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 


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Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 66807 

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

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

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f)(6). 

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

9 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. 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6)(iii). 

12See Securities Exchange Release No. 61061 

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

2009) (SR–NYSEArca–2009–44). 

13For 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). 

securities. The Exchange will distribute 

a Regulatory Circular notifying 

Participants which replacement classes 

shall be included in the Penny Pilot 

Program. 

BOX is specifically authorized to act 

jointly with the other options exchanges 

participating in the Pilot Program in 

identifying any replacement class. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,4

in general, and Section 6(b)(5) of the 

Act,5 in particular, 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, and, in 

general protect investors and the public 

interest. 

In particular, the proposed rule 

change, which extends the Penny Pilot 

until June 30, 2019 and changes the date 

for replacing Penny Pilot issues that 

were delisted to the second trading day 

following January 1, 2019, will enable 

public customers and other market 

participants to express their true prices 

to buy and sell options for the benefit 

of all market participants. This is 

consistent with the Act. 

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. To the 

contrary, this proposal is procompetitive because it allows Penny 

Pilot issues to continue trading on the 

Exchange. Moreover, the Exchange 

believes that the proposed rule change 

will allow for further analysis of the 

Pilot and a determination of how the 

Pilot should be structured in the future; 

and will serve to promote regulatory 

clarity and consistency, thereby 

reducing burdens on the marketplace 

and facilitating investor protection. The 

Pilot is an industry wide initiative 

supported by all other option 

exchanges. The Exchange believes that 

extending the Pilot will allow for 

continued competition between market 

participants on the Exchange trading 

similar products as their counterparts 

on other exchanges, while at the same 

time allowing the Exchange to continue 

to compete for order flow with other 

exchanges in option issues trading as 

part of the Pilot. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

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 6 and Rule 19b– 

4(f)(6) 7 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 8 and Rule 19b–4(f)(6) 9 thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 10 normally does not 

become operative prior to 30 days after 

the date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),11 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.12 Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.13

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– 

BOX–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–BOX–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, on official business 

days between the hours of 10:00 a.m. 


khammond on DSK30JT082PROD with NOTICES
66808 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 

14 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See generally CHX Article 19. 5See CHX Article 18, Rules 1 and 1A. The 

Exchange will submit a separate Rule 19b–4 filing 

to eliminate fees and credits associated with the 

outbound routing service and SNAP. 6See CHX Article 1, Rule 1(s). From January 1, 

2018 through November 30, 2018, the Exchange 

routed away a total of 634 orders and executed 

178,682 away shares pursuant to the outbound 

routing service. Moreover, a total of 60 SNAP 

auctions that resulted in order executions were 

initiated since June 2016, 16 of which occurred in 

2018. 7See CHX Article 1, Rule 2(b)(3)(A). 8 17 CFR 242.611. 

9 17 CFR 242.610(d). 

10See CHX Article 1, Rule 2(b)(1)(C); see also 

amended CHX Article 20, Rules 5 and 6. 

11See CHX Article 1, Rule 2(h)(1). 

12See CHX Article 1, Rule 2(h)(2). 

13See CHX Article 1, Rule 2(h)(3). 

14See CHX Article 1, Rule 1(b). 

15See CHX Article 18, Rules 1A(a) and (b). 

16The Matching System is a ‘‘Trading Facility’’ of 

the Exchange as defined under CHX Article 1, Rule 

1(z). 

and 3:00 p.m., located at 100 F Street 

NE, Washington, DC 20549. 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–BOX–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.14

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–27993 Filed 12–26–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84852; File No. SR–CHX– 

2018–09] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change To 

Decommission the Exchange’s 

Outbound Routing Service and the 

Sub-Second Non-Displayed Auction 

Process 

December 19, 2018. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

12, 2018, the Chicago Stock Exchange, 

Inc. (‘‘CHX’’ or ‘‘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 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 

rules of the Exchange (‘‘Rules’’) to 

decommission the Exchange’s outbound 

routing service and the Sub-second 

Non-displayed Auction Process 

(‘‘SNAP’’). The proposed rule change is 

available on the Exchange’s website at 

www.nyse.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 

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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

2. Background 

The Exchange proposes to amend the 

Rules to decommission the Exchange’s 

outbound routing service 4 and SNAP.5

Since initial launch of the outbound 

routing service in May 2015 and SNAP 

in June 2016, neither product has been 

frequently or actively utilized by 

Participants.6 Accordingly, to 

streamline the Exchange’s product 

offerings and to reallocate Exchange 

resources to other initiatives and 

obligations, the Exchange proposes to 

decommission the outbound routing 

service and SNAP as of December 31, 

2018 (‘‘Operative Date’’). 

On the Operative Date, the Exchange’s 

outbound routing broker-dealer, 

CHXBD, LLC (‘‘CHXBD’’), will cease 

business operations and all inbound 

orders received by the Exchange will be 

handled Do Not Route.7 Specifically, to 

the extent an inbound order would 

trade-through a protected quotation of 

an away market in violation of Rule 611 

of Regulation NMS 8 or impermissibly 

lock or cross a protected quotation of an 

away market in violation of Rule 610(d) 

of Regulation NMS,9 the order will 

either be cancelled back to the order 

sender or price slid to a permissible 

price if it is marked CHX Only.10

With respect to SNAP, pursuant to 

Article 20, Rule 4(b), the Exchange 

deactivated the Start SNAP,11 Cancel On 

SNAP,12 and SNAP Auction Only Order 

(‘‘SNAP AOO’’) 13 order modifiers as of 

August 16, 2018. As SNAP Cycles 14 can 

only be initiated upon receipt of a valid 

Start SNAP order or pursuant to the 

Exchange’s pro forma review of the 

SNAP AOO queue,15 the Exchange does 

not currently conduct any SNAP 

auctions. Therefore, elimination of the 

SNAP-related Rules will have no impact 

on the current operation of the Matching 

System.16

3. Proposed Rule Change 

To effect the decommissioning of the 

outbound routing service and SNAP, the 

Exchange proposes to amend the Rules 

as follows: 

a. Amendments to Article 1 

Current Article 1, Rule 1(oo) defines 

the term ‘‘Routable Order,’’ which are 

the only orders that may be routed away 

pursuant to the outbound routing 

service. The Exchange proposes to 

amend Article 1, Rule 1(oo) to eliminate 

‘‘Routable Order’’ as a defined term and 

to insert the term ‘‘Reserved’’ in its 

place. 

Current Article 1, Rule 1(rr) defines 

the term ‘‘SNAP Price,’’ which is the 

single price at which an order will be 

executed during a SNAP Cycle, and 

current Article 1, Rule 1(ss) defines 

‘‘SNAP Eligible Orders,’’ which are 

specific orders that are eligible for 

participation in a SNAP Cycle. The 

Exchange proposes to amend these 

Rules to eliminate SNAP Price and 

SNAP Eligible Orders as defined terms 

and to insert the term ‘‘Reserved’’ in 

their place. 

Current Article 1, Rule 2(a) provides 

that the general order types described 

thereunder shall be accepted by the 

Matching System, subject to the 

requirements of Article 20, Rule 4. 

Because the decommissioning of the 

outbound routing service would result 

in all orders being non-routable, the 


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