Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Remove Listing Rule and Other Amendments, 8985-8990 [2020-03100]

Download as PDF Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / Notices 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–NYSE–2020–08 and should be submitted on or before March 10, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–03094 Filed 2–14–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88173; File No. SR– NASDAQ–2020–006] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Remove Listing Rule and Other Amendments lotter on DSKBCFDHB2PROD with NOTICES February 11, 2020. 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 January 29, 2020, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend The Nasdaq Options Market LLC (‘‘NOM’’) Rules at Options 1, Section 1 (Definitions), Options 2, Section 4 (Obligations of Market Makers), Section 5 (Market Maker Quotations), Options 3, Section 2 (Units of Trading and Meaning if Premium Quotes and Orders), Options 3, Section 3 (Minimum Increments), Options 3, Section 8 (Opening and Halt Cross), Options 3, Section 19 (Mass Cancellation of Trading Interest), Options 4, Section 5 (Series of Options Contracts Open for Trading), Options 4A, Section 2 (Definitions), Section 3 (Designation of a Broad-Based Index), Section 6 (Position Limits for Broad-Based Index Options), Section 11 (Trading Sessions), Section 12 (Terms of Index Options Contracts), Section 14 (Disclaimers), Options 5, Section 2 (Order Protection), Section 4 (Order Routing), Options 6C Exercises and Deliveries, and Options 7 (Pricing Schedule). The Exchange also proposes to relocate current rule text to new Options 2, Section 6 entitled ‘‘Market Maker Orders’’ and reserve certain rules within the Rulebook. The text of the proposed rule change is available on the Exchange’s website at http://nasdaq.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. 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8985 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend NOM’s Rules at Options 1, Section 1 (Definitions), Options 2, Section 4 (Obligations of Market Makers), Section 5 (Market Maker Quotations), Options 3, Section 2 (Units of Trading and Meaning if Premium Quotes and Orders), Options 3, Section 3 (Minimum Increments), Options 3, Section 8 (Opening and Halt Cross), Options 3, Section 19 (Mass Cancellation of Trading Interest), Options 4, Section 5 (Series of Options Contracts Open for Trading), Options 4A, Section 2 (Definitions), Section 3 (Designation of a Broad-Based Index), Section 6 (Position Limits for Broad-Based Index Options), Section 11 (Trading Sessions), Section 12 (Terms of Index Options Contracts), Section 14 (Disclaimers), Options 5, Section 2 (Order Protection), Section 4 (Order Routing), Options 6C Exercises and Deliveries, and Options 7 (Pricing Schedule). The Exchange also proposes to relocate current rule text to new Options 2, Section 6 entitled ‘‘Market Maker Orders’’ and reserve certain rules within the Rulebook. Each change is described below. Rulebook Harmonization The Exchange recently harmonized its Rulebook in connection with other Nasdaq affiliated markets. The Exchange proposes to reserve certain rules within the Nasdaq Rulebook to represent the presence of rules in similar locations in other Nasdaq affiliated Rulebooks (e.g., Nasdaq Phlx LLC).3 The Exchange proposes to reserve Sections 17–22 within General 2, Organization and Administration. The Exchange proposes to reserve Sections 11–14 within Options 2, Options Market Participants. The Exchange proposes to reserve Sections 17–21 within Options 4A, Options Index Rules. The Exchange proposes to reserve new section Options 4B. The Exchange proposes to reserve Sections 8–13 within Options 6, Options Trade Administration. The Exchange proposes to reserve Section 7 within Options 6C, which is currently titled ‘‘Exercises and Deliveries.’’ The Exchange proposes to retitle Options 6C as ‘‘Margins’’ to harmonize the title to the other Nasdaq affiliated markets. The Exchange proposes to reserve Section 24 within Options 9, Business Conduct. 1 15 VerDate Sep<11>2014 17:48 Feb 14, 2020 3 See Jkt 250001 PO 00000 Frm 00181 Fmt 4703 Sfmt 4703 E:\FR\FM\18FEN1.SGM SR–Phlx–2020–03 (not yet published). 18FEN1 8986 Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / Notices Definitions The Exchange proposes to add the definition of an ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ within Options 1, Section 1(a)(1). This term is utilized throughout the Rulebook. Defining this term will bring greater transparency to the Rulebook. The Exchange proposes to renumber the remaining definitions and also update corresponding crossreferences within Options 7, Section 1. The Exchange proposes to remove the definitions of ‘‘class of options’’ and ‘‘series of options’’ as they are duplicative of the definitions for ‘‘class’’ and ‘‘series.’’ The Exchange proposes to remove the terms ‘‘System Book Feed’’ and ‘‘System Securities’’ from the Options 1, Section 1. The term ‘‘System Book Feed’’ is not utilized in the Rulebook currently. The term ‘‘System Securities’’ is only utilized within the definition of the term ‘‘System’’ at current Options 1, Section 1(a)(60) and within Options 3, Section 8, Opening and Halt Cross.’’ The term is simply replaced by referring to option series. The Exchange believes that replacing the term with the term ‘‘option series’’ will make the Rulebook clear. Finally, the Exchange is removing the phrase ‘‘, or the United States dollar’’ from the definition of ‘‘foreign currency’’ within current Options 1, Section 1(a)(20). This reference is not needed in this string cite because the United States dollar is a medium of exchange as noted in the introductory phrase to the string cite. Relocation of Options 2 Rules The Exchange proposes to relocate Options 2, Section 4(d) and Section 5(e) to Options 2, Section 6, which is currently reserved. Specifically, the Exchange proposes to relocate these sections into Options 6(a) and (b), respectively. Proposed Options 2, Section 6 would be titled ‘‘Market Maker Orders.’’ This relocation will harmonize the location of these rule to other Nasdaq affiliated markets. lotter on DSKBCFDHB2PROD with NOTICES Removal of Various Listings Mini Options The Exchange has not listed Mini Options in several years and is proposing to delete its listing rules and other ancillary trading rules related to the listing of Mini Options. The Exchange notes that it has no open interest in Mini Options. Specifically, the Exchange proposes to amend Options 3, Section 2 (Units of Trading and Meaning of Premium Quotes and Orders), Options 3, Section 3 (Minimum Increments) and Options 4, Section 5 (Series of Options Contracts VerDate Sep<11>2014 17:48 Feb 14, 2020 Jkt 250001 Open for Trading) at Supplementary Material .15) to remove references to the handling of Mini Options in the System. The Exchange also proposes to remove pricing for Mini Options within Options 7, Section 2 (Nasdaq Options Market— Fees and Rebates). The Exchange is also amending Supplementary Material .01 to Options 4A, Section 2. In the event that the Exchange desires to list Mini Options in the future, it would file a rule change with the Commission to adopt rules to list Mini Options. U.S. Dollar-Settled Foreign Currency Options The Exchange has not listed U.S. Dollar-Settled Foreign Currency Options (‘‘FCOs’’) in several years and is proposing to delete its listing rules and other ancillary trading rules related to the listing of FCOs. The Exchange notes that it has no open interest in FCOs. Specifically, the Exchange proposes to amend Supplementary Material .16 to Options 4, Section 5 (Series of Options Contracts Open for Trading) to remove references to the handling of FCOs in the System. In the event that the Exchange desires to list FCOs in the future, it would file a rule change with the Commission to adopt rules to list FCOs. Mini-Nasdaq-100 Index The Exchange has not listed MiniNasdaq-100 Index options or ‘‘MNX’’ or ‘‘Mini-NDX’’ in several years and is proposing to delete its listing rules and other ancillary trading rules related to the listing of Mini-Nasdaq-100 Index options. The Exchange notes that it has no open interest in Mini-Nasdaq-100 Index options. Specifically, the Exchange proposes to amend Supplementary Material .05 to Options 4, Section 5 (Series of Options Contracts Open for Trading) and Options 4A, Section 12 (Terms of Index Options Contracts) to remove references to the handling of Mini-Nasdaq-100 Index options in the System. In the event that the Exchange desires to list Mini-Nasdaq-100 Index options in the future, it would file a rule change with the Commission to adopt rules to list Mini-Nasdaq-100 Index options. MSCI EM Index and MSCI EAFE Index The Exchange has not listed the MSCI EM Index or MSCI EAFE Index in several years and is proposing to delete its listing rules and other ancillary trading rules related to the listing of the MSCI EM Index and MSCI EAFE Index. The Exchange notes that it has no open interest in the MSCI EM Index and MSCI EAFE Index. PO 00000 Frm 00182 Fmt 4703 Sfmt 4703 Specifically, the Exchange proposes to amend Supplementary Material .01 to Options 4A, Section 2 (Definitions), Section 3 (Designation of a Broad-Based Index), Section 6 (Position Limits for Broad-Based Index Options), Section 11(Trading Sessions) Section 12 (Terms of Index Options Contracts), Section 14 (Disclaimers) to remove references to the handling of the MSCI EM Index and MSCI EAFE Index in the System. The Exchange proposes to add rule text within Options 4A, Section 12(a)(6) which indicates, ‘‘There are currently no P.M.