83 FR 31233 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Exchange's Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 128 (July 3, 2018)

Page Range		31233-31234
FR Document		2018-14294
Federal Register, Volume 83 Issue 128 (Tuesday, July 3, 2018)
[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)]
[Notices]
[Pages 31233-31234]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-14294]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83533; File No. SR-GEMX-2018-23]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the 
Exchange's Penny Pilot Program

June 28, 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 June 25, 2018, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I and II below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to extend a pilot program 
to quote and to trade certain options classes in penny increments 
(``Penny Pilot Program'').
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqgemx.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.

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

1. Purpose
    Under the Penny Pilot Program, the minimum price variation for all 
participating options classes, except for the Nasdaq-100 Index Tracking 
Stock (``QQQQ''), the SPDR S&P 500 Exchange Traded Fund (``SPY'') and 
the iShares Russell 2000 Index Fund (``IWM''), is $0.01 for all 
quotations in options series that are quoted at less than $3 per 
contract and $0.05 for all quotations in options series that are quoted 
at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01 
increments for all options series. The Penny Pilot Program is currently 
scheduled to expire on June 30, 2018.\3\ The Exchange proposes to 
extend the Penny Pilot Program through December 31, 2018, and to 
provide a revised date for adding replacement issues to the Penny Pilot 
Program. The Exchange proposes that any Penny Pilot Program issues that 
have been delisted may be replaced on the second trading day following 
July 1, 2018. The replacement issues will be selected based on trading 
activity for the most recent six month period excluding the month 
immediately preceding the replacement (i.e., beginning December 1, 
2017, and ending May 31, 2018). This filing does not propose any 
substantive changes to the Penny Pilot Program: All classes currently 
participating will remain the same and all minimum increments will 
remain unchanged. The Exchange believes the benefits to public 
customers and other market participants who will be able to express 
their true prices to buy and sell options have been demonstrated to 
outweigh any increase in quote traffic.
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    \3\ See Exchange Act Release No. 82356 (December 19, 2017), 82 
FR 61089 (December 26, 2017) (SR-GEMX-2017-57).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6(b) of the Act.\4\ 
Specifically, the proposed rule change is consistent with Section 
6(b)(5) of the Act,\5\ because it is designed to promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest. In 
particular, the proposed rule change, which extends the Penny Pilot 
Program for an additional six months, will enable public customers and 
other market participants to express their true prices to buy and sell 
options to the benefit of all market participants.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\6\ the Exchange does 
not believe that the proposed rule change will impose any burden on 
intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Specifically, 
the Exchange believes that, by extending the expiration of the Penny 
Pilot Program, the proposed rule change will allow for further analysis 
of the Penny Pilot Program and a determination of how the Penny Pilot 
Program should be structured in the future. In doing so, the proposed 
rule change will also serve to promote regulatory clarity and 
consistency, thereby reducing burdens on the marketplace and 
facilitating investor protection.
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    \6\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).

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[[Page 31234]]

    A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally 
does not become operative prior to 30 days after the date of the 
filing.\10\ However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the 
Commission may designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because doing so will allow the Pilot Program to continue without 
interruption in a manner that is consistent with the Commission's prior 
approval of the extension and expansion of the Pilot Program and will 
allow the Exchange and the Commission additional time to analyze the 
impact of the Pilot Program.\12\ Accordingly, the Commission designates 
the proposed rule change as operative upon filing with the 
Commission.\13\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this pre-filing requirement.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ See Securities Exchange Act Release No. 61061 (November 24, 
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
    \13\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-GEMX-2018-23 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-GEMX-2018-23. 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-GEMX-2018-23 and should be submitted on 
or before July 24, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14294 Filed 7-2-18; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31233

