83_FR_14762 83 FR 14696 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Provisions for Excluding a Day From Its Volume Calculations for Purposes of Determining Volume Based Pricing

83 FR 14696 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Provisions for Excluding a Day From Its Volume Calculations for Purposes of Determining Volume Based Pricing

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 66 (April 5, 2018)

Page Range14696-14698
FR Document2018-06911

Federal Register, Volume 83 Issue 66 (Thursday, April 5, 2018)
[Federal Register Volume 83, Number 66 (Thursday, April 5, 2018)]
[Notices]
[Pages 14696-14698]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-06911]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82968; File No. SR-Phlx-2018-27]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Provisions for Excluding a Day From Its Volume Calculations 
for Purposes of Determining Volume Based Pricing

March 30, 2018.
    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 March 19, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's provisions for 
excluding a day from its volume calculations for purposes of 
determining volume based pricing.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 14697]]

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

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's 
provisions for excluding a day from its volume calculations for 
purposes of determining volume based pricing. The Exchange is 
standardizing its practice for removing a day from volume calculations 
in the fee schedule with its affiliated options exchanges, Nasdaq ISE, 
LLC (``ISE), Nasdaq GEMX, LLC (``GEMX''), and Nasdaq MRX, LLC (``MRX'') 
(collectively, the ``Nasdaq ISE Markets'').
    To avoid penalizing members when aberrant low volume days result 
from systems or other issues at the Exchange, or where the Exchange 
closes early for holiday observance, the Exchange has language in its 
pricing schedule allowing it to exclude certain days from its average 
daily volume (``ADV'') or other volume calculations. Currently, 
language in the Exchange's pricing schedule provides that, for purposes 
of determining average daily volume or volume-based pricing, any day 
that the market is not open for the entire trading day will be excluded 
from such calculation. The Exchange proposes to adopt language for Phlx 
options \3\ that is identical to language currently in place on the 
Nasdaq ISE Markets,\4\ with the one exception that it would include 
language that clarifies how this rule applies to calculations that are 
based on a percentage of industry volume.\5\ Specifically, as proposed, 
any day that the market is not open for the entire trading day or the 
Exchange instructs members in writing to route their orders to other 
markets may be excluded from the ADV calculation or calculation based 
on a percentage of industry volume; provided that the Exchange will 
only remove the day for members that would have a lower ADV or 
percentage of industry volume with the day included. If a day is 
removed from a calculation based on a percentage of monthly industry 
volume, volume executed that day will be removed from both the 
numerator and the denominator of the calculation. While similar to the 
language currently in place on the Exchange, the proposed language: (1) 
Provides greater flexibility to remove a day when the Exchange 
instructs members in writing to route their orders to other markets, 
(2) modifies the provision so that members will only have the day 
removed when doing so is beneficial for the member, (3) applies the 
provision to ADV calculations or calculation based on a percentage of 
industry volume, and not for other volume-based pricing where members 
would not benefit from having the day excluded, and (4) accounts for 
calculations based on a percentage of industry volume by removing the 
day from both the numerator and denominator of the calculation. Other 
than days where the Exchange closes early for a scheduled holiday 
observance, the Exchange will inform members of days that are to be 
excluded from its ADV calculations via system status message 
disseminated to all members.
---------------------------------------------------------------------------

    \3\ Because the Exchange is conforming its practice for options 
markets only, the current language will remain in place for PSX 
equities.
    \4\ See ISE Schedule of Fees, Preface; GEMX Schedule of Fees, 
Qualifying Tier Thresholds; and MRX Schedule of Fees, Member Volume 
Program: Qualifying Tier Thresholds.
    \5\ The Nasdaq ISE Markets do not have any fees calculated based 
on a percentage of industry volume.
---------------------------------------------------------------------------

