[Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)]
[Notices]
[Pages 51094-51097]
[FR Doc No: 2011-20904]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65103; File No. SR-CBOE-2011-078]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to the CBSX Clearly Erroneous Policy Pilot Program

August 11, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 8, 2011, the Chicago Board Options Exchange,
Incorporated (``Exchange'' or

``CBOE'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and
II, below, which Items have been prepared by the Exchange. The Exchange
has designated the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The Exchange proposes to amend a clearly erroneous policy pilot
program pertaining to the CBOE Stock Exchange (``CBSX'', the CBOE's
stock trading facility). In particular, the Exchange is seeking to
amend Rule 52.4 so that the rule will continue to operate in the same
manner after changes to the individual stock trading pause pilot are
effective. The text of the proposed rule change is available on the
Exchange's Web site (http://www.cboe.org/Legal), at the Exchange's
Office of the Secretary 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 those 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 parts of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
Background
    The Exchanges \5\ and FINRA, in consultation with the Commission,
have made changes to their respective rules in a concerted effort to
strengthen the markets after the severe market disruption that occurred
on May 6, 2010. One such effort by the Exchanges and FINRA was to adopt
a uniform trading pause process during periods of extraordinary market
volatility as a pilot in S&P 500 Index stocks (``Pause Pilot''),
approved by the Commission on June 10, 2010.\6\ On September 10, 2010,
the Commission approved the Exchanges' and FINRA's proposals to add the
securities included in the Russell 1000 Index and specified exchange
trading products (``ETPs'') to the Pause Pilot.\7\ On September 10,
2010, the Commission also approved changes proposed by the Exchanges to
amend certain of their respective rules to set forth clearer standards
and curtail their discretion with respect to breaking erroneous
trades.\8\ The changes, among other things, provided uniform treatment
of clearly erroneous execution reviews in the event of transactions
that result in the issuance of an individual stock trading pause
pursuant to the Pause Pilot on the listing market and those that occur
up to the time the trading pause message is received by the other
markets from the single plan processor responsible for consolidation
and dissemination of information for the security (``Latency Trades'').
---------------------------------------------------------------------------

    \5\ For purposes of this filing, the term ``Exchanges'' refers
collectively to BATS Exchange, Inc., BATS Y-Exchange, Inc., NASDAQ
OMX BX, Inc., Chicago Board Options Exchange, Incorporated, Chicago
Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc.,
International Securities Exchange LLC, The NASDAQ Stock Market LLC,
New York Stock Exchange LLC, NYSE Amex LLC, NYSE Arca, Inc.,
National Stock Exchange, Inc., and NASDAX [sic] OMX PHLX LLC.
    \6\ Securities Exchange Act Release Nos. 62252 (June 10, 2010),
75 FR 34186 (June 16, 2010) (File Nos. SR-BATS-2010-014; SR-EDGA-
2010- 01; SR-EDGX-2010-01; SR-BX-2010-037; SR-ISE- 2010-48; SR-NYSE-
2010-39; SR-NYSEAmex- 2010-46; SR-NYSEArca-2010-41; SR-NASDAQ- 2010-
061; SR-CHX-2010-10; SR-NSX-2010-05; and SR-CBOE-2010-047); 62251
(June 10, 2010), 75 FR 34183 (June 16, 2010) (SR-FINRA-2010- 025).
    \7\ See e.g., Securities Exchange Act Release Nos. 62884
(September 10, 2010), 75 FR 56618 (September 16, 2010) (File Nos.
SR-BATS-2010-018; SR-BX-2010-044; SR-CBOE-2010-065; SR-CHX-2010-14;
SR-EDGA-2010-05; SR-EDGX-2010-05; SR-ISE-2010-66; SR-NASDAQ-2010-
079; SR-NYSE-2010-49; SR-NYSEAmex-2010-63; SR-NYSEArca-2010-61; and
SR-NSX-2010-08); and Securities Exchange Act Release No. 62883
(September 10, 2010), 75 FR 56608 (September 16, 2010) (SR-FINRA-
2010-033).
    \8\ Securities Exchange Act Release No. 62886 (September 16
[sic], 2010), 75 FR 56613 (September 16, 2010) (File Nos. SR-BATS-
2010-016; SR-BX-2010-040; SR-CBOE-2010-056; SR-CHX-2010-13; SR-EDGA-
2010-03; SR-EDGX-2010-03; SR-ISE-2010-62; SR-NASDAQ-2010-076; SR-
NSX-2010-07; SR-NYSE-2010-47; SR-NYSEAmex-2010-60; and SR-NYSEArca-
2010-58).
---------------------------------------------------------------------------

