82_FR_61296 82 FR 61050 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Penny Pilot Program

82 FR 61050 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 246 (December 26, 2017)

Page Range61050-61052
FR Document2017-27704

Federal Register, Volume 82 Issue 246 (Tuesday, December 26, 2017)
[Federal Register Volume 82, Number 246 (Tuesday, December 26, 2017)]
[Notices]
[Pages 61050-61052]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27704]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82367; File No. SR-BX-2017-056]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the Penny 
Pilot Program

December 19, 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 December 11, 2017, Nasdaq BX, Inc. (``BX'' 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 amend Chapter VI, Section 5 (Minimum 
Increments),\3\ to extend through June 30, 2018 or the date of 
permanent approval, if earlier, the Penny Pilot Program in options 
classes in certain issues (``Penny Pilot'' or ``Pilot''), and to change 
the date when delisted classes may be replaced in the Penny Pilot.
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    \3\ References herein to Chapter and Series refer to rules of 
the BX Options Market (``BX Options''), unless otherwise noted.
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    The text of the proposed rule change is set forth below. Proposed 
new language is underlined; deleted text is in brackets.
* * * * *

Nasdaq BX Rules

Options Rules

* * * * *

Chapter VI Trading Systems

* * * * *

Sec. 5 Minimum Increments

    (a) The Board may establish minimum quoting increments for options 
contracts traded on BX Options. Such minimum increments established by 
the Board will be designated as a stated policy, practice, or 
interpretation with respect to the administration of this Section 
within the meaning of Section 19 of the Exchange Act and will be filed 
with the SEC as a rule change for effectiveness upon filing. Until such 
time as the Board makes a change in the increments, the following 
principles shall apply:
    (1)-(2) No Change.
    (3) For a pilot period scheduled to expire on [December 31, 
2017]June 30, 2018 or the date of permanent approval, if earlier, if 
the options series is trading pursuant to the Penny Pilot program one 
(1) cent if the options series is trading at less than $3.00, five (5) 
cents if the options series is trading at $3.00 or higher, unless for 
QQQQs, SPY and IWM where the minimum quoting increment will be one cent 
for all series regardless of price. A list of such options shall be 
communicated to membership via an Options Trader Alert (``OTA'') posted 
on the Exchange's website.
    The Exchange may replace any pilot issues that have been delisted 
with the next most actively traded multiply listed options classes that 
are not yet included in the pilot, based on trading activity in the 
previous six months. The replacement issues may be added to the pilot 
on the second trading day following [July 1, 2017]January 1, 2018.
    (4) No Change.
    (b) No Change.
* * * * *

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.

[[Page 61051]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to amend Chapter VI, Section 5, to 
extend the Penny Pilot through June 30, 2018 or the date of permanent 
approval, if earlier,\4\ and to change the date when delisted classes 
may be replaced in the Penny Pilot. The Exchange believes that 
extending the Penny Pilot will allow for further analysis of the Penny 
Pilot and a determination of how the program should be structured in 
the future.
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    \4\ The options exchanges in the U.S. that have pilot programs 
similar to the Penny Pilot (together ``pilot programs'') are 
currently working on a proposal for permanent approval of the 
respective pilot programs.
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    Under the Penny Pilot, the minimum price variation for all 
participating options classes, except for the Nasdaq-100 Index Tracking 
Stock (``QQQQ''), the SPDR S&P 500 Exchange Traded Fund (``SPY'') and 
the iShares Russell 2000 Index Fund (``IWM''), is $0.01 for all 
quotations in options series that are quoted at less than $3 per 
contract and $0.05 for all quotations in options series that are quoted 
at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01 
increments for all options series. The Penny Pilot is currently 
scheduled to expire on December 31, 2017.\5\
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    \5\ See Securities Exchange Act Release No. 80824 (May 31, 
2017), 82 FR 26201 (June 6, 2017) (SR-BX-2017-026).
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    The Exchange proposes to extend the time period of the Penny Pilot 
through June 30, 2018 or the date of permanent approval, if earlier, 
and to provide a revised date for adding replacement issues to the 
Penny Pilot. The Exchange proposes that any Penny Pilot Program issues 
that have been delisted may be replaced on the second trading day 
following January 1, 2018. The replacement issues will be selected 
based on trading activity in the previous six months.\6\
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    \6\ The replacement issues will be announced to the Exchange's 
membership via an Options Trader Alert (OTA) posted on the 
Exchange's website. Penny Pilot replacement issues will be selected 
based on trading activity in the previous six months, as is the case 
today. The replacement issues would be identified based on The 
Options Clearing Corporation's trading volume data. For example, for 
the January replacement, trading volume from May 30, 2017 through 
November 30, 2017 would be analyzed. The month immediately preceding 
the replacement issues' addition to the Pilot Program (i.e., 
December) would not be used for purposes of the six-month analysis.
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    This filing does not propose any substantive changes to the Penny 
Pilot Program; all classes currently participating in the Penny Pilot 
will remain the same and all minimum increments will remain unchanged. 
The Exchange believes the benefits to public customers and other market 
participants who will be able to express their true prices to buy and 
sell options have been demonstrated to outweigh the potential increase 
in quote traffic.
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 prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    In particular, the proposed rule change, which extends the Penny 
Pilot for an additional six months through June 30, 2018 or the date of 
permanent approval, if earlier, and changes the date for replacing 
Penny Pilot issues that were delisted to the second trading day 
following January 1, 2018, will enable public customers and other 
market participants to express their true prices to buy and sell 
options for the benefit of all market participants. This is consistent 
with the Act.

