83 FR 39490 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Certain Terms Under Chapter I, Section 1 of the Options Rules
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 154 (August 9, 2018)
Federal Register Volume 83, Issue 154 (August 9, 2018)
| Page Range | 39490-39492 | |
| FR Document | 2018-17006 |
[Federal Register Volume 83, Number 154 (Thursday, August 9, 2018)] [Notices] [Pages 39490-39492] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-17006] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83771; File No. SR-NASDAQ-2018-060] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Certain Terms Under Chapter I, Section 1 of the Options Rules August 3, 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 July 20, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' 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 [[Page 39491]] solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to proposal to amend The Nasdaq Options Market LLC (``NOM'') Rules at Chapter I, Section 1 to define certain terms. The text of the proposed rule change is available on the Exchange's website at http://nasdaq.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 NOM rules currently do not define an ``in-the-money'' or ``out-of- the-money'' option. The Exchange proposes to define these terms at Chapter I, Section 1 to bring greater transparency to NOM rules. In addition, the Exchange notes that the terms, ``in-the-money'' and ``out-of-the-money'' are generally accepted terms in the options industry. These terms are utilized throughout the options industry. The Exchange desires for its Participants to have a clear understanding of how NOM's System defines these terms. The Exchange proposes to define an ``in-of-the-money'' option at Chapter I, Section 1(a)(68). The Exchange proposes that the term ``in- the-money'' shall mean the following: For call options, all strike prices below the offer in the underlying security on the primary listing market; for put options, all strike prices above the bid in the underlying security on the primary listing market. The Exchange proposes to define an ``out-of-the-money'' option at Chapter I, Section 1(a)(69). The Exchange proposes that the term ``out-of-the-money'' shall mean the following: For call options, all strike prices above the offer in the underlying security on the primary listing market; for put options, all strike prices below the bid in the underlying security on the primary listing market. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\3\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\4\ in particular, in that it is designed to promote just and equitable principles of trade, 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. The Exchange's proposal to define the terms ``in-the-money'' and ``out- of-the-money'' options is consistent with the Act and protects investors and the public interest by bringing greater transparency to the Rulebook. In addition, the Exchange notes that the terms, ``in-the- money'' and ``out-of-the-money'' are generally accepted terms in the options industry. These terms are utilized throughout the options industry. The Exchange desires for its Participants to have a clear understanding of how NOM's System defines these terms. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78f(b). \4\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 Exchange's proposal to define the terms ``in-the-money'' and ``out-of-the-money'' options does not unduly burden competition, rather it adds greater transparency to the Rulebook. 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 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)(iii) of the Act \5\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\6\ --------------------------------------------------------------------------- \5\ 15 U.S.C. 78s(b)(3)(A)(iii). \6\ 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 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 under Rule 19b-4(f)(6) \7\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\8\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange represents that immediately defining the terms ``in-the-money'' and ``out-of-the-money'' options within its Rulebook would provide greater transparency to its Participants. For the same reason, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.\9\ --------------------------------------------------------------------------- \7\ 17 CFR 240.19b-4(f)(6). \8\ 17 CFR 240.19b-4(f)(6)(iii). \9\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of 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 CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or [[Page 39492]] Send an email to rule-comments@sec.gov. Please include File Number SR-NASDAQ-2018-060 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-NASDAQ-2018-060. 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-NASDAQ-2018-060 and should be submitted on or before August 30, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-17006 Filed 8-8-18; 8:45 am] BILLING CODE 8011-01-P
![39490 Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices
Reserve Order has setter priority, and requires that the rules of an exchange be is an odd-lot sized order with setter
the Permitted Price at which the order designed to prevent fraudulent and priority at that price. Second, orders
would be replenished would be a manipulative acts and practices, to would be evaluated for setter priority
different price, the replenish quantity promote just and equitable principles of under two additional circumstances—
would not be eligible for setter trade, to foster cooperation and when an order is resting and assigned a
priority.40 coordination with persons engaged in new display price, and when the
The Exchange also proposes to add regulating, clearing, settling, processing display quantity of a Reserve Order is
two circumstances in which an order information with respect to, and replenished. The Commission believes
would be evaluated for setter priority. facilitating transactions in securities, to that these proposed changes are
Currently, an order will be evaluated for remove impediments to and perfect the reasonably designed to provide
setter priority on arrival (including any mechanism of a free and open market incentives for market participants to
portion that has been routed and returns and a national market system, and, in display liquidity on the Exchange.
