rule 1014 provides, ``.03 The Exchange
has determined for purposes of paragraph (c) of this Rule that,
except for unusual circumstances, at least 50% of the trading
activity in any quarter (measured in terms of contract volume) of an
ROT (other than an RSQT) shall ordinarily be in classes of options
to which he is assigned. Temporarily undertaking the obligations of
paragraph (c) at the request of a member of the Exchange in non
assigned classes of options shall not be deemed trading in non
assigned option contracts.
    The Exchange may, in computing the percentage specified herein,
assign a weighting factor based upon relative inactivity to one or
more classes or series of option contracts.''
---------------------------------------------------------------------------

    The Exchange proposes to renumber Commentary .07 \20\ to Rule 1014
as ``.02.'' The Exchange also proposes to revise the second sentence to
state, ``A Specialist shall also not charge a commission or fee for the
handling, execution or processing of an order delivered through the
Exchange's System, whether the Specialist is acting as principal or
agent for the order.'' The Exchange is capitalizing the proposed
defined term ``Specialist'' and utilizing the defined term ``System.''
\21\
---------------------------------------------------------------------------

    \20\ Commentary .07 to Rule 1014 provides, ``A Specialist acting
in the course of his lead market making function, as agent or
principal, on the Exchange is prohibited from charging a commission
or fee for the execution of an order. A specialist shall also not
charge a commission or fee for the handling, execution or processing
of an order delivered through the Exchange's automated trading
system, Phlx XL II, whether the specialist is acting as principal or
agent for the order.''
    \21\ See Phlx Rule 1000(b)(45).
---------------------------------------------------------------------------

    Commentary .08 \22\ to Rule 1014 was superseded by the Phlx Rule
1017 which governs the Opening Process and provides for the price at
which an option series may open. The rule text within Commentary .08 is
no longer applicable and thus is proposed to be deleted.
---------------------------------------------------------------------------

    \22\ Commentary .08 to Rule 1014 provides, ``The price of an
opening transaction in an option series must be within an acceptable
range (as determined by the Exchange and announced to Exchange
members and member organizations on the Exchange's website) compared
to the highest offer and the lowest bid (e.g., the upper boundary of
the acceptable range may be 125% of the highest quote offer and the
lower boundary may be 75% of the lowest quote bid).''
---------------------------------------------------------------------------

    Commentary .09 to Rule 1014 is obsolete and thus is proposed to be
deleted. The Exchange notes that trading hours and ability to set them
for foreign currency options are handled within Phlx Rule 101. Also,
Phlx Rule 1014(e) no longer exists. Commentary .10 to Rule 1014 is
being deleted because the Exchange requires ROTs to submit orders
electronically similar to all other market participants. This rule text
is not necessary. The deletion of these rules will bring greater
clarity to the Rulebook.
Rule 1020
    The Exchange proposes to amend Rule 1020 to provide that a
Specialist is not required to be assigned to an options series. The
Exchange permits one Specialist per options series. There is no
limitation on the number of ROTs that may be assigned to an options
series. The Exchange notes that if a Specialist cannot be acquired for
an options series it may list the option series nonetheless for ROTs to
quote and provide liquidity. The Exchange notes that a Specialist is
not required to list an option series. Today, The Nasdaq Options Market
LLC (``NOM'') does not have such a Specialist and lists and trades
option series.
Other Amendments
    In addition to the amendments already noted herein, the Exchange
proposes to relocate Rule 1064, ``Crossing, Facilitation and Solicited
Orders'' into Options 8, Section 30. At the time the Exchange relocated
rules it reserved Section 30 to relocate this floor rule at a later
date. The Exchange now proposes to relocate this rule and update
internal cross-references to other rules. This amendment is purely a
technical relocation of the rule (and related cross-reference changes)
and the rule is otherwise unchanged.
    The Exchange proposes a technical amendment to Rule 1082, ``Firm
Quotations'' to rename Risk Monitor Mechanism to its current name
``Automated Quotation Adjustment'' which rule is located within Rule
1099(c)(2). This is only a name change and therefore this amendment is
non-substantive. Also, the Exchange proposes to update Rule 1087,
``Price Improvement XL (``PIXL'')'' to amend ``TOPO Plus Orders'' to
simply ``TOPO data feed'' as provided for in Rule 1070(a)(1) and note
the location of the description of the Specialized Quote Feed within
Rule 1080(a)(i)(B). This is only a name change and therefore this
amendment is non-substantive.
    The Exchange proposes to amend Options 8, Section 2,
``Definitions'' to add a sentence to Rule 2(7) Floor Market Maker to
provide, ``A Floor Market Maker may provide a quote in open outcry.''
Today, a Floor Market Maker is permitted to provide a quote in open
outcry. This sentence merely makes clear that this type of market
participant may submit quotes on the floor, similar to the electronic
market. A Floor Market Maker is a ROT as noted within Options 8,
Section 2(7), who is neither an SQT or RST, so they may not stream
quotes electronically, rather they submit quotes in open outcry on the
trading floor.
    The Exchange proposes to relocate the text of Rule 2(7), except for
the current first sentence to Options 8, Section 11, ``Specialist
Appointment'' and retitle that rule ``Floor Market Maker and Specialist
Appointment.'' The Exchange proposes to renumber this rule and relocate
the text from Options 8, Section 2(7) to proposed Section 11(b).
    Finally, the Exchange proposes to correct cross-references to
current rules within Rules 1000, 1082, 1087, 1098 and Options 8,
Section 30 and also capitalize the word ``floor'' before ``Broker''
within Options 39, E-16 ``Communications and Equipment.''
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\23\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\24\ 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.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).