-settled index options approved for trading on NOM.’’ In the event that the Exchange desires to list the MSCI EM Index and/or MSCI EAFE Index in the future, it would file a rule change with the Commission to adopt rules to list the MSCI EM Index and/or MSCI EAFE Index. Minimum Increments The Exchange proposes to amend Options 3, Section 3 to relocate Section 3(a)(3) into a new Supplementary Material .01 and title the section, ‘‘Penny Pilot Program.’’ The Exchange also proposes to amend a typographical error in Options 3, Section 3(a)(3) to replace ‘‘QQQQs’’ with ‘‘QQQs.’’ The other changes relate to the removal of Mini Options as explained herein. Mass Cancellation of Trading Interest The Exchange proposes to amend the description of Options 3, Section 19 titled ‘‘Mass Cancellation of Trading Interest.’’ The proposed amended rule would state, ’’ An Options Participant may cancel any bids, offers, and orders in any series of options by requesting NOM Market Operations 4 staff to effect such cancellation as per the instructions of the Options Participant.’’ The Exchange is not amending the System with respect to this rule change. The proposed amended language merely makes clear that an Options Participant may contact NOM Market Operations and request the Exchange to cancel any bid, offer or order in any series of options. This is a voluntary service that is offered to market participants. The Exchange, would cancel such bid, offer or order pursuant to the Member’s instruction. This proposed new rule would conform to rules of other Nasdaq affiliated markets.5 4 The request to Market Operations is a manual request which is made telephonically. 5 See Nasdaq Phlx LLC (‘‘Phlx’’), Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq GEMX, LLC (‘‘GEMX’’) and Nasdaq MRX, LLC (‘‘MRX’’) Options 3, Section 19. E:\FR\FM\18FEN1.SGM 18FEN1 Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / Notices Order Routing Phlx recently amended Options 5, Section 4.6 The Exchange proposes to make similar amendments to the NOM Rule. The amendments clarity and correct the rule text to represent current System functionality. Currently, Options 5, Section 4(a)(iii)(A), relating to DNR Orders, states, Any incoming order interacting with such a resting DNR Order will execute at the ABBO price, unless (1) the ABBO is improved to a price which crosses the DNR displayed price, in which case the incoming order will execute at the previous ABBO price; (2) the ABBO is improved to a price which locks the DNR’s displayed price, in which case the incoming order will execute at the DNR’s displayed price. Should the best away market move to an inferior price level, the DNR Order will automatically re-price from its one MPV inferior to the original away best bid/offer price to one MPV away from the new away best bid/offer price or its original limit price. The Exchange proposes to make nonsubstantive amendments to this rule text within Options 5, Section 4(a)(iii)(A), relating to DNR Orders, to align the rule text with Phlx Rule 1093. The Exchange proposes to instead provide: lotter on DSKBCFDHB2PROD with NOTICES Any incoming order interacting with such a resting DNR Order will execute at the ABBO price, unless (1) the ABBO is improved to a price which crosses the DNR Order’s already displayed price, in which case the incoming order will execute at the previous ABBO price as the away market crossed a displayed price; or (2) the ABBO is improved to a price which locks the DNR Order’s displayed price, in which case the incoming order will execute at the DNR Order’s displayed price. Should the best away market move to an inferior price level, the DNR Order will automatically re-price from its one MPV inferior to the original ABBO and display one MPV away from the new ABBO or its original limit price. This proposed new text intends to make clear that if the Exchange’s System is executing an incoming order against a resting DNR Order which is displayed, it would not consider an updated ABBO which crossed the displayed DNR Order. The System would not take into account the away market order or quote which crossed the DNR Order’s displayed price. The Exchange is not trading-through an away market in this scenario, rather an away market is crossing NOM’s displayed market and therefore that market has the obligation not to trade-through NOM’s displayed price. A similar change is being made to the last sentence of Options 5, Section 4(a)(iii)(B)(4) for SEEK Orders and the 6 See Securities Exchange Act Release No. 87811 (December 20, 2019), 84 FR 72017 (December 30, 2019) (SR–Phlx–2019–56). VerDate Sep<11>2014 17:48 Feb 14, 2020 Jkt 250001 last sentence Options 5, Section 4(a)(iii)(C)(4) for SRCH Orders. By way of example, consider the following sequence of events in the System: 9:45:00:00:00—MIAX Quote 0.95 × 1.20 9:45:00:00:10—OPRA updates MIAX BBO 0.95 × 1.20 9:45:00:00:20—NOM Local BBO Quote 1.00 × 1.15 9:45:00:00:30—OPRA disseminates NOM BBO updates: 1.00 × 1.15 9:45:00:00:35: CBOE Quote 1.00 × 1.12 9:45:00:00:45—OPRA disseminates CBOE BBO 1.00 × 1.12 9:45:00:00:50—DNR Order: Buy 5 @1.15 (exposes @ABBO of 1.12, displays 1 MPV from ABBO @1.11) 9:45:00:00:51—OPRA disseminates NOM BBO updates: 1.11 × 1.15 (1.11 being the DNR Order displaying 1 MPV from ABBO) 9:45:00:00:60—MIAX Quote updates to 1.00 × 1.10 (1.10 crosses the displayed DNR Order price, violating locked/crossed market rules; henceforth, we need not protect this price) 9:45:00:00:65—OPRA disseminates MIAX BBO 1.00 × 1.10 9:45:00:00:75—NOM Market Maker Order to Sell 5 @1.09 9:45:00:00:76—Market Maker Order immediately executes against DNR Order 5 contracts @1.12 (1.12 being the ‘previous’ ABBO price disseminated by CBOE before the receipt of the DNR Order that was subsequently and illegally crossed by MIAX’s 2nd quote) 9:45:00:00:77—OPRA disseminates NOM BBO updates: 1.10 × 1.15 (reverts back to BBO set by NOM Local Quote since the DNR Order has executed) The remainder of the changes to Options 5, Section 4(a)(iii)(A) are nonsubstantive changes designed to bring clarity to the rule text. By way of example, the Exchange proposes to add the word ‘‘Order’’ after ‘‘DNR,’’ change the words ‘‘away best bid/offer price’’ to the acronym ‘‘ABBO’’ and add the words ‘‘display’’ and ‘‘already’’ to the rule text to make clear that the intent of the sentence. The Exchange proposes to amend Options 5, Section 4(a)(iii)(B)(4) to amend the sentence which provides, ‘‘If there exists a locked ABBO when the SEEK Order is entered onto the Order Book, the SEEK Order will display at the locked ABBO price.’’ The Exchange is amending this sentence to provide, ‘‘If there exists a locked ABBO when the SEEK Order is entered onto the Order Book, the SEEK Order will be entered at the ABBO price and displayed one MPV inferior to the ABBO.’’ This is true of PO 00000 Frm 00183 Fmt 4703 Sfmt 4703 8987 both SEEK and SRCH Orders. Where there exists a locked ABBO when the SEEK Order or SRCH Order is entered onto the Order Book, the SEEK Order or SRCH Order will be entered into the Order Book at the ABBO price and displayed one MPV inferior to the ABBO. The Exchange is proposing to add additional rule text to Options 5, Section 4(a)(iii)(B)(4). This amendment corrects the current rule text. The Exchange also proposes to remove the sentence, ‘‘When checking the Order Book, the System will seek to execute at the price at which it would send the order to an away market.’’ The Exchange proposes to remove this sentence because the price at which the order would route in explained in greater detail within Options 5, Section 4(a)(iii)(B)(4). Also, this sentence is confusing because the price at which an order would execute is dependent on the scenario within which an order would route. Removing this sentence will remove any confusion related to the price at which the order would route. The Exchange also proposes to remove the same sentence concerning SRCH Orders within Options 5, Section 4(a)(iii)(C)(4). Other Amendments The Exchange proposes to correct the lettering within General 9, Section 1, General Standards. The Exchange proposes to correct a typographical error within Options 4A, Section 12. Specifically, the reference to Options 4, Section 6 should have referenced Options 4, Section 5 instead. The Exchange proposes to remove a reference to paragraph (c) within Options 5, Section 2, as there is no paragraph (c) within the Rule. The Exchange also proposes to update rulebook citations within Options 7, Pricing Schedule to reflect the proposed changes to Options 1, Section 1 (Definitions). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Section 6(b)(5) of the Act,8 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. 7 15 8 15 E:\FR\FM\18FEN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 18FEN1 8988 Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / Notices Rulebook Harmonization The Exchange’s proposal to reserve various sections of the Rules in order to harmonize its Rulebook with other Nasdaq affiliated markets is not a substantive amendment. Definitions The Exchange’s proposal to add the definition of an ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ within Options 1, Section 1(a)(1) is consistent with the Act because these amendments will add transparency to the Rulebook. The Exchange’s proposal to remove the terms ‘‘class of options,’’ ‘‘series of options,’’ ‘‘System Book Feed’’ and ‘‘System Securities’’ from the Options 1, Section 1 is also consistent with the Act. The term ‘‘System Book Feed’’ is not utilized in the Rulebook currently and therefore this term does not need to be defined. The term ‘‘System Securities’’ is only utilized within the definition of the term ‘‘System’’ at current Options 1, Section 1(a)(60) and within Options 3, Section 8, Opening and Halt Cross.’’ Replacing the term with the term ‘‘option series’’ will make the Rulebook clear. MSCI EM Index and MSCI EAFE Index The Exchange’s proposal to removal references to the listing and handling of MSCI EM Index and MSCI EAFE Index options is consistent with the Act because MSCI EM Index and MSCI EAFE Index options have not been listed in several years. Also, the Exchange notes that it has no open interest in MSCI EM Index and MSCI EAFE Index options. In the event that the Exchange desires to list MSCI EM Index and MSCI EAFE Index options in the future, it would file a rule change with the Commission to adopt rules to list MSCI EM Index and MSCI EAFE Index options. Relocation of Options 2 Rules Minimum Increments The proposal to relocate Options 2, Section 4(d) and Section 5(e) to Section 6 into Options 6(a) and (b), respectively is consistent with the Act. This amendment is not substantive. Removal of Various Listings The Exchange’s proposal to relocate parts of Options 3, Section 3 into a new Supplementary Material .01 and add a title for the Penny Pilot Program is consistent with the Act. This amendment will bring greater transparency to the Exchange’s Rules. Mini Options Mass Cancellation of Trading Interest The Exchange’s proposal to removal references to the listing and handling of Mini Options is consistent with the Act because Mini Options have not been listed in several years. Also, the Exchange notes that it has no open interest in Mini Options. In the event that the Exchange desires to list Mini Options in the future, it would file a rule change with the Commission to adopt rules to list Mini Options. The Exchange’s proposal to amend the rule text of Mass Cancellation of Trading Interest rule within Options 3, Section 19 is consistent with the Act because the Exchange desires to conform the rule text to other Nasdaq affiliated markets.9 Permitting Participants to contact Market Operations as a manual alternative to automated functionality, which similarly allows Participants to cancel interest, provides Participants experiencing their own system issues with a means to manage risk. Today, Participants are able to cancel interest, in an automated fashion through protocols 10 and the Kill Switch.11 This is a voluntary services offered to all Participants. This amended rule reflects the Exchange’s current practice of allowing Participants to contact NOM Market Operations and request the Exchange to U.S. Dollar-Settled Foreign Currency Options lotter on DSKBCFDHB2PROD with NOTICES Mini-Nasdaq-100 Index options is consistent with the Act because MiniNasdaq-100 Index options have not been listed in several years. Also, the Exchange notes that it has no open interest in Mini-Nasdaq-100 Index options. In the event that the Exchange desires to list Mini-Nasdaq-100 Index options in the future, it would file a rule change with the Commission to adopt rules to list Mini-Nasdaq-100 Index options. The Exchange’s proposal to removal references to the listing and handling of FCOs is consistent with the Act because FCOs have not been listed in several years. Also, the Exchange notes that it has no open interest in FCOs. In the event that the Exchange desires to list FCOs in the future, it would file a rule change with the Commission to adopt rules to list FCOs. 9 See Mini-Nasdaq-100 Index The Exchange’s proposal to removal references to the listing and handling VerDate Sep<11>2014 17:48 Feb 14, 2020 Jkt 250001 note 5 above. Options 3 at Supplementary Material .03 to Section 7. 11 See Options 3, Section 17. 10 See PO 00000 Frm 00184 Fmt 4703 Sfmt 4703 cancel any bid, offer or order in any series of options. The Exchange would continue to permit Participants to contact market operations and manually request cancellation of interest. The proposed amended language will make clear that an Options Participant may contact NOM Market Operations and request the Exchange to cancel any bid, offer or order in any series of options. The Exchange would continue to cancel such bid, offer or order pursuant to the Participant’s instruction. This service, which permits Participants to cancel interest, does not diminish a Market Maker’s obligation with respect to providing two-sided quotations and this rule is not inconsistent with other firm quote obligations of the Market Maker. Upon the request of a Participant, NOM Market Operations will continue to manually input a mass cancellation message into the System consistent with the Participant’s instruction to cancel trading interest. Once the mass cancellation message is entered into the System by NOM Market Operations, the message will be accepted by the System in the order of receipt in the queue such that the interest that was already accepted into the System will be processed prior to the mass cancellation message. In addition, mass cancellation messages entered into the System by NOM Market Operations are handled by the System through the same queuing mechanism that a quote or order message is handled by the System. The Exchange notes its processing of a mass cancellation message inputted by NOM Market Operations and handled by the System is consistent with firm quote and order handling rules. Order Routing The Exchange’s proposal to amend the sentence within Options 5, Section 4(a)(iii)(A) related to DNR Orders is consistent with the Act. The Exchange proposes to amend this rule text to clarify the current rule text. Specifically, the Exchange proposes to state, ‘‘Any incoming order interacting with such a resting DNR Order will execute at the ABBO price, unless (1) the ABBO is improved to a price which crosses the DNR Order’s already displayed price, in which case the incoming order will execute at the previous ABBO price as the away market crossed a displayed price; or (2) the ABBO is improved to a price which locks the DNR Order’s displayed price, in which case the incoming order will execute at the DNR Order’s displayed price.’’ The System would not take into account the away market order or quote which crossed the DNR’s displayed price. The Exchange is E:\FR\FM\18FEN1.SGM 18FEN1 Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / Notices not trading-through an away market in this scenario, rather an away market is crossing NOM’s displayed market and therefore that market has the obligation not to trade-through NOMs displayed price. Similar amendments were made to Options 5, Section 4(a)(iii)(B)(4) and Section 4(a)(iii)(C)(4). The remainder of the changes to this paragraph are clarifying non-substantive amendments. The Exchange’s proposal to remove the following sentence from Options 5, Section 4(a)(iii)(B)(4) and Section 4(a)(iii)(C)(4), ‘‘When checking the Order Book, the System will seek to execute at the price at which it would send the order to an away market,’’ is consistent with the Act because this sentence is vague. The price at which an order would execute is dependent on the scenario within which an order would route. Removing this sentence will remove any confusion related to the price at which the order would route. The proposed rule would also add additional detail about the scenarios under which an order would route away. With respect to SEEK Orders within Options 5, Section 4(a)(iii)(B) as well as SRCH Orders within Options 5, Section 4(a)(iii)(C) the amendments are consistent with the Act as they protect investors and the general public by amending current incorrect rule text. If there exists a locked ABBO when the SEEK Order or SRCH Order is entered onto the Order Book, the SEEK Order or SRCH Order will be entered at the ABBO price and displayed one MPV inferior to the ABBO. The amendments to Options 5, Section 4 represent current System functionality. This new rule text will provide Participants with clarity as to the manner in which the System handles locked market conditions during routing. The proposed rule text is similar to rule text within Phlx Rule 1093. Other Amendments The Exchange’s proposal to correct certain typographical errors and update rulebook citations are not substantive. lotter on DSKBCFDHB2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rulebook Harmonization The Exchange’s proposal to reserve various rules in connection with a larger Rulebook harmonization do not impose an undue burden on competition VerDate Sep<11>2014 17:48 Feb 14, 2020 Jkt 250001 because these amendments are nonsubstantive. Definitions The Exchange’s proposal to add the definition of an ‘‘Away Best Bid or Offer’’ or ‘‘ABBO’’ within Options 1, Section 1(a)(1) and remove the terms ‘‘class of options,’’ ‘‘series of options,’’ ‘‘System Book Feed’’ and ‘‘System Securities’’ from the Options 1, Section 1 do not impose an undue burden on competition because these amendments will add transparency to the Rulebook. Relocation of Options 2 Rules The proposal to relocate Options 2, Section 4(d) and Section 5(e) to Section 6, into Options 6(a) and (b) does not burden competition as this amendment is not substantive. Removal of Various Listings Mini Options The Exchange’s proposal to removal references to the listing and handling of Mini Options do not impose an undue burden on competition. Mini Options have not been listed in several years. Also, the Exchange notes that it has no open interest in Mini Options. U.S. Dollar-Settled Foreign Currency Options The Exchange’s proposal to remove references to the listing of U.S. DollarSettled Foreign Currency Options (‘‘FCOs’’) does not impose an undue burden on competition. FCOs have not been listed in several years. The Exchange notes that it has no open interest in FCOs. Mini-Nasdaq-100 Index The Exchange’s proposal to removal references to the listing and handling of Mini-Nasdaq-100 Index options does not impose an undue burden on competition. Mini-Nasdaq-100 Index options have not been listed in several years. Also, the Exchange notes that it has no open interest in Mini-Nasdaq100 Index options. MSCI EM Index and MSCI EAFE Index The Exchange’s proposal to removal references to the listing and handling of MSCI EM Index and the MSCI EAFE Index does not impose an undue burden on competition. Neither the MSCI EM Index nor the MSCI EAFE Index have been listed in several years. Also, the Exchange notes that it has no open interest in either the MSCI EM Index or the MSCI EAFE. Minimum Increments The Exchange’s proposal to relocate parts of Options 3, Section 3 into a new PO 00000 Frm 00185 Fmt 4703 Sfmt 4703 8989 Supplementary Material .01 and add a title for the Penny Pilot Program do not impose an undue burden on competition as these amendments are non-substantive. Mass Cancellation of Trading Interest The Exchange’s proposal to amend the rule text of the Mass Cancellation of Trading Interest rule within Options 3, Section 19 does not impose an undue burden on competition because there is no corresponding change to the manner in which this service will be offered. It will continue to be offered to all Participants. Order Routing The Exchange believes that adding greater detail to its rules concerning routing of orders does not impose an undue burden on competition, rather it provides greater transparency as to the potential outcomes when utilizing different routing strategies. Further, the Exchange notes that market participants may elect not to route their orders. The Exchange continues to offer various options to its market participants with respect to routing. Other Amendments The Exchange proposes to correct typographical error and update rulebook citations do not impose and undue burden on competition as these amendments are non-substantive. 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 12 and subparagraph (f)(6) of Rule 19b–4 thereunder.13 12 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires the Exchange 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 13 17 E:\FR\FM\18FEN1.SGM Continued 18FEN1 8990 Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / Notices A proposed rule change filed under Rule 19b–4(f)(6) 14 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),15 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange believes that adoption the term ‘‘ABBO,’’ would add greater transparency to its rules, and that removing the rule text related to various options listing which are no longer listed on the Exchange will provide Participants with notice of the unavailability of these listing. The Exchange also states that its amendment to its routing rules protects investors and the general public by providing clarity concerning the current operation of its System. The Exchange believes that the amended rules will provide market participants with greater information for each potential order routing strategy and, in general, provide greater transparency. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.16 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 lotter on DSKBCFDHB2PROD with NOTICES 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: designated by the Commission. The Exchange has satisfied this requirement. 14 17 CFR 240.19b–4(f)(6). 15 17 CFR 240.19b–4(f)(6)(iii). 16 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 17:48 Feb 14, 2020 Jkt 250001 Electronic Comments DEPARTMENT OF STATE • 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– NASDAQ–2020–006 on the subject line. [Public Notice: 11030] Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2020–006. 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–NASDAQ–2020–006 and should be submitted on or beforeMarch 10, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–03100 Filed 2–14–20; 8:45 am] BILLING CODE 8011–01–P 17 17 PO 00000 CFR 200.30–3(a)(12). Frm 00186 Fmt 4703 Sfmt 4703 Defense Trade Advisory Group; Notice of Membership The U.S. Department of State’s Bureau of Political-Military Affairs is accepting membership applications for the Defense Trade Advisory Group (DTAG). The Bureau of Political-Military Affairs is interested in applications from subject matter experts from the United States defense industry, relevant trade and labor associations, or academic and foundation personnel. The DTAG was established as an advisory committee under the authority of 22 U.S.C. 2656 and the Federal Advisory Committee Act, 5 U.S.C. App. (‘‘FACA’’). The purpose of the DTAG is to provide the Bureau of PoliticalMilitary Affairs with a formal channel for regular consultation and coordination with U.S. private sector defense exporters and defense trade organizations on issues involving U.S. laws, policies, and regulations for munitions exports. The DTAG advises the Bureau on its support for and regulation of defense trade to help ensure that impediments to legitimate exports are reduced while the foreign policy and national security interests of the United States continue to be protected and advanced in accordance with the Arms Export Control Act (AECA), as amended. Major topics addressed by the DTAG include (a) policy issues on commercial defense trade and technology transfer; (b) regulatory and licensing procedures applicable to defense articles, services, and technical data; (c) technical issues involving the U.S. Munitions List (USML); and (d) questions related to the implementation of the AECA and International Traffic in Arms Regulations (ITAR). Members are appointed by the Assistant Secretary of State for PoliticalMilitary Affairs on the basis of individual qualifications and technical expertise. Past members include representatives of United States defense industry, relevant trade and labor associations, or academic and foundation personnel. In accordance with the DTAG Charter, all DTAG members must be U.S. citizens. DTAG members are expected to represent the views of their organizations, while also demonstrating awareness of Department’s mission of ensuring that commercial exports of defense articles and defense services advance U.S. national security and foreign policy objectives. In addition, DTAG members are expected to understand complex E:\FR\FM\18FEN1.SGM 18FEN1

