Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Delay for the Re-introduction of Concurrent Complex Order Auction Functionality, 19130-19133 [2018-09111]

Download as PDF 19130 Federal Register / Vol. 83, No. 84 / Tuesday, May 1, 2018 / Notices through quoting obligations 13 and the commitment of capital. Encouraging Market Makers to add greater liquidity benefits all market participants in the quality of order interaction. 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. Fees for Reponses to PIM Orders IV. Solicitation of Comments The Exchange’s proposal to increase Regular Order Fees for Reponses to PIM Orders for all market participants from $0.20 to $0.25 per contract does not impose an undue burden on competition because the Exchange is assessing all market participants the same Fee for Reponses to PIM Orders. 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: Fees for PIM Orders • 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–2018–37 on the subject line. The Exchange’s proposal to increase the amount assessed to a Member, other than for a Priority Customer, that executes an ADV of 12,500 or more contracts in the PIM from $0.00 to $0.02 per contract does not impose an undue burden on competition because today all market participants, except Priority Customers, are assessed a $0.10 per contract fee for executing PIM orders. Priority Customers are not assessed a Fee for PIM Orders. Non-Priority Customer market participants have the opportunity today to decrease their PIM Order Fee from $0.10 to $0.05 per contract provided a Member executes an ADV of 7,500 or more contracts in the PIM in a given month. With this proposal, all non-Priority Customer market participants have the opportunity today to decrease their PIM Order Fee from $0.10 to $0.02 per contract provided Members execute an ADV of 12,500 or more contracts in the PIM in a given month. 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. amozie on DSK30RV082PROD with NOTICES 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,14 and Rule 19b–4(f)(2) 15 thereunder. 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 13 See ISE Rule 804. U.S.C. 78s(b)(3)(A)(ii). 15 17 CFR 240.19b–4(f)(2). 14 15 VerDate Sep<11>2014 18:12 Apr 30, 2018 Jkt 244001 [FR Doc. 2018–09114 Filed 4–30–18; 8:45 am] BILLING CODE 8011–01–P Electronic Comments 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–2018–37. 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–ISE–2018–37 and should be submitted on or before May 22, 2018. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Assistant Secretary. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83101; File No. SR–ISE– 2018–40] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Delay for the Re-introduction of Concurrent Complex Order Auction Functionality April 25, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 19, 2018, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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 extend the delay for re-introduction of functionality which permits concurrent complex order auctions in the same complex strategy by an additional one year. The text of the proposed rule change is available on the Exchange’s website at https://ise.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\01MYN1.SGM 01MYN1 Federal Register / Vol. 83, No. 84 / Tuesday, May 1, 2018 / Notices Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose amozie on DSK30RV082PROD with NOTICES The purpose of the proposed rule change is to extend the delay for reintroduction of functionality which permits concurrent 3 complex order auctions in the same complex strategy by an additional one year. The Exchange previously filed 4 a rule change which delayed functionality permitting concurrent complex auctions in conjunction with a migration to the INET 5 platform. The April 2017 Rule Change provided that with the delay, a complex order auction in a particular complex strategy would not be initiated if another complex order auction is already ongoing in that complex strategy. In conjunction with the April 2017 Rule Change, the Exchange issued an Options Trader Alert notifying Members that concurrent complex auctions would not be offered at this time.6 By way of background, ISE offers various complex order auctions that are designed to provide members an opportunity to trade and to potentially receive price improvement for complex orders that are entered on the Exchange, including an Exposure auction pursuant to Rule 722(b)(3)(iii), a Complex Price Improvement Mechanism (‘‘PIM’’) pursuant to Supplementary Material .09 to Rule 723, a Complex Facilitation Mechanism pursuant to Supplementary Material .08 to Rule 716, and Complex Solicited Order Mechanism also pursuant to Supplementary Material .08 to Rule 716. While only one PIM auction may be ongoing at any given time in a series or complex strategy, and PIMs are not permitted to queue or 3 The current ISE Rule 722 rule text refers to these auctions as ‘‘simultaneous’’. The Exchange is proposing to amend the rule text to replace the word ‘‘simultaneous’’ with ‘‘concurrent.’’ This change is designed to make the rule text more accurately describe the functionality. The functionality is not being changed. 4 See Securities and Exchange Act Release No. 80525 (April 25, 2017), 82 FR 20405 (May 1, 2017) (SR–ISE–2017–33) (‘‘April 2017 Rule Change’’). 5 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 resulted in higher performance, scalability, and more robust architecture. 6 See Options Trader Alert #2017–35. VerDate Sep<11>2014 18:12 Apr 30, 2018 Jkt 244001 overlap in any manner,7 there are no similar restrictions for non-PIM auctions, and any such auctions may be processed concurrently, including in parallel with a PIM auction. For example, while the trading system would prohibit a member from entering a PIM auction when another PIM auction is already ongoing in a complex strategy, if there was an Exposure auction already running a member would be able to start a PIM, Facilitation, Solicitation, or even another Exposure auction in that strategy. This allows maximum ability of members to express their trading intent on the Exchange by permitting multiple complex order auctions in the same complex strategy to be ongoing at any particular time. When the Exchange initially delayed this functionality, the Exchange noted in the April 2017 Rule Change that it would reintroduce concurrent complex order auctions in the same complex strategy at a later date within one year of date of the filing. The Exchange filed the initial rule change on April 17, 2017, with a one year delay, and the additional one year delay would extend the implementation timeframe for this functionality to April 17, 2019. The extended delay would provide the Exchange additional time to develop and test this functionality on INET. The Exchange will issue an Options Trader Alert notifying Members when this functionality will be available. Furthermore, in connection with this change, the Exchange also proposes to amend Rule 722 to remove language about the migration of symbols to INET as this migration has been completed and all symbols listed by the Exchange are currently trading on the INET platform. With the delay, only one complex order auction would continue to be ongoing at any given time in a complex strategy, and such auctions would not queue or overlap in any manner. For PIM, Facilitation, or Solicitation auctions, the Exchange would continue to reject a complex order auction of the same or different auction type in a complex strategy that would be initiated while another complex order auction is ongoing in that complex strategy.8 In the case where a complex order auction has already been initiated in a complex strategy, an Exposure auction for an order for that strategy would continue to not be initiated and the order would be 7 See Supplementary Material .04 to Rule 723. rejection message sent to the member will contain an appropriate reason code indicating that the auction was rejected due to another ongoing complex order auction in the same complex strategy. 8 The PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 19131 processed as a complex order that is not marked for price improvement,9 instead of rejecting the complex order. If the member requested the order to be cancelled after the exposure period, then the complex order would continue to be cancelled back to the member. The Exchange believes that implementing concurrent complex order auctions in the same complex strategy at a later date will not have a significant impact on members as it is rare for multiple complex order auctions in a complex strategy to be ongoing at a particular time. This is particularly the case today due to the recent decrease in the Exchange’s auction timers to 100 milliseconds.10 The Exchange notes that prior to the migration to the INET platform concurrent complex order auctions in a strategy only occurred approximately 0.5% of the time that an auction runs on the Exchange. The Exchange therefore believes that the impact on Members will continue to be insignificant, and if a member does have auction eligible interest to execute when another complex order auction is ongoing, the member can either resubmit that order to the Exchange, after the auction has concluded, or submit it to another options market that provides similar auction functionality. In this regard, the Exchange notes that its market data feeds provide information to Members about when a complex order auction is ongoing, and Members can therefore use this information to make appropriate routing decisions based on applicable market conditions. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Section 6(b)(5) of the Act,12 in particular, in that it is designed to promote just and equitable principles of 9 Currently, an Exposure order auction is automatically initiated when a member submits an eligible complex order that is marked for price improvement. See Rule 722(b)(3)(iii). Pursuant to Rule 722(b)(3)(iii), complex orders may be marked for price improvement, and if so marked, the complex order may be exposed on the complex order book for a period of up to one-second before being automatically executed. Members can also request that their complex orders be cancelled after the exposure period. 10 See Securities Exchange Act Release No. 79733 (January 4, 2017), 82 FR 3055 (January 10, 2017) (SR–ISE–2016–26) (permitting the Exchange to determine auction timers for PIM, Facilitation, and Solicitation within a range of 100 milliseconds and one second). Each of these auction timers are currently set to 100 milliseconds—i.e., the bottom of the range approved in the filing. Exposure auctions can be any duration up to one second (See Rule 722(b)(3)), and are also currently set to 100 milliseconds. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). E:\FR\FM\01MYN1.SGM 01MYN1 19132 Federal Register / Vol. 83, No. 84 / Tuesday, May 1, 2018 / Notices 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 because the Exchange desires to rollout the concurrent complex order auctions functionality at a later date to allow additional time to test and implement this functionality. As proposed herein, within a year from April 17, 2018, the Exchange will offer concurrent auction functionality. The Exchange does not anticipate that the proposed rule change will have any meaningful impact with respect to members’ ability to execute complex order auctions as similar restrictions are already in place on other options exchanges.13 Concurrent complex order auctions in a complex strategy are rare, and therefore the vast majority of the time members would be able to enter a complex order auction notwithstanding the temporary delay of the implementation of concurrent auctions. With respect to Exposure auctions, in the case where another complex order auction in the same strategy has already been initiated, the Exchange proposes to allow the complex order to continue to be processed without an auction in the same manner as complex orders that are not marked for price improvement. If the Member has marked the complex order to be cancelled after the exposure period, however, the Exchange would cancel the order back to the member consistent with that instruction. If the Member is not able to initiate a complex order auction because another complex order auction in the same strategy has been initiated, the Member may either re-initiate the auction after the auction concludes or submit the order to another options market that offers similar functionality. Thus, Members will be able to continue to express their trading intent regardless of the proposed delay in concurrent auction functionality. amozie on DSK30RV082PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance 13 See Phlx Rule 1098(e)(2) [sic]. Nasdaq Phlx, LLC (‘‘Phlx’’), for example, does not allow the initiation of a Complex Order Live Auction (‘‘COLA’’) when there is already a Price Improvement XL (‘‘PIXL’’) auction already ongoing in the strategy. Similarly, Miami International Securities Exchange LLC (‘‘MIAX’’) can limit the frequency of Complex Auctions by establishing a minimum time period between such auctions, and permits only one Complex Auction per strategy to be in progress at any particular time. See MIAX Rule 518(d)(2). VerDate Sep<11>2014 18:12 Apr 30, 2018 Jkt 244001 of the purposes of the Act. The Exchange does not believe that the proposed rule change will impact the intense competition that exists in the options market. The Exchange does not believe that the proposed delay will impose any significant burden on intermarket competition as it does not impact the ability of other markets to offer or not offer competing functionality. The Exchange does not believe that the proposed rule change will impose any burden on intra-market competition because all Members uniformly will not be able to initiate concurrent auctions in the same complex order strategy. Within a year from April 17, 2018, the Exchange will offer concurrent complex auction functionality. 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 14 and subparagraph (f)(6) of Rule 19b–4 thereunder.15 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of the filing. However, Rule 19b– 4(f)(6)(iii) 16 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In its filing, ISE requests that the Commission waive the 30-day operative delay to allow the proposed one-year extension of the time for re-introducing concurrent complex order auction functionality to begin at the conclusion of the current delay period, which was scheduled to end on April 17, 2018. As noted above, ISE states that extending the delay for 14 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 16 17 CFR 240.19b–4(f)(6)(iii). 15 17 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 re-introducing concurrent complex order auction functionality will provide ISE with additional time to develop and test this functionality. The Exchange also notes that the proposed rule change is not expected to have any meaningful impact on members’ ability to express their trading intent; ISE indicates that such auctions are rare and do not usually occur concurrently. The Commission believes that waiving the operative delay is consistent with the protection of investors and the public interest because it will provide ISE with additional time to develop and test concurrent complex order auction functionality. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.17 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–2018–40 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–2018–40. 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 17 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). E:\FR\FM\01MYN1.SGM 01MYN1 Federal Register / Vol. 83, No. 84 / Tuesday, May 1, 2018 / Notices 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–ISE–2018–40, and should be submitted on or before May 22, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–09111 Filed 4–30–18; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Agency Information Collection Activities: Requests for Comments; Clearance of a Renewed Approval of Information Collection: Agricultural Aircraft Operator Certificate Application Federal Aviation Administration (FAA), DOT. ACTION: Notice and request for comments. AGENCY: In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The Federal Register Notice with a 60-day comment period soliciting comments on the following collection of amozie on DSK30RV082PROD with NOTICES SUMMARY: 18 17 CFR 200.30–3(a)(12) and (59). VerDate Sep<11>2014 18:12 Apr 30, 2018 Jkt 244001 information was published on February 8, 2018. The collection involves the submission of application FAA Form 8710–3 for the certification process. The information to be collected will be used to evaluate the operators’ request to become certificated as an Agricultural Aircraft Operator. DATES: Written comments should be submitted by May 31, 2018. ADDRESSES: Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/FAA, and sent via electronic mail to oira_ submission@omb.eop.gov, or faxed to (202) 395–6974, or mailed to the Office of Information and Regulatory Affairs, Office of Management and Budget, Docket Library, Room 10102, 725 17th Street NW, Washington, DC 20503. FOR FURTHER INFORMATION CONTACT: Barbara Hall at (940) 594–5913, or by email at: Barbara.L.Hall@faa.gov. SUPPLEMENTARY INFORMATION: OMB Control Number: 2120–0049. Title: Agricultural Aircraft Operator Certificate Application. Form Numbers: FAA Form 8710–3. Type of Review: This pertains to a renewal of an existing information collection. Background: The Federal Register Notice with a 60-day comment period soliciting comments on the following collection of information was published on February 8, 2018 (83 FR 5675). Application for a certificate is made on a form, and in a manner, prescribed by the Administrator. The FAA form 8710–3 may be obtained from an FAA Flight Standards District Office and filed with the FAA Flight Standards District Office that has jurisdiction over the area in which the applicant’s home base of operations is located. The information collected includes: Type of application, Operator’s name/ DBAs, telephone number, mailing address, physical address of the principal base of operations, chief pilot/ designee name, airman certificate grade and number, rotorcraft make/model registration numbers to be used and load combinations requested. Respondents: 200 respondents. Frequency: Applicants submit the form once, for initial issuance, and any time the operator requires an amendment to the operating certificate. Estimated Average Burden per Response: 30 minutes each for 137.1, 137.15, 137.17, and 137.51 and 137.71. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 19133 4.5 hours per response for recordkeeping requirements of 137.71. Estimated Total Annual Burden: Total reporting requirements of 325 hours, and recordkeeping requirements of 9000 hours, for a total burden of 9325 hours. Public comments invited: You are asked to comment on any aspect of this information collection, including (a) Whether the proposed collection of information is necessary for FAA’s performance; (b) the accuracy of the estimated burden; (c) ways for FAA to enhance the quality, utility and clarity of the information collection; and (d) ways that the burden could be minimized without reducing the quality of the collected information. The agency will summarize and/or include your comments in the request for OMB’s clearance of this information collection. Issued in Fort Worth, TX, on April 24, 2018. Barbara Hall, FAA Information Collection Clearance Officer, IT Enterprises Business Services Division, ASP–110. [FR Doc. 2018–09086 Filed 4–30–18; 8:45 am] BILLING CODE 4910–13–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: General Aviation and Air Taxi Activity and Avionics Survey Federal Aviation Administration (FAA), DOT. ACTION: Notice and request for comments. AGENCY: In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The Federal Register Notice with a 60-day comment period soliciting comments on the following collection of information was published February 6, 2018. This information will be used by FAA for safety assessment, planning, forecasting, cost/benefit analysis, and to target areas for research. DATES: Written comments should be submitted by May 31, 2018. ADDRESSES: Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed SUMMARY: E:\FR\FM\01MYN1.SGM 01MYN1

Agencies

[Federal Register Volume 83, Number 84 (Tuesday, May 1, 2018)]
[Notices]
[Pages 19130-19133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09111]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83101; File No. SR-ISE-2018-40]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the Delay 
for the Re-introduction of Concurrent Complex Order Auction 
Functionality

April 25, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 19, 2018, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the delay for re-introduction of 
functionality which permits concurrent complex order auctions in the 
same complex strategy by an additional one year.
    The text of the proposed rule change is available on the Exchange's 
website at https://ise.cchwallstreet.com/, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The

[[Page 19131]]

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 extend the delay for 
re-introduction of functionality which permits concurrent \3\ complex 
order auctions in the same complex strategy by an additional one year. 
The Exchange previously filed \4\ a rule change which delayed 
functionality permitting concurrent complex auctions in conjunction 
with a migration to the INET \5\ platform. The April 2017 Rule Change 
provided that with the delay, a complex order auction in a particular 
complex strategy would not be initiated if another complex order 
auction is already ongoing in that complex strategy. In conjunction 
with the April 2017 Rule Change, the Exchange issued an Options Trader 
Alert notifying Members that concurrent complex auctions would not be 
offered at this time.\6\
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    \3\ The current ISE Rule 722 rule text refers to these auctions 
as ``simultaneous''. The Exchange is proposing to amend the rule 
text to replace the word ``simultaneous'' with ``concurrent.'' This 
change is designed to make the rule text more accurately describe 
the functionality. The functionality is not being changed.
    \4\ See Securities and Exchange Act Release No. 80525 (April 25, 
2017), 82 FR 20405 (May 1, 2017) (SR-ISE-2017-33) (``April 2017 Rule 
Change'').
    \5\ 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 resulted in higher performance, 
scalability, and more robust architecture.
    \6\ See Options Trader Alert #2017-35.
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    By way of background, ISE offers various complex order auctions 
that are designed to provide members an opportunity to trade and to 
potentially receive price improvement for complex orders that are 
entered on the Exchange, including an Exposure auction pursuant to Rule 
722(b)(3)(iii), a Complex Price Improvement Mechanism (``PIM'') 
pursuant to Supplementary Material .09 to Rule 723, a Complex 
Facilitation Mechanism pursuant to Supplementary Material .08 to Rule 
716, and Complex Solicited Order Mechanism also pursuant to 
Supplementary Material .08 to Rule 716. While only one PIM auction may 
be ongoing at any given time in a series or complex strategy, and PIMs 
are not permitted to queue or overlap in any manner,\7\ there are no 
similar restrictions for non-PIM auctions, and any such auctions may be 
processed concurrently, including in parallel with a PIM auction. For 
example, while the trading system would prohibit a member from entering 
a PIM auction when another PIM auction is already ongoing in a complex 
strategy, if there was an Exposure auction already running a member 
would be able to start a PIM, Facilitation, Solicitation, or even 
another Exposure auction in that strategy. This allows maximum ability 
of members to express their trading intent on the Exchange by 
permitting multiple complex order auctions in the same complex strategy 
to be ongoing at any particular time.
---------------------------------------------------------------------------

    \7\ See Supplementary Material .04 to Rule 723.
---------------------------------------------------------------------------

    When the Exchange initially delayed this functionality, the 
Exchange noted in the April 2017 Rule Change that it would reintroduce 
concurrent complex order auctions in the same complex strategy at a 
later date within one year of date of the filing. The Exchange filed 
the initial rule change on April 17, 2017, with a one year delay, and 
the additional one year delay would extend the implementation timeframe 
for this functionality to April 17, 2019. The extended delay would 
provide the Exchange additional time to develop and test this 
functionality on INET. The Exchange will issue an Options Trader Alert 
notifying Members when this functionality will be available. 
Furthermore, in connection with this change, the Exchange also proposes 
to amend Rule 722 to remove language about the migration of symbols to 
INET as this migration has been completed and all symbols listed by the 
Exchange are currently trading on the INET platform.
    With the delay, only one complex order auction would continue to be 
ongoing at any given time in a complex strategy, and such auctions 
would not queue or overlap in any manner. For PIM, Facilitation, or 
Solicitation auctions, the Exchange would continue to reject a complex 
order auction of the same or different auction type in a complex 
strategy that would be initiated while another complex order auction is 
ongoing in that complex strategy.\8\ In the case where a complex order 
auction has already been initiated in a complex strategy, an Exposure 
auction for an order for that strategy would continue to not be 
initiated and the order would be processed as a complex order that is 
not marked for price improvement,\9\ instead of rejecting the complex 
order. If the member requested the order to be cancelled after the 
exposure period, then the complex order would continue to be cancelled 
back to the member.
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    \8\ The rejection message sent to the member will contain an 
appropriate reason code indicating that the auction was rejected due 
to another ongoing complex order auction in the same complex 
strategy.
    \9\ Currently, an Exposure order auction is automatically 
initiated when a member submits an eligible complex order that is 
marked for price improvement. See Rule 722(b)(3)(iii). Pursuant to 
Rule 722(b)(3)(iii), complex orders may be marked for price 
improvement, and if so marked, the complex order may be exposed on 
the complex order book for a period of up to one-second before being 
automatically executed. Members can also request that their complex 
orders be cancelled after the exposure period.
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    The Exchange believes that implementing concurrent complex order 
auctions in the same complex strategy at a later date will not have a 
significant impact on members as it is rare for multiple complex order 
auctions in a complex strategy to be ongoing at a particular time. This 
is particularly the case today due to the recent decrease in the 
Exchange's auction timers to 100 milliseconds.\10\ The Exchange notes 
that prior to the migration to the INET platform concurrent complex 
order auctions in a strategy only occurred approximately 0.5% of the 
time that an auction runs on the Exchange. The Exchange therefore 
believes that the impact on Members will continue to be insignificant, 
and if a member does have auction eligible interest to execute when 
another complex order auction is ongoing, the member can either re-
submit that order to the Exchange, after the auction has concluded, or 
submit it to another options market that provides similar auction 
functionality. In this regard, the Exchange notes that its market data 
feeds provide information to Members about when a complex order auction 
is ongoing, and Members can therefore use this information to make 
appropriate routing decisions based on applicable market conditions.
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    \10\ See Securities Exchange Act Release No. 79733 (January 4, 
2017), 82 FR 3055 (January 10, 2017) (SR-ISE-2016-26) (permitting 
the Exchange to determine auction timers for PIM, Facilitation, and 
Solicitation within a range of 100 milliseconds and one second). 
Each of these auction timers are currently set to 100 milliseconds--
i.e., the bottom of the range approved in the filing. Exposure 
auctions can be any duration up to one second (See Rule 722(b)(3)), 
and are also currently set to 100 milliseconds.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of

[[Page 19132]]

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 because the Exchange desires to 
rollout the concurrent complex order auctions functionality at a later 
date to allow additional time to test and implement this functionality. 
As proposed herein, within a year from April 17, 2018, the Exchange 
will offer concurrent auction functionality.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange does not anticipate that the proposed rule change will 
have any meaningful impact with respect to members' ability to execute 
complex order auctions as similar restrictions are already in place on 
other options exchanges.\13\ Concurrent complex order auctions in a 
complex strategy are rare, and therefore the vast majority of the time 
members would be able to enter a complex order auction notwithstanding 
the temporary delay of the implementation of concurrent auctions. With 
respect to Exposure auctions, in the case where another complex order 
auction in the same strategy has already been initiated, the Exchange 
proposes to allow the complex order to continue to be processed without 
an auction in the same manner as complex orders that are not marked for 
price improvement. If the Member has marked the complex order to be 
cancelled after the exposure period, however, the Exchange would cancel 
the order back to the member consistent with that instruction. If the 
Member is not able to initiate a complex order auction because another 
complex order auction in the same strategy has been initiated, the 
Member may either re-initiate the auction after the auction concludes 
or submit the order to another options market that offers similar 
functionality. Thus, Members will be able to continue to express their 
trading intent regardless of the proposed delay in concurrent auction 
functionality.
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    \13\ See Phlx Rule 1098(e)(2) [sic]. Nasdaq Phlx, LLC 
(``Phlx''), for example, does not allow the initiation of a Complex 
Order Live Auction (``COLA'') when there is already a Price 
Improvement XL (``PIXL'') auction already ongoing in the strategy. 
Similarly, Miami International Securities Exchange LLC (``MIAX'') 
can limit the frequency of Complex Auctions by establishing a 
minimum time period between such auctions, and permits only one 
Complex Auction per strategy to be in progress at any particular 
time. See MIAX Rule 518(d)(2).
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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. The Exchange does not believe 
that the proposed rule change will impact the intense competition that 
exists in the options market. The Exchange does not believe that the 
proposed delay will impose any significant burden on inter-market 
competition as it does not impact the ability of other markets to offer 
or not offer competing functionality.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intra-market competition because all Members 
uniformly will not be able to initiate concurrent auctions in the same 
complex order strategy. Within a year from April 17, 2018, the Exchange 
will offer concurrent complex auction functionality.

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 \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 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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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of the filing. However, 
Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. In its filing, ISE requests that the 
Commission waive the 30-day operative delay to allow the proposed one-
year extension of the time for re-introducing concurrent complex order 
auction functionality to begin at the conclusion of the current delay 
period, which was scheduled to end on April 17, 2018. As noted above, 
ISE states that extending the delay for re-introducing concurrent 
complex order auction functionality will provide ISE with additional 
time to develop and test this functionality. The Exchange also notes 
that the proposed rule change is not expected to have any meaningful 
impact on members' ability to express their trading intent; ISE 
indicates that such auctions are rare and do not usually occur 
concurrently. The Commission believes that waiving the operative delay 
is consistent with the protection of investors and the public interest 
because it will provide ISE with additional time to develop and test 
concurrent complex order auction functionality. Accordingly, the 
Commission waives the 30-day operative delay and designates the 
proposed rule change operative upon filing.\17\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ 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 [email protected]. Please include 
File Number SR-ISE-2018-40 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-2018-40. 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

[[Page 19133]]

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-ISE-
2018-40, and should be submitted on or before May 22, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12) and (59).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09111 Filed 4-30-18; 8:45 am]
BILLING CODE 8011-01-P
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