
[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)]
[Notices]
[Pages 63939-63941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-26914]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84752; File No. SR-NASDAQ-2018-100]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Defined Terms ``In-the-Money'' and ``Out-of-the-Money'' in 
Chapter I, Section 1

December 7, 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 November 30, 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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[[Page 63940]]

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

    The Exchange proposes to amend The Nasdaq Options Market LLC 
(``NOM'') Rules at Chapter I, Section 1, specifically the defined terms 
``in-the-money'' and ``out-of-the-money'' at NOM Rules at Chapter I, 
Section 1(a)(67) and (68), respectively.
    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
    NOM rules define an ``in-the-money'' option series at Chapter I, 
Section 1(a)(67). Currently the term ``in-the-money'' means, for call 
options, all strike prices below the offer in the underlying security 
on the primary listing market; for put options, all strike prices above 
the bid in the underlying security on the primary listing market. NOM 
rules define an ``out-of-the-money'' option series at Chapter I, 
Section 1(a)(68). Currently, the term ``out-of-the-money'' shall mean 
the following: For call options, all strike prices above the offer in 
the underlying security on the primary listing market; for put options, 
all strike prices below the bid in the underlying security on the 
primary listing market. The Exchange proposes to amend these defined 
terms as specified below.
In-the-Money
    At this time, the Exchange proposes to amend the defined term ``in-
the-money'' to include an ``at-the-money'' option. The term ``in-the-
money'' would be defined with this amendment to mean, for call options, 
all strike prices at or below the offer in the underlying security on 
the primary listing market; for put options, all strike prices at or 
above the bid in the underlying security on the primary listing market. 
The Exchange believes that amending the term ``in-the-money'' to 
include options that are ``at-the-money'' will bring greater 
transparency to the manner in which the Exchange handles ``at-the-
money'' options.\3\
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    \3\ The Exchange notes that the inclusion of the term ``at-the-
money'' within the defined term ``in-the-money'' represents the 
Exchange's current practice.
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In-the-Money and Out-of-the-Money

    The Exchange proposes to limit the defined terms ``in-the-money'' 
and ``out-of-the-money'' option series for purposes of Market Maker 
quoting obligations in Chapter VII, Section 6. The Exchange notes that 
it specifically proposes to reference the rules related to Market Maker 
quoting obligations to avoid any confusion with the manner in which 
``in-the-money'' and ``out-of-the-money'' options series are defined 
for purposes of other options rules. This limitation represents current 
practice. The Exchange also notes that it is conforming this term 
across its Nasdaq affiliated markets.
2. Statutory Basis
    The Exchange believes that its proposal 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. 
The Exchange's proposal to amend the defined term ``in-the-money'' to 
include options that are ``at-the-money'' will bring greater 
transparency to the current manner in which the Exchange handles ``at-
the-money'' options.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange's proposal to note that the defined terms ``in-the-
money'' and ``out-of-the-money'' would apply for purposes of Market 
Maker quoting obligations in Chapter VII, Section 6 would avoid any 
confusion with the manner in which ``in-the-money'' and ``out-of-the-
money'' options series are defined for purposes of other options rules. 
The limitation of the defined terms for purposes of Market Maker 
quoting obligations in Chapter VII, Section 6 will bring transparency 
to the current use of the defined terms.

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 Exchange's proposal to 
amend the defined term ``in-the-money'' to include options that are 
``at-the-money'' and add limitations to the use of the defined terms 
``in-the-money'' and ``out-of-the-money'' for purposes of Market Maker 
quoting obligations in Chapter VII, Section 6 do not unduly burden 
competition, rather these amendments add greater transparency to the 
Rulebook and makes clear the applicability of the definitions to avoid 
confusion with respect to the remainder of the options rules.

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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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

[[Page 63941]]

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 rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2018-100 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-2018-100. 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-2018-100 and should be submitted 
on or before January 2, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-26914 Filed 12-11-18; 8:45 am]
 BILLING CODE 8011-01-P


