Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter VI, Section 5 To Extend the Penny Pilot Program, 87995-87997 [2016-29162]
Download as PDF
Federal Register / Vol. 81, No. 234 / Tuesday, December 6, 2016 / Notices
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
BatsBYX–2016–36, and should be
submitted on or before December 27,
2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016–29159 Filed 12–5–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79433; File No. SR–
Nasdaq–2016–160]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Chapter VI, Section 5 To Extend the
Penny Pilot Program
November 30, 2016.
mstockstill on DSK3G9T082PROD with NOTICES
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 November
16, 2016, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Chapter VI, Section 5 (Minimum
Increments),3 of the rules of the
NASDAQ Options Market (‘‘NOM’’) to
extend through June 30, 2017 or the date
of permanent approval, if earlier, the
Penny Pilot Program in options classes
in certain issues (‘‘Penny Pilot’’ or
‘‘Pilot’’), and to change the date when
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 References herein to Chapter and Series refer to
rules of the NASDAQ Options Market (‘‘NOM’’),
unless otherwise noted.
1 15
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17:39 Dec 05, 2016
Jkt 241001
delisted classes may be replaced in the
Penny Pilot.4
The text of the proposed rule change
is set forth below. Proposed new
language is italicized; deleted text is in
brackets.
*
*
*
*
*
NASDAQ Stock Market Rules
Options Rules
*
*
*
*
*
Chapter VI Trading Systems
*
*
*
*
*
Sec. 5 Minimum Increments
(a) The Board may establish minimum
quoting increments for options contracts
traded on NOM. Such minimum
increments established by the Board
will be designated as a stated policy,
practice, or interpretation with respect
to the administration of this Section
within the meaning of Section 19 of the
Exchange Act and will be filed with the
SEC as a rule change for effectiveness
upon filing. Until such time as the
Board makes a change in the
increments, the following principles
shall apply:
(1)—(2) No Change.
(3) For a pilot period scheduled to
expire on [December 31, 2016]June 30,
2017 or the date of permanent approval,
if earlier, if the options series is trading
pursuant to the Penny Pilot program one
(1) cent if the options series is trading
at less than $3.00, five (5) cents if the
options series is trading at $3.00 or
higher, unless for QQQQs, SPY and
IWM where the minimum quoting
increment will be one cent for all series
regardless of price. A list of such
options shall be communicated to
membership via an Options Trader Alert
(‘‘OTA’’) posted on the Exchange’s Web
site.
The Exchange may replace any pilot
issues that have been delisted with the
next most actively traded multiply
listed options classes that are not yet
included in the pilot, based on trading
activity in the previous six months. The
replacement issues may be added to the
pilot on the second trading day
following [July 1, 2016]January 1, 2017.
(4) No Change.
(b) No Change.
*
*
*
*
*
4 The Penny Pilot was established in March 2008
and was last extended in 2016. See Securities
Exchange Act Release Nos. 57579 (March 28, 2008),
73 FR 18587 (April 4, 2008)(SR–NASDAQ–2008–
026); 75283 (June 24, 2015), 80 FR 37347 (June 30,
2015)(SR–NASDAQ–2015–063) (notice of filing and
immediate effectiveness establishing Penny Pilot);
and 78037 (June 10, 2016), 81 FR 39299 (June 16,
2016) (SR–NASDAQ–2016–052) (notice of filing
and immediate effectiveness extending the Penny
Pilot through December 31, 2016).
PO 00000
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87995
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.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 this filing is to amend
Chapter VI, Section 5, to extend the
Penny Pilot through June 30, 2017 or the
date of permanent approval, if earlier,5
and to change the date when delisted
classes may be replaced in the Penny
Pilot. The Exchange believes that
extending the Penny Pilot will allow for
further analysis of the Penny Pilot and
a determination of how the program
should be structured in the future.
Under the Penny Pilot, the minimum
price variation for all participating
options classes, except for the Nasdaq100 Index Tracking Stock (‘‘QQQQ’’),
the SPDR S&P 500 Exchange Traded
Fund (‘‘SPY’’) and the iShares Russell
2000 Index Fund (‘‘IWM’’), is $0.01 for
all quotations in options series that are
quoted at less than $3 per contract and
$0.05 for all quotations in options series
that are quoted at $3 per contract or
greater. QQQQ, SPY and IWM are
quoted in $0.01 increments for all
options series. The Penny Pilot is
currently scheduled to expire on
December 31, 2016.
The Exchange proposes to extend the
time period of the Penny Pilot through
June 30, 2017 or the date of permanent
approval, if earlier, and to provide a
revised date for adding replacement
issues to the Penny Pilot. The Exchange
proposes that any Penny Pilot Program
5 The options exchanges in the U.S. that have
pilot programs similar to the Penny Pilot (together
‘‘pilot programs’’) are currently working on a
proposal for permanent approval of the respective
pilot programs.
E:\FR\FM\06DEN1.SGM
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87996
Federal Register / Vol. 81, No. 234 / Tuesday, December 6, 2016 / Notices
issues that have been delisted may be
replaced on the second trading day
following January 1, 2017. The
replacement issues will be selected
based on trading activity in the previous
six months.6
This filing does not propose any
substantive changes to the Penny Pilot
Program; all classes currently
participating in the Penny Pilot will
remain the same and all minimum
increments will remain unchanged. The
Exchange believes the benefits to public
customers and other market participants
who will be able to express their true
prices to buy and sell options have been
demonstrated to outweigh the potential
increase in quote traffic.
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
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and 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.
In particular, the proposed rule
change, which extends the Penny Pilot
for an additional six months through
June 30, 2017 or the date of permanent
approval, if earlier, and changes the date
for replacing Penny Pilot issues that
were delisted to the second trading day
following January 1, 2017, will enable
public customers and other market
participants to express their true prices
to buy and sell options for the benefit
of all market participants. This is
consistent with the Act.
mstockstill on DSK3G9T082PROD with NOTICES
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
6 The replacement issues will be announced to
the Exchange’s membership via an Options Trader
Alert (OTA) posted on the Exchange’s Web site.
Penny Pilot replacement issues will be selected
based on trading activity in the previous six
months, as is the case today. The replacement
issues would be identified based on The Options
Clearing Corporation’s trading volume data. For
example, for the January replacement, trading
volume from May 30, 2016 through November 30,
2016 would be analyzed. The month immediately
preceding the replacement issues’ addition to the
Pilot Program (i.e., December) would not be used for
purposes of the six-month analysis.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
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17:39 Dec 05, 2016
Jkt 241001
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, this proposal is procompetitive because it allows Penny
Pilot issues to continue trading on the
Exchange.
Moreover, the Exchange believes that
the proposed rule change will allow for
further analysis of the Pilot and a
determination of how the Pilot should
be structured in the future; and will
serve to promote regulatory clarity and
consistency, thereby reducing burdens
on the marketplace and facilitating
investor protection.
The Pilot is an industry-wide
initiative supported by all other option
exchanges. The Exchange believes that
extending the Pilot will allow for
continued competition between market
participants on the Exchange trading
similar products as their counterparts
on other exchanges, while at the same
time allowing the Exchange to continue
to compete for order flow with other
exchanges in option issues trading as
part of the Pilot.
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
All submissions should refer to File
Number SR–Nasdaq–2016–160. 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 Web site
(https://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 Web site 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
All submissions should refer to File
Number SR–Nasdaq–2016–160 and
should be submitted on or before
December 27, 2016.
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 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
9 15
U.S.C. 78s(b)(3)(A)(iii).
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.
10 17
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Fmt 4703
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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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SRNasdaq 2016–160 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.
E:\FR\FM\06DEN1.SGM
06DEN1
Federal Register / Vol. 81, No. 234 / Tuesday, December 6, 2016 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016–29162 Filed 12–5–16; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 9810]
mstockstill on DSK3G9T082PROD with NOTICES
Secretary of State’s Determination
Under the International Religious
Freedom Act of 1998
Summary: The Secretary of State’s
designation of ‘‘countries of particular
concern’’ for religious freedom
violations. Pursuant to Section 408(a) of
the International Religious Freedom Act
of 1998 (Pub. L. 105–292), as amended
(the Act), notice is hereby given that, on
October 31, 2016, the Secretary of State,
under authority delegated by the
President, has designated each of the
following as a ‘‘country of particular
concern’’ (CPC) under section 402(b) of
the Act, for having engaged in or
tolerated particularly severe violations
of religious freedom: Burma, China,
Eritrea, Iran, the Democratic People’s
Republic of Korea, Saudi Arabia, Sudan,
Tajikistan, Turkmenistan, and
Uzbekistan. The Secretary
simultaneously designated the following
Presidential Actions for these CPCs:
For Burma, the existing ongoing
restrictions referenced in 22 CFR 126.1,
pursuant to section 402(c)(5) of the Act;
For China, the existing ongoing
restriction on exports to China of crime
control and detection instruments and
equipment, under the Foreign Relations
Authorization Act of 1990 and 1991
(Pub. L. 101–246), pursuant to section
402(c)(5) of the Act;
For Eritrea, the existing ongoing
restrictions referenced in 22 CFR 126.1,
pursuant to section 402(c)(5) of the Act;
For Iran, the existing ongoing travel
restrictions in section 221(c) of the Iran
Threat Reduction and Syria Human
Rights Act of 2012 (TRA) for individuals
identified under section 221(a)(1)(C) of
the TRA in connection with the
commission of serious human rights
abuses, pursuant to section 402(c)(5) of
the Act;
For the Democratic People’s Republic
of Korea, the existing ongoing
restrictions to which the Democratic
People’s Republic of Korea is subject,
pursuant to sections 402 and 409 of the
Trade Act of 1974 (the Jackson-Vanik
Amendment), pursuant to section
402(c)(5) of the Act;
11 17
17:39 Dec 05, 2016
Dated: November 30, 2016.
Daniel L. Nadel,
Director, Office of International Religious
Freedom, Department of State.
[FR Doc. 2016–29171 Filed 12–5–16; 8:45 am]
BILLING CODE 4710–18–P
SURFACE TRANSPORTATION BOARD
[Docket No. AB 1240X]
Southwest Pennsylvania Railroad
Company—Abandonment Exemption—
in Fayette County, Pa.
Southwest Pennsylvania Railroad
Company (SWP) has filed a verified
notice of exemption under 49 CFR part
1152 subpart F—Exempt Abandonments
to abandon .3 miles of rail line between
milepost 7 in Uniontown to the end of
the line in South Union Township
(SUT), in Fayette County, Pa. (the Line).
The Line traverses U.S. Postal Service
Zip Code 15401.
SWP states it plans to abandon the
Line and convert the property to trail
use.1 The proposed transaction may not
be consummated until January 5, 2017.
1 SWP states it has agreed to lease the line to SUT
pursuant to the National Trails System Act, 16
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
For Saudi Arabia, a waiver as required
in the ‘‘important national interest of
the United States,’’ pursuant to section
407 of the Act;
For Sudan, the restriction in the
annual Department of State, Foreign
Operations, and Related Programs
Appropriations Act on making certain
appropriated funds available for
assistance to the Government of Sudan,
currently set forth in section 7042(j) of
the Department of State, Foreign
Operations, and Related Programs
Appropriations Act, 2015 (Div. K, Pub.
L. 114–113), and any provision of law
that is the same or substantially the
same as this provision, pursuant to
section 402(c)(5) of the Act;
For Tajikistan, a waiver as required in
the ‘‘important national interest of the
United States,’’ pursuant to section 407
of the Act;
For Turkmenistan, a waiver as
required in the ‘‘important national
interest of the United States,’’ pursuant
to section 407 of the Act;
For Uzbekistan, a waiver as required
in the ‘‘important national interest of
the United States,’’ pursuant to section
407 of the Act.
For Further Information Contact:
Benjamin W. Medina, Office of
International Religious Freedom, Bureau
of Democracy, Human Rights, and
Labor, U.S. Department of State, (Phone:
(202) 647 3865 or Email: MedinaBW@
state.gov).
Jkt 241001
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87997
SWP has certified that: (1) No local
traffic has moved over the Line for at
least two years; (2) there is no overhead
traffic on the Line; (3) no formal
complaint filed by a user of rail service
on the Line (or by a state or local
government entity acting on behalf of
such user) regarding cessation of service
over the Line either is pending with the
Surface Transportation Board (Board) or
with any U.S. District Court or has been
decided in favor of complainant within
the two-year period; and (4) the
requirements at 49 CFR 1105.7(c) and
1105.8(c) (environmental and historic
report), 49 CFR 1105.11 (transmittal
letter), 49 CFR 1105.12 (newspaper
publication), and 49 CFR 1152.50(d)(1)
(notice to governmental agencies) have
been met.
As a condition to this exemption, any
employee adversely affected by the
abandonment shall be protected under
Oregon Short Line Railroad—
Abandonment Portion Goshen Branch
Between Firth & Ammon, in Bingham &
Bonneville Counties, Idaho, 360 I.C.C.
