41118 Federal Register / Vol. 83, No. 160 / Friday, August 17, 2018 / Notices 

14 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

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

16 15 U.S.C. 78f(b)(8). 

17 15 U.S.C. 78s(b)(2). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Available at https://www.theice.com/ 

publicdocs/clear_credit/ICE_Clear_Credit_

Rules.pdf. Capitalized terms used herein but not 

otherwise defined have the meaning set forth in the 

ICC Rules. 

4Securities Exchange Act Release No. 34–83513 

(June 25, 2018), 83 FR 30802 (June 29, 2018) (SR– 

ICC–2018–006) (‘‘Notice’’). 

5Under the settled-to-market model, the transfer 

of Mark-to-Market Margin constitutes a settlement 

of the contract’s outstanding exposure, with the 

receiving party taking outright title to the Mark-toMarket Margin and the transferring party retaining 

no rights to such margin. Under the collateralizedto-market model, the transfer of Mark-to-Market 

Margin constitutes a pledge of collateral, such that 

the transferring party has a right to reclaim the 

collateral and the receiving party has an obligation 

to return the collateral. For further explanation of 

the settled-to-market model and collateralized-tomarket model, see Notice, 83 FR at 30803. 

6Notice, 83 FR at 30803. 

7 Id. 

8 Id. 

9 Id. 

10 Id. 

11Notice, 83 FR at 30803. 

III. Discussion and Commission’s 

Findings 

After careful review, the Commission 

finds that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.14 In particular, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with Section 6(b)(5) 

of the Act,15 which requires, among 

other things, that the rules of a national 

securities 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 

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, and that the rules not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

Commission also finds that the 

proposed rule change, as modified by 

Amendment No. 1, is consistent with 

Section 6(b)(8) of the Act,16 which 

requires that the rules of an exchange 

not impose any burden on competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As indicated above, the Commission has 

received no comment letters addressing 

the proposed rule change. 

The Commission believes that 

amending NYSE Rule 49 to require 

certain member organizations to 

participate in scheduled MWCB testing 

would enable the Exchange, 

participating member organizations, and 

others to assess the readiness of 

participating member organizations to 

respond in the event of unanticipated 

market volatility. Member organizations 

required to participate in MWCB testing 

pursuant to the proposal would be 

designated as such using the same 

standards used by the Exchange in 

determining which member 

organizations are subject to mandatory 

Regulation SCI testing. Because these 

member organizations have been 

designated by the Exchange as essential 

to the maintenance of a fair and orderly 

market, their demonstrated ability to 

halt and subsequently re-open trading in 

a manner consistent with the MWCB 

rules should contribute to the fairness 

and orderliness of the market for the 

benefit of all market participants. The 

Commission therefore believes that the 

proposal, as modified by Amendment 

No. 1, is designed to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system, and to 

protect investors and the public interest. 

Accordingly, for the reasons 

discussed above, the Commission 

believes that the Exchange’s proposal, as 

modified by Amendment No. 1, is 

consistent with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–NYSE–2018– 

31), as modified by Amendment No.1, 

be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2018–17743 Filed 8–16–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83832; File No. SR–ICC– 

2018–006] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Order Approving 

Proposed Rule Change Relating To 

Amending the ICC Clearing Rules 

Regarding Mark-to-Market Margin 

August 13, 2018. 

I. Introduction 

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 

of 1934 (‘‘Act’’),1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend the ICC Clearing Rules (the ‘‘ICC 

Rules’’) 3 to more clearly characterize 

Mark-to-Market Margin payments as 

settled-to-market rather than 

collateralized-to-market. The proposed 

rule change was published in the 

Federal Register on June 29, 2018.4 The 

Commission has not received any 

comments on the proposed rule change. 

For the reasons discussed below, the 

Commission is approving the proposed 

rule change. 

