83_FR_54365 83 FR 54157 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 303 (Approval To Operate Multiple Memberships)

83 FR 54157 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 303 (Approval To Operate Multiple Memberships)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 208 (October 26, 2018)

Page Range54157-54161
FR Document2018-23390

Federal Register, Volume 83 Issue 208 (Friday, October 26, 2018)
[Federal Register Volume 83, Number 208 (Friday, October 26, 2018)]
[Notices]
[Pages 54157-54161]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-23390]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84465 File No. SR-ISE-2018-86]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 303 
(Approval To Operate Multiple Memberships)

October 22, 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 October 10, 2018, Nasdaq ISE, LLC (``ISE'' or the ``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 303 (Approval to Operate 
Multiple Memberships).
    The text of the proposed rule change is available on the Exchange's 
website at http://ise.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 purpose of the proposed rule change is to amend Rule 303 to 
permit ISE, instead of ISE's Board of Directors (``Board''), to grant 
waivers to allow its members to operate multiple Primary Market Maker 
(``PMM'') Memberships \3\ and Competitive Market Maker (``CMM'') 
Memberships (together, ``Market Maker Memberships''). As explained 
below, the Exchange is seeking to streamline the process by which its 
members may be approved to operate multiple Market Maker Memberships 
(hereinafter, ``waiver process''). No changes to the Market Maker 
Membership structure itself are being contemplated by this rule change 
filing.
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    \3\ The term ``Membership'' refers to the trading privileges 
associated with PMM Rights, CMM Rights, and EAM Rights. See Rules 
100(a)(21) and 100(a)(31).
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Background
    PMM Rights and CMM Rights (together, ``Market Maker Rights'') are 
owned today by Exchange members or non-member owners (collectively, 
``holders'').\4\ This ownership interest

[[Page 54158]]

gives holders the ability to transfer or lease their Market Maker 
Rights to other members for trading pursuant to Rule 307 (Sale and 
Transfer of Market Maker Rights) or Rule 308 (Leasing Memberships), 
respectively. As such, the Exchange's rules provide holders with 
limited voting rights (in addition to the trading rights) to protect 
their ownership over these trading rights.\5\ This structure is a 
remnant of ISE's original membership structure, where the original 
Market Maker Rights provided the holders with an equity ownership 
interest in ISE as well as trading rights on the Exchange.\6\ Today, 
Market Maker Rights do not convey equity ownership in ISE, and the 
ownership and operation of trading rights associated with Market Maker 
Rights continue to exist separately. Despite this separation, ISE's 
rules still contain certain limited voting rights and restrictions 
related to the Market Maker Rights. The voting rights that remain in 
place today for the holders of Market Maker Rights are as follows: (i) 
The right to vote on any increase in the number of authorized PMM 
Rights or CMM Rights, which must be approved by the affirmative vote of 
the holders of at least a majority of the outstanding PMM Rights, 
voting as a class, and the affirmative vote of the holders of at least 
a majority of the outstanding CMM Rights, voting as a class (such 
voting rights, ``Core Rights''); \7\ and (ii) the right to vote on any 
amendments to ISE's LLC Agreement or By-Laws that would alter or change 
the powers, preferences, or special rights of one or more series of PMM 
Rights or CMM Rights, which must be approved by the holders of a 
majority of such PMM Rights or CMM Rights, as applicable.\8\ As noted 
above, these narrow voting rights exist today to protect the ownership 
interests associated with the Market Maker Rights (i.e., the ability to 
transfer or lease to other members for trading on ISE), whether as a 
safeguard against potential dilution in value as noted above, or as the 
right to vote on any impactful changes to ISE's governing documents 
that would alter the nature of their interests. Also, one limitation, 
which has existed without change since ISE's inception, is a mandatory 
cap that prohibits the holder or lessee of Market Maker Rights, 
together with any affiliates, from gaining ownership or voting rights 
in excess of 20% of the outstanding PMM Rights or CMM Rights, as 
applicable.\9\
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    \4\ ``Non-member owners'' are individuals and organizations that 
are not members of the Exchange or that are otherwise members, but 
do not seek to exercise trading privileges associated with such 
Market Maker Rights. See Rule 300(a). Non-member owners are required 
to lease the trading privileges associated with the Market Maker 
Rights (i.e., the Membership) to Exchange members. See Rule 300(b).
    \5\ As discussed more fully later in the filing, these voting 
rights are in paragraphs (d) and (e) of Rule 300.
    \6\ Under ISE's original membership structure, the original 
Market Maker Rights provided the holders with an equity ownership 
interest in ISE as well as trading rights on the Exchange. As such, 
those rights were transferable or leasable to approved persons or 
entities (i.e., Exchange members or non-member owners), subject to 
ownership and voting limitations, as well as concentration limits on 
exercising the trading rights associated with multiple Market Maker 
Rights. Additionally, the original Market Maker Rights conferred 
broader voting rights to protect the holder's equity interest, such 
as the right to vote on corporate actions like mergers or 
consolidations, and the right to vote on changes to the ownership 
structure of ISE like increasing the number of memberships in a 
class. From the beginning, the holders of EAM Rights had no equity 
interests in the Exchange and only had rights to trade on the 
Exchange. Those rights were not transferable by the holders, and 
could only be held by Exchange members. See Securities Exchange Act 
Release No. 42455 (February 24, 2000), 65 FR 11388 (March 2, 2000) 
(Order Granting Registration as a National Securities Exchange). ISE 
has since demutualized and reorganized, resulting in the separation 
of the two functions of Market Maker Rights. Today, equity ownership 
in ISE is held by ISE Holdings as the sole LLC member; the ownership 
and operation of trading rights associated with the Market Maker 
Rights (along with the ability to transfer or lease such rights) 
continue to exist separately, as held by member or non-member 
owners.
    \7\ See Rule 300(d). Presently, the number of outstanding PMM 
Rights and CMM Rights are 10 and 160, respectively. See Rule 
100(a)(13) and (46). Due to this limited number, the Core Rights 
effectively serve as a protection against the potential dilution of 
the value of the PMM and CMM Rights resulting from subsequent 
increases in the number of those rights.
    \8\ See Rule 300(e).
    \9\ See Supplementary Material .02 to Rule 303. The Exchange is 
not proposing any changes to the ownership and voting limitations.
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    In addition to the ownership and voting limitations, Rule 303(b) 
contains trading concentration limits that restrict an applicant or 
approved member, together with any affiliates, from operating more than 
one (1) PMM Membership or more than ten (10) CMM Memberships. Today, 
the Board may waive the limitations contained in this rule if it 
determines that good cause has been shown and such action is, in its 
judgment, in the best interests of the Exchange.\10\ The Board is not 
permitted, however, to waive this requirement if such waiver would 
result in the applicant or approved member (together with any of its 
affiliates) being approved to exercise trading privileges associated 
with more than 20% of the outstanding CMM Memberships.\11\ The 
foregoing limitations serve to minimize potential concerns arising from 
a member owning or operating multiple memberships, and the Commission 
has previously noted that a regulatory concern can arise if a member's 
interest in an exchange becomes so large as to cast doubt on whether 
the exchange can fairly and objectively exercise its self-regulatory 
responsibilities with respect to that member. For example, a member 
that directly or indirectly controls an exchange might be tempted to 
exercise that controlling influence by directing the exchange to 
refrain from diligently monitoring and surveilling the member's conduct 
or diligently enforcing its rules and the federal securities laws with 
respect to conduct by the member that violates such provisions.\12\
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    \10\ When making its determination whether good cause has been 
shown to waive the limitations contained in Rule 303(b), the Board 
will consider whether an operational, business or regulatory need to 
exceed the limits has been demonstrated. In those cases where such a 
need is demonstrated, the Board also will consider any operational, 
business or regulatory concerns that might be raised if such a 
waiver were granted. See Supplementary Material .01 to Rule 303.
    \11\ A similar strict 20% concentration cap was previously in 
place for operating multiple PMM Memberships, but the Exchange has 
over the years relaxed and later eliminated this strict cap. See 
Securities Exchange Act Release Nos. 53271 (February 10, 2006), 71 
FR 8625 (February 17, 2006) (SR-ISE-2005-46) (``2005 Proposal''); 
and 77410 (March 21, 2016), 81 FR 16248 (March 25, 2016) (SR-ISE-
2016-07) (``2016 Proposal''). In justifying the 2016 Proposal, the 
Exchange cited to other exchanges like CBOE and NYSE Arca that did 
not have mandatory caps on the number of issues or trading rights 
that could be allocated to their designated primary market-maker or 
lead market makers. See 2016 Proposal at 16249. It should also be 
noted that both CBOE and NYSE Arca provide for allocations to be 
done at the exchange, not board, level. See CBOE Rule 8.84 and NYSE 
Arca Rule 6.82-O.
    \12\ See 2005 Proposal at 8625 and 8626.
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    Rule 303 is implicated in the context of a transfer or lease of 
Market Maker Rights pursuant to Rule 307 (Sale and Transfer of Market 
Maker Rights) or Rule 308 (Leasing Memberships), respectively, and the 
approval of such transfer or lease would result in a member exceeding 
the limits contained in Rule 303(b) (i.e., the transfer or lease would 
result in the member operating more than 1 PMM Membership or more than 
10 CMM Memberships). The Exchange notes that a transfer or lease of 
Market Maker Rights can occur when an ISE Market Maker exits the 
options market making community, and thus ceases operating their Market 
Maker Membership, resulting in a decrease of the number of ISE Market 
Makers.\13\ In such cases, the Board may find it appropriate to waive 
the trading concentration limit in Rule 303(b) after determining that 
good cause has been shown and if doing so would be in the

[[Page 54159]]

best interest of the Exchange to allow, for instance, a qualified PMM 
to operate more than 1 PMM Membership. In making this determination, 
the Board would also take into account whether the waiver to allow a 
member to operate multiple Market Maker Memberships would enable the 
member to exercise direct or indirect control over ISE in a manner that 
would cast doubt on whether ISE can fairly and objectively exercise its 
self-regulatory responsibilities with respect to that member.\14\ In 
this respect, the Board serves as an independent check on potential 
undue influence concerns.
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    \13\ While Exchange receives applications for new ISE Market 
Makers as well, this decrease is parallel to the continued 
consolidation in the options market making community and resulting 
decrease in the number of market makers, which served as an impetus 
for the both the 2005 Proposal and 2016 Proposal as discussed in 
note 11 above.
    \14\ Pursuant to the Exchange's By-Laws, the Board is 
responsible for ensuring that the Exchange complies with its self-
regulatory obligations to protect investors, maintain fair and 
orderly markets, and advance the public interest. In carrying out 
this responsibility, the Board is further required to appoint a 
Regulatory Oversight Committee, composed solely of Board members 
each of whom must be a Public Director (i.e., has no material 
business relationship with a broker or dealer or with the Exchange 
or its affiliates) and an ``independent director'' as defined in 
Rule 5605 of the Rules of The Nasdaq Stock Market, LLC, to assist 
the Board in overseeing the adequacy and effectiveness of ISE's 
regulatory and self-regulatory responsibilities See Exchange By-Law 
Article III, Sections 3(b) and 5(c).
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Proposal
    The Exchange now proposes to amend Rule 303 to permit the Exchange 
to grant waivers to allow members to operate multiple Market Maker 
Memberships, instead of the Board. As such, the limitations on members 
exercising the trading privileges associated with more than one (1) PMM 
Membership or more than ten (10) CMM Memberships may be waived by the 
Exchange if the member shows good cause, which will be determined by 
the Exchange pursuant to the standards set forth in Supplementary 
Material .01 to Rule 303. The Exchange is not proposing any changes to 
the Market Maker Rights ownership structure itself, or to the 
Exchange's corporate governance by bringing the waiver authority from 
the Board to the Exchange. As proposed, holders will continue to have 
the ability to transfer or lease their rights to other members for 
trading on ISE as well as voting rights on certain limited matters to 
protect their ownership over these trading rights.\15\ Furthermore, the 
Market Maker Rights will still be subject to the same ownership, 
voting, and concentration limits in place today. Specifically, the 20% 
ownership and voting limitations in Supplementary Material .02 to Rule 
303 will remain under this proposal. The trading concentration limits 
in Rule 303(b), including the strict cap that prohibits the Board from 
approving a member to operate more than 20% of the outstanding CMM 
Memberships, will likewise remain under this proposal. The Exchange is 
only proposing to change the manner in which the 1 PMM Membership and 
10 CMM Membership concentration limits in Rule 303(b) may be waived 
(i.e., from the Board to the Exchange).
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    \15\ See notes 7 and 8 above, and accompanying text.
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    The Exchange believes that this change will help with the 
administration and application of Rule 303 by bringing the Exchange's 
membership transfer process more in line with other exchanges.\16\ The 
current practice often results in a long and lengthy process to 
organize a Board meeting to consider such applications, and the 
Exchange is concerned that there may be a deterioration of market 
quality in the interim. Furthermore, Exchange staff has been involved 
in all aspects of the waiver process through its work with the Board, 
including gathering and assessing relevant information on the member 
applying to operate multiple Market Maker Memberships for purposes of 
determining whether or not there is good cause shown under Rule 
303.\17\ Given that PMM and CMM Rights are, for all practical purposes, 
rights to trade on the Exchange as described above, the Exchange 
believes that the process in Rule 303, specifically making the 
determination whether good cause has been shown to waive the 
limitations in Rule 303(b) to allow a member to operate multiple 
trading privileges associated with a PMM or CMM Right, is a proper 
function of the Exchange. As noted above, the Exchange's proposal does 
not change the Market Maker Rights ownership structure, nor does it 
change the Exchange's governance. Holders will continue to have the 
same ability to transfer and lease their rights to other members for 
trading on ISE as well as voting rights on certain limited matters to 
protect their ownership over these trading rights.
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    \16\ See note 11 above. Furthermore, the Exchange notes that its 
affiliates, Phlx and BX, similarly allow for transfers of allocated 
options classes at the exchange, and not board, level. See Phlx Rule 
508, which requires exchange approval of any proposed agreement 
between specialists to transfer one or more options classes already 
allocated to a specialist. See also BX Chapter VII, Section 13(D), 
which governs requested transfers of options classes between BX lead 
market makers, and also provides for an exchange-driven process. On 
ISE, a Market Maker Membership manifests itself as a group of 
options classes allocated to the member, so a transfer of the 
membership is similar to the way transfers of options classes are 
handled on Phlx and BX.
    \17\ Specifically, Exchange staff, including from the options 
business team, market operations, and regulatory department, gather 
relevant information on the applicant member that includes the 
number of Market Maker Memberships that the member currently 
operates and other market quality data as appropriate. This 
information is then compiled into a report that is sent to the Board 
to assist them in making the good cause determination under Rule 
303.
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    The Exchange recognizes that allowing a member to operate multiple 
Market Maker Memberships could raise issues regarding concentration of 
market making expertise, including regulatory concerns around undue 
influence, as discussed above. In this regard, Rule 303 is still only 
an enabling rule. With the proposed change, the Exchange will still 
need to find good cause to approve any member to operate more than one 
PMM Membership or more than ten CMM Memberships, and could consider the 
number of Memberships already operated by the member in determining 
whether or not there is good cause shown. Thus, the Exchange will need 
to weigh each potential application on its own merits, balancing the 
potential benefits of allowing a member to exercise more than one PMM 
Memberships, or more than ten CMM Memberships, against any 
concentration concern.
    In addition, the Exchange's internal procedures will stipulate that 
all such determinations will be made in consultation with the 
Exchange's Chief Regulatory Officer (``CRO'').\18\ It is already the 
Exchange's current practice to involve the CRO as part of the waiver 
process in that the CRO weighs in on any regulatory concerns that could 
arise from a member operating multiple Market Maker Memberships, so the 
Exchange would effectively make current practice a requirement. 
Furthermore, the CRO reports directly to the Regulatory Oversight 
Committee (``ROC''), a Board committee composed solely of Public 
Directors that are also independent directors, and ultimately to the 
Board, on a regular basis.\19\ As proposed, to the extent any 
determinations are made under Rule 303(b), such determinations will be 
reported to the ROC and the Board on a regular basis. In addition, the 
Exchange's regulatory staff, which will continue to be involved in the 
waiver process, operates under the direction of

[[Page 54160]]

the ROC, and works separately and independently from the Exchange's 
business units. Given the foregoing, the Exchange believes that the 
proposed process serves an appropriate independent safeguard in 
assessing and protecting against regulatory concerns around undue 
influence.
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    \18\ Specifically, Exchange staff, including regulatory staff, 
in consultation with the CRO, would make this determination based on 
relevant information on the applicant member, including the number 
of Memberships already operated by the member and other market 
quality data that the Exchange deems appropriate.
    \19\ See note 14 above. See also Nasdaq ISE By-Law Article IV, 
Section 7. The Board receives reports from the ROC during its 
regularly scheduled Board meetings, where the ROC members as well as 
the CRO are all present to answer any questions from the Board.
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    The Board will therefore still be informed of determinations made 
under Rule 303 under the proposed process through the CRO's regular 
reports to the ROC and will, through this process, review and assess 
against potential undue influence concerns.\20\ Accordingly, the 
Exchange believes that the Board will still have meaningful oversight 
notwithstanding the proposed changes to the waiver process itself. 
Ultimately, the Exchange believes that the proposed changes should 
significantly improve the flow and efficiency of the waiver process 
while retaining the regulatory independence of the waiver process 
through the both the ROC's and Board's oversight.
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    \20\ See notes 14 and 19 above, with accompanying text.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\21\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\22\ 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. As discussed above, the Exchange is not seeking to amend any 
of the rights or limitations associated with the Market Maker Rights 
ownership structure, or to Exchange's corporate governance by bringing 
the waiver authority from the Board to the Exchange. Overall, the 
proposed rule change is intended to streamline the Exchange's waiver 
process by allowing the Exchange, instead of the Board, to waive the 
trading concentration limits in Rule 303(b). As discussed above, the 
current practice often results in a long and lengthy process to 
organize a Board meeting to consider such applications, and the 
Exchange is concerned that there may be a deterioration of market 
quality in the interim. The Exchange views the waiver process as a 
proper function of the Exchange given that the PMM and CMM Rights are, 
for all practical purposes, rights to trade on the Exchange. 
Furthermore, the proposed changes will bring the Exchange's waiver 
process more in line with other exchanges, where the transfer of a 
market maker's allocated options classes are handled at the exchange, 
and not the board, level.\23\ As discussed above, Exchange staff, 
including regulatory staff, has been involved in all aspects of the 
waiver process through its work with the Board, and will continue to be 
involved by gathering and assessing relevant information on the member 
applying to operate multiple Market Maker Memberships for purposes of 
determining whether or not there is good cause shown under Rule 303. 
Furthermore, the CRO will be directly involved in all such 
determinations as described above, as is the case today, and will 
report to the ROC and Board on such matters. Accordingly, the Exchange 
believes that the proposed changes will help with the administration 
and application of Rule 303 while retaining the regulatory independence 
of the waiver process through both the ROC's and Board's oversight, as 
discussed above.
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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ See notes 11 and 16 above, with accompanying text.
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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 is 
designed to streamline the waiver process for allowing a member to 
operate multiple Market Maker Memberships, and does not have a 
competitive effect. Furthermore, all similarly situated members will be 
subject to the same requirements and processes proposed hereunder.

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 \24\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\25\
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    \24\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \25\ 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.
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    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 Comments

     Use 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-ISE-2018-86 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-ISE-2018-86. 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

[[Page 54161]]

Reference Room, 100 F Street NE, Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing 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-ISE-
2018-86, and should be submitted on or before November 16, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\

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    \26\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23390 Filed 10-25-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 83, No. 208 / Friday, October 26, 2018 / Notices                                                  54157

                                               (C) Clearing Agency’s Statement on                      those that may be withheld from the                    I. Self-Regulatory Organization’s
                                               Comments on the Proposed Rule                           public in accordance with the                          Statement of the Terms of Substance of
                                               Change Received From Members,                           provisions of 5 U.S.C. 552, will be                    the Proposed Rule Change
                                               Participants or Others                                  available for website viewing and                         The Exchange proposes to amend
                                                 Written comments relating to the                      printing in the Commission’s Public                    Rule 303 (Approval to Operate Multiple
                                               proposed amendments have not been                       Reference Section, 100 F Street NE,                    Memberships).
                                               solicited or received by ICE Clear                      Washington, DC 20549, on official                         The text of the proposed rule change
                                               Europe. ICE Clear Europe will notify the                business days between the hours of                     is available on the Exchange’s website at
                                               Commission of any comments received                     10:00 a.m. and 3:00 p.m. Copies of such                http://ise.cchwallstreet.com/, at the
                                               with respect to the proposed rule                       filings will also be available for                     principal office of the Exchange, and at
                                               change.                                                 inspection and copying at the principal                the Commission’s Public Reference
                                                                                                       office of ICE Clear Europe and on ICE                  Room.
                                               III. Date of Effectiveness of the                       Clear Europe’s website at https://
                                               Proposed Rule Change and Timing for                     www.theice.com/notices/                                II. Self-Regulatory Organization’s
                                               Commission Action                                       Notices.shtml?regulatoryFilings. All                   Statement of the Purpose of, and
                                                  The foregoing rule change has become                 comments received will be posted                       Statutory Basis for, the Proposed Rule
                                               effective pursuant to Section 19(b)(3)(A)               without change. Persons submitting                     Change
                                               of the Act and paragraph (f) of Rule                    comments are cautioned that we do not                    In its filing with the Commission, the
                                               19b–4 thereunder. At any time within                    redact or edit personal identifying                    Exchange included statements
                                               60 days of the filing of the proposed rule              information from comment submissions.                  concerning the purpose of and basis for
                                               change, the Commission summarily may                    You should submit only information                     the proposed rule change and discussed
                                               temporarily suspend such rule change if                 that you wish to make available                        any comments it received on the
                                               it appears to the Commission that such                  publicly. All submissions should refer                 proposed rule change. The text of these
                                               action is necessary or appropriate in the               to File Number SR–ICEEU–2018–017                       statements may be examined at the
                                               public interest, for the protection of                  and should be submitted on or before                   places specified in Item IV below. The
                                               investors, or otherwise in furtherance of               November 16, 2018.                                     Exchange has prepared summaries, set
                                               the purposes of the Act.                                  For the Commission, by the Division of               forth in sections A, B, and C below, of
                                                                                                       Trading and Markets, pursuant to delegated             the most significant aspects of such
                                               IV. Solicitation of Comments
                                                                                                       authority.8                                            statements.
                                                 Interested persons are invited to
                                               submit written data, views, and
                                                                                                       Eduardo A. Aleman,                                     A. Self-Regulatory Organization’s
                                               arguments concerning the foregoing,                     Assistant Secretary.                                   Statement of the Purpose of, and
                                               including whether the proposed rule                     [FR Doc. 2018–23389 Filed 10–25–18; 8:45 am]           Statutory Basis for, the Proposed Rule
                                               change is consistent with the Act.                      BILLING CODE 8011–01–P
                                                                                                                                                              Change
                                               Comments may be submitted by any of                                                                            1. Purpose
                                               the following methods:
                                                                                                       SECURITIES AND EXCHANGE                                   The purpose of the proposed rule
                                               Electronic Comments                                     COMMISSION                                             change is to amend Rule 303 to permit
                                                 • Use the Commission’s internet                                                                              ISE, instead of ISE’s Board of Directors
                                               comment form (http://www.sec.gov/                                                                              (‘‘Board’’), to grant waivers to allow its
                                                                                                       [Release No. 34–84465 File No. SR–ISE–                 members to operate multiple Primary
                                               rules/sro.shtml) or                                     2018–86]
                                                 • Send an email to rule-comments@                                                                            Market Maker (‘‘PMM’’) Memberships 3
                                               sec.gov. Please include File Number SR–                                                                        and Competitive Market Maker
                                                                                                       Self-Regulatory Organizations; Nasdaq
                                               ICEEU–2018–017 on the subject line.                                                                            (‘‘CMM’’) Memberships (together,
                                                                                                       ISE, LLC; Notice of Filing and
                                                                                                                                                              ‘‘Market Maker Memberships’’). As
                                               Paper Comments                                          Immediate Effectiveness of Proposed
                                                                                                                                                              explained below, the Exchange is
                                                                                                       Rule Change To Amend Rule 303
                                                 • Send paper comments in triplicate                                                                          seeking to streamline the process by
                                                                                                       (Approval To Operate Multiple
                                               to Secretary, Securities and Exchange                                                                          which its members may be approved to
                                                                                                       Memberships)
                                               Commission, 100 F Street NE,                                                                                   operate multiple Market Maker
                                               Washington, DC 20549–1090.                              October 22, 2018.                                      Memberships (hereinafter, ‘‘waiver
                                                                                                                                                              process’’). No changes to the Market
                                               All submissions should refer to File                       Pursuant to Section 19(b)(1) of the                 Maker Membership structure itself are
                                               Number SR–ICEEU–2018–017. This file                     Securities Exchange Act of 1934                        being contemplated by this rule change
                                               number should be included on the                        (‘‘Act’’) 1 and Rule 19b–4 thereunder,2                filing.
                                               subject line if email is used. To help the              notice is hereby given that on October
                                               Commission process and review your                      10, 2018, Nasdaq ISE, LLC (‘‘ISE’’ or the              Background
                                               comments more efficiently, please use                   ‘‘Exchange’’) filed with the Securities                   PMM Rights and CMM Rights
                                               only one method. The Commission will                    and Exchange Commission (‘‘SEC’’ or                    (together, ‘‘Market Maker Rights’’) are
                                               post all comments on the Commission’s                   ‘‘Commission’’) the proposed rule                      owned today by Exchange members or
                                               internet website (http://www.sec.gov/                   change as described in Items I, II, and                non-member owners (collectively,
                                               rules/sro.shtml). Copies of the                         III below, which Items have been                       ‘‘holders’’).4 This ownership interest
                                               submission, all subsequent
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                                                                                                       prepared by the Exchange. The
                                               amendments, all written statements                      Commission is publishing this notice to                  3 The term ‘‘Membership’’ refers to the trading
                                               with respect to the proposed rule                       solicit comments on the proposed rule                  privileges associated with PMM Rights, CMM
                                               change that are filed with the                          change from interested persons.                        Rights, and EAM Rights. See Rules 100(a)(21) and
                                               Commission, and all written                                                                                    100(a)(31).
                                                                                                                                                                4 ‘‘Non-member owners’’ are individuals and
                                               communications relating to the                            8 17 CFR 200.30–3(a)(12).                            organizations that are not members of the Exchange
                                               proposed rule change between the                          1 15 U.S.C. 78s(b)(1).                               or that are otherwise members, but do not seek to
                                               Commission and any person, other than                     2 17 CFR 240.19b–4.                                                                           Continued




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                                               54158                          Federal Register / Vol. 83, No. 208 / Friday, October 26, 2018 / Notices

                                               gives holders the ability to transfer or                  a majority of the outstanding CMM                      CMM Memberships.11 The foregoing
                                               lease their Market Maker Rights to other                  Rights, voting as a class (such voting                 limitations serve to minimize potential
                                               members for trading pursuant to Rule                      rights, ‘‘Core Rights’’); 7 and (ii) the right         concerns arising from a member owning
                                               307 (Sale and Transfer of Market Maker                    to vote on any amendments to ISE’s LLC                 or operating multiple memberships, and
                                               Rights) or Rule 308 (Leasing                              Agreement or By-Laws that would alter                  the Commission has previously noted
                                               Memberships), respectively. As such,                      or change the powers, preferences, or                  that a regulatory concern can arise if a
                                               the Exchange’s rules provide holders                      special rights of one or more series of                member’s interest in an exchange
                                               with limited voting rights (in addition to                PMM Rights or CMM Rights, which                        becomes so large as to cast doubt on
                                               the trading rights) to protect their                      must be approved by the holders of a                   whether the exchange can fairly and
                                               ownership over these trading rights.5                     majority of such PMM Rights or CMM                     objectively exercise its self-regulatory
                                               This structure is a remnant of ISE’s                      Rights, as applicable.8 As noted above,                responsibilities with respect to that
                                               original membership structure, where                      these narrow voting rights exist today to              member. For example, a member that
                                               the original Market Maker Rights                          protect the ownership interests                        directly or indirectly controls an
                                               provided the holders with an equity                       associated with the Market Maker Rights                exchange might be tempted to exercise
                                               ownership interest in ISE as well as                      (i.e., the ability to transfer or lease to             that controlling influence by directing
                                               trading rights on the Exchange.6 Today,                   other members for trading on ISE),                     the exchange to refrain from diligently
                                               Market Maker Rights do not convey                         whether as a safeguard against potential               monitoring and surveilling the
                                               equity ownership in ISE, and the                          dilution in value as noted above, or as                member’s conduct or diligently
                                               ownership and operation of trading                        the right to vote on any impactful                     enforcing its rules and the federal
                                               rights associated with Market Maker                       changes to ISE’s governing documents                   securities laws with respect to conduct
                                               Rights continue to exist separately.                      that would alter the nature of their                   by the member that violates such
                                               Despite this separation, ISE’s rules still                interests. Also, one limitation, which                 provisions.12
                                               contain certain limited voting rights and                 has existed without change since ISE’s                    Rule 303 is implicated in the context
                                               restrictions related to the Market Maker                  inception, is a mandatory cap that                     of a transfer or lease of Market Maker
                                               Rights. The voting rights that remain in                  prohibits the holder or lessee of Market               Rights pursuant to Rule 307 (Sale and
                                               place today for the holders of Market                     Maker Rights, together with any                        Transfer of Market Maker Rights) or
                                               Maker Rights are as follows: (i) The right                affiliates, from gaining ownership or                  Rule 308 (Leasing Memberships),
                                               to vote on any increase in the number                     voting rights in excess of 20% of the                  respectively, and the approval of such
                                               of authorized PMM Rights or CMM                           outstanding PMM Rights or CMM                          transfer or lease would result in a
                                               Rights, which must be approved by the                     Rights, as applicable.9                                member exceeding the limits contained
                                               affirmative vote of the holders of at least                  In addition to the ownership and                    in Rule 303(b) (i.e., the transfer or lease
                                               a majority of the outstanding PMM                         voting limitations, Rule 303(b) contains               would result in the member operating
                                               Rights, voting as a class, and the                        trading concentration limits that restrict             more than 1 PMM Membership or more
                                               affirmative vote of the holders of at least               an applicant or approved member,                       than 10 CMM Memberships). The
                                                                                                         together with any affiliates, from                     Exchange notes that a transfer or lease
                                               exercise trading privileges associated with such
                                                                                                         operating more than one (1) PMM                        of Market Maker Rights can occur when
                                               Market Maker Rights. See Rule 300(a). Non-member                                                                 an ISE Market Maker exits the options
                                               owners are required to lease the trading privileges       Membership or more than ten (10) CMM
                                               associated with the Market Maker Rights (i.e., the        Memberships. Today, the Board may                      market making community, and thus
                                               Membership) to Exchange members. See Rule                 waive the limitations contained in this                ceases operating their Market Maker
                                               300(b).                                                                                                          Membership, resulting in a decrease of
                                                                                                         rule if it determines that good cause has
                                                  5 As discussed more fully later in the filing, these
                                                                                                                                                                the number of ISE Market Makers.13 In
                                               voting rights are in paragraphs (d) and (e) of Rule       been shown and such action is, in its
                                                                                                                                                                such cases, the Board may find it
                                               300.                                                      judgment, in the best interests of the
                                                                                                                                                                appropriate to waive the trading
                                                  6 Under ISE’s original membership structure, the
                                                                                                         Exchange.10 The Board is not permitted,
                                               original Market Maker Rights provided the holders                                                                concentration limit in Rule 303(b) after
                                                                                                         however, to waive this requirement if
                                               with an equity ownership interest in ISE as well as                                                              determining that good cause has been
                                               trading rights on the Exchange. As such, those            such waiver would result in the
                                                                                                                                                                shown and if doing so would be in the
                                               rights were transferable or leasable to approved          applicant or approved member (together
                                               persons or entities (i.e., Exchange members or non-       with any of its affiliates) being approved                11 A similar strict 20% concentration cap was
                                               member owners), subject to ownership and voting           to exercise trading privileges associated
                                               limitations, as well as concentration limits on                                                                  previously in place for operating multiple PMM
                                               exercising the trading rights associated with             with more than 20% of the outstanding                  Memberships, but the Exchange has over the years
                                               multiple Market Maker Rights. Additionally, the                                                                  relaxed and later eliminated this strict cap. See
                                               original Market Maker Rights conferred broader               7 See Rule 300(d). Presently, the number of
                                                                                                                                                                Securities Exchange Act Release Nos. 53271
                                               voting rights to protect the holder’s equity interest,                                                           (February 10, 2006), 71 FR 8625 (February 17, 2006)
                                                                                                         outstanding PMM Rights and CMM Rights are 10           (SR–ISE–2005–46) (‘‘2005 Proposal’’); and 77410
                                               such as the right to vote on corporate actions like       and 160, respectively. See Rule 100(a)(13) and (46).
                                               mergers or consolidations, and the right to vote on                                                              (March 21, 2016), 81 FR 16248 (March 25, 2016)
                                                                                                         Due to this limited number, the Core Rights            (SR–ISE–2016–07) (‘‘2016 Proposal’’). In justifying
                                               changes to the ownership structure of ISE like            effectively serve as a protection against the
                                               increasing the number of memberships in a class.                                                                 the 2016 Proposal, the Exchange cited to other
                                                                                                         potential dilution of the value of the PMM and         exchanges like CBOE and NYSE Arca that did not
                                               From the beginning, the holders of EAM Rights had         CMM Rights resulting from subsequent increases in
                                               no equity interests in the Exchange and only had                                                                 have mandatory caps on the number of issues or
                                                                                                         the number of those rights.                            trading rights that could be allocated to their
                                               rights to trade on the Exchange. Those rights were           8 See Rule 300(e).
                                               not transferable by the holders, and could only be                                                               designated primary market-maker or lead market
                                               held by Exchange members. See Securities
                                                                                                            9 See Supplementary Material .02 to Rule 303.       makers. See 2016 Proposal at 16249. It should also
                                               Exchange Act Release No. 42455 (February 24,              The Exchange is not proposing any changes to the       be noted that both CBOE and NYSE Arca provide
                                               2000), 65 FR 11388 (March 2, 2000) (Order Granting        ownership and voting limitations.                      for allocations to be done at the exchange, not
                                               Registration as a National Securities Exchange). ISE         10 When making its determination whether good       board, level. See CBOE Rule 8.84 and NYSE Arca
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                                               has since demutualized and reorganized, resulting         cause has been shown to waive the limitations          Rule 6.82–O.
                                                                                                                                                                   12 See 2005 Proposal at 8625 and 8626.
                                               in the separation of the two functions of Market          contained in Rule 303(b), the Board will consider
                                               Maker Rights. Today, equity ownership in ISE is           whether an operational, business or regulatory need       13 While Exchange receives applications for new

                                               held by ISE Holdings as the sole LLC member; the          to exceed the limits has been demonstrated. In         ISE Market Makers as well, this decrease is parallel
                                               ownership and operation of trading rights                 those cases where such a need is demonstrated, the     to the continued consolidation in the options
                                               associated with the Market Maker Rights (along            Board also will consider any operational, business     market making community and resulting decrease
                                               with the ability to transfer or lease such rights)        or regulatory concerns that might be raised if such    in the number of market makers, which served as
                                               continue to exist separately, as held by member or        a waiver were granted. See Supplementary Material      an impetus for the both the 2005 Proposal and 2016
                                               non-member owners.                                        .01 to Rule 303.                                       Proposal as discussed in note 11 above.



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                                                                             Federal Register / Vol. 83, No. 208 / Friday, October 26, 2018 / Notices                                                     54159

                                               best interest of the Exchange to allow,                 303(b), including the strict cap that                     Holders will continue to have the same
                                               for instance, a qualified PMM to operate                prohibits the Board from approving a                      ability to transfer and lease their rights
                                               more than 1 PMM Membership. In                          member to operate more than 20% of                        to other members for trading on ISE as
                                               making this determination, the Board                    the outstanding CMM Memberships,                          well as voting rights on certain limited
                                               would also take into account whether                    will likewise remain under this                           matters to protect their ownership over
                                               the waiver to allow a member to operate                 proposal. The Exchange is only                            these trading rights.
                                               multiple Market Maker Memberships                       proposing to change the manner in                            The Exchange recognizes that
                                               would enable the member to exercise                     which the 1 PMM Membership and 10                         allowing a member to operate multiple
                                               direct or indirect control over ISE in a                CMM Membership concentration limits                       Market Maker Memberships could raise
                                               manner that would cast doubt on                         in Rule 303(b) may be waived (i.e., from                  issues regarding concentration of market
                                               whether ISE can fairly and objectively                  the Board to the Exchange).                               making expertise, including regulatory
                                               exercise its self-regulatory                               The Exchange believes that this                        concerns around undue influence, as
                                               responsibilities with respect to that                   change will help with the                                 discussed above. In this regard, Rule
                                               member.14 In this respect, the Board                    administration and application of Rule                    303 is still only an enabling rule. With
                                               serves as an independent check on                       303 by bringing the Exchange’s                            the proposed change, the Exchange will
                                               potential undue influence concerns.                     membership transfer process more in                       still need to find good cause to approve
                                                                                                       line with other exchanges.16 The current                  any member to operate more than one
                                               Proposal                                                practice often results in a long and                      PMM Membership or more than ten
                                                  The Exchange now proposes to amend                   lengthy process to organize a Board                       CMM Memberships, and could consider
                                               Rule 303 to permit the Exchange to                      meeting to consider such applications,                    the number of Memberships already
                                               grant waivers to allow members to                       and the Exchange is concerned that                        operated by the member in determining
                                               operate multiple Market Maker                           there may be a deterioration of market                    whether or not there is good cause
                                               Memberships, instead of the Board. As                   quality in the interim. Furthermore,                      shown. Thus, the Exchange will need to
                                               such, the limitations on members                        Exchange staff has been involved in all                   weigh each potential application on its
                                               exercising the trading privileges                       aspects of the waiver process through its                 own merits, balancing the potential
                                               associated with more than one (1) PMM                   work with the Board, including                            benefits of allowing a member to
                                               Membership or more than ten (10) CMM                    gathering and assessing relevant                          exercise more than one PMM
                                               Memberships may be waived by the                        information on the member applying to                     Memberships, or more than ten CMM
                                               Exchange if the member shows good                       operate multiple Market Maker                             Memberships, against any concentration
                                               cause, which will be determined by the                  Memberships for purposes of                               concern.
                                               Exchange pursuant to the standards set                  determining whether or not there is                          In addition, the Exchange’s internal
                                               forth in Supplementary Material .01 to                  good cause shown under Rule 303.17                        procedures will stipulate that all such
                                               Rule 303. The Exchange is not                           Given that PMM and CMM Rights are,                        determinations will be made in
                                               proposing any changes to the Market                     for all practical purposes, rights to trade               consultation with the Exchange’s Chief
                                               Maker Rights ownership structure itself,                on the Exchange as described above, the                   Regulatory Officer (‘‘CRO’’).18 It is
                                               or to the Exchange’s corporate                          Exchange believes that the process in                     already the Exchange’s current practice
                                               governance by bringing the waiver                       Rule 303, specifically making the                         to involve the CRO as part of the waiver
                                               authority from the Board to the                         determination whether good cause has                      process in that the CRO weighs in on
                                               Exchange. As proposed, holders will                     been shown to waive the limitations in                    any regulatory concerns that could arise
                                               continue to have the ability to transfer                Rule 303(b) to allow a member to                          from a member operating multiple
                                               or lease their rights to other members for              operate multiple trading privileges                       Market Maker Memberships, so the
                                               trading on ISE as well as voting rights                 associated with a PMM or CMM Right,                       Exchange would effectively make
                                               on certain limited matters to protect                   is a proper function of the Exchange. As                  current practice a requirement.
                                               their ownership over these trading                      noted above, the Exchange’s proposal                      Furthermore, the CRO reports directly to
                                               rights.15 Furthermore, the Market Maker                 does not change the Market Maker                          the Regulatory Oversight Committee
                                               Rights will still be subject to the same                Rights ownership structure, nor does it                   (‘‘ROC’’), a Board committee composed
                                               ownership, voting, and concentration                    change the Exchange’s governance.                         solely of Public Directors that are also
                                               limits in place today. Specifically, the                                                                          independent directors, and ultimately to
                                               20% ownership and voting limitations
                                                                                                          16 See note 11 above. Furthermore, the Exchange
                                                                                                                                                                 the Board, on a regular basis.19 As
                                                                                                       notes that its affiliates, Phlx and BX, similarly allow
                                               in Supplementary Material .02 to Rule                   for transfers of allocated options classes at the
                                                                                                                                                                 proposed, to the extent any
                                               303 will remain under this proposal.                    exchange, and not board, level. See Phlx Rule 508,        determinations are made under Rule
                                               The trading concentration limits in Rule                which requires exchange approval of any proposed          303(b), such determinations will be
                                                                                                       agreement between specialists to transfer one or          reported to the ROC and the Board on
                                                                                                       more options classes already allocated to a
                                                  14 Pursuant to the Exchange’s By-Laws, the Board
                                                                                                       specialist. See also BX Chapter VII, Section 13(D),       a regular basis. In addition, the
                                               is responsible for ensuring that the Exchange           which governs requested transfers of options classes      Exchange’s regulatory staff, which will
                                               complies with its self-regulatory obligations to        between BX lead market makers, and also provides          continue to be involved in the waiver
                                               protect investors, maintain fair and orderly markets,   for an exchange-driven process. On ISE, a Market
                                               and advance the public interest. In carrying out this                                                             process, operates under the direction of
                                                                                                       Maker Membership manifests itself as a group of
                                               responsibility, the Board is further required to        options classes allocated to the member, so a
                                               appoint a Regulatory Oversight Committee,               transfer of the membership is similar to the way             18 Specifically, Exchange staff, including

                                               composed solely of Board members each of whom           transfers of options classes are handled on Phlx and      regulatory staff, in consultation with the CRO,
                                               must be a Public Director (i.e., has no material        BX.                                                       would make this determination based on relevant
                                               business relationship with a broker or dealer or           17 Specifically, Exchange staff, including from the    information on the applicant member, including the
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                                               with the Exchange or its affiliates) and an             options business team, market operations, and             number of Memberships already operated by the
                                               ‘‘independent director’’ as defined in Rule 5605 of     regulatory department, gather relevant information        member and other market quality data that the
                                               the Rules of The Nasdaq Stock Market, LLC, to           on the applicant member that includes the number          Exchange deems appropriate.
                                               assist the Board in overseeing the adequacy and         of Market Maker Memberships that the member                  19 See note 14 above. See also Nasdaq ISE By-Law
                                               effectiveness of ISE’s regulatory and self-regulatory   currently operates and other market quality data as       Article IV, Section 7. The Board receives reports
                                               responsibilities See Exchange By-Law Article III,       appropriate. This information is then compiled into       from the ROC during its regularly scheduled Board
                                               Sections 3(b) and 5(c).                                 a report that is sent to the Board to assist them in      meetings, where the ROC members as well as the
                                                  15 See notes 7 and 8 above, and accompanying         making the good cause determination under Rule            CRO are all present to answer any questions from
                                               text.                                                   303.                                                      the Board.



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                                               54160                           Federal Register / Vol. 83, No. 208 / Friday, October 26, 2018 / Notices

                                               the ROC, and works separately and                         waiver process more in line with other                  subparagraph (f)(6) of Rule 19b–4
                                               independently from the Exchange’s                         exchanges, where the transfer of a                      thereunder.25
                                               business units. Given the foregoing, the                  market maker’s allocated options classes                   At any time within 60 days of the
                                               Exchange believes that the proposed                       are handled at the exchange, and not the                filing of the proposed rule change, the
                                               process serves an appropriate                             board, level.23 As discussed above,                     Commission summarily may
                                               independent safeguard in assessing and                    Exchange staff, including regulatory                    temporarily suspend such rule change if
                                               protecting against regulatory concerns                    staff, has been involved in all aspects of              it appears to the Commission that such
                                               around undue influence.                                   the waiver process through its work                     action is necessary or appropriate in the
                                                  The Board will therefore still be                      with the Board, and will continue to be                 public interest, for the protection of
                                               informed of determinations made under                     involved by gathering and assessing                     investors, or otherwise in furtherance of
                                               Rule 303 under the proposed process                       relevant information on the member                      the purposes of the Act. If the
                                               through the CRO’s regular reports to the                  applying to operate multiple Market                     Commission takes such action, the
                                               ROC and will, through this process,                       Maker Memberships for purposes of                       Commission shall institute proceedings
                                               review and assess against potential                       determining whether or not there is                     to determine whether the proposed rule
                                               undue influence concerns.20                               good cause shown under Rule 303.                        should be approved or disapproved.
                                               Accordingly, the Exchange believes that                   Furthermore, the CRO will be directly
                                               the Board will still have meaningful                                                                              IV. Solicitation of Comments
                                                                                                         involved in all such determinations as
                                               oversight notwithstanding the proposed                    described above, as is the case today,                    Interested persons are invited to
                                               changes to the waiver process itself.                     and will report to the ROC and Board                    submit written data, views, and
                                               Ultimately, the Exchange believes that                    on such matters. Accordingly, the                       arguments concerning the foregoing,
                                               the proposed changes should                               Exchange believes that the proposed                     including whether the proposed rule
                                               significantly improve the flow and                        changes will help with the                              change is consistent with the Act.
                                               efficiency of the waiver process while                    administration and application of Rule                  Comments may be submitted by any of
                                               retaining the regulatory independence                     303 while retaining the regulatory                      the following methods:
                                               of the waiver process through the both                    independence of the waiver process                      Electronic Comments
                                               the ROC’s and Board’s oversight.                          through both the ROC’s and Board’s
                                                                                                         oversight, as discussed above.                            • Use the Commission’s internet
                                               2. Statutory Basis                                                                                                comment form (http://www.sec.gov/
                                                  The Exchange believes that its                         B. Self-Regulatory Organization’s                       rules/sro.shtml); or
                                               proposal is consistent with Section 6(b)                  Statement on Burden on Competition                        • Send an email to rule-comments@
                                               of the Act,21 in general, and furthers the                   The Exchange does not believe that                   sec.gov. Please include File Number SR–
                                               objectives of Section 6(b)(5) of the Act,22               the proposed rule change will impose                    ISE–2018–86 on the subject line.
                                               in particular, in that it is designed to                  any burden on competition not                           Paper Comments
                                               promote just and equitable principles of                  necessary or appropriate in furtherance
                                               trade, to remove impediments to and                       of the purposes of the Act. The                           • Send paper comments in triplicate
                                               perfect the mechanism of a free and                       proposed rule change is designed to                     to Secretary, Securities and Exchange
                                               open market and a national market                         streamline the waiver process for                       Commission, 100 F Street NE,
                                               system, and, in general to protect                        allowing a member to operate multiple                   Washington, DC 20549–1090.
                                               investors and the public interest. As                     Market Maker Memberships, and does                      All submissions should refer to File
                                               discussed above, the Exchange is not                      not have a competitive effect.                          Number SR–ISE–2018–86. This file
                                               seeking to amend any of the rights or                     Furthermore, all similarly situated                     number should be included on the
                                               limitations associated with the Market                    members will be subject to the same                     subject line if email is used. To help the
                                               Maker Rights ownership structure, or to                   requirements and processes proposed                     Commission process and review your
                                               Exchange’s corporate governance by                        hereunder.                                              comments more efficiently, please use
                                               bringing the waiver authority from the                                                                            only one method. The Commission will
                                               Board to the Exchange. Overall, the                       C. Self-Regulatory Organization’s                       post all comments on the Commission’s
                                               proposed rule change is intended to                       Statement on Comments on the                            internet website (http://www.sec.gov/
                                               streamline the Exchange’s waiver                          Proposed Rule Change Received From                      rules/sro.shtml). Copies of the
                                               process by allowing the Exchange,                         Members, Participants, or Others                        submission, all subsequent
                                               instead of the Board, to waive the                          No written comments were either                       amendments, all written statements
                                               trading concentration limits in Rule                      solicited or received.                                  with respect to the proposed rule
                                               303(b). As discussed above, the current                                                                           change that are filed with the
                                                                                                         III. Date of Effectiveness of the
                                               practice often results in a long and                                                                              Commission, and all written
                                                                                                         Proposed Rule Change and Timing for
                                               lengthy process to organize a Board                                                                               communications relating to the
                                                                                                         Commission Action
                                               meeting to consider such applications,                                                                            proposed rule change between the
                                               and the Exchange is concerned that                           Because the foregoing proposed rule                  Commission and any person, other than
                                               there may be a deterioration of market                    change does not: (i) Significantly affect               those that may be withheld from the
                                               quality in the interim. The Exchange                      the protection of investors or the public               public in accordance with the
                                               views the waiver process as a proper                      interest; (ii) impose any significant                   provisions of 5 U.S.C. 552, will be
                                               function of the Exchange given that the                   burden on competition; and (iii) become                 available for website viewing and
                                               PMM and CMM Rights are, for all                           operative for 30 days from the date on                  printing in the Commission’s Public
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                                               practical purposes, rights to trade on the                which it was filed, or such shorter time
                                               Exchange. Furthermore, the proposed                       as the Commission may designate, it has                   25 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–

                                               changes will bring the Exchange’s                         become effective pursuant to Section                    4(f)(6) requires a self-regulatory organization to give
                                                                                                                                                                 the Commission written notice of its intent to file
                                                                                                         19(b)(3)(A)(iii) of the Act 24 and                      the proposed rule change at least five business days
                                                 20 See   notes 14 and 19 above, with accompanying                                                               prior to the date of filing of the proposed rule
                                               text.                                                       23 See   notes 11 and 16 above, with accompanying     change, or such shorter time as designated by the
                                                 21 15 U.S.C. 78f(b).                                    text.                                                   Commission. The Exchange has satisfied this
                                                 22 15 U.S.C. 78f(b)(5).                                   24 15   U.S.C. 78s(b)(3)(A)(iii).                     requirement.



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                                                                                Federal Register / Vol. 83, No. 208 / Friday, October 26, 2018 / Notices                                                                   54161

                                               Reference Room, 100 F Street NE,                          applications for disaster loans may be                               Issued on 10/18/2018.
                                                                                                                                                                         DATES:
                                               Washington, DC 20549 on official                          filed at the address listed above or other                      Physical Loan Application Deadline
                                               business days between the hours of                        locally announced locations.                                 Date: 12/17/2018.
                                               10:00 a.m. and 3:00 p.m. Copies of such                      The following areas have been                                Economic Injury (EIDL) Loan
                                               filing also will be available for                         determined to be adversely affected by                       Application Deadline Date: 07/18/2019.
                                               inspection and copying at the principal                   the disaster:
                                                                                                                                                                      ADDRESSES: Submit completed loan
                                               office of the Exchange. All comments                      Primary Counties: Lancaster, York.                           applications to: U.S. Small Business
                                               received will be posted without change.                   Contiguous Counties:                                         Administration, Processing and
                                               Persons submitting comments are                              Pennsylvania: Adams, Berks, Chester,                      Disbursement Center, 14925 Kingsport
                                               cautioned that we do not redact or edit                        Cumberland, Dauphin, Lebanon.                           Road, Fort Worth, TX 76155.
                                               personal identifying information from                        Maryland: Baltimore, Carroll, Cecil,
                                               comment submissions. You should                                                                                        FOR FURTHER INFORMATION CONTACT: A.
                                                                                                              Harford.
                                               submit only information that you wish                        The Interest Rates are:                                   Escobar, Office of Disaster Assistance,
                                               to make available publicly. All                                                                                        U.S. Small Business Administration,
                                               submissions should refer to File                                                                              Percent  409 3rd Street SW, Suite 6050,
                                               Number SR–ISE–2018–86, and should                                                                                      Washington, DC 20416, (202) 205–6734.
                                               be submitted on or before November 16,                    For Physical Damage:                                         SUPPLEMENTARY INFORMATION: Notice is
                                               2018.                                                       Homeowners with Credit Avail-                              hereby given that as a result of the
                                                                                                             able Elsewhere ......................              4.000
                                                 For the Commission, by the Division of                                                                               Administrator’s disaster declaration,
                                                                                                           Homeowners without Credit
                                               Trading and Markets, pursuant to delegated                    Available Elsewhere ..............                 2.000 applications for disaster loans may be
                                               authority.26                                                Businesses with Credit Avail-                              filed at the address listed above or other
                                                                                                             able Elsewhere ......................              7.350 locally announced locations.
                                               Eduardo A. Aleman,                                          Businesses        without          Credit                     The following areas have been
                                               Assistant Secretary.                                          Available Elsewhere ..............                 3.675 determined to be adversely affected by
                                               [FR Doc. 2018–23390 Filed 10–25–18; 8:45 am]
                                                                                                           Non-Profit Organizations with                              the disaster:
                                                                                                             Credit Available Elsewhere ...                     2.500
                                               BILLING CODE 8011–01–P                                                                                                 Primary Counties: Ellis, Sutton, Tarrant.
                                                                                                           Non-Profit Organizations with-
                                                                                                             out Credit Available Else-                               Contiguous Counties:
                                                                                                             where .....................................        2.500    Texas: Crockett, Dallas, Denton,
                                               SMALL BUSINESS ADMINISTRATION                             For Economic Injury:                                              Edwards, Henderson, Hill, Johnson,
                                                                                                           Businesses & Small Agricultural                                 Kaufman, Kimble, Menard, Navarro,
                                               [Disaster Declaration #15752 and #15753;                      Cooperatives without Credit
                                               PENNSYLVANIA Disaster Number PA–
                                                                                                                                                                           Parker, Schleicher, Val Verde, Wise.
                                                                                                             Available Elsewhere ..............                 3.675    The Interest Rates are:
                                               00091]                                                      Non-Profit Organizations with-
                                                                                                             out Credit Available Else-
                                               Administrative Declaration of a                                                                                                                                             Percent
                                                                                                             where .....................................         2.500
                                               Disaster for the Commonwealth of
                                                                                                                                                                         For Physical Damage:
                                               Pennsylvania                                                The number assigned to this disaster                            Homeowners with Credit Avail-
                                               AGENCY: U.S. Small Business                               for physical damage is 15752 6 and for                              able Elsewhere ......................           4.000
                                               Administration.                                           economic injury is 15753 0.                                       Homeowners without Credit
                                                                                                           The States which received an EIDL                                 Available Elsewhere ..............              2.000
                                               ACTION: Notice.
                                                                                                         Declaration # are Pennsylvania,                                   Businesses with Credit Avail-
                                               SUMMARY:  This is a notice of an                          Maryland.                                                           able Elsewhere ......................           7.350
                                                                                                                                                                           Businesses        without          Credit
                                               Administrative declaration of a disaster                  (Catalog of Federal Domestic Assistance                             Available Elsewhere ..............               3.675
                                               for the Commonwealth of Pennsylvania                      Number 59008)                                                     Non-Profit Organizations with
                                               dated 10/18/2018.                                           Dated: October 13, 2018.                                          Credit Available Elsewhere ...                   2.500
                                                 Incident: Flooding.                                                                                                       Non-Profit Organizations with-
                                                 Incident Period: 08/31/2018 through                     Linda E. McMahon,
                                                                                                                                                                             out Credit Available Else-
                                               09/01/2018.                                               Administrator.                                                      where .....................................      2.500
                                               DATES: Issued on 10/18/2018.                              [FR Doc. 2018–23480 Filed 10–25–18; 8:45 am]                    For Economic Injury:
                                                 Physical Loan Application Deadline                      BILLING CODE 8025–01–P                                            Businesses & Small Agricultural
                                               Date: 12/17/2018.                                                                                                             Cooperatives without Credit
                                                 Economic Injury (EIDL) Loan                                                                                                 Available Elsewhere ..............              3.675
                                                                                                         SMALL BUSINESS ADMINISTRATION                                     Non-Profit Organizations with-
                                               Application Deadline Date: 07/18/2019.                                                                                        out Credit Available Else-
                                               ADDRESSES: Submit completed loan                          [Disaster Declaration #15754 and #15755;                            where .....................................      2.500
                                               applications to: U.S. Small Business                      TEXAS Disaster Number TX–00507]
                                               Administration, Processing and                                                                                              The number assigned to this disaster
                                               Disbursement Center, 14925 Kingsport                      Administrative Declaration of a
                                                                                                                                                                         for physical damage is 15754 6 and for
                                               Road, Fort Worth, TX 76155.                               Disaster for the State of Texas
                                                                                                                                                                         economic injury is 15755 0.
                                               FOR FURTHER INFORMATION CONTACT: A.                       AGENCY: U.S. Small Business                                       The State which received an EIDL
                                               Escobar, Office of Disaster Assistance,                   Administration.                                                 Declaration # is Texas.
                                               U.S. Small Business Administration,
khammond on DSK30JT082PROD with NOTICES




                                                                                                         ACTION: Notice.                                                 (Catalog of Federal Domestic Assistance
                                               409 3rd Street SW, Suite 6050,                                                                                            Number 59008)
                                               Washington, DC 20416, (202) 205–6734.                     SUMMARY:   This is a notice of an
                                                                                                         Administrative declaration of a disaster                          Dated: October 13, 2018.
                                               SUPPLEMENTARY INFORMATION: Notice is
                                               hereby given that as a result of the                      for the State of Texas dated 10/18/2018.                        Linda E. McMahon,
                                               Administrator’s disaster declaration,                       Incident: Severe Storms and Flooding.                         Administrator.
                                                                                                           Incident Period: 09/21/2018 through                           [FR Doc. 2018–23483 Filed 10–25–18; 8:45 am]
                                                 26 17   CFR 200.30–3(a)(12).                            09/23/2018.                                                     BILLING CODE 8025–01–P




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Document Created: 2018-10-26 02:27:12
Document Modified: 2018-10-26 02:27:12
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 54157 

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