Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a Rule Concerning Handling of No Bid Options and To Clarify the Operation of Chapter V, Section 3, Entitled “Trading Halts”, 36638-36640 [2018-16165]
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<![CDATA[
36638
Federal Register / Vol. 83, No. 146 / Monday, July 30, 2018 / Notices
daltland on DSKBBV9HB2PROD with NOTICES
timely basis, and its use of intraday
liquidity.
Moreover, by using the liquidity ratio
to determine in advance the liquidity
needs of LCH SA arising from the
default of at least two clearing group
members to which LCH SA has the
largest exposures during the 5 days
following default, the Commission
believes the Framework would enhance
LCH SA’s ability to determine whether
it has sufficient resources to meet its
liquidity needs should such a default
occur. The Commission believes that
this would, in turn, enable LCH SA to
avoid any potential disruptions to its
operations caused by such liquidity
needs arising from such a default. The
Commission therefore believes that the
Framework would enable LCH SA to
maintain sufficient liquid resources to
effect settlement of its payment
obligations under a wide range of
foreseeable stress scenarios, including
the default of the participant family that
would generate the largest aggregate
payment obligation for LCH SA in
extreme but plausible market
conditions.
Therefore, for the above reasons the
Commission finds that the proposed
rule change is consistent with Rule
17Ad–22(e)(7)(i).36
C. Consistency With Rule 17Ad–
22(e)(7)(vi) of the Act
Rule 17Ad–22(e)(7)(vi) requires that
LCH SA establish, implement, maintain
and enforce written policies and
procedures reasonably designed to
effectively measure, monitor, and
manage the liquidity risk that arises in
or is borne by LCH SA, including
measuring, monitoring, and managing
its settlement and funding flows on an
ongoing and timely basis, and its use of
intraday liquidity by determining the
amount and regularly testing the
sufficiency of the liquid resources held
for purposes of meeting the minimum
liquid resource requirement under Rule
17Ad–22(e)(7)(i) 37 by, among other
things, conducting stress testing of its
liquidity resources at least once each
day using standard and predetermined
parameters and assumptions.38
As discussed above, the Framework
would describe the metrics LCH SA
would use to quantify its liquidity
needs, and the tests and reports LCH SA
would use to confirm that its sources of
liquidity can satisfy those liquidity
needs. These metrics would include: (i)
The liquidity coverage ratio; (ii) a
monthly rolling average liquidity buffer;
36 17
CFR 240.17Ad–22(e)(7)(i).
CFR 240.17Ad–22(e)(7)(i).
38 17 CFR 240.17Ad–22(e)(7)(vi).
37 17
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(iii) a daily minimum liquidity buffer;
and (iv) required cash collateral. The
Framework would describe how these
metrics would be calculated for each
day over a maximum of a 5 day liquidity
period and how the liquidity coverage
ratio, monthly rolling average liquidity
buffer, and daily minimum liquidity
buffer would be reported to LCH SA
senior management daily.
The Commission believes that the
metrics provided by the Framework
would help LCH SA determine the
amount and regularly test the
sufficiency of LCH SA’s liquid
resources. The Commission believes
that the liquidity coverage ratio, for
example, would provide LCH SA senior
management a view to LCH SA’s
liquidity needs in stressed conditions
arising from a default of at least two
clearing group members to which LCH
SA has the largest exposures. As
discussed above, the Framework would
require the calculation and reporting of
the liquidity coverage ratio daily. The
Commission believes the other metrics
described above would similarly test,
and provide LCH SA senior
management insight regarding, the
sufficiency of LCH SA’s liquid
resources.
For the above reasons, the
Commission therefore finds that the
proposed rule change is consistent with
Rule 17Ad–22(e)(7)(vi).39
III. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act, and in
particular, Section 17A(b)(3)(F) of the
Act 40 and Rules 17Ad–22(e)(7)(i) and
(vi) thereunder.41
It is therefore ordered pursuant to
Section 19(b)(2) of the Act that the
proposed rule change (SR–LCH SA–
2018–003) be, and hereby is,
approved.42
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.43
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–16168 Filed 7–27–18; 8:45 am]
BILLING CODE 8011–01–P
CFR 240.17Ad–22(e)(7)(vi).
