Self-Regulatory Organizations: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange, LLC To Expand the Short Term Option Series Program, 7790-7793 [2018-03565]
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Federal Register / Vol. 83, No. 36 / Thursday, February 22, 2018 / Notices
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Elizabeth A. Reed,
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[FR Doc. 2018–03563 Filed 2–21–18; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82719; File No. SR–MIAX–
2018–05]
Self-Regulatory Organizations: Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by Miami
International Securities Exchange, LLC
To Expand the Short Term Option
Series Program
February 15, 2018.
Pursuant to the provisions of 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 February 12, 2018, Miami
International Securities Exchange, LLC
(‘‘MIAX Options’’ or the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
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.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
expand the Short Term Option Series
Program to allow Monday expirations
for options listed pursuant to the Short
Term Option Series Program, including
options on the SPDR S&P 500 ETF Trust
(‘‘SPY’’).
The text of the proposed rule change
is available on the Exchange’s website at
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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
BILLING CODE 7710–12–P
1 15
https://www.miaxoptions.com/rulefilings/ at MIAX Options’ principal
office, and at the Commission’s Public
Reference Room.
1. Purpose
The Exchange proposes to amend
MIAX Options Rule 100, Definitions,
and Rule 404, Series of Option Contracts
Open for Trading, Interpretations and
Policies .02, to expand the Short Term
Option Series Program (‘‘Program’’) to
permit the listing and trading of options
series with Monday expirations that are
listed pursuant to the Program,
including options on SPY. The
Exchange is also proposing to make a
number of non-substantive,
organizational changes to MIAX Options
Rule 100 and Rule 404, Interpretations
and Policies .02, for purposes of
clarification and uniformity.
Presently, MIAX Options Rule 100
defines a Short Term Options Series as
‘‘a series in an option class that is
approved for listing and trading on the
Exchange in which the series is opened
for trading pursuant to the Short Term
Option Series Program provision of Rule
404, Interpretations and Policies .02.’’
MIAX Options Rule 404, Interpretations
and Policies .02, provides that a Short
Term Option Series is a series in an
option class that is approved for listing
and trading on the Exchange in which
the series is opened for trading on any
Tuesday, Wednesday, Thursday or
Friday that is a business day and that
expires on the Wednesday or Friday of
the next business week.3 The Exchange
is proposing to consolidate the rule text
from Rule 404, Interpretations and
Policies .02, with and into MIAX
Options Rule 100. The Exchange notes
that this rule text consolidation will not
3 See Exchange Rule 404, Interpretations and
Policies .02.
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result in any substantive changes, but is
purely for clarification and uniformity.
Additionally, the Exchange is proposing
to amend the definition in MIAX
Options Rule 100, to permit the listing
of options series that expire on
Mondays, in connection with its
proposal to expand the Program to
permit the listing and trading of options
series with Monday expirations that are
listed pursuant to the Program.
The Exchange notes that this
proposed rule change is substantially
similar to the proposal by Nasdaq PHLX
LLC (‘‘Phlx’’) which was recently
approved by the Commission.4
Specifically, the Exchange is
proposing that it may open for trading
series of options on any Monday that is
a business day and that expires on the
Monday of the next business week. The
Exchange is also proposing to list
Monday expiration series on Fridays
that precede the expiration Monday by
one business week plus one business
day. Since MIAX Options Rule 404,
Interpretations and Policies .02, already
provides for the listing of short term
option series on Fridays, the Exchange
is not modifying this provision in MIAX
Options Rule 100, to allow for Friday
listing of Monday expiration series.
However, the Exchange is amending
MIAX Options Rule 100 to clarify that,
in the case of a series that is listed on
a Friday and expires on a Monday, that
series must be listed one business week
and one business day prior to that
expiration (i.e., two Fridays prior to
expiration).
As part of this proposal, the Exchange
is also proposing to amend MIAX
Options Rule 100 to address the
expiration of Monday expiration series
when the Monday is not a business day.
In that case, the Rule will provide that
the series shall expire on the first
business day immediately following that
Monday. This procedure differs from
the expiration date of Wednesday
expiration series that are scheduled to
expire on a holiday. In that case, the
Wednesday expiration series shall
expire on the first business day
immediately prior to that Wednesday,
e.g., Tuesday of that week.5 However,
the Exchange believes that it is
preferable to require Monday expiration
series in this scenario to expire on the
Tuesday of that week rather than the
previous business day, e.g., the previous
Friday, since the Tuesday is closer in
time to the scheduled expiration date of
4 See Securities Exchange Release No. 82611
(February 1, 2018), 83 FR 5473 (February 7, 2018)
(SR–Phlx–2017–103) (Order approving proposed
rule change).
