82 FR 18329 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Supplementary Material .03 to Rule 713 To Change the Allocation Entitlement for Preferred PMMs

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 73 (April 18, 2017)

Page Range		18329-18331
FR Document		2017-07750
Federal Register, Volume 82 Issue 73 (Tuesday, April 18, 2017)
[Federal Register Volume 82, Number 73 (Tuesday, April 18, 2017)]
[Notices]
[Pages 18329-18331]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-07750]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80438; File No. SR-ISE-2017-31]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend 
Supplementary Material .03 to Rule 713 To Change the Allocation 
Entitlement for Preferred PMMs

April 12, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 5, 2017, Nasdaq ISE, LLC (``ISE'' or ``Exchange'' ) \3\ filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ ISE was renamed Nasdaq ISE, LLC in a rule change that became 
operative on April 3, 2017. See Securities Exchange Act Release No. 
80325 (March 29, 2017) (SR-ISE-2017-25).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Supplementary Material .03 to Rule 
713 to change the allocation entitlement for Preferred PMMs.
    The text of the proposed rule change is available on the Exchange's 
Web site at www.ise.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
    Supplementary Material .03 to Rule 713 allows an Electronic Access 
Member (``EAM'') to designate a ``Preferred Market Maker'' on orders it 
enters into the System (``Preferenced Orders''). A Preferred Market 
Maker may be the Primary Market Maker (``PMM'') appointed to the 
options class or any Competitive Market Maker (``CMM'') appointed to 
the options class.\4\ The purpose of the proposed rule change is to 
amend Supplementary Material .03 to Rule 713 to change the allocation 
entitlement for PMMs that receive Preferenced Orders (i.e., ``Preferred 
PMMs''), consistent with allocation entitlements for PMM equivalents on 
another options exchange.
---------------------------------------------------------------------------

    \4\ See Supplementary Material .03(a) to Rule 713.
---------------------------------------------------------------------------

    Currently, a Preferred Market Maker that is quoting at the national 
best bid of offer (``NBBO'') at the time the Preferenced Order is 
received,\5\ is entitled to participation rights equal to the greater 
of: (i) The proportion of the total size at the best price represented 
by the size of its quote, or (ii) sixty percent (60%) of the contracts 
to be allocated if there is only one (1) other Professional Order or 
market maker quotation at the best price and forty percent (40%) if 
there are two (2) or more other Professional Orders and/or market maker 
quotes at the best price.\6\ This allocation entitlement is in lieu of 
the regular allocation provided in Supplementary Material .01 to Rule 
713, and applies regardless of whether the Preferred Market Maker is a 
PMM or CMM. In some instances where the Preferred Market Maker is the 
PMM appointed to the options class this results in a preferenced 
allocation that is worse than the market maker's regular allocation 
entitlement. Specifically, Supplementary Material .01(c) to Rule 713 
provides a small order entitlement whereby orders of five contracts or 
fewer are executed first by the PMM. A PMM that normally receives an 
allocation entitlement for orders of five contracts or fewer,\7\ would 
not receive this allocation entitlement if it were designated as the 
Preferred Market Maker.
---------------------------------------------------------------------------

    \5\ If the Preferred Market Maker is not quoting at a price 
equal to the NBBO at the time the Preferenced Order is received, the 
Exchange's regular allocation procedure applies to the execution of 
the Preferenced Order. See Supplementary Material .03(b) to Rule 
713.
    \6\ See Supplementary Material .03(c) to Rule 713.
    \7\ See Supplementary Material .01(c) to Rule 713.
---------------------------------------------------------------------------

    The Exchange now proposes to amend the participation rights of 
Preferred PMMs such that the PMM appointed in an option class will 
receive participation rights that are consistent with the higher 
allocation entitlement given to PMM equivalents on the MIAX Options 
Exchange (``MIAX''). In particular, the Exchange proposes to amend 
Supplementary Material .03(c) to Rule 713 to provide that, the 
Preferred Market Maker has participation rights equal to the greater 
of: (i) The proportion of the total size at the best price represented 
by the size of its quote, (ii) sixty percent (60%) of the contracts to 
be allocated if there is only one (1) other Professional Order or 
market maker quotation at the best price and forty percent (40%) if 
there are two (2) or more other Professional Orders and/or market maker 
quotes at the best price, or (iii) the full size of a Preferenced Order 
for five (5) contracts or fewer if the Primary Market Maker appointed 
to the options class is designated as the Preferred Market Maker--i.e., 
the small order allocation entitlement contained in Supplementary 
Material .01(c) to Rule 713. Thus, the PMM appointed to an options 
class would receive an allocation entitlement for orders of five 
contracts or fewer, regardless of whether that order is submitted as a 
Preferenced Order. The Exchange believes that this is appropriate since 
the PMMs obligations to the market are the same regardless of whether 
an order happens to be submitted with a preference instruction. PMM 
equivalents on MIAX currently receive this participation right when 
preferenced, in addition to the regular 60% or 40% preferenced 
allocation currently provided in the rule.\8\ Preferred CMMs will 
continue to receive the same allocation entitlement that they receive 
today.
---------------------------------------------------------------------------

    \8\ See MIAX Rule 514(g), (i). The proposed allocation 
entitlement is also the same as allocation entitlements recently 
adopted by the Exchange's affiliate, ISE Gemini, LLC. See Securities 
Exchange Act Release No. 80239 (March 14, 2017), 82 FR 14413 (March 
20, 2017) (SR-ISEGemini-2017-14).
---------------------------------------------------------------------------

    Pursuant to Supplementary Material .01(c) to Rule 713 the Exchange 
evaluates on a quarterly basis what percentage of the volume executed 
on the Exchange is comprised of orders for five (5) contracts or fewer 
executed by PMMs. The Exchange represents that this review will extend 
to the small order entitlement for Preferred PMMs.

[[Page 18330]]

Thus, consistent with Supplementary Material .01(c) to Rule 713, the 
Exchange will reduce the size of the orders included in the small order 
entitlement if such percentage is over forty percent (40%).
Implementation
    The proposed rule change will be implemented on the Exchange's new 
INET trading system, which is scheduled to launch in Q2 2017,\9\ 
provided that the Exchange will provide notice of this change in a 
circular to be distributed to members prior to implementing the new 
allocation entitlement on INET. The INET migration will take place on a 
symbol by symbol basis as specified by the Exchange in a notice to be 
provided to Members. The Exchange is proposing to implement this rule 
change on the INET platform as the symbols migrate to that platform. As 
such, PMMs will begin receiving the small order entitlement in symbols 
as they migrate to the INET platform.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 80075 (February 21, 
2017), 82 FR 11975 (February 27, 2017) (SR-ISE-2017-03).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6(b) of the Act.\10\ In 
particular, the proposal is consistent with Section 6(b)(5) of the 
Act,\11\ because it is designed to promote just and equitable 
principles of trade, remove impediments to and perfect the mechanisms 
of a free and open market and a national market system and, in general, 
to protect investors and the public interest.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is consistent 
with the protection of investors and the public interest as it will 
allow EAMs to send Preferenced Orders to the PMM appointed in an 
options class without inadvertently disadvantaging the PMM compared to 
if the order was not preferenced. The regular allocation entitlements 
for PMMs, including the small order entitlement, are designed to 
balance the obligations that the PMM has to the market with 
corresponding benefits. The Exchange believes that it is appropriate to 
provide the small order entitlement also when the PMM is designated as 
a Preferred Market Maker as the obligations that the PMM has to the 
market are not diminished when it receives a Preferenced Order. MIAX 
similarly provides the small order entitlement to the PMM regardless of 
whether the order is submitted as a Preferenced Order.\12\ At the same 
time, the proposed rule change does not amend the current participation 
rights for Preferred CMMs, which is also consistent with allocation 
rules of MIAX. While the Exchange believes that it is appropriate to 
grant PMMs an allocation entitlement for small sized orders preferenced 
to them in recognition of the obligations that PMMs have to maintain 
fair and orderly markets, the Exchange does not believe that it is 
appropriate at this time to extend this entitlement to CMMs, 
preferenced or otherwise.
---------------------------------------------------------------------------

    \12\ See supra note 7. [sic]
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change is designed to allow EAMs to send Preferenced Orders to the 
PMM appointed in an options class without inadvertently disadvantaging 
the PMM by reducing its participation rights. The proposed allocation 
entitlements are equivalent to those currently in effect on another 
options exchange.\14\ The proposed rule change is therefore not 
designed to impose any significant burden on competition.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(8).
    \14\ See supra note 7. [sic]
---------------------------------------------------------------------------

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 \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 protected]. Please include 
File Number SR-ISE-2017-31 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-ISE-2017-31. 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 Web site (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 Web site viewing and 
printing in the Commission's Public

[[Page 18331]]

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; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-ISE-2017-31 and should be submitted on or before May 9, 
2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07750 Filed 4-17-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Notices 18329

contact Brent J. Fields from the Office of places specified in Item IV below. The allocation entitlement for orders of five
the Secretary at (202) 551–5400. Exchange has prepared summaries, set contracts or fewer,7 would not receive
Dated: April 13, 2017. forth in sections A, B, and C below, of this allocation entitlement if it were
Brent J. Fields,
the most significant aspects of such designated as the Preferred Market
statements. Maker.
Secretary. The Exchange now proposes to amend
[FR Doc. 2017–07867 Filed 4–14–17; 11:15 am] A. Self-Regulatory Organization’s the participation rights of Preferred
BILLING CODE 8011–01–P Statement of the Purpose of, and PMMs such that the PMM appointed in
Statutory Basis for, the Proposed Rule an option class will receive
Change participation rights that are consistent
SECURITIES AND EXCHANGE 1. Purpose with the higher allocation entitlement
COMMISSION given to PMM equivalents on the MIAX
Supplementary Material .03 to Rule
[Release No. 34–80438; File No. SR–ISE– 713 allows an Electronic Access Options Exchange (‘‘MIAX’’). In
2017–31] Member (‘‘EAM’’) to designate a particular, the Exchange proposes to
‘‘Preferred Market Maker’’ on orders it amend Supplementary Material .03(c) to
Self-Regulatory Organizations; Nasdaq Rule 713 to provide that, the Preferred
enters into the System (‘‘Preferenced
ISE, LLC; Notice of Filing and Market Maker has participation rights
Orders’’). A Preferred Market Maker
Immediate Effectiveness of Proposed equal to the greater of: (i) The
may be the Primary Market Maker
Rule Change To Amend proportion of the total size at the best
(‘‘PMM’’) appointed to the options class
Supplementary Material .03 to Rule 713 price represented by the size of its
or any Competitive Market Maker
To Change the Allocation Entitlement (‘‘CMM’’) appointed to the options quote, (ii) sixty percent (60%) of the
for Preferred PMMs class.4 The purpose of the proposed rule contracts to be allocated if there is only
change is to amend Supplementary one (1) other Professional Order or
April 12, 2017.
Material .03 to Rule 713 to change the market maker quotation at the best price
Pursuant to Section 19(b)(1) of the and forty percent (40%) if there are two
Securities Exchange Act of 1934 allocation entitlement for PMMs that
receive Preferenced Orders (i.e., (2) or more other Professional Orders
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 and/or market maker quotes at the best
notice is hereby given that on April 5, ‘‘Preferred PMMs’’), consistent with
allocation entitlements for PMM price, or (iii) the full size of a
2017, Nasdaq ISE, LLC (‘‘ISE’’ or Preferenced Order for five (5) contracts
‘‘Exchange’’ ) 3 filed with the Securities equivalents on another options
exchange. or fewer if the Primary Market Maker
and Exchange Commission (‘‘SEC’’ or appointed to the options class is
‘‘Commission’’) the proposed rule Currently, a Preferred Market Maker
that is quoting at the national best bid designated as the Preferred Market
change as described in Items I, II, and Maker—i.e., the small order allocation
III, below, which Items have been of offer (‘‘NBBO’’) at the time the
Preferenced Order is received,5 is entitlement contained in Supplementary
prepared by the Exchange. The Material .01(c) to Rule 713. Thus, the
Commission is publishing this notice to entitled to participation rights equal to
the greater of: (i) The proportion of the PMM appointed to an options class
solicit comments on the proposed rule would receive an allocation entitlement
change from interested persons. total size at the best price represented
by the size of its quote, or (ii) sixty for orders of five contracts or fewer,
I. Self-Regulatory Organization’s percent (60%) of the contracts to be regardless of whether that order is
Statement of the Terms of Substance of allocated if there is only one (1) other submitted as a Preferenced Order. The
the Proposed Rule Change Professional Order or market maker Exchange believes that this is
quotation at the best price and forty appropriate since the PMMs obligations
The Exchange proposes to amend to the market are the same regardless of
Supplementary Material .03 to Rule 713 percent (40%) if there are two (2) or
more other Professional Orders and/or whether an order happens to be
to change the allocation entitlement for submitted with a preference instruction.
Preferred PMMs. market maker quotes at the best price.6
This allocation entitlement is in lieu of PMM equivalents on MIAX currently
The text of the proposed rule change receive this participation right when
is available on the Exchange’s Web site the regular allocation provided in
Supplementary Material .01 to Rule 713, preferenced, in addition to the regular
at www.ise.com, at the principal office 60% or 40% preferenced allocation
of the Exchange, and at the and applies regardless of whether the
Preferred Market Maker is a PMM or currently provided in the rule.8
Commission’s Public Reference Room. Preferred CMMs will continue to receive
CMM. In some instances where the
II. Self-Regulatory Organization’s Preferred Market Maker is the PMM the same allocation entitlement that
Statement of the Purpose of, and appointed to the options class this they receive today.
Statutory Basis for, the Proposed Rule results in a preferenced allocation that Pursuant to Supplementary Material
Change is worse than the market maker’s regular .01(c) to Rule 713 the Exchange
allocation entitlement. Specifically, evaluates on a quarterly basis what
In its filing with the Commission, the percentage of the volume executed on
Exchange included statements Supplementary Material .01(c) to Rule
713 provides a small order entitlement the Exchange is comprised of orders for
concerning the purpose of and basis for five (5) contracts or fewer executed by
the proposed rule change and discussed whereby orders of five contracts or
fewer are executed first by the PMM. A PMMs. The Exchange represents that
any comments it received on the this review will extend to the small
proposed rule change. The text of these PMM that normally receives an
sradovich on DSK3GMQ082PROD with NOTICES

