Federal Register / Vol. 83, No. 127 / Monday, July 2, 2018 / Notices 31001 

22 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). 

4 17 CFR 240.19b–4(f)(6). 

5See EDGX Rules 11.6(n)(7), 11.8(b)(7) and 

11.8(d)(5); see also Securities Exchange Act Release 

No. 80841 (June 1, 2017), 82 FR 26559 (June 7, 

2017), (Notice of Filing and Immediate 

Effectiveness To Add a New Optional Order 

Instruction Known as Non-Displayed Swap). 

6See Nasdaq Rule 4703(m) (defining the Trade 

Now order modifier); see also Securities Exchange 

Act Release No. 79282 (November 10, 2016), 81 FR 

81219 (November 17, 2016) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule change to 

Amend Rule 4702 and Rule 4703 to Add a ‘‘Trade 

Now’’ Instruction to Certain Order Types). 

7See Arca Rule 7.31–E(d)(2)(B) (describing the 

Non-Display Remove Modifier); see also Securities 

Exchange Act Release No. 76267 (October 26, 2015), 

80 FR 66951 (October 30, 2015) (Order Approving 

Proposed Rule change Adopting New Equity 

Trading Rules Relating to Orders and Modifiers and 

Retail Liquidity Program To Reflect the 

Implementation of Pillar, the Exchange’s New 

Trading Technology Platform). 

8See supra note 5. 

9See supra notes 6 and 7. 

10See Exchange Rule 11.6(e)(2). 

11See Exchange Rule 1.5(d). 

12See Exchange Rule 1.5(ee). 

13Under Exchange Rule 11.6(n)(4), an order with 

a Post Only instruction will remove contra-side 

liquidity from the EDGA Book if the order is an 

order to buy or sell a security priced below $1.00 

or if the value of such execution when removing 

liquidity equals or exceeds the value of such 

execution if the order instead posted to the EDGA 

Book and subsequently provided liquidity, 

including the applicable fees charged or rebates 

provided. To determine at the time of a potential 

execution whether the value of such execution 

when removing liquidity equals or exceeds the 

value of such execution if the order instead posted 

to the EDGA Book and subsequently provided 

liquidity, the Exchange will use the highest possible 

Continued 

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 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–NASDAQ–2018–047, and 

should be submitted on or before July 

23, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14109 Filed 6–29–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83521; File No. SR– 

CboeEDGA–2018–011] 

Self-Regulatory Organizations; Cboe 

EDGA Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change to Rule 11.6, 

Definitions and Rule 11.8, Order Types 

June 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 June 13, 

2018, Cboe EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) 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 Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders it effective upon filing 

with the Commission. 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 filed a proposal to (i) 

amend paragraph (n) of Exchange Rule 

11.6, Routing/Posting Instructions to 

add a new optional order instruction to 

be known as Non-Displayed Swap; and 

(ii) make a related change to description 

of Limit Orders and MidPoint Peg 

Orders under Exchange Rule 11.8. The 

proposed amendments are identical to 

the rules of Cboe EDGX Exchange, Inc. 

(‘‘EDGX’’) 5 and substantially similar to 

the rules of the Nasdaq Stock Market 

LLC (‘‘Nasdaq’’) 6 and NYSE Arca, Inc. 

(‘‘Arca’’).7

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.com, at the 

Exchange’s principal office and at the 

Public Reference Room of the 

Commission. 

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 parts 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: (i) Amend 

paragraph (n) of Exchange Rule 11.6, 

Routing/Posting Instructions to add a 

new optional order instruction to be 

known as Non-Displayed Swap; and (ii) 

make a related change to description of 

Limit Orders and MidPoint Peg Orders 

under Exchange Rule 11.8. These 

proposed amendments are identical to 

the rules of EDGX 8 and substantially 

similar to the rules of Nasdaq and Arca.9

The proposed Non-Displayed Swap 

(‘‘NDS’’) instruction would provide 

orders with a Non-Displayed 10

instruction resting on the EDGA Book 11

with a greater ability to receive an 

execution when that resting order is 

locked by an incoming order (e.g., the 

price of the resting non-displayed order 

is equal to the price of the incoming 

order that is to be placed on the EDGA 

Book). The NDS instruction would be an 

optional order instruction that would 

allow Users 12 to have their resting nondisplayed orders execute against an 

incoming order with a Post Only 

instruction rather than have it be locked 

by the incoming order. NDS would be 

defined as an instruction that may be 

attached to an order with a NonDisplayed instruction that when such 

order is resting on the EDGA Book and 

would be locked by an incoming order 

with a Post Only instruction that does 

not remove liquidity pursuant to 

paragraph (4) of Exchange Rule 

11.6(n),13 the order with a NDS 


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31002 Federal Register / Vol. 83, No. 127 / Monday, July 2, 2018 / Notices 

rebate paid and highest possible fee charged for 

such executions on the Exchange. 14See Exchange Rule 11.10(a)(4)(C). 15 Id. [sic] 

16 In the event the incoming order with a Post 

Only instruction was to be displayed, it would post 

and display at $10.03 and the resting buy order 

with a Non-Displayed instruction would not 

execute against it or subsequent incoming sell 

orders at $10.03 for so long as the sell order was 

displayed on the Exchange. See Exchange Rule 

11.10(a)(4)(C) and (D). 

