Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 42719 

15 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5The Exchange notes that its regulatory 

responsibilities with respect to Member compliance 

with options sales practice rules have largely been 

allocated to FINRA under a 17d–2 agreement. The 

ORF is not designed to cover the cost of that options 

sales practice regulation. See Securities Exchange 

Act Release No. 76309 (October 29, 2015), 80 FR 

68361 (November 4, 2015). 

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 No. 

SR–CboeBZX–2018–061, and should be 

submitted on or before September 13, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18163 Filed 8–22–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83880; File No. SR– 

CboeEDGX–2018–033] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend the 

Options Regulatory Fee 

August 17, 2018. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 9, 

2018, Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change 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 

amend its Fees Schedule relating to the 

Options Regulatory Fee. 

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.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 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 implement 

proposed changes to its Fees Schedule 

for its equity options platform (‘‘BZX 

[sic] Options’’) to clarify how the 

Options Regulatory Fee (‘‘ORF’’) is 

assessed and collected. 

Background 

By way of background, the ORF is 

assessed by the Exchange to each 

Member for options transactions cleared 

by the Member that are cleared by The 

Options Clearing Corporation (‘‘OCC’’) 

in the customer range (i.e., transactions 

that clear in a customer account at OCC) 

regardless of the exchange on which the 

transaction occurs. The ORF is designed 

to recover a material portion of the costs 

to the Exchange of the supervision and 

regulation of Member customer options 

business, including performing routine 

surveillances, investigations, 

examinations, financial monitoring, as 

well as policy, rulemaking, interpretive 

and enforcement activities.5 The 

Exchange believes that revenue 

generated from the ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, will 

cover a material portion, but not all, of 

the Exchange’s regulatory costs. 

The Exchange monitors the amount of 

revenue collected from the ORF to 

ensure that it, in combination with its 

other regulatory fees and fines, does not 

exceed the Exchange’s total regulatory 

costs. The Exchange monitors its 

regulatory costs and revenues at a 

minimum on a semi-annual basis. If the 

Exchange determines regulatory 

revenues exceed or are insufficient to 

cover a material portion of its regulatory 

costs, the Exchange will adjust the ORF 

by submitting a fee change filing to the 

Commission. The Exchange notifies 

Members of adjustments to the ORF via 

an exchange notice. The Exchange 

provides Members with such notice at 

least 30 calendar days prior to the 

effective date of the change. 

Under the Exchange’s current process, 

the ORF is assessed to Members and 

collected indirectly from Members 

through their clearing firms by OCC on 

behalf of the Exchange. The following 

scenarios reflect how the ORF is 

assessed and collected (these apply 

regardless if the transaction is executed 

on the Exchange or on an away 

exchange): 

1. If a Member is the executing 

clearing firm on a transaction 

(‘‘Executing Clearing Firm’’), the ORF is 

assessed to and collected from that 

Member by OCC on behalf of the 

Exchange. 

2. If a Member is the Executing 

Clearing Firm and the transaction is 

‘‘given up’’ to a different Member that 

clears the transaction (‘‘Clearing Giveup’’), the ORF is assessed to the 

Executing Clearing Firm (the ORF is the 

obligation of the Executing Clearing 

Firm). The ORF is collected from the 

Clearing Give-up. 

3. If the Executing Clearing Firm is a 

non-Member and the Clearing Give-up 

is a Member, the ORF is assessed to and 

collected from the Clearing Give-up. 


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42720 Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 

6See Securities Exchange Act Release No. 82164 

(November 28, 2017), 82 FR 231 (December 4, 2017) 

(SR–CBOE–2017–074) and Securities Exchange Act 

Release No. 82163 (November 28, 2017), 82 FR 231 

(December 4, 2017) (SR–C2–2017–031). 

7The Exchange notes that in the case where a 

non-self-clearing Member executes a transaction on 

the Exchange, the Member’s guaranteeing Clearing 

Member is reflected as the Executing Clearing Firm 

in the OCC cleared trades file and the ORF is 

assessed to and collected from the Executing 

Clearing Firm. 

8The Exchange notes that OCC provides the 

Exchange and other exchanges with information to 

assist in excluding CMTA transfers done to correct 

bona fide errors from the ORF calculation. 

Specifically, if a clearing firm gives up or CMTA 

transfers a position to the wrong clearing firm, the 

firm that caused the error will send an offsetting 

CMTA transfer to that firm and send a new CMTA 

transfer to the correct firm. The offsetting CMTA 

transfer is marked with a CMTA Transfer ORF 

Indicator which results in the original erroneous 

transfer being excluded from the ORF calculation. 

9BZX [sic] Options Rule 24.1 provides that no 

Member shall refuse to make available to the 

Exchange such books, records or other information 

as may be called for under the Rules or as may be 

requested in connection with an investigation by 

the Exchange. 

4. As of August 1, 2018, if a Member 

is the Executing Clearing Firm and a 

non-Member is the Clearing Give-up, 

the ORF will be assessed to the 

Executing Clearing Firm. The ORF is the 

obligation of the Executing Clearing 

Firm but will be collected from the nonMember Clearing Give-up (for the 

reasons described below). The Exchange 

notes that this assessment is consistent 

with how ORF is assessed and collected 

on two of the Exchange’s affiliated 

exchanges.6

5. No ORF is assessed if neither the 

Executing Clearing Firm nor the 

Clearing Give-Up are Members. 

The Exchange currently uses an OCC 

file that summarizes total trades cleared 

in the customer range by OCC number 

to determine the Executing Clearing 

Firm and the Clearing Give-up. As of 

August 1, 2018, the Exchange will use 

a different and more detailed OCC 

cleared trades file to determine the 

Executing Clearing Firm and the 

Clearing Give-up.7

In each of scenarios 1 through 4 

above, if the transaction is transferred 

pursuant to a Clearing Member Trade 

Assignment (‘‘CMTA’’) arrangement to 

another clearing firm who ultimately 

clears the transaction, the ORF is 

collected from the clearing firm that 

ultimately clears the transaction (which 

firm may be a non-Member), by OCC on 

behalf of the Exchange. No ORF is 

assessed if neither the Executing 

Clearing Firm nor the Clearing Give-Up 

are Members. Using CMTA transfer 

information provided by the OCC, the 

Exchange subtracts the ORF charge from 

the monthly ORF bill of the clearing 

firm that transfers the position and adds 

the charge to the monthly ORF bill of 

the clearing firm that receives the 

CMTA transfer (i.e., the ultimate 

clearing firm). This process is performed 

at the end of each month on each 

transfer in the OCC CMTA transfer file 

for that month.8

Proposed Amendments to the Fees 

Schedule 

The Exchange proposes to amend its 

Fees Schedule in the following respects 

to clarify how the ORF is assessed and 

collected. 

First, the Exchange proposes to 

amend its Fees Schedule to clarify that 

the ORF is assessed by the Exchange to 

each Member for options transactions 

cleared by the Member (as opposed to 

‘‘all’’ options transaction ‘‘executed and 

cleared’’ by the Member) that are 

cleared by OCC in the customer range 

regardless of the exchange on which the 

transaction occurs. Because the ORF is 

always assessed to a Clearing Member, 

the Exchange proposes to remove the 

words ‘‘executed and, or simply’’ from 

the Fee Schedule description of the ORF 

to clarify that the ORF is assessed for 

options transactions cleared by a 

Member. 

Second, the Exchange proposes to 

make explicit that the Exchange uses 

reports from OCC when assessing and 

collecting the ORF, as noted above. 

Third, the Exchange proposes to make 

clear in the Fees Schedule, that as of 

August 1, 2018, the ORF will be 

collected by OCC on behalf of the 

Exchange from the Clearing Member or 

non-Clearing Member that ultimately 

clears the transaction. While the ORF is 

an obligation of Members, due to 

industry request the ORF is collected 

from the clearing firm that ultimately 

clears the eligible trade, even if such 

firm is a not a Member. The Exchange, 

OCC and the industry agreed to this 

collection method in response to 

comments that by collecting the ORF in 

this manner Members and non-Members 

could more easily pass-through the ORF 

to their customers. As such, in scenario 

4 above the ORF is collected from the 

non-Clearing Member that clears the 

transaction in order to facilitate the 

pass-through of the ORF to the endcustomer. Likewise, collection of the 

ORF from the ultimate (CMTA) clearing 

firm facilitates the passing of the fee to 

the end-customer. In those cases where 

the ORF is collected from a nonClearing Member, the Exchange 

(through OCC) collects the ORF as a 

convenience for the Member whose 

obligation it is to pay the fee to the 

Exchange. 

