[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]
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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.
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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 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\
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\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.
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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.
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\5\ 15 U.S.C. 78f(b).
\6\ 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. 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\
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\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.
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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-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\
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\9\ 17 CFR 200.30-3(a)(12).
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Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-06912 Filed 4-4-18; 8:45 am]
BILLING CODE 8011-01-P