83 FR 46001 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Move the P.M.-Settled Nasdaq-100 Index Options Expiring on the Third Friday of the Month to the NDX Index Options Class
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 176 (September 11, 2018)
Federal Register Volume 83, Issue 176 (September 11, 2018)
| Page Range | 46001-46003 | |
| FR Document | 2018-19641 |
[Federal Register Volume 83, Number 176 (Tuesday, September 11, 2018)] [Notices] [Pages 46001-46003] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-19641] [[Page 46001]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84034; File No. SR-Phlx-2018-57] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Move the P.M.- Settled Nasdaq-100 Index Options Expiring on the Third Friday of the Month to the NDX Index Options Class September 5, 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 August 27, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \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 move the P.M.-settled Nasdaq-100 Index Options expiring on the third Friday of the month (``NDXPM'') to the NDX index options class. In connection with the move, the Exchange proposes changing the trading symbol for these options from ``NDXPM'' to ``NDXP''. The text of the proposed rule change is available on the Exchange's website at http://nasdaqphlx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange seeks to amend Exchange rules related to certain P.M.- settled options on the NASDAQ-100 Index which have been approved by the Commission but which have not yet been listed by the Exchange.\3\ Currently, third-Friday P.M.-settled NASDAQ-100 Index options form a separate options class and, if listed by the Exchange, would trade under the symbol ``NDXPM.'' The Exchange now seeks to move these third- Friday P.M.-settled NASDAQ-100 Index options into the NASDAQ-100 (``NDX'') options class. --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 81293 (August 2, 2017), 82 FR 37138 (August 8, 2017) (approving SR-Phlx-2017-04). --------------------------------------------------------------------------- The Exchange has also recently received Commission approval to list nonstandard expirations of P.M.-settled NASDAQ-100 Index options trading under the symbol ``NDXP'', also on a pilot basis.\4\ NDXP options are series of the NDX options class. These NDXP options may expire on Mondays, Wednesdays, Fridays (other than third-Friday-of-the- month), and the last trading day of the month.\5\ The proposed rule change would facilitate a change to the trading symbol for P.M.-settled NASDAQ-100 Index options that have standard third Friday-of-the-month (``third-Friday'') expirations from ``NDXPM'' to ``NDXP.'' --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 82341 (December 15, 2017), 82 FR 60651 (December 21, 2017) (SR-Phlx-2017-79). In its proposed rule change to adopt a nonstandard expirations pilot program, the Exchange noted that it anticipated filing a proposed rule change in the near future to move the NDXPM index options with standard third Friday of the month expiration dates to the NDX index option class. \5\ See Rule 1101A(b)(vii), Nonstandard Expirations Pilot Program. --------------------------------------------------------------------------- The Exchange believes moving NDXPM into the NDX options class to trade under the NDXP symbol will have no adverse impact on the marketplace. In fact, the Exchange believes moving NDXPM into the NDX options class to trade under the NDXP symbol will have a positive impact on the marketplace and retail customers in particular. As previously noted, in addition to end-of-the-month expirations, NDXP options are P.M.-settled NASDAQ-100 Index options that may expire on Mondays, Wednesdays, and Fridays (other than third-Friday-of-the- month) (i.e., nonstandard weekly expirations pursuant to Rule 1101A(b)(vii)). Trading P.M.-settled third-Friday expirations under the NDXP symbol will ensure market participants, particularly retail customers, have seamless access to P.M.-settled NASDAQ-100 Index options expiring every Friday of the month. Without the proposed amendments, a user of NDXP options could not roll an existing NDXP position that expires on a first or second Friday of a month into a NDXP position that expires on a third-Friday. Thus, for NDXP users, there would be a gap in Friday expirations. Changing the NDXPM symbol to NDXP would remove the gap in Friday NDXP expirations and allow market participants, especially retail customers that are less likely to utilize both NDXPM and NDXP options to maintain exposure to Friday expirations, to have seamless access to P.M.-settled NASDAQ-100 Index options expiring every Friday of the month. In addition, offering seamless access to P.M.-settled NASDAQ-100 Index options that expire every Friday of the month would allow market participants to submit complex orders with options series that expire on third-Fridays and other Friday expirations. Without the proposed amendments, market participants would not be able to submit into the trading system complex orders that consist of NDXPM options series and NDXP options series because they are currently in separate classes.\6\ Although market participants would have the ability to submit separate orders to leg into a position with third- Friday and other Friday exposure, retail customers would be less likely to leg into a position. Thus, changing the NDXPM symbol to NDXP would allow market participants, especially retail customers, to submit complex orders with options series that expire on third-Fridays and other Fridays. --------------------------------------------------------------------------- \6\ See Rule 1098, Complex Orders on the System, Section (a)(i) which provides that for purposes of the electronic trading of Complex Orders, a Complex Order is an order involving the simultaneous purchase and/or sale of two or more different options series in the same underlying security, priced as a net debit or credit based on the relative prices of the individual components, for the same account, for the purpose of executing a particular investment strategy. --------------------------------------------------------------------------- As previously noted, the Exchange does not believe moving NDXPM into the NDX options class and changing the NDXPM symbol to NDXP will have any adverse impact on market participants. Because the Exchange has not yet listed NDXPM, and because Exchange Rules and systems will treat NDXPM and NDXP the same (other than having separate pilot programs and listing schedules), the Exchange expects a smooth transition of NDXPM series to the NDXP symbol. [[Page 46002]] Position Limits/Reporting Requirements In addition, since third-Friday P.M.-settled options trading under the NDXP symbol will be a new type of series under the NDX options class and not a new options class, all third-Friday P.M.-settled NDXP options will be aggregated together with all other standard expirations for applicable reporting and other requirements.\7\ The Exchange therefore proposes to delete language in Rules 1079, FLEX Index, Equity and Currency Options and 1001A, Position Limits, dealing with position limits for NDXPM options specifically. --------------------------------------------------------------------------- \7\ See e.g., Rule 1001A(c) which sets forth the reporting requirements for certain broad-based indexes that do not have position limits. --------------------------------------------------------------------------- Pilot Reports Third-Friday P.M.-settled NASDAQ-100 Index options are currently approved to be listed on a pilot basis.\8\ After implementation of the proposed amendments, the pilot would continue under the same terms that originally established the pilot. As part of the pilot, the Exchange would submit periodic reports and annual reports that analyze the market impact and trading patterns of third-Friday P.M.-settled NASDAQ- 100 Index options. The reports would provide the same data and analysis for third-Friday P.M.-settled NASDAQ-100 Index options trading under symbol NDXP that would have been submitted for third-Friday P.M.- settled NASDAQ-100 Index options trading under symbol NDXPM had they been listed. --------------------------------------------------------------------------- \8\ See Rule 1101A Commentary .05 and Securities Exchange Act Release No. 81293 (August 2, 2017), 82 FR 37138 (August 8, 2017) (approving SR-Phlx-2017-04). --------------------------------------------------------------------------- Implementation Date The Exchange intends to change the NDXPM symbol to NDXP prior to its listing. The Exchange does not intend to list NDXPM as a separate class. Consistent with the original NDXPM approval order, the pilot for listing third-Friday P.M.-settled NASDAQ-100 Index options trading under symbol NDXP would terminate on December 29, 2018.\9\ --------------------------------------------------------------------------- \9\ The NDXPM approval order provided for termination of the pilot on the earlier to occur of (i) 12 months following the date of the first listing of the options, or (ii) December 29, 2018. Since fewer than 12 months now remain in 2018, the pilot will terminate on December 29, 2018. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\11\ 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \12\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(5). \12\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes trading P.M.-settled third- Friday expirations under the NDXP symbol rather than the separate NDXPM symbol will ensure market participants, particularly retail customers, have seamless access to P.M.-settled NASDAQ-100 Index options expiring every Friday of the month, which helps to remove impediments to and perfect the mechanism of a free and open market. The Exchange believes the proposed rule change will help to protect investors and the public interest by allowing market participants to enter options positions with the same underlying in one symbol that spans every Friday expiration in a month, thus providing a more efficient way to gain exposure and hedge risk. 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 does not believe the rule change will impose a burden on intramarket competition because all market participants will continue to have access to P.M.-settled NASDAQ-100 Index options expiring every Friday of the month and will be able to trade them under the NDXP symbol. The proposal will not impose a burden on intermarket competition because the options affected by this proposal are exclusive to the Exchange. Additionally, the Exchange does not believe the proposal will impose any burden on intermarket competition as market participants on other exchanges are welcome to become members and trade at Phlx if they determine that this proposed rule change has made Phlx more attractive or favorable. 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 \13\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A)(iii). \14\ 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. --------------------------------------------------------------------------- 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 Send an email to [email protected]. Please include File Number SR-Phlx-2018-57 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2018-57. This file [[Page 46003]] 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 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2018-57 and should be submitted on or before October 2, 2018. --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-19641 Filed 9-10-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 176 / Tuesday, September 11, 2018 / Notices 46001
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s market participants, particularly retail
COMMISSION Statement of the Purpose of, and customers, have seamless access to
Statutory Basis for, the Proposed Rule P.M.-settled NASDAQ–100 Index
[Release No. 34–84034; File No. SR–Phlx– Change options expiring every Friday of the
2018–57] month.
1. Purpose
Without the proposed amendments, a
Self-Regulatory Organizations; Nasdaq The Exchange seeks to amend user of NDXP options could not roll an
PHLX LLC; Notice of Filing and Exchange rules related to certain P.M.- existing NDXP position that expires on
Immediate Effectiveness of Proposed settled options on the NASDAQ–100 a first or second Friday of a month into
Rule Change To Move the P.M.-Settled Index which have been approved by the a NDXP position that expires on a third-
Nasdaq-100 Index Options Expiring on Commission but which have not yet Friday. Thus, for NDXP users, there
the Third Friday of the Month to the been listed by the Exchange.3 Currently, would be a gap in Friday expirations.
NDX Index Options Class third-Friday P.M.-settled NASDAQ–100 Changing the NDXPM symbol to NDXP
Index options form a separate options would remove the gap in Friday NDXP
September 5, 2018. class and, if listed by the Exchange, expirations and allow market
would trade under the symbol participants, especially retail customers
Pursuant to Section 19(b)(1) of the
‘‘NDXPM.’’ The Exchange now seeks to that are less likely to utilize both
Securities Exchange Act of 1934
move these third-Friday P.M.-settled NDXPM and NDXP options to maintain
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
NASDAQ–100 Index options into the exposure to Friday expirations, to have
notice is hereby given that on August
NASDAQ–100 (‘‘NDX’’) options class. seamless access to P.M.-settled
27, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or
The Exchange has also recently NASDAQ–100 Index options expiring
‘‘Exchange’’) filed with the Securities
received Commission approval to list every Friday of the month.
and Exchange Commission (‘‘SEC’’ or
nonstandard expirations of P.M.-settled In addition, offering seamless access
‘‘Commission’’) the proposed rule
NASDAQ–100 Index options trading to P.M.-settled NASDAQ–100 Index
change as described in Items I, II, and
under the symbol ‘‘NDXP’’, also on a options that expire every Friday of the
III, below, which Items have been
pilot basis.4 NDXP options are series of month would allow market participants
prepared by the Exchange. The
the NDX options class. These NDXP to submit complex orders with options
Commission is publishing this notice to
options may expire on Mondays, series that expire on third-Fridays and
solicit comments on the proposed rule
Wednesdays, Fridays (other than third- other Friday expirations. Without the
change from interested persons.
Friday-of-the-month), and the last proposed amendments, market
I. Self-Regulatory Organization’s trading day of the month.5 The participants would not be able to submit
Statement of the Terms of Substance of proposed rule change would facilitate a into the trading system complex orders
the Proposed Rule Change change to the trading symbol for P.M.- that consist of NDXPM options series
settled NASDAQ–100 Index options that and NDXP options series because they
The Exchange proposes to move the have standard third Friday-of-the-month are currently in separate classes.6
P.M.-settled Nasdaq-100 Index Options (‘‘third-Friday’’) expirations from Although market participants would
expiring on the third Friday of the ‘‘NDXPM’’ to ‘‘NDXP.’’ have the ability to submit separate
month (‘‘NDXPM’’) to the NDX index The Exchange believes moving orders to leg into a position with third-
options class. In connection with the NDXPM into the NDX options class to Friday and other Friday exposure, retail
move, the Exchange proposes changing trade under the NDXP symbol will have customers would be less likely to leg
the trading symbol for these options no adverse impact on the marketplace. into a position. Thus, changing the
from ‘‘NDXPM’’ to ‘‘NDXP’’. In fact, the Exchange believes moving NDXPM symbol to NDXP would allow
The text of the proposed rule change NDXPM into the NDX options class to market participants, especially retail
is available on the Exchange’s website at trade under the NDXP symbol will have customers, to submit complex orders
http://nasdaqphlx.cchwallstreet.com/, a positive impact on the marketplace with options series that expire on third-
at the principal office of the Exchange, and retail customers in particular. Fridays and other Fridays.
and at the Commission’s Public As previously noted, in addition to As previously noted, the Exchange
Reference Room. end-of-the-month expirations, NDXP does not believe moving NDXPM into
options are P.M.-settled NASDAQ–100 the NDX options class and changing the
II. Self-Regulatory Organization’s Index options that may expire on NDXPM symbol to NDXP will have any
Statement of the Purpose of, and Mondays, Wednesdays, and Fridays adverse impact on market participants.
Statutory Basis for, the Proposed Rule (other than third-Friday-of-the-month) Because the Exchange has not yet listed
Change (i.e., nonstandard weekly expirations NDXPM, and because Exchange Rules
pursuant to Rule 1101A(b)(vii)). Trading and systems will treat NDXPM and
In its filing with the Commission, the
P.M.-settled third-Friday expirations NDXP the same (other than having
Exchange included statements
under the NDXP symbol will ensure separate pilot programs and listing
concerning the purpose of and basis for
the proposed rule change and discussed 3 See Securities Exchange Act Release No. 81293
schedules), the Exchange expects a
any comments it received on the (August 2, 2017), 82 FR 37138 (August 8, 2017)
smooth transition of NDXPM series to
proposed rule change. The text of these (approving SR–Phlx–2017–04). the NDXP symbol.
statements may be examined at the 4 See Securities Exchange Act Release No. 82341
places specified in Item IV below. The (December 15, 2017), 82 FR 60651 (December 21, 6 See Rule 1098, Complex Orders on the System,
daltland on DSKBBV9HB2PROD with NOTICES
2017) (SR–Phlx–2017–79). In its proposed rule Section (a)(i) which provides that for purposes of
Exchange has prepared summaries, set change to adopt a nonstandard expirations pilot the electronic trading of Complex Orders, a
forth in sections A, B, and C below, of program, the Exchange noted that it anticipated Complex Order is an order involving the
the most significant aspects of such filing a proposed rule change in the near future to simultaneous purchase and/or sale of two or more
statements. move the NDXPM index options with standard different options series in the same underlying
third Friday of the month expiration dates to the security, priced as a net debit or credit based on the
NDX index option class. relative prices of the individual components, for the
1 15 U.S.C. 78s(b)(1). 5 See Rule 1101A(b)(vii), Nonstandard same account, for the purpose of executing a
2 17 CFR 240.19b–4. Expirations Pilot Program. particular investment strategy.
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![Federal Register / Vol. 83, No. 176 / Tuesday, September 11, 2018 / Notices 46003
number should be included on the and Exchange Commission two existing Complex Order price
subject line if email is used. To help the (‘‘Commission’’), pursuant to Section protections, the debit/credit check and
Commission process and review your 19(b)(1) of the Securities Exchange Act the maximum price protection, to the
comments more efficiently, please use of 1934 (‘‘Act’’) 1 and Rule 19b–4 proposed Complex Customer Cross and
only one method. The Commission will thereunder,2 a proposed rule change to Complex QCC Orders.9
post all comments on the Commission’s adopt rules governing the trading of Proposed BOX Rule 7110(c)(7)
internet website (http://www.sec.gov/ Complex Qualified Contingent Cross provides that a Complex Customer Cross
rules/sro.shtml). Copies of the Orders (‘‘QCC’’) and Complex Customer order will be executed automatically
submission, all subsequent Cross Orders. The proposed rule change upon entry provided that the execution
amendments, all written statements was published for comment in the (i) is at least $0.01 better than (inside)
with respect to the proposed rule Federal Register on June 8, 2018.3 On the cBBO 10 and any Public Customer
change that are filed with the July 16, 2018, pursuant to Section Complex Order on the Complex Order
Commission, and all written 19(b)(2) of the Act,4 the Commission Book; (ii) is at or better than any non-
communications relating to the designated a longer period within which Public Customer Complex Order on the
proposed rule change between the to approve the proposed rule change, Complex Order Book; and (iii) is at or
Commission and any person, other than disapprove the proposed rule change, or between the cNBBO.11 The system will
those that may be withheld from the institute proceedings to determine reject a Complex Customer Cross Order
public in accordance with the whether to approve or disapprove the if, at the time of receipt of the Complex
provisions of 5 U.S.C. 552, will be proposed rule change.5 The Commission Customer Cross Order: (i) The strategy is
available for website viewing and has received no comment letters subject to an ongoing auction (including
printing in the Commission’s Public regarding the proposed rule change. the COPIP, Facilitation, and Solicitation
Reference Room, 100 F Street NE, This order institutes proceedings auctions); or (ii) there is an exposed
Washington, DC 20549, on official pursuant to Section 19(b)(2)(B) of the order on the strategy pursuant to BOX
business days between the hours of 10 Act 6 to determine whether to approve Rule 7240(b)(3)(B).12 Complex Customer
a.m. and 3 p.m. Copies of the filing also or disapprove the proposed rule change. Cross Orders will be cancelled
will be available for inspection and automatically if they cannot be
II. Description of the Proposal
copying at the principal office of the executed, and Complex Customer Cross
Exchange. All comments received will BOX has proposed to adopt rules Orders may only be entered in the
be posted without change. Persons governing the trading of Complex minimum trading increments applicable
submitting comments are cautioned that Customer Cross Orders 7 and Complex to Complex Orders under BOX Rule
we do not redact or edit personal QCC Orders.8 The proposal also applies 7240(b)(1).13 BOX proposes to apply
identifying information from comment BOX IM–7140–1 to the entry and
1 15 U.S.C. 78s(b)(1).
submissions. You should submit only execution of Complex Customer Cross
2 17 CFR 240.19b–4.
information that you wish to make 3 See Securities Exchange Act Release No. 83367
Orders.14
available publicly. All submissions (June 4, 2018), 83 FR 26719 (‘‘Notice’’).
should refer to File Number SR–Phlx– 4 15 U.S.C. 78s(b)(2). prior existing position) as a result of other
2018–57 and should be submitted on or 5 See Securities Exchange Act Release No. 83647,
components of the contingent trade. See BOX IM–
7110–2. See Notice, supra note 3, for additional
before October 2, 2018. 83 FR 34635 (July 20, 2018). The Commission
description of the proposed rule change, including
designated September 6, 2018, as the date by which
For the Commission, by the Division of examples demonstrating the operation of the
the Commission shall approve or disapprove, or
Trading and Markets, pursuant to delegated proposed Complex Customer Cross and Complex
institute proceedings to determine whether to
authority.15 QCC Orders.
approve or disapprove, the proposed rule change. 9 See proposed BOX IM–7240–1(a)(5) and (b)(5).
6 15 U.S.C. 78s(b)(2)(B).
Eduardo A. Aleman, 10 The cBBO is the best net bid and offer price
7 A Complex Customer Cross Order is comprised
Assistant Secretary. for a Complex Order Strategy based on the BBO on
of one Public Customer Complex Order to buy and
[FR Doc. 2018–19641 Filed 9–10–18; 8:45 am] one Public Customer Complex Order to sell at the the BOX Book for the individual options
same price and for the same quantity. See proposed components of the Strategy. See BOX Rule
BILLING CODE 8011–01–P
BOX Rule 7240(b)(4)(iii). 7240(a)(1). The BOX Book is the electronic book of
8 A Complex QCC Order is comprised of an
orders on each single option series maintained by
the BOX Trading Host. See BOX Rule 100(a)(10).
originating Complex Order to buy or sell where
SECURITIES AND EXCHANGE each component is at least 1,000 contracts that is
11 The cNBBO is the best net bid and offer price
COMMISSION identified as being part of a qualified contingent for a Complex Order Strategy based on the NBBO
trade, as defined in IM–7110–2, coupled with a for the individual options components of the
[Release No. 34–84031; File No. SR–BOX– contra-side Complex Order or orders totaling an Strategy. See BOX Rule 7240(a)(3).
2018–14] equal number of contracts. See proposed BOX Rule
12 See proposed BOX Rule 7110(c)(7).
13 See proposed BOX Rule 7110(c)(7)(i) and (ii).
7240(b)(4)(iv). A ‘‘qualified contingent trade’’ is a
Self-Regulatory Organizations; BOX transaction consisting of two or more component 14 See proposed BOX Rule 7110(c)(7)(iii). BOX
Options Exchange LLC; Order orders, executed as agent or principal, where: (1) At IM–7140–1 provides: ‘‘[BOX Rule 7140(b)] prevents
Instituting Proceedings To Determine least one component is an NMS Stock, as defined an Options Participant executing agency orders to
in Rule 600 of Regulation NMS under the Exchange increase its economic gain from trading against the
Whether To Approve or Disapprove a Act; (2) all components are effected with a product order without first giving other trading interest on
Proposed Rule Change To Adopt Rules or price contingency that either has been agreed to BOX an opportunity to trade with the agency order
Governing the Trading of Complex by all the respective counterparties or arranged for pursuant to Rule 7150 (Price Improvement Period),
Qualified Contingent Cross Orders and by a broker-dealer as principal or agent; (3) the Rule 7245 (Complex Order Price Improvement
execution of one component is contingent upon the Period) or Rule 7270 (Block Trades). However, the
Complex Customer Cross Orders execution of all other components at or near the Exchange recognizes that it may be possible for an
same time; (4) the specific relationship between the Options Participant to establish a relationship with
September 5, 2018.
daltland on DSKBBV9HB2PROD with NOTICES
component orders (e.g., the spread between the a Customer or other person (including affiliates) to
I. Introduction prices of the component orders) is determined by deny agency orders the opportunity to interact on
the time the contingent order is placed; (5) the BOX and to realize similar economic benefits as it
On May 22, 2018, BOX Options component orders bear a derivative relationship to would achieve by executing agency orders as
Exchange LLC (‘‘BOX’’ or the one another, represent different classes of shares of principal. It will be a violation of [BOX Rule
the same issuer, or involve the securities of 7140(b)] for an Options Participant to circumvent
‘‘Exchange’’) filed with the Securities participants in mergers or with intentions to merge [BOX Rule 7140(b)] by providing an opportunity for
that have been announced or cancelled; and (6) the a Customer or other person (including affiliates) to
15 17 CFR 200.30–3(a)(12). transaction is fully hedged (without regard to any Continued
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Document Created: 2018-09-11 01:02:56
Document Modified: 2018-09-11 01:02:56
| Category | Regulatory Information | |
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| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 83 FR 46001 |
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