80_FR_70503 80 FR 70284 - Order Granting Exemption From Compliance With the National Market System Plan To Implement a Tick Size Pilot Program

80 FR 70284 - Order Granting Exemption From Compliance With the National Market System Plan To Implement a Tick Size Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 219 (November 13, 2015)

Page Range70284-70285
FR Document2015-28795

Federal Register, Volume 80 Issue 219 (Friday, November 13, 2015) 
[Federal Register Volume 80, Number 219 (Friday, November 13, 2015)]
[Notices]
[Pages 70284-70285]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-28795]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76382; File No. 4-657]


Order Granting Exemption From Compliance With the National Market 
System Plan To Implement a Tick Size Pilot Program

November 6, 2015.

I. Introduction

    Pursuant to Rule 608(e) \1\ under the Securities Exchange Act of 
1934 (``Exchange Act''), the Securities and Exchange Commission 
(``Commission'') may exempt from compliance with the provisions of Rule 
608, either unconditionally or on specified terms and conditions, any 
self-regulatory organization, member thereof, or specified security, if 
the Commission determines that such exemption is consistent with the 
public interest, the protection of investors, the maintenance of fair 
and orderly markets and the removal of impediments to, and perfection 
of the mechanisms of, a national market system. As discussed below, the 
Commission is exercising its authority under Rule 608(e) to exempt BATS 
Exchange, Inc., BATS Y-Exchange, Inc., Chicago Stock Exchange, Inc., 
EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory 
Authority, Inc. (``FINRA''), NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, 
the Nasdaq Stock Market LLC, New York Stock Exchange LLC (``NYSE''), 
NYSE MKT LLC, and NYSE Arca, Inc., (collectively ``SROs'' or 
``Participants''), from implementing the Plan to Implement a Tick Size 
Pilot Program (``Tick Size Pilot'') until October 3, 2016.
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    \1\ 17 CFR 242.608(e).
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II. Background

    On May 6, 2015, the Commission approved the Tick Size Pilot and 
provided that the Tick Size Pilot be implemented within one year after 
the publication of the order.\2\ The Tick Size Pilot will have a two-
year duration (``Pilot Period''),\3\ and will include exchange-listed 
common stocks that have the following characteristics: (1) A market 
capitalization of less than $3 billion; (2) a closing price of at least 
$2 per share on the last day of the measurement period (and a closing 
price of not less than $1.50 per share during the measurement period); 
(3) a consolidated average daily volume of one million shares or less; 
and (4) a volume-weighted average price of at least $2 per share 
(``Pilot Securities'').
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    \2\ Securities Exchange Act Release No. 74892 (May 6, 2015), 80 
FR 27514 (May 13, 2015).
    \3\ The term Pilot Period means the operative period of the Tick 
Size Pilot, lasting two years from the date of implementation. See 
Section I.U of the Tick Size Pilot at 80 FR 27547.
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    The Pilot Securities will be divided into one control group and 
three test groups. There will be 400 Pilot Securities per test group 
and the remaining Pilot Securities will be assigned to the control 
group. Test Group One Pilot Securities will quote in $0.05 per share 
increments and will trade at any currently permitted increment. Test 
Group Two Pilot Securities will quote in $0.05 per share increments 
like those in Test Group One, but will only be permitted to trade in 
$0.05 per share increments, subject to certain exceptions.\4\ Finally, 
Test Group

[[Page 70285]]

Three Pilot Securities will quote in $0.05 per share increments and 
will trade in $0.05 per share increments consistent with Test Group 
Two, and in addition be subject to a Trade-At Prohibition, which would 
generally prevent price matching by a trading center that is not 
displaying a quotation at the price of the best protected quotation, 
unless an exception applies. Pilot Securities in the control group 
would continue to quote and trade in the pricing increments that are 
currently permitted.
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    \4\ First, executions will be able to at the midpoint between 
the national (or protected) best bid and the national (or protected) 
best offer; second, orders involving retail investor orders will be 
able to trade with price improvement of at least $0.005 per share; 
and third, negotiated trades (such as a volume-weighted average 
price trade or a time-weighted average price trade) will be able to 
trade outside of the $0.05 increment.
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    Pursuant to the Tick Size Pilot, Participants will collect data 
reflecting a variety of market quality metrics with respect to the 
Pilot Securities and transmit such data to the Commission. The 
collected data will be publicly available in an aggregated form. In 
addition, the Participants are required to conduct, and provide the 
Commission with, a publicly-available impact assessment.