persons relying on the exemptions that Exchange has prepared summaries, set just and equitable principles of trade,
are the subject of this Order. forth in sections A, B, and C below, of remove impediments to and perfect the
For the Commission, by the Division of the most significant aspects of such mechanisms of a free and open market
Trading and Markets, pursuant to delegated statements. and a national market system and, in
authority.11
A. Self-Regulatory Organization’s general, to protect investors and the
Eduardo A. Aleman, Statement of the Purpose of, and public interest. In particular, the
Assistant Secretary. Statutory Basis for, the Proposed Rule proposed rule change, which extends
[FR Doc. 2018–14288 Filed 7–2–18; 8:45 am] Change the Penny Pilot Program for an
BILLING CODE 8011–01–P
additional six months, will enable
1. Purpose public customers and other market
Under the Penny Pilot Program, the participants to express their true prices
SECURITIES AND EXCHANGE minimum price variation for all to buy and sell options to the benefit of
COMMISSION participating options classes, except for all market participants.
[Release No. 34–83533; File No. SR–GEMX–
the Nasdaq-100 Index Tracking Stock B. Self-Regulatory Organization’s
2018–23] (‘‘QQQQ’’), the SPDR S&P 500 Exchange Statement on Burden on Competition
Traded Fund (‘‘SPY’’) and the iShares
Self-Regulatory Organizations; Nasdaq Russell 2000 Index Fund (‘‘IWM’’), is In accordance with Section 6(b)(8) of
GEMX, LLC; Notice of Filing and $0.01 for all quotations in options series the Act,6 the Exchange does not believe
Immediate Effectiveness of Proposed that are quoted at less than $3 per that the proposed rule change will
Rule Change To Extend the contract and $0.05 for all quotations in impose any burden on intermarket or
Exchange’s Penny Pilot Program options series that are quoted at $3 per intramarket competition that is not
contract or greater. QQQQ, SPY and necessary or appropriate in furtherance
June 28, 2018. IWM are quoted in $0.01 increments for of the purposes of the Act. Specifically,
Pursuant to Section 19(b)(1) of the all options series. The Penny Pilot the Exchange believes that, by extending
Securities Exchange Act of 1934 Program is currently scheduled to the expiration of the Penny Pilot
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 expire on June 30, 2018.3 The Exchange Program, the proposed rule change will
notice is hereby given that on June 25, proposes to extend the Penny Pilot allow for further analysis of the Penny
2018, Nasdaq GEMX, LLC (‘‘GEMX’’ or Program through December 31, 2018, Pilot Program and a determination of
‘‘Exchange’’) filed with the Securities and to provide a revised date for adding how the Penny Pilot Program should be
and Exchange Commission (‘‘SEC’’ or replacement issues to the Penny Pilot structured in the future. In doing so, the
‘‘Commission’’) the proposed rule Program. The Exchange proposes that proposed rule change will also serve to
change as described in Items I and II any Penny Pilot Program issues that promote regulatory clarity and
below, which Items have been prepared have been delisted may be replaced on consistency, thereby reducing burdens
by the Exchange. The Commission is the second trading day following July 1, on the marketplace and facilitating
publishing this notice to solicit 2018. The replacement issues will be investor protection.
comments on the proposed rule change selected based on trading activity for the
from interested persons. C. Self-Regulatory Organization’s
most recent six month period excluding
Statement on Comments on the
I. Self-Regulatory Organization’s the month immediately preceding the
Proposed Rule Change Received From
Statement of the Terms of Substance of replacement (i.e., beginning December
Members, Participants, or Others
the Proposed Rule Change 1, 2017, and ending May 31, 2018). This
filing does not propose any substantive No written comments were either
The Exchange proposes to amend its changes to the Penny Pilot Program: All solicited or received.
rules to extend a pilot program to quote classes currently participating will
and to trade certain options classes in remain the same and all minimum III. Date of Effectiveness of the
penny increments (‘‘Penny Pilot increments will remain unchanged. The Proposed Rule Change and Timing for
Program’’). Exchange believes the benefits to public Commission Action
The text of the proposed rule change customers and other market participants
is available on the Exchange’s website at The Exchange has filed the proposed
who will be able to express their true rule change pursuant to Section
http://nasdaqgemx.cchwallstreet.com/, prices to buy and sell options have been
at the principal office of the Exchange, 19(b)(3)(A)(iii) of the Act 7 and Rule
demonstrated to outweigh any increase 19b–4(f)(6) thereunder.8 Because the
and at the Commission’s Public in quote traffic.
Reference Room. proposed rule change does not: (i)
2. Statutory Basis Significantly affect the protection of
II. Self-Regulatory Organization’s investors or the public interest; (ii)
Statement of the Purpose of, and The Exchange believes that the
impose any significant burden on
Statutory Basis for, the Proposed Rule proposed rule change is consistent with
competition; and (iii) become operative
Change the requirements of the Act and the
prior to 30 days from the date on which
rules and regulations thereunder that
In its filing with the Commission, the it was filed, or such shorter time as the
are applicable to a national securities
Exchange included statements Commission may designate, if
exchange, and, in particular, with the
concerning the purpose of and basis for consistent with the protection of
requirements of Section 6(b) of the Act.4
the proposed rule change and discussed investors and the public interest, the
Specifically, the proposed rule change is
sradovich on DSK3GMQ082PROD with NOTICES

