Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 42723 

7The Nasdaq Exchanges state that they will 

provide such notice on their websites in the same 

section they use to post their own proposed rule 

change filings pursuant to Rule 19b–4(l) within the 

timeframe required by such Rule. In addition, the 

Nasdaq Exchanges state that their website will also 

include a link to the BX website where the 

proposed rule change filings are located. Id. at 3. 

8 Id. 

9 Id. at 2. 

10See, e.g., Securities Exchange Act Release Nos. 

80338 (March 29, 2017), 82 FR 16464 (April 4, 

2017) (order granting exemptive request from MIAX 

PEARL, LLC relating to rules of Miami International 

Securities Exchange, LLC incorporated by 

reference); 72650 (July 22, 2014), 79 FR 44075 (July 

29, 2014) (order granting exemptive requests from 

NASDAQ OMX BX, Inc. and the NASDAQ Stock 

Market LLC relating to rules of NASDAQ OMX 

PHLX LLC incorporated by reference); 67256 (June 

26, 2012), 77 FR 39277, 39286 (July 2, 2012) (order 

approving SR–BX–2012–030 and granting 

exemptive request relating to rules incorporated by 

reference by the BX Options rules); 61534 (February 

18, 2010), 75 FR 8760 (February 25, 2010) (order 

granting BATS Exchange, Inc.’s exemptive request 

relating to rules incorporated by reference by the 

BATS Exchange Options Market rules) (‘‘BATS 

Options Market Order’’); and 57478 (March 12, 

2008), 73 FR 14521, 14539–40 (March 18, 2008) 

(order approving SR–NASDAQ–2007–004 and SR– 

NASDAQ–2007–080, and granting exemptive 

request relating to rules incorporated by reference 

by The NASDAQ Options Market). 

11See 17 CFR 240.0–12 and Securities Exchange 

Act Release No. 39624 (February 5, 1998), 63 FR 

8101 (February 18, 1998) (‘‘Commission Procedures 

for Filing Applications for Orders for Exemptive 

Relief Pursuant to Section 36 of the Exchange Act; 

Final Rule’’). 

12See BATS Options Market Order, supra note 10 

(citing Securities Exchange Act Release No. 49260 

(February 17, 2004), 69 FR 8500 (February 24, 2004) 

(order granting exemptive request relating to rules 

incorporated by reference by several SROs) (‘‘2004 

Order’’)). 

13See BATS Options Market Order, supra note 

10, 75 FR at 8761; see also 2004 Order, supra note 

12, 69 FR at 8502. 

14 15 U.S.C. 78mm. 

15 17 CFR 200.30–3(a)(76). 

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

2 17 CFR 240.19b–4. 

The Nasdaq Exchanges represent that 

the BX Rule 8000 and 9000 Series are 

not trading rules. Moreover, the Nasdaq 

Exchanges state that in each instance, 

the Nasdaq Exchanges propose to 

incorporate by reference categories of 

rules (rather than individual rules 

within a category) that are regulatory in 

nature. The Nasdaq Exchanges will, as 

a condition of this exemption, provide 

written notice to their members 

whenever BX proposes a change to its 

Rule 8000 and 9000 Series.7 Such notice 

will alert the members of each Nasdaq 

Exchange to the proposed rule change 

and give them an opportunity to 

comment on the proposal. The Nasdaq 

Exchanges state that they will also 

inform members in writing when the 

Commission approves any such 

proposed changes.8

The Nasdaq Exchanges believe this 

exemption is necessary and appropriate, 

because it will result in the Nasdaq 

Exchanges’ rules being consistent with 

the relevant cross-referenced BX rules at 

all times, thus ensuring that the Nasdaq 

Exchanges and BX maintain a 

harmonious system of investigating, 

disciplining, and adjudicating the rights 

of their respective members, associated 

persons, and other persons subject to 

their jurisdiction. Without such an 

exemption, members of the Nasdaq 

Exchanges and BX could become subject 

to different standards for investigations 

and disciplinary actions.9

The Commission has issued 

exemptions similar to the Nasdaq 

Exchanges’ request.10 In granting one 

such exemption in 2010, the 

Commission repeated a prior, 2004 

Commission statement that it would 

consider similar future exemption 

requests from other self-regulatory 

organizations (‘‘SROs’’), provided that: 

• An SRO wishing to incorporate 

rules of another SRO by reference has 

submitted a written request for an order 

exempting it from the requirement in 

Section 19(b) of the Exchange Act to file 

proposed rule changes relating to the 

rules incorporated by reference, has 

identified the applicable originating 

SRO(s), together with the rules it wants 

to incorporate by reference, and 

otherwise has complied with the 

procedural requirements set forth in the 

Commission’s release governing 

procedures for requesting exemptive 

orders pursuant to Rule 0–12 under the 

Exchange Act; 11

• The incorporating SRO has 

requested incorporation of categories of 

rules (rather than individual rules 

within a category) that are not trading 

rules (e.g., the SRO has requested 

incorporation of rules such as margin, 

suitability, or arbitration); and 

• The incorporating SRO has 

reasonable procedures in place to 

provide written notice to its members 

each time a change is proposed to the 

incorporated rules of another SRO.12

The Commission believes that the 

Nasdaq Exchanges have satisfied each of 

these conditions. The Commission also 

believes that granting the Nasdaq 

Exchanges an exemption from the rule 

filing requirements under Section 19(b) 

of the Exchange Act will promote 

efficient use of Commission and Nasdaq 

Exchange resources by avoiding 

duplicative rule filings based on 

simultaneous changes to identical rule 

text sought by more than one SRO.13

The Commission therefore finds it 

appropriate in the public interest and 

consistent with the protection of 

investors to exempt the Nasdaq 

Exchanges from the rule filing 

requirements under Section 19(b) of the 

Exchange Act with respect to the abovedescribed rules they have incorporated 

by reference. This exemption is 

conditioned upon the Nasdaq 

Exchanges promptly providing written 

notice to their members whenever the 

BX changes a rule that the Nasdaq 

Exchanges have incorporated by 

reference. 

Accordingly, it is ordered, pursuant to 

Section 36 of the Exchange Act,14 that 

the Nasdaq Exchanges are exempt from 

the rule filing requirements of Section 

19(b) of the Exchange Act solely with 

respect to changes to the rules identified 

in their request that incorporate by 

reference certain BX rules that are the 

result of changes to such BX rules, 

provided that the Nasdaq Exchanges 

promptly provide written notice to their 

members whenever the BX proposes to 

change a rule that the Nasdaq Exchanges 

have incorporated by reference. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18278 Filed 8–22–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83876; File No. SR–C2– 

2018–017] 

Self-Regulatory Organizations; Cboe 

C2 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 C2 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘C2’’) filed with the 

Securities and Exchange Commission 

(the ‘‘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 its 

Fees Schedule relating to the Options 

Regulatory Fee. 

The text of the proposed rule change 

is also available on the Exchange’s 


daltland on DSKBBV9HB2PROD with NOTICES
42724 Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 

3The Exchange initially filed the proposed fee 

change on August 1, 2018 (SR–C2–2018–016) for 

August 1, 2018 effectiveness. On business date 

August 9, 2018, the Exchange withdrew that filing 

and submitted this filing. 

4See Securities Exchange Act Release No. 76309 

(October 29, 2015), 80 FR 68361 (November 4, 

2015). 

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

6 15 U.S.C. 78f(b)(4). 

7 15 U.S.C. 78f(b)(5). 

8 If the Exchange changes its method of funding 

regulation or if circumstances otherwise change in 

the future, the Exchange may decide to modify the 

ORF or assess a separate regulatory fee on TPH 

proprietary transactions if the Exchange deems it 

advisable. 

website (http://www.c2exchange.com/ 

Legal/), at the Exchange’s Office of the 

Secretary, 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to decrease 

the Options Regulatory Fee (‘‘ORF’’) 

from $.0014 per contract to $.0011 per 

contract in order to help ensure that 

revenue collected from the ORF, in 

combination with other regulatory fees 

and fines, meets the Exchange’s total 

regulatory costs.3

The ORF is assessed by C2 Options to 

each Trading Permit Holder (‘‘TPH’’) for 

options transactions cleared by the TPH 

that are cleared by the Options Clearing 

Corporation (OCC) in the customer 

range, regardless of the exchange on 

which the transaction occurs. In other 

words, the Exchange imposes the ORF 

on all customer-range transactions 

cleared by a TPH, even if the 

transactions do not take place on the 

Exchange. The ORF is collected by OCC 

on behalf of the Exchange from the 

Clearing Trading Permit Holder 

(‘‘CTPH’’) or non-CTPH that ultimately 

clears the transaction. With respect to 

linkage transactions, C2 Options 

reimburses its routing broker providing 

Routing Services pursuant to C2 

Options Rule 6.15 for options regulatory 

fees it incurs in connection with the 

Routing Services it provides. 

Revenue generated from ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, is 

designed to recover a material portion of 

the regulatory costs to the Exchange of 

the supervision and regulation of TPH 

customer options business. Regulatory 

costs include direct regulatory expenses 

and certain indirect expenses for work 

allocated in support of the regulatory 

function. The direct expenses include 

in-house and third party service 

provider costs to support the day to day 

regulatory work such as surveillances, 

investigations and examinations. The 

indirect expenses include support from 

such areas as human resources, legal, 

information technology and accounting. 

These indirect expenses are estimated to 

be approximately 6% of C2 Options’ 

total regulatory costs for 2018. Thus, 

direct expenses are estimated to be 

approximately 94% of total regulatory 

costs for 2018. In addition, it is C2 

Options’ practice that revenue generated 

from ORF not exceed more than 75% of 

total annual regulatory costs. These 

expectations are estimated, preliminary 

and may change. There can be no 

assurance that our final costs for 2018 

will not differ materially from these 

expectations and prior practice; 

however, 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 also notes that its 

regulatory responsibilities with respect 

to TPH compliance with options sales 

practice rules have largely been 

allocated to FINRA under a 17d-2 

agreement.4 The ORF is not designed to 

cover the cost of that options sales 

practice regulation. 

The Exchange will continue to 

monitor 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 semiannual 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 

TPHs of adjustments to the ORF via 

regulatory circular. The Exchange 

endeavors to provide TPHs with such 

notice at least 30 calendar days prior to 

the effective date of the change. 

The Exchange lastly proposes a 

couple of minor clean up changes to the 

Fees Schedule. Particularly, the ORF is 

listed as being $.0015 per contract 

through January 31, 2018 and $0.0014 

per contract effective February 1, 2018. 

As these dates have passed and the ORF 

is now simply $0.0011 per contract, the 

Exchange proposes to delete the 

reference to the ORF being $0.0015 per 

contract through January 31, 2018 and 

the February 1, 2018 effective date of 

the $0.0014 per contract ORF. 

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.5 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,6 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its TPHs 

and other persons using its facilities. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 7 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes the proposed 

fee change is reasonable because it 

would help ensure that revenue 

collected from the ORF, in combination 

with other regulatory fees and fines, 

does not exceed the Exchange’s total 

regulatory costs. Moreover, the 

Exchange believes the ORF ensures 

fairness by assessing higher fees to those 

TPHs that require more Exchange 

regulatory services based on the amount 

of customer options business they 

conduct. Regulating customer trading 

activity is much more labor intensive 

and requires greater expenditure of 

human and technical resources than 

regulating non-customer trading 

activity, which tends to be more 

automated and less labor-intensive. As a 

result, the costs associated with 

administering the customer component 

of the Exchange’s overall regulatory 

program are materially higher than the 

costs associated with administering the 

non-customer component (e.g., TPH 

proprietary transactions) of its 

regulatory program.8 The Exchange 

believes the proposed fee change is 

equitable and not unfairly 

discriminatory in that it is charged to all 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices 42725 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f). 11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

TPHs on all their transactions that clear 

in the customer range at the OCC. 

The Exchange believes the proposal to 

eliminate obsolete language with respect 

to past ORF rates maintains clarity in 

the rules and alleviates potential 

confusion, thereby 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. 

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 9 and paragraph (f) of Rule 

19b–4 10 thereunder. 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 will 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 No. SR–C2– 

2018–017 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–C2–2018–017. 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–C2–2018–017, and should be 

submitted on or before September 13, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18161 Filed 8–22–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83870; File No. SR–CBOE– 

2018–056] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing of a 

Proposed Rule Change To Adopt 

Exchange Rule 6.57, Risk-Weighted 

Assets (‘‘RWA’’) Transactions 

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 8, 

2018, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) filed 

with the Securities and Exchange 

Commission (the ‘‘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 its 

rules to adopt Rule 6.57 to facilitate the 

reduction of SPX options positions 

maintained by Cboe Options MarketMakers. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/CBOELegalRegulatory

Home.aspx), at the Exchange’s Office of 

the Secretary, 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 


daltland on DSKBBV9HB2PROD with NOTICES