Document ID: SEC-2018-0547-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market LLC
Posted Date: 2018-04-05T04:00Z

[Federal Register Volume 83, Number 66 (Thursday, April 5, 2018)]
[Notices]
[Pages 14703-14705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06912]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82969; File No. SR-NASDAQ-2018-024]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Clarify the Requirements for Delivery of a Contrary Exercise Advice

March 30, 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 20, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') 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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the rules of the Nasdaq Options 
Market LLC (``NOM''), at Chapter VIII, Exercises and Deliveries.
    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 Exchange proposes to correct Chapter VIII, Exercises and 
Deliveries, Section 1, Exercise of Options Contracts, to clarify the 
requirements for delivery of a Contrary Exercise Advice. Section 1(b) 
currently provides that option holders desiring to exercise or not 
exercise expiring options must either (i) take no action and allow 
exercise determinations to be made in accordance with the Options 
Clearing Corporation's Ex-by-Ex procedure where applicable, or (ii) 
submit a ``Contrary Exercise Advice'' to the Options Clearing 
Corporation through the participant's clearing firm. In actual 
practice, however, an option holder delivers a Contrary Exchange Advice 
to the Exchange, not to the Options Clearing Corporation. The Exchange 
therefore proposes to replace the words ``Options Clearing Corporation 
through the participants clearing firm'' in Section 1(b)(ii) with a 
reference to the Exchange and make similar, conforming changes to 
Section 1(e)(i). As amended, Section 1(b) would be consistent with 
Nasdaq ISE Rule 1100(b) which directs option holders to submit Contrary 
Exercise Advices to the Exchange (not to the Options Clearing 
Corporation).
    The Exchange proposes to further replace the words ``by the 
deadline specified in paragraph (d) below'' with the words ``as 
specified in paragraph (d) below'' given that paragraph (d) contains a 
number of requirements associated with submission of Contrary Exercise 
Advices in addition to the deadline. As revised, Section (b)(ii) tracks 
the language of ISE Rule 1100(b)(ii) which permits an options holder 
desiring to exercise or not

[[Page 14704]]

exercise expiring options to ``submit a ``Contrary Exercise Advice'' to 
the Exchange as specified in paragraph (d) . . . .'' (which, like the 
counterpart NOM paragraph (d) rule, specifies various requirements 
associated with submitting Contrary Exercise Advices).
    Finally, the Exchange proposes to make a number of nonsubstantive 
revisions to Chapter VIII which are designed simply to facilitate 
administration of the rules. References to ``NOM'' and to ``Nasdaq 
Regulation'' are proposed to be replaced with references to ``the 
Exchange.'' \3\ Substituting the word ``Exchange'' for NOM in various 
places will provide the Exchange flexibility to determine the most 
appropriate department or individual within the Exchange to oversee the 
particular rule, and will also facilitate the incorporation by 
reference of the amended rule into the rules of NOM's affiliated 
exchanges in the future.\4\
---------------------------------------------------------------------------

    \3\ The changes are proposed to be made in Section 1(b), (d), 
(e), (f), (g), (h), (i) (k) and (l), as well as in Section 2(a) and 
(b), of Chapter VIII. The Exchange notes that Chapter 11, Exercises 
and Deliveries, of the ISE Rulebook likewise uses the generic term 
``the Exchange'' throughout that chapter.
    \4\ Recently, the Exchange added a shell structure to its 
Rulebook with the purpose of improving efficiency and readability 
and to align its rules closer to those of its five sister exchanges, 
Nasdaq BX, Inc.; Nasdaq PHLX LLC; Nasdaq ISE, LLC; Nasdaq GEMX, LLC; 
and Nasdaq MRX, LLC (``Affiliated Exchanges''). See Securities 
Exchange Act Release No. 82175 (November 29, 2017), 82 FR 57494 
(December 5, 2017) (SR-NASDAQ-2017-125). The changes proposed herein 
are being made in connection with that effort, to align the NOM 
rules with those of the Affiliated Exchanges more closely.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\6\ 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, 
by identifying the correct entity to which option holders must deliver 
Contrary Exercise Advices and by substituting the word ``Exchange'' for 
NOM in various places which will enable the amended rule to be 
incorporated by reference into rules of affiliated exchanges in the 
future, which should enhance the ability of members of NOM and 
affiliated exchanges to understand and comply with a uniform set of 
rules across the exchanges.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 proposed rule changes will 
apply equally to all option holders desiring to exercise options under 
the NOM rules. Further, the proposed changes merely correct an 
incorrect reference to OCC and conform the wording of the rule more 
closely to that of a NOM rule for the sake of administrative 
convenience. The Exchange does not intend for or expect that such 
changes will have any impact on competition.

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 \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 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.
---------------------------------------------------------------------------

    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-NASDAQ-2018-024 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-2018-024. 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-2018-024, and should be submitted 
on or before April 26, 2018.

[[Page 14705]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-06912 Filed 4-4-18; 8:45 am]
 BILLING CODE 8011-01-P