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 


amozie on DSK3GDR082PROD with NOTICES1
65772 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices 

10 Id. at 539 (quoting Securities Exchange Act 

Release No. 59039 (December 2, 2008), 73 FR 

74770, 74782–83 (December 9, 2008) (SR– 

NYSEArca–2006–21)). 11 15 U.S.C. 78s(b)(3)(A)(ii). 

the execution of order flow from broker 

dealers’ . . . .’’ 10

The Exchange believes that the 

proposed $0.0018 per share executed 

credit 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) is reasonable 

because the Exchange provides other 

$0.0018 per share executed credits for 

entering an order that accesses liquidity 

in the Nasdaq BX Equities System. For 

example, the Exchange currently 

provides members a credit of $0.0018 

per share executed for an order that 

accesses liquidity in securities in Tapes 

A and C (excluding orders with 

Midpoint pegging and excluding orders 

that receive price improvement and 

execute against an order with a Nondisplayed price) entered by a member 

that: (i) Accesses liquidity equal to or 

exceeding 0.20% of total Consolidated 

Volume during a month; and (ii) 

accesses 20% more liquidity as a 

percentage of Consolidated Volume than 

the member accessed in May 2018. The 

proposed credit will provide another 

opportunity to members to receive a 

$0.0018 per share executed credit in 

return for certain levels of participation 

on the Exchange as measured by total 

Consolidated Volume. 

The Exchange believes that the 

proposed $0.0018 per share executed 

credit 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) is an equitable 

allocation and is not unfairly 

discriminatory because the Exchange 

will apply the same fee to all similarly 

situated members. To qualify for the 

new credit, a member must access 

liquidity equal to or exceeding 0.30% of 

total Consolidated Volume during a 

month. Like the other qualification 

criteria required to receive a credit for 

an order that accesses liquidity, the 

proposed qualification criteria ensures 

that members qualifying for this credit 

are meaningfully participating on the 

Exchange in a given month. The 

Exchange notes that any member may 

qualify for the proposed credit if it 

meets the levels of total Consolidated 

Volume required by the credit’s 

qualification criteria. Moreover, if the 

level of total Consolidated Volume is 

too high for a member to achieve in a 

given month, the member may qualify 

for other lower credits with lower total 

Consolidated Volume qualification 

requirements available 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). For example, the Exchange 

provides a credit of $0.0015 per share 

executed for an order that accesses 

liquidity (excluding orders with 

Midpoint pegging and excluding orders 

that receive price improvement and 

execute against an order with a Nondisplayed price) entered by a member 

that accesses liquidity equal to or 

exceeding 0.065% of total Consolidated 

Volume during month. Last, the 

Exchange notes that the proposed credit 

is limited to orders that access liquidity 

in Tape A securities. The Exchange is 

specifically attempting to increase the 

level of liquidity removal in Tape A 

securities, which the Exchange has 

identified as an area in need of 

improvement. Members will continue to 

have opportunities to qualify for the 

same or similar credits for removal of 

liquidity in Tape B and C securities. 

Thus, the Exchange believes that this 

additional new credit provides all of its 

members with choice and flexibility, 

and is therefore an equitable allocation 

and not unfairly discriminatory. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. In terms of 

inter-market competition, the Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive, or 

rebate opportunities available at other 

venues to be more favorable. In such an 

environment, the Exchange must 

continually adjust its fees to remain 

competitive with other exchanges and 

with alternative trading systems that 

have been exempted from compliance 

with the statutory standards applicable 

to exchanges. Because competitors are 

free to modify their own fees in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. 

In this instance, the proposed new 

credit tier does not impose a burden on 

competition because the Exchange’s 

execution services are completely 

voluntary and subject to extensive 

competition both from other exchanges 

and from off-exchange venues. The 

proposed credit provides another 

opportunity for all market participants 

to receive a credit in return for marketimproving activity on the Exchange. In 

this regard, the new credit tier is 

designed to provide incentive to market 

participants to remove a certain level of 

total Consolidated Volume during a 

month receive the credit for its orders 

that access liquidity in securities 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). Thus, the new 

credit may increase activity on the 

Exchange by attracting removers of 

liquidity in Tape A securities. In sum, 

if the changes proposed herein are 

unattractive to market participants, it is 

likely that the Exchange will not gain 

market share as a result. Accordingly, 

the Exchange does not believe that the 

proposed changes will impair the ability 

of members or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 

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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.11

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) 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. 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices 65773 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 82341 

(December 15, 2018), 82 FR 60651 (December 21, 

2017) (approving SR–Phlx–2017–79). 

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– 

BX–2018–062 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BX–2018–062. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–BX–2018–062 and should 

be submitted on or before January 11, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2018–27621 Filed 12–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84835; File No. SR–Phlx– 

2018–80] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Pilot 

Period for the Exchange’s 

Nonstandard Expirations Pilot 

Program 

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 

11, 2018 Nasdaq PHLX LLC 

(‘‘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 

pilot period for the Exchange’s 

nonstandard expirations pilot program, 

currently set to expire on December 15, 

2018. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqphlx.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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On December 15, 2017 the 

Commission approved a proposed rule 

change for the listing and trading on the 

Exchange, on a twelve month pilot 

basis, of p.m.-settled options on broadbased indexes with nonstandard 

expirations dates.3 The pilot program 

permits both Weekly Expirations and 

End of Month (‘‘EOM’’) expirations 

similar to those of the a.m.-settled 

broad-based index options, except that 

the exercise settlement value of the 

options subject to the pilot are based on 

the index value derived from the closing 

prices of component stocks. 

Pursuant to subsection (b)(vii)(1), 

Weekly Expirations, to Rule 1101A, the 

Exchange may open for trading Weekly 

Expirations on any broad-based index 

eligible for standard options trading to 

expire on any Monday, Wednesday, or 

Friday (other than the third Friday-ofthe-month or days that coincide with an 

EOM expiration). Weekly Expirations 

are be subject to all provisions of 

Exchange Rule 1101A and are treated 

the same as options on the same 

underlying index that expire on the 

third Friday of the expiration month. 

Unlike the standard monthly options, 

however, Weekly Expirations are p.m.- 

settled. 

Similarly, pursuant to subsection 

(b)(vii)(2), Weekly Expirations, to Rule 

1101A, the Exchange may open for 

trading EOMs on any broad-based index 

eligible for standard options trading to 

expire on the last trading day of the 

month. EOMs are subject to all 

provisions of Rule 1101A and treated 

the same as options on the same 

underlying index that expire on the 

third Friday of the expiration month. 

However, the EOMs are p.m.-settled. 

The Exchange now proposes to amend 

Exchange Rule 1101A(b)(vii)(3) so that 

the duration of the pilot program for 

these nonstandard expirations will be 

through May 6, 2019. The Exchange 

continues to have sufficient systems 

capacity to handle p.m.-settled options 

on broad-based indexes with 

nonstandard expirations dates and has 

not encountered any issues or adverse 

market effects as a result of listing them. 

Additionally, there is continued 

investor interest in these products. The 

Exchange will make public on its 

website any data and analysis it submits 


amozie on DSK3GDR082PROD with NOTICES1