43942 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices 

84See Ahn Letter, supra note 9. 

85See Fink Letter, supra note 9; Kaleda Letter, 

supra note 9; Moberg Letter, supra note 9; Rousseau 

Letter, supra note 9; Santos Letter, supra note 9. 

86See Desai Letter, supra note 9, at 1; Kumar 

Letter, supra note 9. 

87See Desai Letter, supra note 9, at 1; Malkin 

Letter, supra note 9, at 1. 

88See Desai Letter, supra note 9, at 1; Fitzgerald 

Letter, supra note 9, at 1; Kumar Letter, supra note 

9; Malkin Letter, supra note 9, at 1; Mohammed 

Letter, supra note 9. 

89See Desai Letter, supra note 9, at 1; Malkin 

Letter, supra note 9, at 1; Kumar Letter, supra note 

9; NERA Letter, supra note 9, at 1–2, 3, 5. 

90See Santos Letter, supra note 9. 

91See Desai Letter, supra note 9, at 1, 2; Kumar 

Letter, supra note 9; Santos Letter, supra note 9. 

92 In disapproving the proposed rule change, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. See 

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

93 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The terms ‘‘Priority 2—Display Orders’’ and 

‘‘Priority 3—Non-Display Orders’’ are defined in 

Rule 7.36(e). 

investors and the markets, the proposed 

rule change may still fail to meet other 

requirements under the Exchange Act. 

For the reasons discussed above, the 

Exchange has not met its burden of 

demonstrating an adequate basis in the 

record for the Commission to find that 

the proposal is consistent with 

Exchange Act Section 6(b)(5), and, 

accordingly, the Commission must 

disapprove the proposal. 

D. Other Comments 

Comment letters also addressed the 

intrinsic value of bitcoin; 84 the desire of 

investors to gain access to bitcoin 

through an ETP; 85 investor 

understanding about bitcoin; 86 the 

volatility of bitcoin prices,87 the 

regulation of bitcoin spot markets,88 the 

operation and valuation of the proposed 

ETPs,89 the potential impact of 

Commission approval of the proposed 

ETP on the price of bitcoin,90 and the 

legitimacy that Commission approval of 

the proposed ETP might confer upon 

bitcoin as a digital asset.91 Ultimately, 

however, additional discussion of these 

tangential topics is unnecessary, as they 

do not bear on the basis for the 

Commission’s decision to disapprove 

the proposal. 

E. Basis for Disapproval 

The record before the Commission 

does not provide a basis for the 

Commission to conclude that the 

Exchange has met its burden under the 

Exchange Act and the Commission’s 

Rules of Practice to demonstrate that its 

proposed rule change is consistent with 

Exchange Act Section 6(b)(5).92

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

Section 19(b)(2) of the Exchange Act, 

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with Section 6(b)(5) of the 

Exchange Act. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act, 

that proposed rule change SR– 

NYSEArca–2017–139 is disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.93

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18572 Filed 8–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83900; File No. SR– 

NYSENAT–2018–19] 

Self-Regulatory Organizations; NYSE 

National, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 7.31 

Relating to Reserve Orders and ReName Two Order Types 

August 22, 2018. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 9, 

2018, NYSE National, Inc. (‘‘Exchange’’ 

or ‘‘NYSE National’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. 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 

Rule 7.31 relating to Reserve Orders and 

re-name two order types. The proposed 

rule change is available on the 

Exchange’s website at www.nyse.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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 7.31 relating to Reserve Orders and 

re-name two order types. 

Background 

Rule 7.31(d)(1) defines a Reserve 

Order as a Limit or Inside Limit Order 

with a quantity of the size displayed 

and with a reserve quantity of the size 

(‘‘reserve interest’’) that is not 

displayed. The displayed quantity of a 

Reserve Order is ranked Priority 2— 

Display Orders and the reserve interest 

is ranked Priority 3—Non-Display 

Orders.4 Rule 7.31(d)(1)(A) provides 

that on entry, the display quantity of a 

Reserve Order must be entered in round 

lots and the displayed portion of a 

Reserve Order will be replenished 

following any execution. That rule 

further provides that the Exchange will 

display the full size of the Reserve 

Order when the unfilled quantity is less 

than the minimum display size for the 

order. Rule 7.31(d)(1)(B) provides that 

each time a Reserve Order is 

replenished from reserve interest, a new 

working time is assigned to the 

replenished quantity of the Reserve 

Order, while the reserve interest retains 

the working time of original order entry. 

Pursuant to Rule 7.31(d)(1)(C), a Reserve 

Order must be designated Day and may 

be combined with a Limit Non-Routable 

Order or a Primary Pegged Order. 

Rule 7.31(d)(2) defines a ‘‘Limit NonDisplayed Order,’’ which is a Limit 

Order that is not displayed and does not 

route. Rule 7.31(e)(1) defines a ‘‘Limit 

Non-Routable Order,’’ which is a Limit 

Order that does not route. 


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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices 43943 

5See Securities Exchange Act Release No. 83768 

(August 3, 2018), 83 FR 39488 (August 9, 2018) 

(SR–NYSE–2018–26) (Approval Order). 

6See Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule 

11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’) 

Rule 7503(h). 

Proposed Rule Change Relating to Order 

Type Names 

The Exchange proposes nonsubstantive amendments to Rules 7.31 

and 7.46 to re-name the ‘‘Limit NonRoutable Order’’ as the ‘‘Non-Routable 

Limit Order.’’ This proposed rule 

change is based on the term used by the 

Exchange’s affiliate, NYSE American 

LLC (‘‘NYSE American’’) for the same 

order type. 

The Exchange also proposes nonsubstantive amendments to Rules 7.31 

and 7.46 to re-name the ‘‘Limit NonDisplayed Order’’ as the ‘‘NonDisplayed Limit Order.’’ In both cases, 

the Exchange believes that it promotes 

clarity and consistency in its rules to 

move the respective modifier for each of 

these rules before the term ‘‘Limit 

Order.’’ 

Proposed Rule Change Relating to 

Reserve Orders 

The Exchange proposes to amend 

Rule 7.31(d)(1) to change the manner by 

which the display portion of a Reserve 

Order would be replenished. As 

proposed, rather than replenishing the 

display quantity following any 

execution, the Exchange proposes to 

replenish the Reserve Order when the 

display quantity is decremented to 

below a round lot. The changes that the 

Exchange is proposing to Rule 7.31 

relating to Reserve Orders (and Primary 

Pegged Orders) are identical to changes 

that were recently approved for the 

Exchange’s affiliate, New York Stock 

Exchange LLC (‘‘NYSE’’).5 In addition, 

the proposed changes to how Reserve 

Orders would be replenished are 

consistent with how Reserve Orders are 

replenished on other equity exchanges.6

As is currently the case, the replenish 

quantity would be the minimum display 

size of the order or the remaining 

quantity of reserve interest if it is less 

than the minimum display quantity. To 

reflect this functionality, the Exchange 

proposes that Rule 7.31(d)(1)(A) would 

be amended as follows (deleted text 

bracketed; new text underlined): 

(A) On entry, the display quantity of 

a Reserve Order must be entered in 

round lots. The displayed portion of a 

Reserve Order will be replenished when 

the display quantity is decremented to 

below a round lot. The replenish 

quantity will be the minimum display 

quantity of the order or the remaining 

quantity of the reserve interest if it is 

less than the minimum display 

quantity[following any execution. The 

Exchange will display the full size of 

the Reserve Order when the unfilled 

quantity is less than the minimum 

display size for the order]. 

Under current functionality, because 

the replenished quantity is assigned a 

new working time, it is feasible for a 

single Reserve Order to have multiple 

replenished quantities with separate 

working times, each, a ‘‘child’’ order. 

The proposed change to limit when a 

Reserve Order would be replenished to 

when the display quantity is 

decremented to below a round lot only 

would reduce the number of child 

orders for a Reserve Order. The 

Exchange believes that minimizing the 

number of child orders for a Reserve 

Order would reduce the potential for 

market participants to detect that a child 

order displayed on the Exchange’s 

proprietary market data feeds is 

associated with a Reserve Order. 

In most cases, the maximum number 

of child orders for a Reserve Order 

would be two. For example, assume a 

Reserve Order to buy has a display 

quantity of 100 shares and an additional 

200 shares of reserve interest. A sell 

order of 50 shares would trade with the 

display quantity of such Reserve Order, 

which would decrement the display 

quantity to 50 shares. As proposed, the 

Exchange would then replenish the 

Reserve Order with 100 shares from the 

reserve interest, i.e., the minimum 

display size for the order. After this 

second replenishment, the Reserve 

Order would have two child orders, one 

for 50 shares, the other for 100 shares, 

each with different working times. 

Generally, when there are two child 

orders, the older child order of less than 

a round lot will be executed before the 

second child order. However, there are 

limited circumstances when a Reserve 

Order could have two child orders that 

equal less than a round lot, which, as 

proposed, would trigger a 

replenishment. For such circumstance, 

the Exchange proposes that when a 

Reserve Order is replenished from 

reserve interest and already has two 

child orders that equal less than a round 

lot, the child order with the later 

working time would be reassigned the 

new working time assigned to the next 

replenished quantity. 

For example, taking the same Reserve 

Order as above: 

• If 100 shares of such order (‘‘A’’) are 

routed on arrival, it would have a 

display quantity of 100 shares (‘‘B’’) and 

100 shares in reserve interest. 

• While ‘‘A’’ is routed, a sell order of 

50 shares would trade with ‘‘B,’’ 

decrementing ‘‘B’’ to 50 shares and the 

Reserve Order would be replenished 

from reserve interest, creating a second 

child order ‘‘C’’ of 100 shares. 

• Next, the Exchange receives a 

request to reduce the size of the Reserve 

Order from 300 shares to 230 shares. 

Because ‘‘A’’ is still routed away and 

there is no reserve interest, and as 

described in more detail below, this 70 

share reduction in size would be 

applied against the most recent child 

order of ‘‘C,’’ which would be reduced 

to 30 shares. Together with ‘‘B,’’ which 

would still be 50 shares, the two 

displayed child orders would equal less 

than a round lot, but with no quantity 

in reserve interest. 

• Next, ‘‘A’’ is returned unexecuted, 

and as described below, becomes 

reserve interest and is evaluated for 

replenishment. Because the total display 

quantity (‘‘B’’ + ‘‘C’’) is less than a 

round lot, this Reserve Order would be 

replenished. But because the Reserve 

Order already has two child orders, the 

child order with the later working time, 

‘‘C,’’ would be returned to the reserve 

interest, which would now have a 

quantity of 130 shares (‘‘C’’ + ‘‘A’’), and 

the Reserve Order would be replenished 

with 100 shares from the reserve interest 

with a new working time, which would 

be a new child order ‘‘D.’’ 

• After this replenishment, this 

Reserve Order would have two child 

orders of ‘‘B’’ for 50 shares and ‘‘D’’ for 

100 shares, and a reserve interest of 30 

shares. 

To effect these changes, the Exchange 

proposes to amend current Rule 

7.31(d)(1)(B) to specify that each display 

quantity of a Reserve Order with a 

different working time would be 

referred to as a child order. The 

Exchange further proposes new Rule 

7.31(d)(1)(B)(i) that would provide that 

when a Reserve Order is replenished 

from reserve interest and already has 

two child orders that equal less than a 

round lot, the child order with the later 

working time would rejoin the reserve 

interest and be assigned the new 

working time assigned to the next 

replenished quantity. 

The Exchange also proposes new Rule 

7.31(d)(1)(B)(ii) to provide that if a 

Reserve Order is not routable (i.e., is 

combined with either a Non-Routable 

Limit Order or a Primary Pegged Order), 

the replenish quantity would be 

assigned a display and working price 

consistent with the instructions for the 

order, which represents current 

functionality. For example, for a NonRoutable Limit Reserve Order, if the 

display price would lock or cross the 

contra-side PBBO, the replenished 

quantity would be assigned a display 

price one MPV worse than the PBBO 


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43944 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices 

7The term ‘‘PBBO’’ is defined in Rule 1.1. The 

term ‘‘MPV’’ is defined in Rule 7.6. 

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

9 15 U.S.C. 78f(b)(5). 

10See supra notes 5 and 6. 

and a working price equal to the contraside PBBO, as provided for in Rule 

7.31(e)(1)(A)(i).7 The Exchange believes 

that this proposed rule text would 

provide transparency and clarity to 

Exchange rules. 

For a Primary Pegged Reserve Order, 

the Exchange proposes that the 

replenished quantity would follow Rule 

7.31(h)(2)(B), which provides that a 

Primary Pegged Order would be rejected 

if the PBBO is locked or crossed. 

Because a Primary Pegged Reserve 

Order would have resting reserve 

interest, the Exchange proposes to 

amend Rule 7.31(h)(2)(B) to provide that 

if the PBBO is locked or crossed when 

the display quantity of a Primary Pegged 

Reserve Order is replenished, the entire 

order would be cancelled. The Exchange 

believes that cancelling the entire order 

is consistent with the current rule that 

provides that the entire order would be 

rejected on arrival if the display 

quantity would lock or cross the PBBO. 

The Exchange further proposes to add 

new subsection (D) to Rule 7.31(d)(1) to 

describe when a Reserve Order would 

be routed. As proposed, a routable 

Reserve Order would be evaluated for 

routing both on arrival and each time 

the display quantity is replenished. 

Proposed Rule 7.31(d)(1)(D)(i) would 

provide that if routing is required, the 

Exchange would route from reserve 

interest before publishing the display 

quantity. In addition, if after routing, 

there is less than a round lot available 

to display, the Exchange would wait 

until the routed quantity returns 

(executed or unexecuted) before 

publishing the display quantity. In the 

example described above, the Exchange 

would have published the display 

quantity before the routed quantity 

returned because the display quantity 

was at least a round lot. If, however, 250 

shares of a Reserve Order of 300 shares 

had been routed on arrival, because the 

unrouted quantity was less than a round 

lot (50 shares), the Exchange would wait 

for the routed quantity to return, either 

executed or unexecuted, before 

publishing the display quantity. 

The Exchange proposes this 

functionality to reduce the possibility 

for a Reserve Order to have more than 

one child order. If the Exchange did not 

wait, and instead displayed the 50 

shares when the balance of the Reserve 

Order has routed, if the 250 shares 

returns unexecuted, such Reserve Order 

would be replenished and would have 

two child orders—one for the 50 shares 

that was displayed when the order was 

entered and a second for the 100 shares 

that replenished the Reserve Order from 

the quantity that returned unexecuted. 

By contrast, by waiting for a report on 

the routed quantity, if the routed 

quantity was not executed, the 

Exchange would display the minimum 

display quantity as a single child order. 

If the routed quantity was executed, the 

Exchange would display the 50 shares, 

but only because that would be the full 

remaining quantity of the Reserve 

Order. 

Proposed Rule 7.31(d)(1)(D)(ii) would 

provide that any quantity of a Reserve 

Order that is returned unexecuted 

would join the working time of the 

reserve interest, which is current 

functionality. If there is no quantity of 

reserve interest to join, the returned 

quantity would be assigned a new 

working time as reserve interest. As 

further proposed, in either case, such 

reserve interest would replenish the 

display quantity as provided for in 

Rules 7.31(d)(1)(A) and (B). The 

Exchange believes that this proposed 

rule text would promote transparency 

and clarity in Exchange rules. The 

Exchange further believes it is 

appropriate for a returned quantity of a 

Reserve Order to join the reserve 

interest first because the order may not 

be eligible for a replenishment to the 

display quantity. 

Proposed Rule 7.31(d)(1)(E) would 

provide that a request to reduce in size 

a Reserve Order would cancel the 

reserve interest before canceling the 

display quantity and if there is more 

than one child order, the child order 

with the later working time would be 

cancelled first. This represents current 

functionality and the example set forth 

above demonstrates how this would 

function. The Exchange believes that 

canceling reserve interest before a child 

order would promote the display of 

liquidity on an exchange. The Exchange 

further believes that canceling a latertimed child order would respect the 

time priority of the first child order, and 

any priority such child order may have 

for allocations. 

* * * * * 

Because of the technology changes 

associated with the proposed rule 

changes relating to Reserve Orders, the 

Exchange will announce by Trader 

Update when these changes will be 

implemented, which the Exchange 

anticipates will be in the third quarter 

of 2018. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),8 in general, and furthers the 

objectives of Section 6(b)(5),9 in 

particular, because it is 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 facilitating 

transactions in securities, to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed rule change to replenish a 

Reserve Order only if the display 

quantity is decremented to below a 

round lot would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system because it would reduce the 

number of child orders associated with 

a single Reserve Order. By reducing the 

number of child orders, the Exchange 

believes it would reduce the potential 

for market participants to detect that a 

child order is associated with a Reserve 

Order. The proposed changes to Reserve 

Orders and Primary Pegged Orders are 

identical to recently approved changes 

to the rules of its affiliated exchange, 

NYSE, and how a Reserve Order would 

be replenished is also consistent with 

how Reserve Orders function on BZX 

and Nasdaq.10

For similar reasons, the Exchange 

believes that if a Reserve Order has two 

child orders that equal less than a round 

lot, it would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system to assign a new working time to 

the later child order so that when such 

Reserve Order is replenished, it would 

have a maximum of only two child 

orders. The Exchange believes that this 

proposed change would streamline the 

operation of Reserve Orders and meet 

the objective to reduce the potential for 

market participants to be able to identify 

that a child order is associated with a 

Reserve Order. 

