Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Quote Mitigation, 21278-21280 [2017-09061]
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Federal Register / Vol. 82, No. 86 / Friday, May 5, 2017 / Notices
2. Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
3. Enhance the quality, utility, and
clarity of the information to be
collected; and
4. Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submissions
of responses.
Form RI 25–49 is used to verify that
adult student annuitants are entitled to
payment. The Office of Personnel
Management must confirm that a fulltime enrollment has been maintained.
Analysis
Agency: Retirement Operations,
Retirement Services, Office of Personnel
Management.
Title: Verification of Full-Time School
Attendance.
OMB Number: 3206–0215.
Frequency: On occasion.
Affected Public: Individuals or
Households.
Number of Respondents: 10,000.
Estimated Time per Respondent: 1
hour.
Total Burden Hours: 10,000.
U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.
[FR Doc. 2017–09100 Filed 5–4–17; 8:45 am]
BILLING CODE 6325–38–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2017–126 and CP2017–179]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
negotiated service agreements. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: May 9, 2017.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SRADOVICH on DSK3GMQ082PROD with NOTICES
SUMMARY:
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FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s Web site (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2017–126 and
CP2017–179; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Express & Priority Mail
Contract 48 to Competitive Product List
and Notice of Filing (Under Seal) of
PO 00000
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Unredacted Governors’ Decision,
Contract, and Supporting Data; Filing
Acceptance Date: May 1, 2017; Filing
Authority: 39 U.S.C. 3642 and 39 CFR
3020.30 et seq.; Public Representative:
Katalin K. Clendenin; Comments Due:
May 9, 2017.
This Notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2017–09136 Filed 5–4–17; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80569; File No. SR–ISE–
2017–34]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Regarding Quote
Mitigation
May 1, 2017.
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 April 26,
2017, Nasdaq ISE, LLC (‘‘ISE’’ 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 ISE
Rule 804(h) regarding quote mitigation.
The text of the proposed rule change
is available on the Exchange’s Web site
at www.ise.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
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 82, No. 86 / Friday, May 5, 2017 / Notices
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
SRADOVICH on DSK3GMQ082PROD with NOTICES
1. Purpose
The Exchange proposes to amend ISE
Rule 804, entitled ‘‘Market Maker
Quotations,’’ to specifically amend Rule
804(h) which addresses the Exchange’s
quote traffic mitigation plan to adopt a
similar quote mitigation plan to that of
NASDAQ PHLX LLC (‘‘Phlx’’).
ISE implemented its quote mitigation
plan in conjunction with joining other
options exchanges in entering into the
Penny Pilot Program to Quote Certain
Options in Pennies. In 2007, ISE
proposed to amend its rules to permit
certain options classes to be quoted in
pennies during a six-month pilot.3
ISE Rule 804(h) provides that ISE
shall utilize a mechanism so that newlyreceived quotations and other changes
to the Exchange’s best bid and offer are
not disseminated for a period of up to,
but not more than one second. With the
upcoming planned migration to INET,4
the Exchange proposes to utilize a plan
similar to that of Phlx for quote
mitigation. The Exchange proposes to
amend Rule 804(h) to adopt language
similar to Phlx. Since 2007, Phlx has
operated on INET, the same system that
ISE will be migrating to utilize.
Phlx Rule 1082(a)(ii)(C) sets forth the
conditions under which Phlx
disseminates updated quotations based
on changes in the Exchange’s
disseminated price and/or size. Phlx
disseminates an updated bid and offer
price, together with the size associated
with such bid and offer, when: (1)
Phlx’s disseminated bid or offer price
increases or decreases; (2) the size
associated with Phlx’s disseminated bid
or offer decreases; or (3) the size
associated with Phlx’s bid (offer)
increases by an amount greater than or
equal to a percentage (never to exceed
20%) 5 of the size associated with the
3 See Securities Exchange Release Act. No. 55161
(February 1, 2007), 72 FR 4754 (January 24, 2007)
(SR–ISE–2006–62) (Order Granting Approval to
Proposed Rule Change as Modified by Amendment
Nos. 1 and 2 Thereto, To Implement a Penny Pilot
Program To Quote Certain Options in Pennies).
4 See Securities Exchange Act Release No. 80432
(April 11, 2017), 82 FR 18191 (April 17, 2017) (SR–
ISE–2017–03) (Order Approving Proposed Rule
Change, as Modified by Amendment No. 1, to
Amend Various Rules in Connection with a System
Migration to Nasdaq INET Technology).
5 Phlx has set its percentage to 10%. See https://
www.nasdaqtrader.com/content/phlxmemos/2007/
jan/0197-07.pdf.
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previously disseminated bid (offer).
