Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 28477 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 82870 

(March 14, 2018), 83 FR 12214 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 83143, 

83 FR 20123 (May 7, 2018). The Commission 

designated June 18, 2018, as the date by which the 

Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See CHX Article 1, Rule 1(oo). 

8The Matching System is part of the Exchange’s 

‘‘Trading Facilities,’’ as defined under CHX Article 

1, Rule 1(z). 

9See CHX Article 19, Rule 3(a)(1)–(5). 

10See CHX Article 1, Rule 1(oo) defining 

‘‘Routable Order.’’ 

11See CHX Article 1, Rule 2(a)(3) defining 

‘‘market order.’’ 

12See CHX Article 1, Rule 2(a)(2) defining ‘‘cross 

order.’’ 

13See CHX Article 1, Rule 1(nn) defining 

‘‘Trading Center.’’ 

14QCT Crosses are cross orders that are 

component orders to Qualified Contingent Trades 

that are submitted by an Institutional Broker. See 

CHX Article 1, Rule 2(b)(2)(E) defining ‘‘Qualified 

Contingent Trade.’’ See also CHX Article 1, Rule 

2(a)(2) defining ‘‘cross order.’’ 

15See Securities Exchange Act Release No. 57620 

(April 4, 2008), 73 FR 19271 (April 4, 2008). 

16See CHX Article 1, Rule 2(a)(2) 

17See CHX Article 1, Rule 2(a)(2). See also CHX 

Article 20, Rule 8(e)(1). 

18See CHX Article 1, Rule 2(g)(1). 

19The Exchange states that it has proposed to 

limit use of Route QCT Cross to IBs to be consistent 

with the fact that only IBs are currently permitted 

to submit QCT Crosses to the Matching System. See 

CHX Article 1, Rule 2(b)(2)(E). 

20See CHX Article 1, Rule 1(oo). 

21See CHX Article 1, Rule 2(a)(2). 

22The Exchange states that IBs will be permitted 

to identify only one designated executing broker to 

which all Route QCT Cross orders submitted by the 

IB will be routed, subject to additional 

requirements, as described below. 

23See e.g., CHX Article 19, Rule 2(a). 

24See Notice, supra note 3 at 12215. 

25See id. The Exchange states that like Route 

QCT Cross, the ‘‘Directed Order’’ routing option 

offered by the Nasdaq Stock Market (‘‘Nasdaq’’) 

permits an order sender to route an order to another 

market center while bypassing the Nasdaq’s order 

book, which may result in the routed order 

executing at a price through Nasdaq’s top of book. 

See id. 

26The Exchange states that like Route QCT Cross, 

the ‘‘DRT’’ routing option offered by the Cboe BYX 

and Cboe BZX exchanges permits an order to be 

routed to one or more away alternative trading 

systems. See id. 

27See CHX Article 1, Rule 1(s). 

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–2018–044 and 

should be submitted on or before July 

10, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13080 Filed 6–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83425; File No. SR–CHX– 

2018–001] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To Adopt the 

Route QCT Cross Routing Option 

June 13, 2018. 

I. Introduction 

On March 6, 2018, the Chicago Stock 

Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Exchange 

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

proposed rule change to adopt the Route 

QCT Cross routing option. The proposed 

rule change was published for comment 

in the Federal Register on March 20, 

2018.3 On May 1, 2018, pursuant to 

Section 19(b)(2) of the Exchange Act,4

the Commission designated a longer 

period within which to approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.5

The Commission received no comment 

letters on the proposed rule change. 

This order institutes proceedings under 

Section 19(b)(2)(B) of the Exchange Act 6

to determine whether to approve or 

disapprove the proposed rule change. 

II. Description of the Proposed Rule 

Change 

Currently, under the Exchange’s rules, 

Routable Orders 7 submitted to the CHX 

matching system (‘‘Matching System’’) 8

for execution are routed away from the 

Matching System automatically if a 

Routing Event 9 is triggered. The 

Exchange’s current rules provide that all 

Routable Orders 10 are limit orders. 

Market 11 and cross orders 12 are never 

routable. The Exchange does not 

currently permit orders to be directly 

routed to an away Trading Center 13

without first being submitted to the 

Matching System. 

Because Qualifed Contingent Trade 

(‘‘QCT’’) Crosses 14 are exempt from the 

trade-through prohibition of Rule 611 of 

Regulation NMS,15 the Matching System 

permits QCT Crosses to trade-through 

protected quotes of away markets. 

Under the Exchange’s current rules, 

QCT Crosses are handled IOC16 and can 

never rest on the CHX book. Moreover, 

a QCT Cross submitted to the Matching 

System will be cancelled back to the 

order sender as ‘‘blocked’’ if a precedent 

limit order priced at or better than the 

QCT Cross is resting on the CHX book,17

except that a QCT Cross priced at the 

top of the CHX book (i.e., the bestranked order on the CHX book pursuant 

to Article 20, Rule 8(b)) that qualifies for 

Cross With Size 18 handling will be 

permitted to execute. 

The Exchange has proposed to adopt 

the Route QCT Cross routing option, 

which will permit only Institutional 

Brokers (‘‘IBs’’) 19 to directly route a 

QCT Cross to a non-affiliated third-party 

broker-dealer designated by the IB 

(‘‘designated executing broker’’) for 

execution. Route QCT Cross orders will 

be handled like current Routable 

Orders,20 except that the Route QCT 

Cross order will never be submitted to 

the Matching System for execution. 

Specifically, upon receipt of a Route 

QCT Cross order, the Exchange will 

cause the order to be routed IOC21 from 

the Exchange, through CHXBD, LLC 

(‘‘CHXBD’’), the Exchange’s affiliated 

routing broker, to the designated 

executing broker identified by the IB.22

The Exchange states that the 

relationship between a designated 

executing broker and CHXBD will be 

governed by applicable CHX Rules 23

and customary interbroker agreements, 

such as fully-disclosed clearing and 

customer agreements. The Exchange 

represents that at all times, the use of 

Route QCT Cross will be optional.24 The 

Exchange also states that Route QCT 

Cross is similar to the routing options 

available on the Nasdaq Stock Market 25

and Cboe BYX and Cboe BZX 

exchanges.26

Specifically, the Exchange has 

proposed to adopt proposed Article 19, 

Rule 4 (Routing Options) to provide that 

routing options may be combined with 

all available order types, modifiers and 

related terms, except for order types, 

modifiers, and related terms that are 

inconsistent with the terms of a routing 

option, and that the Exchange may 

activate or deactivate any routing option 

at its discretion and, if practicable, after 

notice to Participants.27 Article 19, Rule 

4(a)(1) provides that Route QCT Cross is 


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28478 Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 

28 In addition, since the cross orders are not 

currently Routable Orders, the Exchange has 

proposed to amend Article 1, Rule 1(oo) by 

adopting paragraph (oo)(2), which would expand 

the definition of Routable Orders to include any 

order marked by a routing option listed under 

proposed Article 19, Rule 4 (i.e., Route QCT Cross). 

29See Notice, supra note 3 at 12215. 

30See id. 

31See id. at 12215–16. 

32To clarify this distinction, the Exchange has 

proposed to amend the title to Article 19, Rule 3 

from ‘‘Routing Events’’ to ‘‘Mandatory Routing 

Events.’’ Also, the Exchange has proposed to 

eliminate the word ‘‘incoming’’ from proposed Rule 

1(oo)(1), which it states is redundant in light of the 

proposed clarifying amendments to Article 19, 

Rule 3. 

33See Notice, supra note 3. 

34 15 U.S.C. 78s(b)(2)(B). 

35 Id. 

36 15 U.S.C. 78f(b)(5). 

37 15 U.S.C. 78f(b)(8). 

38Section 19(b)(2) of the Exchange Act, as 

amended by the Securities Act Amendments of 

1975, Public Law 94–29 (June 4, 1975), grants the 

Commission flexibility to determine what type of 

proceeding—either oral or notice and opportunity 

for written comments—is appropriate for 

consideration of a particular proposal by a selfregulatory organization. See Securities Act 

Amendments of 1975, Senate Comm. on Banking, 

Housing & Urban Affairs, S. Rep. No. 75, 94th 

Cong., 1st Sess. 30 (1975). 

a routing option,28 which may only be 

utilized by IBs, that instructs the 

Exchange to route a cross order marked 

QCT directly to a non-affiliated thirdparty broker-dealer designated by the IB 

without submitting the order into the 

Matching System for execution. In 

addition, each IB is permitted to 

identify only one designated executing 

broker to which all Route QCT Cross 

orders submitted by the IB would be 

routed. Furthermore, the Exchange 

represents that prior to the Exchange 

accepting any Route QCT Cross orders 

directed to a specific designated 

executing broker, the Exchange would 

confirm that the designated executing 

broker has established connectivity to 

the Exchange’s routing systems.29 In 

addition, the IB would be responsible 

for all away execution fees resulting 

from the execution of Route QCT Cross 

orders, including any guaranteed 

payments to its designated executing 

broker.30 Moreover, Route QCT Cross 

orders would be routed IOC and a Route 

QCT Cross order that could not be 

executed by a designated executing 

broker, for any reason, would be 

cancelled back to the original order 

sender.31

As Route QCT Cross orders would be 

routed away from the Exchange without 

being submitted to the Matching System 

for execution, the Exchange proposes to 

amend Article 19, Rules 1(a) and (c), 

and Rule 2(a) to replace the term 

‘‘Matching System’’ with ‘‘Exchange.’’ 

Moreover, since Route QCT Cross orders 

are a subset of cross orders that will not 

be handled IOC upon receipt by the 

Exchange, and all cross orders currently 

received by the Exchange are deemed to 

have been received IOC, the Exchange 

proposes to amend the definition of 

‘‘cross orders’’ under Article 1, Rule 

2(a)(2) to provide that all cross orders 

submitted to the Matching System for 

execution shall be deemed to have been 

received IOC. 

The Exchange has also proposed to 

amend Article 19, Rule 3(a) to provide 

that a Routable Order that is submitted 

to the Matching System would be routed 

away from the Matching System 

pursuant to the CHX Routing Services if 

a Routing Event is triggered.32

In addition, the Exchange proposes 

non-substantive amendments to Article 

19, Rules 3(a)(1)–(5) to clarify the 

current operation of the Routing 

Events.33

II. Proceedings To Determine Whether 

To Approve or Disapprove SR–CHX– 

2018–001 and Grounds for Disapproval 

Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Exchange Act 34 to 

determine whether the proposed rule 

change should be approved or 

disapproved. Institution of such 

proceedings is appropriate at this time 

in view of the legal and policy issues 

raised by the proposed rule change. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Exchange Act,35 the Commission is 

providing notice of the grounds for 

disapproval under consideration. As 

discussed above, the Exchange has 

proposed to offer a new Route QCT 

Cross routing option, which would be 

available only to IBs. Route QCT Crosses 

would not check the CHX order book. In 

addition, Route QCT Crosses would 

only route to a single designated broker, 

as designated by each IB, for execution. 

The Commission is instituting 

proceedings to allow for additional 

analysis of the proposed rule change’s 

consistency with Sections 6(b)(5) 36 and 

6(b)(8) 37 of the Exchange Act. Section 

6(b)(5) of the Exchange Act requires that 

the rules of a national securities 

exchange be designed, among other 

things, 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, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

Section 6(b)(8) of the Exchange Act 

requires that the rules of a national 

securities exchange not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

III. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Sections 

6(b)(5) and 6(b)(8), or any other 

provision of the Exchange Act, or the 

rules and regulations thereunder. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.38

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by July 10, 2018. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by July 24, 2018. 

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– 

CHX–2018–001 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 

Numbers SR–CHX–2018–001. 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 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 28479 

39 17 CFR 200.30–3(a)(57). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Under Rule 107B, an SLP can be either a 

proprietary trading unit of a member organization 

(‘‘SLP-Prop’’) or a registered market maker at the 

Exchange (‘‘SLMM’’). For purposes of the 10% 

average or more quoting requirement in assigned 

securities pursuant to Rule 107B, quotes of an SLPProp and an SLMM of the same member 

organization are not aggregated. However, for 

purposes of adding liquidity for assigned SLP 

securities in the aggregate, shares of both an SLPProp and an SLMM of the same member 

organization are included. 

5The phrase ‘‘Adding ADV’’ in the proposed tier 

would have a citation to footnote 4 in the current 

Price List, which provides ‘‘For purposes of 

transaction fees and Supplemental Liquidity 

Provider liquidity credits, ADV calculations 

exclude early closing days.’’ The text of current 

footnote 4 would remain unchanged. 

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 these 

filings 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–CHX–2018–001 and should 

be submitted on or before July 10, 2018. 

Rebuttal comments should be submitted 

by July 24, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13084 Filed 6–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83424; File No. SR–NYSE– 

2018–27] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Its 

Price List 

June 13, 2018. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on June 1, 

2018, New York Stock Exchange LLC 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory 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 its 

Price List to (1) add a new incentive for 

member organizations and 

Supplemental Liquidity Providers 

(‘‘SLP’’) in Tape A securities when 

adding liquidity in securities traded 

pursuant to Unlisted Trading Privileges 

(‘‘UTP’’) (Tapes B and C) on the Pillar 

Trading Platform; (2) add a new Tier 4 

for SLPs; and (3) make non-substantive 

changes to eliminate obsolete footnotes. 

The Exchange proposes to implement 

these changes to its Price List effective 

June 1, 2018. 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 

The Exchange proposes to amend its 

Price List to (1) add a new incentive for 

member organizations and SLPs on 

Tape A when adding liquidity in UTP 

Securities (Tapes B and C) on the Pillar 

Trading Platform; (2) add a new Tier 4 

for SLPs; and (3) make non-substantive 

changes to eliminate obsolete footnotes. 

The Exchange proposes to implement 

these changes to its Price List effective 

June 1, 2018. 

New Cross Tape Incentive 

The Exchange proposes an additional 

incentive to member organizations and 

SLPs in Tape A securities that add 

liquidity to the Exchange in UTP 

Securities, as follows. 

As proposed, member organizations 

that meet the current requirements for 

the Non-Tier Adding Credit, Tier 3 

Adding Credit, and Tier 4 Adding Credit 

on Tape A would be eligible to receive 

an additional $0.0001 per share if the 

member organization adds liquidity, 

excluding liquidity added as an SLP, in 

UTP Securities of at least 0.20% of Tape 

B and Tape C consolidated average daily 

volume (‘‘CADV’’) combined. 

Similarly, SLPs that (1) meet the 

current requirements for SLP Tier 3, 

SLP Tier 2 and SLP Tier 1A credits, and 

(2) add liquidity in UTP Securities of at 

least 0.30% of Tape B and Tape C CADV 

combined, would be eligible for an 

additional $0.0001 per share in 

securities with a per share price of $1.00 

or more that meet the 10% average or 

more quoting requirement in an 

assigned security pursuant to Rule 107B 

(quotes of an SLP-Prop and an SLMM of 

the same member organization would 

not be aggregated). 

New SLP Tier 4 

The Exchange proposes a new, fifth 

SLP Tier designated ‘‘4’’ that would 

provide that an SLP that either (1) is in 

the first two calendar months as an SLP, 

or (2) adds liquidity for all assigned SLP 

securities in the aggregate (including 

shares of both an SLP-Prop and an 

SLMM 4 of the same or an affiliated 

member organization) of an ADV of 

more than 0.03% of NYSE CADV after 

averaging less an adding ADV 5 of than 

0.01% in each of the prior 3 months, 

after a discount of the percentage for the 

prior quarter of NYSE CADV in DMM 

assigned securities as of the last 

business day of the prior month, would 

receive a credit of $0.0029, or $0.00105 

if a Non-Displayed Reserve Order, if the 

SLP meets the 10% average or more 

quoting requirement in an assigned 

security pursuant to Rule 107B when 

adding liquidity to the NYSE with 

orders, other than Mid-Point Liquidity 

(‘‘MPL’’) orders, in securities with a per 

share price of $1.00 or more. For 


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