83 FR 63933 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Supplementary Material .02 to Rule 715
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 238 (December 12, 2018)
Federal Register Volume 83, Issue 238 (December 12, 2018)
| Page Range | 63933-63935 | |
| FR Document | 2018-26907 |
[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)] [Notices] [Pages 63933-63935] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-26907] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84745; File No. SR-GEMX-2018-40] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Supplementary Material .02 to Rule 715 December 7, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [[Page 63934]] (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on November 29, 2018, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Supplementary Material .02 to Rule 715 regarding Cancel and Replace Orders. The text of the proposed rule change is available on the Exchange's website at http://nasdaqgemx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Supplementary Material .02 to Rule 715 regarding Cancel and Replace Orders to: (i) Correct an inconsistency between the Exchange's rule text and the operation of the System \3\ by removing the reference to Rule 710, (ii) update rule cross-references, and (iii) make other non-substantive, technical changes. --------------------------------------------------------------------------- \3\ The term ``System'' means the electronic system operated by the Exchange that receives and disseminates quotes, executes orders and reports transactions. See Rule 100(a)(64). --------------------------------------------------------------------------- Today, a member has the option of either sending in a cancel order and then separately sending in a new order which serves as a replacement of the original order (two separate messages), or sending a single cancel and replace order in one message (i.e., a Cancel and Replace Order). Specifically, Supplementary Material .02 to Rule 715 defines a Cancel and Replace Order as a single message for the immediate cancellation of a previously received order and the replacement of that order with a new order.\4\ The replacement portion of the Cancel and Replace Order is treated as a new order and therefore goes through price or other reasonability checks as a result of being viewed as such.\5\ If the replacement portion of a Cancel and Replace Order does not satisfy the System's price or other reasonability checks, the existing order will be cancelled and not replaced.\6\ The Exchange notes, however, that when it initially codified Cancel and Replace Orders in its Rulebook as part of SR-ISEGemini-2017-07, it inadvertently included Rule 710 within the list of price reasonability checks. In SR-ISEGemini-2017-07, the Exchange explained that the System conducts price or other reasonability checks for Cancel and Replace Orders to validate such orders against the current market conditions prior to proceeding with the request to modify the order.\7\ Rule 710, which relates to the minimum price variations applicable to options series traded on the Exchange, does not involve the System considering the current market at the time of the Cancel and Replace Order, and an incoming Cancel and Replace Order that fails the minimum price variation checks in Rule 710 would not result in the existing order being cancelled and not replaced.\8\ The Exchange therefore proposes to remove the reference to Rule 710 from the list of price or other reasonability checks to conform its rule text to the System. --------------------------------------------------------------------------- \4\ If the previously placed order is already filled partially or in its entirety, the replacement order is automatically cancelled or reduced by the number of contracts that were executed. See Supplementary Material .02 to Rule 715. \5\ Supplementary Material .02 to Rule 715 further provides how the replacement portion may retain the priority of the original order, provided certain specified conditions are met. The manner in which the Exchange treats priority with respect to Cancel and Replace Orders is not changing under this proposal. \6\ See Securities Exchange Act Release No. 80106 (February 24, 2017), 82 FR 12374 (March 2, 2017) (SR-ISEGemini-2017-07) (memorializing Cancel and Replace Orders in Supplementary Material .02 to Rule 715). The Exchange subsequently changed its name from ISE Gemini to Nasdaq GEMX. \7\ Id. \8\ In this instance, the System would simply reject the cancel and replace message as an invalid instruction. The Exchange notes that the previous T7 system likewise treated Cancel and Replace Orders in this manner. --------------------------------------------------------------------------- The Exchange also proposes to update the various rule references related to the price reasonability checks within this provision to refer to the current rules.\9\ Finally, the Exchange proposes other non-substantive, technical changes within Supplementary Material .02 to Rule 715 to capitalize ``Cancel and Replace Order'' for consistency, and to capitalize ``System,'' which is a defined term. --------------------------------------------------------------------------- \9\ In particular, Rules 711(c) and 714(b)(2) are now Rules 714(b)(1)(B) and 714(b)(1)(A), respectively, pursuant to SR-GEMX- 2018-32. See Securities Exchange Act Release No. 84238 (September 20, 2018), 83 FR 48678 (September 26, 2018). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\11\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The Exchange's proposal corrects an inadvertent error in Supplementary Material .02 to Rule 715, which currently includes Rule 710 within the list of price or other reasonability checks. As discussed above, including Rule 710 is inconsistent with the operation of the Exchange's System because an incoming Cancel and Replace Order which fails the minimum price variation checks in Rule 710 does not result in the existing order getting cancelled and not replaced. This rule change would amend the rule text to reflect GEMX's current practice, and should avoid potential confusion about how the System processes Cancel and Replace Orders today.\12\ Furthermore, the Exchange's proposal to update the rule references and make other non- substantive technical changes, as further described above, will bring greater transparency to its Rulebook thereby protecting investors and the public interest by reducing potential for investor confusion. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(5). \12\ See note 8 above. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. All of the proposed changes are intended to bring greater transparency to the Exchange's Rulebook, and therefore does not unduly burden competition. [[Page 63935]] C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A)(iii). \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. At the Exchange's request, the Commission has waived this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-GEMX-2018-40 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-GEMX-2018-40. 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-GEMX-2018-40 and should be submitted on or before January 2, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-26907 Filed 12-11-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices 63933
promote just and equitable principles of For the Commission, by the Division of the Commission has received more than
trade, to foster cooperation and Trading and Markets, pursuant to delegated 1,600 comments on the proposed rule
coordination with persons engaged in authority.18 change.8
regulating transactions in securities, to Eduardo A. Aleman, Section 19(b)(2) of the Act 9 provides
remove impediments to and perfect the Assistant Secretary. that after initiating disapproval
mechanism of a free and open market [FR Doc. 2018–26834 Filed 12–11–18; 8:45 am] proceedings, the Commission shall issue
and a national market system and, in BILLING CODE 8011–01–P an order approving or disapproving the
general, to protect investors and the proposed rule change not later than 180
public interest, and not be designed to days after the date of publication of
permit unfair discrimination between SECURITIES AND EXCHANGE notice of filing of the proposed rule
customers, issuers, brokers, or dealers. COMMISSION change. The Commission may extend
The Commission also finds that the the period for issuing an order
[Release No. 34–84731; File No. SR–
proposed rule change is consistent with approving or disapproving the proposed
CboeBZX–2018–040]
Section 6(b)(8) of the Act,15 which rule change, however, by not more than
requires that the rules of a national Self-Regulatory Organizations; Cboe 60 days if the Commission determines
securities exchange not impose any BZX Exchange, Inc.; Notice of that a longer period is appropriate and
burden on competition that is not Designation of a Longer Period for publishes reasons for such
necessary or appropriate in furtherance Commission Action on Proceedings To determination. The proposed rule
of the purposes of the Act. Determine Whether To Approve or change was published for notice and
Disapprove a Proposed Rule Change comment in the Federal Register on July
The Commission notes that the 2, 2018. December 29, 2018, is 180 days
primary listing market’s official closing To List and Trade Shares of SolidX
Bitcoin Shares Issued by the VanEck from that date, and February 27, 2019 is
price for a security is relied upon by 240 days from that date.
market participants for a variety of SolidX Bitcoin Trust
The Commission finds it appropriate
reasons, including, but not limited to, December 6, 2018. to designate a longer period within
calculation of index values, calculation On June 20, 2018, Cboe BZX which to issue an order approving or
of the net asset value of mutual funds Exchange, Inc. (‘‘BZX’’) filed with the disapproving the proposed rule change
and exchange-traded products, the price Securities and Exchange Commission so that it has sufficient time to consider
of derivatives that are based on the (‘‘Commission’’), pursuant to Section this proposed rule change. Accordingly,
security, and certain types of trading 19(b)(1) of the Securities Exchange Act the Commission, pursuant to Section
benchmarks such as volume weighted of 1934 (‘‘Act’’) 1 and Rule 19b–4 19(b)(2) of the Act,10 designates
average price strategies. For Derivatives thereunder,2 a proposed rule change to February 27, 2019, as the date by which
Securities Products, in circumstances list and trade shares of SolidX Bitcoin the Commission shall either approve or
where there is no Closing Auction, or Shares issued by the VanEck SolidX disapprove the proposed rule change
the Closing Auction trade consists of Bitcoin Trust under BZX Rule (File No. SR–CboeBZX–2018–040).
less than one round lot, the Exchange 14.11(e)(4), Commodity-Based Trust
proposes to utilize more recent firm For the Commission, by the Division of
Shares. The proposed rule change was Trading and Markets, pursuant to delegated
quotations instead of less recent trades, published for comment in the Federal authority.11
as such trades may provide less Register on July 2, 2018.3 Eduardo A. Aleman,
information about the current value of a On August 7, 2018, pursuant to
security. The Exchange asserts that by Assistant Secretary.