order entitlement for Preferred PMMs.
statements may be examined at the 4 See Supplementary Material .03(a) to Rule 713.
5 If 7 See Supplementary Material .01(c) to Rule 713.
the Preferred Market Maker is not quoting at
1 15 U.S.C. 78s(b)(1). a price equal to the NBBO at the time the 8 See MIAX Rule 514(g), (i). The proposed
2 17 CFR 240.19b–4.
Preferenced Order is received, the Exchange’s allocation entitlement is also the same as allocation
3 ISE was renamed Nasdaq ISE, LLC in a rule regular allocation procedure applies to the entitlements recently adopted by the Exchange’s
change that became operative on April 3, 2017. See execution of the Preferenced Order. See affiliate, ISE Gemini, LLC. See Securities Exchange
Securities Exchange Act Release No. 80325 (March Supplementary Material .03(b) to Rule 713. Act Release No. 80239 (March 14, 2017), 82 FR
29, 2017) (SR–ISE–2017–25). 6 See Supplementary Material .03(c) to Rule 713. 14413 (March 20, 2017) (SR–ISEGemini–2017–14).

VerDate Sep<11>2014 16:55 Apr 17, 2017 Jkt 241001 PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 E:\FR\FM\18APN1.SGM 18APN1
18330 Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Notices

Thus, consistent with Supplementary receives a Preferenced Order. MIAX subparagraph (f)(6) of Rule 19b–4
Material .01(c) to Rule 713, the similarly provides the small order thereunder.16
Exchange will reduce the size of the entitlement to the PMM regardless of At any time within 60 days of the
orders included in the small order whether the order is submitted as a filing of the proposed rule change, the
entitlement if such percentage is over Preferenced Order.12 At the same time, Commission summarily may
forty percent (40%). the proposed rule change does not temporarily suspend such rule change if
amend the current participation rights it appears to the Commission that such
Implementation
for Preferred CMMs, which is also action is: (i) Necessary or appropriate in
The proposed rule change will be consistent with allocation rules of the public interest; (ii) for the protection
implemented on the Exchange’s new MIAX. While the Exchange believes that of investors; or (iii) otherwise in
INET trading system, which is it is appropriate to grant PMMs an furtherance of the purposes of the Act.
scheduled to launch in Q2 2017,9 allocation entitlement for small sized If the Commission takes such action, the
provided that the Exchange will provide orders preferenced to them in Commission shall institute proceedings
notice of this change in a circular to be recognition of the obligations that to determine whether the proposed rule
distributed to members prior to PMMs have to maintain fair and orderly should be approved or disapproved.
implementing the new allocation
markets, the Exchange does not believe IV. Solicitation of Comments
entitlement on INET. The INET
that it is appropriate at this time to
migration will take place on a symbol by Interested persons are invited to
extend this entitlement to CMMs,
symbol basis as specified by the submit written data, views, and
preferenced or otherwise.
Exchange in a notice to be provided to arguments concerning the foregoing,
Members. The Exchange is proposing to B. Self-Regulatory Organization’s including whether the proposed rule
implement this rule change on the INET Statement on Burden on Competition change is consistent with the Act.
platform as the symbols migrate to that Comments may be submitted by any of
platform. As such, PMMs will begin In accordance with Section 6(b)(8) of the following methods:
receiving the small order entitlement in the Act,13 the Exchange does not believe
symbols as they migrate to the INET that the proposed rule change will Electronic Comments
platform. impose any burden on intermarket or • Use the Commission’s Internet
intramarket competition that is not comment form (http://www.sec.gov/
2. Statutory Basis
necessary or appropriate in furtherance rules/sro.shtml); or
The Exchange believes that the of the purposes of the Act. The • Send an email to rule-comments@
proposed rule change is consistent with proposed rule change is designed to sec.gov. Please include File Number SR–
the requirements of the Act and the allow EAMs to send Preferenced Orders ISE–2017–31 on the subject line.
rules and regulations thereunder that to the PMM appointed in an options
are applicable to a national securities Paper Comments
class without inadvertently
exchange, and, in particular, with the disadvantaging the PMM by reducing its • Send paper comments in triplicate
requirements of Section 6(b) of the participation rights. The proposed to Secretary, Securities and Exchange
Act.10 In particular, the proposal is allocation entitlements are equivalent to Commission, 100 F Street NE.,
consistent with Section 6(b)(5) of the those currently in effect on another Washington, DC 20549–1090.
Act,11 because it is designed to promote options exchange.14 The proposed rule All submissions should refer to File
just and equitable principles of trade, change is therefore not designed to Number SR–ISE–2017–31. This file
remove impediments to and perfect the impose any significant burden on number should be included on the
mechanisms of a free and open market competition. subject line if email is used. To help the
and a national market system and, in Commission process and review your
general, to protect investors and the C. Self-Regulatory Organization’s comments more efficiently, please use
public interest. Statement on Comments on the only one method. The Commission will
The Exchange believes that the Proposed Rule Change Received From post all comments on the Commission’s
proposed rule change is consistent with Members, Participants, or Others Internet Web site (http://www.sec.gov/
the protection of investors and the
No written comments were either rules/sro.shtml). Copies of the
public interest as it will allow EAMs to
solicited or received. submission, all subsequent
send Preferenced Orders to the PMM
appointed in an options class without amendments, all written statements
III. Date of Effectiveness of the with respect to the proposed rule
inadvertently disadvantaging the PMM
Proposed Rule Change and Timing for change that are filed with the
compared to if the order was not
Commission Action Commission, and all written
preferenced. The regular allocation
entitlements for PMMs, including the communications relating to the
Because the foregoing proposed rule proposed rule change between the
small order entitlement, are designed to change does not: (i) Significantly affect
balance the obligations that the PMM Commission and any person, other than
the protection of investors or the public those that may be withheld from the
has to the market with corresponding interest; (ii) impose any significant
benefits. The Exchange believes that it public in accordance with the
burden on competition; and (iii) become provisions of 5 U.S.C. 552, will be
is appropriate to provide the small order operative for 30 days from the date on
entitlement also when the PMM is available for Web site viewing and
which it was filed, or such shorter time printing in the Commission’s Public
designated as a Preferred Market Maker
sradovich on DSK3GMQ082PROD with NOTICES

as the Commission may designate, it has
as the obligations that the PMM has to become effective pursuant to Section 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
the market are not diminished when it 19(b)(3)(A)(iii) of the Act 15 and 4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
9 See Securities Exchange Act Release No. 80075
12 See
the proposed rule change at least five business days
(February 21, 2017), 82 FR 11975 (February 27, supra note 7. [sic] prior to the date of filing of the proposed rule
2017) (SR–ISE–2017–03). 13 15 U.S.C. 78f(b)(8). change, or such shorter time as designated by the
10 15 U.S.C. 78f(b). 14 See supra note 7. [sic]
Commission. The Exchange has satisfied this
11 15 U.S.C. 78f(b)(5). 15 15 U.S.C. 78s(b)(3)(A)(iii). requirement.

VerDate Sep<11>2014 16:55 Apr 17, 2017 Jkt 241001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 E:\FR\FM\18APN1.SGM 18APN1
Federal Register / Vol. 82, No. 73 / Tuesday, April 18, 2017 / Notices 18331

Reference Room, 100 F Street NE., Options (‘‘FLEX Options’’) pilot II. Self-Regulatory Organization’s
Washington, DC 20549, on official program through May 3, 2018.5 The text Statement of the Purpose of, and
business days between the hours of of the proposed rule change is provided Statutory Basis for, the Proposed Rule
10:00 a.m. and 3:00 p.m. Copies of the below (additions are italicized; Change
filing also will be available for deletions are [bracketed]). In its filing with the Commission, the
inspection and copying at the principal * * * * * Exchange included statements
office of the Exchange. All comments concerning the purpose of and basis for
received will be posted without change; Chicago Board Options Exchange,
Incorporated Rules the proposed rule change and discussed
the Commission does not edit personal any comments it received on the
identifying information from * * * * * proposed rule change. The text of these
submissions. You should submit only statements may be examined at the
information that you wish to make Rule 24A.4. Terms of FLEX Options
places specified in Item IV below. The
available publicly. All submissions No change. Exchange has prepared summaries, set
should refer to File Number SR–ISE– forth in sections A, B, and C below, of
2017–31 and should be submitted on or . . . Interpretations and Policies
the most significant aspects of such
before May 9, 2017. .01 FLEX Index Option PM statements.
For the Commission, by the Division of Settlements Pilot Program:
Notwithstanding subparagraph (a)(2)(iv) A. Self-Regulatory Organization’s
Trading and Markets, pursuant to delegated
authority.17 above, for a pilot period ending the Statement of the Purpose of, and
Eduardo A. Aleman, earlier of May 3, 201[7]8 or the date on Statutory Basis for, the Proposed Rule
which the pilot program is approved on Change
Assistant Secretary.
[FR Doc. 2017–07750 Filed 4–17–17; 8:45 am] a permanent basis, a FLEX Index Option 1. Purpose
that expires on an Expiration Friday
BILLING CODE 8011–01–P On January 28, 2010, the Exchange
may have any exercise settlement value
received approval of a rule change that,
that is permissible pursuant to among other things, established a pilot
SECURITIES AND EXCHANGE subparagraph (b)(3) above. program regarding permissible exercise
COMMISSION .02 No change. settlement values for FLEX Index
[Release No. 34–80443; File No. SR–CBOE–
* * * * * Options.6 The Exchange has extended
2017–032] Rule 24B.4. Terms of FLEX Options the pilot period six times, which is
currently set to expire on the earlier of
Self-Regulatory Organizations; No change. May 3, 2017 or the date on which the
Chicago Board Options Exchange, . . . Interpretations and Policies pilot program is approved on a
Incorporated; Notice of Filing and permanent basis.7 The purpose of this
Immediate Effectiveness of a Proposed .01 FLEX Index Option PM
Rule Change Relating to FLEX Options Settlements Pilot Program: 6 Securities Exchange Act Release No. 61439

Pilot Program Notwithstanding subparagraph (a)(2)(iv) (January 28, 2010), 75 FR 5831 (February 4, 2010)
above, for a pilot period ending the (SR–CBOE–2009–087) (‘‘Approval Order’’). The
April 12, 2017. initial pilot period was set to expire on March 28,
earlier of May 3, 201[7]8 or the date on 2011, which date was added to the rules in 2010.
Pursuant to Section 19(b)(1) of the which the pilot program is approved on See Securities Exchange Act Release No. 61676
Securities Exchange Act of 1934 a permanent basis, a FLEX Index Option (March 9, 2010), 75 FR 13191 (March 18, 2010) (SR–
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 that expires on an Expiration Friday CBOE–2010–026).
notice is hereby given that on April 4, may have any exercise settlement value 7 See Securities Exchange Act Release Nos. 64110