---------------------------------------------------------------------------

Rule 1000
    The Exchange's proposal to amend Rule 1000, titled ``Applicability,
Definitions and References'' to conform the formatting of the rule,
update the name of The Options Clearing Corporation to add a ``The''
before the name, and relocate definitions from Rule 1014 to Rule 1000
are non-substantive amendments. The Exchange's proposal to add a
definition for ``Public Customer'' within the Rule 1000(b)(56), amend
the description of a Professional within Rule 1000(b)(14), and add the
terms ``Public Customer'' and ``Professional'', where appropriate,
throughout the Rulebook, is consistent with the Act because these
amendments will bring greater transparency to the Rulebook. The
Exchange desires to make clear where a customer order means a Public
Customer order or both a Public Customer and a Professional order. By
distinguishing the use of these terms, market participants will better
understand Exchange Rules.
    Relocating and amending the term ``Registered Options Trader''
within proposed Rule 1000(b)(57) is consistent with the Act because it
will make the description of this market participant clear. Phlx no
longer has a separate ``foreign currency options participation.'' Those
participations were eliminated.\25\ The Exchange has separately defined
a ``Floor Market Maker'' within Options 8, Section 2(7) as an ROT who
is neither an SQT or an RSQT so the reference to the floor is no longer
necessary. Finally, this definition of ROT is utilized throughout the
Rules, not simply for Rule 1014, so it is better placed among the other
definitions. The proposed new description will bring greater clarity to
the term ``ROT''.
---------------------------------------------------------------------------

    \25\ See note 7 above.
---------------------------------------------------------------------------

    The Exchange's proposal to add a sentence to the description of an
RSQT, which is being relocated to proposed Rule 1000(b)(60), which
provides, ``A Remote Streaming Quote Organization (``RSQTO'') or Remote
Market Maker Organization (``RMO'') are Exchange member organizations
that have qualified pursuant to Rule 507'' is consistent with the Act
because the proposed definition will makes clear that the usage of the
terms RSQTO and RMO in relation to an RSQT. Finally, the Exchange's
proposal to define a Specialist within Rule 1000 will make it easier
for market participants to understand the various registrations that
exist on Phlx which would all be available within Rule 1000.
Rule 1014
    The Exchange's proposal to amend the title of Rule 1014 from
``Obligations and Restrictions Applicable to Specialists and Registered
Options Traders'' to ``Obligations of Market Makers,'' relocate text
from Rule 1014 to Rule 1000, retitle certain sections within Rule
1014(c), renumber Rule 1014, and modify the current paragraph at Rule
1014(b)(ii)(B) are non-substantive amendments.
    The Exchange's proposal to add the following sentence to Rule
1014(d) ``With respect to classes of options to which an ROT is not
appointed, it should not engage in transactions for an account in which
it has an interest that are disproportionate in relation to, or in
derogation of, the performance of his obligations as specified in
paragraph (c) above with respect to those classes of options to which
it is appointed,'' before the phrase ``an ROT should not'' is
consistent with the Act. The Exchange believes that adding this
sentence will provide more context to the information which follows.
This rule text is similar to rule text within ISE Rules at Options 2,
Section 5(d).
    The Exchange's proposes to amend Rule 1014(d)(ii) from ``Be
conspicuous in the general market or in the market in a particular
option'' to ``effect purchases or sales on the Exchange except in a
reasonable and orderly manner'' is consistent with the Act in that it
protects investors and the public interest by providing a standard that
is understandable. The Exchange notes that the quoting requirements
within Rule 1081 require ROTs to be quoting a certain amount of the
trading day. The new rule text is clear and unambiguous. It is the same
requirement for market makers on other options markets.\26\
---------------------------------------------------------------------------

    \26\ See GEMX and MRX Rules at Options 2, Section 5(d) and NOM
and BX Chapter VII, Section 5(b).
---------------------------------------------------------------------------

    The Exchange's proposal to delete Rule 1014(f) is consistent with
the Act because the provisions in this rule are no longer necessary.
The rule text does not provide additional information to the current
rule and additionally, the Exchange would not approve a market making
transaction that is not done by a Specialist or ROT. This rule has been
in existence for some time and the Exchange does not believe it has
relevance. The Exchange's deletion of Commentary .02 of Rule 1014 is
consistent with the Act because this rule text related to paragraph
(c)(i)(B), which was deleted.\27\
---------------------------------------------------------------------------

    \27\ See Securities Exchange Act Release No. 76441 (November 16,
2015), 80 FR 72773 (November 20, 2015) (SR-Phlx-2015-91).
---------------------------------------------------------------------------

    The Exchange's proposal to make minor amendments to Commentary .07
is consistent with the Act because the changes are not substantive. The
Exchange's proposal to delete Commentary .08 is consistent with the Act
as Phlx Rule 1017 governs the Opening Process and Specialists may not
circumvent that process. The Exchange's proposal to delete Commentary
.09 to Rule 1014 is consistent with the Act because the provision is
redundant. Trading hours and ability to set them for foreign currency
options are handled within Phlx Rule 101. Also, Phlx Rule 1014(e) no
longer exists. The Exchange's proposal to delete Commentary .10 to Rule
1014 is consistent with the Act because the Exchange requires ROTs to
submit orders electronically similar to all other market participants.
This rule text is not necessary. The Exchange believes these proposed
rule changes will bring greater transparency and clarity to the
regulation of ROTs and Specialists on Phlx.
Bid/Ask Differential
    The Exchange proposes to amend its bid/ask differential
requirements within Rule 1014(c) and Options 8, Section 27 for in-the-
money series for options on equities (including Exchange-Traded Fund
Shares), index options and options on U.S. dollar-settled FCOs, to a
quote spread allowance which may be as wide as the spread between the
national best bid and offer in the underlying security, or its decimal
equivalent rounded down to the nearest minimum increment, provided the
market for the underlying security is not wider than the differentials
set forth above is consistent with the Act. The Exchange believes the
proposed bid/offer differentials allow market makers greater
flexibility with respect to their quoting obligations. Aligning the
bid/ask differentials for all in-the-money options would cause the
Exchange to have a single standard regardless of the product. Phlx
believes that measuring the permissible width of a market maker's quote
against the NBBO more accurately reflects the current trading
environment where multiple trading venues contribute to the prevailing
market price of a security underlying an options series traded on Phlx.
Applying this standard only when the market for the underlying security
is wider than the differentials set forth allows Specialists and ROTs
to submit quotations that may be more reflective of the market for the
security. Specialists and ROTs take into consideration market
conditions, including trading and liquidity when

quoting. Further, the Exchange also notes that Specialists and ROTs are
consistently incentivized through allocation models, pricing, and rules
enforcement of market maker obligations to submit quotes which reflect
a quality market and are representative of the Specialist's or ROT's
best quote.
    With this proposal, Specialists and ROTs would obtain the same
flexibility in quoting as they experience on other options markets
today.\28\ Aligning the requirements for all in-the-money options
across the Exchange will avoid confusion for Specialists and ROTs in
submitting quotes on both the trading floor and electronically on Phlx.
The Exchange is not amending quote width allowances for options which
are not in-the-money. Further, a Specialist or ROT quoting an in-the-
money options series can hedge its position by trading in the
underlying security at the NBBO, which may be narrower than the
quotation on the primary market.
---------------------------------------------------------------------------