Section 19(b)(2) of the Act,4 the
doing so, the BZX Official Closing Price [FR Doc. 2018–26828 Filed 12–11–18; 8:45 am]
Commission designated a longer period
for such a Derivative Securities Product within which to approve the proposed BILLING CODE 8011–01–P
would be more reflective of the true and rule change, disapprove the proposed
current value of such security on that rule change, or institute proceedings to
trading day than otherwise would under SECURITIES AND EXCHANGE
determine whether to disapprove the
the Exchange’s current rule, particularly COMMISSION
proposed rule change.5 On September
for a Derivative Securities Product that 20, 2018, the Commission instituted
is thinly traded.16 The Commission proceedings under Section 19(b)(2)(B) of [Release No. 34–84745; File No. SR–GEMX–
therefore believes that the Exchange’s 2018–40]
the Act 6 to determine whether to
proposal is reasonably designed to approve or disapprove the proposed Self-Regulatory Organizations; Nasdaq
achieve the Act’s objectives to protect rule change.7 As of December 6, 2018, GEMX, LLC; Notice of Filing and
investors and the public interest.
Immediate Effectiveness of Proposed
Accordingly, the Commission finds that 1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Rule Change to Supplementary
the proposed rule change is consistent Material .02 to Rule 715
3 See Securities Exchange Act Release No. 83520
with the requirements of the Act.
(June 26, 2018), 83 FR 31014 (July 2, 2018).
December 7, 2018.
IV. Conclusion 4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 83792 Pursuant to Section 19(b)(1) of the
It is therefore ordered, pursuant to (Aug. 7, 2018), 83 FR 40112 (Aug. 13, 2018). Securities Exchange Act of 1934
6 15 U.S.C. 78s(b)(2)(B).
Section 19(b)(2) of the Act 17 that the 7 See Securities Exchange Act Release No. 84231
proposed rule change (SR–CboeBZX– interest.’’ See id. at 48667 (citing 15 U.S.C.
amozie on DSK3GDR082PROD with NOTICES1
(Sept. 20, 2018), 83 FR 48665 (Sept. 26, 2018).
2018–079), as modified by Amendment 78f(b)(5)).
Specifically, the Commission instituted proceedings 8 All comments on the proposed rule change are
No. 1, be, and hereby is, approved. to allow for additional analysis of the proposed rule
change’s consistency with Section 6(b)(5) of the available on the Commission’s website at: https://
Act, which requires among other things, that the www.sec.gov/comments/sr-cboebzx-2018-040/cboeb
15 15 U.S.C. 78f(b)(8). zx2018040.htm.
rules of a national securities exchange be ‘‘designed
16 See Notice, supra note 4, at 55437. 9 15 U.S.C. 78s(b)(2).
to prevent fraudulent and manipulative acts and
17 15 U.S.C. 78s(b)(2). 10 Id.
practices, to promote just and equitable principles
18 17 CFR 200.30–3(a)(12). of trade,’’ and ‘‘to protect investors and the public 11 17 CFR 200.30–3(a)(57).
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![Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices 63935
C. Self-Regulatory Organization’s number should be included on the notice is hereby given that on December
Statement on Comments on the subject line if email is used. To help the 4, 2018, Nasdaq BX, Inc. (‘‘BX’’ or
Proposed Rule Change Received From Commission process and review your ‘‘Exchange’’) filed with the Securities
Members, Participants, or Others comments more efficiently, please use and Exchange Commission
No written comments were either only one method. The Commission will (‘‘Commission’’) the proposed rule
solicited or received. post all comments on the Commission’s change as described in Items I, II, and
internet website (http://www.sec.gov/ III, below, which Items have been
III. Date of Effectiveness of the rules/sro.shtml). Copies of the prepared by the Exchange. The
Proposed Rule Change and Timing for submission, all subsequent Commission is publishing this notice to
Commission Action amendments, all written statements solicit comments on the proposed rule
Because the foregoing proposed rule with respect to the proposed rule change from interested persons.
change does not: (i) Significantly affect change that are filed with the
Commission, and all written I. Self-Regulatory Organization’s
the protection of investors or the public Statement of the Terms of Substance of
interest; (ii) impose any significant communications relating to the
proposed rule change between the the Proposed Rule Change
burden on competition; and (iii) become
operative for 30 days from the date on Commission and any person, other than The Exchange proposes to amend BX
which it was filed, or such shorter time those that may be withheld from the Options Rules at Chapter I, Section 1,
as the Commission may designate, it has public in accordance with the specifically the defined terms ‘‘in the
become effective pursuant to Section provisions of 5 U.S.C. 552, will be money’’ and ‘‘out-of-the-money’’ at BX
19(b)(3)(A)(iii) of the Act 13 and available for website viewing and Options Rules at Chapter I, Sections
subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public 1(a)(68) and (69), respectively.
