Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 66779 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change 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. 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 

14See Securities Exchange Release No. 61061 

(November 24, 2009), 74 FR 62857 (December 1, 

2009) (SR–NYSEArca–2009–44). 

15For 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). 16 17 CFR 200.30–3(a)(12). 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

the Exchange believes that, by extending 

the expiration of the Pilot Program, the 

proposed rule change will allow for 

further analysis of the Penny Pilot 

Program and a determination of how the 

Program should be structured in the 

future. In doing so, the proposed rule 

change will also serve to promote 

regulatory clarity and consistency, 

thereby reducing burdens on the 

marketplace, facilitating investor 

protection, and fostering a competitive 

environment. In addition, consistent 

with previous practices, the Exchange 

believes the other options exchanges 

will be filing similar extensions of the 

Penny Pilot Program. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A) of the Act 8 and Rule 19b– 

4(f)(6) 9 thereunder. 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 after the date of 

the filing, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

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

Act 10 and Rule 19b–4(f)(6) 11

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 12 normally does not 

become operative prior to 30 days after 

the date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),13 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 proposal may become operative 

immediately upon filing. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because doing so will 

allow the Pilot Program to continue 

without interruption in a manner that is 

consistent with the Commission’s prior 

approval of the extension and expansion 

of the Pilot Program.14 Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.15

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MIAX–2018–38 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–MIAX–2018–38. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). 

Copies of the submission, all 

subsequent amendments, all written 

statements with respect to the proposed 

rule change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549–1090, 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–MIAX–2018–38 and should 

be submitted on or before January 17, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27998 Filed 12–26–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84870; File No. SR– 

NYSEAMER–2018–39] 

Self-Regulatory Organizations; NYSE 

American LLC; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change To Allow Flexible 

Exchange Equity Options Where the 

Underlying Security Is an ExchangeTraded Fund That Is Included in the 

Option Penny Pilot To Be Settled in 

Cash 

December 19, 2018. 

I. Introduction 

On September 20, 2018, NYSE 

American LLC (‘‘NYSE American’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 


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66780 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 

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

2 17 CFR 240.19b–4. 

3For the definitions of ‘‘FLEX Options,’’ ‘‘FLEX 

Equity Options,’’ and ‘‘Option Penny Pilot,’’ see 

infra notes 9 and 11. 

4See Securities Exchange Act Release No. 84364 

(October 4, 2018), 83 FR 51535 (October 11, 2018) 

(‘‘Notice’’). 

5 15 U.S.C. 78s(b)(2). 

6See Securities Exchange Act Release No. 82994 

(April 4, 2018), 83 FR 15441 (April 10, 2018). The 

Commission designated January 9, 2019, as the date 

by which it should approve, disapprove, or institute 

proceedings to determine whether to disapprove the 

proposed rule change. 

7See Letter to Brent J. Fields, Secretary, 

Commission, from Samara Cohen, Head of ETF 

Global Markets, BlackRock, dated November 27, 

2018 (‘‘BlackRock Letter’’). 

8 15 U.S.C. 78s(b)(2)(B). 

9A ‘‘FLEX Option’’ is a customized options 

contract that is subject to the rules in Section 15, 

Flexible Exchange Options. See NYSE American 

Rule 900G(b)(1). A ‘‘FLEX Equity Option’’ is an 

option on a specified underlying equity security 

that is subject to the rules of Section 15. See NYSE 

American Rule 900G(b)(10). 

10See NYSE American Rule 903G(c)(3)(i). There 

is an exception to physical settlement for settlement 

of FLEX Binary Return Derivatives (‘‘ByRDs’’). See 

NYSE American Rules 900G(b)(17), 903G(c)(3)(ii), 

and 910ByRDs. 

11The ‘‘Option Penny Pilot’’ is a pilot program by 

the options exchanges that permits certain option 

classes to be quoted in penny or nickel increments 

on a pilot basis. See NYSE American Rule 960NY, 

Commentary .02. See also Securities Exchange Act 

Release No. 55162 (January 24, 2007), 72 FR 4738, 

4739 (February 1, 2007) (SR–Amex–2006–106) 

(‘‘Option Penny Pilot Approval Order’’). The Option 

Penny Pilot is currently set to expire on December 

31, 2018. See NYSE American Rule 960NY, 

Commentary .02. 

12See proposed NYSE American Rule 

903G(c)(3)(ii). The Exchange proposes conforming 

changes to NYSE American Rule 903G(c)(3) to 

reflect that the proposed rule change would add a 

second exception to the general requirement for 

physical settlement for FLEX Equity Options. See 

proposed NYSE American Rule 903G(c)(3)(i) and 

(iii). 

13See Notice, supra note 4, at 51535–36. 

14See id. at 51536. The Exchange also states that 

market participants trade cash-settled FLEX ETF 

Options in the over-the-counter market and 

exchange trading would provide benefits to these 

market participants. See id. 

15See id. 

16See id. 

17See id. The Commission notes that the criteria 

for qualifying for the Option Penny Pilot is based 

on the national average daily volume over a six 

month period in the options class itself, not based 

on the volume of the underlying ETF. See Securities 

Exchange Act Release No. 60711 (September 23, 

2009), 74 FR 49419 (September 28, 2009) (SR– 

NYSEArca–2009–44) (‘‘Option Penny Pilot 

Expansion Order’’) and Securities Exchange Act 

Release No. 61106 (December 3, 2009), 74 FR 65193 

(December 9, 2009) (NYSEAmex–2009–74) (Option 

Penny Pilot Expansion Notice’’). 

18See Notice, supra note 4, at 51536. The 

Exchange adds that other existing regulatory 

safeguards, such as exercise limits and reporting 

requirements, would also continue to apply. See id. 

at 51537. The Commission notes that NYSE 

American Rule 906G provides generally that there 

are no position limits for FLEX Equity Options, but 

that positions in FLEX Options that expire on a 

third Friday-of-the-month expiration day 

(‘‘Expiration Friday’’) will be aggregated with 

positions in non-FLEX Options on the same 

underlying and subject to the position limits 

applicable to such options. See NYSE American 

Rule 906G(b). 

19See Notice, supra note 4, at 51536. 

20See id. 

21See id. 

22See id. 

23See id. 

24See id. 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

modify the rules related to Flexible 

Exchange (‘‘FLEX’’) Options to allow 

FLEX Equity Options where the 

underlying security is an ExchangeTraded Fund (‘‘ETF’’) that is included in 

the Option Penny Pilot to be settled in 

cash.3 The proposed rule change was 

published for comment in the Federal 

Register on October 11, 2018.4 On 

November 19, 2018, pursuant to Section 

19(b(2) of the Act,5 the Commission 

designated a longer period within which 

to either approve the proposed rule 

change, disapprove the proposed rule 

change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.6 The Commission 

received one comment on the proposed 

rule change.7 This order institutes 

proceedings under Section 19(b)(2)(B) of 

the Act8 to determine whether to 

approve or disapprove the proposed 

rule change. 

