80 FR 19715 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules 11.8, 11.9, 11.10, 11.11, and 11.16 Regarding the Limit Up-Limit Down Plan
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 70 (April 13, 2015)
Federal Register Volume 80, Issue 70 (April 13, 2015)
| Page Range | 19715-19721 | |
| FR Document | 2015-08335 |
[Federal Register Volume 80, Number 70 (Monday, April 13, 2015)] [Notices] [Pages 19715-19721] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-08335] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74664; File No. SR-EDGX-2015-15] Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules 11.8, 11.9, 11.10, 11.11, and 11.16 Regarding the Limit Up-Limit Down Plan April 7, 2015. 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 March 26, 2015, EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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 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 the Substance of the Proposed Rule Change The Exchange filed a proposal to amend Rules 11.8, 11.9, 11.10, 11.11, and 11.16, in order to conform Exchange Rules to the rules of BATS Exchange, Inc. (``BZX'') and BATS Y-Exchange, Inc. [[Page 19716]] (``BYX'') as they relate to the Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the ``Limit Up-Limit Down Plan'' or ``Plan'').\3\ --------------------------------------------------------------------------- \3\ See BZX and BYX Rules 11.18(e). See Securities Exchange Act Release Nos. 69084 (March 8, 2013), 77 FR 16334 (March 14, 2013) (SR-BATS-2015-015) [sic]; and 69088 (March 8, 2013), 77 FR 16308 (March 14, 2013) (SR-BYX-2013-010). See also Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down Release''). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's Web site at www.batstrading.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 proposes to restructure and amend various Exchange Rules related to the applicability of the Plan in order to make the Exchange's Rules identical to the corresponding rules on BZX and BYX, as further described below. In early 2014, the Exchange and its affiliate, EDGA Exchange, Inc. (``EDGA''), received approval to effect a merger (the ``Merger'') of the Exchange's parent company, Direct Edge Holdings LLC, with BATS Global Markets, Inc., the parent of BZX and BYX (together with BZX, EDGA, and EDGX, the ``BGM Affiliated Exchanges'').\4\ In the context of the Merger, the BGM Affiliated Exchanges are working to align certain system and regulatory functionality, retaining only intended differences between the BGM Affiliated Exchanges. Thus, the proposal set forth below is intended to amend Rules 11.8, 11.9, 11.10, 11.11, and 11.16 to make such Rules identical to corresponding rules on BZX and BYX related to the Plan. The Exchange does not propose to alter its current system functionality with regard to compliance with the Plan set forth under current Exchange Rules.\5\ Rather, the proposed rule change is designed to provide a consistent rule set across each of the BGM Affiliated Exchanges.\6\ --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 71449 (January 30, 2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-043; SR-EDGA- 2013-034). \5\ See Securities Exchange Act Release Nos. 69002 (February 27, 2013), 78 FR 14394 (March 5, 2013) (SR-EDGA-2013-08); and 69003 (February 27, 2013), 78 FR 14380 (March 5, 2013) (SR-EDGX-2013-08). \6\ See BZX and BYX Rules 11.18(e). The Exchange notes that EDGA intends to file a proposal very similar to this proposal that will align the rules related to the Plan across each of the BGM Affiliated Exchanges. --------------------------------------------------------------------------- Background The Plan is designed to prevent trades in individual NMS Stocks from occurring outside of specified Price Bands.\7\ As described more fully below, the requirements of the Plan are coupled with Trading Pauses to accommodate more fundamental price moves (as opposed to erroneous trades or momentary gaps in liquidity). All trading centers in NMS Stocks, including both those operated by Participants and those operated by members of Participants, are required to establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with the requirements specified in the Plan.\8\ As set forth in more detail in the Plan, Price Bands consisting of a Lower Price Band and an Upper Price Band for each NMS Stock are calculated by the Processors.\9\ When the National Best Bid (Offer) is below (above) the Lower (Upper) Price Band, the Processors shall disseminate such National Best Bid (Offer) with an appropriate flag identifying it as non-executable. When the National Best Bid (Offer) is equal to the Upper (Lower) Price Band, the Processors shall distribute such National Best Bid (Offer) with an appropriate flag identifying it as a Limit State Quotation.\10\ All trading centers in NMS Stocks must maintain written policies and procedures that are reasonably designed to prevent the display of offers below the Lower Price Band and bids above the Upper Price Band for NMS Stocks. Notwithstanding this requirement, the Processor shall display an offer below the Lower Price Band or a bid above the Upper Price Band, but with a flag that it is non-executable. Such bids or offers shall not be included in the National Best Bid (``NBB'') or National Best Offer (``NBO'') calculations.\11\ --------------------------------------------------------------------------- \7\ Unless otherwise specified, capitalized terms used in this rule filing are based on the defined terms of the Plan. \8\ The Exchange is a Participant in the Plan. \9\ See Section (V)(A) of the Plan. \10\ See Section VI(A) of the Plan. \11\ See Section VI(A)(3) of the Plan. --------------------------------------------------------------------------- Trading in an NMS Stock immediately enters a Limit State if the National Best Offer (Bid) equals but does not cross the Lower (Upper) Price Band.\12\ Trading for an NMS stock exits a Limit State if, within 15 seconds of entering the Limit State, all Limit State Quotations were executed or canceled in their entirety. If the market does not exit a Limit State within 15 seconds, then the Primary Listing Exchange would declare a five-minute Trading Pause pursuant to Section VII of the Limit Up-Limit Down Plan, which would be applicable to all markets trading the security.\13\ In addition, the Plan defines a Straddle State as when the National Best Bid (Offer) is below (above) the Lower (Upper) Price Band and the NMS Stock is not in a Limit State. For example, assume the Lower Price Band for an NMS Stock is $9.50 and the Upper Price Band is $10.50, such NMS stock would be in a Straddle State if the National Best Bid were below $9.50, and therefore non- executable, and the National Best Offer were above $9.50 (including a National Best Offer that could be above $10.50). If an NMS Stock is in a Straddle State and trading in that stock deviates from normal trading characteristics, the Primary Listing Exchange may declare a Trading Pause for that NMS Stock. --------------------------------------------------------------------------- \12\ See Section VI(B)(1) of the Plan. \13\ The primary listing market would declare a trading pause in an NMS Stock; upon notification by the primary listing market, the Processor would disseminate this information to the public. No trades in that NMS Stock could occur during the trading pause, but all bids and offers may be displayed. See Section VII(A) of the Plan. --------------------------------------------------------------------------- Proposed Amendment to Rule 11.9 Currently, Rule 11.9(a)(8) describes the priority of orders that are re-priced and displayed in accordance with the Plan. The Exchange is proposing to delete this clause and to include this information in Rule 11.16(e)(5) in order to adopt a consistent rule set as between the Exchange and the other BGM Affiliated Exchanges. The proposed rule text for Exchange Rule 11.16(e)(5) is directly based on BZX and BYX Rule 11.18(e)(5), and is described in greater detail below. The Exchange is not proposing to alter the priority handling of orders that are re- priced and displayed in accordance with the Plan, but rather, is proposing to adopt rule text that is identical to that of its affiliated exchanges to reduce potential confusion. [[Page 19717]] Proposed Amendment to Rule 11.10 In sum, Rule 11.10(a)(3) sets forth the general rule that no executions shall occur outside the Price Bands during Regular Trading Hours. The Exchange proposes to amend Rule 11.10(a)(3) to further state that the Exchange's procedures for handling executing, re-pricing and displaying orders in connection with the Plan are further described in proposed Rule 11.16(e), which is discussed below. Current Rule 11.10(a)(3)(A) discusses how an order priced within the Price Bands may be executed or posted to the EDGX Book. Current Rule 11.10(a)(3)(B) explains how the Exchange will re-price an order that is priced outside of the Price Bands. The Exchange proposes to delete Rules 11.10(a)(3)(A) and (B) and replace them with Rule 11.16(e)(5). The proposed rule text for Exchange Rule 11.16(e)(5) is directly based on BZX and BYX Rule 11.18(e)(5) and is described more fully below. The Exchange is not proposing to alter the handling and re-pricing of orders that [sic] under the Plan, but rather, is proposing to adopt rule text that is identical to that of its affiliated exchanges to reduce potential confusion. The Exchange also proposes to delete Rule 11.10(a)(3)(C) and does not propose to include it as part of the amended rule set. Rule 11.10(a)(3)(C) states that a description of the behavior of routable market and Limit Orders in response to the Plan is found in Rule 11.11(b)(1). The Exchange believes this provision is no longer necessary as the Exchange's procedures for handling, executing, re- pricing, and displaying orders in connection with the Plan are proposed to be described in a single rule, Rule 11.16(e), rather than multiple rules as is currently the case. The Exchange proposes to delete Rule 11.10(a)(3)(D), which discusses the handling of orders with a Short Sale instruction \14\ under the Plan, and replace it with Rule 11.16(e)(5)(E). The proposed rule text for Exchange Rule 11.16(e)(5)(E) is directly based on BZX and BYX Rule 11.18(e)(5)(E) and is described more fully below. The Exchange is not proposing to alter the handling of orders with a Short Sale instruction under the Plan, but rather, is proposing to relocate the text, with modifications, to Rule 11.16(e)(5)(E) as discussed below. --------------------------------------------------------------------------- \14\ A ``Short Sale'' instruction is defined as ``[a]n instruction on an order which shall have the same meaning as defined in Rule 200(a) of Regulation SHO.'' See Exchange Rule 11.6(o). --------------------------------------------------------------------------- The Exchange proposes to delete Rule 11.10(a)(3)(E) and replace it with Rule 11.16(e)(2) thru (4). Current Rule 11.10(a)(3)(E) states that pursuant to Section IV of the Plan all Trading Centers in NMS Stocks, including those operated by Members of the Exchange, shall establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with the requirements specified in Section VI of the Plan, and to comply with the Trading Pauses specified in Section VII of the Plan. The proposed rule text for Exchange Rule 11.16(e)(2) thru (4) expands upon this provision and is directly based on BZX and BYX Rule 11.18(e)(2) thru (4) described more fully below. Proposed Amendment to Rule 11.11 Rule 11.11 discusses the handling of orders that are to be routed to away trading centers. Paragraphs (b) thru (d) of Rule 11.11 discuss the routing of orders under the Plan. The Exchange proposes to delete Rules 11.11(b) thru (d) and replace them with Rule 11.16(e)(5)(D). The Exchange proposes to delete in its entirety Rule 11.11(b)(1) as this provision is no longer necessary as it is covered succinctly in new Rule 11.16(e)(5)(D). Rule 11.11(c), which discusses re-routing of orders under the Plan, will be moved to Rule 11.16(e)(5)(D)(i) with slight modifications. Rule 11.11(d), which discusses the operation of certain routing strategies under the Plan, will be moved to Rule 11.16(e)(5)(D)(ii) without change. Each of these changes are discussed in more detail below. Proposed Amendment to Rule 11.16 The Exchange is required by the Plan to establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with the limit up-limit down and trading pause requirements specified in the Plan. In February 2013, the Exchange amended its Rules in connection with the implementation of the Plan.\15\ The Exchange now proposes to incorporate the provisions discussed above into Rule 11.16(e) in order to make the Exchange's Rules identical to the corresponding rules on BZX and BYX. The proposed amendments to Rule 11.16(e) are based on BZX and BYX Rules 11.18(e). The Exchange believes that the provisions proposed below are reasonably designed to prevent executions outside the Price Bands as required by the limit up-limit down and trading pause requirements specified in the Plan. --------------------------------------------------------------------------- \15\ See supra note 7 [sic]. --------------------------------------------------------------------------- First, the Exchange proposes to add Rule 11.16(e)(1) to provide that all capitalized terms not otherwise defined in paragraph (e) of the Rule shall have the meanings set forth in the Plan or Exchange Rules, as applicable. The Exchange also proposes to add Rules 11.16(e)(2) thru (4) described below. These provisions are based on BXZ and BYX Rules 11.18(e)(2) thru (4) and designed to replace deleted Rule 11.10(a)(3)(E), which states that the Exchange and its Members must establish policies and procedures that are reasonably designed to comply with the Plan. Specifically, the Exchange proposes to add Rule 11.16(e)(2) to provide that the Exchange is a Participant in, and subject to the applicable requirements of, the Plan, which establishes procedures to address extraordinary volatility in NMS Stocks. Further, the Exchange proposes to add Rule 11.16(e)(3) to provide that Exchange Members shall comply with the applicable provisions of the Plan. The Exchange believes the requirements of current Rule 11.10(a)(3)(E) would be sufficiently covered in proposed Rules 11.16(e)(2) and (3), which will help ensure the compliance by its Members with the provisions of the Plan as required pursuant to Section II(B) of the Plan.\16\ --------------------------------------------------------------------------- \16\ See Section II(B) of the Plan. --------------------------------------------------------------------------- The Exchange also proposes to add Rule 11.16(e)(4) to replace deleted Rule 11.10(a)(3)(E). Rule 11.16(e)(4) would provide that the Exchange's System \17\ shall not display or execute buy (sell) interest above (below) the Upper (Lower) Price Bands, unless such interest is specifically exempted under the Plan. The Exchange believes that this requirement is reasonably designed to help ensure the compliance with the limit up-limit down and trading pause requirements specified in the Plan by preventing executions outside the Price Bands as required pursuant to Section VI(A)(1) of the Plan.\18\ --------------------------------------------------------------------------- \17\ The ``System'' is defined in Exchange Rule 1.5(cc) as ``the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away.'' \18\ See Section VI(A)(1) of the Plan. --------------------------------------------------------------------------- As mentioned above, the Exchange proposes to incorporate the provisions of current Rules 11.9(a)(8) and 11.10(a)(3)(A) and (B) within Rule 11.16(e)(5) regarding the treatment of certain trading interest on the Exchange in order to prevent executions outside the Price Bands and to comply with the Plan. The Exchange is proposing to delete Rules 11.9(a)(8) and 11.10(a)(3)(A) and (B) to include this information in Rule 11.16(e)(5) in order to adopt a consistent rule set as between the Exchange and the other BGM [[Page 19718]] Affiliated Exchanges. Proposed Rule 11.16(e)(5) is based on BZX and BYX Rules 11.18(e)(5). Current Rule 11.9(a)(8) describes the priority of orders that are re-priced and displayed in accordance with the Plan. Specifically, Rule 11.9(a)(8) states that if the Upper (Lower) Price Band moves so that the price of a buy (sell) order resting on the EDGX Book would consequently be above (below) the Upper (Lower) Price Band, such order will be re-priced and displayed at a price equal to the Upper (Lower) Price Band, provided a new timestamp, and prioritized based on its existing timestamp at the time the new Price Bands are established. If an order is resting on the EDGX Book at a price equal to the Upper (Lower) Price Band, such order will not be re-priced but will be provided a new timestamp and prioritized based on its existing timestamp at the time the new Price Bands are established. Likewise, under proposed Rule 11.16(e)(5), when re-pricing resting orders because such orders are above (below) the Upper (Lower) Price Band, the Exchange will provide new timestamps to such orders. The Exchange will also provide new timestamps to resting orders at the less aggressive price to which such orders are re-priced. Any resting interest that is re-priced pursuant to Rule 11.16(e)(5) shall maintain priority ahead of interest that was originally less aggressively priced, regardless of the original timestamps for such orders. The Exchange is not proposing to alter the priority handling of orders that are re-priced and displayed in accordance with the Plan, but rather, is proposing to adopt rule text that is identical to that of its affiliated exchanges to reduce potential confusion. While the text of current Rule 11.9(a)(8) is not identical to proposed Rule 11.16(e)(5), the Exchange proposes to adopt language identical to BZX and BYX Rules 11.18(e)(5), which it believes more clearly describes system functionality. Current Rules 11.10(a)(3)(A) and (B) address the handling and re- pricing of orders under the Plan. Rule 11.10(a)(3)(A) discusses how an order priced within the Price Bands may be executed or posted to the EDGX Book by stating that a non-routable buy (sell) order that is entered into the System at a price less (greater) than or equal to the Upper (Lower) Price Band will be posted to the EDGX Book or executed, unless: (i) the order includes a Time-in-Force Instruction (``TIF'') of Immediate or Cancel (``IOC'') or Fill-or-Kill (``FOK''), in which case it will be cancelled if not executed; or (ii) the User has entered instructions to cancel \19\ the order. Rule 11.10(a)(3)(B) explains how the Exchange will re-price an order that is priced outside of the Price Bands by stating that a non-routable buy (sell) order at a price greater (less) than the Upper (Lower) Price Band will be re-priced and displayed at the price of the Upper (Lower) Price Band. If the price of the Upper (Lower) Price Band moves above (below) the non-routable buy (sell) order's displayed price, the buy (sell) order will not be adjusted further and will remain posted at the original price at which it was posted to the EDGX Book. If the Upper (Lower) Price Band crosses a non-routable buy (sell) order resting on the EDGX Book, the buy (sell) order will be re-priced to the price of the Upper (Lower) Price Band. --------------------------------------------------------------------------- \19\ Under the Cancel Back instruction, a User may instruct the System to immediately cancel the order when, if displayed by the System on the EDGX Book at the time of entry, or upon return to the System after being routed away, would create a violation of Rule 610(d) of Regulation NMS or Rule 201 of Regulation SHO, or the order cannot otherwise be executed or posted by the System to the EDGX Book at its limit price. See Exchange Rule 11.6(b). --------------------------------------------------------------------------- Likewise, proposed Rule 11.16(e)(5) discusses the re-pricing and cancellation of interest and specifically provides that the Exchange systems shall re-price and/or cancel buy (sell) interest that is priced or could be executed \20\ above (below) the Upper (Lower) Price Band. The Exchange is not proposing to alter the handling or re-pricing of orders under the Plan, but rather, is proposing to adopt rule text that is identical to that of its affiliated exchanges to reduce potential confusion. The Exchange notes that while the format of current Rules 11.10(a)(3)(A) and (B) are not identical to that of proposed Rule 11.16(e)(5), the Exchange proposes to include the following provisions under Rule 11.16(e)(5) regarding the re-pricing or canceling of certain trading interest that are similar to BZX and BYX Rule 11.18(e)(5), which if [sic] believes continue to accurately describe system functionality and provide additional specificity, the specifics of which are described under each subsection of proposed Rule 11.16(e)(5) set forth below. --------------------------------------------------------------------------- \20\ The Exchange notes that this includes any interest that is displayed and/or resting at a less aggressive price but executable at a more aggressive price, such as orders subject to price sliding and discretionary order types. --------------------------------------------------------------------------- Market Orders and Orders With a TIF of IOC or FOK Proposed Rule 11.16(e)(5)(A) would state that the System will only execute Market Orders or orders with a TIF instruction of IOC or FOK at or within the Price Bands. If a Market Order or order with a TIF instruction of IOC or FOK cannot be fully executed at or within the Price Bands, the System shall cancel any unexecuted portion of the order without posting such order to the EDGX Book. This provision is similar to current Rule 11.10(a)(3)(A). The Rule would also state that the display of Market Orders will be handled in accordance with Rule 11.8(a)(4). Limit Orders The operation of Limit Orders under the Plan would be set forth in Rule 11.16(e)(5)(B), which would include the following provisions.Orders Not Subject to Re-Pricing. Limit Orders will be cancelled if a User has entered instructions not to use the re-pricing process set forth in Rule 11.16(e)(5) and such interest to buy (sell) is priced above (below) the Upper (Lower) Price Band. Incoming Orders. If re-pricing is permitted based on a User's instructions, both displayable and non-displayable incoming Limit Orders to buy (sell) that are priced above (below) the Upper (Lower) Price Band shall be re-priced to the Upper (Lower) Price Band. Resting Orders. The System shall re-price resting Limit Orders to buy (sell) to the Upper (Lower) Price Band if Price Bands move such that the price of resting Limit Orders to buy (sell) would be above (below) the Upper (Lower) Price Band. If the Price Bands move again and the original limit price of a displayed and re-priced Limit Order is at or within the Price Bands and a User has opted into the Exchange's optional multiple re-pricing process, as described in Rule 11.6(l), the System shall re-price such displayed limit interest to the most aggressive permissible price up to the order's limit price. All other displayed and non-displayed limit interest re-priced pursuant to paragraph (e) of Rule 11.16 will remain at its new price unless the Price Bands move such that the price of resting Limit Order to buy (sell) would again be above (below) the Upper (Lower) Price Band. Orders With a Pegged Instruction \21\ --------------------------------------------------------------------------- \21\ The ``Pegged'' instruction is described under Rule 11.6(j). --------------------------------------------------------------------------- Currently, the operation of orders with a Pegged instruction under the Plan is not specifically addressed in the Exchange's Rules. Therefore, the Exchange proposes to adopt Rule 11.16(e)(5)(C) which would state that orders with a Pegged instruction to buy [[Page 19719]] (sell) shall peg to the specified pegging price or the Upper (Lower) Price Band, whichever is lower (higher). Rule 11.16(e)(5)(c) is similar to BZX and BYX Rules 11.18(e)(5)(C). Routable Orders The Exchange proposes to delete Rules 11.11(b) thru (d), which discuss the routing of orders under the Plan, and replace them with Rule 11.16(e)(5)(D). The Exchange is not proposing any changes to its routing functionality in connection with the implementation of the Plan. The Exchange proposes to delete in its entirety Rule 11.11(b)(1), which states when an order may be routed under the Plan, as these provisions are no longer necessary as they are covered succinctly in new Rule 11.16(e)(5)(D). Rule 11.16(e)(5)(D) would state that if routing is permitted based on a User's instructions, orders shall be routed away from the Exchange pursuant to Rule 11.11, provided that the System shall not route buy (sell) interest at a price above (below) the Upper (Lower) Price Band.\22\ Rule 11.11(c), which discusses re-routing of orders under the Plan, will be moved to Rule 11.16(e)(5)(D)(i) with slight modifications. Current Rule 11.11(c) states that for routing strategies that access all Protected Quotations, when the Upper (Lower) Price Band adjusts such that the NBO (NBB) becomes executable, a routable buy (sell) Market or marketable Limit Order will be eligible to be re-routed by the Exchange. Likewise, Rule 11.16(e)(5)(D)(i) would state that when the Upper (Lower) Price Band adjusts such that the NBO (NBB) becomes executable, a routable buy (sell) Market or marketable Limit Order will be eligible to be re-routed by the Exchange if such order contains an Aggressive \23\ or Super Aggressive \24\ instruction.\25\ Rule 11.11(d), which discusses the operation of certain routing strategies under the Plan, will be moved to Rule 11.16(e)(5)(D)(ii) without change. Rule 11.16(e)(5)(D)(ii) would state that routing strategies SWPA and SWPB (together, ``SWP''), as described in Rule 11.11(g), are eligible for routing in accordance with the Plan as follows: the System will immediately cancel orders utilizing an SWP routing strategy when an order to buy utilizing an SWP routing strategy has a limit price that is greater than the Upper Price Band or if a sell order utilizing an SWP routing strategy has a limit price that is less than the Lower Price Band. Proposed Rule 11.16(e)(5)(D)(ii) is similar to BZX and BYX Rule 11.13(a)(3)(I).\26\ --------------------------------------------------------------------------- \22\ This provision shall also replace current Rule 11.10(a)(3)(C) which states that the description of the behavior of routable Market Orders and Limit Orders in response to the Plan is set forth in Rule 11.11(b)(1). \23\ The ``Aggressive'' instruction is described under Rule 11.6(n)(1). \24\ The ``Super Aggressive'' instruction is described under Rule 11.6(n)(2). \25\ The Exchange notes that this provision is not included in BZX or BYX Rule 11.18(e), but the Exchange believes it provides additional detail that was included in current Exchange Rule 11.11(c) that is helpful to retain in proposed Rule 11.16(e)(5)(D)(i). \26\ The Exchange notes that it proposal to include current Rule 11.11(d) within proposed Rule 11.16(e)(5)(D)(ii), rather than within its Rule 11.11(g) which describes each of its routing strategies, differs from the location of the same provision under BZX and BYX Rule 11.13(a)(3), which describes BZX and BYX's routing strategies. --------------------------------------------------------------------------- Orders With a Short Sale Instruction The Exchange proposes to replace current Rule 11.10(a)(3)(D), which discusses the handling of orders with a Short Sale instruction under the Plan, with proposed Rule 11.16(e)(5)(E). The proposed rule text for Exchange Rule 11.16(e)(5)(E) is directly based on BZX and BYX Rule 11.18(e)(5)(E). Current Rule 11.10(a)(3)(D) states that where a short sale order is entered into the System with a limit price below the Lower Price Band and a short sale price test restriction under Rule 201 of Regulation SHO is in effect, the System will re-price such order to the Lower Price Band as long as the Lower Price Band is at a Permitted Price.\27\ When an order with a Short Sale instruction is entered into the System with a limit price above the Lower Price Band and a short sale price test restriction under Rule 201 of Regulation SHO is in effect, the System will re-price such order, if necessary, at a Permitted Price. Likewise, proposed Rule 11.16(e)(5)(E) would state that where a short sale price restriction under Rule 201 of Regulation SHO is in effect, orders with a Short Sale instruction priced below the Lower Price Band shall be re-priced to the higher of the Lower Price Band or the Permitted Price. The Exchange is not proposing to alter the handling of orders with a Short Sale instruction that under the Plan, but rather, is proposing to relocate the text, with modifications, to Rule 11.16(e)(5)(E) discussed above. --------------------------------------------------------------------------- \27\ The term ``Permitted Price'' is defined in Rule 11.6(k). --------------------------------------------------------------------------- Other Amendments to Rule 11.16 The Exchange also proposes to relocate Rule 11.16(c), which discusses the re-opening of trading following a trading halt, to proposed Rule 11.16(e)(6), with minor modifications. Current Rule 11.16(c) states that the re-opening of trading following a trading halt will be conducted pursuant to procedures adopted by the Exchange and communicated by notice to its Members. The Exchange recently codified its opening process, including its re-opening process follow a halt, suspension or pause, under Rule 11.7.\28\ Therefore, with respect to the re-opening of trading following a Trading Pause, the Exchange proposes to adopt Rule 11.16(e)(6) to provide that the Exchange shall re-open the security as set forth in Rule 11.7(e), which is the Exchange's Rule describing the Exchange's re-opening process following a trading halt, suspension or pause. --------------------------------------------------------------------------- \28\ See Securities Exchange Act Release Nos. 73468 (October 29, 2014), 79 FR 65450 (November 4, 2014) (SR-EDGX-2014-18); and 73592 (November 13, 2014), 79 FR 68937 (November 19, 2014) (SR-EDGA-2014- 20). --------------------------------------------------------------------------- The Exchange also proposes to delete Rule 11.16(d) which discusses when the Exchange may resume trading where the Primary Listing Market issues an individual stock trading pause and how individual stock trading pauses are to be handled during Phase I of the Plan. Interpretation and Policy .01 to Rule 11.16 states that the provisions of paragraph (d) of this Rule shall be in effect during a pilot set to end on the earlier of the initial date of operations of the Regulation NMS Plan to Address Extraordinary Market Volatility or February 4, 2014. Phase I of the Plan has expired and the Exchange, therefore, proposes to delete Rule 11.16(d) as well as Interpretation and Policy .01 to Rule 11.16 as they are no longer relevant. Lastly, the Exchange proposes the following additional amendments to Rule 11.16: (i) renumber paragraph (f) as (d); (ii) delete current Rule 11.16(e) and replace it with new paragraph (f) providing that in the event of a trading halt, all orders will remain on the EDGA [sic] Book unless cancelled by the User; and (iii) adopt paragraph (g), which would state that all times referenced in Rule 11.16 shall be Eastern Time. Ministerial Changes In light of the above restructuring of the Exchange Rules, the Exchange proposes the following ministerial changes to update cross references to Rules that are to be deleted or relocated as described above: amend Rule 11.8(a)(4) regarding the display of Market Orders to update a cross-reference to current Rule 11.10(a)(3)(A) to proposed Rule 11.16(e)(5), amend Rule 11.8(d)(7) regarding the operation of MidPoint Match Orders under the Plan to update a cross- [[Page 19720]] reference to current Rule 11.10(a)(3) to proposed Rule 11.16(e), and amend Rule 11.9(a)(2)(D)(ii) regarding the priority of Market Orders displayed on the EDGX Book to delete a cross-reference to current Rule 11.10(a)(3)(A). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.