unexecuted) and when the order general, to protect investors and the Accordingly, the Commission finds
becomes eligible to trade for the first public interest. that the proposal is consistent with the
time upon transitioning to a new trading The proposal would alter how UTP requirements of the Act, and is designed
session.41 First, NYSE proposes that an Securities trade on the Exchange’s Pillar to promote just and equitable principles
order would be evaluated for setter trading platform with respect to two of trade, to remove impediments to and
priority when resting and assigned a order types—reserve orders and primary perfect the mechanism of a free and
new display price.42 If multiple orders pegged orders—and would also amend open market and a national market
reprice at the same time, none of the the rules that determine when orders are system, and, in general, to protect
orders would be eligible for setter eligible for setter priority. The proposed investors and the public interest.
priority unless one order is equal to or changes relating to Reserve Orders
greater than a round lot and the sum of would seek to reduce the quantity of IV. Conclusion
the other orders at the same price is less child orders and the potential for
than one round lot.43 Second, the information leakage. The Commission It is therefore ordered, pursuant to
Exchange proposes that an order would believes that the proposal to replenish Section 19(b)(2) of the Act,51 that the
be evaluated for setter priority when the the displayed quantity when it falls proposed rule change (SR–NYSE–2018–
display quantity of a Reserve Order is below one round lot is consistent with 26), as modified by Amendment No. 1,
replenished.44 The Exchange asserts reserve order functioning on other be, and hereby is, approved.
that, if a repriced resting or replenished national securities exchanges that the For the Commission, by the Division of
Reserve Order meets the conditions for Commission has found to be consistent Trading and Markets, pursuant to delegated
establishing setter priority,45 then that with the Exchange Act.50 The authority.52
order is aggressively displaying Commission also believes that the Eduardo A. Aleman,
liquidity on the Exchange, which the proposal is consistent with Section Assistant Secretary.
Exchange seeks to encourage by 6(b)(5)—with respect to replenishing a [FR Doc. 2018–17004 Filed 8–8–18; 8:45 am]
providing a setter priority allocation.46 Reserve Order that has two existing BILLING CODE 8011–01–P
child orders totaling less than one round
III. Discussion and Commission
lot, routing from reserve interest before
Findings
publishing the display quantity, and SECURITIES AND EXCHANGE
After careful review of the proposal, aligning the Exchange’s rule text to the COMMISSION
as modified by Amendment No. 1, the existing treatment of Reserve Orders
Commission finds that the proposed that are not routable and of routed [Release No. 34–83771; File No. SR–
rule change is consistent with the Reserve Orders that return NASDAQ–2018–060]
requirements of the Act 47 and the rules unexecuted—because the proposed
and regulations thereunder applicable to changes are reasonably designed to Self-Regulatory Organizations; The
a national securities exchange.48 In encourage the provision of liquidity on Nasdaq Stock Market LLC; Notice of
particular, the Commission finds that the exchange by reducing the likelihood Filing and Immediate Effectiveness of
the proposed rule change is consistent of adverse selection against liquidity Proposed Rule Change To Amend
with Section 6(b)(5) of the Act,49 which providers through information leakage Certain Terms Under Chapter I, Section
and providing clarity to market 1 of the Options Rules
40 See Proposed NYSE Rule 7.36(h)(1)(D).
41 See
participants, while not permitting unfair
NYSE Rule 7.36(h)(1)(A)–(B). August 3, 2018.
42 See Proposed NYSE Rule 7.36(h)(1)(C).
discrimination on the exchange.
