42538 Federal Register / Vol. 83, No. 163 / Wednesday, August 22, 2018 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 15 U.S.C. 78s(b)(1). 

5 17 CRF 240.19b–4. 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4. 

8See Securities Exchange Act Release No. 81195 

(July 24, 2017), 82 FR 35250 (July 28, 2017). 

9See Rule 11.220(a)(2). See also Rule 11.231(a)(1). 

10See Rule 11.190(f)(1) for a complete description 

of the IEX Order Collar. 

11The upper (lower) Order Collar price range is 

calculated by adding (subtracting) the appropriate 

percentage (consistent with the numerical 

guidelines for clearly erroneous executions) to the 

Order Collar Reference Price. 

12 In the event there is no valid Order Collar 

Reference Price, the Exchange generally rejects 

orders for the security. See Rule 11.190(f)(1). 

13See Rule 11.190(f)(1)(A). 

14See Securities Exchange Act Release No. 81662 

(September 20, 2017), 82 FR 44861 (September 26, 

2017) (SR–IEX–2017–31), a proposed rule change to 

clarify the inapplicability of the Exchange’s Order 

Collar and Router Constraint to certain orders that 

are eligible for participation in the opening process 

for non-IEX-listed securities pursuant to Rule 

11.231, or for auctions in IEX-listed securities 

pursuant to Rule 11.350. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83862; File No. SR–IEX– 

2018–18] 

Self-Regulatory Organizations: 

Investors Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Definition of the Cross Price 

Constraint Utilized in the Opening 

Process for Non-IEX-Listed Securities 

Pursuant to Rule 11.231 

August 16, 2018. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on August 9, 

2018, the Investors Exchange LLC 

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

Securities and Exchange Commission 

(‘‘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 

Pursuant to the provisions of Section 

19(b)(1) under the Securities Exchange 

Act of 1934 (‘‘Act’’),4 and Rule 19b–4 

thereunder,5 Investors Exchange LLC 

(‘‘IEX’’ or ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend the definition of the Cross 

Price Constraint utilized in the opening 

process for non-IEX-listed securities 

pursuant to Rule 11.231. The Exchange 

has designated this rule change as ‘‘noncontroversial’’ under Section 19(b)(3)(A) 

of the Act 6 and provided the 

Commission with the notice required by 

Rule 19b–4(f)(6) thereunder.7

The text of the proposed rule change 

is available at the Exchange’s website at 

www.iextrading.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 

self-regulatory organization 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 statement [sic] may be 

examined at the places specified in Item 

IV below. The self-regulatory 

organization 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 

Background 

The purpose of this proposed rule 

change is to amend the definition of the 

Cross Price Constraint utilized in the 

opening process for non-IEX-listed 

securities pursuant to Rule 11.231. On 

July 24, 2017, the Commission approved 

a proposed rule change filed by the 

Exchange to amend IEX Rule 11.231 to 

modify the manner in which the 

Exchange opens trading for non-IEXlisted securities beginning at the start of 

Regular Market Hours (the ‘‘Opening 

Process’’).8

Opening Process for Non-IEX-Listed 

Securities 

Pursuant to Rule 11.231, the Exchange 

attempts to perform the Opening 

Process in each non-IEX-listed security, 

in which all eligible interest resting on 

the Order Book in the Pre-Market 

Session available for continuous trading 

(i.e., orders on the ‘‘Continuous Book’’) 

as well as all eligible interest queued for 

execution in the Regular Market Session 

(i.e., orders on the ‘‘Cross Book’’) are 

executed at a single price (the ‘‘Opening 

Match’’). Prior to the beginning of 

Regular Market Hours, Users who wish 

to participate in the Opening Process 

may enter limit, market, and pegged 

orders designated with a time-in-force of 

DAY and limit orders designated with a 

time-in-force of GTX, which shall queue 

in the System and are eligible for 

execution in the Opening Process 

(orders on the Cross Book); interest 

resting on the Order Book in the PreMarket Session available for continuous 

trading (i.e., orders on the Continuous 

Book) are also eligible for execution in 

the Opening Process (collectively, 

‘‘Cross Eligible Orders’’). 

Cross Eligible Orders resting on the 

Continuous Book are ranked by the 

price at which they are resting on the 

Continuous Book and Cross Eligible 

Orders resting on the Cross Book are 

ranked by the limit price defined by the 

User, if any, except in the case of pegged 

orders, which are ranked by their 

current book price (in each case, the 

order’s ‘‘resting price’’).9

IEX Order Collar 

Rule 11.190(f)(1) sets forth the 

operation of the IEX Order Collar. 

