36638 Federal Register / Vol. 83, No. 146 / Monday, July 30, 2018 / Notices 

36 17 CFR 240.17Ad–22(e)(7)(i). 

37 17 CFR 240.17Ad–22(e)(7)(i). 

38 17 CFR 240.17Ad–22(e)(7)(vi). 

39 17 CFR 240.17Ad–22(e)(7)(vi). 

40 15 U.S.C. 78q–1(b)(3)(F). 

41 17 CFR 240.17Ad–22(e)(7)(i), (vi). 

42 In approving the proposed rule change, the 

Commission considered the proposal’s impacts on 

efficiency, competition, and capital formation. 15 

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

43 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

timely basis, and its use of intraday 

liquidity. 

Moreover, by using the liquidity ratio 

to determine in advance the liquidity 

needs of LCH SA arising from the 

default of at least two clearing group 

members to which LCH SA has the 

largest exposures during the 5 days 

following default, the Commission 

believes the Framework would enhance 

LCH SA’s ability to determine whether 

it has sufficient resources to meet its 

liquidity needs should such a default 

occur. The Commission believes that 

this would, in turn, enable LCH SA to 

avoid any potential disruptions to its 

operations caused by such liquidity 

needs arising from such a default. The 

Commission therefore believes that the 

Framework would enable LCH SA to 

maintain sufficient liquid resources to 

effect settlement of its payment 

obligations under a wide range of 

foreseeable stress scenarios, including 

the default of the participant family that 

would generate the largest aggregate 

payment obligation for LCH SA in 

extreme but plausible market 

conditions. 

Therefore, for the above reasons the 

Commission finds that the proposed 

rule change is consistent with Rule 

17Ad–22(e)(7)(i).36

C. Consistency With Rule 17Ad– 

22(e)(7)(vi) of the Act 

Rule 17Ad–22(e)(7)(vi) requires that 

LCH SA establish, implement, maintain 

and enforce written policies and 

procedures reasonably designed to 

effectively measure, monitor, and 

manage the liquidity risk that arises in 

or is borne by LCH SA, including 

measuring, monitoring, and managing 

its settlement and funding flows on an 

ongoing and timely basis, and its use of 

intraday liquidity by determining the 

amount and regularly testing the 

sufficiency of the liquid resources held 

for purposes of meeting the minimum 

liquid resource requirement under Rule 

17Ad–22(e)(7)(i) 37 by, among other 

things, conducting stress testing of its 

liquidity resources at least once each 

day using standard and predetermined 

parameters and assumptions.38

As discussed above, the Framework 

would describe the metrics LCH SA 

would use to quantify its liquidity 

needs, and the tests and reports LCH SA 

would use to confirm that its sources of 

liquidity can satisfy those liquidity 

needs. These metrics would include: (i) 

The liquidity coverage ratio; (ii) a 

monthly rolling average liquidity buffer; 

(iii) a daily minimum liquidity buffer; 

and (iv) required cash collateral. The 

Framework would describe how these 

metrics would be calculated for each 

day over a maximum of a 5 day liquidity 

period and how the liquidity coverage 

ratio, monthly rolling average liquidity 

buffer, and daily minimum liquidity 

buffer would be reported to LCH SA 

senior management daily. 

The Commission believes that the 

metrics provided by the Framework 

would help LCH SA determine the 

amount and regularly test the 

sufficiency of LCH SA’s liquid 

resources. The Commission believes 

that the liquidity coverage ratio, for 

example, would provide LCH SA senior 

management a view to LCH SA’s 

liquidity needs in stressed conditions 

arising from a default of at least two 

clearing group members to which LCH 

SA has the largest exposures. As 

discussed above, the Framework would 

require the calculation and reporting of 

the liquidity coverage ratio daily. The 

Commission believes the other metrics 

described above would similarly test, 

and provide LCH SA senior 

management insight regarding, the 

sufficiency of LCH SA’s liquid 

resources. 

For the above reasons, the 

Commission therefore finds that the 

proposed rule change is consistent with 

Rule 17Ad–22(e)(7)(vi).39

III. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act, and in 

particular, Section 17A(b)(3)(F) of the 

Act 40 and Rules 17Ad–22(e)(7)(i) and 

(vi) thereunder.41

It is therefore ordered pursuant to 

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

proposed rule change (SR–LCH SA– 

2018–003) be, and hereby is, 

approved.42

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–16168 Filed 7–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83700; File No. SR–BX– 

2018–033] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Adopt a Rule 

Concerning Handling of No Bid 

Options and To Clarify the Operation 

of Chapter V, Section 3, Entitled 

‘‘Trading Halts’’ 

July 24, 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 July 13, 

2018 Nasdaq BX, Inc. (‘‘BX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. 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 

Chapter V, Section 3, entitled ‘‘Trading 

Halts’’ and Chapter VI, Section 6, 

entitled ‘‘Acceptance of Quotes and 

Orders.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqbx.cchwallstreet.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 

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 aspects of such 

statements. 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 146 / Monday, July 30, 2018 / Notices 36639 

3See Phlx Rule 1035. 