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. To the contrary, this proposal 
is pro-competitive because it allows Penny Pilot issues to continue 
trading on the Exchange.
    Moreover, the Exchange believes that the proposed rule change will 
allow for further analysis of the Pilot and a determination of how the 
Pilot should be structured in the future; and will serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.
    The Pilot is an industry-wide initiative supported by all other 
option exchanges. The Exchange believes that extending the Pilot will 
allow for continued competition between market participants on the 
Exchange trading similar products as their counterparts on other 
exchanges, while at the same time allowing the Exchange to continue to 
compete for order flow with other exchanges in option issues trading as 
part of the Pilot.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing.\12\ However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the 
Commission may 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 
because doing so will allow the Pilot Program to continue without 
interruption in a manner that is consistent with the Commission's prior 
approval of the extension and expansion of the Pilot Program and will 
allow the

[[Page 61052]]

Exchange and the Commission additional time to analyze the impact of 
the Pilot Program. Accordingly, the Commission designates the proposed 
rule change as operative upon filing with the Commission.\14\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and the text of 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 pre-filing requirement.
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has 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 such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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-BX-2017-056 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-BX-2017-056. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly.
All submissions should refer to File Number SR-BX-2017-056 and should 
be submitted on or before January 16, 2018.

    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. 2017-27704 Filed 12-22-17; 8:45 am]
 BILLING CODE 8011-01-P



                                               61050                      Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices

                                               the Commission shall: (a) By order                      and Markets, pursuant to delegated                      Sec. 5    Minimum Increments
                                               approve or disapprove such proposed                     authority.10
                                               rule change, or (b) institute proceedings                                                                          (a) The Board may establish minimum
                                                                                                       Eduardo A. Aleman,                                      quoting increments for options contracts
                                               to determine whether the proposed rule
                                               change should be disapproved.                           Assistant Secretary.                                    traded on BX Options. Such minimum
                                                                                                       [FR Doc. 2017–27700 Filed 12–22–17; 8:45 am]            increments established by the Board
                                               IV. Solicitation of Comments                            BILLING CODE 8011–01–P                                  will be designated as a stated policy,
                                                 Interested persons are invited to                                                                             practice, or interpretation with respect
                                               submit written data, views, and                                                                                 to the administration of this Section
                                               arguments concerning the foregoing,                     SECURITIES AND EXCHANGE                                 within the meaning of Section 19 of the
                                               including whether the proposed rule                     COMMISSION                                              Exchange Act and will be filed with the
                                               change is consistent with the Act.                                                                              SEC as a rule change for effectiveness
                                               Comments may be submitted by any of                     [Release No. 34–82367; File No. SR–BX–                  upon filing. Until such time as the
                                               the following methods:                                  2017–056]                                               Board makes a change in the
                                               Electronic Comments                                                                                             increments, the following principles
                                                                                                       Self-Regulatory Organizations; Nasdaq
                                                                                                                                                               shall apply:
                                                 • Use the Commission’s internet                       BX, Inc.; Notice of Filing and
                                               comment form (http://www.sec.gov/                       Immediate Effectiveness of Proposed                        (1)–(2) No Change.
                                               rules/sro.shtml); or                                    Rule Change To Extend the Penny                            (3) For a pilot period scheduled to
                                                 • Send an email to rule-comments@                     Pilot Program                                           expire on [December 31, 2017]June 30,
                                               sec.gov. Please include File Number SR–                                                                         2018 or the date of permanent approval,
                                                                                                       December 19, 2017.
                                               Phlx–2017–103 on the subject line.                                                                              if earlier, if the options series is trading
                                                                                                          Pursuant to Section 19(b)(1) of the                  pursuant to the Penny Pilot program one
                                               Paper Comments                                          Securities Exchange Act of 1934                         (1) cent if the options series is trading
                                                  • Send paper comments in triplicate                  (‘‘Act’’),1 and Rule 19b–4 thereunder,2                 at less than $3.00, five (5) cents if the
                                               to Secretary, Securities and Exchange                   notice is hereby given that on December                 options series is trading at $3.00 or
                                               Commission, 100 F Street NE,                            11, 2017, Nasdaq BX, Inc. (‘‘BX’’ or
                                                                                                                                                               higher, unless for QQQQs, SPY and
                                               Washington, DC 20549–1090.                              ‘‘Exchange’’) filed with the Securities
                                                                                                                                                               IWM where the minimum quoting
                                               All submissions should refer to File                    and Exchange Commission (‘‘SEC’’ or
                                                                                                       ‘‘Commission’’) the proposed rule                       increment will be one cent for all series
                                               Number SR–Phlx–2017–103. This file                                                                              regardless of price. A list of such
                                               number should be included on the                        change as described in Items I and II,
                                                                                                       below, which Items have been prepared                   options shall be communicated to
                                               subject line if email is used. To help the                                                                      membership via an Options Trader Alert
                                               Commission process and review your                      by the Exchange. The Commission is
                                                                                                       publishing this notice to solicit                       (‘‘OTA’’) posted on the Exchange’s
                                               comments more efficiently, please use
                                                                                                       comments on the proposed rule change                    website.
                                               only one method. The Commission will
                                               post all comments on the Commission’s                   from interested persons.                                   The Exchange may replace any pilot
                                               internet website (http://www.sec.gov/                   I. Self-Regulatory Organization’s                       issues that have been delisted with the
                                               rules/sro.shtml).                                       Statement of the Terms of Substance of                  next most actively traded multiply
                                                  Copies of the submission, all                        the Proposed Rule Change                                listed options classes that are not yet
                                               subsequent amendments, all written                                                                              included in the pilot, based on trading
                                               statements with respect to the proposed                    The Exchange proposes to amend                       activity in the previous six months. The
                                               rule change that are filed with the                     Chapter VI, Section 5 (Minimum                          replacement issues may be added to the
                                               Commission, and all written                             Increments),3 to extend through June 30,                pilot on the second trading day
                                               communications relating to the                          2018 or the date of permanent approval,                 following [July 1, 2017]January 1, 2018.
                                               proposed rule change between the                        if earlier, the Penny Pilot Program in
                                                                                                                                                                  (4) No Change.
                                               Commission and any person, other than                   options classes in certain issues (‘‘Penny
                                               those that may be withheld from the                     Pilot’’ or ‘‘Pilot’’), and to change the                   (b) No Change.
                                               public in accordance with the                           date when delisted classes may be                       *      *      *     *    *
                                               provisions of 5 U.S.C. 552, will be                     replaced in the Penny Pilot.
                                               available for website viewing and                                                                               II. Self-Regulatory Organization’s
                                                                                                          The text of the proposed rule change                 Statement of the Purpose of, and
                                               printing in the Commission’s Public                     is set forth below. Proposed new
                                               Reference Room, 100 F Street NE,                                                                                Statutory Basis for, the Proposed Rule
                                                                                                       language is underlined; deleted text is
                                               Washington, DC 20549, on official                                                                               Change
                                                                                                       in brackets.
                                               business days between the hours of
                                                                                                       *      *     *      *     *                               In its filing with the Commission, the
                                               10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                                                                               Exchange included statements
                                               filing also will be available for                       Nasdaq BX Rules
                                               inspection and copying at the principal                                                                         concerning the purpose of and basis for
                                                                                                       Options Rules                                           the proposed rule change and discussed
                                               office of the Exchange. All comments
                                               received will be posted without change;                 *           *   *      *       *                        any comments it received on the
                                               the Commission does not edit personal                                                                           proposed rule change. The text of these
                                                                                                       Chapter VI Trading Systems                              statements may be examined at the
                                               identifying information from
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                                               submissions. You should submit only                     *           *   *      *       *                        places specified in Item IV below. The
                                               information that you wish to make                                                                               Exchange has prepared summaries, set
                                               available publicly. All submissions                         10 17
                                                                                                               CFR 200.30–3(a)(12).                            forth in sections A, B, and C below, of
                                               should refer to File Number SR–Phlx–                        1 15
                                                                                                              U.S.C. 78s(b)(1).                                the most significant aspects of such
                                                                                                         2 17 CFR 240.19b–4.
                                               2017–103 and should be submitted on                                                                             statements.
                                                                                                         3 References herein to Chapter and Series refer to
                                               or before January 16, 2018. For the                     rules of the BX Options Market (‘‘BX Options’’),
                                               Commission, by the Division of Trading                  unless otherwise noted.