17Should the Limit Order to buy at $10.03 with 

time priority (i.e., Order A) be displayed on the 

EDGA Book, the incoming sell order at $10.03 with 

a Post Only instruction will not execute against the 

non-displayed buy order with a NDS instruction 

because displayed orders have priority over nondisplayed orders. In such a case, the incoming Limit 

Order would be handled as it is today in accordance 

with existing Exchange rules. See, e.g., Exchange 

Rules 11.6(l), 11.9, and 11.10(a). 

18The execution occurs here because the value of 

the execution against the buy order when removing 

liquidity exceeds the value of such execution if the 

order instead posted to the EDGA Book and 

subsequently provided liquidity, including the 

applicable fees charged or rebates provided. See 

supra note 13. 

19See Exchange Rule 11.9(a)(5). 

20See Exchange Rule 11.8(b). 

21See Exchange Rule 11.8(d); the Exchange notes 

that NDS can be combined with other instructions 

also available to Limit Orders with a Non-Displayed 

instruction, such as the Discretionary Range 

instruction, the Minimum Execution Quantity 

instruction and the Pegged instruction, as such 

terms are defined in Exchange Rules 11.6(d), 11.6(h) 

and 11.6(j), respectively. 

22See Nasdaq Rule 4703(m). See also Securities 

and Exchange Act Release No. 79282 (November 10, 

2016), 81 FR 81219 (November 17, 2016) (SR– 

Nasdaq–2016–156) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change to Amend 

Rule 4703 and Rule 4703 to add a ‘‘Trade Now’’ 

Instruction to Certain Order Types). 23See Arca Rule 7.31–E(d)(2)(B). See also 

Securities and Exchange Act Release No. 76267 

(October 26, 2015), 80 FR 66951 (October 30, 2015) 

(SR–NYSEArca–2015–56) (Order Approving 

Proposed Rule Change, and Notice of Filing and 

Order Granting Accelerated Approval of 

Amendment Nos. 1 and 2 Thereto, Adopting New 

Equity Trading Rules Relating to Orders and 

Modifiers and the Retail Liquidity Program To 

Reflect the Implementation of Pillar, the Exchange’s 

New Trading Technology Platform) (including the 

Non-Display Remove Modifier). 

24See Arca Rule 7.31–E(d)(2)(b). 25Arca provides their Non-Display Remove 

Modifier to their Mid-Point Liquidity Orders (‘‘MPL 

Orders’’) designated Day and MPL–ALO Orders and 

Arca Only Orders. Nasdaq’s Trade Now 

functionality is available to Price to Comply Orders, 

Price to Display Orders, Non-Displayed Orders, 

Post-Only Orders, Midpoint Peg Post-Only Orders, 

and Market Maker Peg Orders. To the extent the 

NDS instruction is only available to Limit Orders 

with a Non-Displayed instruction and MidPoint Peg 

Orders, the Exchange notes that the NDS instruction 

will apply to different order types than Arca’s NonDisplay Remove Modifier and Nasdaq’s Trade Now 

functionality. 

26 15 U.S.C. 78f(b). 

27 15 U.S.C. 78f(b)(5). 

instruction is converted to an executable 

order and will remove liquidity against 

such incoming order. An order with a 

NDS instruction would not be eligible 

for routing pursuant to Exchange Rule 

11.11, Routing to Away Trading Centers. 

The proposed NDS instruction assists in 

the avoidance of an internally locked 

EDGA Book (though such lock would 

not be displayed by the Exchange) 14 by 

facilitating the execution of orders that 

would otherwise lock each other. 

The following example illustrates the 

operation of an order with a NDS 

instruction. Assume the National Best 

Bid and Offer is $10.00 by $10.04. There 

is a Limit Order to buy with a NonDisplayed instruction resting on the 

EDGA Book at $10.03. An order to sell 

with a Post Only instruction priced at 

$10.03 is entered. Under current 

behavior, the incoming sell order with 

a Post Only instruction would post to 

the EDGA Book because it would not 

receive sufficient price improvement.15

This would result in the EDGA Book 

being internally locked.16 As proposed, 

if the Limit Order to buy with NonDisplayed instruction also included a 

NDS instruction, the orders would 

instead execute against each other at 

$10.03, with the resting buy order with 

the NDS instruction becoming the 

remover of liquidity and the incoming 

sell order with a Post Only instruction 

becoming the liquidity provider. 

Assume the same facts as above, but 

that a Limit Order with a Non-Displayed 

instruction to buy at $10.03 (‘‘Order A’’) 

is also resting on the EDGA Book with 

time priority ahead of the Limit Order 

to buy with a Non-Displayed instruction 

mentioned above (‘‘Order B’’). Like 

above, an order to sell with a Post Only 

instruction priced at $10.03 is entered. 

