80 FR 18890 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4751(h)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 67 (April 8, 2015)

[Federal Register Volume 80, Number 67 (Wednesday, April 8, 2015)]
[Notices]
[Pages 18890-18892]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07966]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74638; File No. SR-BX-2015-016]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 4751(h)

April 2, 2015.
    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 24, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I and II 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 Rule 4751(h) to introduce the Market 
Hours Immediate or Cancel Time in Force for use on BX and to modify the 
processing of Good-til-market close-designated orders.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.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 is proposing to expand the number of Time in Force 
designations currently available for use in the BX System by adopting a 
Market Hours Immediate or Cancel (``Market Hours IOC'' or ``MIOC'') 
Time in Force. Time in Force is a characteristic of an order that 
limits the period of time that the System will hold an order for 
potential execution. Currently the Exchange offers the following six 
Times in Force: (1) System Hours Immediate or Cancel; (2) System Hours 
Day; (3) System Hours Good-till-Cancelled; (4) System Hours Expire 
Time; (5) Market Hours GTC; and (6) Good-til-market close.\3\ The 
Exchange is proposing to add the Market Hours IOC Time in Force, which 
will cause an order designated as such (or unexecuted portion thereof) 
to be canceled if, after entry into the System, the order (or 
unexecuted portion thereof) becomes non-marketable during the period 
from 9:30 a.m. Eastern Time until 4:00 p.m. Eastern Time (``Regular 
Market Hours''). The new Time in Force is similar to the System Hours 
Immediate or Cancel (``SIOC'') Time in Force, which, as noted above, is 
currently available on the Exchange. Like the proposed MIOC Time in 
Force, an order with a Time in Force of SIOC will cause such an order 
(or a portion thereof) to be canceled and returned to the entering 
market participant if, after entry into the System, the order (or 
unexecuted portion thereof) is not marketable. Unlike the System Hours 
Immediate or Cancel Time in Force, which is available for entry and 
potential execution from 7:00 a.m. until 7:00 p.m. Eastern Time 
(``System Hours''), the proposed MIOC Time in Force is only available 
for entry and potential execution during Regular Market Hours. As such, 
MIOC-designated orders will operate in the same manner as SIOC-
designated orders, but are limited to entry and potential execution 
only during Regular Market Hours. The Exchange notes that, because it 
is an immediate or cancel time in force,\4\ the Exchange believes that 
it is appropriate to limit MIOC order entry to Regular

[[Page 18891]]

Market Hours. An order designated with a Time in Force of MIOC that is 
entered outside of Regular Market Hours will be returned to the 
entering member firm without attempting to execute.
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    \3\ See Rules 4751(h)(1)-(8). The Exchange notes that Rules 
4751(h)(5) and (6) are currently held in reserve.
    \4\ An order designated as ``immediate or cancel'' represents 
the entering member firm's desire for the order to either execute 
immediately after the System determines whether the order is 
marketable or be canceled.
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    The Exchange notes that the NASDAQ Stock Market LLC (``NASDAQ'') 
currently has a MIOC Time in Force, which was adopted in 2006.\5\ The 
Exchange's proposed MIOC Time in Force will operate identically, but 
will be available during a slightly different time period, which is 
attributable to NASDAQ's Opening Cross process.\6\ Specifically, the 
Exchange's MIOC Time in Force will be available for entry and potential 
execution from 9:30 a.m. through 4:00 p.m. Eastern Time, whereas 
NASDAQ's MIOC Time in Force is available for entry and potential 
execution beginning after the completion of the NASDAQ Opening Cross 
\7\ through 4:00 p.m. Eastern Time.\8\ Unlike NASDAQ, BX does not have 
an opening cross process, but rather opens for trading at 9:30 a.m. 
Eastern Time.\9\ Otherwise, the Exchange's proposed MIOC Time in Force 
will operate identically to NASDAQ's.
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    \5\ See Securities Exchange Act Release No. 54155 (July 16 
[sic], 2006), 71 FR 41291 (July 20, 2006) (SR-NASDAQ-2006-001); see 
also NASDAQ Rule 4751(h)(5).
    \6\ See NASDAQ Rule 4752.
    \7\ NASDAQ's Opening Cross begins at 9:30 a.m. Eastern Time and 
market hours trading commences when the Opening Cross concludes. See 
NASDAQ Rule 4752(d).
    \8\ The Exchange notes that NASDAQ recently provided the 
Commission notice of a proposed immediately effective filing to 
simplify handling of NASDAQ MIOC-designated orders by no longer 
accepting such orders prior to the completion of the NASDAQ Opening 
Cross. See SR-NASDAQ-2015-11P.
    \9\ The official opening price for a security listed on the 
Exchange is the price of the first trade executed at or after 9:30 
a.m. See Rule 4752(b).
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    The Exchange is also proposing to modify the processing of orders 
designated as Good-til-market close (``GTMC'').\10\ As noted above, the 
Exchange currently has a GTMC Time in Force, which allows an order 
designated as such to be executed from 7:00 a.m. to 7:00 p.m. Eastern 
Time. GTMC-designated orders entered after 4:00 p.m. Eastern Time, 
however, are converted to a Time in Force of SIOC. In lieu of 
converting such orders, the Exchange is proposing to no longer accept 
GTMC orders for execution after 4:00 p.m. Eastern Time. As a 
consequence, the Exchange is adding rule text to the rule noting the 
GTMC orders entered after 4:00 p.m. Eastern Time will not be accepted 
and is deleting text concerning conversion of the order. The Exchange 
notes that NASDAQ recently made similar changes to its GTMC Time in 
Force, whereby it will no longer accept GTMC-designated orders after 
initiation of its Lockdown Period, the time at which no further orders 
for participation in the NASDAQ Closing Cross or the continuous market 
will be accepted, which begins at 4:00 p.m. Eastern Time.\11\
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    \10\ See Rule 4751(h)(8).
    \11\ See Securities Exchange Act Release No. 73943 (December 24, 
2014), 80 FR 69 (January 2, 2015) (SR-NASDAQ-2014-123); see also 
Securities Exchange Act Release No. 74342 (February 20, 2015), 80 FR 
10562 (February 26, 2015) (SR-NASDAQ-2015-014) (delaying 
implementation of the changes made by SR-NASDAQ-2014-123 until April 
13, 2015).
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2. Statutory Basis
    BX believes that the proposed rule changes are consistent with the 
provisions of Section 6 of the Act,\12\ in general, and with Section 
6(b)(5) of the Act,\13\ in particular, in that the proposal is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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; and also in that it is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange believes that offering market 
participants with an additional Time in Force, which NASDAQ has had 
since 2006, is indicative of the Exchange's maturation as an equities 
market. Allowing Exchange participants the ability to more precisely 
select when their order may be executed removes impediments and 
perfects the mechanism of the market because it benefits all market 
participants and ensures that BX is able to compete with other market 
venues by providing similar tools and functionality. This functionality 
is nearly identical to the MIOC Time in Force that has been available 
on NASDAQ since 2006 and is well known to its market participants. 
Lastly, offering MIOC to BX market participants raises no issues 
concerning unfair discrimination as the new Time in Force is available 
to all BX market participants.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) [sic] and (5).
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    The proposed changes to the processing of GTMC-designated orders 
further these objectives because the changes simplify processing of 
such orders when entered after the close of Regular Market Hours. 
Rather than converting GTMC-designated orders to an order with a 
different time-in-force if entered after the market close, the Exchange 
will no longer accept them after 4:00 p.m. Eastern Time, which is 
consistent with a market participant's intent to execute during the 
period from 7:00 a.m. and 4:00 p.m. To the extent a member firm would 
like to participate in post-market hours trading, it may enter a new 
order eligible to participate in post-market trading. Moreover, 
simplifying the processing of GTMC-designated orders will remove 
complication in the handling of such orders, thereby further improving 
the operation of the market.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Specifically, 
the Exchange believes that the proposal will enhance BX's 
competitiveness by providing its market participants with an additional 
option to limit when their orders may be executed. As discussed above, 
the MIOC Time in Force is available on NASDAQ, and providing it on BX 
will allow it to compete with NASDAQ and any other market venue that 
provides similar Time in Force functionality. This may, in turn, 
increase the extent of liquidity available on BX and increase its 
ability to compete with other execution venues to attract orders that 
are seeking immediate execution during Regular Market Hours. The 
Exchange further believes that the introduction of the MIOC Time in 
Force will not impair in any manner the ability of market participants 
or other execution venues to compete. The proposed changes to GTMC Time 
in Force are designed to promote consistency and stability in the 
closing process and in the handling of orders after Regular Market 
Hours has [sic] ended. Such changes do not place a burden on 
competition between market participants as the changes are applied 
consistently to all BX market participants. Moreover, the proposed 
changes may foster competition among exchanges and other markets, to 
the extent they make BX a more attractive venue to market participants.

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.

[[Page 18892]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
Because the 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, if consistent with the protection of 
investors and the public interest, the proposed rule change 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 represents that this proposed 
rule change will be implemented during the Second Quarter of 2015 
subject to the issuance of an Equity Trader Alert that will provide at 
least 30 days of notice prior to the operative date for the respective 
amendments to Rule 4751(h).
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 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.

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-BX-2015-016 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-BX-2015-016. 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 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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal offices of the Exchange. 
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 available 
publicly. All submissions should refer to File Number SR-BX-2015-016, 
and should be submitted on or before April 29, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-07966 Filed 4-7-15; 8:45 am]
 BILLING CODE 8011-01-P