Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 66803 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 3See Chapter VI, Section 18(a)(1). 

4Price Improving Orders are orders to buy or sell 

an option at a specified price at an increment 

smaller than the minimum price variation in the 

security. Price Improving Orders may be entered in 

increments as small as one cent. Price Improving 

Orders that are available for display shall be 

displayed at the minimum price variation in that 

security and shall be rounded up for sell orders and 

rounded down for buy orders. See NOM Rules at 

Chapter VI, Section 1(e)(6). 

5Nasdaq ISE, LLC (‘‘ISE’’) provides a Limit Order 

Price Protection feature at Rule 714(b)(1)(A). This 

risk protection limits the amount by which 

incoming limit orders to buy may be priced above 

the Exchange’s best offer and by which incoming 

limit orders to sell may be priced below the 

Exchange’s best bid. Limit orders that exceed the 

pricing limit are rejected. The limit is established 

by the Exchange from time-to-time for orders to buy 

(sell) as the greater of the Exchange’s best offer (bid) 

plus (minus): (i) An absolute amount not to exceed 

$2.00, or (ii) a percentage of the Exchange’s best 

bid/offer not to exceed 10%. Limit Order Price 

Protection shall not apply to the Opening Process 

or during a trading halt. 

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–MRX–2018–39 and should 

be submitted on or before January 17, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28000 Filed 12–26–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84856; File No. SR– 

NASDAQ–2018–102] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Order Price Protection 

December 19, 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 

7, 2018, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘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 

Order Price Protection or ‘‘OPP’’ within 

The Nasdaq Options Market LLC 

(‘‘NOM’’) Rules at Chapter VI, Section 

18, entitled, ‘‘Risk Protections.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaq.cchwallstreet.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend Chapter VI, Section 

18, entitled, ‘‘Risk Protections.’’ 

Specifically, the Exchange proposes to 

amend the Order Price Protection or 

‘‘OPP’’ functionality at Chapter VI, 

Section 18(a) to: (i) Propose an 

alternative method to determine 

parameters for this risk protection; and 

(ii) memorialize certain rule text within 

Chapter VI, Section 18. The Exchage 

[sic] notes that OPP is intended to 

prevent erroneous executions of orders 

on NOM. This proposal seeks to further 

this objective by introducting [sic] a 

fixed dollar threshold that in 

combination with the existing 

percentage threshold will provide a 

modified approach to order rejection 

based on the price of the order. 

Background 

Today, the OPP feature prevents 

certain day limit, good til cancelled or 

immediate or cancel orders at prices 

outside of certain pre-set limits from 

being accepted by the System. OPP 

applies market-wide to all options, but 

does not apply to market orders or 

Intermarket Sweep Orders. OPP is 

operational each trading day after the 

opening until the close of trading, 

except during trading halts.3 The OPP 

assists Participants in controlling risk by 

checking each order, before it is 

accepted into the System, against 

certain parameters. Today, OPP rejects 

incoming orders that exceed certain 

parameters according to the following 

algorithm: 

(i) If the better of the NBBO or the internal 

market BBO (the ‘‘Reference BBO’’) on the 

contra-side of an incoming order is greater 

than $1.00, orders with a limit more than 

50% through such contra-side Reference BBO 

will be rejected by the System upon receipt. 

(ii) If the Reference BBO on the contra-side 

of an incoming order is less than or equal to 

$1.00, orders with a limit more than 100% 

through such contra-side Reference BBO will 

be rejected by the System upon receipt. 

Today, NOM offers price improving 

orders 4 to market participants for 

submitting orders in increments smaller 

than the minimum price variation 

(‘‘MPV’’) and as small as one cent. Price 

Improving Orders are displayed on The 

Options Price Report Authority 

(‘‘OPRA’’) as part of volume at the MPV. 

Alternative Method 

The Exchange proposes to expand the 

algorithm for OPP to permit an 

alternative to the percentage specified 

within the current rule. The proposal is 

similar to Nasdaq ISE, LLC’s Limit 

Order Price Protection feature.5 The 

Exchange proposes to amend Chapter 

VI, Section 18(1)(B)(i) to provide that 

OPP will reject incoming orders that 

exceed certain parameters according to 

the following algorithm: 

(i) If the better of the NBBO or the internal 

market BBO (the ‘‘Reference BBO’’) on the 

contra-side of an incoming order is greater 

than $1.00, orders with a limit more than the 

greater of the below will cause the order to 

be rejected by the System upon receipt. 

(A) 50% through such contra-side 

Reference BBO; or 

(B) a configurable dollar amount not to 

exceed $1.00 through such contra-side 

Reference BBO as specified by the Exchange 

announced via an Options Trader Alert. 


khammond on DSK30JT082PROD with NOTICES
66804 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 

6The Exchange notes that this particular scenario 

is not very frequent, but may occur on NOM 

because of the price improving order type. 

7See Securities Exchange Act Release No. 64312 

(April 20, 2011), 76 FR 23351 (April 26, 2011) (SR– 

NASDAQ–2011–053) (‘‘2011 Rule Change’’). 

The Exchange proposes to amend 

Chapter VI, Section 18(1)(B)(ii) to 

provide that OPP will reject incoming 

orders that exceed certain parameters 

according to the following algorithm: 

(ii) If the Reference BBO on the contra-side 

of an incoming order is less than or equal to 

$1.00, orders with a limit more than the 

greater of the below will cause the order to 

be rejected by the System upon receipt. 

(A) 100% through such contra-side 

Reference BBO; or 

(B) a configurable dollar amount not to 

exceed $1.00 through such contra-side 

Reference BBO as specified by the Exchange 

announced via an Options Trader Alert. 

Today, orders are rejected if they 

exceed the percentage threshold and in 

some cases the percentages may be too 

restrictive. The proposed alternative 

would permit for a range of prices to be 

executed where the incoming order is 

up to $1.00 from the Reference BBO. 

The Exchange believes that utilizing the 

greater of a fixed dollar amount 

alternative or percentage would expand 

the applicability of OPP while still 

providing a reasonable limit to the range 

where orders will be accepted. By 

implementing a functionality which 

applies the greater of (i) a fixed dollar 

amount not to exceed $1.00; or (ii) a 

percentage, the Exchange would ensure 

that this protection would be able to 

accommodate all orders based on a 

determination of how far from the 

Reference BBO the order is priced. The 

application of OPP would continue to 

be market-wide. This proposal permits 

the Exchange to consider the price of 

the order to determine the appropriate 

threshold with which to apply OPP. 

The Exchange notes that ISE’s Limit 

Order Price Protection feature combines 

a percentage and fixed dollar threshold, 

similar to NOM’s proposal. The 

Exchange notes that certain securities in 

lower price ranges would not benefit 

from the application of a percentage as 

would securities with higher prices. For 

example, the application of a 50% 

threshold to a $50 security would 

provide a rejection if a limit order was 

priced $75 or greater compared to a 

100% threshold for a $0.02 security 

which would be rejected a limit order 

priced $0.04 or greater. 

Today, the Exchange notes that 

certain orders, such as the price 

improving orders noted previously, are 

rejected because a 100% percentage is 

applied to the contra-side of an 

incoming order that is less than $1.00. 

A rejection occurs in cases where the 

order is not erroneously priced. Below 

are some additional examples utilizing 

the proposed rule: 

Example 2: An option priced less than 

$1.00 

For a penny MPV option with a BBO 

on NOM of $0.01 × $0.02, consider that 

the configurable dollar amount is set to 

$0.05. 

Current Rule: Reject buy orders of 

more than $0.04 bid if incoming order 

was less than $1.00, and it was more 

than 100% through the contra-side of 

the Reference BBO. 

Proposed Rule: A buy order priced up 

to $0.07 ($0.02 offer + $0.05 

configuration) would not be rejected 

because a configurable dollar amount 

from $0.00 to $0.05 would allow the 

order to be entered into the System for 

execution. 

This order was marketable upon entry 

and was not priced far from the current 

bid. The Exchange believes in this 

example, the order should be permitted 

to trade instead of being rejected. 

Example 3: An option priced greater 

than $1.00 

For a penny MPV option with a BBO 

on NOM of $1.01 × $1.02, consider that 

the configurable dollar amount is set to 

$0.60. 

Current Rule: Reject buy orders 50% 

through $1.02—orders priced greater 

than $1.53 ($1.02 + $0.51). 

Proposed Rule: Reject buy orders 

priced greater than $1.62–$0.60 through 

1.02 (this would be greater than 50% 

through 1.02). 

This order was marketable upon entry 

and was not priced far from the current 

bid. The Exchange believes in this 

example, the order should be permitted 

to trade instead of being rejected. 

Example No. 4: Price Improving Order 6

Today, assume a NOM Participant 

enters a $.01 offer in an issue that is a 

$0.05 MPV. 

The NOM Order Book would be $0 × 

$.01 and would be displayed on OPRA 

as $0 × $.05. 

Current Rule: Reject Buy orders 100% 

through $0.01—orders priced greater 

than $0.02 ($0.01 + $0.01) 

Proposed Rule: Reject buy orders 

priced greater than $0.06–$0.05 through 

$0.01 (this would be greater than 100% 

through $0.01). 

If a buyer submits a $0.05 order, OPP 

checks the order against the NOM Order 

Book and assuming a configurable 

amount of $0.05, this order would not 

reject the the $.05 bid utilizing the 

proposed fixed dollar parameter. 

The desire for this alternative arose 

specifically in the case where the 

contra-side of an incoming order is less 

than $1.00, but the Exchange believes 

that an incoming order priced more than 

$1.00 could also benefit by this 

alternative method because the fixed 

amount provides for additional 

executions in certain situations where a 

percentage would reject an order which 

was intentional and not erroneous, as 

displayed in the examples above. The 

Exchange specifically selected a limit of 

$1.00 because within that range, $1.00 

from the Reference BBO, applying a 

percentage may cause the System to 

reject a greater number of orders than 

the Exchange intended. Also, the $1.00 

equates to 100% through the $1.00 

threshold that exists today for OPP. The 

configurable dollar amount would 

provide more granularity to the 

application of OPP to permit a larger 

range of orders to execute. The 

Exchange believes that this approach 

will accomplish the goal of limiting 

erroneous executions while permitting 

intentional executions at reasonable 

prices. 

The Exchange would continue to 

analyze trading behavior and its 

experience with OPP to determine the 

configurable amount not to exceed 

$1.00. The Exchange would post the 

configurable amount on its website and 

announce any changes to the 

configurable amount in an Options 

Trader Alert. The Exchange notes that it 

typically has not changed its 

configurable amounts over the years 

with respect to its risk protections. The 

Exchange researches market behavior to 

determine the amount in setting risk 

thresholds, in this case for rejection of 

orders. The Exchange notifies market 

participants of the thresholds. The 

Exchange would revisit its proposed 

OPP threshold if there was a change in 

behavior of OPP rejections or in 

response to market participant feedback 

regarding the behavior of a risk 

protection. 

Memorialization of Rule Text 

A prior rule change 7 specified that 

the Exchange is permitted to 

temporarily deactivate OPP from time to 

time on an intraday basis at its 

discretion if it determined that volatility 

warranted deactivation. Participants 

would be notified of intraday OPP 

deactivation due to volatility and any 

subsequent intraday reactivation by the 

Exchange through the issuance of 

System status messages. The Exchange 

proposes to memorialize the Exchange’s 

discretion within NOM Rules at Chapter 

VI, Section 18(a)(1)(A) by adding the 

following rule text, ‘‘OPP may be 


khammond on DSK30JT082PROD with NOTICES
Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 66805 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

10See note 5 above. 

11See note 4 above. 

12The Exchange notes that this particular 

scenario is not very frequent, but may occur on 

NOM because of the price improving order type. 

13By way of example, with the current OPP 

methodology an option priced at $1.90 would be 

rejected for order priced greater than $2.85. 

Whereas the threshold would allow an order priced 

at $2.90 to be submitted to the System for 

execution. 

14See note 7 above. 

15See ISE 714(b)(1)(A). 

16 15 U.S.C. 78s(b)(3)(A)(iii). 

17 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. 

temporarily deactivated on an intra-day 

basis at the Exchange’s discretion.’’ 

Implementation 

The Exchange proposes to implement 

this rule change prior to March 2019. 

The Exchange will announce the date of 

implementation via an Options Traders 

Alert. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,8 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,9

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, by 

adopting an alternative configurable 

dollar amount standard, not to exceed 

$1.00, which would allow NOM to 

establish appropriate boundaries for 

rejecting potentially erroneous orders 

while continuing to allow Participants 

to access liquidity. 

Alternative Method 

OPP is intended to prevent orders 

which were clearly erroneous from 

executing within the System to the 

detriment of market participants. OPP 

was not intended to reject legitimate 

orders which are otherwise capable of 

execution at a fair price. The Exchange’s 

proposal would allow the Exchange to 

establish a fixed dollar amount in 

addition to a percentage threshold, 

similar to ISE,10 which would continue 

to protect investors and the public 

interest against erroneous executions 

while also allowing orders to execute 

where appropriate at a more granular 

level where the incoming order is $1.00 

from the Reference BBO. 

Because today NOM offers price 

improving orders 11 to market 

participants for submitting orders in 

increments smaller than the MPV and as 

small as one cent, OPP orders which 

rely on the Reference BBO on the NOM 

Order Book are rejected because in some 

cases the price improving order appears 

greater than than [sic] 100% through the 

contra-side Reference BBO of $.01.12

The Exchange believes that it is 

consistent with the Act in this case 

because the order was not entered at an 

erroneous price. The Exchange proposes 

an alternative to utilize a second 

method to determine the rejection of 

orders in addition to the current OPP 

methodology for rejecting orders. The 

Exchange believes that by implementing 

a functionality which applies the greater 

of (i) a fixed dollar amount not to 

exceed $1.00; or (ii) a percentage, the 

Exchange would ensure that this 

protection would be able to 

accommodate all orders based on a 

determination of how far from the 

Reference BBO the order is priced. The 

application of OPP would continue to 

be market-wide. 

The Exchange believes that its 

proposal is consistent with the Act 

because the fixed amount provides for a 

larger range of executions within the 

$1.00 variance which would otherwise 

be rejected by the application of a 

percentage which would not capture the 

potential incremental executions. 

Orders would be rejected which were 

intentional and not erroneous. The 

Exchange specifically selected a limit of 

$1.00 because within that range, $1.00 

from the Reference BBO, applying a 

percentage may reject a greater number 

of orders than is intended. The 

Exchange notes that options which are 

at or near the money with regard to the 

strike and the price of the underlying 

stock are typically priced in a range 

between $0.0–$2.00.13 The Exchange 

would provide market participants with 

greater flexilibity [sic] to enter orders 

priced near in-the-money ranges. The 

Exchange will continue to analyze 

trading behavior and its experience with 

OPP to determine the configurable 

amount not to exceed $1.00. The 

Exchange would post the configurable 

amount on its website and announce 

any changes to the configurable amount 

in an Options Trader Alert. The 

configurable dollar amount would 

provide more granularity to the 

application of OPP to permit a larger 

range of orders to execute. The 

Exchange believes that this approach 

will accomplish the goal of limiting 

erroneous executions while permitting 

intentional executions at reasonable 

prices. 

Memorialization of Rule Text 

The Exchange’s proposal to 

memorialize rule text which was 

described in the 2011 Rule Change 14

relating to discretion to deactivate OPP 

on an intraday basis would bring greater 

transparency to the ability of the 

Exchange to exercise this discretion. 

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. The proposal 

does not impose an intra-market burden 

on competition because this mandatory 

risk protection applies to all 

Participants who submit orders into 

NOM. The Exchange would reject all 

incoming orders that exceed certain 

parameters uniformly for all 

Participants. The proposal does not 

impose an inter-market burden on 

competition because today other 

markets offer similar protections to 

avoid erroneous executions on their 

markets.15

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 16 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.17

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. 


khammond on DSK30JT082PROD with NOTICES
66806 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Penny Pilot Program has been in effect on 

the Exchange since its inception in May 2012. See 

Securities Exchange Act Release Nos. 66871 (April 

27, 2012), 77 FR 26323 (May 3, 2012) (File No.10– 

206, In the Matter of the Application of BOX 

Options Exchange LLC for Registration as a 

National Securities Exchange Findings, Opinion, 

and Order of the Commission), 67328 (June 29, 

2012), 77 FR 40123 (July 6, 2012) (SR–BOX–2012– 

007), 68425 (December 13, 2012), 77 FR 75234 

(December 19, 2013) (SR–BOX–2012–021), 69789 

(June 18, 2013), 78 FR 37854 (June 24, 2013) (SR– 

BOX–2013–31), 71056 (December 12, 2013), 78 FR 

76691 (December 18, 2013) (SR–BOX–2013–56), 

72348 (June 9, 2014), 79 FR 33976 (June 13, 2014) 

(SR–BOX–2014–17), 73822 (December 11, 2014), 79 

FR 75606 (December 18, 2014) (SR–BOX–2014–29), 

75295 (June 25, 2015), 80 FR 37690 (July 1, 

2015)(SR–BOX–2015–23), 78172 (June 28, 2016), 81 

FR 43325 (July 1, 2016)(SR–BOX–2016–24), 79429 

(November 30, 2016), 81 FR 87991 (December 6, 

2016)(SR–BOX–2016–55), 80828 (May 31, 2017), 82 

FR 26175 (June 6, 2017) (SR–BOX–2017–18), 82353 

(December 19, 2017) 82 FR 61087 (December 26, 

2017)(SR–BOX–2017–37), and 83500 (June 22, 

2018), 83 FR 30471 (June 28, 2018)(SR–BOX–2018– 

23). The extension of the effective date and the 

revision of the date to replace issues that have been 

delisted are the only changes to the Penny Pilot 

Program being proposed at this time. 

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– 

NASDAQ–2018–102 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–2018–102. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2018–102 and 

should be submitted on or before 

January 17, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28002 Filed 12–26–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84869; File No. SR–BOX– 

2018–38] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To amend Rule 7260 by 

Extending the Penny Pilot Program 

Through June 30, 2019 

December 19, 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 

18, 2018, BOX Exchange LLC (the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

effective time period of the Penny Pilot 

Program that is currently scheduled to 

expire on December 31, 2018, until June 

30, 2019. The text of the proposed rule 

change is available from the principal 

office of the Exchange, at the 

Commission’s Public Reference Room 

and also on the Exchange’s internet 

website at http://boxoptions.com. 

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 

self-regulatory organization 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 self-regulatory organization 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 extend the 

effective time period of the Penny Pilot 

Program that is currently scheduled to 

expire on December 31, 2018, until June 

30, 2019.3 The Penny Pilot Program 

permits certain classes to be quoted in 

penny increments. The minimum price 

variation for all classes included in the 

Penny Pilot Program, except for 

PowerShares QQQ Trust (‘‘QQQQ’’)®, 

SPDR S&P 500 Exchange Traded Funds 

(‘‘SPY’’), and iShares Russell 2000 Index 

Funds (‘‘IWM’’), will continue to be 

$0.01 for all quotations in options series 

that are quoted at less than $3 per 

contract and $0.05 for all quotations in 

options series that are quoted at $3 per 

contract or greater. QQQQ, SPY, and 

IWM will continue to be quoted in $0.01 

increments for all options series. 

The Exchange may replace, on a semiannual basis, any Pilot Program classes 

that have been delisted on the second 

trading day following January 1, 2019. 

The Exchange notes that the 

replacement classes will be selected 

based on trading activity for the six 

month period beginning June 1, 2018 

and ending November 30, 2018 for the 

January 2019 replacements. The 

Exchange will employ the same 

parameters to prospective replacement 

classes as approved and applicable 

under the Pilot Program, including 

excluding high-priced underlying 


khammond on DSK30JT082PROD with NOTICES