Fourth, the Exchange proposes to 

clarify its process for assessing the ORF 

on linkage transactions. An options 

order entered on the Exchange may be 

routed to and executed on another 

exchange pursuant to the Options Order 

Protection and Locked/Crossed Market 

Plan. The Exchange may engage a 

routing broker to provide routing 

services (‘‘Routing Services’’) to 

facilitate linkage transactions. A 

customer order routed by a routing 

broker for execution at another 

exchange results in a transaction on that 

exchange and an obligation of the 

routing broker to pay the options 

regulatory fee, if any, of that exchange. 

After receiving a fill on the away 

exchange, the routing broker trades 

against the original order entered on the 

Exchange and incurs the BZX [sic] 

Options ORF. Pursuant to its agreement 

with the routing broker, the Exchange 

reimburses the routing broker for any 

options regulatory fee assessed by the 

Exchange and by the away market on 

which the customer order was executed. 

As a result, only the original customer 

order executed on the Exchange is 

assessed the ORF. The Exchange 

proposes to amend its Fees Schedule to 

clarify that, with respect to linkage 

transactions, the Exchange reimburses 

its routing broker providing Routing 

Services for options regulatory fees it 

incurs in connection with the Routing 

Services it provides. 

Fifth, the Exchange proposes to 

change the method it uses to assess the 

ORF to better align with the Exchange’s 

Fees Schedule. Currently, the Exchange 

assesses the ORF to a Member based on 

the OCC clearing number(s) that the 

Member registers with the Exchange. A 

Member may have additional OCC 

clearing numbers that are not registered 

with the Exchange because they are 

used by the Member to clear activity on 

other exchanges. If a Member uses a 

non-BZX [sic] Options registered OCC 

clearing number on a transaction and 

that clearing number is denoted as the 

Executing Clearing Firm or the Clearing 

Give-up, the ORF is not assessed to that 

transaction because the clearing number 

is not known to the Exchange. Such 

transactions are subject to the ORF 

under the Exchange’s Fees Schedule 

because the Executing Clearing Firm or 

the Clearing Give-up was a Member. 

The ORF is assessed at the Member 

entity level, not at the OCC clearing 

number level. In order to conform its 

ORF billing practice to its Fees 

Schedule, the Exchange proposes to 

amend the Fees Schedule to require 

Members, pursuant to BZX [sic] Options 

Rule 24.1,9 to provide the Exchange 

with a complete list of its OCC clearing 

numbers. The Exchange would use the 


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Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 42721 

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

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78f(b)(4). 

list provided solely for ORF billing 

purposes. Members would be required 

to keep such information up to date 

with the Exchange. The Exchange will 

issue an Exchange Notice to provide 

Members with notice of this change and 

a deadline for initial submission of its 

OCC clearing numbers list. The 

Exchange expects to implement this 

change for August 2018 ORF billing in 

order for the Exchange to provide 

Members with notice of this new 

requirement and time to comply. 

The Exchange lastly proposes a 

couple of minor clean up changes to the 

Fees Schedule such as defining the 

‘‘OCC’’ as ‘‘The Options Clearing 

Corporation’’. 

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.10 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 11 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 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 general, to protect 

investors and the public interest. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

Section 6(b)(4) of the Act,12 which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Members and other persons using its 

facilities. 

The Exchange believes the proposed 

clarifications to the Fees Schedule with 

respect to how ORF is assessed and 

collected provides further transparency 

in the Fees Schedule and alleviates 

potential confusion. The alleviation of 

confusion removes impediments to and 

perfects the mechanism of a free and 

open market and a national market 

system, and, in general, protects 

investors and the public interest. 

