81 FR 18925 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Rule 4770 To Implement the Regulation NMS Plan To Implement a Tick Size Pilot Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 63 (April 1, 2016)
Federal Register Volume 81, Issue 63 (April 1, 2016)
| Page Range | 18925-18931 | |
| FR Document | 2016-07333 |
[Federal Register Volume 81, Number 63 (Friday, April 1, 2016)] [Notices] [Pages 18925-18931] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-07333] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77456; File No. SR-NASDAQ-2016-043] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Rule 4770 To Implement the Regulation NMS Plan To Implement a Tick Size Pilot Program March 28, 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 23, 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 and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to a proposal to adopt Exchange Rule 4770 to implement the Regulation NMS Plan to Implement a Tick Size Pilot Program (``Plan''). The proposed rule change is substantially similar to proposed rule changes recently approved or published by the Commission by the Bats BZX Exchange, Inc. f/k/a BATS Exchange, Inc. (``BZX'') to adopt BZX Rule 11.27(b) which also sets forth requirements for the collection and transmission of data pursuant to Appendices B and C of the Plan.\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 77105 (February 10, 2016), 81 FR 8112 (February 17, 2016) (order approving SR-BATS-2015- 102); see also Securities Exchange Act Release No. 77310 (March 7, 2016), 81 FR 13012 (March 11, 2016) (notice for comment and immediate effectiveness of SR-BATS-2016-27). --------------------------------------------------------------------------- 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 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. [[Page 18926]] A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On August 25, 2014, NYSE Group, Inc., on behalf of BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc. (``FINRA''), NASDAQ BX, Inc., NASDAQ PHLX LLC, the Nasdaq Stock Market LLC, New York Stock Exchange LLC (``NYSE''), NYSE MKT LLC, and NYSE Arca, Inc. (collectively ``Participants''), filed with the Commission, pursuant to Section 11A of the Act \4\ and Rule 608 of Regulation NMS thereunder,\5\ the Plan to Implement a Tick Size Pilot Program (``Pilot'').\6\ --------------------------------------------------------------------------- \4\ 15 U.S.C. 78k-1. \5\ 17 CFR 242.608. \6\ See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014. --------------------------------------------------------------------------- The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014.\7\ The Plan \8\ was published for comment in the Federal Register on November 7, 2014, and approved by the Commission, as modified, on May 6, 2015.\9\ --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). \8\ Capitalized terms used in this rule filing are defined in the Plan, unless otherwise specified herein. \9\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (``Approval Order''). --------------------------------------------------------------------------- The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stocks of small- capitalization companies. Each Participant is required to comply, and to enforce compliance by its member organizations, as applicable, with the provisions of the Plan. As is described more fully below, the proposed rules would require Members \10\ to comply with the applicable data collection requirements of the Plan.\11\ --------------------------------------------------------------------------- \10\ The term ``Member'' or ``Nasdaq Member'' is defined as ``any registered broker or dealer that has been admitted to membership in Nasdaq. A Nasdaq Member is not a member of Nasdaq within the meaning of the Delaware Limited Liability Company Act by reason of being admitted to membership in Nasdaq.'' See Exchange Rule 0120(i). \11\ The Exchange proposes Commentary .11 to Rule 4770 to provide that the Rule shall be in effect during a pilot period to coincide with the pilot period for the Plan (including any extensions to the pilot period for the Plan). --------------------------------------------------------------------------- The Pilot will include stocks of companies with $3 billion or less in market capitalization, an average daily trading volume of one million shares or less, and a volume weighted average price of at least $2.00 for every trading day. The Pilot will consist of a control group of approximately 1400 Pilot Securities and three test groups with 400 Pilot Securities in each (selected by a stratified random sampling process).\12\ During the pilot, Pilot Securities in the control group will be quoted at the current tick size increment of $0.01 per share and will trade at the currently permitted increments. --------------------------------------------------------------------------- \12\ See Section V of the Plan for identification of Pilot Securities, including criteria for selection and grouping. --------------------------------------------------------------------------- Pilot Securities in the first test group (``Test Group One'') will be quoted in $0.05 minimum increments but will continue to trade at any price increment that is currently permitted.\13\ Pilot Securities in the second test group (``Test Group Two'') will be quoted in $0.05 minimum increments and will trade at $0.05 minimum increments subject to a midpoint exception, a retail investor order exception, and a negotiated trade exception.\14\ Pilot Securities in the third test group (``Test Group Three'') will be subject to the same quoting and trading increments as Test Group Two and also will be subject to the ``Trade-at'' requirement to prevent price matching by a market participant that is not displaying at a Trading Center's ``Best Protected Bid'' or ``Best Protected Offer,'' unless an enumerated exception applies.\15\ In addition to the exceptions provided under Test Group Two, an exception for Block Size orders and exceptions that mirror those under Rule 611 of Regulation NMS \16\ will apply to the Trade-at requirement. --------------------------------------------------------------------------- \13\ See Section VI(B) of the Plan. \14\ See Section VI(C) of the Plan. \15\ See Section VI(D) of the Plan. \16\ 17 CFR 242.611. --------------------------------------------------------------------------- In approving the Plan, the Commission noted that the Trading Center data reporting requirements would facilitate an analysis of the effects of the Pilot on liquidity (e.g., transaction costs by order size), execution quality (e.g., speed of order executions), market maker activity, competition between trading venues (e.g., routing frequency of market orders), transparency (e.g., choice between displayed and hidden orders), and market dynamics (e.g., rates and speed of order cancellations).\17\ --------------------------------------------------------------------------- \17\ See Approval Order, 80 FR at 27543. --------------------------------------------------------------------------- The Commission also noted that Market Maker profitability data would assist the Commission in evaluating the effect, if any, of a widened tick increment on market marker profits and any corresponding changes in the liquidity of small-capitalization securities.