42954 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Notices 

proposed rule’s impact on efficiency, competition, 

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

35 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Today the Exchange offers FIX, SQF and QUO 

(formerly known as OTTO) to its Participants. 

4Rules have been filed for Nasdaq ISE, LLC 

(‘‘ISE’’), Nasdaq GEMX, LLC (‘‘GEMX’’), Nasdaq 

MRX, LLC (‘‘MRX’’), Nasdaq BX, Inc. and Nasdaq 

Phlx, LLC. 

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 

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– 

CBOE–2018–058 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–CBOE–2018–058. 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–CBOE–2018–058 and 

should be submitted on or before 

September 14, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Eduardo A. Aleman 

Assistant Secretary. 

[FR Doc. 2018–18295 Filed 8–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83888; File No. SR– 

NASDAQ–2018–069] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Codify the 

Definitions of the Protocols to Enter 

Quotes and Orders 

August 20, 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 August 

17, 2018, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III, 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 adopt new 

rule text within The Nasdaq Options 

Market LLC Rules at Chapter VI, Section 

21. Specifically, the Exchange proposes 

to codify the definitions of the current 

protocols that Participants can use to 

enter quotes and orders on the Exchange 

and introduce a new protocol. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaq.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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to adopt new 

rule text at Chapter VI, Section 21 to 

codify the Financial Information 

eXchange (‘‘FIX’’) and Specialized 

Quote Feed (‘‘SQF’’) protocols. The 

Exchange proposes to adopt a new 

protocol and name it ‘‘Ouch to Trade 

Options’’ (‘‘OTTO’’) and rename and 

amend the current OTTO protocol on 

NOM as ‘‘Quote Using Orders’’ or 

‘‘QUO’’.3 The Exchange believes that 

codifying definitions of current and new 

protocols in its rules will increase 

transparency around its operations. 

Furthermore, the proposed definitions 

will be harmonized where appropriate 

with definitions contained in the rules 

of the Exchange’s affiliated options 

markets,4 by using consistent terms to 

define the buckets of information 

transmitted, or the features available, on 

each protocol. The protocols used by 

NOM Participants to submit quotes and 

orders play an important role in the 

operation of the System. 

The Exchange notes it has two 

protocols today, SQF and proposed to 

be renamed QUO (formerly known as 

OTTO), that NOM Market Makers can 

use to meet their quoting obligations. 

All quotes on SQF are counted toward 

market making obligations. While a 

NOM Market Maker may enter an 

Immediate-or-Cancel Order through 

SQF this order does not rest on the 

Exchange’s order book and therefore 

does not count toward quoting 


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Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Notices 42955 

5See Securities Exchange Act Release No. 74616 

(April 6, 2015), 80 FR 18450 (March 31, 2015) (SR– 

NASDAQ–2015–027). The FIX port was previously 

referred to as the ‘‘Order Entry Port’’ and described 

as a connection to routing orders to the Exchange 

via an external order entry port. NOM Participants 

access the Exchange’s network through order entry 

ports. A NOM Participant may have more than one 

order entry port. The Exchange recently renamed 

the ‘‘Order Entry Port’’ as the ‘‘FIX Port’’ in the 

Exchange’s Pricing Schedule. See Securities 

Exchange Act Release No. 83192 [sic] (May 9, 2018), 

83 FR 22570 [sic] (May 15, 2018) (SR–NASDAQ– 

2018–036). 

6See Securities Exchange Act Release No. 83193 

(May 9, 2018), 83 FR 22539 (May 15, 2018) (SR– 

NASDAQ–2018–036). This rule change generally 

described SQF as an interface that allows market 

makers to send quotes, sweeps and auction 

responses into the Exchange. 

7All of the notification messages available on 

SQF ports as described above (i.e., options symbol 

directory messages, system event messages, trading 

action messages, etc.) are configurable in that NOM 

Market Makers can select the specific types of 

notifications they wish to receive on their SQF 

ports. As such, SQF Purge Interface ports are a 

subpart of SQF ports that have been configured to 

only receive and notify of purge requests. 

8See Securities Exchange Act Release No. 78480 

(August 4, 2016), 81 FR 52926 (August 10, 2016) 

(SR–NASDAQ–2016–097). 

9 Id. 

10 Id. 

11The new OTTO protocol is the same protocol 

offered on ISE, GEMX and MRX. 

12To allow for the conformance suggested herein, 

the Exchange is proposing to rename the current 

protocol ‘‘Quote Using Orders’’ or ‘‘QUO.’’ 

13Unlike the current OTTO, orders submitted 

through the proposed new OTTO protocol would 

not be treated as quotes for purposes of Market 

Maker quoting obligations. 

obligations. In contrast orders that NOM 

Market Makers send through QUO will 

count toward market maker quoting 

obligations because orders submitted 

through QUO will rest on the order book 

and allow NOM Market Makers to 

provide liquidity on NOM. NOM Market 

Makers cannot use QUO to submit 

quotes. As noted below in the section on 

QUO, specifically orders would count 

toward meeting quoting obligations for 

purposes of Rule 701, Opening, and 

Rule 804(e), regarding intra-day quoting. 

The Exchange proposes to title 

proposed new Section 21 as ‘‘Order and 

Quote Protocols’’ and codify 

descriptions of the various current and 

new protocols that Participants may use 

to enter quotes and orders on NOM. 

Proposed new section (a) to Chapter VI, 

Section 21 would be entitled ‘‘Entry and 

Display of Orders and Quotes.’’ 

Proposed new Chapter VI, Section 21(a) 

would provide, ‘‘Participants may enter 

orders and quotes into the System as 

specified below.’’ The Exchange 

proposes to add a section Chapter VI, 

Section 21(a)(i) which states, ‘‘The 

Exchange offers Participants the 

following protocols for entering orders 

and quotes respectively.’’ Each protocol 

will be explained in greater detail 

below. 

A. Financial Information eXchange 

Ports 

This protocol is not memorialized 

within the Exchange’s Rulebook, 

however rule changes describing FIX 

were filed previously.5 The Exchange 

proposes to codify a description of FIX 

at Rule 1080(a)(i)(a) to add even greater 

specificity to this protocol. The 

Exchange proposes to state that FIX is 

an interface that allows Participants 

(Market Makers and non-Market Maker 

Participants) and their Sponsored 

Customers to connect, send and receive 

messages related to orders to and from 

the Exchange. Features include the 

following: (1) Execution messages; (2) 

order messages; and (3) risk protection 

triggers and cancel notifications. 

B. Specialized Quote Feed Ports 

This protocol is not memorialized 

within the Exchange’s Rulebook, 

however rule changes describing SQF 

were filed previously.6 The Exchange 

proposes to more specifically define an 

SQF Port. The Exchange proposes the 

following definition: 

SQF is an interface that allows Market 

Makers to connect, send, and receive 

messages related to quotes and 

Immediate-or-Cancel Orders into and 

from the Exchange. Features include the 

following: (1) Options symbol directory 

messages (e.g underlying instruments); 

(2) system event messages (e.g., start of 

trading hours messages and start of 

opening); (3) trading action messages 

(e.g., halts and resumes); (4) execution 

messages; (5) quote messages; (6) 

Immediate-or-Cancel Order messages; 

(7) risk protection triggers and purge 

notifications; and (8) opening imbalance 

messages. The SQF Purge Interface only 

receives and notifies of purge request 

from the Market Maker.7

The Exchange believes that this 

information provides a more thorough 

description of SQF. 

C. Quote Using Orders (Formerly OTTO) 

Today, the Exchange offers a protocol 

named ‘‘Ouch to Trade Options’’ or 

‘‘OTTO.’’ The Exchange has filed a 

description of the current OTTO in prior 

rule changes stating OTTO is a protocol 

which permits the transmission of 

orders to the Exchange by a Participant.8

Further, the prior filing noted 

Immediate-or- Cancel orders will not be 

cancelled pursuant to this Chapter VI, 

Section 6 because, by definition, these 

orders will cancel if not executed.9 All 

Participants have the ability to utilize 

OTTO. Today, orders submitted by 

NOM Market Makers over this interface 

are treated as quotes.10

The Exchange proposes to rename the 

current OTTO as ‘‘Quote Using Orders’’ 

or ‘‘QUO’’ and amend the protocol by 

restricting it to NOM Market Makers 

only because this protocol is 

predominately utilized by NOM Market 

Makers. Further, the Exchange is 

offering non-Market Makers the new 

OTTO protocol, described below, which 

some Participants, who are also 

members of ISE, GEMX and MRX,11

utilize today. The Exchange also notes 

QUO users will be subject to certain 

quote protections specified in Chapter 

VI, Section 18(c) which are specific to 

NOM Market Makers and would 

otherwise not apply to non-Market 

Makers. This interface would continue 

to allow NOM Market Makers to 

connect, send, and receive messages 

related to single-sided orders to and 

from the Exchange. The Exchange 

proposes to add additional granularity 

to this protocol by stating that the order 

features include the following: (1) 

Options symbol directory messages (e.g., 

underlying); (2) system event messages 

(e.g., start of trading hours messages and 

start of opening); (3) trading action 

messages (e.g., halts and resumes); (4) 

execution messages; (5) order messages; 

and (6) risk protection triggers and 

cancel notifications. Similar to how the 

protocol operates today, orders 

submitted by NOM Market Makers over 

this interface are treated as quotes. 

These orders would therefore count 

toward meeting quoting obligations for 

purposes of Rule 701, Opening, and 

Rule 804(e), regarding intra-day quoting. 

D. New Ouch to Trade Options 

The Exchange proposes to introduce a 

new interface similar to OTTO offered 

on affiliated markets which would be 

available to all NOM Participants 

(Market Makers and non-Market 

Makers). In order to bring conformance 

to the protocols across its affiliated 

markets, the Exchange proposes to name 

the new interface ‘‘Ouch to Trade 

Options’’ or ‘‘OTTO’’ similar to the 

other markets.12 This new protocol 

would allow Participants and their 

Sponsored Customers to connect, send, 

and receive messages related to orders 

to and from the Exchange. Features 

would include the following: (1) 

Options symbol directory messages (e.g., 

underlying); (2) system event messages 

(e.g., start of trading hours messages and 

start of opening); (3) trading action 

messages (e.g., halts and resumes); (4) 

execution messages; (5) order messages; 

and (6) risk protection triggers and 

cancel notifications.13 Orders submitted 

by NOM Market Makers through the 


daltland on DSKBBV9HB2PROD with NOTICES
42956 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Notices 

14 15 U.S.C. 78f(b). 

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

16 15 U.S.C. 78s(b)(3)(A)(iii). 

17 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. 

new OTTO will not count toward their 

quoting obligations. 

Implementation 

The Exchange proposes to rename the 

current OTTO to QUO and introduce 

the new OTTO protocol in Q4. The 

Exchange would issue an Options 

Trader Alert announcing the date on 

which these protocols would be 

available. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,14 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,15

in particular, in that it is designed to 

promote just and equitable principles of 

trade and to protect investors and the 

public interest by adding greater 

transparency to the order and quote 

protocols available on NOM. 

The Exchange believes that the 

proposed rule change is consistent with 

the protection of investors and the 

public interest as it codifies the current 

FIX and SQF protocols used to connect 

to the Exchange’s System. With respect 

to these protocols in particular, the 

Exchange believes that including a 

description of the various order entry 

protocols into the Rulebook will benefit 

Participants by increasing transparency 

around the operation of the Exchange. 

Furthermore, the proposed descriptions 

of all protocols in one rule will reflect 

information available on these 

protocols, and will be harmonized with 

language to be included in the rules of 

its affiliated exchanges to the extent that 

the protocols operate in the same 

manner. 

With respect to the renamed and 

amended QUO protocol the Exchange 

believes that restricting it to NOM 

Market Makers and further expanding 

the description of the protocol is 

consistent with the Act because the 

Exchange is also proposing to add a new 

protocol on NOM which would be 

available to all Participants. NOM is 

restricting QUO to Market Makers 

because it is already predominately 

utilized by Market Makers today. The 

Exchange is offering non-Market Makers 

the new OTTO protocol, which some 

Participants, who are also members of 

ISE, GEMX and MRX, utilize today. The 

Exchange also notes QUO users will be 

subject to certain quote protections 

specified in Chapter VI, Section 18(c) 

which are specific to NOM Market 

Makers and would otherwise not apply 

to non-Market Makers. The amended 

definition will provide greater 

transparency concerning this protocol 

which is in use today. 

Adopting a new protocol and naming 

it OTTO will bring greater conformance 

to the protocols across Nasdaq affiliated 

markets. The Exchange believes that the 

new proprietary protocol will offers 

Participants a range of important 

features including the ability to submit 

orders other than through FIX, while 

continuing to perform functions 

necessary to manage trading on the 

Exchange. The proposed new OTTO 

offers all NOM Participants the ability to 

send orders, similar to QUO. The new 

OTTO is intended to continue to permit 

non-Market Makers to have a protocol 

similar to the QUO (formerly OTTO) 

protocol offered on NOM today. The 

functionality offered on new OTTO 

mirrors the protocols offered on ISE, 

GEMX and MRX. The Exchange desires 

to conform its protocols across Nasdaq 

affiliated markets. The Exchange 

believes adopting and codifying this 

protocol will increase transparency to 

the Participants. The Exchange also 

notes that today this protocol is offered 

on ISE, GEMX and MRX. 

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. As explained 

above, the Exchange is codifying the 

quote and order entry protocols for FIX, 

SQF, renamed QUO and the new OTTO. 

Participants utilize the FIX, SQF and 

current OTTO protocols to connect to 

the Exchange’s System. The Exchange 

will offer a new OTTO protocol and 

rename current OTTO to QUO. The 

Exchange does not believe that 

codifying these existing and new 

protocols in the Rulebook will have any 

competitive impact. 

The Exchange does not believe 

limiting QUO to only Market Makers 

presents an undue burden on 

competition because, today, this 

protocol is predominately utilized by 

Market Makers. The Exchange is 

offering non-Market Makers the new 

OTTO protocol which some 

Participants, who are also members of 

ISE, GEMX and MRX, utilize today. The 

Exchange also notes QUO users will be 

subject to certain quote protections 

specified in Chapter VI, Section 18(c) 

which are specific to NOM Market 

Makers and would otherwise not apply 

to non-Market Makers. 

Locating all the protocol descriptions 

within a single rule and adding context 

around each protocol will increase 

transparency around the operation of 

the Exchange without having any 

impact on inter-market or intra-market 

competition. All market participants 

have the ability to subscribe to the 

protocols for order entry. The quoting 

protocols are limited to the market 

participants who are permitted by rule 

to quote on NOM, but the function is 

uniformly available to these eligible 

participants. Further, adopting OTTO 

will provide market participants with 

additional choices in selecting an order 

protocol other than FIX. Market Makers 

will be able to utilize either SQF or 

QUO to comply with quoting 

obligations. Every market participant 

will have more than one protocol 

available to utilize. 

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 

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 16 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.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: (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. 


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Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Notices 42957 

18 17 CFR 200.30–3(a)(12). 

1See rule 22e–3(a)(3). 

2This estimate is based upon the Commission’s 

experience with the frequency with which money 

market funds have historically required sponsor 

support. Although the vast majority of money 

market fund sponsors have supported their money 

market funds in times of market distress, for 

purposes of this estimate Commission staff 

conservatively estimates that one or more sponsors 

may not provide support. 

3Based on a review of filings with the 

Commission, Commission staff estimates that 2.3 

conduit funds are invested in each master fund. 

However, master funds account for only 5.1% of all 

money market funds. Solely for the purposes of this 

information collection, and to avoid 

underestimating possible burdens, the Commission 

conservatively assumes that any money market that 

breaks the buck and liquidates would be a master 

fund. 

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– 

NASDAQ–2018–069 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–NASDAQ–2018–069. 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–NASDAQ–2018–069 and 

should be submitted on or before 

September 14, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18294 Filed 8–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Rule 22e–3, SEC File No. 270–603, OMB 

Control No. 3235–0658 

Notice is hereby given that, under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520), the Securities and 

Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Section 22(e) of the Investment 

Company Act [15 U.S.C. 80a–22(e)] 

(‘‘Act’’) generally prohibits funds, 

including money market funds, from 

suspending the right of redemption, and 

from postponing the payment or 

satisfaction upon redemption of any 

redeemable security for more than seven 

days. The provision was designed to 

prevent funds and their investment 

advisers from interfering with the 

redemption rights of shareholders for 

improper purposes, such as the 

preservation of management fees. 

Although section 22(e) permits funds to 

postpone the date of payment or 

satisfaction upon redemption for up to 

seven days, it does not permit funds to 

suspend the right of redemption for any 

amount of time, absent certain specified 

circumstances or a Commission order. 

Rule 22e–3 under the Act [17 CFR 

270.22e–3] exempts money market 

funds from section 22(e) to permit them 

to suspend redemptions in order to 

facilitate an orderly liquidation of the 

fund. Specifically, rule 22e–3 permits a 

money market fund to suspend 

redemptions and postpone the payment 

of proceeds pending board-approved 

liquidation proceedings if: (i) The fund’s 

board of directors, including a majority 

of disinterested directors, determines 

pursuant to § 270.2a–7(c)(8)(ii)(C) that 

the extent of the deviation between the 

fund’s amortized cost price per share 

and its current net asset value per share 

calculated using available market 

quotations (or an appropriate substitute 

that reflects current market conditions) 

may result in material dilution or other 

unfair results to investors or existing 

shareholders; (ii) the fund’s board of 

directors, including a majority of 

disinterested directors, irrevocably 

approves the liquidation of the fund; 

and (iii) the fund, prior to suspending 

redemptions, notifies the Commission of 

its decision to liquidate and suspend 

redemptions. Rule 22e–3 also provides 

an exemption from section 22(e) for 

registered investment companies that 

own shares of a money market fund 

pursuant to section 12(d)(1)(E) of the 

Act (‘‘conduit funds’’), if the underlying 

money market fund has suspended 

redemptions pursuant to the rule. A 

conduit fund that suspends redemptions 

in reliance on the exemption provided 

by rule 22e–3 is required to provide 

prompt notice of the suspension of 

redemptions to the Commission. Notices 

required by the rule must be provided 

by electronic mail, directed to the 

attention of the Director of the Division 

of Investment Management or the 

Director’s designee.1 Compliance with 

the notification requirement is 

mandatory for money market funds and 

conduit funds that rely on rule 22e–3 to 

suspend redemptions and postpone 

payment of proceeds pending a 

liquidation, and are not kept 

confidential. 

Commission staff estimates that, on 

average, one money market fund would 

break the buck and liquidate every six 

years.2 In addition, Commission staff 

estimates that there are an average of 

two conduit funds that may be invested 

in a money market fund that breaks the 

buck.3 Commission staff further 

estimates that a money market fund or 

conduit fund would spend 

approximately one hour of an in-house 

attorney’s time to prepare and submit 

the notice required by the rule. Given 

these estimates, the total annual burden 

of the notification requirement of rule 

22e–3 for all money market funds and 


daltland on DSKBBV9HB2PROD with NOTICES