43 Id.
The proposed changes relating to Pursuant to Section 19(b)(1) of the
44 See Proposed NYSE Rule 7.36(h)(1)(D). In Primary Pegged Reserve Orders would Securities Exchange Act of 1934
connection with this proposed change, the provide that, if the PBBO is locked or (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Exchange also proposed to delete current NYSE crossed when the display quantity of the notice is hereby given that on July 20,
Rule 7.36(h)(4)(B), which states that setter priority order is to be replenished, the entire
is not available when the reserve quantity
2018, The Nasdaq Stock Market LLC
replenishes the display quantity of a Reserve Order. order would be canceled. The (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
45 The requirements for an order to achieve setter Commission believes that the proposal Securities and Exchange Commission
priority are that it is an order ranked Priority 2— is reasonably designed to prevent the (‘‘SEC’’ or ‘‘Commission’’) the proposed
Display Orders with a display quantity of at least display of locked or crossed quotations
one round lot, that it establishes a new BBO, and
rule change as described in Items I and
sradovich on DSK3GMQ082PROD with NOTICES
that it either establishes a new NBBO or joins an in NMS securities. II below, which Items have been
Away Market NBBO. See NYSE Rule 7.36(h). The rules relating to the setter priority prepared by the Exchange. The
46 See Notice, supra note 7, at 28704–05. would change in two ways. First, the Commission is publishing this notice to
47 15 U.S.C. 78f.
rules would be amended to reflect that,
48 In approving this proposed rule change, the
under existing order function, an order 51 15 U.S.C. 78s(b)(2).
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital is not eligible for setter priority if there 52 17 CFR 200.30–3(a)(12).
formation. See 15 U.S.C. 78c(f). 1 15 U.S.C. 78s(b)(1).
49 15 U.S.C. 78f(b)(5). 50 See Notice, supra note 7, at 28704. 2 17 CFR 240.19b–4.
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![39492 Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices
• Send an email to rule-comments@ SMALL BUSINESS ADMINISTRATION The State which received an EIDL
sec.gov. Please include File Number Declaration # is Iowa.
[Disaster Declaration #15616 and #15617;
SR–NASDAQ–2018–060 on the subject IOWA Disaster Number IA–00078] (Catalog of Federal Domestic Assistance
line. Number 59008)
Administrative Declaration of a Dated: July 30, 2018.
Paper Comments
Disaster for the State of Iowa Linda E. McMahon,
• Send paper comments in triplicate AGENCY: U.S. Small Business Administrator.
to Secretary, Securities and Exchange Administration. [FR Doc. 2018–17022 Filed 8–8–18; 8:45 am]
Commission, 100 F Street NE, ACTION: Notice. BILLING CODE 8025–01–P
Washington, DC 20549–1090.
SUMMARY: This is a notice of an
All submissions should refer to File Administrative declaration of a disaster
Number SR–NASDAQ–2018–060. This DEPARTMENT OF STATE
for the State of Iowa dated 07/30/2018.
file number should be included on the Incident: Tornado. [Public Notice: 10490]
subject line if email is used. To help the Incident Period: 07/19/2018.
Commission process and review your DATES: Issued on 07/30/2018. Defense Trade Advisory Group; Notice
comments more efficiently, please use Physical Loan Application Deadline of Open Meeting
only one method. The Commission will Date: 09/28/2018. The Defense Trade Advisory Group
post all comments on the Commission’s Economic Injury (EIDL) Loan (DTAG) will meet in open session from
internet website (http://www.sec.gov/ Application Deadline Date: 04/30/2019. 1:00 p.m. until 5:00 p.m. on Thursday,
rules/sro.shtml). Copies of the ADDRESSES: Submit completed loan October 25, 2018 at 1777 F Street NW,
submission, all subsequent applications to: U.S. Small Business Washington, DC 20006. Entry and
amendments, all written statements Administration, Processing and registration will begin at 12:30 p.m. The
with respect to the proposed rule Disbursement Center, 14925 Kingsport membership of this advisory committee
change that are filed with the Road, Fort Worth, TX 76155. consists of private sector defense trade
Commission, and all written FOR FURTHER INFORMATION CONTACT: A. representatives, appointed by the
communications relating to the Escobar, Office of Disaster Assistance, Assistant Secretary of State for Political-
proposed rule change between the U.S. Small Business Administration, Military Affairs, who advise the
Commission and any person, other than 409 3rd Street SW, Suite 6050, Department on policies, regulations, and
those that may be withheld from the Washington, DC 20416, (202) 205–6734. technical issues affecting defense trade.
