82_FR_61870 82 FR 61622 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rule 510 To Extend the Penny Pilot Program

82 FR 61622 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX PEARL Rule 510 To Extend the Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 248 (December 28, 2017)

Page Range61622-61624
FR Document2017-28079

Federal Register, Volume 82 Issue 248 (Thursday, December 28, 2017)
[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Pages 61622-61624]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-28079]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82391; File No. SR-PEARL-2017-39]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend MIAX 
PEARL Rule 510 To Extend the Penny Pilot Program

December 22, 2017.
    Pursuant to the provisions of 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, MIAX PEARL LLC (``MIAX 
PEARL'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a 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 is filing a proposal to amend Exchange Rule 510, 
Interpretations and Policies .01 to extend the pilot program for the 
quoting and trading of certain options in pennies.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/pearl, at MIAX 
PEARL's principal office, 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.

[[Page 61623]]

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

1. Purpose
    The Exchange is a participant in an industry-wide pilot program 
that provides for the quoting and trading of certain option classes in 
penny increments (the ``Penny Pilot Program'' or ``Program''). The 
Penny Pilot Program allows the quoting and trading of certain option 
classes in minimum increments of $0.01 for all series in such option 
classes with a price of less than $3.00; and in minimum increments of 
$0.05 for all series in such option classes with a price of $3.00 or 
higher. Options overlying the PowerShares QQQTM (``QQQ''), 
SPDR[supreg] S&P 500[supreg] ETF (``SPY''), and iShares[supreg] Russell 
2000 ETF (``IWM''), however, are quoted and traded in minimum 
increments of $0.01 for all series regardless of the price. The Penny 
Pilot Program was initiated at the then existing option exchanges in 
January 2007 \3\ and currently includes more than 300 of the most 
active option classes. The Penny Pilot Program is currently scheduled 
to expire on December 31, 2017.\4\ The purpose of the proposed rule 
change is to extend the Penny Pilot Program in its current format 
through June 30, 2018.
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    \3\ See Securities Exchange Act Release Nos. 55154 (January 23, 
2007), 72 FR 4743 (February 1, 2007) (SR-CBOE-2006-92); 55161 
(January 24, 2007), 72 FR 4754 (February 1, 2007) (SR-ISE-2006-62); 
54886 (December 6, 2006), 71 FR 74979 (December 13, 2006) (SR-Phlx-
2006-74); 54590 (October 12, 2006), 71 FR 61525 (October 18, 2006) 
(SR-NYSEArca-2006-73); and 54741 (November 9, 2006), 71 FR 67176 
(November 20, 2006) (SR-Amex-2006-106).
    \4\ See Securities Exchange Act Release No. 80758 (May 24, 
2017), 82 FR 25022 (May 31, 2017) (SR-PEARL-2017-24) (extending the 
Penny Pilot Program to December 31, 2017).
---------------------------------------------------------------------------

    In addition to the extension of the Penny Pilot Program through 
June 30, 2018, the Exchange proposes to extend one other date in the 
Rule. Currently, Interpretations and Policies .01 states that the 
Exchange will replace any Penny Pilot issues that have been delisted 
with the next most actively traded multiply listed option classes that 
are not yet included in the Penny Pilot Program, and that the 
replacement issues will be selected based on trading activity in the 
previous six months. Such option classes will be added to the Penny 
Pilot Program on the second trading day following July 1, 2017.\5\ 
Because this date has expired and the Exchange intends to continue this 
practice for the duration of the Penny Pilot Program, the Exchange is 
proposing to amend the Rule to reflect that such option classes will be 
added to the Penny Pilot Program on the second trading day following 
January 1, 2018.
---------------------------------------------------------------------------

    \5\ The month immediately preceding a replacement class's 
addition to the Pilot Program (i.e., June) is not used for purposes 
of the six-month analysis. For example, a replacement added on the 
second trading day following January 1, 2018, will be identified 
based on trading activity from June 1, 2017, through November 30, 
2017.
---------------------------------------------------------------------------