                                          VerDate Sep<11>2014   20:21 Dec 22, 2017   Jkt 244001   PO 00000    Frm 00103    Fmt 4703   Sfmt 4703   E:\FR\FM\26DEN1.SGM   26DEN1


                                                                          Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices                                                      61051

                                               A. Self-Regulatory Organization’s                       remain the same and all minimum                         similar products as their counterparts
                                               Statement of the Purpose of, and                        increments will remain unchanged. The                   on other exchanges, while at the same
                                               Statutory Basis for, the Proposed Rule                  Exchange believes the benefits to public                time allowing the Exchange to continue
                                               Change                                                  customers and other market participants                 to compete for order flow with other
                                                                                                       who will be able to express their true                  exchanges in option issues trading as
                                               1. Purpose
                                                                                                       prices to buy and sell options have been                part of the Pilot.
                                                  The purpose of this filing is to amend               demonstrated to outweigh the potential
                                               Chapter VI, Section 5, to extend the                                                                            C. Self-Regulatory Organization’s
                                                                                                       increase in quote traffic.                              Statement on Comments on the
                                               Penny Pilot through June 30, 2018 or the
                                               date of permanent approval, if earlier,4                2. Statutory Basis                                      Proposed Rule Change Received From
                                               and to change the date when delisted                       The Exchange believes that its                       Members, Participants, or Others
                                               classes may be replaced in the Penny                    proposal is consistent with Section 6(b)                  No written comments were either
                                               Pilot. The Exchange believes that                       of the Act,7 in general, and furthers the               solicited or received.
                                               extending the Penny Pilot will allow for                objectives of Section 6(b)(5) of the Act,8              III. Date of Effectiveness of the
                                               further analysis of the Penny Pilot and                 in particular, in that it is designed to                Proposed Rule Change and Timing for
                                               a determination of how the program                      prevent fraudulent and manipulative                     Commission Action
                                               should be structured in the future.                     acts and practices, to promote just and
                                                  Under the Penny Pilot, the minimum                   equitable principles of trade, to foster                   The Exchange has filed the proposed
                                               price variation for all participating                   cooperation and coordination with                       rule change pursuant to Section
                                               options classes, except for the Nasdaq-                 persons engaged in facilitating                         19(b)(3)(A)(iii) of the Act 9 and Rule
                                               100 Index Tracking Stock (‘‘QQQQ’’),                    transactions in securities, and to remove               19b–4(f)(6) thereunder.10 Because the
                                               the SPDR S&P 500 Exchange Traded                        impediments to and perfect the                          proposed rule change does not: (i)
                                               Fund (‘‘SPY’’) and the iShares Russell                  mechanism of a free and open market                     Significantly affect the protection of
                                               2000 Index Fund (‘‘IWM’’), is $0.01 for                 and a national market system and, in                    investors or the public interest; (ii)
                                               all quotations in options series that are               general, to protect investors and the                   impose any significant burden on
                                               quoted at less than $3 per contract and                 public interest.                                        competition; and (iii) become operative
                                               $0.05 for all quotations in options series                 In particular, the proposed rule                     prior to 30 days from the date on which
                                               that are quoted at $3 per contract or                   change, which extends the Penny Pilot                   it was filed, or such shorter time as the
                                               greater. QQQQ, SPY and IWM are                          for an additional six months through                    Commission may designate, if
                                               quoted in $0.01 increments for all                      June 30, 2018 or the date of permanent                  consistent with the protection of
                                               options series. The Penny Pilot is                      approval, if earlier, and changes the date              investors and the public interest, the
                                               currently scheduled to expire on                        for replacing Penny Pilot issues that                   proposed rule change has become
                                               December 31, 2017.5                                     were delisted to the second trading day                 effective pursuant to Section 19(b)(3)(A)
                                                  The Exchange proposes to extend the                  following January 1, 2018, will enable                  of the Act and Rule 19b–4(f)(6)(iii)
                                               time period of the Penny Pilot through                  public customers and other market                       thereunder.
                                               June 30, 2018 or the date of permanent                                                                             A proposed rule change filed under
                                                                                                       participants to express their true prices
                                               approval, if earlier, and to provide a                                                                          Rule 19b–4(f)(6) 11 normally does not
                                                                                                       to buy and sell options for the benefit
                                               revised date for adding replacement                                                                             become operative prior to 30 days after