91 (1979). To address whether this
condition adequately protects affected
employees, a petition for partial
revocation under 49 U.S.C. 10502(d)
must be filed.
Provided no formal expression of
intent to file an offer of financial
assistance (OFA) has been received, this
exemption will become effective on
January 5, 2017, unless stayed pending
reconsideration. Petitions to stay that do
not involve environmental issues,2
formal expressions of intent to file an
OFA under 49 CFR 1152.27(c)(2),3 and
interim trail use/rail banking requests
under 49 CFR 1152.29 must be filed by
December 16, 2016. Petitions to reopen
or requests for public use conditions
under 49 CFR 1152.28 must be filed by
December 27, 2016, with the Surface
Transportation Board, 395 E Street SW.,
Washington, DC 20423–0001.
A copy of any petition filed with the
Board should be sent to SWP’s
representative: Richard R. Wilson, P.C.,
U.S.C. 1247(d), upon the Board imposing a decision
and notice of interim trail use or abandonment.
2 The Board will grant a stay if an informed
decision on environmental issues (whether raised
by a party or by the Board’s Office of Environmental
Analysis (OEA) in its independent investigation)
cannot be made before the exemption’s effective
date. See Exemption of Out-of-Serv. Rail Lines, 5
I.C.C.2d 377 (1989). Any request for a stay should
be filed as soon as possible so that the Board may
take appropriate action before the exemption’s
effective date.
3 Each OFA must be accompanied by the filing
fee, which is currently set at $1,700. See
Regulations Governing Fees for Servs. Performed in
Connection with Licensing & Related Servs.—2016
Update, EP 542 (Sub-No. 24) (STB served Aug. 2,
2016).
E:\FR\FM\06DEN1.SGM
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Agencies
[Federal Register Volume 81, Number 234 (Tuesday, December 6, 2016)]
[Notices]
[Pages 87995-87997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29162]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79433; File No. SR-Nasdaq-2016-160]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Chapter VI, Section 5 To Extend the Penny Pilot Program
November 30, 2016.
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 November 16, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Chapter VI, Section 5 (Minimum
Increments),\3\ of the rules of the NASDAQ Options Market (``NOM'') to
extend through June 30, 2017 or the date of permanent approval, if
earlier, the Penny Pilot Program in options classes in certain issues
(``Penny Pilot'' or ``Pilot''), and to change the date when delisted
classes may be replaced in the Penny Pilot.\4\
---------------------------------------------------------------------------
\3\ References herein to Chapter and Series refer to rules of
the NASDAQ Options Market (``NOM''), unless otherwise noted.
\4\ The Penny Pilot was established in March 2008 and was last
extended in 2016. See Securities Exchange Act Release Nos. 57579
(March 28, 2008), 73 FR 18587 (April 4, 2008)(SR-NASDAQ-2008-026);
75283 (June 24, 2015), 80 FR 37347 (June 30, 2015)(SR-NASDAQ-2015-
063) (notice of filing and immediate effectiveness establishing
Penny Pilot); and 78037 (June 10, 2016), 81 FR 39299 (June 16, 2016)
(SR-NASDAQ-2016-052) (notice of filing and immediate effectiveness
extending the Penny Pilot through December 31, 2016).
---------------------------------------------------------------------------
The text of the proposed rule change is set forth below. Proposed
new language is italicized; deleted text is in brackets.
* * * * *
NASDAQ Stock Market Rules
Options Rules
* * * * *
Chapter VI Trading Systems
* * * * *
Sec. 5 Minimum Increments
(a) The Board may establish minimum quoting increments for options
contracts traded on NOM. Such minimum increments established by the
Board will be designated as a stated policy, practice, or
interpretation with respect to the administration of this Section
within the meaning of Section 19 of the Exchange Act and will be filed
with the SEC as a rule change for effectiveness upon filing. Until such
time as the Board makes a change in the increments, the following
principles shall apply:
(1)--(2) No Change.
(3) For a pilot period scheduled to expire on [December 31,
2016]June 30, 2017 or the date of permanent approval, if earlier, if
the options series is trading pursuant to the Penny Pilot program one
(1) cent if the options series is trading at less than $3.00, five (5)
cents if the options series is trading at $3.00 or higher, unless for
QQQQs, SPY and IWM where the minimum quoting increment will be one cent
for all series regardless of price. A list of such options shall be
communicated to membership via an Options Trader Alert (``OTA'') posted
on the Exchange's Web site.
