Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Market Order Spread Protection and Reorganize Rule Chapter VI, Section 18 Entitled, “Order Price Protections”, 23302-23305 [2018-10605]
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Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
NUCLEAR REGULATORY
COMMISSION
[NRC–2018–0001]
Sunshine Act Meetings
Weeks of May 21, 28, June 4, 11,
18, 25, 2018.
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the week of June 11, 2018.
at: https://www.nrc.gov/public-involve/
public-meetings/schedule.html.
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Dated: May 16, 2018.
Glenn Ellmers,
Policy Coordinator, Office of the Secretary.
[FR Doc. 2018–10769 Filed 5–16–18; 4:15 pm]
BILLING CODE 7590–01–P
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Tuesday, June, 19, 2018
9:00 a.m. Briefing on Results of the
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POSTAL SERVICE
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VerDate Sep<11>2014
International Product Change—Global
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Jkt 244001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83229; File No. SR–BX–
2018–019]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Market
Order Spread Protection and
Reorganize Rule Chapter VI, Section 18
Entitled, ‘‘Order Price Protections’’
May 14, 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 May 7,
2018, Nasdaq BX, Inc. (‘‘BX’’ or the
‘‘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 amend the
Market Order Spread Protection and
reorganize Rule Chapter VI, Section 18
entitled, ‘‘Order Price Protections.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqbx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
Ruth B. Stevenson,
Attorney, Federal Compliance.
[FR Doc. 2018–10635 Filed 5–17–18; 8:45 am]
1 15
BILLING CODE 7710–12–P
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
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 amend Chapter VI, Section
18, entitled, ‘‘Order Price Protection’’ to
‘‘Risk Protections’’ and relocate all the
order protections into a single rule and
categorize them as either order
protections, order and quote protections
or market maker protections. The
Exchange believes that placing all the
order protections into a single rule will
provide market participants with
information as to the availability of
these protections, which are all
mandatory. The Exchange also proposes
to amend the Market Order Spread
Protection and Acceptable Trade Range
Rules to add more specificity.
Universal Amendments
The Exchange proposes to restructure
Chapter VI, Section 18 into three parts:
(1) Order protections; (2) order and
quote protections; and (3) market maker
protections. The Exchange proposes to
reletter and renumber the rule as well to
provide a more organized structure. The
Exchange believes that categorizing the
various protections provides more
information to market participants as to
each of the risk protections.
daltland on DSKBBV9HB2PROD with NOTICES
Order Price Protection
The Exchange proposes only to
reorganize the rule by adding new
lettering and numbering to conform to
the remainder of the proposed rule, no
other amendments are being made to
Order Price Protection.
Market Order Spread Protection
The Exchange proposes to relocate the
Market Order Spread Protection rule
from Chapter VI, Section 6(c) into
Chapter VI, Section 18. The Exchange
also proposes to amend the Market
Order Spread Protection at proposed
Chapter VI, Section 18(a)(2) by adding
an additional sentence stating, ‘‘Market
Order Spread Protection shall not apply
to the Opening Process and during a
halt.’’ Today, the Market Order Spread
Protection does not apply during the
Opening Process and during a trading
halt. The Exchange is adding this
additional specificity to the rule to make
clear when the protection is operative.
Both the Opening Process and trading
halts have the same or more restrictive
boundaries as those proposed for the
Market Order Spread Protection. With
respect to the Opening Process, a Valid
Width National Best Bid or Offer is
required. A Valid Width National Best
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Bid or Offer’’ or ‘‘Valid Width NBBO’’
shall mean the combination of all away
market quotes and any combination of
BX Options-registered Market Maker
orders and quotes received over the SQF
Protocols within a specified bid/ask
differential as established and published
by the Exchange.3 The Valid Width
NBBO will be configurable by
underlying, and tables with valid width
differentials will be posted by Nasdaq
on its website.4 The Exchange’s
threshold for the Market Order Spread
Protection is currently set at $5.5 Today,
the maximum bid/ask differentials are
more restrictive for both Special Penny,
Penny and Non-Penny issues (up to
$1.60, $2.00 and $2.25, respectively, for
the bid/ask differentials). The Exchange
believes that the Market Order Spread
Protection is unnecessary during the
Opening Process because other
protections are in place to ensure that
the best bid and offer displayed on the
Exchange are within a reasonable range.