II. Description of the Proposed Rule 

Change 

The proposed rule change would 

revise Chapters 4, 8, and 20 of the ICC 

Rules to more clearly characterize Markto-Market Margin payments as 

settlement payments (‘‘settled-tomarket’’) rather than collateral 

(‘‘collateralized-to-market’’).5 The 

proposed rule change would not change 

the manner in which Mark-to-Market 

Margin is calculated, or other current 

ICC operational practices.6 Rather, the 

proposed rule change would revise 

terminology to further clarify the legal 

characterization that payments of Markto-Market Margin represent settlement 

rather than collateral payments.7 ICC 

states that these clarifying changes are 

the result of ICC’s analysis of the legal 

characterization of Mark-to-Market 

Margin payments, at the request of its 

Clearing Participants (‘‘CPs’’).8

The proposed rule change would 

revise Rule 401 to reference Mark-toMarket Margin Balance, a new term that 

is defined in Rule 404 to mean the 

aggregate amount of Mark-to-Market 

Margin paid or received.9 The new 

definition would be used in several 

calculations to describe specifics 

pertaining to the Mark-to-Market Margin 

calculation.10 For example, the 

proposed rule change would amend 

Rule 401(a), which governs House 

Margin, to state that ICC calculates a net 

amount of Mark-to-Market Margin by 

subtracting a CP’s Mark-to-Market 

Margin Balance from a CP’s Mark-toMarket Margin Requirement.11 The 

proposed rule change would make 

corresponding changes to reference 


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Federal Register / Vol. 83, No. 160 / Friday, August 17, 2018 / Notices 41119 

12 Id. 

13 Id. 

14 Id. 

15 Id. 

16 Id. 

17Notice, 83 FR at 30803. 

18 Id. 

19 Id. 

20 Id. 

21 Id. 

22 Id. 

23 Id. 

24Notice, 83 FR at 30803. 

25 Id. 

26 Id. 

27 Id. 

28Notice, 83 FR at 30803. 

Mark-to-Market Margin Balance in Rule 

401(b)(ii), which covers Client-Related 

Mark-to-Market Margin.12

As stated above, the proposed rule 

change would not modify the current 

calculation of Mark-to-Market Margin, 

or other operational practices, but, 

instead, would replace certain specifics 

relating to ICC’s Mark-to-Market Margin 

calculation with the new defined term 

Mark-to-Market Margin Balance.13 In 

addition, the proposed rule change 

would not change the manner in which 

Initial Margin is calculated, posted and 

held.14

Further, the proposed rule change 

would revise Rule 401(g) to specify that 

amounts ICC currently pays to CPs as 

interest on any Mark-to-Market Margin 

would no longer be considered interest 

but instead would be treated as a new 

payment obligation between ICC and 

CPs and referred to as the ‘‘price 

alignment amount.’’ 15 A price 

alignment amount would be 

economically equivalent to the 

‘‘interest’’ that ICC pays or charges a CP 

for any net Mark-to-Market Margin 

transferred between the parties under 

current Rule 401(g).16 Because the term 

interest may be more typically 

associated with collateral, however, the 

proposed rule change would refer to 

such an amount as price alignment to 

avoid confusion over the proper 

characterization of Mark-to-Market 

Margin as settlement payments.17 ICC 

states that such change would not affect 

ICC’s operations because ICC would 

continue to pay or charge a CP an 

amount, which would serve the same 

purpose and would be calculated 

identically, for any net Mark-to-Market 

Margin transferred between the 

parties.18

The proposed rule change would also 

clarify in proposed revisions to Rule 

401(g) that the rate ICC may pay or 

charge a CP for a price alignment 

amount on any Mark-to-Market Margin 

or interest on any Initial Margin in the 

form of cash may be negative. This 

proposed revision is intended by ICC to 

more clearly address the effect negative 

market rate environments could have on 

how such amounts might be paid or 

charged by ICC to CPs.19

The proposed rule change would add 

and clarify references to amounts that 

ICC will continue to treat as collateral 

to avoid confusion over the proper 

characterization of Mark-to-Market 

Margin under the ICC Rules. 