II. Description of the Proposal and 

Comments Received 

The Exchange has proposed to amend 

NYSE American Rule 903G(c) to allow 

for cash settlement for certain FLEX 

Equity Options.9 Currently, FLEX 

Equity Options settle by physical 

delivery of the underlying security.10

The Exchange proposes, in the case of 

a FLEX Equity Option whose underlying 

security is an ETF that is included in 

the Option Penny Pilot 11 (‘‘FLEX ETF 

Option’’), to allow settlement either by 

the delivery of cash or, as currently 

permitted under the Exchange rules, by 

physical delivery of the underlying 

security.12

The Exchange states that it believes 

that it is appropriate to introduce cash 

settlement as an alternative for FLEX 

ETF Options because ETFs generally 

have increasingly become a major part 

of investors’ portfolios, allowing 

investors to take advantage of many 

unique opportunities to hedge their 

portfolios and manage risk.13 The 

Exchange asserts that physical 

settlement possess certain risks with 

respect to volatility and movement of 

the underlying security at expiration 

that market participants may need to 

hedge against and cash settlement does 

not present these same risks.14

The Exchange states that it seeks to 

allay concerns about cash-settled equity 

options by proposing to adopt cash 

settlement as an alternative settlement 

method for 64 ETFs that are included in 

the Option Penny Pilot.15 The Exchange 

adds that generally index options are 

cash-settled and derive their value from 

a disseminated index price, and that 

similarly ETFs typically have their 

values linked to a disseminated index 

price.16 The Exchange states that the 

option classes included in the original 

pilot were chosen based on being one of 

the most actively-traded multiply-listed 

options classes and also states that the 

most recent expansion identified the 

most-active classes based on the 

‘‘underlying security’s ‘national average 

daily volume over a six-month 

period.’ ’’ 17

The Exchange states that cash-settled 

FLEX ETF Options would be subject to 

the same position limits as non-cashsettled FLEX ETF Options (i.e., the 

position limits in NYSE American Rule 

906G).18 The Exchange represents that it 

confirmed with the Options Clearing 

Corporation (‘‘OCC’’) that OCC can 

support the clearance and settlement of 

cash-settled FLEX ETF Options.19 The 

Exchange also states that it believes the 

Exchange and the Options Price 

Reporting Authority (‘‘OPRA’’) have the 

necessary systems capacity to handle 

the additional traffic associated with the 

listing of cash-settled FLEX ETF 

Options and that it believes that its 

members will not have a capacity issue 

as a result of the proposal.20 The 

Exchange represents that it does not 

believe that the proposed rule change 

will cause fragmentation of liquidity.21

The Exchange further represents that it 

will monitor the trading volume 

associated with the options series listed 

as a result of this proposed rule change 

and the effect, if any, of these series on 

market fragmentation and on the 

capacity of the Exchange’s automated 

systems.22

The Exchange represents that it will 

have an adequate surveillance program 

for cash-settled FLEX ETF Options and 

states that it intends to use the same 

surveillance procedures, including 

procedures concerning surveillance for 

manipulation, for cash-settled FLEX 

ETF Options that it uses for the 

Exchange’s other options products.23

The Exchange states that it believes 

manipulating the settlement price of 

cash-settled FLEX ETF Options would 

be difficult because of the size of the 

market for such ETFs.24 According to 

the Exchange each cash-settled FLEX 

ETF Option is sufficiently active so as 

to alleviate concerns about the potential 


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25See id. at 51536–37. 

26See id. at 51537. 

27See id. 

28See BlackRock Letter, supra note 7. 

29See id. 

30 15 U.S.C. 78s(b)(2)(B). 

31 15 U.S.C. 78f(b)(5). 

32 Id. 33See Notice, supra note 4, at 51536. 34See Option Penny Pilot Approval Order, supra 

note 11, at 4740. As noted in the 2009 Option 

Penny Pilot Expansion Order, for example, the pilot 

report provided information on the most active and 

least active options classes in the pilot and 

analyzed the impact the pilot had on those options 

in certain specified areas. See supra note 17, at 

49420. See also Option Penny Pilot Expansion 

Notice, supra note 17, at 65194. 

35See Notice, supra note 4, at 51536. 

36See NYSE American Rule 906G(b). 

for manipulation.25 The Exchange states 

that the vast liquidity of ETF options 

and the underlying equities markets and 

the high level of participation among 

market participants that enter quotes or 

orders in ETF options would, according 

to the Exchange, make it very difficult 

for a single participant to alter the prices 

of each security underlying an ETF 

without becoming exposed to regulatory 

scrutiny and that such attempt at 

manipulation would be costprohibitive.26 Moreover, the Exchange 

states that it is a member of the 

Intermarket Surveillance Group (‘‘ISG’’) 

and therefore would have access to 

surveillance and investigative 

information regarding trading in the 

underlying securities.27

The Commission received one 

comment letter, which supports the 

proposed rule change.28 The commenter 

states that it agrees with the Exchange 

that the proposal alleviates several 

potential challenges associated with 

physical settlement and presents 

advantages to the end investor. This 

commenter asserts that the proposal 

would lead to greater standardization of 

contract terms, mitigate counterparty 

risk, increase price discovery, and 

improve information dissemination, 

which would lead to greater 

transparency.29

III. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

NYSEAMER–2018–39 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act to determine 

whether the proposal should be 

approved or disapproved.30 Institution 

of such proceedings is appropriate at 

this time in view of the legal and policy 

issues raised by the proposed rule 

change, as discussed below. Institution 

of disapproval proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. 

Pursuant to Section 19(b)(2)(B) of the 

Act, the Commission is providing notice 

of the grounds for disapproval under 

consideration. The Commission is 

instituting proceedings to allow for 

additional analysis and input 

concerning the proposed rule change’s 

consistency with the Act 31 and, in 

particular, with Section 6(b)(5) of the 

Act, which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, 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.32

As discussed above, the Exchange 

proposes to modify NYSE American 

Rule 903G(c)(3)(ii) to allow cash 

settlement for FLEX ETF Options. In its 

proposal, the Exchange acknowledges 

that concerns have been raised in the 

past regarding the susceptibility of cashsettled equity options to manipulation. 

The Exchange asserts that to address 

such concerns, it has proposed to limit 

cash settlement to options on a narrow 

set of ETFs that are the most actively 

traded, as evidenced by the inclusion of 

options on those ETFs in the Option 

Penny Pilot.33 The Commission notes 

that the goal of the Option Penny Pilot 

since its inception has been to analyze 

the impact of penny quoting on options 

spreads, transaction costs, payment for 

order flow, and quote message traffic.34

As a result, the Option Penny Pilot 

eligibility criterion is based on the 

national average daily volume of the 

options classes rather than the volume 

in the underlying securities. 

The Commission notes that critical to 

any assessment of the potential for 

manipulation when trading cash-settled 

options on ETFs is also an analysis of 

the liquidity and depth of the market for 

both the ETFs underlying the options 

and the component securities of the 

ETFs themselves. The Exchange has not, 

however, provided any specific data, 

analysis, and studies demonstrating that 

the ETFs underlying the options 

included in the Option Penny Pilot have 

the liquidity necessary to adequately 

address concerns on the risks of 

manipulation and potential for market 

disruption that may arise from cash 

settlement on such options. 

As noted above, because options in 

the Option Penny Pilot are assessed 

every six months based on options 

trading volume, we believe the 64 ETFs 

underlying the options in the Option 

Penny Pilot that the Exchange identifies 

generally in its proposal were those 

eligible for the pilot as of the date the 

Exchange submitted its proposal to the 

Commission. This raises further 

questions, which are not addressed in 

the current proposal, as to how the 

Exchange will treat options on those 

ETFs that become ineligible for the 

Option Penny Pilot in the future, as well 

as how to analyze the potential for 

manipulation and market disruption 

from future ETFs underlying options 

that are not yet, but later, included in 

the Option Penny Pilot and will 

therefore become eligible for cash 

settlement under the Exchange’s 

proposal. 

The Exchange also takes the position 

that cash settlement for options is not 

unique because other options exchanges 

trade cash-settled options.35 Cashsettled options on equity securities such 

as ETFs that hold specific component 

securities, however, are unique and 

present distinct issues different from 

cash-settled index options that track an 

index. The Commission notes that 

allowing for cash settlement of FLEX 

ETF Options, as proposed, would 

permit cash settlement on a significantly 

broader set of equity options than that 

previously approved. Further, it is not 

clear from the Exchange’s proposal how 

the expanded use of cash settlement for 

equity options may bear on the potential 

for manipulation or impact market 

quality since, as noted above, the 

proposal lacks any supporting data or 

analysis on these issues. 

The Exchange proposes to apply the 

same position limits to cash-settled 

FLEX ETF Options as for other FLEX 

Equity Options. The Commission notes 

that the Exchange generally does not 

impose position limits for FLEX Equity 

Options unless the FLEX Equity 

Options’ expiration coincides with an 

Expiration Friday.36 This means that 

there would be no position limits, 

including on the days leading up to and 

surrounding Expiration Friday, for 

many of the cash-settled FLEX ETF 

Options under the proposal. The 

Commission is therefore concerned that 

the lack of position limits for nonExpiration Friday expiring cash-settled 

FLEX ETF Options could make them 

more susceptible to manipulation and 

could lead to market disruption. 

Finally, the Commission notes that 

the proposal would allow for settlement 

in cash or by physical delivery on 

options that otherwise have the same 

terms. The Commission notes that 

allowing both physical delivery and 

cash settlement alternatives could 


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66782 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 

37Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

38See id. 

39See id. 

40Section 19(b)(2) of the Exchange Act, as 

amended by the Securities Act Amendments of 

1975, Public Law 94–29 (June 4, 1975), grants the 

Commission flexibility to determine what type of 

proceeding—either oral or notice and opportunity 

for written comments—is appropriate for 

consideration of a particular proposal by a selfregulatory organization. See Securities Act 

Amendments of 1975, Senate Comm. on Banking, 

Housing & Urban Affairs, S. Rep. No. 75, 94th 

Cong., 1st Sess. 30 (1975). 41See Notice, supra note 4. 

42 17 CFR 200.30–3(a)(57). 

1 15 U.S.C. 7201 et seq. 

2Public Law 111–203, 124 Stat. 1376 (2010). 

increase market fragmentation and raise 

additional manipulation concerns. 

The Commission notes that under the 

Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the 

Exchange Act and the rules and 

regulations issued thereunder . . . is on 

the self-regulatory organization [‘SRO’] 

that proposed the rule change.’’ 37 The 

description of a proposed rule change, 

its purpose and operation, its effect, and 

a legal analysis of its consistency with 

applicable requirements must all be 

sufficiently detailed and specific to 

support an affirmative Commission 

finding,38 and any failure of an SRO to 

provide this information may result in 

the Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Exchange Act and the 

applicable rules and regulations.39

For these reasons, the Commission 

believes it is appropriate to institute 

proceedings pursuant to Section 

19(b)(2)(B) of the Act to determine 

whether the proposal should be 

approved or disapproved. 

IV. Commission’s Solicitation of 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written view of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

or the rules and regulations thereunder. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.40

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by January 17, 2019. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by January 31, 2019. The 

Commission asks that commenters 

address the sufficiency of the 

Exchange’s statements in support of the 

proposal which are set forth in the 

Notice,41 in addition to any other 

comments they may wish to submit 

about the proposed rule change. 

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– 

NYSEAMER–2018–39 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–NYSEAMER–2018–39. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

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–NYSEAMER–2018–39 and 

should be submitted on or before 

January 17, 2019. Rebuttal comments 

should be submitted by January 31, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27992 Filed 12–26–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Securities Act of 1933 Release No. 10592/ 

December 19, 2018; Securities Exchange 

Act of 1934 Release No. 84877/December 

19, 2018] 

Order Approving Public Company 

Accounting Oversight Board Budget 

and Annual Accounting Support Fee 

for Calendar Year 2019 

The Sarbanes-Oxley Act of 2002, as 

amended (the ‘‘Sarbanes-Oxley Act’’),1

established the Public Company 

Accounting Oversight Board (‘‘PCAOB’’) 

to oversee the audits of companies that 

are subject to the securities laws, and 

related matters, in order to protect the 

interests of investors and further the 

public interest in the preparation of 

informative, accurate, and independent 

audit reports. Section 982 of the DoddFrank Wall Street Reform and Consumer 

Protection Act (the ‘‘Dodd-Frank Act’’) 2

amended the Sarbanes-Oxley Act to 

provide the PCAOB with explicit 

authority to oversee auditors of brokerdealers registered with the Securities 

and Exchange Commission (the 

‘‘Commission’’). The PCAOB is to 

accomplish these goals through 

registration of public accounting firms 

and standard setting, inspection, and 

disciplinary programs. The PCAOB is 

subject to the comprehensive oversight 

of the Commission. 

Section 109 of the Sarbanes-Oxley Act 

provides that the PCAOB shall establish 

a reasonable annual accounting support 

fee, as may be necessary or appropriate 

to establish and maintain the PCAOB. 

Under Section 109(f) of the SarbanesOxley Act, the aggregate annual 

accounting support fee shall not exceed 

the PCAOB’s aggregate ‘‘recoverable 

budget expenses,’’ which may include 

operating, capital, and accrued items. 

The PCAOB’s annual budget and 

accounting support fee are subject to 

approval by the Commission. In 


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