                                                                                                       of all market participants. This is
                                               issues to the Penny Pilot. The Exchange                                                                         the date of the filing.12 However,
                                                                                                       consistent with the Act.
                                               proposes that any Penny Pilot Program                                                                           pursuant to Rule 19b–4(f)(6)(iii),13 the
                                               issues that have been delisted may be                   B. Self-Regulatory Organization’s                       Commission may designate a shorter
                                               replaced on the second trading day                      Statement on Burden on Competition                      time if such action is consistent with the
                                               following January 1, 2018. The                            The Exchange does not believe that                    protection of investors and the public
                                               replacement issues will be selected                     the proposed rule change will impose                    interest. The Exchange has asked the
                                               based on trading activity in the previous               any burden on competition not                           Commission to waive the 30-day
                                               six months.6                                            necessary or appropriate in furtherance                 operative delay so that the proposal may
                                                  This filing does not propose any                     of the purposes of the Act. To the                      become operative immediately upon
                                               substantive changes to the Penny Pilot                  contrary, this proposal is pro-                         filing. The Commission believes that
                                               Program; all classes currently                          competitive because it allows Penny                     waiving the 30-day operative delay is
                                               participating in the Penny Pilot will                   Pilot issues to continue trading on the                 consistent with the protection of
                                                                                                       Exchange.                                               investors and the public interest
                                                  4 The options exchanges in the U.S. that have
                                                                                                         Moreover, the Exchange believes that                  because doing so will allow the Pilot
                                               pilot programs similar to the Penny Pilot (together                                                             Program to continue without
                                               ‘‘pilot programs’’) are currently working on a
                                                                                                       the proposed rule change will allow for
                                               proposal for permanent approval of the respective       further analysis of the Pilot and a                     interruption in a manner that is
                                               pilot programs.                                         determination of how the Pilot should                   consistent with the Commission’s prior
                                                  5 See Securities Exchange Act Release No. 80824
                                                                                                       be structured in the future; and will                   approval of the extension and expansion
                                               (May 31, 2017), 82 FR 26201 (June 6, 2017) (SR–         serve to promote regulatory clarity and                 of the Pilot Program and will allow the
                                               BX–2017–026).
                                                  6 The replacement issues will be announced to        consistency, thereby reducing burdens
                                                                                                                                                                 9 15  U.S.C. 78s(b)(3)(A)(iii).
                                               the Exchange’s membership via an Options Trader         on the marketplace and facilitating
                                                                                                                                                                 10 17  CFR 240.19b–4(f)(6).
                                               Alert (OTA) posted on the Exchange’s website.           investor protection.                                      11 17 CFR 240.19b–4(f)(6).
                                               Penny Pilot replacement issues will be selected           The Pilot is an industry-wide                           12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
                                               based on trading activity in the previous six
                                                                                                       initiative supported by all other option
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                                               months, as is the case today. The replacement                                                                   4(f)(6)(iii) requires the Exchange to give the
                                               issues would be identified based on The Options         exchanges. The Exchange believes that                   Commission written notice of the Exchange’s intent
                                               Clearing Corporation’s trading volume data. For         extending the Pilot will allow for                      to file the proposed rule change along with a brief
                                               example, for the January replacement, trading           continued competition between market                    description and the text of the proposed rule
                                               volume from May 30, 2017 through November 30,                                                                   change, at least five business days prior to the date
                                               2017 would be analyzed. The month immediately
                                                                                                       participants on the Exchange trading                    of filing of the proposed rule change, or such
                                               preceding the replacement issues’ addition to the                                                               shorter time as designated by the Commission. The
                                                                                                         7 15   U.S.C. 78f(b).                                 Exchange has satisfied this pre-filing requirement.
                                               Pilot Program (i.e., December) would not be used for
                                               purposes of the six-month analysis.                       8 15   U.S.C. 78f(b)(5).                                13 17 CFR 240.19b–4(f)(6)(iii).




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                                               61052                      Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices

                                               Exchange and the Commission                             public in accordance with the                         I. Self-Regulatory Organization’s
                                               additional time to analyze the impact of                provisions of 5 U.S.C. 552, will be                   Statement of the Terms of Substance of
                                               the Pilot Program. Accordingly, the                     available for website viewing and                     the Proposed Rule Change
                                               Commission designates the proposed                      printing in the Commission’s Public                      The Exchange proposes to amend
                                               rule change as operative upon filing                    Reference Room, 100 F Street NE.,                     Commentary .02 to Rule 6.72–O in order
                                               with the Commission.14                                  Washington, DC 20549, on official                     to extend the Penny Pilot in options
                                                  At any time within 60 days of the                    business days between the hours of                    classes in certain issues (‘‘Pilot
                                               filing of such proposed rule change, the                10:00 a.m. and 3:00 p.m. Copies of the
                                               Commission summarily may                                                                                      Program’’) previously approved by the
                                                                                                       filing also will be available for                     Securities and Exchange Commission
                                               temporarily suspend such rule change if
                                                                                                       inspection and copying at the principal               (‘‘Commission’’) through June 30, 2018.
                                               it appears to the Commission that such
                                               action is necessary or appropriate in the               office of the Exchange. All comments                  The Pilot Program is currently
                                               public interest, for the protection of                  received will be posted without change.               scheduled to expire on December 31,
                                               investors, or otherwise in furtherance of               Persons submitting comments are                       2017. The proposed rule change is
                                               the purposes of the Act. If the                         cautioned that we do not redact or edit               available on the Exchange’s website at
                                               Commission takes such action, the                       personal identifying information from                 www.nyse.com, at the principal office of
                                               Commission shall institute proceedings                  comment submissions. You should                       the Exchange, and at the Commission’s
                                               under Section 19(b)(2)(B) 15 of the Act to              submit only information that you wish                 Public Reference Room.
                                               determine whether the proposed rule                     to make available publicly.                           II. Self-Regulatory Organization’s
                                               change should be approved or                            All submissions should refer to File                  Statement of the Purpose of, and
                                               disapproved.                                            Number SR–BX–2017–056 and should                      Statutory Basis for, the Proposed Rule
                                               IV. Solicitation of Comments                            be submitted on or before January 16,                 Change
                                                                                                       2018.                                                   In its filing with the Commission, the
                                                 Interested persons are invited to
                                               submit written data, views, and                           For the Commission, by the Division of              self-regulatory organization included
                                               arguments concerning the foregoing,                     Trading and Markets, pursuant to delegated            statements concerning the purpose of,
                                               including whether the proposed rule                     authority.16                                          and basis for, the proposed rule change
                                               change is consistent with the Act.                      Eduardo A. Aleman,                                    and discussed any comments it received
                                               Comments may be submitted by any of                                                                           on the proposed rule change. The text
                                                                                                       Assistant Secretary.
                                               the following methods:                                                                                        of those statements may be examined at
                                                                                                       [FR Doc. 2017–27704 Filed 12–22–17; 8:45 am]
                                                                                                                                                             the places specified in Item IV below.
                                               Electronic Comments                                     BILLING CODE 8011–01–P                                The Exchange has prepared summaries,
                                                 • Use the Commission’s internet                                                                             set forth in sections A, B, and C below,
                                               comment form (http://www.sec.gov/                                                                             of the most significant parts of such
                                               rules/sro.shtml); or                                    SECURITIES AND EXCHANGE                               statements.
                                                 • Send an email to rule-comments@                     COMMISSION
                                                                                                                                                             A. Self-Regulatory Organization’s
                                               sec.gov. Please include File Number SR–
                                                                                                                                                             Statement of the Purpose of, and the
                                               BX–2017–056 on the subject line.                        [Release No. 34–82366; File No. SR–
                                                                                                                                                             Statutory Basis for, the Proposed Rule
                                                                                                       NYSEARCA–2017–141]
                                               Paper Comments                                                                                                Change
                                                 • Send paper comments in triplicate                   Self-Regulatory Organizations; NYSE                   1. Purpose
                                               to Secretary, Securities and Exchange                   Arca, Inc.; Notice of Filing and
                                               Commission, 100 F Street NE,                                                                                     The Exchange hereby proposes to
                                                                                                       Immediate Effectiveness of Proposed
                                               Washington, DC 20549–1090.                                                                                    amend Commentary .02 to Rule 6.72–O
                                                                                                       Rule Change To Amend Commentary                       to extend the time period of the Pilot
                                               All submissions should refer to File                    .02 to Rule 6.72–O in Order To Extend                 Program,4 which is currently scheduled
                                               Number SR–BX–2017–056. This file                        the Penny Pilot in Options Classes                    to expire on December 31, 2017, through
                                               number should be included on the
                                                                                                       December 19, 2017.                                    June 30, 2018. The Exchange also
                                               subject line if email is used. To help the
                                                                                                                                                             proposes that the dates to replace issues
                                               Commission process and review your                         Pursuant to Section 19(b)(1) 1 of the              in the Pilot Program that have been
                                               comments more efficiently, please use                   Securities Exchange Act of 1934 (the                  delisted be revised to the second trading
                                               only one method. The Commission will                    ‘‘Act’’) 2 and Rule 19b–4 thereunder,3                day following January 1, 2018.5 The
                                               post all comments on the Commission’s                   notice is hereby given that, on December              Exchange believes that extending the
                                               internet website (http://www.sec.gov/                   11, 2017, NYSE Arca, Inc. (the                        Pilot would allow for further analysis of
                                               rules/sro.shtml).                                       ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
                                                 Copies of the submission, all                                                                               the Pilot Program and a determination
                                                                                                       the Securities and Exchange                           of how the Pilot Program should be
                                               subsequent amendments, all written
                                               statements with respect to the proposed                 Commission (the ‘‘Commission’’) the                   structured in the future.
                                               rule change that are filed with the                     proposed rule change as described in
                                               Commission, and all written                             Items I and II below, which Items have                   4 See Securities Exchange Act Release No. 80988

