838 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Notices 

3See Securities Exchange Act Release No. 84624 

(November 19, 2018), 83 FR 60547. 

4See letters to Brent J. Fields, Secretary 

Commission, from Matthew R. Scott, President, 

Merrill Lynch Professional Clearing Corp., dated 

December 7, 2018; Ellen Greene, Managing Director, 

Capital Markets, SIFMA, dated December 17, 2018; 

and John P. Davidson, President and Chief 

Operating Officer, The Options Clearing 

Corporation, dated December 19, 2018. 

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

6 Id. 

7 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

3References herein to rules refer to rules of Phlx, 

unless otherwise noted. 

4The options exchanges in the U.S. that have 

pilot programs similar to the Penny Pilot (together 

‘‘pilot programs’’) are currently working on a 

proposal for permanent approval of the respective 

pilot programs. 

5See Securities Exchange Act Release No. 83530 

(June 28, 2018), 83 FR 31227 (July 3, 2018) (SR– 

Phlx–2018–50). 

6The replacement issues will be announced to 

the Exchange’s membership via an Options Trader 

Alert (OTA) posted on the Exchange’s website. 

Penny Pilot replacement issues will be selected 

based on trading activity in the previous six 

months, as is the case today. The replacement 

issues would be identified based on The Options 

Clearing Corporation’s trading volume data. For 

example, for the January replacement, trading 

volume from June 1, 2018 through November 30, 

2018 would be analyzed. The month immediately 

preceding the replacement issues’ addition to the 

Pilot (i.e., December) would not be used for 

purposes of the six-month analysis. 

proposed rule change to establish rules 

governing the give up of a Clearing 

Member by a member organization on 

Exchange transactions. The proposed 

rule change was published for comment 

in the Federal Register on November 26, 

2018.3 The Commission has received 

three comment letters regarding the 

proposed rule change.4

Section 19(b)(2) of the Act 5 provides 

that, within 45 days of publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it find such longer period to 

be appropriate and publishes its reasons 

for so finding, or as to which the selfregulatory organization consents, the 

Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day after 

publication of the notice for this 

proposed rule change is January 10, 

2019. The Commission is extending this 

45-day time period. 

The Commission finds it appropriate 

to designate a longer period within 

which to take action on the proposed 

rule change so that it has sufficient time 

to consider the proposed rule change. 

Accordingly, the Commission pursuant 

to Section 19(b)(2) of the Act,6

designates February 24, 2019, as the 

date by which the Commission shall 

either approve or disapprove, or 

institute proceedings to determine 

whether to disapprove, the proposed 

rule change (File No. SR–PHLX–2018– 

72). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Brent J. Fields, 

Secretary. 

[FR Doc. 2019–00497 Filed 1–30–19; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84961; File No. SR–Phlx– 

2018–84] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Phlx Rule 1034 

December 26, 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 

21, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘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 

Phlx Rule 1034 (Minimum Increments) 3

to extend through June 30, 2019 or the 

date of permanent approval, if earlier, 

the Penny Pilot Program in options 

classes in certain issues (‘‘Penny Pilot’’ 

or ‘‘Pilot’’), and to change the date when 

delisted classes may be replaced in the 

Penny Pilot. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to amend 

Phlx Rule 1034 to extend the Penny 

Pilot through June 30, 2019 or the date 

of permanent approval, if earlier,4 and 

to change the date when delisted classes 

may be replaced in the Penny Pilot. The 

Exchange believes that extending the 

Penny Pilot will allow for further 

analysis of the Penny Pilot and a 

determination of how the program 

should be structured in the future. 

Under the Penny Pilot, the minimum 

price variation for all participating 

options classes, except for the Nasdaq– 

100 Index Tracking Stock (‘‘QQQQ’’), 

the SPDR S&P 500 Exchange Traded 

Fund (‘‘SPY’’) and the iShares Russell 

2000 Index Fund (‘‘IWM’’), is $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 are 

quoted in $0.01 increments for all 

options series. The Penny Pilot is 

currently scheduled to expire on 

December 31, 2018.5

The Exchange proposes to extend the 

time period of the Penny Pilot through 

June 30, 2019 or the date of permanent 

approval, if earlier, and to provide a 

revised date for adding replacement 

issues to the Penny Pilot. The Exchange 

proposes that any Penny Pilot Program 

issues that have been delisted may be 

replaced on the second trading day 

following January 1, 2019. The 

replacement issues will be selected 

based on trading activity in the previous 

six months.6

This filing does not propose any 

substantive changes to the Penny Pilot 

Program; all classes currently 

participating in the Penny Pilot will 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Notices 839 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

11 15 U.S.C. 78s(b)(3)(A). 

12 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. 

13 17 CFR 240.19b–4(f)(6). 

14 17 CFR 240.19b–4(f)(6)(iii). 

15See Securities Exchange Release No. 61061 

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

2009) (SR–NYSEArca–2009–44). 

16For 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). 

remain the same and all minimum 

increments will remain unchanged. The 

Exchange believes the benefits to public 

customers and other market participants 

who will be able to express their true 

prices to buy and sell options have been 

demonstrated to outweigh the potential 

increase in quote traffic. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,8

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, to protect investors and the 

public interest. 

In particular, the proposed rule 

change, which extends the Penny Pilot 

for an additional six months through 

June 30, 2019 or the date of permanent 

approval, if earlier, 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 

No written comments were either 

solicited or 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 9 and Rule 19b– 

4(f)(6) 10 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 11 and Rule 19b–4(f)(6) 12

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 13 normally does not 

become operative prior to 30 days after 

the date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),14 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.15 Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.16

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– 

PHLX–2018–84 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–PHLX–2018–84. 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 


amozie on DSK3GDR082PROD with NOTICES1
840 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5The month immediately preceding a 

replacement class’s addition to the Pilot Program 

(i.e., June) would not be used for purposes of the 

six-month analysis. Thus, a replacement class to be 

added on the second trading day following January 

1, 2019 would be identified based on The Option 

Clearing Corporation’s trading volume data from 

June 1, 2018 through November 30, 2018. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

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–Phlx–2018–84 and should 

be submitted on or before February 21, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2019–00473 Filed 1–30–19; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84936; File No. SR–C2– 

2018–026] 

Self-Regulatory Organizations; Cboe 

C2 Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to the Penny 

Pilot Program 

December 21, 2018. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

20, 2018, Cboe C2 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘C2’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

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

Rule 19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

operation of Penny Pilot Program 

through June 30, 2019. The text of the 

proposed rule change is provided 

below. (additions are in italics; 

deletions are [bracketed]) 

* * * * * 

Rules of Cboe C2 Exchange, Inc. 

* * * * * 

Rule 6.4. Minimum Increments for Bids 

and Offers 

(a)–(b) No change. 

Interpretations and Policies . . . 

.01 No change. 

.02 The Exchange may replace any 

option class participating in the Penny 

Pilot Program that has been delisted 

with the next most actively traded, 

multiply listed option class, based on 

national average daily volume in the 

preceding six calendar months, that is 

not yet included in the Pilot Program. 

Any replacement class would be added 

on the second trading day following 

[July 1, 2018] January 1, 2019. The 

Penny Pilot will expire on [December 

31, 2018] June 30, 2019. 

* * * * * 

The text of the proposed rule change 

is also available on the Exchange’s 

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

AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Penny Pilot Program (the ‘‘Pilot 

Program’’) is scheduled to expire on 

December 31, 2018. The Exchange 

proposes to extend the Pilot Program 

until June 30, 2019. The Exchange 

believes that extending the Pilot 

Program will allow for further analysis 

of the Pilot Program and a 

determination of how the Pilot Program 

should be structured in the future. 

During this extension of the Pilot 

Program, the Exchange proposes that it 

may replace any option class that is 

currently included in the Pilot Program 

and that has been delisted with the next 

most actively traded, multiply listed 

option class that is not yet participating 

in the Pilot Program (‘‘replacement 

class’’). Any replacement class would be 

determined based on national average 

daily volume in the preceding six 

months,5 and would be added on the 

second trading day following January 1, 

2019. The Exchange will announce to its 

Trading Permit Holders by circular any 

replacement classes in the Pilot 

Program. The Exchange notes that it 

intends to utilize the same parameters to 

select prospective replacement classes 

as was originally approved. 

The Exchange is specifically 

authorized to act jointly with the other 

options exchanges participating in the 

Pilot Program in identifying any 

replacement class. The Exchange lastly 

represents that the Exchange has the 

necessary system capacity to continue to 

support operation of the Penny Pilot. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.6 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 7 requirements that the rules of 

an exchange be 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 regulating, clearing, settling, 

processing information with respect to, 

and facilitation transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 


amozie on DSK3GDR082PROD with NOTICES1