Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 31589 

25 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. 83082 

(April 20, 2018), 83 FR 18379 (‘‘Notice’’). See also, 

Securities Exchange Act Release No. 83398 (June 8, 

2018), 83 FR 27807 (June 14, 2018) extending the 

time for the Commission to act on the filing. 

4 In Amendment No. 1, FINRA states that, if the 

Commission approves the proposed rule change, 

FINRA anticipates that the FINRA/Nasdaq TRF 

Chicago will commence operation in September 

2018, but in no event later than December 31, 2018. 

Amendment No. 1 is available at: https://

www.sec.gov/comments/sr-finra-2018-013/ 

finra2018013-3918682-166985.pdf. Because 

Amendment No. 1 does not materially alter the 

substance of the proposed rule change or raise 

unique or novel regulatory issues, Amendment No. 

1 is not subject to notice and comment. 

5See Rule 600(b) of Regulation NMS under the 

Act. 

6NYSE is the Business Member of the FINRA/ 

NYSE TRF. 

7See Notice at 18381. 

8See id. 

9See Trade Reporting Notice, January 20, 2016 

(OTC Equity Trading and Reporting in the Event of 

Systems Issues). 

10As discussed in the Trade Reporting Notice, if 

a firm chooses not to have connectivity to a 

secondary facility, it should cease executing OTC 

trades altogether when its primary trade reporting 

facility is experiencing a widespread systems issue. 

In that instance, the firm could route orders for 

execution to an exchange or another FINRA 

member (i.e., a member with connectivity and the 

ability to report trades to a FINRA Facility that is 

operational). 

11See Securities Exchange Act Release No. 54084 

(June 30, 2006), 71 FR 38935 (July 10, 2006) (order 

approving SR–NASD–2005–087); and Securities 

Exchange Act Release No. 54798 (November 21, 

2006), 71 FR 69156 (November 29, 2006) (order 

approving SR–NASD–2006–104). 

12A FINRA member also has the option to report 

some trades, on a primary basis, to the FINRA/ 

Nasdaq TRF Chicago, and some trades, on a primary 

basis, to the FINRA/Nasdaq TRF Carteret. 

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–NYSE–2018–30 and should 

be submitted on or before July 27, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14465 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83559; File No. SR–FINRA– 

2018–013] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Establish a 

Second Trade Reporting Facility 

June 29, 2018. 

I. Introduction 

On April 19, 2018, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to establish a 

second Trade Reporting Facility 

(‘‘TRF’’) to be operated in conjunction 

with Nasdaq, Inc. (‘‘Nasdaq’’). The 

proposed rule change was published for 

comment in the Federal Register on 

April 26, 2018.3 The Commission 

received no comment letters on the 

proposal. On June 21, 2018, FINRA filed 

Amendment No. 1.4 This order approves 

the proposed rule change, as modified 

by Amendment No. 1. 

II. Description of the Proposal 

Background 

FINRA currently has three facilities 

that allow its members to report overthe-counter (‘‘OTC’’) trades in NMS 

stocks: 5 The FINRA/Nasdaq TRF, the 

FINRA/NYSE TRF, and the Alternative 

Display Facility (‘‘ADF’’) (collectively, 

the ‘‘FINRA Facilities’’). For each TRF, 

FINRA is the SRO Member and, as such, 

it has sole regulatory responsibility for 

the TRFs, including: Real-time 

monitoring and T+1 surveillance, 

development and enforcement of trade 

reporting rules, and submission of 

proposed rule changes to the 

Commission. Nasdaq is the ‘‘Business 

Member’’ of the FINRA/Nasdaq TRF.6 A 

Business Member is primarily 

responsible for the management of the 

business affairs of its TRF.7 Among 

other things, the Business Member 

establishes pricing, is obligated to pay 

the cost of regulation and is entitled to 

the profits and responsible for the losses 

derived from the operation of its TRF.8

In January 2016, FINRA published a 

Trade Reporting Notice (‘‘Trade 

Reporting Notice’’) that provided 

guidance on the reporting obligations of 

member firms regarding OTC equity 

trades in the event of a systems issue 

during the trading day that prevents 

firms from reporting OTC trades in NMS 

stocks in accordance with FINRA rules.9

As set forth in the Trade Reporting 

Notice, a firm that routinely reports its 

OTC trades in NMS stocks to one FINRA 

Facility (‘‘primary facility’’) must 

establish and maintain connectivity and 

report to a second FINRA Facility 

(‘‘secondary facility’’) if the firm intends 

to continue to support OTC trading as 

an executing broker while its primary 

facility is experiencing a widespread 

systems issue.10

Proposal 

FINRA proposed to establish a second 

FINRA/Nasdaq TRF (‘‘FINRA/Nasdaq 

TRF Chicago’’), to provide FINRA 

members an additional facility to which 

to report trades in compliance with 

FINRA rules and the Trade Reporting 

Notice. The FINRA/Nasdaq TRF 

Chicago would be governed by the rules 

applicable to the existing FINRA/ 

Nasdaq Trade Reporting Facility 

(‘‘FINRA/Nasdaq TRF Carteret’’).11 A 

primary user of the FINRA/Nasdaq TRF 

Carteret could report on a back-up basis 

to the FINRA/Nasdaq TRF Chicago 

pursuant to the same rules, pricing, 

features and performance to which the 

firm is accustomed as a user of the 

FINRA/Nasdaq TRF Carteret—and vice 

versa.12 FINRA/Nasdaq TRF Chicago 

trade reports would be disseminated 

with a modifier indicating the source of 

the transactions that would distinguish 

them from transactions executed on an 

exchange or reported to another FINRA 

Facility, including the FINRA/Nasdaq 

TRF Carteret. 