\18\ --------------------------------------------------------------------------- \18\ Id. --------------------------------------------------------------------------- Compliance With the Data Collection Requirements of the Plan The Plan contains requirements for collecting and transmitting data to the Commission and to the public.\19\ Specifically, Appendix B.I of the Plan (Market Quality Statistics) requires Trading Centers \20\ to submit variety of market quality statistics, including information about an order's original size, whether the order was displayable or not, the cumulative number of orders, the cumulative number of shares of orders, and the cumulative number of shares executed within specific time increments, e.g., from 30 seconds to less than 60 seconds after the time of order receipt. This information shall be categorized by security, order type, original order size, hidden status, and coverage under Rule 605.\21\ Appendix B.I of the Plan also contains additional requirements for market orders and marketable limit orders, including the share-weighted average effective spread for executions of orders; the cumulative number of shares of orders executed with price improvement; and, for shares executed with price improvement, the share-weighted average amount per share that prices were improved. --------------------------------------------------------------------------- \19\ The Exchange is also required by the Plan to establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with applicable quoting and trading requirements specified in the Plan. The Exchange intends to separately propose rules that would require compliance by its Members with the applicable quoting and trading requirements specified in the Plan, and has reserved Paragraph (a) for such rules. \20\ The Plan incorporates the definition of a ``Trading Center'' from Rule 600(b)(78) of Regulation NMS. Regulation NMS defines a ``Trading Center'' as ``a national securities exchange or national securities association that operates an SRO trading facility, an alternative trading system, an exchange market maker, an OTC market maker, or any other broker or dealer that executes orders internally by trading as principal or crossing orders as agent.'' See 17 CFR 242.600(b). \21\ 17 CFR 242.605. --------------------------------------------------------------------------- Appendix B.II of the Plan (Market and Marketable Limit Order Data) requires Trading Centers to submit information relating to market orders and marketable limit orders, including the time of order receipt, order type, the order size, the National Best Bid and National Best Offer (``NBBO'') quoted price, the NBBO quoted depth, the average execution price-share-weighted average, and the average execution time- share-weighted average. The Plan requires Appendix B.I and B.II data to be submitted by Participants [[Page 18927]] that operate a Trading Center, and by members of the Participants that operate Trading Centers. The Plan provides that each Participant that is the Designated Examining Authority (``DEA'') for a member of the Participant that operates a Trading Center shall collect such data in a pipe delimited format, beginning six months prior to the Pilot Period and ending six months after the end of the Pilot Period. The Plan also requires the Participant, operating as DEA, to transmit this information to the SEC within 30 calendar days following month end. The Exchange is therefore proposing Rule 4770(b) to set forth the requirements for the collection and transmission of data pursuant to Appendices B and C of the Plan. Proposed Rule 4770(b) is substantially similar to proposed rule changes by BZX that were recently approved or published by the Commission to adopt BZX Rule 11.27(b) which also sets forth requirements for the collection and transmission of data pursuant to Appendices B and C of the Plan.\22\ --------------------------------------------------------------------------- \22\ See supra note 3. --------------------------------------------------------------------------- Proposed Rule 4770(b)(1) requires that a Member that operates a Trading Center shall establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with the data collection and transmission requirements of Items I and II to Appendix B of the Plan, and a Member that is a Market Maker shall establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with the data collection and transmission requirements of Item IV of Appendix B of the Plan and Item I of Appendix C of the Plan. Proposed Rule 4770(b)(2) provides that the Exchange shall collect and transmit to the SEC the data described in Items I and II of Appendix B of the Plan relating to trading activity in Pre-Pilot Securities and Pilot Securities on a Trading Center operated by the Exchange. The Exchange shall transmit such data to the SEC in a pipe delimited format, on a disaggregated basis by Trading Center, within 30 calendar days following month end for: (i) Each Pre-Pilot Data Collection Security for the period beginning six months prior to the Pilot Period through the trading day immediately preceding the Pilot Period; and (ii) each Pilot Security for the period beginning on the first day of the Pilot Period through six months after the end of the Pilot Period. The Exchange also shall make such data publicly available on the Exchange Web site on a monthly basis at no charge and will not identify the Member that generated the data. Appendix B.IV (Daily Market Maker Participation Statistics) requires a Participant to collect data related to Market Maker participation from each Market Maker \23\ engaging in trading activity on a Trading Center operated by the Participant. The Exchange is therefore proposing Rule 4770(b)(3) to gather data about a Market Maker's participation in Pilot Securities and Pre-Pilot Data Collection Securities. Proposed Rule 4770(b)(3)(A) provides that a Member that is a Market Maker shall collect and transmit to their DEA data relating to Item IV of Appendix B of the Plan with respect to activity conducted on any Trading Center in Pilot Securities and Pre-Pilot Data Collection Securities in furtherance of its status as a registered Market Maker, including a Trading Center that executes trades otherwise than on a national securities exchange, for transactions that have settled or reached settlement date. --------------------------------------------------------------------------- \23\ The Plan defines a Market Maker as ``a dealer registered with any self-regulatory organization, in accordance with the rules thereof, as (i) a market maker or (ii) a liquidity provider with an obligation to maintain continuous, two-sided trading interest.'' --------------------------------------------------------------------------- The proposed rule requires Market Makers to transmit such data in a format required by their DEA, by 12:00 p.m. EST on T+4 for: (i) Transactions in each Pre-Pilot Data Collection Security for the period beginning six months