Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate the BX Options Rules at Chapter IV, Securities Traded on BX, 31937-31940 [2019-14163]
Download as PDF
<![CDATA[
Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Notices
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
C2–2019–016 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.
jspears on DSK30JT082PROD with NOTICES
All submissions should refer to File
Number SR–C2–2019–016. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–C2–2019–016 and should
be submitted on or before July 24, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–14157 Filed 7–2–19; 8:45 am]
BILLING CODE 8011–01–P
14 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
19:23 Jul 02, 2019
Jkt 247001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86221; File No. SR–BX–
2019–023]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Relocate the BX
Options Rules at Chapter IV, Securities
Traded on BX
June 27, 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 19,
2019, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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 the
BX Options Rules (‘‘BX Options’’) at
Chapter IV (Securities Traded on BX
Options) under the Options 4 title in the
Exchange’s rulebook’s (‘‘Rulebook’’)
shell structure.3
The proposal also amends the rules as
relocated to conform primarily to the
equivalent options rules in the Nasdaq
ISE, LLC (‘‘ISE’’) rulebook, as well as in
one instance to the equivalent options
rule in the Nasdaq PHLX LLC (‘‘Phlx’’)
rulebook.
The proposal also amends Section 1
of Chapter I of the BX Options Rules to
add several definitions.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqbx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In 2017, 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, The
Nasdaq Stock Market LLC (‘‘Nasdaq’’); Nasdaq
PHLX LLC; Nasdaq ISE, LLC; Nasdaq GEMX, LLC;
and Nasdaq MRX, LLC (‘‘Affiliated Exchanges’’).
The shell structure currently contains eight (8)
General sections which, once complete, will apply
a common set of rules to the Affiliated Exchanges.
See Securities Exchange Act Release No. 82174
(November 29, 2017), 82 FR 57492 (December 5,
2017) (SR–BX–2017–054).
PO 00000
1 15
2 17
Frm 00106
Fmt 4703
Sfmt 4703
31937
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to relocate the
rule text in Chapter IV (Securities
Traded on BX Options) to the Options
4 title in the Rulebook’s shell structure.
For ease of reference and the purposes
of this filing, the relocated rules are
herein described as the ‘‘Options Listing
Rules.’’
The relocation of the Options Listing
Rules is part of the Exchange’s
continued effort to promote efficiency
and the conformity of its processes with
those of the Affiliated Exchanges,4 and
its goal of harmonizing and
uniformizing its rules.5
This proposed change is of a nonsubstantive nature. Moreover, the
relocation of the Options Listing Rules
will facilitate the use of the Rulebook by
Members 6 of the Exchange, who are
members of other Affiliated Exchanges;
other market participants; and the
public in general. The relocated rules
will be amended to reflect the
equivalent options rules in the ISE
rulebook, but the changes are of a nonsubstantive nature.
The overarching goal is to align BX
Options rules with those of the ISE. The
Exchange is proposing to amend the
rules for BX Options, most notably the
rule text in the Options Listing Rules
concerning securities traded on BX
Options, but also adding several
definitions to Section1 of Chapter I.
The vast majority of the changes are
technical changes and made throughout
the Options Listing Rules. These minor
4 Id.
5 This proposal is similar to the recent relocation
of options rules at Chapter IV (Securities Traded on
NOM) under the Options 4 title in the Nasdaq
rulebook. See Securities Exchange Act Release No.
86022 (June 4, 2019), 84 FR 26912 (June 10, 2019)
(SR–NASDAQ–2019–047).
6 As defined by Exchange Rule 0120(i).
E:\FR\FM\03JYN1.SGM
03JYN1
31938
Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Notices
changes are designed to conform the BX
Options rules to the equivalent ISE
rules, as well as to increase the clarity
of the rules. This includes some
reorganization and renumbering within
the Options Listing Rules’ subsections
to ensure they remain consistent.
The proposed changes that do not fit
within the description above are listed
below, beginning with changes to
Chapter I General Provisions and
followed by global changes to the
Options Listing Rules. The changes are
then broken down by section within the
Options Listing Rules.
Proposed Changes to Chapter I
The Exchange is proposing to add
definitions to ‘‘Section 1 Definitions’’.