    \28\ See ISE, GEMX and MRX Options 2, Section 4. Options 2,
Section 4 provides, ``(4) To price options contracts fairly by,
among other things, bidding and offering so as to create differences
of no more than $5 between the bid and offer following the opening
rotation in an equity or index options contract. The Exchange may
establish differences other than the above for one or more series or
classes of options. (i) The bid/offer differentials stated in
subparagraph (b)(4) of this Rule shall not apply to in-the-money
options series where the underlying securities market is wider than
the differentials set forth above. For these series, the bid/ask
differential may be as wide as the spread between the national best
bid and offer in the underlying security.''
---------------------------------------------------------------------------

    The Exchange also proposes to note that it may establish
differences other than the above for one or more series or classes of
options. The Exchange's proposal to amend its rule to permit intra-day
discretion to conform to current practice is consistent with the Act
because such discretion is necessary to permit the Exchange the ability
to attract liquidity from Specialists and ROTs while also maintaining a
fair and orderly market. Specialists and ROTS accept a certain amount
of risk when quoting on the Exchange. The Exchange imposes quoting and
other obligations on ROTs.\29\ The Exchange notes that these risks
which ROTs accept each trading day are calculated risks. The Exchange
notes that it considers certain factors, which are likely unforeseen,
in determining whether to grant relief either in individual options
classes or for all option classes based upon specific criteria.
Specifically, the Exchange considers, among other factors, the
following: (i) Pending corporate actions with undisclosed or uncertain
terms; (ii) company or industry news with anticipated significant
market impact; (iii) government news of a sensational nature. The
Exchange believes that it is necessary to grant quote relief in certain
circumstances where an ROT may not have enough information to maintain
fair and orderly markets. The Exchange notes that other markets have
similar discretion for intra-day quotes today.\30\ The Exchange is
proposing this amendment to align the in-the-money bid/ask
differentials with the requirements for the Trading Floor. The Exchange
believes that the in-the-money bid/ask requirements for electronic
quoting should align with floor trading.
---------------------------------------------------------------------------

    \29\ See Phlx Rules 1017 and Rule 1081.
    \30\ NOM does not require NOM Market Makers to quote during the
opening, however if a NOM Market Maker decided to quote during the
opening, the Market Maker would be permitted to submit a bid/ask
differential with a difference not to exceed $5 between the bid and
offer regardless of the price of the bid. However, respecting in-
the-money series where the market for the underlying security is
wider than $5, the bid/ask differential may be as wide as the spread
between the national best bid and offer in the underlying security.
See NOM Rules at Chapter VII, Section 6(d)(ii).
---------------------------------------------------------------------------

Rule 1020
    The Exchange's proposal to amend Rule 1020 to provide that a
Specialist is not required to be assigned to an options series is
consistent with the Act because this provision will allow the Exchange
to list options series without the need to assign a Specialist. Today,
the Exchange permits one Specialist per options series. There is no
limitation on the number of ROTs that may be assigned to an options
series. The Exchange notes that if a Specialist cannot be acquired for
an options series it proposes to list the option series nonetheless for
ROTs to quote and provide liquidity. Today, NOM does not have such a
Specialist and lists and trades option series. The Exchange believes
that this provision will remove impediments to and perfect the
mechanism of a free and open market and a national market system
because it will permit Phlx to competitively list all options series
for which it has rules.
Other Amendments
    The Exchange's relocation of Rule 1064, ``Crossing, Facilitation
and Solicited Orders'' into Options 8, Section 30 and retitling of that
rule are non-substantive.
    The Exchange's proposed technical amendments to Rule 1082, ``Firm
Quotations'' to rename Risk Monitor Mechanism and its proposal to
update Rule 1087, ``Price Improvement XL (``PIXL'')'' to amend ``TOPO
Plus Orders'' to simple and provide a citation are non-substantive rule
changes.
    The Exchange's proposal to amend Options 8, Section 2,
``Definitions'' to add a sentence to Rule 2(7) Floor Market Maker to
provide, ``A Floor Market Maker may provide a quote in open outcry'' is
consistent with the Act as this provision will further distinguish
floor and electronic trading and bring greater clarity to the 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.
Rule 1000
    The Exchange's proposal to amend Rule 1000, titled ``Applicability,
Definitions and References'' to conform the formatting of the rule,
update the name of The Options Clearing Corporation to add the ``The''
before the name, and relocate definitions from Rule 1014 to Rule 1000
are non-substantive amendments. The Exchange's proposal to add a
definition for ``Public Customer'' within the Rule 1000(b)(56), amend
the description of a Professional within Rule 1000(b)(14), and add the
terms ``Public Customer'' and ``Professional'', where appropriate,
throughout the Rulebook, does not impose an undue burden on competition
because these definitions will bring greater transparency to the
Rulebook. The Exchange is not amending any provision of the rules,
rather the Exchange is making clear where a Public Customer order is
intended and where the term Professional is intended to avoid
confusion.
    Amending the term ``Registered Options Trader'' within proposed
Rule 1000(b)(57) does not impose an undue burden on competition because
it will make the description of this market participant clear. Phlx no
longer has a separate ``foreign currency options participation.'' Those
participations were eliminated.\31\
---------------------------------------------------------------------------

    \31\ See Securities Exchange Act Release No. 63981 (February 25,
2011), 76 FR 12180 (March 4, 2011) (SR-Phlx-2011-13).
---------------------------------------------------------------------------

    The Exchange's proposal to add a sentence to the description of an
RSQT also does not impose an undue burden on competition because the
proposed definition will makes clear that the usage of the terms RSQTO
and RMO in relation to an RSQT. Finally, the Exchange's proposal to add
a definition for a Specialist within Rule 1000 will make it easier for
market participants to understand the various registrations that

exist on Phlx which would all be available within Rule 1000.
Rule 1014
    The Exchange's proposal to amend titles, relocate text, renumber
sections of Rule 1014 from ``Obligations and Restrictions Applicable to
Specialists and Registered Options Traders'' to ``Obligations of Market
Makers,'' relocate text from Rule 1014 to Rule 1000, retitle certain
sections within Rule 1014(c), renumber Rule 1014, and modify the
current paragraph at Rule 1014(b)(ii)(B) are non-substantive
amendments.
    The Exchange's proposal to add the following sentence to Rule
1014(d) ``With respect to classes of options to which an ROT is not
appointed, it should not engage in transactions for an account in which
it has an interest that are disproportionate in relation to, or in
derogation of, the performance of his obligations as specified in
paragraph (c) above with respect to those classes of options to which
it is appointed,'' before the phrase ``an ROT does not'' does not
impose an undue burden on competition. This rule will apply to all ROTs
uniformly and does not apply to other market participants.
    The Exchange's proposes to amend Rule 1014(d)(ii) from ``Be
conspicuous in the general market or in the market in a particular
option'' to ``effect purchases or sales on the Exchange except in a
reasonable and orderly manner'' does not impose an undue burden on
competition in that it protects investors and the public interest by
providing a standard that is understandable. This rule will apply to
all ROTs uniformly and does not apply to other market participants.
    The Exchange's proposal to delete Rule 1014(f) does not impose an
undue burden on competition because the provision is no longer
necessary. The Exchange's deletion of Commentary .02 of Rule 1014 does
not impose an undue burden on competition because this rule text
related to paragraph (c)(i)(B), which was deleted.\32\
---------------------------------------------------------------------------