    As part of the changes to the clearly erroneous process under Rule
52.4, Clearly Erroneous Policy, the Exchange replaced existing Rule
52.4(c)(4) with all new text to provide clarity in the clearly
erroneous process when a Pause Pilot trading pause is triggered.
Pursuant to Rule 52.4(c)(4), Latency Trades will be broken by the
Exchange if they exceed the applicable percentage from the Reference
Price, as noted in the table found under Rule 52.4(c)(1).\9\ The
Reference Price, for purposes of Rule 52.4(c)(4), is the price that
triggered a trading pause pursuant to the Pause Pilot (the ``Trading
Pause Trigger Price''). As such, Latency Trades that occur on the
Exchange would be broken by the Exchange pursuant to Rule 52.4(c)(4) if
the transaction occurred at either three, five or ten percent above the
Trading Pause Trigger Price.\10\
---------------------------------------------------------------------------

    \9\ Pursuant to Rule 52.4(c)(1), a security with a Reference
Price of greater than zero and up to an including $25 is subject to
a 10% threshold; a security with a Reference Price of greater than
$25 and up to and including $50 is subject to a 5% threshold; and a
security with a Reference Price of greater than $50 is subject to a
3% threshold.
    \10\ Rule 52.4(c)(4).
---------------------------------------------------------------------------

    On June 23, 2011, the Commission approved a joint proposal to
expand the respective Pause Pilot rules of the Exchanges and FINRA to
include all remaining NMS stocks (``Phase III Securities'').\11\ The
new pilot rules, which will be implemented on August 8, 2011, not only
expand the application of the Pause Pilot, but also apply larger
percentage moves that trigger a pause to the Phase III Securities. The
Exchange amended its Pause Pilot rule, Rule 6.3C, by adding three new
subparagraphs to address the treatment of the Phase III Securities. The
rule applicable to the original Pause Pilot securities was placed in
new Rule 6.3C.03(a). The rules applicable to the Phase III Securities
were placed in new Rules 6.3C(b) [sic] and (c). A pause under Rule
6.3C.03(b) is triggered by a 30 percent price move within a five minute
period in a Phase III Security that had a closing price on the previous
trading day of $1 or more. A pause under Rule 6.3C.03(c) is triggered
by a 50 percent price move within a five minute period in a Phase III
Security that had a closing price on the previous trading day of less
than $1. If no prior day closing price is available, the last sale
reported to the Consolidated Tape on the previous trading day is used.
---------------------------------------------------------------------------

    \11\ Securities Exchange Act Release No. 64735 (June 23, 2011),
76 FR 38243 (June 29, 2011) (File Nos. SR-BATS-2011-016; SR-BYX-
2011-011; SR-BX-2011-025; SR-CBOE-2011-049; SR-CHX-2011-09; SR-EDGA-
2011-15; SR-EDGX-2011-14; SR-FINRA-2011-023; SR-ISE-2011-028; SR-
NASDAQ-2011-067; SR-NYSE-2011-21; SR-NYSEAmex-2011-32; SR-NYSEArca-
2011-26; SR-NSX-2011-06; SR-Phlx-2011-64).
---------------------------------------------------------------------------

The Issue
    The recently-approved changes to the Pause Pilot will have the
unintended effect of removing the Phase III Securities from the normal
clearly

erroneous process and potentially result in unfair outcomes in the face
of severe volatility in such securities. Phase III Securities are
currently subject to the clearly erroneous process under Rules
52.4(c)(1)-(3), which apply to all securities except the current Pause
Pilot securities subject to a pause. For purposes of transactions in
securities not involving Pause Pilot securities, or transactions
involving Pause Pilot securities that occur when there is not a pause
pursuant to the Pause Pilot, the Reference Price is the consolidated
last sale price immediately prior to the execution(s) under review,
subject to certain exceptions.\12\ As noted above, the Trading Pause
Trigger Price is used as the Reference Price when a Pause Pilot pause
is in effect. As a consequence, under the current rules a Latency Trade
is subject to the clearly erroneous thresholds based on the Trading
Pause Trigger Price, which represents a ten percent or greater move in
the transacted price of the security in a five minute period.
---------------------------------------------------------------------------

    \12\ Id.
---------------------------------------------------------------------------