prior to the Pilot Period through the trading day immediately preceding the Pilot Period; and (ii) for transactions in each Pilot Security for the period beginning on the first day of the Pilot Period through six months after the end of the Pilot Period. The Exchange understands that some Members may utilize a DEA that is not a Participant to the Plan and that their DEA would not be subject to the Plan's data collection requirements. In such case, a DEA that is not a Participant of the Plan would not have an obligation to collect the data required under subparagraph (b)(3)(A) of Rule 4770 and in accordance with Item IV of Appendix B of the Plan. Therefore, the Exchange proposes to adopt subparagraph (b)(3)(B) to Rule 4770 to require a Member that is a Market Maker whose DEA is not a Participant to the Plan to transmit the data collected pursuant to paragraph (3)(A) of Rule 4770(b) to FINRA, which is a Participant to the Plan and is to collect data relating to Item IV of Appendix B of the Plan on behalf of the Participants. For Market Makers for which it is the DEA, FINRA issued a Market Maker Transaction Data Technical Specification to collect data on Pre-Pilot Data Collection Securities and Pilot Securities from Trading Centers to comply with the Plan's data collection requirements.\24\ --------------------------------------------------------------------------- \24\ FINRA members for which FINRA is their DEA should refer to the Market Maker Transaction Data Technical Specification on the FINRA Web site at http://www.finra.org/sites/default/files/market-maker-transaction-data-tech-specs.pdf. --------------------------------------------------------------------------- Proposed Rule 4770(b)(3)(C) provides that the Exchange shall transmit the data collected by the DEA or FINRA pursuant to Rule 4770(b)(3)(A) and (B) above relating to Market Maker activity on a Trading Center operated by the Exchange to the SEC in a pipe delimited format within 30 calendar days following month end. The Exchange shall also make such data publicly available on the Exchange Web site on a monthly basis at no charge and shall not identify the Trading Center that generated the data. Appendix C.I (Market Maker Profitability) requires a Participant to collect data related to Market Maker profitability from each Market Maker for which it is the DEA. Specifically, the Participant is required to collect the total number of shares of orders executed by the Market Maker; the raw Market Maker realized trading profits, and the raw Market Maker unrealized trading profits. Data shall be collected for dates starting six months prior to the Pilot Period through six months after the end of the Pilot Period. This data shall be collected on a monthly basis, to be provided in a pipe delimited format to the Participant, as DEA, within 30 calendar days following month end. Appendix C.II (Aggregated Market Maker Profitability) requires the Participant, as DEA, to aggregate the Appendix C.I data, and to categorize this data by security as well as by the control group and each Test Group. That aggregated data shall contain information relating to total raw Market Maker realized trading profits, volume- weighted average of raw Market Maker realized trading profits, the total raw Market Maker unrealized trading profits, and the volume- weighted average of Market Maker unrealized trading profits. The Exchange is therefore proposing Rule 4770(b)(4) to set forth the requirements for the collection and transmission of data pursuant to Appendix C.I of the Plan. Proposed Rule 4770(b)(4)(A) requires that a Member that is a Market Maker shall collect and transmit to their DEA the data described in Item I of Appendix C of the Plan with respect to executions in Pilot Securities that have settled or reached settlement date that were executed on any Trading Center. The proposed rule also requires Members to provide such data in a format required by their DEA by 12 p.m. [[Page 18928]] EST on T+4 for executions during and outside of Regular Trading Hours in each: (i) Pre-Pilot Data Collection Security for the period beginning six months prior to the Pilot Period through the trading day immediately preceding the Pilot Period; and (ii) Pilot Security for the period beginning on the first day of the Pilot Period through six months after the end of the Pilot Period. For the same reasons set forth above for subparagraph (b)(3)(B) to Rule 4770, the Exchange proposes to adopt subparagraph (b)(4)(B) to Rule 4770 to require a Member that is a Market Maker whose DEA is not a Participant to the Plan to transmit the data collected pursuant to paragraph (4)(A) of Rule 4770(b) to FINRA. As stated above, FINRA is a Participant to the Plan and is to collect data relating to Item I of Appendix C of the Plan on behalf of the Participants. For Market Makers for which it is the DEA, FINRA issued a Market Maker Transaction Data Technical Specification to collect data on Pre-Pilot Data Collection Securities and Pilot Securities from Trading Centers to comply with the Plan's data collection requirements.\25\ --------------------------------------------------------------------------- \25\ Id. --------------------------------------------------------------------------- The Exchange is also adopting a rule setting forth the manner in which Market Maker participation will be calculated. Item III of Appendix B of the Plan requires each Participant that is a national securities exchange to collect daily Market Maker registration statistics categorized by security, including the following information: (i) Ticker symbol; (ii) the Participant exchange; (iii) number of registered market makers; and (iv) the number of other registered liquidity providers. Therefore, the Exchange proposes to adopt Rule 4770(b)(5) providing that the Exchange shall collect and transmit to the SEC the data described in Item III of Appendix B of the Plan relating to daily Market Maker registration statistics in a pipe delimited format within 30 calendar days following month end for: (i) Transactions in each Pre- Pilot Data Collection Security for the period beginning six months prior to the Pilot Period through the trading day immediately preceding the Pilot Period; and (ii) transactions in each Pilot Security for the period beginning on the first day of the Pilot Period through six months after the end of the Pilot Period. The Exchange is also proposing, through Commentary, to clarify other aspects of the data collection requirements.\26\ Proposed Commentary .02 relates to the use of the retail investor order flag for purposes of Appendix B.II(n) reporting. The Plan currently states that market and marketable limit orders shall include a ``yes/no'' field relating to the Retail Investor Order flag. The Exchange is proposing Commentary .02 to clarify that, for purposes of the reporting requirement in Appendix B.II(n), a Trading Center shall report ``y'' to their DEA where it is relying upon the Retail Investor Order exception to Test Groups Two and Three, and ``n'' for all other instances.