Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices 67443 

2The requested relief would apply to direct sales 

of shares in Creation Units by a Fund to a Fund of 

Funds and redemptions of those shares. Applicants, 

moreover, are not seeking relief from section 17(a) 

for, and the requested relief will not apply to, 

transactions where a Fund could be deemed an 

Affiliated Person, or a Second-Tier Affiliate, of a 

Fund of Funds because an Adviser or an entity 

controlling, controlled by or under common control 

with an Adviser provides investment advisory 

services to that Fund of Funds. 

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

2 17 CFR 240.19b–4. 

7. Applicants request an exemption to 

permit Funds of Funds to acquire Fund 

shares beyond the limits of section 

12(d)(1)(A) of the Act; and the Funds, 

and any principal underwriter for the 

Funds, and/or any broker or dealer 

registered under the Exchange Act, to 

sell shares to Funds of Funds beyond 

the limits of section 12(d)(1)(B) of the 

Act. The application’s terms and 

conditions are designed to, among other 

things, help prevent any potential (i) 

undue influence over a Fund through 

control or voting power, or in 

connection with certain services, 

transactions, and underwritings, (ii) 

excessive layering of fees, and (iii) 

overly complex fund structures, which 

are the concerns underlying the limits 

in sections 12(d)(1)(A) and (B) of the 

Act. 

8. Applicants request an exemption 

from sections 17(a)(1) and 17(a)(2) of the 

Act to permit persons that are Affiliated 

Persons, or Second-Tier Affiliates, of the 

Funds, solely by virtue of certain 

ownership interests, to effectuate 

purchases and redemptions in-kind. The 

deposit procedures for in-kind 

purchases of Creation Units and the 

redemption procedures for in-kind 

redemptions of Creation Units will be 

the same for all purchases and 

redemptions and Deposit Instruments 

and Redemption Instruments will be 

valued in the same manner as those 

Portfolio Instruments currently held by 

the Funds. Applicants also seek relief 

from the prohibitions on affiliated 

transactions in section 17(a) to permit a 

Fund to sell its shares to and redeem its 

shares from a Fund of Funds, and to 

engage in the accompanying in-kind 

transactions with the Fund of Funds.2

The purchase of Creation Units by a 

Fund of Funds directly from a Fund will 

be accomplished in accordance with the 

policies of the Fund of Funds and will 

be based on the NAVs of the Funds. 

9. Applicants also request relief to 

permit a Feeder Fund to acquire shares 

of another registered investment 

company managed by the Adviser 

having substantially the same 

investment objectives as the Feeder 

Fund (‘‘Master Fund’’) beyond the 

limitations in section 12(d)(1)(A) and 

permit the Master Fund, and any 

principal underwriter for the Master 

Fund, to sell shares of the Master Fund 

to the Feeder Fund beyond the 

limitations in section 12(d)(1)(B). 

10. Section 6(c) of the Act permits the 

Commission to exempt any persons or 

transactions from any provision of the 

Act if such exemption is necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Section 17(b) of the Act authorizes the 

Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28300 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84902; File No. SR–BOX– 

2018–39] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 7050 

December 20, 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 

19, 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 amend 

Rule 7050. 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 purpose of the proposed rule 

change is to delete Rule 7050 (Minimum 

Trading Increments) in its entirety and 

replace it with an identical rule in place 

at another option exchange in the 

industry. Currently, Rule 7050(a) details 

the minimum trading increments in 

place on the Exchange. In this rule, such 

minimum increments established by the 

Board will be designated as a stated 

policy, practice, or interpretation with 

respect to the administration of this 

Rule 7050 within the meaning of 

subparagraph (3)(A) of Section 19(b) of 

the Exchange Act and will be filed with 

the SEC as a rule change for 

effectiveness upon filing. Further, the 

rule goes on to state that until such time 

as the Board makes a change in the 

increments, the following principles 

shall apply: (1) If the options contract is 

trading at less than $3.00 per option, 

five (5) cents; (2) if the options contract 

is trading at $3.00 per option of higher, 

ten (10) cents. The Exchange now 

proposes to delete 7050(a) in its entirety 

and add proposed Rule 7050(a)(1) and 

(2) which states that unless specified in 

another Exchange rule, the following 

minimum quoting increments shall 

apply to options traded on the 

Exchange: (1) Five cents ($0.05) for all 


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67444 Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices 

3The Exchange notes that the current trading 

increment principles remain unchanged. The 

Exchange also notes that the proposed language is 

identical to rules at other options exchanges in the 

industry. 

4See BOX Rule 7150(f)(2). 

5The Exchange notes that the current minimum 

increments for the pilot program remain 

unchanged. 

6The minimum trading increments for Jumbo 

SPY Options are located in Rule 5050(e)(4). The 

minimum trading increments for Complex Orders 

are addressed in Rule 7240(b)(1). 

7See NYSE American, LLC (‘‘NYSE American’’) 

Rule 960NY, NYSE Arca, LLC (‘‘NYSE Arca’’) Rule 

6.72–O. 

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

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

10See supra note 7. 

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

12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and the text of 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). 

15For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

option contracts trading at less than $3 

other than those defined in (3) below; 

(2) ten cents ($0.10) for all option 

contracts trading at $3 and above other 

than those defined in (3) below.3

The Exchange also notes that current 

Rule 7050(a)(3) states that if the options 

contract is traded pursuant to the 

procedures of the Improvement Period 

in Rule 7150 then one (1) cent. The 

Exchange proposes to include this in the 

deletion of current Rule 7050(a) as the 

minimum trading increments for option 

contracts traded in the Improvement 

Period are already addressed in the BOX 

Rulebook.4

Further, current Rule 7050(b) through 

(e) details exceptions to the minimum 

trading increments discussed in current 

Rule 7050(a). Specifically, current Rule 

7050(b) states that notwithstanding 

paragraph (a) of this Rule 7050, the 

Exchange will operate a pilot program to 

permit options classes to be quoted and 

traded in increments as low as one (1) 

cent. The Exchange now proposes to 

delete current Rule 7050(b) and replace 

it with proposed Rule 7050(a)(3)which 

states that for options contract traded 

pursuant to the penny pilot as described 

in Rule 7260: (A) One cent ($0.01) for 

all options contracts in QQQ 

(PowerShares QQQQ Trust), SPY (SPDR 

S&P 500 ETF Trust) and IWM (iShares 

Russell 2000 Index Fund); (B) one cent 

($0.01) for all other options contracts 

included in a penny pilot that are 

trading at less than $3; (C) five cents 

($0.05) for all other option contracts 

included in a penny pilot that are 

trading at or above $3.5

Further, current Rules 7050(c) 

through (e) detail other exceptions to 

the minimum trading increments in 

current Rule 7050(a). Specifically, 

7050(c) states that notwithstanding any 

other provision in this Rule 7050, the 

minimum trading increment for Mini 

Options shall be determined in 

accordance with IM–5050–10(d) to BOX 

Rule 5050. The Exchange proposes to 

delete this provision in its entirety as 

the minimum trading increments for 

Mini Options already exist in another 

provision in the BOX Rulebook. 

Similarly, the Exchange proposes to 

delete Rules 7050(d) and (e) for the 

same reason. The minimum trading 

increments for Jumbo SPY options (Rule 

7050(d)) and Complex Orders (Rule 

7050(e)) already exist in other 

provisions in the BOX Rulebook.6

The Exchange also proposes Rule 

7050(b) which states that the minimum 

trading increment for option contracts 

traded on the Exchange will be one cent 

($0.01) for all series. The Exchange 

notes that the proposed rule discussed 

herein is identical to rules at other 

options exchanges in the industry.7

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,8

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

Act,9 in particular, in that the proposed 

change is designed to promote just and 

equitable principles of trade, 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, by conforming the Exchange’s 

minimum trading increment rule with 

rules at other options exchanges in the 

industry.10 The Exchange believes that 

the proposed change will provide clarity 

with respect to the minimum trading 

increment rule which removes 

impediments to and better provides for 

a free and open market. Additionally, 

the Exchange believes that deleting 

7050(c) through (e) will reduce investor 

confusion with respect to certain 

minimum trading increments on the 

Exchange as the trading increments for 

the orders discussed in 7050(c) through 

(e) are already included in other rules in 

the BOX Rulebook. As such, BOX 

believes the proposed rule change is in 

the public interest, and therefore, 

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. The proposal 

merely conforms the Exchange’s 

minimum trading increment rule to 

similar rules at other options exchanges 

in the industry. The proposed rule 

change would provide clarity and 

reduce any potential confusion with 

respect to minimum trading increments 

on the Exchange. As such, 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. 

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 

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 11 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.12

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 the filing. However, Rule 

19b–4(f)(6)(iii) 14 permits the 

Commission to 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 Exchange notes that the 

proposed rule change simply seeks to 

conform the Exchange’s minimum 

trading increments rule to similar rules 

at other options exchanges and raises no 

new or novel issues. The Commission 

believes that waiver of the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby waives the operative delay and 

designates the proposed rule change as 

operative upon filing.15


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Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices 67445 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Model Changes include new and enhanced risk 

modeling components of ICC’s risk management 

system. Depending on how substantially the Model 

Change affects the system’s assessment of risk for 

the related risk driver(s), it is classified as 

Materiality A (i.e., substantial impact) or Materiality 

B (i.e., no substantial impact). 

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. 

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–2018–39 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BOX–2018–39. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of 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–BOX–2018–39 and should 

be submitted on or before January 18, 

2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28199 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84889; File No. SR–ICC– 

2018–011] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Notice of Filing of 

Proposed Rule Change Relating to 

ICC’s New Initiatives Approval Policy 

and Procedural Framework 

December 20, 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, ICE Clear Credit LLC (‘‘ICC’’) 

filed with the Securities and Exchange 

Commission the proposed rule change 

as described in Items I, II and III below, 

which Items have been prepared by ICC. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The principal purpose of the 

proposed rule change is to revise the 

ICC New Initiatives Approval Policy 

and Procedural Framework (‘‘NIA 

Policy’’). These revisions do not require 

any changes to the ICC Clearing Rules 

(‘‘Rules’’). 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, ICC 

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. ICC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

(a) Purpose 

ICC proposes to formalize its NIA 

Policy. ICC believes that such a change 

will facilitate the prompt and accurate 

clearance and settlement of securities 

transactions and derivative agreements, 

contracts, and transactions for which it 

is responsible. The proposed rule 

change is described in detail as follows. 

The NIA Policy sets forth ICC’s 

policies and procedures for the review 

and approval of certain new initiatives 

to be offered or implemented by ICC. 

The NIA Policy clarifies and harmonizes 

the policies, procedures, and 

documentation for the review and 

approval of new initiatives that involve 

potentially significant changes. The 

intention of the NIA Policy is to notify 

all relevant departments of the 

introduction of the new initiative, 

provide for information sharing between 

departments and ensure a thorough 

understanding of the new initiative, and 

establish requirements for the prelaunch verification and testing of the 

new initiative. 

The NIA Policy includes a list of 

definitions that serves to clarify and 

recognize the projects, key participants, 

and documents that are subject to the 

NIA Policy. New projects that are 

approved by the Steering Committee, a 

management committee responsible for 

prioritizing the implementation of 

initiatives and monitoring and guiding 

delivery, and meet the following criteria 

are defined as New Initiatives that are 

subject to the NIA Policy: (1) Involve 

new and material modifications to the 

risk or pricing methodology; (2) involve 

potential significant changes to the 

processing system, ICC Clearing Rules, 

or clearing operating procedures; (3) 

involve new and material modifications 

to existing and significant capabilities 

provided by ICC; or (4) involve Model 

Changes 3 classified as Materiality A 

under ICC’s Model Validation 

Framework. The New Initiative 

Approval Committee (the ‘‘NIAC’’) 

identifies, reviews, and approves New 

Initiatives and is composed of ICC 

management, including department 

heads, and representatives from 


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