83 FR 16146 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.3, Criteria for Underlying Securities
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 72 (April 13, 2018)
Federal Register Volume 83, Issue 72 (April 13, 2018)
| Page Range | 16146-16150 | |
| FR Document | 2018-07673 |
[Federal Register Volume 83, Number 72 (Friday, April 13, 2018)] [Notices] [Pages 16146-16150] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-07673] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83018; File No. SR-CboeBZX-2018-025] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.3, Criteria for Underlying Securities April 8, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on March 29, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b- 4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend Rule 19.3(b). (additions are italicized; deletions are [bracketed]) * * * * * Cboe BZX Exchange, Inc. Rules * * * * * Rule 19.3. Criteria for Underlying Securities (a) (No change). (b) In addition, the Exchange shall from time to time establish standards to be considered in evaluating potential underlying securities for BZX Options options transactions. There are many relevant factors which must be considered in arriving at such a determination, and the fact that a particular security may meet the standards established by the Exchange does not necessarily mean that it will be selected as an underlying security. The Exchange may give consideration to maintaining diversity among various industries and issuers in selecting underlying securities. Notwithstanding the foregoing, an underlying security will not be selected unless: (1)-(4) (No change). (5) Either: (A) if the underlying security is a ``covered security'' as defined under Section 18(b)(1)(A) of the Securities Act of 1933, the market price per share of the underlying security has been at least $3.00 for the previous [five]three consecutive business days preceding the date on which the Exchange submits a certificate to the Clearing Corporation for listing and trading, as measured by the closing price reported in the primary market in which the underlying security is traded; or (B) (No change). (c)-(m) (No change). * * * * * The text of the proposed rule change is available at the Exchange's website at www.markets.cboe.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 parts of such statements. (A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 19.3, Criteria for Underlying Securities, to modify the criteria for listing options on an underlying security as defined in Section 18(b)(1)(A) of the Securities Act of 1933 (hereinafter ``covered security'' or ``covered securities''). This is a competitive filing that is based on a proposal recently submitted by Nasdaq PHLX LLC (``Nasdaq Phlx'') and approved by the Commission.\5\ --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 82474 (January 9, 2018), 83 FR 2240 (January 16, 2018) (order approving SR-Phlx-2017- 75); see also Securities Exchange Act Release No. 82828 (March 8, 2018), 83 FR 11278 (March 14, 2018) (notice of filing and immediate effectiveness of SR-MIAX-2018-06). --------------------------------------------------------------------------- In particular, the Exchange proposes to modify Rule 19.3(b)(5)(A) to permit the listing of an option on an underlying covered security that has a market price of at least $3.00 per share for the previous three (3) consecutive business days preceding the date on which the Exchange submits a certificate to the [[Page 16147]] Options Clearing Corporation (``OCC'') for listing and trading. The Exchange does not intend to amend any other criteria for listing options on an underlying security in Rule 19.3. Currently the underlying covered security must have a closing market price of $3.00 per share for the previous five (5) consecutive business days preceding the date on which the Exchange submits a listing certificate to OCC. In the proposed amendment, the market price will still be measured by the closing price reported in the primary market in which the underlying covered security is traded, but the measurement will be the price over the prior three (3) consecutive business day period preceding the submission of the listing certificate to OCC, instead of the prior five (5) business day period. The Exchange acknowledges that the Options Listing Procedures Plan \6\ requires that the listing certificate be provided to OCC no earlier than 12:01 a.m. and no later than 11:00 a.m. (Chicago time) on the trading day prior to the day on which trading is to begin.\7\ The proposed amendment will still comport with that requirement. For example, if an initial public offering (``IPO'') occurs at 11:00 a.m. on Monday, the earliest date the Exchange could submit its listing certificate to OCC would be on Thursday by 12:01 a.m. (Chicago time), with the market price determined by the closing price over the three- day period from Monday through Wednesday. The option on the IPO would then be eligible for trading on the Exchange on Friday. The proposed amendment would essentially enable options trading within four (4) business days of an IPO becoming available instead of six (6) business days (five (5) consecutive days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \6\ The Plan for the Purpose of Developing and Implementing Procedures Designed to Facilitate the Listing and Trading of Standardized Options Submitted Pursuant to Section 11a(2)(3)(B) of the Securities Exchange Act of 1934 (a/k/a the Options Listing Procedures Plan (``OLPP'')) is a national market system plan that, among other things, sets forth procedures governing the listing of new options series. See Securities Exchange Act Release No. 44521 (July 6, 2001), 66 FR 36809 (July 13, 2001) (Order approving OLPP). The sponsors of OLPP include OCC; Cboe BZX Exchange, Inc. (formerly BATS Exchange, Inc.); BOX Options Exchange LLC; Cboe C2 Exchange, Inc. (formerly C2 Options Exchange, Incorporated); Cboe Exchange, Inc. (formerly Chicago Board Options Exchange, Incorporated); Cboe EDGX Exchange, Inc. (formerly EDGX Exchange, Inc.); Miami International Securities Exchange, LLC; MIAX PEARL, LLC; The Nasdaq Stock Market LLC; NASDAQ BX, Inc.; Nasdaq PHLX LLC; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; NYSE American, LLC; and NYSE Arca, Inc. \7\ See OLPP at page 3. --------------------------------------------------------------------------- The Exchange's initial listing standards for equity options in Rule 19.3 (including the current price/time standard of $3.00 per share for five (5) consecutive business days) are substantially similar to the initial listing standards adopted by other options exchanges.\8\ At the time BZX Options received its initial approval from the Commission, as part of its Rules, the Exchange adopted the options industry adopted the ``look back'' period of five consecutive business days, because it determined that the five-day period was sufficient to protect against attempts to manipulate the market price of the underlying security and would provide a reliable test for stability.\9\ Surveillance technologies and procedures concerning manipulation have evolved since then to provide adequate prevention or detection of rule or securities law violations within the proposed time frame, and the Exchange represents that its existing trading surveillances are adequate to monitor the trading of options on the Exchange.\10\ --------------------------------------------------------------------------- \8\ See, e.g., Phlx Rule 1009, Commentary .01; see also MIAX Rule 402(b)(5) and BOX Rule 5020(b)(5). \9\ See Securities Exchange Act Release No. 61419 (January 26, 2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-031) (order approving rules governing the trading of options on the Cboe BZX Exchange). \10\ Such surveillance procedures generally focus on detecting securities trading subject to opening price manipulation, closing price manipulation, layering, spoofing or other unlawful activity impacting an underlying security, the option, or both. The Exchange has price movement alerts, unusual market activity and order book alerts active for all trading symbols. These real-time patterns are active for the new security as soon as the IPO begins trading. --------------------------------------------------------------------------- Furthermore, the Exchange notes that the scope of its surveillance program also includes cross-market surveillance for trading that is not just limited to the Exchange. In particular, the Exchange or the Financial Industry Regulatory Authority (``FINRA''), pursuant to a regulatory services agreement on behalf of the Exchange and its affiliate Cboe EDGX Exchange, Inc. (``EDGX''), operates a range of cross-market equity surveillance patterns to look for potential manipulative behavior, including spoofing, algorithm gaming, marking the close and open, and momentum ignition strategies, as well as more general, abusive behavior related to front running, wash sales, quoting/routing, and Reg SHO violations. These cross-market patterns incorporate relevant data from various markets beyond the Exchange and its affiliates, including data from the New York Stock Exchange (``NYSE'') and from the Nasdaq Stock Market (``Nasdaq''). Additionally, for options, the Exchange and EDGX utilize an array of patterns that monitor manipulation of options, or manipulation of equity securities (regardless of venue) for the purpose of impacting options prices on both the Exchange and EDGX options markets (i.e., mini-manipulation strategies). Surveillance coverage is initiated once options begin trading on either the Exchange or EDGX. Accordingly, the Exchange believes that the cross-market surveillance performed by the Exchange or FINRA on behalf of the Exchange and EDGX, coupled with the Exchange staff's real-time monitoring of similarly violative activity on the Exchange and EDGX as described herein, reflects a comprehensive surveillance program that is adequate to monitor for manipulation of the underlying security and overlying option within the proposed three- day look back period. Furthermore, the Exchange notes that the proposed listing criteria would still require that the underlying security be listed on NYSE, the American Stock Exchange (now known as NYSE American), or the National Market System of The Nasdaq Stock Market (now known as the Nasdaq Global Market) (collectively, the ``Named Markets''), as provided for in the definition of ``covered security'' from Section 18(b)(1)(A) of the 1933 Act. Accordingly, the Exchange believes that the proposed rule change would still ensure that the underlying security meets the high listing standards of a Named Market, and would also ensure that the underlying is covered by the regulatory protections (including market surveillance, investigation and enforcement) offered by these exchanges for trading in covered securities conducted on their facilities. Furthermore, the Nasdaq had no cases within the past five years where an IPO-related issue for which it had pricing information qualified for the $3.00 price requirement during the first three (3) days of trading and did not qualify for the $3.00 price requirement during the first five (5) days.\11\ In other words, none of these qualifying issues fell below the $3.00 threshold within the first three (3) or five (5) days of trading. As such, the Exchange believes that its existing surveillance technologies and procedures, coupled with Nasdaq's [[Page 16148]] findings related to the IPO-related issues as described herein, adequately address potential concerns regarding possible manipulation or price stability within the proposed timeframe. --------------------------------------------------------------------------- \11\ There were over 750 IPO-related issues on Nasdaq within the past five years. Out of all of the issues with pricing information, there was only one issue that had a price below $3 during the first five consecutive business days. The Exchange notes, however, that Nasdaq allows for companies to list on the Nasdaq Capital Market at $2.00 or $3.00 per share in some instances, which was the case for this particular issue. See Nasdaq Rule 5500 Series for initial listing standards on the Nasdaq Capital Market; see also Release No. 82474 in supra note 5. --------------------------------------------------------------------------- The Exchange also believes that the proposed look back period can be implemented in connection with the other initial listing criteria for underlying covered securities. In particular, the Exchange recognizes that it may be difficult to verify the number of shareholders in the days immediately following an IPO due to the fact that stock trades generally clear within two business days (T+2) of their trade date and therefore the shareholder count will generally not be known until T+2.\12\ The Exchange notes that the current T+2 settlement cycle was recently reduced from T+3 on September 5, 2017 in connection with the Commission's amendments to Rule 15c6-1(a) to adopt the shortened settlement cycle,\13\ and the look back period of three (3) consecutive business days proposed herein reflects this shortened T+2 settlement period. As proposed, stock trades would clear within T+2 of their trade date (i.e., within three (3) business days) and therefore the number of shareholders could be verified within three (3) business days, thereby enabling options trading within four (4) business days of an IPO (three (3) consecutive business days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \12\ The number of shareholders of record can be validated by large clearing agencies such as The Depository Trust and Clearing Corporation (``DTCC'') upon the settlement date (i.e., T+2). \13\ See Securities Exchange Act Release No. 78962 (September 28, 2016), 81 FR 69240 (October 5, 2016) (Amendment to Securities Transaction Settlement Cycle) (File No. S7-22-16). --------------------------------------------------------------------------- Furthermore, the Exchange notes that it can verify the shareholder count with various brokerage firms that have a large retail customer clientele. Such firms can confirm the number of individual customers who have a position in the new issue. The earliest that these firms can provide confirmation is usually the day after the first day of trading (T+1) on an unsettled basis, while others can confirm on the third day of trading (T+2). The Exchange has confirmed with some of these brokerage firms who provide shareholder numbers to the Exchange that they are T+2 after an IPO. For the foregoing reasons, the Exchange believes that basing the proposed three (3) business day look back period on the T+2 settlement cycle would allow for sufficient verification of the number of shareholders. The proposed rule change will apply to all covered securities that meet the criteria of Rule 19.3. Pursuant to Rule 19.3, the Exchange establishes guidelines to be considered in evaluating the potential underlying securities for Exchange option transactions.\14\ However, the fact that a particular security may meet the guidelines established by the Exchange does not necessarily mean that it will be approved as an underlying security.\15\ As part of the established criteria, the issuer must be in compliance with any applicable requirement of the Securities Exchange Act of 1934.\16\ Additionally, there are many relevant factors that are considered in arriving at a determination to approve an underlying security.\17\ Even if the proposed option meets the objective criteria, the Exchange may decide not to list, or place limitations or conditions upon listing.\18\ The Exchange believes that these measures, together with its existing surveillance procedures, provide adequate safeguards in the review of any covered security that may meet the proposed criteria for consideration of the option within the timeframe contained in this proposal. --------------------------------------------------------------------------- \14\ See Rule 19.3(b). The Exchange established specific criteria to be considered in evaluating potential underlying securities for Exchange option transactions. \15\ Id. \16\ See Rule 19.3(b)(3). \17\ See Rule 19.3(b). \18\ Id. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\19\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \20\ requirements that the rules of an exchange be 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \21\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b). \20\ 15 U.S.C. 78f(b)(5). \21\ Id. --------------------------------------------------------------------------- The Exchange believes that the proposed changes to its listing standards for covered securities would allow the Exchange to more quickly list options on a qualifying covered security that has met the $3.00 eligibility price without sacrificing investor protection. As discussed above, the Exchange believes that its existing trading surveillances provide a sufficient measure of protection against potential price manipulation within the proposed three (3) consecutive business day timeframe. The Exchange also believes that the proposed three (3) consecutive business day timeframe would continue to be a reliable test for price stability in light of Nasdaq's findings that none of the IPO-related issues on Nasdaq within the past five years that qualified for the $3.00 per share price standard during the first three trading days fell below the $3.00 threshold during the fourth or fifth trading day. Furthermore, the established guidelines to be considered by the Exchange in evaluating the potential underlying securities for Exchange option transactions,\22\ together with existing trading surveillances, provide adequate safeguards in the review of any covered security that may meet the proposed criteria for consideration of the option within the proposed timeframe. --------------------------------------------------------------------------- \22\ See supra notes 14-18. --------------------------------------------------------------------------- In addition, the Exchange believes that basing the proposed timeframe on the T+2 settlement cycle adequately addresses the potential difficulties in confirming the number of shareholders of the underlying covered security. Having some of the largest brokerage firms that provide these shareholder counts to the Exchange confirm that they are able to provide these numbers within T+2 further demonstrates that the 2,000 shareholder requirement can be sufficiently verified within the proposed timeframe. For the foregoing reasons, the Exchange believes that the proposed amendments will remove and perfect the mechanism of a free and open market and a national market system by providing an avenue for investors to swiftly hedged their investment in the stock in a shorter amount of time than what is currently in place.\23\ --------------------------------------------------------------------------- \23\ This proposed rule change does not alter any obligations of issuers or other investors of an IPO that may be subject to a lock- up or other restrictions on trading related securities. --------------------------------------------------------------------------- Finally, it should be noted that a price/time standard for the underlying security was first adopted when the listed options market was in its infancy, [[Page 16149]] and was intended to prevent the proliferation of options being listed on low-priced securities that presented special manipulation concerns and/or lacked liquidity needed to maintain fair and orderly markets.\24\ When options trading commenced in 1973, the Commission determined that it was necessary for securities underlying options to meet certain minimum standards regarding both the quality of the issuer and the quality of the market for a particular security.\25\ These standards, including a price/time standard, were imposed to ensure that those issuers upon whose securities options were to be traded were widely-held, financially sound companies whose shares had trading volume and float substantial enough so as not to be readily susceptible to manipulation.\26\ At the time, the Commission determined that the imposition of these standards was reasonable in view of the pilot nature of options trading and the limited experience of investors with options trading.\27\ --------------------------------------------------------------------------- \24\ See Securities Exchange Act Release No. 29628 (August 29, 1991), 56 FR 43949-01 (September 5, 1991) (SR-AMEX-86-21; SR-CBOE- 86-15; SR-NYSE-86-20; SR-PSE-86-15; and SR-PHLX-86-21) (``1991 Approval Order'') at 43949 (discussing the Commission's concerns when options trading initially commenced in 1973). \25\ See 1991 Approval Order at 43949. \26\ Id. \27\ Id. --------------------------------------------------------------------------- Now more than 40 years later, the listed options market has evolved into a mature market with sophisticated investors. In view of this evolution, the Commission has approved various exchange proposals to relax some of these initial listing standards throughout the years,\28\ including reducing the price/time standard in 2003 from $7.50 per share for the majority of business days over a three month period to the current $3.00 per share/five business day standard (``2003 Proposal'').