Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the Criteria for Listing an Option on an Underlying Covered Security, 20940-20944 [2019-09724]
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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Notices
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
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
control number.
Please direct your written comments
to 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.
Dated: May 8, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–09797 Filed 5–10–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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
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Extension:
Form F–7, SEC File No. 270–331, OMB
Control No. 3235–0383
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
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form F–7 (17 CFR 239.37) is a
registration statement under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.) used to register securities that are
offered for cash upon the exercise of
rights granted to a registrant’s existing
security holders to purchase or
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subscribe such securities. The
information collected is intended to
ensure that the information required to
be filed by the Commission permits
verification of compliance with
securities law requirements and assures
the public availability of such
information. Form F–7 takes
approximately 4 hours per response to
prepare and is filed by approximately 5
respondents. We estimate that 25% of 4
hours per response (one hour) is
prepared by the company for a total
annual reporting burden of 5 hours (one
hour per response × 5 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
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
control number.
Please direct your written comment to
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.
Dated: May 8, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–09798 Filed 5–10–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85798; File No. SR–BOX–
2019–15]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Modify the Criteria for
Listing an Option on an Underlying
Covered Security
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
Frm 00095
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
BOX Rule 5020 (Criteria for Underlying
Securities) to modify the criteria for
listing an option on an underlying
covered security. The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
internet website at https://
boxoptions.com.
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
self-regulatory organization 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 self-regulatory organization 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
BOX Rule 5020 (Criteria for Underlying
Securities) to modify the criteria for
listing an option on an underlying
covered security. This is a competitive
filing that is based on a proposal
submitted by NASDAQ PHLX LLC
(‘‘Phlx’’) and approved by the
Commission.3 The Exchange proposes
to modify Rule 5020(b)(5)(i) to permit
the listing of an option on an underlying
covered security that has a market price
of at least $3.00 for the previous three
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 34–
82474 (January 9, 2018) (Order Approving SR–
Phlx–2017–75).
2 17
May 7, 2019.
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(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 25,
2019, BOX Exchange LLC (‘‘Exchange’’
or ‘‘BOX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
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consecutive business days preceding the
date on which the Exchange submits a
certificate to the Options Clearing
Corporation (‘‘OCC’’) for listing and
trading. The Exchange does not intend
to amend any other criteria for listing
options on an underlying security in
Rule 5020.
Currently, the underlying covered
security must have a closing market
price of at least $3.00 per share for the
previous five consecutive business days
preceding the date on which the
Exchange submits a listing certificate to
the OCC. In the proposed amendment,
the market price will still be measured
by the closing price reported in the
primary market in which the underlying
covered security is traded, but the
measurement will be the price over the
prior three consecutive business day
period preceding the submission of the
listing certificate to OCC, instead of the
prior five business day period.
The Exchange acknowledges that the
Options Listing Procedures Plan 4
requires that the listing certificate be
provided to OCC no earlier than 12:01
a.m. and no later than 11:00 a.m.
(Chicago time) on the trading day prior
to the day on which trading is to begin.5
The proposed amendment will still
comport with that requirement. For
example, if an initial public offering
(‘‘IPO’’) occurs at 11 a.m. on Monday,
the earliest date the Exchange could
submit its listing certificate to OCC
would be on Thursday by 12:01 a.m.
(Chicago time), with the market price
determined by the closing price over the
three-day period from Monday through
Wednesday. The option on the IPO
would then be eligible for trading on the
Exchange on Friday. The proposed
amendment would essentially enable
options trading within four business
days of an IPO becoming available
instead of six business days (five
4 The Plan for the Purpose of Developing and
Implementing procedures Designed to Facilitate the
Listing and Trading of Standardized Options
Submitted Pursuant to Section 11a(2)(3)(B) of the
Securities Exchange Act of 1934 (a/k/a the Options
Listing Procedures Plan (‘‘OLPP’’)) is a national
market system plan that, among other things, sets
forth procedures governing the listing of new
options series.
See Securities Exchange Act Release No. 44521
(July 6, 2001), 66 FR 36809 (July 13, 2001) (Order
approving OLPP). The sponsors of OLPP include
Phlx; OCC; BATS Exchange, Inc.; BOX Options
Exchange LLC; C2 Options Exchange, Incorporated;
Chicago Board Options Exchange, Incorporated;
EDGX Exchange, Inc.; Miami International
Securities Exchange, LLC; MIAX PEARL, LLC; The
NASDAQ Stock Market LLC; NASDAQ BX, Inc.;
Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq
MRX, LLC; NYSE American, LLC; and NYSE Arca,
Inc.
5 See OLPP at page 3.
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consecutive days plus the day the listing
certificate is submitted to OCC).
At the time the Exchange adopted the
‘‘look back’’ period of five consecutive
business days, it determined that the
five-day period was sufficient to protect
against attempts to manipulate the
market price of the underlying security
and would provide a reliable test for
stability.6 Surveillance technologies and
procedures concerning manipulation
have evolved since then to provide
adequate prevention or detection of rule
or securities law violations within the
proposed time frame, and the Exchange
represents that its existing trading
surveillances are adequate to monitor
the trading of options on the Exchange.7
Furthermore, the Exchange notes that
the scope of its surveillance program
also includes cross market surveillance
for trading that is not just limited to the
Exchange. In particular, the Financial
Industry Regulatory Authority
(‘‘FINRA’’), pursuant to a regulatory
services agreement, operates a range of
cross-market equity surveillance
patterns on behalf of the Exchange to
look for potential manipulative
behavior, including spoofing, algorithm
gaming, marking the close and open,
and momentum ignition strategies, as
well as more general, abusive behavior
related to front running, wash shales,
quoting/routing, and Reg SHO
violations. These cross-market patterns
incorporate relevant data from various
markets beyond the Exchange, including
data from the New York Stock Exchange
(‘‘NYSE’’) and from the Nasdaq Stock
Market (‘‘Nasdaq’’).
Additionally, for options, the
Exchange, through FINRA, utilizes an
array of patterns that monitor
manipulation of options, or
manipulation of equity securities
(regardless of venue) for the purpose of
impacting options prices on BOX
options facility (i.e., mini-manipulation
strategies). Accordingly, the Exchange
believes that the cross market
6 See Securities Exchange Act Release Nos. 47190
(January 15, 2003), 68 FR 3072 (January 22, 2003)
(SR–CBOE–2002–62); 47352 (February 11, 2003), 68
FR 8319 (February 20, 2003) (SR–PCX–2003–06);
47483 (March 11, 2003), 68 FR 13352 (March
19,2003) (SR–ISE–2003–04); 47613 (April 1, 2003),
68 FR 17120 (April 8, 2003) (SR–Amex–2003–19);
and 47794 (May 5, 2003), 68 FR 25076 (May 9,
2003) (SR–Phlx–2003–27)
7 Such surveillance procedures generally focus on
detecting securities trading subject to opening price
manipulation, closing price manipulation, layering,
spoofing or other unlawful activity impacting an
underlying security, the option, or both. The
Exchange, through the Financial Industry
Regulatory Authority (‘‘FINRA’’), has price
movement alerts, unusual market activity and order
book alerts active for all trading symbols. These real
time patterns are active for the new security as soon
as the IPO begins trading.
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20941
surveillance performed by FINRA on
behalf of the Exchange, coupled with
the Exchange staff’s real-time
monitoring of similarly violative activity
on the exchange as described herein,
reflects a comprehensive surveillance
program that is adequate to monitor for
manipulation of the underlying security
and overlying option within the
proposed three-day look back period.
Furthermore, the Exchange notes that
the proposed listing criteria would still
require that the underlying security be
listed on NYSE, the American Stock
Exchange (now known as NYSE
American), or the National Market
System of The Nasdaq Stock Market
(now known as the Nasdaq Global
Market) (collectively, the ‘‘Named
Markets’’), as provided for in the
definition of ‘‘covered security’’ from
Section 18(b)(1)(A) of the 1933 Act.8
Accordingly, the Exchange believes that
the proposed rule change would still
ensure that the underlying security
meets the high listing standards of a
Named Market, and would also ensure
that the underlying is covered by the
regulatory protections (including market
surveillance, investigation and
enforcement) offered by these exchanges
for trading in covered securities
conducted on their facilities.
Furthermore, according to Phlx’s
approved proposal, the Nasdaq, had no
cases, within a five year period ending
in 2018, where an IPO-related issue for
which it had pricing information
qualified for the $3.00 price requirement
during the first three (3) days of trading
and did not qualify for the $3.00 price
requirement during the first five (5)
days.9 In other words, none of these
qualifying issues fell below the $3.00
threshold within the first three (3) or
five (5) days of trading. As such, the
Exchange believes that its existing
surveillance technologies and
procedures, coupled with Nasdaq’s
findings related to the IPO-related issues
as described herein, adequately address
potential concerns regarding possible
manipulation or price stability within
the proposed timeframe.
The Exchange also believes that the
proposed look back period can be
implemented in connection with the
other initial listing criteria for
8 See
15 U.S.C. 77r(b)(1)(A).
were over 750 IPO-related issues on
Nasdaq within the past five years. Out of all of the
issues with pricing information, there was only one
issue that had a price below $3.00 during the first
five consecutive business days. The Exchange
notes, however, that Nasdaq allows for companies
to list on the Nasdaq Capital Market at $2.00 or
$3.00 per share in some instances, which was the
case for this particular issue. See Nasdaq Rule 5500
Series for initial listing standards on the Nasdaq
Capital Market. See also supra note 3.
9 There
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underlying covered securities. In
particular, the Exchange recognizes that
it may be difficult to verify the number
of shareholders in the days immediately
following an IPO due to the fact that
stock trades generally clear within two
business days (T+2) of their trade date
and therefore the shareholder count will
generally not be known until T+2.10 The
Exchange notes that the current T+2
settlement cycle was recently reduced
from T+3 on September 5, 2017 in
connection with the Commission’s
amendments to Exchange Rule 15c6–
1(a) to adopt the shortened settlement
cycle,11 and the look back period of
three (3) consecutive business days
proposed herein reflects this shortened
T+2 settlement period. As proposed,
stock trades would clear within T+2 of
their trade date (i.e., within three (3)
business days) and therefore the number
of shareholders could be verified within
three (3) business days, thereby enabling
options trading within four (4) business
days of an IPO (three (3) consecutive
business days plus the day the listing
certificate is submitted to OCC).
Furthermore, the Exchange notes that
various brokerage firms that have a large
retail customer clientele can confirm the
number of individual customers who
have a position in new issues. The
earliest that these firms can provide
confirmation is usually the day after the
first day of trading (T+1) on an unsettled
basis, while others can confirm on the
third day of trading (T+2). For the
foregoing reasons, the Exchange believes
that basing the proposed three (3)
business day look back period on the
T+2 settlement cycle would allow for
sufficient verification of the number of
shareholders.
The proposed rule change will apply
to all covered securities that meet the
criteria of Rule 5020. Pursuant to Rule
5020, the Exchange establishes
guidelines to be considered in
evaluating the potential underlying
securities for Exchange option
transactions.12 However, the fact that a
particular security may meet the
guidelines established by the Exchange
does not necessarily mean that it will be
approved as an underlying security.13
As part of the established criteria, the
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10 The
number of shareholders of record can be
validated by large clearing agencies such as the
Depository Trust and Clearing Corporation
(‘‘DTCC’’) upon the settlement date (i.e., T+2).
11 See Securities Exchange Act Release no. 78962
(September 28, 2016), 81 FR 69240 (October 5,
2016) (Amendment to Securities Transaction
Settlement Cycle) (File No. S7–22–16).
12 See Exchange Rule 5020. The Exchange
established specific criteria to be considered in
evaluating potential underlying securities for
Exchange option transactions.
13 Id.
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issuer must be in compliance with any
applicable requirement of the Securities
Exchange Act of 1934.14 Additionally,
in considering the underlying security,
the Exchange relies on information
made publicly available by the issuer
and/or the markets in which the
security is traded.15 Even if the
proposed option meets the objective
criteria, the Exchange may decide not to
list, or place limitations or conditions
upon listing.16 The Exchange believes
that these measures, together with its
existing surveillance procedures,
provide adequate safeguards in the
review of any covered security that may
meet the proposed criteria for
consideration of the option within the
timeframe contained in this proposal.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),17 in general, and Section 6(b)(5)
of the Act,18 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
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest.
In particular, the Exchange believes
that the proposed changes to its listing
standards for covered securities would
allow the Exchange to more quickly list
options on a qualifying covered security
that has met the $3.00 eligibility price
without sacrificing investor protection.
As discussed above, the Exchange
believes that its existing trading
surveillances provide a sufficient
measure of protection against potential
price manipulation within the proposed
three (3) consecutive business day
timeframe. The Exchange also believes
that the proposed three (3) consecutive
business day timeframe would continue
to be a reliable test for price stability in
light of Nasdaq’s findings that none of
the IPO-related issues on Nasdaq,
within a five year time period ending in
2018, qualified for the $3.00 per share
price standard during the first three
trading days fell below the $3.00
threshold during the fourth or fifth
trading day. Furthermore, the
14 See
Exchange Rule 5020(b)(3).
Exchange Rule 5020(d).
16 See Exchange Rule 5020(b).
17 15 U.S.C. 78f(b).
18 15 U.S.C. 78f(b)(5).
15 See
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established guidelines to be considered
by the Exchange in evaluating the
potential underlying securities for
Exchange option transactions,19 together
with existing trading surveillances,
provide adequate safeguards in the
review of any covered security that may
meet the proposed criteria for
consideration of the option within the
proposed timeframe.
In addition, the Exchange believes
that basing the proposed timeframe on
the T+2 settlement cycle adequately
addresses the potential difficulties in
confirming the number of shareholders
of the underlying covered security. For
the foregoing reasons, the Exchange
believes that the proposed amendments
will remove impediments and perfect
the mechanism of a free and open
market and a national market system by
providing an avenue for investors to
swiftly hedge their investment in the
stock in a shorter amount of time than
what is currently in place.20
Finally, it should be noted that a
price/time standard for the underlying
security was first adopted when the
listed options market was in its infancy,
and was intended to prevent the
proliferation of options being listed on
low-priced securities that presented
special manipulation concerns and/or
lacked liquidity needed to maintain fair
and orderly markets.21 When options
trading commenced in 1973, the
Commission determined that it was
necessary for securities underlying
options to meet certain minimum
standards regarding both the quality of
the issuer and the quality of the market
for a particular security.22 These
standards, including a price/time
standard, were imposed to ensure that
those issuers upon whose securities
options were to be traded were widelyheld, financially sound companies
whose shares had trading volume and
float substantial enough so as not to be
readily susceptible to manipulation.23
At the time, the Commission
determined that the imposition of these
standards was reasonable in view of the
pilot nature of options trading and the
19 See
notes 12–16 above.
proposed rule change does not alter any
obligations of issuers or other investors of an IPO
that may be subject to a lock-up or other restrictions
on trading related securities.
21 See Securities Exchange Act Release No. 29628
(August 29, 1991), 56 FR 43949–01 (September 5,
1991) (SR–AMEX–86–21; SR–CBOE–86–15; SR–
NYSE–86–20; SR–PSE86–15; and SR–PHLX–86–21)
(‘‘1991 Approval Order’’) at 43949 (discussing the
Commission’s concerns when options trading
initially commenced in 1973).
22 See 1991 Approval Order at 43949.
23 Id.
20 This
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limited experience of investors with
options trading.24
Now more than 40 years later, the
listed options market has evolved into a
mature market with sophisticated
investors. In view of this evolution, the
Commission has approved various
exchange proposals to relax some of
these initial listing standards
throughout the years,25 including
reducing the price/time standard in
2003 from $7.50 per share for the
majority of business days over a three
month period to the current $3.00 per
share/five business day standard (‘‘2003
Proposal’’).26 It has been over sixteen
years since the Commission approved
the 2003 proposal, and both the listed
options market and exchange
technologies have continued to evolve
since then. In this instance, the
Exchange is only proposing a modest
reduction of the current five (5) business
day standard to three (3) business days
to correspond to the securities
industry’s move to a T+2 standard
settlement cycle.27 The $3.00 per share
standard and all other initial options
listing criteria in Rule 5020 will remain
unchanged by this proposal. For the
reasons discussed herein, the Exchange
therefore believes that the proposed
three (3) business day period will be
beneficial to the marketplace without
sacrificing investor protections.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. In this regard
and as indicated above, the Exchange
notes that the rule change is being
proposed as a competitive response to a
filing submitted by Phlx that was
approved by the Commission.28 The
proposed rule change will reduce the
number of days to list options on an
underlying security, and is intended to
bring new options listings to the
marketplace quicker.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 29 and
subparagraph (f)(6) of Rule 19b–4
thereunder.30
A proposed rule change filed under
Rule 19b–4(f)(6) 31 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 32 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange states that the
waiver of the operative delay will
ensure fair competition among the
exchanges by allowing the Exchange to
modify the criteria for listing an option
on an underlying covered security
which is currently allowed on other
options exchanges. The Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the operative delay and
designates the proposed rule change as
operative upon filing.33
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24 Id.
25 See e.g., 1991 Approval Order (modifying a
number of initial listing criteria, including the
reduction of the price/time standard from $10 per
share each day during the preceding three calendar
months to $7.50 per share for the majority of days
during the same period).
26 See Securities Exchange Act Release Nos.
47190 (January 15, 2003), 68 FR 3072 (January 22,
2003) (SR–CBOE–2002–62); 47352 (February 11,
2003), 68 FR 8319 (February 20, 2003) (SR–PCX–
2003–06); 47483 (March 11, 2003), 68 FR 13352
(March 19, 2003) (SR–ISE–2003–04); 47613 (April
1, 2003), 68 FR 17120 (April 8, 2003) (SRAmex–
2003–19); and 47794 (May 5, 2003), 68 FR 25076
(May 9, 2003) (SR–Phlx–200327).
27 See supra note 11.
28 See supra, note 3.
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29 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and the text of 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.
31 17 CFR 240.19b–4(f)(6).
32 17 CFR 240.19b–4(f)(6)(iii).
33 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
30 17
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20943
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2019–15 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–BOX–2019–15. 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
E:\FR\FM\13MYN1.SGM
13MYN1
20944
Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Notices
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–BOX–2019–15 and should
be submitted on or before June 3, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–09724 Filed 5–10–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
FEDERAL REGISTER CITATION OF PREVIOUS
ANNOUNCEMENT: 84 FR 19979, 7 May
2019.
PREVIOUSLY ANNOUNCED TIME AND DATE OF
THE MEETING: Thursday, May 9, 2019 at
9:00 a.m.
The following
item will not be considered during the
Open Meeting on Thursday, May 9,
2019:
• Whether to propose certain rule
amendments and interpretive guidance
regarding the cross-border application of
certain security-based swap
requirements under the Securities
Exchange Act of 1934 that were added
by Title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act.
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed, please contact the
Office of the Secretary at (202) 551–
5400.
CHANGES IN THE MEETING:
Dated: May 8, 2019.
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019–09894 Filed 5–9–19; 11:15 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
jbell on DSK3GLQ082PROD with NOTICES
Administrator’s Line of Succession
Designation, No. 1–A, Revision 37
This document replaces and
supersedes ‘‘Line of Succession
Designation No. 1–A, Revision 36’’.
Line of Succession Designation No. 1–
A, Revision 37:
Effective immediately, the
Administrator’s Line of Succession
Designation is as follows:
34 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
16:29 May 10, 2019
Jkt 247001
(a) In the event of my inability to
perform the functions and duties of my
position, or my absence from the office,
the Deputy Administrator will assume
all functions and duties of the
Administrator. In the event the Deputy
Administrator and I are both unable to
perform the functions and duties of the
position or are absent from our offices,
I designate the officials in listed order
below, if they are eligible to act as
Administrator under the provisions of
the Federal Vacancies Reform Act of
1998 (5 U.S.C. 3345–3349d), to serve as
Acting Administrator with full authority
to perform all acts which the
Administrator is authorized to perform:
(1) Chief of Staff;
(2) General Counsel;
(3) Associate Administrator, Office of
Capital Access;
(4) Associate Administrator, Office of
Disaster Assistance;
(5) Regional Administrator for Region
IX; and
(6) Regional Administrator for Region
VIII.
Notwithstanding the provisions of
SBA Standard Operating Procedure 00
01 2, ‘‘absence from the office,’’ as used
in reference to myself in paragraph (a)
above, means the following:
(1) I am not present in the office and
cannot be reasonably contacted by
phone or other electronic means, and
there is an immediate business necessity
for the exercise of my authority; or
(2) I am not present in the office and,
upon being contacted by phone or other
electronic means, I determine that I
cannot exercise my authority effectively
without being physically present in the
office.
(b) An individual serving in an acting
capacity in any of the positions listed in
subparagraphs (a)(1) through (6), unless
designated as such by the
Administrator, is not also included in
this Line of Succession. Instead, the
next non-acting incumbent in the Line
of Succession shall serve as Acting
Administrator.
(c) This designation shall remain in
full force and effect until revoked or
superseded in writing by the
Administrator, or by the Deputy
Administrator when serving as Acting
Administrator.
(d) Serving as Acting Administrator
has no effect on the officials listed in
subparagraphs (a)(1) through (6), above,
with respect to the authorities, duties,
and responsibilities of their full-time
positions (except that such official
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
cannot both recommend and approve an
action).
Christopher M. Pilkerton,
Acting Administrator.
[FR Doc. 2019–09775 Filed 5–10–19; 8:45 am]
BILLING CODE P
DEPARTMENT OF STATE
[Public Notice: 10768]
Advisory Committee for the Study of
Eastern Europe and the Independent
States of the Former Soviet Union
(Title VIII) Public Meeting Notice
The Advisory Committee for the
Study of Eastern Europe and the
Independent States of the Former Soviet
Union (Advisory Committee) will
convene on Wednesday, June 26, from
1:30 p.m. until approximately 3:30 p.m.
The meeting will take place at the U.S.
Department of State, Harry S Truman
Building, 2201 C Street NW,
Washington, DC, in Room 1485.
The Advisory Committee will
recommend grant recipients for the 2019
funding opportunity for the Program for
the Study of Eastern Europe and the
Independent States of the Former Soviet
Union, in accordance with the Research
and Training for Eastern Europe and the
Independent States of the Former Soviet
Union Act of 1983, Public Law 98–164,
as amended. The agenda will include
opening statements by the chairperson
and members of the committee. The
committee will provide an overview and
discussion of grant proposals from
‘‘national organizations with an interest
and expertise in conducting research
and training concerning the countries of
Eastern Europe and the Independent
States of the Former Soviet Union,’’
based on the guidelines set forth in the
June request for proposals published on
Grants.gov and SAMS Domestic
(mygrants.service-now.com). Following
committee deliberation, interested
members of the public may make oral
statements concerning the Title VIII
program.
This meeting will be open to the
public; however, attendance is limited
to available seating. Entry into the Harry
S Truman building is controlled and
must be arranged in advance of the
meeting. Those planning to attend
should notify the Title VIII Program
Officer at the U.S. Department of State
at TitleVIII@state.gov, subject: Public
Meeting RSVP, no later than close of
business, Tuesday, June 25, 2019.
For pre-clearance into the Harry S
Truman building, the Title VIII Program
Officer will request identifying data
pursuant to Public Law 99–399
E:\FR\FM\13MYN1.SGM
13MYN1
]]>Agencies
[Federal Register Volume 84, Number 92 (Monday, May 13, 2019)]
[Notices]
[Pages 20940-20944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09724]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85798; File No. SR-BOX-2019-15]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Modify the
Criteria for Listing an Option on an Underlying Covered Security
May 7, 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 April 25, 2019, BOX Exchange LLC (``Exchange'' or ``BOX'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule 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 BOX Rule 5020 (Criteria for
Underlying Securities) to modify the criteria for listing an option on
an underlying covered security. The text of the proposed rule change is
available from the principal office of the Exchange, at the
Commission's Public Reference Room and also on the Exchange's internet
website at https://boxoptions.com.
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 self-regulatory organization
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 self-regulatory organization
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 BOX Rule 5020 (Criteria for
Underlying Securities) to modify the criteria for listing an option on
an underlying covered security. This is a competitive filing that is
based on a proposal submitted by NASDAQ PHLX LLC (``Phlx'') and
approved by the Commission.\3\ The Exchange proposes to modify Rule
5020(b)(5)(i) to permit the listing of an option on an underlying
covered security that has a market price of at least $3.00 for the
previous three
[[Page 20941]]
consecutive business days preceding the date on which the Exchange
submits a certificate to the Options Clearing Corporation (``OCC'') for
listing and trading. The Exchange does not intend to amend any other
criteria for listing options on an underlying security in Rule 5020.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 34-82474 (January 9,
2018) (Order Approving SR-Phlx-2017-75).
---------------------------------------------------------------------------
Currently, the underlying covered security must have a closing
market price of at least $3.00 per share for the previous five
consecutive business days preceding the date on which the Exchange
submits a listing certificate to the OCC. In the proposed amendment,
the market price will still be measured by the closing price reported
in the primary market in which the underlying covered security is
traded, but the measurement will be the price over the prior three
consecutive business day period preceding the submission of the listing
certificate to OCC, instead of the prior five business day period.