Additionally, the Exchange notes that 

the proposal to clarify that the ORF is 

assessed to Members for options 

transactions cleared by the Member (as 

opposed to executed and cleared) is 

appropriate and equitable because it 

adds clarity to the Fee Schedule by 

better and more accurately describing 

the application of the ORF. The 

Exchange believes it is appropriate to 

charge the ORF only to transactions that 

clear as customer at the OCC. The 

Exchange believes that its broad 

regulatory responsibilities with respect 

to its Members’ activities supports 

applying the ORF to transactions 

cleared by a Member. The Exchange’s 

regulatory responsibilities are the same 

regardless of whether a Member 

executes a transaction or clears a 

transaction executed on its behalf. The 

Exchange regularly reviews all such 

activity, including performing 

surveillance for position limit 

violations, manipulation, insider 

trading, front-running and contrary 

exercise advice violations. The 

Exchange believes the proposal is 

equitable and not unfairly 

discriminatory because it applies in the 

same manner to Members subject to the 

ORF. The ORF is only assessed to a 

Member with respect to a particular 

transaction in which it is either the 

Executing Clearing Firm or the Clearing 

Give-up. 

The Exchange believes the proposal to 

collect the ORF from non-Members that 

ultimately clear the transaction is an 

equitable allocation of reasonable dues, 

fees, and other charges among its 

Members and other persons using its 

facilities. The Exchange notes that there 

is a material distinction between 

‘‘assessing’’ the ORF and ‘‘collecting’’ 

the ORF. The Exchange does not assess 

the ORF to non-Members. The ORF is an 

obligation of Members. Once, however, 

the ORF is assessed to a Member for a 

particular transaction, the ORF may be 

collected from a Member or a nonMember, depending on how the 

transaction is cleared at OCC. If there 

was no change to the clearing number 

of the original transaction, the ORF 

would be collected from the Member. If 

there was a change to the clearing 

number of the original transaction and 

a non-Member becomes the ultimate 

clearing firm for that transaction, then 

the ORF will be collected from that nonMember. The Exchange believes that 

this collection practice is reasonable 

and appropriate, and was originally 

instituted at the request of the industry 

for the ORF be collected from the 

clearing firm that ultimately clears the 

transaction in order to facilitate the 

passing of the fee to the end-customer. 

The Exchange believes that the 

proposal to clarify that the ORF is 

collected by OCC on behalf of the 

Exchange from the Clearing Member 

that ultimately clears the transaction 

also provides clarity in the Fee 

Schedule and is reasonable. As 

discussed, if the ORF is assessed to a 

Member for a particular transaction and 

there was no change to the clearing 

number of the original transaction, the 

ORF would be collected from the 

Member. If there was a change to the 

clearing number of the original 

transaction and another Member 

becomes the ultimate clearing firm for 

that transaction, then the ORF will be 

collected from the Member that 

ultimately cleared the transaction. 

Similarly, as noted above, if there is a 

change to the clearing number of the 

original transaction and a non-Member 

becomes the ultimate clearing firm for 

that transaction, then the ORF will be 

collected from that non-Member. 

The Exchange believes it is 

reasonable, equitable and 

nondiscriminatory not to pass the ORF 

to a CMTA transferee when neither the 

CMTA transferor, transferee nor 

Executing Clearing Firm is a Member 

because this would help ensure the ORF 

is not collected on any transactions that 

may not be subject to the ORF. 

The Exchange also believes it is 

reasonable, equitable and 

nondiscriminatory to reimburse its 

routing broker for any options 

regulatory fees the broker incurs in 

connection with Routing Services 

because this helps ensure the Exchange 

does not charge the ORF more than once 

to a single customer order. 

Lastly, the Exchange believes the 

minor clean-up change to define ‘‘OCC 

reduces confusion, thereby removing 

impediments to and perfecting the 

mechanism of a free and open market 

and a national market system, and, in 

general, protecting investors and the 

public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. This 

proposal does not create an unnecessary 

or inappropriate intra-market burden on 

competition because the ORF applies to 

all customer activity, thereby raising 

regulatory revenue to offset regulatory 

expenses. It also supplements the 

regulatory revenue derived from noncustomer activity. This proposal does 

not create an unnecessary or 

inappropriate inter-market burden on 

competition because it is a regulatory 

fee that supports regulation in 

furtherance of the purposes of the Act. 


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42722 Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 

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

14 17 CFR 240.19b–4(f). 

15 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78mm(a)(1). 