public in accordance with the SUPPLEMENTARY INFORMATION: Notice is The purpose of the meeting will be to
provisions of 5 U.S.C. 552, will be hereby given that as a result of the discuss current defense trade issues and
Administrator’s disaster declaration, topics for further study. The following
available for website viewing and
applications for disaster loans may be agenda topics will be discussed and
printing in the Commission’s Public final reports presented: (1) Oversight of
Reference Room, 100 F Street NE, filed at the address listed above or other
locally announced locations. technical data under the ITAR and
Washington, DC 20549, on official NISPOM; (2) Challenges regulated
The following areas have been
business days between the hours of entities face in advising the Department
determined to be adversely affected by
10:00 a.m. and 3:00 p.m. Copies of the the disaster: of ownership changes that implicate
filing also will be available for existing licenses and foreign persons,
Primary Counties: Marshall
inspection and copying at the principal Contiguous Counties: and processes the Department may
office of the Exchange. All comments Iowa: Grundy, Hardin, Jasper, implement to facilitate the provisions of
received will be posted without change. Poweshiek, Story, Tama this information; (3) Possible schedule
Persons submitting comments are The Interest Rates are: for future ongoing periodic review of
cautioned that we do not redact or edit USML categories; (4) Developing a
personal identifying information from Percent definition for common carrier; and (5)
comment submissions. You should Issues that exist with licensing of
submit only information that you wish For Physical Damage: defense articles, including intelligence
Homeowners with Credit Avail- related products, related technical data,
to make available publicly. All
able Elsewhere ........................ 3.875 and defense services to the ‘‘Five Eyes’’
submissions should refer to File Homeowners without Credit
Number SR–NASDAQ–2018–060 and countries of the U.S., UK, Australia,
Available Elsewhere ................ 1.938
should be submitted on or before Businesses with Credit Available
Canada and New Zealand. Members of
Elsewhere ................................ 7.220 the public may attend this open session
August 30, 2018.
Businesses without Credit Avail- and will be permitted to participate in
For the Commission, by the Division of able Elsewhere ........................ 3.610 the question and answer discussion
Trading and Markets, pursuant to delegated Non-Profit Organizations with period following the formal DTAG
authority.10 Credit Available Elsewhere ..... 2.500 presentation on each agenda topic in
Eduardo A. Aleman, Non-Profit Organizations without accordance with the Chair’s
Credit Available Elsewhere ..... 2.500 instructions. Members of the public may
Assistant Secretary.
For Economic Injury: also, if they wish, submit a brief
[FR Doc. 2018–17006 Filed 8–8–18; 8:45 am] Businesses & Small Agricultural
statement (less than 3 pages) to the
sradovich on DSK3GMQ082PROD with NOTICES
BILLING CODE 8011–01–P Cooperatives without Credit
Available Elsewhere ................ 3.610 committee in writing for inclusion in
Non-Profit Organizations without the public minutes of the meeting. As
Credit Available Elsewhere ..... 2.500 seating is limited to 125 persons, each
member of the public that wishes to
The number assigned to this disaster attend this plenary session must
for physical damage is 15616 C and for provide: His/her name and contact
10 17 CFR 200.30–3(a)(12). economic injury is 15617 0. information such as email address and/
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Document Created: 2018-08-09 01:11:05
Document Modified: 2018-08-09 01:11:05
| Category | Regulatory Information | |
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| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 39490 |
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