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Tuesday, May 19, 2020

Options Regulatory Alert #2020 - 16
NASDAQ PHLX Open Outcry Safety Measures Related to COVID-19


  • Regulatory

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Nasdaq Phlx (Phlx) Open Outcry trading will reopen on Monday, June 1, 2020 as noted in Options Trader Alert 2020-13. Several safety measures have been implemented to ensure the health and safety of Phlx members as well as Phlx staff (Staff). Among a number of other policies that have been implemented, Phlx reminds members that the below measures are effective immediately, until further notice. When on the trading floor or on the premises immediately adjacent to the trading floor (collectively, the Premises):

  • Members must maintain a social distance of 6 feet at all times;
  • Consistent with Commonwealth of Pennsylvania requirements, masks and face shields must be worn at all times while on the Premises, except during brief eating/drinking breaks while sitting at one’s assigned desk;
  • Members may sit only a desk assigned to him or her by Phlx;
  • All brokers must announce trades using the microphones supplied by Phlx to avoid the need to speak loudly or yell. Microphones may not be shared between different individuals. Brokers are responsible for keeping their microphones charged;
  • Members must enter and exit the Premises as instructed by Staff;
  • Members must comply with door check-in procedures, including temperature checks, and complete any questionnaires required by Staff;
  • Members may not conduct business on the Premises if they were exposed to a person who is a probable or confirmed case of COVID-19 or if they have an elevated temperature or fever or otherwise exhibit symptoms of COVID-19 in accordance with Pennsylvania Department of Health Guidelines;
  • Food delivery to the Premises is prohibited. Members must bring their own lunches/snacks to the Premises along with required utensils, at the beginning of their workday;
  • Refrain from frivolous discussion regarding COVID-19 related symptoms or other requirements (e.g., “I was just joking around” excuses will not be tolerated);
  • Members may not access any area marked as restricted;
  • No visitors are permitted;
  • Communications with the Corrections Post during trading hours will be electronic only; and
  • Members must not use public transportation (e.g. trains, buses and other forms of transportation which involve traveling with other individuals).

These measures are in addition to complying with any public health orders issued by the Pennsylvania Department of Health. Members that fail to provide accurate data or provide false or misleading information to Staff may be subject to disciplinary actions.

Phlx members who fail to comply with the above safety measures, which have been implemented to protect floor members and Phlx staff from the threat posed by COVID-19, will be subject to disciplinary actions, including immediate exclusion from the Premises for at least a 48 hour period.

Phlx member organizations are reminded of their obligation pursuant to Options 8, Section 39, F, Regulation 4(f) to monitor for compliance with the above requirements, and pursuant to Phlx Rule General 9, Section 20 to establish, maintain, and enforce written supervisory procedures, and a system for applying such procedures, that are reasonably designed to prevent and detect violations of the above requirements. Member organization are further reminded that failure to adequately supervise their registered representatives, employees, and associated persons to ensure their compliance with the requirements contained in Options 8, Section 39, F may also result in disciplinary action,

Rule 9216(c)(2), located in Phlx General 5, Section 3, provides for the exclusion of a member as follows:

(2) An Options Exchange Official and an officer of the Exchange may exclude a member and any associated person from the trading floor for breaches of regulations that relate to administration of order, decorum, health, safety and welfare on the Exchange that occurred on the trading floor or on the premises immediately adjacent to the trading floor. Specifically, members and associated persons shall be excluded if they pose an immediate threat to the safety of persons or property, are seriously disrupting Exchange operations, or are in possession of a firearm. Members or associated persons so excluded may be excluded for a period of up to five (5) business days.

(A) For purposes of this Rule, an “officer of the Exchange” shall refer to an officer who is a vice president or higher.

(B) For purposes of this Rule and the Regulations promulgated thereunder, the “premises immediately adjacent to the trading floor” shall include the following: (1) all premises other than the trading floor that are under Exchange control, and (2) premises in the building where the Exchange maintains its principal office and place of business, namely FMC Tower, 2929 Walnut Street, Philadelphia, Pennsylvania.

(C) Exclusion from the floor may not be the exclusive sanction for breaches of this Rule and the regulations thereunder. In addition to exclusion, a member or associated person may also be subject to a fine or Exchange staff may request authorization of a complaint directly from the Office of Disciplinary Affairs, or refer the matter to the Department of Enforcement, where it shall proceed in accordance with Rule 8000 and 9000 Series.

(D) If a member shall be excluded for a period exceeding forty-eight hours, an expedited hearing (“Expedited Hearing”) will be held before the Chair of the Exchange Review Council or a member of the Exchange Review Council designated by the Chair (“Expedited Hearing Officer”) within forty-eight (48) business hours after the members' exclusion from the trading floor. Written notice will be provided to the member of the date, time and place of the hearing. The member may be represented by counsel. The Expedited Hearing Officer or his or her designee shall conduct an Expedited Hearing. The Expedited Hearing Officer shall allow both the member or his or her representative and Exchange staff to present arguments. The Expedited Hearing Officer shall make a determination of whether to continue the member's exclusion from the trading floor for a period of up to five (5) business days. The determination shall be based on the severity of the threat posed to persons on the trading floor, the disruptiveness caused by the actor and the safety and welfare of persons on the trading floor. The Expedited Hearing Officer shall make a ruling at the time of the hearing and a written decision will be provided to the member following the hearing. Members shall not be excluded from electronic trading, but will not be permitted to be physically present on the trading floor for the duration of any exclusion.

(E) The procedure to be followed when a member is to be excluded from the trading floor is as follows:

(i) No Further Right of Appeal. The determination that a member shall be excluded is final. There shall be no appeal from such determination.

(ii) Report to the SEC. A report in appropriate form shall be made to the SEC. However, no report shall be made in a case where a clerical employee is excluded from the trading floor for not more than five days for a breach of regulations relating to order, decorum, health, safety and welfare or administration of the Exchange if the clerical employee has not sought an adjudication, including a hearing, or otherwise exhausted his administrative remedies at the Exchange with respect to the matter, as provided by Rule 19b-1(c) of the Act.

Phlx takes the safety and welfare of its members and Staff very seriously. These control measures are necessary to ensure the safety of everyone on Premises and to protect against the spread of COVID-19.

If you have questions or concerns about the measures or their implementation please contact U.S. Market Operations at +1 215 496 1571.

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