    The Nasdaq ISE Markets adopted the language on instructing members 
to route away to prevent situations where days that have artificially 
lower volume could not be excluded, for example, because the exchange 
experienced an issue in the morning that did not carry over into the 
trading day. Like the Nasdaq ISE Markets, the Exchange believes that it 
should have the flexibility to exclude days if members have been 
instructed to send their orders elsewhere, regardless of whether the 
issue that resulted in this instruction ultimately impacts the 
availability of the Exchange for trading.
    In addition, to avoid penalizing members that step up and trade on 
a day that the Exchange is experiencing difficulties, the Nasdaq ISE 
Markets only remove days from their ADV calculations for members that 
would have a lower ADV or percentage of industry volume with the day 
included. This provision would also be helpful on the Exchange as it 
would ensure that members that continue to execute a large volume of 
contracts are not inadvertently disadvantaged when the Exchange removes 
a day from its ADV calculation.
    Furthermore, the proposed language applies to ADV calculations or 
calculation based on a percentage of industry volume, and not for other 
volume-based pricing, as members do not benefit when a day is removed 
for straight volume accumulations. Again, the Exchange believes that 
the approach of the Nasdaq ISE Markets would be beneficial for the 
Exchange as it counts volume executed during an excluded day for 
purposes of straight volume accumulations. Unlike the Nasdaq ISE 
Markets, however, the Exchange has fees that are based on a percentage 
of industry volume. As such, the Exchange is including language in its 
rule that accounts for these calculations by explicitly mentioning that 
days may be removed from these calculations, and including language 
that explains that the day will be moved from both the numerator of the 
calculation and the denominator of the calculation. Removing the day 
from both the numerator and denominator of the calculation will ensure 
that members benefit from this rule as removing the day from the 
numerator only (i.e., the member's volume) without removing it from the 
denominator (i.e., industry volume) would penalize the member.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is reasonable 
and equitable as it provides a new framework for removing days from the 
Exchange's volume calculations that the Exchange believes is beneficial 
to members and consistent with similar provisions already in place on 
its affiliated options exchanges, with the one exception described 
above for fees based on a percentage of industry volume. The proposed 
rule change would allow the Exchange to remove a day from its ADV 
calculations in more circumstances, i.e., when the Exchange instructs 
members in writing to route their orders to other markets, and ensures 
that the Exchange will only do so in circumstances where beneficial for 
the member due to the member executing a lower ADV or percentage of 
industry volume during the excluded day. The Exchange believes that it 
is reasonable and equitable to exclude a day from its ADV calculations 
when members are instructed to route their orders to other markets as 
this preserves the Exchange's intent behind adopting volume-based 
pricing, and avoids penalizing members that follow this instruction. 
Similarly, the Exchange believes that it is reasonable and

[[Page 14698]]

equitable to only exclude a day from its calculations for members that 
would otherwise have a lower ADV or percentage of industry volume. 
Without these changes, members that route away in accordance with the 
Exchange's instructions, or that step up and trade significant volume 
on excluded trading days, may be negatively impacted, resulting in an 
effective cost increase for those members. In addition, the Exchange 
believes that it is reasonable and equitable to apply the proposed 
language only to ADV based volume calculations and calculation based on 
a percentage of industry volume as removing the day for straight volume 
accumulations would never be beneficial for the member as it would 
reduce the volume counted for the member for the month. Furthermore, 
the proposed language about removing the day from both the numerator 
and denominator of a calculation based on a percentage of industry 
volume is reasonable and equitable and this treatment ensures that the 
member actually benefits from having the day removed. Finally, the 
Exchange further believes that the proposed rule change is not unfairly 
discriminatory because it applies equally to all members. While the 
Exchange currently has rules in place for removing a day from its 
pricing, the Exchange believes that the proposed changes will benefit 
all members by providing broader authority to remove a day similar to 
that available on its affiliates, and ensuring that days are removed 
only in situations where the member benefits.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is 
designed to standardize the Exchange's practice for removing days from 
its ADV calculations with its affiliated options exchanges, with one 
exception that accounts for fees based on a percentage of industry 
volume. The Exchange believes that the proposed modifications to its 
ADV calculations are pro-competitive and will result in lower total 
costs to end users, a positive outcome of competitive markets. The 
Exchange operates in a highly competitive market in which market 
participants can readily direct their order flow to competing venues. 
In such an environment, the Exchange must continually review, and 
consider adjusting, its fees and rebates to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed fee changes reflect this competitive environment.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\8\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2018-27 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-Phlx-2018-27. 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-Phlx-2018-27 and 
should be submitted on or before April 26, 2018.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-06911 Filed 4-4-18; 8:45 am]
BILLING CODE 8011-01-P



                                             14696                          Federal Register / Vol. 83, No. 66 / Thursday, April 5, 2018 / Notices

                                             B. Self-Regulatory Organization’s                       Comments may be submitted by any of                   SECURITIES AND EXCHANGE
                                             Statement on Burden on Competition                      the following methods:                                COMMISSION
                                                The Exchange does not believe that                   Electronic Comments
                                             the proposed rule change will impose                                                                          [Release No. 34–82968; File No. SR–Phlx–
                                             any burden on competition not                             • Use the Commission’s internet                     2018–27]
                                             necessary or appropriate in furtherance                 comment form (http://www.sec.gov/
                                             of the purposes of the Act. Electronic                  rules/sro.shtml); or                                  Self-Regulatory Organizations; Nasdaq
                                             ROTs will continue to be entitled to                      • Send an email to rule-comments@                   PHLX LLC; Notice of Filing and
                                             certain allocations, similar to today.                  sec.gov. Please include File Number SR–               Immediate Effectiveness of Proposed
                                             Electronic ROTs, unlike other market                    Phlx–2018–22 on the subject line.                     Rule Change To Amend the
                                             participants, have obligations which the                                                                      Exchange’s Provisions for Excluding a
                                             Exchange has memorialized within the                    Paper Comments                                        Day From Its Volume Calculations for
                                             proposed rule text. The Exchange                                                                              Purposes of Determining Volume
                                             believes that treating Electronic ROTs                    • Send paper comments in triplicate
                                                                                                     to Secretary, Securities and Exchange                 Based Pricing
                                             differently than other market
                                             participants does not impose an undue                   Commission, 100 F Street NE,                          March 30, 2018.
                                             burden on competition because                           Washington, DC 20549–1090.
                                                                                                                                                              Pursuant to Section 19(b)(1) of the
                                             Electronic ROTs provide liquidity to the                All submissions should refer to File                  Securities Exchange Act of 1934
                                             market which benefits market                            Number SR–Phlx–2018–22. This file
                                             participants who interact with that                                                                           (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                                                                     number should be included on the                      notice is hereby given that on March 19,
                                             liquidity. The Exchange requires                        subject line if email is used. To help the
                                             Electronic ROTs today to maintain fair                                                                        2018, Nasdaq PHLX LLC (‘‘Phlx’’ or
                                                                                                     Commission process and review your
                                             and orderly markets. The Exchange                                                                             ‘‘Exchange’’) filed with the Securities
                                                                                                     comments more efficiently, please use
                                             believes the allocation benefits are                                                                          and Exchange Commission (‘‘SEC’’ or
                                                                                                     only one method. The Commission will
                                             commensurate with the quoting                                                                                 ‘‘Commission’’) the proposed rule
                                                                                                     post all comments on the Commission’s
                                             obligations imposed on Electronic                       internet website (http://www.sec.gov/                 change as described in Items I, II, and
                                             ROTs. Additionally, the Exchange                        rules/sro.shtml). Copies of the                       III, below, which Items have been
                                             believes that the varying quoting                       submission, all subsequent                            prepared by the Exchange. The
                                             requirements as between electronic                      amendments, all written statements                    Commission is publishing this notice to
                                             ROTs and Specialists and electronic                     with respect to the proposed rule                     solicit comments on the proposed rule
                                             Directed SQTs and Directed RSQTs does                   change that are filed with the                        change from interested persons.
                                             not impose an undue burden on                           Commission, and all written
                                             competition because while electronic                                                                          I. Self-Regulatory Organization’s
                                                                                                     communications relating to the                        Statement of the Terms of Substance of
                                             ROTs will be subject to lower quoting                   proposed rule change between the
                                             requirements as compared to Specialists                                                                       the Proposed Rule Change
                                                                                                     Commission and any person, other than
                                             and electronic Directed SQTs and                        those that may be withheld from the
                                             Directed RSQTs, they will also be                                                                                The Exchange proposes to amend the
                                                                                                     public in accordance with the                         Exchange’s provisions for excluding a
                                             entitled to lower allocations.                          provisions of 5 U.S.C. 552, will be                   day from its volume calculations for
                                             C. Self-Regulatory Organization’s                       available for website viewing and                     purposes of determining volume based
                                             Statement on Comments on the                            printing in the Commission’s Public                   pricing.
                                             Proposed Rule Change Received From                      Reference Room, 100 F Street NE,
                                             Members, Participants, or Others                        Washington, DC 20549 on official                         The text of the proposed rule change
                                                                                                     business days between the hours of                    is available on the Exchange’s website at
                                               No written comments were either                                                                             http://nasdaqphlx.cchwallstreet.com/,
                                             solicited or received.                                  10:00 a.m. and 3:00 p.m. Copies of such
                                                                                                     filing also will be available for                     at the principal office of the Exchange,
                                             III. Date of Effectiveness of the                       inspection and copying at the principal               and at the Commission’s Public
                                             Proposed Rule Change and Timing for                     office of the Exchange. All comments                  Reference Room.
                                             Commission Action                                       received will be posted without change.               II. Self-Regulatory Organization’s
                                                Within 45 days of the date of                        Persons submitting comments are
                                                                                                                                                           Statement of the Purpose of, and
                                             publication of this notice in the Federal               cautioned that we do not redact or edit
                                                                                                                                                           Statutory Basis for, the Proposed Rule
                                             Register or within such longer period (i)               personal identifying information from
                                                                                                     comment submissions. You should                       Change
                                             as the Commission may designate up to
                                             90 days of such date if it finds such                   submit only information that you wish                   In its filing with the Commission, the
                                             longer period to be appropriate and                     to make available publicly. All                       Exchange included statements
                                             publishes its reasons for so finding or                 submissions should refer to File                      concerning the purpose of and basis for
                                             (ii) as to which the Exchange consents,                 Number SR–Phlx–2018–22, and should                    the proposed rule change and discussed
                                             the Commission shall: (a) By order                      be submitted on or before April 26,                   any comments it received on the
                                             approve or disapprove such proposed                     2018.
                                                                                                                                                           proposed rule change. The text of these
                                             rule change, or (b) institute proceedings                 For the Commission, by the Division of              statements may be examined at the
                                             to determine whether the proposed rule                  Trading and Markets, pursuant to delegated            places specified in Item IV below. The
                                             change should be disapproved.                           authority.47                                          Exchange has prepared summaries, set
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                                             IV. Solicitation of Comments                            Eduardo Aleman,                                       forth in sections A, B, and C below, of
                                               Interested persons are invited to                     Assistant Secretary.                                  the most significant aspects of such
                                             submit written data, views, and                         [FR Doc. 2018–06916 Filed 4–4–18; 8:45 am]            statements.
                                             arguments concerning the foregoing,                     BILLING CODE 8011–01–P
                                             including whether the proposed rule                                                                             1 15   U.S.C. 78s(b)(1).
                                             change is consistent with the Act.                        47 17   CFR 200.30–3(a)(12).                          2 17   CFR 240.19b–4.



