Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Approving a Proposed Rule Change To Amend Rules 1000, 1064, and 1069 To Allow for the Snapshot Functionality of the Floor-Based Management System To Be Used for All Orders, 59433-59434 [2018-25467]
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Federal Register / Vol. 83, No. 226 / Friday, November 23, 2018 / Notices
Company Act and to enable the
Commission to administer the
provisions of the Investment Company
Act with respect to those companies.
After an investment company has filed
its notification of registration under
section 8(a), the company is then subject
to the provisions of the Investment
Company Act which govern certain
aspects of its organization and activities,
such as the composition of its board of
directors and the issuance of senior
securities. Form N–8A requires an
investment company to provide its
name, state of organization, form of
organization, classification, the name
and address of each investment adviser
of the investment company, the current
value of its total assets, and certain
other information readily available to
the investment company. If the
investment company is filing a
registration statement as required by
Section 8(b) of the Investment Company
Act concurrently with its notification of
registration, Form N–8A requires only
that the registrant file the cover page
(giving its name, address, and agent for
service of process) and sign the form in
order to effect registration.
Based on recent filings of notifications
of registration on Form N–8A, we
estimate that about 96 investment
companies file such notifications each
year. An investment company must only
file a notification of registration on
Form N–8A once. The currently
approved average hour burden per
investment company of preparing and
filing a notification of registration on
Form N–8A is one hour. Based on the
Commission staff’s experience with the
requirements of Form N–8A and with
disclosure documents generally—and
considering that investment companies
that are filing notifications of
registration on Form N–8A
simultaneously with the registration
statement under the Investment
Company Act are only required by Form
N–8A to file a signed cover page—we
continue to believe that this estimate is
appropriate. Therefore, we estimate that
the total annual hour burden to prepare
and file notifications of registration on
Form N–8A is 96 hours. The currently
approved cost burden of Form N–8A is
$449. We continue to believe that this
estimate is appropriate. Therefore, we
estimate that the total annual cost
burden to associated with preparing and
filing notifications of registration on
Form N–8A is about $43,104.
Estimates of average burden hours
and costs are made solely for the
purposes of the Paperwork Reduction
Act, and are not derived from a
comprehensive or even representative
survey or study of the costs of
VerDate Sep<11>2014
18:33 Nov 21, 2018
Jkt 247001
Commission rules and forms.
Compliance with the collection of
information requirements of Form N–8A
is mandatory. Responses to the
collection of information will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid OMB control number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
Lindsay.M.Abate@omb.eop.gov ; and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov. Comments must be
submitted to OMB within 30 days of
this notice.
Dated: November 19, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25490 Filed 11–21–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84610; File No. SR–Phlx–
2018–59]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Order Approving a
Proposed Rule Change To Amend
Rules 1000, 1064, and 1069 To Allow
for the Snapshot Functionality of the
Floor-Based Management System To
Be Used for All Orders
November 16, 2018.
I. Introduction
On September 18, 2018, Nasdaq PHLX
LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to allow the Snapshot
functionality of the Floor-Based
Management System (‘‘FBMS’’) to be
used for all orders on the trading floor.
The proposed rule change was
published for comment in the Federal
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00080
Fmt 4703
59433
Register on October 2, 2018.3 The
Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change.
II. Description of the Proposed Rule
Change
The ‘‘Snapshot’’ functionality of the
FBMS allows a Floor Broker, Registered
Options Trader (‘‘ROT’’), or Specialist to
‘‘provisionally execute’’ 4 a trade in the
trading crowd and capture and record
the market conditions that exist at the
time of the provisional execution.5 Once
the member triggers the Snapshot, the
member has up to 30 seconds to use the
information recorded on the Snapshot
for purposes of entering the terms of the
provisionally-executed trade into FBMS
and submitting the trade to the Trading
System.6 Once submitted, the Trading
System will only execute the trade if it
is consistent with the applicable priority
and trade-through rules based upon the
prevailing market as reflected on the
Snapshot at the time of the provisional
execution. The Trading System will
reject a trade that is subject to a
Snapshot if it would violate tradethough or priority rules.7
Currently, the ‘‘Snapshot’’ feature of
the FBMS may only be used to
provisionally execute certain types of
orders in the trading crowd.
Specifically, Floor Brokers, Specialists,
and ROTS may only use Snapshot to
provisionally execute multi-leg orders
and simple orders in options on
Exchange Traded Funds (‘‘ETFs’’) that
are included in the Options Penny
Pilot.8 The Exchange proposes to
expand the use of the Snapshot
functionality to all orders on the trading
floor, subject to the current procedures
for and the limitations on the use of
Snapshot.9 The Exchange believes that
3 See Securities Exchange Act Release No. 84290
(September 26, 2018), 83 FR 49596 (‘‘Notice’’).