\29\ Specifically, the proposed change is consistent with Section 6(b)(5) of the Act,\30\ because 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 does not propose to alter its current system functionality with regard to compliance with the Plan set forth under current Exchange Rules. Rather, the proposed rule change is designed to provide a consistent rule set across each of the BGM Affiliated Exchanges. As mentioned above, the proposed rule changes, combined with the planned filing for EDGA,\31\ would allow the BGM Affiliated Exchanges to provide a consistent set of rules as it relates to the compliance with the Plan across each of the BGM Affiliated Exchanges. Consistent rules, in turn, will simplify the regulatory requirements for Members of the Exchange that are also participants on EDGA, BZX and/or BYX. The proposed rule change would provide greater harmonization between rules of similar purpose on the BGM Affiliated Exchanges, resulting in greater uniformity and less burdensome and more efficient regulatory compliance and understanding of Exchange Rules. As such, the proposed rule change would foster cooperation and coordination with persons engaged in facilitating transactions in securities and would remove impediments to and perfect the mechanism of a free and open market and a national market system. Similarly, the Exchange also believes that, by harmonizing the rules and across each BGM Affiliated Exchange with respect to the Plan, the proposal will enhance the Exchange's ability to fairly and efficiently regulate its Members, meaning that the proposed rule change is equitable and will promote fairness in the market place. --------------------------------------------------------------------------- \29\ 15 U.S.C. 78f(b). \30\ 15 U.S.C. 78f(b)(5). \31\ See supra note 8 [sic]. --------------------------------------------------------------------------- Finally, the proposal to remove the references to individual stock trading pauses promotes just and equitable principles of trade and removes impediments to, and perfects the mechanism of, a free and open market and a national market system. By eliminating the reference to trading pauses outside the scope of the Plan in its rules, the Exchange will help to alleviate any potential confusion with respect to such pauses, particularly in light of the implementation of the Plan. The proposed rule change is also consistent with Section 11A(a)(1) of the Act \32\ in that it seeks to assure fair competition among brokers and dealers and exchange markets. --------------------------------------------------------------------------- \32\ 15 U.S.C. 78k-1(a)(1). --------------------------------------------------------------------------- Finally, the Exchange believes that the non-substantive, ministerial changes discussed above will contribute to the protection of investors and the public interest by helping to avoid confusion with respect to Exchange Rules. 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. To the contrary, allowing the Exchange to implement substantively identical rules across each of the BGM Affiliated Exchanges regarding the Plan does not present any competitive issues, but rather is designed to provide greater harmonization among Exchange, BYX, BZX, and EDGA rules of similar purpose. The proposed rule change should, therefore, resulting in less burdensome and more efficient regulatory compliance and understanding of Exchange Rules for common members of the BGM Affiliated Exchanges and an enhanced ability of the BGM Affiliated Exchanges to fairly and efficiently regulate Members, which will further enhance competition. 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)(iii) of the Act \33\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\34\ --------------------------------------------------------------------------- \33\ 15 U.S.C. 78s(b)(3)(a)(iii). \34\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-EDGX-2015-15 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-EDGX-2015-15. 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 [[Page 19721]] 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 office 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-EDGX-2015-15, and should be submitted on or before May 4, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\35\ --------------------------------------------------------------------------- \35\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-08335 Filed 4-10-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19715
Specifically, the Exchange notes that 19(b)(3)(A) of the Act 10 and Rule 19b– public in accordance with the
while CBOE would cease to administer 4(f)(6) 11 thereunder. provisions of 5 U.S.C. 552, will be
an arbitration program, TPHs, associated At any time within 60 days of the available for Web site viewing and
persons, and their customers would still filing of the proposed rule change, the printing in the Commission’s Public
have an effective forum in which to Commission summarily may Reference Room, 100 F Street NE.,
arbitrate their disputes, claims, or temporarily suspend such rule change if Washington, DC 20549–1090 on official
controversies (i.e., TPHs, associated it appears to the Commission that such business days between the hours of
persons, and their customers would still action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of the
have the availability of an arbitration public interest, for the protection of filing also will be available for
program; it would just be FINRA’s investors, or otherwise in furtherance of inspection and copying at the principal
program in lieu of CBOE’s). The the purposes of the Act. If the office of the Exchange. All comments
Exchange believes that FINRA Commission takes such action, the received will be posted without change;
maintains a robust dispute resolution Commission shall institute proceedings the Commission does not edit personal
system that provides a clear framework under Section 19(b)(2)(B) of the Act 12 to identifying information from
to handle arbitrations in a manner that determine whether the proposed rule submissions. You should submit only
is designed to prevent fraudulent and change should be approved or information that you wish to make
manipulative acts and practices and disapproved. available publicly. All submissions
promotes the protection of investors and should refer to File Number SR–CBOE–
IV. Solicitation of Comments 2015–037 and should be submitted on
the public interest.
Interested persons are invited to or before May 4, 2015.
B. Self-Regulatory Organization’s submit written data, views, and For the Commission, by the Division of
Statement on Burden on Competition arguments concerning the foregoing, Trading and Markets, pursuant to delegated
CBOE does not believe that the including whether the proposed rule authority.13
proposed rule change would impose any change is consistent with the Act. Brent J. Fields,
burden on competition that is not Comments may be submitted by any of Secretary.
necessary or appropriate in furtherance the following methods: [FR Doc. 2015–08336 Filed 4–10–15; 8:45 am]
of the purposes of the Act. CBOE Electronic Comments BILLING CODE 8011–01–P
believes that the proposed rule change
is not designed to address any • Use the Commission’s Internet
competitive issues. Rather, CBOE comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE
believes that the proposed rule change rules/sro.shtml ); or COMMISSION
is designed to facilitate the transition of • Send an email to rule-comments@
sec.gov. Please include File Number SR– [Release No. 34–74664; File No. SR–EDGX–
the Exchange’s arbitration forum to 2015–15]
FINRA’s pursuant to the RSA and CBOE–2015–037 on the subject line.
streamline the arbitration process and Paper Comments Self-Regulatory Organizations; EDGX
provide for a unified and efficient Exchange, Inc.; Notice of Filing and
arbitration forum with one set of • Send paper comments in triplicate Immediate Effectiveness of a Proposed
arbitration rules and administrative to Secretary, Securities and Exchange Rule Change To Amend Rules 11.8,
procedures for all cases filed after the Commission, 100 F Street NE., 11.9, 11.10, 11.11, and 11.16 Regarding
Effective Date. Additionally, CBOE Washington, DC 20549–1090. the Limit Up-Limit Down Plan
believes that the proposed rule change All submissions should refer to File
would provide greater harmonization Number SR–CBOE–2015–037. This file April 7, 2015.
between the Exchange Rules and FINRA number should be included on the Pursuant to Section 19(b)(1) of the
Rules of similar purpose, resulting in subject line if email is used. To help the Securities Exchange Act of 1934 (the
less burdensome and more efficient Commission process and review your ‘‘Act’’),1 and Rule 19b–4 thereunder,2
regulatory compliance for Dual comments more efficiently, please use notice is hereby given that on March 26,
Members. only one method. The Commission will 2015, EDGX Exchange, Inc. (the
post all comments on the Commission’s ‘‘Exchange’’ or ‘‘EDGX’’) filed with the
C. Self-Regulatory Organization’s Internet Web site at http://www.sec.gov/ Securities and Exchange Commission
Statement on Comments on the rules/sro.shtml. Copies of the (‘‘Commission’’) the proposed rule
Proposed Rule Change Received From submission, all subsequent change as described in Items I and II
Members, Participants, or Others amendments, all written statements below, which Items have been prepared
The Exchange neither solicited nor with respect to the proposed rule by the Exchange. The Commission is
received comments on the proposed change that are filed with the publishing this notice to solicit
rule change. Commission, and all written comments on the proposed rule change
communications relating to the from interested persons.
III. Date of Effectiveness of the proposed rule change between the
Proposed Rule Change and Timing for I. Self-Regulatory Organization’s
Commission and any person, other than Statement of the Terms of the Substance
Commission Action those that may be withheld from the of the Proposed Rule Change
Because the proposed rule change
10 15 U.S.C. 78s(b)(3)(A). The Exchange filed a proposal to
does not: (i) Significantly affect the
mstockstill on DSK4VPTVN1PROD with NOTICES
11 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) amend Rules 11.8, 11.9, 11.10, 11.11,
protection of investors or the public
requires a self-regulatory organization to give the and 11.16, in order to conform Exchange
interest; (ii) impose any significant Commission written notice of its intent to file the Rules to the rules of BATS Exchange,
burden on competition; and (iii) become proposed rule change at least five business days
Inc. (‘‘BZX’’) and BATS Y-Exchange,
operative for 30 days from the date on prior to the date of filing of the proposed rule
which it was filed, or such shorter time change, or such shorter time as designated by the
13 17 CFR 200.30–3(a)(12).
Commission. The Exchange has satisfied this
as the Commission may designate, it has requirement. 1 15 U.S.C. 78s(b)(1).
become effective pursuant to Section 12 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 20:28 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/1.svg)
![19716 Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices
Inc. (‘‘BYX’’) as they relate to the Plan Rules identical to corresponding rules executable. Such bids or offers shall not
to Address Extraordinary Market on BZX and BYX related to the Plan. be included in the National Best Bid
Volatility Pursuant to Rule 608 of The Exchange does not propose to alter (‘‘NBB’’) or National Best Offer (‘‘NBO’’)
Regulation NMS under the Act (the its current system functionality with calculations.11
‘‘Limit Up-Limit Down Plan’’ or regard to compliance with the Plan set Trading in an NMS Stock
‘‘Plan’’).3 forth under current Exchange Rules.5 immediately enters a Limit State if the
The text of the proposed rule change Rather, the proposed rule change is National Best Offer (Bid) equals but
is available at the Exchange’s Web site designed to provide a consistent rule set does not cross the Lower (Upper) Price
at www.batstrading.com, at the across each of the BGM Affiliated Band.12 Trading for an NMS stock exits
principal office of the Exchange, and at Exchanges.6 a Limit State if, within 15 seconds of
the Commission’s Public Reference entering the Limit State, all Limit State
Background Quotations were executed or canceled
Room.
The Plan is designed to prevent trades in their entirety. If the market does not
II. Self-Regulatory Organization’s in individual NMS Stocks from exit a Limit State within 15 seconds,
Statement of the Purpose of, and occurring outside of specified Price then the Primary Listing Exchange
Statutory Basis for, the Proposed Rule Bands.7 As described more fully below, would declare a five-minute Trading
Change the requirements of the Plan are coupled Pause pursuant to Section VII of the
In its filing with the Commission, the with Trading Pauses to accommodate Limit Up-Limit Down Plan, which
Exchange included statements more fundamental price moves (as would be applicable to all markets
concerning the purpose of and basis for opposed to erroneous trades or trading the security.13 In addition, the
the proposed rule change and discussed momentary gaps in liquidity). All Plan defines a Straddle State as when
any comments it received on the trading centers in NMS Stocks, the National Best Bid (Offer) is below
proposed rule change. The text of these including both those operated by (above) the Lower (Upper) Price Band
statements may be examined at the Participants and those operated by and the NMS Stock is not in a Limit
places specified in Item IV below. The members of Participants, are required to State. For example, assume the Lower
Exchange has prepared summaries, set establish, maintain, and enforce written Price Band for an NMS Stock is $9.50
forth in Sections A, B, and C below, of policies and procedures that are and the Upper Price Band is $10.50,
the most significant parts of such reasonably designed to comply with the such NMS stock would be in a Straddle
statements. requirements specified in the Plan.8 As State if the National Best Bid were
set forth in more detail in the Plan, Price below $9.50, and therefore non-
A. Self-Regulatory Organization’s
Bands consisting of a Lower Price Band executable, and the National Best Offer
Statement of the Purpose of, and
and an Upper Price Band for each NMS were above $9.50 (including a National
Statutory Basis for, the Proposed Rule
Stock are calculated by the Processors.9 Best Offer that could be above $10.50).
Change
When the National Best Bid (Offer) is If an NMS Stock is in a Straddle State
1. Purpose below (above) the Lower (Upper) Price and trading in that stock deviates from
The Exchange proposes to restructure Band, the Processors shall disseminate normal trading characteristics, the
and amend various Exchange Rules such National Best Bid (Offer) with an Primary Listing Exchange may declare a
related to the applicability of the Plan appropriate flag identifying it as non- Trading Pause for that NMS Stock.
in order to make the Exchange’s Rules executable. When the National Best Bid
(Offer) is equal to the Upper (Lower) Proposed Amendment to Rule 11.9
identical to the corresponding rules on
Price Band, the Processors shall Currently, Rule 11.9(a)(8) describes
BZX and BYX, as further described
distribute such National Best Bid (Offer) the priority of orders that are re-priced
below. In early 2014, the Exchange and
with an appropriate flag identifying it as and displayed in accordance with the
its affiliate, EDGA Exchange, Inc.
a Limit State Quotation.10 All trading Plan. The Exchange is proposing to
(‘‘EDGA’’), received approval to effect a
centers in NMS Stocks must maintain delete this clause and to include this
merger (the ‘‘Merger’’) of the Exchange’s
written policies and procedures that are information in Rule 11.16(e)(5) in order
parent company, Direct Edge Holdings
reasonably designed to prevent the to adopt a consistent rule set as between
LLC, with BATS Global Markets, Inc.,
display of offers below the Lower Price the Exchange and the other BGM
the parent of BZX and BYX (together
Band and bids above the Upper Price Affiliated Exchanges. The proposed rule
with BZX, EDGA, and EDGX, the ‘‘BGM
Band for NMS Stocks. Notwithstanding text for Exchange Rule 11.16(e)(5) is
Affiliated Exchanges’’).4 In the context
this requirement, the Processor shall directly based on BZX and BYX Rule
of the Merger, the BGM Affiliated
display an offer below the Lower Price 11.18(e)(5), and is described in greater
Exchanges are working to align certain
Band or a bid above the Upper Price detail below. The Exchange is not
system and regulatory functionality,
Band, but with a flag that it is non- proposing to alter the priority handling
retaining only intended differences
of orders that are re-priced and
between the BGM Affiliated Exchanges. 5 See Securities Exchange Act Release Nos. 69002 displayed in accordance with the Plan,
Thus, the proposal set forth below is (February 27, 2013), 78 FR 14394 (March 5, 2013) but rather, is proposing to adopt rule
intended to amend Rules 11.8, 11.9, (SR–EDGA–2013–08); and 69003 (February 27,
text that is identical to that of its
11.10, 11.11, and 11.16 to make such 2013), 78 FR 14380 (March 5, 2013) (SR–EDGX–
2013–08). affiliated exchanges to reduce potential
3 See BZX and BYX Rules 11.18(e). See Securities
6 See BZX and BYX Rules 11.18(e). The Exchange confusion.
Exchange Act Release Nos. 69084 (March 8, 2013), notes that EDGA intends to file a proposal very
mstockstill on DSK4VPTVN1PROD with NOTICES
77 FR 16334 (March 14, 2013) (SR–BATS–2015– similar to this proposal that will align the rules 11 See Section VI(A)(3) of the Plan.
015) [sic]; and 69088 (March 8, 2013), 77 FR 16308 related to the Plan across each of the BGM 12 See Section VI(B)(1) of the Plan.
(March 14, 2013) (SR–BYX–2013–010). See also Affiliated Exchanges. 13 The primary listing market would declare a
7 Unless otherwise specified, capitalized terms
Securities Exchange Act Release No. 67091 (May trading pause in an NMS Stock; upon notification
31, 2012), 77 FR 33498 (June 6, 2012) (the ‘‘Limit used in this rule filing are based on the defined by the primary listing market, the Processor would
Up-Limit Down Release’’). terms of the Plan. disseminate this information to the public. No
4 See Securities Exchange Act Release No. 71449 8 The Exchange is a Participant in the Plan.
trades in that NMS Stock could occur during the
9 See Section (V)(A) of the Plan.
(January 30, 2014), 79 FR 6961 (February 5, 2014) trading pause, but all bids and offers may be
(SR–EDGX–2013–043; SR–EDGA–2013–034). 10 See Section VI(A) of the Plan. displayed. See Section VII(A) of the Plan.
VerDate Sep<11>2014 20:28 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/2.svg)
![Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19717
Proposed Amendment to Rule 11.10 11.10(a)(3)(E) states that pursuant to in paragraph (e) of the Rule shall have
In sum, Rule 11.10(a)(3) sets forth the Section IV of the Plan all Trading the meanings set forth in the Plan or
general rule that no executions shall Centers in NMS Stocks, including those Exchange Rules, as applicable. The
occur outside the Price Bands during operated by Members of the Exchange, Exchange also proposes to add Rules
Regular Trading Hours. The Exchange shall establish, maintain, and enforce 11.16(e)(2) thru (4) described below.
proposes to amend Rule 11.10(a)(3) to written policies and procedures that are These provisions are based on BXZ and
further state that the Exchange’s reasonably designed to comply with the BYX Rules 11.18(e)(2) thru (4) and
procedures for handling executing, re- requirements specified in Section VI of designed to replace deleted Rule
pricing and displaying orders in the Plan, and to comply with the 11.10(a)(3)(E), which states that the
connection with the Plan are further Trading Pauses specified in Section VII Exchange and its Members must
described in proposed Rule 11.16(e), of the Plan. The proposed rule text for establish policies and procedures that
which is discussed below. Exchange Rule 11.16(e)(2) thru (4) are reasonably designed to comply with
Current Rule 11.10(a)(3)(A) discusses expands upon this provision and is the Plan. Specifically, the Exchange
how an order priced within the Price directly based on BZX and BYX Rule proposes to add Rule 11.16(e)(2) to
Bands may be executed or posted to the 11.18(e)(2) thru (4) described more fully provide that the Exchange is a
EDGX Book. Current Rule 11.10(a)(3)(B) below. Participant in, and subject to the
explains how the Exchange will re-price applicable requirements of, the Plan,
Proposed Amendment to Rule 11.11
an order that is priced outside of the which establishes procedures to address
Price Bands. The Exchange proposes to Rule 11.11 discusses the handling of extraordinary volatility in NMS Stocks.
orders that are to be routed to away Further, the Exchange proposes to add
delete Rules 11.10(a)(3)(A) and (B) and
trading centers. Paragraphs (b) thru (d) Rule 11.16(e)(3) to provide that
replace them with Rule 11.16(e)(5). The
of Rule 11.11 discuss the routing of Exchange Members shall comply with
proposed rule text for Exchange Rule
orders under the Plan. The Exchange the applicable provisions of the Plan.
11.16(e)(5) is directly based on BZX and
proposes to delete Rules 11.11(b) thru The Exchange believes the requirements
BYX Rule 11.18(e)(5) and is described
(d) and replace them with Rule of current Rule 11.10(a)(3)(E) would be
more fully below. The Exchange is not
11.16(e)(5)(D). The Exchange proposes sufficiently covered in proposed Rules
proposing to alter the handling and re-
to delete in its entirety Rule 11.11(b)(1) 11.16(e)(2) and (3), which will help
pricing of orders that [sic] under the
as this provision is no longer necessary ensure the compliance by its Members
Plan, but rather, is proposing to adopt
as it is covered succinctly in new Rule with the provisions of the Plan as
rule text that is identical to that of its 11.16(e)(5)(D). Rule 11.11(c), which
affiliated exchanges to reduce potential required pursuant to Section II(B) of the
discusses re-routing of orders under the Plan.16
confusion. Plan, will be moved to Rule
The Exchange also proposes to delete The Exchange also proposes to add
11.16(e)(5)(D)(i) with slight Rule 11.16(e)(4) to replace deleted Rule
Rule 11.10(a)(3)(C) and does not
modifications. Rule 11.11(d), which 11.10(a)(3)(E). Rule 11.16(e)(4) would
propose to include it as part of the
discusses the operation of certain provide that the Exchange’s System 17
amended rule set. Rule 11.10(a)(3)(C)
routing strategies under the Plan, will be shall not display or execute buy (sell)
states that a description of the behavior
moved to Rule 11.16(e)(5)(D)(ii) without interest above (below) the Upper
of routable market and Limit Orders in
change. Each of these changes are (Lower) Price Bands, unless such
response to the Plan is found in Rule
discussed in more detail below. interest is specifically exempted under
11.11(b)(1). The Exchange believes this
the Plan. The Exchange believes that
provision is no longer necessary as the Proposed Amendment to Rule 11.16
this requirement is reasonably designed
Exchange’s procedures for handling, The Exchange is required by the Plan to help ensure the compliance with the
executing, re-pricing, and displaying to establish, maintain, and enforce limit up-limit down and trading pause
orders in connection with the Plan are written policies and procedures that are requirements specified in the Plan by
proposed to be described in a single reasonably designed to comply with the preventing executions outside the Price
rule, Rule 11.16(e), rather than multiple limit up-limit down and trading pause Bands as required pursuant to Section
rules as is currently the case. requirements specified in the Plan. In
The Exchange proposes to delete Rule VI(A)(1) of the Plan.18
February 2013, the Exchange amended As mentioned above, the Exchange
11.10(a)(3)(D), which discusses the its Rules in connection with the proposes to incorporate the provisions
handling of orders with a Short Sale implementation of the Plan.15 The of current Rules 11.9(a)(8) and
instruction 14 under the Plan, and Exchange now proposes to incorporate 11.10(a)(3)(A) and (B) within Rule
replace it with Rule 11.16(e)(5)(E). The the provisions discussed above into 11.16(e)(5) regarding the treatment of
proposed rule text for Exchange Rule Rule 11.16(e) in order to make the certain trading interest on the Exchange
11.16(e)(5)(E) is directly based on BZX Exchange’s Rules identical to the in order to prevent executions outside
and BYX Rule 11.18(e)(5)(E) and is corresponding rules on BZX and BYX. the Price Bands and to comply with the
described more fully below. The The proposed amendments to Rule Plan. The Exchange is proposing to
Exchange is not proposing to alter the 11.16(e) are based on BZX and BYX delete Rules 11.9(a)(8) and
handling of orders with a Short Sale Rules 11.18(e). The Exchange believes 11.10(a)(3)(A) and (B) to include this
instruction under the Plan, but rather, is that the provisions proposed below are information in Rule 11.16(e)(5) in order
proposing to relocate the text, with reasonably designed to prevent to adopt a consistent rule set as between
modifications, to Rule 11.16(e)(5)(E) as executions outside the Price Bands as the Exchange and the other BGM
discussed below.