    \32\ See Securities Exchange Act Release No. 76441 (November 16,
2015), 80 FR 72773 (November 20, 2015) (SR-Phlx-2015-91).
---------------------------------------------------------------------------

    The Exchange's proposal to amend Commentary .07 to Rule 1014 does
not impose an undue burden on competition because the amendment is non-
substantive. The Exchange's proposal to delete Commentary .08 to Rule
1014 does not impose an undue burden on competition because all members
are subject to the Opening Process described within Rule 1017 and the
elimination of the rule text within Commentary .08 will remove
confusion. The Exchange's proposal to delete Commentary .09 to Rule
1014 does not impose an undue burden on competition because the
provision is redundant. Trading hours and ability to set them for
foreign currency options are handled within Phlx Rule 101. Also, Phlx
Rule 1014(e) no longer exists. The Exchange's proposal to delete
Commentary .10 to Rule 1014 does not impose an undue burden on
competition because the Exchange requires ROTs to submit orders
electronically similar to all other market participants. This rule text
is not necessary. The Exchange believes these proposed rule changes
will bring greater transparency and clarity to the regulation of ROTs
and Specialists on Phlx.
Bid/Ask Differential
    The Exchange's proposal to amend the bid/ask differentials within
Rule 1014(c), for in-the-money series, from $5 for electronic
quotations to be as wide as the spread between the national best bid
and offer in the underlying security, or its decimal equivalent rounded
down to the nearest minimum increment does not impose an undue burden
on competition as this requirement applies to all ROTs and Specialists
today and the proposal will align the in-the-money quoting requirements
for ROTs and Specialists transacting business electronically and on the
trading floor. Today, this is the requirement for in-the-money bid/ask
differentials on the trading floor as well as on other markets.\33\
---------------------------------------------------------------------------

    \33\ See ISE, GEMX and MRX Options 2, Section 4.
---------------------------------------------------------------------------

    The Exchange's proposal to amend its rule to permit intra-day
discretion to conform to current practice because ROTs are the only
market participants subject to quoting requirements and the proposal
specifically considers the need for ROTs to have information to make
informed decisions to make calculated risks in the marketplace so that
they may provide liquidity while maintaining fair and orderly markets.
The proposed amendments do not create an undue burden on inter-market
competition because other options markets have the same intra-day
requirements.\34\
---------------------------------------------------------------------------

    \34\ See Miami International Securities Exchange LLC Rule
604(b)(4), Cboe Exchange, Inc. Rule 8.7(d), NYSE American LLC Rule
925NY(b)(4), NYSE Arca, Inc. 6.37-O(b)(4).
---------------------------------------------------------------------------

Rule 1020
    The Exchange's proposal to amend Rule 1020 to provide that a
Specialist is not required to be assigned to an options series does not
impose an undue burden on competition because the Exchange will
continue to send notices for each new options series requesting
interested Specialists to express interest. In the event that it is
unable to locate an interested Specialist, the Exchange proposes to
list the option series nonetheless for ROTs to quote and provide
liquidity. Today, the Exchange permits one Specialist per options
series. There is no limitation on the number of ROTs that may be
assigned to an options series. Today, NOM does not have such a
Specialist and lists and trades option series.
Other Amendments
    The Exchange's relocation of Rule 1064 and technical amendments to
Rule 1082 and 1087 are non-substantive.
    The Exchange's proposal to amend Options 8, Section 2,
``Definitions'' to add a sentence to Rule 2(7) Floor Market Maker does
not impose an undue burden on competition, rather this provision will
further distinguish floor and electronic trading and bring greater
clarity to the 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 \35\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\36\
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \36\ 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.
---------------------------------------------------------------------------

    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 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<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2019-33 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-2019-33. 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-2019-33 and should be submitted on
or before October 10, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20223 Filed 9-18-19; 8:45 am]
 BILLING CODE 8011-01-P


Cooling Water Intake Structure ( CWIS) Information Data Required Rig Information Rig Name ENSCO 7500 Rig Type Semi submersible ( Dynamically Positioned) Total Installed Power Generation Capacity 31,400 HP Number of Cooling Water Intake Structures ( CWISs) 6 Brief description of each CWIS ( e. g., sea chest, simple pipe) Sea Chests: 2 ballast 2 ballast/ thruster cooling 2 thruster cooling/ engine cooling/ seawater service Rough dimensions of each CWIS and indicate whether onboard CWIS has an existing flange Aft Main Seachests: 28" W x 24" H, w/ 6.5" radiused corners  Flanged ( Doubler plate with tapped blind holes) port & starboard, open area 462 sq in Aft Ballast Seachests: 28" W x 16" H, w/ 6.5" radiused corners  Flanged ( Doubler plate with tapped blind holes) port & starboard, open area 289 sq in Forward Seachests: 28" W x 16" H, w/ 6.5" radiused corners  Flanged ( Doubler plate with tapped blind holes) port & starboard, open area 289 sq in Screen type ( e. g., strainer, wedge wire) with mesh size 1 1/ 4" x ¼ " Serrated Bar Grating ( All sea chests similar)

