Federal Register / Vol. 83, No. 176 / Tuesday, September 11, 2018 / Notices 46001 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 81293 

(August 2, 2017), 82 FR 37138 (August 8, 2017) 

(approving SR–Phlx–2017–04). 

4See Securities Exchange Act Release No. 82341 

(December 15, 2017), 82 FR 60651 (December 21, 

2017) (SR–Phlx–2017–79). In its proposed rule 

change to adopt a nonstandard expirations pilot 

program, the Exchange noted that it anticipated 

filing a proposed rule change in the near future to 

move the NDXPM index options with standard 

third Friday of the month expiration dates to the 

NDX index option class. 

5See Rule 1101A(b)(vii), Nonstandard 

Expirations Pilot Program. 

6See Rule 1098, Complex Orders on the System, 

Section (a)(i) which provides that for purposes of 

the electronic trading of Complex Orders, a 

Complex Order is an order involving the 

simultaneous purchase and/or sale of two or more 

different options series in the same underlying 

security, priced as a net debit or credit based on the 

relative prices of the individual components, for the 

same account, for the purpose of executing a 

particular investment strategy. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84034; File No. SR–Phlx– 

2018–57] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Move the P.M.-Settled 

Nasdaq-100 Index Options Expiring on 

the Third Friday of the Month to the 

NDX Index Options Class 

September 5, 2018. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

27, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ 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 move the 

P.M.-settled Nasdaq-100 Index Options 

expiring on the third Friday of the 

month (‘‘NDXPM’’) to the NDX index 

options class. In connection with the 

move, the Exchange proposes changing 

the trading symbol for these options 

from ‘‘NDXPM’’ to ‘‘NDXP’’. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqphlx.cchwallstreet.com/, 

at the principal office of the Exchange, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange seeks to amend 

Exchange rules related to certain P.M.- 

settled options on the NASDAQ–100 

Index which have been approved by the 

Commission but which have not yet 

been listed by the Exchange.3 Currently, 

third-Friday P.M.-settled NASDAQ–100 

Index options form a separate options 

class and, if listed by the Exchange, 

would trade under the symbol 

‘‘NDXPM.’’ The Exchange now seeks to 

move these third-Friday P.M.-settled 

NASDAQ–100 Index options into the 

NASDAQ–100 (‘‘NDX’’) options class. 

The Exchange has also recently 

received Commission approval to list 

nonstandard expirations of P.M.-settled 

NASDAQ–100 Index options trading 

under the symbol ‘‘NDXP’’, also on a 

pilot basis.4 NDXP options are series of 

the NDX options class. These NDXP 

options may expire on Mondays, 

Wednesdays, Fridays (other than thirdFriday-of-the-month), and the last 

trading day of the month.5 The 

proposed rule change would facilitate a 

change to the trading symbol for P.M.- 

settled NASDAQ–100 Index options that 

have standard third Friday-of-the-month 

(‘‘third-Friday’’) expirations from 

‘‘NDXPM’’ to ‘‘NDXP.’’ 

The Exchange believes moving 

NDXPM into the NDX options class to 

trade under the NDXP symbol will have 

no adverse impact on the marketplace. 

In fact, the Exchange believes moving 

NDXPM into the NDX options class to 

trade under the NDXP symbol will have 

a positive impact on the marketplace 

and retail customers in particular. 

As previously noted, in addition to 

end-of-the-month expirations, NDXP 

options are P.M.-settled NASDAQ–100 

Index options that may expire on 

Mondays, Wednesdays, and Fridays 

(other than third-Friday-of-the-month) 

(i.e., nonstandard weekly expirations 

pursuant to Rule 1101A(b)(vii)). Trading 

P.M.-settled third-Friday expirations 

under the NDXP symbol will ensure 

market participants, particularly retail 

customers, have seamless access to 

P.M.-settled NASDAQ–100 Index 

options expiring every Friday of the 

month. 

Without the proposed amendments, a 

user of NDXP options could not roll an 

existing NDXP position that expires on 

a first or second Friday of a month into 

a NDXP position that expires on a thirdFriday. Thus, for NDXP users, there 

would be a gap in Friday expirations. 

Changing the NDXPM symbol to NDXP 

would remove the gap in Friday NDXP 

expirations and allow market 

participants, especially retail customers 

that are less likely to utilize both 

NDXPM and NDXP options to maintain 

exposure to Friday expirations, to have 

seamless access to P.M.-settled 

NASDAQ–100 Index options expiring 

every Friday of the month. 

In addition, offering seamless access 

to P.M.-settled NASDAQ–100 Index 

options that expire every Friday of the 

month would allow market participants 

to submit complex orders with options 

series that expire on third-Fridays and 

other Friday expirations. Without the 

proposed amendments, market 

participants would not be able to submit 

into the trading system complex orders 

that consist of NDXPM options series 

and NDXP options series because they 

are currently in separate classes.6

Although market participants would 

have the ability to submit separate 

orders to leg into a position with thirdFriday and other Friday exposure, retail 

customers would be less likely to leg 

into a position. Thus, changing the 

NDXPM symbol to NDXP would allow 

market participants, especially retail 

customers, to submit complex orders 

with options series that expire on thirdFridays and other Fridays. 

As previously noted, the Exchange 

does not believe moving NDXPM into 

the NDX options class and changing the 

NDXPM symbol to NDXP will have any 

adverse impact on market participants. 

Because the Exchange has not yet listed 

NDXPM, and because Exchange Rules 

and systems will treat NDXPM and 

NDXP the same (other than having 

separate pilot programs and listing 

schedules), the Exchange expects a 

smooth transition of NDXPM series to 

the NDXP symbol. 


daltland on DSKBBV9HB2PROD with NOTICES
46002 Federal Register / Vol. 83, No. 176 / Tuesday, September 11, 2018 / Notices 

7See e.g., Rule 1001A(c) which sets forth the 

reporting requirements for certain broad-based 

indexes that do not have position limits. 

8See Rule 1101A Commentary .05 and Securities 

Exchange Act Release No. 81293 (August 2, 2017), 

82 FR 37138 (August 8, 2017) (approving SR–Phlx– 

2017–04). 

9The NDXPM approval order provided for 

termination of the pilot on the earlier to occur of 

(i) 12 months following the date of the first listing 

of the options, or (ii) December 29, 2018. Since 

fewer than 12 months now remain in 2018, the pilot 

will terminate on December 29, 2018. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 12 Id. 

13 15 U.S.C. 78s(b)(3)(A)(iii). 

14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

Position Limits/Reporting Requirements 

In addition, since third-Friday P.M.- 

settled options trading under the NDXP 

symbol will be a new type of series 

under the NDX options class and not a 

new options class, all third-Friday P.M.- 

settled NDXP options will be aggregated 

together with all other standard 

expirations for applicable reporting and 

other requirements.7 The Exchange 

therefore proposes to delete language in 

Rules 1079, FLEX Index, Equity and 

Currency Options and 1001A, Position 

Limits, dealing with position limits for 

NDXPM options specifically. 

Pilot Reports 

Third-Friday P.M.-settled NASDAQ– 

100 Index options are currently 

approved to be listed on a pilot basis.8

After implementation of the proposed 

amendments, the pilot would continue 

under the same terms that originally 

established the pilot. As part of the 

pilot, the Exchange would submit 

periodic reports and annual reports that 

analyze the market impact and trading 

patterns of third-Friday P.M.-settled 

NASDAQ–100 Index options. The 

reports would provide the same data 

and analysis for third-Friday P.M.- 

settled NASDAQ–100 Index options 

trading under symbol NDXP that would 

have been submitted for third-Friday 

P.M.-settled NASDAQ–100 Index 

options trading under symbol NDXPM 

had they been listed. 

Implementation Date 

The Exchange intends to change the 

NDXPM symbol to NDXP prior to its 

listing. The Exchange does not intend to 

list NDXPM as a separate class. 