The Exchange further believes that the 

proposed rule change to evaluate a 

Reserve Order for routing both on 

arrival and when replenishing would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would reduce the potential for the 

display quantity of a Reserve Order to 

lock or cross the PBBO of an away 

market. The Exchange further believes 

that routing from reserve interest would 


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11 15 U.S.C. 78s(b)(3)(A)(iii). 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6). 

14 17 CFR 240.19b–4(f)(6)(iii). 15 15 U.S.C. 78s(b)(2)(B). 

promote the display of liquidity on the 

Exchange, because if there is at least a 

round lot remaining of a Reserve Order 

that is not routed, the Exchange would 

display that quantity. The Exchange also 

believes that it would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system to wait to 

display a Reserve Order if there is less 

than a round lot remaining after routing 

because it would reduce the potential 

for such Reserve Order to have more 

than one child order. Finally, the 

Exchange believes that joining any 

quantity of a Reserve Order that is 

returned unexecuted with reserve 

interest first would be consistent with 

the proposed replenishment logic that a 

Reserve Order would be replenished 

only if the display quantity is 

decremented to below a round lot. 

The Exchange believes that it would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system to apply 

a request to reduce in size a Reserve 

Order to the reserve interest first, and 

then next to the child order with the 

later working time, because such 

functionality would promote the display 

of liquidity on the Exchange and honor 

the priority of the first child order with 

the earlier working time. The Exchange 

believes that including this existing 

functionality in Rule 7.31 would 

promote transparency and clarity in 

Exchange rules. 

The Exchange believes that the 

proposed change to Primary Pegged 

Reserve Orders would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

similar to how a Primary Pegged Order 

would function on arrival, if the 

replenish quantity of a Primary Pegged 

Reserve Order would lock or cross the 

PBBO, the entire Reserve Order would 

be cancelled. The Exchange believes 

that by cancelling the entire order, the 

Exchange would reduce the potential for 

such order to be displayed at a price 

that would lock or cross the PBBO. 

The Exchange believes that the 

proposed non-substantive amendments 

to rename the ‘‘Limit Non-Displayed 

Order’’ as the ‘‘Non-Displayed Limit 

Order’’ and to rename the ‘‘Limit NonRoutable Order’’ as the ‘‘Non-Routable 

Limit Order’’ would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

the proposed changes are designed to 

promote clarity and consistency in 

Exchange rules by moving the modifier 

describing the function of the order type 

before the term ‘‘Limit Order.’’ 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not designed to 

address any competitive issues. Rather, 

the proposed rule change to Reserve 

Orders is designed to reduce the 

potential for market participants to 

identify that a child order is related to 

a Reserve Order. The additional 

proposed rule changes are nonsubstantive and are designed to promote 

clarity and consistency in Exchange 

rules. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 11 and Rule 

19b–4(f)(6) thereunder.12 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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

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

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 13 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),14 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. 

At any time within 60 days of the 

filing of such 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) 15 of the Act 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– 

NYSENAT–2018–19 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–NYSENAT–2018–19. 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 


daltland on DSKBBV9HB2PROD with NOTICES
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16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

submissions should refer to File 

Number SR–NYSENAT–2018–19 and 

should be submitted on or before 

September 18, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18571 Filed 8–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83909; File No. SR–CBOE– 

2018–061] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 5.5A, 

Select Provisions of Options Listing 

Procedures Plan, 5.8, Long-Term 

Equity Option Series (LEAPS) and Rule 

24.9, Terms of Index Option Contracts 

August 22, 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 

20, 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 and II below, which Items have 

been prepared by the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 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 

Rules 5.5A, 5.8, and 24.9. 

(additions are italicized; deletions are 

[bracketed]) 

* * * * * 

Rules of Cboe Exchange, Inc. 

* * * * * 

Rule 5.5A. Select Provisions of Options 

Listing Procedures Plan 

(a) No change. 

