Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Temporarily Suspend the Implementation of QCC With Stock Order Functionality Upon Migration to INET, 23932-23934 [2017-10586]
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23932
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
asabaliauskas on DSK3SPTVN1PROD with NOTICES
exchanges and FINRA are proposing
this proposed fee schedule to
implement the requirements of the CAT
NMS Plan. Therefore, this is not a
competitive fee filing and, therefore, it
does not raise competition issues
between and among the exchanges and
FINRA.
Moreover, as previously described,
MRX believes that the proposed rule
change fairly and equitably allocates
costs among CAT Reporters. In
particular, the proposed fee schedule is
structured to impose comparable fees on
similarly situated CAT Reporters, and
lessen the impact on smaller CAT
Reporters. CAT Reporters with similar
levels of CAT activity will pay similar
fees. For example, Industry Members
(other than Execution Venue ATSs) with
higher levels of message traffic will pay
higher fees, and those with lower levels
of message traffic will pay lower fees.
Similarly, Execution Venue ATSs and
other Execution Venues with larger
market share will pay higher fees, and
those with lower levels of market share
will pay lower fees. Therefore, given
that there is generally a relationship
between message traffic and market
share to the CAT Reporter’s size, smaller
CAT Reporters generally pay less than
larger CAT Reporters. Accordingly, the
Exchange does not believe that the CAT
Fees would have a disproportionate
effect on smaller or larger CAT
Reporters. In addition, ATSs and
exchanges will pay the same fees based
on market share. Therefore, MRX does
not believe that the fees will impose any
burden on the competition between
ATSs and exchanges. Accordingly, MRX
believes that the proposed fees will
minimize the potential for adverse
effects on competition between CAT
Reporters in the market.
Furthermore, the tiered, fixed fee
funding model limits the disincentives
to providing liquidity to the market.
Therefore, the proposed fees are
structured to limit burdens on
competitive quoting and other liquidity
provision in the market.
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.57 At any time
57 15
U.S.C. 78s(b)(3)(A)(ii).
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19:43 May 23, 2017
Jkt 241001
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–
MRX–2017–04 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–MRX–2017–04. 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
PO 00000
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Fmt 4703
Sfmt 4703
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–MRX–
2017–04, and should be submitted on or
before June 14, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.58
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10595 Filed 5–23–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80718; File No. SR–ISE–
2017–44]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Temporarily Suspend
the Implementation of QCC With Stock
Order Functionality Upon Migration to
INET
May 18, 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 May 8,
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 and II,
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delay the
implementation of QCC with Stock
Order functionality with the migration
to Nasdaq INET.
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
58 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
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
asabaliauskas on DSK3SPTVN1PROD with NOTICES
1. Purpose
The purpose of the proposed rule
change is to delay the implementation
of QCC with Stock Order functionality
offered to members on a voluntary basis.
QCC with Stock Orders will be
temporarily unavailable in symbols that
have migrated to the INET architecture
as this functionality will be introduced
later in the launch of the INET trading
system. The QCC with Stock Order is a
piece of functionality that facilitates the
execution of the stock component of
qualified contingent trades in
connection with the execution of a
Qualified Contingent Cross (‘‘QCC’’)
Order on the Exchange. Specifically, a
QCC with Stock Order is defined as a
QCC Order 3 entered with a stock
component to be communicated to a
designated broker-dealer for execution
pursuant to Rule 721(c).4
Rule 721(c) and the Supplementary
Material thereto describe how the stock
component of QCC with Stock Orders
are executed. Since QCC Orders
represent one component of a qualified
contingent trade, each QCC Order must
be paired with a stock transaction.
When a member enters a QCC Order, the
member is responsible for executing the
associated stock component of the
qualified contingent trade within a
reasonable period of time after the QCC
Order is executed. QCC with Stock
Order functionality is a voluntary piece
of functionality that provides members
with an automated means of executing
the stock component of a qualified
contingent trade. Specifically, when a
member enters a QCC with Stock Order,
a QCC Order is entered on the
Exchange. That QCC Order is
automatically executed upon entry
provided that the conditions of Rule
721(b) are met. If the QCC Order is
executed, the Exchange will
automatically communicate the stock
3 A QCC Order is comprised of an originating
order to buy or sell at least 1000 contracts that is
identified as being part of a qualified contingent
trade, coupled with a contra-side order or orders
totaling an equal number of contracts. See Rule
715(j).
4 See Rule 715(t).
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Jkt 241001
component to the member’s designated
broker-dealer for execution. Currently,
members that execute the options
component of a qualified contingent
trade entered as a QCC with Stock Order
remain responsible for the execution of
the stock component if they do not
receive an execution from their
designated broker-dealer. Although QCC
Orders are eligible for automatic
execution, it is possible that the QCC
Order may not be executable based on
market prices at the time the order is
entered. If the QCC Order is not capable
of being executed, the entire QCC with
Stock Order, including both the stock
and options components, is cancelled.