4 A ‘‘provisional execution’’ occurs in the trading
crowd when either (1) the participants to a trade
reach a verbal agreement in the trading crowd as to
the terms of the trade; or (ii) a member announces
that he is crossing an order in accordance with Phlx
Rule 1064(a). See Phlx Rule 1069(a)(i)(A). See also
Notice, supra note 3, at 49596–97 n.5.
5 See Securities Exchange Act Release No. 81980
(October 30, 2017), 82 FR 51313 (November 3, 2017)
(SR–Phlx–2017–34) (approving the Snapshot
functionality as an exception to Phlx Rule 1000(f))
(‘‘Snapshot Approval’’). See also Securities
Exchange Act Release No. 83656 (July 17, 2018), 82
FR 34899 (July 23, 2018) (SR–Phlx–2018–40)
(expanding the availability of the Snapshot feature
to ROTS and Specialists).
6 See Notice, supra note 3, at 49596–97.
7 See id. at 49597.
8 See Phlx Rule 1069(a)(i)(A).
9 See Notice, supra note 3, at 49596–97. The
procedures and limitations regarding the current
Continued
Sfmt 4703
E:\FR\FM\23NON1.SGM
23NON1
59434
Federal Register / Vol. 83, No. 226 / Friday, November 23, 2018 / Notices
its proposed expansion of the use of
Snapshot will make the functionality
simpler, more consistent, and more
useful in a greater number of
circumstances than it is currently.10 To
effectuate these changes, the Exchange
proposes several modifications to Phlx
Rules 1000, 1064, and 1069.11
The Exchange represents that it does
not anticipate that the use of Snapshot
to provisionally execute all orders,
rather than just multi-leg or simple
orders in options on ETFs that are
included in the Options Penny Pilot,
will materially increase the risk that
Snapshot will be overused or abused
relative to its current use.12 Therefore,
the Exchange proposes to utilize the
same methods it currently uses to
surveil its members’ use of the Snapshot
functionality and represents that if
Surveillance detects a significant uptick
in improper usage, the Exchange will
evaluate whether additional controls are
necessary.13
Finally, the Exchange notes that it
expects to make Snapshot available for
all orders before the end of the fourth
quarter of 2018 and represents that it
will notify its members via an Options
Trader Alert, to be posted on the
Exchange’s website, at least seven
calendar days prior to the date when
Snapshot will be available for expanded
use.14
amozie on DSK3GDR082PROD with NOTICES1
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.15 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,16 which requires,
among other things, that the rules of a
national securities exchange be
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in securities
and, in general, to protect investors and
the public interest, and not be designed
use of Snapshot are currently set forth in Phlx Rule
1069 and will continue to apply.
10 See Notice, supra note 3, at 49597.
11 A more detailed description of the proposal
appears in the Notice.
12 See Notice, supra note 3, at 49597.
13 See id.
14 See id.
15 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
16 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014
18:33 Nov 21, 2018
Jkt 247001
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Commission notes that use of the
Snapshot functionality for certain orders
is one of the current exceptions set forth
in Phlx Rule 1000(f), and allows Floor
Brokers, ROTS, and Specialists to
provisionally execute, in the options
trading crowd (as opposed to through
FBMS), multi-leg orders and simple
orders in options on ETFs that are
included in the Options Penny Pilot.17
According to the Exchange, Snapshot
promotes just and equitable principles
of trade and serves the interests of
investors and the public by increasing
the likelihood that investors will be able
to execute their orders and do so in line
with their expectations.18 The Exchange
further represents that Snapshot is
designed to mitigate the risk that the
Trading System will reject a trade due
to a change in market conditions that
occurs between the time when the
parties to a trade negotiate a valid trade
on the trading floor and the time when
the Trading System receives the trade.
The Exchange believes that expanding
the availability of Snapshot to all orders
will broaden the scope of these
protections to the benefit of investors
and will make the exchange’s trading
floor more competitive with other
trading venues because it will make the
trading floor operate more efficiently.19
Further, the Exchange represents that
the proposal is consistent with Rule 611
of Regulation NMS, which requires the
Exchange to establish policies and
procedures that are reasonably designed
to prevent trade-throughs of protected
quotations. The Exchange notes that
although the proposal will change the
time of execution of a trade for purposes
of verifying compliance with tradethough and priority rules, the current
automated compliance verification
process will continue to apply and will
systematically prevent any violation of
the trade-though and priority rules.20
Finally, as noted above, the Exchange
does not believe that the proposal will
increase the risk that Snapshot will be
used improperly and believes that its
existing design controls are sufficient to
continue to closely monitor Snapshot
usage by its members.21
The Commission notes that, at the
time Snapshot was adopted, the
Exchange adopted several measures to
help ensure that Snapshot operates, and
is used by members, in a manner that
is consistent with the Act and Phlx’s
Phlx Rule 1000(f)(iii)(E).