mstockstill on DSK4VPTVN1PROD with NOTICES
required by the limit up-limit down and
The Exchange proposes to delete Rule
trading pause requirements specified in 16 See Section II(B) of the Plan.
11.10(a)(3)(E) and replace it with Rule
the Plan. 17 The ‘‘System’’ is defined in Exchange Rule
11.16(e)(2) thru (4). Current Rule First, the Exchange proposes to add 1.5(cc) as ‘‘the electronic communications and
trading facility designated by the Board through
14 A ‘‘Short Sale’’ instruction is defined as ‘‘[a]n
Rule 11.16(e)(1) to provide that all which securities orders of Users are consolidated
instruction on an order which shall have the same capitalized terms not otherwise defined for ranking, execution and, when applicable,
meaning as defined in Rule 200(a) of Regulation routing away.’’
SHO.’’ See Exchange Rule 11.6(o). 15 See supra note 7 [sic]. 18 See Section VI(A)(1) of the Plan.
VerDate Sep<11>2014 18:02 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/3.svg)
![19718 Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices
Affiliated Exchanges. Proposed Rule User has entered instructions to instruction of IOC or FOK at or within
11.16(e)(5) is based on BZX and BYX cancel 19 the order. Rule 11.10(a)(3)(B) the Price Bands. If a Market Order or
Rules 11.18(e)(5). explains how the Exchange will re-price order with a TIF instruction of IOC or
Current Rule 11.9(a)(8) describes the an order that is priced outside of the FOK cannot be fully executed at or
priority of orders that are re-priced and Price Bands by stating that a non- within the Price Bands, the System shall
displayed in accordance with the Plan. routable buy (sell) order at a price cancel any unexecuted portion of the
Specifically, Rule 11.9(a)(8) states that if greater (less) than the Upper (Lower) order without posting such order to the
the Upper (Lower) Price Band moves so Price Band will be re-priced and EDGX Book. This provision is similar to
that the price of a buy (sell) order displayed at the price of the Upper current Rule 11.10(a)(3)(A). The Rule
resting on the EDGX Book would (Lower) Price Band. If the price of the would also state that the display of
consequently be above (below) the Upper (Lower) Price Band moves above Market Orders will be handled in
Upper (Lower) Price Band, such order (below) the non-routable buy (sell) accordance with Rule 11.8(a)(4).
will be re-priced and displayed at a order’s displayed price, the buy (sell)
price equal to the Upper (Lower) Price order will not be adjusted further and Limit Orders
Band, provided a new timestamp, and will remain posted at the original price The operation of Limit Orders under
prioritized based on its existing at which it was posted to the EDGX the Plan would be set forth in Rule
timestamp at the time the new Price Book. If the Upper (Lower) Price Band 11.16(e)(5)(B), which would include the
Bands are established. If an order is crosses a non-routable buy (sell) order following provisions.
resting on the EDGX Book at a price resting on the EDGX Book, the buy (sell) • Orders Not Subject to Re-Pricing.
equal to the Upper (Lower) Price Band, order will be re-priced to the price of Limit Orders will be cancelled if a User
such order will not be re-priced but will the Upper (Lower) Price Band. has entered instructions not to use the
be provided a new timestamp and Likewise, proposed Rule 11.16(e)(5) re-pricing process set forth in Rule
prioritized based on its existing discusses the re-pricing and 11.16(e)(5) and such interest to buy
timestamp at the time the new Price cancellation of interest and specifically (sell) is priced above (below) the Upper
Bands are established. provides that the Exchange systems (Lower) Price Band.
Likewise, under proposed Rule shall re-price and/or cancel buy (sell) • Incoming Orders. If re-pricing is
11.16(e)(5), when re-pricing resting interest that is priced or could be permitted based on a User’s
orders because such orders are above executed 20 above (below) the Upper instructions, both displayable and non-
(below) the Upper (Lower) Price Band, (Lower) Price Band. The Exchange is not displayable incoming Limit Orders to
the Exchange will provide new proposing to alter the handling or re- buy (sell) that are priced above (below)
timestamps to such orders. The pricing of orders under the Plan, but the Upper (Lower) Price Band shall be
Exchange will also provide new rather, is proposing to adopt rule text re-priced to the Upper (Lower) Price
timestamps to resting orders at the less that is identical to that of its affiliated Band.
aggressive price to which such orders exchanges to reduce potential • Resting Orders. The System shall
are re-priced. Any resting interest that is confusion. The Exchange notes that re-price resting Limit Orders to buy
re-priced pursuant to Rule 11.16(e)(5) while the format of current Rules (sell) to the Upper (Lower) Price Band
shall maintain priority ahead of interest 11.10(a)(3)(A) and (B) are not identical if Price Bands move such that the price
that was originally less aggressively to that of proposed Rule 11.16(e)(5), the of resting Limit Orders to buy (sell)
priced, regardless of the original Exchange proposes to include the would be above (below) the Upper
timestamps for such orders. The following provisions under Rule (Lower) Price Band. If the Price Bands
Exchange is not proposing to alter the 11.16(e)(5) regarding the re-pricing or move again and the original limit price
priority handling of orders that are re- canceling of certain trading interest that of a displayed and re-priced Limit Order
priced and displayed in accordance are similar to BZX and BYX Rule is at or within the Price Bands and a
with the Plan, but rather, is proposing 11.18(e)(5), which if [sic] believes User has opted into the Exchange’s
to adopt rule text that is identical to that continue to accurately describe system optional multiple re-pricing process, as
of its affiliated exchanges to reduce functionality and provide additional described in Rule 11.6(l), the System
potential confusion. While the text of specificity, the specifics of which are shall re-price such displayed limit
current Rule 11.9(a)(8) is not identical to described under each subsection of interest to the most aggressive
proposed Rule 11.16(e)(5), the Exchange proposed Rule 11.16(e)(5) set forth permissible price up to the order’s limit
proposes to adopt language identical to below. price. All other displayed and non-
BZX and BYX Rules 11.18(e)(5), which displayed limit interest re-priced
it believes more clearly describes system Market Orders and Orders With a TIF of
IOC or FOK pursuant to paragraph (e) of Rule 11.16
functionality. will remain at its new price unless the
Current Rules 11.10(a)(3)(A) and (B) Proposed Rule 11.16(e)(5)(A) would Price Bands move such that the price of
address the handling and re-pricing of state that the System will only execute resting Limit Order to buy (sell) would
orders under the Plan. Rule Market Orders or orders with a TIF again be above (below) the Upper
11.10(a)(3)(A) discusses how an order (Lower) Price Band.
priced within the Price Bands may be 19 Under the Cancel Back instruction, a User may
executed or posted to the EDGX Book by instruct the System to immediately cancel the order Orders With a Pegged Instruction 21
when, if displayed by the System on the EDGX
stating that a non-routable buy (sell) Book at the time of entry, or upon return to the Currently, the operation of orders
order that is entered into the System at System after being routed away, would create a with a Pegged instruction under the
mstockstill on DSK4VPTVN1PROD with NOTICES
a price less (greater) than or equal to the violation of Rule 610(d) of Regulation NMS or Rule
201 of Regulation SHO, or the order cannot
Plan is not specifically addressed in the
Upper (Lower) Price Band will be otherwise be executed or posted by the System to Exchange’s Rules. Therefore, the
posted to the EDGX Book or executed, the EDGX Book at its limit price. See Exchange Rule Exchange proposes to adopt Rule
unless: (i) the order includes a Time-in- 11.6(b). 11.16(e)(5)(C) which would state that
Force Instruction (‘‘TIF’’) of Immediate 20 The Exchange notes that this includes any
orders with a Pegged instruction to buy
interest that is displayed and/or resting at a less
or Cancel (‘‘IOC’’) or Fill-or-Kill aggressive price but executable at a more aggressive
(‘‘FOK’’), in which case it will be price, such as orders subject to price sliding and 21 The ‘‘Pegged’’ instruction is described under
cancelled if not executed; or (ii) the discretionary order types. Rule 11.6(j).
VerDate Sep<11>2014 18:02 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/4.svg)
![Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19719
(sell) shall peg to the specified pegging in Rule 11.11(g), are eligible for routing halt will be conducted pursuant to
price or the Upper (Lower) Price Band, in accordance with the Plan as follows: procedures adopted by the Exchange
whichever is lower (higher). Rule the System will immediately cancel and communicated by notice to its
11.16(e)(5)(c) is similar to BZX and BYX orders utilizing an SWP routing strategy Members. The Exchange recently
Rules 11.18(e)(5)(C). when an order to buy utilizing an SWP codified its opening process, including
Routable Orders routing strategy has a limit price that is its re-opening process follow a halt,
greater than the Upper Price Band or if suspension or pause, under Rule 11.7.28
The Exchange proposes to delete a sell order utilizing an SWP routing Therefore, with respect to the re-
Rules 11.11(b) thru (d), which discuss strategy has a limit price that is less opening of trading following a Trading
the routing of orders under the Plan, than the Lower Price Band. Proposed Pause, the Exchange proposes to adopt
and replace them with Rule Rule 11.16(e)(5)(D)(ii) is similar to BZX Rule 11.16(e)(6) to provide that the
11.16(e)(5)(D). The Exchange is not and BYX Rule 11.13(a)(3)(I).26 Exchange shall re-open the security as
proposing any changes to its routing set forth in Rule 11.7(e), which is the
functionality in connection with the Orders With a Short Sale Instruction
Exchange’s Rule describing the
implementation of the Plan. The The Exchange proposes to replace Exchange’s re-opening process
Exchange proposes to delete in its current Rule 11.10(a)(3)(D), which following a trading halt, suspension or
entirety Rule 11.11(b)(1), which states discusses the handling of orders with a pause.
when an order may be routed under the Short Sale instruction under the Plan, The Exchange also proposes to delete
Plan, as these provisions are no longer with proposed Rule 11.16(e)(5)(E). The Rule 11.16(d) which discusses when the
necessary as they are covered succinctly proposed rule text for Exchange Rule Exchange may resume trading where the
in new Rule 11.16(e)(5)(D). Rule 11.16(e)(5)(E) is directly based on BZX Primary Listing Market issues an
11.16(e)(5)(D) would state that if routing and BYX Rule 11.18(e)(5)(E). Current individual stock trading pause and how
is permitted based on a User’s Rule 11.10(a)(3)(D) states that where a individual stock trading pauses are to be
instructions, orders shall be routed short sale order is entered into the handled during Phase I of the Plan.
away from the Exchange pursuant to System with a limit price below the Interpretation and Policy .01 to Rule
Rule 11.11, provided that the System Lower Price Band and a short sale price 11.16 states that the provisions of
shall not route buy (sell) interest at a test restriction under Rule 201 of paragraph (d) of this Rule shall be in
price above (below) the Upper (Lower) Regulation SHO is in effect, the System effect during a pilot set to end on the
Price Band.22 Rule 11.11(c), which will re-price such order to the Lower earlier of the initial date of operations
discusses re-routing of orders under the Price Band as long as the Lower Price of the Regulation NMS Plan to Address
Plan, will be moved to Rule Band is at a Permitted Price.27 When an Extraordinary Market Volatility or
11.16(e)(5)(D)(i) with slight order with a Short Sale instruction is February 4, 2014. Phase I of the Plan has
modifications. Current Rule 11.11(c) entered into the System with a limit expired and the Exchange, therefore,
states that for routing strategies that price above the Lower Price Band and proposes to delete Rule 11.16(d) as well
access all Protected Quotations, when a short sale price test restriction under as Interpretation and Policy .01 to Rule
the Upper (Lower) Price Band adjusts Rule 201 of Regulation SHO is in effect, 11.16 as they are no longer relevant.
such that the NBO (NBB) becomes the System will re-price such order, if Lastly, the Exchange proposes the
executable, a routable buy (sell) Market necessary, at a Permitted Price. following additional amendments to
or marketable Limit Order will be Likewise, proposed Rule 11.16(e)(5)(E) Rule 11.16: (i) renumber paragraph (f) as
eligible to be re-routed by the Exchange. would state that where a short sale price (d); (ii) delete current Rule 11.16(e) and
Likewise, Rule 11.16(e)(5)(D)(i) would restriction under Rule 201 of Regulation replace it with new paragraph (f)
state that when the Upper (Lower) Price SHO is in effect, orders with a Short providing that in the event of a trading
Band adjusts such that the NBO (NBB) Sale instruction priced below the Lower halt, all orders will remain on the EDGA
becomes executable, a routable buy Price Band shall be re-priced to the [sic] Book unless cancelled by the User;
(sell) Market or marketable Limit Order higher of the Lower Price Band or the and (iii) adopt paragraph (g), which
will be eligible to be re-routed by the Permitted Price. The Exchange is not would state that all times referenced in
Exchange if such order contains an proposing to alter the handling of orders Rule 11.16 shall be Eastern Time.
Aggressive 23 or Super Aggressive 24 with a Short Sale instruction that under
instruction.25 Rule 11.11(d), which the Plan, but rather, is proposing to Ministerial Changes
discusses the operation of certain relocate the text, with modifications, to In light of the above restructuring of
routing strategies under the Plan, will be Rule 11.16(e)(5)(E) discussed above. the Exchange Rules, the Exchange
moved to Rule 11.16(e)(5)(D)(ii) without proposes the following ministerial
change. Rule 11.16(e)(5)(D)(ii) would Other Amendments to Rule 11.16
changes to update cross references to
state that routing strategies SWPA and The Exchange also proposes to Rules that are to be deleted or relocated
SWPB (together, ‘‘SWP’’), as described relocate Rule 11.16(c), which discusses as described above:
the re-opening of trading following a • amend Rule 11.8(a)(4) regarding the
22 This provision shall also replace current Rule
trading halt, to proposed Rule display of Market Orders to update a
11.10(a)(3)(C) which states that the description of 11.16(e)(6), with minor modifications.
the behavior of routable Market Orders and Limit
cross-reference to current Rule
Orders in response to the Plan is set forth in Rule Current Rule 11.16(c) states that the re- 11.10(a)(3)(A) to proposed Rule
11.11(b)(1). opening of trading following a trading 11.16(e)(5),
23 The ‘‘Aggressive’’ instruction is described
• amend Rule 11.8(d)(7) regarding the
mstockstill on DSK4VPTVN1PROD with NOTICES
under Rule 11.6(n)(1). 26 The Exchange notes that it proposal to include
operation of MidPoint Match Orders
24 The ‘‘Super Aggressive’’ instruction is current Rule 11.11(d) within proposed Rule
described under Rule 11.6(n)(2). 11.16(e)(5)(D)(ii), rather than within its Rule
under the Plan to update a cross-
25 The Exchange notes that this provision is not 11.11(g) which describes each of its routing
included in BZX or BYX Rule 11.18(e), but the strategies, differs from the location of the same 28 See Securities Exchange Act Release Nos.
Exchange believes it provides additional detail that provision under BZX and BYX Rule 11.13(a)(3), 73468 (October 29, 2014), 79 FR 65450 (November
was included in current Exchange Rule 11.11(c) which describes BZX and BYX’s routing strategies. 4, 2014) (SR–EDGX–2014–18); and 73592
that is helpful to retain in proposed Rule 27 The term ‘‘Permitted Price’’ is defined in Rule (November 13, 2014), 79 FR 68937 (November 19,
11.16(e)(5)(D)(i). 11.6(k). 2014) (SR–EDGA–2014–20).
VerDate Sep<11>2014 18:02 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/5.svg)
![19720 Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices
reference to current Rule 11.10(a)(3) to rule change is equitable and will interest; (ii) impose any significant
proposed Rule 11.16(e), and promote fairness in the market place. burden on competition; and (iii) become
• amend Rule 11.9(a)(2)(D)(ii) Finally, the proposal to remove the operative for 30 days from the date on
regarding the priority of Market Orders references to individual stock trading which it was filed, or such shorter time
displayed on the EDGX Book to delete pauses promotes just and equitable as the Commission may designate, it has
a cross-reference to current Rule principles of trade and removes become effective pursuant to Section
11.10(a)(3)(A). impediments to, and perfects the 19(b)(3)(A)(iii) of the Act 33 and
mechanism of, a free and open market subparagraph (f)(6) of Rule 19b–4
2. Statutory Basis and a national market system. By thereunder.34
The Exchange believes that the eliminating the reference to trading At any time within 60 days of the
proposed rule change is consistent with pauses outside the scope of the Plan in filing of the proposed rule change, the
the requirements of the Act and the its rules, the Exchange will help to Commission summarily may
rules and regulations thereunder that alleviate any potential confusion with temporarily suspend such rule change if
are applicable to a national securities respect to such pauses, particularly in it appears to the Commission that such
exchange, and, in particular, with the light of the implementation of the Plan. action is: (i) Necessary or appropriate in
requirements of Section 6(b) of the The proposed rule change is also the public interest; (ii) for the protection
Act.29 Specifically, the proposed change consistent with Section 11A(a)(1) of the of investors; or (iii) otherwise in
is consistent with Section 6(b)(5) of the Act 32 in that it seeks to assure fair furtherance of the purposes of the Act.
Act,30 because it is designed to promote competition among brokers and dealers If the Commission takes such action, the
just and equitable principles of trade, to and exchange markets. Commission shall institute proceedings
Finally, the Exchange believes that to determine whether the proposed rule
remove impediments to, and perfect the
the non-substantive, ministerial changes should be approved or disapproved.
mechanism of, a free and open market
discussed above will contribute to the
and a national market system, and, in IV. Solicitation of Comments
protection of investors and the public
general, to protect investors and the
interest by helping to avoid confusion Interested persons are invited to
public interest. The Exchange does not
with respect to Exchange Rules. submit written data, views, and
propose to alter its current system
arguments concerning the foregoing,
functionality with regard to compliance B. Self-Regulatory Organization’s
including whether the proposed rule
with the Plan set forth under current Statement on Burden on Competition
change is consistent with the Act.