As provided in Chapter V, Section 4
trading halts are subject to the
reopening process as provided for in
Chapter VI, Section 8. The same
protections noted for the Opening
Process above will apply for trading
halts. The Exchange believes that the
Market Order Spread Protection is
unnecessary during a trading halt
because other protections are in place to
ensure that the best bid and offer
displayed on the Exchange are within a
reasonable range.
Acceptable Trade Range
The Exchange proposes to relocate the
Acceptable Trade Protection from
Chapter VI, Section 10(7) into Chapter
VI, Section 18(b)(1). The Exchange also
proposes to note more specifically
within the rule that this risk protection
applies to both quotes and orders.
Today, the rule only refers to ‘‘orders’’
in a few places. The Exchange proposes
to note ‘‘order/quotes’’ in those
instances to make clear that both orders
and quotes are protected. This addition
and the categorization proposed within
this rule change should make that this
protection more transparent.
3 Away markets that are crossed will void all
Valid Width NBBO calculations. If any Market
Maker orders or quotes on BX Options are crossed
internally, then all such orders and quotes will be
excluded from the Valid Width NBBO calculation.
See BX Chapter VI, Section 8(a)(6).
4 The table with the differentials is published on
the Exchange’s website at: https://
www.nasdaqtrader.com/content/technicalsupport/
BXOptions_SystemSettings.pdf.
5 The current Market Order Spread Differential is
set at $5. The table in note 4 above notes the current
setting.
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23303
Anti-Internalization
The Exchange proposes to relocate the
Anti-Internalization Protection from
Chapter VI, Section 10(6) into Chapter
VI, Section 18(c)(1). The Exchange
proposes only to reorganize the rule by
adding new lettering and numbering to
conform to the remainder of the
proposed rule, no other amendments are
being made to the Anti-Internalization
rule. The Exchange also notes that the
word ‘‘exception’’ is being removed
from this rule to conform the rule text
to the remainder of the rule.
Automated Removal of Quotes and
Orders
The Exchange proposes to relocate the
Automated Removal of Quotes and
Orders from Chapter VII, Section 6(f)
into Chapter VI, Section 18(c)(2). The
Exchange proposes only to reorganize
the rule by adding new lettering and
numbering to conform to the remainder
of the proposed rule, no other
amendments are being made to the
Automated Removal of Quotes and
Orders rule.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,6 in general, and furthers the
objectives of Section 6(b)(5) of the Act,7
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest, by
grouping the various order protections
applied on BX into a single rule for ease
of reference and adding headers to the
rule to make clear whether the risk
protection is an order, quote or order
and market maker protection. The
Exchange believes the reorganization of
the existing rule and relocation of
various rules into Rule Chapter VI,
Section 18 is a non-substantive rule
change.
The Exchange is amending the Market
Order Spread Protection to provide
more specificity to that rule. Today, the
Market Order Spread Protection does
not apply during the Opening Process
and during halts. The Exchange is
proposing to memorialize this exception
into the rule to provide more
transparency as to the operation of this
protection. Both the Opening Process
and trading halts have the same or more
restrictive boundaries as for the Market
Order Spread Protection. With respect
to the Opening Process, a Valid Width
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
National Best Bid or Offer is required.
A Valid Width National Best Bid or
Offer’’ or ‘‘Valid Width NBBO’’ shall
mean the combination of all away
market quotes and any combination of
BX Options-registered Market Maker
orders and quotes received over the SQF
Protocols within a specified bid/ask
differential as established and published
by the Exchange.8 The Exchange’s
requirements during the Opening
Process are as as restrictive or more
restrictive as the setting for the Market
Order Spread Protection. As provided in
Chapter V, Section 4 trading halts are
subject to the reopening process as
provided for in Chapter VI, Section 8.
The same protections noted for the
Opening Process above will apply for
trading halts. The Exchange believes
that the Market Order Spread Protection
is unnecessary during the Opening
Process and during a trading halt
because other protections are in place to
ensure that the best bid and offer
displayed on the Exchange are within a
reasonable range.
