81 FR 13007 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Establish a Secondary Contingency Procedure To Enable the Exchange To Report an Official Closing Price on Behalf of an Impaired Primary Listing Exchange

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 48 (March 11, 2016)

Page Range		13007-13010
FR Document		2016-05440
Federal Register, Volume 81 Issue 48 (Friday, March 11, 2016)
[Federal Register Volume 81, Number 48 (Friday, March 11, 2016)]
[Notices]
[Pages 13007-13010]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-05440]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77309; File No. SR-NASDAQ-2016-035]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Establish a Secondary 
Contingency Procedure To Enable the Exchange To Report an Official 
Closing Price on Behalf of an Impaired Primary Listing Exchange

March 7, 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 March 2, 2016, The Nasdaq Stock Market LLC (``Nasdaq'' 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

    The Exchange proposes to establish a Secondary Contingency 
Procedure that would enable the Exchange to report an Official Closing 
Price on behalf of an impaired primary listing exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these

[[Page 13008]]

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
    Nasdaq has robust and resilient systems that are designed to ensure 
fair and orderly markets, including multiple redundancies and back-up 
systems. For the critical Nasdaq Official Closing Price (``NOCP''), 
Nasdaq currently has three systems that are designed to ensure the 
orderly execution and dissemination of the NOCP: (1) The Nasdaq Closing 
Cross set forth in Rule 4754(b)(1); Auxiliary Procedures described in 
Rule 4754(b)(5); and Contingency Procedures contained in Rule 
4754(b)(7).
    Here, Nasdaq is proposing to establish Secondary Contingency 
Procedures in proposed new Rule 4754(b)(8). This proposal is made in 
conjunction with the New York Stock Exchange LLC (``NYSE''), NYSE Arca, 
Inc., and the exclusive securities information processors for the 
Nasdaq UTP Plan and the Consolidated Quote/Consolidated Tape Plan 
(``SIPs'').
Overview of Secondary Contingency Procedures
    Procedurally, Nasdaq, as a primary listing market, will designate a 
back-up exchange to provide an official closing price in the event that 
Nasdaq's market is impaired and unable to execute a closing auction for 
all or a subset of listed securities. Nasdaq would invoke the Secondary 
Contingency Procedures by announcing publicly that its market is 
impaired and unable to execute a closing auction. If Nasdaq makes that 
announcement prior to 3:00 p.m., Eastern Standard Time (``EST''), the 
official closing price from Nasdaq's designated back-up exchange would 
serve as the NOCP. If Nasdaq makes that announcement after 3:00 p.m., 
EST, the SIP would calculate a Volume Weighted Average Price 
(``VWAP''), described in more detail below. Whether the announcement is 
made before or after 3:00 p.m., EST, the SIP would publish the NOCP on 
Nasdaq's behalf either: (1) Based on a message from Nasdaq's back-up 
exchange or (2) based on the VWAP calculation.
Designation of Back-Up Exchange
    Nasdaq proposes to designate NYSE Arca as its official back-up 
exchange. Nasdaq believes that NYSE Arca is best positioned to serve as 
Nasdaq's back-up for two primary reasons: (1) NYSE Arca and Nasdaq 
membership substantially overlaps; (2) NYSE Arca already operates an 
effective closing cross that it can use to execute a closing cross in 
Nasdaq-listed securities. In the event Nasdaq is unable to execute a 
closing cross, Nasdaq members that are also NYSE Arca members should be 
technically prepared to transfer liquidity to NYSE Arca to ensure a 
deeply liquid closing cross.
    Nasdaq expects NYSE Arca will designate Nasdaq as its back-up 
exchange for the same reasons. Again, the two exchanges' memberships 
substantially overlap, meaning that liquidity can and already does flow 
smoothly from one exchange to the other. Also, Nasdaq already operates 
a closing cross for securities listed on NYSE Arca, as well as all 
other securities for which consolidated information is disseminated via 
Tapes A and B.
The Role of the SIPs
    The Operating Committees for the Nasdaq and CQ/CT Plans have 
already voted to modify the SIPs to support this proposal. 
Specifically, each exchange that is designated as a back-up exchange 
(Nasdaq and NYSE Arca), will disseminate via the SIPs an official 
closing price in every listed security marked with the .M sale 
condition code.
    The SIPs will apply the following procedures:
    1. Each primary listing exchange would print a standardized 
Official Closing Price (``OCP''), with a sale condition `M,' in each 
security it trades, whether as primary or on a UTP basis.
    2. Each primary listing exchange would include in its rules that, 
in the event that it is impaired and cannot conduct a closing auction, 
the exchange's contingency OCP would be the OCP of a specified ``back-
up exchange'' or, if the impairment is announced after 3:00 p.m., EST, 
a VWAP calculation.
    3. In the event that a primary listing exchange publicly announces 
that it is impaired and unable to conduct a closing auction for all or 
a subset of its primary symbols, the SIP would print the primary 
listing exchange's contingency OCP as the OCP of the primary listing 
exchange, including calculation of the VWAP. The advantages of the SIP 
reprinting the contingency OCP as the OCP of the primary listing 
exchange, rather than the back-up exchange separately sending to the 
SIP its OCP as the OCP of the primary exchange are that:
    a. The SIP provides a centralized service of which each primary 
listing exchange can take advantage
    b. Participant--line validations are retained
    c. There is assurance of full symbol coverage
    d. The SIP provides a single location for future updates or 
configuration changes or new primary listing exchanges
    e. A single source and method for VWAP calculations
    ** this is so with either proposal
    4. The primary listing exchange's contingency OCP would differ 
depending on what time the impaired primary market announces that it 
will be using the closing contingency plan.
    a. If announced prior to 3:00 p.m., EST, the primary listing 
exchange's contingency OCP would be based on the following hierarchy:
    i. Official Closing Price (sale condition `M') of a pre-designated 
back-up exchange(s). An exchange that has more than 1 back-up exchange 
as part of its hierarchy of contingency OCPs, will announce publicly 
the exchange(s) that will be relied on for the contingency OCP.
    ii. If no such contingency OCP exists, then a VWAP calculated by 
the SIP of the final 5 minute regular trading session. The VWAP 
calculations would include all last sale eligible trades in the last 5 
minutes of the normal trading day, including the closing auctions 
prints of all markets.
    iii. If no last sale eligible trades printed in the last 5 minutes, 
then the consolidated last sale during regular trading hours.
    iv. If no such same day consolidated last sale eligible trades 
exist, then the primary listing exchange's prior trading day's Official 
Closing Price.
    b. If announced after 3:00 p.m., EST, the primary listing 
exchange's contingency OCP would be determined by the following 
hierarchy:
    i. Final 5 minute VWAP of regular trading session (same calculation 
as described above).
    ii. If no last sale eligible trades printed in the last 5 minutes, 
then the consolidated last sale during regular trading hours.
    iii. If no such same day consolidated last sale eligible trades 
exist, then the primary listing exchange's prior trading day's Official 
Closing Price.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \3\ in general, and furthers the

[[Page 13009]]

objectives of Section 6(b)(5) of the Act \4\ in particular, in that it 
is designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would provide transparency in how 
the Exchange would determine the Nasdaq Official Closing Price in 
Exchange-listed securities when the Exchange is unable to conduct a 
closing transaction due to a systems or technical issue. The Exchange 
believes that the proposed amendments would remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system because the proposed determination of a Nasdaq Official Closing 
Price was crafted in response to input from industry participants and 
would:
     Provide a pre-determined, consistent solution that would 
result in a closing print to the SIP within a reasonable time frame 
from the normal closing time;
     minimize the need for industry participants to modify 
their processing of data from the SIP; and
     provide advance notification of the applicable closing 
contingency plan to provide sufficient time for industry participants 
to route any closing interest to an alternate venue to participate in 
that venue's closing auction.
    More specifically, the Exchange believes the proposed hierarchy for 
determining the Nasdaq Official Closing Price if the Exchange 
determines that it is impaired before 3:00 p.m., EST, would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because the proposal, which is based on input 
from market participants, would provide sufficient time for market 
participants to direct closing-only interest to a designated alternate 
exchange in time for such interest to participate in a closing auction 
on such alternate venue in a meaningful manner.
    The Exchange further believes that relying on the official closing 
price of a designated alternate exchange would provide for an 
established hierarchy for determining an Official Closing Price for an 
Exchange-listed security if there is insufficient interest to conduct a 
closing auction on the alternate exchange. In such case, the rules of 
NYSE Arca and Nasdaq already provide a mechanism for determining an 
official closing price for securities that trade on those markets.
    The Exchange further believes that if the Exchange determines after 
3:00 p.m., EST, that it is impaired and unable the conduct a closing 
transaction, the proposed VWAP calculation would remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system because it would provide for a mechanism to determine the 
value of an affected security for purposes of determining a Nasdaq 
Official Closing Price. By using a volume-weighted calculation that 
would include the closing transactions on an affected security on 
alternate exchanges as well as any busts or corrections that were 
reported up to the time that the SIP calculates the value, the Exchange 
believes that the proposed calculation would reflect the correct price 
of a security. In addition, by using a VWAP calculation rather than the 
last consolidated last-sale eligible price as of the end of regular 
trading hours, the Exchange would reduce the potential for an anomalous 
trade that may not reflect the true price of a security from being set 
as the Nasdaq Official Closing Price for a security.
    The Exchange further believes that the proposed rule change would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because the proposal would have 
minimal impact on market participants. As proposed, from the 
perspective of market participants, even if the Exchange were impaired, 
the SIP would publish a Nasdaq Official Closing Price for Exchange-
listed securities on behalf of the Exchange in a manner that would be 
no different than if the Exchange were not impaired. If the Exchange 
determines that it is impaired after 3:00 p.m., market participants 
would not have to make any system changes. If the Exchange determines 
that it is impaired before 3:00 p.m., EST, and designates an alternate 
exchange, market participants may have to do systems work to re-direct 
closing-only orders to the alternate exchange. However, the Exchange 
understands, based on input from market participants, that such changes 
would be feasible based on the amount of advance notice.
    In addition, the Exchange believes that designating an alternate 
exchange when there is sufficient time to do so would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would allow for the price-discovery 
mechanism of a closing auction to be available for impacted Exchange-
listed securities

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
designed to address any competitive issues, but rather to provide for 
how the Exchange would determine an Official Closing Price for 
Exchange-listed securities if it is impaired and cannot conduct a 
closing transaction due to a systems or technical issue. The proposal 
has been crafted with input from market participants, Nasdaq, and the 
SIPs, and is designed to reduce the burden on competition by having 
similar back-up procedures across all primary listing exchanges if such 
exchange is impaired and cannot conduct a closing transaction.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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-NASDAQ-2016-035 on the subject line.

[[Page 13010]]

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2016-035. 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-NASDAQ-2016-035 and should 
be submitted on or before April 1, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-05440 Filed 3-10-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices 13007

a cage has no effect on a User’s orders publishes its reasons for so finding or For the Commission, by the Division of
going to, or trade data coming from, the (ii) as to which the Exchange consents, Trading and Markets, pursuant to delegated
Exchange, or the User’s ability to utilize the Commission shall: (a) By order authority.21
other co-location services, the Exchange approve or disapprove such proposed
believes that being waitlisted for a cage rule change, or (b) institute proceedings Robert W. Errett,
will not impose a burden on a User’s to determine whether the proposed rule Deputy Secretary.
ability to compete. The Exchange change should be disapproved. [FR Doc. 2016–05434 Filed 3–10–16; 8:45 am]
believes that the proposed allocation BILLING CODE 8011–01–P
IV. Solicitation of Comments
procedure would establish rational,
objective procedures that would reduce Interested persons are invited to
any potential for User confusion on how submit written data, views, and SECURITIES AND EXCHANGE
cages would be allocated should it arguments concerning the foregoing, COMMISSION
become necessary. including whether the proposed rule
[Release No. 34–77309; File No. SR–
The Exchange believes that the change is consistent with the Act.
NASDAQ–2016–035]
proposed amendment to the visitor Comments may be submitted by any of
security escort fee would not impose the following methods: Self-Regulatory Organizations; The
any burden on competition that is not Electronic Comments Nasdaq Stock Market LLC; Notice of
necessary or appropriate in furtherance Filing of Proposed Rule Change To
of the purposes of the Act because it • Use the Commission’s Internet
Establish a Secondary Contingency
would eliminate an unnecessary comment form (http://www.sec.gov/
Procedure To Enable the Exchange To
requirement, as the security purposes rules/sro.shtml); or
• Send an email to rule-comments@ Report an Official Closing Price on
that lead the Exchange to visitor Behalf of an Impaired Primary Listing
security escorts are not present when a sec.gov. Please include File No. SR–
NYSEArca–2016–21 on the subject line. Exchange
User representative is visiting the User’s
cage, because the User representative Paper Comments March 7, 2016.
would only have access to the Users’ Pursuant to Section 19(b)(1) of the
• Send paper comments in triplicate
cabinets, which would be in the Securities Exchange Act of 1934
to Secretary, Securities and Exchange
confined area within the locked cage. (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Commission, 100 F Street NE.,
The User representative would not have notice is hereby given that on March 2,
Washington, DC 20549–1090.
access to the cabinets of other Users or 2016, The Nasdaq Stock Market LLC
Exchange equipment, which are locked All submissions should refer to File No. (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
as well. The proposed rate of $75 per SR–NYSEArca–2016–21. This file Securities and Exchange Commission
number should be included on the (‘‘SEC’’ or ‘‘Commission’’) the proposed
visit for the Visitor Security Escort
subject line if email is used. To help the rule change as described in Items I, II,
would be a fee reduction for any visit
Commission process and review your
that lasted more than an hour, and so it and III below, which Items have been
comments more efficiently, please use
would reduce the burden placed on prepared by the Exchange. The
only one method. The Commission will
Users that are still subject to the fee. Commission is publishing this notice to
Finally, the Exchange notes that it post all comments on the Commission’s
solicit comments on the proposed rule
operates in a highly competitive market Internet Web site (http://www.sec.gov/
change from interested persons.
in which market participants can rules/sro.shtml). Copies of the
readily favor competing venues if they submission, all subsequent I. Self-Regulatory Organization’s
deem fee levels at a particular venue to amendments, all written statements Statement of the Terms of Substance of
be excessive. In such an environment, with respect to the proposed rule the Proposed Rule Change
the Exchange must continually review, change that are filed with the The Exchange proposes to establish a
and consider adjusting, its services and Commission, and all written Secondary Contingency Procedure that
related fees and credits to remain communications relating to the would enable the Exchange to report an
competitive with other exchanges. For proposed rule change between the Official Closing Price on behalf of an
the reasons described above, the Commission and any person, other than impaired primary listing exchange.
Exchange believes that the proposed those that may be withheld from the The text of the proposed rule change
rule change reflects this competitive public in accordance with the is available on the Exchange’s Web site
environment. provisions of 5 U.S.C. 552, will be at http://nasdaq.cchwallstreet.com, at
available for Web site viewing and the principal office of the Exchange, and
C. Self-Regulatory Organization’s printing in the Commission’s Public at the Commission’s Public Reference
Statement on Comments on the Reference Room, 100 F Street NE., Room.
Proposed Rule Change Received From Washington, DC 20549 on official
Members, Participants, or Others business days between the hours of II. Self-Regulatory Organization’s
No written comments were solicited 10:00 a.m. and 3:00 p.m. Copies of such Statement of the Purpose of, and
or received with respect to the proposed filing also will be available for Statutory Basis for, the Proposed Rule
rule change. inspection and copying at the principal Change
office of the Exchange. All comments In its filing with the Commission, the
III. Date of Effectiveness of the received will be posted without change;
asabaliauskas on DSK3SPTVN1PROD with NOTICES

Proposed Rule Change and Timing for Exchange included statements
the Commission does not edit personal concerning the purpose of and basis for
Commission Action identifying information from the proposed rule change and discussed
Within 45 days of the date of submissions. You should submit only any comments it received on the
publication of this notice in the Federal information that you wish to make proposed rule change. The text of these
Register or within such longer period (i) available publicly. All submissions
as the Commission may designate up to should refer to File No. SR–NYSEArca– 21 17 CFR 200.30–3(a)(12).
90 days of such date if it finds such 2016–21, and should be submitted on or 1 15 U.S.C. 78s(b)(1).
longer period to be appropriate and before April 1, 2016. 2 17 CFR 240.19b–4.

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13008 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices

statements may be examined at the Nasdaq believes that NYSE Arca is best a. The SIP provides a centralized
places specified in Item IV below. The positioned to serve as Nasdaq’s back-up service of which each primary listing
Exchange has prepared summaries, set for two primary reasons: (1) NYSE Arca exchange can take advantage
forth in sections A, B, and C below, of and Nasdaq membership substantially b. Participant—line validations are
the most significant aspects of such overlaps; (2) NYSE Arca already retained
statements. operates an effective closing cross that c. There is assurance of full symbol
it can use to execute a closing cross in coverage
A. Self-Regulatory Organization’s Nasdaq-listed securities. In the event d. The SIP provides a single location
Statement of the Purpose of, and Nasdaq is unable to execute a closing for future updates or configuration
Statutory Basis for, the Proposed Rule cross, Nasdaq members that are also changes or new primary listing
Change NYSE Arca members should be exchanges
1. Purpose technically prepared to transfer e. A single source and method for
liquidity to NYSE Arca to ensure a VWAP calculations
Nasdaq has robust and resilient ** this is so with either proposal
deeply liquid closing cross.
systems that are designed to ensure fair Nasdaq expects NYSE Arca will 4. The primary listing exchange’s
and orderly markets, including multiple designate Nasdaq as its back-up contingency OCP would differ
redundancies and back-up systems. For exchange for the same reasons. Again, depending on what time the impaired
the critical Nasdaq Official Closing Price the two exchanges’ memberships primary market announces that it will
(‘‘NOCP’’), Nasdaq currently has three substantially overlap, meaning that be using the closing contingency plan.
systems that are designed to ensure the liquidity can and already does flow a. If announced prior to 3:00 p.m.,
orderly execution and dissemination of smoothly from one exchange to the EST, the primary listing exchange’s
the NOCP: (1) The Nasdaq Closing Cross other. Also, Nasdaq already operates a contingency OCP would be based on the
set forth in Rule 4754(b)(1); Auxiliary closing cross for securities listed on following hierarchy:
Procedures described in Rule 4754(b)(5); NYSE Arca, as well as all other i. Official Closing Price (sale
and Contingency Procedures contained securities for which consolidated condition ‘M’) of a pre-designated back-
in Rule 4754(b)(7). information is disseminated via Tapes A up exchange(s). An exchange that has
Here, Nasdaq is proposing to establish and B. more than 1 back-up exchange as part of
Secondary Contingency Procedures in its hierarchy of contingency OCPs, will
proposed new Rule 4754(b)(8). This The Role of the SIPs
announce publicly the exchange(s) that
proposal is made in conjunction with The Operating Committees for the will be relied on for the contingency
the New York Stock Exchange LLC Nasdaq and CQ/CT Plans have already OCP.
(‘‘NYSE’’), NYSE Arca, Inc., and the voted to modify the SIPs to support this ii. If no such contingency OCP exists,
exclusive securities information proposal. Specifically, each exchange then a VWAP calculated by the SIP of
processors for the Nasdaq UTP Plan and that is designated as a back-up exchange the final 5 minute regular trading
the Consolidated Quote/Consolidated (Nasdaq and NYSE Arca), will session. The VWAP calculations would
Tape Plan (‘‘SIPs’’). disseminate via the SIPs an official include all last sale eligible trades in the
Overview of Secondary Contingency closing price in every listed security last 5 minutes of the normal trading day,
Procedures marked with the .M sale condition code. including the closing auctions prints of
The SIPs will apply the following all markets.
Procedurally, Nasdaq, as a primary procedures: iii. If no last sale eligible trades
listing market, will designate a back-up 1. Each primary listing exchange printed in the last 5 minutes, then the
exchange to provide an official closing would print a standardized Official consolidated last sale during regular
price in the event that Nasdaq’s market Closing Price (‘‘OCP’’), with a sale trading hours.
is impaired and unable to execute a condition ‘M,’ in each security it trades, iv. If no such same day consolidated
closing auction for all or a subset of whether as primary or on a UTP basis. last sale eligible trades exist, then the
listed securities. Nasdaq would invoke 2. Each primary listing exchange primary listing exchange’s prior trading
the Secondary Contingency Procedures would include in its rules that, in the day’s Official Closing Price.
by announcing publicly that its market event that it is impaired and cannot b. If announced after 3:00 p.m., EST,
is impaired and unable to execute a conduct a closing auction, the the primary listing exchange’s
closing auction. If Nasdaq makes that exchange’s contingency OCP would be contingency OCP would be determined
announcement prior to 3:00 p.m., the OCP of a specified ‘‘back-up by the following hierarchy:
Eastern Standard Time (‘‘EST’’), the exchange’’ or, if the impairment is i. Final 5 minute VWAP of regular
official closing price from Nasdaq’s announced after 3:00 p.m., EST, a trading session (same calculation as
designated back-up exchange would VWAP calculation. described above).
serve as the NOCP. If Nasdaq makes that 3. In the event that a primary listing ii. If no last sale eligible trades printed
announcement after 3:00 p.m., EST, the exchange publicly announces that it is in the last 5 minutes, then the
SIP would calculate a Volume Weighted impaired and unable to conduct a consolidated last sale during regular
Average Price (‘‘VWAP’’), described in closing auction for all or a subset of its trading hours.
more detail below. Whether the primary symbols, the SIP would print iii. If no such same day consolidated
announcement is made before or after the primary listing exchange’s last sale eligible trades exist, then the
contingency OCP as the OCP of the
asabaliauskas on DSK3SPTVN1PROD with NOTICES

3:00 p.m., EST, the SIP would publish primary listing exchange’s prior trading
the NOCP on Nasdaq’s behalf either: (1) primary listing exchange, including day’s Official Closing Price.
Based on a message from Nasdaq’s back- calculation of the VWAP. The
up exchange or (2) based on the VWAP advantages of the SIP reprinting the 2. Statutory Basis
calculation. contingency OCP as the OCP of the The Exchange believes that its
primary listing exchange, rather than proposal is consistent with Section 6(b)
Designation of Back-Up Exchange the back-up exchange separately of the Act 3 in general, and furthers the
Nasdaq proposes to designate NYSE sending to the SIP its OCP as the OCP
Arca as its official back-up exchange. of the primary exchange are that: 3 15 U.S.C. 78f(b).

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Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices 13009

objectives of Section 6(b)(5) of the Act 4 such case, the rules of NYSE Arca and price-discovery mechanism of a closing
in particular, in that it is designed to Nasdaq already provide a mechanism auction to be available for impacted
promote just and equitable principles of for determining an official closing price Exchange-listed securities
trade, to remove impediments to and for securities that trade on those
B. Self-Regulatory Organization’s
perfect the mechanism of a free and markets.
The Exchange further believes that if Statement on Burden on Competition
open market and a national market
system, and, in general to protect the Exchange determines after 3:00 p.m., The Exchange does not believe that
investors and the public interest. EST, that it is impaired and unable the the proposed rule change will impose
The Exchange believes that the conduct a closing transaction, the any burden on competition not
proposed rule change would remove proposed VWAP calculation would necessary or appropriate in furtherance
impediments to and perfect the remove impediments to and perfect the of the purposes of the Act. The
mechanism of a free and open market mechanism of a free and open market proposed rule change is not designed to
and a national market system because it and a national market system because it address any competitive issues, but
would provide transparency in how the would provide for a mechanism to rather to provide for how the Exchange
Exchange would determine the Nasdaq determine the value of an affected would determine an Official Closing
Official Closing Price in Exchange-listed security for purposes of determining a Price for Exchange-listed securities if it
securities when the Exchange is unable Nasdaq Official Closing Price. By using is impaired and cannot conduct a
to conduct a closing transaction due to a volume-weighted calculation that closing transaction due to a systems or
a systems or technical issue. The would include the closing transactions technical issue. The proposal has been
Exchange believes that the proposed on an affected security on alternate crafted with input from market
amendments would remove exchanges as well as any busts or participants, Nasdaq, and the SIPs, and
impediments to and perfect the corrections that were reported up to the is designed to reduce the burden on
mechanism of a free and open market time that the SIP calculates the value, competition by having similar back-up
and a national market system because the Exchange believes that the proposed procedures across all primary listing
the proposed determination of a Nasdaq calculation would reflect the correct exchanges if such exchange is impaired
Official Closing Price was crafted in price of a security. In addition, by using and cannot conduct a closing
response to input from industry a VWAP calculation rather than the last transaction.
participants and would: consolidated last-sale eligible price as of
• Provide a pre-determined, the end of regular trading hours, the C. Self-Regulatory Organization’s
consistent solution that would result in Exchange would reduce the potential for Statement on Comments on the
a closing print to the SIP within a an anomalous trade that may not reflect Proposed Rule Change Received From
reasonable time frame from the normal the true price of a security from being Members, Participants, or Others
closing time; set as the Nasdaq Official Closing Price No written comments were either
• minimize the need for industry for a security. solicited or received.
participants to modify their processing The Exchange further believes that the
of data from the SIP; and proposed rule change would remove III. Date of Effectiveness of the
• provide advance notification of the impediments to and perfect the Proposed Rule Change and Timing for
applicable closing contingency plan to mechanism of a free and open market Commission Action
provide sufficient time for industry and a national market system because
participants to route any closing interest the proposal would have minimal Within 45 days of the date of
to an alternate venue to participate in impact on market participants. As publication of this notice in the Federal
that venue’s closing auction. proposed, from the perspective of Register or within such longer period (i)
More specifically, the Exchange market participants, even if the as the Commission may designate up to
believes the proposed hierarchy for Exchange were impaired, the SIP would 90 days of such date if it finds such
determining the Nasdaq Official Closing publish a Nasdaq Official Closing Price longer period to be appropriate and
Price if the Exchange determines that it for Exchange-listed securities on behalf publishes its reasons for so finding or
is impaired before 3:00 p.m., EST, of the Exchange in a manner that would (ii) as to which the Exchange consents,
would remove impediments to and be no different than if the Exchange the Commission shall: (a) By order
perfect the mechanism of a free and were not impaired. If the Exchange approve or disapprove such proposed
open market and a national market determines that it is impaired after 3:00 rule change, or (b) institute proceedings
system because the proposal, which is p.m., market participants would not to determine whether the proposed rule
based on input from market have to make any system changes. If the change should be disapproved.
participants, would provide sufficient Exchange determines that it is impaired IV. Solicitation of Comments
time for market participants to direct before 3:00 p.m., EST, and designates an
closing-only interest to a designated alternate exchange, market participants Interested persons are invited to
alternate exchange in time for such may have to do systems work to re- submit written data, views, and
interest to participate in a closing direct closing-only orders to the arguments concerning the foregoing,
auction on such alternate venue in a alternate exchange. However, the including whether the proposed rule
meaningful manner. Exchange understands, based on input change is consistent with the Act.
The Exchange further believes that from market participants, that such Comments may be submitted by any of
relying on the official closing price of a changes would be feasible based on the the following methods:
asabaliauskas on DSK3SPTVN1PROD with NOTICES

designated alternate exchange would amount of advance notice. Electronic Comments
provide for an established hierarchy for In addition, the Exchange believes
determining an Official Closing Price for that designating an alternate exchange • Use the Commission’s Internet
an Exchange-listed security if there is when there is sufficient time to do so comment form (http://www.sec.gov/
insufficient interest to conduct a closing would remove impediments to and rules/sro.shtml); or
auction on the alternate exchange. In perfect the mechanism of a free and • Send an email to rule-comments@
open market and a national market sec.gov. Please include File Number SR–
4 15 U.S.C. 78f(b)(5). system because it would allow for the NASDAQ–2016–035 on the subject line.

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13010 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices

Paper Comments SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
COMMISSION Statement of the Purpose of, and
• Send paper comments in triplicate Statutory Basis for, the Proposed Rule
to Brent J. Fields, Secretary, Securities Change
[Release No. 34–77311; File No. SR–ICEEU–
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
2016–002] 1. Purpose
The purpose of the changes is to
All submissions should refer to File Self-Regulatory Organizations; ICE
authorize the President and Managing
Number SR–NASDAQ–2016–035. This Clear Europe Limited; Notice of Filing
Director of ICE Clear Europe, acting
file number should be included on the and Immediate Effectiveness of a together with the Head of Regulation, to
subject line if email is used. To help the Proposed Rule Change Relating to the approve certain amendments to the ICE
Commission process and review your Delegation of Authority To Approve Clear Europe Clearing Rules and
comments more efficiently, please use Certain Rule and Procedure Procedures, without the need for
only one method. The Commission will Amendments specific Board approval. Under existing
post all comments on the Commission’s practice, consistent with the ICE Clear
March 7, 2016.
Internet Web site (http://www.sec.gov/ Europe Articles, all Rule and Procedure
rules/sro.shtml). Copies of the Pursuant to Section 19(b)(1) of the amendments, regardless of significance,
submission, all subsequent Securities Exchange Act of 1934 require Board approval. In light of its
amendments, all written statements (‘‘Act’’),1 and Rule 19b–4 thereunder,2 experience with this practice, the ICE
with respect to the proposed rule notice is hereby given that on February Clear Europe Board has determined that
change that are filed with the 29, 2016, ICE Clear Europe Limited certain categories of Rule and Procedure
Commission, and all written (‘‘ICE Clear Europe’’) filed with the changes do not necessarily need Board
communications relating to the Securities and Exchange Commission approval, as discussed herein.
(‘‘Commission’’) the proposed rule Accordingly, the ICE Clear Europe
proposed rule change between the
change as described in Items I, II, and Board proposes to delegate to the
Commission and any person, other than
III below, which Items have been President and Managing Director, acting
those that may be withheld from the together with the Head of Regulation,
public in accordance with the prepared primarily by ICE Clear Europe.
authority to approve Rule and
provisions of 5 U.S.C. 552, will be ICE Clear Europe filed the proposed rule
Procedure amendments relating to
available for Web site viewing and change pursuant to section 19(b)(3)(A)
business-as-usual product launches and
printing in the Commission’s Public of the Act,3 and Rule 19b–4(f)(4)(i) 4 operational processes. These categories
Reference Room, 100 F Street NE., thereunder, so that the proposal was of amendments would include, for
Washington, DC 20549, on official effective upon filing with the example, amendments relating to
business days between the hours of Commission. The Commission is launches of new cleared products of the
10:00 a.m. and 3:00 p.m. Copies of the publishing this notice to solicit same types as currently cleared,
filing also will be available for comments on the proposed rule change amendments that reflect changes in
inspection and copying at the principal from interested persons. operational practices and processes, and
office of the Exchange. All comments I. Self-Regulatory Organization’s drafting clarifications, updates and
received will be posted without change; Statement of the Terms of Substance of corrections to errors. Such amendments
the Commission does not edit personal would not be required to be submitted
the Proposed Rule Change
identifying information from for approval to the Board. The
submissions. You should submit only ICE Clear Europe is proposing certain delegation will not otherwise affect
information that you wish to make rule changes relating to the delegation other aspects of the Rule and Procedure
by the ICE Clear Europe Board of amendment process, including the role
available publicly. All submissions
Directors to its President and Managing of the relevant Risk Committees,
should refer to File Number SR–
Director (acting together with the Head consultation with Clearing Members
NASDAQ–2016–035 and should be and others as appropriate, internal
submitted on or before April 1, 2016. of Regulation) of authority to approve
regulatory, business and operational
certain rule and procedure amendments.
For the Commission, by the Division of reviews and internal or external legal
Trading and Markets, pursuant to delegated II. Self-Regulatory Organization’s review, as appropriate. The delegation,
authority.5 Statement of the Purpose of, and of course, will also not affect regulatory
Robert W. Errett, Statutory Basis for, the Proposed Rule submission, filing and approval
Deputy Secretary. Change requirements, as applicable. ICE Clear
[FR Doc. 2016–05440 Filed 3–10–16; 8:45 am]
Europe management will report to the
In its filing with the Commission, ICE Board any Rule and Procedure
BILLING CODE 8011–01–P Clear Europe included statements amendments approved under this
concerning the purpose of and basis for delegated authority.
the proposed rule change. The text of The delegation does not apply to Rule
these statements may be examined at and Procedure changes amendments
the places specified in Item IV below. [sic] that are required to ensure
compliance with relevant legislation
asabaliauskas on DSK3SPTVN1PROD with NOTICES

ICE Clear Europe has prepared
summaries, set forth in sections A, B, directed at ICE Clear Europe as a
and C below, of the most significant clearing organization. Accordingly, such
aspects of such statements. amendments will continue to require
Board approval. In addition, even for
1 15 U.S.C. 78s(b)(1). amendments that may be approved by
2 17 CFR 240.19b–4. the President and Managing Director
3 15 U.S.C. 78s(b)(3)(A). (acting together with the Head of
5 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(4)(i). Regulation), the delegation would not

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Document Created: 2016-03-11 01:51:38
Document Modified: 2016-03-11 01:51:38
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 13007