83 FR 4104 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter IV, Section 3
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 19 (January 29, 2018)
Federal Register Volume 83, Issue 19 (January 29, 2018)
| Page Range | 4104-4108 | |
| FR Document | 2018-01542 |
[Federal Register Volume 83, Number 19 (Monday, January 29, 2018)] [Notices] [Pages 4104-4108] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-01542] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82574; File No. SR-BX-2018-004] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter IV, Section 3 January 23, 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 January 16, 2018, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \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 amend Chapter IV, Section 3 (Criteria for Underlying Securities) to modify the criteria for listing an option on an underlying covered security. The text of the proposed rule change is available on the Exchange's website at http://nasdaqbx.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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend Chapter IV, Section [[Page 4105]] 3 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''). In particular, the Exchange proposes to modify Section 3(b)v.1) 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 consecutive business days preceding the date on which the Exchange submits a certificate to the 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 Chapter IV, Section 3. This proposed rule change is identical to a recently-approved rule change by the Exchange's affiliate, Nasdaq PHLX LLC (``Phlx''), to its initial listing standards,\3\ and serves to align the rules of Phlx and the Exchange. --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 82474 (January 9, 2018) (SR-Phlx-2017-75) (Order Granting Approval of a Proposed Rule Change) (``Phlx Filing''). The Exchange, together with its affiliates, The Nasdaq Stock Market LLC (``Nasdaq'') and Nasdaq ISE, LLC (``ISE''), all of which are wholly owned subsidiaries of Nasdaq, Inc. (``Nasdaq HoldCo''), have filed identical rule change proposals based on the Phlx Filing. --------------------------------------------------------------------------- Currently the underlying covered security must have a closing market price of $3.00 per share for the previous five 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 consecutive business day period preceding the submission of the listing certificate to OCC, instead of the prior five business day period. The Exchange acknowledges that the Options Listing Procedures Plan \4\ 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.\5\ The proposed amendment will still comport with that requirement. For example, if an initial public offering (``IPO'') occurs at 11 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 business days of an IPO becoming available instead of six business days (five consecutive days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \4\ 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 BX; OCC; BATS Exchange, Inc.; BOX Options Exchange LLC; C2 Options Exchange, Incorporated Chicago Board Options Exchange, Incorporated; EDGX Exchange Inc.; Miami International Securities Exchange, LLC; MIAX PEARL, LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; NYSE American, LLC; and NYSE Arca, Inc. \5\ See OLPP at page 3. --------------------------------------------------------------------------- The Exchange's initial listing standards for equity options in Chapter IV, Section 3 (including the current price/time standard of $3.00 per share for five consecutive business days) are substantially similar to the initial listing standards adopted by other options exchanges.\6\ At the time the options industry adopted the ``look back'' period of five consecutive business days, it was 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.\7\ 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 in the underlying security and subsequent trading of options on the Exchange.\8\ --------------------------------------------------------------------------- \6\ See, e.g., Phlx Rule 1009, Commentary .01. \7\ 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). \8\ 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. As it relates to IPOs, 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. The Nasdaq MarketWatch group, which provides such real-time surveillance on the Exchange and its affiliated markets, monitors trading activity in IPOs to see whether the new issue moves substantially above or below the public offering price in the first day or several days of 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 Financial Industry Regulatory Authority (``FINRA''), pursuant to a regulatory services agreement, operates a range of cross-market equity surveillance patterns on behalf of the Exchange 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''). Additionally for options, the Nasdaq Options Surveillance team utilizes 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 any of the six Nasdaq HoldCo-operated options markets (i.e., mini-manipulation strategies). Surveillance coverage is initiated once options begin trading on any of Nasdaq HoldCo's six options markets, including the Exchange. Accordingly, the Exchange believes that the cross market surveillance performed by FINRA on behalf of the Exchange, coupled with Exchange staff's real-time monitoring of similarly violative activity on BX and its affiliated markets 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.\9\ 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 [[Page 4106]] 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. --------------------------------------------------------------------------- \9\ See 15 U.S.C. 77r(b)(1)(A). --------------------------------------------------------------------------- In addition, The Nasdaq Stock Market LLC, the Exchange's affiliated listing market, 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 days of trading and did not qualify for the $3.00 price requirement during the first five days.\10\ In other words, none of these qualifying issues fell below the $3.00 threshold within the first three or five days of trading. As such, the Exchange believes that its existing surveillance program, coupled with its findings related to the IPO-related issues on Nasdaq as described herein, adequately address potential concerns regarding possible manipulation or price stability within the proposed timeframe. --------------------------------------------------------------------------- \10\ 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. --------------------------------------------------------------------------- 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.