5 See id.
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the series than the previous Friday, and
therefore may be more representative of
anticipated market conditions. The
Exchange also notes that Cboe
Exchange, Inc. (‘‘Cboe’’) uses the same
procedure for options on the S&P 500
index (‘‘SPX’’) with Monday expirations
that are listed pursuant to its
Nonstandard Expirations Pilot Program
and that are scheduled to expire on a
holiday.6
The Exchange also proposes to make
corresponding changes to MIAX
Options Rule 404, Interpretations and
Policies .02, which sets forth the
requirements for SPY options that are
listed pursuant to the Short Term
Options Series Program, to permit
Monday SPY expirations (‘‘Monday SPY
Expirations’’). Accordingly, the
Exchange proposes to amend
Interpretations and Policies .02 to Rule
404, to state that, with respect to
Monday SPY Expirations, the Exchange
may open for trading on any Friday or
Monday that is a business day, series of
options on SPY to expire on any
Monday of the month that is a business
day and is not a Monday in which
Quarterly Options Series expire,
provided that Monday SPY Expirations
that are listed on a Friday must be listed
at least one business week and one
business day prior to the expiration. As
with the current rules for Wednesday
SPY Expirations, the Exchange will also
amend Interpretations and Policies .02
to state that it may list up to five
consecutive Monday SPY Expirations at
one time, and may have no more than
a total of five Monday SPY Expirations
(in addition to the maximum of five
Short Term Option Series expirations
for SPY expiring on Friday and five
Wednesday SPY Expirations). The
Exchange will also clarify that, as with
Wednesday SPY Expirations, Monday
SPY Expirations will be subject to the
provisions of this Rule.
The interval between strike prices for
the proposed Monday SPY Expirations
will be the same as those for the current
Short Term Option Series for
Wednesday and Friday SPY Expirations.
Specifically, the Monday SPY
Expirations will have a $0.50 strike
interval minimum. As is the case with
other options series listed pursuant to
the Short Term Option Series, the
Monday SPY Expiration series will be
P.M.-settled.
6 See Cboe Rule 24.9(e)(1) (‘‘If the Exchange is not
open for business on a respective Monday, the
normally Monday expiring Weekly Expirations will
expire on the following business day. If the
Exchange is not open for business on a respective
Wednesday or Friday, the normally Wednesday or
Friday expiring Weekly Expirations will expire on
the previous business day.’’)
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Currently, for each option class
eligible for participation in the Program,
the Exchange is limited to opening
thirty (30) series for each expiration date
for the specific class. The thirty (30)
series restriction does not include series
that are open by other securities
exchanges under their respective short
term option rules; the Exchange may list
these additional series that are listed by
other exchanges.7 This thirty (30) series
restriction shall apply to Monday SPY
Expiration series as well. In addition,
the Exchange will be able to list series
that are listed by other exchanges,
assuming they file similar rules with the
Commission to list SPY options expiring
on Mondays.
Finally, the Exchange is amending
Interpretations and Policies .02(b) to
Rule 404, which addresses the listing of
Short Term Options Series that expire in
the same week as monthly or quarterly
options series. Currently, that rule states
that no Short Term Option Series may
expire in the same week in which
monthly option series on the same class
expire (with the exception of
Wednesday SPY Expirations) or, in the
case of Quarterly Options Series, on an
expiration that coincides with an
expiration of Quarterly Option Series on
the same class. As with Wednesday SPY
Expirations, the Exchange is proposing
to permit Monday SPY Expirations to
expire in the same week as monthly
options series on the same class. The
Exchange believes that it is reasonable
to extend this exemption to Monday
SPY Expirations because Monday SPY
Expirations and standard monthly
options will not expire on the same
trading day, as standard monthly
options expire on Fridays. Additionally,
the Exchange believes that not listing
Monday SPY Expirations for one week
every month because there was a
monthly SPY expiration on the Friday
of that week would create investor
confusion.