thereunder.14 Reference Room, 100 F Street NE, The text of the proposed rule change
At any time within 60 days of the Washington, DC 20549, on official is available on the Exchange’s website at
filing of the proposed rule change, the business days between the hours of http://nasdaqbx.cchwallstreet.com/, at
Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the the principal office of the Exchange, and
temporarily suspend such rule change if filing also will be available for at the Commission’s Public Reference
it appears to the Commission that such inspection and copying at the principal Room.
action is necessary or appropriate in the office of the Exchange. All comments
received will be posted without change. II. Self-Regulatory Organization’s
public interest, for the protection of Statement of the Purpose of, and
investors, or otherwise in furtherance of Persons submitting comments are
cautioned that we do not redact or edit Statutory Basis for, the Proposed Rule
the purposes of the Act. If the Change
Commission takes such action, the personal identifying information from
Commission shall institute proceedings comment submissions. You should In its filing with the Commission, the
to determine whether the proposed rule submit only information that you wish Exchange included statements
to make available publicly. All concerning the purpose of and basis for
should be approved or disapproved.
submissions should refer to File the proposed rule change and discussed
IV. Solicitation of Comments Number SR–GEMX–2018–40 and any comments it received on the
Interested persons are invited to should be submitted on or before proposed rule change. The text of these
submit written data, views, and January 2, 2019. statements may be examined at the
arguments concerning the foregoing, For the Commission, by the Division of places specified in Item IV below. The
including whether the proposed rule Trading and Markets, pursuant to delegated Exchange has prepared summaries, set
change is consistent with the Act. authority.15 forth in sections A, B, and C below, of
Comments may be submitted by any of Eduardo A. Aleman, the most significant aspects of such
the following methods: Assistant Secretary. statements.
[FR Doc. 2018–26907 Filed 12–11–18; 8:45 am]
Electronic Comments A. Self-Regulatory Organization’s
BILLING CODE 8011–01–P Statement of the Purpose of, and
• Use the Commission’s internet
Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/
Change
rules/sro.shtml); or SECURITIES AND EXCHANGE
• Send an email to rule-comments@ COMMISSION 1. Purpose
sec.gov. Please include File Number SR– BX rules define an ‘‘in-the-money’’
[Release No. 34–84753; File No. SR–BX–
GEMX–2018–40 on the subject line. 2018–061] option series at Chapter I, Section
Paper Comments 1(a)(68). Currently the term ‘‘in-the-
Self-Regulatory Organizations; Nasdaq money’’ means, for call options, all
• Send paper comments in triplicate BX, Inc.; Notice of Filing and
to Secretary, Securities and Exchange strike prices below the offer in the
Immediate Effectiveness of Proposed underlying security on the primary
Commission, 100 F Street NE, Rule Change To Amend the Defined
Washington, DC 20549–1090. listing market; for put options, all strike
Terms ‘‘In-the-Money’’ and ‘‘Out-of-the- prices above the bid in the underlying
All submissions should refer to File Money’’ in BX Options Rules at security on the primary listing market.
Number SR–GEMX–2018–40. This file Chapter I, Section 1 BX rules define an ‘‘out-of-the-money’’
December 7, 2018. option series at Chapter I, Section
amozie on DSK3GDR082PROD with NOTICES1
13 15 U.S.C. 78s(b)(3)(A)(iii).
14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Pursuant to Section 19(b)(1) of the 1(a)(69). Currently, the term ‘‘out-of-the-
4(f)(6) requires a self-regulatory organization to give Securities Exchange Act of 1934 money’’ shall mean the following: For
the Commission written notice of its intent to file (‘‘Act’’),1 and Rule 19b–4 thereunder,2 call options, all strike prices above the
the proposed rule change at least five business days offer in the underlying security on the
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
15 17 CFR 200.30–3(a)(12). primary listing market; for put options,
Commission. At the Exchange’s request, the 1 15 U.S.C. 78s(b)(1). all strike prices below the bid in the
Commission has waived this requirement. 2 17 CFR 240.19b–4. underlying security on the primary
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Document Created: 2018-12-12 01:39:10
Document Modified: 2018-12-12 01:39:10
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 63933 |
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