2017, Chicago Board Options Exchange, (March 23, 2011), 76 FR 17463 (March 29, 2011)
that is permissible pursuant to (SR–CBOE–2011–024) (extending the pilot program
Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) subparagraph (b)(3) above. through the earlier of March 30, 2012 or the date
filed with the Securities and Exchange .02 No change. on which the pilot program is approved on the
Commission (‘‘Commission’’) the * * * * *
permanent basis); 66701 (March 30, 2012), 77 FR
proposed rule change as described in 20673 (April 5, 2012) (SR–CBOE–2012–027)
The text of the proposed rule change (extending the pilot through the earlier of
Items I and II below, which Items have is also available on the Exchange’s Web November 2, 2012 or the date on which the pilot
been prepared by the Exchange. The site (http://www.cboe.com/AboutCBOE/ program is approved on a permanent basis); 68145
Exchange filed the proposal as a ‘‘non- CBOELegalRegulatoryHome.aspx), at
(November 2, 2012), 77 FR 67044 (November 8,
controversial’’ proposed rule change 2012) (SR–CBOE–2012–102) (extending the pilot
the Exchange’s Office of the Secretary, program through the earlier of November 2, 2013 or
pursuant to Section 19(b)(3)(A)(iii) of and at the Commission’s Public the date on which the pilot program is approved on
the Act 3 and Rule 19b–4(f)(6) Reference Room. a permanent basis); 70752 (October 24, 2013), 78 FR
thereunder.4 The Commission is 65023 (October 30, 2013) (SR–CBOE–2013–099)
publishing this notice to solicit (extending the pilot program through the earlier of
5 FLEX Options provide investors with the ability November 3, 2014 or the date on which the pilot
comments on the proposed rule change to customize basic option features including size, program is approved on a permanent basis); 73460
from interested persons. expiration date, exercise style, and certain exercise (October 29, 2014), 79 FR 65464 (November 4, 2014)
prices. FLEX Options can be FLEX Index Options (SR–CBOE–2014–080) (extending the pilot program
I. Self-Regulatory Organization’s or FLEX Equity Options. In addition, other products through the earlier of May 3, 2016 or the date on
Statement of the Terms of Substance of are permitted to be traded pursuant to the FLEX which the pilot program is approved on a
the Proposed Rule Change trading procedures. For example, credit options are permanent basis); and 77742 (April 29, 2016), 81 FR
eligible for trading as FLEX Options pursuant to the 26857 (May 4, 2016) (SR–CBOE–2016–032)
sradovich on DSK3GMQ082PROD with NOTICES

The Exchange proposes to extend the FLEX rules in Chapters XXIVA and XXIVB. See (extending the pilot program through the earlier of
operation of its Flexible Exchange CBOE Rules 24A.1(e) and (f), 24A.4(b)(1) and (c)(1), May 3, 2017 or the date on which the pilot program
24B.1(f) and (g), 24B.4(b)(1) and (c)(1), and 29.18. is approved on a permanent basis). At the same
17 17 The rules governing the trading of FLEX Options on time the permissible exercise settlement values
CFR 200.30–3(a)(12).
1 15
the FLEX Request for Quote (‘‘RFQ’’) System pilot was established for FLEX Index Options, the
U.S.C. 78s(b)(1). platform are contained in Chapter XXIVA. The rules Exchange also established a pilot program
2 17 CFR 240.19b–4.
governing the trading of FLEX Options on the FLEX eliminating the minimum value size requirements
3 15 U.S.C. 78s(b)(3)(A)(iii).
Hybrid Trading System platform are contained in for all FLEX Options. See Approval Order, supra
4 17 CFR 240.19b–4(f)(6). Chapter XXIVB. Continued

VerDate Sep<11>2014 17:52 Apr 17, 2017 Jkt 241001 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 E:\FR\FM\18APN1.SGM 18APN1
Document Created: 2017-04-18 00:00:03
Document Modified: 2017-04-18 00:00:03
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 18329