\11\ 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 Exchange Rule 15c6-1(a) to adopt the shortened settlement cycle,\12\ and the look back period of three 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 business days) and therefore the number of shareholders could be verified within three business days, thereby enabling options trading within four business days of an IPO (three consecutive business days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \11\ The number of shareholders of record can be verified from large clearing agencies such as The Depository Trust and Clearing Corporation (``DTCC'') upon the settlement date (i.e., T+2). \12\ 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 able to provide these numbers within T+2 after an IPO. For the foregoing reasons, the Exchange believes that basing the proposed three 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 relevant criteria in Chapter IV, Section 3. Pursuant to Section 3(b), BX Regulation establishes guidelines to be considered in evaluating potential underlying securities for BX Options transactions. However, the fact that a particular security may meet the standards established by BX Regulation does not necessarily mean that it will be selected as an underlying security.\13\ As part of the established criteria, the issuer must be in compliance with any applicable requirements of the Act and the rules thereunder.\14\ Additionally, in considering the underlying security, BX Regulation relies on information made publicly available by the issuer and/or the markets in which the security is traded.\15\ 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. --------------------------------------------------------------------------- \13\ See Chapter IV, Section 3(b). \14\ See Chapter IV, Section 3(b)iii. \15\ See Chapter IV, Section 3(d). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\16\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\17\ 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. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b). \17\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 consecutive business day timeframe. The Exchange also believes that the proposed three consecutive business day timeframe would continue to be a reliable test for price stability in light of its 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,\18\ 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. --------------------------------------------------------------------------- \18\ See notes 13-15 above. --------------------------------------------------------------------------- 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 hedge their investment in the stock in a shorter amount of time than what is currently in place.\19\ --------------------------------------------------------------------------- \19\ 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. --------------------------------------------------------------------------- [[Page 4107]] 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, 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.\20\ 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.\21\ 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.\22\ At that 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.\23\ --------------------------------------------------------------------------- \20\ See Securities Exchange Act Release No. 29628 (August 29, 1991), 56 FR 43949-01 (September 5, 1991) (SR-AMEX-86-19; 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). \21\ See 1991 Approval Order at 43949. \22\ Id. \23\ 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,\24\ 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'').\25\ 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, Nasdaq is only proposing a modest reduction of the current five business day standard to three business days to correspond to the securities industry's move to a T+2 standard settlement cycle.\26\ The $3.00 per share standard and all other initial options listing criteria in Chapter IV, Section 3 will remain unchanged by this proposal. For the reasons discussed herein, the Exchange therefore believes that the proposed three business day period will be beneficial to the marketplace without sacrificing investor protections. --------------------------------------------------------------------------- \24\ 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). \25\ See note 7 above. \26\ See note 12 above. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change reduces the number of days to list options on an underlying security, and is intended to bring new options listings to the marketplace quicker. 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 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 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 \27\ and Rule 19b-4(f)(6) thereunder.\28\ --------------------------------------------------------------------------- \27\ 15 U.S.C. 78s(b)(3)(A). \28\ 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 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 under Rule 19b-4(f)(6) \29\ normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\30\ 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 upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Exchange to align its initial options listing standards with that of its affiliates, and the Exchange's proposal does not raise new issues. Accordingly, the Commission hereby waives the 30-day operative delay requirement and designates the proposed rule change as operative upon filing.\31\ --------------------------------------------------------------------------- \29\ 17 CFR 240.19b-4(f)(6). \30\ 17 CFR 240.19b-4(f)(6)(iii). \31\ 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 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 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 Send an email to [email protected]. Please include File Number SR-BX-2018-004 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-BX-2018-004. 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 [[Page 4108]] 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-BX-2018-004, and should be submitted on or before February 20, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\32\ --------------------------------------------------------------------------- \32\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-01542 Filed 1-26-18; 8:45 am] BILLING CODE 8011-01-P
![4104 Federal Register / Vol. 83, No. 19 / Monday, January 29, 2018 / Notices
transactions or proprietary data has the Electronic Comments SECURITIES AND EXCHANGE
potential to impair revenues from both COMMISSION
products. In this manner, the • Use the Commission’s internet
comment form (http://www.sec.gov/ [Release No. 34–82574; File No. SR–BX–
competition for order flow will 2018–004]
constrain prices for proprietary data rules/sro.shtml); or
products. • Send an email to rule-comments@ Self-Regulatory Organizations; Nasdaq
Competition among Distributors sec.gov. Please include File Number SR– BX, Inc.; Notice of Filing and
provides another form of price Phlx–2018–10 on the subject line. Immediate Effectiveness of Proposed
discipline for proprietary data products. Rule Change To Amend Chapter IV,
If the price of PSX TotalView were set Paper Comments Section 3
above competitive levels, Distributors
purchasing PSX TotalView would be at • Send paper comments in triplicate January 23, 2018.
a disadvantage relative to their to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) of the
competitors, and would therefore either Commission, 100 F Street NE, Securities Exchange Act of 1934
curtail their purchase or forego the Washington, DC 20549–1090. (‘‘Act’’),1 and Rule 19b–4 thereunder,2
product altogether. All submissions should refer to File notice is hereby given that on January
Market forces constrain the price of 16, 2018, Nasdaq BX, Inc. (‘‘BX’’ or
Number SR–Phlx–2018–10. This file
depth-of-book data such as PSX ‘‘Exchange’’) filed with the Securities
number should be included on the
TotalView through the competition for and Exchange Commission (‘‘SEC’’ or
subject line if email is used. To help the ‘‘Commission’’) the proposed rule
order flow and in the competition
Commission process and review your change as described in Items I, II, and
among vendors for customers. If the
comments more efficiently, please use III, below, which Items have been
changes proposed herein are
only one method. The Commission will prepared by the Exchange. The
unattractive to market participants, it is
likely that the Exchange will lose post all comments on the Commission’s Commission is publishing this notice to
market share as a result. Accordingly, internet website (http://www.sec.gov/ solicit comments on the proposed rule
the Exchange does not believe that the rules/sro.shtml). Copies of the change from interested persons.
proposed changes will impair the ability submission, all subsequent
I. Self-Regulatory Organization’s
of members or competing order amendments, all written statements
Statement of the Terms of Substance of
execution venues to maintain their with respect to the proposed rule
the Proposed Rule Change
competitive standing in the financial change that are filed with the
markets. Commission, and all written The Exchange proposes to amend
communications relating to the Chapter IV, Section 3 (Criteria for
C. Self-Regulatory Organization’s proposed rule change between the Underlying Securities) to modify the
Statement on Comments on the criteria for listing an option on an
Commission and any person, other than
Proposed Rule Change Received From underlying covered security.
those that may be withheld from the The text of the proposed rule change
Members, Participants, or Others
public in accordance with the is available on the Exchange’s website at
No written comments were either provisions of 5 U.S.C. 552, will be
solicited or received. http://nasdaqbx.cchwallstreet.com/, at
available for website viewing and the principal office of the Exchange, and
III. Date of Effectiveness of the printing in the Commission’s Public at the Commission’s Public Reference
Proposed Rule Change and Timing for Reference Room, 100 F Street NE, Room.
Commission Action Washington, DC 20549, on official
business days between the hours of II. Self-Regulatory Organization’s
The foregoing rule change has become Statement of the Purpose of, and
effective pursuant to Section 10:00 a.m. and 3:00 p.m. Copies of the
Statutory Basis for, the Proposed Rule
19(b)(3)(A)(ii) of the Act.42 filing also will be available for
Change
At any time within 60 days of the inspection and copying at the principal
filing of the proposed rule change, the office of the Exchange. All comments In its filing with the Commission, the
Commission summarily may received will be posted without change. Exchange included statements
temporarily suspend such rule change if Persons submitting comments are concerning the purpose of and basis for
it appears to the Commission that such cautioned that we do not redact or edit the proposed rule change and discussed
action is: (i) Necessary or appropriate in personal identifying information from any comments it received on the
the public interest; (ii) for the protection comment submissions. You should proposed rule change. The text of these
of investors; or (iii) otherwise in statements may be examined at the
submit only information that you wish
furtherance of the purposes of the Act. places specified in Item IV below. The
to make available publicly. All
If the Commission takes such action, the Exchange has prepared summaries, set
submissions should refer to File forth in sections A, B, and C below, of
Commission shall institute proceedings Number SR–Phlx–2018–10 and should
to determine whether the proposed rule the most significant aspects of such
be submitted on or before February 20, statements.
should be approved or disapproved. 2018.
IV. Solicitation of Comments A. Self-Regulatory Organization’s
For the Commission, by the Division of
Statement of the Purpose of, and the
Interested persons are invited to Trading and Markets, pursuant to delegated
Statutory Basis for, the Proposed Rule
authority.43
sradovich on DSK3GMQ082PROD with NOTICES
submit written data, views, and Change
arguments concerning the foregoing, Eduardo A. Aleman,
including whether the proposed rule Assistant Secretary.
1. Purpose
change is consistent with the Act. [FR Doc. 2018–01536 Filed 1–26–18; 8:45 am] The purpose of the proposed rule
Comments may be submitted by any of change is to amend Chapter IV, Section
BILLING CODE 8011–01–P
the following methods:
1 15 U.S.C. 78s(b)(1).
42 15 U.S.C. 78s(b)(3)(A)(ii). 43 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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![4108 Federal Register / Vol. 83, No. 19 / Monday, January 29, 2018 / Notices
with respect to the proposed rule I. Self-Regulatory Organization’s Currently the underlying covered
change that are filed with the Statement of the Terms of Substance of security must have a closing market
Commission, and all written the Proposed Rule Change price of $3.00 per share for the previous
communications relating to the The Exchange proposes to amend five consecutive business days
proposed rule change between the Rule 502 (Criteria for Underlying preceding the date on which the
Commission and any person, other than Securities) to modify the criteria for Exchange submits a listing certificate to
those that may be withheld from the listing an option on an underlying OCC. In the proposed amendment, the
public in accordance with the covered security. market price will still be measured by
provisions of 5 U.S.C. 552, will be The text of the proposed rule change the closing price reported in the primary
available for website viewing and is available on the Exchange’s website at market in which the underlying covered
printing in the Commission’s Public http://ise.cchwallstreet.com/, at the security is traded, but the measurement
Reference Room, 100 F Street NE, principal office of the Exchange, and at will be the price over the prior three
Washington, DC 20549, on official the Commission’s Public Reference consecutive business day period
business days between the hours of Room. preceding the submission of the listing
10:00 a.m. and 3:00 p.m. Copies of the certificate to OCC, instead of the prior
filing also will be available for II. Self-Regulatory Organization’s five business day period.
inspection and copying at the principal Statement of the Purpose of, and The Exchange acknowledges that the
office of the Exchange. All comments Statutory Basis for, the Proposed Rule Options Listing Procedures Plan 4
received will be posted without change. Change requires that the listing certificate be
Persons submitting comments are In its filing with the Commission, the provided to OCC no earlier than 12:01
cautioned that we do not redact or edit Exchange included statements a.m. and no later than 11:00 a.m.
personal identifying information from concerning the purpose of and basis for (Chicago time) on the trading day prior
comment submissions. You should the proposed rule change and discussed to the day on which trading is to begin.5
submit only information that you wish any comments it received on the The proposed amendment will still
to make available publicly. All proposed rule change. The text of these comport with that requirement. For
submissions should refer to File statements may be examined at the example, if an initial public offering
Number SR–BX–2018–004, and should places specified in Item IV below. The (‘‘IPO’’) occurs at 11 a.m. on Monday,
be submitted on or before February 20, Exchange has prepared summaries, set the earliest date the Exchange could
2018. forth in sections A, B, and C below, of submit its listing certificate to OCC
For the Commission, by the Division of
the most significant aspects of such would be on Thursday by 12:01 a.m.
Trading and Markets, pursuant to delegated statements. (Chicago time), with the market price
authority.32 A. Self-Regulatory Organization’s determined by the closing price over the
Eduardo A. Aleman, Statement of the Purpose of, and the three-day period from Monday through
Assistant Secretary. Statutory Basis for, the Proposed Rule Wednesday. The option on the IPO
[FR Doc. 2018–01542 Filed 1–26–18; 8:45 am] Change would then be eligible for trading on the
Exchange on Friday. The proposed
BILLING CODE 8011–01–P
1. Purpose amendment would essentially enable
The purpose of the proposed rule options trading within four business
SECURITIES AND EXCHANGE change is to amend ISE Rule 502 to days of an IPO becoming available
COMMISSION modify the criteria for listing options on instead of six business days (five
an underlying security as defined in consecutive days plus the day the listing
Section 18(b)(1)(A) of the Securities Act certificate is submitted to OCC).
[Release No. 34–82572; File No. SR–ISE–
2018–06] of 1933 (hereinafter ‘‘covered security’’
or ‘‘covered securities’’). In particular, and Nasdaq BX, Inc. (‘‘BX’’), have filed identical
rule change proposals based on the Phlx Filing. The
Self-Regulatory Organizations; Nasdaq the Exchange proposes to modify Exchange notes that Chapter 5 of the ISE Rulebook,
ISE, LLC; Notice of Filing and Section (b)(5)(i) of Rule 502 to permit including Rule 502, is incorporated by reference
Immediate Effectiveness of Proposed the listing of an option on an underlying into the rulebooks of Nasdaq GEMX, LLC (‘‘GEMX’’)
Rule Change To Amend Rule 502 covered security that has a market price and Nasdaq MRX, LLC (‘‘MRX’’). As such, the
amendments to ISE Rule 502 will also impact
of at least $3.00 per share for the GEMX and MRX Rules 502. ISE, GEMX, MRX,
January 23, 2018. previous three consecutive business Nasdaq, Phlx and BX are all wholly owned
Pursuant to Section 19(b)(1) of the days preceding the date on which the subsidiaries of Nasdaq, Inc. (‘‘Nasdaq HoldCo’’).
Securities Exchange Act of 1934 Exchange submits a certificate to the 4 The Plan for the Purpose of Developing and
Options Clearing Corporation (‘‘OCC’’) Implementing Procedures Designed to Facilitate the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Listing and Trading of Standardized Options
notice is hereby given that on January for listing and trading. The Exchange Submitted Pursuant to Section 11a(2)(3)(B) of the
16, 2018, Nasdaq ISE, LLC (‘‘ISE’’ or does not intend to amend any other Securities Exchange Act of 1934 (a/k/a the Options
‘‘Exchange’’) filed with the Securities criteria for listing options on an Listing Procedures Plan (‘‘OLPP’’)) is a national
underlying security in Rule 502. market system plan that, among other things, sets
and Exchange Commission (‘‘SEC’’ or forth procedures governing the listing of new
‘‘Commission’’) the proposed rule This proposed rule change is identical options series. See Securities Exchange Act Release
change as described in Items I, II, and to a recently-approved rule change by No. 44521 (July 6, 2001), 66 FR 36809 (July 13,
III, below, which Items have been the Exchange’s affiliate, Nasdaq PHLX 2001) (Order approving OLPP). The sponsors of
LLC (‘‘Phlx’’), to its initial listing OLPP include ISE; OCC; BATS Exchange, Inc.; BOX
sradovich on DSK3GMQ082PROD with NOTICES
prepared by the Exchange. The Options Exchange LLC; C2 Options Exchange,
Commission is publishing this notice to standards,3 and serves to align the rules Incorporated; Chicago Board Options Exchange,
solicit comments on the proposed rule of Phlx and the Exchange. Incorporated; EDGX Exchange, Inc.; Miami
change from interested persons. International Securities Exchange, LLC; MIAX
3 See Securities Exchange Act Release No. 82474 PEARL, LLC; Nasdaq BX, Inc.; Nasdaq PHLX LLC;
(January 9, 2018) (SR–Phlx–2017–75) (Order The Nasdaq Stock Market LLC; Nasdaq GEMX, LLC;
32 17 CFR 200.30–3(a)(12). Granting Approval of a Proposed Rule Change) Nasdaq MRX, LLC; NYSE American, LLC; and
1 15 U.S.C. 78s(b)(1). NYSE Arca, Inc.
(‘‘Phlx Filing’’). The Exchange, together with its
2 17 CFR 240.19b–4. affiliates, The Nasdaq Stock Market LLC (‘‘Nasdaq’’) 5 See OLPP at page 3.
VerDate Sep<11>2014 19:42 Jan 26, 2018 Jkt 244001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 E:\FR\FM\29JAN1.SGM 29JAN1](https://thefederalregister.org/doc/83_FR_4123/page/5.svg)
Document Created: 2018-01-27 00:57:53
Document Modified: 2018-01-27 00:57:53
| 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 4104 |
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