Relatedly, the Exchange is also
amending Interpretations and Policies
.02(b) to Rule 404 to clarify that Monday
and Wednesday SPY Expirations may
expire in the same week as monthly
option series in the same class expire,
but that no Short Term Option Series
may expire on the same day as an
expiration of Quarterly Option Series on
the same class. This change will make
that provision more consistent with the
existing language in Interpretations and
Policies .02 to Rule 404, which prohibits
Wednesday SPY Expirations from
expiring on a Wednesday in which
Quarterly Options Series expire.
7 See Exchange Rule 404, Interpretations and
Policies .02(a).
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The Exchange does not believe that
any market disruptions will be
encountered with the introduction of
P.M.-settled Monday expirations. The
Exchange has the necessary capacity
and surveillance programs in place to
support and properly monitor trading in
the proposed Monday expiration series,
including Monday SPY Expirations. The
Exchange currently trades P.M.-settled
Short Term Option Series that expire
almost every Wednesday and Friday,
which provide market participants a
tool to hedge special events and to
reduce the premium cost of buying
protection. The Exchange notes that it
has been listing Wednesday expirations
pursuant to MIAX Options Rule 100 and
Rule 404 since 2016.8 With the
exception of Monday expiration series
that are scheduled to expire on a
holiday, the Exchange does not believe
that there are any material differences
between Monday expirations and
Wednesday or Friday expirations for
Short Term Option Series.
The Exchange seeks to introduce
Monday expirations to, among other
things, expand hedging tools available
to market participants and to continue
the reduction of the premium cost of
buying protection. The Exchange
believes that Monday expirations,
similar to Wednesday and Friday
expirations, will allow market
participants to purchase an option based
on their timing as needed and allow
them to tailor their investment and
hedging needs more effectively.
As noted above, Phlx recently
received approval to list Monday
expirations for SPY options pursuant to
its Short Term Options program. In
addition, other exchanges currently
permit Monday expirations for other
options. For example, Cboe lists options
on the SPX with a Monday expiration as
part of its Nonstandard Expirations Pilot
Program.9
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 10 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 11 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
8 See Securities Exchange Act Release No. 78772
(September 6, 2016), 81 FR 62784 (September 12,
2016) (SR–MIAX–2016–31).
9 See Cboe Rule 24.9(e)(1) (‘‘The Exchange may
open for trading Weekly Expirations on any broadbased index eligible for standard options trading to
expire on any Monday, Wednesday, or Friday (other
than the third Friday-of-the-month or days that
coincide with an EOM expiration.’’).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
In particular, the Exchange believes
the Short Term Option Series Program
has been successful to date and that
Monday expirations, including Monday
SPY Expirations, simply expand the
ability of investors to hedge risk against
market movements stemming from
economic releases or market events that
occur throughout the month in the same
way that the Short Term Option Series
Program has expanded the landscape of
hedging. Similarly, the Exchange
believes Monday expirations, including
Monday SPY Expirations, should create
greater trading and hedging
opportunities and flexibility, and will
provide customers with the ability to
tailor their investment objectives more
effectively. While other exchanges do
not currently list Monday SPY
Expirations, the Exchange notes that
Cboe currently permits Monday
expirations for other options with a
weekly expiration, such as options on
the SPX.12 Additionally, Nasdaq PHLX
LLC (‘‘Phlx’’) has recently received
approval from the Commission to list
Monday SPY Expirations for SPY
options pursuant to its Short Term
Options program.13
With the exception of Monday
expiration series that are scheduled to
expire on a holiday, the Exchange does
not believe that there are any material
differences between Monday
expirations, including Monday SPY
Expirations, and Wednesday or Friday
expirations, including Wednesday and
Friday SPY Expirations, for Short Term
Option Series. The Exchange notes that
it has been listing Wednesday
expiration pursuant to MIAX Options
Rule 100 and Rule 404 since 2016.14
The Exchange believes that it is
consistent with the Act to treat Monday
expiration series that expire on a
holiday differently than Wednesday or
Friday expiration series, since the
proposed treatment for Monday
expiration series will result in an
expiration date that is closer in time to
the scheduled expiration date of the
series, and therefore may be more
representative of anticipated market
conditions. The Exchange also notes
that Cboe uses the same procedure for
SPX options with Monday expirations
12 See
supra note 9.
supra note 4.
14 See supra note 8.
13 See
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that are listed pursuant to its
Nonstandard Expirations Pilot Program
and that are scheduled to expire on a
holiday.
Given the similarities between
Monday SPY Expiration series and
Wednesday and Friday SPY Expiration
series, the Exchange believes that
applying the provisions in
Interpretations and Policies .02 to Rule
404 that currently apply to Wednesday
SPY Expirations, to Monday SPY
Expirations, is justified. For example,
the Exchange believes that allowing
Monday SPY Expirations and monthly
SPY expirations in the same week will
benefit investors and minimize investor
confusion by providing Monday SPY
Expirations in a continuous and
uniform manner. The Exchange also
believes that it is appropriate to amend
Interpretations and Policies .02(b) to
Rule 404 to clarify that no Short Term
Option Series may expire on the same
day as an expiration of Quarterly Option
Series on the same class. This change
will make that provision more
consistent with the existing language in
Interpretations and Policies .02 to Rule
404 that prohibit Wednesday SPY
Expirations from expiring on a
Wednesday in which Quarterly Options
Series expire.
Finally, the Exchange represents that
it has an adequate surveillance program
in place to detect manipulative trading
in Monday expirations, including
Monday SPY Expirations, in the same
way that it monitors trading in the
current Short Term Option Series. The
Exchange also represents that it has the
necessary systems capacity to support
the new options series.
The Exchange believes the proposed
rule text organizational changes
promote just and equitable principles of
trade and remove impediments to and
perfect the mechanism of a free and
open market and a national market
system because the proposed rule text
organizational change conforms its rules
to the rules of other exchanges. As such,
the proposed amendments would foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities and would
remove impediments to and perfect the
mechanism of a free and open market
and a national exchange system. In
particular, the Exchange believes that
the proposed changes will provide
greater clarity to Members and the
public regarding the Exchange’s Rules.
It is in the public interest for rules to be
accurate and concise so as to eliminate
the potential for confusion.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
MIAX Options does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange notes that having Monday
expirations is not a novel proposal, as
Cboe currently lists and trades shortterm SPX options with a Monday
expiration, and Phlx has recently
received approval from the Commission
to list Monday SPY expirations. The
Exchange does not believe the proposal
will impose any burden on intra-market
competition, as all market participants
will be treated in the same manner
under this proposal. Additionally, the
Exchange does not believe the proposal
will impose any burden on inter-market
competition, as nothing prevents the
other options exchanges from proposing
similar rules to list and trade short-term
options series with Monday expirations.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor 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, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 15 and Rule 19b–4(f)(6)
thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days from the
date of filing. However, Rule 19b–
4(f)(6)(iii) 17 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
15 15
U.S.C. 78s(b)(3)(A).
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 intention 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.
17 17 CFR 240.19b–4(f)(6)(iii).
16 17
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Federal Register / Vol. 83, No. 36 / Thursday, February 22, 2018 / Notices
immediately upon filing. The
Commission notes that it recently
approved Phlx’s substantially similar
proposal to list and trade Monday SPY
Expirations.18 The Exchange has stated
that waiver of the operative delay will
allow the Exchange to list and trade
Monday SPY Expirations as soon as
possible, and therefore, promote
competition among the option
exchanges.19 For these reasons, the
Commission believes that the proposed
rule change presents no novel issues
and that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest, and
will allow the Exchange to remain
competitive with other exchanges.
Therefore, the Commission hereby
waives the 30-day operative delay and
designates the proposal effective upon
filing.20
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
D Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
D Send an email to rule-comments@
sec.gov. Please include File Number SR–
MIAX–2018–05 on the subject line.
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–MIAX–2018–05 and should
be submitted on or before March 15,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–03565 Filed 2–21–18; 8:45 am]
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Paper Comments
D Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MIAX–2018–05. This file
supra note 4.
Exchange also proposes a number of nonsubstantive changes to its rulebook. The Exchange
stated these changes will help to provide clarity and
therefore are in the public interest.
20 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).
20:10 Feb 21, 2018
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[Release No. 34–82727; File No. SR–CHX–
2016–20]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Order
Setting Aside Action by Delegated
Authority and Disapproving a
Proposed Rule Change, as Modified by
Amendments No. 1 and No. 2,
Regarding the Acquisition of CHX
Holdings, Inc. by North America Casin
Holdings, Inc.
February 15, 2018.
I. Introduction
On December 2, 2016, the Chicago
Stock Exchange, Inc. (‘‘CHX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’), pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change in connection
with the proposed acquisition
(‘‘Proposed Transaction’’) of CHX
Holdings, Inc. (‘‘CHX Holdings’’) by
North America Casin Holdings, Inc.