III. Discussion

    As discussed in the Approval Order,\5\ several actions need to 
occur prior to the implementation of the Tick Size Pilot, including: 
(1) The development and testing of applicable trading and compliance 
systems, (2) the filing and approval of SRO rules related to the Tick 
Size Pilot's quoting and trading requirements, and (3) the development 
and implementation of the written policies and procedures by 
Participants and their members that are reasonably designed to comply 
with the applicable quoting and trading increments. In addition, the 
Participants must develop appropriate policies and procedures for 
collecting and reporting to the Commission the requisite data in 
connection with the Tick Size Pilot, including the filing and approval 
of SRO rules requiring the collection and reporting of data from 
certain member firms. Data is to be collected by the Participants for 
periods beginning six months prior to the Pilot Period.\6\ To date, the 
requisite SRO rule proposals have not been filed or approved by the 
Commission, and there has not been an opportunity for the Participants 
and their members to develop and test applicable trading and compliance 
systems.\7\
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    \5\ 80 FR at 27545.
    \6\ See Sections IV and VII of the Tick Size Pilot at 80 FR at 
27548 and 27552-53.
    \7\ The Commission notes that the Participants anticipate filing 
model data collection rule proposals with the Commission no later 
than November 13, 2015. See Letter from Brendon J. Weiss, Co-Head, 
Government Affairs, Intercontinental Exchange/NYSE, to Brent J. 
Fields, Secretary, Commission, dated November 4, 2015. In addition, 
the Commission notes that the Participants issued technical 
specifications and FAQs related to the data collection requirements 
on October 12, 2015.
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    Accordingly, the Commission believes additional time is needed for 
the Participants and their members to complete their preparations for 
implementation of the Tick Size Pilot. The Commission believes that 
extending the implementation date by approximately five months, to 
October 3, 2016, is sufficient to allow for a smooth yet timely 
implementation of the Tick Size Pilot, including the approval of 
applicable SRO rules and the development and testing of new compliance 
systems.\8\
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    \8\ The Commission has received requests to extend the 
implementation date of the Tick Size Pilot or its data collection 
requirements for various periods. See Letter from Theodore R. Lazo, 
Managing Director and Associate General Counsel, SIFMA, to Stephen 
Luparello, Director, Division of Trading and Markets, Commission, 
dated August 31, 2015 (requesting the data collection period be 
extended until at least three months after the requisite SRO rules 
are approved by the Commission and related interpretive guidance is 
published); Letter from Mary Lou Von Kaenel, Managing Director, 
Financial Information Forum, to Stephen Luparello, Director, 
Division of Trading and Markets, Commission, dated September 24, 
2015 (requesting the data collection period be extended a minimum of 
six months); and Letter from Brendon J. Weiss, Co-Head, Government 
Affairs, Intercontinental Exchange/NYSE, to Brent J. Fields, 
Secretary, Commission, dated November 4, 2015 (requesting the data 
collection period be extended until six months after the requisite 
SRO rules are approved, and the implementation data of the Tick Size 
Pilot until six months thereafter).
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    Therefore, the Commission believes that it is necessary and 
appropriate to issue an exemption to extend the date by which the 
Participants must implement the Tick Size Pilot until October 3, 2016. 
The Commission has determined that such an exemption is consistent with 
the public interest, the protection of investors, the maintenance of 
fair and orderly markets and the removal of impediments to, and 
perfection of the mechanisms of, a national market system.

IV. Conclusion

    It is hereby ordered, pursuant to Rule 608(e) of Exchange Act,\9\ 
that the Participants are exempt from implementing the Tick Size Pilot 
until October 3, 2016.
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    \9\ 17 CFR 242.608(e).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(42).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28795 Filed 11-12-15; 8:45 am]
 BILLING CODE 8011-01-P

70284 Federal Register / Vol. 80, No. 219 / Friday, November 13, 2015 / Notices market participants can readily favor Internet Web site (http://www.sec.gov/ of fair and orderly markets and the competing venues if they deem fee rules/sro.shtml). removal of impediments to, and levels at a particular venue to be Copies of the submission, all perfection of the mechanisms of, a excessive. In such an environment, the subsequent amendments, all written national market system. As discussed Exchange must continually adjust its statements with respect to the proposed below, the Commission is exercising its fees to remain competitive with other rule change that are filed with the authority under Rule 608(e) to exempt exchanges and to attract order flow. The Commission, and all written BATS Exchange, Inc., BATS Y- Exchange believes that the proposal communications relating to the Exchange, Inc., Chicago Stock Exchange, reflects this competitive environment. proposed rule change between the Inc., EDGA Exchange, Inc., EDGX Commission and any person, other than Exchange, Inc., Financial Industry C. Self-Regulatory Organization’s those that may be withheld from the Regulatory Authority, Inc. (‘‘FINRA’’), Statement on Comments on the public in accordance with the NASDAQ OMX BX, Inc., NASDAQ Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be OMX PHLX LLC, the Nasdaq Stock Members, Participants, or Others available for Web site viewing and Market LLC, New York Stock Exchange No written comments were either printing in the Commission’s Public LLC (‘‘NYSE’’), NYSE MKT LLC, and solicited or received. Reference Room, 100 F Street NE., NYSE Arca, Inc., (collectively ‘‘SROs’’ Washington, DC 20549 on official or ‘‘Participants’’), from implementing III. Date of Effectiveness of the business days between the hours of the Plan to Implement a Tick Size Pilot Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of such Program (‘‘Tick Size Pilot’’) until Commission Action filing also will be available for October 3, 2016. The foregoing rule change has become inspection and copying at the principal effective pursuant to Section office of the Exchange. All comments II. Background 19(b)(3)(A)(ii) of the Act.13 received will be posted without change; On May 6, 2015, the Commission At any time within 60 days of the the Commission does not edit personal approved the Tick Size Pilot and filing of the proposed rule change, the identifying information from provided that the Tick Size Pilot be Commission summarily may submissions. You should submit only implemented within one year after the temporarily suspend such rule change if information that you wish to make publication of the order.2 The Tick Size it appears to the Commission that such available publicly. All submissions Pilot will have a two-year duration action is: (i) Necessary or appropriate in should refer to File Number SR– (‘‘Pilot Period’’),3 and will include the public interest; (ii) for the protection NASDAQ–2015–128 and should be exchange-listed common stocks that of investors; or (iii) otherwise in submitted on or before December 4, have the following characteristics: (1) A furtherance of the purposes of the Act. 2015. market capitalization of less than $3 If the Commission takes such action, the For the Commission, by the Division of billion; (2) a closing price of at least $2 Commission shall institute proceedings Trading and Markets, pursuant to delegated per share on the last day of the to determine whether the proposed rule authority.14 measurement period (and a closing should be approved or disapproved. Robert W. Errett, price of not less than $1.50 per share Deputy Secretary. during the measurement period); (3) a IV. Solicitation of Comments consolidated average daily volume of [FR Doc. 2015–28810 Filed 11–12–15; 8:45 am] Interested persons are invited to one million shares or less; and (4) a BILLING CODE 8011–01–P submit written data, views, and volume-weighted average price of at arguments concerning the foregoing, least $2 per share (‘‘Pilot Securities’’). including whether the proposed rule The Pilot Securities will be divided SECURITIES AND EXCHANGE change is consistent with the Act. into one control group and three test COMMISSION Comments may be submitted by any of groups. There will be 400 Pilot the following methods: [Release No. 34–76382; File No. 4–657] Securities per test group and the remaining Pilot Securities will be Electronic Comments Order Granting Exemption From assigned to the control group. Test • Use the Commission’s Internet Compliance With the National Market Group One Pilot Securities will quote in comment form (http://www.sec.gov/ System Plan To Implement a Tick Size $0.05 per share increments and will rules/sro.shtml); or Pilot Program trade at any currently permitted • Send an email to rule-comments@ November 6, 2015. increment. Test Group Two Pilot sec.gov. Please include File Number SR– Securities will quote in $0.05 per share NASDAQ–2015–128 on the subject line. I. Introduction increments like those in Test Group Pursuant to Rule 608(e) 1 under the One, but will only be permitted to trade Paper Comments Securities Exchange Act of 1934 in $0.05 per share increments, subject to • Send paper comments in triplicate (‘‘Exchange Act’’), the Securities and certain exceptions.4 Finally, Test Group to Brent J. Fields, Secretary, Securities Exchange Commission (‘‘Commission’’) and Exchange Commission, 100 F Street may exempt from compliance with the 2 Securities Exchange Act Release No. 74892 (May NE., Washington, DC 20549–1090. 6, 2015), 80 FR 27514 (May 13, 2015). provisions of Rule 608, either 3 The term Pilot Period means the operative All submissions should refer to File unconditionally or on specified terms period of the Tick Size Pilot, lasting two years from Number SR–NASDAQ–2015–128. This and conditions, any self-regulatory the date of implementation. See Section I.U of the file number should be included on the Tick Size Pilot at 80 FR 27547. jstallworth on DSK7TPTVN1PROD with NOTICES organization, member thereof, or 4 First, executions will be able to at the midpoint subject line if email is used. To help the specified security, if the Commission between the national (or protected) best bid and the Commission process and review your determines that such exemption is national (or protected) best offer; second, orders comments more efficiently, please use consistent with the public interest, the involving retail investor orders will be able to trade only one method. The Commission will protection of investors, the maintenance with price improvement of at least $0.005 per share; and third, negotiated trades (such as a volume- post all comments on the Commission’s weighted average price trade or a time-weighted 14 17 CFR 200.30–3(a)(12). average price trade) will be able to trade outside of 13 15 U.S.C. 78s(b)(3)(A)(ii). 1 17 CFR 242.608(e). the $0.05 increment. VerDate Sep<11>2014 15:03 Nov 12, 2015 Jkt 238001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\13NON1.SGM 13NON1