\27\ The Exchange believes that requiring the identification of a Retail Investor Orders only where the exception may apply (i.e., Pilot Securities in Test Groups Two and Three) is consistent with Appendix B.II(n). --------------------------------------------------------------------------- \26\ The Exchange is also proposing Commentary .01 to Rule 4770 to clarify that certain enumerated terms used throughout Rule 4770 shall have the same meaning as set forth in the Plan. \27\ FINRA, on behalf of the Plan Participants submitted a letter to Commission requesting exemption from certain provisions of the Plan related to data collection. See letter from Marcia E. Asquith, Senior Vice President and Corporate Secretary, FINRA dated December 9, 2015 to Robert W. Errett, Deputy Secretary, Commission (``Exemption Request''). The Commission, pursuant to its authority under Rule 608(e) of Regulation NMS, granted BZX a limited exemption from the requirement to comply with certain provisions of the Plan as specified in the letter and noted herein. See letter from David Shillman, Associate Director, Division of Trading and Markets, Commission, to Eric Swanson, General Counsel, BZX, dated February 10, 2016 (``Exemption Letter''). --------------------------------------------------------------------------- Commentary .03 requires that Members populate a field to identify to their DEA whether an order is affected by the bands in place pursuant to the National Market System Plan to Address Extraordinary Market Volatility.\28\ Pursuant to the Limit-Up Limit-Down Plan, between 9:30 a.m. and 4:00 p.m., the Securities Information Processor (``SIP'') calculates a lower price band and an upper price band for each NMS stock. These price bands represent a specified percentage above or below the stock's reference price, which generally is calculated based on reported transactions in that stock over the preceding five minutes. When one side of the market for an individual security is outside the applicable price band, the SIP identifies that quotation as non-executable. When the other side of the market reaches the applicable price band (e.g., the offer reaches the lower price band), the security enters a Limit State. The stock would exit a Limit State if, within 15 seconds of entering the Limit State, all Limit State Quotations were executed or canceled in their entirety. If the security does not exit a Limit State within 15 seconds, then the primary listing exchange declares a five-minute trading pause, which would be applicable to all markets trading the security. --------------------------------------------------------------------------- \28\ See National Market System Plan to Address Extraordinary Market Volatility, Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (File No. 4-631) (``Limit-Up Limit-Down Plan''). --------------------------------------------------------------------------- The Exchange and the other Participants have determined that it is appropriate to create a new flag for reporting orders that are affected by the Limit-Up Limit-Down bands. Accordingly, a Trading Center shall report a value of ``Y'' to their DEA when the ability of an order to execute has been affected by the Limit-Up Limit-Down bands in effect at the time of order receipt. A Trading Center shall report a value of ``N'' to their DEA when the ability of an order to execute has not been affected by the Limit-Up Limit-Down bands in effect at the time of order receipt. Commentary .03 also requires, for securities that may trade in a foreign market, that the Participant indicate whether the order was handled domestically, or routed to a foreign venue. Accordingly, the Participant will indicate, for purposes of Appendix B.I, whether the order was: (1) Fully executed domestically, or (2) fully or partially executed on a foreign market. For purposes of Appendix B.II, the Participant will classify all orders in securities that may trade in a foreign market Pilot and Pre-Pilot Securities as: (1) Directed to a domestic venue for execution; (2) may only be directed to a foreign venue for execution; or (3) was fully or partially directed to a foreign venue at the discretion of the member. The Exchange believes that this proposed flag will better identify orders in securities that may trade in a foreign market, as such orders that were routed to foreign venues would not be subject to the Plan's quoting and trading requirements, and could otherwise compromise the integrity of the data. Commentary .04 relates to the time ranges specified in Appendix B.I.a(14), B.I.a(15), B.I.a(21) and B.I.a(22).\29\ The Exchange and the other Participants have determined that it is appropriate to change the reporting times in these provisions to require more granular reporting for these categories. [[Page 18929]] Accordingly, the Exchange proposes to add Appendix B.I.a(14A), which will require Trading Centers to report the cumulative number of shares of orders executed from 100 microseconds to less than 1 millisecond after the time of order receipt. Appendix B.I.a(15) will be changed to require the cumulative number of shares of orders executed from 1 millisecond to less than 100 milliseconds after the time of order receipt. The Exchange also proposes to add Appendix B.I.a(21A), which will require Trading Centers to report the cumulative number of shares of orders canceled from 100 microseconds to less than 1 millisecond after the time of order receipt. Appendix B.I.a(22) will be changed to require the cumulative number of shares of orders canceled from 1 millisecond to less than 100 milliseconds after the time of order receipt. The Exchange believes that these new reporting requirements will contribute to a meaningful analysis of the Pilot by producing more granular data on these points.\30\ --------------------------------------------------------------------------- \29\ Specifically, Appendix B.I.a(14) requires reporting of the cumulative number of shares of orders executed from 0 to less than 100 microseconds after the time of order receipt; Appendix B.I.a(15) requires reporting of the cumulative number of shares of orders executed from 100 microseconds to less than 100 milliseconds after the time of order receipt; Appendix B.I.a(21) requires reporting of the cumulative number of shares of orders cancelled from 0 to less than 100 microseconds after the time of order receipt; and Appendix B.I.a(22) requires reporting of the cumulative number of shares of orders cancelled from 100 microseconds to less than 100 milliseconds after the time of order receipt. \30\ The Commission granted BZX an exemption from Rule 608(c) related to this provision. See Exemption Letter, supra note 27. --------------------------------------------------------------------------- Commentary .05 relates to the relevant measurement for purposes of Appendix B.I.a(31)-(33) reporting. Currently, the Plan states that this data shall be reported as of the time of order execution. The Exchange and the other Participants believe that this information should more properly be captured at the time of order receipt as evaluating share- weighted average prices at the time of order receipt is more consistent with the goal of observing the effect of the Pilot on the liquidity of Pilot Securities. The Exchange is therefore proposing to make this change through Commentary .05.