    The purpose of this provision is to reflect the new date on which 
replacement issues may be added to the Penny Pilot Program.
2. Statutory Basis
    MIAX PEARL believes that its proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \7\ 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, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the proposed rule change, which extends the Penny 
Pilot Program for six months, allows the Exchange to continue to 
participate in a program that has been viewed as beneficial to traders, 
investors and public customers and viewed as successful by the other 
options exchanges participating in it.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. Specifically, the Exchange 
believes that, by extending the expiration of the Pilot Program, the 
proposed rule change will allow for further analysis of the Penny Pilot 
Program and a determination of how the Program should be structured in 
the future. In doing so, the proposed rule change will also serve to 
promote regulatory clarity and consistency, thereby reducing burdens on 
the marketplace, facilitating investor protection, and fostering a 
competitive environment. In addition, consistent with previous 
practices, the Exchange believes the other options exchanges will be 
filing similar extensions of the Penny Pilot Program.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor 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 \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of the 
filing.\11\ However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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 Exchange and the Commission additional time to analyze the 
impact of the Pilot Program.\13\ Accordingly, the

[[Page 61624]]

Commission designates the proposed rule change as operative upon filing 
with the Commission.\14\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 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.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ See Securities Exchange Act Release No. 61061 (November 24, 
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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- PEARL-2017-39 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-PEARL-2017-39. 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-PEARL-2017-39 and should be submitted on 
or before January 18, 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. 2017-28079 Filed 12-27-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                61622                         Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices

                                                Persons submitting comments are                               By providing more accurate                         SECURITIES AND EXCHANGE
                                                cautioned that we do not redact or edit                    descriptions of DTC’s liquidity risk                  COMMISSION
                                                personal identifying information from                      management tools, Amendment No. 6
                                                comment submissions. You should                            would help ensure that the DTC Rules                  [Release No. 34–82391; File No. SR–
                                                submit only information that you wish                      are transparent and clear, which would                PEARL–2017–39]
                                                to make available publicly. All                            help enable its Participants to better
                                                submissions should refer to File                           identify and understand the risks they                Self-Regulatory Organizations; MIAX
                                                Number SR–DTC–2017–004, SR–NSCC–                           incur by participating in DTC. In                     PEARL, LLC; Notice of Filing and
                                                2017–005, or SR–FICC–2017–008 and                          addition, by providing additional detail              Immediate Effectiveness of a Proposed
                                                should be submitted on or before
                                                                                                           around FICC and NSCC’s daily liquidity                Rule Change To Amend MIAX PEARL
                                                January 18, 2018. If comments are
                                                                                                           sufficiency testing, as well as the                   Rule 510 To Extend the Penny Pilot
                                                received, any rebuttal comments should
                                                be submitted on or before February 1,                      analysis and escalation process for                   Program
                                                2018.                                                      liquidity shortfalls, Amendment No. 6
                                                                                                                                                                 December 22, 2017.
                                                                                                           could help mitigate the risk that FICC
                                                V. Accelerated Approval of the                             and NSCC would be unable to promptly                     Pursuant to the provisions of Section
                                                Amended Proposed Rule Changes                              meet their settlement obligations due to              19(b)(1) of the Securities Exchange Act
                                                   The Commission finds good cause,                        insufficient liquidity. By doing so, the              of 1934 (‘‘Act’’) 1 and Rule 19b–4
                                                pursuant to Section 19(b)(2) of the                        Commission finds that Amendment No.                   thereunder,2 notice is hereby given that
                                                Act,66 to approve the Amended                              6 could help FICC and NSCC to be in                   on December 11, 2017, MIAX PEARL
                                                Proposed Rule Changes prior to the 30th                    a better position to withstand their                  LLC (‘‘MIAX PEARL’’ or ‘‘Exchange’’)
                                                day after the date of publication of                       respective liquidity risks, thereby                   filed with the Securities and Exchange
                                                Amendment No. 6 in the Federal                             promoting the prompt and accurate                     Commission (‘‘Commission’’) a
                                                Register.                                                  clearance and settlement of securities,               proposed rule change as described in
                                                   As discussed more fully above, the                      consistent with Section 17A(b)(3)(F) of               Items I and II below, which Items have
                                                Commission finds that the Framework                        the Act.69                                            been prepared by the Exchange. The
                                                could help Clearing Agencies to
                                                                                                              Accordingly, the Commission finds                  Commission is publishing this notice to
                                                withstand the liquidity risks that arise
                                                                                                           good cause for approving the Amended                  solicit comments on the proposed rule
                                                in or are borne by the Clearing Agencies,
                                                                                                           Proposed Rule Changes on an                           change from interested persons.
                                                and to continue their critical operations
                                                and services, which helps to promote                       accelerated basis, pursuant to Section                I. Self-Regulatory Organization’s
                                                the prompt and accurate clearance and                      19(b)(2) of the Act.70                                Statement of the Terms of Substance of
                                                settlement of securities transactions,                                                                           the Proposed Rule Change
                                                                                                           VI. Conclusion
                                                consistent with Section 17A(b)(3)(F) of
                                                the Act.67 By maintaining liquidity                          On the basis of the foregoing, the                     The Exchange is filing a proposal to
                                                resources and monitoring sufficiency of                    Commission finds that the proposed                    amend Exchange Rule 510,
                                                the available liquidity resources, the                     rule changes, as modified by                          Interpretations and Policies .01 to
                                                Commission further finds that the                          Amendment No. 1, 3, and 6 are                         extend the pilot program for the quoting
                                                Framework is designed to help reduce                       consistent with the requirements of the               and trading of certain options in
                                                the possibility of the Clearing Agencies’                  Act and in particular with the                        pennies.
                                                failure, as well as mitigate the risk of                                                                            The text of the proposed rule change
                                                                                                           requirements of Section 17A of the
                                                financial loss contagion caused by the
                                                                                                           Act 71 and the rules and regulations                  is available on the Exchange’s website at
                                                Clearing Agencies’ failure. Therefore,
                                                                                                           thereunder.                                           http://www.miaxoptions.com/rule-
                                                the Framework could help further
                                                assure the safeguarding of securities and                    It is therefore ordered, pursuant to                filings/pearl, at MIAX PEARL’s
                                                funds which are in the custody or                          Section 19(b)(2) of the Act, that the                 principal office, and at the
                                                control of the Clearing Agencies, or for                   proposed rule changes SR–DTC–2017–                    Commission’s Public Reference Room.
                                                which they are responsible, consistent                     004, SR–NSCC–2017–005, or SR–FICC–                    II. Self-Regulatory Organization’s
                                                with Section 17A(b)(3)(F).68                               2017–008 as modified by Amendment                     Statement of the Purpose of, and
                                                   More specifically regarding                             Nos. 1, 3, and 6 be, and hereby are,                  Statutory Basis for, the Proposed Rule
                                                Amendment No. 6, the amendment                             APPROVED on an accelerated basis.72                   Change
                                                clarifies and modifies the Framework by
                                                                                                             For the Commission, by the Division of
                                                (1) providing more accurate descriptions                                                                           In its filing with the Commission, the
                                                                                                           Trading and Markets, pursuant to delegated
                                                of DTC’s Collateral Monitor and Net                                                                              Exchange included statements
                                                                                                           authority.73
                                                Debit Cap, (2) modifying and elaborating                                                                         concerning the purpose of and basis for
                                                                                                             Eduardo Aleman,
                                                on FICC and NSCC’s daily liquidity                                                                               the proposed rule change and discussed
                                                stress testing to ensure that their                        Assistant Secretary.
                                                                                                                                                                 any comments it received on the
                                                respective liquidity resources are                         [FR Doc. 2017–27997 Filed 12–27–17; 8:45 am]
                                                                                                                                                                 proposed rule change. The text of these
                                                sufficient to meet the cash settlement                     BILLING CODE 8011–01–P
                                                                                                                                                                 statements may be examined at the
                                                obligations of their respective largest                                                                          places specified in Item IV below. The
                                                Affiliated Family of Members, and (3)
                                                                                                                                                                 Exchange has prepared summaries, set
sradovich on DSK3GMQ082PROD with NOTICES




                                                providing the analysis and escalation                        69 15 U.S.C. 78q–1(b)(3)(F).                        forth in sections A, B, and C below, of
                                                process for liquidity shortfalls that are                    70 15 U.S.C. 78s(b)(2).
                                                                                                                                                                 the most significant aspects of such
                                                identified through the daily testing with                    71 15 U.S.C. 78q–1.

                                                respect to Level 2 and Level 3 Scenarios.                    72 In approving the Amended Proposed Rule
                                                                                                                                                                 statements.
                                                                                                           Changes, the Commission considered the proposals’
                                                  66 15    U.S.C. 78s(b)(2).                               impact on efficiency, competition and capital
                                                  67 15    U.S.C. 78q–1(b)(3)(F).                          formation. 15 U.S.C. 78c(f).                            1 15   U.S.C. 78s(b)(1).
                                                  68 Id.                                                     73 17 CFR 200.30–3(a)(12).                            2 17   CFR 240.19b–4.



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                                                                           Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices                                                     61623

                                                A. Self-Regulatory Organization’s                        Because this date has expired and the                  C. Self-Regulatory Organization’s
                                                Statement of the Purpose of, and                         Exchange intends to continue this                      Statement on Comments on the
                                                Statutory Basis for, the Proposed Rule                   practice for the duration of the Penny                 Proposed Rule Change Received From
                                                Change                                                   Pilot Program, the Exchange is                         Members, Participants, or Others
                                                                                                         proposing to amend the Rule to reflect
                                                1. Purpose                                                                                                        Written comments were neither
                                                                                                         that such option classes will be added
                                                   The Exchange is a participant in an                                                                          solicited nor received.
                                                                                                         to the Penny Pilot Program on the
                                                industry-wide pilot program that                         second trading day following January 1,                III. Date of Effectiveness of the
                                                provides for the quoting and trading of                  2018.                                                  Proposed Rule Change and Timing for
                                                certain option classes in penny                            The purpose of this provision is to                  Commission Action
                                                increments (the ‘‘Penny Pilot Program’’                  reflect the new date on which
                                                or ‘‘Program’’). The Penny Pilot Program                                                                           The Exchange has filed the proposed
                                                                                                         replacement issues may be added to the                 rule change pursuant to Section
                                                allows the quoting and trading of certain                Penny Pilot Program.
                                                option classes in minimum increments                                                                            19(b)(3)(A)(iii) of the Act 8 and Rule
                                                of $0.01 for all series in such option                   2. Statutory Basis                                     19b–4(f)(6) thereunder.9 Because the
                                                classes with a price of less than $3.00;                                                                        proposed rule change does not: (i)
                                                                                                            MIAX PEARL believes that its                        Significantly affect the protection of
                                                and in minimum increments of $0.05 for                   proposed rule change is consistent with
                                                all series in such option classes with a                                                                        investors or the public interest; (ii)
                                                                                                         Section 6(b) of the Act 6 in general, and              impose any significant burden on
                                                price of $3.00 or higher. Options                        furthers the objectives of Section 6(b)(5)
                                                overlying the PowerShares QQQTM                                                                                 competition; and (iii) become operative
                                                                                                         of the Act 7 in particular, in that it is
                                                (‘‘QQQ’’), SPDR® S&P 500® ETF                                                                                   prior to 30 days from the date on which
                                                                                                         designed to prevent fraudulent and
                                                (‘‘SPY’’), and iShares® Russell 2000 ETF                                                                        it was filed, or such shorter time as the
                                                                                                         manipulative acts and practices, to                    Commission may designate, if
                                                (‘‘IWM’’), however, are quoted and
                                                                                                         promote just and equitable principles of               consistent with the protection of
                                                traded in minimum increments of $0.01
                                                                                                         trade, to foster cooperation and                       investors and the public interest, the
                                                for all series regardless of the price. The
                                                                                                         coordination with persons engaged in                   proposed rule change has become
                                                Penny Pilot Program was initiated at the
                                                                                                         facilitating transactions in securities, to            effective pursuant to Section 19(b)(3)(A)
                                                then existing option exchanges in
                                                                                                         remove impediments to and perfect the                  of the Act and Rule 19b–4(f)(6)(iii)
                                                January 2007 3 and currently includes
                                                                                                         mechanisms of a free and open market                   thereunder.
                                                more than 300 of the most active option
                                                classes. The Penny Pilot Program is                      and a national market system and, in
                                                                                                                                                                   A proposed rule change filed under
                                                currently scheduled to expire on                         general, to protect investors and the
                                                                                                                                                                Rule 19b–4(f)(6) 10 normally does not
                                                December 31, 2017.4 The purpose of the                   public interest.
                                                                                                                                                                become operative prior to 30 days after
                                                proposed rule change is to extend the                       In particular, the proposed rule                    the date of the filing.11 However,
                                                Penny Pilot Program in its current                       change, which extends the Penny Pilot                  pursuant to Rule 19b–4(f)(6)(iii),12 the
                                                format through June 30, 2018.                            Program for six months, allows the                     Commission may designate a shorter
                                                   In addition to the extension of the                   Exchange to continue to participate in a               time if such action is consistent with the
                                                Penny Pilot Program through June 30,                     program that has been viewed as                        protection of investors and the public
                                                2018, the Exchange proposes to extend                    beneficial to traders, investors and                   interest. The Exchange has asked the
                                                one other date in the Rule. Currently,                   public customers and viewed as                         Commission to waive the 30-day
                                                Interpretations and Policies .01 states                  successful by the other options                        operative delay so that the proposal may
                                                that the Exchange will replace any                       exchanges participating in it.                         become operative immediately upon
                                                Penny Pilot issues that have been                        B. Self-Regulatory Organization’s                      filing. The Commission believes that
                                                delisted with the next most actively                     Statement on Burden on Competition                     waiving the 30-day operative delay is
                                                traded multiply listed option classes                                                                           consistent with the protection of
                                                that are not yet included in the Penny                     The Exchange does not believe that                   investors and the public interest
                                                Pilot Program, and that the replacement                  the proposed rule change will impose                   because doing so will allow the Pilot
                                                issues will be selected based on trading                 any burden on competition that is not                  Program to continue without
                                                activity in the previous six months.                     necessary or appropriate in furtherance                interruption in a manner that is
                                                Such option classes will be added to the                 of the purposes of the Act. Specifically,              consistent with the Commission’s prior
                                                Penny Pilot Program on the second                        the Exchange believes that, by extending               approval of the extension and expansion
                                                trading day following July 1, 2017.5                     the expiration of the Pilot Program, the               of the Pilot Program and will allow the
                                                                                                         proposed rule change will allow for                    Exchange and the Commission
                                                   3 See Securities Exchange Act Release Nos. 55154      further analysis of the Penny Pilot                    additional time to analyze the impact of
                                                (January 23, 2007), 72 FR 4743 (February 1, 2007)        Program and a determination of how the
                                                (SR–CBOE–2006–92); 55161 (January 24, 2007), 72                                                                 the Pilot Program.13 Accordingly, the
                                                FR 4754 (February 1, 2007) (SR–ISE–2006–62);
                                                                                                         Program should be structured in the
                                                54886 (December 6, 2006), 71 FR 74979 (December          future. In doing so, the proposed rule                   8 15  U.S.C. 78s(b)(3)(A)(iii).
                                                13, 2006) (SR–Phlx–2006–74); 54590 (October 12,          change will also serve to promote                        9 17  CFR 240.19b–4(f)(6).
                                                2006), 71 FR 61525 (October 18, 2006) (SR–               regulatory clarity and consistency,                      10 17 CFR 240.19b–4(f)(6).
                                                NYSEArca–2006–73); and 54741 (November 9,
                                                2006), 71 FR 67176 (November 20, 2006) (SR–              thereby reducing burdens on the                          11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–

                                                Amex–2006–106).                                          marketplace, facilitating investor                     4(f)(6)(iii) requires the Exchange to give the
                                                   4 See Securities Exchange Act Release No. 80758       protection, and fostering a competitive                Commission written notice of the Exchange’s intent
                                                (May 24, 2017), 82 FR 25022 (May 31, 2017) (SR–                                                                 to file the proposed rule change along with a brief
                                                                                                         environment. In addition, consistent
sradovich on DSK3GMQ082PROD with NOTICES




                                                PEARL–2017–24) (extending the Penny Pilot                                                                       description and the text of the proposed rule
                                                Program to December 31, 2017).
                                                                                                         with previous practices, the Exchange                  change, at least five business days prior to the date
                                                   5 The month immediately preceding a                   believes the other options exchanges                   of filing of the proposed rule change, or such
                                                replacement class’s addition to the Pilot Program        will be filing similar extensions of the               shorter time as designated by the Commission. The
                                                (i.e., June) is not used for purposes of the six-month                                                          Exchange has satisfied this pre-filing requirement.
                                                                                                         Penny Pilot Program.                                     12 17 CFR 240.19b–4(f)(6)(iii).
                                                analysis. For example, a replacement added on the
                                                second trading day following January 1, 2018, will                                                                13 See Securities Exchange Act Release No. 61061
                                                                                                          6 15   U.S.C. 78f(b).
                                                be identified based on trading activity from June 1,                                                            (November 24, 2009), 74 FR 62857 (December 1,
                                                2017, through November 30, 2017.                          7 15   U.S.C. 78f(b)(5).                              2009) (SR–NYSEArca–2009–44).