Total Design Specifications for Daily Maximum Water Intake Volume of each CWIS Aft Main Seachests: 10,224,000 gal each Aft Ballast Seachests: 2,592,000 gal each Fwd Seachests: 3,312,000 gal each Total Daily Water Intake Volume of each CWIS ( Set up/ Drilling) Total Daily Water Intake at Set up Stbd. Aft Main Seachest: 10,224,000 gal Stbd. Aft Ballast Seachest: 324,000 gal Stbd Fwd Seachest: 1,044,000 gal Port Aft Main Seachest: 720,000 gal Port Aft Ballast Seachest: 324,000 gal Port Fwd Seachest: 1,044,000 gal Total Daily Water Intake during Drilling Stbd. Aft Main Seachest: 10,224,000 gal Stbd. Aft Ballast Seachest: 16,000 gal Stbd Fwd Seachest: 16,000 gal Port Aft Main Seachest: 720,000 gal Port Aft Ballast Seachest: 16,000 gal Port Fwd Seachest: 16,000 gal Total Daily Cooling Water Intake during Setup and Drilling Stbd. Aft Main Seachest: 8,512,000 gal Stbd. Aft Ballast Seachest: none Stbd Fwd Seachest: 720,000 gal Port Aft Main Seachest: 720,000 gal Port Aft Ballast Seachest: none Port Fwd Seachest: 720,000 gal Design Specs for Through Screen Velocity of each CWIS ( i. e., Q= V* A) ( Set up/ Drilling) Stbd. Aft Main Seachest: 4.93 fps Stbd. Aft Ballast Seachest: 2.0 fps Stbd Fwd Seachest: 2.55 fps Port Aft Main Seachest: 4.93 fps Port Aft Ballast Seachest: 2.0 fps Port Fwd Seachest: 2.55 fps List of Purposes of Cooling Water Intakes ( e. g., cool crude oil, produced water, power generators, drill pipe brakes) Aft Main Seachests: cooling to power rectifier and 3 A/ C units. Aft Ballast Seachests: None Fwd Seachest: cooling to 2 thrusters List of Purposes of Non cooling Water Intakes ( e. g., fire water, hotel loads) Aft Main Seachests: Distillation units, oil/ water separators ( 4), cuttings washer, flush water for cuttings dump chute Aft Ballast Seachests: Ballast Fwd Seachest: cooling to 2 thrusters Total Volume of Water Intake for Ballasting, Duration of the Ballast intake, and the Through Screen Velocity of the Ballast intake Total Daily Water Intake for Ballasting: Duration Velocity Stbd. Aft Main Seachest: none Stbd. Aft Ballast Seachest: 3 hrs 2.0 fps Stbd Fwd Seachest: 3 hrs 2.0 fps Port Aft Main Seachest: none Port Aft Ballast Seachest: 3 hrs 2.0 fps Port Fwd Seachest: 3 hrs 2.0 fps Mitigation Measures for reducing Exotic Species Migration through Ballast water Aluminum and copper impressed current anodes at all seachests. Deepwater ballast exchange when ballast water carried.. Mitigation Measures for reducing Impingement and Entrainment of Aquatic Organisms, as well as Bio fouling Prevention Measures Biocide injection and corrosion inhibitor injection into engine cooling suctions and thruster cooling suctions. No injection into ballast suctions. Aluminum and copper impressed current anodes at all seachests. Is the Rig equipped with a Radiator Cooling System for the Main Engines? No


[Federal Register: January 9, 2009 (Volume 74, Number 6)]
[Notices]
[Page 923-927]
[DOCID:fr09ja09-61]

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DEPARTMENT OF LABOR

Occupational Safety and Health Administration

[Docket No. OSHA-2007-0053]

Nationally Recognized Testing Laboratories; Satellite
Notification and Acceptance Program

AGENCY: Occupational Safety and Health Administration (OSHA), Labor.

ACTION: Implementation of the Satellite Notification and Acceptance
Program.

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SUMMARY: This notice announces OSHA's implementation of the ninth
supplemental program under its Nationally Recognized Testing Laboratory
(NRTL) Program. This supplemental program is the Satellite Notification
and Acceptance Program (SNAP), and participation by NRTLs in the SNAP
is voluntary. The SNAP Description for this program specifies the
conditions under which NRTLs may use SNAP sites to perform equipment
testing and certification functions.

DATES: The SNAP will become effective on May 11, 2009.

FOR FURTHER INFORMATION CONTACT: MaryAnn Garrahan, Director, Office of
Technical Programs and Coordination Activities, NRTL Program,
Occupational Safety and Health Administration, U.S. Department of
Labor, 200 Constitution Avenue, NW., Room N-3655, Washington, DC 20210,
or phone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    On April 21, 2008, OSHA published in the Federal Register a notice
proposing the SNAP, and requested public comment on the proposal (73 FR
21378). OSHA made the proposed SNAP Description available on its Web
site at http://www.osha-slc.gov/dts/otpca/nrtl/index.html, but did not
provide this document in the published proposal. OSHA received seven
comments to the proposal, and has made a number of revisions to the
proposed SNAP based on these comments.
    The SNAP will become the ninth supplemental program available to
NRTLs under the NRTL Program. In general, supplemental programs permit
an NRTL to use the services of other facilities to test and certify
products used in the workplace. OSHA formally established the initial
eight supplemental programs after publishing a description of these
programs in the Federal Register (60 FR 12980, March 9, 1995). The
current notice sets forth the criteria and conditions that an NRTL must
meet to use the SNAP.
    To use a supplemental program, an NRTL must receive approval from
OSHA and, once approved, the supplemental program becomes a part of the
NRTL's scope of recognition. In general, each NRTL is approved by OSHA
for a scope of recognition that identifies the following three
elements: (1) The types of products the NRTL may approve, (2) the
NRTL's ``recognized sites,'' that are the NRTL's wholly owned sites
that can perform the full range of product-testing and -certification
activities necessary in approving those products, and (3)
``supplemental programs,'' that, unlike the other two elements, are
optional. Through these programs, an NRTL can use other resources in
performing activities necessary for product testing and certification.
OSHA maintains a Web page for each NRTL describing its scope of
recognition.
    For more information about supplemental programs and the NRTL
Program in general, see the 1995 Federal Register notice cited above,
and Chapters 1 and 2 of the NRTL Program Directive (hereafter, ``the
NRTL Directive''; CPL 01-00-003--CPL 1-0.3 (``NRTL Program Policies,
Procedures, and Guidelines'')), which is available on OSHA's Web site
at http://www.osha.gov/dts/otpca/nrtl/index.html. This site also
provides a listing of the types of products that OSHA requires to be
approved by NRTLs and the regulations of the NRTL Program (29 CFR
1910.7)

II. Summary and Analysis of Comments

    OSHA provided 30 days for the public to submit comments on the
proposed SNAP, with the comment period ending on May 21, 2008 (73 FR
21378, April 21, 2008). We received seven comments--six from currently
recognized NRTLs, and one from an independent consultant who is a
former staff member of OSHA's NRTL Program. In the remainder of this
section, we discuss the comments made on the key conditions described
for the proposed SNAP.
    A. Limiting use of an NRTL's mark to wholly owned SNAP sites. In
the notice proposing the SNAP, OSHA stated that it ``would allow SNAP
sites that are wholly owned by the NRTL to authorize the use of the
NRTL's mark.'' (Ex. OSHA-2007-0053-0001, p. 21380.) OSHA proposed this
condition because it believes that NRTLs must retain control of this
final step of their product-approval process. This step identifies them
as the entity that tested and approved a product for use in the
workplace. However, several commenters opposed this condition. For
example, the Canadian Standards Association (CSA) stated that this
condition was ``overly restrictive and could prevent expansion of SNAP
internationally.'' (Ex. OSHA-2007-0053-0007.) Underwriters Laboratories
(UL) noted that this condition could weaken the approval process
because a majority-owned SNAP site would lack ``authority to grant or
withdraw use of the NRTL['s] mark.'' In addition, UL noted that the
``[a]uthorization to use the mark is an administrative, not technical,
task that follows the critical technical review and decision on
certification.'' Thus, if maintained as a final and administrative
step, allowing a majority-owned site to grant the mark would not
compromise the testing and certification process. UL also commented
that this condition would make auditing the entire process impractical
because ``OSHA must audit 2 separate sites to review the complete
certification process.'' (Ex. OSHA-2007-0053-0006.) These comments made
clear that OSHA does not have to limit the authorization function to
SNAP sites owned solely by an NRTL, especially when the decision on
certification can occur at a majority-owned site. Thus, OSHA removed
this condition from the SNAP.
    B. Definition of SNAP sites. OSHA proposed that NRTLs, or
organizations in which NRTLs have a majority interest, own or lease
SNAP sites. Several NRTLs stated that this condition eliminated the
option of using sites owned or leased by their parent company. (See
Exs. OSHA-2007-0053-0002 and -0003.) Intertek Testing Services NA
(ITSNA) also noted that current NRTL Program policy (paragraph X,
Appendix C, NRTL Directive) allows NRTLs to either wholly own or
``organizationally encompass'' their recognized sites. Thus, the policy
does not require the NRTL to demonstrate ownership of sites that are
organizationally encompassed. (Ex. OSHA-2007-0053-0003.) This comment
indicated that OSHA should allow NRTLs to similarly encompass their
SNAP sites or allow SNAP sites that are not majority-owned by the NRTL.
NSF International (NSF) pointed out that the majority-ownership
condition makes it impossible to have SNAP sites in foreign countries
that do not permit majority ownership by outside entities. (OSHA-2007-
0053-0009.)
    OSHA proposed the majority-ownership condition to ensure that NRTLs
would have administrative and operational control over the SNAP site.
OSHA believes that this condition would maintain the same degree of
control that NRTLs must now exercise over their recognized sites. This
policy specifies that the NRTL must wholly own or ``organizationally
encompass'' its recognized sites, and ``have administrative and
operational control over these sites.'' (As explained below, the term
``organizationally encompass,'' when used in this context, is
equivalent to the NRTL completely owning the site's legal entity.) The
policy also states that ``the NRTL must clearly demonstrate control in
its operating policies and procedures and quality assurance program
documentation.''
    OSHA requires this policy largely to ensure that a site that it
recognizes as part of the NRTL (i.e., a recognized site) constitutes
the NRTL's technical capabilities, which is necessary to determine that
the NRTL meets the capability requirements under 29 CFR 1910.7.
However, as explained in the notice proposing the SNAP, a SNAP site's
technical capabilities are not considered in making this

determination. Thus, majority-ownership ensures that NRTLs maintain
administrative and operational control over their SNAP sites, thereby
providing NRTLs the flexibility under SNAP to conduct their
certification activities at more locations than had been previously
possible.
    As used in OSHA's policy on Sites, the term ``organizationally
encompass'' means that a site is within the NRTL's organizational
structure and subject to the NRTL's control. This term covers
situations in which a state or region of a country issues a license to
the NRTL that identifies its legal name, and allows it to establish an
office or facility in this state or region to conduct business without
requiring the NRTL to establish the office or facility as a subsidiary
with a headquarters located outside the country. Because the site's
legal entity is the NRTL, the entity is in effect wholly owned by the
NRTL. Thus, the NRTL's control over a SNAP site would not diminish if
OSHA permits an NRTL to establish a SNAP site that is organizationally
encompassed by the NRTL. Therefore, the definition of a SNAP site in
the final SNAP Description will provide for this option.
    With respect to the comments suggesting that OSHA allow SNAP sites
that are owned by the NRTL's parent company, ITSNA stated that it has
``significant experience'' that demonstrates ownership by ``a common
parent'' of both the site and the NRTL ``can provide the same level of
control'' as direct ownership of this site by the NRTL. (Ex. OSHA-2007-
0053-0003, p. 2.) In reviewing this condition, OSHA agrees that the
requisite control would exist provided that the NRTL's parent company
wholly owns or organizationally encompasses the site, and delegates or
otherwise assigns responsibility for the site's SNAP functions to the
NRTL. This control must be demonstrated in the parent's and the NRTL's
policies or procedures, as appropriate. Under these circumstances, OSHA
would be assured that NRTLs exercise the same degree of control that
OSHA now requires by NRTLs over their recognized sites. Accordingly,
OSHA concludes that the NRTL has control of a SNAP site wholly owned or
organizationally encompassed by the NRTL's parent company when the
parent company delegates to the NRTL operational and administrative
control over the SNAP site or the functions performed on behalf of the
NRTL at the site.
    C. Frequency of SNAP-site audits. OSHA specified in the proposal
that NRTLs must perform an initial audit to qualify a site for the
SNAP, and then perform two program audits and one technical audit at
the site each year. OSHA proposed these conditions to ensure that NRTLs
timely identified nonconforming situations at SNAP sites. OSHA plans to
audit each SNAP site every two years and, therefore, is relying on
adequate oversight by NRTLs to compensate for the reduced frequency of
OSHA audits. This proposed condition seemed to be a reasonable
safeguard for assuring the NRTLs could resolve problems before serious
consequences arose. Several commenters opposed this condition as
excessive, and unnecessary for proper oversight. (See Exs. OSHA-2007-
0053-0003, -0004, -0009.) In reviewing this condition, OSHA concludes
that the distinction drawn between program and technical audits is
somewhat artificial, and that some of those audits may overlap. Thus,
OSHA believes that it would be adequate for NRTLs to perform a minimum
of two audits of each SNAP site on a yearly (12-month) cycle, provided
that each audit reviews all of the site's SNAP operations, both
technical (e.g., staff competence, equipment, facilities) and
programmatic (e.g., quality-control procedures, internal audits,
control of the certification mark). However, if the site only performs
SNAP product testing and no ``SNAP function'' (both described later in
this notice), then the NRTL must perform a minimum of one audit of the
SNAP site, provided that the audit reviews all of a SNAP sites testing
activities. This frequency is consistent with the current practice
specified by OSHA for regular internal audits by NRTLs of their testing
processes.
    D. Location of auditors. OSHA proposed that the program auditor for
SNAP sites be located at the SNAP headquarters of the NRTL, which would
need to be located at a recognized site. OSHA proposed this condition
because it believed that the headquarters would have experienced and
well qualified auditors available, and using a centralized pool of
auditors would maintain the continuity and reliability of audits. In
addition, locating the NRTL's auditors at a central location would
facilitate access to the NRTL auditors and their reports by OSHA
auditors, especially when OSHA auditors conduct annual audits at the
NRTL's SNAP headquarters. NSF believed that staff located at other
sites are as qualified to conduct audits as auditors from the SNAP
headquarters of the NRTL. (Ex. OSHA-2007-0053-0009.) Several commenters
raised concerns about the burden imposed on auditors having to travel
to many distant SNAP sites from an NRTL's headquarters. (Exs. OSHA-
2007-0053-0003 and -0009.) Based on this travel burden, ITSNA
recommended that auditors be located at the NRTLs' regional
headquarters.
    After reviewing these comments, OSHA believes that locating
auditors at a recognized site, as well as at the NRTL's SNAP
headquarters, will not compromise the effectiveness of the audits.
Accordingly, OSHA finds that an NRTL can exercise adequate oversight
over its SNAP sites when the auditors of these sites report their
findings to the NRTL's SNAP headquarters, and when OSHA annually audits
any of these locations annually. OSHA also is assuring the
effectiveness of the audits by requiring that auditors be located at
any recognized site, and by requiring the auditors at these sites to
forward audit records to the SNAP headquarters of the NRTL and to keep
a copy of the audit report at the auditor's location.
    E. Independence of NRTL's SNAP auditors. OSHA proposed that an
NRTL's SNAP auditors must be in an organizational unit that is separate
from the NRTL's operations, and that the unit must report directly to a
senior executive of the NRTL. OSHA proposed this condition to ensure
that SNAP auditors were independent of an NRTL's operational units, and
that auditing units had authority to compel operational units to
conform with the prescribed SNAP conditions. Two commenters opposed
this condition. (Exs. OSHA-2007-0053-0007 and -0008.). The first
commenter believed this condition was inappropriate because auditing
units may report to a team of executives instead of one executive,
while the second commenter noted that the executive structure
envisioned in the proposal may not exist in many NRTL organizations.
OSHA agrees with these comments, and revised the condition to specify
that SNAP auditors cannot be under the control or direction of any SNAP
site, and that auditors must report audit results from a SNAP site to
the SNAP headquarters of the NRTL.
    F. Policies and procedures for SNAP operations. Footnote 4 in the
proposed SNAP Description states:

    For purposes of participating in SNAP and complying with the
criteria in II.C and II.D of this description, any [NRTL may] use
policies and procedures applicable to other aspects of its
operations provided they meet or are tailored to meet the relevant
criteria. Under such conditions, the NRTL would not need to develop
separate policies and procedures for its participation in SNAP.

Thus, OSHA was trying to facilitate NRTLs' participation in the SNAP by
permitting the NRTLs to adopt already-developed policies and
procedures. In its comment, UL recommended revising this footnote to
allow NRTLs to use ``alternate policies and procedures (e.g., those
applicable to other aspects of its operations) provided they meet or
are tailored to meet or exceed (in an alternate way) the relevant
criteria.'' (Ex. OSHA-2007-0053-0007; emphasis in original noting
revised language.) UL explained that the revisions would allow NRTLs to
use ``individual level qualification'' for SNAP sites instead of site-
level qualification. However, OSHA requires individual qualification
under the proposed SNAP as a condition for qualifying a site. For
example, paragraph II.C.2 of the proposed SNAP Description requires,
``Detailed criteria to grant a site's qualification, addressing both
its capability to evaluate a product with respect to the requirements
in a standard (i.e., technical capability) and its capability to
perform any of the proposed SNAP functions (i.e., program
capability).'' Such qualification must ensure that a site has properly
qualified staff, equipment, and procedures to perform technical and
program functions. OSHA is revising the proposed SNAP Description to
clarify this point, while leaving the footnote in its proposed form.
    G. Other topics and issues. CSA (Ex. OSHA-2007-0053-0007) noted
that the proposed SNAP Description did not provide sufficient detail
regarding the qualification and requalification requirements to ensure
consistent application of the requirements. In response to this
comment, OSHA will update the application format applicable for SNAP to
specify the minimum documentation needed to apply, and the criteria
OSHA will use to determine if the application is satisfactory.
    ITSNA expressed concern that use of the term ``leased'' in the
definition of SNAP in the proposed SNAP Description could be
interpreted to exclude subleasing. (Ex. OSHA-2007-0053-0003.) To avoid
confusion, OSHA is clarifying the definition to include subleasing and
renting.
    UL took exception to a statement in the preamble of the proposal
that appeared to require NRTLs to issue the authorization of its mark
``simultaneously or concurrently with the final decision on
certification.'' (Ex. OSHA-2007-0053-0007.) In taking exception to this
statement, UL noted that ``there is no realistic way to concurrently or
simultaneously decide and authorize.'' OSHA believes the preamble
statement is ambiguous, and agrees with UL that authorization must
follow the decision to certify a product, even if, as UL noted,
authorization occurs immediately after the decision.
    UL also opposed the condition in the proposed SNAP Description
requiring NRTLs to post SNAP-site locations on the NRTLs' Web sites.
(Ex. OSHA-2007-0053-0007.) In this regard, UL stated that the public
will have difficulty understanding the differences between a SNAP site
and an NRTL site, and that ``competitive issues between NRTLs using
SNAP may arise regarding how their SNAP sites are referenced on their
respective Internet sites.'' OSHA agrees that the public may not
readily understand the differences between NRTL sites and SNAP sites,
and that inconsistencies could arise among NRTLs in describing SNAP
sites on their Web sites. Therefore, OSHA will remove this condition
from the final SNAP Description, and will maintain on its Web site a
list of NRTLs and their associated SNAP sites, as well as an
explanation of how NRTLs and their recognized sites differ from SNAP
sites.
    Finally, UL noted that the proposed SNAP Description allowed SNAP
sites to perform testing, which UL stated was not a SNAP function. (Ex.
OSHA-2007-0053-0007.) However, OSHA proposed the SNAP to allow NRTLs to
perform testing and certification functions at sites in countries that
do not permit foreign entities to wholly own local businesses, provided
the NRTL has qualified the sites as capable of performing specific
product testing. OSHA revised the proposed SNAP Description to make
clear that SNAP sites can perform testing when qualified by an NRTL to
do so.

