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]
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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 (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–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
https://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
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SR–Phlx–2020–03 (not yet published).
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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.
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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
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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.
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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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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:
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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).
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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
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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
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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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
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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
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note 5 above.
Options 3 at Supplementary Material .03 to
Section 7.
11 See Options 3, Section 17.
10 See
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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
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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
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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
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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 (https://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 (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–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]
-----------------------------------------------------------------------
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 https://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.
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\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 (https://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 (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-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