U.S.C. 78q–1(b)(3)(F).
41 17 CFR 240.17Ad–22(e)(7)(i), (vi).
42 In approving the proposed rule change, the
Commission considered the proposal’s impacts on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
43 17 CFR 200.30–3(a)(12).
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39 17
40 15
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83700; File No. SR–BX–
2018–033]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Adopt a Rule
Concerning Handling of No Bid
Options and To Clarify the Operation
of Chapter V, Section 3, Entitled
‘‘Trading Halts’’
July 24, 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 July 13,
2018 Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Chapter V, Section 3, entitled ‘‘Trading
Halts’’ and Chapter VI, Section 6,
entitled ‘‘Acceptance of Quotes and
Orders.’’
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.
1 15
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. 146 / Monday, July 30, 2018 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Chapter V, Section 3, entitled ‘‘Trading
Halts’’ to add more specificity
concerning auctions during a trading
halt and remove unnecessary rule text.
The Exchange proposes to adopt a zero
bid options rule on BX within Chapter
VI, Section 6, entitled ‘‘Acceptance of
Quotes and Orders.’’ Each proposal is
described in more detail below.
daltland on DSKBBV9HB2PROD with NOTICES
Chapter V, Section 3
The Exchange proposes to amend
Chapter V, Section 3(a)(vi)(B) to add a
sentence which provides, ‘‘Auction
orders and responses are rejected during
a halt.’’ The Exchange notes that today,
during a trading halt, the Exchange does
not commence an auction. This
proposed rule text will make clear how
auction orders and auction responses
are handled during a trading halt.
The Exchange proposes to amend
Chapter V, Section 3(b), which currently
provides, ‘‘In the event BX Regulation
determines to halt trading, all trading in
the effected class or classes of options
shall be halted. BX Options shall
disseminate through its trading facilities
and over OPRA a symbol with respect
to such class or classes of options
indicating that trading has been halted,
and a record of the time and duration of
the halt shall be made available to
vendors.’’ The Exchange proposes to
remove the words ‘‘such class or’’ in
both places from this sentence because
the Exchange only disseminates over
OPRA a symbol with respect to classes
of options to indicate a trading halt.
Today, the Exchange halts symbol by
symbol; all classes or every option
would be halted. By amending this rule,
the Exchange will add more
transparency as to how it determines to
halt trading and disseminates
information regarding trading halts.
Chapter VI, Section 6
Today, the Exchange does not have a
rule for the handling of options with no
bid or zero bid options. The Exchange’s
handling of zero bid options on BX is
identical to the manner in which zero
bid is handled on Phlx.3 The Exchange
proposes to add this new rule to Chapter
VI, Section 6(a)(3). The new rule would
provide, ‘‘In the case where the bid
price for any options contract is $0.00,
a market order accepted into the System
to sell that series shall be considered a
3 See
Phlx Rule 1035.
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20:33 Jul 27, 2018
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limit order to sell at a price equal to the
minimum trading increment as defined
in Chapter VI, Section 5. Orders will be
placed on the limit order book in the
order in which they were received by
the System. With respect to market
orders to sell which are submitted prior
to the Opening and persist after the
Opening, those orders are posted at a
price equal to the minimum trading
increment as defined in Chapter VI,
Section 5.’’
The Exchange intends to accept and
convert market orders to sell allowing
them an equal opportunity to trade if
interest should arrive in the case of a no
bid option. The Exchange notes that the
orders would rest on the Order Book at
the minimum price increment. The
Exchange notes market orders ‘‘accepted
into the System’’ would be converted to
account for market orders that may not
be accepted into the System due to
Limit Up-Limit Down restrictions,
which may prevent the market order
from being accepted.4 Only after
acceptance into the System will market
orders be treated as a sell limit order at
a price equal to the minimum trading
increment.
Further, the Exchange proposes to add
rule text, which provides ‘‘Orders will
be placed on the limit order book in the
order in which they were received by
the System.’’ 5 The Exchange proposes
to note that with respect to market
orders to sell in zero bid options, which
are submitted prior to the Opening
Process 6 and persist after the Opening
Process, those orders are posted at a
price equal to the minimum trading
increment as defined in Chapter VI,
Section 5.7 The Exchange’s proposed
rule will provide market participants
with greater insight into the handling of
orders where there is a zero bid. The
Exchange believes that this proposed
amendment will accurately describe the
manner in which a zero-bid options
series operates within the System both
before and after the Opening Process.
