81 FR 1238 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Retail Price Improvement Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 6 (January 11, 2016)

Page Range		1238-1240
FR Document		2016-00253
Federal Register, Volume 81 Issue 6 (Monday, January 11, 2016)
[Federal Register Volume 81, Number 6 (Monday, January 11, 2016)]
[Notices]
[Pages 1238-1240]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-00253]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76829; File No. SR-BX-2015-086]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Retail Price Improvement Program

January 5, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 22, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    BX is proposing change to amend BX Rule 4780, which governs the 
Exchange's Retail Price Improvement Program (``Retail Program''), to 
distinguish between retail orders routed on behalf of other broker-
dealers and retail orders that are routed on behalf of introduced 
retail accounts that are carried on a fully disclosed basis, as further 
described below.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.cchwallstreet.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend BX Rule 4780, which governs the 
Exchange's Retail Program,\3\ to distinguish between orders routed on 
behalf of other broker-dealers and orders routed on behalf of 
introduced retail accounts that are carried on a fully disclosed basis, 
as further described below.
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    \3\ The Exchange adopted the Retail Program as BX Rule 4780 in 
2014. See Securities Exchange Act Release No. 73702 (November 28, 
2014), 79 FR 72049 (December 4, 2014) (SR-BX-2014-048).
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    The Exchange established the Retail Program in an attempt to 
attract retail order flow to the Exchange, primarily by offering 
pricing incentives. Under the Retail Program, Retail Member

[[Page 1239]]