                                                                                                                                                             (June 21, 2017), 82 FR 29128 (June 27, 2017) (SR–
                                               communications relating to the                          been prepared by the self-regulatory                  NYSEArca–2017–68).
                                               proposed rule change between the                        organization. The Commission is                          5 The month immediately preceding a

                                               Commission and any person, other than                   publishing this notice to solicit                     replacement class’s addition to the Pilot Program
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                                                                                                       comments on the proposed rule change                  (i.e., December) would not be used for purposes of
                                               those that may be withheld from the                                                                           the analysis for determining the replacement class.
                                                                                                       from interested persons.                              Thus, a replacement class to be added on the
                                                  14 For purposes only of waiving the operative
                                                                                                                                                             second trading day following January 1, 2018 would
                                               delay for this proposal, the Commission has               16 17                                               be identified based on The Option Clearing
                                                                                                               CFR 200.30–3(a)(12).
                                               considered the proposed rule’s impact on                                                                      Corporation’s trading volume data from June 1,
                                                                                                         1 15 U.S.C. 78s(b)(1).
                                               efficiency, competition, and capital formation. See                                                           2017 through November 30, 2017. The Exchange
                                                                                                         2 15 U.S.C. 78a.
                                               15 U.S.C. 78c(f).                                                                                             will announce the replacement issues to the
                                                  15 15 U.S.C. 78s(b)(2)(B).                             3 17 CFR 240.19b–4.                                 Exchange’s membership through a Trader Update.



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Document Created: 2017-12-23 03:08:45
Document Modified: 2017-12-23 03:08:45
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 61050 

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