Specifically, the terms ‘‘class’’ ‘‘series’’
and ‘‘underlying security’’ will be added
to Section 1(a) as (73), (74), and (75),
respectively.7 The Exchange believes
that using the definitions for these terms
as defined in the By-Laws of The
Options Clearing Corporation (‘‘OCC’’)
uniformly across Nasdaq, Inc.’s
exchanges will help to align them.
Providing uniform, clear and precise
definitions for these terms will provide
consistency, lessen potential confusion
and add clarity for market participants.
Proposed Changes to the Options Listing
Rules
Global Changes
As described above, the current
Options Listing Rules will be amended
throughout to change ‘‘BX Options’’ to
‘‘the Exchange’’. This proposed change
will add consistency throughout the
chapter. ‘‘BX Regulation’’ also will be
changed to ‘‘the Exchange’’ throughout
the Options Listing Rules to update the
appropriate references. Additionally,
there are a number of minor changes
made throughout the chapter to increase
the clarity of the language, as well as
renumbering within the section to
ensure it remains consistent.
jspears on DSK30JT082PROD with NOTICES
Proposed Changes to Section 1
Designation of Securities
This section will be amended to
clarify that the options contracts that are
designated by reference to the issuer of
the underlying security can also be
designated by reference to the name of
the underlying foreign currency.
Additionally, it can be referenced by not
only the expiration month, but also by
the expiration date.
Proposed Changes to Section 2 Rights
and Obligations of Holders and Writers
This section will be amended to
clarify that option contracts of any class
of options dealt in on the Exchange are
subject to the provisions of Options 4
and as set forth in the rules of the
Clearing Corporation. This change
clarifies the rights and obligations of
holders and writers of option contracts.
Proposed Changes to Section 3 Criteria
for Underlying Securities
Section 3(i) of the Options Listing
Rules is being replaced and updated by
incorporating the ISE version of the
Exchange-Traded Fund (‘‘ETF’’) option
listing rule.8 Most of the changes in
Section 3 of the Options Listing Rules
simply result from reorganization
within the section done to mirror the
ISE rule and for greater clarity.
Section 3(k)(ii) of the Options Listing
Rules will be amended to delete the
language stating that the Exchange will
‘‘employ the same procedures to qualify
underlying securities pursuant to this
subsection (k) as it employs in
qualifying underlying securities
pursuant to other subsections of this
Section 3.’’ This deleted language is
unnecessary since it is redundant given
that each of the other subsections in
Section 3 have procedures to qualify
underlying securities plus it is also not
reflected in the ISE rule version being
adopted for this section.
Section 3(m) will be deleted since the
definition of ‘‘Partnership Unit’’ is a
remnant from the legacy Exchange ETF
listing rule and is unnecessary since it
has never been used. It also is not
reflected in the ISE rule version being
adopted for this section.
Proposed Changes to Section 4
Withdrawal of Approval of Underlying
Securities
Section 4(a) of the Options Listing
Rules will be amended to add flexibility
for the Exchange to choose whether to
decline new additional series of options
on the underlying security previously
approved.9 Currently, this section
restricts this, but flexibility is being
added to give greater discretion about
adding series and an exception also will
be added that opening transactions by
market makers executed to
accommodate closing transactions of
other market participants may be
permitted. This will provide the public
with greater protection since it will
allow the Exchange to now decline new
additional series of options on the
underlying security previously
7 See OCC By-Laws Article I–Definitions C.(11);
S.(12); and U.(3), respectively.
VerDate Sep<11>2014
19:23 Jul 02, 2019
Jkt 247001
PO 00000
8 See
9 See
ISE Rule 502(h).
ISE Rule 503(a).
Frm 00107
Fmt 4703
Sfmt 4703
approved that may not be in the best
interests of the public.
Section 4(h)(ii) of the Options Listing
Rules will be amended to change for
options covering Exchange-Traded Fund
Shares approved pursuant to Section
3(i)(iv)(2) of Options 4, following the
initial twelve-month period beginning
upon the commencement of trading in
the Exchange-Traded Fund Shares on a
national securities exchange and are
defined as NMS stock under Rule 600 of
Regulation NMS, that there were fewer
than 50 record and/or beneficial holders
of such Exchange-Traded Fund Shares
for 30 or more consecutive trading days
rather than as it is currently stated for
30 consecutive days. It is only on
trading days that the information
regarding 50 record and/or beneficial
holders can be ascertained. Also, the
change is consistent with the ISE rule.10
Proposed Changes to Section 6 Series of
Options Contracts Open for Trading
Section 6(a) of the Options Listing
Rules will be amended to add to note
that exercise-price setting parameters
adopted as part of the Options Listing
Procedures Plan will be included in
Supplementary Material .02 Select
Provisions of Options Listing
Procedures Plan.
In order to mirror the equivalent ISE
rules,11 Section 6(d)iv of the Options
Listing Rules will be amended to
incorporate, in large part, former
Supplementary Material .03 within
Section 6 itself. Also, Section 6(d)v of
the Options Listing Rules will be
relocated to .10 of the Supplementary
Material to Section 6 of the Options
Listing Rules.12
Supplementary Material .01(a) and (b)
to Section 6 will detail the $1 Strike
Price Interval Program and will replace
.01 and .02 of the Supplementary
Material to Section 6. Select Provisions
of Options Listing Procedures Plan
(‘‘OLPP’’) will be added as
Supplementary Material .02 to Section
6.
Supplementary Material. 03 and .04
will detail the Short Term Option Series
Program 13 and the Quarterly Options
Series Program,14 respectively, and each
will be consistent with the equivalent
ISE rule.
.05 of the Supplementary Material to
Section 6 will be amended to cover the
intervals between strike prices for Mini10 See
ISE Rule 503(h)(2).
ISE Rule 504(g).
12 See ISE Supplementary Material .09 to Rule
504.
13 See ISE Supplementary Material .02 to Rule
504.
14 See ISE Supplementary Material .03 to Rule
504.
11 See
E:\FR\FM\03JYN1.SGM
03JYN1
jspears on DSK30JT082PROD with NOTICES
Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Notices
Nasdaq 100 Index options series and
will be consistent with the equivalent
ISE rule.15
The first sentence of .06 Range
Limitations for New Option Series of the
Options Listing Rules has been deleted
since it is covered in .02 of the
Supplementary Material to Section 6,
but the definition of OLPP has been
moved to Section 6(a).
The introductory paragraph to .02 of
the Supplementary Material to Section 6
of the Options Listing Rules details that
the quote mitigation strategy and is
codified in the OLPP. Subsection (a)
states that the exercise price of each
options series listed by the Exchange is
fixed at a price per share that is
reasonably close to the price of the
underlying equity security, ETF or Trust
Issued Receipt at or about the time the
Exchange determines to list such series.
Subsection (a)(ii) says that for new
expiration months, the daily high and
low of all prices reported by all national
securities exchanges on the day the
Exchange determines its preliminary
notification of a new series. The
amended language will say that the
price of the underlying security is
measured by, for new expiration
months, the daily high and low of all
prices reported by all national securities
exchanges on the day the Exchange
determines its preliminary notification
of a new series rather than on the day
the Exchange determines to list a new
series. This change also mirrors the
language in the ISE rules.16
Subsection (c) will be added to the
Supplementary Material to Section 6 of
the Options Listing Rules to make clear
that subsection (a) of the Supplementary
Material to Section 6 of the Options
Listing Rules will not permit the listing
of series that are otherwise prohibited
by the rules of the Exchange or the
OLPP. Additionally, to the extent the
rules of the Exchange permit the listing
of new series that are otherwise
prohibited by the provisions of the
OLPP, the provisions of the OLPP will
govern. These changes are consistent
with the ISE rules.17
Supplementary Material .16 U.S.
Dollar-Settled Foreign Currency Options
(formerly Supplementary Material .09)
will be amended to reflect the language
of the equivalent Phlx Rule since ISE
does not have U.S. Dollar-Settled
Foreign Currency Options.18 Also, the
references to the continuity rules here
(formerly Supplementary Material
.09(C)) and in Section 8. Long-Term
Options Contracts have been deleted
since quoting obligations for long term
options has recently been updated and
addressed in Phlx Rule 1081 and in BX
Options Chapter VII Section 6.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,19 in general, and furthers the
objectives of Section 6(b)(5) of the Act,20
in particular, in that it is designed to
promote just and equitable principles of
trade, 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.
