83 FR 63935 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Defined Terms “In-the-Money” and “Out-of-the-Money” in BX Options Rules at Chapter I, Section 1
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 238 (December 12, 2018)
Federal Register Volume 83, Issue 238 (December 12, 2018)
| Page Range | 63935-63937 | |
| FR Document | 2018-26915 |
[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)] [Notices] [Pages 63935-63937] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-26915] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84753; File No. SR-BX-2018-061] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Defined Terms ``In-the-Money'' and ``Out-of-the-Money'' in BX Options Rules at Chapter I, Section 1 December 7, 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 December 4, 2018, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BX Options Rules at Chapter I, Section 1, specifically the defined terms ``in the money'' and ``out- of-the-money'' at BX Options Rules at Chapter I, Sections 1(a)(68) and (69), respectively. The text of the proposed rule change is available on the Exchange's website at http://nasdaqbx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose BX rules define an ``in-the-money'' option series at Chapter I, Section 1(a)(68). Currently the term ``in-the-money'' means, for call options, all strike prices below the offer in the underlying security on the primary listing market; for put options, all strike prices above the bid in the underlying security on the primary listing market. BX rules define an ``out-of-the-money'' option series at Chapter I, Section 1(a)(69). Currently, the term ``out-of-the-money'' shall mean the following: For call options, all strike prices above the offer in the underlying security on the primary listing market; for put options, all strike prices below the bid in the underlying security on the primary [[Page 63936]] listing market. The Exchange proposes to amend these defined terms as specified below. In-the-Money At this time, the Exchange proposes to amend the defined term ``in- the-money'' to include an ``at-the-money'' option. The term ``in-the- money'' would be defined with this amendment to mean, for call options, all strike prices at or below the offer in the underlying security on the primary listing market; for put options, all strike prices at or above the bid in the underlying security on the primary listing market. The Exchange believes that amending the term ``in-the-money'' to include options that are ``at-the-money'' will bring greater transparency to the manner in which the Exchange handles ``at-the- money'' options.\3\ --------------------------------------------------------------------------- \3\ The Exchange notes that the inclusion of the term ``at-the- money'' within the defined term ``in-the-money'' represents the Exchange's current practice. --------------------------------------------------------------------------- In-the-Money and Out-of-the-Money The Exchange proposes to limit the defined terms ``in-the-money'' and ``out-of-the-money'' option series for purposes of Market Maker quoting obligations in Chapter VII, Section 6. The Exchange notes that it specifically proposes to reference the rules related to Market Maker quoting obligations to avoid any confusion with the manner in which ``in-the-money'' and ``out-of-the-money'' options series are defined for purposes of other options rules. This limitation represents current practice. The Exchange also notes that it is conforming this term across its Nasdaq affiliated markets. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\4\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\5\ 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 to amend the defined term ``in-the-money'' to include options that are ``at-the-money'' will bring greater transparency to the current manner in which the Exchange handles ``at- the-money'' options. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange's proposal to note that the defined terms ``in-the- money'' and ``out-of-the-money'' would apply for purposes of Market Maker quoting obligations in Chapter VII, Section 6 would avoid any confusion with the manner in which ``in-the-money'' and ``out-of-the- money'' options series are defined for purposes of other options rules. The limitation of the defined terms for purposes of Market Maker quoting obligations in Chapter VII, Section 6 will bring transparency to the current use of the defined terms. 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's proposal to amend the defined term ``in-the-money'' to include options that are ``at-the-money'' and add limitations to the use of the defined terms ``in-the-money'' and ``out-of-the-money'' for purposes of Market Maker quoting obligations in Chapter VII, Section 6 do not unduly burden competition, rather these amendments add greater transparency to the Rulebook and makes clear the applicability of the definitions to avoid confusion with respect to the remainder of the options rules. 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 \6\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\7\ --------------------------------------------------------------------------- \6\ 15 U.S.C. 78s(b)(3)(A)(iii). \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2018-061 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-2018-061. 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-2018-061 and should [[Page 63937]] be submitted on or before January 2, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\8\ --------------------------------------------------------------------------- \8\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-26915 Filed 12-11-18; 8:45 am] BILLING CODE 8011-01-P
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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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![Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices 63937
be submitted on or before January 2, proposed rule change. The text of these Phlx Rule 1014(c)(i)(A)(1)(a) states that,
2019. statements may be examined at the for in-the-money series, the bid/ask
For the Commission, by the Division of places specified in Item IV below. The differentials may be as wide as the
Trading and Markets, pursuant to delegated Exchange has prepared summaries, set spread between the national best bid
authority.8 forth in sections A, B, and C below, of and offer in the underlying security, or
Eduardo A. Aleman, the most significant aspects of such its decimal equivalent rounded up to
Assistant Secretary. statements. the nearest minimum increment. In
[FR Doc. 2018–26915 Filed 12–11–18; 8:45 am] A. Self-Regulatory Organization’s practice, however, the Exchange’s
BILLING CODE 8011–01–P Statement of the Purpose of, and System permits a Valid Width Quote in
Statutory Basis for, the Proposed Rule the Opening Process to be as wide as the
Change quotation for the underlying security on
SECURITIES AND EXCHANGE the primary (listing) market.6
COMMISSION 1. Purpose
Proposal
[Release No. 34–84727; File No. SR–Phlx–
Phlx proposes several amendments in
this rule change. First, the Exchange The Exchange proposes to codify its
2018–77] current practice and correctly reflect in
proposes to amend Phlx Rule 1017,
Self-Regulatory Organizations; Nasdaq entitled ‘‘Openings in Options’’ and its Rules that the Valid Width Quote in
PHLX LLC; Notice of Filing and Phlx Rule 1014, entitled ‘‘Obligations the Opening Process apply a primary
Immediate Effectiveness of Proposed and Restrictions Applicable to market analysis, not a national best bid
Rule Change Relating to Bid/Ask Specialists and Registered Options or offer (‘‘NBBO’’) analysis.7
Differentials Traders’’ to correct inconsistencies Specifically, this proposal would
between the Exchange’s rule text and conform the current rule text to the
December 6, 2018. the operation of the System. Second, the current System by amending the
Pursuant to Section 19(b)(1) of the Exchange proposes to add definitions to definition of a Valid Width Quote in
Securities Exchange Act of 1934 Phlx Rule 1000 to define ‘‘in-the- Rule 1017, ‘‘Opening in Options,’’ so
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 money’’ and ‘‘out-of-the-money’’ option that, in the case of in-the-money option
notice is hereby given that on November series. Third, the Exchange proposes to series 8 where the market for the
28, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or amend Rule 1014 to correct an error underlying security is wider than the
‘‘Exchange’’) filed with the Securities regarding rounding. Each amendment differentials set forth above, the bid/ask
and Exchange Commission will be described in more detail below. differential set forth in Phlx Rule
(‘‘Commission’’) the proposed rule 1017(a)(ix) may be as wide as the
change as described in Items I and II Rule 1017 quotation for the underlying security on
below, which Items have been prepared Today, Phlx Rule 1017(a)(ix) defines a the primary 9 (listing) market, or its
by the Exchange. The Commission is Valid Width Quotes as a two-sided decimal equivalent rounded down to
publishing this notice to solicit electronic quotation submitted by a Phlx the nearest minimum increment.
comments on the proposed rule change Electronic Market Maker (which The Exchange believes that utilizing
from interested persons. includes a Specialist 3 and a Registered the primary market in the Opening
Options Trader 4 or ‘‘ROT’’) that consists Process is reasonable given the close
I. Self-Regulatory Organization’s of a bid/ask differential that is connection between the primary market
Statement of the Terms of Substance of compliant with Rule 1014(c)(i)(A)(1)(a).5 and the Opening Process. For example,
the Proposed Rule Change Specifically, for the Opening Process, Phlx Rule 1017(d)(ii) provides, ‘‘For all
The Exchange proposes to amend options, the underlying security,
Phlx Rule 1017, entitled ‘‘Openings in 3 A Specialist is an Exchange member who is
including indexes, must be open on the
Options,’’ Phlx Rule 1014, entitled registered as an options Specialist. See Phlx Rule primary market for a certain time period
1020(a).
‘‘Obligations and Restrictions 4 Rule 1014(b) defines a ROT as ‘‘a regular as determined by the Exchange for the
Applicable to Specialists and Registered member or a foreign currency options participant of Opening Process to commence. The
Options Traders,’’ and Rule 1000, the Exchange located on the trading floor who has time period shall be no less than 100
entitled ‘‘Applicability, Definitions an received permission from the Exchange to trade in milliseconds and no more than 5
options for his own account.’’ For purposes of Rule
References.’’ 1014, the term ‘‘ROT’’ shall include a Streaming seconds.’’
The text of the proposed rule change Quote Trader and a Remote Streaming Quote Today, in order to open, the Exchange
is available on the Exchange’s website at Trader, as defined in Rule 1014. requires either: (i) The Specialist’s Valid
http://nasdaqphlx.cchwallstreet.com/, 5 Phlx Rule 1014(c)(i)(A)(1)(a) provides,
at the principal office of the Exchange, ‘‘[o]ptions on equities and index options bidding 6 The primary market has always been utilized on
and/or offering so as to create differences of no
and at the Commission’s Public more than $.25 between the bid and the offer for
Phlx since the migration to Phlx XLII.
7 The Exchange notes that today Phlx utilizes the
Reference Room. each option contract for which the prevailing bid
is less than $2; no more than $.40 where the primary market in calculating the bid/ask
II. Self-Regulatory Organization’s prevailing bid is $2 or more but less than $5; no differential during the Opening Process. This rule
Statement of the Purpose of, and more than $.50 where the prevailing bid is $5 or change would amend the rule to reflect Phlx’s
more but less than $10; no more than $.80 where current practice.
Statutory Basis for, the Proposed Rule 8 An at-the-money option series would also
the prevailing bid is $10 or more but less than $20;
Change and no more than $1 where the prevailing bid is qualify. An out-of-the-money series would not
$20 or more, provided that, in the case of equity qualify.
In its filing with the Commission, the 9 The term ‘‘primary market’’ means, in the case
options, the bid/ask differentials stated above shall
Exchange included statements
amozie on DSK3GDR082PROD with NOTICES1
not apply to in-the-money series where the market of securities listed on The Nasdaq Stock Market, the
concerning the purpose of and basis for for the underlying security is wider than the market that is identified as the listing market
the proposed rule change and discussed differentials set forth above. For such series, the pursuant to Section X(d) of the approved national
any comments it received on the bid/ask differentials may be as wide as the spread market system plan governing the trading of
between the national best bid and offer in the Nasdaq-listed securities, and, in the case of
underlying security, or its decimal equivalent securities listed on another national securities
8 17 CFR 200.30–3(a)(12). rounded up to the nearest minimum increment. The exchange, the market that is identified as the listing
1 15 U.S.C. 78s(b)(1). Exchange may establish differences other than the market pursuant to Section XI of the Consolidated
2 17 CFR 240.19b–4. above for one or more series or classes of options.’’ Tape Association Plan. See Phlx Rule 1000(b)(31).
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Document Created: 2018-12-12 01:39:27
Document Modified: 2018-12-12 01:39:27
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 63935 |
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