Specifically, the proposed rule change 

would update Rule 401(h) to provide 

that CPs may substitute, in accordance 

with the ICC Procedures and applicable 

law, Eligible Margin only for an amount 

of Initial Margin.20 CPs would no longer 

be able to substitute Eligible Margin for 

Mark-to-Market Margin because under 

the proposed rule change, ICC would 

take outright title to the Mark-to-Market 

Margin and CPs would retain no 

substitution or other rights to such 

Mark-to-Market Margin. The proposed 

changes to Rule 402, which governs 

ICC’s rights with respect to the use of 

margin, would exclude Mark-to-Market 

Margin from subsections (a) and (b), 

would remove details relating to Markto-Market Margin from subsection (b), 

and would specify subsection (c)’s 

applicability to Initial Margin. Because 

ICC’s rights with respect to Mark-toMarket Margin would now be set out in 

Rule 402(e), it would no longer be 

necessary to refer to Mark-to-Market 

Margin in Rule 402(a) and (b). To avoid 

uncertainty, the proposed rule change 

would clarify that the requirements set 

forth in Rule 406(c) regarding collateral 

for Client-Related Positions apply to 

Initial Margin.21

The proposed rule change would 

similarly add and clarify references to 

amounts that ICC would treat as settled 

to avoid confusion over the proper 

characterization of Mark-to-Market 

Margin under the ICC Rules. The 

proposed rule change would add 

language to Rule 402(e) to describe ICC’s 

rights with respect to Mark-to-Market 

Margin and more clearly state that 

Mark-to-Market Margin payments 

constitute a settlement. The proposed 

rule change would also update Rule 

401(l) to refer to settlement finality in 

relation to Mark-to-Market Margin.22

Further, the proposed rule change 

would add new subsection (c) to Rule 

404 to define Mark-to-Market Margin 

Balance as a sum equal to the Mark-toMarket Margin value transferred by the 

CP to ICC minus the Mark-to-Market 

Margin value transferred by ICC to the 

CP.23

Finally, the proposed rule change 

would make clarifications and 

conforming changes to Chapters 8 and 

20 of the ICC Rules. The proposed rule 

change would revise Rule 801(a)(i), 

which describes how ICC calculates a 

CP’s Required Contribution to the 

General Guaranty Fund, to refer to the 

transfer of Mark-to-Market Margin.24

This change would characterize Markto-Market Margin as settled, rather than 

collateral, by referring to the amount of 

Mark-to-Market Margin transferred to 

ICC in respect of a defaulting CP’s 

positions. The proposed rule change 

would not change ICC’s calculation of a 

CP’s Required Contribution, which 

would continue to take into account the 

expected loss to ICC associated with a 

CP’s default after the application of 

Initial Margin and Mark-to-Market 

Margin.25

The proposed rule change would also 

replace, in the defined term MTM in 

Rule 808, the phrase ‘‘amount of MTM 

held by any Participant or ICE Clear 

Credit’’ with a conforming reference to 

the new defined term Mark-to-Market 

Margin Balance.26 This proposed 

change would not alter the operation of 

Rule 808, which describes how and 

when ICC would implement Reduced 

Gains Distributions. 

The proposed rule change would 

replace terminology in Rule 810(e) that 

is commonly used in conjunction with 

collateral by changing the words 

‘‘posted’’ to ‘‘transferred’’ and removing 

the phrase ‘‘and be offset against’’. This 

change would avoid confusion over the 

proper characterization of Mark-toMarket Margin as settlement 

payments.27 This proposed change 

would not alter the operation of Rule 

810, which describes ICC’s termination 

of clearing operations. 

Finally, the proposed rule change 

would clarify in Rule 20–605(c)(i)(B), 

which specifies the resources to be used 

to cover losses with respect to ClientRelated Positions, that ICC would use 

the defaulting CP’s Client-Related Markto-Market Margin, to the extent not 

previously applied to pay Mark-toMarket Margin to other CPs.28 Because 

Mark-to-Market Margin would be settled 

with ICC, ICC would obtain outright 

title to the Mark-to-Market Margin and 

would be able to use the Mark-to-Market 

Margin for purposes other than 

collateralizing a CP’s position, in 

accordance with ICC’s Rules and 

applicable regulatory requirements. The 

proposed rule change would make this 

point clear and therefore clarify that 

Mark-to-Market Margin payments 

constitute settlement rather than 

collateral. 


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41120 Federal Register / Vol. 83, No. 160 / Friday, August 17, 2018 / Notices 

29 15 U.S.C. 78s(b)(2)(C). 

30 15 U.S.C. 78q–1(b)(3)(F). 

31 17 CFR 240.17Ad–22(b)(2), (d)(1). 

32 15 U.S.C. 78q–1(b)(3)(F). 33 15 U.S.C. 78q–1(b)(3)(F). 34 17 CFR 240.17Ad–22(b)(2). 

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act directs 

the Commission to approve a proposed 

rule change of a self-regulatory 

organization if it finds that such 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization.29 For 

the reasons given below, the 

Commission finds that the proposal is 

consistent with Section 17A(b)(3)(F) of 

the Act 30 and Rules 17Ad–22(b)(2) and 

17Ad–22(d)(1) thereunder.31

A. Consistency With Section 

17A(b)(3)(F) of the Act 

Section 17A(b)(3)(F) of the Act 

requires, among other things, that the 

rules of ICC be designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions 

and, to the extent applicable, derivative 

agreements, contracts, and transactions, 

as well as to assure the safeguarding of 

securities and funds which are in the 

custody or control of ICC or for which 

it is responsible, and, in general, to 

protect investors and the public 

interest.32

As described above, the proposed rule 

change would revise Chapters 4, 8, and 

20 of the ICC Rules to more clearly 

characterize Mark-to-Market Margin 

payments as settlement payments rather 

than collateral. To facilitate this 

characterization, the proposed rule 

change would introduce a new 

definition, Mark-to-Market Margin 

Balance, and a new concept, price 

alignment amount. Moreover, the 

proposed rule change would update the 

terminology used in certain rules, and 

the application of certain rules to Markto-Market Margin, in light of the 

characterization of Mark-to-Market 

Margin payments as settlement 

payments rather than collateral. The 

proposed rule change would not change 

the manner in which Mark-to-Market 

Margin is calculated, or other current 

ICC operational practices. 

The Commission believes that by 

clarifying the treatment of Mark-toMarket Margin payments, the proposed 

rule change would help ensure that 

Mark-to-Market margin is treated as 

settled payments rather than collateral, 

consistent with ICC’s intention. In doing 

so, the Commission further believes the 

proposed rule change would clarify that 

ICC has all rights and outright title to 

such Mark-to-Market Margin. The 

Commission believes the proposed rule 

change would clarify ICC’s interest in 

and rights to Mark-to-Market Margin, 

thereby supporting ICC’s ability to use 

Mark-to-Market Margin to cover credit 

and market losses. 

The Commission further believes that 

in this regard the proposed rule change 

would remove potential confusion 

regarding the treatment of Mark-toMarket Margin, thereby helping to 

improve the operation and effectiveness 

of ICC’s margin system. Given that an 

effective margin system is necessary to 

manage ICC’s credit exposures to its CPs 

and the risks associated with clearing 

security based swap-related portfolios, 

the Commission believes that the 

proposed rule change would help 

improve ICC’s ability to avoid the losses 

that could result from the 

mismanagement of credit exposures and 

the risks associated with clearing 

security based swap-related portfolios. 

Because such losses could disrupt ICC’s 

ability to promptly and accurately clear 

security based swap transactions, the 

Commission believes that the proposed 

rule change, by improving the operation 

and effectiveness of ICC’s margin 

system, would thereby help promote the 

prompt and accurate clearance and 

settlement of securities transactions. 

Similarly, given that mismanagement 

of ICC’s credit exposures to its CPs and 

the risks associated with clearing 

security based swap-related portfolios 

could cause ICC to realize losses on 

such portfolios and threaten ICC’s 

ability to operate, thereby threatening 

access to securities and funds in ICC’s 

control, the Commission believes that 

the proposed rule change would help 

assure the safeguarding of securities and 

funds which are in the custody or 

control of the ICC or for which it is 

responsible. Finally, for both of these 

reasons, the Commission believes the 

Framework would, in general, protect 

investors and the public interest. 

Therefore, the Commission finds that 

the proposed rule change would 

promote the prompt and accurate 

clearance and settlement of securities 

transactions, assure the safeguarding of 

securities and funds in ICC’s custody 

and control, and, in general, protect 

investors and the public interest, 

consistent with the Section 17A(b)(3)(F) 

of the Act.33

B. Consistency With Rule 17Ad–22(b)(2) 

Rule 17Ad–22(b)(2) requires that ICC 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to use margin 

requirements to limit its credit 

exposures to participants under normal 

market conditions and use risk-based 

models and parameters to set margin 

requirements and review such margin 

requirements and the related risk-based 

models and parameters at least 

monthly.34

As described above, the proposed rule 

change would revise Chapters 4, 8, and 

20 of the ICC Rules to more clearly 

characterize Mark-to-Market Margin 

payments as settlement payments rather 

than collateral. Specifically, the 

Proposed Rule Change would revise 

Rule 401 to reference Mark-to-Market 

Margin Balance, a new term that is 

defined in Rule 404 to mean the 

aggregate amount of Mark-to-Market 

Margin paid or received. The new 

definition would be used in Rule 401(a), 

regarding House Margin, which would 

be revised to state that ICC calculates a 

net amount of Mark-to-Market Margin 

by subtracting a CP’s Mark-to-Market 

Margin Balance from a CP’s Mark-toMarket Margin Requirement. Moreover, 

under the proposed revised Rule 401(g), 

ICC would pay or charge a CP price 

alignment, which would be 

economically equivalent to interest, on 

any Mark-to-Market Margin and interest 

on any cash Initial Margin at a rate that 

may be negative. The proposed rule 

change would not modify the current 

calculation of Mark-to-Market Margin, 

or other operational practices, but, 

instead, would replace certain specifics 

relating to ICC’s Mark-to-Market Margin 

calculation with the new defined term 

Mark-to-Market Margin Balance. 

The Commission believes that by 

clarifying the treatment of Mark-toMarket Margin payments, the proposed 

rule change would help ensure that 

Mark-to-Market margin is treated as 

settled payments rather than collateral. 

The Commission believes that in this 

regard the proposed rule change would 

help ensure that the margin system is 

operating consistently for all CPs and in 

a manner that is consistent with ICC’s 

view on the treatment of Mark-to-Market 

Margin by confirming that all Mark-toMarket Margin would be treated as 

settlement payments. In doing so, the 

Commission further believes the 

proposed rule change would clarify that 

ICC has all rights and outright title to 

such Mark-to-Market Margin. The 

Commission believes the proposed rule 

change would thereby clarify ICC’s 

interest in and rights to Mark-to-Market 

Margin, thereby supporting ICC’s ability 

to use Mark-to-Market to cover credit 

and market losses. The Commission 

therefore believes the proposed rule 

change would help ICC maintain and 


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Federal Register / Vol. 83, No. 160 / Friday, August 17, 2018 / Notices 41121 

35 17 CFR 240.17Ad–22(b)(2). 

36 17 CFR 240.17Ad–22(d)(1). 

37 17 CFR 240.17Ad–22(d)(1). 

38 15 U.S.C. 78q–1(b)(3)(F). 

39 17 CFR 240.17Ad–22(b)(2), (d)(1). 

40 15 U.S.C. 78s(b)(2). 

41 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition, and capital formation. 15 

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

42 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Pursuant to Rule 7018(a), the term 

‘‘Consolidated Volume’’ means the total 

consolidated volume reported to all consolidated 

transaction reporting plans by all exchanges and 

trade reporting facilities during a month in equity 

securities, excluding executed orders with a size of 

less than one round lot. 

enforce written policies and procedures 

reasonably designed to use margin 

requirements to limit its credit 

exposures to participants under normal 

market conditions. 

Moreover, as noted above, the 

proposed rule change resulted from a 

request by CPs for ICC to confirm it 

treats Mark-to-Market Margin as 

settlement payments. CPs therefore may 

hesitate to post Mark-to-Market Margin 

if ICC does not consistently treat such 

margin as settlement payments. Thus, 

the Commission believes the proposed 

rule change would help ICC enforce 

written policies and procedures 

reasonably designed to use margin 

requirements to limit its credit 

exposures to participants under normal 

market conditions. 

Therefore, for the above reasons the 

Commission finds that the proposed 

rule change is consistent with Rule 

17Ad–22(b)(2).35

C. Consistency With Rule 17Ad–22(d)(1) 

Rule 17Ad–22(d)(1) requires that ICC 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to provide for a 

well-founded, transparent, and 

enforceable legal framework for each 

aspect of its activities in all relevant 

jurisdictions.36

As discussed above, the proposed rule 

change would revise Chapters 4, 8, and 

20 of the ICC Rules to more clearly 

characterize Mark-to-Market Margin 

payments as settlement payments rather 

than collateral. The proposed rule 

change would also revise terminology to 

further clarify the legal characterization 

that payments of Mark-to-Market Margin 

represent settlement rather than 

collateral payments. These clarifying 

changes are the result of ICC’s analysis 

of the legal characterization of Mark-toMarket Margin payments, at the request 

of its CPs. 

Thus, ICC intends to treat Mark-toMarket Margin payments as settled 

rather than collateral, and the 

Commission believes that the proposed 

rule change’s clarifications and 

additions would help ensure that ICC’s 

margin system operates consistently 

with this intention. The Commission 

further believes that the proposed rule 

change would help ensure that the 

margin system is operating consistently 

for all CPs by confirming that all Markto-Market Margin would be treated as 

settlement payments. In ensuring the 

consistent treatment of Mark-to-Market 

Margin, the Commission believes that 

the proposed rule change would help 

ensure that the policies and procedures 

underlying ICC’s margin system provide 

a well-founded, transparent, and 

enforceable legal framework. 

Therefore, for the above reasons the 

Commission finds that the proposed 

rule change is consistent with Rule 

17Ad–22(d)(1).37

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act, and in particular, with the 

requirements of Section 17A(b)(3)(F) of 

the Act 38 and Rules 17Ad–22(b)(2) and 

17Ad–22(d)(1) thereunder.39

It is therefore ordered pursuant to 

Section 19(b)(2) of the Act 40 that the 

proposed rule change (SR–ICC–2018– 

006) be, and hereby is, approved.41

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2018–17741 Filed 8–16–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83833; File No. SR–BX– 

2018–037] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Section 

7018(a) of the Exchange’s Rules 

August 13, 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 31, 

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, 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 amend the 

Exchange’s transaction fees at Rule 

7018(a), as described further below. 

While these amendments are effective 

upon filing, the Exchange has 

designated the proposed amendments to 

be operative on August 1, 2018. 

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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

transaction fees at Rule 7018 to (i) adjust 

the volume threshold for a credit 

associated with orders that access 

liquidity that are entered by members 

that access liquidity equal to or in 

excess of a certain percentage of their 

[sic] total Consolidated Volume 3 for a 

month; and (ii) adding two credit tiers 

for orders entered by members that, 

during a given month, have a total 

volume (accessing and providing 

liquidity) equal to or exceeding 0.50% 

of total Consolidated Volume, at least 

20% more volume during that month (as 

a percentage of Consolidated Volume) 

than the member’s total volume in July 

2018, and where at least 30% of that 

20% increase in volume arises from 

adding liquidity. 


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