Such percentage, which would never
exceed 20%, would be determined on
an issue-by-issue basis by the Exchange
and announced to membership via an
Exchange circular. The percentage size
increase necessary to give rise to a
refreshed quote may vary from issue to
issue, depending, without limitation, on
the liquidity, average volume, and
average number of quotations submitted
in the issue. The mitigation would
apply to all options traded on ISE.
The Exchange will not be adopting
Phlx Rule 1082(a)(ii)(C)(4). This
functionality is not necessary on INET.
Phlx adopted 1082(a)(ii)(C)(4) when it
was not operating on INET, with its
subsequent replatform to INET
functionality, 1082(a)(ii)(C)(4) was no
longer necessary because of the realtime features which exist on INET. The
INET functionality rendered the rule
text in 1082(a)(ii)(C)(4) as unnecessary.
The Exchange will begin a system
migration to Nasdaq INET in Q2 of
2017.6 The migration will be on a
symbol by symbol basis as specified by
the Exchange in a notice to Members.
The Exchange is proposing to
implement this rule change once all
symbols have migrated to INET.
Upon completion of the migration to
INET, ISE will set an initial percentage
of 3% to be applied to all issues, which
will be announced in an Options Trader
Alert. ISE will continue to monitor the
quote activity on the market and would
not notify participants of any
incremental increase in the size of the
Exchange’s quote to be disseminated to
OPRA.
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, 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, by
reducing the number of options
quotations required to be submitted to
OPRA and, therefore, mitigating the
Exchange’s quote message traffic and
capacity. By adopting a quote mitigation
plan similar to Phlx, the Exchange will
6 See
Securities Exchange Act Release No. 80432
(April 11, 2017), 82 FR 18191 (April 17, 2017) (SR–
ISE–2017–03) (Order Approving Proposed Rule
Change, as Modified by Amendment No. 1, to
Amend Various Rules in Connection with a System
Migration to Nasdaq INET Technology).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
PO 00000
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21279
continue to mitigate quotes and monitor
its quote capacity, as is the case today.
While the Phlx method differs from that
of ISE’s rule, the Exchange believes that
Phlx’s method today successfully
mitigates quotes on that market. In
addition, ISE desires to adopt a similar
mitigation as currently utilized by its
affiliated market, as it will operate on
the same architecture.
The Phlx quote mitigation process has
been in place since 2007. Phlx is
operating on the INET system today, the
same system that ISE will migrate to for
its operating system. The Exchange
believes that Phlx’s quote mitigation
process has successfully controlled
Phlx’s quote capacity. The Exchange
believes that it is reasonable to utilize a
similar process as Phlx to mitigate
quotes for ISE given the system
architecture which will be utilized on
ISE with the upcoming migration.
Additionally, Nasdaq, Inc., a common
parent to Phlx and ISE, has experience
with this quote mitigation strategy on
INET. The Exchange has selected to
mitigate ISE at 3% to start and
determine if the percentage will need to
be adjusted thereafter. While ISE,
similar to Phlx, is a mature market with
various auction offerings and higher
volumes, ISE will be newly migrated to
INET. The Exchange plans on
monitoring the volume on this market to
determine if the percentage needs to be
adjusted. Utilizing 3% as the initial
percentage will provide the Exchange
with data for the newly migrated
market.
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 proposes to mitigate all
options trading on ISE. All options
exchanges have a quote mitigation
process in place in connection with
their participation in the Penny Pilot
Program.
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
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21280
Federal Register / Vol. 82, No. 86 / Friday, May 5, 2017 / Notices
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
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:
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–ISE–
2017–34 and should be submitted on or
before May 26, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–09061 Filed 5–4–17; 8:45 am]
BILLING CODE 8011–01–P
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–
ISE–2017–34 on the subject line.
SRADOVICH on DSK3GMQ082PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ISE–2017–34. 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
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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17:43 May 04, 2017
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80567; File No. TP 17–08]
Order Granting Limited Exemptions
From Exchange Act Rule 10b–17 and
Rules 101 and 102 of Regulation M to
Alpha Architect Value Momentum
Trend ETF Pursuant to Exchange Act
Rule 10b–17(b)(2) and Rules 101(d) and
102(e) of Regulation M
May 1, 2017.
By letter dated May 01, 2017 (the
‘‘Letter’’), counsel for Alpha Architect
ETF Trust (the ‘‘Trust’’), on behalf of the
Trust, Alpha Architect Value
Momentum Trend ETF (the ‘‘Fund’’),
any national securities exchange or
national securities association on or
through which shares issued by the
Fund (‘‘Shares’’) are listed and/or may
subsequently trade, Quasar Distributors,
LLC (the ‘‘Distributor’’), and other
persons engaging in transactions in
Shares (collectively, the ‘‘Requestors’’),
requested exemptions, or interpretive or
no-action relief, from Rule 10b–17 of the
Securities Exchange Act of 1934, as
amended (‘‘Exchange Act’’), and Rules
101 and 102 of Regulation M, in
connection with secondary market
transactions in Shares and the creation
11 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00095
Fmt 4703
Sfmt 4703
or redemption of aggregations of 50,000
Shares (‘‘Creation Units’’).
The Trust is registered with the
Securities and Exchange Commission
(‘‘Commission’’) under the Investment
Company Act of 1940, as amended
(‘‘1940 Act’’), as an open-end
management investment company. The
Fund is an exchange-traded fund
(‘‘ETF’’) organized as a series of the
Trust. The Fund seeks to track the
performance of the Alpha Architect
Value Momentum Trend Index (the
‘‘Index’’). The Fund intends to operate
as an ‘‘ETF of ETFs’’ by seeking to track
the performance of its underlying Index
through, under normal circumstances,1
investing at least 80% of its total assets 2
in up to four ETFs that comprise the
Index (‘‘Underlying ETFs’’). The Fund
also intends to invest the remaining
twenty percent of its total assets in cash
and cash equivalents, other investment
companies, as well as securities and
other types of financial instruments that
may not be components of the Index,
but which will help the Fund track the
Index (e.g., the Fund may invest in
securities that are not components of the
Index to reflect various corporate
actions and other changes to the Index
such as reconstitutions, additions, and
deletions).3 Except for the fact that the
Fund will operate as an ETF of ETFs,
the Fund will operate in a manner
identical to the Underlying ETFs.
The Requestors represent, among
other things, the following:
• Shares of the Fund will be issued
by the Trust, an open-end management
investment company that is registered
with the Commission;
• The Trust will continuously redeem
Creation Units at net asset value
(‘‘NAV’’), and the secondary market
price of the Shares should not vary
1 The term ‘‘under normal circumstances’’
includes, but is not limited to, the absence of
adverse market, economic, political, or other
conditions, including extreme volatility or trading
halts in the securities markets or the financial
markets generally; operational issues causing
dissemination of inaccurate market information; or
force majeure type events, such as systems failure,
natural or man-made disaster, act of God, armed
conflict, act of terrorism, riot or labor disruption, or
any similar intervening circumstance.
2 Regardless of the representation that the Fund
generally will invest at least 80% of its total assets
in securities that comprise the underlying Index,
the Fund seeks to have a tracking error of less than
five percent in any given month over a one-year
period.
3 The Fund intends, under normal circumstances,
to hold shares of the Underlying ETFs and, from
time to time, for hedging purposes, the Fund
intends to short index ETFs or various types of
financial instruments including, but not limited to,
futures contracts and options on securities, indices,
and futures contracts (‘‘Financial Instruments’’).
Financial Instruments held or shorted by the Fund,
if any, will be expected to provide a hedge against
potential adverse market movements.
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]]>Agencies
[Federal Register Volume 82, Number 86 (Friday, May 5, 2017)]
[Notices]
[Pages 21278-21280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09061]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80569; File No. SR-ISE-2017-34]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Regarding Quote
Mitigation
May 1, 2017.
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 April 26, 2017, Nasdaq ISE, LLC (``ISE'' 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 ISE Rule 804(h) regarding quote
mitigation.
The text of the proposed rule change is available on the Exchange's
Web site at www.ise.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
[[Page 21279]]
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 ISE Rule 804, entitled ``Market
Maker Quotations,'' to specifically amend Rule 804(h) which addresses
the Exchange's quote traffic mitigation plan to adopt a similar quote
mitigation plan to that of NASDAQ PHLX LLC (``Phlx'').
ISE implemented its quote mitigation plan in conjunction with
joining other options exchanges in entering into the Penny Pilot
Program to Quote Certain Options in Pennies. In 2007, ISE proposed to
amend its rules to permit certain options classes to be quoted in
pennies during a six-month pilot.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Release Act. No. 55161 (February 1,
2007), 72 FR 4754 (January 24, 2007) (SR-ISE-2006-62) (Order
Granting Approval to Proposed Rule Change as Modified by Amendment
Nos. 1 and 2 Thereto, To Implement a Penny Pilot Program To Quote
Certain Options in Pennies).
---------------------------------------------------------------------------
ISE Rule 804(h) provides that ISE shall utilize a mechanism so that
newly-received quotations and other changes to the Exchange's best bid
and offer are not disseminated for a period of up to, but not more than
one second. With the upcoming planned migration to INET,\4\ the
Exchange proposes to utilize a plan similar to that of Phlx for quote
mitigation. The Exchange proposes to amend Rule 804(h) to adopt
language similar to Phlx. Since 2007, Phlx has operated on INET, the
same system that ISE will be migrating to utilize.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 80432 (April 11,
2017), 82 FR 18191 (April 17, 2017) (SR-ISE-2017-03) (Order
Approving Proposed Rule Change, as Modified by Amendment No. 1, to
Amend Various Rules in Connection with a System Migration to Nasdaq
INET Technology).
---------------------------------------------------------------------------
Phlx Rule 1082(a)(ii)(C) sets forth the conditions under which Phlx
disseminates updated quotations based on changes in the Exchange's
disseminated price and/or size. Phlx disseminates an updated bid and
offer price, together with the size associated with such bid and offer,
when: (1) Phlx's disseminated bid or offer price increases or
decreases; (2) the size associated with Phlx's disseminated bid or
offer decreases; or (3) the size associated with Phlx's bid (offer)
increases by an amount greater than or equal to a percentage (never to
exceed 20%) \5\ of the size associated with the previously disseminated
bid (offer). Such percentage, which would never exceed 20%, would be
determined on an issue-by-issue basis by the Exchange and announced to
membership via an Exchange circular. The percentage size increase
necessary to give rise to a refreshed quote may vary from issue to
issue, depending, without limitation, on the liquidity, average volume,
and average number of quotations submitted in the issue. The mitigation
would apply to all options traded on ISE.
---------------------------------------------------------------------------
\5\ Phlx has set its percentage to 10%. See https://www.nasdaqtrader.com/content/phlxmemos/2007/jan/0197-07.pdf.
---------------------------------------------------------------------------
The Exchange will not be adopting Phlx Rule 1082(a)(ii)(C)(4). This
functionality is not necessary on INET. Phlx adopted 1082(a)(ii)(C)(4)
when it was not operating on INET, with its subsequent replatform to
INET functionality, 1082(a)(ii)(C)(4) was no longer necessary because
of the real-time features which exist on INET. The INET functionality
rendered the rule text in 1082(a)(ii)(C)(4) as unnecessary.
The Exchange will begin a system migration to Nasdaq INET in Q2 of
2017.\6\ The migration will be on a symbol by symbol basis as specified
by the Exchange in a notice to Members. The Exchange is proposing to
implement this rule change once all symbols have migrated to INET.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 80432 (April 11,
2017), 82 FR 18191 (April 17, 2017) (SR-ISE-2017-03) (Order
Approving Proposed Rule Change, as Modified by Amendment No. 1, to
Amend Various Rules in Connection with a System Migration to Nasdaq
INET Technology).
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Upon completion of the migration to INET, ISE will set an initial
percentage of 3% to be applied to all issues, which will be announced
in an Options Trader Alert. ISE will continue to monitor the quote
activity on the market and would not notify participants of any
incremental increase in the size of the Exchange's quote to be
disseminated to OPRA.
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, 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,
by reducing the number of options quotations required to be submitted
to OPRA and, therefore, mitigating the Exchange's quote message traffic
and capacity. By adopting a quote mitigation plan similar to Phlx, the
Exchange will continue to mitigate quotes and monitor its quote
capacity, as is the case today. While the Phlx method differs from that
of ISE's rule, the Exchange believes that Phlx's method today
successfully mitigates quotes on that market. In addition, ISE desires
to adopt a similar mitigation as currently utilized by its affiliated
market, as it will operate on the same architecture.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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The Phlx quote mitigation process has been in place since 2007.
Phlx is operating on the INET system today, the same system that ISE
will migrate to for its operating system. The Exchange believes that
Phlx's quote mitigation process has successfully controlled Phlx's
quote capacity. The Exchange believes that it is reasonable to utilize
a similar process as Phlx to mitigate quotes for ISE given the system
architecture which will be utilized on ISE with the upcoming migration.
Additionally, Nasdaq, Inc., a common parent to Phlx and ISE, has
experience with this quote mitigation strategy on INET. The Exchange
has selected to mitigate ISE at 3% to start and determine if the
percentage will need to be adjusted thereafter. While ISE, similar to
Phlx, is a mature market with various auction offerings and higher
volumes, ISE will be newly migrated to INET. The Exchange plans on
monitoring the volume on this market to determine if the percentage
needs to be adjusted. Utilizing 3% as the initial percentage will
provide the Exchange with data for the newly migrated market.
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 proposes to
mitigate all options trading on ISE. All options exchanges have a quote
mitigation process in place in connection with their participation in
the Penny Pilot Program.
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
[[Page 21280]]
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-ISE-2017-34 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2017-34. 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-ISE-2017-34 and should be
submitted on or before May 26, 2017.
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. 2017-09061 Filed 5-4-17; 8:45 am]
BILLING CODE 8011-01-P