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                                                61624                     Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices

                                                Commission designates the proposed                      printing in the Commission’s Public                   I. Clearing Agency’s Statement of the
                                                rule change as operative upon filing                    Reference Room, 100 F Street NE,                      Terms of Substance of the Proposed
                                                with the Commission.14                                  Washington, DC 20549, on official                     Rule Change
                                                   At any time within 60 days of the                    business days between the hours of                       The proposed rule change consists of
                                                filing of such proposed rule change, the                10:00 a.m. and 3:00 p.m. Copies of the                the elimination of the Development Fees
                                                Commission summarily may                                filing also will be available for                     from the Fee Schedule in the FICC
                                                temporarily suspend such rule change if                 inspection and copying at the principal               Mortgage-Backed Securities Division
                                                it appears to the Commission that such                  office of the Exchange. All comments                  (‘‘MBSD’’) Clearing Rules (‘‘MBSD
                                                action is necessary or appropriate in the                                                                     Rules’’),5 as described in greater detail
                                                                                                        received will be posted without change.
                                                public interest, for the protection of                                                                        below.
                                                                                                        Persons submitting comments are
                                                investors, or otherwise in furtherance of
                                                the purposes of the Act. If the                         cautioned that we do not redact or edit               II. Clearing Agency’s Statement of the
                                                Commission takes such action, the                       personal identifying information from                 Purpose of, and Statutory Basis for, the
                                                Commission shall institute proceedings                  comment submissions. You should                       Proposed Rule Change
                                                under Section 19(b)(2)(B) 15 of the Act to              submit only information that you wish
                                                                                                                                                                 In its filing with the Commission, the
                                                determine whether the proposed rule                     to make available publicly. All
                                                                                                                                                              clearing agency included statements
                                                change should be approved or                            submissions should refer to File                      concerning the purpose of and basis for
                                                disapproved.                                            Number SR–PEARL–2017–39 and                           the proposed rule change and discussed
                                                                                                        should be submitted on or before                      any comments it received on the
                                                IV. Solicitation of Comments
                                                                                                        January 18, 2018.                                     proposed rule change. The text of these
                                                  Interested persons are invited to
                                                                                                          For the Commission, by the Division of              statements may be examined at the
                                                submit written data, views, and
                                                                                                        Trading and Markets, pursuant to delegated            places specified in Item IV below. The
                                                arguments concerning the foregoing,
                                                                                                        authority.16                                          clearing agency has prepared
                                                including whether the proposed rule
                                                                                                        Eduardo A. Aleman,                                    summaries, set forth in sections A, B,
                                                change is consistent with the Act.
                                                                                                        Assistant Secretary.
                                                                                                                                                              and C below, of the most significant
                                                Comments may be submitted by any of
                                                                                                                                                              aspects of such statements.
                                                the following methods:                                  [FR Doc. 2017–28079 Filed 12–27–17; 8:45 am]
                                                                                                        BILLING CODE 8011–01–P                                (A) Clearing Agency’s Statement of the
                                                Electronic Comments
                                                                                                                                                              Purpose of, and Statutory Basis for, the
                                                  • Use the Commission’s internet                                                                             Proposed Rule Change
                                                comment form (http://www.sec.gov/                       SECURITIES AND EXCHANGE
                                                rules/sro.shtml); or                                                                                          1. Purpose
                                                                                                        COMMISSION
                                                  • Send an email to rule-comments@                                                                              On December 30, 2014, FICC filed
                                                sec.gov. Please include File Number SR–                                                                       proposed rule change SR–FICC–2014–
                                                PEARL–2017–39 on the subject line.                      [Release No. 34–82386; File No. SR–FICC–
                                                                                                                                                              12 6 with the Commission to amend the
                                                                                                        2017–023]
                                                Paper Comments                                                                                                MBSD Rules to include fees to cover the
                                                                                                        Self-Regulatory Organizations; Fixed                  development cost of the MBSD novation
                                                  • Send paper comments in triplicate                                                                         service (‘‘Development Fees’’).7 The
                                                to Secretary, Securities and Exchange                   Income Clearing Corporation; Notice of
                                                                                                                                                              filing stated that Clearing Members
                                                Commission, 100 F Street NE,                            Filing and Immediate Effectiveness of
                                                                                                                                                              would be assessed the Development
                                                Washington, DC 20549–1090.                              a Proposed Rule Change To Eliminate
                                                                                                                                                              Fees as of January 1, 2015 and such fees
                                                All submissions should refer to File                    the Development Fees From the                         would remain in effect for three (3)
                                                Number SR–PEARL–2017–39. This file                      Mortgage-Backed Securities Division                   consecutive years.8 Because the
                                                number should be included on the                        Clearing Rules                                        Development Fees will have been in
                                                subject line if email is used. To help the                                                                    place for three (3) consecutive years as
                                                                                                        December 21, 2017.
                                                Commission process and review your                                                                            of December 31, 2017, and FICC has
                                                comments more efficiently, please use                      Pursuant to Section 19(b)(1) of the                used the Development Fees to develop
                                                only one method. The Commission will                    Securities Exchange Act of 1934                       the operational aspect of the MBSD
                                                post all comments on the Commission’s                   (‘‘Act’’) 1 and Rule 19b–4 thereunder,2               novation service,9 FICC is proposing to
                                                internet website (http://www.sec.gov/                   notice is hereby given that on December
                                                rules/sro.shtml). Copies of the                         19, 2017, Fixed Income Clearing                          5 Capitalized terms not defined herein are defined