QCC with Stock Order functionality
will not initially be available on INET
for symbols that have been migrated to
that platform. In conjunction with the
upcoming migration to INET, the
Exchange proposes to temporarily
suspend the availability of QCC with
Stock Order functionality provided
under Rule 721(c) and the
Supplementary Material to Rule 721
until a date to be announced by the
Exchange via an Options Trader Alert,
which date shall occur prior to August
1, 2017. QCC with Stock Orders in
symbols that have migrated to INET will
be rejected until such time as that
functionality is introduced on INET.
Specifically, the Exchange has filed and
received approval for a proposed rule
change to begin the system migration to
INET in Q2 of 2017.5 The migration to
INET will be on a symbol-by-symbol
basis as will be communicated by the
Exchange in a notice to Members.6 The
Exchange proposes to implement QCC
with Stock Order functionality on the
INET platform during the INET symbol
migration. Once QCC with Stock Order
functionality is launched on INET,
members may utilize this functionality
for symbols as they migrate to INET.
The Exchange will announce a date, via
an Options Trader Alert, when the
functionality will be available. At that
5 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).
6 The Exchange will issue an Options Trader
Alert prior to the migration and will specify the
dates that symbols will migrate to the INET
platform. The Exchange is staging the re-platform to
provide maximum benefit to its Members while also
ensuring a successful rollout. INET is the
proprietary core technology utilized across
Nasdaq’s global markets and utilized on The
NASDAQ Options Market LLC (‘‘NOM’’), NASDAQ
PHLX LLC (‘‘Phlx’’) and NASDAQ BX, Inc. (‘‘BX’’)
(collectively, ‘‘Nasdaq Exchanges’’). The migration
of ISE to the Nasdaq INET architecture would result
in higher performance, scalability, and more robust
architecture.
PO 00000
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Fmt 4703
Sfmt 4703
23933
time, all symbols that have migrated to
INET as of that date will be able to
utilize the QCC with Stock Order
functionality. All other symbols that
migrate after that date, if any, would be
able to utilize the QCC with Stock Order
functionality as they migrate. The QCC
with Stock Order functionality will
continue to be available on the legacy
ISE system until the symbols migrate to
INET.
2. Statutory Basis
The Exchange believes that the
proposed rule change 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. Specifically, the
Exchange believes that the proposed
rule change is consistent with the
protection of investors and the public
interest because QCC with Stock Order
functionality is currently offered to
members on a voluntary basis to assist
in their execution of qualified
contingent trades. Furthermore,
members that execute the options
component of a Qualified Contingent
Trade entered as a QCC with Stock
Order remain responsible for the
execution of the stock component if
they do not receive an execution from
their designated broker-dealer. There is
no requirement that members utilize
QCC with Stock functionality, and
members will continue to be able to
enter regular QCC Orders where the
exchange does not assist with the
execution of the stock component of the
trade and the members do so
themselves. Specifically, Members
would remain able to execute QCC
Orders on the INET platform prior to
QCC with Stock functionality being
turned back on, provided that the
member would be responsible for
executing the associated stock
component of the qualified contingent
trade within a reasonable period of time
after the QCC Order is executed.
Furthermore, the Exchange will
continue to offer the QCC with Stock
Order functionality on the legacy ISE
system until such time as each symbol
migrates to INET. The Exchange intends
to introduce QCC with Stock Order
functionality on INET during the
symbol migration, and prior to the
rollout of the majority of symbols on
7 15
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
E:\FR\FM\24MYN1.SGM
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Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
INET. Based on the Exchange’s
anticipated symbol rollout, the affected
symbols will not include symbols where
members typically enter a significant
volume of QCC with Stock Orders.9 The
Exchange also notes that it has issued an
Options trader Alert providing Members
notice of its proposal to delay the QCC
with Stock Order functionality during
the initial launch of the INET
technology until such time as the
Exchange announces the availability of
the QCC with Stock Order
functionality.10 The Exchange intends
to make clear the implementation
timeline of this functionality within its
rulebook.
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. No market
participant would be able to submit a
QCC with Stock Order on INET until
such time as the Exchange turns back on
the functionality with notice to
members. The Exchange believes that
notwithstanding the delay of this
functionality, ISE will continue to
remain a competitive with other options
markets. Moreover, Members will still
be able to execute QCC Orders on the
Exchange using other means to ensure
the execution of the stock component of
those qualified contingent trades.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
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 11 and
subparagraph (f)(6) of Rule 19b–4
thereunder.12
9 Of the 3,172 symbols listed on ISE, the
Exchange anticipates rolling out approximately 151
symbols prior to introducing QCC with Stock Order
functionality on INET.
10 See Options Trader Alert #2017–32.
11 15 U.S.C. 78s(b)(3)(A)(iii).
12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
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19:43 May 23, 2017
Jkt 241001
In its filing, ISE requested that the
Commission waive the 30-day operative
delay in order to enable the Exchange to
launch the new INET system on the
schedule previously announced to
members. The Commission believes that
such waiver is consistent with the
protection of investors and the public
interest. The Exchange represented that
delaying the launch of the INET system
could harm members that have relied
upon the schedule previously
announced by ISE. Moreover, ISE
explained that waiving the 30-day
operative delay would have limited
consequences; members received notice
of the proposed change on April 28,
2017, and the Exchange will migrate
symbols that have a higher volume of
QCC with Stock Orders later in its INET
rollout in order to reduce the impact on
its members. For these reasons, the
Commission believes that proposed rule
change will provide clarity to ISE
members regarding the availability QCC
with Stock Order functionality on the
Exchange and designates the proposed
rule change to be operative upon
filing.13
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–2017–44 on the subject line.
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.
13 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
Frm 00163
Fmt 4703
Sfmt 9990
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–2017–44. 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–
2017–44 and should be submitted on or
before June 14, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10586 Filed 5–23–17; 8:45 am]
BILLING CODE 8011–01–P
14 17
E:\FR\FM\24MYN1.SGM
CFR 200.30–3(a)(12) and (59).
24MYN1
]]>Agencies
[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)]
[Notices]
[Pages 23932-23934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10586]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80718; File No. SR-ISE-2017-44]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Temporarily
Suspend the Implementation of QCC With Stock Order Functionality Upon
Migration to INET
May 18, 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 May 8, 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 and II, below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delay the implementation of QCC with Stock
Order functionality with the migration to Nasdaq INET.
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
[[Page 23933]]
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 the proposed rule change is to delay the
implementation of QCC with Stock Order functionality offered to members
on a voluntary basis. QCC with Stock Orders will be temporarily
unavailable in symbols that have migrated to the INET architecture as
this functionality will be introduced later in the launch of the INET
trading system. The QCC with Stock Order is a piece of functionality
that facilitates the execution of the stock component of qualified
contingent trades in connection with the execution of a Qualified
Contingent Cross (``QCC'') Order on the Exchange. Specifically, a QCC
with Stock Order is defined as a QCC Order \3\ entered with a stock
component to be communicated to a designated broker-dealer for
execution pursuant to Rule 721(c).\4\
---------------------------------------------------------------------------
\3\ A QCC Order is comprised of an originating order to buy or
sell at least 1000 contracts that is identified as being part of a
qualified contingent trade, coupled with a contra-side order or
orders totaling an equal number of contracts. See Rule 715(j).
\4\ See Rule 715(t).
---------------------------------------------------------------------------
Rule 721(c) and the Supplementary Material thereto describe how the
stock component of QCC with Stock Orders are executed. Since QCC Orders
represent one component of a qualified contingent trade, each QCC Order
must be paired with a stock transaction. When a member enters a QCC
Order, the member is responsible for executing the associated stock
component of the qualified contingent trade within a reasonable period
of time after the QCC Order is executed. QCC with Stock Order
functionality is a voluntary piece of functionality that provides
members with an automated means of executing the stock component of a
qualified contingent trade. Specifically, when a member enters a QCC
with Stock Order, a QCC Order is entered on the Exchange. That QCC
Order is automatically executed upon entry provided that the conditions
of Rule 721(b) are met. If the QCC Order is executed, the Exchange will
automatically communicate the stock component to the member's
designated broker-dealer for execution. Currently, members that execute
the options component of a qualified contingent trade entered as a QCC
with Stock Order remain responsible for the execution of the stock
component if they do not receive an execution from their designated
broker-dealer. Although QCC Orders are eligible for automatic
execution, it is possible that the QCC Order may not be executable
based on market prices at the time the order is entered. If the QCC
Order is not capable of being executed, the entire QCC with Stock
Order, including both the stock and options components, is cancelled.
QCC with Stock Order functionality will not initially be available
on INET for symbols that have been migrated to that platform. In
conjunction with the upcoming migration to INET, the Exchange proposes
to temporarily suspend the availability of QCC with Stock Order
functionality provided under Rule 721(c) and the Supplementary Material
to Rule 721 until a date to be announced by the Exchange via an Options
Trader Alert, which date shall occur prior to August 1, 2017. QCC with
Stock Orders in symbols that have migrated to INET will be rejected
until such time as that functionality is introduced on INET.
Specifically, the Exchange has filed and received approval for a
proposed rule change to begin the system migration to INET in Q2 of
2017.\5\ The migration to INET will be on a symbol-by-symbol basis as
will be communicated by the Exchange in a notice to Members.\6\ The
Exchange proposes to implement QCC with Stock Order functionality on
the INET platform during the INET symbol migration. Once QCC with Stock
Order functionality is launched on INET, members may utilize this
functionality for symbols as they migrate to INET. The Exchange will
announce a date, via an Options Trader Alert, when the functionality
will be available. At that time, all symbols that have migrated to INET
as of that date will be able to utilize the QCC with Stock Order
functionality. All other symbols that migrate after that date, if any,
would be able to utilize the QCC with Stock Order functionality as they
migrate. The QCC with Stock Order functionality will continue to be
available on the legacy ISE system until the symbols migrate to INET.
---------------------------------------------------------------------------
\5\ 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).
\6\ The Exchange will issue an Options Trader Alert prior to the
migration and will specify the dates that symbols will migrate to
the INET platform. The Exchange is staging the re-platform to
provide maximum benefit to its Members while also ensuring a
successful rollout. INET is the proprietary core technology utilized
across Nasdaq's global markets and utilized on The NASDAQ Options
Market LLC (``NOM''), NASDAQ PHLX LLC (``Phlx'') and NASDAQ BX, Inc.
(``BX'') (collectively, ``Nasdaq Exchanges''). The migration of ISE
to the Nasdaq INET architecture would result in higher performance,
scalability, and more robust architecture.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change 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. Specifically, the Exchange believes
that the proposed rule change is consistent with the protection of
investors and the public interest because QCC with Stock Order
functionality is currently offered to members on a voluntary basis to
assist in their execution of qualified contingent trades. Furthermore,
members that execute the options component of a Qualified Contingent
Trade entered as a QCC with Stock Order remain responsible for the
execution of the stock component if they do not receive an execution
from their designated broker-dealer. There is no requirement that
members utilize QCC with Stock functionality, and members will continue
to be able to enter regular QCC Orders where the exchange does not
assist with the execution of the stock component of the trade and the
members do so themselves. Specifically, Members would remain able to
execute QCC Orders on the INET platform prior to QCC with Stock
functionality being turned back on, provided that the member would be
responsible for executing the associated stock component of the
qualified contingent trade within a reasonable period of time after the
QCC Order is executed. Furthermore, the Exchange will continue to offer
the QCC with Stock Order functionality on the legacy ISE system until
such time as each symbol migrates to INET. The Exchange intends to
introduce QCC with Stock Order functionality on INET during the symbol
migration, and prior to the rollout of the majority of symbols on
[[Page 23934]]
INET. Based on the Exchange's anticipated symbol rollout, the affected
symbols will not include symbols where members typically enter a
significant volume of QCC with Stock Orders.\9\ The Exchange also notes
that it has issued an Options trader Alert providing Members notice of
its proposal to delay the QCC with Stock Order functionality during the
initial launch of the INET technology until such time as the Exchange
announces the availability of the QCC with Stock Order
functionality.\10\ The Exchange intends to make clear the
implementation timeline of this functionality within its rulebook.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Of the 3,172 symbols listed on ISE, the Exchange anticipates
rolling out approximately 151 symbols prior to introducing QCC with
Stock Order functionality on INET.
\10\ See Options Trader Alert #2017-32.
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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. No market participant would be
able to submit a QCC with Stock Order on INET until such time as the
Exchange turns back on the functionality with notice to members. The
Exchange believes that notwithstanding the delay of this functionality,
ISE will continue to remain a competitive with other options markets.
Moreover, Members will still be able to execute QCC Orders on the
Exchange using other means to ensure the execution of the stock
component of those qualified contingent trades.
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 \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 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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In its filing, ISE requested that the Commission waive the 30-day
operative delay in order to enable the Exchange to launch the new INET
system on the schedule previously announced to members. The Commission
believes that such waiver is consistent with the protection of
investors and the public interest. The Exchange represented that
delaying the launch of the INET system could harm members that have
relied upon the schedule previously announced by ISE. Moreover, ISE
explained that waiving the 30-day operative delay would have limited
consequences; members received notice of the proposed change on April
28, 2017, and the Exchange will migrate symbols that have a higher
volume of QCC with Stock Orders later in its INET rollout in order to
reduce the impact on its members. For these reasons, the Commission
believes that proposed rule change will provide clarity to ISE members
regarding the availability QCC with Stock Order functionality on the
Exchange and designates the proposed rule change to be operative upon
filing.\13\
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\13\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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-2017-44 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-2017-44. 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-2017-44 and should be
submitted on or before June 14, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12) and (59).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10586 Filed 5-23-17; 8:45 am]
BILLING CODE 8011-01-P