Organizations \4\ are permitted to submit Retail Orders,\5\ and receive 
rebates for added liquidity that are higher than the exchanges [sic] 
standard rebates for added liquidity.\6\ In addition, RMOs may 
optionally designate Retail Orders to be identified as Retail on the 
Exchange's proprietary data feeds.\7\
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    \4\ A Retail Member Organization is a Member (or a division 
thereof) that has been approved by the Exchange under BX Rule 4780 
to submit Retail Orders.
    \5\ A Retail Order is an agency order, or riskless principal 
order that satisfies the criteria of FINRA Rule 5320.03. The Retail 
Order must reflect trading interest of a natural person with no 
change made to the terms of the underlying order of the natural 
person with respect to price (except in the case of a market order 
that is changed to a marketable limit order) or side of market and 
that does not originate from a trading algorithm or any other 
computerized methodology.
    \6\ See BX Rule 7018.
    \7\ See BX Rule 4780(f).
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    Exchange Rule 4780(b)(1) currently states that ``[t]o qualify as a 
Retail Member Organization, a Member must conduct a retail business or 
handle retail orders on behalf of another broker-dealer.'' \8\ Rather 
than stating that one way to qualify as an RMO is to handle retail 
orders on behalf of another broker-dealer, the Exchange proposes to 
state that a Member may qualify as an RMO if it ``routes'' retail 
orders on behalf of another broker-dealer. The Exchange believes that 
providing routing services on behalf of other broker-dealers with 
retail order flow was the intended meaning of the provision and that 
the term ``handle'' is vague. Thus, the Exchange believes that the 
description would be better if it referred to routing services provided 
to another broker-dealer with retail customers. The Exchange also 
proposes to distinguish such routing services on behalf of another 
broker-dealer from services provided by broker-dealers that carry 
retail customer accounts on a fully disclosed basis, as described 
below.
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    \8\ Emphasis added.
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    As background with respect to the proposed change, the Exchange 
first would like to describe the terms ``introducing broker'', 
``carrying firm'' or ``carrying broker-dealer'', and ``fully 
disclosed,'' as such terms are commonly used in the securities 
industry. An ``introducing'' broker-dealer is ``one that has a 
contractual arrangement with another firm, known as the carrying or 
clearing firm, under which the carrying firm agrees to perform certain 
services for the introducing firm. Usually, the introducing firm 
submits its customer accounts and customer orders to the carrying firm, 
which executes the orders and carries the account. The carrying firm's 
duties include the proper disposition of the customer funds and 
securities after the trade date, the custody of customer securities and 
funds, and the recordkeeping associated with carrying customer 
accounts.'' \9\
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    \9\ See Securities Exchange Act Release No. 31511 (Nov. 24, 
1992), 57 FR 56973 (December 2, 1992).
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    Further, a ``fully disclosed'' introducing arrangement is 
``distinguished from an omnibus clearing arrangement where the clearing 
firm maintains one account for all the customer transactions of the 
introducing firm. In an omnibus relationship, the clearing firm does 
not know the identity of the customers of the introducing firm. In a 
fully disclosed clearing arrangement, the clearing firm knows the 
names, addresses, securities positions and other relevant data as to 
each customer.'' \10\
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    \10\ Id.
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    With respect to a broker-dealer that is routing on behalf of 
another broker-dealer, the Exchange does not believe that the routing 
broker-dealer has sufficient information to assess whether orders are 
truly retail in nature, and thus, requires an RMO routing on behalf of 
other broker-dealers to maintain additional supervisory procedures and 
obtain annual attestations, as described below, in order to submit 
Retail Orders to the Exchange. In contrast, however, if a broker-dealer 
is carrying a customer account on a fully disclosed basis, then such 
carrying broker-dealer is required to perform certain diligence 
regarding such account that the Exchange believes is sufficient to 
assess whether a customer is a retail customer in order to submit 
orders on behalf of such a customer to the Exchange as a Retail Order. 
The carrying broker of an account typically handles orders from its 
retail customers that are ``introduced'' by an introducing broker. 
However, as noted above, in contrast to a typical routing relationship 
on behalf of another broker- dealer, a carrying broker does obtain a 
significant level of information regarding each customer introduced by 
the introducing broker. Accordingly, the Exchange proposes to state in 
BX Rule 4780(b)(1) that for purposes of BX Rule 4780, ``conducting a 
retail business shall include carrying retail customer accounts on a 
fully disclosed basis.''
    BX Rule 4780(b)(6) currently states, in part, that ``[i]f a Retail 
Member Organization represents Retail Orders from another broker-dealer 
customer, the Retail Member Organization's supervisory procedures must 
be reasonably designed to assure that the orders it receives from such 
broker-dealer customer that it designates as Retail Orders meet the 
definition of a Retail Order.'' This includes obtaining attestations 
from the other broker-dealers for whom the RMO routes. In addition to 
the proposed changes to BX Rule 4780(b)(1) described above, the 
Exchange proposes to modify the language of BX Rule 4780(b)(6) to again 
distinguish between an RMO that conducts a retail business because it 
carries accounts on a fully disclosed basis from an RMO that routes 
orders on behalf of another broker-dealer. As proposed, the additional 
attestation requirements of BX Rule 4780(b)(6) would apply to an RMO 
that does not itself conduct a retail business but routes Retail Orders 
on behalf of other broker-dealers. In turn, such attestation 
requirements would not apply to an RMO that carries retail customer 
accounts on a fully disclosed basis. In connection with this change, 
the Exchange is proposing various edits to the existing rule text so 
that the reference is consistently to ``other broker-dealers'' rather 
than ``broker-dealer customers.''
    The Exchange believes that allowing an RMO that carries retail 
customer accounts on a fully disclosed basis to submit Retail Orders to 
the Exchange without obtaining attestations from broker-dealers that 
might introduce such accounts will encourage participation in the 
Retail Program. As noted above, the Exchange believes that the carrying 
broker has sufficient information to itself confirm that orders are 
Retail Orders without such attestations. The Exchange still believes it 
is necessary to require the attestation by broker-dealers that route 
Retail Orders on behalf of other broker- dealers, because, in contrast, 
such broker-dealers typically do not have a relationship with the 
retail customer and would not be in position to confirm that such 
customers are in fact retail customers.
2. Statutory Basis
    BX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\11\ in general, and with Section 
6(b)(5) of the Act,\12\ in particular, in that the proposal is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, and to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative

[[Page 1240]]

acts and practices because it highlights the parties for whom 
additional procedures are required because they do not maintain 
relationships with the end customer (i.e., routing brokers) and still 
requires the RMO to follow such procedures to ensure that such orders 
qualify as Retail Orders. As proposed, however, an RMO would not be 
required to follow such procedures, including obtaining annual 
attestations, to the extent such RMO actually knows the end customer 
and carries the account of such customer and thus can itself confirm 
that the orders qualify as Retail Orders.
    The Exchange believes that the proposed rule change will remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it will allow RMOs that carry retail 
customer accounts to participate in the Program without imposing 
additional attestation requirements that the Exchange did not initially 
intend to impose upon them. By removing impediments to participation in 
the Program, the proposed change would permit expanded access of retail 
customers to the Program.

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

    BX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. The Exchange 
believes that the amendment, by increasing the level of participation 
in the Program, will increase the level of competition around retail 
executions. The Exchange believes that the transparency and 
competitiveness of operating a program such as the Program on an 
exchange market would result in better prices for retail investors and 
benefits retail investors by expanding the capabilities of Exchanges to 
encompass practices currently allowed on non-exchange venues.

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

    No written comments were either solicited or received.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) \13\ of the Act and Rule 19b-4(f)(6) thereunder.\14\ 
Because the proposed rule change does not (i) significantly affect the 
protection of investors or the public interest, (ii) impose any 
significant burden on competition, and (iii) become operative for 30 
days after its filing date, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6) thereunder.\16\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BX-2015-086 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2015-086. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BX-2015-086, and should be 
submitted on or before February 1, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00253 Filed 1-8-16; 8:45 am]
 BILLING CODE 8011-01-P
1238 Federal Register / Vol. 81, No. 6 / Monday, January 11, 2016 / Notices

Dated at Lisle, Illinois this 21st day of filed in this docket for the protection of III below, which Items have been
December, 2015. information that it has filed under seal. prepared by the Exchange. The
For the Nuclear Regulatory Commission. Id. at 1–2. Commission is publishing this notice to
Cynthia D. Pederson solicit comments on the proposed rule
II. Notice of Filings
Regional Administrator. change from interested persons.
[FR Doc. 2016–00322 Filed 1–8–16; 8:45 am] The Commission invites comments on
whether the changes presented in the I. Self-Regulatory Organization’s
BILLING CODE 7590–01–P
Postal Service’s Notice are consistent Statement of the Terms of Substance of
with the policies of 39 U.S.C. 3632, the Proposed Rule Change
3633, or 3642, 39 CFR 3015.5, and 39 BX is proposing change to amend BX
POSTAL REGULATORY COMMISSION
CFR part 3020, subpart B. Comments are Rule 4780, which governs the
[Docket No. CP2015–75; Order No. 2979] due no later than January 12, 2016. The Exchange’s Retail Price Improvement
public portions of these filings can be Program (‘‘Retail Program’’), to
New Postal Product accessed via the Commission’s Web site distinguish between retail orders routed
AGENCY: Postal Regulatory Commission. (http://www.prc.gov). on behalf of other broker-dealers and
ACTION: Notice. The Commission appoints Kenneth R. retail orders that are routed on behalf of
Moeller to represent the interests of the introduced retail accounts that are
SUMMARY: The Commission is noticing a general public (Public Representative) carried on a fully disclosed basis, as
recent Postal Service filing concerning a in this docket. further described below.
modification to a Global Expedited The text of the proposed rule change
III. Ordering Paragraphs
Package Services 3 negotiated service is available on the Exchange’s Web site
agreement. This notice informs the It is ordered: at http://
public of the filing, invites public 1. The Commission reopens Docket nasdaqomxbx.cchwallstreet.com, at the
comment, and takes other No. CP2015–75 for consideration of principal office of the Exchange, and at
administrative steps. matters raised by the Postal Service’s the Commission’s Public Reference
DATES: Comments are due: January 12, Notice. Room.
2016. 2. Pursuant to 39 U.S.C. 505, the
Commission appoints Kenneth R. II. Self-Regulatory Organization’s
ADDRESSES: Submit comments
Moeller to serve as an officer of the Statement of the Purpose of, and
electronically via the Commission’s Statutory Basis for, the Proposed Rule
Filing Online system at http:// Commission (Public Representative) to
represent the interests of the general Change
www.prc.gov. Those who cannot submit
comments electronically should contact public in this proceeding. In its filing with the Commission, the
the person identified in the FOR FURTHER 3. Comments are due no later than Exchange included statements
INFORMATION CONTACT section by
January 12, 2016. concerning the purpose of and basis for
telephone for advice on filing 4. The Secretary shall arrange for the proposed rule change and discussed
alternatives. publication of this order in the Federal any comments it received on the
Register. proposed rule change. The text of these
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at By the Commission. statements may be examined at the
202–789–6820. Stacy L. Ruble, places specified in Item IV below. The
Secretary. Exchange has prepared summaries, set
SUPPLEMENTARY INFORMATION:
[FR Doc. 2016–00243 Filed 1–8–16; 8:45 am] forth in sections A, B, and C below, of
Table of Contents BILLING CODE 7710–FW–P
the most significant aspects of such
statements.
I. Introduction
II. Notice of Filings A. Self-Regulatory Organization’s
III. Ordering Paragraphs SECURITIES AND EXCHANGE Statement of the Purpose of, and
COMMISSION Statutory Basis for, the Proposed Rule
I. Introduction [Release No. 34–76829; File No. SR–BX– Change
On January 4, 2016, the Postal Service 2015–086] 1. Purpose
filed notice that it has agreed to a
modification to the existing Global Self-Regulatory Organizations; The Exchange proposes to amend BX
Expedited Package Services 3 negotiated NASDAQ OMX BX, Inc.; Notice of Filing Rule 4780, which governs the
service agreement approved in this and Immediate Effectiveness of a Exchange’s Retail Program,3 to
docket.1 In support of its Notice, the Proposed Rule Change To Amend the distinguish between orders routed on
Postal Service includes a redacted copy Retail Price Improvement Program behalf of other broker-dealers and orders
of the modification and a certification of routed on behalf of introduced retail
January 5, 2016. accounts that are carried on a fully
compliance with 39 U.S.C. 3633(a), as Pursuant to Section 19(b)(1) of the
required by 39 CFR 3015.5. disclosed basis, as further described
Securities Exchange Act of 1934 below.
The Postal Service asserts that the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange established the Retail
modification revises a few articles and
notice is hereby given that on December Program in an attempt to attract retail
replaces Annex 1 to the agreement. Id.
22, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’
ebenthall on DSK6SPTVN1PROD with NOTICES

at 1. The Postal Service also seeks to order flow to the Exchange, primarily by
or ‘‘Exchange’’) filed with the Securities offering pricing incentives. Under the
incorporate by reference the Application
and Exchange Commission (‘‘SEC’’ or Retail Program, Retail Member
for Non-Public Treatment originally
‘‘Commission’’) the proposed rule
1 Notice of the United States Postal Service of
change as described in Items I, II, and 3 The Exchange adopted the Retail Program as BX

Filing Modification to Global Expedited Package Rule 4780 in 2014. See Securities Exchange Act
1 15 U.S.C. 78s(b)(1).
Services 3 Negotiated Service Agreement, January 4, Release No. 73702 (November 28, 2014), 79 FR
2016 (Notice). 2 17 CFR 240.19b–4. 72049 (December 4, 2014) (SR–BX–2014–048).

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Organizations 4 are permitted to submit securities after the trade date, the Retail Order.’’ This includes obtaining
Retail Orders,5 and receive rebates for custody of customer securities and attestations from the other broker-
added liquidity that are higher than the funds, and the recordkeeping associated dealers for whom the RMO routes. In
exchanges [sic] standard rebates for with carrying customer accounts.’’ 9 addition to the proposed changes to BX
added liquidity.6 In addition, RMOs Further, a ‘‘fully disclosed’’ Rule 4780(b)(1) described above, the
may optionally designate Retail Orders introducing arrangement is Exchange proposes to modify the
to be identified as Retail on the ‘‘distinguished from an omnibus language of BX Rule 4780(b)(6) to again
Exchange’s proprietary data feeds.7 clearing arrangement where the clearing distinguish between an RMO that
Exchange Rule 4780(b)(1) currently firm maintains one account for all the conducts a retail business because it
states that ‘‘[t]o qualify as a Retail customer transactions of the introducing carries accounts on a fully disclosed
Member Organization, a Member must firm. In an omnibus relationship, the basis from an RMO that routes orders on
conduct a retail business or handle clearing firm does not know the identity behalf of another broker-dealer. As
retail orders on behalf of another broker- of the customers of the introducing firm. proposed, the additional attestation
dealer.’’ 8 Rather than stating that one In a fully disclosed clearing requirements of BX Rule 4780(b)(6)
way to qualify as an RMO is to handle arrangement, the clearing firm knows would apply to an RMO that does not
retail orders on behalf of another broker- the names, addresses, securities itself conduct a retail business but
dealer, the Exchange proposes to state positions and other relevant data as to routes Retail Orders on behalf of other
that a Member may qualify as an RMO each customer.’’ 10 broker-dealers. In turn, such attestation
if it ‘‘routes’’ retail orders on behalf of With respect to a broker-dealer that is requirements would not apply to an
another broker-dealer. The Exchange routing on behalf of another broker- RMO that carries retail customer
believes that providing routing services dealer, the Exchange does not believe accounts on a fully disclosed basis. In
on behalf of other broker-dealers with that the routing broker-dealer has connection with this change, the
retail order flow was the intended sufficient information to assess whether Exchange is proposing various edits to
meaning of the provision and that the orders are truly retail in nature, and the existing rule text so that the
term ‘‘handle’’ is vague. Thus, the thus, requires an RMO routing on behalf reference is consistently to ‘‘other
Exchange believes that the description of other broker-dealers to maintain broker-dealers’’ rather than ‘‘broker-
would be better if it referred to routing additional supervisory procedures and dealer customers.’’
services provided to another broker- obtain annual attestations, as described The Exchange believes that allowing
dealer with retail customers. The below, in order to submit Retail Orders an RMO that carries retail customer
Exchange also proposes to distinguish to the Exchange. In contrast, however, if accounts on a fully disclosed basis to
such routing services on behalf of a broker-dealer is carrying a customer submit Retail Orders to the Exchange
another broker-dealer from services account on a fully disclosed basis, then without obtaining attestations from
provided by broker-dealers that carry such carrying broker-dealer is required broker-dealers that might introduce
retail customer accounts on a fully to perform certain diligence regarding such accounts will encourage
disclosed basis, as described below. such account that the Exchange believes participation in the Retail Program. As
As background with respect to the is sufficient to assess whether a noted above, the Exchange believes that
proposed change, the Exchange first customer is a retail customer in order to the carrying broker has sufficient
would like to describe the terms submit orders on behalf of such a information to itself confirm that orders
‘‘introducing broker’’, ‘‘carrying firm’’ or customer to the Exchange as a Retail are Retail Orders without such
‘‘carrying broker-dealer’’, and ‘‘fully Order. The carrying broker of an attestations. The Exchange still believes
disclosed,’’ as such terms are commonly account typically handles orders from it is necessary to require the attestation
used in the securities industry. An its retail customers that are by broker-dealers that route Retail
‘‘introducing’’ broker-dealer is ‘‘one that ‘‘introduced’’ by an introducing broker. Orders on behalf of other broker-
has a contractual arrangement with However, as noted above, in contrast to dealers, because, in contrast, such
another firm, known as the carrying or a typical routing relationship on behalf broker-dealers typically do not have a
clearing firm, under which the carrying of another broker- dealer, a carrying relationship with the retail customer
firm agrees to perform certain services broker does obtain a significant level of and would not be in position to confirm
for the introducing firm. Usually, the information regarding each customer that such customers are in fact retail
introducing firm submits its customer introduced by the introducing broker. customers.
accounts and customer orders to the Accordingly, the Exchange proposes to
carrying firm, which executes the orders 2. Statutory Basis
state in BX Rule 4780(b)(1) that for
and carries the account. The carrying purposes of BX Rule 4780, ‘‘conducting BX believes that the proposed rule
firm’s duties include the proper a retail business shall include carrying change is consistent with the provisions
disposition of the customer funds and retail customer accounts on a fully of Section 6 of the Act,11 in general, and
disclosed basis.’’ with Section 6(b)(5) of the Act,12 in
4 A Retail Member Organization is a Member (or
BX Rule 4780(b)(6) currently states, in particular, in that the proposal is
a division thereof) that has been approved by the
Exchange under BX Rule 4780 to submit Retail part, that ‘‘[i]f a Retail Member designed to prevent fraudulent and
Orders. Organization represents Retail Orders manipulative acts and practices, to
5 A Retail Order is an agency order, or riskless
from another broker-dealer customer, promote just and equitable principles of
principal order that satisfies the criteria of FINRA the Retail Member Organization’s trade, and to remove impediments to
Rule 5320.03. The Retail Order must reflect trading
interest of a natural person with no change made supervisory procedures must be and perfect the mechanism of a free and
ebenthall on DSK6SPTVN1PROD with NOTICES

to the terms of the underlying order of the natural reasonably designed to assure that the open market and a national market
person with respect to price (except in the case of orders it receives from such broker- system.
a market order that is changed to a marketable limit The Exchange believes that the
order) or side of market and that does not originate
dealer customer that it designates as
from a trading algorithm or any other computerized Retail Orders meet the definition of a proposed rule change is designed to
methodology. prevent fraudulent and manipulative
6 See BX Rule 7018. 9 See Securities Exchange Act Release No. 31511
7 See BX Rule 4780(f). (Nov. 24, 1992), 57 FR 56973 (December 2, 1992). 11 15 U.S.C. 78f.
8 Emphasis added. 10 Id. 12 15 U.S.C. 78f(b)(5).

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acts and practices because it highlights 19b–4(f)(6) thereunder.14 Because the Commission, and all written
the parties for whom additional proposed rule change does not (i) communications relating to the
procedures are required because they do significantly affect the protection of proposed rule change between the
not maintain relationships with the end investors or the public interest, (ii) Commission and any person, other than
customer (i.e., routing brokers) and still impose any significant burden on those that may be withheld from the
requires the RMO to follow such competition, and (iii) become operative public in accordance with the
procedures to ensure that such orders for 30 days after its filing date, or such provisions of 5 U.S.C. 552, will be
qualify as Retail Orders. As proposed, shorter time as the Commission may available for Web site viewing and
however, an RMO would not be designate if consistent with the printing in the Commission’s Public
required to follow such procedures, protection of investors and the public Reference Room, 100 F Street NE.,
including obtaining annual attestations, interest, the proposed rule change has Washington, DC 20549 on official
to the extent such RMO actually knows become effective pursuant to business days between the hours of
the end customer and carries the 19(b)(3)(A) 15 of the Act and Rule 19b– 10:00 a.m. and 3:00 p.m. Copies of the
account of such customer and thus can 4(f)(6) thereunder.16 filing also will be available for
itself confirm that the orders qualify as At any time within 60 days of the
inspection and copying at the principal
Retail Orders. filing of the proposed rule change, the
office of the Exchange. All comments
The Exchange believes that the Commission summarily may
temporarily suspend such rule change if received will be posted without change;
proposed rule change will remove the Commission does not edit personal
impediments to and perfect the it appears to the Commission that such
action is: (i) Necessary or appropriate in identifying information from
mechanism of a free and open market
the public interest; (ii) for the protection submissions. You should submit only
and a national market system because it
of investors; or (iii) otherwise in information that you wish to make
will allow RMOs that carry retail
furtherance of the purposes of the Act. available publicly. All submissions
customer accounts to participate in the
Program without imposing additional If the Commission takes such action, the should refer to File Number SR–BX–
attestation requirements that the Commission shall institute proceedings 2015–086, and should be submitted on
Exchange did not initially intend to to determine whether the proposed rule or before February 1, 2016.
impose upon them. By removing should be approved or disapproved. For the Commission, by the Division of
impediments to participation in the IV. Solicitation of Comments Trading and Markets, pursuant to delegated
Program, the proposed change would authority.17
permit expanded access of retail Interested persons are invited to
Robert W. Errett,
customers to the Program. submit written data, views, and
arguments concerning the foregoing, Deputy Secretary.
B. Self-Regulatory Organization’s including whether the proposed rule [FR Doc. 2016–00253 Filed 1–8–16; 8:45 am]
Statement on Burden on Competition change is consistent with the Act. BILLING CODE 8011–01–P

BX does not believe that the proposed Comments may be submitted by any of
rule change will result in any burden on the following methods:
SECURITIES AND EXCHANGE
competition that is not necessary or Electronic Comments COMMISSION
appropriate in furtherance of the
• Use the Commission’s Internet
purposes of the Act, as amended. The
comment form (http://www.sec.gov/ [Release No. 34–76833; File No. SR–
Exchange believes that the amendment,
rules/sro.shtml); or NASDAQ–2015–159]
by increasing the level of participation • Send an email to rule-
in the Program, will increase the level comments@sec.gov. Please include File
of competition around retail executions. Self-Regulatory Organizations; The
Number SR–BX–2015–086 on the NASDAQ Stock Market LLC; Notice of
The Exchange believes that the subject line.
transparency and competitiveness of Filing of Proposed Rule Change To
operating a program such as the Paper Comments Implement Additional Price Protections
in the Opening Process
Program on an exchange market would • Send paper comments in triplicate
result in better prices for retail investors to Secretary, Securities and Exchange January 5, 2016.
and benefits retail investors by Commission, 100 F Street NE.,
expanding the capabilities of Exchanges Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
to encompass practices currently Securities Exchange Act of 1934
All submissions should refer to File
allowed on non-exchange venues. Number SR–BX–2015–086. This file (‘‘Act’’),1 and Rule 19b–4 thereunder,2
number should be included on the notice is hereby given that on December
C. Self-Regulatory Organization’s
subject line if email is used. To help the 23, 2015, The NASDAQ Stock Market
Statement on Comments on the
Commission process and review your LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
Proposed Rule Change Received From
comments more efficiently, please use with the Securities and Exchange
Members, Participants, or Others
only one method. The Commission will Commission (‘‘SEC’’ or ‘‘Commission’’)
No written comments were either post all comments on the Commission’s the proposed rule change as described
solicited or received. Internet Web site (http://www.sec.gov/ in Items I and II, below, which Items
III. Date of Effectiveness of the rules/sro.shtml). Copies of the have been prepared by the Exchange.
The Commission is publishing this
ebenthall on DSK6SPTVN1PROD with NOTICES

Proposed Rule Change and Timing for submission, all subsequent
Commission Action amendments, all written statements notice to solicit comments on the
with respect to the proposed rule proposed rule change from interested
The Exchange has filed the proposed change that are filed with the persons.
rule change pursuant to Section
19(b)(3)(A)(iii) 13 of the Act and Rule 14 17 CFR 240.19b–4(f)(6). 17 17 CFR 200.30–3(a)(12).
15 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
13 15 U.S.C. 78s(b)(3)(A)(iii). 16 17 CFR 240.19b–4(f)(6). 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 21:33 Jan 14, 2016 Jkt 238001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 E:\FR\FM\11JAN1.SGM 11JAN1
Document Created: 2016-01-16 01:07:11
Document Modified: 2016-01-16 01:07:11
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		81 FR 1238