Except for orders that are eligible for the 

Cross Book, the IEX Order Collar 

prevents any incoming order (including 

those marked ISO), or order resting on 

the Order Book, from executing at prices 

outside of the Order Collar price 

range.10 The Order Collar price range is 

calculated by applying the numerical 

guidelines for clearly erroneous 

executions to the Order Collar Reference 

Price.11 The Order Collar Reference 

Price is defined as the most current of 

the following: 12

• The consolidated last sale price 

disseminated during the Regular Market 

Session on the current trade date; 

• Last trade price disseminated 

outside of the Regular Market Session 

(Form T, as communicated by the 

relevant SIP) on trade date which other 

than for the Form T designation would 

have been considered a valid last sale 

price; or 

• If neither of the prices above are 

available, the prior days Official Closing 

Price from the listing exchange, adjusted 

to account for corporate actions, news 

events, etc.13

Proposed Changes 

The Exchange recently identified a 

minor omission in the Cross Price 

Constraint rule provisions with respect 

to manner in which the IEX Order 

Collar price range applies. Specifically, 

as described above, the Exchange does 

not apply the IEX Order Collar to orders 

eligible for the Cross Book so that it 

does not impact their relative priority of 

execution.14 However, while the IEX 

Order Collar does not apply to orders 


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Federal Register / Vol. 83, No. 163 / Wednesday, August 22, 2018 / Notices 42539 

15Rule 11.231(b)(2) states in relevant part that an 

imbalance of Cross Eligible Orders on the buy side 

or sell side may result in orders that are not 

executed in whole or in part. Thus, as part of the 

transition to the Regular Market Session (see Rule 

1.160(gg)), unexecuted Cross Eligible Orders to buy 

(sell) that are priced at or above (below) the Cross 

Price Constraint (but remain unexecuted due to an 

imbalance of Cross Eligible Orders) will price slide 

pursuant to IEX Rule 11.190(h) and all remaining 

unexecuted Cross Eligible Orders, along with any 

orders that were either ineligible to participate in 

the Opening Process or too passive to be executed 

in the Opening Process, will be released to the 

Order Book for continuous trading or canceled in 

accordance with the terms of the order. Thus, the 

Exchange notes that when the Cross Price 

Constraint is narrowed because the Away Protected 

NBB is below the lower threshold of the IEX Order 

Collar price range, or the Away Protected NBO is 

above the upper threshold of the IEX Order Collar 

price range, there may be a smaller quantity of 

shares executed in the Opening Process, which may 

result in a larger quantity of unexecuted Cross 

Eligible Order shares that are priced equal to or 

more aggressively than the more narrow Cross Price 

Constraint (as proposed) transitioning to the RMS 

and price sliding pursuant to Rule 11.190(h), or 

canceling pursuant to the terms of the order, as 

applicable. 

16 15 U.S.C. 78f. 

17 15 U.S.C. 78f(b)(5). 

eligible for the Cross Book, the current 

implementation of the Cross Price 

Constraint mechanism is in fact 

adjusted by the IEX Order Collar price 

range in limited circumstances when 

the upper or lower threshold of such 

price is less aggressive than the upper 

or lower threshold of the Cross Price 

Constraint, respectively. In other words, 

if the Away Protected NBB is below the 

lower threshold of the IEX Order Collar 

price range, or the Away Protected NBO 

is above the upper threshold of the IEX 

Order Collar price range, the Opening 

Process execution is constrained by the 

upper and/or lower thresholds of the 

IEX Order Collar. Adjusting the Cross 

Price Constraint by the IEX Order Collar 

price range does not impact the relative 

priority of orders eligible for the Cross 

Book because the constraint is not 

applied at the order level but instead to 

the cross price, in connection with the 

Opening Match. 

Based on the foregoing, the Exchange 

believes the existing Cross Price 

Constraint definition should explicitly 

account for the IEX Order Collar price 

range. Accordingly, the Exchange is 

proposing to amend rule 11.231(c)(1)(iii) 

to explicitly state that the Cross Price 

Constraint is adjusted by the IEX Order 

Collar price range, as described below: 

• The upper threshold price of the 

Cross Price Constraint is equal to the 

lesser of the price of the Away Protected 

NBO or the upper threshold of the Order 

Collar price range for the Regular 

Market Session, calculated pursuant to 

Rule 11.190(f)(1)(C), except in the event 

that an Away Protected Bid is crossing 

an Away Protected Offer, the upper 

threshold price is equal to the greater of 

five cents ($0.05) or one half of a 

percent (0.5%) higher than the lowest 

Away Protected Offer; and 

• The lower threshold price of the 

Cross Price Constraint is equal to the 

greater of the price of the Away 

Protected NBB or the lower threshold of 

the Order Collar price range for the 

Regular Market Session, calculated 

pursuant to Rule 11.190(f)(1)(C), except 

in the event that an Away Protected Bid 

is crossing an Away Protected Offer, the 

lower threshold price is equal to the 

greater of five cents ($0.05) or one half 

of a percent (0.5%) lower than the 

highest Away Protected Bid.15

2. Statutory Basis 

IEX believes that the proposed rule 

change is consistent with the provisions 

of Section 6(b) 16 of the Act in general, 

and furthers the objectives of Section 

6(b)(5) of the Act 17 in particular, in that 

it is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, 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. 

The Exchange believes it is consistent 

with the protection of investors and the 

public interest to constrain the Opening 

Process match by the IEX Order Collar 

price range because executions outside 

of the Order Collar price range are 

significantly dislocated from recent 

trading activity (as measured by the 

Order Collar Reference Price), and often 

are the result of erroneous system 

processing or manual trading errors. The 

Exchange also notes that executions 

outside of the IEX Order Collar price 

range often meet the clearly erroneous 

criteria and are therefore eligible to be 

reviewed for cancellation pursuant to 

Rule 11.270. Thus, the Exchange 

believes that applying the IEX Order 

Collar to the cross price in connection 

with the Opening Match is consistent 

with the protection of investors and the 

public interest because it is designed to 

prevent executions at dislocated prices 

that are significantly dislocated from 

recent trading activity and may be 

canceled pursuant to Rule 11.270. 

Furthermore, the Exchange believes 

that the proposed rule change does not 

materially alter the Opening Process, 

because the Opening Process match is 

already subject to the Cross Price 

Constraint. Instead, the Exchange 

believes the proposed changes are 

designed to make the Cross Price 

Constraint definition more robust by 

accounting for the rare scenarios where 

the Away Protected NBB is below the 

lower threshold of the IEX Order Collar 

price range, or the Away Protected NBO 

is above the upper threshold of the IEX 

Order Collar price range (i.e., when the 

spread between the Away Protected 

NBBO is excessively wide, such that it 

may not reflect the market for the 

security). The Exchange further believes 

that the proposed rule changes are 

consistent with the protection of 

investors and the public interest 

because the proposed changes are 

designed to avoid any potential 

confusion regarding the Opening 

Process functionality, and to make the 

Exchange’s rules more accurate, 

complete, and descriptive of the 

System’s functionality. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

IEX does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that the proposed 

changes do not impact competition in 

any respect since it is designed to avoid 

any potential confusion regarding the 

Opening Process functionality, and to 

make the Exchange’s rules more 

accurate, complete, and descriptive of 

the System’s functionality without 

materially changing the Opening 

Process. In addition, the Exchange 

believes there will be no impact on 

intra-market competition, as the 

proposed changes will apply equally to 

all Members and therefore no new 

burdens are being proposed. 

Furthermore, the Exchange believes 

there will be no impact on intra-market 

competition because as discussed above, 

the proposed changes to the Cross Price 

Constraint do not impact the relative 

execution priority of orders eligible for 

the Cross Book, as the constraint is not 

applied at the order level but instead to 

the cross price in connection with the 

Opening Match. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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 


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42540 Federal Register / Vol. 83, No. 163 / Wednesday, August 22, 2018 / Notices 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and 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. 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 23 15 U.S.C. 78s(b)(2)(B). 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 34–83545 

(June 28, 2018), 83 FR 31244 (July 3, 2018) (SR– 

ICC–2018–007) (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 18 and Rule 19b– 

4(f)(6) thereunder.19

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 20 normally does not become 

operative for 30 days after the date of its 

filing. However, pursuant to Rule 19b– 

4(f)(6)(iii),21 the Commission may 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. In its 

filing with the Commission, the 

Exchange has asked the Commission to 

waive the 30-day operative delay so that 

the proposed rule change may become 

operative upon filing. The Exchange 

represents that the proposed rule change 

would protect against executions in the 

Opening Process that are significantly 

disclocated from recent trading activity 

and may be cancelled pursuant to Rule 

11.270. In addition, the Exchange notes 

that while the proposed change to the 

Cross Price Constraint may affect the 

cross price in limited circumstances, 

there will be no change to the relative 

priority of execution for Cross Eligible 

Orders. Furthermore, the Exchange 

states that waiver of the operative delay 

would allow the Exchange to update its 

rules without delay to avoid potential 

confusion among market participants 

regarding the Exchange’s Opening 

Process functionality and immediately 

protect against dislocated executions in 

the Opening Process. The Commission 

does not believe that any new or novel 

issues are raised by the proposal. For 

these reasons, the Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest. 

Therefore, the Commission hereby 

waives the operative delay and 

designates the proposed rule change 

operative upon filing.22

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 

under Section 19(b)(2)(B) of the Act 23 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– 

IEX–2018–18 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–IEX–2018–18. 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–IEX–2018–18, and should 

be submitted on or before September 12, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18060 Filed 8–21–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83864; File No. SR–ICC– 

2018–007] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Notice of 

Designation of Longer Period for 

Commission Action on Proposed Rule 

Change Relating to the Clearance of an 

Additional Credit Default Swap 

Contract 

August 16, 2018. 

On June 13, 2018, ICE Clear Credit 

LLC (‘‘ICC’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

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

proposed rule change to provide for the 

clearance of an additional credit default 

swap contract (File No. SR–ICC–2018– 

007). The proposed rule change was 

published for comment in the Federal 

Register on July 3, 2018.3 To date, the 

Commission has not received comments 

on the proposed rule change. 

Section 19(b)(2) of the Act 4 provides 

that within 45 days of the publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day from the 

publication of notice of filing of this 


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