4The Limit Up-Limit Down requirements must be 

met first before the proposed rule would apply. 

5The time of receipt for an order is the time such 

message is processed by the System. 

6The Exchange’s Opening Process is described 

within Chapter VI, Section 8. 

7Chapter VI, Section 5, entitled ‘‘Minimum 

Increments’’ provides for the minimum increments 

of trading. 

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

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

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Chapter V, Section 3, entitled ‘‘Trading 

Halts’’ to add more specificity 

concerning auctions during a trading 

halt and remove unnecessary rule text. 

The Exchange proposes to adopt a zero 

bid options rule on BX within Chapter 

VI, Section 6, entitled ‘‘Acceptance of 

Quotes and Orders.’’ Each proposal is 

described in more detail below. 

Chapter V, Section 3 

The Exchange proposes to amend 

Chapter V, Section 3(a)(vi)(B) to add a 

sentence which provides, ‘‘Auction 

orders and responses are rejected during 

a halt.’’ The Exchange notes that today, 

during a trading halt, the Exchange does 

not commence an auction. This 

proposed rule text will make clear how 

auction orders and auction responses 

are handled during a trading halt. 

The Exchange proposes to amend 

Chapter V, Section 3(b), which currently 

provides, ‘‘In the event BX Regulation 

determines to halt trading, all trading in 

the effected class or classes of options 

shall be halted. BX Options shall 

disseminate through its trading facilities 

and over OPRA a symbol with respect 

to such class or classes of options 

indicating that trading has been halted, 

and a record of the time and duration of 

the halt shall be made available to 

vendors.’’ The Exchange proposes to 

remove the words ‘‘such class or’’ in 

both places from this sentence because 

the Exchange only disseminates over 

OPRA a symbol with respect to classes 

of options to indicate a trading halt. 

Today, the Exchange halts symbol by 

symbol; all classes or every option 

would be halted. By amending this rule, 

the Exchange will add more 

transparency as to how it determines to 

halt trading and disseminates 

information regarding trading halts. 

Chapter VI, Section 6 

Today, the Exchange does not have a 

rule for the handling of options with no 

bid or zero bid options. The Exchange’s 

handling of zero bid options on BX is 

identical to the manner in which zero 

bid is handled on Phlx.3 The Exchange 

proposes to add this new rule to Chapter 

VI, Section 6(a)(3). The new rule would 

provide, ‘‘In the case where the bid 

price for any options contract is $0.00, 

a market order accepted into the System 

to sell that series shall be considered a 

limit order to sell at a price equal to the 

minimum trading increment as defined 

in Chapter VI, Section 5. Orders will be 

placed on the limit order book in the 

order in which they were received by 

the System. With respect to market 

orders to sell which are submitted prior 

to the Opening and persist after the 

Opening, those orders are posted at a 

price equal to the minimum trading 

increment as defined in Chapter VI, 

Section 5.’’ 

The Exchange intends to accept and 

convert market orders to sell allowing 

them an equal opportunity to trade if 

interest should arrive in the case of a no 

bid option. The Exchange notes that the 

orders would rest on the Order Book at 

the minimum price increment. The 

Exchange notes market orders ‘‘accepted 

into the System’’ would be converted to 

account for market orders that may not 

be accepted into the System due to 

Limit Up-Limit Down restrictions, 

which may prevent the market order 

from being accepted.4 Only after 

acceptance into the System will market 

orders be treated as a sell limit order at 

a price equal to the minimum trading 

increment. 