Agencies

[Federal Register Volume 85, Number 32 (Tuesday, February 18, 2020)]
[Notices]
[Pages 8985-8990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03100]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88173; File No. SR-NASDAQ-2020-006]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Remove Listing Rule and Other Amendments

February 11, 2020.
    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 January 29, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' 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 amend The Nasdaq Options Market LLC 
(``NOM'') Rules at Options 1, Section 1 (Definitions), Options 2, 
Section 4 (Obligations of Market Makers), Section 5 (Market Maker 
Quotations), Options 3, Section 2 (Units of Trading and Meaning if 
Premium Quotes and Orders), Options 3, Section 3 (Minimum Increments), 
Options 3, Section 8 (Opening and Halt Cross), Options 3, Section 19 
(Mass Cancellation of Trading Interest), Options 4, Section 5 (Series 
of Options Contracts Open for Trading), Options 4A, Section 2 
(Definitions), Section 3 (Designation of a Broad-Based Index), Section 
6 (Position Limits for Broad-Based Index Options), Section 11 (Trading 
Sessions), Section 12 (Terms of Index Options Contracts), Section 14 
(Disclaimers), Options 5, Section 2 (Order Protection), Section 4 
(Order Routing), Options 6C Exercises and Deliveries, and Options 7 
(Pricing Schedule). The Exchange also proposes to relocate current rule 
text to new Options 2, Section 6 entitled ``Market Maker Orders'' and 
reserve certain rules within the Rulebook. The text of the proposed 
rule change is available on the Exchange's website at http://nasdaq.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 amend NOM's Rules at Options 1, Section 1 
(Definitions), Options 2, Section 4 (Obligations of Market Makers), 
Section 5 (Market Maker Quotations), Options 3, Section 2 (Units of 
Trading and Meaning if Premium Quotes and Orders), Options 3, Section 3 
(Minimum Increments), Options 3, Section 8 (Opening and Halt Cross), 
Options 3, Section 19 (Mass Cancellation of Trading Interest), Options 
4, Section 5 (Series of Options Contracts Open for Trading), Options 
4A, Section 2 (Definitions), Section 3 (Designation of a Broad-Based 
Index), Section 6 (Position Limits for Broad-Based Index Options), 
Section 11 (Trading Sessions), Section 12 (Terms of Index Options 
Contracts), Section 14 (Disclaimers), Options 5, Section 2 (Order 
Protection), Section 4 (Order Routing), Options 6C Exercises and 
Deliveries, and Options 7 (Pricing Schedule). The Exchange also 
proposes to relocate current rule text to new Options 2, Section 6 
entitled ``Market Maker Orders'' and reserve certain rules within the 
Rulebook. Each change is described below.
Rulebook Harmonization
    The Exchange recently harmonized its Rulebook in connection with 
other Nasdaq affiliated markets. The Exchange proposes to reserve 
certain rules within the Nasdaq Rulebook to represent the presence of 
rules in similar locations in other Nasdaq affiliated Rulebooks (e.g., 
Nasdaq Phlx LLC).\3\
---------------------------------------------------------------------------

    \3\ See SR-Phlx-2020-03 (not yet published).
---------------------------------------------------------------------------

    The Exchange proposes to reserve Sections 17-22 within General 2, 
Organization and Administration. The Exchange proposes to reserve 
Sections 11-14 within Options 2, Options Market Participants. The 
Exchange proposes to reserve Sections 17-21 within Options 4A, Options 
Index Rules. The Exchange proposes to reserve new section Options 4B. 
The Exchange proposes to reserve Sections 8-13 within Options 6, 
Options Trade Administration. The Exchange proposes to reserve Section 
7 within Options 6C, which is currently titled ``Exercises and 
Deliveries.'' The Exchange proposes to retitle Options 6C as 
``Margins'' to harmonize the title to the other Nasdaq affiliated 
markets. The Exchange proposes to reserve Section 24 within Options 9, 
Business Conduct.

[[Page 8986]]