Consistent with the original NDXPM 

approval order, the pilot for listing 

third-Friday P.M.-settled NASDAQ–100 

Index options trading under symbol 

NDXP would terminate on December 29, 

2018.9

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,10 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,11

in particular, in that it is designed 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 12 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

trading P.M.-settled third-Friday 

expirations under the NDXP symbol 

rather than the separate NDXPM symbol 

will ensure market participants, 

particularly retail customers, have 

seamless access to P.M.-settled 

NASDAQ–100 Index options expiring 

every Friday of the month, which helps 

to remove impediments to and perfect 

the mechanism of a free and open 

market. The Exchange believes the 

proposed rule change will help to 

protect investors and the public interest 

by allowing market participants to enter 

options positions with the same 

underlying in one symbol that spans 

every Friday expiration in a month, thus 

providing a more efficient way to gain 

exposure and hedge risk. 

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. The 

Exchange does not believe the rule 

change will impose a burden on 

intramarket competition because all 

market participants will continue to 

have access to P.M.-settled NASDAQ– 

100 Index options expiring every Friday 

of the month and will be able to trade 

them under the NDXP symbol. The 

proposal will not impose a burden on 

intermarket competition because the 

options affected by this proposal are 

exclusive to the Exchange. 

Additionally, the Exchange does not 

believe the proposal will impose any 

burden on intermarket competition as 

market participants on other exchanges 

are welcome to become members and 

trade at Phlx if they determine that this 

proposed rule change has made Phlx 

more attractive or favorable. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 13 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.14

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

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– 

Phlx–2018–57 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–Phlx–2018–57. This file 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 176 / Tuesday, September 11, 2018 / Notices 46003 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 83367 

(June 4, 2018), 83 FR 26719 (‘‘Notice’’). 

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

5See Securities Exchange Act Release No. 83647, 

83 FR 34635 (July 20, 2018). The Commission 

designated September 6, 2018, as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

approve or disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7A Complex Customer Cross Order is comprised 

of one Public Customer Complex Order to buy and 

one Public Customer Complex Order to sell at the 

same price and for the same quantity. See proposed 

BOX Rule 7240(b)(4)(iii). 

8A Complex QCC Order is comprised of an 

originating Complex Order to buy or sell where 

each component is at least 1,000 contracts that is 

identified as being part of a qualified contingent 

trade, as defined in IM–7110–2, coupled with a 

contra-side Complex Order or orders totaling an 

equal number of contracts. See proposed BOX Rule 

7240(b)(4)(iv). A ‘‘qualified contingent trade’’ is a 

transaction consisting of two or more component 

orders, executed as agent or principal, where: (1) At 

least one component is an NMS Stock, as defined 

in Rule 600 of Regulation NMS under the Exchange 

Act; (2) all components are effected with a product 

or price contingency that either has been agreed to 

by all the respective counterparties or arranged for 

by a broker-dealer as principal or agent; (3) the 

execution of one component is contingent upon the 

execution of all other components at or near the 

same time; (4) the specific relationship between the 

component orders (e.g., the spread between the 

prices of the component orders) is determined by 

the time the contingent order is placed; (5) the 

component orders bear a derivative relationship to 

one another, represent different classes of shares of 

the same issuer, or involve the securities of 

participants in mergers or with intentions to merge 

that have been announced or cancelled; and (6) the 

transaction is fully hedged (without regard to any 

prior existing position) as a result of other 

components of the contingent trade. See BOX IM– 

7110–2. See Notice, supra note 3, for additional 

description of the proposed rule change, including 

examples demonstrating the operation of the 

proposed Complex Customer Cross and Complex 

QCC Orders. 

9See proposed BOX IM–7240–1(a)(5) and (b)(5). 

10The cBBO is the best net bid and offer price 

for a Complex Order Strategy based on the BBO on 

the BOX Book for the individual options 

components of the Strategy. See BOX Rule 

7240(a)(1). The BOX Book is the electronic book of 

orders on each single option series maintained by 

the BOX Trading Host. See BOX Rule 100(a)(10). 

11The cNBBO is the best net bid and offer price 

for a Complex Order Strategy based on the NBBO 

for the individual options components of the 

Strategy. See BOX Rule 7240(a)(3). 

12See proposed BOX Rule 7110(c)(7). 

13See proposed BOX Rule 7110(c)(7)(i) and (ii). 

14See proposed BOX Rule 7110(c)(7)(iii). BOX 

IM–7140–1 provides: ‘‘[BOX Rule 7140(b)] prevents 

an Options Participant executing agency orders to 

increase its economic gain from trading against the 

order without first giving other trading interest on 

BOX an opportunity to trade with the agency order 

pursuant to Rule 7150 (Price Improvement Period), 

Rule 7245 (Complex Order Price Improvement 

Period) or Rule 7270 (Block Trades). However, the 

Exchange recognizes that it may be possible for an 

Options Participant to establish a relationship with 

a Customer or other person (including affiliates) to 

deny agency orders the opportunity to interact on 

BOX and to realize similar economic benefits as it 

would achieve by executing agency orders as 

principal. It will be a violation of [BOX Rule 

7140(b)] for an Options Participant to circumvent 

[BOX Rule 7140(b)] by providing an opportunity for 

a Customer or other person (including affiliates) to 

Continued 

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 

a.m. and 3 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–Phlx– 

2018–57 and should be submitted on or 

before October 2, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–19641 Filed 9–10–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84031; File No. SR–BOX– 

2018–14] 

Self-Regulatory Organizations; BOX 

Options Exchange LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To Adopt Rules 

Governing the Trading of Complex 

Qualified Contingent Cross Orders and 

Complex Customer Cross Orders 

September 5, 2018. 

I. Introduction 

On May 22, 2018, BOX Options 

Exchange LLC (‘‘BOX’’ or the 

‘‘Exchange’’) 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 

adopt rules governing the trading of 

Complex Qualified Contingent Cross 

Orders (‘‘QCC’’) and Complex Customer 

Cross Orders. The proposed rule change 

was published for comment in the 

Federal Register on June 8, 2018.3 On 

July 16, 2018, pursuant to Section 

19(b)(2) of the Act,4 the Commission 

designated a longer period within which 

to approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to approve or disapprove the 

proposed rule change.5 The Commission 

has received no comment letters 

regarding the proposed rule change. 

This order institutes proceedings 

pursuant to Section 19(b)(2)(B) of the 

Act 6 to determine whether to approve 

or disapprove the proposed rule change. 

II. Description of the Proposal 

BOX has proposed to adopt rules 

governing the trading of Complex 

Customer Cross Orders 7 and Complex 

QCC Orders.8 The proposal also applies 

two existing Complex Order price 

protections, the debit/credit check and 

the maximum price protection, to the 

proposed Complex Customer Cross and 

Complex QCC Orders.9

Proposed BOX Rule 7110(c)(7) 

provides that a Complex Customer Cross 

order will be executed automatically 

upon entry provided that the execution 

(i) is at least $0.01 better than (inside) 

the cBBO 10 and any Public Customer 

Complex Order on the Complex Order 

Book; (ii) is at or better than any nonPublic Customer Complex Order on the 

Complex Order Book; and (iii) is at or 

between the cNBBO.11 The system will 

reject a Complex Customer Cross Order 

if, at the time of receipt of the Complex 

Customer Cross Order: (i) The strategy is 

subject to an ongoing auction (including 

the COPIP, Facilitation, and Solicitation 

auctions); or (ii) there is an exposed 

order on the strategy pursuant to BOX 

Rule 7240(b)(3)(B).12 Complex Customer 

Cross Orders will be cancelled 

automatically if they cannot be 

executed, and Complex Customer Cross 

Orders may only be entered in the 

minimum trading increments applicable 

to Complex Orders under BOX Rule 

7240(b)(1).13 BOX proposes to apply 

BOX IM–7140–1 to the entry and 

execution of Complex Customer Cross 

Orders.14


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