81 FR 23032 - Self-Regulatory Organizations; BATS-Y Exchange, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Adopt an Early Trading Session and Three New Time-In-Force Instructions
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 75 (April 19, 2016)
Federal Register Volume 81, Issue 75 (April 19, 2016)
| Page Range | 23032-23035 | |
| FR Document | 2016-08955 |
[Federal Register Volume 81, Number 75 (Tuesday, April 19, 2016)] [Notices] [Pages 23032-23035] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-08955] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77607; File No. SR-BYX-2016-03] Self-Regulatory Organizations; BATS-Y Exchange, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Adopt an Early Trading Session and Three New Time-In-Force Instructions April 13, 2016. I. Introduction On February 16, 2016, BATS-Y Exchange, Inc. (n/k/a Bats BYX Exchange, Inc.) (the ``Exchange'' or ``BYX'') filed with the Securities and Exchange Commission (the ``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to amend its rules to: (i) Create a new trading session to be known as the Early Trading Session, which will run from 7:00 a.m. to 8:00 a.m. Eastern Time; and (ii) adopt three new Time-in-Force (``TIF'') instructions. The proposed rule change was published for comment in the Federal Register on February 29, 2016.\4\ On April 11, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.\5\ The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 1. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. \4\ See Securities Exchange Act Release No. 77213 (February 23, 2016), 81 FR 10310 (``Notice''). \5\ Amendment No. 1 amended and replaced the proposed rule change in its entirety. In Amendment No. 1, the Exchange made technical, non-substantive changes to the proposed rule text to replace references to ``BATS'' with ``BYX,'' and otherwise revised Exhibit 5, so that the proposed rule text therein is consistent with the Exchange's current rule text. See Securities Exchange Act Release No. 77308 (March 7, 2016) 81 FR 12975 (March 11, 2016) (SR- BYX-2016-07). In Amendment No. 1, the Exchange also proposes a non- substantive change to Exchange Rule 14.1 to correct an inaccurate description of the start time for the Pre-Opening Session. Because Amendment No. 1 adds clarification and does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, Amendment No. 1 is not subject to notice and comment. --------------------------------------------------------------------------- II. Description of the Proposal The Exchange proposes to amend its rules to: (i) Create a new trading session, the Early Trading Session, which will run from 7:00 a.m. to 8:00 a.m. Eastern Time; and (ii) adopt three new TIF instructions. A. Early Trading Session The Exchange trading day is currently divided into three sessions: (i) The Pre-Opening Session, which starts at 8:00 a.m. and ends at 9:30 a.m. Eastern Time; (ii) Regular Trading Hours, which run from 9:30 a.m. to 4:00 p.m. Eastern Time; and (iii) the After Hours Session, which runs from 4:00 p.m. to 5:00 p.m. Eastern Time.\6\ The Exchange proposes to amend its rules to create the Early Trading Session. Exchange Rule 1.5 would be amended to add a new term, ``Early Trading Session,'' under proposed paragraph (ee). ``Early Trading Session'' would be defined as ``the time between 7:00 a.m. and 8:00 a.m. Eastern Time.'' --------------------------------------------------------------------------- \6\ See Notice, supra note 4, at 10310. --------------------------------------------------------------------------- The Exchange also proposes to amend Exchange Rule 11.1(a) to state that orders may be entered or executed on, or routed away from, the Exchange during the Early Trading Session and to reflect the start time of the Early Trading Session as 7:00 a.m. Eastern Time. Other than the proposal to adopt an Early Trading Session, the Exchange does not propose to amend the substance or operation of Exchange Rule 11.1(a).\7\ --------------------------------------------------------------------------- \7\ See id. --------------------------------------------------------------------------- Users \8\ currently designate when their orders are eligible for execution by selecting a desired TIF instruction. Orders entered between 6:00 a.m. and 8:00 a.m. Eastern Time are not eligible for execution until the start of the Pre-Opening Session or Regular Trading Hours, depending on the TIF selected by the User. A User may enter orders in advance of the trading session for which its orders are eligible. For example, Users may enter orders starting at 6:00 a.m. Eastern Time with a TIF of Regular Hours Only (``RHO''), which designates that the order only be eligible for execution during Regular Trading Hours.\9\ Users may enter orders as early as 6:00 a.m. Eastern Time, but those orders would not be eligible for execution until the start of the Pre-Opening Session at 8:00 a.m. According to the Exchange, some Users have requested the ability for their orders to be eligible for execution starting at 7:00 a.m. Eastern Time. Therefore, the Exchange is proposing to adopt the Early Trading Session.\10\ --------------------------------------------------------------------------- \8\ ``User'' is defined as ``any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.3.'' See Exchange Rule 1.5(cc). \9\ See Exchange Rule 11.9(b)(7). \10\ See Notice, supra note 4, at 10310. --------------------------------------------------------------------------- As amended, Exchange Rule 11.1(a) would state that orders entered between 6:00 a.m. and 7:00 a.m. Eastern Time, rather than 6:00 a.m. and 8:00 a.m. [[Page 23033]] Eastern Time, would not be eligible for execution until the start of the Early Trading Session, Pre-Opening Session, or Regular Trading Hours, depending on the TIF selected by the User. Exchange Rule 11.1(a) would also be amended to state that the Exchange would not accept the following orders prior to 7:00 a.m. Eastern Time, rather than 8:00 a.m.: (i) BYX Post Only Orders; \11\ (ii) Partial Post Only at Limit Orders; \12\ (iii) Intermarket Sweep Orders (``ISOs''); \13\ (iv) BYX Market Orders \14\ with a TIF other than RHO; (v) Minimum Quantity Orders \15\ that also include a TIF of RHO; (vi) Retail Price Improvement Orders; \16\ and (vii) all orders with a TIF instruction of Immediate-or-Cancel (``IOC'') \17\ or Fill-or-Kill (``FOK'').\18\ At the commencement of the Early Trading Session, orders entered between 6:00 a.m. and 7:00 a.m. Eastern Time, rather than 6:00 a.m. and 8:00 a.m. Eastern Time, would be handled in time sequence, beginning with the order with the oldest time stamp, and would be placed on the BYX Book,\19\ routed, cancelled, or executed in accordance with the terms of the order. As amended, Exchange Rule 11.1(a) would state that orders may be executed on the Exchange or routed away from the Exchange during Regular Trading Hours and during the Early Trading, Pre-Opening, and After Hours Trading Sessions.\20\ --------------------------------------------------------------------------- \11\ See Exchange Rule 11.9(c)(6). \12\ See Exchange Rule 11.9(c)(7). \13\ See Exchange Rule 11.9(d). \14\ See Exchange Rule 11.9(a)(2). \15\ See Exchange Rule 11.9(c)(5). \16\ See Exchange Rule 11.24(a)(3). \17\ See Exchange Rule 11.9(b)(1). \18\ See Exchange Rule 11.9(b)(6). \19\ See Exchange Rule 1.5(e). \20\ See Notice, supra note 4, at 10310-11. Amendment No. 1 updated Exhibit 5 so that the names of orders, order modifiers, and the Exchange's book stated therein conform with those used in the current Exchange Rules. See supra, note 5. The Exchange also describes how the Early Trading Session will affect its Members' operations and the Exchange's opening process, order types, routing services, order processing, data feeds, trade reporting, market surveillance, and clearly erroneous trade processing. The Exchange clarifies that these processes would operate in the same manner with the exception of changes in time to reflect the adoption of the Early Trading Session. See Notice, supra note 4, at 10311. --------------------------------------------------------------------------- The Exchange also proposes to make the changes described below to Exchange Rules 3.21, 11.9, 11.13, 11.17, and 14.1 to reflect the adoption of the Early Trading Session:Exchange Rule 3.21, Customer Disclosures. Exchange Rule 3.21 prohibits Members from accepting an order from a customer for execution in the Pre-Opening or After Hours Trading Session without disclosing to their customer that extended hours trading involves material trading risks, including the possibility of lower liquidity, high volatility, changing prices, unlinked markets, an exaggerated effect from news announcements, wider spreads and any other relevant risk. The Exchange proposes to amend Exchange Rule 3.21 to also require such disclosures for customer orders that are to be executed during the Early Trading Session.\21\ --------------------------------------------------------------------------- \21\ See id. --------------------------------------------------------------------------- Exchange Rule 11.9, Orders and Modifiers. The Exchange proposes to amend the description of BYX Market Orders under Exchange Rule 11.9(a)(2), Market Maker Peg Orders under Rule 11.9(c)(16), and Supplementary Peg Orders under Rule 11.9(c)(19) to account for the Early Trading Session. Every order type that is currently available beginning at 8:00 a.m. would be available beginning at 7:00 a.m. for inclusion in the Early Trading Session. All other order types, and all order type behaviors, would otherwise remain unchanged. Therefore, each of the above rules for BYX Market Orders, Market Maker Peg Orders, and Supplemental Peg Orders would be amended to account for the Early Trading Session.\22\ --------------------------------------------------------------------------- \22\ See id. at 10311-12. Amendment No. 1 updated Exhibit 5 so that the names of orders and order modifiers stated therein conform with those used in the current Exchange Rules. See supra, note 5. --------------------------------------------------------------------------- Exchange Rule 11.13, Order Execution and Routing. Exchange Rule 11.13(a)(2)(B) discusses compliance with Regulation NMS and Trade Through Protections and states that the price of any execution occurring during the Pre-Opening Session or the After Hours Trading Session must be equal to or better than the highest Protected Bid or lowest Protected Offer, unless the order is marked ISO or a Protected Bid is crossing a Protected Offer. The Exchange proposes to amend Exchange Rule 11.13(a)(2)(B) to expand the Exchange Rule's requirements to the Early Trading Session.\23\ --------------------------------------------------------------------------- \23\ See Notice, supra note 4, at 10312. --------------------------------------------------------------------------- Exchange Rule 11.17, Clearly Erroneous Executions. Exchange Rule 11.17 outlines under which conditions the Exchange may determine that an execution is clearly erroneous. The Exchange proposes to amend Exchange Rule 11.17 to include executions that occur during the Early Trading Session. Exchange Rule 11.17(c)(1) sets forth the numerical guidelines the Exchange is to follow when determining whether an execution was clearly erroneous during Regular Trading Hours or the Pre-Opening or After Hours Trading Session. Exchange Rule 11.17(c)(3) sets forth additional factors the Exchange may consider in determining whether a transaction is clearly erroneous. These factors include whether the transaction was executed during the Pre-Opening or After Hours Trading Sessions. The Exchange proposes to amend Exchange Rule 11.17(c)(1) and (3) to include executions occurring during the Early Trading Session.\24\ --------------------------------------------------------------------------- \24\ See id. The Exchange also proposes technical amendments to Exchange Rules 11.17(c)(1) and (3) to delete the letter ``s'' from the word ``Trading Sessions'' and the letter ``s'' from the word ``tapes,'' respectively. --------------------------------------------------------------------------- Rule 14.1, Unlisted Trading Privileges. The Exchange proposes to amend Rules 14.1(c)(2), and Interpretation and Policies .01(a) and (b) to account for the proposed Early Trading Session. Specifically, the Exchange proposes to amend paragraph (c)(2) to state that an information circular distributed by the Exchange prior to the commencement of trading of a UTP Derivative Security will include the risk of trading during the Early Trading Session, in addition to the Pre-Opening Session and After Hours Trading Session.\25\ In addition, the Exchange proposes to amend Interpretation and Policies .01(a) to add Early Trading Session to the paragraph's title and to state that if a UTP Derivative Security begins trading on the Exchange in the Early Trading Session or Pre-Opening Session and subsequently a temporary interruption occurs in the calculation or wide dissemination of the Intraday Indicative Value (``IIV'') or the value of the underlying index, as applicable, to such UTP Derivative Security, by a major market data vendor, the Exchange may continue to trade the UTP Derivative Security for the remainder of the Early Trading Session and Pre-Opening Session. Lastly, the Exchange proposes to amend Interpretation and Policies .01(b) to add Early Trading Session to the paragraph's title and to amend subparagraph (ii) of that section to state that if the IIV or the value of the underlying index continues not to be calculated or widely available as of the commencement of the Early Trading Session or Pre-Opening Session on the next business day, the Exchange shall not commence trading of the UTP Derivative Security in the Early Trading Session or Pre-Opening Session that day.\26\ --------------------------------------------------------------------------- \25\ In Amendment No. 1, the Exchange also proposes to amend Rule 14.1(c)(2) to correct an inaccurate description of the Pre- Opening Session, which currently reads as 9:00 a.m. to 9:30 a.m. rather than 8:00 a.m. to 9:30 a.m. as is set forth throughout Exchange Rules. \26\ See Notice, supra note 4, at 10312. --------------------------------------------------------------------------- [[Page 23034]] B. TIF Instructions The Exchange proposes to adopt three new TIF instructions under Exchange Rule 11.9(b). As discussed above, a User may designate when its order is eligible for execution by selecting the desired TIF instruction under Exchange Rule 11.9(b).\27\ --------------------------------------------------------------------------- \27\ See Exchange Rule 11.1(a). --------------------------------------------------------------------------- Although the Exchange states that the proposal to adopt an Early Trading Session is in response to User requests for their orders to be eligible for execution starting at 7:00 a.m. Eastern Time, the Exchange states that some Users have requested that their orders continue to not be eligible for execution until the start of the Pre-Opening Session at 8:00 a.m. Therefore, the Exchange proposes to adopt the following three new TIF instructions under Exchange Rule 11.9(b): \28\ --------------------------------------------------------------------------- \28\ See Notice, supra note 4, at 10312. --------------------------------------------------------------------------- Pre-Opening Session Plus (``PRE''). A limit order that is designated for execution during the Pre-Opening Session and Regular Trading Hours. Like the current Good `til Cancel TIF instruction,\29\ any portion not executed would expire at the end of Regular Trading Hours. --------------------------------------------------------------------------- \29\ See Exchange Rule 11.9(b)(3). --------------------------------------------------------------------------- Pre-Opening Session `til Extended Day (``PTX''). A limit order that is designated for execution during the Pre-Opening Session, Regular Trading Hours, and the After Hours Session. Like the current Good `til Extended Day TIF instruction,\30\ any portion not executed would expire at the end of the After Hours Session. --------------------------------------------------------------------------- \30\ See Exchange Rule 11.9(b)(5). --------------------------------------------------------------------------- Pre-Opening Session `til Day (``PTD''). A limit order that is designated for execution during the Pre-Opening Session, Regular Trading Hours, and the After Hours Session. Like the current Good `til Day TIF instruction,\31\ any portion not executed would be cancelled at the expiration time assigned to the order, which can be no later than the close of the After Hours Trading Session. --------------------------------------------------------------------------- \31\ See Exchange Rule 11.9(b)(4). --------------------------------------------------------------------------- Under each proposed TIF instruction, Users may designate that their orders only be eligible for execution starting with the Pre-Opening Session. Users may continue to enter orders as early as 6:00 a.m., but orders with the proposed TIF instructions would not be eligible for execution until 8:00 a.m. Eastern Time, which is the start of the Pre- Opening Session. At the commencement of the Pre-Opening Session, orders entered between 6:00 a.m. and 8:00 a.m. Eastern Time with one of the proposed TIF instructions would be handled in time sequence, beginning with the order with the oldest time stamp, and would be placed on the BYX Book, routed, cancelled, or executed in accordance with the terms of the order.\32\ --------------------------------------------------------------------------- \32\ See Notice, supra note 4, at 10312. Amendment No. 1 updated Exhibit 5 so that the name of the Exchange's book stated therein conforms with the name used in the current Exchange Rules. See supra, note 5. Orders utilizing one of the proposed TIF instructions would not be eligible for execution during the Early Trading Session. See Notice, supra note 4, at 10312, n.32. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful consideration, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\33\ The Commission believes that the proposed rule change is consistent with Section 6(b)(5) \34\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, 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. --------------------------------------------------------------------------- \33\ In approving this rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \34\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange proposes to adopt an Early Trading Session and three new TIF instructions and to make related changes to its rules as discussed above.\35\ The Commission believes that the proposed rules would provide Users with additional options for trading on the Exchange. The Commission notes that the proposed Early Trading Session hours are similar to those of other exchanges,\36\ and that the proposed TIF instructions would offer functionality similar to existing functionality available on the Exchange and other exchanges that allows Members to select when their orders become eligible for execution.\37\ --------------------------------------------------------------------------- \35\ See supra section II. \36\ For example, NYSE Arca, Inc. operates an Opening Session that starts at 4:00 a.m. Eastern Time and ends at 9:30 a.m. Eastern Time, and Nasdaq Stock Market LLC operates a pre-market session that also opens at 4:00 a.m. and ends at 9:30 a.m. Eastern Time. See NYSE Arca Rule 7.34(a)(1); Nasdaq Rule 4701(g). See also Securities Exchange Act Release No. 60605 (September 1, 2009), 74 FR 46277 (September 8, 2009) (SR-CHX-2009-13) (adopting bifurcated post- trading session on the Chicago Stock Exchange, Inc.). \37\ Specifically, on the Exchange, Users may enter an order starting at 6:00 a.m. Eastern Time with a TIF of Regular Hours Only, which designates that the order only be eligible for execution during Regular Trading Hours, which begin at 9:30 a.m. Eastern Time. See Exchange Rule 11.9(b)(7); see also NASDAQ Rule 4703(a)(7). --------------------------------------------------------------------------- The Commission notes that the Exchange has represented that it would subject orders that are eligible for execution as of the start of the Pre-Opening Session to all of the Exchange's standard regulatory checks, as it currently does with all orders upon entry.