Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate ISE's Rules From Their Current Place in the Rulebook Into the New Rulebook Shell, 29567-29573 [2019-13305]

Download as PDF Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86138; File No. SR–ISE– 2019–17] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate ISE’s Rules From Their Current Place in the Rulebook Into the New Rulebook Shell June 18, 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 June 6, 2019, Nasdaq ISE, LLC (‘‘ISE’’ 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 relocate rules from its current Rulebook into its new Rulebook shell. The text of the proposed rule change is available on the Exchange’s website at http://ise.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this rule change is to relocate ISE rules into the new Rulebook shell with some amendments to the shell.3 The Exchange is relocating the ISE Rules first and plans on relocating the Rulebooks of its Affiliated Exchanges so that it may harmonize its rules, where applicable, across Nasdaq markets. The relocation and harmonization of the ISE Rules is part of the Exchange’s continued effort to promote efficiency and conformity of its processes with those of its Affiliated Exchanges. The Exchange believes that the placement of the ISE Rules into their new location in the shell will facilitate the use of the Rulebook by Members. Universal Changes The Exchange proposes to amend the defined term ‘‘System’’ 4 and replace ‘‘trading system’’ or ‘‘system’’ with the defined term throughout the new rules. The Exchange proposes to capitalize the defined term ‘‘market maker’’ within proposed Options 1, Section 1(a)(21) and also capitalize the term throughout the Rulebook. The Exchange proposes to capitalize the defined term ‘‘Member’’ 5 throughout the new rules where it is not already capitalized. The Exchange proposes to correct references to the non-defined term ‘‘member organization’’ to the defined term ‘‘Member.’’ The Exchange proposes to Proposed new rule No. jbell on DSK3GLQ082PROD with NOTICES Section 3 ............................................................. Section 4 ............................................................. U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Previously, the Exchange added a shell structure to its Rulebook with the purpose of improving efficiency and readability and to align its rules closer to those of its five sister exchanges, Nasdaq BX, Inc.; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; Nasdaq GEMX, LLC; and Nasdaq MRX, 2 17 VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 capitalize the ‘‘t’’ in the defined term ‘‘Exchange Transactions’’ 6 where the term is not properly capitalized within the Rules. The Exchange proposes to change references to ‘‘Commentary’’ to ‘‘Supplementary Material’’ to conform the term throughout the Rulebook. References to the term ‘‘Regulatory Information Circular’’ are being amended to the updated term ‘‘Options Regulatory Alert.’’ The Exchange proposes to update all cross-references within the Rule to the new relocated rule cites. The Exchange proposes to replace internal rule references to simply state ‘‘this Rule’’ where the rule is citing itself without a more specific cite included in the Rule. For example, if ISE Rule 715 refers currently to ‘‘Rule 715’’ or ‘‘this Rule 715’’ the Exchange will amend the phrase to simply ‘‘this Rule.’’ The Exchange proposes to conform numbering and lettering in certain rules to the remainder of the Rulebook. Finally, the Exchange proposes to delete any current Rules that are reserved in the Rulebook. General 1 The Exchange proposes to relocate certain definitions from Rule 100 into proposed General 1, Section 1 and the remainder of the rules into Options 1, Section 1. The Exchange proposes to relocate definitions that are specific to the options product into Options 1, Section 1 and the more general definitions will be relocated into the General provisions.7 General 2 The Exchange will not relocate ISE Rules 200–203 into General 2 Organization and Administration. The Exchange will separately file a proposed rule change to delete these rules. General 2 would be comprised of the following rules: Current rule No. Section 1 ............................................................. Section 2 (all 4 rules combined) ......................... 1 15 29567 Rule Rule Rule Rule Rule Rule Rule 204. 205. 206. 207. 208. 211. 312. Divisions of the Exchange. Access Fees. Transaction Fees. Communication Fees. Regulatory Fees or Charges. Exchange’s Costs of Defending Legal Proceedings. Limitation on Affiliation between the Exchange and Members. LLC (‘‘Affiliated Exchanges’’). The shell structure currently contains eight (8) Chapters which, once complete, will apply a common set of rules to the Affiliated Exchanges. See Securities Exchange Act Release No. 82175 (November 29, 2017), 82 FR 57494 (December 5, 2017) (SR–NASDAQ–2017– 125). 4 The term ‘‘System’’ is defined at Rule 100(a)(63). PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 5 The term ‘‘Member’’ is defined at Rule 100(a)(30). 6 The term ‘‘Exchange Transactions’’ is defined at Rule 100(a)(22). 7 These rules are being relocated into Section 1 of the General Provisions: Chapter I(a)(4), (9), (10), (13A), (17), (18), (20), (20A), (22), (25), (26), (27), (30), (31), (48), (57), (58), (62) and (66). E:\FR\FM\24JNN1.SGM 24JNN1 29568 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices The Exchange is combining Rules 205–208 into a single rule to conform the content to that of other Affiliated Exchanges.8 Rule 212, Sales Value Fee, will be relocated into Options 7. The Exchange intends to locate similar rules within other Nasdaq Rulebooks in similar locations when it files to relocate other Affiliate Exchange Rulebooks in separate rule changes. The Exchange proposes to reserve Sections 5 and 6 within General 2. Proposed new rule No. Section Section Section Section Section Section 1 2 3 4 5 6 General 3 The Exchange proposes to relocate the following rules into General 3, ‘‘Membership and Access.’’ Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. Rule Rule Rule Rule Rule Rule 301. 302. 304. 305. 306. 310. Qualification of Members. Denial of and Conditions to Becoming a Member. Persons Associated with Members. Documents Required of Applicants and Members. Member Application Procedures. Dissolution and Liquidation of Members. General 5 The Exchange proposes to relocate the following rules into General 5 Discipline: Proposed new rule No. Current rule No. Section 1 ............................................................. Section 2 ............................................................. Section 3 ............................................................. Options 1 Rule 1600. Disciplinary Jurisdiction. 80. Investigations and Sanctions. 90. Code of Procedure. proposed General 1, Section 1 and the remainder of the rules into Options 1, Section 1. The Exchange proposes to relocate definitions that are specific to the options product into Options 1, Section 1. Section 2 of Options 1 is being reserved. The Exchange proposes to rename current Options 1 from ‘‘Options Definitions’’ to ‘‘General Provisions.’’ The Exchange proposes to relocate certain definitions from Rule 100 into Proposed new rule No. Section Section Section Section Section Section Section Section 1 2 3 4 5 6 7 8 ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. Sections 9 and 10 will be reserved. Rule Rule Rule Rule Rule Rule Rule Rule 800. 801. 802. 803. 804. 805. 807. 