36639
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism for a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Chapter V, Section 3
The Exchange is providing greater
transparency as to the manner in which
auctions are handled during a trading
halt and the manner in which the
Exchange determines to halt trading and
disseminates information over OPRA
during a trading halt. The Exchange
believes that this rule text is consistent
with the Act and the protection of
investors and the public interest
because it brings greater clarity to the
manner in which trading halts function
and what type of information is
provided during a halt.
Chapter VI, Section 6
The Exchange’s proposal to adopt a
zero bid rule is consistent with the Act
and designed to promote just and
equitable principles of trade and to
protect investors and the public interest
by adopting text which describes the
handling of zero-bid options. The
Exchange is treating all market orders to
sell in zero bid options in the same
fashion by converting all those orders,
provided that the Exchange’s
disseminated bid price in such option is
zero for an option listed only on the
Exchange or, for an option listed on
multiple exchanges and the
disseminated NBBO includes a bid price
of zero in the series. Market orders to
sell in zero bid options will be placed
on the limit order book in the order in
which they were received by the
System. The Exchange desires to
prevent members from submitting
market orders to sell in no bid series,
which would execute at a price of $0.00.
The Exchange believes that the
proposed rule will achieve this objective
and continue to permit the Exchange to
2. Statutory Basis
execute orders within its System at
The Exchange believes that the
prices that reflect some value. Adding
proposed rule change is consistent with rule text regarding market orders to sell
Section 6(b) of the Securities Exchange
in zero bid options submitted prior to
Act of 1934,8 in general, and furthers the the Opening Process and persisting after
objectives of Section 6(b)(5) of the Act,9 the Opening Process is consistent with
the Act because it provides more
4 The Limit Up-Limit Down requirements must be
transparency as to the operation of this
met first before the proposed rule would apply.
rule and as to how those market orders
5 The time of receipt for an order is the time such
to sell in zero bid options will be
message is processed by the System.
6 The Exchange’s Opening Process is described
handled by the System. Further, the
within Chapter VI, Section 8.
Exchange believes that memorializing
7 Chapter VI, Section 5, entitled ‘‘Minimum
its current practice within the rule text
Increments’’ provides for the minimum increments
will bring more clarity to the manner in
of trading.
which the zero bid rule operates to the
8 15 U.S.C. 78f(b).
benefits of all market participants.
9 15 U.S.C. 78f(b)(5).
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36640
Federal Register / Vol. 83, No. 146 / Monday, July 30, 2018 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,10 the Exchange does not believe
that the proposed rule change will
impose any burden on intermarket or
intra-market competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Chapter V, Section 3
The Exchange’s proposal to amend
Chapter V, Section 3(a)(vi)(B) to make
clear how auction orders and auction
responses are handled during a trading
halt and amend Chapter V, Section 3 to
more specifically describe how the
Exchange determines to halt trading as
well as the information disseminated
during a trading halt do not impose an
undue burden on competition because
the amendments add more transparency
to the trading halt rule.
Chapter VI, Section 6
The Exchange’s proposal to adopt a
zero bid options rule does not impose
an undue burden on competition
because the proposed rule change will
continue to apply uniformly for all
market participants who enter market
orders to sell into the System when
there is a zero-bid options.
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.
daltland on DSKBBV9HB2PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 11 and Rule
19b–4(f)(6) thereunder.12 Because the
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, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 13 and Rule 19b–4(f)(6)
thereunder.14
U.S.C. 78f(b)(8).
11 15 U.S.C. 78s(b)(3)(A)(iii).
12 17 CFR 240.19b–4(f)(6).
13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f)(6).