\29\ It has been almost fifteen years since the Commission approved the 2003 proposal, and both the listed options market and exchange technologies have continued to evolve since then. In this instance, the Exchange is only proposing a modest reduction of the current five (5) business day standard to three (3) business days to correspond to the securities industry's move to a T+2 standard settlement cycle.\30\ The $3.00 per share standard and all other initial options listing criteria in Rule 19.3 will remain unchanged by this proposal. For the reasons discussed herein, the Exchange therefore believes that the proposed three (3) business day period will be beneficial to the marketplace without sacrificing investor protections. --------------------------------------------------------------------------- \28\ See, e.g., 1991 Approval Order (modifying a number of initial listing criteria, including the reduction of the price/time standard from $10 per share each day during the preceding three calendar months to $7.50 per share for the majority of days during the same period). \29\ See Securities Exchange Act Release Nos. 47190 (January 15, 2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62); 47352 (February 11, 2003), 68 FR 8319 (February 20, 2003) (SR-PCX-2003- 06); 47483 (March 11, 2003), 68 FR 13352 (March 19, 2003) (SR-ISE- 2003-04); 47613 (April 1, 2003), 68 FR 17120 (April 8, 2003) (SR- Amex-2003-19); and 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003) (SR-Phlx-2003-27). \30\ See supra note 13. --------------------------------------------------------------------------- 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. In this regard and as indicated above, the Exchange notes that the rule change is being proposed as a competitive response to a filing submitted by Nasdaq Phlx that was recently approved by the Commission.\31\ The proposed rule change will reduce the number of days to list options on an underlying security, and is intended to bring new options listings to the marketplace quicker. --------------------------------------------------------------------------- \31\ See supra note 5. --------------------------------------------------------------------------- (B) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) \32\ of the Act and Rule 19b- 4(f)(6) thereunder.\33\ --------------------------------------------------------------------------- \32\ 15 U.S.C. 78s(b)(3)(A). \33\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, 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 requirement. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \34\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \35\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange states that waiver of the 30-day operative delay would allow the Exchange greater flexibility in bringing new options listing to the marketplace more quickly, which will be beneficial to the marketplace permit fair competition among the exchanges by allowing the Exchange to modify the criteria for listing an option on an underlying covered security which is currently allowed on Nasdaq Phlx.\36\ Based on the foregoing, the Commission believes the waiver of the operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal operative upon filing.\37\ --------------------------------------------------------------------------- \34\ 17 CFR 240.19b-4(f)(6). \35\ 17 CFR 240.19b-4(f)(6)(iii). \36\ See supra note 5. \37\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 proposal is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File No. SR-CboeBZX-2018-025 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange [[Page 16150]] Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File No. SR-CboeBZX-2018-025. 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 such filing will also 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 No. SR-CboeBZX-2018-025 and should be submitted on or before May 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\38\ --------------------------------------------------------------------------- \38\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-07673 Filed 4-12-18; 8:45 am] BILLING CODE 8011-01-P
![16146 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Notices
including whether the proposal is SECURITIES AND EXCHANGE (A) if the underlying security is a ‘‘covered
consistent with the Act. Comments may COMMISSION security’’ as defined under Section
be submitted by any of the following 18(b)(1)(A) of the Securities Act of 1933, the
[Release No. 34–83018; File No. SR– market price per share of the underlying
methods: CboeBZX–2018–025] security has been at least $3.00 for the
Electronic Comments previous [five]three consecutive business
Self-Regulatory Organizations; Cboe days preceding the date on which the
• Use the Commission’s internet BZX Exchange, Inc.; Notice of Filing Exchange submits a certificate to the Clearing
comment form (http://www.sec.gov/ and Immediate Effectiveness of a Corporation for listing and trading, as
rules/sro.shtml); or Proposed Rule Change To Amend Rule measured by the closing price reported in the
• Send an email to rule-comments@ primary market in which the underlying
19.3, Criteria for Underlying Securities security is traded; or
sec.gov. Please include File No. SR–
CboeEDGX–2018–011 on the subject April 8, 2018. (B) (No change).
(c)–(m) (No change).
line. Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the * * * * *
Paper Comments The text of the proposed rule change
‘‘Act’’),1 and Rule 19b–4 thereunder,2
• Send paper comments in triplicate notice is hereby given that on March 29, is available at the Exchange’s website at
to Secretary, Securities and Exchange 2018, Cboe BZX Exchange, Inc. (the www.markets.cboe.com, at the principal
Commission, 100 F Street NE, ‘‘Exchange’’ or ‘‘BZX Options’’) filed office of the Exchange, and at the
Washington, DC 20549–1090. with the Securities and Exchange Commission’s Public Reference Room.
All submissions should refer to File No. Commission (‘‘Commission’’) the II. Self-Regulatory Organization’s
SR–CboeEDGX–2018–011. This file proposed rule change as described in Statement of the Purpose of, and
number should be included on the Items I and II below, which Items have Statutory Basis for, the Proposed Rule
subject line if email is used. To help the been prepared by the Exchange. The Change
Commission process and review your Exchange has designated this proposal
comments more efficiently, please use In its filing with the Commission, the
as a ‘‘non-controversial’’ proposed rule
only one method. The Commission will Exchange included statements
change pursuant to Section 19(b)(3)(A)
post all comments on the Commission’s concerning the purpose of and basis for
of the Act 3 and Rule 19b–4(f)(6)(iii)
internet website (http://www.sec.gov/ the proposed rule change and discussed
thereunder,4 which renders it effective
rules/sro.shtml). Copies of the any comments it received on the
upon filing with the Commission. The
submission, all subsequent proposed rule change. The text of these
Commission is publishing this notice to
amendments, all written statements statements may be examined at the
solicit comments on the proposed rule
with respect to the proposed rule places specified in Item IV below. The
change from interested persons.
Exchange has prepared summaries, set
change that are filed with the
I. Self-Regulatory Organization’s forth in Sections A, B, and C below, of
Commission, and all written
Statement of the Terms of Substance of the most significant parts of such
communications relating to the
the Proposed Rule Change statements.
proposed rule change between the
Commission and any person, other than The Exchange filed a proposal to (A) Self-Regulatory Organization’s
those that may be withheld from the amend Rule 19.3(b). Statement of the Purpose of, and
public in accordance with the (additions are italicized; deletions are Statutory Basis for, the Proposed Rule
provisions of 5 U.S.C. 552, will be [bracketed]) Change
available for website viewing and * * * * * 1. Purpose
printing in the Commission’s Public
Cboe BZX Exchange, Inc. The Exchange proposes to amend
Reference Room, 100 F Street NE,
Washington, DC 20549, on official Rules Rule 19.3, Criteria for Underlying
business days between the hours of * * * * * Securities, to modify the criteria for
10:00 a.m. and 3:00 p.m. Copies of such listing options on an underlying
Rule 19.3. Criteria for Underlying Securities security as defined in Section
filing will also be available for
inspection and copying at the principal (a) (No change). 18(b)(1)(A) of the Securities Act of 1933
office of the Exchange. All comments (b) In addition, the Exchange shall from (hereinafter ‘‘covered security’’ or
time to time establish standards to be ‘‘covered securities’’). This is a
received will be posted without change. considered in evaluating potential
Persons submitting comments are competitive filing that is based on a
underlying securities for BZX Options
cautioned that we do not redact or edit options transactions. There are many relevant
proposal recently submitted by Nasdaq
personal identifying information from factors which must be considered in arriving PHLX LLC (‘‘Nasdaq Phlx’’) and
comment submissions. You should at such a determination, and the fact that a approved by the Commission.5
submit only information that you wish particular security may meet the standards In particular, the Exchange proposes
to make available publicly. All established by the Exchange does not to modify Rule 19.3(b)(5)(A) to permit
submissions should refer to File No. necessarily mean that it will be selected as the listing of an option on an underlying
an underlying security. The Exchange may covered security that has a market price
SR–CboeEDGX–2018–011 and should be give consideration to maintaining diversity
submitted on or before May 4, 2018. of at least $3.00 per share for the
among various industries and issuers in previous three (3) consecutive business
For the Commission, by the Division of selecting underlying securities.