809. Registration of Market Makers. Designated Trading Representatives. Appointment of Market Makers. Obligations of Market Makers. Market Maker Quotations except 804(h) which will be relocated into Options 3. Market Maker Orders. Securities Accounts and Orders of Market Makers. Financial Requirements for Market Makers. Options Section 2A titled ‘‘ISE Market Maker Rights’’ and proposes to relocate the following rules into this chapter: The Exchange proposes a new Proposed new rule No. jbell on DSK3GLQ082PROD with NOTICES 1 2 3 4 5 6 The Exchange proposes to rename Options 2 from ‘‘Options Trading Rules’’ to ‘‘Options Market Participants’’ and relocate the following rules into this chapter: Current rule No. Options 2A Section Section Section Section Section Section Options 2 Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. Section 7 ............................................................. Rule 300. Market Maker Rights. Rule 303. Approval to Operate Multiple Memberships. Rule 307. Sale and Transfer of Market Maker Rights. Rule 308. Leasing Memberships. Rule 309. Registration of Memberships by Individuals for Members. Rule 311. Obligations of Terminating Members and Transferors of Market Maker Rights and Memberships. Rule 209. Transfer Fees. 8 The Exchange is not proposing any substantive changes in consolidating these rules. VerDate Sep<11>2014 20:38 Jun 21, 2019 Jkt 247001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\24JNN1.SGM 24JNN1 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices Options 3 rename Options 3 from ‘‘Options Market Participants’’ to ‘‘Options Trading Rules’’ and relocate the following rules into this chapter: The Exchange proposes to Proposed new rule No. Current rule No. Section 1 ............................................................. Section 2 ............................................................. Rule 700. Days and Hours of Business. Rule 708. Units of Trading/Rule 709. Meaning of Premium Quotes and Orders (combined into one rule). Rule 710. Minimum Trading Increments. Rule 711. Acceptance of Quotes and Orders, except (c) and (d). Reserved. Rule 704. Collection and Dissemination of Quotations. Rule 715. Types of Orders. Rule 701. Opening. Rule 702. Trading Halts/Rule 703. Trading Halts Due To Extraordinary Market Volatility. Rule 713. Priority of Quotes and Orders. Rule 716. Auction Mechanisms. Rule 721. Crossing Orders. Rule 723. Price Improvement Mechanism for Crossing Transactions. Rule 722. Complex Orders. Rule 714. Automatic Execution of Orders. Rule 724. Complex Order Risk Protections. Kill Switch (relocating 711(c)). Detection of Loss of Communication (relocating 711(d)). Reserved. Rule 720. Nullification and Adjustment of Options Transactions including Obvious Errors/Rule 720A. Erroneous Trades due to System Disruptions and Malfunctions (combined into one rule). Rule 706. Access to and Conduct on the Exchange. Rule 717. Limitations on Orders. Rule 718. Data Feeds and Trade Information. Rule 719. Transaction Price Binding. Reserved. Message Traffic Mitigation (relocating Rule 804(h)). Rule 705. Limitation of Liability. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 3 ............................................................. 4 ............................................................. 5 ............................................................. 6 ............................................................. 7 ............................................................. 8 ............................................................. 9 ............................................................. 10 ........................................................... 11 ........................................................... 12 ........................................................... 13 ........................................................... 14 ........................................................... 15 ........................................................... 16 ........................................................... 17 ........................................................... 18 ........................................................... 19 ........................................................... 20 ........................................................... Section Section Section Section Section Section Section 21 22 23 24 25 26 27 ........................................................... ........................................................... ........................................................... ........................................................... ........................................................... ........................................................... ........................................................... The Exchange proposes to combine ISE Rules 708 and 709 within Section 2.9 ISE Rule 714 is being relocated into Options 3, Section 15 and is being renamed from ‘‘Automatic Execution of Orders’’ to ‘‘Simple Order Risk Protections.’’ ISE Rules 702 and 703 are being combined into Section 9. The Exchange proposes to combine ISE Rules 720 and 720A into Section 20.10 The Exchange proposes to relocate ISE Rule 711(c) and (d) into new separate Rules at Sections 17 and 18. The Exchange proposes to create a separate Proposed new rule No. Section Section Section Section Section Section Section Section Section Section 1 ............................................................. 2 ............................................................. 3 ............................................................. 4 ............................................................. 5 ............................................................. 6 ............................................................. 7 ............................................................. 8 ............................................................. 9 ............................................................. 10 ........................................................... Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Options 4A The Exchange proposes to relocate rules within new proposed Options 4A, 9 The Exchange is not proposing any substantive changes in consolidating these rules. Jkt 247001 which is proposed to be titled ‘‘Options Index Rules’’ as follows: Current rule No. Section 1 ............................................................. Section 2 ............................................................. 20:38 Jun 21, 2019 Options 4 The Exchange proposes to relocate rules within Options 4 Options Listing Rules as follows: 500. Designation of Securities. 501. Rights and Obligations of Holders and Writers. 502. Criteria for Underlying Securities. 503. Withdrawal of Approval of Underlying Securities. 504. Series of Options Contracts Open for Trading. 504A. Select Provisions of Options Listing Procedures Plan. 505. Adjustments. 506. Long-Term Options Contracts. 507. Limitation on the Liability of Index Licensors for Options on Fund Shares. 508. Back-Up Trading Arrangements. Proposed new rule No. VerDate Sep<11>2014 rule in Section 26 relocated from Rule 804(h) and title the rule ‘‘Message Traffic Mitigation.’’ Current rule No. Rule 509, ‘‘Authority to Take Action Under Emergency Conditions’’ is not being relocated as this rule will be deleted. jbell on DSK3GLQ082PROD with NOTICES 29569 Rule 2000. Application of Index Rules. Rule 2001. Definitions. 10 Id. PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 E:\FR\FM\24JNN1.SGM 24JNN1 29570 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Current rule No. 3 ............................................................. 4 ............................................................. 5 ............................................................. 6 ............................................................. 7 ............................................................. 8 ............................................................. 9 ............................................................. 10 ........................................................... 11 ........................................................... 12 ........................................................... 13 ........................................................... 14 ........................................................... 15 ........................................................... 16 ........................................................... Rule 2002. Designation of an Index. Reserved. Rule 2003. Dissemination of Information. Rule 2004. Position Limits for Broad-Based Index Options. Rule 2005. Position Limits for Industry Index Options. Rule 2005A. Position Limits for Foreign Currency Index Options. Rule 2006. Exemptions from Position Limits. Rule 2007. Exercise Limits. Rule 2008. Trading Sessions. Rule 2009. Terms of Index Options Contracts. Rule 2010. Debit Put Spread Cash Account Transactions. Rule 2011. Disclaimers. Rule 2012. Exercise of American-Style Index Options. Rule 2013. Market Maker Trading License. Administration’’ to ‘‘Order Protection and Locked and Crossed Markets’’ and Options 5 The Exchange proposes to rename Options 5 from ‘‘Options Trade Proposed new rule No. Section Section Section Section Section 1 2 3 4 5 Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. Options 6 The Exchange proposes rename Options 6 from ‘‘Order Protection and Rule Rule Rule Rule Rule 1900. 1901. 1902. 1903. 1904. Definitions. Order Protection. Locked and Crossed Markets. Order Routing to Other Exchanges. Cancellation of Orders and Error Account. Locked and Cross Markets’’ to ‘‘Options Trade Administration’’ and relocate rules within Options 6 as follows: Proposed new rule No. Section Section Section Section 1 2 3 4 relocate rules within Options 5 as follows: Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. Rule Rule Rule Rule 707. 712. 806. 808. Clearing Member Give Up. Submission of Orders and Clearance of Transactions. Trade Reporting and Comparison. Letters of Guarantee. Options 6A The Exchange proposes to relocate rules within new proposed Options 6A titled ‘‘Closing Transactions’’ as follows: Proposed new rule No. Current rule No. Section 1 ............................................................. Section 2 ............................................................. Options 6B The Exchange proposes to relocate rules within new proposed Options 6B Rule 1000. Contracts of Suspended Members. Rule 1001. Failure to Pay Premium. titled ‘‘Exercises and Deliveries’’ as follows: jbell on DSK3GLQ082PROD with NOTICES Proposed new rule No. Current rule No. Section 1 ............................................................. Section 2 ............................................................. Section 3 ............................................................. VerDate Sep<11>2014 20:38 Jun 21, 2019 Jkt 247001 Rule 1100. Exercise of Options Contracts. Rule 1101. Allocation of Exercise Notices. Rule 1102. Delivery and Payment. PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\24JNN1.SGM 24JNN1 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices 29571 Options 6C The Exchange proposes to relocate rules within new proposed Options 6C titled ‘‘Margins’’ as follows: Proposed new rule No. Section Section Section Section Section Section 1 2 3 4 5 6 Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. Options 6D Rule Rule Rule Rule Rule Rule 1200. 1201. 1202. 1203. 1204. 1205. General Rule. Time Margin Must Be Obtained. Margin Requirements. Meeting Margin Calls by Liquidation Prohibited. Margin Required Is Minimum. Margin Requirements Exception. rules within new proposed Options 6D titled ‘‘Net Capital Requirements’’ as follows: The Exchange proposes to relocate Proposed new rule No. Section Section Section Section 1 2 3 4 Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. Options 6E Rule Rule Rule Rule 1300. 1301. 1302. 1303. Minimum Requirements. ‘‘Early Warning’’ Notification Requirements. Power of President to Impose Restrictions. Joint Back Office Arrangements. rules within new proposed Options 6E titled ‘‘Records, Reports and Audits’’ as follows: The Exchange proposes to relocate Proposed new rule No. Section Section Section Section Section Section Section Section 1 2 3 4 5 6 7 8 Current rule No. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. ............................................................. Rule 1400. Maintenance, Retention and Furnishing of Books, Records and Other Information. Rule 1401. Reports of Uncovered Short Positions. Rule 1402. Financial Reports. Rule 1403. Audits. Rule 1404. Automated Submission of Trade Data. Rule 1405. Risk Analysis of Market Maker Accounts. Rule 1406. Regulatory Cooperation. Rule 1408. Fingerprint-Based Background Checks of Exchange Employees and Independent Contractors and Other Service Providers. The Exchange is updating various cross-references within Options 7 to reflect the new rule locations. Within the definition of Options 7, Section 1, the Exchange is also deleting rule references to ‘‘SSF-Option Orders’’ Options 7 The Exchange proposes to relocate Rule 212 titled ‘‘Sales Value Fee’’ to Options 7, Options Pricing at new proposed Section 12. jbell on DSK3GLQ082PROD with NOTICES Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section which terminology no longer exists within current Rule 722.11 Options 9 The Exchange proposes to relocate rules within new proposed Options 9 titled ‘‘Business Conduct’’ as follows: Current rule No. 1 ............................................................. 2 ............................................................. 3 ............................................................. 4 ............................................................. 5 ............................................................. 6 ............................................................. 7 ............................................................. 8 ............................................................. 9 ............................................................. 10 ........................................................... 11 ........................................................... 12 ........................................................... 13 ........................................................... 14 ........................................................... 15 ........................................................... 16 ........................................................... Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule 400. 401. 402. 403. 404. 405. 406. 407. 408. 409. 410. 411. 412. 413. 414. 415. Just and Equitable Principles of Trade. Adherence to Law. Sharing of Offices and Wire Connections. Disruptive Quoting and Trading Activity Prohibited. False Statements. Manipulation. Gratuities. Rumors. Prevention of the Misuse of Material Nonpublic Information. Disciplinary Action by Other Organizations. Other Restrictions on Members. Significant Business Transactions. Position Limits. Exemptions from Position Limits. Exercise Limits. Reports Related to Position Limits. 11 See Securities Exchange Act Release No. 82999 (April 5, 2018), 83 FR 15662 (April 11, 2018) (SR– ISE–2018–28). VerDate Sep<11>2014 20:38 Jun 21, 2019 Jkt 247001 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 E:\FR\FM\24JNN1.SGM 24JNN1 29572 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices Proposed new rule No. Section Section Section Section Section Section Section 17 18 19 20 21 22 23 Current rule No. ........................................................... ........................................................... ........................................................... ........................................................... ........................................................... ........................................................... ........................................................... Options 10 The Exchange proposes to relocate rules within new proposed Options 10 Rule 416. Liquidation Positions. Rule 417. Limit on Outstanding Uncovered Short Positions. Rule 418. Other Restrictions on Options Transactions and Exercises. Rule 419. Mandatory Systems Testing. Rule 420. Anti-Money Laundering Compliance Program. Rule 421. Proxy Voting. Reserved. titled ‘‘Doing Business with the Public’’ as follows: Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Current rule No. 1 ............................................................. 