82_FR_22112 82 FR 22022 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Complex Order Quoting

82 FR 22022 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Complex Order Quoting

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 90 (May 11, 2017)

Page Range22022-22024
FR Document2017-09529

Federal Register, Volume 82 Issue 90 (Thursday, May 11, 2017)
[Federal Register Volume 82, Number 90 (Thursday, May 11, 2017)]
[Notices]
[Pages 22022-22024]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-09529]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80613; File No. SR-ISE-2017-37]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Complex 
Order Quoting

May 5, 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 26, 2017, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I and II, below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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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 designate that a symbol will not be 
eligible for Market Maker quotes in the complex order book after the 
symbol migrates to Nasdaq INET technology. In addition, that symbol 
will trade in price/time priority.
    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
    Today, ISE permits Market Makers to enter quotes on certain symbols 
for complex strategies on the complex order book in their appointed 
options classes. Market Maker quotes for complex strategies are not 
automatically executed against bids and offers on the Exchange for the 
individual legs nor can they be marked for price improvement.\3\ Market 
Makers are not required to enter quotes on the Exchange's complex order 
book. Quotes for complex orders are not subject to any quotation 
requirements that are applicable to Market Maker quotes in the regular 
market for individual options series or classes, nor is any volume 
executed in complex orders taken into consideration when determining 
whether Market Markers are meeting quotation obligations applicable to 
market maker quotes in the regular market for individual options 
series.
---------------------------------------------------------------------------

    \3\ See Supplementary Material .03 to Rule 722.
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    The Exchange proposes to designate that a symbol will not be 
eligible for Market Maker quotes in the complex order book after the 
symbol migrates to the INET platform. Specifically, the Exchange filed 
a proposal to begin the system migration to Nasdaq INET in Q2 of 
2017.\4\ The migration to INET will be on a symbol by symbol basis as 
specified by the Exchange in a notice to Members.\5\ The Exchange is 
proposing to implement this rule change on the INET platform as the 
symbols migrate to that platform. Once a symbol moves to INET no 
complex quoting \6\ will be available for that symbol and the symbol 
will be allocated in price/time priority.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 80432 (April 11, 
2017), 82 FR 18191 (April 17, 2017) (SR-ISE-2017-03) (Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1, to 
Amend Various Rules in Connection with a System Migration to Nasdaq 
INET Technology).
    \5\ The Exchange will issue an Options Trader Alert prior to the 
migration and will specify the dates that symbols will migrate to 
the INET platform.
    \6\ The Exchange notes that Phlx does not offer complex order 
quoting functionality.
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    INET is the proprietary core technology utilized across Nasdaq's 
global markets and utilized on The NASDAQ Options Market LLC (``NOM''), 
NASDAQ PHLX LLC (``Phlx'') and NASDAQ BX, Inc. (``BX'') (collectively, 
``Nasdaq Exchanges''). The migration of ISE to the Nasdaq INET 
architecture would result in higher performance, scalability, and more 
robust architecture. With this system

[[Page 22023]]

migration, the Exchange intends to adopt certain trading functionality 
currently utilized at Nasdaq Exchanges.\7\
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    \7\ See note 4 above.
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    The Exchange is staging the re-platform to provide maximum benefit 
to its Members while also ensuring a successful rollout. As symbols 
migrate to the INET functionality, the symbols that are currently 
enabled for Market Maker Quotes will become ineligible for complex 
quoting. This will provide the Exchange additional time to test and 
implement this functionality on the INET platform. The Exchange will 
issue an Options Trader Alert to all Members notifying them that 
complex order quoting functionality will no longer be available after a 
symbol migrates to INET.\8\
---------------------------------------------------------------------------

    \8\ Even though the complex quoting functionality will not be 
available, Market Makers will still be able to submit complex 
orders.
---------------------------------------------------------------------------