Notwithstanding the foregoing, an underlying days preceding the date on which the
Trading and Markets, pursuant to delegated
Exchange submits a certificate to the
daltland on DSKBBV9HB2PROD with NOTICES
authority.38 security will not be selected unless:
Eduardo A. Aleman, (1)–(4) (No change).
5 See Securities Exchange Act Release No. 82474
(5) Either:
Assistant Secretary. (January 9, 2018), 83 FR 2240 (January 16, 2018)
[FR Doc. 2018–07675 Filed 4–12–18; 8:45 am] 1 15
(order approving SR–Phlx–2017–75); see also
U.S.C. 78s(b)(1). Securities Exchange Act Release No. 82828 (March
BILLING CODE 8011–01–P 2 17 CFR 240.19b–4. 8, 2018), 83 FR 11278 (March 14, 2018) (notice of
3 15 U.S.C. 78s(b)(3)(A).
filing and immediate effectiveness of SR–MIAX–
38 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(6)(iii). 2018–06).
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![16150 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Notices
Commission, 100 F Street NE, SECURITIES AND EXCHANGE has received no comments on the
Washington, DC 20549–1090. COMMISSION proposal. The Commission is publishing
this notice to solicit comments on
All submissions should refer to File No. [Release No. 34–83014; File No. SR–
Amendment No. 2 from interested
SR–CboeBZX–2018–025. This file CboeBZX–2017–023]
persons and is approving the proposed
number should be included on the rule change, as modified by Amendment
Self-Regulatory Organizations;
subject line if email is used. To help the No. 2, on an accelerated basis.
CboeBZX Exchange, Inc.; Notice of
Commission process and review your Filing of Amendment No. 2 and Order
comments more efficiently, please use II. Exchange’s Description of the
Granting Accelerated Approval of a Proposal, as Modified by Amendment
only one method. The Commission will Proposed Rule Change, as Modified by
post all comments on the Commission’s No. 2
Amendment No. 2, To List and Trade
internet website (http://www.sec.gov/ Shares of the iShares Gold Strategy A. Self-Regulatory Organization’s
rules/sro.shtml). Copies of the ETF Under Exchange Rule 14.11(i) Statement of the Purpose of, and
submission, all subsequent Statutory Basis for, the Proposed Rule
amendments, all written statements April 9, 2018. Change
with respect to the proposed rule I. Introduction 1. Purpose
change that are filed with the On December 21, 2017, CboeBZX This Amendment No. 2 to SR–
Commission, and all written Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) CboeBZX–2017–023 amends and
communications relating to the filed with the Securities and Exchange replaces in its entirety Amendment No.
proposed rule change between the Commission (‘‘Commission’’), pursuant
Commission and any person, other than to Section 19(b)(1) of the Securities 80% of the Fund’s investments in Gold Futures (as
those that may be withheld from the Exchange Act of 1934 (‘‘Act’’) 1 and Rule defined below), as calculated using gross notional
public in accordance with the 19b–4 thereunder,2 a proposed rule exposure, will be in CME-listed or LME-listed gold
futures or other exchange-traded gold futures with
provisions of 5 U.S.C. 552, will be change to list and trade shares a similar liquidity profile; (6) represented that all
available for website viewing and (‘‘Shares’’) of the iShares Gold Strategy of the Listed Gold Derivatives (as defined below)
printing in the Commission’s Public ETF (‘‘Fund’’), a series of the iShares held by the Fund will trade on markets that are a
U.S. ETF Trust (‘‘Trust’’), under member of, or affiliated with a member of, the
Reference Room, 100 F Street NE, Intermarket Surveillance Group, or with which the
Washington, DC 20549, on official Exchange Rule 14.11(i) (‘‘Managed Fund Exchange has in place a comprehensive
business days between the hours of Shares’’). The proposed rule change was surveillance sharing agreement; (7) represented that
10:00 a.m. and 3:00 p.m. Copies of such published for comment in the Federal all exchange-traded products held by the Fund will
Register on January 11, 2018.3 On be listed on U.S. national securities exchanges; (8)
filing will also be available for stated that the Fund’s investments in derivatives
inspection and copying at the principal February 22, 2018, pursuant to Section will primarily consist of Gold Futures and clarified
office of the Exchange. All comments 19(b)(2) of the Act,4 the Commission the circumstances under which the Fund may