(‘‘NA Casin Holdings’’). The Division of
Trading and Markets, for the
Commission pursuant to delegated
authority, approved the proposed rule
change as modified by CHX in
Amendment No. 1. Pursuant to Section
4A of the Exchange Act, and
Commission Rules of Practice, we have
reviewed the action by the Division of
Trading and Markets pursuant to
delegated authority. As discussed in
more detail below, during the period of
our review, CHX further modified the
proposed rule change in Amendment
No. 2.
In conducting a de novo review of the
proposed rule change—through which
CHX seeks to effect a change in
ownership—the Commission is mindful
of the important role national securities
exchanges, such as CHX, play in the
securities markets.3 Not only do they
operate trading markets, but registered
national securities exchanges are also
self-regulatory organizations (‘‘SROs’’)
‘‘charged with a public trust to
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Exchange Act Release No. 40760 (December 8,
1998), 63 FR 70844, 70881 (December 22, 1998)
(‘‘the self-regulatory role of registered exchanges is
fundamental to the enforcement of the federal
securities laws.’’); and Exchange Act Release No.
50699 (November 18, 2004), 69 FR 71126, 71132
(December 8, 2004) (‘‘As operators of trading
markets, front-line regulators of securities firms,
and standard-setters for listed issuers, national
securities exchanges . . . are critical to the integrity
of the U.S. securities markets.’’).
2 17
19 The
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1 15
18 See
21 17
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CFR 200.30–3(a)(12).
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[Federal Register Volume 83, Number 36 (Thursday, February 22, 2018)]
[Notices]
[Pages 7790-7793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03565]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82719; File No. SR-MIAX-2018-05]
Self-Regulatory Organizations: Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by Miami International
Securities Exchange, LLC To Expand the Short Term Option Series Program
February 15, 2018.
Pursuant to the provisions of 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 February 12, 2018, Miami International
Securities Exchange, LLC (``MIAX Options'' or the ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') a 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to expand the Short Term Option
Series Program to allow Monday expirations for options listed pursuant
to the Short Term Option Series Program, including options on the SPDR
S&P 500 ETF Trust (``SPY'').
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/ at MIAX Options'
principal office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend MIAX Options Rule 100, Definitions,
and Rule 404, Series of Option Contracts Open for Trading,
Interpretations and Policies .02, to expand the Short Term Option
Series Program (``Program'') to permit the listing and trading of
options series with Monday expirations that are listed pursuant to the
Program, including options on SPY. The Exchange is also proposing to
make a number of non-substantive, organizational changes to MIAX
Options Rule 100 and Rule 404, Interpretations and Policies .02, for
purposes of clarification and uniformity.
Presently, MIAX Options Rule 100 defines a Short Term Options
Series as ``a series in an option class that is approved for listing
and trading on the Exchange in which the series is opened for trading
pursuant to the Short Term Option Series Program provision of Rule 404,
Interpretations and Policies .02.'' MIAX Options Rule 404,
Interpretations and Policies .02, provides that a Short Term Option
Series is a series in an option class that is approved for listing and
trading on the Exchange in which the series is opened for trading on
any Tuesday, Wednesday, Thursday or Friday that is a business day and
that expires on the Wednesday or Friday of the next business week.\3\
The Exchange is proposing to consolidate the rule text from Rule 404,
Interpretations and Policies .02, with and into MIAX Options Rule 100.
The Exchange notes that this rule text consolidation will not result in
any substantive changes, but is purely for clarification and
uniformity. Additionally, the Exchange is proposing to amend the
definition in MIAX Options Rule 100, to permit the listing of options
series that expire on Mondays, in connection with its proposal to
expand the Program to permit the listing and trading of options series
with Monday expirations that are listed pursuant to the Program.
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\3\ See Exchange Rule 404, Interpretations and Policies .02.
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The Exchange notes that this proposed rule change is substantially
similar to the proposal by Nasdaq PHLX LLC (``Phlx'') which was
recently approved by the Commission.\4\
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\4\ See Securities Exchange Release No. 82611 (February 1,
2018), 83 FR 5473 (February 7, 2018) (SR-Phlx-2017-103) (Order
approving proposed rule change).
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Specifically, the Exchange is proposing that it may open for
trading series of options on any Monday that is a business day and that
expires on the Monday of the next business week. The Exchange is also
proposing to list Monday expiration series on Fridays that precede the
expiration Monday by one business week plus one business day. Since
MIAX Options Rule 404, Interpretations and Policies .02, already
provides for the listing of short term option series on Fridays, the
Exchange is not modifying this provision in MIAX Options Rule 100, to
allow for Friday listing of Monday expiration series. However, the
Exchange is amending MIAX Options Rule 100 to clarify that, in the case
of a series that is listed on a Friday and expires on a Monday, that
series must be listed one business week and one business day prior to
that expiration (i.e., two Fridays prior to expiration).
As part of this proposal, the Exchange is also proposing to amend
MIAX Options Rule 100 to address the expiration of Monday expiration
series when the Monday is not a business day. In that case, the Rule
will provide that the series shall expire on the first business day
immediately following that Monday. This procedure differs from the
expiration date of Wednesday expiration series that are scheduled to
expire on a holiday. In that case, the Wednesday expiration series
shall expire on the first business day immediately prior to that
Wednesday, e.g., Tuesday of that week.\5\ However, the Exchange
believes that it is preferable to require Monday expiration series in
this scenario to expire on the Tuesday of that week rather than the
previous business day, e.g., the previous Friday, since the Tuesday is
closer in time to the scheduled expiration date of
[[Page 7791]]
the series than the previous Friday, and therefore may be more
representative of anticipated market conditions. The Exchange also
notes that Cboe Exchange, Inc. (``Cboe'') uses the same procedure for
options on the S&P 500 index (``SPX'') with Monday expirations that are
listed pursuant to its Nonstandard Expirations Pilot Program and that
are scheduled to expire on a holiday.\6\
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\5\ See id.
\6\ See Cboe Rule 24.9(e)(1) (``If the Exchange is not open for
business on a respective Monday, the normally Monday expiring Weekly
Expirations will expire on the following business day. If the
Exchange is not open for business on a respective Wednesday or
Friday, the normally Wednesday or Friday expiring Weekly Expirations
will expire on the previous business day.'')
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The Exchange also proposes to make corresponding changes to MIAX
Options Rule 404, Interpretations and Policies .02, which sets forth
the requirements for SPY options that are listed pursuant to the Short
Term Options Series Program, to permit Monday SPY expirations (``Monday
SPY Expirations''). Accordingly, the Exchange proposes to amend
Interpretations and Policies .02 to Rule 404, to state that, with
respect to Monday SPY Expirations, the Exchange may open for trading on
any Friday or Monday that is a business day, series of options on SPY
to expire on any Monday of the month that is a business day and is not
a Monday in which Quarterly Options Series expire, provided that Monday
SPY Expirations that are listed on a Friday must be listed at least one
business week and one business day prior to the expiration. As with the
current rules for Wednesday SPY Expirations, the Exchange will also
amend Interpretations and Policies .02 to state that it may list up to
five consecutive Monday SPY Expirations at one time, and may have no
more than a total of five Monday SPY Expirations (in addition to the
maximum of five Short Term Option Series expirations for SPY expiring
on Friday and five Wednesday SPY Expirations). The Exchange will also
clarify that, as with Wednesday SPY Expirations, Monday SPY Expirations
will be subject to the provisions of this Rule.
The interval between strike prices for the proposed Monday SPY
Expirations will be the same as those for the current Short Term Option
Series for Wednesday and Friday SPY Expirations. Specifically, the
Monday SPY Expirations will have a $0.50 strike interval minimum. As is
the case with other options series listed pursuant to the Short Term
Option Series, the Monday SPY Expiration series will be P.M.-settled.
Currently, for each option class eligible for participation in the
Program, the Exchange is limited to opening thirty (30) series for each
expiration date for the specific class. The thirty (30) series
restriction does not include series that are open by other securities
exchanges under their respective short term option rules; the Exchange
may list these additional series that are listed by other exchanges.\7\
This thirty (30) series restriction shall apply to Monday SPY
Expiration series as well. In addition, the Exchange will be able to
list series that are listed by other exchanges, assuming they file
similar rules with the Commission to list SPY options expiring on
Mondays.
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\7\ See Exchange Rule 404, Interpretations and Policies .02(a).
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Finally, the Exchange is amending Interpretations and Policies
.02(b) to Rule 404, which addresses the listing of Short Term Options
Series that expire in the same week as monthly or quarterly options
series. Currently, that rule states that no Short Term Option Series
may expire in the same week in which monthly option series on the same
class expire (with the exception of Wednesday SPY Expirations) or, in
the case of Quarterly Options Series, on an expiration that coincides
with an expiration of Quarterly Option Series on the same class. As
with Wednesday SPY Expirations, the Exchange is proposing to permit
Monday SPY Expirations to expire in the same week as monthly options
series on the same class. The Exchange believes that it is reasonable
to extend this exemption to Monday SPY Expirations because Monday SPY
Expirations and standard monthly options will not expire on the same
trading day, as standard monthly options expire on Fridays.
Additionally, the Exchange believes that not listing Monday SPY
Expirations for one week every month because there was a monthly SPY
expiration on the Friday of that week would create investor confusion.
Relatedly, the Exchange is also amending Interpretations and
Policies .02(b) to Rule 404 to clarify that Monday and Wednesday SPY
Expirations may expire in the same week as monthly option series in the
same class expire, but that no Short Term Option Series may expire on
the same day as an expiration of Quarterly Option Series on the same
class. This change will make that provision more consistent with the
existing language in Interpretations and Policies .02 to Rule 404,
which prohibits Wednesday SPY Expirations from expiring on a Wednesday
in which Quarterly Options Series expire.
The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Monday expirations.
The Exchange has the necessary capacity and surveillance programs in
place to support and properly monitor trading in the proposed Monday
expiration series, including Monday SPY Expirations. The Exchange
currently trades P.M.-settled Short Term Option Series that expire
almost every Wednesday and Friday, which provide market participants a
tool to hedge special events and to reduce the premium cost of buying
protection. The Exchange notes that it has been listing Wednesday
expirations pursuant to MIAX Options Rule 100 and Rule 404 since
2016.\8\ With the exception of Monday expiration series that are
scheduled to expire on a holiday, the Exchange does not believe that
there are any material differences between Monday expirations and
Wednesday or Friday expirations for Short Term Option Series.
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\8\ See Securities Exchange Act Release No. 78772 (September 6,
2016), 81 FR 62784 (September 12, 2016) (SR-MIAX-2016-31).
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The Exchange seeks to introduce Monday expirations to, among other
things, expand hedging tools available to market participants and to
continue the reduction of the premium cost of buying protection. The
Exchange believes that Monday expirations, similar to Wednesday and
Friday expirations, will allow market participants to purchase an
option based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively.
As noted above, Phlx recently received approval to list Monday
expirations for SPY options pursuant to its Short Term Options program.
In addition, other exchanges currently permit Monday expirations for
other options. For example, Cboe lists options on the SPX with a Monday
expiration as part of its Nonstandard Expirations Pilot Program.\9\
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\9\ See Cboe Rule 24.9(e)(1) (``The Exchange may open for
trading Weekly Expirations on any broad-based index eligible for
standard options trading to expire on any Monday, Wednesday, or
Friday (other than the third Friday-of-the-month or days that
coincide with an EOM expiration.'').
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \10\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \11\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of
[[Page 7792]]
trade, to foster cooperation and coordination with persons engaged in
facilitating transactions in securities, to remove impediments to and
perfect the mechanisms 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the Short Term Option Series
Program has been successful to date and that Monday expirations,
including Monday SPY Expirations, simply expand the ability of
investors to hedge risk against market movements stemming from economic
releases or market events that occur throughout the month in the same
way that the Short Term Option Series Program has expanded the
landscape of hedging. Similarly, the Exchange believes Monday
expirations, including Monday SPY Expirations, should create greater
trading and hedging opportunities and flexibility, and will provide
customers with the ability to tailor their investment objectives more
effectively. While other exchanges do not currently list Monday SPY
Expirations, the Exchange notes that Cboe currently permits Monday
expirations for other options with a weekly expiration, such as options
on the SPX.\12\ Additionally, Nasdaq PHLX LLC (``Phlx'') has recently
received approval from the Commission to list Monday SPY Expirations
for SPY options pursuant to its Short Term Options program.\13\
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\12\ See supra note 9.
\13\ See supra note 4.
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With the exception of Monday expiration series that are scheduled
to expire on a holiday, the Exchange does not believe that there are
any material differences between Monday expirations, including Monday
SPY Expirations, and Wednesday or Friday expirations, including
Wednesday and Friday SPY Expirations, for Short Term Option Series. The
Exchange notes that it has been listing Wednesday expiration pursuant
to MIAX Options Rule 100 and Rule 404 since 2016.\14\ The Exchange
believes that it is consistent with the Act to treat Monday expiration
series that expire on a holiday differently than Wednesday or Friday
expiration series, since the proposed treatment for Monday expiration
series will result in an expiration date that is closer in time to the
scheduled expiration date of the series, and therefore may be more
representative of anticipated market conditions. The Exchange also
notes that Cboe uses the same procedure for SPX options with Monday
expirations that are listed pursuant to its Nonstandard Expirations
Pilot Program and that are scheduled to expire on a holiday.
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\14\ See supra note 8.
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Given the similarities between Monday SPY Expiration series and
Wednesday and Friday SPY Expiration series, the Exchange believes that
applying the provisions in Interpretations and Policies .02 to Rule 404
that currently apply to Wednesday SPY Expirations, to Monday SPY
Expirations, is justified. For example, the Exchange believes that
allowing Monday SPY Expirations and monthly SPY expirations in the same
week will benefit investors and minimize investor confusion by
providing Monday SPY Expirations in a continuous and uniform manner.
The Exchange also believes that it is appropriate to amend
Interpretations and Policies .02(b) to Rule 404 to clarify that no
Short Term Option Series may expire on the same day as an expiration of
Quarterly Option Series on the same class. This change will make that
provision more consistent with the existing language in Interpretations
and Policies .02 to Rule 404 that prohibit Wednesday SPY Expirations
from expiring on a Wednesday in which Quarterly Options Series expire.
Finally, the Exchange represents that it has an adequate
surveillance program in place to detect manipulative trading in Monday
expirations, including Monday SPY Expirations, in the same way that it
monitors trading in the current Short Term Option Series. The Exchange
also represents that it has the necessary systems capacity to support
the new options series.
The Exchange believes the proposed rule text organizational changes
promote just and equitable principles of trade and remove impediments
to and perfect the mechanism of a free and open market and a national
market system because the proposed rule text organizational change
conforms its rules to the rules of other exchanges. As such, the
proposed amendments would foster cooperation and coordination with
persons engaged in facilitating transactions in securities and would
remove impediments to and perfect the mechanism of a free and open
market and a national exchange system. In particular, the Exchange
believes that the proposed changes will provide greater clarity to
Members and the public regarding the Exchange's Rules. It is in the
public interest for rules to be accurate and concise so as to eliminate
the potential for confusion.
B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX Options does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange notes that
having Monday expirations is not a novel proposal, as Cboe currently
lists and trades short-term SPX options with a Monday expiration, and
Phlx has recently received approval from the Commission to list Monday
SPY expirations. The Exchange does not believe the proposal will impose
any burden on intra-market competition, as all market participants will
be treated in the same manner under this proposal. Additionally, the
Exchange does not believe the proposal will impose any burden on inter-
market competition, as nothing prevents the other options exchanges
from proposing similar rules to list and trade short-term options
series with Monday expirations.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor 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, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\15\ and Rule 19b-4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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 intention 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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days from the date of filing. However, Rule
19b-4(f)(6)(iii) \17\ permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange has asked the Commission to waive the
30-day operative delay so that the proposal may become operative
[[Page 7793]]
immediately upon filing. The Commission notes that it recently approved
Phlx's substantially similar proposal to list and trade Monday SPY
Expirations.\18\ The Exchange has stated that waiver of the operative
delay will allow the Exchange to list and trade Monday SPY Expirations
as soon as possible, and therefore, promote competition among the
option exchanges.\19\ For these reasons, the Commission believes that
the proposed rule change presents no novel issues and that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest, and will allow the Exchange to
remain competitive with other exchanges. Therefore, the Commission
hereby waives the 30-day operative delay and designates the proposal
effective upon filing.\20\
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\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ See supra note 4.
\19\ The Exchange also proposes a number of non-substantive
changes to its rulebook. The Exchange stated these changes will help
to provide clarity and therefore are in the public interest.
\20\ 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 necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
[ssquf] Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
[ssquf] Send an email to [email protected]. Please include File
Number SR-MIAX-2018-05 on the subject line.
Paper Comments
[ssquf] Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2018-05. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MIAX-2018-05 and should be submitted on
or before March 15, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-03565 Filed 2-21-18; 8:45 am]
BILLING CODE 8011-01-P