    Under the new Pause Pilot rules, a Latency Trade in a Phase III
Security occurs only after either a 30 or 50 percent (or greater) move
in the transacted price of the security in a five minute period. As a
result, a Trading Permit Holder that trades in a Phase III Security
that triggers a clearly erroneous threshold of three, five or ten
percent from the Reference Price, yet falls below the Pause Pilot
trigger of either 30 or 50 percent, would be able to avail themselves
of a clearly erroneous review. A similarly situated Trading Permit
Holder that transacts in the same security as a Latency Trade at a
price equal to or greater than the Phase III Security thresholds, yet
less than the clearly erroneous thresholds under Rule 52.4(c)(1), would
not be able to avail themselves of the clearly erroneous process.
Another Trading Permit Holder that transacts in the same security as a
Latency Trade that exceeds three, five or ten percent from the Trading
Pause Trigger Price would automatically receive clearly erroneous
relief. The Exchange believes that this would be an inequitable result
and an arbitrary application of the clearly erroneous process.
Specifically, the Exchange believes that, since the 30 and 50 percent
triggers of the Pause Pilot are substantially greater than the 10
percent threshold of the original Pause Pilot, the Phase III Securities
should remain under the current clearly erroneous process of Rules
52.4(c)(1)-(3).
    Applying the clearly erroneous process under Rules 52.4(c)(1)-(3)
to the Phase III Securities would allow the Exchange to review all
transactions that exceed the normal clearly erroneous thresholds and
Reference Price, and, importantly, avoid arbitrary selection of
``winners'' and ``losers'' in the face of severe volatile moves in a
security of 30 or 50 percent over a five minute period. For example, a
Trading Permit Holder that trades in a security subject to Rule
6.3C.03(b) or (c) that triggers a clearly erroneous threshold of three,
five or ten percent, yet falls below the Pause Pilot trigger threshold
trading at 29 percent from the prior day's closing price, would be
potentially entitled to a clearly erroneous break pursuant Rule
52.4(c)(1). Should trading in that same stock trigger a trading pause
at a price of 30 or 50 percent greater than the prior day's close, the
Trading Permit Holder would not be entitled to a clearly erroneous
trade break unless that trade exceeded three, five or ten percent
beyond the price that triggered the pause. This scenario causes an
inequity among a group of Trading Permit Holders that have transactions
in the Phase III Securities falling between the three, five and ten
percent thresholds from the Reference Price under the normal Rule
52.4(c)(1) clearly erroneous process and the Pause Pilot clearly
erroneous triggers of three, five or ten percent away from the Trading
Pause Trigger Price. Such Trading Permit Holders would not be provided
relief under the clearly erroneous rules merely due to the imposition
of a Pause Pilot halt, notwithstanding that other member firms with
transactions that occur at the same rolling five minute percentage
difference. The Exchange believes a better outcome is to afford all
Trading Permit Holders transacting in Phase III Securities the
opportunity of having such trades reviewed.
Summary
    The expansion of the Pause Pilot to the Phase III Securities will
have the unintended consequence of setting the point at which a clearly
erroneous transaction occurs once a Pause Pilot pause is initiated far
beyond the triggers applied prior to the expansion, which will, in
turn, prevent certain market participants from availing themselves of
the clearly erroneous rules, notwithstanding that other similarly
situated participants are able to do so. The Exchange believes that
this would be an arbitrary application of the clearly erroneous process
in a manner that is unfair and not consistent with the spirit and
purpose of the rule. Accordingly, the Exchange is proposing to amend
Rules 52.4(c)(1)-(4) to specify that Rule 52.4(c)(4) applies only to
the current securities of Pause Pilot, as found under Rule 6.3C.03(a),
and not to Phase III Securities.\13\
---------------------------------------------------------------------------

    \13\ The Exchange is also proposing to amend Rule 52.4 to remove
outdated references to the term ``Circuit Breaker Stocks,'' which
was previously defined in Rule 6.3C.03. Through August 5, 2011, the
term ``Circuit Breaker Stocks'' is defined to mean the stocks
included in the S&P 500 Index, the Russell 1000 Index, as well as
the pilot list of ETPs. As discussed above, beginning August 8,
2011, the individual stock trading pause pilot will be expanded to
include all NMS stocks and Rule 6.3C.03 will be revised accordingly.
As revised, use of the term ``Circuit Breaker Stocks'' will no
longer be necessary and it is therefore being removed from the
Exchange Rules. See Interpretation and Policy .03 to Rule 6.3C and
Securities Exchange Act Release No. 64735 (June 23, 2011), 76 FR
38243 (June 29, 2011) (SR-CBOE-2011-049) (order approving expansion
of the individual stock trading pause pilot to include all NMS
stocks effective August 8, 2011). In that regard, the Exchange is
herein proposing to amend Rule 52.4 to remove two references to the
term ``Circuit Breaker Stocks'' and to replace them with a cross-
reference to Rule 6.3C.03(a).
---------------------------------------------------------------------------

2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\14\ which requires the rules of an exchange 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. The
proposed rule change also is designed to support the principles of
Section 11A(a)(1) \15\ of the Act in that it seeks to assure fair
competition among brokers and dealers and among exchange markets. The
Exchange believes that the proposed rule meets these requirements in
that it promotes transparency and uniformity across markets concerning
decisions to break erroneous trades, yet also ensures fair application
of the process so that similarly situated Trading Permit Holders are
provided the same opportunity of a clearly erroneous review. The
Exchange notes that the changes proposed herein will in no way
interfere with the operation of the Pause Pilot process, as amended.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the
proposal.

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) of the Act \16\ and Rule 19b-
4(f)(6)(iii) thereunder.\17\ The Exchange has asked the Commission to
waive the 30-day operative delay so that the proposal may become
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 because such waiver will allow the
clearly erroneous rules to continue to operate as they did prior to the
effectiveness of the Pause Pilot expansion to Phase III Securities so
that similarly situated Trading Permit Holders are provided the same
opportunity of a clearly erroneous review. Accordingly, the Commission
waives the 30-day operative delay requirement and designates the
proposed rule change as operative upon filing with the Commission.\18\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
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 filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Commission is waiving the five day written notice
requirement in this case. Therefore, the Commission notes that the
Exchange has satisfied this requirement.
    \18\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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 necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2011-078 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2011-078. This file
number should be included on the subject line if e-mail 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 Web site (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 Web site 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 such filing also will be available for
inspection and copying at the principal office of CBOE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make publicly available. All
submissions should refer to File Number SR-CBOE-2011-078 and should be
submitted on or before September 7, 2011.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20904 Filed 8-16-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 103 (Tuesday, June 1, 2021)]
[Notices]
[Pages 29317-29321]
[FR Doc No: 2021-11405]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92012; File No. SR-NASDAQ-2021-043]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Exchange's Transaction Credits at Equity 7, Section 118(a)

May 25, 2021.
    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 May 19, 2021, 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, 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 Exchange's transaction credits
at Equity 7, Section 118(a), as described further below.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 amend the Exchange's
schedule of credits, at Equity 7, Section 118(a). Specifically, the
Exchange proposes to (1) amend an existing credit of $0.0030 per share
executed for members that add at least a certain threshold volume of
liquidity in securities in Tape B; (2) amend an existing credit of
$0.00295 per share executed for members that add at least a certain
threshold volume of liquidity in securities in Tape C and in
``Designated Retail Orders'' \3\ for securities in any Tape; (3) amend
an existing credit of $0.0027 per share for members that meet specified
volume requirements on both Nasdaq and the Nasdaq Options Market
(``NOM'') when adding liquidity; and (4) amend an existing credit of
$0.0025 per share executed for orders that are routed using the
``SCAR'' routing option \4\ and which ultimately execute on Nasdaq BX,
Inc. (``BX'').
---------------------------------------------------------------------------

    \3\ Pursuant to Equity 7, Section 118, a ``Designated Retail
Order'' is an agency or riskless principal order that meets the
criteria of FINRA Rule 5320.03 and that originates from a natural
person and is submitted to Nasdaq by a member that designates it
pursuant to this section, provided that no change is made to the
terms of the order with respect to price or side of market and the
order does not originate from a trading algorithm or any other
computerized methodology.
    \4\ Pursuant to Equity 4, Section 4758(a)(1)(A)(xv), ``SCAR'' is
a routing option under which orders will check the System for
available shares and simultaneously route to BX and Nasdaq PSX in
accordance with the System routing table. If shares remain
unexecuted after routing, they are posted on the book or cancelled.
Once on the book, should the order subsequently be locked or crossed
by another market center, the System will not route the order to the
locking or crossing market center.
---------------------------------------------------------------------------

Amend Existing Credit for Adding Liquidity in Tape B Securities
    First, the Exchange proposes to amend an existing credit of $0.0030
per share executed to a member with shares of liquidity provided in all
securities through one or more of its Nasdaq Market Center MPIDs that
represent 1.30% or more of Consolidated Volume \5\ during the month,
which includes shares of liquidity provided with respect to securities
that are listed on exchanges other than Nasdaq or NYSE (``Tape B
Securities'') that represent 0.40% or more of Consolidated Volume.
---------------------------------------------------------------------------

    \5\ Equity 7, Section 118(a) defines ``Consolidated Volume'' to
mean the total consolidated volume reported to all consolidated
transaction reporting plans by all exchanges and trade reporting
facilities during a month in equity securities, excluding executed
orders with a size of less than one round lot. For purposes of
calculating Consolidated Volume and the extent of a member's trading
activity the date of the annual reconstitution of the Russell
Investments Indexes is excluded from both total Consolidated Volume
and the member's trading activity.
---------------------------------------------------------------------------

    The Exchange proposes to lower the liquidity adding threshold for
the credit

from 1.30% of Consolidated Volume to 1.25% of Consolidated Volume. In
doing so, the Exchange intends to render the credit more readily
accessible to members. If more members assess that this credit is
accessible to them, and they increase their liquidity adding activity
on the Exchange to qualify for it, then the quality of the market will
improve, to the benefit of all participants.
Amend Existing Credit for Adding Liquidity in Tape C Securities and in
Designated Retail Orders
    Second, the Exchange proposes to amend a credit it presently offers
of $0.00295 per share executed to a member that, through one or more of
its Nasdaq Market Center MPIDs (i) adds shares of liquidity during the
month representing at least 0.80% of Consolidated Volume during the
month; (ii) adds at least 0.35% of Consolidated Volume during the month
in securities in Tape C; and (iii) adds at least 0.15% of Consolidated
Volume during the month in Designated Retail Orders for securities in
any Tape. The Exchange proposes to amend this credit in several ways.
    The Exchange proposes to lower the liquidity adding threshold for
the credit from 0.80% of Consolidated Volume to 0.65% of Consolidated
Volume. In doing so, the Exchange intends to render the credit more
readily accessible to members. If more members assess that this credit
is accessible to them, and they increase their liquidity adding
activity on the Exchange to qualify for it, then the quality of the
market will improve, to the benefit of all participants.
    The Exchange also proposes to add a new qualifying criterion to the
credit that would require members to achieve at least a 60% ratio of
its liquidity adding activity to its total activity on the Exchange
during the month. The Exchange proposes to add this new criterion so
that the credit rewards members whose activities on the Exchange
consist primarily of adding liquidity. Again, the Exchange believes
that all participants will benefit from an improvement in market
quality to the extent that the Exchange successfully incentivizes
liquidity adding activity.
    Finally, the Exchange proposes to eliminate the qualifying
criterion that members must add at least 0.35% of Consolidated Volume
during the month in securities in Tape C. The Exchange proposes to
eliminate this criterion because the Exchange believes it already has
adequate incentives for members to add liquidity in Tape C securities,
such that this criterion is not necessary. Moreover, the Exchange seeks
to avoid rendering this credit overly complex and onerous for members
to attain.
Amend Existing Credit for Adding Liquidity on Nasdaq and NOM
    Third, the Exchange proposes to amend an existing credit for
securities in all three Tapes that it provides (other than Supplemental
Orders or Designated Retail Orders) to members that meet a specified
volume threshold on Nasdaq for orders that add liquidity, and that also
meet a specified volume threshold on NOM when adding liquidity. The
existing credit provides that a member will receive a credit of $0.0027
per share executed if the member (1) adds liquidity through one or more
of its Nasdaq Market Center MPIDs during the month that, in all
securities, represents more than 0.10% of Consolidated Volume during
the month, and (2) adds Customer,\6\ Professional,\7\ Firm,\8\ Non-NOM
Market Maker,\9\ and/or Broker-Dealer \10\ liquidity of 0.40% or more
of total industry ADV in the customer clearing range for Equity and ETF
option contracts per day during the month on the Nasdaq Options Market.
---------------------------------------------------------------------------

    \6\ The term ``Customer'' applies to any transaction that is
identified by a participant for clearing in the Customer range at
The Options Clearing Corporation (``OCC'') which is not for the
account of broker or dealer or for the account of a
``Professional,'' as defined in Option 7, Section 1.
    \7\ A ``Professional'' is defined in Options 1, Section 1(a)(47)
as ``any person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s).''
    \8\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC.
    \9\ The term ``Non-NOM Market Maker'' or (``O'') is a registered
market maker on another options exchange that is not a NOM Market
Maker. A Non-NOM Market Maker must append the proper Non-NOM Market
Maker designation to orders routed to NOM.
    \10\ The term ``Broker-Dealer'' or (``B'') applies to any
transaction which is not subject to any of the other transaction
fees applicable within a particular category.
---------------------------------------------------------------------------

    The Exchange proposes to amend this credit by deleting the
requirement that members must add a threshold percentage of liquidity
on NOM that is classified as ``Customer, Professional, Firm, Non-NOM
Market Maker, and/or Broker-Dealer'' liquidity. By eliminating this
requirement, the Exchange intends to render the credit easier for
members to attain, as the addition of any type of liquidity in the
customer clearing range on NOM would be acceptable. The Exchange
believes that if more members find the credit to be attainable, then
more will seek to qualify for it by adding liquidity to the Exchange
and NOM, which will improve the quality of both markets.
Amend Existing Credit for Routed Orders Using SCAR That Execute on BX
    Finally, the Exchange proposes to lower from $0.0025 to $0.0016 per
share executed the credit that it provides to a member that uses the
SCAR order routing option and executes an order in a security in any of
the three tapes on BX.
    BX recently revised its pricing schedule to lower the amounts of
the credits it provides to its members that remove liquidity from
BX.\11\ Currently, all of the credits that BX provides to its members
are lower than $0.0025 per share executed.\12\ As a result, the
Exchange proposes to lower its own $0.0025 per share executed credit
for SCAR routed orders that execute on BX in order to better align this
credit with corresponding credits that BX provides to its own members.
---------------------------------------------------------------------------

    \11\ Securities Exchange Act Release No. 91639 (April 22, 2021),
80 FR 22500 (April 28, 2021).
    \12\ See BX Equity 7 (Pricing Schedule), available at https://listingcenter.nasdaq.com/rulebook/bx/rules/BX%20Equity%207.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposals are consistent with
Section 6(b) of the Act,\13\ in general, and further the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\14\ in particular, in that
they provide for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and are not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The proposals are also
consistent with Section 11A of the Act relating to the establishment of
the national market system for securities.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposals Are Reasonable
    The Exchange's proposals are reasonable in several respects. As a
threshold matter, the Exchange is subject to significant competitive
forces in the market for equity securities transaction services that
constrain its pricing determinations in that market. The fact that this
market is competitive has long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing

agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \15\
---------------------------------------------------------------------------

    \15\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \16\
---------------------------------------------------------------------------

    \16\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
equity security transaction services. The Exchange is only one of
several equity venues to which market participants may direct their
order flow. Competing equity exchanges offer similar tiered pricing
structures to that of the Exchange, including schedules of rebates and
fees that apply based upon members achieving certain volume thresholds.
    Within this environment, market participants can freely and often
do shift their order flow among the Exchange and competing venues in
response to changes in their respective pricing schedules. Within the
foregoing context, the proposals represent reasonable attempts by the
Exchange to increase its liquidity and market share relative to its
competitors.
    The Exchange believes that it is reasonable to modify the
qualification criteria for two of its transaction credits, at Equity 7,
Section 118(a) because they will each encourage the addition of
liquidity to the Exchange, first by making it easier for additional
members to qualify for the $0.0030 and the $0.00295 credit, and second
by specifying that the $0.00295 per share executed credit will go to
those members whose activities on the Exchange consist primarily of
adding liquidity to the Exchange. If more members seek to qualify for
these credits by adding liquidity to the Exchange, and if members seek
to become net adders of liquidity on the Exchange to qualify or
continue to qualify for the $0.00295 credit, then the quality of the
market will improve, and the Exchange will become more attractive to
existing and prospective participants.
    The Exchange also believes that it is reasonable for it to
eliminate the requirement for the $0.00295 credit that members must add
at least 0.35% of Consolidated Volume during the month in securities in
Tape C. The Exchange believes that this proposal is reasonable because
it assesses that it already has adequate incentives for members to add
liquidity in Tape C securities, such that this requirement is not
necessary. Moreover, the Exchange seeks to avoid rendering this credit
overly complex and onerous for members to attain.
    Similarly, the Exchange believes that it is reasonable to ease the
qualification criteria for the $0.0027 per share executed credit for a
member that adds certain threshold volumes of liquidity on the Exchange
and on NOM during a month. By eliminating the existing requirement that
a member must add liquidity to NOM that consists of Customer,
Professional, Firm, Non-NOM Market Maker, and/or Broker-Dealer
liquidity, the Exchange again intends to render the credit easier for
members to attain. If as a result of the proposal, more members find
the credit to be attainable and seek to qualify for it by adding
liquidity to the Exchange and NOM, then the quality of both markets
will improve, and the Exchange will become more attractive to existing
and prospective participants.
    Finally, the Exchange believes it is reasonable to lower the
$0.0025 per share executed credit that it provides to a member that
enters a SCAR routed order that executes on BX because the proposal
will better align this credit with corresponding credits that BX
provides to its own members that remove liquidity from that exchange.
The Exchange believes that it is appropriate to periodically reassess
and recalibrate its credits. In this instance, aligning the credits
will help to ensure that market participants do not use the Exchange's
SCAR order routing strategy solely to obtain a higher rebate on orders
that are routed and executed on BX.
    The Exchange notes that those market participants that are
dissatisfied with the proposals are free to shift their order flow to
competing venues that offer more generous pricing or less stringent
qualifying criteria.
The Proposals Are Equitable Allocations of Credits
    The Exchange believes that is an equitable allocation to ease and
otherwise modify the eligibility requirements for three of its
transaction credits because the proposals will encourage members to add
additional liquidity to the Exchange. To the extent that the Exchange
succeeds in increasing liquidity on the Exchange, then the Exchange
will experience improvements in its market quality, which again stands
to benefit all market participants.
    The Exchange believes its proposal to lower its credit for SCAR
routed orders that execute on BX is an equitable allocation because the
proposed amended credit amount is better aligned with liquidity removal
credits that BX provides to its members.
    Any participant that is dissatisfied with the proposals is free to
shift their order flow to competing venues that provide more generous
pricing or less stringent qualifying criteria.
The Proposals Are Not Unfairly Discriminatory
    The Exchange believes that its proposals are not unfairly
discriminatory. As an initial matter, the Exchange believes that
nothing about its volume-based tiered pricing model is inherently
unfair; instead, it is a rational pricing model that is well-
established and ubiquitous in today's economy among firms in various
industries--from co-branded credit cards to grocery stores to cellular
telephone data plans--that use it to reward the loyalty of their best
customers that provide high levels of business activity and incent
other customers to increase the extent of their business activity. It
is also a pricing model that the Exchange and its competitors have long
employed with the assent of the Commission. It is fair because it
incentivizes customer activity that increases liquidity, enhances price
discovery, and improves the overall quality of the equity markets.
    The Exchange believes that its proposals to ease or otherwise amend
the qualifying criteria for three of its transaction credits are not
unfairly discriminatory because these credits are available to all
members. Moreover, these proposals stand to improve the overall market
quality of the Exchange, to the benefit of all market participants, by
incentivizing members to increase the extent of their liquidity adding
activity on the Exchange.
    Meanwhile, the proposal to lower the amount of its credit for
members that use SCAR and execute orders on BX is

not unfairly discriminatory because the proposed amended credit is
available to all members and is in better alignment with the amounts of
the credits that BX itself provides to members that remove liquidity
from that exchange.
    Any participant that is dissatisfied with the proposals is free to
shift their order flow to competing venues that provide more generous
pricing or less stringent qualifying criteria.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition
    The Exchange does not believe that its proposal will place any
category of Exchange participant at a competitive disadvantage.
    As noted above, the proposed changes to the qualifying criteria for
three of its transaction credits are intended to have market-improving
effects, to the benefit of all members. Any member may elect to achieve
the levels of liquidity required in order to qualify for the credits.
    Likewise, the Exchange's proposal to lower the amount of the credit
it provides to members that utilize the SCAR routing strategy and
execute orders on BX will not competitively disadvantage any category
of Exchange member. The proposal will merely ensure that the amount of
the credit is better aligned with the recently lowered corresponding
credits that BX provides to its own members that remove liquidity from
that exchange.
    The Exchange notes that its members are free to trade on other
venues to the extent they believe that the proposed qualification
criteria for or amounts of these credits are not attractive. As one can
observe by looking at any market share chart, price competition between
exchanges is fierce, with liquidity and market share moving freely
between exchanges in reaction to fee and credit changes. The Exchange
notes that its pricing tier structure is consistent with broker-dealer
fee practices as well as the other industries, as described above.
Intermarket Competition
    In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its credits and fees to remain competitive with
other exchanges and with alternative trading systems that have been
exempted from compliance with the statutory standards applicable to
exchanges. Because competitors are free to modify their own credits and
fees in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which credit or fee changes in this market may impose any burden on
competition is extremely limited.
    The proposed amended credits are reflective of this competition
because, even as one of the largest U.S. equities exchanges by volume,
the Exchange has less than 20% market share, which in most markets
could hardly be categorized as having enough market power to burden
competition. Moreover, as noted above, price competition between
exchanges is fierce, with liquidity and market share moving freely
between exchanges in reaction to fee and credit changes. This is in
addition to free flow of order flow to and among off-exchange venues
which comprises upwards of 44% of industry volume.
    The Exchange's proposals to amend three of its transaction credits
are pro-competitive in that the Exchange intends for them to increase
liquidity on the Exchange, thereby rendering the Exchange a more
attractive and vibrant venue to market participants. Meanwhile, the
Exchange's proposal to lower the credit it offers to members that use
SCAR and execute orders on BX is pro-competitive in that the proposal
will result in better competitive alignment between the SCAR credit and
the amounts of liquidity removal credits that BX provides to its own
members that remove liquidity from that exchange.
    In sum, if the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\17\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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_ADDRESS>Please include
File Number SR-NASDAQ-2021-043 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-2021-043. 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-2021-043 and should
be submitted on or before June 22, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-11405 Filed 5-28-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 56 (Thursday, March 22, 2018)]
[Notices]
[Pages 12633-12635]
[FR Doc No: 2018-05795]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82895; File No. SR-CboeBZX-2018-020]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Listing Rules Under Rule 14.11(d)(2)(K)(i) Related to Equity Index-
Linked Securities

March 16, 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 8, 2018, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
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 by the Exchange. The Exchange has designated this
proposal as a ``non-controversial'' proposed rule change pursuant to
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)(iii)

thereunder,\4\ which renders it effective upon filing with the
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

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

    The Exchange filed a proposal to amend its listing rules under Rule
14.11(d)(2)(K)(i) related to Equity Index-Linked Securities.
    The text of the proposed rule change is available at the Exchange's
website at www.markets.cboe.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 parts 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 is submitting this proposal in order to bring its
listing rules related to Equity Index-Linked Securities in line with
those of NYSE Arca, Inc (``Arca'').\5\ Rule 14.11(d) sets forth certain
rules related to the listing and trading of Linked Securities (as
defined therein) on the Exchange and Rule 14.11(d)(2)(K)(i) relates
specifically to the generic listing standards applicable to Equity
Index-Linked Securities.\6\ Specifically, Rule 14.11(d)(2)(K)(i)(a)
provides that the index underlying a series of Equity Index-Linked
Securities must include at least 10 component securities and meet the
requirements of either Rule 14.11(d)(2)(K)(i)(a)(1) or (2). Rule
14.11(d)(2)(K)(i)(a)(1) provides that an index must have been reviewed
and approved for the trading of options or other derivatives by the
Commission under Section 19(b)(2) of the Act and rules thereunder and
the conditions set forth in the Commission's approval order, including
comprehensive surveillance sharing agreements for non-U.S. stocks,
continue to be satisfied. Rule 14.11(d)(2)(K)(i)(a)(2) provides certain
quantitative standards related to the market cap, trading volume,
rebalancing, concentration, and surveillance sharing. As noted above,
where an index has at least 10 component securities and meets the
criteria either Rule 14.11(d)(2)(K)(i)(a)(1) or (2), it meets the
initial listing criteria for Equity Index-Linked Securities. Rule
14.11(d)(2)(K)(i)(b) includes the continued listing criteria for Equity
Index-Linked Securities and provides that the Exchange will consider
suspension and will initiate delisting proceedings where the standards
set forth in Rule 14.11(d)(2)(K)(i)(a) are not continuously met, with
some additional concentration and trading volume criteria.
---------------------------------------------------------------------------

    \5\ See Arca Rule 5.2-E(j)(6)(B)(I).
    \6\ See Securities Exchange Act Release No. 65225 (August 30,
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018) (Order
Approving Proposed Rule Change to Adopt Rules for the Qualification,
Listing and Delisting of Companies on the Exchange).
---------------------------------------------------------------------------

    The Exchange proposes to amend Rule 14.11(d)(2)(K)(i) related to
Equity Index-Linked Securities in order to make it substantively
identical to the comparable rule on Arca. In particular, the Exchange
is proposing to make certain changes to its rules consistent with
Arca's rule such that: (i) Derivative Securities Products and Linked
Securities will be excluded from several initial and continued listing
criteria; (ii) the rule text makes clear that Rule
14.11(d)(2)(K)(i)(a)(1) includes a series of Index Fund Shares approved
by the Commission under Section 19(b)(2) of the Act; (iii) the existing
trading volume requirement under Rule 14.11(d)(2)(K)(i)(a)(2)(B) is
replaced with a more flexible trading volume standard; (iv) rules with
standards applicable only to certain index weightings, including equal-
dollar, modified equal-dollar, capitalization-weighted, and modified
capitalization-weighted, are eliminated; and (v) Rule
14.11(d)(2)(K)(i)(a)(2)(G) provides that securities of a foreign issuer
(including when they underlie ADRs) whose primary trading market
outside the United States is not a member of the Intermarket
Surveillance Group (``ISG'') or a party to a comprehensive surveillance
sharing agreement with the Exchange will not in the aggregate represent
more than 50% of the dollar weight of the index, and (a) the securities
of any one such market may not represent more than 20% of the dollar
weight of the index, and (b) the securities of any two such markets may
not represent more than 33% of the dollar weight of the index.
    As noted above, the Exchange believes that these proposed changes
are non-controversial because the changes would make the Exchange's
listing rules related to Equity Index-Linked Securities substantively
identical to the rules of another listing exchange and do not present
any new or novel issues that have not been previously considered by the
Commission.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with 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 prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to, and perfect the
mechanism of a free and open market and, in general, to protect
investors and the public interest. Specifically, the Exchange believes
that the proposal is designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to remove impediments to, and perfect the mechanism of a free and open
market and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed changes to Rule 14.11(d)(2)(K)(i) related to the
listing of Equity Index-Linked Securities on the Exchange remain
consistent with the Act because the proposed changes generally
constitute minor modifications to the existing listing requirements
that do not significantly change the scope or applicability of the
listing standards. Further and as noted throughout this filing, the
changes will make the Exchange's listing rules for Equity Index-Linked
Securities substantively identical to those of Arca.
    As such, the Exchange believes that the proposal is designed to
prevent fraudulent and manipulative acts and practices, 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 because
there are no substantive issues raised by this proposal that were not
otherwise addressed by the Commission in the approvals of Arca's
listing rules related to Equity Index-Linked Securities.

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 that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange believes that
the proposal will allow the Exchange to better compete with Arca by
putting the two exchanges on equal footing as it relates to listing
standards applicable to Equity Index-Linked Securities.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative for 30 days after the date of its filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requests
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Exchange
represents that waiver of the 30-day operative delay will allow the
Exchange to immediately compete with respect to listing new series of
Equity Index-Linked Securities on the Exchange. Because the proposed
rules previously have been approved by the Commission for, and are
substantively identical to those of, another listing exchange, the
Commission believes that the proposal promotes competition with respect
to the listing and trading of Equity Index-Linked Securities, and does
not believe that the proposal raises any novel or unique regulatory
issues.\13\ Therefore, the Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest. The Commission hereby waives the 30-day operative
delay and designates the proposed rule change operative upon
filing.\14\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ See supra note 5.
    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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 change 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-CboeBZX-2018-020 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-CboeBZX-2018-020. 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-CboeBZX-2018-020, and should be
submitted on or before April 12, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05795 Filed 3-21-18; 8:45 am]
BILLING CODE 8011-01-P