81 FR 1661 - Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Changes to Rules 11.5, Registration of Market Makers, 11.6, Obligations of Market Maker Authorized Traders, 11.7, Registration of Market Makers in a Security, and 11.8, Obligations of Market Makers
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 8 (January 13, 2016)
Federal Register Volume 81, Issue 8 (January 13, 2016)
| Page Range | 1661-1665 | |
| FR Document | 2016-00493 |
[Federal Register Volume 81, Number 8 (Wednesday, January 13, 2016)] [Notices] [Pages 1661-1665] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-00493] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76852; File No. SR-BYX-2015-53] Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Changes to Rules 11.5, Registration of Market Makers, 11.6, Obligations of Market Maker Authorized Traders, 11.7, Registration of Market Makers in a Security, and 11.8, Obligations of Market Makers January 7, 2016. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on December 29, 2015, BATS Y-Exchange, Inc. (the ``Exchange'' or ``BYX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend Rules 11.5, Registration of Market Makers, 11.6, Obligations of Market Maker Authorized Traders, 11.7, Registration of Market Makers in a Security, and 11.8, Obligations of Market Makers, in order to update certain provisions and conform to the rules of EDGA Exchange, Inc. (``EDGA''), EDGX Exchange, Inc. (``EDGX''), BATS Exchange, Inc.'s (``BZX'') equity options trading platform (``BZX Options''), EDGX's equity options trading platform [[Page 1662]] (``EDGX Options''), and the Nasdaq Stock Market LLC (``Nasdaq'').\5\ --------------------------------------------------------------------------- \5\ See EDGA and EDGX Rules 11.17, 11.18, 11.19, and 11.20; BZX Options Rule 22.6(d)(4), (5), and (7); EDGX Options Rule 22.6(d)(4), (5), and (7); and Nasdaq Rules Rule 4613(a)(2)(ii) [sic], 4613(a)(2)(D) and (E). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's Web site at www.batstrading.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In early 2014, the Exchange and its affiliate, BZX, received approval to effect a merger (the ``Merger'') of the Exchange's parent company, BATS Global Markets, Inc., with Direct Edge Holdings LLC, the indirect parent of EDGX and EDGA (together with BZX, BYX and EDGX, the ``BGM Affiliated Exchanges'').\6\ In the context of the Merger, the BGM Affiliated Exchanges are working to align their rules, retaining only intended differences between the BGM Affiliated Exchanges. Thus, the Exchange proposes to amend Rules 11.5, Registration of Market Makers, 11.6, Obligations of Market Maker Authorized Traders, 11.7, Registration of Market Makers in a Security, and 11.8, Obligations of Market Makers, in order to update certain provisions and conform to the rules of EDGA and EDGX and provide a consistent rule set across each of the BGM Affiliated Exchanges.\7\ As amended, Exchange Rules 11.5, 11.6, 11.7, and 11.8 would be identical to EDGA and EDGX Rules 11.17, 11.18, 11.19, and 11.20 but for different cross references to Exchange Rules that are due to the different rule numbering amongst the Exchange, EDGA and EDGX.\8\ --------------------------------------------------------------------------- \6\ See Securities Exchange Act Release No. 71375 (January 23, 2014), 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013- 039). \7\ The Exchange notes that BZX intends to file an identical proposal with the Commission to amend its Rules 11.5, 11.6, 11.7, and 11.8 to updated certain provisions and conform to EDGA and EDGX Rules 11.17, 11.18, 11.19, and 11.20. The Exchange also notes that EDGA and EDGX intend to file proposals with the Commission to amend Rules 11.17, 11.18, 11.19, and 11.20 to update certain provisions to harmonize with the changes to Exchange Rules 11.5, 11.6, 11.7, and 11.8 proposed herein. \8\ The Exchange notes that the substance of the rules that are cross-referenced in Rule 11.5, 11.6, 11.7 and 11.8 are identical or substantially similar to the corresponding EDGA and EDGX Rules. --------------------------------------------------------------------------- Rule 11.5, Registration of Market Makers Like EDGA and EDGX Rule 11.17, Exchange Rule 11.5 governs the registration of Market Makers on the Exchange. In particular, paragraphs (a) and (b) of Rule 11.5 sets forth the application process for Members seeking to register as Market Makers on the Exchange. The Exchange proposes to amend paragraphs (c) and (d) of Rule 11.5 to harmonize Rule 11.5 with EDGA and EDGX Rule 11.17. Paragraph (c) sets for [sic] the scenarios under which the Exchange may suspend or terminate a Market Maker's registration which include where the Market Maker has: (i) Substantially of [sic] continuously failed to engage in dealings in accordance with Rule 11.8 (discussed below); (ii) failed to meet the minimum net capital requirements set forth under paragraph (a) of the Rule; and [sic] (iii) maintain a fair and orderly market. Rule 11.5(c) is substantially similar to EDGA and EDGX Rules 11.17(c)(1) thru (3). EDGA and EDGX contain an additional provision under Rule 11.17(c)(4) allowing them to suspend or terminate a Market Maker's registration where it does not have at least one registered Market Maker Authorized Trader (``MMAT'') qualified to perform market making activities as set forth in EDGA and EDGX Rule 11.18(b)(5).\9\ Under proposed Rule 11.5(c)(4), a MMAT whose registration is suspended pursuant to Exchange Rule 11.6(c) shall not be deemed qualified within the meaning of Exchange Rule 11.6(c). In order to harmonize the scenarios under which the Exchange may suspend or terminate a Market Maker's registration under Rule 11.5(c) with EDGA and EDGX, the Exchange proposes to adopt the provisions under EDGA and EDGX Rule 11.17(c)(4) as new subparagraph (c)(4) under Rule 11.5. The Exchange believes it is reasonable to suspend or terminate a Market Maker's registration where it does not have at least one registered MMAT qualified to perform market making activities as the absence of a qualified MMAT would impede its ability to satisfy its market making obligations. To accommodate the addition of subparagraph (c)(4) under Rule 11.5, the Exchange also proposes to relocate the ``or'' from the end of subparagraph (c)(2) to the end of subparagraph (c)(3). --------------------------------------------------------------------------- \9\ Under Exchange Rule 11.6(b)(5), a Market Maker must ensure that a MMAT is properly qualified to perform market making activities, including but not limited to ensuring the MMAT has met the requirements set forth in Exchange Rule 11.6(b)(2). In addition, the Exchange notes that EDGA and EDGX Rules [sic] Rule 11.17(c)(4) currently reference EDGA and EDGX Rules 11.19(b)(5). The Exchange notes that this reference should be to EDGA and EDGX Rules 11.18(b)(5) and that EDGA and EDGX intend to include this correction in an upcoming rule filing to be submitted to the Commission. --------------------------------------------------------------------------- Lastly, to conform to EDGA and EDGX Rules 11.17(d), the Exchange proposes to amend paragraph (d) or [sic] Rule 11.5 to remove the letter ``s'' from after the word ``interests''. Rule 11.6, Obligations of Market Maker Authorized Traders Like EDGA and EDGX Rules 11.18, Exchange Rule 11.6 governs the registration of MMATs. The Exchange proposes to amend paragraph (b)(4) to remove the letter ``s'' from after the word ``interests'' to harmonize Rule 11.6 with EDGA and EDGX Rule 11.18. Rule 11.7, Registration of Market Makers in a Security Like EDGA and EDGX Rules 11.19, Exchange Rule 11.7 sets forth the process for a Market Maker to become registered in a newly authorized security or in a security already admitted to dealings on the Exchange. The Exchange proposes to make the following changes to harmonize Rule 11.7 with EDGA and EDGX Rule 11.19:Amend paragraph (a) to state that registration in a security shall become effective on the same day as the Exchange's approval of the registration, unless otherwise provided by the Exchange; rather than the day following the following the Exchange's approval of the registration. This proposed amendment would harmonize Exchange Rule 11.7(a) with EDGA and EDGX Rules 11.19(a) in order to provide for consistent timeframes within which a registration may become effective across each of the BGM Affiliated Exchanges. Also, allowing for a registration to become effective on the same day as Exchange approval would enable a Market Maker to immediately provide liquidity in a security, rather than waiting until the following trading day. The Exchange would continue to maintain the authority to delay the effectiveness of the registration due to [[Page 1663]] the Market Maker satisfying additional procedural requirements, such as the daily notification to the Exchange of the symbols to which it will make a market in on a particular trading day; amend paragraph (a)(4) to replace the term ``they are'' with ``Market Maker is''; amend paragraph (a)(5) to add an ``and'' to the end of the paragraph; and amend paragraph (b) to remove the letter ``s'' from after the word ``interests''. The changes proposed above would harmonize Exchange Rule 11.7 with EDGA and EDGX Rules 11.19. Rule 11.8, Obligations of Market Makers Like EDGA and EDGX Rules 11.20, Exchange Rule 11.8 sets forth the obligations of Market Makers. In short, Members who are registered as Market Makers in one or more securities traded on the Exchange must engage in a course of dealings for their own account to assist in the maintenance, insofar as reasonably practicable, of fair and orderly markets on the Exchange in accordance with these Rules. The Exchange proposes to make the following changes to harmonize Rule 11.8(a), (c), and (d) with EDGA and EDGX Rule 11.19: Amend subparagraph (a)(1) to clarify that the Market Maker must maintain continuous, two-sided quotations; \10\ --------------------------------------------------------------------------- \10\ The Exchange does not propose to amend a Market Maker's quoting obligations. The proposed change is simply intended to make clear that the obligation is to maintain a continuous, two-sided quotation. --------------------------------------------------------------------------- amend paragraph (c) to: (i) Replace in the first sentence ``or'' with ``including, but without limitation'' and ``the'' with ``its''; (ii) delete the ``other'' from the second sentence; and (iii) add an ``s'' to the word ``power'' in the second sentence; amend paragraph (d)(1) to: (i) Add ``Continuous'' to the title ``Two-Sided Quote Obligations''; \11\ --------------------------------------------------------------------------- \11\ Id. --------------------------------------------------------------------------- amend paragraphs (d)(2) and (d)(2)(C) to replace the word ``under'' with ``of'' before Regulation NMS; amend paragraph (d)(2)(A) to replace ``from'' with ``as reported by'' before reference to the responsible single plan processor; and amend paragraph (d)(2)(B) to replace ``received from'' with ``reported by'' before reference to the responsible single plan processor. The Exchange also proposes to amend Rule 11.8(d)(1) to clarify the scenarios in which a Market Maker's two-sided quoting obligation may be temporarily suspended or alleviated. The provisions proposed to be added are each substantially similar to the rules of BZX Options and EDGX Options.\12\ Proposed Rule 11.8(d)(1)(A) addresses a Market Maker's ability to satisfy the quoting standard in the event of a technical failure or system limitation. In particular, if a technical failure or limitation of a system of the Exchange prevents the Market Maker from maintaining or communicating to the Exchange timely and accurate quotes in each security in which a Member is registered as a Market Maker, the duration of such failure shall not be considered in determining whether the Market Maker has satisfied the quoting standard with respect to that security.\13\ --------------------------------------------------------------------------- \12\ See BZX Options Rule 22.6(d)(4), (5), and (7). See also EDGX Options Rule 22.6(d)(4), (5), and (7). \13\ See Securities Exchange Act Release No. 71229 [sic] (December 18, 2013), 78 FR 77736 (December 24, 2013) (SR-BATS-2013- 062) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Modify BATS Options Market Maker Continuous Quoting Obligation Rules). --------------------------------------------------------------------------- In addition, proposed Rule 11.8(d)(1)(B) addresses a Market Maker's ability to satisfy the quoting standard during a halt, suspension or pause. A Market Maker's quoting obligation under Rule 11.8 would be suspended during a trading halt, suspension, or pause in the security.\14\ A Market Maker's quoting obligation would recommence after the first regular way transaction on the primary listing market following such halt, suspension, or pause in the security, as reported by the responsible single plan processor.\15\ A Market Maker's quoting obligation would also be suspended under Rule 11.8(d)(1)(B) for the duration that an NMS stock is in a Limit State or a Straddle State declared pursuant to the Plan to Address Extraordinary Market Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the ``Limit Up-Limit Down Plan'' or ``Plan'').\16\ --------------------------------------------------------------------------- \14\ The Exchange notes that proposed Rule 11.8(d)(B) would differ from BZX Options and EDGX Options Rules 22.6(d)(5) in so far as proposed Rule 11.8(d)(B) references ``security'' rather than ``underlying security'' in order to conform to the equities markets. \15\ See also Nasdaq Stock Market LLC (``Nasdaq'') Rule 4613(a)(2)(ii). \16\ See BZX and BYX Rules 11.18(e). See also EDGA and EDGX Rules 11.16(e). See also Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down Release''). --------------------------------------------------------------------------- Under proposed Rule 11.8(d)(1)(C), the Exchange would have the ability to consider other exceptions to the Two-Sided Obligation based on demonstrated legal or regulatory requirements or other mitigating circumstances. For example, a Market Maker must implement the pre-trade and other risk controls required by Rule 15c3-5 of the Act (the ``Market Access Rule'') with respect to all of their quoting activity. These pre-trade risk controls must be reasonably designed to systemically limit financial exposure and ensure compliance with all regulatory requirements. The risk controls a Market Maker may have in place to comply with the Market Access Rule may prevent that Market Maker from satisfying its quoting obligation. In such case, the Exchange would consider whether the Market Maker's failure to satisfy its quoting obligation due to its compliance with the Market Access Rule was proper. Lastly, the Exchange proposes to amend its definitions of ``Designated Percentage'' and ``Defined Limit'' under Rules 11.8(d)(2)(D) and (E) respectively to be substantially similar to Nasdaq Rules 4613(a)(2)(D) and (E). The pricing obligations applicable to quotations of Market Makers are based on the Designated Percentage and the Defined Limit, which are determined based on the applicable trigger percentage. The amended definitions would include revised percentages and updated descriptions of the categories of securities that are subject to those percentages. The Exchange notes that the percentages discussed below in the proposed definitions of Designated Percentage and Defined Limit are currently included in Interpretation and Policy .01 to Rule 11.8. Therefore, the Exchange is not proposing new percentages governing a Market Maker's quoting obligations; it is seeking to adopt revised definitions that are substantially similar to that of Nasdaq in order to provide consistent rules with regard to Market Maker's quoting obligations.\17\ The Exchange believes consistent definitions would avoid confusion amongst market participants that make markets on multiple venues. --------------------------------------------------------------------------- \17\ The Exchange proposed to categorize securities included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products as Tier 1 NMS Stocks under the under the Limit Up-Limit Down Plan. Securities not included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, or in the pilot list of Exchange Traded Products would be categorized as Tier 2 NMS Stocks under the under the Limit Up-Limit Down Plan. Nasdaq Rule 4613(a)(2)(D) and (E) references securities as included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products as such and those that are not as Tier 2 NMS Stocks. The Exchange notes that EDGA and EDGX also intent [sic] to amend their definitions of Designated Percentage and Defined Limit to mirror that proposed herein. --------------------------------------------------------------------------- The Exchange currently defines Designated Percentage under Rule 11.8(d)(2)(D) as the individual stock pause trigger percentage under the applicable rules of a primary listing market less: Two (2) percentage points [[Page 1664]] for securities that are included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products and for all other NMS stocks with a price equal to or greater than $1.00 per share; and twenty (20) percentage points for all NMS stocks with a price less than $1.00 per share that are not included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products. Exchange Rule 11.8(d)(2)(D) also states that for times during Regular Trading Hours \18\ when stock pause triggers are not in effect under the rules of the primary listing market, the Designated Percentage will be 20% for securities included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products. The Designated Percentage will remain the same throughout Regular Trading Hours for all other NMS stocks. --------------------------------------------------------------------------- \18\ See Exchange Rule 1.5(w). --------------------------------------------------------------------------- As amended, Designated Percentage would be defined as 8% for Tier 1 NMS Stocks under the Limit Up-Limit Down Plan,\19\ 28% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan \20\ with a price equal to or greater than $1.00, and 30% for Tier 2 NMS Stocks under the Limit Up- Limit Down Plan with a price less than $1.00, except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, when Exchange Rule 11.18(b) is not in effect, the Designated Percentage shall be 20% for Tier 1 NMS Stocks under the Limit Up-Limit Down Plan, 28% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a price equal to or greater than $1.00, and 30% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a price less than $1.00. --------------------------------------------------------------------------- \19\ Tier 1 NMS Stocks under the Limit Up-Limit Down Plan are securities that are included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products. See the Limit Up-Limit Down Release supra note 16. \20\ Tier 2 NMS Stocks under the Limit Up-Limit Down Plan are securities that are not included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products. Id. --------------------------------------------------------------------------- The Exchange currently defines Defined Limit under Rule 11.8(d)(2)(E) as the individual stock pause trigger percentage under the applicable rules of a primary listing market less one-half (1/2) percentage point for securities that are included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products and for all other NMS stocks with a price equal to or greater than $1.00 per share; and eighteen and one-half (18.5) percentage points for all NMS stocks with a price less than $1.00 per share that are not included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products. As amended, Defined Limit would be defined as 9.5% for Tier 1 NMS Stocks under the Limit Up-Limit Down Plan, 29.5% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a price equal to or greater than $1.00, and 31.5% for Tier 2 NMS Stocks under the Limit Up- Limit Down Plan with a price less than $1.00, except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, when Exchange Rule 11.18(b) is not in effect, the Defined Limit shall be 21.5% for Tier 1 NMS Stocks under the Limit Up-Limit Down Plan, 29.5% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a price equal to or greater than $1.00, and 31.5% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a price less than $1.00. Exchange Rule 11.8(d)(2)(E) also states that for times during Regular Trading Hours when stock pause triggers are not in effect under the rules of the primary listing market, the Defined Limit will be 21.5% for securities included in the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of Exchange Traded Products. The Defined Limit will remain the same throughout Regular Trading Hours for all other NMS stocks. The Exchange proposes to delete Interpretation and Policy .01 to Rule 11.8 as its content would now be duplicative with the definitions of Designated Percentage and Defined Limit under proposed Rules 11.8(d)(2)(D) and (E). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of section 6(b) of the Act.\21\ Specifically, the proposed change is consistent with section 6(b)(5) of the Act,\22\ because it is designed to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, to protect investors and the public interest. As mentioned above, the proposed rule changes, combined with the planned filing for the BZX, EDGA, and EDGX, would allow the BGM Affiliated Exchanges to provide a consistent set of rules as it relates to the registration and obligations of Market Makers. Consistent rules, in turn, will simplify the regulatory requirements for Market Makers on the Exchange that are also Market Makers on EDGA, EDGX and/or BZX. The proposed rule change would provide greater harmonization between rules of similar purpose on the BGM Affiliated Exchanges, resulting in greater uniformity and less burdensome and more efficient regulatory compliance and understanding of Exchange Rules. As such, the proposed rule change would foster cooperation and coordination with persons engaged in facilitating transactions in securities and would remove impediments to and perfect the mechanism of a free and open market and a national market system. Similarly, the Exchange also believes that, by harmonizing the rules across each BGM Affiliated Exchange, the proposal will enhance the Exchange's ability to fairly and efficiently regulate its Market Makers by utilizing a consistent rule set and obligations across each of the BGM Affiliated Exchanges. Consistent rules would enable the Exchange to apply identical standards to that of its affiliates, alleviating confusion by Market Makers on who may also be registered as such on BZX, EDGA, or EDGX, thereby promoting just and equitable principles of trade in accordance with section 6(b)(5) of the Act.\23\ --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f(b). \22\ 15 U.S.C. 78f(b)(5). \23\ Id. --------------------------------------------------------------------------- The Exchange also believes the proposed amendments to Rule 11.8(d) are consistent with section 6(b)(5) of the Act,\24\ because they are designed to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed amendments to Rule 11.8(d)(1) are meant to clarify the scenarios in which a Market Maker's two-sided quoting obligation may be temporarily suspended or alleviated. The provisions proposed to be added are each substantially similar to the rules of the BZX Options, EDGX Options and Nasdaq.\25\ The Exchange believes it is appropriate to have consistent rules across its equities and options platforms. Consistent rules would aid in alleviating confusion amongst those that are Members on both platforms. The Exchange believes it is reasonable to suspend or alleviate a Market Maker's quoting obligations in the event of a technical or system limitation, during a trading halt, suspension or pause, as well as where demonstrated legal or regulatory [[Page 1665]] requirements prevent the Market Maker from quoting. In each scenario, the Exchange will review the reasons behind the Market Maker inability to quote for compliance with the Rule. In addition, the percentages included in the proposed definitions of Designated Percentage and Defined Limit are currently included in Interpretation and Policy .01 to Rule 11.8. Therefore, the Exchange is not proposing to new percentages governing a Market Maker's quoting obligations; it is seeking to adopt revised definitions that are substantially similar to that of Nasdaq in order to provide a consistent rules with regard to Market Makers quoting obligations. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78f(b)(5). \25\ See supra notes 12 and 15. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the act. To the contrary, allowing the Exchange to implement substantively identical rules across each of the BGM Affiliated Exchanges regarding Market Maker registration and their obligations does not present any competitive issues, but rather is designed to provide greater harmonization among Exchange, BZX, EDGX, and EDGA rules of similar purpose. The proposed rule change should, therefore, result in less burdensome and more efficient regulatory compliance and understanding of Exchange Rules for common members of the BGM Affiliated Exchanges and an enhanced ability of the BGM Affiliated Exchanges to fairly and efficiently regulate Market Makers. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (A) Significantly affect the protection of investors or the public interest; (B) impose any significant burden on competition; and (C) by its terms, become operative for 30 days from the date on which it was filed or such shorter time as the Commission may designate it has become effective pursuant to section 19(b)(3)(A) of the Act \26\ and paragraph (f)(6) of Rule 19b-4 thereunder,\27\ the Exchange has designated this rule filing as non-controversial. The Exchange has given the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- \26\ 15 U.S.C. 78s(b)(3)(A). \27\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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: (1) Necessary or appropriate in the public interest; (2) for the protection of investors; or (3) 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 No. SR-BYX-2015-53 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 No. SR-BYX-2015-53. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal 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 No. SR-BYX-2015-53, and should be submitted on or before February 3, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\28\ --------------------------------------------------------------------------- \28\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-00493 Filed 1-12-16; 8:45 am] BILLING CODE 8011-01-P
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implement substantively identical rules IV. Solicitation of Comments For the Commission, by the Division of
across each of the BGM Affiliated Trading and Markets, pursuant to delegated
Exchanges regarding Market Maker Interested persons are invited to authority.28
registration and their obligations does submit written data, views, and Robert W. Errett,
not present any competitive issues, but arguments concerning the foregoing, Deputy Secretary.
rather is designed to provide greater including whether the proposed rule [FR Doc. 2016–00464 Filed 1–12–16; 8:45 am]
harmonization among Exchange, BYX, change is consistent with the Act. BILLING CODE 8011–01–P
EDGX, and EDGA rules of similar Comments may be submitted by any of
purpose. The proposed rule change the following methods:
should, therefore, result in less SECURITIES AND EXCHANGE
Electronic Comments COMMISSION
burdensome and more efficient
regulatory compliance and • Use the Commission’s Internet
understanding of Exchange Rules for comment form (http://www.sec.gov/ [Release No. 34–76852; File No. SR–BYX–
common members of the BGM Affiliated rules/sro.shtml); or 2015–53]
Exchanges and an enhanced ability of
• Send an email to rule-comments@ Self-Regulatory Organizations; BATS
the BGM Affiliated Exchanges to fairly
sec.gov. Please include File No. SR– Y-Exchange, Inc.; Notice of Filing and
and efficiently regulate Market Makers.
BATS–2015–121 on the subject line. Immediate Effectiveness of a Proposed
C. Self-Regulatory Organization’s Rule Changes to Rules 11.5,
Statement on Comments on the Paper Comments
Registration of Market Makers, 11.6,
Proposed Rule Change Received From • Send paper comments in triplicate Obligations of Market Maker
Members, Participants, or Others to Secretary, Securities and Exchange Authorized Traders, 11.7, Registration
Commission, 100 F Street NE., of Market Makers in a Security, and
The Exchange has neither solicited 11.8, Obligations of Market Makers
nor received written comments on the Washington, DC 20549–1090.
proposed rule change. All submissions should refer to File No. January 7, 2016.
SR–BATS–2015–121. This file number Pursuant to section 19(b)(1) of the
III. Date of Effectiveness of the
should be included on the subject line Securities Exchange Act of 1934 (the
Proposed Rule Change and Timing for
if email is used. To help the ‘‘Act’’),1 and Rule 19b–4 thereunder,2
Commission Action
Commission process and review your notice is hereby given that on December
Because the foregoing proposed rule comments more efficiently, please use 29, 2015, BATS Y-Exchange, Inc. (the
change does not: (A) Significantly affect only one method. The Commission will ‘‘Exchange’’ or ‘‘BYX’’) filed with the
the protection of investors or the public post all comments on the Commission’s Securities and Exchange Commission
interest; (B) impose any significant Internet Web site (http://www.sec.gov/ (‘‘Commission’’) the proposed rule
burden on competition; and (C) by its change as described in Items I, II, and
rules/sro.shtml). Copies of the
terms, become operative for 30 days III below, which Items have been
submission, all subsequent
from the date on which it was filed or prepared by the Exchange. The
amendments, all written statements
such shorter time as the Commission Exchange has designated this proposal
with respect to the proposed rule as a ‘‘non-controversial’’ proposed rule
may designate it has become effective change that are filed with the
pursuant to Section 19(b)(3)(A) of the change pursuant to section 19(b)(3)(A)
Commission, and all written of the Act 3 and Rule 19b–4(f)(6)(iii)
Act 26 and paragraph (f)(6) of Rule 19b– communications relating to the
4 thereunder,27 the Exchange has thereunder,4 which renders it effective
proposed rule change between the upon filing with the Commission. The
designated this rule filing as non-
Commission and any person, other than Commission is publishing this notice to
controversial. The Exchange has given
those that may be withheld from the solicit comments on the proposed rule
the Commission written notice of its
intent to file the proposed rule change, public in accordance with the change from interested persons.
along with a brief description and text provisions of 5 U.S.C. 552, will be
available for Web site viewing and I. Self-Regulatory Organization’s
of the proposed rule change at least five Statement of the Terms of the Substance
business days prior to the date of filing printing in the Commission’s Public
of the Proposed Rule Change
of the proposed rule change, or such Reference Room, 100 F Street NE.,
shorter time as designated by the Washington, DC 20549 on official The Exchange filed a proposal to
Commission. business days between the hours of amend Rules 11.5, Registration of
10:00 a.m. and 3:00 p.m. Copies of such Market Makers, 11.6, Obligations of
At any time within 60 days of the Market Maker Authorized Traders, 11.7,
filing of the proposed rule change, the filing also will be available for
inspection and copying at the principal Registration of Market Makers in a
Commission summarily may Security, and 11.8, Obligations of
temporarily suspend such rule change if office of the Exchange. All comments
received will be posted without change; Market Makers, in order to update
it appears to the Commission that such certain provisions and conform to the
action is: (1) Necessary or appropriate in the Commission does not edit personal
rules of EDGA Exchange, Inc. (‘‘EDGA’’),
the public interest; (2) for the protection identifying information from
EDGX Exchange, Inc. (‘‘EDGX’’), BATS
of investors; or (3) otherwise in submissions. You should submit only
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Exchange, Inc.’s (‘‘BZX’’) equity options
furtherance of the purposes of the Act. information that you wish to make trading platform (‘‘BZX Options’’),
If the Commission takes such action, the available publicly. All submissions EDGX’s equity options trading platform
Commission shall institute proceedings should refer to File No. SR–BATS–
to determine whether the proposed rule 2015–121, and should be submitted on 28 17 CFR 200.30–3(a)(12).
should be approved or disapproved. or before February 3, 2016. 1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
26 15 U.S.C. 78s(b)(3)(A). 3 15 U.S.C. 78s(b)(3)(A).
27 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(6)(iii).
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![1662 Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
(‘‘EDGX Options’’), and the Nasdaq amended, Exchange Rules 11.5, 11.6, terminate a Market Maker’s registration
Stock Market LLC (‘‘Nasdaq’’).5 11.7, and 11.8 would be identical to under Rule 11.5(c) with EDGA and
The text of the proposed rule change EDGA and EDGX Rules 11.17, 11.18, EDGX, the Exchange proposes to adopt
is available at the Exchange’s Web site 11.19, and 11.20 but for different cross the provisions under EDGA and EDGX
at www.batstrading.com, at the references to Exchange Rules that are Rule 11.17(c)(4) as new subparagraph
principal office of the Exchange, and at due to the different rule numbering (c)(4) under Rule 11.5. The Exchange
the Commission’s Public Reference amongst the Exchange, EDGA and believes it is reasonable to suspend or
Room. EDGX.8 terminate a Market Maker’s registration
II. Self-Regulatory Organization’s where it does not have at least one
Rule 11.5, Registration of Market Makers
Statement of the Purpose of, and registered MMAT qualified to perform
Like EDGA and EDGX Rule 11.17, market making activities as the absence
Statutory Basis for, the Proposed Rule Exchange Rule 11.5 governs the
Change of a qualified MMAT would impede its
registration of Market Makers on the ability to satisfy its market making
In its filing with the Commission, the Exchange. In particular, paragraphs (a) obligations. To accommodate the
Exchange included statements and (b) of Rule 11.5 sets forth the addition of subparagraph (c)(4) under
concerning the purpose of and basis for application process for Members Rule 11.5, the Exchange also proposes to
the proposed rule change and discussed seeking to register as Market Makers on relocate the ‘‘or’’ from the end of
any comments it received on the the Exchange. The Exchange proposes to subparagraph (c)(2) to the end of
proposed rule change. The text of these amend paragraphs (c) and (d) of Rule subparagraph (c)(3).
statements may be examined at the 11.5 to harmonize Rule 11.5 with EDGA Lastly, to conform to EDGA and EDGX
places specified in Item IV below. The and EDGX Rule 11.17. Rules 11.17(d), the Exchange proposes
Exchange has prepared summaries, set Paragraph (c) sets for [sic] the to amend paragraph (d) or [sic] Rule
forth in sections A, B, and C below, of scenarios under which the Exchange 11.5 to remove the letter ‘‘s’’ from after
the most significant parts of such may suspend or terminate a Market the word ‘‘interests’’.
statements. Maker’s registration which include
where the Market Maker has: (i) Rule 11.6, Obligations of Market Maker
A. Self-Regulatory Organization’s Substantially of [sic] continuously failed Authorized Traders
Statement of the Purpose of, and to engage in dealings in accordance with Like EDGA and EDGX Rules 11.18,
Statutory Basis for, the Proposed Rule Rule 11.8 (discussed below); (ii) failed Exchange Rule 11.6 governs the
Change to meet the minimum net capital registration of MMATs. The Exchange
1. Purpose requirements set forth under paragraph proposes to amend paragraph (b)(4) to
In early 2014, the Exchange and its (a) of the Rule; and [sic] (iii) maintain remove the letter ‘‘s’’ from after the
a fair and orderly market. Rule 11.5(c) word ‘‘interests’’ to harmonize Rule 11.6
affiliate, BZX, received approval to
is substantially similar to EDGA and with EDGA and EDGX Rule 11.18.
effect a merger (the ‘‘Merger’’) of the
EDGX Rules 11.17(c)(1) thru (3). EDGA
Exchange’s parent company, BATS Rule 11.7, Registration of Market Makers
and EDGX contain an additional
Global Markets, Inc., with Direct Edge in a Security
provision under Rule 11.17(c)(4)
Holdings LLC, the indirect parent of Like EDGA and EDGX Rules 11.19,
allowing them to suspend or terminate
EDGX and EDGA (together with BZX, Exchange Rule 11.7 sets forth the
a Market Maker’s registration where it
BYX and EDGX, the ‘‘BGM Affiliated process for a Market Maker to become
does not have at least one registered
Exchanges’’).6 In the context of the registered in a newly authorized
Market Maker Authorized Trader
Merger, the BGM Affiliated Exchanges (‘‘MMAT’’) qualified to perform market security or in a security already
are working to align their rules, making activities as set forth in EDGA admitted to dealings on the Exchange.
retaining only intended differences and EDGX Rule 11.18(b)(5).9 Under The Exchange proposes to make the
between the BGM Affiliated Exchanges. proposed Rule 11.5(c)(4), a MMAT following changes to harmonize Rule
Thus, the Exchange proposes to amend whose registration is suspended 11.7 with EDGA and EDGX Rule 11.19:
Rules 11.5, Registration of Market pursuant to Exchange Rule 11.6(c) shall • Amend paragraph (a) to state that
Makers, 11.6, Obligations of Market not be deemed qualified within the registration in a security shall become
Maker Authorized Traders, 11.7, meaning of Exchange Rule 11.6(c). In effective on the same day as the
Registration of Market Makers in a order to harmonize the scenarios under Exchange’s approval of the registration,
Security, and 11.8, Obligations of which the Exchange may suspend or unless otherwise provided by the
Market Makers, in order to update Exchange; rather than the day following
certain provisions and conform to the 11.17, 11.18, 11.19, and 11.20 to update certain the following the Exchange’s approval
rules of EDGA and EDGX and provide provisions to harmonize with the changes to of the registration. This proposed
a consistent rule set across each of the Exchange Rules 11.5, 11.6, 11.7, and 11.8 proposed
amendment would harmonize Exchange
BGM Affiliated Exchanges.7 As herein.
8 The Exchange notes that the substance of the Rule 11.7(a) with EDGA and EDGX
5 See EDGA and EDGX Rules 11.17, 11.18, 11.19,
rules that are cross-referenced in Rule 11.5, 11.6, Rules 11.19(a) in order to provide for
11.7 and 11.8 are identical or substantially similar consistent timeframes within which a
and 11.20; BZX Options Rule 22.6(d)(4), (5), and (7); to the corresponding EDGA and EDGX Rules.
EDGX Options Rule 22.6(d)(4), (5), and (7); and 9 Under Exchange Rule 11.6(b)(5), a Market Maker
registration may become effective across
Nasdaq Rules Rule 4613(a)(2)(ii) [sic], 4613(a)(2)(D) must ensure that a MMAT is properly qualified to each of the BGM Affiliated Exchanges.
and (E). Also, allowing for a registration to
asabaliauskas on DSK5VPTVN1PROD with NOTICES
perform market making activities, including but not
6 See Securities Exchange Act Release No. 71375
limited to ensuring the MMAT has met the become effective on the same day as
(January 23, 2014), 79 FR 4771 (January 29, 2014) requirements set forth in Exchange Rule 11.6(b)(2).
(SR–BATS–2013–059; SR–BYX–2013–039). Exchange approval would enable a
In addition, the Exchange notes that EDGA and
7 The Exchange notes that BZX intends to file an
EDGX Rules [sic] Rule 11.17(c)(4) currently Market Maker to immediately provide
identical proposal with the Commission to amend reference EDGA and EDGX Rules 11.19(b)(5). The liquidity in a security, rather than
its Rules 11.5, 11.6, 11.7, and 11.8 to updated Exchange notes that this reference should be to waiting until the following trading day.
certain provisions and conform to EDGA and EDGX EDGA and EDGX Rules 11.18(b)(5) and that EDGA
Rules 11.17, 11.18, 11.19, and 11.20. The Exchange and EDGX intend to include this correction in an
The Exchange would continue to
also notes that EDGA and EDGX intend to file upcoming rule filing to be submitted to the maintain the authority to delay the
proposals with the Commission to amend Rules Commission. effectiveness of the registration due to
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![Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices 1663
the Market Maker satisfying additional proposed to be added are each required by Rule 15c3–5 of the Act (the
procedural requirements, such as the substantially similar to the rules of BZX ‘‘Market Access Rule’’) with respect to
daily notification to the Exchange of the Options and EDGX Options.12 Proposed all of their quoting activity. These pre-
symbols to which it will make a market Rule 11.8(d)(1)(A) addresses a Market trade risk controls must be reasonably
in on a particular trading day; Maker’s ability to satisfy the quoting designed to systemically limit financial
• amend paragraph (a)(4) to replace standard in the event of a technical exposure and ensure compliance with
the term ‘‘they are’’ with ‘‘Market Maker failure or system limitation. In all regulatory requirements. The risk
is’’; particular, if a technical failure or controls a Market Maker may have in
• amend paragraph (a)(5) to add an limitation of a system of the Exchange place to comply with the Market Access
‘‘and’’ to the end of the paragraph; and prevents the Market Maker from Rule may prevent that Market Maker
• amend paragraph (b) to remove the maintaining or communicating to the from satisfying its quoting obligation. In
letter ‘‘s’’ from after the word Exchange timely and accurate quotes in such case, the Exchange would consider
‘‘interests’’. each security in which a Member is whether the Market Maker’s failure to
The changes proposed above would registered as a Market Maker, the satisfy its quoting obligation due to its
harmonize Exchange Rule 11.7 with duration of such failure shall not be compliance with the Market Access
EDGA and EDGX Rules 11.19. considered in determining whether the Rule was proper.
Market Maker has satisfied the quoting Lastly, the Exchange proposes to
Rule 11.8, Obligations of Market Makers
standard with respect to that security.13 amend its definitions of ‘‘Designated
Like EDGA and EDGX Rules 11.20, In addition, proposed Rule Percentage’’ and ‘‘Defined Limit’’ under
Exchange Rule 11.8 sets forth the 11.8(d)(1)(B) addresses a Market Maker’s Rules 11.8(d)(2)(D) and (E) respectively
obligations of Market Makers. In short, ability to satisfy the quoting standard to be substantially similar to Nasdaq
Members who are registered as Market during a halt, suspension or pause. A Rules 4613(a)(2)(D) and (E). The pricing
Makers in one or more securities traded Market Maker’s quoting obligation obligations applicable to quotations of
on the Exchange must engage in a under Rule 11.8 would be suspended Market Makers are based on the
course of dealings for their own account during a trading halt, suspension, or Designated Percentage and the Defined
to assist in the maintenance, insofar as pause in the security.14 A Market Limit, which are determined based on
reasonably practicable, of fair and Maker’s quoting obligation would the applicable trigger percentage. The
orderly markets on the Exchange in recommence after the first regular way amended definitions would include
accordance with these Rules. The transaction on the primary listing revised percentages and updated
Exchange proposes to make the market following such halt, suspension, descriptions of the categories of
following changes to harmonize Rule or pause in the security, as reported by securities that are subject to those
11.8(a), (c), and (d) with EDGA and the responsible single plan processor.15 percentages. The Exchange notes that
EDGX Rule 11.19: A Market Maker’s quoting obligation the percentages discussed below in the
• Amend subparagraph (a)(1) to would also be suspended under Rule proposed definitions of Designated
clarify that the Market Maker must 11.8(d)(1)(B) for the duration that an Percentage and Defined Limit are
maintain continuous, two-sided NMS stock is in a Limit State or a currently included in Interpretation and
quotations; 10 Straddle State declared pursuant to the Policy .01 to Rule 11.8. Therefore, the
• amend paragraph (c) to: (i) Replace Exchange is not proposing new
Plan to Address Extraordinary Market
in the first sentence ‘‘or’’ with percentages governing a Market Maker’s
Volatility Pursuant to Rule 608 of
‘‘including, but without limitation’’ and quoting obligations; it is seeking to
Regulation NMS under the Act (the
‘‘the’’ with ‘‘its’’; (ii) delete the ‘‘other’’ adopt revised definitions that are
‘‘Limit Up-Limit Down Plan’’ or
from the second sentence; and (iii) add substantially similar to that of Nasdaq in
‘‘Plan’’).16
an ‘‘s’’ to the word ‘‘power’’ in the Under proposed Rule 11.8(d)(1)(C), order to provide consistent rules with
second sentence; the Exchange would have the ability to regard to Market Maker’s quoting
• amend paragraph (d)(1) to: (i) Add obligations.17 The Exchange believes
consider other exceptions to the Two-
‘‘Continuous’’ to the title ‘‘Two-Sided consistent definitions would avoid
Sided Obligation based on demonstrated
Quote Obligations’’; 11 confusion amongst market participants
legal or regulatory requirements or other
• amend paragraphs (d)(2) and that make markets on multiple venues.
mitigating circumstances. For example,
(d)(2)(C) to replace the word ‘‘under’’ The Exchange currently defines
a Market Maker must implement the
with ‘‘of’’ before Regulation NMS; Designated Percentage under Rule
• amend paragraph (d)(2)(A) to pre-trade and other risk controls
11.8(d)(2)(D) as the individual stock
replace ‘‘from’’ with ‘‘as reported by’’ 12 See BZX Options Rule 22.6(d)(4), (5), and (7). pause trigger percentage under the
before reference to the responsible See also EDGX Options Rule 22.6(d)(4), (5), and (7). applicable rules of a primary listing
single plan processor; and 13 See Securities Exchange Act Release No. 71229 market less: Two (2) percentage points
• amend paragraph (d)(2)(B) to [sic] (December 18, 2013), 78 FR 77736 (December
replace ‘‘received from’’ with ‘‘reported 24, 2013) (SR–BATS–2013–062) (Notice of Filing 17 The Exchange proposed to categorize securities
by’’ before reference to the responsible and Immediate Effectiveness of a Proposed Rule included in the S&P 500® Index, Russell 1000®
Change to Modify BATS Options Market Maker Index, and a pilot list of Exchange Traded Products
single plan processor. Continuous Quoting Obligation Rules). as Tier 1 NMS Stocks under the under the Limit
The Exchange also proposes to amend 14 The Exchange notes that proposed Rule
Up-Limit Down Plan. Securities not included in the
Rule 11.8(d)(1) to clarify the scenarios 11.8(d)(B) would differ from BZX Options and S&P 500® Index, Russell 1000® Index, or in the
in which a Market Maker’s two-sided EDGX Options Rules 22.6(d)(5) in so far as
asabaliauskas on DSK5VPTVN1PROD with NOTICES
pilot list of Exchange Traded Products would be
proposed Rule 11.8(d)(B) references ‘‘security’’ categorized as Tier 2 NMS Stocks under the under
quoting obligation may be temporarily rather than ‘‘underlying security’’ in order to the Limit Up-Limit Down Plan. Nasdaq Rule
suspended or alleviated. The provisions conform to the equities markets. 4613(a)(2)(D) and (E) references securities as
15 See also Nasdaq Stock Market LLC (‘‘Nasdaq’’)
included in the S&P 500® Index, Russell 1000®
10 The Exchange does not propose to amend a Rule 4613(a)(2)(ii). Index, and a pilot list of Exchange Traded Products
Market Maker’s quoting obligations. The proposed 16 See BZX and BYX Rules 11.18(e). See also as such and those that are not as Tier 2 NMS Stocks.
change is simply intended to make clear that the EDGA and EDGX Rules 11.16(e). See also Securities The Exchange notes that EDGA and EDGX also
obligation is to maintain a continuous, two-sided Exchange Act Release No. 67091 (May 31, 2012), 77 intent [sic] to amend their definitions of Designated
quotation. FR 33498 (June 6, 2012) (the ‘‘Limit Up-Limit Down Percentage and Defined Limit to mirror that
11 Id. Release’’). proposed herein.
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![Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices 1665
requirements prevent the Market Maker 4 thereunder,27 the Exchange has provisions of 5 U.S.C. 552, will be
from quoting. In each scenario, the designated this rule filing as non- available for Web site viewing and
Exchange will review the reasons controversial. The Exchange has given printing in the Commission’s Public
behind the Market Maker inability to the Commission written notice of its Reference Room, 100 F Street NE.,
quote for compliance with the Rule. In intent to file the proposed rule change, Washington, DC 20549 on official
addition, the percentages included in along with a brief description and text business days between the hours of
the proposed definitions of Designated of the proposed rule change at least five 10:00 a.m. and 3:00 p.m. Copies of such
Percentage and Defined Limit are business days prior to the date of filing filing also will be available for
currently included in Interpretation and of the proposed rule change, or such inspection and copying at the principal
Policy .01 to Rule 11.8. Therefore, the shorter time as designated by the office of the Exchange. All comments
Exchange is not proposing to new Commission. received will be posted without change;
percentages governing a Market Maker’s At any time within 60 days of the the Commission does not edit personal
quoting obligations; it is seeking to filing of the proposed rule change, the identifying information from
adopt revised definitions that are Commission summarily may submissions. You should submit only
substantially similar to that of Nasdaq in temporarily suspend such rule change if information that you wish to make
order to provide a consistent rules with it appears to the Commission that such available publicly. All submissions
regard to Market Makers quoting action is: (1) Necessary or appropriate in should refer to File No. SR–BYX–2015–
obligations. the public interest; (2) for the protection 53, and should be submitted on or
of investors; or (3) otherwise in before February 3, 2016.
B. Self-Regulatory Organization’s
furtherance of the purposes of the Act. For the Commission, by the Division of
Statement on Burden on Competition
If the Commission takes such action, the Trading and Markets, pursuant to delegated
The Exchange does not believe that Commission shall institute proceedings authority.28
the proposed rule change will impose to determine whether the proposed rule Robert W. Errett,
any burden on competition not should be approved or disapproved. Deputy Secretary.
necessary or appropriate in furtherance
IV. Solicitation of Comments [FR Doc. 2016–00493 Filed 1–12–16; 8:45 am]
of the purposes of the act. To the
BILLING CODE 8011–01–P
contrary, allowing the Exchange to Interested persons are invited to
implement substantively identical rules submit written data, views, and
across each of the BGM Affiliated arguments concerning the foregoing, SECURITIES AND EXCHANGE
Exchanges regarding Market Maker including whether the proposed rule COMMISSION
registration and their obligations does change is consistent with the Act.
not present any competitive issues, but Comments may be submitted by any of [File No. 500–1]
rather is designed to provide greater the following methods:
harmonization among Exchange, BZX, In the Matter of DC Brands
Electronic Comments International Inc., Order of Suspension
EDGX, and EDGA rules of similar
purpose. The proposed rule change • Use the Commission’s Internet of Trading
should, therefore, result in less comment form (http://www.sec.gov/ January 11, 2016.
burdensome and more efficient rules/sro.shtml); or It appears to the Securities and
regulatory compliance and • Send an email to rule-comments@
Exchange Commission that there is a
understanding of Exchange Rules for sec.gov. Please include File No. SR–
lack of current and accurate information
common members of the BGM Affiliated BYX–2015–53 on the subject line. concerning the securities of DC Brands
Exchanges and an enhanced ability of Paper Comments International Inc. (‘‘DC Brands’’)
the BGM Affiliated Exchanges to fairly because DC Brands has not filed any
• Send paper comments in triplicate
and efficiently regulate Market Makers. periodic reports since it filed a Form
to Secretary, Securities and Exchange
C. Self-Regulatory Organization’s Commission, 100 F Street NE., 10–Q for the period ended June 30,
Statement on Comments on the Washington, DC 20549–1090. 2014. Specifically, DC Brands is over a
Proposed Rule Change Received From year delinquent in its periodic reporting
All submissions should refer to File No.
Members, Participants, or Others and it has not submitted the following
SR–BYX–2015–53. This file number
required filings:
The Exchange has neither solicited should be included on the subject line • Form 10–Q for the quarter ended
nor received written comments on the if email is used. To help the September 30, 2014 (due November 15,
proposed rule change. Commission process and review your 2014)
comments more efficiently, please use • Form 10–K for the fiscal year ended
III. Date of Effectiveness of the only one method. The Commission will
Proposed Rule Change and Timing for December 31, 2014 (due March 31,
post all comments on the Commission’s 2015)
Commission Action Internet Web site (http://www.sec.gov/ • Form 10–Q for the quarter ended
Because the foregoing proposed rule rules/sro.shtml). Copies of the March 31, 2015 (due May 15, 2015)
change does not: (A) Significantly affect submission, all subsequent • Form 10–Q for the quarter ended
the protection of investors or the public amendments, all written statements June 30, 2015 (due August 15, 2015)
interest; (B) impose any significant with respect to the proposed rule • Form 10–Q for the quarter ended
burden on competition; and (C) by its change that are filed with the
asabaliauskas on DSK5VPTVN1PROD with NOTICES
September 30, 2015 (due November 15,
terms, become operative for 30 days Commission, and all written 2015)
from the date on which it was filed or communications relating to the The Commission is of the opinion that
such shorter time as the Commission proposed rule change between the the public interest and the protection of
may designate it has become effective Commission and any person, other than investors require a suspension of trading
pursuant to section 19(b)(3)(A) of the those that may be withheld from the in the securities of the above-listed
Act 26 and paragraph (f)(6) of Rule 19b– public in accordance with the company.
26 15 U.S.C. 78s(b)(3)(A). 27 17 CFR 240.19b–4. 28 17 CFR 200.30–3(a)(12).
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Document Created: 2016-01-13 01:01:21
Document Modified: 2016-01-13 01:01:21
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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