\38\ Specifically, the Exchange would subject such orders to checks for compliance with, including but not limited to, Regulation NMS,\39\ Regulation SHO,\40\ and relevant Exchange rules.\41\ Moreover, the Exchange reminds its Members of their regulatory obligations when submitting an order with one of the proposed TIF instructions.\42\ In particular, the Exchange states that Members must comply with the Market Access Rule,\43\ which requires, among other things, pre-trade controls and procedures that are reasonably designed to assure compliance with Exchange trading rules and Commission rules pursuant to Regulation SHO and Regulation NMS. The Exchange also notes that a Member's procedures must be reasonably designed to ensure compliance with the applicable regulatory requirements, not just at the time the order is routed to the Exchange, but also at the time the order becomes eligible for execution.\44\ --------------------------------------------------------------------------- \38\ See Notice, supra note 4, at 10314. \39\ See 17 CFR 242.600-613. \40\ See 17 CFR 242.200-204. \41\ See Notice, supra note 4, at 10314. \42\ See id. \43\ See 17 CFR 240.15c3-5. \44\ See Notice, supra note 4, at 10314. --------------------------------------------------------------------------- The Commission further notes the Exchange's discussion of the best execution obligations of Members utilizing the proposed TIF instructions.\45\ Specifically, the Exchange states that a Member's best execution obligations may include cancelling an order when market conditions deteriorate and could result in an inferior execution or informing customers when the execution of their order may be delayed intentionally while the Member utilizes reasonable diligence to ascertain the best market for the security.\46\ The Exchange further notes that Members will maintain the ability to cancel or modify the terms of an order utilizing any of the proposed TIF instructions at any time, including during the time from when the order is routed to the Exchange until the start of the Pre-Opening Session.\47\ As a result, [[Page 23035]] the Exchange states that a Member who utilizes the proposed TIF instructions, but later determines that market conditions favor execution during Early Trading Session, can cancel the order residing at the Exchange and enter a separate order to execute during the Early Trading Session.\48\ --------------------------------------------------------------------------- \45\ See id. at 10314. \46\ See id. at n.41. \47\ See id. at 10313. \48\ See id. at 10313-14. --------------------------------------------------------------------------- Furthermore, the Exchange proposes technical amendments to its Rules to correct erroneous plural words and an inaccurate description of the Pre-Opening Session times in Exchange Rules 11.17 and 14.1, respectively. The Commission believes these proposed amendments would help alleviate potential confusion among Users and Members regarding the operation of the Exchange's rules and are, therefore, consistent with the Act. IV. Conclusion IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act \49\ that the proposed rule change (SR-BYX-2016-03), as modified by Amendment No.1, be, and it hereby is, approved. --------------------------------------------------------------------------- \49\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\50\ --------------------------------------------------------------------------- \50\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-08955 Filed 4-18-16; 8:45 am] BILLING CODE 8011-01-P
![23032 Federal Register / Vol. 81, No. 75 / Tuesday, April 19, 2016 / Notices
Paper Comments SECURITIES AND EXCHANGE A. Early Trading Session
COMMISSION The Exchange trading day is currently
• Send paper comments in triplicate
to Secretary, Securities and Exchange divided into three sessions: (i) The Pre-
Commission, 100 F Street NE.,
[Release No. 34–77607; File No. SR–BYX– Opening Session, which starts at 8:00
2016–03] a.m. and ends at 9:30 a.m. Eastern Time;
Washington, DC 20549–1090.
(ii) Regular Trading Hours, which run
All submissions should refer to File Self-Regulatory Organizations; BATS– from 9:30 a.m. to 4:00 p.m. Eastern
Number SR–BatsEDGA–2016–03. This Y Exchange, Inc.; Order Approving Time; and (iii) the After Hours Session,
file number should be included on the Proposed Rule Change, as Modified by which runs from 4:00 p.m. to 5:00 p.m.
subject line if email is used. To help the Amendment No. 1 Thereto, To Adopt Eastern Time.6 The Exchange proposes
an Early Trading Session and Three to amend its rules to create the Early
Commission process and review your
New Time-In-Force Instructions Trading Session. Exchange Rule 1.5
comments more efficiently, please use
only one method. The Commission will April 13, 2016. would be amended to add a new term,
post all comments on the Commission’s ‘‘Early Trading Session,’’ under
I. Introduction proposed paragraph (ee). ‘‘Early Trading
Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the Session’’ would be defined as ‘‘the time
On February 16, 2016, BATS–Y
submission, all subsequent between 7:00 a.m. and 8:00 a.m. Eastern
Exchange, Inc. (n/k/a Bats BYX
amendments, all written statements Time.’’
Exchange, Inc.) (the ‘‘Exchange’’ or The Exchange also proposes to amend
with respect to the proposed rule ‘‘BYX’’) filed with the Securities and Exchange Rule 11.1(a) to state that
change that are filed with the Exchange Commission (the orders may be entered or executed on,
Commission, and all written ‘‘Commission’’), pursuant to Section or routed away from, the Exchange
communications relating to the 19(b)(1) 1 of the Securities Exchange Act during the Early Trading Session and to
proposed rule change between the of 1934 (‘‘Act’’) 2 and Rule 19b–4 reflect the start time of the Early Trading
Commission and any person, other than thereunder,3 a proposed rule change to Session as 7:00 a.m. Eastern Time. Other
those that may be withheld from the amend its rules to: (i) Create a new than the proposal to adopt an Early
public in accordance with the trading session to be known as the Early Trading Session, the Exchange does not
provisions of 5 U.S.C. 552, will be Trading Session, which will run from propose to amend the substance or
available for Web site viewing and 7:00 a.m. to 8:00 a.m. Eastern Time; and operation of Exchange Rule 11.1(a).7
printing in the Commission’s Public (ii) adopt three new Time-in-Force Users 8 currently designate when their
Reference Room, 100 F Street NE., (‘‘TIF’’) instructions. The proposed rule orders are eligible for execution by
change was published for comment in selecting a desired TIF instruction.
Washington, DC 20549 on official
the Federal Register on February 29, Orders entered between 6:00 a.m. and
business days between the hours of
2016.4 On April 11, 2016, the Exchange 8:00 a.m. Eastern Time are not eligible
10:00 a.m. and 3:00 p.m. Copies of such
filed Amendment No. 1 to the proposed for execution until the start of the Pre-
filing also will be available for rule change.5 The Commission received
inspection and copying at the principal Opening Session or Regular Trading
no comments on the proposed rule Hours, depending on the TIF selected by
office of the Exchange. All comments change. This order approves the
received will be posted without change; the User. A User may enter orders in
proposed rule change, as modified by advance of the trading session for which
the Commission does not edit personal Amendment No. 1.
identifying information from its orders are eligible. For example,
submissions. You should submit only II. Description of the Proposal Users may enter orders starting at 6:00
a.m. Eastern Time with a TIF of Regular
information that you wish to make The Exchange proposes to amend its Hours Only (‘‘RHO’’), which designates
available publicly. All submissions rules to: (i) Create a new trading session, that the order only be eligible for
should refer to File Number SR– the Early Trading Session, which will execution during Regular Trading
BatsEDGA–2016–03, and should be run from 7:00 a.m. to 8:00 a.m. Eastern Hours.9 Users may enter orders as early
submitted on or before May 10, 2016. Time; and (ii) adopt three new TIF as 6:00 a.m. Eastern Time, but those
For the Commission, by the Division of instructions. orders would not be eligible for
Trading and Markets, pursuant to delegated execution until the start of the Pre-
authority.28 1 15 U.S.C. 78s(b)(1). Opening Session at 8:00 a.m. According
2 15 U.S.C. 78a.
Robert W. Errett, to the Exchange, some Users have
3 17 CFR 240.19b–4.
Deputy Secretary. 4 See Securities Exchange Act Release No. 77213
requested the ability for their orders to
[FR Doc. 2016–08943 Filed 4–18–16; 8:45 am] (February 23, 2016), 81 FR 10310 (‘‘Notice’’).
be eligible for execution starting at 7:00
5 Amendment No. 1 amended and replaced the a.m. Eastern Time. Therefore, the
BILLING CODE 8011–01–P
proposed rule change in its entirety. In Amendment Exchange is proposing to adopt the
No. 1, the Exchange made technical, non- Early Trading Session.10
substantive changes to the proposed rule text to As amended, Exchange Rule 11.1(a)
replace references to ‘‘BATS’’ with ‘‘BYX,’’ and
otherwise revised Exhibit 5, so that the proposed would state that orders entered between
rule text therein is consistent with the Exchange’s 6:00 a.m. and 7:00 a.m. Eastern Time,
current rule text. See Securities Exchange Act rather than 6:00 a.m. and 8:00 a.m.
Release No. 77308 (March 7, 2016) 81 FR 12975
mstockstill on DSK4VPTVN1PROD with NOTICES
(March 11, 2016) (SR–BYX–2016–07). In 6 See Notice, supra note 4, at 10310.
Amendment No. 1, the Exchange also proposes a 7 See
non-substantive change to Exchange Rule 14.1 to id.
8 ‘‘User’’ is defined as ‘‘any Member or Sponsored
correct an inaccurate description of the start time
for the Pre-Opening Session. Because Amendment Participant who is authorized to obtain access to the
No. 1 adds clarification and does not materially System pursuant to Rule 11.3.’’ See Exchange Rule
alter the substance of the proposed rule change or 1.5(cc).
9 See Exchange Rule 11.9(b)(7).
raise unique or novel regulatory issues, Amendment
28 17 CFR 200.30–3(a)(12), (59). No. 1 is not subject to notice and comment. 10 See Notice, supra note 4, at 10310.
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![Federal Register / Vol. 81, No. 75 / Tuesday, April 19, 2016 / Notices 23035
the Exchange states that a Member who trading session to be known as the Early Users 8 currently designate when their
utilizes the proposed TIF instructions, Trading Session, which will run from orders are eligible for execution by
but later determines that market 7:00 a.m. to 8:00 a.m. Eastern Time; and selecting a desired TIF instruction.
conditions favor execution during Early (ii) adopt three new Time-in-Force Orders entered between 6:00 a.m. and
Trading Session, can cancel the order (‘‘TIF’’) instructions. The proposed rule 8:00 a.m. Eastern Time are not eligible
residing at the Exchange and enter a change was published for comment in for execution until the start of the Pre-
separate order to execute during the the Federal Register on February 29, Opening Session or Regular Trading
Early Trading Session.48 2016.4 On April 11, 2016, the Exchange Hours, depending on the TIF selected by
Furthermore, the Exchange proposes filed Amendment No. 1 to the proposed the User. A User may enter orders in
technical amendments to its Rules to rule change.5 The Commission received advance of the trading session for which
correct erroneous plural words and an no comments on the proposed rule its orders are eligible. For example,
inaccurate description of the Pre- change. This order approves the Users may enter orders starting at 6:00
Opening Session times in Exchange proposed rule change, as modified by a.m. Eastern Time with a TIF of Regular
Rules 11.17 and 14.1, respectively. The Amendment No. 1. Hours Only (‘‘RHO’’), which designates
Commission believes these proposed that the order only be eligible for
II. Description of the Proposal
amendments would help alleviate execution during Regular Trading
potential confusion among Users and The Exchange proposes to amend its Hours.9 Users may enter orders as early
Members regarding the operation of the rules to: (i) Create a new trading session, as 6:00 a.m. Eastern Time, but those
Exchange’s rules and are, therefore, the Early Trading Session, which will orders would not be eligible for
consistent with the Act. run from 7:00 a.m. to 8:00 a.m. Eastern execution until the start of the Pre-
Time; and (ii) adopt three new TIF Opening Session at 8:00 a.m. According
IV. Conclusion instructions. to the Exchange, some Users have
IT IS THEREFORE ORDERED, A. Early Trading Session requested the ability for their orders to
pursuant to Section 19(b)(2) of the Act 49 be eligible for execution starting at 7:00
that the proposed rule change (SR– The Exchange trading day is currently a.m. Eastern Time. Therefore, the
BYX–2016–03), as modified by divided into three sessions: (i) The Pre- Exchange is proposing to adopt the
Amendment No.1, be, and it hereby is, Opening Session, which starts at 8:00 Early Trading Session.10
approved. a.m. and ends at 9:30 a.m. Eastern Time; As amended, Exchange Rule 11.1(a)
(ii) Regular Trading Hours, which run would state that orders entered between
For the Commission, by the Division of from 9:30 a.m. to 4:00 p.m. Eastern
Trading and Markets, pursuant to delegated 6:00 a.m. and 7:00 a.m. Eastern Time,
Time; and (iii) the After Hours Session, rather than 6:00 a.m. and 8:00 a.m.
authority.50
which runs from 4:00 p.m. to 5:00 p.m. Eastern Time, would not be eligible for
Robert W. Errett, Eastern Time.6 The Exchange proposes
Deputy Secretary. execution until the start of the Early
to amend its rules to create the Early Trading Session, Pre-Opening Session,
[FR Doc. 2016–08955 Filed 4–18–16; 8:45 am] Trading Session. Exchange Rule 1.5 or Regular Trading Hours, depending on
BILLING CODE 8011–01–P would be amended to add a new term, the TIF selected by the User. Exchange
‘‘Early Trading Session,’’ under Rule 11.1(a) would also be amended to
proposed paragraph (ee). ‘‘Early Trading
SECURITIES AND EXCHANGE state that the Exchange would not
Session’’ would be defined as ‘‘the time
COMMISSION accept the following orders prior to 7:00
between 7:00 a.m. and 8:00 a.m. Eastern
a.m. Eastern Time, rather than 8:00 a.m.:
[Release No. 34–77611; File No. SR–BATS– Time.’’
The Exchange also proposes to amend (i) BZX Post Only Orders; 11 (ii) Partial
2016–14] Post Only at Limit Orders; 12 (iii)
Exchange Rule 11.1(a) to state that
orders may be entered or executed on, Intermarket Sweep Orders (‘‘ISOs’’); 13
Self-Regulatory Organizations; BATS
or routed away from, the Exchange (iv) BZX Market Orders 14 that are not
Exchange, Inc.; Order Approving
during the Early Trading Session and to Eligible Auction Orders as defined in
Proposed Rule Change, as Modified by
reflect the start time of the Early Trading Rule 11.23(a)(8); (v) Minimum Quantity
Amendment No. 1 Thereto, To Adopt
Session as 7:00 a.m. Eastern Time. Other Orders 15 that also include a TIF of RHO;
an Early Trading Session and Three
than the proposal to adopt an Early and (vi) all orders with a TIF instruction
New Time-in-Force Instructions
Trading Session, the Exchange does not of Immediate-or-Cancel (‘‘IOC’’) 16 or
April 13, 2016. propose to amend the substance or Fill-or-Kill (‘‘FOK’’).17 At the
operation of Exchange Rule 11.1(a).7 commencement of the Early Trading
I. Introduction Session, orders entered between 6:00
On February 12, 2016, BATS 4 See Securities Exchange Act Release No. 77214 a.m. and 7:00 a.m. Eastern Time, rather
Exchange, Inc. (the ‘‘Exchange’’ or (February 23, 2016), 81 FR 10350 (‘‘Notice’’). than 6:00 a.m. and 8:00 a.m. Eastern
‘‘BATS’’) (n/k/a Bats BZX Exchange, 5 Amendment No. 1 amended and replaced the
Time, would be handled in time
Inc.) filed with the Securities and proposed rule change in its entirety. In Amendment sequence, beginning with the order with
No. 1, the Exchange made technical nonsubstantive
Exchange Commission (the changes to the proposed rule text to replace all
‘‘Commission’’), pursuant to section references to ‘‘BATS’’ with ‘‘BZX’’ and to otherwise 8 ‘‘User’’ is defined as ‘‘any Member or Sponsored
19(b)(1) 1 of the Securities Exchange Act revise Exhibit 5 so that the proposed rule text is Participant who is authorized to obtain access to the
consistent with the Exchange’s current rule text. System pursuant to Rule 11.3.’’ See Exchange Rule
of 1934 (‘‘Act’’) 2 and Rule 19b–4 See Securities Exchange Act Release Nos. 77307 1.5(cc).
thereunder,3 a proposed rule change to (March 7, 2016), 81 FR 12996 (March 11, 2016) (SR– 9 See Exchange Rule 11.9(b)(7).
mstockstill on DSK4VPTVN1PROD with NOTICES
amend its rules to: (i) Create a new BATS–2016–25) and 77476 (March 30, 2016) 81 FR 10 See Notice, supra note 4, at 10351.
19661 (April 5, 2016) (SR–BATS–2016–17). Because 11 See Exchange Rule 11.9(c)(6).
48 See
Amendment No. 1 adds clarification and does not
id. at 10313–14. materially alter the substance of the proposed rule
12 See Exchange Rule 11.9(c)(7).
49 15 U.S.C. 78s(b)(2). 13 See Exchange Rule 11.9(d).
change or raise unique or novel regulatory issues,
50 17 CFR 200.30–3(a)(12). 14 See Exchange Rule 11.9(a)(2).
Amendment No. 1 is not subject to notice and
1 15 U.S.C. 78s(b)(1). comment. 15 See Exchange Rule 11.9(c)(5).
2 15 U.S.C. 78a. 6 See Notice, supra note 4, at 10350. 16 See Exchange Rule 11.9(b)(1).
3 17 CFR 240.19b–4. 7 See id. 17 See Exchange Rule 11.9(b)(6).
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Document Created: 2016-04-19 00:16:08
Document Modified: 2016-04-19 00:16:08
| 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 23032 |
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