received will be posted without change. designated a longer period within which invest in other specified derivatives; (9) represented
to approve the proposed rule change, that the Fund will not hold mortgage-backed or
Persons submitting comments are other asset-backed government obligations; (10)
disapprove the proposed rule change, or clarified that the Fund will not invest in sovereign
cautioned that we do not redact or edit
institute proceedings to determine debt obligations of emerging market countries; (11)
personal identifying information from whether to disapprove the proposed represented that all Fixed Income Investments (as
comment submissions. You should rule change.5 On February 28, 2018, the defined below) held by the Fund will be investment
submit only information that you wish grade and will not include instruments with a
Exchange filed Amendment No. 1 to the maturity longer than 397 days; (12) clarified the
to make available publicly. All proposed rule change, which replaced Cash Equivalents (as defined below) in which the
submissions should refer to File No. and superseded the proposed rule Fund may invest; (13) stated that up to 25% of the
SR–CboeBZX–2018–025 and should be change as originally filed. On April 4, total assets of the Fund may be indirectly held
through the Subsidiary (as defined below); (14)
submitted on or before May 4, 2018. 2018, the Exchange filed Amendment made representations relating to the Fund’s
For the Commission, by the Division of No. 2 to the proposed rule change, investments in derivatives, including that such
Trading and Markets, pursuant to delegated which replaced and superseded the investments will be made consistent with the
proposed rule change as modified by Investment Company Act of 1940 and the Fund’s
authority.38 objective and policies, that the Fund does not
Eduardo A. Aleman,
Amendment No. 1.6 The Commission intend to make investments for the purposes of
enhancing leverage, and that the Fund will take
Assistant Secretary. 1 15 U.S.C. 78s(b)(1). certain actions to mitigate and disclose leveraging
[FR Doc. 2018–07673 Filed 4–12–18; 8:45 am] 2 17 CFR 240.19b–4. risk; (15) stated where pricing information for the
3 See Securities Exchange Act Release No. 82444 Fund’s permitted investments will be publicly
BILLING CODE 8011–01–P available; (16) made additional representations
(Jan. 5, 2018), 83 FR 1438.
4 15 U.S.C. 78s(b)(2). regarding the Fund, including where information
5 See Securities Exchange Act Release No. 82758,
relating to the Fund and the Shares will be made
available; (17) provided additional justification for
83 FR 8717 (Feb. 28, 2018). The Commission why the Fund’s proposed investments are
designated April 11, 2018, as the date by which it consistent with the Act, including why it is
should approve or disapprove, or institute consistent with the Act for the Fund to hold fixed
proceedings to determine whether to disapprove, income instruments in a manner that may not
the proposed rule change. comply with Exchange Rule 14.11(i)(4)(C)(ii); (18)
6 In Amendment No. 2, the Exchange: (1) Made
represented that the Fixed Income Investments of
changes to reflect that the Fund’s name changed; (2) the Fund will meet the requirements of Exchange
represented that the Adviser (as defined below) will Rule 14.11(i)(4)(C)(ii)(e); (19) made additional
daltland on DSKBBV9HB2PROD with NOTICES
erect and maintain fire walls with respect to its representations regarding the ability of the
current and future broker-dealer affiliates; (3) stated Exchange and the Financial Industry Regulatory
that the Fund’s investments in fixed income Authority, on behalf of the Exchange, to surveil
instruments may not comply with Exchange Rule trading in the Shares and certain of the underlying
14.11(i)(4)(C)(ii); (4) modified and clarified the investments; and (20) made other clarifications,
Fund’s permitted investments, including with corrections, and technical changes. Amendment No.
respect to the listed and over-the-counter 2 is available at: https://www.sec.gov/comments/sr-
derivatives and the fixed income instruments that cboebzx-2017-023/cboebzx2017023-3383514-
38 17 CFR 200.30–3(a)(12). the Fund may invest in; (5) represented that at least 162149.pdf.
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Document Created: 2018-04-13 00:18:22
Document Modified: 2018-04-13 00:18:22
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 16146 |
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