81_FR_45468 81 FR 45334 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend PRISM Pilot Program Through January 18, 2017

81 FR 45334 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend PRISM Pilot Program Through January 18, 2017

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 134 (July 13, 2016)

Page Range45334-45336
FR Document2016-16491

Federal Register, Volume 81 Issue 134 (Wednesday, July 13, 2016)
[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Notices]
[Pages 45334-45336]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16491]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78249; File No. SR-BX-2016-038]


Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend PRISM 
Pilot Program Through January 18, 2017

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 29, 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

[[Page 45335]]

comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BX rules at Chapter VI, Section 9, 
concerning a price-improvement mechanism, ``PRISM'' to extend, through 
January 18, 2017, a pilot program (the ``pilot'') concerning (i) the 
early conclusion of the PRISM Auction (as described below); (ii) an 
unrelated market or marketable limit order (against the BX BBO) on the 
opposite side of the market from the PRISM Order received during the 
Auction will not cause the Auction to end early and will execute 
against interest outside of the Auction; and (iii) no minimum size 
requirement of orders. The current pilot is scheduled to expire July 
18, 2016.\3\
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    \3\ See Securities Exchange Release No. 76301 (October 29, 
2015), 80 FR 68347 (November 4, 2015) (SR-BX-2015-032).
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    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.

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 purpose of this proposed rule change is to extend certain 
pilots within Chapter VI, Section 9, entitled ``Price Improvement 
Auction (``PRISM''), through January 18, 2017.
Background
    The Exchange adopted PRISM in November 2015 as a price-improvement 
mechanism on the Exchange.\4\ This mechanism permits a Participant (an 
``Initiating Participant'') to electronically submit for execution an 
order it represents as agent on behalf of a Public Customer,\5\ 
Professional customer, broker dealer, or any other entity (``PRISM 
Order'') against principal interest or against any other order it 
represents as agent (an ``Initiating Order''), provided it submits the 
PRISM Order for electronic execution into the PRISM Auction 
(``Auction'') pursuant to the Chapter VI, Section 9.\6\ All options 
traded on the Exchange are eligible for PRISM.
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    \4\ Id.
    \5\ A Public Customer order does not include a Professional 
order, and therefore a Professional would not be entitled to Public 
Customer priority as described herein. A Public Customer means a 
person that is not a broker or dealer in securities. See BX Options 
Rules at Chapter I, Section 1(a)(50). A Public Customer order does 
not include a Professional order for purposes of BX Rule at Chapter 
VI, Section 10(1)(C)(1)(a), which governs allocation priority. A 
``Professional'' means any person or entity that (i) is not a broker 
or dealer in securities, and (ii) places more than 390 orders in 
listed options per day on average during a calendar month for its 
own beneficial account(s). A Participant or a Public Customer may, 
without limitation, be a Professional. All Professional orders shall 
be appropriately marked by Participants. See BX Rules at Chapter I, 
Section 1(a)(49).
    \6\ BX will only conduct an auction for Simple Orders.
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Pilot Program
    Three components of PRISM were approved by the Commission on a 
pilot basis: (1) The early conclusion of the PRISM Auction; \7\ (2) an 
unrelated market or marketable limit order (against the BX BBO) on the 
opposite side of the market from the PRISM Order received during the 
Auction will not cause the Auction to end early and will execute 
against interest outside of the Auction; \8\ and (3) no minimum size 
requirement of orders. The Exchange has provided the following 
additional information on a monthly basis.\9\ The pilots were approved 
for a pilot period expiring on July 18, 2016.\10\
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    \7\ See Chapter VI, Section 9(ii)(B)(4).
    \8\ See Chapter VI, Section 9(ii)(D).
    \9\ See Chapter VI, Section 9(vii).
    \10\ See note 3 above.
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    The Exchange notes that during the pilot period it has been 
required to submit, and has been submitting, certain data periodically 
as required by the Commission, to provide supporting evidence that, 
among other things, there is meaningful competition for all size orders 
and that there is an active and liquid market functioning on the 
Exchange outside of the Auction mechanism. Specifically, the Exchange 
has submitted the following data as specified in its approval order: 
\11\
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    \11\ Id.
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    (1) The number of contracts (of orders of 50 contracts or greater) 
entered into the PRISM;
    (2) The number of contracts (of orders of fewer than 50 contracts) 
entered into the PRISM;
    (3) The number of orders of 50 contracts or greater entered into 
the PRISM; and
    (4) The number of orders of fewer than 50 contracts entered into 
the PRISM.
    The Exchange will continue to provide such data. The Exchange 
believes that, because the pilot has been operating for a relatively 
short amount of time, the proposed extension should afford the 
Commission additional time to evaluate the pilot. The Exchange proposes 
to extend the pilot through January 18, 2017.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\12\ in general and with 
Section 6(b)(5) of the Act,\13\ in that it is designed to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and 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; and is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers, or to regulate by virtue of any authority conferred by the Act 
matters not related to the purposes of the Act or the administration of 
the Exchange.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is also 
consistent with Section 6(b)(8) of the Act \14\ in that it does not 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \14\ 15 U.S.C. 78f(b)(8).
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    Specifically, the Exchange believes that PRISM, including the rules 
to which the pilot applies, results in increased liquidity available at 
improved prices, with competitive final pricing out of the Initiating 
Participant's complete control. The Exchange believes that PRISM 
promotes and fosters competition and affords the opportunity for price 
improvement to more options contracts. The extension proposal allows 
additional time for the Commission to evaluate the pilot.

[[Page 45336]]

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 proposal extends existing 
pilots that apply to all Exchange members, and enables the Exchange to 
be competitive in respect of other option exchanges that have similar 
programs.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(a).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requested 
that the Commission waive the 30-day operative delay. The Exchange 
stated that the proposed rule change does not involve any substantive 
changes to the Exchange's Rules and only seeks to extend the previously 
approved PRISM pilot. The Exchange also stated that the extension will 
ensure fair competition among exchanges by allowing the Exchange to 
continue with this pilot similar to other options exchanges that 
operate auctions. Finally, the Exchange stated that the waiver is 
consistent with the protection of investors and the public interest 
because it will permit the PRISM pilot to continue without interruption 
and will allow the Exchange to gather more information in connection 
with the pilot.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the PRISM pilot to continue uninterrupted, thereby 
avoiding any potential investor confusion that could result from a 
temporary interruption in the pilot. Therefore, the Commission 
designates the proposed rule change to be operative on July 18, 
2016.\19\
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    \19\ For purposes only of waiving the operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BX-2016-038 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-2016-038. 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-2016-038 and should be 
submitted on or before August 3, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-16491 Filed 7-12-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                  45334                        Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices

                                                  open market and a national market                        proposal creates any significant impact                 Internet Web site (http://www.sec.gov/
                                                  system, and, in general to protect                       on competition. This type of risk                       rules/sro.shtml). Copies of the
                                                  investors and the public interest, by                    protection is in place today for NOM                    submission, all subsequent
                                                  mitigating risks to market participants of               Options Participants.12 Offering this                   amendments, all written statements
                                                  human error in entering Limit Orders at                  protection to the Nasdaq Market Center                  with respect to the proposed rule
                                                  clearly unintended prices. The                           will not impose any undue burden on                     change that are filed with the
                                                  proposals are appropriate and                            intra-market competition, rather, it                    Commission, and all written
                                                  reasonable, because they offer                           would permit equities and options                       communications relating to the
                                                  protections for Limit Orders which                       members to be protected in a similar                    proposed rule change between the
                                                  should encourage price continuity and,                   manner from erroneous executions.                       Commission and any person, other than
                                                  in turn, protect investors and the public                                                                        those that may be withheld from the
                                                  interest by reducing executions                          C. Self-Regulatory Organization’s
                                                                                                                                                                   public in accordance with the
                                                  occurring at dislocated prices.                          Statement on Comments on the
                                                                                                                                                                   provisions of 5 U.S.C. 552, will be
                                                     The proposed LOP feature would                        Proposed Rule Change Received From
                                                                                                                                                                   available for Web site viewing and
                                                  assist with the maintenance of fair and                  Members, Participants, or Others
                                                                                                                                                                   printing in the Commission’s Public
                                                  orderly markets by mitigating the risks                    No written comments were either                       Reference Room, 100 F Street NE.,
                                                  associated with errors resulting in                      solicited or received.                                  Washington, DC 20549, on official
                                                  executions at prices that are away from                                                                          business days between the hours of
                                                  the Best Bid or Offer and potentially                    III. Date of Effectiveness of the
                                                                                                           Proposed Rule Change and Timing for                     10:00 a.m. and 3:00 p.m. Copies of the
                                                  erroneous. Further the proposal protects                                                                         filing also will be available for
                                                  investors from potentially receiving                     Commission Action
                                                                                                                                                                   inspection and copying at the principal
                                                  executions away from the prevailing                        Within 45 days of the date of                         office of the Exchange. All comments
                                                  prices at any given time. The Exchange                   publication of this notice in the Federal               received will be posted without change;
                                                  proposes LOP to avoid a series of                        Register or within such longer period                   the Commission does not edit personal
                                                  improperly priced aggressive orders                      up to 90 days (i) as the Commission may                 identifying information from
                                                  transacting in the Order Book. The LOP                   designate if it finds such longer period                submissions. You should submit only
                                                  Limit is appropriate because it seeks to                 to be appropriate and publishes its                     information that you wish to make
                                                  capture improperly priced Limit Orders                   reasons for so finding or (ii) as to which              available publicly. All submissions
                                                  and reject them to reduce the risk of,                   the self-regulatory organization                        should refer to File Number SR–
                                                  and to potentially prevent, the                          consents, the Commission will:                          NASDAQ–2016–067 and should be
                                                  automatic execution of Orders at prices                    (A) By order approve or disapprove                    submitted on or before August 3, 2016.
                                                  that may be considered clearly                           such proposed rule change, or
                                                  erroneous. The System will only                            (B) institute proceedings to determine                  For the Commission, by the Division of
                                                  execute Limit Orders priced within the                                                                           Trading and Markets, pursuant to delegated
                                                                                                           whether the proposed rule change                        authority.13
                                                  LOP Limit. The Exchange’s proposed                       should be disapproved.
                                                  LOP Limit is a reasonable measure to                                                                             Brent J. Fields,
                                                  ensure prices remain within the                          IV. Solicitation of Comments                            Secretary.
                                                  reasonable limits. This protection will                    Interested persons are invited to                     [FR Doc. 2016–16487 Filed 7–12–16; 8:45 am]
                                                  bolster the normal resilience and market                 submit written data, views, and                         BILLING CODE 8011–01–P
                                                  behavior that persistently produces                      arguments concerning the foregoing,
                                                  robust reference prices. This feature                    including whether the proposed rule
                                                  should create a level of protection that                 change is consistent with the Act.                      SECURITIES AND EXCHANGE
                                                  prevents the Limit Orders from entering                  Comments may be submitted by any of                     COMMISSION
                                                  the Order Book outside of an acceptable                  the following methods:                                  [Release No. 34–78249; File No. SR–BX–
                                                  range for the Limit Order to execute.                                                                            2016–038]
                                                     The LOP will reduce the negative                      Electronic Comments
                                                  impacts of sudden, unanticipated                           • Use the Commission’s Internet                       Self-Regulatory Organizations;
                                                  volatility, and serve to preserve an                     comment form (http://www.sec.gov/                       NASDAQ BX, Inc.; Notice of Filing and
                                                  orderly market in a transparent and                      rules/sro.shtml); or                                    Immediate Effectiveness of Proposed
                                                  uniform manner, increase overall                           • Send an email to rule-comments@                     Rule Change To Extend PRISM Pilot
                                                  market confidence, and promote fair                      sec.gov. Please include File Number SR–                 Program Through January 18, 2017
                                                  and orderly markets and the protection                   NASDAQ–2016–067 on the subject line.
                                                  of investors. This feature is not optional                                                                       July 7, 2016.
                                                                                                           Paper Comments                                             Pursuant to Section 19(b)(1) of the
                                                  and is applicable to all members
                                                  submitting Limit Orders.                                    • Send paper comments in triplicate                  Securities Exchange Act of 1934
                                                                                                           to Secretary, Securities and Exchange                   (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                  B. Self-Regulatory Organization’s                        Commission, 100 F Street NE.,                           notice is hereby given that on June 29,
                                                  Statement on Burden on Competition                       Washington, DC 20549–1090.                              2016, NASDAQ BX, Inc. (‘‘BX’’ or
                                                    The Exchange does not believe that                     All submissions should refer to File                    ‘‘Exchange’’) filed with the Securities
                                                  the proposed rule change will impose                     Number SR–NASDAQ–2016–067. This                         and Exchange Commission (‘‘SEC’’ or
                                                  any burden on competition not                            file number should be included on the                   ‘‘Commission’’) the proposed rule
                                                  necessary or appropriate in furtherance
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                                                                           subject line if email is used. To help the              change as described in Items I and II
                                                  of the purposes of the Act. The LOP                      Commission process and review your                      below, which Items have been prepared
                                                  feature will provide market participants                 comments more efficiently, please use                   by the Exchange. The Commission is
                                                  with additional price protection from                    only one method. The Commission will                    publishing this notice to solicit
                                                  anomalous executions. This feature is                    post all comments on the Commission’s
                                                  not optional and is applicable to all                                                                              13 17 CFR 200.30–3(a)(12).
                                                  members submitting Limit Orders.                              12 See
                                                                                                                   NOM Rules at Chapter VI, Section 6(c) and         1 15 U.S.C. 78s(b)(1).
                                                  Thus, the Exchange does not believe the                  Section 18.                                               2 17 CFR 240.19b–4.




                                             VerDate Sep<11>2014   15:08 Jul 12, 2016   Jkt 238001   PO 00000     Frm 00061   Fmt 4703   Sfmt 4703   E:\FR\FM\13JYN1.SGM     13JYN1


                                                                               Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices                                                45335

                                                  comments on the proposed rule change                     electronically submit for execution an                      (2) The number of contracts (of orders
                                                  from interested persons.                                 order it represents as agent on behalf of                of fewer than 50 contracts) entered into
                                                                                                           a Public Customer,5 Professional                         the PRISM;
                                                  I. Self-Regulatory Organization’s
                                                                                                           customer, broker dealer, or any other                       (3) The number of orders of 50
                                                  Statement of the Terms of Substance of
                                                                                                           entity (‘‘PRISM Order’’) against                         contracts or greater entered into the
                                                  the Proposed Rule Change                                 principal interest or against any other                  PRISM; and
                                                     The Exchange proposes to amend BX                     order it represents as agent (an
                                                  rules at Chapter VI, Section 9,                          ‘‘Initiating Order’’), provided it submits                  (4) The number of orders of fewer
                                                  concerning a price-improvement                           the PRISM Order for electronic                           than 50 contracts entered into the
                                                  mechanism, ‘‘PRISM’’ to extend,                          execution into the PRISM Auction                         PRISM.
                                                  through January 18, 2017, a pilot                        (‘‘Auction’’) pursuant to the Chapter VI,                   The Exchange will continue to
                                                  program (the ‘‘pilot’’) concerning (i) the               Section 9.6 All options traded on the                    provide such data. The Exchange
                                                  early conclusion of the PRISM Auction                    Exchange are eligible for PRISM.                         believes that, because the pilot has been
                                                  (as described below); (ii) an unrelated                                                                           operating for a relatively short amount
                                                                                                           Pilot Program
                                                  market or marketable limit order                                                                                  of time, the proposed extension should
                                                  (against the BX BBO) on the opposite                        Three components of PRISM were                        afford the Commission additional time
                                                  side of the market from the PRISM                        approved by the Commission on a pilot                    to evaluate the pilot. The Exchange
                                                  Order received during the Auction will                   basis: (1) The early conclusion of the                   proposes to extend the pilot through
                                                  not cause the Auction to end early and                   PRISM Auction; 7 (2) an unrelated                        January 18, 2017.
                                                  will execute against interest outside of                 market or marketable limit order
                                                  the Auction; and (iii) no minimum size                   (against the BX BBO) on the opposite                     2. Statutory Basis
                                                  requirement of orders. The current pilot                 side of the market from the PRISM
                                                  is scheduled to expire July 18, 2016.3                   Order received during the Auction will                      The Exchange believes that the
                                                     The text of the proposed rule change                  not cause the Auction to end early and                   proposed rule change is consistent with
                                                  is available on the Exchange’s Web site                  will execute against interest outside of                 the provisions of Section 6 of the Act,12
                                                  at http://nasdaqbx.cchwallstreet.com/,                   the Auction; 8 and (3) no minimum size                   in general and with Section 6(b)(5) of
                                                  at the principal office of the Exchange,                 requirement of orders. The Exchange                      the Act,13 in that it is designed to
                                                  and at the Commission’s Public                           has provided the following additional                    promote just and equitable principles of
                                                  Reference Room.                                          information on a monthly basis.9 The                     trade, to foster cooperation and
                                                                                                           pilots were approved for a pilot period                  coordination with persons engaged in
                                                  II. Self-Regulatory Organization’s                       expiring on July 18, 2016.10                             regulating, clearing, settling, processing
                                                  Statement of the Purpose of, and                            The Exchange notes that during the                    information with respect to, and
                                                  Statutory Basis for, the Proposed Rule                   pilot period it has been required to                     facilitating transactions in securities, to
                                                  Change                                                   submit, and has been submitting, certain                 remove impediments to and perfect the
                                                     In its filing with the Commission, the                data periodically as required by the                     mechanism of a free and open market
                                                  Exchange included statements                             Commission, to provide supporting                        and a national market system, and, in
                                                  concerning the purpose of and basis for                  evidence that, among other things, there                 general, to protect investors and the
                                                  the proposed rule change and discussed                   is meaningful competition for all size                   public interest; and is not designed to
                                                  any comments it received on the                          orders and that there is an active and                   permit unfair discrimination between
                                                  proposed rule change. The text of these                  liquid market functioning on the                         customers, issuers, brokers, or dealers,
                                                  statements may be examined at the                        Exchange outside of the Auction                          or to regulate by virtue of any authority
                                                  places specified in Item IV below. The                   mechanism. Specifically, the Exchange                    conferred by the Act matters not related
                                                  Exchange has prepared summaries, set                     has submitted the following data as                      to the purposes of the Act or the
                                                  forth in sections A, B, and C below, of                  specified in its approval order: 11                      administration of the Exchange.
                                                  the most significant aspects of such                        (1) The number of contracts (of orders
                                                                                                                                                                       The Exchange believes that the
                                                  statements.                                              of 50 contracts or greater) entered into
                                                                                                                                                                    proposed rule change is also consistent
                                                                                                           the PRISM;
                                                  A. Self-Regulatory Organization’s                                                                                 with Section 6(b)(8) of the Act 14 in that
                                                  Statement of the Purpose of, and                            5 A Public Customer order does not include a
                                                                                                                                                                    it does not impose any burden on
                                                  Statutory Basis for, the Proposed Rule                   Professional order, and therefore a Professional         competition not necessary or
                                                  Change                                                   would not be entitled to Public Customer priority        appropriate in furtherance of the
                                                                                                           as described herein. A Public Customer means a           purposes of the Act.
                                                  1. Purpose                                               person that is not a broker or dealer in securities.
                                                                                                           See BX Options Rules at Chapter I, Section 1(a)(50).        Specifically, the Exchange believes
                                                     The purpose of this proposed rule                     A Public Customer order does not include a               that PRISM, including the rules to
                                                  change is to extend certain pilots within                Professional order for purposes of BX Rule at            which the pilot applies, results in
                                                  Chapter VI, Section 9, entitled ‘‘Price                  Chapter VI, Section 10(1)(C)(1)(a), which governs
                                                                                                                                                                    increased liquidity available at
                                                  Improvement Auction (‘‘PRISM’’),                         allocation priority. A ‘‘Professional’’ means any
                                                                                                           person or entity that (i) is not a broker or dealer in   improved prices, with competitive final
                                                  through January 18, 2017.                                securities, and (ii) places more than 390 orders in      pricing out of the Initiating Participant’s
                                                                                                           listed options per day on average during a calendar      complete control. The Exchange
                                                  Background                                               month for its own beneficial account(s). A
                                                     The Exchange adopted PRISM in                         Participant or a Public Customer may, without            believes that PRISM promotes and
                                                  November 2015 as a price-improvement                     limitation, be a Professional. All Professional orders   fosters competition and affords the
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                  mechanism on the Exchange.4 This
                                                                                                           shall be appropriately marked by Participants. See       opportunity for price improvement to
                                                                                                           BX Rules at Chapter I, Section 1(a)(49).                 more options contracts. The extension
                                                  mechanism permits a Participant (an                         6 BX will only conduct an auction for Simple
                                                                                                                                                                    proposal allows additional time for the
                                                  ‘‘Initiating Participant’’) to                           Orders.
                                                                                                              7 See Chapter VI, Section 9(ii)(B)(4).                Commission to evaluate the pilot.
                                                    3 See Securities Exchange Release No. 76301               8 See Chapter VI, Section 9(ii)(D).
                                                                                                              9 See Chapter VI, Section 9(vii).                      12 15 U.S.C. 78f.
                                                  (October 29, 2015), 80 FR 68347 (November 4, 2015)
                                                  (SR–BX–2015–032).                                           10 See note 3 above.                                   13 15 U.S.C. 78f(b)(5).
                                                    4 Id.                                                     11 Id.                                                 14 15 U.S.C. 78f(b)(8).




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                                                  45336                          Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices

                                                  B. Self-Regulatory Organization’s                         public interest because it will permit the              proposed rule change between the
                                                  Statement on Burden on Competition                        PRISM pilot to continue without                         Commission and any person, other than
                                                    The Exchange does not believe that                      interruption and will allow the                         those that may be withheld from the
                                                  the proposed rule change will impose                      Exchange to gather more information in                  public in accordance with the
                                                  any burden on competition not                             connection with the pilot.                              provisions of 5 U.S.C. 552, will be
                                                  necessary or appropriate in furtherance                      The Commission believes that                         available for Web site viewing and
                                                  of the purposes of the Act. The proposal                  waiving the 30-day operative delay is                   printing in the Commission’s Public
                                                  extends existing pilots that apply to all                 consistent with the protection of                       Reference Room, 100 F Street NE.,
                                                  Exchange members, and enables the                         investors and the public interest, as it                Washington, DC 20549, on official
                                                  Exchange to be competitive in respect of                  will allow the PRISM pilot to continue                  business days between the hours of
                                                  other option exchanges that have similar                  uninterrupted, thereby avoiding any                     10:00 a.m. and 3:00 p.m. Copies of the
                                                  programs.                                                 potential investor confusion that could                 filing also will be available for
                                                                                                            result from a temporary interruption in                 inspection and copying at the principal
                                                  C. Self-Regulatory Organization’s                         the pilot. Therefore, the Commission                    office of the Exchange. All comments
                                                  Statement on Comments on the                              designates the proposed rule change to                  received will be posted without change;
                                                  Proposed Rule Change Received From                        be operative on July 18, 2016.19                        the Commission does not edit personal
                                                  Members, Participants, or Others                             At any time within 60 days of the                    identifying information from
                                                    No written comments were either                         filing of the proposed rule change, the                 submissions. You should submit only
                                                  solicited or received.                                    Commission summarily may                                information that you wish to make
                                                                                                            temporarily suspend such rule change if                 available publicly. All submissions
                                                  III. Date of Effectiveness of the                         it appears to the Commission that such                  should refer to File Number SR–BX–
                                                  Proposed Rule Change and Timing for                       action is necessary or appropriate in the               2016–038 and should be submitted on
                                                  Commission Action                                         public interest, for the protection of                  or before August 3, 2016.
                                                     Because the foregoing proposed rule                    investors, or otherwise in furtherance of                 For the Commission, by the Division of
                                                  change does not: (i) Significantly affect                 the purposes of the Act.                                Trading and Markets, pursuant to delegated
                                                  the protection of investors or the public                                                                         authority.20
                                                                                                            IV. Solicitation of Comments                            Brent J. Fields,
                                                  interest; (ii) impose any significant
                                                  burden on competition; and (iii) become                     Interested persons are invited to                     Secretary.
                                                  operative for 30 days from the date on                    submit written data, views, and                         [FR Doc. 2016–16491 Filed 7–12–16; 8:45 am]
                                                  which it was filed, or such shorter time                  arguments concerning the foregoing,                     BILLING CODE 8011–01–P
                                                  as the Commission may designate, it has                   including whether the proposed rule
                                                  become effective pursuant to Section                      change is consistent with the Act.
                                                  19(b)(3)(A) of the Act 15 and                             Comments may be submitted by any of                     SECURITIES AND EXCHANGE
                                                  subparagraph (f)(6) of Rule 19b–4                         the following methods:                                  COMMISSION
                                                  thereunder.16                                             Electronic Comments                                     [Release No. 34–78215A]
                                                     A proposed rule change filed under
                                                  Rule 19b–4(f)(6) 17 normally does not                       • Use the Commission’s Internet                       Corrected Order Extending a
                                                  become operative for 30 days after the                    comment form (http://www.sec.gov/                       Temporary Exemption From
                                                  date of filing. However, pursuant to                      rules/sro.shtml); or                                    Compliance With Rules 13n–1 to 13n–
                                                  Rule 19b–4(f)(6)(iii),18 the Commission                     • Send an email to rule-comments@                     12 Under the Securities Exchange Act
                                                  may designate a shorter time if such                      sec.gov. Please include File Number SR–                 of 1934
                                                  action is consistent with the protection                  BX–2016–038 on the subject line.
                                                  of investors and the public interest. The                                                                         June 30, 2016.
                                                                                                            Paper Comments
                                                  Exchange requested that the                                                                                       I. Introduction
                                                  Commission waive the 30-day operative                       • Send paper comments in triplicate
                                                  delay. The Exchange stated that the                       to Secretary, Securities and Exchange                      On March 18, 2016, under its
                                                  proposed rule change does not involve                     Commission, 100 F Street NE.,                           authority in section 36 of the Securities
                                                  any substantive changes to the                            Washington, DC 20549–1090.                              Exchange Act of 1934 (‘‘Exchange Act’’),
                                                  Exchange’s Rules and only seeks to                        All submissions should refer to File                    the Securities and Exchange
                                                  extend the previously approved PRISM                      Number SR–BX–2016–038. This file                        Commission (‘‘Commission’’) granted a
                                                  pilot. The Exchange also stated that the                  number should be included on the                        temporary exemption from compliance
                                                  extension will ensure fair competition                    subject line if email is used. To help the              with Rules 13n–1 to 13n–12 (‘‘SDR
                                                  among exchanges by allowing the                           Commission process and review your                      Rules’’) until June 30, 2016. The
                                                  Exchange to continue with this pilot                      comments more efficiently, please use                   Commission also granted an extension
                                                  similar to other options exchanges that                   only one method. The Commission will                    of the exemptions from Exchange Act
                                                  operate auctions. Finally, the Exchange                   post all comments on the Commission’s                   sections 13(n)(5)(D)(i), 13(n)(5)(F),
                                                  stated that the waiver is consistent with                 Internet Web site (http://www.sec.gov/                  13(n)(5)(G), 13(n)(5)(H), 13(n)(7)(A),
                                                  the protection of investors and the                       rules/sro.shtml). Copies of the                         13(n)(7)(B), 13(n)(7)(C) and 29(b)
                                                                                                            submission, all subsequent                              provided in the DFA Effective Date
                                                    15 15  U.S.C. 78s(b)(3)(a).                             amendments, all written statements                      Order 1 (‘‘SDR Relief’’), as described in
                                                    16 17  CFR 240.19b–4(f)(6). In addition, Rule 19b–      with respect to the proposed rule                       the Commission’s March 18, 2016 order,
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                  4(f)(6) requires a self-regulatory organization to give   change that are filed with the
                                                  the Commission written notice of its intent to file                                                                 20 17 CFR 200.30–3(a)(12).
                                                  the proposed rule change at least five business days      Commission, and all written                               1 See Temporary Exemptions and Other
                                                  prior to the date of filing of the proposed rule          communications relating to the                          Temporary Relief, Together with Information on
                                                  change, or such shorter time as designated by the                                                                 Compliance Dates for New Provisions of the
                                                  Commission. The Exchange has satisfied this                 19 For purposes only of waiving the operative         Exchange Act Applicable to Security-Based Swaps,
                                                  requirement.                                              delay, the Commission has considered the proposed       Exchange Act Release No. 64678 (June 15, 2011), 76
                                                    17 17 CFR 240.19b–4(f)(6).
                                                                                                            rule’s impact on efficiency, competition, and capital   FR 36287 (June 22, 2011) (the ‘‘DFA Effective Date
                                                    18 17 CFR 240.19b–4(f)(6)(iii).                         formation. See 15 U.S.C. 78c(f).                        Order’’).



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Document Created: 2016-07-13 01:43:40
Document Modified: 2016-07-13 01:43:40
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 45334 

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