Document ID: SEC-2019-0492-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2019-04-17T04:00Z

[Federal Register Volume 84, Number 74 (Wednesday, April 17, 2019)]
[Notices]
[Pages 16100-16102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07612]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85631; File No. SR-NASDAQ-2019-026]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Pilot to the Close of Business on October 18, 2019

April 11, 2019.
    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 April 5, 2019, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the pilot to the close of business 
on October 18, 2019, for certain options market rules that are linked 
to the equity market Plan to Address Extraordinary Market Volatility.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaq.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 extend the pilot to 
the close of business on October 18, 2019, for certain options market 
rules that are linked to the equity market Plan to Address 
Extraordinary Market Volatility (the ``Limit Up-Limit Down Plan'' or 
the ``Plan''). This change is being proposed in connection with a 
proposed amendment to the Limit Up-Limit Down Plan that would allow the 
Plan to continue to operate on a permanent basis (``Amendment 18'').
    In an attempt to address extraordinary market volatility in NMS 
Stock, and, in particular, events like the severe volatility on May 6, 
2010, U.S. national securities exchanges and the Financial Industry 
Regulatory Authority, Inc. (collectively, ``Participants'') drafted the

[[Page 16101]]

Plan pursuant to Rule 608 of Regulation NMS and under the Act.\3\ On 
May 31, 2012, the Commission approved the Plan, as amended, on a one-
year pilot basis.\4\ Though the Plan was primarily designed for equity 
markets, the Exchange believed it would, indirectly, potentially impact 
the options markets as well. Thus, the Exchange has previously amended 
and adopted Chapter V, Section 3(d) to ensure the option markets were 
not harmed as a result of the Plan's implementation and has implemented 
such rules on a pilot basis that has coincided with the pilot period 
for the Plan (the ``Options Pilots'').\5\
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    \3\ See Securities Exchange Act Release No. 64547 (May 25, 
2011), 76 FR 31647 (June 1, 2011) (File No. 4-631).
    \4\ See Securities and Exchange Act Release No. 67091 (May 31, 
2012) 77 FR 33498 (June 6, 2012).
    \5\ See Securities Exchange Act Release No. 69341 (April 8, 
2013), 78 FR 21996 (April 12, 2013) (SR-NASDAQ-2013-048) (amending 
Chapter V, Section (d)(iv) to coincide with the pilot period for the 
Plan).
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    The Commission recently published an Amendment 18, which would 
allow the Plan to operate on a permanent, rather than pilot, basis.\6\ 
In connection with this change, the Exchange proposes to amend the 
Options Pilots to expire at the close of business on October 18, 2019--
i.e., six months after the expiration of the current pilot period for 
the Plan. Specifically, the Exchange proposes to amend Exchange Rules 
at Chapter V, Section 3(d) to untie the Options Pilot's effectiveness 
from that of the Plan and to extend the Options Pilot's effectiveness 
to the close of business on October 18, 2019. The Exchange understands 
that the other national securities exchanges will also file similar 
proposals to extend their respective pilot programs, the substance of 
which are identical to the proposal.
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    \6\ See Securities Exchange Act Release Nos. 84843 (December 18, 
2018), 83 FR 66464 (December 26, 2018) (Amendment No. 18 Proposing 
Release).
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    The Exchange does not propose any additional changes to Exchange 
Rules at Chapter V, Section 3. The Exchange believes the benefits to 
market participants from the Options Pilots should continue on a 
limited six month pilot basis after Commission approves the Plan to 
operate on a permanent basis. Assuming the Plan is approved by the 
Commission to operate on a permanent, rather than pilot, basis the 
Exchange intends to assess whether additional changes should also be 
made to the Options Pilots. Extending the Options Pilots for an 
additional six months should provide the Exchange and other national 
securities exchanges additional time to consider further amendments to 
their rules in light of proposed Amendment 18.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, to promote just and equitable principles of 
trade, and, in general, to protect investors and the public interest 
and not to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange believes that the proposed rule 
change promotes just and equitable principles of trade in that it 
promotes transparency and uniformity across markets concerning rules 
for options markets adopted to coincide with the Plan. The Exchange 
believes that extending the Options Pilots for an additional six months 
would help assure that the rules subject to such Pilots are either 
similarly made permanent, amended or removed, following additional 
discussion and analysis by the Exchange and other national securities 
exchanges. The proposed rule change would also help assure that such 
rules are not immediately eliminated, thus furthering fair and orderly 
markets, the protection of investors and the public interest. Based on 
the foregoing, the Exchange believes the Options Pilots should continue 
to be in effect on a pilot basis while the Exchange and the other 
national securities exchanges consider and develop a permanent proposal 
for such rules.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposal would ensure 
the continued, uninterrupted operation of the Options Pilots while the 
Exchange and other national securities exchanges consider further 
amendments to these rules in light of proposed Amendment 18. The 
Exchange understands that the other national securities exchanges will 
also file similar proposals to extend their respective pilot programs, 
the substance of which are identical to this proposal. Thus, the 
proposed rule change will help to ensure consistency across market 
centers without implicating any competitive issues.

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 \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become effective and operative immediately upon filing. 
The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the current Options Pilots to continue uninterrupted, 
without any changes, while the Exchange and the other national 
securities exchanges consider and develop a permanent proposal for 
Options Pilots. For this reason, the Commission hereby waives the 30-
day operative delay and designates the proposed rule change as 
operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the

[[Page 16102]]

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 [email protected]. Please include 
File Number SR-NASDAQ-2019-026 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-NASDAQ-2019-026. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2019-026 and should be submitted 
on or before May 8, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07612 Filed 4-16-19; 8:45 am]
 BILLING CODE 8011-01-P