    Within a year from the date of filing this rule change, the 
Exchange will offer complex quoting functionality on the ISE INET 
platform. Thereafter, Exchange may offer the complex quoting from time 
to time with notice to members. At the time the Exchange designates a 
symbol as available for complex quoting, it will also designate the 
allocation methodology for that symbol pursuant to ISE Rule 
722(b)(3)(i).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\10\ 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 because the Exchange desires to rollout the complex order 
quoting functionality at a later date to allow additional time to 
rebuild this technology on the new platform.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Not offering the Market Maker quotes in the complex order book with 
the symbol migration to INET, will allow the Exchange additional time 
to test and implement this functionality. The Exchange will provide 
Members with ample notice of the turn-off of this functionality in an 
Options Trader Alert. The Exchange will continue to provide 
notification to Members to ensure clarity about the availability of 
this functionality with the symbol migration.
    The Exchange is proposing to implement this rule change on the INET 
platform as the symbols migrate to that platform. Once a symbol moves 
to INET, no complex quoting \11\ will be available for that symbol and 
the Exchange will specify that the allocation methodology for that 
symbol will be price/time. Within a year from the date of filing this 
rule change, the Exchange will offer complex quoting functionality on 
the ISE INET platform. Thereafter, the Exchange may offer the complex 
quoting for specified symbols from time to time with notice to members. 
At the time the Exchange designates a symbol as available for complex 
quoting, it will also designate the allocation methodology for that 
symbols pursuant to ISE Rule 722(b)(3)(i).
---------------------------------------------------------------------------

    \11\ The Exchange notes that Phlx does not offer complex order 
quoting functionality.
---------------------------------------------------------------------------

    Even though the complex quoting functionality will not be 
available, Market Makers will still be able to submit complex orders. 
The Exchange does not anticipate any significant impact with respect to 
execution quality. The Exchange notes that Phlx does not offer complex 
order quoting functionality.\12\
---------------------------------------------------------------------------

    \12\ See Phlx Rule 1098.
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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. The Exchange does not believe 
that the proposed rule change will impact the intense competition that 
exists in the options market. Members will be able to continue to 
submit complex orders on ISE; however Market Maker quotes in the 
complex order book will not be available after a symbol migrates to 
INET. The Exchange does not believe that the proposed rule change will 
impose any burden on intra-market competition because all Members 
uniformly will not be able to submit Market Maker quotes in the complex 
order book.
    The Exchange is proposing to implement this rule change on the INET 
platform as the symbols migrate to that platform. Once a symbol moves 
to INET, no complex quoting \13\ will be available for that symbol and 
the Exchange will specify the allocation methodology for that symbol as 
price/time. Within a year from the date of filing this rule change, the 
Exchange will offer complex quoting functionality on the ISE INET 
platform. Thereafter, the Exchange may offer the complex quoting for 
specified symbols from time to time with notice to members. At the time 
the Exchange designates a symbol as available for complex quoting, it 
will also designate the allocation methodology for that symbol pursuant 
to ISE Rule 722(b)(3)(i).
---------------------------------------------------------------------------

    \13\ The Exchange notes that Phlx does not offer complex order 
quoting functionality.
---------------------------------------------------------------------------

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 \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 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.
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    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-2017-37 on the subject line.

[[Page 22024]]

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-2017-37. 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 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-2017-37 and should be 
submitted on or before June 1, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09529 Filed 5-10-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    22022                          Federal Register / Vol. 82, No. 90 / Thursday, May 11, 2017 / Notices