The Exchange is also proposing to
make clear that the Acceptable Trade
Range protection is an order and quote
protection. This particular rule does not
specifically state orders and quotes in
each place either is mentioned with the
rule. The Exchange believes adding
order/quote in each instance it appears
will bring greater transparency to the
rule and protect investors and the
public interest by providing greater
clarity to the rule.
daltland on DSKBBV9HB2PROD 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
of the purposes of the Act. The proposal
does not impose an intra-market burden
on competition with respect to the
reorganization and relocation of the
various rules into Rule Chapter VI,
Section 18 because the various price
protections will continue to apply
uniformly to all market participants.
The Exchange does not believe that
not applying the Market Order Spread
Protection during the Opening Process
and during a trading halt creates an
undue burden on competition because
these mechanisms have the same or
more restrictive protections as the
Market Order Spread Protection.
8 Away markets that are crossed will void all
Valid Width NBBO calculations. If any Market
Maker orders or quotes on BX Options are crossed
internally, then all such orders and quotes will be
excluded from the Valid Width NBBO calculation.
See BX Chapter VI, Section 8(a)(6).
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Finally, the amendments to the
Acceptable Trade Range rule creates an
undue burden on competition because
the additional language brings more
transparency to the existing rule.
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) of the Act 9 and Rule 19b–
4(f)(6) thereunder.10
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 11 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 12
however, 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 requested that the
Commission waive the 30-day operative
delay so that the proposal may become
operative upon filing. The Exchange
states that it believes it is important for
it to be able to manage the
administration of its rules on an
immediately effective basis. Further,
with respect to the amendment to the
Market Order Spread Protection and
Acceptable Trade Range, the Exchange
believes that the amendment protects
investors and the public interest by
providing more transparency as to the
operation of this protection during the
Opening Process and during halts for
the Market Order Spread Protection and
also clarifies the Acceptable Trade
Range rule. For these reasons, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest and, therefore, the
9 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 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.
11 17 CFR 240.19b–4(f)(6)(iii).
12 17 CFR 240.19b–4(f)(6)(iii).
10 17
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Commission hereby waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2018–019 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–BX–2018–019. 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,
13 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 83, No. 97 / Friday, May 18, 2018 / Notices
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–BX–2018–019 and should
be submitted on or before June 8, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–10605 Filed 5–17–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33098; 812–14815]
PFM Multi-Manager Series Trust and
PFM Asset Management LLC
May 15, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
daltland on DSKBBV9HB2PROD with NOTICES
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (‘‘Act’’) for an exemption from
section 15(a) of the Act and rule 18f–2
under the Act, as well as from certain
disclosure requirements in rule 20a–1
under the Act, Item 19(a)(3) of Form
N–1A, Items 22(c)(1)(ii), 22(c)(1)(iii),
22(c)(8) and 22(c)(9) of Schedule 14A
under the Securities Exchange Act of
1934, and sections 6–07(2)(a), (b), and
(c) of Regulation S–X (‘‘Disclosure
Requirements’’). The requested
exemption would permit an investment
adviser to hire and replace certain subadvisers without shareholder approval
and grant relief from the Disclosure
Requirements as they relate to fees paid
to the sub-advisers.
APPLICANTS: PFM Multi-Manager Series
Trust (the ‘‘Trust’’), a Delaware statutory
trust registered under the Act as an
open-end management investment
company, and PFM Asset Management
LLC (the ‘‘Initial Adviser’’), a Delaware
limited liability company registered as
an investment adviser under the
Investment Advisers Act of 1940
14 17
CFR 200.30–3(a)(12).
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16:38 May 17, 2018
Jkt 244001
(collectively with the Trust, the
‘‘Applicants’’).
FILING DATES: The application was filed
on August 22, 2017 and amended on
March 1, 2018, and May 9, 2018.
HEARING OR NOTIFICATION OF HEARING:
An order granting the application will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 11, 2018, and
should be accompanied by proof of
service on the applicants, in the form of
an affidavit or, for lawyers, a certificate
of service. Pursuant to rule 0–5 under
the Act, hearing requests should state
the nature of the writer’s interest, any
facts bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
Applicants: One Keystone Plaza, Suite
300, North Front and Market Streets,
Harrisburg, PA 17101–2044.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Kaitlin C. Bottock,
Branch Chief, at (202) 551–6825
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. The Adviser will serve as the
investment adviser to the Subadvised
Series pursuant to an investment
advisory agreement with the Trust (the
‘‘Investment Management
Agreement’’).1 The Adviser will provide
1 Applicants request relief with respect to the
named Applicants, as well as to any future series
of the Trust and any other registered open-end
management investment company or series thereof
that: (a) Is advised by the Initial Adviser, its
successors, or any entity controlling, controlled by
or under common control with the Initial Adviser
or its successors (each, an ‘‘Adviser’’); (b) uses the
multi-manager structure described in the
application; and (c) complies with the terms and
conditions set forth in the application (each, a
‘‘Subadvised Series’’). For purposes of the requested
order, ‘‘successor’’ is limited to an entity that
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23305
the Subadvised Series with continuous
investment management services,
subject to the supervision of, and
policies established by, the board of
trustees of the Trust (‘‘Board’’). The
Investment Management Agreement
permits the Adviser, subject to the
approval of the Board, to delegate to one
or more sub-advisers (each, a ‘‘SubAdviser’’ and collectively, the ‘‘SubAdvisers’’) the responsibility to provide
the day-to-day portfolio investment
management of each Subadvised Series,
subject to the supervision and direction
of the Adviser.2 The primary
responsibility for managing each
Subadvised Series will remain vested in
the Adviser. The Adviser will hire,
evaluate, allocate assets to and oversee
the Sub-Advisers, including
determining whether a Sub-Adviser
should be terminated, at all times
subject to the authority of the Board.
2. Applicants request an exemption to
permit the Adviser, subject to Board
approval, to hire certain Sub-Advisers
pursuant to Sub-Advisory Agreements
and materially amend existing SubAdvisory Agreements without obtaining
the shareholder approval required under
section 15(a) of the Act and rule 18f–2
under the Act.3 Applicants also seek an
exemption from the Disclosure
Requirements to permit a Subadvised
Series to disclose (as both a dollar
amount and a percentage of the
Subadvised Series’ net assets): (a) The
aggregate fees paid to the Adviser and
any Wholly-Owned Sub-Adviser; (b) the
aggregate fees paid to Non-Affiliated
Sub-Advisers; and (c) the fee paid to
each Affiliated Sub-Adviser
(collectively, ‘‘Aggregate Fee
Disclosure’’).
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
results from a reorganization into another
jurisdiction or a change in the type of business
organization.
2 A ‘‘Sub-Adviser’’ for a Subadvised Series is (1)
an indirect or direct ‘‘wholly-owned subsidiary’’ (as
such term is defined in the Act) of the Adviser for
that Subadvised Series, or (2) a sister company of
the Adviser for that Subadvised Series that is an
indirect or direct ‘‘wholly-owned subsidiary’’ of the
same company that, indirectly or directly, wholly
owns the Adviser (each of (1) and (2) a ‘‘WhollyOwned Sub-Adviser’’ and collectively, the
‘‘Wholly-Owned Sub-Advisers’’), or (3) not an
‘‘affiliated person’’ (as such term is defined in
section 2(a)(3) of the Act) of the Subadvised Series
or the Adviser, except to the extent that an
affiliation arises solely because the Sub-Adviser
serves as a sub-adviser to a Subadvised Series
(‘‘Non-Affiliated Sub-Advisers’’).
3 The requested relief will not extend to any subadviser, other than a Wholly-Owned Sub-Adviser,
who is an affiliated person, as defined in Section
2(a)(3) of the Act, of the Subadvised Series, the
Trust or of the Adviser, other than by reason of
serving as a sub-adviser to one or more of the
Subadvised Series (‘‘Affiliated Sub-Adviser’’).
E:\FR\FM\18MYN1.SGM
18MYN1
]]>Agencies
[Federal Register Volume 83, Number 97 (Friday, May 18, 2018)]
[Notices]
[Pages 23302-23305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10605]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83229; File No. SR-BX-2018-019]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the Market
Order Spread Protection and Reorganize Rule Chapter VI, Section 18
Entitled, ``Order Price Protections''
May 14, 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 May 7, 2018, Nasdaq BX, Inc. (``BX'' or the ``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.
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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 proposes to amend the Market Order Spread Protection
and reorganize Rule Chapter VI, Section 18 entitled, ``Order Price
Protections.''
The text of the proposed rule change is available on the Exchange's
website at https://nasdaqbx.cchwallstreet.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 23303]]
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 amend Chapter VI,
Section 18, entitled, ``Order Price Protection'' to ``Risk
Protections'' and relocate all the order protections into a single rule
and categorize them as either order protections, order and quote
protections or market maker protections. The Exchange believes that
placing all the order protections into a single rule will provide
market participants with information as to the availability of these
protections, which are all mandatory. The Exchange also proposes to
amend the Market Order Spread Protection and Acceptable Trade Range
Rules to add more specificity.
Universal Amendments
The Exchange proposes to restructure Chapter VI, Section 18 into
three parts: (1) Order protections; (2) order and quote protections;
and (3) market maker protections. The Exchange proposes to reletter and
renumber the rule as well to provide a more organized structure. The
Exchange believes that categorizing the various protections provides
more information to market participants as to each of the risk
protections.
Order Price Protection
The Exchange proposes only to reorganize the rule by adding new
lettering and numbering to conform to the remainder of the proposed
rule, no other amendments are being made to Order Price Protection.
Market Order Spread Protection
The Exchange proposes to relocate the Market Order Spread
Protection rule from Chapter VI, Section 6(c) into Chapter VI, Section
18. The Exchange also proposes to amend the Market Order Spread
Protection at proposed Chapter VI, Section 18(a)(2) by adding an
additional sentence stating, ``Market Order Spread Protection shall not
apply to the Opening Process and during a halt.'' Today, the Market
Order Spread Protection does not apply during the Opening Process and
during a trading halt. The Exchange is adding this additional
specificity to the rule to make clear when the protection is operative.
Both the Opening Process and trading halts have the same or more
restrictive boundaries as those proposed for the Market Order Spread
Protection. With respect to the Opening Process, a Valid Width National
Best Bid or Offer is required. A Valid Width National Best Bid or
Offer'' or ``Valid Width NBBO'' shall mean the combination of all away
market quotes and any combination of BX Options-registered Market Maker
orders and quotes received over the SQF Protocols within a specified
bid/ask differential as established and published by the Exchange.\3\
The Valid Width NBBO will be configurable by underlying, and tables
with valid width differentials will be posted by Nasdaq on its
website.\4\ The Exchange's threshold for the Market Order Spread
Protection is currently set at $5.\5\ Today, the maximum bid/ask
differentials are more restrictive for both Special Penny, Penny and
Non-Penny issues (up to $1.60, $2.00 and $2.25, respectively, for the
bid/ask differentials). The Exchange believes that the Market Order
Spread Protection is unnecessary during the Opening Process because
other protections are in place to ensure that the best bid and offer
displayed on the Exchange are within a reasonable range.
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\3\ Away markets that are crossed will void all Valid Width NBBO
calculations. If any Market Maker orders or quotes on BX Options are
crossed internally, then all such orders and quotes will be excluded
from the Valid Width NBBO calculation. See BX Chapter VI, Section
8(a)(6).
\4\ The table with the differentials is published on the
Exchange's website at: https://www.nasdaqtrader.com/content/technicalsupport/BXOptions_SystemSettings.pdf.
\5\ The current Market Order Spread Differential is set at $5.
The table in note 4 above notes the current setting.
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As provided in Chapter V, Section 4 trading halts are subject to
the reopening process as provided for in Chapter VI, Section 8. The
same protections noted for the Opening Process above will apply for
trading halts. The Exchange believes that the Market Order Spread
Protection is unnecessary during a trading halt because other
protections are in place to ensure that the best bid and offer
displayed on the Exchange are within a reasonable range.
Acceptable Trade Range
The Exchange proposes to relocate the Acceptable Trade Protection
from Chapter VI, Section 10(7) into Chapter VI, Section 18(b)(1). The
Exchange also proposes to note more specifically within the rule that
this risk protection applies to both quotes and orders. Today, the rule
only refers to ``orders'' in a few places. The Exchange proposes to
note ``order/quotes'' in those instances to make clear that both orders
and quotes are protected. This addition and the categorization proposed
within this rule change should make that this protection more
transparent.
Anti-Internalization
The Exchange proposes to relocate the Anti-Internalization
Protection from Chapter VI, Section 10(6) into Chapter VI, Section
18(c)(1). The Exchange proposes only to reorganize the rule by adding
new lettering and numbering to conform to the remainder of the proposed
rule, no other amendments are being made to the Anti-Internalization
rule. The Exchange also notes that the word ``exception'' is being
removed from this rule to conform the rule text to the remainder of the
rule.
Automated Removal of Quotes and Orders
The Exchange proposes to relocate the Automated Removal of Quotes
and Orders from Chapter VII, Section 6(f) into Chapter VI, Section
18(c)(2). The Exchange proposes only to reorganize the rule by adding
new lettering and numbering to conform to the remainder of the proposed
rule, no other amendments are being made to the Automated Removal of
Quotes and Orders rule.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest,
by grouping the various order protections applied on BX into a single
rule for ease of reference and adding headers to the rule to make clear
whether the risk protection is an order, quote or order and market
maker protection. The Exchange believes the reorganization of the
existing rule and relocation of various rules into Rule Chapter VI,
Section 18 is a non-substantive rule change.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange is amending the Market Order Spread Protection to
provide more specificity to that rule. Today, the Market Order Spread
Protection does not apply during the Opening Process and during halts.
The Exchange is proposing to memorialize this exception into the rule
to provide more transparency as to the operation of this protection.
Both the Opening Process and trading halts have the same or more
restrictive boundaries as for the Market Order Spread Protection. With
respect to the Opening Process, a Valid Width
[[Page 23304]]
National Best Bid or Offer is required. A Valid Width National Best Bid
or Offer'' or ``Valid Width NBBO'' shall mean the combination of all
away market quotes and any combination of BX Options-registered Market
Maker orders and quotes received over the SQF Protocols within a
specified bid/ask differential as established and published by the
Exchange.\8\ The Exchange's requirements during the Opening Process are
as as restrictive or more restrictive as the setting for the Market
Order Spread Protection. As provided in Chapter V, Section 4 trading
halts are subject to the reopening process as provided for in Chapter
VI, Section 8. The same protections noted for the Opening Process above
will apply for trading halts. The Exchange believes that the Market
Order Spread Protection is unnecessary during the Opening Process and
during a trading halt because other protections are in place to ensure
that the best bid and offer displayed on the Exchange are within a
reasonable range.
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\8\ Away markets that are crossed will void all Valid Width NBBO
calculations. If any Market Maker orders or quotes on BX Options are
crossed internally, then all such orders and quotes will be excluded
from the Valid Width NBBO calculation. See BX Chapter VI, Section
8(a)(6).
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The Exchange is also proposing to make clear that the Acceptable
Trade Range protection is an order and quote protection. This
particular rule does not specifically state orders and quotes in each
place either is mentioned with the rule. The Exchange believes adding
order/quote in each instance it appears will bring greater transparency
to the rule and protect investors and the public interest by providing
greater clarity to the rule.
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 proposal does not impose an
intra-market burden on competition with respect to the reorganization
and relocation of the various rules into Rule Chapter VI, Section 18
because the various price protections will continue to apply uniformly
to all market participants.
The Exchange does not believe that not applying the Market Order
Spread Protection during the Opening Process and during a trading halt
creates an undue burden on competition because these mechanisms have
the same or more restrictive protections as the Market Order Spread
Protection.
Finally, the amendments to the Acceptable Trade Range rule creates
an undue burden on competition because the additional language brings
more transparency to the existing rule.
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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \11\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ however, 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 requested that the Commission waive the 30-day operative delay so
that the proposal may become operative upon filing. The Exchange states
that it believes it is important for it to be able to manage the
administration of its rules on an immediately effective basis. Further,
with respect to the amendment to the Market Order Spread Protection and
Acceptable Trade Range, the Exchange believes that the amendment
protects investors and the public interest by providing more
transparency as to the operation of this protection during the Opening
Process and during halts for the Market Order Spread Protection and
also clarifies the Acceptable Trade Range rule. For these reasons, the
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest
and, therefore, the Commission hereby waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6)(iii).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BX-2018-019 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-BX-2018-019. 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,
[[Page 23305]]
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-BX-2018-019 and should be
submitted on or before June 8, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10605 Filed 5-17-18; 8:45 am]
BILLING CODE 8011-01-P