Exchange Rules. Rather, the proposed The Exchange does not believe that Comments may be submitted by any of
rule change is designed to provide a the proposed rule change will impose the following methods:
consistent rule set across each of the any burden on competition not
BGM Affiliated Exchanges. As necessary or appropriate in furtherance Electronic Comments
mentioned above, the proposed rule of the purposes of the act. To the • Use the Commission’s Internet
changes, combined with the planned contrary, allowing the Exchange to comment form (http://www.sec.gov/
filing for EDGA,31 would allow the BGM implement substantively identical rules rules/sro.shtml); or
Affiliated Exchanges to provide a across each of the BGM Affiliated • Send an email to rule-comments@
consistent set of rules as it relates to the Exchanges regarding the Plan does not sec.gov. Please include File Number SR–
compliance with the Plan across each of present any competitive issues, but EDGX–2015–15 on the subject line.
the BGM Affiliated Exchanges. rather is designed to provide greater
Consistent rules, in turn, will simplify harmonization among Exchange, BYX, Paper Comments
the regulatory requirements for BZX, and EDGA rules of similar • Send paper comments in triplicate
Members of the Exchange that are also purpose. The proposed rule change to Secretary, Securities and Exchange
participants on EDGA, BZX and/or BYX. should, therefore, resulting in less Commission, 100 F Street NE.,
The proposed rule change would burdensome and more efficient Washington, DC 20549–1090.
provide greater harmonization between regulatory compliance and All submissions should refer to File
rules of similar purpose on the BGM understanding of Exchange Rules for Number SR–EDGX–2015–15. This file
Affiliated Exchanges, resulting in common members of the BGM Affiliated number should be included on the
greater uniformity and less burdensome Exchanges and an enhanced ability of subject line if email is used. To help the
and more efficient regulatory the BGM Affiliated Exchanges to fairly Commission process and review your
compliance and understanding of and efficiently regulate Members, which comments more efficiently, please use
Exchange Rules. As such, the proposed will further enhance competition. only one method. The Commission will
rule change would foster cooperation post all comments on the Commission’s
and coordination with persons engaged C. Self-Regulatory Organization’s
Statement on Comments on the Internet Web site (http://www.sec.gov/
in facilitating transactions in securities rules/sro.shtml). Copies of the
and would remove impediments to and Proposed Rule Change Received From
Members, Participants, or Others submission, all subsequent
perfect the mechanism of a free and amendments, all written statements
open market and a national market The Exchange has neither solicited with respect to the proposed rule
system. Similarly, the Exchange also nor received written comments on the change that are filed with the
believes that, by harmonizing the rules proposed rule change. Commission, and all written
and across each BGM Affiliated
III. Date of Effectiveness of the
mstockstill on DSK4VPTVN1PROD with NOTICES
Exchange with respect to the Plan, the 33 15 U.S.C. 78s(b)(3)(a)(iii).
proposal will enhance the Exchange’s Proposed Rule Change and Timing for
34 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
ability to fairly and efficiently regulate Commission Action
4(f)(6) requires a self-regulatory organization to give
its Members, meaning that the proposed Because the foregoing proposed rule the Commission written notice of its intent to file
change does not: (i) Significantly affect the proposed rule change at least five business days
prior to the date of filing of the proposed rule
29 15 U.S.C. 78f(b). the protection of investors or the public change, or such shorter time as designated by the
30 15 U.S.C. 78f(b)(5). Commission. The Exchange has satisfied this
31 See supra note 8 [sic]. 32 15 U.S.C. 78k–1(a)(1). requirement.
VerDate Sep<11>2014 18:02 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/6.svg)
![Federal Register / Vol. 80, No. 70 / Monday, April 13, 2015 / Notices 19721
communications relating to the I. Self-Regulatory Organization’s fees for such transactions and provide
proposed rule change between the Statement of the Terms of Substance of greater incentives for such trading.
Commission and any person, other than the Proposed Rule Change
2. Statutory Basis
those that may be withheld from the
The Exchange proposes to amend its The Exchange believes the proposed
public in accordance with the
Fees Schedule. The text of the proposed rule change is consistent with the
provisions of 5 U.S.C. 552, will be rule change is available on the
available for Web site viewing and Securities Exchange Act of 1934 (the
Exchange’s Web site (http:// ‘‘Act’’) and the rules and regulations
printing in the Commission’s Public www.cboe.com/AboutCBOE/ thereunder applicable to the Exchange
Reference Room, 100 F Street NE., CBOELegalRegulatoryHome.aspx), at and, in particular, the requirements of
Washington, DC 20549 on official the Exchange’s Office of the Secretary, Section 6(b) of the Act.4 Specifically,
business days between the hours of and at the Commission’s Public the Exchange believes the proposed rule
10:00 a.m. and 3:00 p.m. Copies of such Reference Room. change is consistent with the Section
filing also will be available for 6(b)(5) 5 requirements that the rules of
inspection and copying at the principal II. Self-Regulatory Organization’s
Statement of the Purpose of, and an exchange be designed to prevent
office of the Exchange. All comments fraudulent and manipulative acts and
received will be posted without change; Statutory Basis for, the Proposed Rule
Change practices, to promote just and equitable
the Commission does not edit personal principles of trade, to foster cooperation
identifying information from In its filing with the Commission, the and coordination with persons engaged
submissions. You should submit only Exchange included statements in regulating, clearing, settling,
information that you wish to make concerning the purpose of and basis for processing information with respect to,
available publicly. All submissions the proposed rule change and discussed and facilitation transactions in
should refer to File Number SR–EDGX– any comments it received on the securities, to remove impediments to
2015–15, and should be submitted on or proposed rule change. The text of these and perfect the mechanism of a free and
before May 4, 2015. statements may be examined at the open market and a national market
For the Commission, by the Division of places specified in Item IV below. The system, and, in general, to protect
Trading and Markets, pursuant to delegated Exchange has prepared summaries, set investors and the public interest.
authority.35 forth in sections A, B, and C below, of Additionally, the Exchange believes the
the most significant aspects of such proposed rule change is consistent with
Brent J. Fields,
statements. Section 6(b)(4) of the Act,6 which
Secretary. requires that Exchange rules provide for
[FR Doc. 2015–08335 Filed 4–10–15; 8:45 am] A. Self-Regulatory Organization’s
the equitable allocation of reasonable
Statement of the Purpose of, and
BILLING CODE 8011–01–P dues, fees, and other charges among its
Statutory Basis for, the Proposed Rule
Trading Permit Holders and other
Change
persons using its facilities.
SECURITIES AND EXCHANGE 1. Purpose The Exchange believes that the
COMMISSION proposal to exclude from the COB Taker
The Exchange proposes to amend its Surcharge stock-option orders is
Fees Schedule, effective April 1, 2015. reasonable because it will allow TPHs
[Release No. 34–74669; File No. SR–CBOE–
Specifically, the Exchange proposes to who engage in stock-option order
2015–038]
amend the Complex Order Book trading the opportunity to pay lower
Self-Regulatory Organizations; (‘‘COB’’) Taker Surcharge. By way of fees for such transactions. It is equitable
Chicago Board Options Exchange, background, the COB Taker Surcharge is and not unfairly discriminatory because
a $0.05 per contract per side surcharge it is applied to all TPHs equally.
Incorporated; Notice of Filing and
for non-customer complex order Additionally, the Exchange believes the
Immediate Effectiveness of a Proposed
executions that take liquidity from the proposed change is designed to attract
Rule Change To Amend the Fees
COB in all underlying classes except greater stock-option order flow to the
Schedule OEX, XEO, SPX (including SPXW), Exchange. This would bring greater
April 7, 2015. SPXpm, SRO, VIX, VXST, Volatility liquidity to the market, which benefits
Indexes and binary options all market participants.
Pursuant to Section 19(b)(1) of the (‘‘Underlying Symbol List A 3’’) and
Securities Exchange Act of 1934 (the mini-options. Additionally, the COB B. Self-Regulatory Organization’s
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Taker Surcharge is not assessed on non- Statement on Burden on Competition
notice is hereby given that on April 1, customer complex order executions in The Exchange does not believe that
2015, Chicago Board Options Exchange, the Complex Order Auction (‘‘COA’’), the proposed rule changes will impose
Incorporated (the ‘‘Exchange’’ or the Automated Aim Mechanism any burden on competition that are not
‘‘CBOE’’) filed with the Securities and (‘‘AIM’’), orders originating from a Floor necessary or appropriate in furtherance
Exchange Commission (the Broker PAR, or electronic executions of the purposes of the Act. The
‘‘Commission’’) the proposed rule against single leg markets. The Exchange does not believe that the
change as described in Items I, II, and Exchange proposes to exclude from the proposed rule change will impose any
III below, which Items have been COB Taker Surcharge, stock-option burden on intramarket competition that
mstockstill on DSK4VPTVN1PROD with NOTICES
prepared by the Exchange. The order executions. Eliminating the is not necessary or appropriate in
Commission is publishing this notice to surcharge for stock-option orders will furtherance of the purposes of the Act
solicit comments on the proposed rule allow Trading Permit Holders (‘‘TPHs’’) because the proposed change applies to
change from interested persons. who engage in stock-option order all TPHs. The Exchange does not believe
executions the opportunity to pay lower
35 17 CFR 200.30–3(a)(12). 4 15 U.S.C. 78f(b).
1 15 U.S.C. 78s(b)(1). 3 As 5 15 U.S.C. 78f(b)(5).
of April 1, 2015, Underlying Symbol List A
2 17 CFR 240.19b–4. will also include the Russell 2000 Index (‘‘RUT’’). 6 15 U.S.C. 78f(b)(4).
VerDate Sep<11>2014 18:02 Apr 10, 2015 Jkt 235001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1](https://thefederalregister.org/doc/80_FR_19785/page/7.svg)
Document Created: 2015-12-18 11:22:14
Document Modified: 2015-12-18 11:22:14
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 19715 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR