Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices 65769 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The Exchange has filed to make the pilot 

program permanent. See Securities Exchange Act 

Release No. 83831 (August 13, 2018), 83 FR 41128 

(August 17, 2018) (SR–CboeBYX–2018–014). 

6See Securities Exchange Act Release No. 68303 

(November 27, 2012), 77 FR 71652 (December 3, 

2012) (‘‘RPI Approval Order’’) (SR–BYX–2012–019). 

7A ‘‘User’’ is defined in BYX Rule 1.5(cc) as any 

member or sponsored participant of the Exchange 

who is authorized to obtain access to the System. 

8A ‘‘Retail Order’’ is defined in Rule 11.24(a)(2) 

as an agency order that originates from a natural 

person and is submitted to the Exchange by a RMO, 

provided that no change is made to the terms of the 

order with respect to price or side of market and 

the order does not originate from a trading 

algorithm or any computerized methodology. See 

Rule 11.24(a)(2). 

9The term Protected Quotation is defined in BYX 

Rule 1.5(t) and has the same meaning as is set forth 

in Regulation NMS Rule 600(b)(58). The terms 

Protected NBB and Protected NBO are defined in 

BYX Rule 1.5(s). The Protected NBB is the bestpriced protected bid and the Protected NBO is the 

best-priced protected offer. Generally, the Protected 

NBB and Protected NBO and the national best bid 

(‘‘NBB’’) and national best offer (‘‘NBO’’, together 

with the NBB, the ‘‘NBBO’’) will be the same. 

However, a market center is not required to route 

to the NBB or NBO if that market center is subject 

to an exception under Regulation NMS Rule 

611(b)(1) or if such NBB or NBO is otherwise not 

available for an automatic execution. In such case, 

the Protected NBB or Protected NBO would be the 

best-priced protected bid or offer to which a market 

center must route interest pursuant to Regulation 

NMS Rule 611. 

10See RPI Approval Order, supra note 6 at 71652. 

11 Id. 

12See Securities Exchange Act Release Nos. 

71249 (January 7, 2014), 79 FR 2229 (January 13, 

2014) (SR–BYX–2014–001); 74111 (January 22, 

2015), 80 FR 4598 (January 28, 2015) (SR–BYX– 

2015–05); 76965 (January 22, 2016), 81 FR 4682 

(January 27, 2016) (SR–BYX–2016–01); 78180 (June 

28, 2016), 81 FR 43306 (July 1, 2016) (SR–BatsBYX– 

2016–15); 81368 (August 10, 2017), 82 FR 38960 

(August 16, 2017) (SR–BatsBYX–2017–18); 83758 

(August 1, 2018), 83 FR 38757 (August 7, 2018) 

(SR–CboeBYX–2018–015). 

13A ‘‘Retail Price Improvement Order’’ is defined 

in Rule 11.24(a)(3) as an order that consists of nondisplayed interest on the Exchange that is priced 

better than the Protected NBB or Protected NBO by 

at least $0.001 and that is identified as such. See 

Rule 11.24(a)(3). 

any decrease in the market value of 

equity securities granted as 

compensation to, or held directly or 

indirectly by, an employee or director. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 

what, if any, matters have been added, 

deleted or postponed, please contact the 

Office of the Secretary at (202) 551– 

5400. 

Dated: December 18, 2018. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27829 Filed 12–19–18; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84830; File No. SR– 

CboeBYX–2018–025] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Extend the 

Pilot Period for the Exchange’s Retail 

Price Improvement Program 

December 17, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

11, 2018, Cboe BYX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BYX Exchange, Inc. (‘‘BYX’’ or 

the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) a proposed rule 

change to extend the pilot period for the 

Exchange’s Retail Price Improvement 

Program. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/CBOELegalRegulatory 

Home.aspx), at the Exchange’s Office of 

the Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to extend the pilot period for 

the Exchange’s Retail Price 

Improvement Program (the ‘‘Program’’). 

The Program is currently set to expire 

on the earlier of approval of the filing 

to make the Program permanent or 

December 31, 2018.5 The Exchange now 

proposes to extend the Program until 

the earlier of approval of the filing to 

make the Program permanent or June 

30, 2019. 

Background 

In November 2012, the Commission 

approved the Program on a pilot basis.6

The Program is designed to attract retail 

order flow to the Exchange, and allows 

such order flow to receive potential 

price improvement. The Program is 

currently limited to trades occurring at 

prices equal to or greater than $1.00 per 

share. Under the Program, all Exchange 

Users 7 are permitted to provide 

potential price improvement for Retail 

Orders 8 in the form of non-displayed 

interest that is better than the national 

best bid that is a Protected Quotation 

(‘‘Protected NBB’’) or the national best 

offer that is a Protected Quotation 

(‘‘Protected NBO’’, and together with the 

Protected NBB, the ‘‘Protected NBBO’’).9

The Program was approved by the 

Commission on a pilot basis running 

one year from the date of 

implementation.10 The Commission 

approved the Program on November 27, 

2012.11 The Exchange implemented the 

Program on January 11, 2013, and has 

extended the pilot period six times.12

The pilot period for the Program is 

currently set to expire on the earlier of 

approval of the filing to make this rule 

permanent or December 31, 2018. This 

filing seeks to extend the pilot until the 

earlier of approval of the filing to make 

the Program permanent or June 30, 

2019. 

Proposal To Extend the Operation of the 

Program 

The Exchange established the 

Program in an attempt to attract retail 

order flow to the Exchange by 

potentially providing price 

improvement to such order flow. The 

Exchange believes that the Program 

promotes competition for retail order 

flow by allowing Exchange members to 

submit Retail Price Improvement Orders 

(‘‘RPI Orders’’) 13 to interact with Retail 

Orders. Such competition has the ability 

to promote efficiency by facilitating the 

price discovery process and generating 


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65770 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices 

14See RPI Approval Order, supra note 6 at 71655. 

15Concurrently with this filing, the Exchange has 

submitted a request for an extension of the 

exemption under Regulation NMS Rule 612 

previously granted by the Commission that permits 

it to accept and rank the RPI orders in sub-penny 

increments. See Letter from Anders Franzon, SVP, 

Deputy General Counsel, Cboe BYX Exchange, Inc. 

to Brent J. Fields, Secretary, Securities and 

Exchange Commission dated December 11, 2018. 

16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(5). 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4. As required under Rule 

19b–4(f)(6)(iii), the Exchange has given 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. 17 CFR 240.19b– 

4(f)(6). 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

additional investor interest in trading 

securities, thereby promoting capital 

formation. The Exchange believes that 

extending the pilot is appropriate 

because it will allow the Exchange and 

the Commission additional time to 

gather and analyze data regarding the 

Program that the Exchange has 

committed to provide.14 As such, the 

Exchange believes that it is appropriate 

to extend the current operation of the 

Program.15 Through this filing, the 

Exchange seeks to extend the current 

pilot period of the Program until the 

earlier of approval of the filing to make 

the Program permanent or June 30, 

2019. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the 

Act.16 In particular, the Exchange 

believes the proposed change furthers 

the objectives of Section 6(b)(5) of the 

Act,17 in that it is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. The Exchange believes that 

extending the pilot period for the 

Program is consistent with these 

principles because the Program is 

reasonably designed to attract retail 

order flow to the exchange environment, 

while helping to ensure that retail 

investors benefit from the better price 

that liquidity providers are willing to 

give their orders. Additionally, as 

previously stated, the competition 

promoted by the Program may facilitate 

the price discovery process and 

potentially generate additional investor 

interest in trading securities. The 

extension of the pilot period will allow 

the Commission and the Exchange to 

continue to monitor the Program for its 

potential effects on public price 

discovery, and on the broader market 

structure. 

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. The 

proposed rule change extends an 

established pilot program, thus allowing 

the Program to enhance competition for 

retail order flow and contribute to the 

public price discovery process. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any written 

comments from Members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (A) Significantly affect 

the protection of investors or the public 

interest; (B) impose any significant 

burden on competition; and (C) by its 

terms, become operative for 30 days 

from the date on which it was filed or 

such shorter time as the Commission 

may designate it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 18 and paragraph (f)(6) of Rule 19b– 

4 thereunder,19 the Exchange has 

designated this rule filing as noncontroversial. 

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of the filing.20 However, 

pursuant to Rule 19b–4(f)(6)(iii),21 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposed 

rule change may become operative upon 

filing. The Exchange states that waiver 

of the operative delay is consistent with 

the protection of investors and the 

public interest and will allow the 

Exchange to extend the Program, which 

will ensure that the Program continues 

while the Exchange and Commission 

continue to analyze data regarding the 

Program. 

The Commission believes that 

waiving the 30-day operative delay for 

the instant filing is consistent with the 

protection of investors. Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.22

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: (1) Necessary or appropriate in 

the public interest; (2) for the protection 

of investors; or (3) 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 rule-comments@

sec.gov. Please include File Number SR– 

CboeBYX–2018–025 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–CboeBYX–2018–025. 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 


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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices 65771 

23 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The term ‘‘Consolidated Volume’’ shall mean 

the total consolidated volume reported to all 

consolidated transaction reporting plans by all 

exchanges and trade reporting facilities during a 

month in equity securities, excluding executed 

orders with a size of less than one round lot. For 

purposes of calculating Consolidated Volume and 

the extent of a member’s trading activity the date 

of the annual reconstitution of the Russell 

Investments Indexes shall be excluded from both 

total Consolidated Volume and the member’s 

trading activity. See Equity 7, Section 118. 

4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(4) and (5). 

6Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

7NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 

2010). 

8See NetCoalition, at 534–535. 

9 Id. at 537. 

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–CboeBYX–2018–025 and 

should be submitted on or before 

January 11, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27618 Filed 12–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84833; File No. SR–BX– 

2018–062] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Transaction Fees at Equity 

7, Section 118 

December 17, 2018. 

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 December 

3, 2018, Nasdaq BX, Inc. (‘‘BX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s transaction fees at Equity 7, 

Section 118 to adopt a new credit for 

entering an order that accesses liquidity 

in the Nasdaq BX Equities System. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqbx.cchwallstreet.com/, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

transaction fees at Equity 7, Section 118 

to adopt a new credit for entering an 

order that accesses liquidity in the 

Nasdaq BX Equities System. 

Specifically, the Exchange is proposing 

to provide a credit of $0.0018 per share 

executed for orders that access liquidity 

in Tape A securities (excluding orders 

with Midpoint pegging and excluding 

orders that receive price improvement 

and execute against an order with a 

Non-displayed price). To qualify for the 

proposed credit, a member must access 

liquidity equal to or exceeding 0.30% of 

total Consolidated Volume 3 during a 

month. The proposed new credit, and 

its associated qualification criteria, is 

similar to existing credits provided for 

Orders that access liquidity, which 

require a certain level of total 

Consolidated Volume accessed during a 

month to qualify. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,4 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,5 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among members and issuers and other 

persons using any facility, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Commission and the courts have 

repeatedly expressed their preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, while 

adopting a series of steps to improve the 

current market model, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 6

Likewise, in NetCoalition v. Securities 

and Exchange Commission 7

(‘‘NetCoalition’’) the D.C. Circuit upheld 

the Commission’s use of a market-based 

approach in evaluating the fairness of 

market data fees against a challenge 

claiming that Congress mandated a costbased approach.8 As the court 

emphasized, the Commission ‘‘intended 

in Regulation NMS that ‘market forces, 

rather than regulatory requirements’ 

play a role in determining the market 

data . . . to be made available to 

investors and at what cost.’’ 9

Further, ‘‘[n]o one disputes that 

competition for order flow is ‘fierce.’ 

. . . As the SEC explained, ‘[i]n the U.S. 

national market system, buyers and 

sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 


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