20:33 Jul 27, 2018
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–2018–033 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–2018–033. 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
offices 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–2018–033, and should
be submitted on or before August 20,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–16165 Filed 7–27–18; 8:45 am]
BILLING CODE 8011–01–P
15 Id.
10 15
VerDate Sep<11>2014
A proposed rule change filed under
Rule 19b–4(f)(6) 15 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),16 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become operative
immediately. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest
because the proposal raises no novel
issues. Specifically, as the Exchange
noted in its proposal, the provisions on
the handling of zero bid options are the
same as Rule 1035 of Nasdaq PHLX LLC
and the changes to the trading halt rules
clarify that the Exchange rejects auction
orders and responses during a trading
halt, which is consistent with the fact
that the Exchange does not commence
auctions during trading halts. Further,
the proposal conforms a minor reference
in the trading halt rules to better reflect
the fact that the Exchange halts trading
on a symbol-by-symbol basis. For these
reasons, the Commission hereby waives
the 30-day operative delay and
designates the proposal 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 necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
16 17
CFR 240.19b–4(f)(6)(iii).
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
17 For
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CFR 200.30–3(a)(12), (59).
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]]>Agencies
[Federal Register Volume 83, Number 146 (Monday, July 30, 2018)]
[Notices]
[Pages 36638-36640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16165]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83700; File No. SR-BX-2018-033]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Adopt a Rule
Concerning Handling of No Bid Options and To Clarify the Operation of
Chapter V, Section 3, Entitled ``Trading Halts''
July 24, 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 July 13, 2018 Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Chapter V, Section 3, entitled
``Trading Halts'' and Chapter VI, Section 6, entitled ``Acceptance of
Quotes and Orders.''
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 36639]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Chapter V, Section 3, entitled
``Trading Halts'' to add more specificity concerning auctions during a
trading halt and remove unnecessary rule text. The Exchange proposes to
adopt a zero bid options rule on BX within Chapter VI, Section 6,
entitled ``Acceptance of Quotes and Orders.'' Each proposal is
described in more detail below.
Chapter V, Section 3
The Exchange proposes to amend Chapter V, Section 3(a)(vi)(B) to
add a sentence which provides, ``Auction orders and responses are
rejected during a halt.'' The Exchange notes that today, during a
trading halt, the Exchange does not commence an auction. This proposed
rule text will make clear how auction orders and auction responses are
handled during a trading halt.
The Exchange proposes to amend Chapter V, Section 3(b), which
currently provides, ``In the event BX Regulation determines to halt
trading, all trading in the effected class or classes of options shall
be halted. BX Options shall disseminate through its trading facilities
and over OPRA a symbol with respect to such class or classes of options
indicating that trading has been halted, and a record of the time and
duration of the halt shall be made available to vendors.'' The Exchange
proposes to remove the words ``such class or'' in both places from this
sentence because the Exchange only disseminates over OPRA a symbol with
respect to classes of options to indicate a trading halt. Today, the
Exchange halts symbol by symbol; all classes or every option would be
halted. By amending this rule, the Exchange will add more transparency
as to how it determines to halt trading and disseminates information
regarding trading halts.
Chapter VI, Section 6
Today, the Exchange does not have a rule for the handling of
options with no bid or zero bid options. The Exchange's handling of
zero bid options on BX is identical to the manner in which zero bid is
handled on Phlx.\3\ The Exchange proposes to add this new rule to
Chapter VI, Section 6(a)(3). The new rule would provide, ``In the case
where the bid price for any options contract is $0.00, a market order
accepted into the System to sell that series shall be considered a
limit order to sell at a price equal to the minimum trading increment
as defined in Chapter VI, Section 5. Orders will be placed on the limit
order book in the order in which they were received by the System. With
respect to market orders to sell which are submitted prior to the
Opening and persist after the Opening, those orders are posted at a
price equal to the minimum trading increment as defined in Chapter VI,
Section 5.''
---------------------------------------------------------------------------
\3\ See Phlx Rule 1035.
---------------------------------------------------------------------------
The Exchange intends to accept and convert market orders to sell
allowing them an equal opportunity to trade if interest should arrive
in the case of a no bid option. The Exchange notes that the orders
would rest on the Order Book at the minimum price increment. The
Exchange notes market orders ``accepted into the System'' would be
converted to account for market orders that may not be accepted into
the System due to Limit Up-Limit Down restrictions, which may prevent
the market order from being accepted.\4\ Only after acceptance into the
System will market orders be treated as a sell limit order at a price
equal to the minimum trading increment.
---------------------------------------------------------------------------
\4\ The Limit Up-Limit Down requirements must be met first
before the proposed rule would apply.
---------------------------------------------------------------------------
Further, the Exchange proposes to add rule text, which provides
``Orders will be placed on the limit order book in the order in which
they were received by the System.'' \5\ The Exchange proposes to note
that with respect to market orders to sell in zero bid options, which
are submitted prior to the Opening Process \6\ and persist after the
Opening Process, those orders are posted at a price equal to the
minimum trading increment as defined in Chapter VI, Section 5.\7\ The
Exchange's proposed rule will provide market participants with greater
insight into the handling of orders where there is a zero bid. The
Exchange believes that this proposed amendment will accurately describe
the manner in which a zero-bid options series operates within the
System both before and after the Opening Process.
---------------------------------------------------------------------------
\5\ The time of receipt for an order is the time such message is
processed by the System.
\6\ The Exchange's Opening Process is described within Chapter
VI, Section 8.
\7\ Chapter VI, Section 5, entitled ``Minimum Increments''
provides for the minimum increments of trading.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Securities Exchange Act of 1934,\8\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\9\
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
for a free and open market and a national market system, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Chapter V, Section 3
The Exchange is providing greater transparency as to the manner in
which auctions are handled during a trading halt and the manner in
which the Exchange determines to halt trading and disseminates
information over OPRA during a trading halt. The Exchange believes that
this rule text is consistent with the Act and the protection of
investors and the public interest because it brings greater clarity to
the manner in which trading halts function and what type of information
is provided during a halt.
Chapter VI, Section 6
The Exchange's proposal to adopt a zero bid rule is consistent with
the Act and designed to promote just and equitable principles of trade
and to protect investors and the public interest by adopting text which
describes the handling of zero-bid options. The Exchange is treating
all market orders to sell in zero bid options in the same fashion by
converting all those orders, provided that the Exchange's disseminated
bid price in such option is zero for an option listed only on the
Exchange or, for an option listed on multiple exchanges and the
disseminated NBBO includes a bid price of zero in the series. Market
orders to sell in zero bid options will be placed on the limit order
book in the order in which they were received by the System. The
Exchange desires to prevent members from submitting market orders to
sell in no bid series, which would execute at a price of $0.00. The
Exchange believes that the proposed rule will achieve this objective
and continue to permit the Exchange to execute orders within its System
at prices that reflect some value. Adding rule text regarding market
orders to sell in zero bid options submitted prior to the Opening
Process and persisting after the Opening Process is consistent with the
Act because it provides more transparency as to the operation of this
rule and as to how those market orders to sell in zero bid options will
be handled by the System. Further, the Exchange believes that
memorializing its current practice within the rule text will bring more
clarity to the manner in which the zero bid rule operates to the
benefits of all market participants.
[[Page 36640]]
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\10\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
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\10\ 15 U.S.C. 78f(b)(8).
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Chapter V, Section 3
The Exchange's proposal to amend Chapter V, Section 3(a)(vi)(B) to
make clear how auction orders and auction responses are handled during
a trading halt and amend Chapter V, Section 3 to more specifically
describe how the Exchange determines to halt trading as well as the
information disseminated during a trading halt do not impose an undue
burden on competition because the amendments add more transparency to
the trading halt rule.
Chapter VI, Section 6
The Exchange's proposal to adopt a zero bid options rule does not
impose an undue burden on competition because the proposed rule change
will continue to apply uniformly for all market participants who enter
market orders to sell into the System when there is a zero-bid options.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the 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, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because the proposal
raises no novel issues. Specifically, as the Exchange noted in its
proposal, the provisions on the handling of zero bid options are the
same as Rule 1035 of Nasdaq PHLX LLC and the changes to the trading
halt rules clarify that the Exchange rejects auction orders and
responses during a trading halt, which is consistent with the fact that
the Exchange does not commence auctions during trading halts. Further,
the proposal conforms a minor reference in the trading halt rules to
better reflect the fact that the Exchange halts trading on a symbol-by-
symbol basis. For these reasons, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon
filing.\17\
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\15\ Id.
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change 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-2018-033 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-2018-033. 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 offices 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-2018-033, and should be submitted on
or before August 20, 2018.
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\18\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16165 Filed 7-27-18; 8:45 am]
BILLING CODE 8011-01-P
