81 FR 45320 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing of Proposed Rule Change To Adopt Limit Order Protection
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 134 (July 13, 2016)
Federal Register Volume 81, Issue 134 (July 13, 2016)
| Page Range | 45320-45322 | |
| FR Document | 2016-16485 |
[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)] [Notices] [Pages 45320-45322] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16485] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78244; File No. SR-BX-2016-037) Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing of Proposed Rule Change To Adopt Limit Order Protection July 7, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on June 24, 2016, NASDAQ BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BX Rule 4757, entitled ``Book Processing'' to adopt a Limit Order Protection or ``LOP'' for members accessing the BX. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqbx.cchwallstreet.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. [[Page 45321]] II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to adopt a new mechanism to protect against erroneous Limit Orders which are entered into BX. Specifically, this new feature addresses risks to market participants of human error in entering Limit Orders at unintended prices. LOP would prevent certain Limit Orders from executing or being placed on the Order Book at prices outside pre-set standard limits. The System would reject those Limit Orders, rather than executing them automatically. The proposed LOP feature is similar to a risk feature which exists today on BX \3\ and is available for Options Participants. --------------------------------------------------------------------------- \3\ See BX Rules at Chapter VI, Section 6(c) and Section 18. --------------------------------------------------------------------------- The Exchange proposes to adopt a new feature, LOP for Limit Orders, which would reject Limit Orders back to the member when the order exceeds certain defined logic. The Exchange intends to apply LOP system wide. The Exchange reserves the ability to temporarily disable LOP for certain securities in the event of extraordinary market conditions in a certain symbol.\4\ Specifically, the LOP feature would prevent certain Limit Orders at prices outside of pre-set standard limits (``LOP Limit'') from being accepted by the System. LOP shall apply to all Quotes and Orders, including any modified Orders.\5\ LOP would not apply to Market Orders, Market Maker Peg Orders \6\ or Intermarket Sweep Orders (ISO).\7\ A Market Maker Peg Order is a passive order type which will not otherwise remove liquidity from the Order Book. This order type was designed to assist Market Makers with meeting their quoting obligations. Market Makers have a diverse business model as compared with other market participants. Excluding the Market Maker Peg Order from the LOP will assist Market Makers in meeting their quoting obligations. The Exchange believes that because Market Makers have other risk protections in place to prevent them from quoting outside of their financial means, the risk level for erroneous trades is not the same as with other market participants. Market Makers have more sophisticated infrastructures than other market participants and are able to manage their risk, particularly with quoting, utilizing other tools which may not be available to other market participants. An ISO is immediately executable within BX against orders against which they are marketable. The ISO designation on an order presumes that the market participant has satisfied their obligation to all protected quotes up to the limit of the ISO. --------------------------------------------------------------------------- \4\ For example, LOP may cause a greater number of orders to be rejected in a very volatile market. In the event that the Exchange were to disable LOP in a particular symbol temporarily, the Exchange would immediately notify market participants by sending an alert via an Equities Trader Alert. The Exchange would enable LOP in that symbol as soon as is reasonably practicable and send an updated alert notifying participants that LOP was enabled. \5\ If an Order is modified, LOP will review the order anew and, if LOP is triggered, such modification will not take effect and the original order will be rejected. \6\ A ``Market Maker Peg Order'' is an Order Type designed to allow a Market Maker to maintain a continuous two-sided quotation at a displayed price that is compliant with the quotation requirements for Market Makers set forth in Rule 4613(a)(2). The displayed price of the Market Maker Peg Order is set with reference to a ``Reference Price'' in order to keep the displayed price of the Market Maker Peg Order within a bounded price range. A Market Maker Peg Order may be entered through RASH or FIX only. A Market Maker Peg Order must be entered with a limit price beyond which the Order may not be priced. The Reference Price for a Market Maker Peg Order to buy (sell) is the then-current National Best Bid (National Best Offer), or if no such National Best Bid or National Best Offer, the most recent reported last-sale eligible trade from the responsible single plan processor for that day, or if none, the previous closing price of the security as adjusted to reflect any corporate actions (e.g., dividends or stock splits) in the security. See BX 4702(b)(7). \7\ An Intermarket Sweep or ISO Order, which is an Order that is immediately executable within BX against Orders against which they are marketable, is not subject to LOP. See BX Rule 6951(g). --------------------------------------------------------------------------- LOP would be operational each trading day. LOP would not be operational during trading halts and pauses. Also, LOP would not apply in the event that there is no established LOP Reference Price.\8\ The LOP Reference Price shall be the current National Best Bid or Best Offer (NBBO), the bid for sell orders and the offer for buy orders. --------------------------------------------------------------------------- \8\ For example, if there is a one-sided quote or if the LOP Reference Price is less than the greater of 10% or $0.50. --------------------------------------------------------------------------- The Exchange proposes to not accept incoming Limit Orders that exceed the LOP Reference Threshold. Limit Orders will not be accepted if the price of the Limit Order is greater than the LOP Reference Threshold for a buy Limit Order. Limit Orders will not be accepted if the price of the Limit Order is less than the LOP Reference Threshold for a sell Limit Order. The LOP Reference Threshold for buy orders will be the LOP Reference Price (offer) plus the applicable percentage specified [sic] in the LOP Limit. The LOP Reference Threshold for sell orders will be the LOP Reference Price (bid) minus the applicable percentage specified [sic] in the LOP Limit. The LOP Limit shall be the greater of 10% of the LOP Reference Price or $0.50 for all securities across all trading sessions. The LOP Reference Price shall be the current National Best Bid or Best Offer (NBBO), the bid for sell orders and the offer for buy orders. The Exchange also notes that LOP will be applicable on all protocols.\9\ The LOP feature will be mandatory for all BX members. The Exchange proposes to implement this rule within ninety (90) days of the approval of this proposed rule change. The Exchange will issue an Equities Trader Alert in advance to inform market participants of such implementation date. --------------------------------------------------------------------------- \9\ BX maintains several communications protocols for members to use in entering Orders and sending other messages to BX, such as: OUCH, RASH, FLITE and FIX. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \10\ in general, and furthers the objectives of Section 6(b)(5) of the Act \11\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest, by mitigating risks to market participants of human error in entering Limit Orders at clearly unintended prices. The proposals are appropriate and reasonable, because they offer protections for Limit Orders which should encourage price continuity and, in turn, protect investors and the public interest by reducing executions occurring at dislocated prices. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The proposed LOP feature would assist with the maintenance of fair and orderly markets by mitigating the risks associated with errors resulting in executions at prices that are away from the Best Bid or Offer and potentially erroneous. Further the proposal protects investors from potentially receiving [[Page 45322]] executions away from the prevailing prices at any given time. The Exchange proposes LOP to avoid a series of improperly priced aggressive orders transacting in the Order Book. The LOP Limit is appropriate because it seeks to capture improperly priced Limit Orders and reject them to reduce the risk of, and to potentially prevent, the automatic execution of Orders at prices that may be considered clearly erroneous. The System will only execute Limit Orders priced within the LOP Limit. The proposed limit of greater than 10% or $0.50 is a reasonable measure to ensure prices remain within the reasonable limits. This protection will bolster the normal resilience and market behavior that persistently produces robust reference prices. This feature should create a level of protection that prevents the Limit Orders from entering the Order Book outside of an acceptable range for the Limit Order to execute. The LOP will reduce the negative impacts of sudden, unanticipated volatility, and serve to preserve an orderly market in a transparent and uniform manner, increase overall market confidence, and promote fair and orderly markets and the protection of investors. This feature is not optional and is applicable to all members submitting Limit Orders. 4. Self-Regulatory Organization's Statement on Burden on Competition [sic] The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The LOP feature will provide market participants with additional price protection from anomalous executions. This feature is not optional and is applicable to all members submitting Limit Orders. Thus, the Exchange does not believe the proposal creates any significant impact on competition. This type of risk protection is in place today for BX Options Participants.\12\ Offering this protection to the BX Market Center will not impose any undue burden on intra-market competition, rather, it would permit equities and options members to be protected in a similar manner from erroneous executions. [sic] --------------------------------------------------------------------------- \12\ See BX Rules at Chapter VI, Section 6(c) and Section 18. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The LOP feature will provide market participants with additional price protection from anomalous executions. This feature is not optional and is applicable to all members submitting Limit Orders. Thus, the Exchange does not believe the proposal creates any significant impact on competition. This type of risk protection is in place today for BX Options Participants.\13\ Offering this protection to the BX Market Center will not impose any undue burden on intra-market competition, rather, it would permit equities and options members to be protected in a similar manner from erroneous executions. --------------------------------------------------------------------------- \13\ See BX Rules at Chapter VI, Section 6(c) and Section 18. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2016-037 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2016-037. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BX-2016-037 and should be submitted on or before August 3, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-16485 Filed 7-12-16; 8:45 am] BILLING CODE 8011-01-P
![45320 Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices
Because the Plan supports further At any time within 60 days of the filing also will be available for
examination and analysis on the impact filing of the proposed rule change, the inspection and copying at the principal
of tick sizes on the trading and liquidity Commission summarily may office of the Exchange. All comments
of the securities of small capitalization temporarily suspend such rule change if received will be posted without change;
companies, and the Commission it appears to the Commission that such the Commission does not edit personal
believes that altering tick sizes could action is: (i) Necessary or appropriate in identifying information from
result in significant market-wide the public interest; (ii) for the protection submissions. You should submit only
benefits and improvements to liquidity of investors; or (iii) otherwise in information that you wish to make
and capital formation, adopting rules furtherance of the purposes of the Act. available publicly. All submissions
that enforce compliance by its members If the Commission takes such action, the
should refer to File Number SR–
with the provisions of the Plan would Commission shall institute proceedings
NASDAQ–2016–093, and should be
help promote liquidity in the to determine whether the proposed rule
should be approved or disapproved. submitted on or before August 3, 2016.
marketplace and perfect the mechanism
of a free and open market and national For the Commission, by the Division of
IV. Solicitation of Comments Trading and Markets, pursuant to delegated
market system.
Interested persons are invited to authority.44
B. Self-Regulatory Organization’s submit written data, views, and Brent J. Fields,
Statement on Burden on Competition arguments concerning the foregoing,
Secretary.
The Exchange does not believe that including whether the proposed rule
[FR Doc. 2016–16493 Filed 7–12–16; 8:45 am]
the proposed rule change will impose change is consistent with the Act.
any burden on competition that is not Comments may be submitted by any of BILLING CODE 8011–01–P
necessary or appropriate in furtherance the following methods:
of the purposes of the Act. The Electronic Comments SECURITIES AND EXCHANGE
proposed changes are being made to
establish, maintain, and enforce written • Use the Commission’s Internet COMMISSION
policies and procedures that are comment form (http://www.sec.gov/
reasonably designed to comply with the rules/sro.shtml); or [Release No. 34–78244; File No. SR–BX–
• Send an email to rule-comments@ 2016–037)
trading and quoting requirements
sec.gov. Please include File Number SR–
specified in the Plan, of which other
NASDAQ–2016–093 on the subject line. Self-Regulatory Organizations;
equities exchanges are also Participants.
Other competing national securities Paper Comments NASDAQ BX, Inc.; Notice of Filing of
exchanges are subject to the same Proposed Rule Change To Adopt Limit
• Send paper comments in triplicate
trading and quoting requirements Order Protection
to Secretary, Securities and Exchange
specified in the Plan. Therefore, the Commission, 100 F Street NE., July 7, 2016.
proposed changes would not impose Washington, DC 20549–1090.
any burden on competition, while Pursuant to Section 19(b)(1) of the
All submissions should refer to File
providing certainty of treatment and Securities Exchange Act of 1934
Number SR–NASDAQ–2016–093. This
execution of trading interests on the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
file number should be included on the
Exchange to market participants in NMS subject line if email is used. To help the notice is hereby given that on June 24,
Stocks that are acting in compliance Commission process and review your 2016, NASDAQ BX, Inc. (‘‘BX’’ or
with the requirements specified in the comments more efficiently, please use ‘‘Exchange’’) filed with the Securities
Plan. only one method. The Commission will and Exchange Commission (‘‘SEC’’ or
C. Self-Regulatory Organization’s post all comments on the Commission’s ‘‘Commission’’) the proposed rule
Statement on Comments on the Internet Web site (http://www.sec.gov/ change as described in Items I and II
Proposed Rule Change Received From rules/sro.shtml). Copies of the below, which Items have been prepared
Members, Participants, or Others submission, all subsequent by the Exchange. The Commission is
amendments, all written statements publishing this notice to solicit
No written comments were either comments on the proposed rule change
with respect to the proposed rule
solicited or received.
change that are filed with the from interested persons.
III. Date of Effectiveness of the Commission, and all written
Proposed Rule Change and Timing for I. Self-Regulatory Organization’s
communications relating to the
Commission Action proposed rule change between the Statement of the Terms of Substance of
Commission and any person, other than the Proposed Rule Change
Because the foregoing proposed rule
change does not: (i) Significantly affect those that may be withheld from the The Exchange proposes to amend BX
the protection of investors or the public public in accordance with the Rule 4757, entitled ‘‘Book Processing’’
interest; (ii) impose any significant provisions of 5 U.S.C. 552, will be to adopt a Limit Order Protection or
burden on competition; and (iii) become available for Web site viewing and
‘‘LOP’’ for members accessing the BX.
operative for 30 days from the date on printing in the Commission’s Public
Reference Room, 100 F Street NE., The text of the proposed rule change
which it was filed, or such shorter time
Washington, DC 20549, on official is available on the Exchange’s Web site
as the Commission may designate, it has
business days between the hours of at http://nasdaqbx.cchwallstreet.com, at
jstallworth on DSK7TPTVN1PROD with NOTICES
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 42 and 10:00 a.m. and 3:00 p.m. Copies of the the principal office of the Exchange, and
subparagraph (f)(6) of Rule 19b–4 at the Commission’s Public Reference
thereunder.43 the Commission written notice of its intent to file Room.
the proposed rule change at least five business days
prior to the date of filing of the proposed rule 44 17
42 15 U.S.C. 78s(b)(3)(a)(iii). change, or such shorter time as designated by the CFR 200.30–3(a)(12).
43 17 1 15 U.S.C. 78s(b)(1).
CFR 240.19b–4(f)(6). In addition, Rule 19b– Commission. The Exchange has satisfied this
4(f)(6) requires a self-regulatory organization to give requirement. 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 15:08 Jul 12, 2016 Jkt 238001 PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 E:\FR\FM\13JYN1.SGM 13JYN1](https://thefederalregister.org/doc/81_FR_45454/page/1.svg)
![Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices 45321
II. Self-Regulatory Organization’s Orders, Market Maker Peg Orders 6 or LOP Reference Threshold. Limit Orders
Statement of the Purpose of, and Intermarket Sweep Orders (ISO).7 A will not be accepted if the price of the
Statutory Basis for, the Proposed Rule Market Maker Peg Order is a passive Limit Order is greater than the LOP
Change order type which will not otherwise Reference Threshold for a buy Limit
In its filing with the Commission, the remove liquidity from the Order Book. Order. Limit Orders will not be accepted
Exchange included statements This order type was designed to assist if the price of the Limit Order is less
concerning the purpose of and basis for Market Makers with meeting their than the LOP Reference Threshold for a
the proposed rule change and discussed quoting obligations. Market Makers have sell Limit Order. The LOP Reference
any comments it received on the a diverse business model as compared Threshold for buy orders will be the
proposed rule change. The text of these with other market participants. LOP Reference Price (offer) plus the
statements may be examined at the Excluding the Market Maker Peg Order applicable percentage specified [sic] in
places specified in Item IV below. The from the LOP will assist Market Makers the LOP Limit. The LOP Reference
Exchange has prepared summaries, set in meeting their quoting obligations. Threshold for sell orders will be the
forth in sections A, B, and C below, of The Exchange believes that because LOP Reference Price (bid) minus the
the most significant aspects of such Market Makers have other risk applicable percentage specified [sic] in
statements. protections in place to prevent them the LOP Limit. The LOP Limit shall be
from quoting outside of their financial the greater of 10% of the LOP Reference
A. Self-Regulatory Organization’s means, the risk level for erroneous Price or $0.50 for all securities across all
Statement of the Purpose of, and trades is not the same as with other trading sessions. The LOP Reference
Statutory Basis for, the Proposed Rule market participants. Market Makers Price shall be the current National Best
Change have more sophisticated infrastructures Bid or Best Offer (NBBO), the bid for
1. Purpose than other market participants and are sell orders and the offer for buy orders.
able to manage their risk, particularly The Exchange also notes that LOP
The Exchange proposes to adopt a with quoting, utilizing other tools which will be applicable on all protocols.9 The
new mechanism to protect against may not be available to other market LOP feature will be mandatory for all
erroneous Limit Orders which are participants. An ISO is immediately BX members. The Exchange proposes to
entered into BX. Specifically, this new executable within BX against orders implement this rule within ninety (90)
feature addresses risks to market against which they are marketable. The days of the approval of this proposed
participants of human error in entering ISO designation on an order presumes rule change. The Exchange will issue an
Limit Orders at unintended prices. LOP that the market participant has satisfied Equities Trader Alert in advance to
would prevent certain Limit Orders their obligation to all protected quotes inform market participants of such
from executing or being placed on the implementation date.
up to the limit of the ISO.
Order Book at prices outside pre-set LOP would be operational each
standard limits. The System would 2. Statutory Basis
trading day. LOP would not be
reject those Limit Orders, rather than operational during trading halts and The Exchange believes that its
executing them automatically. The pauses. Also, LOP would not apply in proposal is consistent with Section 6(b)
proposed LOP feature is similar to a risk the event that there is no established of the Act 10 in general, and furthers the
feature which exists today on BX 3 and LOP Reference Price.8 The LOP objectives of Section 6(b)(5) of the Act 11
is available for Options Participants. Reference Price shall be the current in particular, in that it is designed to
The Exchange proposes to adopt a promote just and equitable principles of
National Best Bid or Best Offer (NBBO),
new feature, LOP for Limit Orders, trade, to remove impediments to and
the bid for sell orders and the offer for
which would reject Limit Orders back to perfect the mechanism of a free and
the member when the order exceeds buy orders.
The Exchange proposes to not accept open market and a national market
certain defined logic. The Exchange system, and, in general to protect
incoming Limit Orders that exceed the
intends to apply LOP system wide. The investors and the public interest, by
Exchange reserves the ability to 6 A ‘‘Market Maker Peg Order’’ is an Order Type mitigating risks to market participants of
temporarily disable LOP for certain designed to allow a Market Maker to maintain a human error in entering Limit Orders at
securities in the event of extraordinary continuous two-sided quotation at a displayed price clearly unintended prices. The
market conditions in a certain symbol.4 that is compliant with the quotation requirements proposals are appropriate and
Specifically, the LOP feature would for Market Makers set forth in Rule 4613(a)(2). The
displayed price of the Market Maker Peg Order is reasonable, because they offer
prevent certain Limit Orders at prices set with reference to a ‘‘Reference Price’’ in order protections for Limit Orders which
outside of pre-set standard limits (‘‘LOP to keep the displayed price of the Market Maker Peg should encourage price continuity and,
Limit’’) from being accepted by the Order within a bounded price range. A Market in turn, protect investors and the public
System. LOP shall apply to all Quotes Maker Peg Order may be entered through RASH or
FIX only. A Market Maker Peg Order must be
interest by reducing executions
and Orders, including any modified entered with a limit price beyond which the Order occurring at dislocated prices.
Orders.5 LOP would not apply to Market may not be priced. The Reference Price for a Market The proposed LOP feature would
Maker Peg Order to buy (sell) is the then-current assist with the maintenance of fair and
3 See BX Rules at Chapter VI, Section 6(c) and National Best Bid (National Best Offer), or if no orderly markets by mitigating the risks
Section 18. such National Best Bid or National Best Offer, the
4 For example, LOP may cause a greater number most recent reported last-sale eligible trade from the associated with errors resulting in
of orders to be rejected in a very volatile market. responsible single plan processor for that day, or if executions at prices that are away from
In the event that the Exchange were to disable LOP none, the previous closing price of the security as the Best Bid or Offer and potentially
in a particular symbol temporarily, the Exchange adjusted to reflect any corporate actions (e.g., erroneous. Further the proposal protects
jstallworth on DSK7TPTVN1PROD with NOTICES
would immediately notify market participants by dividends or stock splits) in the security. See BX
4702(b)(7). investors from potentially receiving
sending an alert via an Equities Trader Alert. The
7 An Intermarket Sweep or ISO Order, which is
Exchange would enable LOP in that symbol as soon
9 BX maintains several communications protocols
as is reasonably practicable and send an updated an Order that is immediately executable within BX
alert notifying participants that LOP was enabled. against Orders against which they are marketable, for members to use in entering Orders and sending
5 If an Order is modified, LOP will review the is not subject to LOP. See BX Rule 6951(g). other messages to BX, such as: OUCH, RASH, FLITE
order anew and, if LOP is triggered, such 8 For example, if there is a one-sided quote or if and FIX.
10 15 U.S.C. 78f(b).
modification will not take effect and the original the LOP Reference Price is less than the greater of
order will be rejected. 10% or $0.50. 11 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014 15:08 Jul 12, 2016 Jkt 238001 PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 E:\FR\FM\13JYN1.SGM 13JYN1](https://thefederalregister.org/doc/81_FR_45454/page/2.svg)
![45322 Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices
executions away from the prevailing necessary or appropriate in furtherance All submissions should refer to File
prices at any given time. The Exchange of the purposes of the Act. The LOP Number SR–BX–2016–037. This file
proposes LOP to avoid a series of feature will provide market participants number should be included on the
improperly priced aggressive orders with additional price protection from subject line if email is used. To help the
transacting in the Order Book. The LOP anomalous executions. This feature is Commission process and review your
Limit is appropriate because it seeks to not optional and is applicable to all comments more efficiently, please use
capture improperly priced Limit Orders members submitting Limit Orders. only one method. The Commission will
and reject them to reduce the risk of, Thus, the Exchange does not believe the post all comments on the Commission’s
and to potentially prevent, the proposal creates any significant impact Internet Web site (http://www.sec.gov/
automatic execution of Orders at prices on competition. This type of risk rules/sro.shtml). Copies of the
that may be considered clearly protection is in place today for BX submission, all subsequent
erroneous. The System will only Options Participants.13 Offering this amendments, all written statements
execute Limit Orders priced within the protection to the BX Market Center will
LOP Limit. The proposed limit of with respect to the proposed rule
not impose any undue burden on intra-
greater than 10% or $0.50 is a change that are filed with the
market competition, rather, it would
reasonable measure to ensure prices permit equities and options members to Commission, and all written
remain within the reasonable limits. be protected in a similar manner from communications relating to the
This protection will bolster the normal erroneous executions. proposed rule change between the
resilience and market behavior that Commission and any person, other than
persistently produces robust reference C. Self-Regulatory Organization’s those that may be withheld from the
prices. This feature should create a level Statement on Comments on the public in accordance with the
of protection that prevents the Limit Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be
Orders from entering the Order Book Members, Participants, or Others available for Web site viewing and
outside of an acceptable range for the No written comments were either printing in the Commission’s Public
Limit Order to execute. solicited or received. Reference Room, 100 F Street NE.,
The LOP will reduce the negative Washington, DC 20549, on official
impacts of sudden, unanticipated III. Date of Effectiveness of the
Proposed Rule Change and Timing for business days between the hours of
volatility, and serve to preserve an 10:00 a.m. and 3:00 p.m. Copies of the
orderly market in a transparent and Commission Action
filing also will be available for
uniform manner, increase overall Within 45 days of the date of inspection and copying at the principal
market confidence, and promote fair publication of this notice in the Federal office of the Exchange. All comments
and orderly markets and the protection Register or within such longer period received will be posted without change;
of investors. This feature is not optional up to 90 days (i) as the Commission may
the Commission does not edit personal
and is applicable to all members designate if it finds such longer period
identifying information from
submitting Limit Orders. to be appropriate and publishes its
submissions. You should submit only
reasons for so finding or (ii) as to which
4. Self-Regulatory Organization’s information that you wish to make
the self-regulatory organization
Statement on Burden on Competition available publicly. All submissions
consents, the Commission will:
[sic] should refer to File Number SR–BX–
(A) By order approve or disapprove
The Exchange does not believe that such proposed rule change, or 2016–037 and should be submitted on
the proposed rule change will impose (B) institute proceedings to determine or before August 3, 2016.
any burden on competition not whether the proposed rule change For the Commission, by the Division of
necessary or appropriate in furtherance should be disapproved. Trading and Markets, pursuant to delegated
of the purposes of the Act. The LOP authority.14
feature will provide market participants IV. Solicitation of Comments
Brent J. Fields,
with additional price protection from Interested persons are invited to
Secretary.
anomalous executions. This feature is submit written data, views, and
not optional and is applicable to all [FR Doc. 2016–16485 Filed 7–12–16; 8:45 am]
arguments concerning the foregoing,
members submitting Limit Orders. including whether the proposed rule BILLING CODE 8011–01–P
Thus, the Exchange does not believe the change is consistent with the Act.
proposal creates any significant impact Comments may be submitted by any of
on competition. This type of risk the following methods:
protection is in place today for BX
Options Participants.12 Offering this Electronic Comments
protection to the BX Market Center will • Use the Commission’s Internet
not impose any undue burden on intra- comment form (http://www.sec.gov/
market competition, rather, it would rules/sro.shtml); or
permit equities and options members to • Send an email to rule-comments@
be protected in a similar manner from sec.gov. Please include File Number SR–
erroneous executions. [sic] BX–2016–037 on the subject line.
B. Self-Regulatory Organization’s Paper Comments
jstallworth on DSK7TPTVN1PROD with NOTICES
Statement on Burden on Competition • Send paper comments in triplicate
The Exchange does not believe that to Secretary, Securities and Exchange
the proposed rule change will impose Commission, 100 F Street NE.,
any burden on competition not Washington, DC 20549–1090.
12 See BX Rules at Chapter VI, Section 6(c) and 13 See BX Rules at Chapter VI, Section 6(c) and
Section 18. Section 18. 14 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014 15:08 Jul 12, 2016 Jkt 238001 PO 00000 Frm 00049 Fmt 4703 Sfmt 9990 E:\FR\FM\13JYN1.SGM 13JYN1](https://thefederalregister.org/doc/81_FR_45454/page/3.svg)
Document Created: 2016-07-13 01:43:49
Document Modified: 2016-07-13 01:43:49
| 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 45320 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR