83 FR 55765 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Definitions to Chapter I, Section 1, Titled General Provisions and Also Amend Chapter VI, Section 18, Titled Risk Protections
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 216 (November 7, 2018)
Federal Register Volume 83, Issue 216 (November 7, 2018)
| Page Range | 55765-55768 | |
| FR Document | 2018-24308 |
[Federal Register Volume 83, Number 216 (Wednesday, November 7, 2018)] [Notices] [Pages 55765-55768] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-24308] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84520; File No. SR-BX-2018-050] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Definitions to Chapter I, Section 1, Titled General Provisions and Also Amend Chapter VI, Section 18, Titled Risk Protections November 1, 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 18, 2018, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to add definitions to Chapter I, Section 1, titled ``General Provisions'' and also amend Chapter VI, Section 18, titled, ``Risk Protections.'' The text of the proposed rule change is available on the Exchange's website at http://nasdaqbx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these [[Page 55766]] 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 this rule change is to adopt certain definitions within Chapter I, Section 1, titled ``General Provisions'' and also amend Chapter VI, Section 18, titled, ``Risk Protections.'' Each change is described in more detail below. Definitions The Exchange proposes to amend Chapter I, Section 1 to add three new definitions into its Rulebook. These definitions are utilized in technical documents issued by the Exchange and will provide an ease of reference for understanding these terms. Specifically, Chapter I, Section 1(a)(70) would define an account number as a number assigned to a Participant. Participants may have more than one account number. Chapter I, Section 1(a)(71) would define a badge as an account number, which may contain letters and/or numbers, assigned to BX Market Makers. A BX Market Maker account may be associated with multiple badges. Finally, Chapter I, Section 1(a)(72) would define a mnemonic as an acronym comprised of letters and/or numbers assigned to Participants. A Participant account may be associated with multiple mnemonics. Risk Protections Order Price Protection The Exchange proposes a minor amendment to Chapter VI, Section 18(1) to add punctuation and ``OPP'' at the beginning of that sentence to conform the text to the remainder of the rule. The Exchange proposes to remove the example within Rule Chapter VI, Section 18(1)(B)(i) which states, ``For example, if the Reference BBO on the offer side is $1.10, an order to buy options for more than $1.65 would be rejected. Similarly, if the Reference BBO on the bid side is $1.10, an order to sell options for less than $0.55 will be rejected.'' The Exchange also proposes to remove the example within Chapter VI, Section 18(1)(B)(ii) which states, ``For example, if the Reference BBO on the offer side is $1.00, an order to buy options for more than $2.00 would be rejected. However, if the Reference BBO of the bid side of an incoming order to sell is less than or equal to $1.00, the OPP limits set forth above will result in all incoming sell orders being accepted regardless of their limit.'' The Exchange notes that while the examples remain accurate, the Exchange proposes to remove the text to conform the rule text to other risk protections. The Exchange does not believe it is necessary to have these examples within the rule text. Market Order Spread Protection The Exchange proposes to amend the Market Order Spread Protection Rule in Chapter VI, Section 18(a)(2) to permit BX to establish different thresholds for one or more series or classes of options similar to Phlx.\3\ The Exchange desires, similar to Phlx, to be permitted the flexibility to allow it to determine a threshold suitable for each series or class of option. The Exchange's current rule provides no discretion to permit different thresholds for one or more series or classes of options. By adding this rule text, the Exchange proposes to permit one or more series or classes of options to set a different threshold, which the Exchange would announce via an Options Trader Alert, similar to Phlx. The Exchange desires to conform this protection to Phlx so that it could set the same threshold across affiliated markets. The Phlx Rule Change provided that the $5 threshold is appropriate because it seeks to ensure that the displayed bid and offer are within reasonable ranges and do not represent erroneous prices. Further the Exchange noted that this protection will bolster the normal resilience and market behavior that persistently produces robust reference prices. This feature should create a level of protection that prevents Market Orders from entering the Order Book outside of an acceptable range for the Market Order to execute. The Exchange notes that those goals remain consistent with the Exchange's goals today for this risk feature. The Exchange would establish different thresholds for one or more series or classes of options if it believed that the threshold should differ to retain these goals. --------------------------------------------------------------------------- \3\ Securities Exchange Act Release No. 83141 (May 1, 2018), 83 FR 20123 (May 7, 2018) (SR-Phlx-2018-32). Footnote 11 of this filing provides that Exchange may establish differences other than the referenced threshold for one or more series or classes of options. --------------------------------------------------------------------------- Anti-Internalization The Exchange proposes to add a new sentence to Anti-Internalization Rule at Chapter VI, Section 18(c)(1) to provide that Anti- Internalization functionality shall not apply in any auction. This is the current practice today. With respect to an auction,\4\ the Exchange notes that Anti-Internalization functionality is difficult to apply during auctions, and there is limited benefit in doing so. There is limited benefit because, generally speaking, auctions do not raise the same policy concerns for wash sales and ERISA \5\ due to the semi- random manner in which trades are matched. Also, the Exchange notes that with respect to entering quotes in an auction, a Market Maker could not start an auction in symbols in which they are assigned. With respect to orders, Market Makers can only commence a PRISM in a non- assigned symbol.\6\ It is not common for a Market Maker to commence such an auction. Finally, the Exchange notes that Nasdaq ISE, LLC Rule 714(b)(3)(A) contains the same constraint in that it does not apply the Anti-Internalization protection in any auction. --------------------------------------------------------------------------- \4\ PRISM is the Exchange's Price Improvement Auction. See BX Rules at Chapter VI, Section 9. \5\ AIQ is designed to assist market participants in complying with certain rules and regulations of the Employee Retirement Income Security Act (``ERISA'') that preclude and/or limit managing broker- dealers of such accounts from trading as principal with orders generated for those accounts. It can also assist Market Makers in reducing trading costs from unwanted executions potentially resulting from the interaction of executable buy and sell trading interest from the same firm when performing the same market making function. \6\ Specialists and ROTs can only quote in symbols in which they are assigned. --------------------------------------------------------------------------- Automated Removal of Quotes Finally, the Exchange proposes to amend the title of Chapter VI, Section 18(c)(2) from ``Automated Removal of Quotes'' to ``Quotation Adjustments'' to conform the title across Nasdaq markets. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\7\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it is designed to promote just and equitable principles of trade and to protect investors and the public interest by adding greater transparency to the Exchange's rules. The Exchange's proposal to add definitions to Chapter I, Section 1 will bring greater clarity to the Anti-Internalization functionality and to the Rulebook. Amendments to remove examples from the OPP rule text will conform the rule text to other rules. The Exchange believes that it is unnecessary to have examples in the rule text. Adding the word ``trading'' before the word ``halt'' within the Market Order [[Page 55767]] Spread Protection rule text will bring conformity to Chapter VI, Section 18. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b). \8\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange's proposal to expand the Market Order Spread Protection permits the Exchange to establish different thresholds for one or more series or classes of options similar to Phlx. The Exchange desires this flexibility to allow it, similar to Phlx,\9\ to determine a threshold suitable for each series or class of option. The Exchange believes that expanding this capability is consistent with the Act because it would allow the Exchange to consider thresholds for Market Order Spread Protection at a more granular level, per series or class, to ensure that the displayed bid and offer are within reasonable ranges and do not represent erroneous prices. The Exchange intends that this risk protection would bolster the normal resilience and market behavior that persistently produces robust reference prices, while creating a level of protection that prevents Market Orders from entering the Order Book outside of an acceptable range for the Market Order to execute. --------------------------------------------------------------------------- \9\ See note 4 above. --------------------------------------------------------------------------- The Exchange's proposal to make clear that the Anti-Internalization functionality will not apply in any auction will also bring greater transparency to the rules and the limitation of this functionality. With respect to an auction,\10\ the Exchange notes that Anti- Internalization functionality is difficult to apply during auctions, and there is limited benefit in doing so. There is limited benefit because, generally speaking, auctions do not raise the same policy concerns for wash sales and ERISA \11\ due to the semi-random manner in which trades are matched. Also, the Exchange notes that with respect to entering quotes in an auction, a Market Maker could not start an auction in symbols in which they are assigned. With respect to orders, Market Makers can only commence a PRISM in a non-assigned symbol. It is not common for a Market Maker to commence such an auction. --------------------------------------------------------------------------- \10\ PIXL is the Exchange's Price Improvement XL auction. See Phlx Rule 1087. \11\ See note 6 above. --------------------------------------------------------------------------- Finally, the Exchange's proposal to amend the title of Chapter VI, Section 18(c)(2) from ``Automated Removal of Quotes'' to ``Quotation Adjustments'' should better describe the rule and conform the title to other Nasdaq affiliate markets. The proposals noted herein are consistent with the Act because they provide more detail and transparency to the Exchange's rules noted herein to the benefit of market participants. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed amendments do not impose an undue burden on competition because the definitions and amendments to conform the rule text will provide greater clarity as to the meaning of those terms. Removing examples from the OPP rule text does not impose an undue burden on competition because this text is not necessary within the rule text. Adding the word ``trading'' before the word ``halt'' within the Market Order Spread Protection rule text will bring conformity to Chapter VI, Section 18. The Exchange's proposal to expand the Market Order Spread Protection to permit the Exchange to establish different thresholds for one or more series or classes of options, similar to Phlx, would apply uniformly to all market participants. The Exchange's proposal to make clear that the Anti-Internalization functionality will not apply in any auction will also bring greater transparency to the rules and the limitation of this functionality. With respect to an auction, the Exchange notes that Anti- Internalization functionality is difficult to apply during auctions, and there is limited benefit in doing so. There is limited benefit because, generally speaking, auctions do not raise the same policy concerns for wash sales and ERISA \12\ due to the semi-random manner in which trades are matched. Finally, the Exchange's proposal to amend the title of Rule Chapter VI, Section 18(c)(2) is non-substantive. --------------------------------------------------------------------------- \12\ See note 6 above. --------------------------------------------------------------------------- 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) of the Act \13\ and Rule 19b- 4(f)(6) thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A). \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \15\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Exchange believes that waiver of the operative delay would allow the Exchange to update its rules without delay to remove inconsistent rule language, make clarifying changes to reflect current and accurate information, and bring greater transparency to the Exchange's risk protections and Anti-Internalization rule. Additionally, the Commission notes that the changes relating to the Anti-Internalization functionality and Market Order Spread Protection are based on the operation of similar functionality on Nasdaq ISE and Phlx, respectively. Therefore, the Commission believes that waiver of the 30- day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.\17\ --------------------------------------------------------------------------- \15\ 17 CFR 240.19b-4(f)(6). \16\ 17 CFR 240.19b-4(f)(6)(iii). \17\ For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is 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 change should be approved or disapproved. [[Page 55768]] IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2018-050 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2018-050. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BX-2018-050, and should be submitted on or before November 28, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-24308 Filed 11-6-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 216 / Wednesday, November 7, 2018 / Notices 55765
duration for such a prohibition would responsibility for closing auctions under 2018. Rebuttal comments should be
be preferable? If so, what duration and NYSE rules, would the obligations of submitted by December 12, 2018.
why? DMMs under NYSE rules be reasonably For the Commission, by the Division of
3. What are commenters’ views on the designed to prevent DMMs from Trading and Markets, pursuant to delegated
significance of the proposed change inappropriately influencing or authority.26
from the current prohibition against manipulating the close if the proposed Eduardo A. Aleman,
certain transactions that would set a rule change were approved? Assistant Secretary.
new high or low price on the Exchange Comments may be submitted by any [FR Doc. 2018–24303 Filed 11–6–18; 8:45 am]
for the day to the proposed prohibition of the following methods: BILLING CODE 8011–01–P
against certain transactions that would
Electronic Comments
result in a new consolidated high or low
price for the day? Do commenters • Use the Commission’s internet SECURITIES AND EXCHANGE
believe that this change would have comment form (http://www.sec.gov/ COMMISSION
additional consequences for the rules/sro.shtml); or
operation of Rule 104? • Send an email to rule-comments@ [Release No. 34–84520; File No. SR–BX–
sec.gov. Please include File Number SR– 2018–050]
4. What are commenters’ views on
how the obligations imposed on DMMs NYSE–2018–34 on the subject line. Self-Regulatory Organizations; Nasdaq
by proposed NYSE Rule 104 during the Paper Comments BX, Inc.; Notice of Filing and
rest of the trading day would compare Immediate Effectiveness of Proposed
with the obligations imposed by current • Send paper comments in triplicate
Rule Change To Add Definitions to
NYSE Rule 104? to Secretary, Securities and Exchange
Chapter I, Section 1, Titled General
5. What are commenters’ views on the Commission, 100 F Street NE,
Provisions and Also Amend Chapter
Exchange’s argument that changes to Washington, DC 20549–1090.
VI, Section 18, Titled Risk Protections
NYSE Rule 104 would promote All submissions should refer to File
aggressive DMM quoting in their Number SR–NYSE–2018–34. This file November 1, 2018.
assigned securities? What are number should be included on the Pursuant to Section 19(b)(1) of the
commenters’ views on the Exchange’s subject line if email is used. To help the Securities Exchange Act of 1934
argument that DMMs are currently at a Commission process and review your (‘‘Act’’),1 and Rule 19b–4 thereunder,2
competitive disadvantage because of comments more efficiently, please use notice is hereby given that on October
NYSE Rule 104 and that the current rule only one method. The Commission will 18, 2018, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘thwarts the ability of the DMM to meet post all comments on the Commission’s ‘‘Exchange’’) filed with the Securities
their affirmative obligations to quote internet website (http://www.sec.gov/ and Exchange Commission
aggressively in assigned securities’’? rules/sro.shtml). Copies of the (‘‘Commission’’) the proposed rule
6. What are commenters’ views on submission, all subsequent change as described in Items I and II
whether the ‘‘Price Participation Points’’ amendments, all written statements below, which Items have been prepared
that the Exchange provides to its DMMs with respect to the proposed rule by the Exchange. The Commission is
would be sufficient under the proposed change that are filed with the publishing this notice to solicit
changes to NYSE Rule 104 to prevent Commission, and all written comments on the proposed rule change
DMMs from aggressively taking communications relating to the from interested persons.
liquidity and moving prices on the proposed rule change between the I. Self-Regulatory Organization’s
Exchange immediately before the Commission and any person, other than Statement of the Terms of Substance of
closing auction? those that may be withheld from the the Proposed Rule Change
7. Existing Rules 104(g) and (h) refer public in accordance with the
to ‘‘DMMs,’’ and proposed Rule 104(g) provisions of 5 U.S.C. 552, will be The Exchange proposes to add
would refer instead to ‘‘DMM units.’’ available for website viewing and definitions to Chapter I, Section 1, titled
What are commenters’ views of the printing in the Commission’s Public ‘‘General Provisions’’ and also amend
significance, if any, of this change in Reference Room, 100 F Street NE, Chapter VI, Section 18, titled, ‘‘Risk
wording? What are commenters’ views Washington, DC 20549, on official Protections.’’
on whether the amended rule should business days between the hours of The text of the proposed rule change
apply to the activities of individuals 10:00 a.m. and 3:00 p.m. Copies of the is available on the Exchange’s website at
trading as DMMs on the Exchange floor? filing also will be available for http://nasdaqbx.cchwallstreet.com/, at
8. Generally, would the Exchange’s inspection and copying at the principal the principal office of the Exchange, and
proposal maintain an appropriate office of the Exchange. All comments at the Commission’s Public Reference
balance between the benefits and received will be posted without change. Room.
obligations of being a DMM on the Persons submitting comments are II. Self-Regulatory Organization’s
Exchange? 25 In light of DMMs’ special cautioned that we do not redact or edit Statement of the Purpose of, and
personal identifying information from Statutory Basis for, the Proposed Rule
25 Current NYSE Rule 104 was originally
comment submissions. You should Change
approved as part of the NYSE pilot program called
submit only information that you wish
the ‘‘New Market Model.’’ See Securities Exchange In its filing with the Commission, the
Act Release No. 58845 (Oct. 24, 2008), 73 FR 64379 to make available publicly. All
Exchange included statements
(Oct. 29, 2008). As the Commission stated when submissions should refer to File
concerning the purpose of and basis for
amozie on DSK3GDR082PROD with NOTICES1
approving the NYSE’s proposal to conduct the New Number SR–NYSE–2018–34 and should
Market Model pilot, ‘‘[w]e carefully review trading the proposed rule change and discussed
be submitted on or before November 28,
rule proposals that seek to offer special advantages any comments it received on the
to market makers. Although an exchange may proposed rule change. The text of these
reward such participants for the benefits they that the pilot had been conducted to seek ‘‘further
provide to the exchange’s market, such reward must evidence that the benefits proposed for DMMs are
26 17 CFR 200.30–3(a)(57).
not be disproportionate to the services provided.’’ not disproportionate to their obligations.’’ See
1 15 U.S.C. 78s(b)(1).
See id. In 2015, the Commission permanently Securities Exchange Act Release No. 75578 (July 31,
approved the New Market Model pilot and noted 2015), 80 FR 47008 (Aug. 6, 2015). 2 17 CFR 240.19b–4.
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![55768 Federal Register / Vol. 83, No. 216 / Wednesday, November 7, 2018 / Notices
IV. Solicitation of Comments For the Commission, by the Division of II. Clearing Agency’s Statement of the
Trading and Markets, pursuant to delegated Purpose of, and Statutory Basis for, the
Interested persons are invited to authority.18 Proposed Rule Change
submit written data, views, and Eduardo A. Aleman,
In its filing with the Commission,
arguments concerning the foregoing, Assistant Secretary.
OCC included statements concerning
including whether the proposed rule [FR Doc. 2018–24308 Filed 11–6–18; 8:45 am] the purpose of and basis for the
change is consistent with the Act. BILLING CODE 8011–01–P proposed rule change and discussed any
Comments may be submitted by any of comments it received on the proposed
the following methods: rule change. The text of these statements
SECURITIES AND EXCHANGE may be examined at the places specified
Electronic Comments COMMISSION in Item IV below. OCC has prepared
• Use the Commission’s internet [Release No. 34–84521; File No. SR–OCC– summaries, set forth in sections (A), (B),
comment form (http://www.sec.gov/ 2018–013] and (C) below, of the most significant
rules/sro.shtml); or aspects of these statements.
Self-Regulatory Organizations; The
• Send an email to rule-comments@ (A) Clearing Agency’s Statement of the
Options Clearing Corporation; Notice
sec.gov. Please include File Number SR– Purpose of, and Statutory Basis for, the
of Filing of Proposed Rule Change To
BX–2018–050 on the subject line. Proposed Rule Change
Extend Term Limits for Member
Paper Comments Directors Serving on The Options (1) Purpose
Clearing Corporation’s Board of
• Send paper comments in triplicate Background
Directors
to Secretary, Securities and Exchange OCC is proposing changes to Article
Commission, 100 F Street NE, November 1, 2018. III, Section 2 of its By-Laws and to its
Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the Board of Directors Charter and
Securities Exchange Act of 1934 Corporate Governance Principles
All submissions should refer to File (‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule (‘‘Board Charter’’) that would extend the
Number SR–BX–2018–050. This file 19b–4 thereunder,2 notice is hereby term limits for Member Directors from
number should be included on the given that on October 26, 2018, The two consecutive three-year terms to
subject line if email is used. To help the Options Clearing Corporation (‘‘OCC’’) three consecutive three-year terms. The
Commission process and review your filed with the Securities and Exchange purpose of the proposed rule change is
comments more efficiently, please use Commission (‘‘SEC’’ or ‘‘Commission’’) to address issues associated with
only one method. The Commission will the proposed rule change as described frequent Member Director turnover by
post all comments on the Commission’s in Items I, II, and III below, which Items providing the potential for longer
internet website (http://www.sec.gov/ have been prepared primarily by OCC. consecutive service by Member
rules/sro.shtml). Copies of the The Commission is publishing this Directors who, among other
submission, all subsequent notice to solicit comments on the considerations, may have developed
amendments, all written statements proposed rule change from interested considerable knowledge about OCC’s
with respect to the proposed rule persons. business and the interests of Clearing
change that are filed with the I. Clearing Agency’s Statement of the Members.
Commission, and all written Terms of Substance of the Proposed Board Composition and Member
communications relating to the Rule Change Director Considerations
proposed rule change between the
The proposed rule change by OCC OCC’s Certificate of Incorporation and
Commission and any person, other than would extend the term limits for By-Laws establish the composition of its
those that may be withheld from the Member Directors serving on the Board Board of Directors (‘‘Board’’) and the
public in accordance with the of Directors from two consecutive three- procedures for director selection. When
provisions of 5 U.S.C. 552, will be year terms to three consecutive three- at its full capacity, the Board consists of
available for website viewing and year terms. The proposed changes to twenty directors: (i) Nine directors
printing in the Commission’s Public OCC’s By-Laws and Board of Directors representing OCC Clearing Members
Reference Room, 100 F Street NE, Charter and Corporate Governance (‘‘Member Directors’’); (ii) five directors
Washington, DC 20549 on official Principles are included as Exhibits 5A designated by and representing each of
business days between the hours of and 5B, respectively. Material proposed OCC’s five Equity Exchanges
10:00 a.m. and 3:00 p.m. Copies of the to be added is underlined and material (‘‘Exchange Directors’’); (iii) five
filing also will be available for proposed to be deleted is marked in directors who are not affiliated with any
inspection and copying at the principal strikethrough text. The proposed rule national securities exchange, national
office of the Exchange. All comments change, including Exhibits 5A and 5B, securities association or with any broker
received will be posted without change. is available on OCC’s website at https:// or dealer in securities (‘‘Public
Persons submitting comments are www.theocc.com/about/publications/ Directors’’); and (iv) one management
cautioned that we do not redact or edit bylaws.jsp. All terms with initial director, who serves as the Executive
personal identifying information from capitalization that are not otherwise Chairman (‘‘Management Director’’).4
comment submissions. You should defined herein have the same meaning
amozie on DSK3GDR082PROD with NOTICES1
submit only information that you wish as set forth in the OCC By-Laws and about/publications/bylaws.jsp. OCC’s Board of
Rules.3 Directors Charter and Corporate Governance
to make available publicly. All Principles is also available on OCC’s public
submissions should refer to File 18 17
website: https://www.theocc.com/about/corporate-
CFR 200.30–3(a)(12). information/board-charter.jsp.
Number SR–BX–2018–050, and should 1 15U.S.C. 78s(b)(1). 4 OCC By-Laws, Article III, Sections 1, 2, 6, 6A
be submitted on or before November 28, 2 17 CFR 240.19b–4.
and 7 (addressing the number of directors and
2018. 3 OCC’s By-Laws and Rules can be found on required qualifications of Member Directors,
OCC’s public website: http://optionsclearing.com/ Exchange Directors, Public Directors and the
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Document Created: 2018-11-07 00:04:34
Document Modified: 2018-11-07 00:04:34
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 83 FR 55765 |
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