The Exchange may replace any pilot issues that have been delisted
with the next most actively traded multiply listed options classes that
are not yet included in the pilot, based on trading activity in the
previous six months. The replacement issues may be added to the pilot
on the second trading day following [July 1, 2016]January 1, 2017.
(4) No Change.
(b) No Change.
* * * * *
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaq.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 this filing is to amend Chapter VI, Section 5, to
extend the Penny Pilot through June 30, 2017 or the date of permanent
approval, if earlier,\5\ and to change the date when delisted classes
may be replaced in the Penny Pilot. The Exchange believes that
extending the Penny Pilot will allow for further analysis of the Penny
Pilot and a determination of how the program should be structured in
the future.
---------------------------------------------------------------------------
\5\ The options exchanges in the U.S. that have pilot programs
similar to the Penny Pilot (together ``pilot programs'') are
currently working on a proposal for permanent approval of the
respective pilot programs.
---------------------------------------------------------------------------
Under the Penny Pilot, the minimum price variation for all
participating options classes, except for the Nasdaq-100 Index Tracking
Stock (``QQQQ''), the SPDR S&P 500 Exchange Traded Fund (``SPY'') and
the iShares Russell 2000 Index Fund (``IWM''), is $0.01 for all
quotations in options series that are quoted at less than $3 per
contract and $0.05 for all quotations in options series that are quoted
at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01
increments for all options series. The Penny Pilot is currently
scheduled to expire on December 31, 2016.
The Exchange proposes to extend the time period of the Penny Pilot
through June 30, 2017 or the date of permanent approval, if earlier,
and to provide a revised date for adding replacement issues to the
Penny Pilot. The Exchange proposes that any Penny Pilot Program
[[Page 87996]]
issues that have been delisted may be replaced on the second trading
day following January 1, 2017. The replacement issues will be selected
based on trading activity in the previous six months.\6\
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\6\ The replacement issues will be announced to the Exchange's
membership via an Options Trader Alert (OTA) posted on the
Exchange's Web site. Penny Pilot replacement issues will be selected
based on trading activity in the previous six months, as is the case
today. The replacement issues would be identified based on The
Options Clearing Corporation's trading volume data. For example, for
the January replacement, trading volume from May 30, 2016 through
November 30, 2016 would be analyzed. The month immediately preceding
the replacement issues' addition to the Pilot Program (i.e.,
December) would not be used for purposes of the six-month analysis.
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This filing does not propose any substantive changes to the Penny
Pilot Program; all classes currently participating in the Penny Pilot
will remain the same and all minimum increments will remain unchanged.
The Exchange believes the benefits to public customers and other market
participants who will be able to express their true prices to buy and
sell options have been demonstrated to outweigh the potential increase
in quote traffic.
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 prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and 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.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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In particular, the proposed rule change, which extends the Penny
Pilot for an additional six months through June 30, 2017 or the date of
permanent approval, if earlier, and changes the date for replacing
Penny Pilot issues that were delisted to the second trading day
following January 1, 2017, will enable public customers and other
market participants to express their true prices to buy and sell
options for the benefit of all market participants. This is consistent
with the Act.
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. To the contrary, this proposal
is pro-competitive because it allows Penny Pilot issues to continue
trading on the Exchange.
Moreover, the Exchange believes that the proposed rule change will
allow for further analysis of the Pilot and a determination of how the
Pilot should be structured in the future; and will serve to promote
regulatory clarity and consistency, thereby reducing burdens on the
marketplace and facilitating investor protection.
The Pilot is an industry-wide initiative supported by all other
option exchanges. The Exchange believes that extending the Pilot will
allow for continued competition between market participants on the
Exchange trading similar products as their counterparts on other
exchanges, while at the same time allowing the Exchange to continue to
compete for order flow with other exchanges in option issues trading as
part of the Pilot.
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 \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-Nasdaq 2016-160 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-Nasdaq-2016-160. 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 Web site (https://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 Web site 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; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
All submissions should refer to File Number SR-Nasdaq-2016-160 and
should be submitted on or before December 27, 2016.
[[Page 87997]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-29162 Filed 12-5-16; 8:45 am]
BILLING CODE 8011-01-P