any comments it received on the proposed rule change has become
consistent with Section 6(b)(5) of the effective pursuant to Section 19(b)(3)(A)
proposed rule change. The text of these Act,5 because it is designed to promote
statements may be examined at the of the Act and Rule 19b–4(f)(6)(iii)
places specified in Item IV below. The 3 See Exchange Act Release No. 82356 (December
thereunder.
19, 2017), 82 FR 61089 (December 26, 2017) (SR–
11 17 CFR 200.30–3(a)(83). GEMX–2017–57). 6 15 U.S.C. 78f(b)(8).
1 15 U.S.C. 78s(b)(1). 4 15 U.S.C. 78f(b). 7 15 U.S.C. 78s(b)(3)(A)(iii).
2 17 CFR 240.19b–4. 5 15 U.S.C. 78f(b)(5). 8 17 CFR 240.19b–4(f)(6).

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31234 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices

A proposed rule change filed under Comments may be submitted by any of SECURITIES AND EXCHANGE
Rule 19b–4(f)(6) 9 normally does not the following methods: COMMISSION
become operative prior to 30 days after
Electronic Comments
the date of the filing.10 However, [Release No. 34–83540; File No. SR–NYSE–
pursuant to Rule 19b–4(f)(6)(iii),11 the • Use the Commission’s internet 2018–29]
Commission may designate a shorter comment form (http://www.sec.gov/
time if such action is consistent with the rules/sro.shtml); or Self-Regulatory Organizations; New
protection of investors and the public York Stock Exchange LLC; Notice of
interest. The Exchange has asked the • Send an email to rule-comments@
sec.gov. Please include File Number SR– Filing and Immediate Effectiveness of
Commission to waive the 30-day Proposed Rule Change To Extend the
operative delay so that the proposal may GEMX–2018–23 on the subject line.
Pilot Period for the Exchange’s Retail
become operative immediately upon Paper Comments Liquidity Program Until December 31,
filing. The Commission believes that 2018
waiving the 30-day operative delay is • Send paper comments in triplicate
consistent with the protection of to Secretary, Securities and Exchange June 28, 2018.
investors and the public interest Commission, 100 F Street NE,
Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
because doing so will allow the Pilot
Securities Exchange Act of 1934
Program to continue without All submissions should refer to File
interruption in a manner that is (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Number SR–GEMX–2018–23. This file notice is hereby given that on June 20,
consistent with the Commission’s prior number should be included on the
approval of the extension and expansion 2018, New York Stock Exchange LLC
subject line if email is used. To help the (‘‘NYSE’’ or ‘‘Exchange’’), filed with the
of the Pilot Program and will allow the Commission process and review your
Exchange and the Commission Securities and Exchange Commission
comments more efficiently, please use (‘‘SEC’’ or ‘‘Commission’’) the proposed
additional time to analyze the impact of only one method. The Commission will
the Pilot Program.12 Accordingly, the rule change as described in Items I and
post all comments on the Commission’s II below, which Items have been
Commission designates the proposed internet website (http://www.sec.gov/
rule change as operative upon filing prepared by the Exchange. The
rules/sro.shtml). Copies of the
with the Commission.13 Commission is publishing this notice to
submission, all subsequent
At any time within 60 days of the solicit comments on the proposed rule
amendments, all written statements
filing of such proposed rule change, the change from interested persons.
with respect to the proposed rule
Commission summarily may change that are filed with the I. Self-Regulatory Organization’s
temporarily suspend such rule change if Commission, and all written Statement of the Terms of Substance of
it appears to the Commission that such communications relating to the the Proposed Rule Change
action is necessary or appropriate in the proposed rule change between the
public interest, for the protection of Commission and any person, other than The Exchange proposes to extend the
investors, or otherwise in furtherance of those that may be withheld from the pilot period for the Exchange’s Retail
the purposes of the Act. If the public in accordance with the Liquidity Program (the ‘‘Retail Liquidity
Commission takes such action, the provisions of 5 U.S.C. 552, will be Program’’ or the ‘‘Program’’), which is
Commission shall institute proceedings available for website viewing and currently scheduled to expire on June
under Section 19(b)(2)(B) 14 of the Act to printing in the Commission’s Public 30, 2018, until the earlier of approval of
determine whether the proposed rule Reference Room, 100 F Street NE, the filing to make the Program
change should be approved or Washington, DC 20549, on official permanent or December 31, 2018. The
disapproved. business days between the hours of proposed rule change is available on the
IV. Solicitation of Comments 10:00 a.m. and 3:00 p.m. Copies of the Exchange’s website at www.nyse.com, at
filing also will be available for the principal office of the Exchange, and
Interested persons are invited to inspection and copying at the principal at the Commission’s Public Reference
submit written data, views, and office of the Exchange. All comments Room.
arguments concerning the foregoing, received will be posted without change.
including whether the proposed rule Persons submitting comments are II. Self-Regulatory Organization’s
change is consistent with the Act. cautioned that we do not redact or edit Statement of the Purpose of, and
personal identifying information from Statutory Basis for, the Proposed Rule
9 17 CFR 240.19b–4(f)(6). comment submissions. You should Change
10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– submit only information that you wish
4(f)(6)(iii) requires the Exchange to give the to make available publicly. All In its filing with the Commission, the
Commission written notice of the Exchange’s intent
submissions should refer to File self-regulatory organization included
to file the proposed rule change along with a brief statements concerning the purpose of,
description and the text of the proposed rule Number SR–GEMX–2018–23 and
change, at least five business days prior to the date should be submitted on or before July and basis for, the proposed rule change
of filing of the proposed rule change, or such 24, 2018. and discussed any comments it received
shorter time as designated by the Commission. The on the proposed rule change. The text
Exchange has satisfied this pre-filing requirement. For the Commission, by the Division of of those statements may be examined at
11 17 CFR 240.19b–4(f)(6)(iii). Trading and Markets, pursuant to delegated
the places specified in Item IV below.
sradovich on DSK3GMQ082PROD with NOTICES

12 See Securities Exchange Act Release No. 61061 authority.15
(November 24, 2009), 74 FR 62857 (December 1, The Exchange has prepared summaries,
Eduardo A. Aleman,
2009) (SR–NYSEArca–2009–44). set forth in sections A, B, and C below,
13 For purposes only of waiving the operative Assistant Secretary. of the most significant parts of such
delay for this proposal, the Commission has [FR Doc. 2018–14294 Filed 7–2–18; 8:45 am] statements.
considered the proposed rule’s impact on
BILLING CODE 8011–01–P
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f). 1 15 U.S.C. 78s(b)(1).
14 15 U.S.C. 78s(b)(2)(B). 15 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:07 Jul 02, 2018 Jkt 244001 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 E:\FR\FM\03JYN1.SGM 03JYN1
Document Created: 2018-07-02 23:55:25
Document Modified: 2018-07-02 23:55:25
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 31233