Definitions
    The Exchange proposes to add the definition of an ``Away Best Bid 
or Offer'' or ``ABBO'' within Options 1, Section 1(a)(1). This term is 
utilized throughout the Rulebook. Defining this term will bring greater 
transparency to the Rulebook. The Exchange proposes to renumber the 
remaining definitions and also update corresponding cross-references 
within Options 7, Section 1.
    The Exchange proposes to remove the definitions of ``class of 
options'' and ``series of options'' as they are duplicative of the 
definitions for ``class'' and ``series.'' The Exchange proposes to 
remove the terms ``System Book Feed'' and ``System Securities'' from 
the Options 1, Section 1. The term ``System Book Feed'' is not utilized 
in the Rulebook currently. The term ``System Securities'' is only 
utilized within the definition of the term ``System'' at current 
Options 1, Section 1(a)(60) and within Options 3, Section 8, Opening 
and Halt Cross.'' The term is simply replaced by referring to option 
series. The Exchange believes that replacing the term with the term 
``option series'' will make the Rulebook clear.
    Finally, the Exchange is removing the phrase ``, or the United 
States dollar'' from the definition of ``foreign currency'' within 
current Options 1, Section 1(a)(20). This reference is not needed in 
this string cite because the United States dollar is a medium of 
exchange as noted in the introductory phrase to the string cite.
Relocation of Options 2 Rules
    The Exchange proposes to relocate Options 2, Section 4(d) and 
Section 5(e) to Options 2, Section 6, which is currently reserved. 
Specifically, the Exchange proposes to relocate these sections into 
Options 6(a) and (b), respectively. Proposed Options 2, Section 6 would 
be titled ``Market Maker Orders.'' This relocation will harmonize the 
location of these rule to other Nasdaq affiliated markets.
Removal of Various Listings
Mini Options
    The Exchange has not listed Mini Options in several years and is 
proposing to delete its listing rules and other ancillary trading rules 
related to the listing of Mini Options. The Exchange notes that it has 
no open interest in Mini Options.
    Specifically, the Exchange proposes to amend Options 3, Section 2 
(Units of Trading and Meaning of Premium Quotes and Orders), Options 3, 
Section 3 (Minimum Increments) and Options 4, Section 5 (Series of 
Options Contracts Open for Trading) at Supplementary Material .15) to 
remove references to the handling of Mini Options in the System. The 
Exchange also proposes to remove pricing for Mini Options within 
Options 7, Section 2 (Nasdaq Options Market--Fees and Rebates). The 
Exchange is also amending Supplementary Material .01 to Options 4A, 
Section 2.
    In the event that the Exchange desires to list Mini Options in the 
future, it would file a rule change with the Commission to adopt rules 
to list Mini Options.
U.S. Dollar-Settled Foreign Currency Options
    The Exchange has not listed U.S. Dollar-Settled Foreign Currency 
Options (``FCOs'') in several years and is proposing to delete its 
listing rules and other ancillary trading rules related to the listing 
of FCOs. The Exchange notes that it has no open interest in FCOs.
    Specifically, the Exchange proposes to amend Supplementary Material 
.16 to Options 4, Section 5 (Series of Options Contracts Open for 
Trading) to remove references to the handling of FCOs in the System.
    In the event that the Exchange desires to list FCOs in the future, 
it would file a rule change with the Commission to adopt rules to list 
FCOs.
Mini-Nasdaq-100 Index
    The Exchange has not listed Mini-Nasdaq-100 Index options or 
``MNX'' or ``Mini-NDX'' in several years and is proposing to delete its 
listing rules and other ancillary trading rules related to the listing 
of Mini-Nasdaq-100 Index options. The Exchange notes that it has no 
open interest in Mini-Nasdaq-100 Index options.
    Specifically, the Exchange proposes to amend Supplementary Material 
.05 to Options 4, Section 5 (Series of Options Contracts Open for 
Trading) and Options 4A, Section 12 (Terms of Index Options Contracts) 
to remove references to the handling of Mini-Nasdaq-100 Index options 
in the System.
    In the event that the Exchange desires to list Mini-Nasdaq-100 
Index options in the future, it would file a rule change with the 
Commission to adopt rules to list Mini-Nasdaq-100 Index options.
MSCI EM Index and MSCI EAFE Index
    The Exchange has not listed the MSCI EM Index or MSCI EAFE Index in 
several years and is proposing to delete its listing rules and other 
ancillary trading rules related to the listing of the MSCI EM Index and 
MSCI EAFE Index. The Exchange notes that it has no open interest in the 
MSCI EM Index and MSCI EAFE Index.
    Specifically, the Exchange proposes to amend Supplementary Material 
.01 to Options 4A, Section 2 (Definitions), Section 3 (Designation of a 
Broad-Based Index), Section 6 (Position Limits for Broad-Based Index 
Options), Section 11(Trading Sessions) Section 12 (Terms of Index 
Options Contracts), Section 14 (Disclaimers) to remove references to 
the handling of the MSCI EM Index and MSCI EAFE Index in the System.
    The Exchange proposes to add rule text within Options 4A, Section 
12(a)(6) which indicates, ``There are currently no P.M.-settled index 
options approved for trading on NOM.''
    In the event that the Exchange desires to list the MSCI EM Index 
and/or MSCI EAFE Index in the future, it would file a rule change with 
the Commission to adopt rules to list the MSCI EM Index and/or MSCI 
EAFE Index.
Minimum Increments
    The Exchange proposes to amend Options 3, Section 3 to relocate 
Section 3(a)(3) into a new Supplementary Material .01 and title the 
section, ``Penny Pilot Program.'' The Exchange also proposes to amend a 
typographical error in Options 3, Section 3(a)(3) to replace ``QQQQs'' 
with ``QQQs.'' The other changes relate to the removal of Mini Options 
as explained herein.
Mass Cancellation of Trading Interest
    The Exchange proposes to amend the description of Options 3, 
Section 19 titled ``Mass Cancellation of Trading Interest.'' The 
proposed amended rule would state, '' An Options Participant may cancel 
any bids, offers, and orders in any series of options by requesting NOM 
Market Operations \4\ staff to effect such cancellation as per the 
instructions of the Options Participant.'' The Exchange is not amending 
the System with respect to this rule change. The proposed amended 
language merely makes clear that an Options Participant may contact NOM 
Market Operations and request the Exchange to cancel any bid, offer or 
order in any series of options. This is a voluntary service that is 
offered to market participants. The Exchange, would cancel such bid, 
offer or order pursuant to the Member's instruction. This proposed new 
rule would conform to rules of other Nasdaq affiliated markets.\5\
---------------------------------------------------------------------------

    \4\ The request to Market Operations is a manual request which 
is made telephonically.
    \5\ See Nasdaq Phlx LLC (``Phlx''), Nasdaq ISE, LLC (``ISE''), 
Nasdaq GEMX, LLC (``GEMX'') and Nasdaq MRX, LLC (``MRX'') Options 3, 
Section 19.

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[[Page 8987]]

Order Routing
    Phlx recently amended Options 5, Section 4.\6\ The Exchange 
proposes to make similar amendments to the NOM Rule. The amendments 
clarity and correct the rule text to represent current System 
functionality. Currently, Options 5, Section 4(a)(iii)(A), relating to 
DNR Orders, states,
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 87811 (December 20, 
2019), 84 FR 72017 (December 30, 2019) (SR-Phlx-2019-56).

    Any incoming order interacting with such a resting DNR Order 
will execute at the ABBO price, unless (1) the ABBO is improved to a 
price which crosses the DNR displayed price, in which case the 
incoming order will execute at the previous ABBO price; (2) the ABBO 
is improved to a price which locks the DNR's displayed price, in 
which case the incoming order will execute at the DNR's displayed 
price. Should the best away market move to an inferior price level, 
the DNR Order will automatically re-price from its one MPV inferior 
to the original away best bid/offer price to one MPV away from the 
---------------------------------------------------------------------------
new away best bid/offer price or its original limit price.

    The Exchange proposes to make non-substantive amendments to this 
rule text within Options 5, Section 4(a)(iii)(A), relating to DNR 
Orders, to align the rule text with Phlx Rule 1093. The Exchange 
proposes to instead provide:

    Any incoming order interacting with such a resting DNR Order 
will execute at the ABBO price, unless (1) the ABBO is improved to a 
price which crosses the DNR Order's already displayed price, in 
which case the incoming order will execute at the previous ABBO 
price as the away market crossed a displayed price; or (2) the ABBO 
is improved to a price which locks the DNR Order's displayed price, 
in which case the incoming order will execute at the DNR Order's 
displayed price. Should the best away market move to an inferior 
price level, the DNR Order will automatically re-price from its one 
MPV inferior to the original ABBO and display one MPV away from the 
new ABBO or its original limit price.

    This proposed new text intends to make clear that if the Exchange's 
System is executing an incoming order against a resting DNR Order which 
is displayed, it would not consider an updated ABBO which crossed the 
displayed DNR Order. The System would not take into account the away 
market order or quote which crossed the DNR Order's displayed price. 
The Exchange is not trading-through an away market in this scenario, 
rather an away market is crossing NOM's displayed market and therefore 
that market has the obligation not to trade-through NOM's displayed 
price. A similar change is being made to the last sentence of Options 
5, Section 4(a)(iii)(B)(4) for SEEK Orders and the last sentence 
Options 5, Section 4(a)(iii)(C)(4) for SRCH Orders. By way of example, 
consider the following sequence of events in the System:

9:45:00:00:00--MIAX Quote 0.95 x 1.20
9:45:00:00:10--OPRA updates MIAX BBO 0.95 x 1.20
9:45:00:00:20--NOM Local BBO Quote 1.00 x 1.15
9:45:00:00:30--OPRA disseminates NOM BBO updates: 1.00 x 1.15
9:45:00:00:35: CBOE Quote 1.00 x 1.12
9:45:00:00:45--OPRA disseminates CBOE BBO 1.00 x 1.12
9:45:00:00:50--DNR Order: Buy 5 @1.15 (exposes @ABBO of 1.12, displays 
1 MPV from ABBO @1.11)
9:45:00:00:51--OPRA disseminates NOM BBO updates: 1.11 x 1.15 (1.11 
being the DNR Order displaying 1 MPV from ABBO)
9:45:00:00:60--MIAX Quote updates to 1.00 x 1.10 (1.10 crosses the 
displayed DNR Order price, violating locked/crossed market rules; 
henceforth, we need not protect this price)
9:45:00:00:65--OPRA disseminates MIAX BBO 1.00 x 1.10
9:45:00:00:75--NOM Market Maker Order to Sell 5 @1.09
9:45:00:00:76--Market Maker Order immediately executes against DNR 
Order 5 contracts @1.12 (1.12 being the `previous' ABBO price 
disseminated by CBOE before the receipt of the DNR Order that was 
subsequently and illegally crossed by MIAX's 2nd quote)
9:45:00:00:77--OPRA disseminates NOM BBO updates: 1.10 x 1.15 (reverts 
back to BBO set by NOM Local Quote since the DNR Order has executed)

    The remainder of the changes to Options 5, Section 4(a)(iii)(A) are 
non-substantive changes designed to bring clarity to the rule text. By 
way of example, the Exchange proposes to add the word ``Order'' after 
``DNR,'' change the words ``away best bid/offer price'' to the acronym 
``ABBO'' and add the words ``display'' and ``already'' to the rule text 
to make clear that the intent of the sentence.
    The Exchange proposes to amend Options 5, Section 4(a)(iii)(B)(4) 
to amend the sentence which provides, ``If there exists a locked ABBO 
when the SEEK Order is entered onto the Order Book, the SEEK Order will 
display at the locked ABBO price.'' The Exchange is amending this 
sentence to provide, ``If there exists a locked ABBO when the SEEK 
Order is entered onto the Order Book, the SEEK Order will be entered at 
the ABBO price and displayed one MPV inferior to the ABBO.'' This is 
true of both SEEK and SRCH Orders. Where there exists a locked ABBO 
when the SEEK Order or SRCH Order is entered onto the Order Book, the 
SEEK Order or SRCH Order will be entered into the Order Book at the 
ABBO price and displayed one MPV inferior to the ABBO. The Exchange is 
proposing to add additional rule text to Options 5, Section 
4(a)(iii)(B)(4). This amendment corrects the current rule text.
    The Exchange also proposes to remove the sentence, ``When checking 
the Order Book, the System will seek to execute at the price at which 
it would send the order to an away market.'' The Exchange proposes to 
remove this sentence because the price at which the order would route 
in explained in greater detail within Options 5, Section 
4(a)(iii)(B)(4). Also, this sentence is confusing because the price at 
which an order would execute is dependent on the scenario within which 
an order would route. Removing this sentence will remove any confusion 
related to the price at which the order would route. The Exchange also 
proposes to remove the same sentence concerning SRCH Orders within 
Options 5, Section 4(a)(iii)(C)(4).
Other Amendments
    The Exchange proposes to correct the lettering within General 9, 
Section 1, General Standards. The Exchange proposes to correct a 
typographical error within Options 4A, Section 12. Specifically, the 
reference to Options 4, Section 6 should have referenced Options 4, 
Section 5 instead. The Exchange proposes to remove a reference to 
paragraph (c) within Options 5, Section 2, as there is no paragraph (c) 
within the Rule. The Exchange also proposes to update rulebook 
citations within Options 7, Pricing Schedule to reflect the proposed 
changes to Options 1, Section 1 (Definitions).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).

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[[Page 8988]]

Rulebook Harmonization
    The Exchange's proposal to reserve various sections of the Rules in 
order to harmonize its Rulebook with other Nasdaq affiliated markets is 
not a substantive amendment.
Definitions
    The Exchange's proposal to add the definition of an ``Away Best Bid 
or Offer'' or ``ABBO'' within Options 1, Section 1(a)(1) is consistent 
with the Act because these amendments will add transparency to the 
Rulebook. The Exchange's proposal to remove the terms ``class of 
options,'' ``series of options,'' ``System Book Feed'' and ``System 
Securities'' from the Options 1, Section 1 is also consistent with the 
Act. The term ``System Book Feed'' is not utilized in the Rulebook 
currently and therefore this term does not need to be defined. The term 
``System Securities'' is only utilized within the definition of the 
term ``System'' at current Options 1, Section 1(a)(60) and within 
Options 3, Section 8, Opening and Halt Cross.'' Replacing the term with 
the term ``option series'' will make the Rulebook clear.
Relocation of Options 2 Rules
    The proposal to relocate Options 2, Section 4(d) and Section 5(e) 
to Section 6 into Options 6(a) and (b), respectively is consistent with 
the Act. This amendment is not substantive.
Removal of Various Listings
Mini Options
    The Exchange's proposal to removal references to the listing and 
handling of Mini Options is consistent with the Act because Mini 
Options have not been listed in several years. Also, the Exchange notes 
that it has no open interest in Mini Options. In the event that the 
Exchange desires to list Mini Options in the future, it would file a 
rule change with the Commission to adopt rules to list Mini Options.
U.S. Dollar-Settled Foreign Currency Options
    The Exchange's proposal to removal references to the listing and 
handling of FCOs is consistent with the Act because FCOs have not been 
listed in several years. Also, the Exchange notes that it has no open 
interest in FCOs. In the event that the Exchange desires to list FCOs 
in the future, it would file a rule change with the Commission to adopt 
rules to list FCOs.
Mini-Nasdaq-100 Index
    The Exchange's proposal to removal references to the listing and 
handling Mini-Nasdaq-100 Index options is consistent with the Act 
because Mini-Nasdaq-100 Index options have not been listed in several 
years. Also, the Exchange notes that it has no open interest in Mini-
Nasdaq-100 Index options. In the event that the Exchange desires to 
list Mini-Nasdaq-100 Index options in the future, it would file a rule 
change with the Commission to adopt rules to list Mini-Nasdaq-100 Index 
options.
MSCI EM Index and MSCI EAFE Index
    The Exchange's proposal to removal references to the listing and 
handling of MSCI EM Index and MSCI EAFE Index options is consistent 
with the Act because MSCI EM Index and MSCI EAFE Index options have not 
been listed in several years. Also, the Exchange notes that it has no 
open interest in MSCI EM Index and MSCI EAFE Index options. In the 
event that the Exchange desires to list MSCI EM Index and MSCI EAFE 
Index options in the future, it would file a rule change with the 
Commission to adopt rules to list MSCI EM Index and MSCI EAFE Index 
options.
Minimum Increments
    The Exchange's proposal to relocate parts of Options 3, Section 3 
into a new Supplementary Material .01 and add a title for the Penny 
Pilot Program is consistent with the Act. This amendment will bring 
greater transparency to the Exchange's Rules.
Mass Cancellation of Trading Interest
    The Exchange's proposal to amend the rule text of Mass Cancellation 
of Trading Interest rule within Options 3, Section 19 is consistent 
with the Act because the Exchange desires to conform the rule text to 
other Nasdaq affiliated markets.\9\ Permitting Participants to contact 
Market Operations as a manual alternative to automated functionality, 
which similarly allows Participants to cancel interest, provides 
Participants experiencing their own system issues with a means to 
manage risk. Today, Participants are able to cancel interest, in an 
automated fashion through protocols \10\ and the Kill Switch.\11\ This 
is a voluntary services offered to all Participants.
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    \9\ See note 5 above.
    \10\ See Options 3 at Supplementary Material .03 to Section 7.
    \11\ See Options 3, Section 17.
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    This amended rule reflects the Exchange's current practice of 
allowing Participants to contact NOM Market Operations and request the 
Exchange to cancel any bid, offer or order in any series of options. 
The Exchange would continue to permit Participants to contact market 
operations and manually request cancellation of interest. The proposed 
amended language will make clear that an Options Participant may 
contact NOM Market Operations and request the Exchange to cancel any 
bid, offer or order in any series of options. The Exchange would 
continue to cancel such bid, offer or order pursuant to the 
Participant's instruction.
    This service, which permits Participants to cancel interest, does 
not diminish a Market Maker's obligation with respect to providing two-
sided quotations and this rule is not inconsistent with other firm 
quote obligations of the Market Maker. Upon the request of a 
Participant, NOM Market Operations will continue to manually input a 
mass cancellation message into the System consistent with the 
Participant's instruction to cancel trading interest. Once the mass 
cancellation message is entered into the System by NOM Market 
Operations, the message will be accepted by the System in the order of 
receipt in the queue such that the interest that was already accepted 
into the System will be processed prior to the mass cancellation 
message. In addition, mass cancellation messages entered into the 
System by NOM Market Operations are handled by the System through the 
same queuing mechanism that a quote or order message is handled by the 
System. The Exchange notes its processing of a mass cancellation 
message inputted by NOM Market Operations and handled by the System is 
consistent with firm quote and order handling rules.
Order Routing
    The Exchange's proposal to amend the sentence within Options 5, 
Section 4(a)(iii)(A) related to DNR Orders is consistent with the Act. 
The Exchange proposes to amend this rule text to clarify the current 
rule text. Specifically, the Exchange proposes to state, ``Any incoming 
order interacting with such a resting DNR Order will execute at the 
ABBO price, unless (1) the ABBO is improved to a price which crosses 
the DNR Order's already displayed price, in which case the incoming 
order will execute at the previous ABBO price as the away market 
crossed a displayed price; or (2) the ABBO is improved to a price which 
locks the DNR Order's displayed price, in which case the incoming order 
will execute at the DNR Order's displayed price.'' The System would not 
take into account the away market order or quote which crossed the 
DNR's displayed price. The Exchange is

[[Page 8989]]

not trading-through an away market in this scenario, rather an away 
market is crossing NOM's displayed market and therefore that market has 
the obligation not to trade-through NOMs displayed price. Similar 
amendments were made to Options 5, Section 4(a)(iii)(B)(4) and Section 
4(a)(iii)(C)(4). The remainder of the changes to this paragraph are 
clarifying non-substantive amendments.
    The Exchange's proposal to remove the following sentence from 
Options 5, Section 4(a)(iii)(B)(4) and Section 4(a)(iii)(C)(4), ``When 
checking the Order Book, the System will seek to execute at the price 
at which it would send the order to an away market,'' is consistent 
with the Act because this sentence is vague. The price at which an 
order would execute is dependent on the scenario within which an order 
would route. Removing this sentence will remove any confusion related 
to the price at which the order would route. The proposed rule would 
also add additional detail about the scenarios under which an order 
would route away.
    With respect to SEEK Orders within Options 5, Section 4(a)(iii)(B) 
as well as SRCH Orders within Options 5, Section 4(a)(iii)(C) the 
amendments are consistent with the Act as they protect investors and 
the general public by amending current incorrect rule text. If there 
exists a locked ABBO when the SEEK Order or SRCH Order is entered onto 
the Order Book, the SEEK Order or SRCH Order will be entered at the 
ABBO price and displayed one MPV inferior to the ABBO. The amendments 
to Options 5, Section 4 represent current System functionality. This 
new rule text will provide Participants with clarity as to the manner 
in which the System handles locked market conditions during routing. 
The proposed rule text is similar to rule text within Phlx Rule 1093.
Other Amendments
    The Exchange's proposal to correct certain typographical errors and 
update rulebook citations are not substantive.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
Rulebook Harmonization
    The Exchange's proposal to reserve various rules in connection with 
a larger Rulebook harmonization do not impose an undue burden on 
competition because these amendments are non-substantive.
Definitions
    The Exchange's proposal to add the definition of an ``Away Best Bid 
or Offer'' or ``ABBO'' within Options 1, Section 1(a)(1) and remove the 
terms ``class of options,'' ``series of options,'' ``System Book Feed'' 
and ``System Securities'' from the Options 1, Section 1 do not impose 
an undue burden on competition because these amendments will add 
transparency to the Rulebook.
Relocation of Options 2 Rules
    The proposal to relocate Options 2, Section 4(d) and Section 5(e) 
to Section 6, into Options 6(a) and (b) does not burden competition as 
this amendment is not substantive.
Removal of Various Listings
Mini Options
    The Exchange's proposal to removal references to the listing and 
handling of Mini Options do not impose an undue burden on competition. 
Mini Options have not been listed in several years. Also, the Exchange 
notes that it has no open interest in Mini Options.
U.S. Dollar-Settled Foreign Currency Options
    The Exchange's proposal to remove references to the listing of U.S. 
Dollar-Settled Foreign Currency Options (``FCOs'') does not impose an 
undue burden on competition. FCOs have not been listed in several 
years. The Exchange notes that it has no open interest in FCOs.
Mini-Nasdaq-100 Index
    The Exchange's proposal to removal references to the listing and 
handling of Mini-Nasdaq-100 Index options does not impose an undue 
burden on competition. Mini-Nasdaq-100 Index options have not been 
listed in several years. Also, the Exchange notes that it has no open 
interest in Mini-Nasdaq-100 Index options.
MSCI EM Index and MSCI EAFE Index
    The Exchange's proposal to removal references to the listing and 
handling of MSCI EM Index and the MSCI EAFE Index does not impose an 
undue burden on competition. Neither the MSCI EM Index nor the MSCI 
EAFE Index have been listed in several years. Also, the Exchange notes 
that it has no open interest in either the MSCI EM Index or the MSCI 
EAFE.
Minimum Increments
    The Exchange's proposal to relocate parts of Options 3, Section 3 
into a new Supplementary Material .01 and add a title for the Penny 
Pilot Program do not impose an undue burden on competition as these 
amendments are non-substantive.
Mass Cancellation of Trading Interest
    The Exchange's proposal to amend the rule text of the Mass 
Cancellation of Trading Interest rule within Options 3, Section 19 does 
not impose an undue burden on competition because there is no 
corresponding change to the manner in which this service will be 
offered. It will continue to be offered to all Participants.
Order Routing
    The Exchange believes that adding greater detail to its rules 
concerning routing of orders does not impose an undue burden on 
competition, rather it provides greater transparency as to the 
potential outcomes when utilizing different routing strategies. 
Further, the Exchange notes that market participants may elect not to 
route their orders. The Exchange continues to offer various options to 
its market participants with respect to routing.
Other Amendments
    The Exchange proposes to correct typographical error and update 
rulebook citations do not impose and undue burden on competition as 
these amendments are non-substantive.

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 \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange 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.

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[[Page 8990]]

    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requests 
that the Commission waive the 30-day operative delay so that the 
proposal may become operative immediately upon filing. The Exchange 
believes that adoption the term ``ABBO,'' would add greater 
transparency to its rules, and that removing the rule text related to 
various options listing which are no longer listed on the Exchange will 
provide Participants with notice of the unavailability of these 
listing. The Exchange also states that its amendment to its routing 
rules protects investors and the general public by providing clarity 
concerning the current operation of its System. The Exchange believes 
that the amended rules will provide market participants with greater 
information for each potential order routing strategy and, in general, 
provide greater transparency. The Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest. Accordingly, the Commission waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2020-006 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2020-006. 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-NASDAQ-2020-006 and should be submitted 
on or before March 10, 2020.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-03100 Filed 2-14-20; 8:45 am]
 BILLING CODE 8011-01-P