                                                submission, all subsequent                              Corporation (‘‘FICC’’) filed with the                 in the MBSD Rules, available at http://
                                                                                                                                                              www.dtcc.com/legal/rules-and-procedures.
                                                amendments, all written statements                      Securities and Exchange Commission                       6 See Securities Exchange Act Release No. 74033
                                                with respect to the proposed rule                       (‘‘Commission’’) the proposed rule                    (January 12, 2015), 80 FR 2452 (January 16, 2015)
                                                change that are filed with the                          change as described in Items I, II and III            (SR–FICC–2014–12).
                                                Commission, and all written                             below, which Items have been prepared                    7 Id. at 2453.

                                                communications relating to the                          by the clearing agency. FICC filed the                   8 Id.
                                                                                                                                                                 9 See Securities Exchange Act Release No. 80716
                                                proposed rule change between the                        proposed rule change pursuant to                      (May 18, 2017), 82 FR 23852 (May 24, 2017) (SR–
                                                Commission and any person, other than                   Section 19(b)(3)(A) of the Act 3 and Rule             FICC–2017–012). Specifically, the purpose of the
                                                those that may be withheld from the                     19b–4(f)(2) thereunder.4 The                          rule filing SR–FICC–2017–012 was to amend the
                                                public in accordance with the                           Commission is publishing this notice to               MBSD Rules to (1) move the time that FICC treats
                                                provisions of 5 U.S.C. 552, will be                                                                           itself as the settlement counterparty for SBO-
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        solicit comments on the proposed rule                 Destined Trades to the time of trade comparison,
                                                available for website viewing and                       change from interested persons.                       which is earlier in the lifecycle of the trade, (2)
                                                                                                                                                              move the time that FICC novates and treats itself as
                                                   14 For purposes only of waiving the operative
                                                                                                          16 17                                               the settlement counterparty for Trade-for-Trade
                                                delay for this proposal, the Commission has                     CFR 200.30–3(a)(12).
                                                                                                          1 15
                                                                                                                                                              Transactions to the time of trade comparison, which
                                                considered the proposed rule’s impact on                       U.S.C. 78s(b)(1).                              is earlier in the lifecycle of the trade, (3) novate and
                                                                                                          2 17 CFR 240.19b–4.
                                                efficiency, competition, and capital formation. See                                                           establish FICC as the settlement counterparty at the
                                                15 U.S.C. 78c(f).                                         3 15 U.S.C. 78s(b)(3)(A).
                                                                                                                                                              time of trade comparison for Specified Pool Trades,
                                                   15 15 U.S.C. 78s(b)(2)(B).                             4 17 CFR 240.19b–4(f)(2).                           and (4) guarantee and novate Stipulated Trades, a



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Document Created: 2017-12-28 00:43:52
Document Modified: 2017-12-28 00:43:52
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 61622 

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