Under current behavior, the incoming 

sell order with a Post Only instruction 

would post to the EDGA Book because 

the value of such execution against the 

resting buy interest when removing 

liquidity does not equal or exceed the 

value of such execution if the order 

instead posted to the EDGA Book and 

subsequently provided liquidity, 

including the applicable fees charged or 

rebates provided. As proposed, if Order 

B also included a NDS instruction, the 

incoming sell order would execute 

against Order B and such order would 

become the remover of liquidity and the 

incoming sell order with a Post Only 

instruction would become the liquidity 

provider. In such case, Order A cedes 

time priority to Order B because Order 

A did not also include a NDS 

instruction and thus the User that 

submitted Order A did not indicate the 

preference to be treated as the remover 

of liquidity in favor of an execution; 

instead, by not using NDS, a User 

indicates the preference to remain 

posted on the EDGA Book as a liquidity 

provider.17 However, if the incoming 

sell order was priced at $10.02, it would 

receive sufficient price improvement to 

execute upon entry against all resting 

buy Limit Orders in time priority at 

$10.03.18

If the order with a NDS instruction is 

only partially executed, the unexecuted 

portion of that order remains on the 

EDGA Book and maintains its priority, 

as is the case today for an order that is 

partially executed and not cancelled by 

the User.19 The Exchange is proposing 

to make the NDS instruction available to 

Limit Orders 20 that include a NonDisplayed instruction and MidPoint Peg 

Orders.21 The NDS instruction would 

not be available to all other order types 

provided by the Exchange under its 

Rule 11.8, as the execution of these 

order types is governed by other 

Exchange rules and the NDS instruction 

would be inconsistent with the use of 

those order types. 

The Exchange notes that similar 

functionality exists on Nasdaq and Arca. 

Nasdaq refers to their functionality as 

the ‘‘Trade Now’’ instruction 22 and 

Arca refers to their functionality as the 

‘‘Non-Display Remove Modifier’’.23 On 

Arca, a Limit Non-Displayed Order may 

be designated with a Non-Display 

Remove Modifier. If so designated, a 

Limit Non-Displayed Order to buy (sell) 

will trade as the remover of liquidity 

with an incoming Adding Liquidity 

Only Order (‘‘ALO Order’’) to sell (buy) 

that has a working price equal to the 

working price of the Limit NonDisplayed Order.24 On Nasdaq, Trade 

Now is an order attribute that allows a 

resting order that becomes locked by an 

incoming Displayed Order to execute 

against the available size of the contraside locking order as a liquidity taker, 

and any remaining shares of the resting 

order will remain posted on the Nasdaq 

Book with the same priority.25 Nasdaq 

requires the contra-side order to be 

display eligible, while the Exchange 

proposes to enable an order with a NDS 

instruction to remove liquidity 

regardless of whether the incoming 

order would have ultimately been 

eligible for display consistent with 

Arca’s Non-Display Remove Modifier. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 26 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 27

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 


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28See supra notes 5–7. 

29 15 U.S.C. 78s(b)(3)(A)(iii). 

30 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. 

31 17 CFR 240.19b–4(f)(6)(iii). 

32For 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). 33 17 CFR 200.30–3(a)(12) and (59). 

general, to protect investors and the 

public interest by offering Users 

optional functionality that will facilitate 

the execution of orders that would 

otherwise remain unexecuted, thereby 

increasing the efficient functioning of 

the Exchange. The NDS instruction is an 

optional feature that is intended to 

reflect the order management practices 

of various market participants. The 

proposed NDS instruction assists in the 

avoidance of an internally locked EDGA 

Book by facilitating the execution of 

orders that would otherwise post, or 

remain posted, to the EDGA Book. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

On the contrary, the Exchange believes 

the proposed rule change promotes 

competition because it will enable the 

Exchange to offer functionality 

substantially similar to that offered by 

Nasdaq and Arca (in addition to the fact 

that such functionality is identical to 

that already offered by the Exchange’s 

affiliate, EDGX).28 Therefore, the 

Exchange does not believe the proposed 

rule change will result in any burden on 

intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. As the NDS 

feature will be equally available to all 

Users, the Exchange does not believe the 

proposed rule change will result in any 

burden on intramarket competition that 

is 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 

No comments were solicited or 

received 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 29 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.30

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative for 30 days after the 

date of the filing. However, Rule 19b– 

4(f)(6)(iii) 31 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. In its 

filing, EDGA requested that the 

Commission waive the 30-day operative 

delay so that the Exchange can 

implement the proposed rule change 

promptly after filing. The Exchange 

noted that the proposed functionality is 

optional, may lead to increased order 

interaction on the Exchange, and is 

identical to functionality already 

provided on EDGX. The Commission 

believes that waiver of the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest, as such waiver will permit the 

Exchange to update its rule without 

delay so that it provides the same 

optional NDS functionality as is 

available on EDGX and potentially 

increase order interaction on the 

Exchange. Accordingly, the Commission 

waives the 30-day operative delay and 

designates the proposed rule change 

operative upon filing.32

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– 

CboeEDGA–2018–011 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–CboeEDGA–2018–011. 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–CboeEDGA–2018–011, and 

should be submitted on or before July 

23, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14108 Filed 6–29–18; 8:45 am] 

BILLING CODE 8011–01–P 


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