The Exchange acknowledges that the Options Listing Procedures Plan
\4\ requires that the listing certificate be provided to OCC no earlier
than 12:01 a.m. and no later than 11:00 a.m. (Chicago time) on the
trading day prior to the day on which trading is to begin.\5\ The
proposed amendment will still comport with that requirement. For
example, if an initial public offering (``IPO'') occurs at 11 a.m. on
Monday, the earliest date the Exchange could submit its listing
certificate to OCC would be on Thursday by 12:01 a.m. (Chicago time),
with the market price determined by the closing price over the three-
day period from Monday through Wednesday. The option on the IPO would
then be eligible for trading on the Exchange on Friday. The proposed
amendment would essentially enable options trading within four business
days of an IPO becoming available instead of six business days (five
consecutive days plus the day the listing certificate is submitted to
OCC).
---------------------------------------------------------------------------
\4\ The Plan for the Purpose of Developing and Implementing
procedures Designed to Facilitate the Listing and Trading of
Standardized Options Submitted Pursuant to Section 11a(2)(3)(B) of
the Securities Exchange Act of 1934 (a/k/a the Options Listing
Procedures Plan (``OLPP'')) is a national market system plan that,
among other things, sets forth procedures governing the listing of
new options series.
See Securities Exchange Act Release No. 44521 (July 6, 2001), 66
FR 36809 (July 13, 2001) (Order approving OLPP). The sponsors of
OLPP include Phlx; OCC; BATS Exchange, Inc.; BOX Options Exchange
LLC; C2 Options Exchange, Incorporated; Chicago Board Options
Exchange, Incorporated; EDGX Exchange, Inc.; Miami International
Securities Exchange, LLC; MIAX PEARL, LLC; The NASDAQ Stock Market
LLC; NASDAQ BX, Inc.; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX,
LLC; NYSE American, LLC; and NYSE Arca, Inc.
\5\ See OLPP at page 3.
---------------------------------------------------------------------------
At the time the Exchange adopted the ``look back'' period of five
consecutive business days, it determined that the five-day period was
sufficient to protect against attempts to manipulate the market price
of the underlying security and would provide a reliable test for
stability.\6\ Surveillance technologies and procedures concerning
manipulation have evolved since then to provide adequate prevention or
detection of rule or securities law violations within the proposed time
frame, and the Exchange represents that its existing trading
surveillances are adequate to monitor the trading of options on the
Exchange.\7\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release Nos. 47190 (January 15,
2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62); 47352
(February 11, 2003), 68 FR 8319 (February 20, 2003) (SR-PCX-2003-
06); 47483 (March 11, 2003), 68 FR 13352 (March 19,2003) (SR-ISE-
2003-04); 47613 (April 1, 2003), 68 FR 17120 (April 8, 2003) (SR-
Amex-2003-19); and 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003)
(SR-Phlx-2003-27)
\7\ Such surveillance procedures generally focus on detecting
securities trading subject to opening price manipulation, closing
price manipulation, layering, spoofing or other unlawful activity
impacting an underlying security, the option, or both. The Exchange,
through the Financial Industry Regulatory Authority (``FINRA''), has
price movement alerts, unusual market activity and order book alerts
active for all trading symbols. These real time patterns are active
for the new security as soon as the IPO begins trading.
---------------------------------------------------------------------------
Furthermore, the Exchange notes that the scope of its surveillance
program also includes cross market surveillance for trading that is not
just limited to the Exchange. In particular, the Financial Industry
Regulatory Authority (``FINRA''), pursuant to a regulatory services
agreement, operates a range of cross-market equity surveillance
patterns on behalf of the Exchange to look for potential manipulative
behavior, including spoofing, algorithm gaming, marking the close and
open, and momentum ignition strategies, as well as more general,
abusive behavior related to front running, wash shales, quoting/
routing, and Reg SHO violations. These cross-market patterns
incorporate relevant data from various markets beyond the Exchange,
including data from the New York Stock Exchange (``NYSE'') and from the
Nasdaq Stock Market (``Nasdaq'').
Additionally, for options, the Exchange, through FINRA, utilizes an
array of patterns that monitor manipulation of options, or manipulation
of equity securities (regardless of venue) for the purpose of impacting
options prices on BOX options facility (i.e., mini-manipulation
strategies). Accordingly, the Exchange believes that the cross market
surveillance performed by FINRA on behalf of the Exchange, coupled with
the Exchange staff's real-time monitoring of similarly violative
activity on the exchange as described herein, reflects a comprehensive
surveillance program that is adequate to monitor for manipulation of
the underlying security and overlying option within the proposed three-
day look back period.
Furthermore, the Exchange notes that the proposed listing criteria
would still require that the underlying security be listed on NYSE, the
American Stock Exchange (now known as NYSE American), or the National
Market System of The Nasdaq Stock Market (now known as the Nasdaq
Global Market) (collectively, the ``Named Markets''), as provided for
in the definition of ``covered security'' from Section 18(b)(1)(A) of
the 1933 Act.\8\ Accordingly, the Exchange believes that the proposed
rule change would still ensure that the underlying security meets the
high listing standards of a Named Market, and would also ensure that
the underlying is covered by the regulatory protections (including
market surveillance, investigation and enforcement) offered by these
exchanges for trading in covered securities conducted on their
facilities.
---------------------------------------------------------------------------
\8\ See 15 U.S.C. 77r(b)(1)(A).
---------------------------------------------------------------------------
Furthermore, according to Phlx's approved proposal, the Nasdaq, had
no cases, within a five year period ending in 2018, where an IPO-
related issue for which it had pricing information qualified for the
$3.00 price requirement during the first three (3) days of trading and
did not qualify for the $3.00 price requirement during the first five
(5) days.\9\ In other words, none of these qualifying issues fell below
the $3.00 threshold within the first three (3) or five (5) days of
trading. As such, the Exchange believes that its existing surveillance
technologies and procedures, coupled with Nasdaq's findings related to
the IPO-related issues as described herein, adequately address
potential concerns regarding possible manipulation or price stability
within the proposed timeframe.
---------------------------------------------------------------------------
\9\ There were over 750 IPO-related issues on Nasdaq within the
past five years. Out of all of the issues with pricing information,
there was only one issue that had a price below $3.00 during the
first five consecutive business days. The Exchange notes, however,
that Nasdaq allows for companies to list on the Nasdaq Capital
Market at $2.00 or $3.00 per share in some instances, which was the
case for this particular issue. See Nasdaq Rule 5500 Series for
initial listing standards on the Nasdaq Capital Market. See also
supra note 3.
---------------------------------------------------------------------------
The Exchange also believes that the proposed look back period can
be implemented in connection with the other initial listing criteria
for
[[Page 20942]]
underlying covered securities. In particular, the Exchange recognizes
that it may be difficult to verify the number of shareholders in the
days immediately following an IPO due to the fact that stock trades
generally clear within two business days (T+2) of their trade date and
therefore the shareholder count will generally not be known until
T+2.\10\ The Exchange notes that the current T+2 settlement cycle was
recently reduced from T+3 on September 5, 2017 in connection with the
Commission's amendments to Exchange Rule 15c6-1(a) to adopt the
shortened settlement cycle,\11\ and the look back period of three (3)
consecutive business days proposed herein reflects this shortened T+2
settlement period. As proposed, stock trades would clear within T+2 of
their trade date (i.e., within three (3) business days) and therefore
the number of shareholders could be verified within three (3) business
days, thereby enabling options trading within four (4) business days of
an IPO (three (3) consecutive business days plus the day the listing
certificate is submitted to OCC).
---------------------------------------------------------------------------
\10\ The number of shareholders of record can be validated by
large clearing agencies such as the Depository Trust and Clearing
Corporation (``DTCC'') upon the settlement date (i.e., T+2).
\11\ See Securities Exchange Act Release no. 78962 (September
28, 2016), 81 FR 69240 (October 5, 2016) (Amendment to Securities
Transaction Settlement Cycle) (File No. S7-22-16).
---------------------------------------------------------------------------
Furthermore, the Exchange notes that various brokerage firms that
have a large retail customer clientele can confirm the number of
individual customers who have a position in new issues. The earliest
that these firms can provide confirmation is usually the day after the
first day of trading (T+1) on an unsettled basis, while others can
confirm on the third day of trading (T+2). For the foregoing reasons,
the Exchange believes that basing the proposed three (3) business day
look back period on the T+2 settlement cycle would allow for sufficient
verification of the number of shareholders.
The proposed rule change will apply to all covered securities that
meet the criteria of Rule 5020. Pursuant to Rule 5020, the Exchange
establishes guidelines to be considered in evaluating the potential
underlying securities for Exchange option transactions.\12\ However,
the fact that a particular security may meet the guidelines established
by the Exchange does not necessarily mean that it will be approved as
an underlying security.\13\ As part of the established criteria, the
issuer must be in compliance with any applicable requirement of the
Securities Exchange Act of 1934.\14\ Additionally, in considering the
underlying security, the Exchange relies on information made publicly
available by the issuer and/or the markets in which the security is
traded.\15\ Even if the proposed option meets the objective criteria,
the Exchange may decide not to list, or place limitations or conditions
upon listing.\16\ The Exchange believes that these measures, together
with its existing surveillance procedures, provide adequate safeguards
in the review of any covered security that may meet the proposed
criteria for consideration of the option within the timeframe contained
in this proposal.
---------------------------------------------------------------------------
\12\ See Exchange Rule 5020. The Exchange established specific
criteria to be considered in evaluating potential underlying
securities for Exchange option transactions.
\13\ Id.
\14\ See Exchange Rule 5020(b)(3).
\15\ See Exchange Rule 5020(d).
\16\ See Exchange Rule 5020(b).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\17\ in general, and Section 6(b)(5) of the Act,\18\ 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 mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposed changes to
its listing standards for covered securities would allow the Exchange
to more quickly list options on a qualifying covered security that has
met the $3.00 eligibility price without sacrificing investor
protection. As discussed above, the Exchange believes that its existing
trading surveillances provide a sufficient measure of protection
against potential price manipulation within the proposed three (3)
consecutive business day timeframe. The Exchange also believes that the
proposed three (3) consecutive business day timeframe would continue to
be a reliable test for price stability in light of Nasdaq's findings
that none of the IPO-related issues on Nasdaq, within a five year time
period ending in 2018, qualified for the $3.00 per share price standard
during the first three trading days fell below the $3.00 threshold
during the fourth or fifth trading day. Furthermore, the established
guidelines to be considered by the Exchange in evaluating the potential
underlying securities for Exchange option transactions,\19\ together
with existing trading surveillances, provide adequate safeguards in the
review of any covered security that may meet the proposed criteria for
consideration of the option within the proposed timeframe.
---------------------------------------------------------------------------
\19\ See notes 12-16 above.
---------------------------------------------------------------------------
In addition, the Exchange believes that basing the proposed
timeframe on the T+2 settlement cycle adequately addresses the
potential difficulties in confirming the number of shareholders of the
underlying covered security. For the foregoing reasons, the Exchange
believes that the proposed amendments will remove impediments and
perfect the mechanism of a free and open market and a national market
system by providing an avenue for investors to swiftly hedge their
investment in the stock in a shorter amount of time than what is
currently in place.\20\
---------------------------------------------------------------------------
\20\ This proposed rule change does not alter any obligations of
issuers or other investors of an IPO that may be subject to a lock-
up or other restrictions on trading related securities.
---------------------------------------------------------------------------
Finally, it should be noted that a price/time standard for the
underlying security was first adopted when the listed options market
was in its infancy, and was intended to prevent the proliferation of
options being listed on low-priced securities that presented special
manipulation concerns and/or lacked liquidity needed to maintain fair
and orderly markets.\21\ When options trading commenced in 1973, the
Commission determined that it was necessary for securities underlying
options to meet certain minimum standards regarding both the quality of
the issuer and the quality of the market for a particular security.\22\
These standards, including a price/time standard, were imposed to
ensure that those issuers upon whose securities options were to be
traded were widely-held, financially sound companies whose shares had
trading volume and float substantial enough so as not to be readily
susceptible to manipulation.\23\ At the time, the Commission determined
that the imposition of these standards was reasonable in view of the
pilot nature of options trading and the
[[Page 20943]]
limited experience of investors with options trading.\24\
---------------------------------------------------------------------------
\21\ See Securities Exchange Act Release No. 29628 (August 29,
1991), 56 FR 43949-01 (September 5, 1991) (SR-AMEX-86-21; SR-CBOE-
86-15; SR-NYSE-86-20; SR-PSE86-15; and SR-PHLX-86-21) (``1991
Approval Order'') at 43949 (discussing the Commission's concerns
when options trading initially commenced in 1973).
\22\ See 1991 Approval Order at 43949.
\23\ Id.
\24\ Id.
---------------------------------------------------------------------------
Now more than 40 years later, the listed options market has evolved
into a mature market with sophisticated investors. In view of this
evolution, the Commission has approved various exchange proposals to
relax some of these initial listing standards throughout the years,\25\
including reducing the price/time standard in 2003 from $7.50 per share
for the majority of business days over a three month period to the
current $3.00 per share/five business day standard (``2003
Proposal'').\26\ It has been over sixteen years since the Commission
approved the 2003 proposal, and both the listed options market and
exchange technologies have continued to evolve since then. In this
instance, the Exchange is only proposing a modest reduction of the
current five (5) business day standard to three (3) business days to
correspond to the securities industry's move to a T+2 standard
settlement cycle.\27\ The $3.00 per share standard and all other
initial options listing criteria in Rule 5020 will remain unchanged by
this proposal. For the reasons discussed herein, the Exchange therefore
believes that the proposed three (3) business day period will be
beneficial to the marketplace without sacrificing investor protections.
---------------------------------------------------------------------------
\25\ See e.g., 1991 Approval Order (modifying a number of
initial listing criteria, including the reduction of the price/time
standard from $10 per share each day during the preceding three
calendar months to $7.50 per share for the majority of days during
the same period).
\26\ See Securities Exchange Act Release Nos. 47190 (January 15,
2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62); 47352
(February 11, 2003), 68 FR 8319 (February 20, 2003) (SR-PCX-2003-
06); 47483 (March 11, 2003), 68 FR 13352 (March 19, 2003) (SR-ISE-
2003-04); 47613 (April 1, 2003), 68 FR 17120 (April 8, 2003)
(SRAmex-2003-19); and 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003)
(SR-Phlx-200327).
\27\ See supra note 11.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In this regard and as indicated
above, the Exchange notes that the rule change is being proposed as a
competitive response to a filing submitted by Phlx that was approved by
the Commission.\28\ The proposed rule change will reduce the number of
days to list options on an underlying security, and is intended to
bring new options listings to the marketplace quicker.
---------------------------------------------------------------------------
\28\ See supra, note 3.
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \29\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\30\
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78s(b)(3)(A)(iii).
\30\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and the text of 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) \31\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \32\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange states that
the waiver of the operative delay will ensure fair competition among
the exchanges by allowing the Exchange to modify the criteria for
listing an option on an underlying covered security which is currently
allowed on other options exchanges. The Commission believes that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the operative delay and designates the proposed rule change as
operative upon filing.\33\
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\31\ 17 CFR 240.19b-4(f)(6).
\32\ 17 CFR 240.19b-4(f)(6)(iii).
\33\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BOX-2019-15 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-BOX-2019-15. 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
[[Page 20944]]
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-BOX-2019-15 and should be
submitted on or before June 3, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09724 Filed 5-10-19; 8:45 am]
BILLING CODE 8011-01-P