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

3See Letter from Brett M. Kitt, Senior Associate 

General Counsel, Nasdaq Inc., to Brent Fields, 

Secretary, Commission, dated July 16, 2018 

(‘‘Exemptive Request’’). 

4See Securities Exchange Act Release Nos. 83703 

(July 25, 2018) (SR–ISE–2018–59); 83704 (July 25, 

2018) (SR–GEMX–2018–24); and 83705 (July 25, 

2018) (SR–MRX–2018–23). 

5 17 CFR 240.0–12. 

6See Exemptive Request, supra note 3, at 2. 

The Exchange is obligated to ensure that 

the amount of regulatory revenue 

collected from the ORF, in combination 

with its other regulatory fees and fines, 

does not exceed regulatory costs. 

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 foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 13 and paragraph (f) of Rule 

19b–4 thereunder.14 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. 

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 No. SR– 

CboeEDGX–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 No. 

SR–CboeEDGX–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 

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 No. 

SR–CboeEDGX–2018–033, and should 

be submitted on or before September 13, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18165 Filed 8–22–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83887] 

Order Granting Applications by 

Nasdaq ISE, LLC, Nasdaq GEMX, LLC, 

and Nasdaq MRX, LLC for Exemption 

Pursuant to Section 36(a) of the 

Exchange Act From the Rule Filing 

Requirements of Section 19(b) of the 

Exchange Act With Respect to Certain 

Rules Incorporated by Reference 

August 20, 2018. 

Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq 

GEMX, LLC (‘‘GEMX’’), and Nasdaq 

MRX, LLC (‘‘MRX’’) (each, a ‘‘Nasdaq 

Exchange,’’ and collectively, the 

‘‘Nasdaq Exchanges’’) have filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) an 

application for an exemption under 

Section 36(a)(1) of the Securities 

Exchange Act of 1934 (‘‘Exchange 

Act’’) 1 from the rule filing requirements 

of Section 19(b) of the Exchange Act 2

with respect to certain rules of Nasdaq 

BX, Inc. (‘‘BX’’), an affiliate of the 

Nasdaq Exchanges, that the Nasdaq 

Exchanges seek to incorporate by 

reference.3 Section 36 of the Exchange 

Act authorizes the Commission to 

conditionally or unconditionally 

exempt any person, security, or 

transaction, or any class thereof, from 

any provision of the Exchange Act or 

rule thereunder, if necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors. 

Recently, the Nasdaq Exchanges each 

filed a proposed rule change 4 under 

Section 19(b) of the Exchange Act to 

largely replace their existing 

investigatory, disciplinary, and 

adjudicatory rules with those contained 

in the BX Rule 8000 and 9000 Series, as 

such rules may be in effect from time to 

time. In the proposed rule changes, the 

Nasdaq Exchanges proposed to 

incorporate by reference the BX Rule 

8000 and 9000 Series into new Chapters 

80 and 90 of their respective rulebooks, 

and thus make these BX Rules 

applicable to their members, associated 

persons, and other persons subject to 

their jurisdiction. When the proposed 

rule changes become operative, Nasdaq 

Exchange members, associated persons, 

and other persons subject to the 

jurisdiction of the Nasdaq Exchanges 

will be required to comply with the BX 

Rule 8000 and 9000 Series as though 

such rules are fully set forth within each 

of the Nasdaq Exchange’s rulebooks. 

The Nasdaq Exchanges have 

requested, pursuant to Rule 0–12 under 

the Exchange Act,5 that the Commission 

grant the Nasdaq Exchanges an 

exemption from the rule filing 

requirements of Section 19(b) of the 

Exchange Act for changes to each of the 

Nasdaq Exchange’s rules that are 

effected solely by virtue of a change to 

the BX Rule 8000 and 9000 Series that 

are incorporated by reference. 

Specifically, the Nasdaq Exchanges 

request that they be permitted to 

incorporate by reference changes made 

to the BX Rule 8000 and 9000 Series 

that are cross-referenced in each of the 

Nasdaq Exchange’s rules, without the 

need for each Nasdaq Exchange to file 

separately the same proposed rule 

changes pursuant to Section 19(b) of the 

Exchange Act.6


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