Federal Register / Vol. 80, No. 219 / Friday, November 13, 2015 / Notices 70285 Three Pilot Securities will quote in Accordingly, the Commission believes SMALL BUSINESS ADMINISTRATION $0.05 per share increments and will additional time is needed for the trade in $0.05 per share increments Participants and their members to Interagency Task Force on Veterans consistent with Test Group Two, and in complete their preparations for Small Business Development addition be subject to a Trade-At implementation of the Tick Size Pilot. AGENCY: U.S. Small Business Prohibition, which would generally The Commission believes that extending Administration. prevent price matching by a trading the implementation date by ACTION: Notice of open Federal center that is not displaying a quotation approximately five months, to October Interagency Task Force Meeting. at the price of the best protected 3, 2016, is sufficient to allow for a quotation, unless an exception applies. smooth yet timely implementation of Date and Time: December 10, 2015, Pilot Securities in the control group the Tick Size Pilot, including the from 9:00 a.m. to 12:00 noon. would continue to quote and trade in approval of applicable SRO rules and ADDRESSES: SBA Headquarters, 409 3rd the pricing increments that are currently the development and testing of new Street SW., Washington, DC 20416, in permitted. compliance systems.8 the Eisenhower Conference Room B, Pursuant to the Tick Size Pilot, Therefore, the Commission believes Concourse Level. Participants will collect data reflecting a that it is necessary and appropriate to Purpose: This public meeting is to variety of market quality metrics with issue an exemption to extend the date discuss recommendations identified by respect to the Pilot Securities and by which the Participants must the Interagency Task Force (IATF) to transmit such data to the Commission. implement the Tick Size Pilot until further enable veteran entrepreneurship The collected data will be publicly October 3, 2016. The Commission has policy and programs. In addition, the available in an aggregated form. In determined that such an exemption is Task Force will allow public comment addition, the Participants are required to consistent with the public interest, the regarding the focus areas. conduct, and provide the Commission protection of investors, the maintenance SUPPLEMENTARY INFORMATION: Pursuant with, a publicly-available impact of fair and orderly markets and the to section 10(a) (2) of the Federal assessment. removal of impediments to, and Advisory Committee Act (5 U.S.C., III. Discussion perfection of the mechanisms of, a Appendix 2), SBA announces the national market system. meeting of the Interagency Task Force As discussed in the Approval Order,5 on Veterans Small Business several actions need to occur prior to IV. Conclusion Development. The Task Force is the implementation of the Tick Size established pursuant to Executive Order Pilot, including: (1) The development It is hereby ordered, pursuant to Rule 608(e) of Exchange Act,9 that the 13540 and focused on coordinating the and testing of applicable trading and efforts of Federal agencies to improve compliance systems, (2) the filing and Participants are exempt from implementing the Tick Size Pilot until capital, business development approval of SRO rules related to the opportunities and pre-established Tick Size Pilot’s quoting and trading October 3, 2016. Federal contracting goals for small requirements, and (3) the development For the Commission, by the Division of business concerns owned and and implementation of the written Trading and Markets, pursuant to delegated controlled by veterans (VOB’s) and policies and procedures by Participants authority.10 service-disabled veterans (SDVOSB’S). and their members that are reasonably Robert W. Errett, Moreover, the Task Force shall designed to comply with the applicable