                                                    compliance with Rule 611. The                           SECURITIES AND EXCHANGE                                A. Self-Regulatory Organization’s
                                                    estimated cost for an in-house attorney                 COMMISSION                                             Statement of the Purpose of, and
                                                    is $396 per hour and the estimated cost                                                                        Statutory Basis for, the Proposed Rule
                                                    for an assistant compliance director in                 [Release No. 34–80613; File No. SR–ISE–                Change
                                                    the securities industry is $349 per hour.               2017–37]                                               1. Purpose
                                                    Therefore the estimated total cost of
                                                                                                                                                                      Today, ISE permits Market Makers to
                                                    compliance for the annual hour burden                   Self-Regulatory Organizations; Nasdaq
                                                                                                                                                                   enter quotes on certain symbols for
                                                    is as follows: [(2 legal hours × 12 months              ISE, LLC; Notice of Filing and
                                                                                                                                                                   complex strategies on the complex order
                                                    × $396) × 304] + [(3 compliance hours                   Immediate Effectiveness of Proposed                    book in their appointed options classes.
                                                    × 12 months × $349) × 304] =                            Rule Change Relating to Complex                        Market Maker quotes for complex
                                                    $6,708,672.2                                            Order Quoting                                          strategies are not automatically executed
                                                       Written comments are invited on: (a)                 May 5, 2017.                                           against bids and offers on the Exchange
                                                    Whether the proposed collection of                                                                             for the individual legs nor can they be
                                                    information is necessary for the proper                    Pursuant to Section 19(b)(1) of the                 marked for price improvement.3 Market
                                                    performance of the functions of the                     Securities Exchange Act of 1934                        Makers are not required to enter quotes
                                                    Commission, including whether the                       (‘‘Act’’),1 and Rule 19b–4 thereunder,2                on the Exchange’s complex order book.
                                                    information shall have practical utility;               notice is hereby given that on April 26,               Quotes for complex orders are not
                                                    (b) the accuracy of the Commission’s                    2017, Nasdaq ISE, LLC (‘‘ISE’’ or                      subject to any quotation requirements
                                                    estimates of the burden of the proposed                 ‘‘Exchange’’) filed with the Securities                that are applicable to Market Maker
                                                    collection of information; (c) ways to                  and Exchange Commission (‘‘SEC’’ or                    quotes in the regular market for
                                                                                                            ‘‘Commission’’) the proposed rule                      individual options series or classes, nor
                                                    enhance the quality, utility, and clarity
                                                                                                            change as described in Items I and II,                 is any volume executed in complex
                                                    of the information to be collected; and
                                                                                                            below, which Items have been prepared                  orders taken into consideration when
                                                    (d) ways to minimize the burden of the                                                                         determining whether Market Markers
                                                    collection of information on                            by the Exchange. The Commission is
                                                                                                            publishing this notice to solicit                      are meeting quotation obligations
                                                    respondents, including through the use                                                                         applicable to market maker quotes in
                                                    of automated collection techniques or                   comments on the proposed rule change
                                                                                                                                                                   the regular market for individual
                                                    other forms of information technology.                  from interested persons.
                                                                                                                                                                   options series.
                                                    Consideration will be given to                          I. Self-Regulatory Organization’s                         The Exchange proposes to designate
                                                    comments and suggestions submitted in                   Statement of the Terms of Substance of                 that a symbol will not be eligible for
                                                    writing within 60 days of this                          the Proposed Rule Change                               Market Maker quotes in the complex
                                                    publication.                                                                                                   order book after the symbol migrates to
                                                       An agency may not conduct or                            The Exchange proposes to designate                  the INET platform. Specifically, the
                                                    sponsor, and a person is not required to                that a symbol will not be eligible for                 Exchange filed a proposal to begin the
                                                    respond to, a collection of information                 Market Maker quotes in the complex                     system migration to Nasdaq INET in Q2
                                                                                                            order book after the symbol migrates to                of 2017.4 The migration to INET will be
                                                    under the PRA unless it displays a
                                                                                                            Nasdaq INET technology. In addition,                   on a symbol by symbol basis as
                                                    currently valid OMB control number.
                                                                                                            that symbol will trade in price/time                   specified by the Exchange in a notice to
                                                       Please direct your written comments                  priority.                                              Members.5 The Exchange is proposing
                                                    to: Thomas Bayer, Director/Chief                                                                               to implement this rule change on the
                                                    Information Officer, Securities and                        The text of the proposed rule change
                                                                                                                                                                   INET platform as the symbols migrate to
                                                    Exchange Commission, c/o Remi Pavlik-                   is available on the Exchange’s Web site                that platform. Once a symbol moves to
                                                    Simon, 100 F Street NE., Washington,                    at www.ise.com, at the principal office                INET no complex quoting 6 will be
                                                    DC 20549, or send an email to: PRA_                     of the Exchange, and at the                            available for that symbol and the symbol
                                                    Mailbox@sec.gov.                                        Commission’s Public Reference Room.                    will be allocated in price/time priority.
                                                                                                            II. Self-Regulatory Organization’s                        INET is the proprietary core
                                                      Dated: May 8, 2017.
                                                                                                            Statement of the Purpose of, and                       technology utilized across Nasdaq’s
                                                    Eduardo A. Aleman,                                                                                             global markets and utilized on The
                                                                                                            Statutory Basis for, the Proposed Rule
                                                    Assistant Secretary.                                                                                           NASDAQ Options Market LLC
                                                                                                            Change
                                                    [FR Doc. 2017–09585 Filed 5–10–17; 8:45 am]                                                                    (‘‘NOM’’), NASDAQ PHLX LLC (‘‘Phlx’’)
                                                    BILLING CODE 8011–01–P                                    In its filing with the Commission, the               and NASDAQ BX, Inc. (‘‘BX’’)
                                                                                                            Exchange included statements                           (collectively, ‘‘Nasdaq Exchanges’’). The
                                                                                                            concerning the purpose of and basis for                migration of ISE to the Nasdaq INET
                                                                                                            the proposed rule change and discussed                 architecture would result in higher
                                                                                                            any comments it received on the                        performance, scalability, and more
                                                                                                            proposed rule change. The text of these                robust architecture. With this system
                                                                                                            statements may be examined at the                        3 See Supplementary Material .03 to Rule 722.
                                                                                                            places specified in Item IV below. The                   4 See Securities Exchange Act Release No. 80432
                                                                                                            Exchange has prepared summaries, set                   (April 11, 2017), 82 FR 18191 (April 17, 2017) (SR–
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                       2 The total cost of compliance for the annual hour   forth in sections A, B, and C below, of                ISE–2017–03) (Order Approving Proposed Rule
                                                                                                                                                                   Change, as Modified by Amendment No. 1, to
                                                    burden has been revised to reflect updated              the most significant aspects of such                   Amend Various Rules in Connection with a System
                                                    estimated cost figures for an in-house attorney and     statements.                                            Migration to Nasdaq INET Technology).
                                                    an assistant compliance director. These figures are                                                              5 The Exchange will issue an Options Trader
                                                    from SIFMA’s Management & Professional Earnings                                                                Alert prior to the migration and will specify the
                                                    in the Securities Industry 2017, modified by                                                                   dates that symbols will migrate to the INET
                                                    Commission staff to account for an 1800-hour work-                                                             platform.
                                                                                                             1 15   U.S.C. 78s(b)(1).
                                                    year and multiplied by 5.35 to account for bonuses,                                                              6 The Exchange notes that Phlx does not offer