Further, the Exchange proposes to add 

rule text, which provides ‘‘Orders will 

be placed on the limit order book in the 

order in which they were received by 

the System.’’ 5 The Exchange proposes 

to note that with respect to market 

orders to sell in zero bid options, which 

are submitted prior to the Opening 

Process 6 and persist after the Opening 

Process, those orders are posted at a 

price equal to the minimum trading 

increment as defined in Chapter VI, 

Section 5.7 The Exchange’s proposed 

rule will provide market participants 

with greater insight into the handling of 

orders where there is a zero bid. The 

Exchange believes that this proposed 

amendment will accurately describe the 

manner in which a zero-bid options 

series operates within the System both 

before and after the Opening Process. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Securities Exchange 

Act of 1934,8 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,9

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism for a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

Chapter V, Section 3 

The Exchange is providing greater 

transparency as to the manner in which 

auctions are handled during a trading 

halt and the manner in which the 

Exchange determines to halt trading and 

disseminates information over OPRA 

during a trading halt. The Exchange 

believes that this rule text is consistent 

with the Act and the protection of 

investors and the public interest 

because it brings greater clarity to the 

manner in which trading halts function 

and what type of information is 

provided during a halt. 

Chapter VI, Section 6 

The Exchange’s proposal to adopt a 

zero bid rule is consistent with the Act 

and designed to promote just and 

equitable principles of trade and to 

protect investors and the public interest 

by adopting text which describes the 

handling of zero-bid options. The 

Exchange is treating all market orders to 

sell in zero bid options in the same 

fashion by converting all those orders, 

provided that the Exchange’s 

disseminated bid price in such option is 

zero for an option listed only on the 

Exchange or, for an option listed on 

multiple exchanges and the 

disseminated NBBO includes a bid price 

of zero in the series. Market orders to 

sell in zero bid options will be placed 

on the limit order book in the order in 

which they were received by the 

System. The Exchange desires to 

prevent members from submitting 

market orders to sell in no bid series, 

which would execute at a price of $0.00. 

The Exchange believes that the 

proposed rule will achieve this objective 

and continue to permit the Exchange to 

execute orders within its System at 

prices that reflect some value. Adding 

rule text regarding market orders to sell 

in zero bid options submitted prior to 

the Opening Process and persisting after 

the Opening Process is consistent with 

the Act because it provides more 

transparency as to the operation of this 

rule and as to how those market orders 

to sell in zero bid options will be 

handled by the System. Further, the 

Exchange believes that memorializing 

its current practice within the rule text 

will bring more clarity to the manner in 

which the zero bid rule operates to the 

benefits of all market participants. 


daltland on DSKBBV9HB2PROD with NOTICES
36640 Federal Register / Vol. 83, No. 146 / Monday, July 30, 2018 / Notices 

10 15 U.S.C. 78f(b)(8). 

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

12 17 CFR 240.19b–4(f)(6). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). 

15 Id. 

16 17 CFR 240.19b–4(f)(6)(iii). 

17For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 18 17 CFR 200.30–3(a)(12), (59). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,10 the Exchange does not believe 

that the proposed rule change will 

impose any burden on intermarket or 

intra-market competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Chapter V, Section 3 

The Exchange’s proposal to amend 

Chapter V, Section 3(a)(vi)(B) to make 

clear how auction orders and auction 

responses are handled during a trading 

halt and amend Chapter V, Section 3 to 

more specifically describe how the 

Exchange determines to halt trading as 

well as the information disseminated 

during a trading halt do not impose an 

undue burden on competition because 

the amendments add more transparency 

to the trading halt rule. 

Chapter VI, Section 6 

The Exchange’s proposal to adopt a 

zero bid options rule does not impose 

an undue burden on competition 

because the proposed rule change will 

continue to apply uniformly for all 

market participants who enter market 

orders to sell into the System when 

there is a zero-bid options. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

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 11 and Rule 

19b–4(f)(6) thereunder.12 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 

for 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 13 and Rule 19b–4(f)(6) 

thereunder.14

A proposed rule change filed under 

Rule 19b–4(f)(6) 15 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),16 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 proposed 

rule change may become operative 

immediately. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because the proposal raises no novel 

issues. Specifically, as the Exchange 

noted in its proposal, the provisions on 

the handling of zero bid options are the 

same as Rule 1035 of Nasdaq PHLX LLC 

and the changes to the trading halt rules 

clarify that the Exchange rejects auction 

orders and responses during a trading 

halt, which is consistent with the fact 

that the Exchange does not commence 

auctions during trading halts. Further, 

the proposal conforms a minor reference 

in the trading halt rules to better reflect 

the fact that the Exchange halts trading 

on a symbol-by-symbol basis. For these 

reasons, the Commission hereby waives 

the 30-day operative delay and 

designates the proposal operative upon 

filing.17

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 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 

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– 

BX–2018–033 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–BX–2018–033. 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 

offices 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–BX–2018–033, and should 

be submitted on or before August 20, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–16165 Filed 7–27–18; 8:45 am] 

BILLING CODE 8011–01–P 


daltland on DSKBBV9HB2PROD with NOTICES