The Exchange believes that the
relocation of its Options Listing Rules is
a non-substantive change and is
consistent with similar filings by the
Exchange for the relocation of its
rules.21 As noted above, the relocation
of the Options Listing Rules is part of
the Exchange’s continued effort to
promote efficiency and the structural
conformity of its processes with those of
the Affiliated Exchanges,22 and its goal
of harmonizing and uniformizing its
rules.23 Additionally, the relocation of
the Options Listing Rules will facilitate
the use of the Rulebook by Members 24
of the Exchange, who are members of
other Affiliated Exchanges; other market
participants; and the public in general.
The majority of the changes are also
consistent with the ISE rulebook and the
overarching goal is to align the BX
Options rules with those of the ISE.
These changes include the change to
subsection (a)(ii) of the Supplementary
Material to Section 6 to say that the
price of the underlying security is
measured by, for new expiration
months, the daily high and low of all
prices reported by all national securities
exchanges on the day the Exchange
determines its preliminary notification
of a new series rather than on the day
the Exchange determines to list a new
series.
Another such change is amending the
Options Listing Rules to change for
options covering Exchange-Traded Fund
Shares approved pursuant to Section
3(i)(iv)(2) of Options 4, following the
initial twelve-month period beginning
upon the commencement of trading in
the Exchange-Traded Fund Shares on a
national securities exchange and are
19 15
15 See
ISE Supplementary Material .04 to Rule
504.
16 See
ISE Rule 504A(b)(i)(2).
ISE Rule 504A(b)(v) and (vi).
18 See Phlx Rule 1012(a)(iii).
17 See
VerDate Sep<11>2014
19:23 Jul 02, 2019
Jkt 247001
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
21 See footnote 3.
22 Id.
23 See footnote 5.
24 As defined by Exchange Rule 0120(i).
20 15
Frm 00108
Fmt 4703
Sfmt 4703
31939
defined as NMS stock under Rule 600 of
Regulation NMS, that there were fewer
than 50 record and/or beneficial holders
of such Exchange-Traded Fund Shares
for 30 or more consecutive trading days
rather than as it is currently stated for
30 consecutive days. It is only on
trading days that the information
regarding 50 record and/or beneficial
holders can be ascertained. This change
serves 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.
The Exchange believes that amending
Section 4(a) of the Options Listing Rules
to add flexibility for the Exchange to
choose whether to decline new
additional series of options on the
underlying security previously
approved will serve 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 since it will allow the
Exchange to now decline new
additional series of options on the
underlying security previously
approved that may not be in the best
interests of the public.
The Exchange believe that adding
definitions for the terms ‘‘class’’,
‘‘series’’, and ‘‘underlying security’’ to
the BX Options rulebook from the OCC
By-Laws will help 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
through providing uniform, clear and
precise definitions for these terms and
increase consistency, lessen potential
confusion and add clarity for market
participants.25
As a result, the Exchange believes that
the changes included in this filing serve
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 since the changes are
intended to organize the Rulebook in a
way that it will ease the Members’,
market participants’, and the general
public’s navigation and reading of the
rules.
With respect to the proposed
technical corrections to the rules, the
Exchange believes that these changes
are consistent with the Act because they
will prevent investor confusion that
may be caused by including in the Rules
incorrect rule citations and defunct rule
text.
25 See
E:\FR\FM\03JYN1.SGM
footnote 7.
03JYN1
31940
Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Notices
IV. Solicitation of Comments
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
proposed change does not impose a
burden on competition because, as
previously stated, it (i) is of a nonsubstantive nature, (ii) is intended to
harmonize the structure of the
Exchange’s rules with those of its
Affiliated Exchanges, and (iii) is
intended to organize the Rulebook in a
way that it will ease the Members’,
market participants’, and the general
public’s navigation and reading of the
rules.
Consequently, the Exchange does not
believe that the proposed changes
implicate competition at all.
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)(iii) of the Act 26 and
subparagraph (f)(6) of Rule 19b–4
thereunder.27
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
should be approved or disapproved.
jspears on DSK30JT082PROD with NOTICES
26 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change, 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.
27 17
VerDate Sep<11>2014
19:23 Jul 02, 2019
Jkt 247001
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2019–023 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2019–023. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–BX–2019–023, and should
be submitted on or before July 24, 2019.