2 ............................................................. 3 ............................................................. 4 ............................................................. 5 ............................................................. 6 ............................................................. 7 ............................................................. 8 ............................................................. 9 ............................................................. 10 ........................................................... 11 ........................................................... 12 ........................................................... 13 ........................................................... 14 ........................................................... 15 ........................................................... 16 ........................................................... 17 ........................................................... 18 ........................................................... 19 ........................................................... 20 ........................................................... 21 ........................................................... 22 ........................................................... 23 ........................................................... The Exchange proposes to reserve Options 10, Sections 24 and 25. jbell on DSK3GLQ082PROD with NOTICES Options 11 Finally, the Exchange proposes to relocate Rule 1614, titled ‘‘Imposition of Fines for Minor Rule Violations’’ to Options 11 titled ‘‘Minor Rule Plan Violations’’ at Section 1. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Section 6(b)(5) of the Act,13 in particular, in that it is designed to promote just and equitable principles of trade and to protect investors and the public interest by bringing greater transparency to its rules by relocating its Rules into the new Rulebook shell together with other rules which have already been relocated. The Exchange’s proposal is consistent with the Act and will protect investors and the public interest by harmonizing its rules, where 12 15 13 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule 600. 601. 602. 606. 607. 608. 609. 610. 611. 612. 613. 614. 616. 617. 618. 619. 620. 621. 622. 623. 624. 625. 626. Exchange Approval. Registration of Options Principals. Registration of Representatives. Discipline, Suspension, Expulsion of Registered Persons. Branch Offices. Opening of Accounts. Supervision of Accounts. Suitability of Recommendations. Discretionary Accounts. Confirmation to Customers. Statement of Accounts to Customers. Statements of Financial Condition to Customers. Delivery of Current Options Disclosure Documents and Prospectus. Restrictions on Pledge and Lending of Customers’ Securities. Transactions of Certain Customers. Guarantees. Profit Sharing. Assuming Losses. Transfer of Accounts. Options Communications. Brokers’ Blanket Bonds. Customer Complaints. Telemarketing. applicable, across Nasdaq markets so that Members can readily locate rules which cover similar topics. The relocation and harmonization of the ISE Rules is part of the Exchange’s continued effort to promote efficiency and conformity of its processes with those of its Affiliated Exchanges. The Exchange believes that the placement of the ISE Rules into their new location in the shell will facilitate the use of the Rulebook by Members. Specifically, the Exchange believes that market participants that are members of more than one Nasdaq market will benefit from the ability to compare Rulebooks. The Exchange is not substantively amending rule text unless noted otherwise within this rule change. The renumbering, re-lettering, deleting reserved rules, amending crossreferences and other minor technical changes will bring greater transparency to ISE’s Rules. The Exchange intends to file other rule change to relocate Affiliated Exchange Rulebooks to relocate corresponding rules into the same location in each Rulebook for ease PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 of reference. The Exchange believes its proposal will benefit investors and the general public by increasing the transparency of its Rulebook and promoting easy comparisons among the various Nasdaq Rulebooks. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed amendments do not impose an undue burden on competition because the amendments to relocate the Rules are non-substantive. This rule change is intended to bring greater clarity to the Exchange’s Rules. Renumbering, relettering, deleting reserved rules and amending cross-references will bring greater transparency to ISE’s Rules. E:\FR\FM\24JNN1.SGM 24JNN1 Federal Register / Vol. 84, No. 121 / Monday, June 24, 2019 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Vanessa A. Countryman, Acting Secretary. IV. Solicitation of Comments [FR Doc. 2019–13305 Filed 6–21–19; 8:45 am] III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 14 and Rule 19b– 4(f)(6) thereunder.15 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 16 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 17 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. As the proposed rule change raises no novel issues and is largely organizational, 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 operative upon filing.18 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the 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: 14 15 U.S.C. 78s(b)(3)(A). 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 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. 16 17 CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(f)(6)(iii). 18 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 15 17 jbell on DSK3GLQ082PROD with NOTICES 29573 VerDate Sep<11>2014 16:50 Jun 21, 2019 Jkt 247001 BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– ISE–2019–17 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–ISE–2019–17. 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 (http://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–ISE–2019–17 and should be submitted on or before July 15, 2019. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–132, OMB Control No. 3235–0158] Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Rule 20a–1 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520), the Securities and Exchange Commission has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below. Rule 20a–1 (17 CFR 270.20a–1) was adopted under Section 20(a) of the Investment Company Act of 1940 (‘‘1940 Act’’) (15 U.S.C. 80a–20(a)) and concerns the solicitation of proxies, consents, and authorizations with respect to securities issued by registered investment companies (‘‘Funds’’). More specifically, rule 20a–1 under the 1940 Act (15 U.S.C. 80a–1 et seq.) requires that the solicitation of a proxy, consent, or authorization with respect to a security issued by a Fund be in compliance with Regulation 14A (17 CFR 240.14a–1 et seq.), Schedule 14A (17 CFR 240.14a–101), and all other rules and regulations adopted pursuant to section 14(a) of the Securities Exchange Act of 1934 (‘‘1934 Act’’) (15 U.S.C. 78n(a)). It also requires, in certain circumstances, a Fund’s investment adviser or a prospective adviser, and certain affiliates of the adviser or prospective adviser, to transmit to the person making the solicitation the information necessary to enable that person to comply with the rules and regulations applicable to the solicitation. In addition, rule 20a–1 instructs Funds that have made a public offering of securities and that hold security holder votes for which proxies, consents, or authorizations are not being solicited, to refer to section 14(c) of the 19 17 E:\FR\FM\24JNN1.SGM CFR 200.30–3(a)(12). 24JNN1

Agencies

[Federal Register Volume 84, Number 121 (Monday, June 24, 2019)]
[Notices]
[Pages 29567-29573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13305]



[[Page 29567]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86138; File No. SR-ISE-2019-17]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Relocate ISE's 
Rules From Their Current Place in the Rulebook Into the New Rulebook 
Shell

June 18, 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 June 6, 2019, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to relocate rules from its current Rulebook 
into its new Rulebook shell.
    The text of the proposed rule change is available on the Exchange's 
website at http://ise.cchwallstreet.com/, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this rule change is to relocate ISE rules into the 
new Rulebook shell with some amendments to the shell.\3\ The Exchange 
is relocating the ISE Rules first and plans on relocating the Rulebooks 
of its Affiliated Exchanges so that it may harmonize its rules, where 
applicable, across Nasdaq markets. The relocation and harmonization of 
the ISE Rules is part of the Exchange's continued effort to promote 
efficiency and conformity of its processes with those of its Affiliated 
Exchanges. The Exchange believes that the placement of the ISE Rules 
into their new location in the shell will facilitate the use of the 
Rulebook by Members.
---------------------------------------------------------------------------

    \3\ Previously, the Exchange added a shell structure to its 
Rulebook with the purpose of improving efficiency and readability 
and to align its rules closer to those of its five sister exchanges, 
Nasdaq BX, Inc.; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; 
Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (``Affiliated Exchanges''). 
The shell structure currently contains eight (8) Chapters which, 
once complete, will apply a common set of rules to the Affiliated 
Exchanges. See Securities Exchange Act Release No. 82175 (November 
29, 2017), 82 FR 57494 (December 5, 2017) (SR-NASDAQ-2017-125).
---------------------------------------------------------------------------

Universal Changes
    The Exchange proposes to amend the defined term ``System'' \4\ and 
replace ``trading system'' or ``system'' with the defined term 
throughout the new rules. The Exchange proposes to capitalize the 
defined term ``market maker'' within proposed Options 1, Section 
1(a)(21) and also capitalize the term throughout the Rulebook. The 
Exchange proposes to capitalize the defined term ``Member'' \5\ 
throughout the new rules where it is not already capitalized. The 
Exchange proposes to correct references to the non-defined term 
``member organization'' to the defined term ``Member.'' The Exchange 
proposes to capitalize the ``t'' in the defined term ``Exchange 
Transactions'' \6\ where the term is not properly capitalized within 
the Rules. The Exchange proposes to change references to ``Commentary'' 
to ``Supplementary Material'' to conform the term throughout the 
Rulebook. References to the term ``Regulatory Information Circular'' 
are being amended to the updated term ``Options Regulatory Alert.''
---------------------------------------------------------------------------

    \4\ The term ``System'' is defined at Rule 100(a)(63).
    \5\ The term ``Member'' is defined at Rule 100(a)(30).
    \6\ The term ``Exchange Transactions'' is defined at Rule 
100(a)(22).
---------------------------------------------------------------------------

    The Exchange proposes to update all cross-references within the 
Rule to the new relocated rule cites. The Exchange proposes to replace 
internal rule references to simply state ``this Rule'' where the rule 
is citing itself without a more specific cite included in the Rule. For 
example, if ISE Rule 715 refers currently to ``Rule 715'' or ``this 
Rule 715'' the Exchange will amend the phrase to simply ``this Rule.'' 
The Exchange proposes to conform numbering and lettering in certain 
rules to the remainder of the Rulebook. Finally, the Exchange proposes 
to delete any current Rules that are reserved in the Rulebook.
General 1
    The Exchange proposes to relocate certain definitions from Rule 100 
into proposed General 1, Section 1 and the remainder of the rules into 
Options 1, Section 1. The Exchange proposes to relocate definitions 
that are specific to the options product into Options 1, Section 1 and 
the more general definitions will be relocated into the General 
provisions.\7\
---------------------------------------------------------------------------

    \7\ These rules are being relocated into Section 1 of the 
General Provisions: Chapter I(a)(4), (9), (10), (13A), (17), (18), 
(20), (20A), (22), (25), (26), (27), (30), (31), (48), (57), (58), 
(62) and (66).
---------------------------------------------------------------------------

General 2
    The Exchange will not relocate ISE Rules 200-203 into General 2 
Organization and Administration. The Exchange will separately file a 
proposed rule change to delete these rules. General 2 would be 
comprised of the following rules:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 204. Divisions of the Exchange.
Section 2 (all 4 rules         Rule 205. Access Fees.
 combined).                    Rule 206. Transaction Fees.
                               Rule 207. Communication Fees.
                               Rule 208. Regulatory Fees or Charges.
Section 3....................  Rule 211. Exchange's Costs of Defending
                                Legal Proceedings.
Section 4....................  Rule 312. Limitation on Affiliation
                                between the Exchange and Members.
------------------------------------------------------------------------


[[Page 29568]]

    The Exchange is combining Rules 205-208 into a single rule to 
conform the content to that of other Affiliated Exchanges.\8\ Rule 212, 
Sales Value Fee, will be relocated into Options 7. The Exchange intends 
to locate similar rules within other Nasdaq Rulebooks in similar 
locations when it files to relocate other Affiliate Exchange Rulebooks 
in separate rule changes. The Exchange proposes to reserve Sections 5 
and 6 within General 2.
---------------------------------------------------------------------------

    \8\ The Exchange is not proposing any substantive changes in 
consolidating these rules.
---------------------------------------------------------------------------

General 3
    The Exchange proposes to relocate the following rules into General 
3, ``Membership and Access.''

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 301. Qualification of Members.
Section 2....................  Rule 302. Denial of and Conditions to
                                Becoming a Member.
Section 3....................  Rule 304. Persons Associated with
                                Members.
Section 4....................  Rule 305. Documents Required of
                                Applicants and Members.
Section 5....................  Rule 306. Member Application Procedures.
Section 6....................  Rule 310. Dissolution and Liquidation of
                                Members.
------------------------------------------------------------------------

General 5
    The Exchange proposes to relocate the following rules into General 
5 Discipline:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1600. Disciplinary Jurisdiction.
Section 2....................  80. Investigations and Sanctions.
Section 3....................  90. Code of Procedure.
------------------------------------------------------------------------

Options 1
    The Exchange proposes to rename current Options 1 from ``Options 
Definitions'' to ``General Provisions.'' The Exchange proposes to 
relocate certain definitions from Rule 100 into proposed General 1, 
Section 1 and the remainder of the rules into Options 1, Section 1. The 
Exchange proposes to relocate definitions that are specific to the 
options product into Options 1, Section 1. Section 2 of Options 1 is 
being reserved.
Options 2
    The Exchange proposes to rename Options 2 from ``Options Trading 
Rules'' to ``Options Market Participants'' and relocate the following 
rules into this chapter:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 800. Registration of Market Makers.
Section 2....................  Rule 801. Designated Trading
                                Representatives.
Section 3....................  Rule 802. Appointment of Market Makers.
Section 4....................  Rule 803. Obligations of Market Makers.
Section 5....................  Rule 804. Market Maker Quotations except
                                804(h) which will be relocated into
                                Options 3.
Section 6....................  Rule 805. Market Maker Orders.
Section 7....................  Rule 807. Securities Accounts and Orders
                                of Market Makers.
Section 8....................  Rule 809. Financial Requirements for
                                Market Makers.
------------------------------------------------------------------------

    Sections 9 and 10 will be reserved.
Options 2A
    The Exchange proposes a new Options Section 2A titled ``ISE Market 
Maker Rights'' and proposes to relocate the following rules into this 
chapter:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 300. Market Maker Rights.
Section 2....................  Rule 303. Approval to Operate Multiple
                                Memberships.
Section 3....................  Rule 307. Sale and Transfer of Market
                                Maker Rights.
Section 4....................  Rule 308. Leasing Memberships.
Section 5....................  Rule 309. Registration of Memberships by
                                Individuals for Members.
Section 6....................  Rule 311. Obligations of Terminating
                                Members and Transferors of Market Maker
                                Rights and Memberships.
Section 7....................  Rule 209. Transfer Fees.
------------------------------------------------------------------------


[[Page 29569]]

Options 3
    The Exchange proposes torename Options 3 from ``Options Market 
Participants'' to ``Options Trading Rules'' and relocate the following 
rules into this chapter:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 700. Days and Hours of Business.
Section 2....................  Rule 708. Units of Trading/Rule 709.
                                Meaning of Premium Quotes and Orders
                                (combined into one rule).
Section 3....................  Rule 710. Minimum Trading Increments.
Section 4....................  Rule 711. Acceptance of Quotes and
                                Orders, except (c) and (d).
Section 5....................  Reserved.
Section 6....................  Rule 704. Collection and Dissemination of
                                Quotations.
Section 7....................  Rule 715. Types of Orders.
Section 8....................  Rule 701. Opening.
Section 9....................  Rule 702. Trading Halts/Rule 703. Trading
                                Halts Due To Extraordinary Market
                                Volatility.
Section 10...................  Rule 713. Priority of Quotes and Orders.
Section 11...................  Rule 716. Auction Mechanisms.
Section 12...................  Rule 721. Crossing Orders.
Section 13...................  Rule 723. Price Improvement Mechanism for
                                Crossing Transactions.
Section 14...................  Rule 722. Complex Orders.
Section 15...................  Rule 714. Automatic Execution of Orders.
Section 16...................  Rule 724. Complex Order Risk Protections.
Section 17...................  Kill Switch (relocating 711(c)).
Section 18...................  Detection of Loss of Communication
                                (relocating 711(d)).
Section 19...................  Reserved.
Section 20...................  Rule 720. Nullification and Adjustment of
                                Options Transactions including Obvious
                                Errors/Rule 720A. Erroneous Trades due
                                to System Disruptions and Malfunctions
                                (combined into one rule).
Section 21...................  Rule 706. Access to and Conduct on the
                                Exchange.
Section 22...................  Rule 717. Limitations on Orders.
Section 23...................  Rule 718. Data Feeds and Trade
                                Information.
Section 24...................  Rule 719. Transaction Price Binding.
Section 25...................  Reserved.
Section 26...................  Message Traffic Mitigation (relocating
                                Rule 804(h)).
Section 27...................  Rule 705. Limitation of Liability.
------------------------------------------------------------------------

    The Exchange proposes to combine ISE Rules 708 and 709 within 
Section 2.\9\ ISE Rule 714 is being relocated into Options 3, Section 
15 and is being renamed from ``Automatic Execution of Orders'' to 
``Simple Order Risk Protections.'' ISE Rules 702 and 703 are being 
combined into Section 9. The Exchange proposes to combine ISE Rules 720 
and 720A into Section 20.\10\ The Exchange proposes to relocate ISE 
Rule 711(c) and (d) into new separate Rules at Sections 17 and 18. The 
Exchange proposes to create a separate rule in Section 26 relocated 
from Rule 804(h) and title the rule ``Message Traffic Mitigation.''
---------------------------------------------------------------------------

    \9\ The Exchange is not proposing any substantive changes in 
consolidating these rules.
    \10\ Id.
---------------------------------------------------------------------------

Options 4
    The Exchange proposes to relocate rules within Options 4 Options 
Listing Rules as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 500. Designation of Securities.
Section 2....................  Rule 501. Rights and Obligations of
                                Holders and Writers.
Section 3....................  Rule 502. Criteria for Underlying
                                Securities.
Section 4....................  Rule 503. Withdrawal of Approval of
                                Underlying Securities.
Section 5....................  Rule 504. Series of Options Contracts
                                Open for Trading.
Section 6....................  Rule 504A. Select Provisions of Options
                                Listing Procedures Plan.
Section 7....................  Rule 505. Adjustments.
Section 8....................  Rule 506. Long-Term Options Contracts.
Section 9....................  Rule 507. Limitation on the Liability of
                                Index Licensors for Options on Fund
                                Shares.
Section 10...................  Rule 508. Back-Up Trading Arrangements.
------------------------------------------------------------------------

    Rule 509, ``Authority to Take Action Under Emergency Conditions'' 
is not being relocated as this rule will be deleted.
Options 4A
    The Exchange proposes to relocate rules within new proposed Options 
4A, which is proposed to be titled ``Options Index Rules'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 2000. Application of Index Rules.
Section 2....................  Rule 2001. Definitions.

[[Page 29570]]

 
Section 3....................  Rule 2002. Designation of an Index.
Section 4....................  Reserved.
Section 5....................  Rule 2003. Dissemination of Information.
Section 6....................  Rule 2004. Position Limits for Broad-
                                Based Index Options.
Section 7....................  Rule 2005. Position Limits for Industry
                                Index Options.
Section 8....................  Rule 2005A. Position Limits for Foreign
                                Currency Index Options.
Section 9....................  Rule 2006. Exemptions from Position
                                Limits.
Section 10...................  Rule 2007. Exercise Limits.
Section 11...................  Rule 2008. Trading Sessions.
Section 12...................  Rule 2009. Terms of Index Options
                                Contracts.
Section 13...................  Rule 2010. Debit Put Spread Cash Account
                                Transactions.
Section 14...................  Rule 2011. Disclaimers.
Section 15...................  Rule 2012. Exercise of American-Style
                                Index Options.
Section 16...................  Rule 2013. Market Maker Trading License.
------------------------------------------------------------------------

Options 5
    The Exchange proposes to rename Options 5 from ``Options Trade 
Administration'' to ``Order Protection and Locked and Crossed Markets'' 
and relocate rules within Options 5 as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1900. Definitions.
Section 2....................  Rule 1901. Order Protection.
Section 3....................  Rule 1902. Locked and Crossed Markets.
Section 4....................  Rule 1903. Order Routing to Other
                                Exchanges.
Section 5....................  Rule 1904. Cancellation of Orders and
                                Error Account.
------------------------------------------------------------------------

Options 6
    The Exchange proposes rename Options 6 from ``Order Protection and 
Locked and Cross Markets'' to ``Options Trade Administration'' and 
relocate rules within Options 6 as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 707. Clearing Member Give Up.
Section 2....................  Rule 712. Submission of Orders and
                                Clearance of Transactions.
Section 3....................  Rule 806. Trade Reporting and Comparison.
Section 4....................  Rule 808. Letters of Guarantee.
------------------------------------------------------------------------

Options 6A
    The Exchange proposes to relocate rules within new proposed Options 
6A titled ``Closing Transactions'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1000. Contracts of Suspended
                                Members.
Section 2....................  Rule 1001. Failure to Pay Premium.
------------------------------------------------------------------------

Options 6B
    The Exchange proposes to relocate rules within new proposed Options 
6B titled ``Exercises and Deliveries'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1100. Exercise of Options Contracts.
Section 2....................  Rule 1101. Allocation of Exercise
                                Notices.
Section 3....................  Rule 1102. Delivery and Payment.
------------------------------------------------------------------------


[[Page 29571]]

Options 6C
    The Exchange proposes to relocate rules within new proposed Options 
6C titled ``Margins'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1200. General Rule.
Section 2....................  Rule 1201. Time Margin Must Be Obtained.
Section 3....................  Rule 1202. Margin Requirements.
Section 4....................  Rule 1203. Meeting Margin Calls by
                                Liquidation Prohibited.
Section 5....................  Rule 1204. Margin Required Is Minimum.
Section 6....................  Rule 1205. Margin Requirements Exception.
------------------------------------------------------------------------

Options 6D
    The Exchange proposes to relocaterules within new proposed Options 
6D titled ``Net Capital Requirements'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1300. Minimum Requirements.
Section 2....................  Rule 1301. ``Early Warning'' Notification
                                Requirements.
Section 3....................  Rule 1302. Power of President to Impose
                                Restrictions.
Section 4....................  Rule 1303. Joint Back Office
                                Arrangements.
------------------------------------------------------------------------

Options 6E
    The Exchange proposes to relocaterules within new proposed Options 
6E titled ``Records, Reports and Audits'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 1400. Maintenance, Retention and
                                Furnishing of Books, Records and Other
                                Information.
Section 2....................  Rule 1401. Reports of Uncovered Short
                                Positions.
Section 3....................  Rule 1402. Financial Reports.
Section 4....................  Rule 1403. Audits.
Section 5....................  Rule 1404. Automated Submission of Trade
                                Data.
Section 6....................  Rule 1405. Risk Analysis of Market Maker
                                Accounts.
Section 7....................  Rule 1406. Regulatory Cooperation.
Section 8....................  Rule 1408. Fingerprint-Based Background
                                Checks of Exchange Employees and
                                Independent Contractors and Other
                                Service Providers.
------------------------------------------------------------------------

Options 7
    The Exchange proposes to relocate Rule 212 titled ``Sales Value 
Fee'' to Options 7, Options Pricing at new proposed Section 12.
    The Exchange is updating various cross-references within Options 7 
to reflect the new rule locations. Within the definition of Options 7, 
Section 1, the Exchange is also deleting rule references to ``SSF-
Option Orders'' which terminology no longer exists within current Rule 
722.\11\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 82999 (April 5, 
2018), 83 FR 15662 (April 11, 2018) (SR-ISE-2018-28).
---------------------------------------------------------------------------

Options 9
    The Exchange proposes to relocate rules within new proposed Options 
9 titled ``Business Conduct'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 400. Just and Equitable Principles
                                of Trade.
Section 2....................  Rule 401. Adherence to Law.
Section 3....................  Rule 402. Sharing of Offices and Wire
                                Connections.
Section 4....................  Rule 403. Disruptive Quoting and Trading
                                Activity Prohibited.
Section 5....................  Rule 404. False Statements.
Section 6....................  Rule 405. Manipulation.
Section 7....................  Rule 406. Gratuities.
Section 8....................  Rule 407. Rumors.
Section 9....................  Rule 408. Prevention of the Misuse of
                                Material Nonpublic Information.
Section 10...................  Rule 409. Disciplinary Action by Other
                                Organizations.
Section 11...................  Rule 410. Other Restrictions on Members.
Section 12...................  Rule 411. Significant Business
                                Transactions.
Section 13...................  Rule 412. Position Limits.
Section 14...................  Rule 413. Exemptions from Position
                                Limits.
Section 15...................  Rule 414. Exercise Limits.
Section 16...................  Rule 415. Reports Related to Position
                                Limits.

[[Page 29572]]

 
Section 17...................  Rule 416. Liquidation Positions.
Section 18...................  Rule 417. Limit on Outstanding Uncovered
                                Short Positions.
Section 19...................  Rule 418. Other Restrictions on Options
                                Transactions and Exercises.
Section 20...................  Rule 419. Mandatory Systems Testing.
Section 21...................  Rule 420. Anti-Money Laundering
                                Compliance Program.
Section 22...................  Rule 421. Proxy Voting.
Section 23...................  Reserved.
------------------------------------------------------------------------

Options 10
    The Exchange proposes to relocate rules within new proposed Options 
10 titled ``Doing Business with the Public'' as follows:

------------------------------------------------------------------------
    Proposed new rule No.                   Current rule No.
------------------------------------------------------------------------
Section 1....................  Rule 600. Exchange Approval.
Section 2....................  Rule 601. Registration of Options
                                Principals.
Section 3....................  Rule 602. Registration of
                                Representatives.
Section 4....................  Rule 606. Discipline, Suspension,
                                Expulsion of Registered Persons.
Section 5....................  Rule 607. Branch Offices.
Section 6....................  Rule 608. Opening of Accounts.
Section 7....................  Rule 609. Supervision of Accounts.
Section 8....................  Rule 610. Suitability of Recommendations.
Section 9....................  Rule 611. Discretionary Accounts.
Section 10...................  Rule 612. Confirmation to Customers.
Section 11...................  Rule 613. Statement of Accounts to
                                Customers.
Section 12...................  Rule 614. Statements of Financial
                                Condition to Customers.
Section 13...................  Rule 616. Delivery of Current Options
                                Disclosure Documents and Prospectus.
Section 14...................  Rule 617. Restrictions on Pledge and
                                Lending of Customers' Securities.
Section 15...................  Rule 618. Transactions of Certain
                                Customers.
Section 16...................  Rule 619. Guarantees.
Section 17...................  Rule 620. Profit Sharing.
Section 18...................  Rule 621. Assuming Losses.
Section 19...................  Rule 622. Transfer of Accounts.
Section 20...................  Rule 623. Options Communications.
Section 21...................  Rule 624. Brokers' Blanket Bonds.
Section 22...................  Rule 625. Customer Complaints.
Section 23...................  Rule 626. Telemarketing.
------------------------------------------------------------------------

    The Exchange proposes to reserve Options 10, Sections 24 and 25.
Options 11
    Finally, the Exchange proposes to relocate Rule 1614, titled 
``Imposition of Fines for Minor Rule Violations'' to Options 11 titled 
``Minor Rule Plan Violations'' at Section 1.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest by bringing greater transparency to its rules 
by relocating its Rules into the new Rulebook shell together with other 
rules which have already been relocated. The Exchange's proposal is 
consistent with the Act and will protect investors and the public 
interest by harmonizing its rules, where applicable, across Nasdaq 
markets so that Members can readily locate rules which cover similar 
topics. The relocation and harmonization of the ISE Rules is part of 
the Exchange's continued effort to promote efficiency and conformity of 
its processes with those of its Affiliated Exchanges. The Exchange 
believes that the placement of the ISE Rules into their new location in 
the shell will facilitate the use of the Rulebook by Members. 
Specifically, the Exchange believes that market participants that are 
members of more than one Nasdaq market will benefit from the ability to 
compare Rulebooks.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange is not substantively amending rule text unless noted 
otherwise within this rule change. The renumbering, re-lettering, 
deleting reserved rules, amending cross-references and other minor 
technical changes will bring greater transparency to ISE's Rules. The 
Exchange intends to file other rule change to relocate Affiliated 
Exchange Rulebooks to relocate corresponding rules into the same 
location in each Rulebook for ease of reference. The Exchange believes 
its proposal will benefit investors and the general public by 
increasing the transparency of its Rulebook and promoting easy 
comparisons among the various Nasdaq Rulebooks.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed amendments do not impose an undue burden on competition 
because the amendments to relocate the Rules are non-substantive. This 
rule change is intended to bring greater clarity to the Exchange's 
Rules. Renumbering, re-lettering, deleting reserved rules and amending 
cross-references will bring greater transparency to ISE's Rules.

[[Page 29573]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. As the 
proposed rule change raises no novel issues and is largely 
organizational, 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 operative upon 
filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-ISE-2019-17 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-ISE-2019-17. 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 (http://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-ISE-2019-17 and should be submitted on 
or before July 15, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-13305 Filed 6-21-19; 8:45 am]
 BILLING CODE 8011-01-P