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                                                                            Federal Register / Vol. 83, No. 66 / Thursday, April 5, 2018 / Notices                                              14697

                                             A. Self-Regulatory Organization’s                       similar to the language currently in                  accumulations. Unlike the Nasdaq ISE
                                             Statement of the Purpose of, and                        place on the Exchange, the proposed                   Markets, however, the Exchange has
                                             Statutory Basis for, the Proposed Rule                  language: (1) Provides greater flexibility            fees that are based on a percentage of
                                             Change                                                  to remove a day when the Exchange                     industry volume. As such, the Exchange
                                                                                                     instructs members in writing to route                 is including language in its rule that
                                             1. Purpose                                              their orders to other markets, (2)                    accounts for these calculations by
                                                The purpose of the proposed rule                     modifies the provision so that members                explicitly mentioning that days may be
                                             change is to amend the Exchange’s                       will only have the day removed when                   removed from these calculations, and
                                             provisions for excluding a day from its                 doing so is beneficial for the member,                including language that explains that
                                             volume calculations for purposes of                     (3) applies the provision to ADV                      the day will be moved from both the
                                             determining volume based pricing. The                   calculations or calculation based on a                numerator of the calculation and the
                                             Exchange is standardizing its practice                  percentage of industry volume, and not                denominator of the calculation.
                                             for removing a day from volume                          for other volume-based pricing where                  Removing the day from both the
                                             calculations in the fee schedule with its               members would not benefit from having                 numerator and denominator of the
                                             affiliated options exchanges, Nasdaq                    the day excluded, and (4) accounts for                calculation will ensure that members
                                             ISE, LLC (‘‘ISE), Nasdaq GEMX, LLC                      calculations based on a percentage of                 benefit from this rule as removing the
                                             (‘‘GEMX’’), and Nasdaq MRX, LLC                         industry volume by removing the day                   day from the numerator only (i.e., the
                                             (‘‘MRX’’) (collectively, the ‘‘Nasdaq ISE               from both the numerator and                           member’s volume) without removing it
                                             Markets’’).                                             denominator of the calculation. Other                 from the denominator (i.e., industry
                                                To avoid penalizing members when                     than days where the Exchange closes                   volume) would penalize the member.
                                             aberrant low volume days result from                    early for a scheduled holiday
                                                                                                                                                           2. Statutory Basis
                                             systems or other issues at the Exchange,                observance, the Exchange will inform
                                             or where the Exchange closes early for                  members of days that are to be excluded                  The Exchange believes that its
                                             holiday observance, the Exchange has                    from its ADV calculations via system                  proposal is consistent with Section 6(b)
                                             language in its pricing schedule                        status message disseminated to all                    of the Act,6 in general, and furthers the
                                             allowing it to exclude certain days from                members.                                              objectives of Sections 6(b)(4) and 6(b)(5)
                                             its average daily volume (‘‘ADV’’) or                      The Nasdaq ISE Markets adopted the                 of the Act,7 in particular, in that it
                                             other volume calculations. Currently,                   language on instructing members to                    provides for the equitable allocation of
                                             language in the Exchange’s pricing                      route away to prevent situations where                reasonable dues, fees and other charges
                                             schedule provides that, for purposes of                 days that have artificially lower volume              among members and issuers and other
                                             determining average daily volume or                     could not be excluded, for example,                   persons using any facility, and is not
                                             volume-based pricing, any day that the                  because the exchange experienced an                   designed to permit unfair
                                             market is not open for the entire trading               issue in the morning that did not carry               discrimination between customers,
                                             day will be excluded from such                          over into the trading day. Like the                   issuers, brokers, or dealers.
                                                                                                     Nasdaq ISE Markets, the Exchange                         The Exchange believes that the
                                             calculation. The Exchange proposes to
                                                                                                     believes that it should have the                      proposed rule change is reasonable and
                                             adopt language for Phlx options 3 that is
                                                                                                     flexibility to exclude days if members                equitable as it provides a new
                                             identical to language currently in place
                                                                                                     have been instructed to send their                    framework for removing days from the
                                             on the Nasdaq ISE Markets,4 with the
                                                                                                     orders elsewhere, regardless of whether               Exchange’s volume calculations that the
                                             one exception that it would include
                                                                                                     the issue that resulted in this instruction           Exchange believes is beneficial to
                                             language that clarifies how this rule
                                                                                                     ultimately impacts the availability of the            members and consistent with similar
                                             applies to calculations that are based on
                                                                                                     Exchange for trading.                                 provisions already in place on its
                                             a percentage of industry volume.5
                                                                                                        In addition, to avoid penalizing                   affiliated options exchanges, with the
                                             Specifically, as proposed, any day that                                                                       one exception described above for fees
                                                                                                     members that step up and trade on a day
                                             the market is not open for the entire                                                                         based on a percentage of industry
                                                                                                     that the Exchange is experiencing
                                             trading day or the Exchange instructs                                                                         volume. The proposed rule change
                                                                                                     difficulties, the Nasdaq ISE Markets
                                             members in writing to route their orders                                                                      would allow the Exchange to remove a
                                                                                                     only remove days from their ADV
                                             to other markets may be excluded from                                                                         day from its ADV calculations in more
                                                                                                     calculations for members that would
                                             the ADV calculation or calculation                                                                            circumstances, i.e., when the Exchange
                                                                                                     have a lower ADV or percentage of
                                             based on a percentage of industry                                                                             instructs members in writing to route
                                                                                                     industry volume with the day included.
                                             volume; provided that the Exchange                                                                            their orders to other markets, and
                                                                                                     This provision would also be helpful on
                                             will only remove the day for members                    the Exchange as it would ensure that                  ensures that the Exchange will only do
                                             that would have a lower ADV or                          members that continue to execute a                    so in circumstances where beneficial for
                                             percentage of industry volume with the                  large volume of contracts are not                     the member due to the member
                                             day included. If a day is removed from                  inadvertently disadvantaged when the                  executing a lower ADV or percentage of
                                             a calculation based on a percentage of                  Exchange removes a day from its ADV                   industry volume during the excluded
                                             monthly industry volume, volume                         calculation.                                          day. The Exchange believes that it is
                                             executed that day will be removed from                     Furthermore, the proposed language                 reasonable and equitable to exclude a
                                             both the numerator and the                              applies to ADV calculations or                        day from its ADV calculations when
                                             denominator of the calculation. While                   calculation based on a percentage of                  members are instructed to route their
                                               3 Because the Exchange is conforming its practice
                                                                                                     industry volume, and not for other                    orders to other markets as this preserves
                                             for options markets only, the current language will
                                                                                                     volume-based pricing, as members do                   the Exchange’s intent behind adopting
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                                             remain in place for PSX equities.                       not benefit when a day is removed for                 volume-based pricing, and avoids
                                               4 See ISE Schedule of Fees, Preface; GEMX             straight volume accumulations. Again,                 penalizing members that follow this
                                             Schedule of Fees, Qualifying Tier Thresholds; and       the Exchange believes that the approach               instruction. Similarly, the Exchange
                                             MRX Schedule of Fees, Member Volume Program:            of the Nasdaq ISE Markets would be
                                             Qualifying Tier Thresholds.                                                                                   believes that it is reasonable and
                                               5 The Nasdaq ISE Markets do not have any fees         beneficial for the Exchange as it counts
                                             calculated based on a percentage of industry            volume executed during an excluded                      6 15   U.S.C. 78f(b).
                                             volume.                                                 day for purposes of straight volume                     7 15   U.S.C. 78f(b)(4) and (5).



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                                             14698                          Federal Register / Vol. 83, No. 66 / Thursday, April 5, 2018 / Notices

                                             equitable to only exclude a day from its                the reasons described above, the                        change that are filed with the
                                             calculations for members that would                     Exchange believes that the proposed fee                 Commission, and all written
                                             otherwise have a lower ADV or                           changes reflect this competitive                        communications relating to the
                                             percentage of industry volume. Without                  environment.                                            proposed rule change between the
                                             these changes, members that route away                                                                          Commission and any person, other than
                                                                                                     C. Self-Regulatory Organization’s                       those that may be withheld from the
                                             in accordance with the Exchange’s
                                             instructions, or that step up and trade                 Statement on Comments on the                            public in accordance with the
                                             significant volume on excluded trading                  Proposed Rule Change Received From                      provisions of 5 U.S.C. 552, will be
                                             days, may be negatively impacted,                       Members, Participants, or Others                        available for website viewing and
                                             resulting in an effective cost increase for               No written comments were either                       printing in the Commission’s Public
                                             those members. In addition, the                         solicited or received.                                  Reference Room, 100 F Street NE,
                                             Exchange believes that it is reasonable                                                                         Washington, DC 20549, on official
                                                                                                     III. Date of Effectiveness of the
                                             and equitable to apply the proposed                                                                             business days between the hours of
                                                                                                     Proposed Rule Change and Timing for
                                             language only to ADV based volume                                                                               10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                     Commission Action
                                             calculations and calculation based on a                                                                         filing also will be available for
                                             percentage of industry volume as                           The foregoing rule change has become                 inspection and copying at the principal
                                             removing the day for straight volume                    effective pursuant to Section                           office of the Exchange. All comments
                                             accumulations would never be                            19(b)(3)(A)(ii) of the Act.8                            received will be posted without change.
                                             beneficial for the member as it would                      At any time within 60 days of the                    Persons submitting comments are
                                             reduce the volume counted for the                       filing of the proposed rule change, the                 cautioned that we do not redact or edit
                                             member for the month. Furthermore, the                  Commission summarily may                                personal identifying information from
                                             proposed language about removing the                    temporarily suspend such rule change if                 comment submissions. You should
                                             day from both the numerator and                         it appears to the Commission that such                  submit only information that you wish
                                             denominator of a calculation based on a                 action is: (i) Necessary or appropriate in              to make available publicly.
                                             percentage of industry volume is                        the public interest; (ii) for the protection               All submissions should refer to File
                                             reasonable and equitable and this                       of investors; or (iii) otherwise in                     Number SR–Phlx–2018–27 and should
                                             treatment ensures that the member                       furtherance of the purposes of the Act.                 be submitted onor before April 26, 2018.
                                             actually benefits from having the day                   If the Commission takes such action, the                  For the Commission, by the Division of
                                             removed. Finally, the Exchange further                  Commission shall institute proceedings                  Trading and Markets, pursuant to delegated
                                             believes that the proposed rule change                  to determine whether the proposed rule                  authority.9
                                             is not unfairly discriminatory because it               should be approved or disapproved.                      Eduardo Aleman,
                                             applies equally to all members. While                   IV. Solicitation of Comments                            Assistant Secretary.
                                             the Exchange currently has rules in                                                                             [FR Doc. 2018–06911 Filed 4–4–18; 8:45 am]
                                             place for removing a day from its                         Interested persons are invited to
                                                                                                     submit written data, views, and                         BILLING CODE 8011–01–P
                                             pricing, the Exchange believes that the
                                             proposed changes will benefit all                       arguments concerning the foregoing,
                                             members by providing broader authority                  including whether the proposed rule
                                                                                                                                                             SECURITIES AND EXCHANGE
                                             to remove a day similar to that available               change is consistent with the Act.
                                                                                                                                                             COMMISSION
                                             on its affiliates, and ensuring that days               Comments may be submitted by any of
                                             are removed only in situations where                    the following methods:                                  [Release No. 34–82973; File No. SR–
                                             the member benefits.                                                                                            NYSEArca–2017–99]
                                                                                                     Electronic Comments
                                             B. Self-Regulatory Organization’s                         • Use the Commission’s internet                       Self-Regulatory Organizations; NYSE
                                             Statement on Burden on Competition                      comment form (http://www.sec.gov/                       Arca, Inc.; Notice of Filing of
                                               The Exchange does not believe that                    rules/sro.shtml); or                                    Amendment No. 3 and Order Granting
                                             the proposed rule change will impose                      • Send an email to rule-comments@                     Accelerated Approval of a Proposed
                                             any burden on competition not                           sec.gov. Please include File Number SR–                 Rule Change, as Modified by
                                             necessary or appropriate in furtherance                 Phlx–2018–27 on the subject line.                       Amendment No. 3, To List and Trade
                                             of the purposes of the Act. The                                                                                 Shares of the Hartford Schroders Tax-
                                                                                                     Paper Comments                                          Aware Bond ETF Under NYSE Arca
                                             proposed rule change is designed to
                                             standardize the Exchange’s practice for                   • Send paper comments in triplicate                   Rule 8.600–E
                                             removing days from its ADV                              to Secretary, Securities and Exchange
                                                                                                                                                             March 30, 2018.
                                             calculations with its affiliated options                Commission, 100 F Street NE,
                                             exchanges, with one exception that                      Washington, DC 20549–1090.                              I. Introduction
                                             accounts for fees based on a percentage                 All submissions should refer to File                       On October 11, 2017, NYSE Arca, Inc.
                                             of industry volume. The Exchange                        Number SR–Phlx–2018–27. This file                       (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
                                             believes that the proposed modifications                number should be included on the                        with the Securities and Exchange
                                             to its ADV calculations are pro-                        subject line if email is used. To help the              Commission (‘‘Commission’’), pursuant
                                             competitive and will result in lower                    Commission process and review your                      to Section 19(b)(1) of the Securities
                                             total costs to end users, a positive                    comments more efficiently, please use                   Exchange Act of 1934 (‘‘Act’’) 1 and Rule
                                             outcome of competitive markets. The                     only one method. The Commission will                    19b–4 thereunder,2 a proposed rule
                                             Exchange operates in a highly                           post all comments on the Commission’s                   change to list and trade shares
amozie on DSK30RV082PROD with NOTICES




                                             competitive market in which market                      internet website (http://www.sec.gov/                   (‘‘Shares’’) of the Hartford Schroders
                                             participants can readily direct their                   rules/sro.shtml). Copies of the                         Tax-Aware Bond ETF (‘‘Fund’’) under
                                             order flow to competing venues. In such                 submission, all subsequent                              NYSE Arca Rule 8.600–E. The proposed
                                             an environment, the Exchange must                       amendments, all written statements
                                             continually review, and consider                        with respect to the proposed rule                         9 17 CFR 200.30–3(a)(12).
                                             adjusting, its fees and rebates to remain                                                                         1 15 U.S.C. 78s(b)(1).
                                             competitive with other exchanges. For                     8 15   U.S.C. 78s(b)(3)(A)(ii).                         2 17 CFR 240.19b–4.




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Document Created: 2018-11-01 09:13:44
Document Modified: 2018-11-01 09:13:44
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 Citation83 FR 14696 

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