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–14163 Filed 7–2–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86224; File No. SR–CBOE–
2019–030]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing of a
Proposed Rule Change To Use Cboe
Exchange’s Affiliate, Cboe Trading, as
an Inbound and Outbound Router for
Cboe Options
June 27, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 25,
2019, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III 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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to adopt
rules related to the inbound and
outbound router for Cboe Options, as
well as seek approval from the
Securities and Exchange Commission
(‘‘Commission’’) for affiliate, [sic]
Trading, Inc. (‘‘Cboe Trading’’), to
become a Trading Permit Holder of the
Exchange. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/About
CBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
28 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
Frm 00109
Fmt 4703
Sfmt 4703
E:\FR\FM\03JYN1.SGM
03JYN1
]]>Agencies
[Federal Register Volume 84, Number 128 (Wednesday, July 3, 2019)]
[Notices]
[Pages 31937-31940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14163]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86221; File No. SR-BX-2019-023]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Relocate the BX
Options Rules at Chapter IV, Securities Traded on BX
June 27, 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 19, 2019, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I, II, and III 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 the BX Options Rules (``BX
Options'') at Chapter IV (Securities Traded on BX Options) under the
Options 4 title in the Exchange's rulebook's (``Rulebook'') shell
structure.\3\
---------------------------------------------------------------------------
\3\ In 2017, 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,
The Nasdaq Stock Market LLC (``Nasdaq''); Nasdaq PHLX LLC; Nasdaq
ISE, LLC; Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (``Affiliated
Exchanges''). The shell structure currently contains eight (8)
General sections which, once complete, will apply a common set of
rules to the Affiliated Exchanges. See Securities Exchange Act
Release No. 82174 (November 29, 2017), 82 FR 57492 (December 5,
2017) (SR-BX-2017-054).
---------------------------------------------------------------------------
The proposal also amends the rules as relocated to conform
primarily to the equivalent options rules in the Nasdaq ISE, LLC
(``ISE'') rulebook, as well as in one instance to the equivalent
options rule in the Nasdaq PHLX LLC (``Phlx'') rulebook.
The proposal also amends Section 1 of Chapter I of the BX Options
Rules to add several definitions.
The text of the proposed rule change is available on the Exchange's
website at https://nasdaqbx.cchwallstreet.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to relocate the rule text in Chapter IV
(Securities Traded on BX Options) to the Options 4 title in the
Rulebook's shell structure. For ease of reference and the purposes of
this filing, the relocated rules are herein described as the ``Options
Listing Rules.''
The relocation of the Options Listing Rules is part of the
Exchange's continued effort to promote efficiency and the conformity of
its processes with those of the Affiliated Exchanges,\4\ and its goal
of harmonizing and uniformizing its rules.\5\
---------------------------------------------------------------------------
\4\ Id.
\5\ This proposal is similar to the recent relocation of options
rules at Chapter IV (Securities Traded on NOM) under the Options 4
title in the Nasdaq rulebook. See Securities Exchange Act Release
No. 86022 (June 4, 2019), 84 FR 26912 (June 10, 2019) (SR-NASDAQ-
2019-047).
---------------------------------------------------------------------------
This proposed change is of a non-substantive nature. Moreover, the
relocation of the Options Listing Rules will facilitate the use of the
Rulebook by Members \6\ of the Exchange, who are members of other
Affiliated Exchanges; other market participants; and the public in
general. The relocated rules will be amended to reflect the equivalent
options rules in the ISE rulebook, but the changes are of a non-
substantive nature.
---------------------------------------------------------------------------
\6\ As defined by Exchange Rule 0120(i).
---------------------------------------------------------------------------
The overarching goal is to align BX Options rules with those of the
ISE. The Exchange is proposing to amend the rules for BX Options, most
notably the rule text in the Options Listing Rules concerning
securities traded on BX Options, but also adding several definitions to
Section1 of Chapter I.
The vast majority of the changes are technical changes and made
throughout the Options Listing Rules. These minor
[[Page 31938]]
changes are designed to conform the BX Options rules to the equivalent
ISE rules, as well as to increase the clarity of the rules. This
includes some reorganization and renumbering within the Options Listing
Rules' subsections to ensure they remain consistent.
The proposed changes that do not fit within the description above
are listed below, beginning with changes to Chapter I General
Provisions and followed by global changes to the Options Listing Rules.
The changes are then broken down by section within the Options Listing
Rules.
Proposed Changes to Chapter I
The Exchange is proposing to add definitions to ``Section 1
Definitions''. Specifically, the terms ``class'' ``series'' and
``underlying security'' will be added to Section 1(a) as (73), (74),
and (75), respectively.\7\ The Exchange believes that using the
definitions for these terms as defined in the By-Laws of The Options
Clearing Corporation (``OCC'') uniformly across Nasdaq, Inc.'s
exchanges will help to align them. Providing uniform, clear and precise
definitions for these terms will provide consistency, lessen potential
confusion and add clarity for market participants.
---------------------------------------------------------------------------
\7\ See OCC By-Laws Article I-Definitions C.(11); S.(12); and
U.(3), respectively.
---------------------------------------------------------------------------
Proposed Changes to the Options Listing Rules
Global Changes
As described above, the current Options Listing Rules will be
amended throughout to change ``BX Options'' to ``the Exchange''. This
proposed change will add consistency throughout the chapter. ``BX
Regulation'' also will be changed to ``the Exchange'' throughout the
Options Listing Rules to update the appropriate references.
Additionally, there are a number of minor changes made throughout the
chapter to increase the clarity of the language, as well as renumbering
within the section to ensure it remains consistent.
Proposed Changes to Section 1 Designation of Securities
This section will be amended to clarify that the options contracts
that are designated by reference to the issuer of the underlying
security can also be designated by reference to the name of the
underlying foreign currency. Additionally, it can be referenced by not
only the expiration month, but also by the expiration date.
Proposed Changes to Section 2 Rights and Obligations of Holders and
Writers
This section will be amended to clarify that option contracts of
any class of options dealt in on the Exchange are subject to the
provisions of Options 4 and as set forth in the rules of the Clearing
Corporation. This change clarifies the rights and obligations of
holders and writers of option contracts.
Proposed Changes to Section 3 Criteria for Underlying Securities
Section 3(i) of the Options Listing Rules is being replaced and
updated by incorporating the ISE version of the Exchange-Traded Fund
(``ETF'') option listing rule.\8\ Most of the changes in Section 3 of
the Options Listing Rules simply result from reorganization within the
section done to mirror the ISE rule and for greater clarity.
---------------------------------------------------------------------------
\8\ See ISE Rule 502(h).
---------------------------------------------------------------------------
Section 3(k)(ii) of the Options Listing Rules will be amended to
delete the language stating that the Exchange will ``employ the same
procedures to qualify underlying securities pursuant to this subsection
(k) as it employs in qualifying underlying securities pursuant to other
subsections of this Section 3.'' This deleted language is unnecessary
since it is redundant given that each of the other subsections in
Section 3 have procedures to qualify underlying securities plus it is
also not reflected in the ISE rule version being adopted for this
section.
Section 3(m) will be deleted since the definition of ``Partnership
Unit'' is a remnant from the legacy Exchange ETF listing rule and is
unnecessary since it has never been used. It also is not reflected in
the ISE rule version being adopted for this section.
Proposed Changes to Section 4 Withdrawal of Approval of Underlying
Securities
Section 4(a) of the Options Listing Rules will be amended to add
flexibility for the Exchange to choose whether to decline new
additional series of options on the underlying security previously
approved.\9\ Currently, this section restricts this, but flexibility is
being added to give greater discretion about adding series and an
exception also will be added that opening transactions by market makers
executed to accommodate closing transactions of other market
participants may be permitted. This will provide the public with
greater protection since it will allow the Exchange to now decline new
additional series of options on the underlying security previously
approved that may not be in the best interests of the public.
---------------------------------------------------------------------------
\9\ See ISE Rule 503(a).
---------------------------------------------------------------------------
Section 4(h)(ii) of the Options Listing Rules will be amended to
change for options covering Exchange-Traded Fund Shares approved
pursuant to Section 3(i)(iv)(2) of Options 4, following the initial
twelve-month period beginning upon the commencement of trading in the
Exchange-Traded Fund Shares on a national securities exchange and are
defined as NMS stock under Rule 600 of Regulation NMS, that there were
fewer than 50 record and/or beneficial holders of such Exchange-Traded
Fund Shares for 30 or more consecutive trading days rather than as it
is currently stated for 30 consecutive days. It is only on trading days
that the information regarding 50 record and/or beneficial holders can
be ascertained. Also, the change is consistent with the ISE rule.\10\
---------------------------------------------------------------------------
\10\ See ISE Rule 503(h)(2).
---------------------------------------------------------------------------
Proposed Changes to Section 6 Series of Options Contracts Open for
Trading
Section 6(a) of the Options Listing Rules will be amended to add to
note that exercise-price setting parameters adopted as part of the
Options Listing Procedures Plan will be included in Supplementary
Material .02 Select Provisions of Options Listing Procedures Plan.
In order to mirror the equivalent ISE rules,\11\ Section 6(d)iv of
the Options Listing Rules will be amended to incorporate, in large
part, former Supplementary Material .03 within Section 6 itself. Also,
Section 6(d)v of the Options Listing Rules will be relocated to .10 of
the Supplementary Material to Section 6 of the Options Listing
Rules.\12\
---------------------------------------------------------------------------
\11\ See ISE Rule 504(g).
\12\ See ISE Supplementary Material .09 to Rule 504.
---------------------------------------------------------------------------
Supplementary Material .01(a) and (b) to Section 6 will detail the
$1 Strike Price Interval Program and will replace .01 and .02 of the
Supplementary Material to Section 6. Select Provisions of Options
Listing Procedures Plan (``OLPP'') will be added as Supplementary
Material .02 to Section 6.
Supplementary Material. 03 and .04 will detail the Short Term
Option Series Program \13\ and the Quarterly Options Series
Program,\14\ respectively, and each will be consistent with the
equivalent ISE rule.
---------------------------------------------------------------------------
\13\ See ISE Supplementary Material .02 to Rule 504.
\14\ See ISE Supplementary Material .03 to Rule 504.
---------------------------------------------------------------------------
.05 of the Supplementary Material to Section 6 will be amended to
cover the intervals between strike prices for Mini-
[[Page 31939]]
Nasdaq 100 Index options series and will be consistent with the
equivalent ISE rule.\15\
---------------------------------------------------------------------------
\15\ See ISE Supplementary Material .04 to Rule 504.
---------------------------------------------------------------------------
The first sentence of .06 Range Limitations for New Option Series
of the Options Listing Rules has been deleted since it is covered in
.02 of the Supplementary Material to Section 6, but the definition of
OLPP has been moved to Section 6(a).
The introductory paragraph to .02 of the Supplementary Material to
Section 6 of the Options Listing Rules details that the quote
mitigation strategy and is codified in the OLPP. Subsection (a) states
that the exercise price of each options series listed by the Exchange
is fixed at a price per share that is reasonably close to the price of
the underlying equity security, ETF or Trust Issued Receipt at or about
the time the Exchange determines to list such series. Subsection
(a)(ii) says that for new expiration months, the daily high and low of
all prices reported by all national securities exchanges on the day the
Exchange determines its preliminary notification of a new series. The
amended language will say that the price of the underlying security is
measured by, for new expiration months, the daily high and low of all
prices reported by all national securities exchanges on the day the
Exchange determines its preliminary notification of a new series rather
than on the day the Exchange determines to list a new series. This
change also mirrors the language in the ISE rules.\16\
---------------------------------------------------------------------------
\16\ See ISE Rule 504A(b)(i)(2).
---------------------------------------------------------------------------
Subsection (c) will be added to the Supplementary Material to
Section 6 of the Options Listing Rules to make clear that subsection
(a) of the Supplementary Material to Section 6 of the Options Listing
Rules will not permit the listing of series that are otherwise
prohibited by the rules of the Exchange or the OLPP. Additionally, to
the extent the rules of the Exchange permit the listing of new series
that are otherwise prohibited by the provisions of the OLPP, the
provisions of the OLPP will govern. These changes are consistent with
the ISE rules.\17\
---------------------------------------------------------------------------
\17\ See ISE Rule 504A(b)(v) and (vi).
---------------------------------------------------------------------------
Supplementary Material .16 U.S. Dollar-Settled Foreign Currency
Options (formerly Supplementary Material .09) will be amended to
reflect the language of the equivalent Phlx Rule since ISE does not
have U.S. Dollar-Settled Foreign Currency Options.\18\ Also, the
references to the continuity rules here (formerly Supplementary
Material .09(C)) and in Section 8. Long-Term Options Contracts have
been deleted since quoting obligations for long term options has
recently been updated and addressed in Phlx Rule 1081 and in BX Options
Chapter VII Section 6.
---------------------------------------------------------------------------
\18\ See Phlx Rule 1012(a)(iii).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\19\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\20\ in particular, in that it is designed to
promote just and equitable principles of trade, 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the relocation of its Options Listing
Rules is a non-substantive change and is consistent with similar
filings by the Exchange for the relocation of its rules.\21\ As noted
above, the relocation of the Options Listing Rules is part of the
Exchange's continued effort to promote efficiency and the structural
conformity of its processes with those of the Affiliated Exchanges,\22\
and its goal of harmonizing and uniformizing its rules.\23\
Additionally, the relocation of the Options Listing Rules will
facilitate the use of the Rulebook by Members \24\ of the Exchange, who
are members of other Affiliated Exchanges; other market participants;
and the public in general.
---------------------------------------------------------------------------
\21\ See footnote 3.
\22\ Id.
\23\ See footnote 5.
\24\ As defined by Exchange Rule 0120(i).
---------------------------------------------------------------------------
The majority of the changes are also consistent with the ISE
rulebook and the overarching goal is to align the BX Options rules with
those of the ISE. These changes include the change to subsection
(a)(ii) of the Supplementary Material to Section 6 to say that the
price of the underlying security is measured by, for new expiration
months, the daily high and low of all prices reported by all national
securities exchanges on the day the Exchange determines its preliminary
notification of a new series rather than on the day the Exchange
determines to list a new series.
Another such change is amending the Options Listing Rules to change
for options covering Exchange-Traded Fund Shares approved pursuant to
Section 3(i)(iv)(2) of Options 4, following the initial twelve-month
period beginning upon the commencement of trading in the Exchange-
Traded Fund Shares on a national securities exchange and are defined as
NMS stock under Rule 600 of Regulation NMS, that there were fewer than
50 record and/or beneficial holders of such Exchange-Traded Fund Shares
for 30 or more consecutive trading days rather than as it is currently
stated for 30 consecutive days. It is only on trading days that the
information regarding 50 record and/or beneficial holders can be
ascertained. This change serves 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.
The Exchange believes that amending Section 4(a) of the Options
Listing Rules to add flexibility for the Exchange to choose whether to
decline new additional series of options on the underlying security
previously approved will serve 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 since it will
allow the Exchange to now decline new additional series of options on
the underlying security previously approved that may not be in the best
interests of the public.
The Exchange believe that adding definitions for the terms
``class'', ``series'', and ``underlying security'' to the BX Options
rulebook from the OCC By-Laws will help 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
through providing uniform, clear and precise definitions for these
terms and increase consistency, lessen potential confusion and add
clarity for market participants.\25\
---------------------------------------------------------------------------
\25\ See footnote 7.
---------------------------------------------------------------------------
As a result, the Exchange believes that the changes included in
this filing serve 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 since the changes are
intended to organize the Rulebook in a way that it will ease the
Members', market participants', and the general public's navigation and
reading of the rules.
With respect to the proposed technical corrections to the rules,
the Exchange believes that these changes are consistent with the Act
because they will prevent investor confusion that may be caused by
including in the Rules incorrect rule citations and defunct rule text.
[[Page 31940]]
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 proposed change does not
impose a burden on competition because, as previously stated, it (i) is
of a non-substantive nature, (ii) is intended to harmonize the
structure of the Exchange's rules with those of its Affiliated
Exchanges, and (iii) is intended to organize the Rulebook in a way that
it will ease the Members', market participants', and the general
public's navigation and reading of the rules.
Consequently, the Exchange does not believe that the proposed
changes implicate competition at all.
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)(iii) of the Act \26\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\27\
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78s(b)(3)(A)(iii).
\27\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, 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.
---------------------------------------------------------------------------
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 should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BX-2019-023 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2019-023. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-BX-2019-023, and should be submitted on
or before July 24, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-14163 Filed 7-2-19; 8:45 am]
BILLING CODE 8011-01-P
