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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Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 31591 

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 July 1, 

2018 would be identified based on The Option 

Clearing Corporation’s trading volume data from 

December 1, 2017 through May 31, 2018. 

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

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

8 Id. 

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

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6). 

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

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s 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 pre-filing requirement. 

13 17 CFR 240.19b–4(f)(6)(iii). 

14See Securities Exchange Act Release No. 61061 

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

2009) (SR–NYSEArca–2009–44). 

15For 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). 

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 

June 30, 2018. The Exchange proposes 

to extend the Pilot Program until 

December 31, 2018. 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 July 1, 

2018. 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 

investors and the public interest. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 8 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the proposed rule change 

allows for an extension of the Pilot 

Program for the benefit of market 

participants. The Exchange notes that 

this proposal does not propose any new 

policies or provisions that are unique or 

unproven, but instead relates to the 

continuation of an existing program that 

operates on a pilot basis. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

C2 does not believe that the proposed 

rule change will impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. Specifically, the 

Exchange believes that, by extending the 

expiration of the Pilot Program, the 

proposed rule change will allow for 

further analysis of the Pilot Program and 

a determination of how the Program 

shall be structured in the future. In 

doing so, the proposed rule change will 

also serve to promote regulatory clarity 

and consistency, thereby reducing 

burdens on the marketplace and 

facilitating investor protection. In 

addition, the Exchange has been 

authorized to act jointly in extending 

the Pilot Program and believes the other 

exchanges will be filing similar 

extensions. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

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)(iii) of the Act 9 and Rule 

19b–4(f)(6) thereunder.10 Because the 

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 

prior to 30 days from the date on which 

it was filed, 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 Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 11 normally does not 

become operative prior to 30 days after 

the date of the filing.12 However, 

pursuant to Rule 19b–4(f)(6)(iii),13 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 and will allow the 

Exchange and the Commission 

additional time to analyze the impact of 

the Pilot Program.14 Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.15


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31592 Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 

16 15 U.S.C. 78s(b)(2)(B). 

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). 

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 16 of the Act to 

determine whether the proposed rule 

change 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– 

C2–2018–015 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–C2–2018–015. 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–C2–2018–015 and should 

be submitted on or before July 27, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14468 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83567; File No. SR–CBOE– 

2018–047] 

Self-Regulatory Organizations; Cboe 

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 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) 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 ‘‘noncontroversial’’ 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, 2018. The text of 

the proposed rule change is provided 

below. 

(additions are in italics; deletions are 

[bracketed]) 

* * * * * 

Cboe Exchange, Inc. 

Rules 

* * * * * 

Rule 6.42. Minimum Increments for 

Bids and Offers 

The Board of Directors may establish 

minimum increments for options traded 

on the Exchange. When the Board of 

Directors determines to change the 

minimum increments, the Exchange 

will designate such change as a stated 

policy, practice, or interpretation with 

respect to the administration of Rule 

6.42 within the meaning of 

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

of the Exchange Act and will file a rule 

change for effectiveness upon filing 

with the Commission. Until such time 

as the Board of Directors makes a 

change to the minimum increments, the 

following minimum increments shall 

apply to options traded on the 

Exchange: 

(1) (No change). 

(2) (No change). 

(3) The decimal increments for bids 

and offers for all series of the option 

classes participating in the Penny Pilot 

Program are: $0.01 for all option series 

quoted below $3 (including LEAPS), 

and $0.05 for all option series $3 and 

above (including LEAPS). For QQQQs, 

IWM, and SPY, the minimum increment 

is $0.01 for all option series. 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 1, 2018] 

July 1, 2018. The Penny Pilot shall 

expire on [June 30, 2018] December 31, 

2018. 

(4) (No change). 

. . . Interpretations and Policies: 

.01–.04 (No change). 

* * * * * 

The text of the proposed rule change 

is also available on the Exchange’s 

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

CBOE/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 


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