\31\ This change will make these provisions consistent with the remainder of the statistics in Appendix B.I.a, which are all based on order receipt. --------------------------------------------------------------------------- \31\ The Commission granted BZX an exemption from Rule 608(c) related to this provision. See Exemption Letter, supra note 27. --------------------------------------------------------------------------- Commentary .06 addresses the status of not-held and auction orders for purposes of Appendix B.I reporting. Currently, Appendix B.I sets forth eight categories of orders, including market orders, marketable limit orders, and inside-the-quote resting limit orders, for which daily market quality statistics must be reported. Currently, Appendix B.I does not provide a category for not held orders, clean cross orders, auction orders, or orders received when the NBBO is crossed. The Exchange and the other Participants have determined that it is appropriate to include separate categories for these orders types for purposes of Appendix B reporting. The Exchange is therefore proposing Commentary .06 to provide that not held orders shall be included as an order type for purposes of Appendix B reporting, and shall be assigned the number (18). Clean cross orders shall be included as an order type for purposes of Appendix B reporting, and shall be assigned the number (19); auction orders shall be included an as order type for purposes of Appendix B reporting, and shall be assigned the number (20); and orders that cannot otherwise be classified, including, for example, orders received when the NBBO is crossed shall be included as an order type for purposes of Appendix B reporting, and shall be assigned the number (21). All of these orders already are included in the scope of Appendix B; however, without this proposed change, these order types would be categorized with other orders, such as regular held orders, that should be able to be fully executed upon receipt, which would compromise the value of this data. The Exchange is proposing Commentary .07 to clarify the scope of the Plan as it relates to Members that only execute orders limited purposes. Specifically, The Exchange and the other Participants believe that a Member that only executes orders otherwise than on a national securities exchange for the purpose of: (1) Correcting a bona fide error related to the execution of a customer order; (2) purchasing a security from a customer at a nominal price solely for purposes of liquidating the customer's position; or (3) completing the fractional share portion of an order \32\ shall not be deemed a Trading Center for purposes of Appendix B to the Plan. The Exchange is therefore proposing Commentary .07 to make this clarification. --------------------------------------------------------------------------- \32\ The Exchange notes that where a Member purchases a fractional share from a customer, the Trading Center that executes the remaining whole shares of that customer order would subject to subject to Appendix B of the Plan. --------------------------------------------------------------------------- The Exchange is proposing Commentary .08 to clarify that, for purposes of the Plan, Trading Centers must begin the data collection required pursuant to Appendix B.I.a(1) through B.II.(y) of the Plan and Item I of Appendix C of the Plan on April 4, 2016. While the Exchange or the Member's DEA will provide the information required by Appendix B and C of the Plan during the Pilot Period, the requirement that the Exchange or their DEA provide information to the SEC within 30 days following month end and make such data publicly available on its Web site pursuant to Appendix B and C shall commence six months prior to the beginning of the Pilot Period.\33\ --------------------------------------------------------------------------- \33\ In its order approving the Plan, the SEC noted that the Pilot shall be implemented within one year of the date of publication of its order, e.g., by May 6, 2016. See Approval Order, 80 FR at 27545. However, on November 6, 2015, the SEC extended the implementation date approximately five months to October 3, 2016. See Securities Exchange Act Release No. 76382 (November 6, 2015), 80 FR 70284 (File No. 4-657) (Order Granting Exemption From Compliance With the National Market System Plan To Implement a Tick Size Pilot Program). See also Letter from Brendon J. Weiss, Co-Head, Government Affairs, Intercontinental Exchange/NYSE, to Brent J. Fields, Secretary, Commission, dated November 4, 2015 (requesting the data collection period be extended until six months after the requisite SRO rules are approved, and the implementation data of the Tick Size Pilot until six months thereafter). --------------------------------------------------------------------------- The Exchange is proposing Commentary .09 to address the requirement in Appendix C.I(b) of the Plan that the calculation of raw Market Maker realized trading profits utilize a last in, first out (``LIFO'')-like method to determine which share prices shall be used in that calculation. The Exchange and the other Participants believe that it is more appropriate to utilize a methodology that yields LIFO-like results, rather than utilizing a LIFO-like method, and the Exchange is therefore proposing Commentary .09 to make this change.\34\ --------------------------------------------------------------------------- \34\ Appendix C.I currently requires Market Maker profitability statistics to include (1) the total number of shares of orders executed by the Market Maker; (2) raw Market Maker realized trading profits, which is the difference between the market value of Market Maker shares and the market value of Market Maker purchases, using a LIFO-like method; and (3) raw Market Maker unrealized trading profits, which is the difference between the purchase or sale price of the end-of-day inventory position of the Market Maker and the Closing Price. In the case of a short position, the Closing Price from the sale will be subtracted; in the case of a long position, the purchase price will be subtracted from the Closing Price. --------------------------------------------------------------------------- The Exchange is proposing that, for purposes of Item I of Appendix C, the Participants shall calculate daily Market Maker realized profitability statistics for each trading day on a daily LIFO basis using reported trade price and shall include only trades executed on the subject trading day. The daily LIFO calculation shall not include any positions carried over from previous trading days. For purposes of Item I.c of Appendix C, the Participants shall calculate daily Market Maker unrealized profitability statistics for each trading day on an average price basis. Specifically, the Participants must calculate the volume weighted average price of the excess (deficit) of buy volume over sell volume for the current trading day using reported trade price. The gain (loss) of the excess (deficit) of buy volume over sell volume shall be [[Page 18930]] determined by using the volume weighted average price compared to the closing price of the security as reported by the primary listing exchange. In reporting unrealized trading profits, the Participant shall also report the number of excess (deficit) shares held by the Market Maker, the volume weighted average price of that excess (deficit) and the closing price of the security as reported by the primary listing exchange used in reporting unrealized profit.\35\ --------------------------------------------------------------------------- \35\ The Commission granted BZX an exemption from Rule 608(c) related to this provision. See Exemption Letter, supra note 27. --------------------------------------------------------------------------- Finally, the Exchange is proposing Commentary .10 to address the securities that will be used for data collection purposes prior to the commencement of the Pilot. The Exchange and the other Participants have determined that it is appropriate to collect data for a group of securities that is larger, and using different quantitative thresholds, than the group of securities that will be Pilot Securities. The Exchange is therefore proposing Commentary .10 to define ``Pre- Pilot Data Collection Securities'' as the securities designated by the Participants for purposes of the data collection requirements described in Items I, II, and IV of Appendix B and Item I of Appendix C of the Plan for the period beginning six months prior to the Pilot Period and ending on the trading day immediately preceding the Pilot Period. The Participants shall compile the list of Pre-Pilot Data Collection Securities by selecting all NMS stocks with a market capitalization of $5 billion or less, a Consolidated Average Daily Volume (CADV) of 2 million shares or less and a closing price of $1 per share or more. The market capitalization and the closing price thresholds shall be applied to the last day of the Pre-Pilot measurement period, and the CADV threshold shall be applied to the duration of the Pre-Pilot measurement period. The Pre-Pilot measurement period shall be the three calendar months ending on the day when the Pre-Pilot Data Collection Securities are selected. The Pre-Pilot Data Collection Securities shall be selected thirty days prior to the commencement of the six-month Pre-Pilot Period. On the trading day that is the first trading day of the Pilot Period through six months after the end of the Pilot Period, the data collection requirements will become applicable to the Pilot Securities only. A Pilot Security will only be eligible to be included in a Test Group if it was a Pre-Pilot Security. Implementation Date The proposed rule change will be effective on April 4, 2016. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\36\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\37\ in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, 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. --------------------------------------------------------------------------- \36\ 15 U.S.C. 78f(b). \37\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that this proposal is consistent with the Act because it implements and clarifies the provisions of the Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant of the Plan. In approving the Plan, the SEC noted that the Pilot was an appropriate, data-driven test that was designed to evaluate the impact of a wider tick size on trading, liquidity, and the market quality of securities of smaller capitalization companies, and was therefore in furtherance of the purposes of the Act. The Exchange believes that this proposal is in furtherance of the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Act because the proposal implements and clarifies the requirements of the Plan and applies specific obligations to Members in furtherance of compliance with the Plan. 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 Exchange notes that the proposed rule change implements the provisions of the Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant of the Plan. The Exchange also notes that the data collection requirements for Members that operate Trading Centers will apply equally to all such Members, as will the data collection requirements for Market Makers. 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \38\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\39\ --------------------------------------------------------------------------- \38\ 15 U.S.C. 78s(b)(3)(a)(iii). \39\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \40\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \41\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest because it would allow the Exchange to implement the proposed amendments on April 4, 2016, the date upon which the data collection requirements of the Plan become effective.\42\ Therefore, the Commission hereby waives the operative delay and designates the proposal operative on April 4, 2016.\43\ --------------------------------------------------------------------------- \40\ 17 CFR 240.19b-4(f)(6). \41\ 17 CFR 240.19b-4(f)(6)(iii). \42\ See Securities Exchange Act Release No. 76382 (November 6, 2015), 80 FR 70284 (File No. 4-657) (Order Granting Exemption from Compliance With the National Market System Plan To Implement a Tick Size Pilot Program). \43\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in [[Page 18931]] the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-2016-043 on the subject line. 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-2016-043. 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-2016-043 and should be submitted on or before April 22, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\44\ Robert W. Errett, Deputy Secretary. --------------------------------------------------------------------------- \44\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2016-07333 Filed 3-31-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 63 / Friday, April 1, 2016 / Notices 18925
A proposed rule change filed and Exchange Commission, 100 F Street (‘‘Act’’),1 and Rule 19b–4 thereunder,2
pursuant to Rule 19b–4(f)(6) under the NE., Washington, DC 20549–1090. notice is hereby given that on March 23,
Act 40 normally does not become All submissions should refer to File 2016, The NASDAQ Stock Market LLC
operative for 30 days after the date of its Number SR–Phlx–2016–39. This file (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
filing. However, Rule 19b–4(f)(6)(iii) 41 number should be included on the Securities and Exchange Commission
permits the Commission to designate a (‘‘SEC’’ or ‘‘Commission’’) the proposed
subject line if email is used. To help the
shorter time if such action is consistent rule change as described in Items I and
Commission process and review your
with the protection of investors and the II below, which Items have been
comments more efficiently, please use
public interest. The Exchange has asked prepared by the Exchange. The
only one method. The Commission will
the Commission to waive the 30-day
post all comments on the Commission’s Commission is publishing this notice to
operative delay. The Commission
Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule
believes that waiver of the operative
rules/sro.shtml). change from interested persons.
delay is consistent with the protection
of investors and the public interest Copies of the submission, all I. Self-Regulatory Organization’s
because it would allow the Exchange to subsequent amendments, all written Statement of the Terms of Substance of
implement the proposed amendments statements with respect to the proposed the Proposed Rule Change
on April 4, 2016, the date upon which rule change that are filed with the
the data collection requirements of the Commission, and all written The Exchange proposes to a proposal
Plan become effective.42 Therefore, the communications relating to the to adopt Exchange Rule 4770 to
Commission hereby waives the proposed rule change between the implement the Regulation NMS Plan to
operative delay and designates the Commission and any person, other than Implement a Tick Size Pilot Program
proposal operative on April 4, 2016.43 those that may be withheld from the (‘‘Plan’’). The proposed rule change is
At any time within 60 days of the public in accordance with the substantially similar to proposed rule
filing of the proposed rule change, the provisions of 5 U.S.C. 552, will be changes recently approved or published
Commission summarily may available for Web site viewing and by the Commission by the Bats BZX
temporarily suspend such rule change if printing in the Commission’s Public Exchange, Inc. f/k/a BATS Exchange,
it appears to the Commission that such Reference Room, 100 F Street NE., Inc. (‘‘BZX’’) to adopt BZX Rule 11.27(b)
action is: (i) Necessary or appropriate in Washington, DC 20549, on official
the public interest; (ii) for the protection which also sets forth requirements for
business days between the hours of
of investors; or (iii) otherwise in the collection and transmission of data
10:00 a.m. and 3:00 p.m. Copies of the
furtherance of the purposes of the Act. pursuant to Appendices B and C of the
filing also will be available for
If the Commission takes such action, the Plan.3
inspection and copying at the principal
Commission shall institute proceedings office of the Exchange. All comments The text of the proposed rule change
to determine whether the proposed rule received will be posted without change; is available on the Exchange’s Web site
should be approved or disapproved. the Commission does not edit personal at http://nasdaq.cchwallstreet.com, at
IV. Solicitation of Comments identifying information from the principal office of the Exchange, and
submissions. You should submit only at the Commission’s Public Reference
Interested persons are invited to information that you wish to make Room.
submit written data, views, and available publicly. All submissions
arguments concerning the foregoing, should refer to File Number SR–Phlx– II. Self-Regulatory Organization’s
including whether the proposed rule Statement of the Purpose of, and
2016–39 and should be submitted on or
change is consistent with the Act. Statutory Basis for, the Proposed Rule
before April 22, 2016.
Comments may be submitted by any of Change
the following methods: For the Commission, by the Division of
Trading and Markets, pursuant to delegated In its filing with the Commission, the
Electronic Comments authority.44
Exchange included statements
• Use the Commission’s Internet Robert W. Errett, concerning the purpose of and basis for
comment form (http://www.sec.gov/ Deputy Secretary. the proposed rule change and discussed
rules/sro.shtml); or [FR Doc. 2016–07335 Filed 3–31–16; 8:45 am] any comments it received on the
• Send an email to rule-comments@ BILLING CODE 8011–01–P proposed rule change. The text of these
sec.gov. Please include File Number SR–
statements may be examined at the
Phlx–2016–39 on the subject line.
places specified in Item IV below. The
Paper Comments SECURITIES AND EXCHANGE
Exchange has prepared summaries, set
COMMISSION
• Send paper comments in triplicate forth in sections A, B, and C below, of
to Brent J. Fields, Secretary, Securities the most significant aspects of such
[Release No. 34–77456; File No. SR– statements.
NASDAQ–2016–043]
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement. Self-Regulatory Organizations; The
40 17 CFR 240.19b–4(f)(6). NASDAQ Stock Market LLC; Notice of
41 17 CFR 240.19b–4(f)(6)(iii). Filing and Immediate Effectiveness of
asabaliauskas on DSK3SPTVN1PROD with NOTICES
1 15 U.S.C. 78s(b)(1).
42 See Securities Exchange Act Release No. 76382
Proposed Rule Change To Adopt Rule
(November 6, 2015), 80 FR 70284 (File No. 4–657) 4770 To Implement the Regulation 2 17 CFR 240.19b–4.
(Order Granting Exemption from Compliance With 3 See Securities Exchange Act Release No. 77105
the National Market System Plan To Implement a NMS Plan To Implement a Tick Size
Pilot Program (February 10, 2016), 81 FR 8112 (February 17, 2016)
Tick Size Pilot Program).
43 For purposes only of waiving the 30-day (order approving SR–BATS–2015–102); see also
operative delay, the Commission has also March 28, 2016. Securities Exchange Act Release No. 77310 (March
considered the proposed rule’s impact on 7, 2016), 81 FR 13012 (March 11, 2016) (notice for
efficiency, competition, and capital formation. See
Pursuant to Section 19(b)(1) of the comment and immediate effectiveness of SR–
15 U.S.C. 78c(f). Securities Exchange Act of 1934 BATS–2016–27).
VerDate Sep<11>2014 17:25 Mar 31, 2016 Jkt 238001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\01APN1.SGM 01APN1](https://thefederalregister.org/doc/81_FR_18988/page/1.svg)
![Federal Register / Vol. 81, No. 63 / Friday, April 1, 2016 / Notices 18931
the public interest; (ii) for the protection For the Commission, by the Division of written record of each transaction
of investors; or (iii) otherwise in Trading and Markets, pursuant to delegated subject to the rule, setting forth the
furtherance of the purposes of the Act. authority.44 amount and source of the commission,
If the Commission takes such action, the Robert W. Errett, fee, or other remuneration received; the
Commission shall institute proceedings Deputy Secretary. identity of the broker; the terms of the
to determine whether the proposed rule [FR Doc. 2016–07333 Filed 3–31–16; 8:45 am] transaction; and the materials used to
should be approved or disapproved. BILLING CODE 8011–01–P determine that the transactions were
effected in compliance with the
IV. Solicitation of Comments
procedures adopted by the board. The
Interested persons are invited to SECURITIES AND EXCHANGE recordkeeping requirements under rule
submit written data, views, and COMMISSION 17e–1 enable the Commission to ensure
arguments concerning the foregoing, that affiliated brokers receive
including whether the proposed rule [OMB Control No. 3235–0217, SEC File No.
270–224] compensation that does not exceed the
change is consistent with the Act. usual and customary broker’s
Comments may be submitted by any of Submission for OMB Review; commission. Without the recordkeeping
the following methods: Comment Request requirements, Commission inspectors
Electronic Comments would have difficulty ascertaining
Upon Written Request, Copies Available whether funds were complying with
• Use the Commission’s Internet From: Securities and Exchange rule 17e–1.
comment form (http://www.sec.gov/ Commission, Office of FOIA Services, Based on an analysis of fund filings,
rules/sro.shtml); or 100 F Street NE., Washington, DC the staff estimates that approximately
• Send an email to rule-comments@ 20549–2736. 320 funds enter into subadvisory
sec.gov. Please include File Number SR– agreements each year.1 Based on
NASDAQ–2016–043 on the subject line. Extension:
Rule 17e–1. discussions with industry
Paper Comments representatives, the staff estimates that
Notice is hereby given that, pursuant
• Send paper comments in triplicate it will require approximately 3 attorney
to the Paperwork Reduction Act of 1995
to Brent J. Fields, Secretary, Securities hours to draft and execute additional
(44 U.S.C. 3501 et seq.) (‘‘Paperwork
and Exchange Commission, 100 F Street clauses in new subadvisory contracts in
Reduction Act’’), the Securities and
NE., Washington, DC 20549–1090. order for funds and subadvisers to be
Exchange Commission (the
able to rely on the exemptions in rule
All submissions should refer to File ‘‘Commission’’) has submitted to the
17e–1. Because these additional clauses
Number SR–NASDAQ–2016–043. This Office of Management and Budget
are identical to the clauses that a fund
file number should be included on the (‘‘OMB’’) a request for extension of the
would need to insert in their
subject line if email is used. To help the previously approved collection of
subadvisory contracts to rely on rules
Commission process and review your information described below.
12d3–1, 10f–3, and 17a–10, and because
comments more efficiently, please use Rule 17e–1 (17 CFR 270.17e–1) under
we believe that funds that use one such
only one method. The Commission will the Investment Company Act of 1940
rule generally use all of these rules, we
post all comments on the Commission’s (15 U.S.C. 80a–1 et seq.) (the
apportion this 3 hour time burden
Internet Web site (http://www.sec.gov/ ‘‘Investment Company Act’’) deems a
equally to all four rules. Therefore, we
rules/sro.shtml). remuneration as ‘‘not exceeding the
estimate that the burden allocated to
Copies of the submission, all usual and customary broker’s
rule 17e–1 for this contract change
subsequent amendments, all written commission’’ for purposes of Section
would be 0.75 hours.2 Assuming that all
statements with respect to the proposed 17(e)(2)(A) if, among other things, a
320 funds enter into new subadvisory
rule change that are filed with the registered investment company’s
contracts each year make the
Commission, and all written (‘‘fund’s’’) board of directors has
modification to their contract required
communications relating to the adopted procedures reasonably
by the rule, we estimate that the rule’s
proposed rule change between the designed to provide that the
contract modification requirement will
Commission and any person, other than remuneration to an affiliated broker is a
result in 240 burden hours annually.3
those that may be withheld from the reasonable and fair amount compared to Based on an analysis of fund filings,
public in accordance with the that received by other brokers in we estimate that approximately 1,696
provisions of 5 U.S.C. 552, will be connection with comparable funds use at least one affiliated broker.
available for Web site viewing and transactions involving similar securities Based on staff experience and
printing in the Commission’s Public being purchased or sold on a securities conversations with fund representatives,
Reference Room, 100 F Street NE., exchange during a comparable period of the staff estimates approximately 40
Washington, DC 20549, on official time and the board makes and approves percent of transactions (and thus, 40%
business days between the hours of such changes as it deems necessary. In of funds) that occur under the rule 17e–
10:00 a.m. and 3:00 p.m. Copies of the addition, each quarter, the board must
filing also will be available for determine that all transactions effected 1 Based on data from Morningstar, as of
inspection and copying at the principal under the rule during the preceding September, 2015, there are 12,426 registered funds
office of the Exchange. All comments quarter complied with the established (open-end funds, closed-end funds, and exchange-
received will be posted without change; procedures. Rule 17e–1 also requires the traded funds), 4,683 funds of which have
asabaliauskas on DSK3SPTVN1PROD with NOTICES
subadvisory relationships (approximately 38%).
the Commission does not edit personal fund to (i) maintain permanently a Based on data from the 2015 ICI Factbook, 843 new
identifying information from written copy of the procedures adopted funds were established in 2014 (654 open-end
submissions. You should submit only by the board for complying with the funds + 176 exchange-traded funds + 13 closed-end
information that you wish to make requirements of the rule; and (ii) funds (from the ICI Research Perspective, April
2015)). 843 new funds × 38% = 320 funds.
available publicly. All submissions maintain for a period of six years, the 2 3 hours ÷ 4 rules = 0.75 hours.
should refer to File Number SR– first two in an easily accessible place, a 3 This estimate is based on the following
NASDAQ–2016–043 and should be calculation: 0.75 hours × 320 funds = 240 burden
submitted on or before April 22, 2016. 44 17 CFR 200.30–3(a)(12). hours.
VerDate Sep<11>2014 17:25 Mar 31, 2016 Jkt 238001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\01APN1.SGM 01APN1](https://thefederalregister.org/doc/81_FR_18988/page/7.svg)
Document Created: 2016-04-06 00:08:21
Document Modified: 2016-04-06 00:08:21
| 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 18925 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR