Document ID: SEC-2018-0536-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq ISE, LLC
Posted Date: 2018-04-03T04:00Z

[Federal Register Volume 83, Number 64 (Tuesday, April 3, 2018)]
[Notices]
[Pages 14302-14304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06692]

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SECURITIES AND EXCHANGE COMMISSION

[Release 34-82961; File No. SR-ISE-2018-21]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Extend the 
Delay for Re-Introduction of Legging Functionality for Stock-Option 
Orders on INET by an Additional Year

March 28, 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 March 16, 2018, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II, below, which Items have 
been prepared

[[Page 14303]]

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 delay for re-introduction of 
legging functionality for Stock-Option Orders on INET by an additional 
year.
    The text of the proposed rule change is available on the Exchange's 
website at http://ise.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 delay for 
re-introduction of legging functionality for Stock-Option Orders on 
INET by an additional year. With the recent re-platform of the 
Exchange's trading system to INET, the Exchange delayed the re-
introduction of legging functionality for Stock-Option Orders.\3\ As 
such, Stock-Option Orders entered on the Exchange today are not 
automatically executed against bids and offers on the Exchange for the 
individual legs pursuant to Rule 722(b)(3)(ii)-(iii) and Supplementary 
Material .02 to Rule 722. The Exchange proposes to extend the delay of 
implementation of legging functionality for Stock-Option Orders by an 
additional year. Stock-Option Orders will continue to execute against 
other Stock-Option Orders in the complex order book, thereby providing 
an opportunity for Members to have their Stock-Option Orders executed 
on the Exchange.
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    \3\ See Securities Exchange Act Release No. 80316 (March 27, 
2017) 82 FR 16084 (March 31, 2017) (SR-ISE-2017-28).
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    When the Exchange initially delayed legging functionality for 
Stock-Option Orders, the Exchange noted that it would re-introduce 
legging for Stock-Option Orders within one year from the date of that 
filing. The Exchange filed the initial rule change on March 21, 2017, 
and the additional one year delay would therefore extend the 
implementation timeline for this functionality to March 21, 2019. The 
extended delay would provide the Exchange additional time to develop 
and test this functionality on INET. The Exchange will issue an Options 
Trader Alert notifying Members when this functionality will be 
available. Furthermore, in connection with this change, the Exchange 
also proposes to amend Rule 722 to remove language about the migration 
of symbols to INET as this migration has been completed and all symbols 
listed by the Exchange are currently trading on the INET platform.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\5\ 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. In particular, the Exchange believes 
that the proposed rule change is consistent with the protection of 
investors and the public interest as it would provide additional time 
to develop and test legging functionality for Stock-Option Orders on 
INET. Although the Exchange is now fully operating on the INET 
platform, additional time is necessary to re-implement this 
functionality to ensure a quality experience for Members. Members are 
already aware that this functionality has been delayed, and the 
Exchange will provide Members notice of the date when the functionality 
will be available. While the Exchange is proposing to extend the delay 
of legging functionality for these Stock-Option Orders, Members can 
continue to submit these orders to the Exchange where they can be 
executed against other Stock-Option Orders on the complex order book. 
No Members have notified the Exchange of significant impact on 
execution quality as a result of the delayed implementation of legging 
functionality for Stock-Option Orders, and therefore the Exchange does 
not believe that extending the delay will have a significant impact on 
market participants. This functionality will be available on or before 
March 21, 2019. Furthermore, the other proposed changes merely update 
this rule to reflect the fact that all symbols listed by ISE are 
currently traded on the INET platform.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. Specifically, the Exchange does 
not believe that the proposed one year delay will impose any 
significant burden on intra-market competition because legging for 
Stock-Option Orders will be uniformly delayed for all Members. 
Similarly, the Exchange does not believe that the proposed delay will 
impose any significant burden on inter-market competition as it does 
not impact the ability of other markets to offer or not offer competing 
functionality. The Exchange believes that providing an additional year 
to develop and test this functionality will be beneficial to members.

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 \6\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not

[[Page 14304]]

become operative for 30 days after the date of the filing. However, 
Rule 19b-4(f)(6)(iii) \8\ permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. In its filing, ISE requests that the Commission 
waive the 30-day operative delay to allow the proposed one-year 
extension of the time for re-introducing the legging functionality for 
Stock-Option Orders to begin at the conclusion of the current delay 
period, which was scheduled to end on March 21, 2018. As noted above, 
ISE states that extending the delay for re-introducing the legging 
functionality for Stock-Option Orders will provide ISE with additional 
time to develop and test the legging functionality on INET. ISE further 
states that no Members have notified ISE of a significant impact on 
execution quality as a result of the delayed implementation of the 
legging functionality for Stock-Option Orders and, accordingly, the 
Exchange does not believe that extending the delay will have a 
significant impact on market participants. The Commission believes that 
waiving the operative delay is consistent with the protection of 
investors and the public interest because it will provide ISE with 
additional time to develop and test the legging functionality for 
Stock-Option Orders. Accordingly, the Commission waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\9\
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    \8\ 17 CFR 240.19b-4(f)(6)(iii).
    \9\ 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 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-ISE-2018-21 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-ISE-2018-21. 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-ISE-2018-21, and should be submitted on 
or before April 24, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12) and (59).
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Jill Peterson,
Assistant Secretary.
[FR Doc. 2018-06692 Filed 4-2-18; 8:45 am]
 BILLING CODE 8011-01-P