Notice, supra note 3, at 49597.
19 See id. at 49597–98.
20 See id. at 49598.
21 See id. at 49597.
rules.22 The Commission notes that
these measures will continue to apply to
the expanded application of Snapshot to
all orders and should continue to ensure
that the Snapshot functionality will be
used in a manner that is consistent with
the Act and Phlx’s Rules. For example,
Phlx Rule 1069(a)(i)(B) will continue to
prohibit all members from triggering the
Snapshot feature for the purpose of
obtaining favorable, or avoiding
unfavorable, priority or trade-through
conditions. In addition, the Exchange
represents that its surveillance staff will
monitor the expanded use of Snapshot
and will evaluate whether additional
controls are needed if the Exchange
detects a significant uptick in improper
usage.23
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 24 and the rules and
regulations thereunder applicable to
national securities exchanges.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,25 that the
proposed rule change (SR–Phlx–2018–
59) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25467 Filed 11–21–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–172, OMB Control No.
3235–0169]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Form N–5.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
17 See
22 See
18 See
23 See
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
Snapshot Approval, supra note 5, at 51316.
Notice, supra note 3, at 49597.
24 15 U.S.C. 78f(b)(5).
25 15 U.S.C. 78s(b)(2).
26 17 CFR 200.30–3(a)(12).
E:\FR\FM\23NON1.SGM
23NON1
]]>Agencies
[Federal Register Volume 83, Number 226 (Friday, November 23, 2018)]
[Notices]
[Pages 59433-59434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25467]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84610; File No. SR-Phlx-2018-59]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Approving a
Proposed Rule Change To Amend Rules 1000, 1064, and 1069 To Allow for
the Snapshot Functionality of the Floor-Based Management System To Be
Used for All Orders
November 16, 2018.
I. Introduction
On September 18, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
allow the Snapshot functionality of the Floor-Based Management System
(``FBMS'') to be used for all orders on the trading floor. The proposed
rule change was published for comment in the Federal Register on
October 2, 2018.\3\ The Commission received no comment letters on the
proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 84290 (September 26,
2018), 83 FR 49596 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The ``Snapshot'' functionality of the FBMS allows a Floor Broker,
Registered Options Trader (``ROT''), or Specialist to ``provisionally
execute'' \4\ a trade in the trading crowd and capture and record the
market conditions that exist at the time of the provisional
execution.\5\ Once the member triggers the Snapshot, the member has up
to 30 seconds to use the information recorded on the Snapshot for
purposes of entering the terms of the provisionally-executed trade into
FBMS and submitting the trade to the Trading System.\6\ Once submitted,
the Trading System will only execute the trade if it is consistent with
the applicable priority and trade-through rules based upon the
prevailing market as reflected on the Snapshot at the time of the
provisional execution. The Trading System will reject a trade that is
subject to a Snapshot if it would violate trade-though or priority
rules.\7\
---------------------------------------------------------------------------
\4\ A ``provisional execution'' occurs in the trading crowd when
either (1) the participants to a trade reach a verbal agreement in
the trading crowd as to the terms of the trade; or (ii) a member
announces that he is crossing an order in accordance with Phlx Rule
1064(a). See Phlx Rule 1069(a)(i)(A). See also Notice, supra note 3,
at 49596-97 n.5.
\5\ See Securities Exchange Act Release No. 81980 (October 30,
2017), 82 FR 51313 (November 3, 2017) (SR-Phlx-2017-34) (approving
the Snapshot functionality as an exception to Phlx Rule 1000(f))
(``Snapshot Approval''). See also Securities Exchange Act Release
No. 83656 (July 17, 2018), 82 FR 34899 (July 23, 2018) (SR-Phlx-
2018-40) (expanding the availability of the Snapshot feature to ROTS
and Specialists).
\6\ See Notice, supra note 3, at 49596-97.
\7\ See id. at 49597.
---------------------------------------------------------------------------
Currently, the ``Snapshot'' feature of the FBMS may only be used to
provisionally execute certain types of orders in the trading crowd.
Specifically, Floor Brokers, Specialists, and ROTS may only use
Snapshot to provisionally execute multi-leg orders and simple orders in
options on Exchange Traded Funds (``ETFs'') that are included in the
Options Penny Pilot.\8\ The Exchange proposes to expand the use of the
Snapshot functionality to all orders on the trading floor, subject to
the current procedures for and the limitations on the use of
Snapshot.\9\ The Exchange believes that
[[Page 59434]]
its proposed expansion of the use of Snapshot will make the
functionality simpler, more consistent, and more useful in a greater
number of circumstances than it is currently.\10\ To effectuate these
changes, the Exchange proposes several modifications to Phlx Rules
1000, 1064, and 1069.\11\
---------------------------------------------------------------------------
\8\ See Phlx Rule 1069(a)(i)(A).
\9\ See Notice, supra note 3, at 49596-97. The procedures and
limitations regarding the current use of Snapshot are currently set
forth in Phlx Rule 1069 and will continue to apply.
\10\ See Notice, supra note 3, at 49597.
\11\ A more detailed description of the proposal appears in the
Notice.
---------------------------------------------------------------------------
The Exchange represents that it does not anticipate that the use of
Snapshot to provisionally execute all orders, rather than just multi-
leg or simple orders in options on ETFs that are included in the
Options Penny Pilot, will materially increase the risk that Snapshot
will be overused or abused relative to its current use.\12\ Therefore,
the Exchange proposes to utilize the same methods it currently uses to
surveil its members' use of the Snapshot functionality and represents
that if Surveillance detects a significant uptick in improper usage,
the Exchange will evaluate whether additional controls are
necessary.\13\
---------------------------------------------------------------------------
\12\ See Notice, supra note 3, at 49597.
\13\ See id.
---------------------------------------------------------------------------
Finally, the Exchange notes that it expects to make Snapshot
available for all orders before the end of the fourth quarter of 2018
and represents that it will notify its members via an Options Trader
Alert, to be posted on the Exchange's website, at least seven calendar
days prior to the date when Snapshot will be available for expanded
use.\14\
---------------------------------------------------------------------------
\14\ See id.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\15\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\16\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities and, in general, to protect
investors and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\15\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission notes that use of the Snapshot functionality for
certain orders is one of the current exceptions set forth in Phlx Rule
1000(f), and allows Floor Brokers, ROTS, and Specialists to
provisionally execute, in the options trading crowd (as opposed to
through FBMS), multi-leg orders and simple orders in options on ETFs
that are included in the Options Penny Pilot.\17\ According to the
Exchange, Snapshot promotes just and equitable principles of trade and
serves the interests of investors and the public by increasing the
likelihood that investors will be able to execute their orders and do
so in line with their expectations.\18\ The Exchange further represents
that Snapshot is designed to mitigate the risk that the Trading System
will reject a trade due to a change in market conditions that occurs
between the time when the parties to a trade negotiate a valid trade on
the trading floor and the time when the Trading System receives the
trade. The Exchange believes that expanding the availability of
Snapshot to all orders will broaden the scope of these protections to
the benefit of investors and will make the exchange's trading floor
more competitive with other trading venues because it will make the
trading floor operate more efficiently.\19\
---------------------------------------------------------------------------
\17\ See Phlx Rule 1000(f)(iii)(E).
\18\ See Notice, supra note 3, at 49597.
\19\ See id. at 49597-98.
---------------------------------------------------------------------------
Further, the Exchange represents that the proposal is consistent
with Rule 611 of Regulation NMS, which requires the Exchange to
establish policies and procedures that are reasonably designed to
prevent trade-throughs of protected quotations. The Exchange notes that
although the proposal will change the time of execution of a trade for
purposes of verifying compliance with trade-though and priority rules,
the current automated compliance verification process will continue to
apply and will systematically prevent any violation of the trade-though
and priority rules.\20\ Finally, as noted above, the Exchange does not
believe that the proposal will increase the risk that Snapshot will be
used improperly and believes that its existing design controls are
sufficient to continue to closely monitor Snapshot usage by its
members.\21\
---------------------------------------------------------------------------
\20\ See id. at 49598.
\21\ See id. at 49597.
---------------------------------------------------------------------------
The Commission notes that, at the time Snapshot was adopted, the
Exchange adopted several measures to help ensure that Snapshot
operates, and is used by members, in a manner that is consistent with
the Act and Phlx's rules.\22\ The Commission notes that these measures
will continue to apply to the expanded application of Snapshot to all
orders and should continue to ensure that the Snapshot functionality
will be used in a manner that is consistent with the Act and Phlx's
Rules. For example, Phlx Rule 1069(a)(i)(B) will continue to prohibit
all members from triggering the Snapshot feature for the purpose of
obtaining favorable, or avoiding unfavorable, priority or trade-through
conditions. In addition, the Exchange represents that its surveillance
staff will monitor the expanded use of Snapshot and will evaluate
whether additional controls are needed if the Exchange detects a
significant uptick in improper usage.\23\
---------------------------------------------------------------------------
\22\ See Snapshot Approval, supra note 5, at 51316.
\23\ See Notice, supra note 3, at 49597.
---------------------------------------------------------------------------
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act \24\ and the
rules and regulations thereunder applicable to national securities
exchanges.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\25\ that the proposed rule change (SR-Phlx-2018-59) be, and hereby
is, approved.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------
\26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25467 Filed 11-21-18; 8:45 am]
BILLING CODE 8011-01-P