(b) The exercise price of each option 

series listed by the Exchange shall be 

fixed at a price per share which is 

reasonably close to the price of the 

underlying equity security, Exchange 

Traded Fund (‘‘ETF’’ and referred to as 

a ‘‘Unit’’ in Rule 5.3) or Trust Issued 

Receipt (‘‘TIR’’) at or about the time the 

Exchange determines to list such series. 

Additionally, 

(i) Exercise Price Range Limitations— 

Except as provided in subparagraphs (ii) 

through (iv) below, if the price of the 

underlying security is less than or equal 

to $20, the Exchange shall not list new 

option series with an exercise price 

more than 100% above or below the 

price of the underlying security. 

However, the foregoing restriction shall 

not prohibit the listing of at least three 

exercise prices per expiration month in 

an option class. Except as provided in 

Rule 5.5(d)(4), if the price of the 

underlying security is greater than $20, 

the Exchange shall not list new option 

series with an exercise price more than 

50% above or below the price of the 

underlying security. 

The price of the underlying security is 

measured by: 

(1) For intra-day add-on series and 

next-day series additions, the daily high 

and low of all prices reported by all 

national securities exchanges; 

(2) for new expiration months, the 

daily high and low of all prices reported 

by all national securities exchanges on 

the day the Exchange determines its 

preliminary notification of new series; 

[and] 

(3) for option series to be added as a 

result of pre-market trading, the most 

recent share price reported by all 

national securities exchanges between 

7:45 a.m. and 8:30 a.m. (Chicago 

time)[.]; and 

(4) for option series to be added based 

on trading following regular trading 

hours, the most recent share price 

reported by all national securities 

exchanges between 3:15 p.m. and 5:00 

p.m. (Chicago time). 

(ii)–(vi) No change. 

* * * * * 

Rule 5.8. Long-Term Equity Option 

Series (LEAPS) 

(a) No change. 

(b) [When a new equity LEAPS series 

is listed, such series will be opened for 

trading either when there is buying or 

selling interest, or 40 minutes prior to 

the close, whichever occurs first. No 

quotations will be posted for such 

option series until they are opened for 

trading. 

(c)] With regard to the listing of new 

January LEAPS series on equity option 

classes, options on Exchange Traded 

Funds (‘‘ETFs’’ and referred to as 

‘‘Units’’ in Rule 5.3), or options on Trust 

Issued Receipts (‘‘TIRs’’), the Exchange 

shall not add new LEAP series on a 

currently listed and traded option class 

earlier than the Monday prior to the 

September expiration (which is 28 

months before the expiration)[: 

(i) Earlier than September (which is 

28 months before the expiration), for an 

option class on the January expiration 

cycle; 

(ii) Earlier than October (which is 27 

months before expiration), for an option 

class on the February expiration cycle; 

and 

(iii) Earlier than November (which is 

26 months before expiration), for an 

option class on the March expiration 

cycle]. 

Pursuant to the Options Listing 

Procedures Plan, exchanges that list and 

trade the same equity option class, ETF 

option class, or TIR option class are 

authorized to jointly determine and 

coordinate with the Clearing 

Corporation on the date of introduction 

of new LEAP series for that option class 

consistent with this paragraph ([c]b). 

([d]c) The Exchange shall not list new 

LEAP series on equity option classes, 

options on ETFs, or options on TIRs in 

a new expiration year if the national 

average daily contract volume, 

excluding LEAP and FLEX series, for 

that option class during the preceding 

three calendar months is less than 1,000 

contracts, unless the new LEAP series 

has an expiration year that has already 

been listed on another exchange for that 

option class. The preceding volume 

threshold does not apply during the first 

six months an equity option class, 

option on an ETF, or option on a TIR 

is listed on any exchange. 

* * * * * 

Rule 24.9. Terms of Index Option 

Contracts 

(a) No change. 

(b) Long-Term Index Option Series 

(‘‘LEAPS’’). 

(1) Notwithstanding the provisions of 

Paragraph (a)(2) above, the Exchange 

may list long-term index option series 

that expire from 12 to 180 months from 

the date of issuance. 

(A) Index LEAPS may be based on 

either the full or reduced value of the 

underlying index. 

(B) There may be up to 10 expiration 

months, none further out than onehundred eighty (180) months. 

[(B) When a new Index LEAPS series 

is listed, such series will be opened for 

trading either when there is buying or 

selling interest, or 40 minutes prior to 

the close, whichever occurs first. No 

quotations will be posted for such 


daltland on DSKBBV9HB2PROD with NOTICES