The proposed rule change would 

establish the FINRA/Nasdaq TRF 

Chicago on the same terms as the 

FINRA/Nasdaq TRF Carteret. The 

FINRA/Nasdaq TRF Chicago would be 

built with the same technology, provide 


daltland on DSKBBV9HB2PROD with NOTICES
31590 Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 

13Users of the two FINRA/Nasdaq TRFs may 

experience latency differences due to the different 

locations of the TRFs. 

14According to Nasdaq, the FINRA/Nasdaq TRF 

Chicago will include several new components to 

provide performance improvements and operational 

efficiencies that Nasdaq intends to incorporate into 

the FINRA/Nasdaq TRF Carteret shortly after the 

launch of FINRA/Nasdaq TRF Chicago. Nasdaq will 

provide participants with notice prior to replatforming the FINRA/Nasdaq TRF Carteret. After 

Nasdaq completes this re-platforming, Nasdaq 

generally intends to perform updates, upgrades, 

fixes or other modifications to the two FINRA/ 

Nasdaq TRFs in tandem. However, Nasdaq notes 

that there may be instances in which it will be 

necessary for Nasdaq to act in sequence. During 

such instances, there may be disparities between 

the two TRFs with respect to function or 

performance. Nasdaq expects that any disparity in 

function or performance between the two TRFs that 

arises during sequential changes will be transitory. 

Nasdaq will provide participants with notice if it 

anticipates more than a de minimis transition 

period. 

15See Notice at 18381–82. 

16 In approving this proposed rule change, the 

Commission has considered the proposed rule 

change’s impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 78c(f). 

17 15 U.S.C. 78o–3(b)(6). 

18 15 U.S.C. 78s(b)(2). 

19 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). 

the same features and performance,13

offer the same pricing, and be governed 

by the same substantive rules, policies, 

and procedures. A single set of 

application materials and clearing 

arrangements will provide for access to 

both TRFs. Moreover, Nasdaq, as the 

Business Member, has advised FINRA 

that these two TRFs will evolve in 

tandem and remain the same going 

forward (for example, because the same 

fee and credit schedule under the Rule 

7600A Series will apply to both TRFs, 

any pricing changes would apply to 

both TRFs).14 The proposed rule change 

would allow firms to aggregate the 

volume of trades that they report to the 

two TRFs, which will enable firms to 

continue to qualify for any volumebased pricing that they would otherwise 

qualify for if they limited their trade 

reporting to one of those facilities. 

Finally, FINRA would amend Rules 

6300A, 7200A, and 7600A Series, which 

govern the FINRA/Nasdaq TRF Carteret, 

to accommodate the establishment of 

the FINRA/Nasdaq TRF Chicago.15

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities association.16 In particular, 

the Commission finds that the proposed 

rule change is consistent with Section 

15A(b)(6) of the Act,17 which requires, 

among other things, that FINRA rules be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, and in general, to protect 

investors and the public interest. 

The Commission believes that the 

proposal to establish the FINRA/Nasdaq 

TRF Chicago is consistent with the 

purposes of the Act and with FINRA’s 

responsibility to enforce compliance by 

its members with its rules and with the 

Act. FINRA states that geographic 

dispersion of these TRFs would reduce 

the risk of a regional outage affecting 

them both simultaneously. By providing 

members with an alternative FINRA 

facility in a different location than the 

existing FINRA/Nasdaq TRF with which 

to satisfy their trade reporting 

obligations, the Commission believes 

that the proposed rule change should 

enhance the resiliency and promote the 

integrity of the OTC market. 

Accordingly, for the reasons discussed 

above, the Commission finds that the 

proposed rule change is consistent with 

Section 15A(b)(6) of the Act. 

IV. Conclusion 

It is therefore ordered pursuant to 

Section 19(b)(2) of the Act 18 that the 

proposed rule change (SR–FINRA– 

2018–013), as modified by Amendment 

No. 1, be and hereby is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14462 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83568; File No. SR–C2– 

2018–015] 

Self-Regulatory Organizations; Cboe 

C2 Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to the Penny 

Pilot Program 

June 29, 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 26, 

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 December 31, 2017. The text of 

the proposed rule change is provided 

below. 

(additions are in italics; deletions are 

[bracketed]) 

* * * * * 

Rules of Cboe C2 Exchange, Inc. 

* * * * * 

CHAPTER 6 Trading on the Exchange 

* * * * * 

Rule 6.4. Minimum Increments for Bids 

and Offers 

(a) (No change). 

(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 

[January]July 1, 2018. The Penny Pilot 

will expire on [June 30]December 31, 

2018. 

* * * * * 

The text of the proposed rule change 

is also available on the Exchange’s 

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

AboutCBOE/CBOELegalRegulatory

Home.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 


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