                                                    firm size, employee benefits, and overhead.              2 17   CFR 240.19b–4.                                 complex order quoting functionality.



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                                                                                   Federal Register / Vol. 82, No. 90 / Thursday, May 11, 2017 / Notices                                                       22023

                                                    migration, the Exchange intends to                      platform as the symbols migrate to that               from time to time with notice to
                                                    adopt certain trading functionality                     platform. Once a symbol moves to INET,                members. At the time the Exchange
                                                    currently utilized at Nasdaq Exchanges.7                no complex quoting 11 will be available               designates a symbol as available for
                                                       The Exchange is staging the re-                      for that symbol and the Exchange will                 complex quoting, it will also designate
                                                    platform to provide maximum benefit to                  specify that the allocation methodology               the allocation methodology for that
                                                    its Members while also ensuring a                       for that symbol will be price/time.                   symbol pursuant to ISE Rule
                                                    successful rollout. As symbols migrate                  Within a year from the date of filing this            722(b)(3)(i).
                                                    to the INET functionality, the symbols                  rule change, the Exchange will offer
                                                    that are currently enabled for Market                                                                         C. Self-Regulatory Organization’s
                                                                                                            complex quoting functionality on the                  Statement on Comments on the
                                                    Maker Quotes will become ineligible for                 ISE INET platform. Thereafter, the
                                                    complex quoting. This will provide the                                                                        Proposed Rule Change Received From
                                                                                                            Exchange may offer the complex                        Members, Participants, or Others
                                                    Exchange additional time to test and                    quoting for specified symbols from time
                                                    implement this functionality on the                     to time with notice to members. At the                  No written comments were either
                                                    INET platform. The Exchange will issue                  time the Exchange designates a symbol                 solicited or received.
                                                    an Options Trader Alert to all Members                  as available for complex quoting, it will             III. Date of Effectiveness of the
                                                    notifying them that complex order                       also designate the allocation                         Proposed Rule Change and Timing for
                                                    quoting functionality will no longer be                 methodology for that symbols pursuant                 Commission Action
                                                    available after a symbol migrates to                    to ISE Rule 722(b)(3)(i).
                                                    INET.8                                                                                                           Because the foregoing proposed rule
                                                                                                              Even though the complex quoting
                                                       Within a year from the date of filing                                                                      change does not: (i) Significantly affect
                                                                                                            functionality will not be available,
                                                    this rule change, the Exchange will offer                                                                     the protection of investors or the public
                                                                                                            Market Makers will still be able to
                                                    complex quoting functionality on the                                                                          interest; (ii) impose any significant
                                                                                                            submit complex orders. The Exchange                   burden on competition; and (iii) become
                                                    ISE INET platform. Thereafter, Exchange                 does not anticipate any significant
                                                    may offer the complex quoting from                                                                            operative for 30 days from the date on
                                                                                                            impact with respect to execution                      which it was filed, or such shorter time
                                                    time to time with notice to members. At                 quality. The Exchange notes that Phlx
                                                    the time the Exchange designates a                                                                            as the Commission may designate, it has
                                                                                                            does not offer complex order quoting                  become effective pursuant to Section
                                                    symbol as available for complex                         functionality.12
                                                    quoting, it will also designate the                                                                           19(b)(3)(A)(iii) of the Act 14 and
                                                    allocation methodology for that symbol                  B. Self-Regulatory Organization’s                     subparagraph (f)(6) of Rule 19b–4
                                                    pursuant to ISE Rule 722(b)(3)(i).                      Statement on Burden on Competition                    thereunder.15
                                                                                                                                                                     At any time within 60 days of the
                                                    2. Statutory Basis                                        The Exchange does not believe that                  filing of the proposed rule change, the
                                                                                                            the proposed rule change will impose                  Commission summarily may
                                                       The Exchange believes that its
                                                                                                            any burden on competition not                         temporarily suspend such rule change if
                                                    proposal is consistent with Section 6(b)
                                                    of the Act,9 in general, and furthers the               necessary or appropriate in furtherance               it appears to the Commission that such
                                                    objectives of Section 6(b)(5) of the Act,10             of the purposes of the Act. The                       action is: (i) Necessary or appropriate in
                                                    in particular, in that it is designed to                Exchange does not believe that the                    the public interest; (ii) for the protection
                                                    promote just and equitable principles of                proposed rule change will impact the                  of investors; or (iii) otherwise in
                                                    trade, to remove impediments to and                     intense competition that exists in the                furtherance of the purposes of the Act.
                                                    perfect the mechanism of a free and                     options market. Members will be able to               If the Commission takes such action, the
                                                    open market and a national market                       continue to submit complex orders on                  Commission shall institute proceedings
                                                    system, and, in general to protect                      ISE; however Market Maker quotes in                   to determine whether the proposed rule
                                                    investors and the public interest                       the complex order book will not be                    should be approved or disapproved.
                                                    because the Exchange desires to rollout                 available after a symbol migrates to
                                                                                                            INET. The Exchange does not believe                   IV. Solicitation of Comments
                                                    the complex order quoting functionality
                                                    at a later date to allow additional time                that the proposed rule change will                      Interested persons are invited to
                                                    to rebuild this technology on the new                   impose any burden on intra-market                     submit written data, views and
                                                    platform.                                               competition because all Members                       arguments concerning the foregoing,
                                                       Not offering the Market Maker quotes                 uniformly will not be able to submit                  including whether the proposed rule
                                                    in the complex order book with the                      Market Maker quotes in the complex                    change is consistent with the Act.
                                                    symbol migration to INET, will allow                    order book.                                           Comments may be submitted by any of
                                                    the Exchange additional time to test and                  The Exchange is proposing to                        the following methods:
                                                    implement this functionality. The                       implement this rule change on the INET
                                                                                                            platform as the symbols migrate to that               Electronic Comments
                                                    Exchange will provide Members with
                                                    ample notice of the turn-off of this                    platform. Once a symbol moves to INET,                   • Use the Commission’s Internet
                                                    functionality in an Options Trader                      no complex quoting 13 will be available               comment form (http://www.sec.gov/
                                                    Alert. The Exchange will continue to                    for that symbol and the Exchange will                 rules/sro.shtml); or
                                                    provide notification to Members to                      specify the allocation methodology for                   • Send an email to rule-
                                                    ensure clarity about the availability of                that symbol as price/time. Within a year              comments@sec.gov. Please include File
                                                    this functionality with the symbol                      from the date of filing this rule change,             Number SR–ISE–2017–37 on the subject
                                                    migration.                                              the Exchange will offer complex quoting               line.
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                       The Exchange is proposing to                         functionality on the ISE INET platform.
                                                                                                                                                                    14 15  U.S.C. 78s(b)(3)(A)(iii).
                                                    implement this rule change on the INET                  Thereafter, the Exchange may offer the
                                                                                                                                                                    15 17  CFR 240.19b–4(f)(6). In addition, Rule 19b–
                                                                                                            complex quoting for specified symbols
                                                      7 See
                                                                                                                                                                  4(f)(6) requires a self-regulatory organization to give
                                                            note 4 above.                                                                                         the Commission written notice of its intent to file
                                                      8 Even  though the complex quoting functionality        11 The Exchange notes that Phlx does not offer
                                                                                                                                                                  the proposed rule change at least five business days
                                                    will not be available, Market Makers will still be      complex order quoting functionality.                  prior to the date of filing of the proposed rule
                                                    able to submit complex orders.                            12 See Phlx Rule 1098.
                                                                                                                                                                  change, or such shorter time as designated by the
                                                      9 15 U.S.C. 78f(b).                                     13 The Exchange notes that Phlx does not offer      Commission. The Exchange has satisfied this
                                                      10 15 U.S.C. 78f(b)(5).                               complex order quoting functionality.                  requirement.



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                                                    22024                            Federal Register / Vol. 82, No. 90 / Thursday, May 11, 2017 / Notices

                                                    Paper Comments                                            SECURITIES AND EXCHANGE                                 proposed rule change. The text of these
                                                                                                              COMMISSION                                              statements may be examined at the
                                                      • Send paper comments in triplicate                                                                             places specified in Item IV below. The
                                                    to Secretary, Securities and Exchange                     [Release No. 34–80612; File No. SR–
                                                                                                              BatsBYX–2017–07]
                                                                                                                                                                      Exchange has prepared summaries, set
                                                    Commission, 100 F Street NE.,                                                                                     forth in Sections A, B, and C below, of
                                                    Washington, DC 20549–1090.                                Self-Regulatory Organizations; Bats                     the most significant parts of such
                                                    All submissions should refer to File                      BYX Exchange, Inc.; Notice of Filing                    statements.
                                                    Number SR–ISE–2017–37. This file                          and Immediate Effectiveness of a                        A. Self-Regulatory Organization’s
                                                    number should be included on the                          Proposed Rule Change to Rule 11.15 of                   Statement of the Purpose of, and the
                                                    subject line if email is used. To help the                Bats BYX Exchange, Inc. To Authorize                    Statutory Basis for, the Proposed Rule
                                                    Commission process and review your                        the Exchange To Share a User’s Risk                     Change
                                                    comments more efficiently, please use                     Settings With the Clearing Member
                                                                                                              That Clears Transactions on Behalf of                   1. Purpose
                                                    only one method. The Commission will
                                                                                                              the User                                                   The Exchange is proposing to update
                                                    post all comments on the Commission’s
                                                                                                                                                                      Rule 11.15, Clearance and Settlement;
                                                    Internet Web site (http://www.sec.gov/                    May 5, 2017.
                                                                                                                                                                      Anonymity, to authorize the Exchange
                                                    rules/sro.shtml). Copies of the                              Pursuant to Section 19(b)(1) of the                  to share any of the User’s risk settings
                                                    submission, all subsequent                                Securities Exchange Act of 1934 (the                    with the Clearing Member that clears
                                                    amendments, all written statements                        ‘‘Act’’),1 and Rule 19b–4 thereunder,2                  transactions on behalf of the User, and
                                                    with respect to the proposed rule                         notice is hereby given that on April 24,                to capitalize the term ‘‘Clearing
                                                    change that are filed with the                            2017, Bats BYX Exchange, Inc. (the                      Member’’.
                                                    Commission, and all written                               ‘‘Exchange’’ or ‘‘BYX’’) filed with the                    Current Exchange Rule 11.15 requires
                                                    communications relating to the                            Securities and Exchange Commission                      that all transactions passing through the
                                                    proposed rule change between the                          (‘‘Commission’’) the proposed rule                      facilities of the Exchange shall be
                                                    Commission and any person, other than                     change as described in Items I and II                   cleared and settled through a Qualified
                                                    those that may be withheld from the                       below, which Items have been prepared                   Clearing Agency 6 using a continuous
                                                    public in accordance with the                             by the Exchange. The Exchange has                       net settlement system. This requirement
                                                    provisions of 5 U.S.C. 552, will be                       designated this proposal as a ‘‘non-                    may be satisfied by direct participation,
                                                                                                              controversial’’ proposed rule change                    use of direct clearing services, or by
                                                    available for Web site viewing and
                                                                                                              pursuant to Section 19(b)(3)(A) of the                  entry into a correspondent clearing
                                                    printing in the Commission’s Public
                                                                                                              Act 3 and Rule 19b–4(f)(6) thereunder,4                 arrangement with another Member that
                                                    Reference Room, 100 F Street NE.,                         which renders it effective upon filing
                                                    Washington, DC 20549, on official                                                                                 clears trades through a Qualified
                                                                                                              with the Commission. The Commission                     Clearing Agency (‘‘Clearing Member’’).
                                                    business days between the hours of                        is publishing this notice to solicit                    Rule 11.15 provides that if a Member
                                                    10:00 a.m. and 3:00 p.m. Copies of the                    comments on the proposed rule change                    clears transactions through another
                                                    filing also will be available for                         from interested persons.                                Member that is a Clearing Member,7
                                                    inspection and copying at the principal                                                                           such Clearing Member shall affirm to
                                                    office of the Exchange. All comments                      I. Self-Regulatory Organization’s
                                                                                                              Statement of the Terms of Substance of                  the Exchange in writing, through letter
                                                    received will be posted without change;                                                                           of authorization, letter of guarantee or
                                                    the Commission does not edit personal                     the Proposed Rule Change
                                                                                                                                                                      other agreement acceptable to the
                                                    identifying information from                                 The Exchange filed a proposal to                     Exchange, its agreement to assume
                                                    submissions. You should submit only                       amend Rule 11.15 to authorize the                       responsibility for clearing and settling
                                                    information that you wish to make                         Exchange to share a User’s 5 risk settings              any and all trades executed by the
                                                    available publicly. All submissions                       with the Clearing Member that clears                    Member designating it as its clearing
                                                    should refer to File Number SR–ISE–                       transactions on behalf of the User.                     firm. The rules of any such clearing
                                                    2017–37 and should be submitted on or                        The text of the proposed rule change                 agency shall govern with respect to the
                                                    before June 1, 2017.                                      is available at the Exchange’s Web site                 clearance and settlement of any
                                                                                                              at www.batstrading.com, at the                          transactions executed by the Member on
                                                      For the Commission, by the Division of                  principal office of the Exchange, and at                the Exchange.
                                                    Trading and Markets, pursuant to delegated                the Commission’s Public Reference                          Thus, while not all Members are
                                                    authority.16                                              Room.                                                   Clearing Members, all Members are
                                                    Eduardo A. Aleman,                                                                                                required to either clear their own
                                                                                                              II. Self-Regulatory Organization’s
                                                    Assistant Secretary.                                      Statement of the Purpose of, and                        transactions or to have in place a
                                                    [FR Doc. 2017–09529 Filed 5–10–17; 8:45 am]               Statutory Basis for, the Proposed Rule                  relationship with a Clearing Member’s
                                                    BILLING CODE 8011–01–P                                    Change                                                  that has agreed to clear transactions on
                                                                                                                                                                      their behalf (or on behalf of any
                                                                                                                 In its filing with the Commission, the               Sponsored Participants 8 for which the
                                                                                                              Exchange included statements
                                                                                                              concerning the purpose of and basis for                    6 Qualified Clearing Agency is defined as ‘‘a
                                                                                                              the proposed rule change and discussed                  clearing agency registered with the Commission
                                                                                                              any comments it received on the                         pursuant to Section 17A of the Act that is deemed
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                                                                                                                                      qualified by the Exchange.’’ See Exchange Rule
                                                                                                                1 15
                                                                                                                                                                      1.5(u).
                                                                                                                     U.S.C. 78s(b)(1).                                   7 The Exchange notes that it also proposes to
                                                                                                                2 17 CFR 240.19b–4.                                   amend Rule 11.15(a) to capitalize the term
                                                                                                                3 15 U.S.C. 78s(b)(3)(A).
                                                                                                                                                                      ‘‘Clearing Member’’ to ensure consistency within
                                                                                                                4 17 CFR 240.19b–4(f)(6).                             Exchange Rules.
                                                                                                                5 A User is defined as ‘‘any Member or Sponsored         8 A Sponsored Participant is defined as ‘‘a person

                                                                                                              Participant who is authorized to obtain access to the   which has entered into a sponsorship arrangement
                                                                                                              System pursuant to Rule 11.3.’’ See Exchange Rule       with a Sponsoring Member pursuant to Rule 11.3.’’
                                                      16 17   CFR 200.30–3(a)(12).                            1.5(cc).                                                See Exchange Rule 1.5(x).



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Document Created: 2017-05-11 00:15:20
Document Modified: 2017-05-11 00:15:20
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 22022 

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