82 FR 24761 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Opening Process

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 102 (May 30, 2017)

[Federal Register Volume 82, Number 102 (Tuesday, May 30, 2017)]
[Notices]
[Pages 24761-24763]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-10984]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80751; File No. SR-ISE-2017-41]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Regarding the 
Opening Process

May 23, 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 May 10, 2017, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``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 amend the trading hours and Opening 
Process of Foreign Currency Index options and also amend a reference to 
All-or-None Orders.
    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
    The purpose of this rule change is to amend: (i) The trading hours, 
including during the Opening Process, of Foreign Currency Index 
options; and (ii) a specific rule text reference in Rule 701 related to 
All-or-None Orders.

Foreign Currency Options

    ISE Rule 2008, ``Trading Sessions,'' among other things, governs 
transactions in Foreign Currency Index options. The rule provides that 
such product may be effected on the Exchange between the hours of 7:30 
a.m. Eastern Time and 4:15 p.m. Eastern Time. ISE Rule 2210, ``Trading 
Sessions,'' notes that ``[e]xcept as otherwise provided in this Rule 
[2210] or under unusual conditions as may be determined by an Exchange 
official or his designee, transactions in foreign currency options may 
be effected on the Exchange between the hours of 7:30 a.m. and 4:15 
p.m. Eastern time, except on the last day of trading during expiration 
week, in which case trading shall cease at 12.00 p.m. Eastern time.''
    At this time, the Exchange proposes to amend ISE Rules 2008 and 
2010 so that Foreign Currency Index options will start trading at 9:30 
AM Eastern Time instead of 7:30 a.m. Eastern Time. The purpose of this 
rule change is to conform the start time for the trading of Foreign 
Currency Options to that of other products.
    Likewise, ISE Rule 701, ``Opening,'' which was recently 
approved,\3\ provides that Market Maker Valid Width Quotes and Opening 
Sweeps received starting at 9:25 a.m. Eastern Time, or 7:25 a.m.

[[Page 24762]]

Eastern Time for U.S. dollar-settled foreign currency options, will be 
included in the Opening Process. Orders entered at any time before an 
option series opens are included in the Opening Process. The current 
Opening Process rule states that the submission of Valid Width Quotes 
and Opening Sweeps for U.S. dollar-settled foreign currency options may 
begin at 7:25 a.m. Eastern Time to tie the option Opening Process to 
quoting in the underlying security; \4\ it presumes that option quotes 
submitted before any indicative quotes have been disseminated for the 
underlying security may not be reliable or intentional. The Exchange 
proposes to amend ISE Rule 701 so that the Opening Process for foreign 
currency options would initiate on or after 9:30 a.m. Eastern Time and 
the Market Maker Valid Width Quotes and Opening Sweeps would be 
considered for the Opening Process starting at 9:25 a.m. Eastern Time 
for foreign currency options.
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    \3\ See Securities Exchange Act Release No. 80225; (March 13, 
2017), 82 FR 14243 (March 17, 2017) (SR-ISE-2017-02) (Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1, To 
Amend the Exchange Opening Process).
    \4\ The underlying security can also be an index.
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All-or-None Orders

    The Exchange also proposes to amend ISE Rule 701 to remove a 
specific reference to the manner in which All-or-None Orders will be 
treated in the Opening Process. The Exchange recently filed a proposed 
rule change to amend All-or-None Orders.\5\ The Exchange amended Rule 
715(c) to provide that an All-or-None Order may only be entered into 
the System with a time-in-force designation of Immediate-or-Cancel \6\ 
Order in connection with the Exchange's technology migration to INET. 
At the time that SR-ISE-2017-02 was filed, All-or-None Orders were not 
restricted and could trade as a limit or market order to be executed in 
its entirety or not at all. With this amendment, an All-or-None Order 
would not persist in the Order Book and would therefore be treated the 
same as any other Immediate or Cancel Order. The carve out specified in 
Rule 701(j)(6)(i) is unnecessary since an All-or-None Order would be 
executed immediately or cancel similar to other orders which trade in 
the same manner. The Exchange believes removing this reference will 
eliminate confusion.
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    \5\ 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).
    \6\ An Immediate-or-Cancel Order is a limit order that is to be 
executed in whole or in part upon receipt. Any portion not so 
executed is to be treated as cancelled.
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Implementation

    Both SR-ISE-2017-02 and SR-ISE-2017-03 will be implemented in Q2 
2017 in connection with a system migration to INET. The migration will 
be on a symbol by symbol basis, and the Exchange will issue an alert to 
Members to provide notification of the symbols that will migrate and 
the relevant dates. The Exchange proposes these amendments to be 
operative on the same dates as symbols migrate to INET.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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 
for the reasons stated below.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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Foreign Currency Options

    The Exchange believes that the proposed rule change is consistent 
with the Act in that it will remove impediments to and perfect the 
mechanism of a free and open market and a national market system, to 
initiate the Opening Process for foreign currency options at 9:30 a.m. 
Eastern Time and accept Market Maker Valid Width Quotes and Opening 
Sweeps at 9:25 a.m. Eastern Time for foreign currency options similar 
to the manner in which other options trade today. Today, on NASDAQ 
PHLX, LLC (``Phlx''), foreign currency options trade similar to other 
options.\9\ The Exchange believes that conforming the Opening Process 
and trading hours for foreign currency options to that of other options 
will conform the trading rules so all products would trade during the 
same session. The Exchange believes trading all options on the same 
Opening Process schedule promotes just and equitable principles of 
trade because all options will continue to be available to participants 
for trading on ISE.
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    \9\ See Phlx Rules 1014 and 1017. On Phlx, the Specialist 
assigned in a particular U.S. dollar-settled FCO must enter a Valid 
Width Quote not later than 30 seconds after the announced market 
opening. Also, on Phlx, the Opening Process for an option series 
will be conducted within two minutes of market opening in the case 
of U.S. dollar-settled FCO or such shorter time as determined by the 
Exchange and disseminated to membership on the Exchange's Web site.
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All-or-None Orders

    The Exchange believes that it is consistent with the Act to remove 
an unnecessary and confusing reference to Rule 701 in connection with 
All-or-None Orders, since these orders will now immediately trade or 
cancel. The Exchange originally made clear the manner in which All-or-
None Orders would trade in the Opening Process because this order type 
trades differently as compared to other order types. That distinction 
has become unnecessary because All-or-None Orders trade the same as 
other Immediate or Cancel Orders. By updating the rule to remove an 
unnecessary distinction will protect investors and the public interest 
by clarifying the rule.

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

    The Exchange does not believe that the proposed rule change will 
impose any undue burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal does not change 
the intense competition that exists among the options markets for 
options business including with respect to transacting foreign currency 
options. In addition, all market participants submitting All-or-None 
Orders in the Opening Process will receive similar treatment with 
respect to those orders.

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 \10\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 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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[[Page 24763]]

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \12\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
it will allow the Exchange to implement the proposed rule change in 
coordination with a symbol by symbol transition to the INET technology 
in the second quarter of 2017. Accordingly, the Commission hereby 
waives the operative delay and designates the proposal operative upon 
filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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-2017-41 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-2017-41. 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-2017-41 and should be 
submitted on or before June 20, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10984 Filed 5-26-17; 8:45 am]
BILLING CODE 8011-01-P