III. Key Elements of SNAP

    With this Federal Register notice, OSHA announces implementation of
the SNAP. Implementation of the SNAP will not change any of the
requirements for NRTLs found under 29 CFR 1910.7, or any of OSHA's
requirements governing product approval by NRTLs. OSHA will implement
the SNAP through the NRTL Directive as part of its NRTL Program policy.
    The SNAP will allow NRTLs to use SNAP sites to perform functions
necessary for the NRTLs' testing and certification operations. To
receive approval to participate in the SNAP, NRTLs must ensure that the
SNAP sites meet the conditions specified in the SNAP Description. These
conditions consist of controls and safeguards for ensuring the efficacy
of the functions performed at SNAP sites. Accordingly, an NRTL must
qualify a prospective SNAP site to ensure that the site can perform one
or more functions or activities permitted under the SNAP Description.
Also, OSHA will audit each SNAP site, as well as the NRTL's recognized
site that centrally manages the NRTL's SNAP operations. If OSHA finds
that an NRTL or a SNAP site is not in compliance with any condition
specified in the SNAP Description, it may remove the NRTL or the SNAP
site from the SNAP.
    After reviewing the entire record, including the comments described
above in section II of this notice (``Summary and Analysis of
Comments''), OSHA determined that SNAP sites will be able to perform
the following SNAP functions (paragraphs A to E) and product-testing
activity (paragraph F):
    A. Qualify under Programs 2 through 7 and 9.\1\ Programs 2 through
7 address NRTLs' acceptance and use of testing data and product
evaluations from other facilities that are not part of their corporate
structure, specifically independent laboratories and product
manufacturers. Under these programs, NRTLs must qualify each location
(or site) that generates testing data or product evaluations. In
qualifying such a facility, an NRTL must ensure that the facility meets
the NRTL's internal criteria for conducting the tasks necessary to
collect testing data and perform product evaluations.
---------------------------------------------------------------------------

    \1\ The NRTL Directive contains information about each of these
programs.
---------------------------------------------------------------------------

    Program 9 describes the procedures followed by NRTLs when using
other facilities to perform specified services such as equipment
calibration and follow-up inspections. NRTLs qualify each of these
facilities to ensure that the facilities meet the NRTL's internal
criteria for providing the specified services. Implementation of the
SNAP will permit SNAP sites to qualify to perform functions described
under Programs 2 through 7 and 9.
    B. Accept data under Programs 2 through 8.\2\ In accepting testing
data or product evaluations under Programs 2 through 8, NRTLs must have
appropriate technical personnel to review the adequacy and accuracy of
the data and evaluations, as well as clear procedures for conducting
these reviews. The SNAP will expand this capability from recognized
sites to SNAP sites.
---------------------------------------------------------------------------

    \2\ The NRTL Directive contains information about each of these
programs.
---------------------------------------------------------------------------

    C. Provide OSHA with access to original product-testing and -
evaluation records. AN NRTL must maintain, and make available to OSHA
on request, the

original records resulting from its product testing and evaluation
functions. These critical documents allow NRTLs to exercise quality
control over product testing and evaluation functions, and permit OSHA
to perform an accurate audit of these NRTL functions. SNAP sites must
have the capability to maintain, and provide OSHA with access to,
records of functions performed on behalf of NRTLs.
    D. Perform final technical reviews and make decisions on product
certification. Final technical reviews and subsequent decisions
regarding product certification are the last functions performed in the
technical process for product certification. To provide assurance that
a product meets the relevant test standard(s), only a well qualified
technical staff can perform these functions. As with recognized sites,
SNAP sites can perform these functions only if they have demonstrated
the capability of doing so.
    E. Authorize use of an NRTL's mark. An NRTL's mark symbolizes the
final decision to certify a product, and clearly identifies the NRTL as
the source responsible for testing and certifying the product. While
the SNAP will permit a SNAP site to authorize the mark of the NRTL for
which it performs product-testing and -certification functions, the
NRTLs must control the use of their marks and ensure that SNAP sites
authorize this use only after the decision to certify a product.
    F. SNAP product-testing activity. SNAP sites may perform product
testing within the scope of recognition of the NRTL, provided that the
NRTL qualifies the site as having the capability for this testing. This
activity may be the only activity performed by a SNAP site, or
supplement one or more SNAP functions.

IV. Submitting SNAP Applications

    OSHA will begin accepting applications from NRTLs for the SNAP
after its effective date of May 11, 2009. At that time, OSHA will
invite NRTLs and NRTL applicants to apply for approval to participate
in SNAP and establish SNAP sites. Prior to submitting a SNAP
application, applicants should review the SNAP Description, which OSHA
will make available on its Web site for the NRTL Program at http://
www.osha-slc.gov/dts/otpca/nrtl/index.html. This Web site will contain
instructions describing the information to submit in a SNAP application
and will provide an application format that may be used for this
purpose.

V. Authority and Signature

    Thomas M. Stohler, Acting Assistant Secretary of Labor for
Occupational Safety and Health, U.S. Department of Labor, 200
Constitution Avenue, NW., Washington, DC 20210, directed the
preparation of this notice. Accordingly, the Agency is issuing this
notice pursuant to sections 6(b) and 8(g) of the Occupational Safety
and Health Act of 1970 (29 U.S.C. 655 and 657), Secretary of Labor's
Order 5-2007 (72 FR 31160), and 29 CFR 1911.

    Signed at Washington, DC, on January 5th, 2009.
Thomas M. Stohler,
Acting Assistant Secretary of Labor for Occupational Safety and Health.
 [FR Doc. E9-163 Filed 1-8-09; 8:45 am]

BILLING CODE 4510-26-P