81_FR_23110 81 FR 23035 - Self-Regulatory Organizations; BATS 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

81 FR 23035 - Self-Regulatory Organizations; BATS 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)

Page Range23035-23038
FR Document2016-08969

Federal Register, Volume 81 Issue 75 (Tuesday, April 19, 2016) 
[Federal Register Volume 81, Number 75 (Tuesday, April 19, 2016)]
[Notices]
[Pages 23035-23038]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-08969]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77611; File No. SR-BATS-2016-14]


Self-Regulatory Organizations; BATS 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 12, 2016, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') (n/k/a Bats BZX Exchange, Inc.) 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.
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    \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. 77214 (February 23, 
2016), 81 FR 10350 (``Notice'').
    \5\ Amendment No. 1 amended and replaced the proposed rule 
change in its entirety. In Amendment No. 1, the Exchange made 
technical nonsubstantive changes to the proposed rule text to 
replace all references to ``BATS'' with ``BZX'' and to otherwise 
revise Exhibit 5 so that the proposed rule text is consistent with 
the Exchange's current rule text. See Securities Exchange Act 
Release Nos. 77307 (March 7, 2016), 81 FR 12996 (March 11, 2016) 
(SR-BATS-2016-25) and 77476 (March 30, 2016) 81 FR 19661 (April 5, 
2016) (SR-BATS-2016-17). 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.
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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.''
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    \6\ See Notice, supra note 4, at 10350.
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    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\
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    \7\ See id.
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    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\
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    \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 10351.
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    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. 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) BZX Post Only Orders; \11\ (ii) Partial Post Only 
at Limit Orders; \12\ (iii) Intermarket Sweep Orders (``ISOs''); \13\ 
(iv) BZX Market Orders \14\ that are not Eligible Auction Orders as 
defined in Rule 11.23(a)(8); (v) Minimum Quantity Orders \15\ that also 
include a TIF of RHO; and (vi) all orders with a TIF instruction of 
Immediate-or-Cancel (``IOC'') \16\ or Fill-or-Kill (``FOK'').\17\ 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

[[Page 23036]]

the oldest time stamp, and would be placed on the BZX Book,\18\ routed, 
cancelled, or executed in accordance with the terms of the order.\19\ 
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\
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    \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 11.9(b)(1).
    \17\ See Exchange Rule 11.9(b)(6).
    \18\ See Exchange Rule 1.5(e).
    \19\ See Notice, supra note 4, at 10351.
    \20\ See id. 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 10351.
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    The Exchange also proposes to make the changes described below to 
Exchange Rules 3.21, 11.9, 11.13, 11.17, 11.23, 14.6, 14.11 and 14.12 
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\
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    \21\ See id.
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     Exchange Rule 11.9, Orders and Modifiers. The Exchange 
proposes to amend the description of BZX 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 BZX Market Orders, Market Maker Peg Orders, and 
Supplemental Peg Orders would be amended to account for the Early 
Trading Session.\22\
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    \22\ See id. at 10351-52. 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.
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     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\
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    \23\ See Notice, supra note 4, at 10352.
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     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\
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    \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.
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     Exchange Rule 11.23, Auction. Exchange Rules 11.23(b) and 
(c) describe the Exchange's Opening and Closing Auction processes. The 
Exchange proposes to amend Exchange Rules 11.23(b)(1)(C) to reflect 
that Orders eligible for execution in the Early Trading Session or Pre-
Opening Session may be cancelled or modified at any time prior to 
execution.\25\
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    \25\ The Commission notes that in the initial filing for this 
proposed rule change, the Exchange proposed additional conforming 
changes to Exchange Rules 11.23(b)(1)(A) and (c)(1)(A) to state that 
Users may submit orders at the start of the Early Trading Session at 
7:00 a.m., rather than 8:00 a.m., to participate in either the 
Opening or Closing Auction. In Amendment No. 1, those proposed 
amendments were removed from the proposal because the current rule 
text for each rule no longer requires changes to conform with this 
proposal due to recent amendments in a separate rule filing. See 
Securities Exchange Act Release No. 77476 (March 30, 2016) 81 FR 
19661 (April 5, 2016) (SR-BATS-2016-17).
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     Rule 14.6, Obligations for Companies Listed on the 
Exchange. The Exchange proposes to amend Exchange Rules 14.6(b)(1), 
(b)(2), and Interpretation and Policies .01(a), (b), (c), and .02 to 
require an Exchange-Listed Company that publicly releases material 
information outside of the Exchange market hours to inform the 
Exchange's Surveillance Department of that material information prior 
to 6:50 a.m. rather than 7:50 a.m. Eastern Time. The Exchange proposes 
to amend Exchange Rule 14.6, Interpretation and Policies .01(a), (b), 
(c), and .02 to reflect the start of the Early Trading Session at 7:00 
a.m. Eastern Time. The amended provisions of Exchange Rule 14.6, 
Interpretation and Policies .01(a), (b), (c), and .02 require companies 
to notify the Exchange's Surveillance Department of the release of 
certain material information at least ten minutes prior to the release 
of such information to the public when the public release of the 
information is made during Exchange market hours.\26\
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    \26\ See Notice, supra note 4, at 10352.
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     Rule 14.11, Other Securities. The Exchange proposes to 
amend Exchange Rules 14.11(b)(7) and (c)(7) to reflect the extension of 
the pre-Opening session of the Exchange to 7:00 a.m. Eastern Time for 
the trading of Portfolio Depository Receipts and Index Fund Shares, 
respectively. The Exchange also proposes to amend the provisions of 
Exchange Rules 14.11(d) and (e) that address the trading of the 
following securities to include references to the Early Trading Session 
or to state that transaction in the following products may occur during 
the Early Trading Session, in addition to during Regular Trading Hours 
and the Pre-Opening and After Hours Trading Sessions: (i) Securities 
Linked to the Performance of Indexes and Commodities (Including 
Currencies) (Exchange Rule 14.11(d)); (ii) Commodity-Based Trust Shares 
(Exchange Rule 14.11(e)(4)); (iii) Currency Trust Shares (Exchange Rule 
14.11(e)(5)); (iv) Commodity Index Trust Shares (Exchange Rule 
14.11(e)(6)); (v) Commodity Futures Trust Shares (Exchange Rule 
14.11(e)(7)); (vi) Trust Units (Exchange Rule 14.11(e)(9)); (vii) 
Managed Trust Securities (Exchange Rule 14.11(e)(10)); and (viii) 
Derivative Securities Traded under Unlisted

[[Page 23037]]

Trading Privileges (Exchange Rule 14.11(j)).\27\
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    \27\ See id. at 10352-53. The Exchange also proposes to amend 
Rule 14.11(j)(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. See id. at 10353
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     Rule 14.12, Failure to Meet Listing Standards. The 
Exchange proposes to amend Exchange Rules 14.12(e) and (m)(11) to 
require that companies that publicly announce the receipt of a 
notification of deficiency, Staff Delisting Determination, Public 
Reprimand Letter, or Adjudicatory Body Decision that serves as a Public 
Reprimand Letter outside of Exchange market hours inform the Exchange's 
Surveillance Department of the material information prior to 6:50 a.m. 
rather than 7:50 a.m. Eastern Time. If the public announcement is made 
during Exchange market hours, both Exchange Rules would continue to 
require that the company inform the Exchange's Surveillance Department 
at least 10 minutes prior to the announcement.\28\
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    \28\ See id.
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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).\29\
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    \29\ See Exchange Rule 11.1(a).
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    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): \30\
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    \30\ See Notice, supra note 4, at 10353.
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     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,\31\ 
any portion not executed would expire at the end of Regular Trading 
Hours.
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    \31\ See Exchange Rule 11.9(b)(3).
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     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,\32\ any portion not executed 
would expire at the end of the After Hours Session.
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    \32\ See Exchange Rule 11.9(b)(5).
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     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,\33\ 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.
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    \33\ See Exchange Rule 11.9(b)(4).
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    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 
BZX Book, routed, cancelled, or executed in accordance with the terms 
of the order.\34\
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    \34\ See Notice, supra note 4, at 10353. 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 10353, n.32.
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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.\35\ The Commission 
believes that the proposed rule change is consistent with section 
6(b)(5) \36\ 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.
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    \35\ 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).
    \36\ 15 U.S.C. 78f(b)(5).
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    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.\37\ 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,\38\ 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.\39\
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    \37\ See supra section II.
    \38\ 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.).
    \39\ 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.b(7); see also NASDAQ Rule 4703(a)(7).
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    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.\40\ 
Specifically, the Exchange would subject such orders to checks for 
compliance with, including but not limited to, Regulation NMS,\41\ 
Regulation SHO,\42\ and relevant Exchange rules.\43\ Moreover, the 
Exchange reminds its Members of their regulatory obligations when 
submitting an order with one of the proposed TIF instructions.\44\ In 
particular, the Exchange states that Members must comply with the 
Market Access Rule,\45\ 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

[[Page 23038]]

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.\46\
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    \40\ See Notice, supra note 4, at 10355.
    \41\ See 17 CFR 242.600-613.
    \42\ See 17 CFR 242.200-204.
    \43\ See Notice, supra note 4, at 10355.
    \44\ See id.
    \45\ See 17 CFR 240.15c3-5.
    \46\ See Notice, supra note 4, at 10355.
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    The Commission further notes the Exchange's discussion of the best 
execution obligations of Members utilizing the proposed TIF 
instructions.\47\ 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.\48\ 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.\49\ As a result, 
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.\50\
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    \47\ See id. at 10354-55.
    \48\ See id. n.41.
    \49\ See id. at 10354.
    \50\ See id.
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    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 14.11, 
respectively. The Commission believes these proposed amendments would 
help alleviate potential confusion among Users and Members regarding 
the operation of Exchange Rules and are, therefore, consistent with the 
Act.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\51\ that the proposed rule change (SR-BATS-2016-14), as modified by 
Amendment No.1, be, and it hereby is, approved.
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    \51\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\52\
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    \52\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08969 Filed 4-18-16; 8:45 am]
 BILLING CODE 8011-01-P

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). VerDate Sep<11>2014 18:02 Apr 18, 2016 Jkt 238001 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 E:\FR\FM\19APN1.SGM 19APN1

23036 Federal Register / Vol. 81, No. 75 / Tuesday, April 19, 2016 / Notices the oldest time stamp, and would be Peg Orders would be amended to • Rule 14.6, Obligations for placed on the BZX Book,18 routed, account for the Early Trading Session.22 Companies Listed on the Exchange. The cancelled, or executed in accordance • Exchange Rule 11.13, Order Exchange proposes to amend Exchange with the terms of the order.19 As Execution and Routing. Exchange Rule Rules 14.6(b)(1), (b)(2), and amended, Exchange Rule 11.1(a) would 11.13(a)(2)(B) discusses compliance Interpretation and Policies .01(a), (b), state that orders may be executed on the with Regulation NMS and Trade (c), and .02 to require an Exchange- Exchange or routed away from the Through Protections and states that the Listed Company that publicly releases Exchange during Regular Trading Hours price of any execution occurring during material information outside of the and during the Early Trading, Pre- the Pre-Opening Session or the After Exchange market hours to inform the Opening, and After Hours Trading Hours Trading Session must be equal to Exchange’s Surveillance Department of Sessions.20 or better than the highest Protected Bid that material information prior to 6:50 or lowest Protected Offer, unless the a.m. rather than 7:50 a.m. Eastern Time. The Exchange also proposes to make order is marked ISO or a Protected Bid the changes described below to The Exchange proposes to amend is crossing a Protected Offer. The Exchange Rules 3.21, 11.9, 11.13, 11.17, Exchange Rule 14.6, Interpretation and Exchange proposes to amend Exchange 11.23, 14.6, 14.11 and 14.12 to reflect Policies .01(a), (b), (c), and .02 to reflect Rule 11.13(a)(2)(B) to expand the the adoption of the Early Trading the start of the Early Trading Session at Exchange Rule’s requirements to the Session: Early Trading Session.23 7:00 a.m. Eastern Time. The amended • Exchange Rule 3.21, Customer • Exchange Rule 11.17, Clearly provisions of Exchange Rule 14.6, Disclosures. Exchange Rule 3.21 Erroneous Executions. Exchange Rule Interpretation and Policies .01(a), (b), prohibits Members from accepting an 11.17 outlines under which conditions (c), and .02 require companies to notify order from a customer for execution in the Exchange may determine that an the Exchange’s Surveillance Department the Pre-Opening or After Hours Trading execution is clearly erroneous. The of the release of certain material Session without disclosing to their Exchange proposes to amend Exchange information at least ten minutes prior to customer that extended hours trading Rule 11.17 to include executions that the release of such information to the involves material trading risks, occur during the Early Trading Session. public when the public release of the including the possibility of lower Exchange Rule 11.17(c)(1) sets forth the information is made during Exchange liquidity, high volatility, changing numerical guidelines the Exchange is to market hours.26 prices, unlinked markets, an follow when determining whether an • Rule 14.11, Other Securities. The exaggerated effect from news execution was clearly erroneous during Exchange proposes to amend Exchange announcements, wider spreads and any Regular Trading Hours or the Pre- Rules 14.11(b)(7) and (c)(7) to reflect the other relevant risk. The Exchange Opening or After Hours Trading extension of the pre-Opening session of proposes to amend Exchange Rule 3.21 Session. Exchange Rule 11.17(c)(3) sets the Exchange to 7:00 a.m. Eastern Time to also require such disclosures for forth additional factors the Exchange for the trading of Portfolio Depository customer orders that are to be executed may consider in determining whether a Receipts and Index Fund Shares, during the Early Trading Session.21 transaction is clearly erroneous. These respectively. The Exchange also factors include whether the transaction • Exchange Rule 11.9, Orders and proposes to amend the provisions of was executed during the Pre-Opening or Modifiers. The Exchange proposes to Exchange Rules 14.11(d) and (e) that After Hours Trading Sessions. The amend the description of BZX Market address the trading of the following Exchange proposes to amend Exchange Orders under Exchange Rule 11.9(a)(2), securities to include references to the Rule 11.17(c)(1) and (3) to include Market Maker Peg Orders under Rule Early Trading Session or to state that executions occurring during the Early 11.9(c)(16), and Supplementary Peg transaction in the following products Trading Session.24 Orders under Rule 11.9(c)(19) to • Exchange Rule 11.23, Auction. may occur during the Early Trading account for the Early Trading Session. Exchange Rules 11.23(b) and (c) Session, in addition to during Regular Every order type that is currently describe the Exchange’s Opening and Trading Hours and the Pre-Opening and available beginning at 8:00 a.m. would Closing Auction processes. The After Hours Trading Sessions: (i) be available beginning at 7:00 a.m. for Exchange proposes to amend Exchange Securities Linked to the Performance of inclusion in the Early Trading Session. Rules 11.23(b)(1)(C) to reflect that Indexes and Commodities (Including All other order types, and all order type Orders eligible for execution in the Currencies) (Exchange Rule 14.11(d)); behaviors, would otherwise remain Early Trading Session or Pre-Opening (ii) Commodity-Based Trust Shares unchanged. Therefore, each of the above Session may be cancelled or modified at (Exchange Rule 14.11(e)(4)); (iii) rules for BZX Market Orders, Market any time prior to execution.25 Currency Trust Shares (Exchange Rule Maker Peg Orders, and Supplemental 14.11(e)(5)); (iv) Commodity Index Trust 22 See id. at 10351–52. Amendment No. 1 updated Shares (Exchange Rule 14.11(e)(6)); (v) 18 See Exchange Rule 1.5(e). Exhibit 5 so that the names of orders and order Commodity Futures Trust Shares 19 See Notice, supra note 4, at 10351. modifiers stated therein conform with those used in 20 See id. Amendment No. 1 updated Exhibit 5 so the current Exchange Rules. See supra, note 5. (Exchange Rule 14.11(e)(7)); (vi) Trust that the names of orders, order modifiers, and the 23 See Notice, supra note 4, at 10352. Units (Exchange Rule 14.11(e)(9)); (vii) Exchange’s book stated therein conform with those 24 See id. The Exchange also proposes technical Managed Trust Securities (Exchange used in the current Exchange Rules. See supra, note amendments to Exchange Rules 11.17(c)(1) and (3) Rule 14.11(e)(10)); and (viii) Derivative 5. The Exchange also describes how the Early to delete the letter ‘‘s’’ from the word ‘‘Trading Securities Traded under Unlisted Trading Session will affect its Members’ operations Sessions’’ and the letter ‘‘s’’ from the word ‘‘tapes,’’ mstockstill on DSK4VPTVN1PROD with NOTICES and the Exchange’s opening process, order types, respectively. routing services, order processing, data feeds, trade 25 The Commission notes that in the initial filing amendments were removed from the proposal reporting, market surveillance, and clearly for this proposed rule change, the Exchange because the current rule text for each rule no longer erroneous trade processing. The Exchange clarifies proposed additional conforming changes to requires changes to conform with this proposal due that these processes would operate in the same Exchange Rules 11.23(b)(1)(A) and (c)(1)(A) to state to recent amendments in a separate rule filing. See manner with the exception of changes in time to that Users may submit orders at the start of the Securities Exchange Act Release No. 77476 (March reflect the adoption of the Early Trading Session. Early Trading Session at 7:00 a.m., rather than 8:00 30, 2016) 81 FR 19661 (April 5, 2016) (SR–BATS– See Notice, supra note 4, at 10351. a.m., to participate in either the Opening or Closing 2016–17). 21 See id. Auction. In Amendment No. 1, those proposed 26 See Notice, supra note 4, at 10352. VerDate Sep<11>2014 18:02 Apr 18, 2016 Jkt 238001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\19APN1.SGM 19APN1

Federal Register / Vol. 81, No. 75 / Tuesday, April 19, 2016 / Notices 23037 Trading Privileges (Exchange Rule executed would expire at the end of the general, to protect investors and the 14.11(j)).27 After Hours Session. public interest. • Rule 14.12, Failure to Meet Listing • Pre-Opening Session ‘til Day The Exchange proposes to adopt an Standards. The Exchange proposes to (‘‘PTD’’). A limit order that is designated Early Trading Session and three new amend Exchange Rules 14.12(e) and TIF instructions and to make related for execution during the Pre-Opening (m)(11) to require that companies that changes to its rules as discussed Session, Regular Trading Hours, and the publicly announce the receipt of a above.37 The Commission believes that After Hours Session. Like the current notification of deficiency, Staff Delisting the proposed rules would provide Users Good ‘til Day TIF instruction,33 any Determination, Public Reprimand with additional options for trading on portion not executed would be Letter, or Adjudicatory Body Decision the Exchange. The Commission notes that serves as a Public Reprimand Letter cancelled at the expiration time that the proposed Early Trading Session outside of Exchange market hours assigned to the order, which can be no hours are similar to those of other inform the Exchange’s Surveillance later than the close of the After Hours exchanges,38 and that the proposed TIF Department of the material information Trading Session. instructions would offer functionality prior to 6:50 a.m. rather than 7:50 a.m. Under each proposed TIF instruction, similar to existing functionality Eastern Time. If the public Users may designate that their orders available on the Exchange and other announcement is made during Exchange only be eligible for execution starting exchanges that allows Members to select market hours, both Exchange Rules with the Pre-Opening Session. Users when their orders become eligible for would continue to require that the may continue to enter orders as early as execution.39 company inform the Exchange’s 6:00 a.m., but orders with the proposed The Commission notes that the Surveillance Department at least 10 TIF instructions would not be eligible Exchange has represented that it would minutes prior to the announcement.28 for execution until 8:00 a.m. Eastern subject orders that are eligible for Time, which is the start of the Pre- execution as of the start of the Pre- B. TIF Instructions Opening Session to all of the Exchange’s Opening Session. At the commencement The Exchange proposes to adopt three of the Pre-Opening Session, orders standard regulatory checks, as it new TIF instructions under Exchange entered between 6:00 a.m. and 8:00 a.m. currently does with all orders upon Rule 11.9(b). As discussed above, a User Eastern Time with one of the proposed entry.40 Specifically, the Exchange may designate when its order is eligible TIF instructions would be handled in would subject such orders to checks for for execution by selecting the desired time sequence, beginning with the order compliance with, including but not TIF instruction under Exchange Rule with the oldest time stamp, and would limited to, Regulation NMS,41 11.9(b).29 be placed on the BZX Book, routed, Regulation SHO,42 and relevant Although the Exchange states that the Exchange rules.43 Moreover, the cancelled, or executed in accordance proposal to adopt an Early Trading Exchange reminds its Members of their Session is in response to User requests with the terms of the order.34 regulatory obligations when submitting for their orders to be eligible for III. Discussion and Commission an order with one of the proposed TIF execution starting at 7:00 a.m. Eastern Findings instructions.44 In particular, the Time, the Exchange states that some Exchange states that Members must Users have requested that their orders After careful consideration, the comply with the Market Access Rule,45 continue to not be eligible for execution Commission finds that the proposed which requires, among other things, pre- until the start of the Pre-Opening rule change, as modified by Amendment trade controls and procedures that are Session at 8:00 a.m. Therefore, the No.1, is consistent with the reasonably designed to assure Exchange proposes to adopt the requirements of the Act and the rules compliance with Exchange trading rules following three new TIF instructions and regulations thereunder applicable to and Commission rules pursuant to under Exchange Rule 11.9(b): 30 a national securities exchange.35 The Regulation SHO and Regulation NMS. • Pre-Opening Session Plus (‘‘PRE’’). Commission believes that the proposed The Exchange also notes that a A limit order that is designated for rule change is consistent with section Member’s procedures must be execution during the Pre-Opening 6(b)(5) 36 in particular, in that it is reasonably designed to ensure Session and Regular Trading Hours. designed to prevent fraudulent and Like the current Good ‘til Cancel TIF manipulative acts and practices, to 37 See supra section II. instruction,31 any portion not executed promote just and equitable principles of 38 For example, NYSE Arca, Inc. operates an would expire at the end of Regular trade, to foster cooperation and Opening Session that starts at 4:00 a.m. Eastern Trading Hours. Time and ends at 9:30 a.m. Eastern Time, and coordination with persons engaged in Nasdaq Stock Market LLC operates a pre-market • Pre-Opening Session ‘til Extended facilitating transactions in securities, to session that also opens at 4:00 a.m. and ends at 9:30 Day (‘‘PTX’’). A limit order that is remove impediments to and perfect the a.m. Eastern Time. See NYSE Arca Rule 7.34(a)(1); designated for execution during the Pre- mechanism of a free and open market Nasdaq Rule 4701(g). See also Securities Exchange Opening Session, Regular Trading Act Release No. 60605 (September 1, 2009), 74 FR and a national market system, and, in 46277 (September 8, 2009) (SR–CHX–2009–13) Hours, and the After Hours Session. (adopting bifurcated post-trading session on the Like the current Good ‘til Extended Day 33 See Chicago Stock Exchange, Inc.). Exchange Rule 11.9(b)(4). TIF instruction,32 any portion not 34 See Notice, supra note 4, at 10353. Amendment 39 Specifically, on the Exchange, Users may enter an order starting at 6:00 a.m. Eastern Time with a No. 1 updated Exhibit 5 so that the name of the 27 See id. at 10352–53. The Exchange also TIF of Regular Hours Only, which designates that Exchange’s book stated therein conforms with the proposes to amend Rule 14.11(j)(2) to correct an the order only be eligible for execution during name used in the current Exchange Rules. See mstockstill on DSK4VPTVN1PROD with NOTICES inaccurate description of the Pre-Opening Session, Regular Trading Hours, which begin at 9:30 a.m. supra, note 5. Orders utilizing one of the proposed which currently reads as 9:00 a.m. to 9:30 a.m. Eastern Time. See Exchange Rule 11.b(7); see also TIF instructions would not be eligible for execution rather than 8:00 a.m. to 9:30 a.m. as is set forth NASDAQ Rule 4703(a)(7). during the Early Trading Session. See Notice, supra 40 See Notice, supra note 4, at 10355. throughout Exchange Rules. See id. at 10353 note 4, at 10353, n.32. 28 See id. 41 See 17 CFR 242.600–613. 35 In approving this rule change, the Commission 29 See Exchange Rule 11.1(a). 42 See 17 CFR 242.200–204. notes that it has considered the proposed rule’s 30 See Notice, supra note 4, at 10353. 43 See Notice, supra note 4, at 10355. impact on efficiency, competition, and capital 31 See Exchange Rule 11.9(b)(3). formation. See 15 U.S.C. 78c(f). 44 See id. 32 See Exchange Rule 11.9(b)(5). 36 15 U.S.C. 78f(b)(5). 45 See 17 CFR 240.15c3–5. VerDate Sep<11>2014 18:02 Apr 18, 2016 Jkt 238001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\19APN1.SGM 19APN1

23038 Federal Register / Vol. 81, No. 75 / Tuesday, April 19, 2016 / Notices compliance with the applicable SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s regulatory requirements, not just at the COMMISSION Statement of the Purpose of, and time the order is routed to the Exchange, Statutory Basis for, the Proposed Rule but also at the time the order becomes [Release No. 34–77609; File No. SR– Change eligible for execution.46 NASDAQ–2016–054] The Commission further notes the 1. Purpose Exchange’s discussion of the best The purpose of the proposed rule Self-Regulatory Organizations; The execution obligations of Members change is to amend the Exchange’s NASDAQ Stock Market LLC; Notice of utilizing the proposed TIF transaction fees at Rule 7018(a) to add Filing and Immediate Effectiveness of a new credit tier available to a member instructions.47 Specifically, the Proposed Rule Change To Amend for displayed quotes/orders (other than Exchange states that a Member’s best execution obligations may include Nasdaq Rule 7018(a) Supplemental Orders or Designated cancelling an order when market April 13, 2016. Retail Orders) that provide liquidity. conditions deteriorate and could result The new credit tier will be available for in an inferior execution or informing Pursuant to Section 19(b)(1) of the transactions in securities of all three customers when the execution of their Securities Exchange Act of 1934 Tapes 3 and accordingly the new credit order may be delayed intentionally (‘‘Act’’),1 and Rule 19b–4 thereunder,2 tier is being added to Rules 7018(a)(1), while the Member utilizes reasonable notice is hereby given that on April 12, (2), and (3), which provide the fees and diligence to ascertain the best market for 2016, The NASDAQ Stock Market LLC credits for execution and routing of the security.48 The Exchange further (‘‘Exchange’’) filed with the Securities orders in Nasdaq-Listed securities, New notes that Members will maintain the and Exchange Commission (‘‘SEC’’ or York Stock Exchange (‘‘NYSE’’)-listed ability to cancel or modify the terms of ‘‘Commission’’) the proposed rule securities, and securities not listed on an order utilizing any of the proposed change as described in Items I, II, and Nasdaq or NYSE, respectively. TIF instructions at any time, including III, below, which Items have been The Exchange is proposing to provide during the time from when the order is prepared by the Exchange. The a $0.0030 per share executed credit to routed to the Exchange until the start of Commission is publishing this notice to a member that has shares of liquidity the Pre-Opening Session.49 As a result, provided in all securities during the solicit comments on the proposed rule the Exchange states that a Member who month representing more than 0.20% of change from interested persons. utilizes the proposed TIF instructions, Consolidated Volume during the month, but later determines that market I. Self-Regulatory Organization’s through one or more of its Nasdaq conditions favor execution during Early Statement of the Terms of the Substance Market Center MPIDs. The member Trading Session, can cancel the order of the Proposed Rule Change must also qualify for the additional residing at the Exchange and enter a $0.05 per contract rebate under Note separate order to execute during the The Exchange proposes to amend the c(3) of Nasdaq Options Market (‘‘NOM’’) Early Trading Session.50 Exchange’s transaction fees at Rule Rules Chapter XV Section 2(1).4 The Furthermore, the Exchange proposes 7018(a) to add a new credit tier criteria to receive the additional $0.05 technical amendments to its Rules to available to a member for displayed per contract rebate under NOM Chapter correct erroneous plural words and an quotes/orders (other than Supplemental XV Section 2(1) Note c(3) requires a inaccurate description of the Pre- Orders or Designated Retail Orders) that NOM Participant to (i) add Customer, Opening Session times in Exchange provide liquidity. Professional, Firm, Non-NOM Market Rules 11.17 and 14.11, respectively. The Maker and/or Broker-Dealer 5 liquidity The text of the proposed rule change Commission believes these proposed is available on the Exchange’s Web site 3 Tape C securities are those that are listed on the amendments would help alleviate at http://nasdaq.cchwallstreet.com, at Exchange, Tape A securities are those that are listed potential confusion among Users and the principal office of the Exchange, and on NYSE, and Tape B securities are those that are Members regarding the operation of listed on exchanges other than Nasdaq or NYSE. at the Commission’s Public Reference Exchange Rules and are, therefore, 4 The Exchange notes that rebate and criteria Room. required to receive the rebate under NOM Chapter consistent with the Act. XV Section 2(1) Note c(3) is being amended IV. Conclusion II. Self-Regulatory Organization’s consistent with the description herein effective as Statement of the Purpose of, and of the date of this proposed rule change to Rule It is therefore ordered, pursuant to Statutory Basis for, the Proposed Rule 7018(a). section 19(b)(2) of the Act 51 that the Change 5 NOM Chapter XV provides the following proposed rule change (SR–BATS–2016– defined terms: The term ‘‘Customer’’ or (‘‘C’’) applies to any 14), as modified by Amendment No.1, In its filing with the Commission, the transaction that is identified by a Participant for be, and it hereby is, approved. Exchange included statements clearing in the Customer range at The Options For the Commission, by the Division of concerning the purpose of and basis for Clearing Corporation (‘‘OCC’’) which is not for the account of broker or dealer or for the account of a Trading and Markets, pursuant to delegated the proposed rule change and discussed ‘‘Professional’’ (as that term is defined in Chapter authority.52 any comments it received on the I, Section 1(a)(48)). Robert W. Errett, proposed rule change. The text of these The term ‘‘NOM Market Maker’’ or (‘‘M’’) is a Deputy Secretary. statements may be examined at the Participant that has registered as a Market Maker on NOM pursuant to Chapter VII, Section 2, and must [FR Doc. 2016–08969 Filed 4–18–16; 8:45 am] places specified in Item IV below. The also remain in good standing pursuant to Chapter BILLING CODE 8011–01–P Exchange has prepared summaries, set VII, Section 4. In order to receive NOM Market mstockstill on DSK4VPTVN1PROD with NOTICES forth in sections A, B, and C below, of Maker pricing in all securities, the Participant must 46 See Notice, supra note 4, at 10355. be registered as a NOM Market Maker in at least one the most significant aspects of such security. 47 See id. at 10354–55. 48 See id. n.41. statements. The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is 49 See id. at 10354. a registered market maker on another options exchange that is not a NOM Market Maker. A Non- 50 See id. NOM Market Maker must append the proper Non- 51 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). NOM Market Maker designation to orders routed to 52 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. NOM. VerDate Sep<11>2014 18:02 Apr 18, 2016 Jkt 238001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 E:\FR\FM\19APN1.SGM 19APN1


Document Created: 2016-04-19 00:16:11
Document Modified: 2016-04-19 00:16:11
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 23035 
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