Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 510, Minimum Price Variations and Minimum Trading Increments, 13355-13357 [2019-06516]
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
change will allow the Exchange to add
classes to the pilot that are actively
traded at the start of the second quarter
(i.e., in April 2019) and replace those
that have been delisted and are no
longer trading on a more frequent basis.
This will help ensure that the top 363
most actively traded, multiply-listed
classes are included in the Pilot, which
will enable further analysis of the
Pilot.12
At any time within 60 days of the
filing of such 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
under Section 19(b)(2)(B) 13 of the Act 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:
jbell on DSK30RV082PROD with NOTICES
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–
NASDAQ–2019–020 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–NASDAQ–2019–020. 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
12 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
13 15 U.S.C. 78s(b)(2)(B).
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Jkt 247001
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly.
All submissions should refer to File
Number SR–NASDAQ–2019–020 and
should be submitted on or before April
25, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06511 Filed 4–3–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85457; File No. SR–
EMERALD–2019–16]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 510, Minimum Price Variations
and Minimum Trading Increments
March 29, 2019.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on March 22, 2019, MIAX Emerald, LLC
(‘‘MIAX Emerald’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
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13355
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rule 510, Minimum
Price Variations and Minimum Trading
Increments, to specify that replacement
classes may be added to the Penny Pilot
Program on a quarterly basis, without
altering the expiration date of the Penny
Pilot Program, which is June 30, 2019.3
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald at MIAX Emerald’s
principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 510, Minimum Price Variations
and Minimum Trading Increments,
Interpretations and Policies .01,
regarding the Penny Pilot Program, to
specify that replacement classes may be
added to the Penny Pilot Program on a
quarterly basis, without altering the
expiration date of the Penny Pilot
Program, which is June 30, 2019.
The Exchange recently filed to extend
the Penny Pilot Program until June 30,
2019 (from December 31, 2018) and also
updated the rule text to delete the
sentence regarding replacement classes
being added to the Penny Pilot Program
on the second trading day following July
1, 2018. At that time, the Exchange
noted that the deletion would create a
difference between the rule text of
MIAX Emerald and that of the
Exchange’s affiliates, Miami
International Securities Exchange, LLC
and MIAX PEARL, LLC, however, in
3 See Securities Exchange Act Release No. 85225
(March 1, 2019), 84 FR 8353 (March 7, 2019) (SR–
EMERALD–2019–06).
E:\FR\FM\04APN1.SGM
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13356
Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
practice there would be no difference as
the second trading day following
January 1, 2019 had already passed.4
The Exchange now proposes to adopt a
new sentence to the rule text about
when replacement classes may be added
to the Penny Pilot Program. Specifically,
the Exchange proposes to add the
following sentence after the last
sentence of Exchange Rule 510,
Interpretations and Policies .01: ‘‘The
replacement classes may be added to the
penny pilot on the second trading day
in the first month of each quarter.’’
Exchange Rule 510 currently
authorizes the Exchange to replace any
option classes in the Penny Pilot
Program that have been delisted with
the next most actively traded multiply
listed option classes that are not yet
included in the Penny Pilot Program,
based on trading activity in the previous
six months.5 The Exchange now
proposes to modify Rule 510, Minimum
Price Variations and Minimum Trading
Increments, Interpretations and Policies
.01, to allow the Exchange to add
replacement classes (for Penny Pilot
Program classes that have been delisted)
on a quarterly basis. With this proposal,
the Exchange would add eligible
replacement classes in April, July,
October of 2019, and then in January of
2020 and each subsequent quarter. The
Exchange believes this change would
allow the Exchange to update option
classes eligible for the Penny Pilot
Program (by replacing delisted classes)
on a quarterly basis and would enable
further analysis of the Penny Pilot
Program and a determination of how the
Penny Pilot Program should be
structured in the future.
As is the case today, the Exchange
will determine replacement classes
based on trading activity in the previous
six months (the ‘‘six month lookback’’)
but will not use the month immediately
preceding the addition of a replacement
to the Penny Pilot Program. Thus, a
replacement class to be added on the
second trading day following April 1,
2019 would be identified based on The
Option Clearing Corporation’s trading
volume data from September 1, 2018
through February 28, 2019.6 The
Exchange believes the six month
lookback is appropriate because this
time period would help reduce the
impact of unusual trading activity as a
result of unique market events, such as
a corporate action (i.e., it would result
in a more reliable measure of average
4 See
id.
5 See Exchange Rule 510, Interpretations and
Policies .01.
6 Exchange Rule 510, Interpretations and Policies
.01 continues to obligate the Exchange to announce
the replacement classes by a Listings Alert.
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Jkt 247001
daily trading volume than would a
shorter period).
This filing does not propose any
substantive changes to the Penny Pilot
Program: all classes currently
participating will remain the same and
all minimum increments will remain
unchanged. The Exchange believes the
benefits to public customers and other
market participants who will be able to
express their true prices to buy and sell
options have been demonstrated to
outweigh the increase in quote traffic. In
addition, the proposed change would
align the Exchange with competing
options exchanges that have proposed
rules consistent with this proposal.7
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 8 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 9 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
Additionally, the Exchange believes
the proposed rule change is consistent
with the Section 6(b)(5) 10 requirement
that the rules of an exchange not be
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers. In
particular, the Exchange believes the
proposal to allow the addition of
replacement classes to the Penny Pilot
Program on a quarterly basis would
result in a more current list of Penny
Pilot Program-eligible classes and would
enable further analysis of the Penny
Pilot Program, including for a
determination of how the Penny Pilot
Program should be structured in the
future. Further, the Exchange believes
the six month lookback is appropriate
because this time period would help
reduce the impact of unusual trading
activity as a result of unique market
events, such as a corporate action (i.e.,
it would result in a more reliable
7 See Securities Exchange Act Release Nos. 85348
(March 18, 2019), 84 FR 10860 (March 22, 2019)
(SR–NYSEAMER–2019–05); 85363 (March 19,
2019) (SR–NYSEARCA–2019–13) (Notice of Filing
and Immediate Effectiveness of Proposed Rule
Change Amending Commentary .02 to Rule 6.72–O
to specify that replacement issues may be added to
the Penny Pilot quarterly).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
10 Id.
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
measure of average daily trading volume
than would a shorter period). Thus, the
Exchange believes this proposal would
promote just and equitable principles of
trade, foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and remove impediments to and perfect
the mechanisms of a free and open
market and a national market system.
The Exchange notes that it is not
making any other substantive changes to
the Penny Pilot Program, other than
modifying the timing for replacement
issues and therefore the Exchange will
continue to participate in a program that
has been viewed as beneficial to traders,
investors and public customers and
viewed as successful by the other
options exchanges participating in it.
The Exchange believes that the Penny
Pilot Program would continue to
promote just and equitable principles of
trade by enabling public customers and
other market participants to express
their true prices to buy and sell options
to the benefit of all market participants.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange believes that allowing the
Exchange to add replacement classes to
the Penny Pilot Program on a quarterly
basis would make the list of Penny Pilot
Program-eligible classes more current
and would enable further analysis of the
Penny Pilot Program, including for a
determination of how the Penny Pilot
Program should be structured in the
future. In doing so, the proposed rule
change will also serve to promote
regulatory clarity and consistency,
thereby reducing burdens on the
marketplace and facilitating investor
protection. The Penny Pilot Program is
an industry-wide initiative supported by
all other option exchanges. The
Exchange believes that the proposed
change would allow for continued
competition between Exchange market
participants trading similar products as
their counterparts on other exchanges,
while at the same time allowing the
Exchange to continue to compete for
order flow with other exchanges in
option issues trading as part of the
Penny Pilot Program.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / 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
prior to 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 and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),14 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 proposal may
become operative immediately upon
filing. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
change will allow the Exchange to add
classes to the pilot that are actively
traded at the start of the second quarter
(i.e., in April 2019) and replace those
that have been delisted and are no
longer trading on a more frequent basis.
This will help ensure that the top 363
most actively traded, multiply-listed
classes are included in the Pilot, which
will enable further analysis of the
Pilot.15
At any time within 60 days of the
filing of such 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
11 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
jbell on DSK30RV082PROD with NOTICES
12 17
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17:25 Apr 03, 2019
Jkt 247001
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
under Section 19(b)(2)(B) 16 of the Act 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 rule-comments@
sec.gov. Please include File Number SR–
EMERALD–2019–16 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–EMERALD–2019–16. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly.
All submissions should refer to File
Number SR–EMERALD–2019–16 and
should be submitted on or before April
25, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06516 Filed 4–3–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85454; File No. SR–BX–
2019–005]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Chapter VI,
Section 5, ‘‘Minimum Increments’’
March 29, 2019.
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 March 21,
2019, 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 VI, Section 5, ‘‘Minimum
Increments,’’ to specify replacement
issues that may be added to the Penny
Pilot (‘‘Pilot’’) on a quarterly basis,
without altering the expiration date of
the Pilot, which is June 30, 2019.
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
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
16 15
PO 00000
U.S.C. 78s(b)(2)(B).
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Agencies
[Federal Register Volume 84, Number 65 (Thursday, April 4, 2019)]
[Notices]
[Pages 13355-13357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06516]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85457; File No. SR-EMERALD-2019-16]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Exchange Rule 510, Minimum Price Variations and Minimum Trading
Increments
March 29, 2019.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 22, 2019, MIAX Emerald, LLC (``MIAX
Emerald'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 is filing a proposal to amend Exchange Rule 510,
Minimum Price Variations and Minimum Trading Increments, to specify
that replacement classes may be added to the Penny Pilot Program on a
quarterly basis, without altering the expiration date of the Penny
Pilot Program, which is June 30, 2019.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 85225 (March 1,
2019), 84 FR 8353 (March 7, 2019) (SR-EMERALD-2019-06).
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/emerald at MIAX
Emerald's principal office, and at the Commission's Public Reference
Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 510, Minimum Price Variations
and Minimum Trading Increments, Interpretations and Policies .01,
regarding the Penny Pilot Program, to specify that replacement classes
may be added to the Penny Pilot Program on a quarterly basis, without
altering the expiration date of the Penny Pilot Program, which is June
30, 2019.
The Exchange recently filed to extend the Penny Pilot Program until
June 30, 2019 (from December 31, 2018) and also updated the rule text
to delete the sentence regarding replacement classes being added to the
Penny Pilot Program on the second trading day following July 1, 2018.
At that time, the Exchange noted that the deletion would create a
difference between the rule text of MIAX Emerald and that of the
Exchange's affiliates, Miami International Securities Exchange, LLC and
MIAX PEARL, LLC, however, in
[[Page 13356]]
practice there would be no difference as the second trading day
following January 1, 2019 had already passed.\4\ The Exchange now
proposes to adopt a new sentence to the rule text about when
replacement classes may be added to the Penny Pilot Program.
Specifically, the Exchange proposes to add the following sentence after
the last sentence of Exchange Rule 510, Interpretations and Policies
.01: ``The replacement classes may be added to the penny pilot on the
second trading day in the first month of each quarter.''
---------------------------------------------------------------------------
\4\ See id.
---------------------------------------------------------------------------
Exchange Rule 510 currently authorizes the Exchange to replace any
option classes in the Penny Pilot Program that have been delisted with
the next most actively traded multiply listed option classes that are
not yet included in the Penny Pilot Program, based on trading activity
in the previous six months.\5\ The Exchange now proposes to modify Rule
510, Minimum Price Variations and Minimum Trading Increments,
Interpretations and Policies .01, to allow the Exchange to add
replacement classes (for Penny Pilot Program classes that have been
delisted) on a quarterly basis. With this proposal, the Exchange would
add eligible replacement classes in April, July, October of 2019, and
then in January of 2020 and each subsequent quarter. The Exchange
believes this change would allow the Exchange to update option classes
eligible for the Penny Pilot Program (by replacing delisted classes) on
a quarterly basis and would enable further analysis of the Penny Pilot
Program and a determination of how the Penny Pilot Program should be
structured in the future.
---------------------------------------------------------------------------
\5\ See Exchange Rule 510, Interpretations and Policies .01.
---------------------------------------------------------------------------
As is the case today, the Exchange will determine replacement
classes based on trading activity in the previous six months (the ``six
month lookback'') but will not use the month immediately preceding the
addition of a replacement to the Penny Pilot Program. Thus, a
replacement class to be added on the second trading day following April
1, 2019 would be identified based on The Option Clearing Corporation's
trading volume data from September 1, 2018 through February 28,
2019.\6\ The Exchange believes the six month lookback is appropriate
because this time period would help reduce the impact of unusual
trading activity as a result of unique market events, such as a
corporate action (i.e., it would result in a more reliable measure of
average daily trading volume than would a shorter period).
---------------------------------------------------------------------------
\6\ Exchange Rule 510, Interpretations and Policies .01
continues to obligate the Exchange to announce the replacement
classes by a Listings Alert.
---------------------------------------------------------------------------
This filing does not propose any substantive changes to the Penny
Pilot Program: all classes currently participating will remain the same
and all minimum increments will remain unchanged. The Exchange believes
the benefits to public customers and other market participants who will
be able to express their true prices to buy and sell options have been
demonstrated to outweigh the increase in quote traffic. In addition,
the proposed change would align the Exchange with competing options
exchanges that have proposed rules consistent with this proposal.\7\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 85348 (March 18,
2019), 84 FR 10860 (March 22, 2019) (SR-NYSEAMER-2019-05); 85363
(March 19, 2019) (SR-NYSEARCA-2019-13) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Commentary
.02 to Rule 6.72-O to specify that replacement issues may be added
to the Penny Pilot quarterly).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \9\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. In particular, the Exchange
believes the proposal to allow the addition of replacement classes to
the Penny Pilot Program on a quarterly basis would result in a more
current list of Penny Pilot Program-eligible classes and would enable
further analysis of the Penny Pilot Program, including for a
determination of how the Penny Pilot Program should be structured in
the future. Further, the Exchange believes the six month lookback is
appropriate because this time period would help reduce the impact of
unusual trading activity as a result of unique market events, such as a
corporate action (i.e., it would result in a more reliable measure of
average daily trading volume than would a shorter period). Thus, the
Exchange believes this proposal would promote just and equitable
principles of trade, foster cooperation and coordination with persons
engaged in facilitating transactions in securities, and remove
impediments to and perfect the mechanisms of a free and open market and
a national market system.
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\10\ Id.
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The Exchange notes that it is not making any other substantive
changes to the Penny Pilot Program, other than modifying the timing for
replacement issues and therefore the Exchange will continue to
participate in a program that has been viewed as beneficial to traders,
investors and public customers and viewed as successful by the other
options exchanges participating in it.
The Exchange believes that the Penny Pilot Program would continue
to promote just and equitable principles of trade by enabling public
customers and other market participants to express their true prices to
buy and sell options to the benefit of all market participants.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
believes that allowing the Exchange to add replacement classes to the
Penny Pilot Program on a quarterly basis would make the list of Penny
Pilot Program-eligible classes more current and would enable further
analysis of the Penny Pilot Program, including for a determination of
how the Penny Pilot Program should be structured in the future. In
doing so, the proposed rule change will also serve to promote
regulatory clarity and consistency, thereby reducing burdens on the
marketplace and facilitating investor protection. The Penny Pilot
Program is an industry-wide initiative supported by all other option
exchanges. The Exchange believes that the proposed change would allow
for continued competition between Exchange market participants trading
similar products as their counterparts on other exchanges, while at the
same time allowing the Exchange to continue to compete for order flow
with other exchanges in option issues trading as part of the Penny
Pilot Program.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
[[Page 13357]]
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 prior to
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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 proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. The change will allow
the Exchange to add classes to the pilot that are actively traded at
the start of the second quarter (i.e., in April 2019) and replace those
that have been delisted and are no longer trading on a more frequent
basis. This will help ensure that the top 363 most actively traded,
multiply-listed classes are included in the Pilot, which will enable
further analysis of the Pilot.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For purposes only of waiving the operative delay for this
proposal, 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 such 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 under
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 15 U.S.C. 78s(b)(2)(B).
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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-EMERALD-2019-16 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-EMERALD-2019-16. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly.
All submissions should refer to File Number SR-EMERALD-2019-16 and
should be submitted on or before April 25, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-06516 Filed 4-3-19; 8:45 am]
BILLING CODE 8011-01-P