Deputy Secretary. coordinate administrative and quoting and trading increments. In regulatory activities and develop [FR Doc. 2015–28795 Filed 11–12–15; 8:45 am] addition, the Participants must develop proposals relating to ‘‘six focus areas’’: appropriate policies and procedures for BILLING CODE 8011–01–P (1) Access to capital (loans, surety collecting and reporting to the bonding and franchising); (2) Ensure Commission the requisite data in addition, the Commission notes that the Participants issued technical specifications and achievement of pre-established connection with the Tick Size Pilot, FAQs related to the data collection requirements on contracting goals, including mentor including the filing and approval of October 12, 2015. protégé and matching with contracting SRO rules requiring the collection and 8 The Commission has received requests to extend opportunities; (3) Increase the integrity reporting of data from certain member the implementation date of the Tick Size Pilot or of certifications of status as a small firms. Data is to be collected by the its data collection requirements for various periods. See Letter from Theodore R. Lazo, Managing business; (4) Reducing paperwork and Participants for periods beginning six Director and Associate General Counsel, SIFMA, to administrative burdens in accessing months prior to the Pilot Period.6 To Stephen Luparello, Director, Division of Trading business development and date, the requisite SRO rule proposals and Markets, Commission, dated August 31, 2015 entrepreneurship opportunities; (5) have not been filed or approved by the (requesting the data collection period be extended until at least three months after the requisite SRO Increasing and improving training and Commission, and there has not been an rules are approved by the Commission and related counseling services; and (6) Making opportunity for the Participants and interpretive guidance is published); Letter from other improvements to support veteran’s their members to develop and test Mary Lou Von Kaenel, Managing Director, Financial business development by the Federal applicable trading and compliance Information Forum, to Stephen Luparello, Director, Division of Trading and Markets, Commission, government. systems.7 dated September 24, 2015 (requesting the data Additional Information: Advance collection period be extended a minimum of six notice of attendance is requested. 5 80 FR at 27545. months); and Letter from Brendon J. Weiss, Co- Anyone wishing to attend and/or make jstallworth on DSK7TPTVN1PROD with NOTICES 6 See Sections IV and VII of the Tick Size Pilot Head, Government Affairs, Intercontinental at 80 FR at 27548 and 27552–53. Exchange/NYSE, to Brent J. Fields, Secretary, a presentation to the Task Force must 7 The Commission notes that the Participants Commission, dated November 4, 2015 (requesting contact Cheryl Simms by November 27, anticipate filing model data collection rule the data collection period be extended until six 2015 by email in order to be placed on proposals with the Commission no later than months after the requisite SRO rules are approved, and the implementation data of the Tick Size Pilot the agenda. Comments for the record November 13, 2015. See Letter from Brendon J. Weiss, Co-Head, Government Affairs, until six months thereafter). should be applicable to the ‘‘six focus Intercontinental Exchange/NYSE, to Brent J. Fields, 9 17 CFR 242.608(e). areas’’ of the Task Force and emailed Secretary, Commission, dated November 4, 2015. In 10 17 CFR 200.30–3(a)(42). prior to the meeting for inclusion in the VerDate Sep<11>2014 15:03 Nov 12, 2015 Jkt 238001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\13NON1.SGM 13NON1


Document Created: 2018-03-01 11:23:25
Document Modified: 2018-03-01 11:23:25
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 70284 
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