81 FR 46739 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Detection of Loss of Connection
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 137 (July 18, 2016)
Federal Register Volume 81, Issue 137 (July 18, 2016)
| Page Range | 46739-46744 | |
| FR Document | 2016-16857 |
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)] [Notices] [Pages 46739-46744] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16857] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78298; File No. SR-BX-2016-040] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Detection of Loss of Connection July 12, 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 July 8, 2016, NASDAQ BX, Inc. (``BX'' or [[Page 46740]] ``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 Chapter VI, Section 6, entitled ``Acceptance of Quotes and Orders'' to adopt functionality which is designed to assist BX Participants in the event that they lose communication with their assigned Financial Information eXchange (``FIX'') \3\ or Specialized Quote Feed (``SQF'') \4\ Ports due to a loss of connectivity. --------------------------------------------------------------------------- \3\ FIX permits the entry of orders. \4\ SQF permits the transmission of quotes to the Exchange by a BX Options Market Makers using its Client Application. SQF Auction Responses would not be cancelled pursuant to this Chapter VI, Section 6(e) because other rules govern auction specific responses, see Chapter VI, Section 9, entitled ``Price Improvement Auction (``PRISM''). --------------------------------------------------------------------------- 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 Exchange proposes to amend Chapter VI, Section 6, entitled ``Acceptance of Quotes and Orders'' to adopt a new section ``e'' entitled ``Detection of Loss of Connection,'' a new automated process which BX proposes to adopt for its SQF \5\ and FIX Ports in the event that they lose communication with a Client Application due to a loss of connectivity. This feature is designed to protect BX Options Market Makers \6\ and other market participants from inadvertent exposure to excessive risk. --------------------------------------------------------------------------- \5\ Today, SQF and FIX have the capability to disconnect and cancel quotes and orders, respectively, for technical disconnects although there is no automated process triggered by pre-set conditions. The rule change would adopt a formalized process to automatically disconnect and cancel quotes for SQF and disconnect and cancel orders, if elected, for FIX when there is a loss of communication with the BX Participant's Client Application. \6\ The term ``BX Options Market Makers'' or ``Options Market Makers'' (herein ``BX Options Market Makers'') means an Options Participant registered with the Exchange for the purpose of making markets in options contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VII of these Rules.'' See BX Rules at Chapter I, Section 1(a)(9). --------------------------------------------------------------------------- By way of background, BX Participants currently enter quotes and orders utilizing either an SQF or FIX Port. SQF is utilized by BX Options Market Makers and FIX is utilized by all market participants. These ports are System \7\ components through which a BX Participant communicates its quotes and/or orders to the BX match engine through the BX Participant's Client Application. --------------------------------------------------------------------------- \7\ The term ``System'' shall mean the automated system for order execution and trade reporting owned and operated by BX as the BX Options market. See Chapter VI, Section 1(a). --------------------------------------------------------------------------- Under the proposed rule change, an SQF Port would be defined as the Exchange's System component through which BX Participants communicate their quotes from the BX Participant's Client Application at proposed Chapter VI, Section 6(e)(i)(B). A FIX Port would be defined as the Exchange's System component through which BX Participants communicate their orders from the BX Participant's Client Application at proposed Chapter VI, Section 6(e)(i)(C). BX Options Market Makers may submit quotes to the Exchange from one or more SQF Ports. Similarly, market participants may submit orders to the Exchange from one or more FIX Ports. The proposed cancellation feature will be mandatory for each BX Options Market Maker utilizing SQF for the removal of quotes and optional for any market participant utilizing FIX for the removal of orders. When the SQF Port detects the loss of communication with a BX Participant's Client Application because the Exchange's server does not receive a Heartbeat message \8\ for a certain period of time (a period of ``nn'' seconds), the Exchange will automatically logoff the BX Participant's affected Client Application and automatically cancel all of the BX Participant's open quotes. Quotes will be cancelled across all Client Applications that are associated with the same BX Options Market Makers ID and underlying issues. --------------------------------------------------------------------------- \8\ It is important to note that the Exchange separately sends a connectivity message to the BX Participant as evidence of connectivity. --------------------------------------------------------------------------- The Exchange proposes to define ``Client Application'' as the System component of the BX Participant through which the BX Participant communicates its quotes and orders to the Exchange at proposed Chapter VI, Section 6(e)(i)(D). The Exchange proposes to define a ``Heartbeat'' message as a communication which acts as a virtual pulse between the SQF or FIX Port and the Client Application at proposed Chapter VI, Section 6(e)(i)(A). The Heartbeat message sent by the BX Participant and subsequently received by the Exchange allows the SQF or FIX Port to continually monitor its connection with the BX Participant. SQF Ports The Exchange's System has a default time period, which will trigger a disconnect from the Exchange and remove quotes, set to fifteen (15) seconds for SQF Ports. A BX Participant may change the default period of ``nn'' seconds of no technical connectivity to trigger a disconnect from the Exchange and remove quotes to a number between one hundred (100) milliseconds and 99,999 milliseconds for SQF Ports prior to each session of connectivity to the Exchange. This feature is enabled for each BX Options Market Maker and may not be disabled. There are two ways to change the number of ``nn'' seconds: (1) Systemically or (2) by contacting the Exchange's operations staff. If the BX Participant systemically changes the default number of ``nn'' seconds, that new setting shall be in effect throughout the current session of connectivity \9\ and will then default back to fifteen seconds.\10\ The BX Participant may change the default setting systemically prior to each session of connectivity. The BX Participant may also communicate the time to the Exchange by calling the Exchange's operations staff. If the time period is communicated [[Page 46741]] to the Exchange by calling Exchange operations, the number of ``nn'' seconds selected by the BX Participant shall persist for each subsequent session of connectivity until the BX Participant either contacts Exchange operations and changes the setting or the BX Participant systemically selects another time period prior to the next session of connectivity. --------------------------------------------------------------------------- \9\ Each time the BX Participant connects to the Exchange's System is a new period of connectivity. For example, if the BX Participant were to connect and then disconnect within a trading day several times, each time the BX Participant disconnected the next session would be a new session of connectivity. \10\ The Exchange's System would capture the new setting information that was changed by the BX Participant and utilize the amended setting for that particular session. The setting would not persist beyond the current session of connectivity and the setting would default back to 15 seconds for the next session if the BX Participant did not change the setting again. --------------------------------------------------------------------------- FIX Ports The Exchange's System has a default time period, which will trigger a disconnect from the Exchange and remove orders, set to thirty (30) seconds for FIX Ports. The BX Participant may disable the removal of orders feature but not the disconnect feature. If the BX Participant elects to have its orders removed, in addition to the disconnect, the BX Participant may determine a time period of no technical connectivity to trigger the disconnect and removal of orders between one (1) second and thirty (30) seconds for FIX Ports prior to each session of connectivity to the Exchange. There are two ways to change the number of ``nn'' seconds: (1) Systemically or (2) by contacting the Exchange's operations staff. If the BX Participant systemically changes the default number of ``nn'' seconds, that new setting shall be in effect throughout that session of connectivity and will then default back to thirty seconds at the end of that session. The BX Participant may change the default setting systemically prior to each session of connectivity. The BX Participant may also communicate the time to the Exchange by calling the Exchange's operations staff. If the time period is communicated to the Exchange by calling Exchange operations, the number of ``nn'' seconds selected by the BX Participant shall persist for each subsequent session of connectivity until the BX Participant either contacts Exchange operations and changes the setting or the BX Participant systemically selects another time period prior to the next session of connectivity. Similar to SQF Ports, when a FIX Port detects the loss of communication with a Participant's Client Application for a certain time period (a period of ``nn'' seconds), the Exchange will automatically logoff the BX Participant's affected Client Application and if elected, automatically cancel all open orders. The BX Participant may have an order which has routed away prior to the cancellation, in the event that the order returns to the Order Book, because it was either not filled or partially filled, that order will be subsequently cancelled. The disconnect feature is mandatory for FIX users however the user has the ability to elect to also enable a removal feature, which will cancel all open orders submitted through that FIX Port. If the removal of orders feature is not enabled, the System will simply disconnect the FIX user and not cancel any orders. The FIX user would have to commence a new session to add, modify or cancel its orders once disconnected. The Exchange will issue an Options Trader Alert advising BX Participants on the manner in which they should communicate the number of ``nn'' seconds to the Exchange for SQF and FIX Ports. The trigger for the SQF and FIX Ports is event and Client Application specific. The automatic cancellation of the BX Options Market Maker's quotes for SQF Ports and open orders, if elected by the BX Participant for FIX Ports entered into the respective SQF or FIX Ports via a particular Client Application will neither impact nor determine the treatment of the quotes of other BX Options Market Makers entered into SQF Ports or orders of the same or other BX Participants entered into the FIX Ports via a separate and distinct Client Application. In other words, with respect to quotes, each BX Options Market Maker only maintains one quote in a given option in the order book. A new quote would replace the existing quote. Orders on the other hand do not replace each other in the order book as multiple orders may exist in a given option at once. Therefore the difference in the impact as between BX Options Market Makers submitting quotes and BX Participants submitting orders is that quotes may continue to be submitted and/or refreshed by unaffected BX Options Market Makers because these market participants are cancelled based on ID when an SQF Port disconnects, whereas all of the open orders submitted by a given firm will be impacted when a FIX port disconnects, if the firm elected to have orders cancelled. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\11\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\12\ 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 imposing this mandatory removal functionality on BX Options Market Makers to prevent disruption in the marketplace and also offering this removal feature to other market participants. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f(b). \12\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- BX Options Market Makers will be required to utilize this removal functionality with respect to SQF Ports. This feature will remove impediments to and perfect the mechanism of a free and open market and a national market system and protect investors and the public interest by requiring BX Options Market Makers quotes to be removed in the event of a loss of connectivity with the Exchange's System. BX Options Market Makers provide liquidity to the market place and have obligations unlike other market participants.\13\ This risk feature is important because it will enable BX Options Market Makers to avoid risks associated with inadvertent executions in the event of a loss of connectivity with the Exchange. The proposed rule change is designed to not permit unfair discrimination among market participants, as it would apply uniformly to all BX Options Market Makers utilizing SQF. --------------------------------------------------------------------------- \13\ Pursuant to BX Rules at Chapter VII, Section 5, entitled ``Obligations of BX Options Market Makers,'' in registering as a market maker, an Options Participant commits himself to various obligations. Transactions of a BX Options Market Makers must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and BX Options Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings. Further, all BX Options Market Makers are designated as specialists on BX for all purposes under the Act or rules thereunder. --------------------------------------------------------------------------- The disconnect feature of FIX is mandatory, however market participants will have the option to either enable or disable the cancellation feature, which would result in the cancellation of all orders submitted over a FIX port when such port disconnects. It is appropriate to offer this removal feature as optional to all market participants utilizing FIX, because unlike BX Options Market Makers who are required to provide quotes in all products in which they are registered, market participants utilizing FIX do not bear the same magnitude of risk of potential erroneous or unintended executions. In addition, market participants utilizing FIX may desire their orders to remain on the order book despite a technical disconnect, so as not to miss any opportunities for execution of such orders while the FIX session is disconnected. Utilizing a time period for SQF Ports of fifteen (15) seconds and permitting the BX Options Market Maker to modify [[Page 46742]] the setting to between 100 milliseconds and 99,999 milliseconds is consistent with the Act because the Exchange does not desire to trigger unwarranted logoffs of BX Options Market Makers and therefore allows BX Options Market Makers the ability to set their time in order to enable the Exchange the authority to disconnect the BX Options Market Maker with this feature. Each BX Options Market Maker has different levels of sensitivity with respect to this disconnect setting and each BX Options Market Maker has their own system safeguards as well. A default setting of fifteen (15) seconds is appropriate to capture the needs of all BX Options Market Makers and high enough not to trigger unwarranted removal of quotes. Further, BX Options Market Makers are able to customize their setting. The Exchange's proposal to permit a timeframe for SQF Ports between 100 milliseconds and 99,999 milliseconds is consistent with the Act and the protection of investors because the purpose of this feature is to mitigate the risk of potential erroneous or unintended executions associated with a loss in communication with a Client Application. BX Options Market Makers are able to better anticipate the appropriate time within which they may require prior to a logoff as compared to the Exchange. BX Options Market Makers are offered a timeframe by the Exchange within which to select the appropriate time. The Exchange does not desire to trigger unwarranted logoffs of BX Options Market Makers and therefore permits BX Options Market Makers to provide an alternative time to the Exchange, within the Exchange's prescribed timeframe, which authorized the Exchange to disconnect the BX Options Market Maker. The ``nn'' seconds serve as the BX Options Market Maker's instruction to the Exchange to act upon the loss of connection and remove quotes from the System. This range will accommodate BX Options Market Makers in selecting their appropriate times within the prescribed timeframes. Also, BX Options Market Makers have quoting obligations \14\ and are more sensitive to price movements as compared to other market participants. It is consistent with the Act to provide a wider timeframe within which to customize settings for FIX Ports as compared to SQF Ports. BX Options Market Makers need to remain vigilant of market conditions and react more quickly to market movements as compared to other BX Participants entering orders into the System. The proposal acknowledges this sensitivity borne by BX Options Market Makers and reflects the reaction time of BX Options Market Makers as compared to other BX Participants entering orders. Of note, the proposed customized timeframe for FIX would be too long for BX Options Market Makers given their quoting requirements and sensitivity to price movements. BX Options Market Makers would be severely impacted by a loss of connectivity of more than several seconds. The BX Options Market Maker would have exposure during the time period in which they are unable to manage their quote and update that quote. The BX Options Market Maker is best positioned to determine their setting. --------------------------------------------------------------------------- \14\ Id. --------------------------------------------------------------------------- The Exchange's proposal is further consistent with the Act because it will mitigate the risk of potential erroneous or unintended executions associated with a loss in communication with a Client Application which protects investors and the public interest. Also, any interest that is executable against a BX Options Market Maker's quotes that is received \15\ by the Exchange prior to the trigger of the disconnect to the Client Application, which is processed by the System, automatically executes at the price up to the BX Options Market Maker's size. In other words, the System will process the request for cancellation in the order it was received by the System. --------------------------------------------------------------------------- \15\ The time of receipt for an order or quote is the time such message is processed by the Exchange book. --------------------------------------------------------------------------- The System operates consistently with the firm quote obligations of a broker-dealer pursuant to Rule 602 of Regulation NMS. Specifically, with respect to BX Options Market Makers, their obligation to provide continuous two-sided quotes on a daily basis is not diminished by the removal of such quotes triggered by the disconnect. BX Options Market Makers are required to provide continuous two-sided quotes on a daily basis.\16\ BX Options Market Makers will not be relieved of the obligation to provide continuous two-sided quotes on a daily basis, nor will it prohibit the Exchange from taking disciplinary action against a BX Options Market Makers for failing to meet the continuous quoting obligation each trading day as a result of disconnects. --------------------------------------------------------------------------- \16\ See note 13 above. --------------------------------------------------------------------------- Today, BOX Options Exchange LLC offers its market makers a similar feature to the one proposed by the Exchange for the automatic removal of quotes when connectivity issues arise.\17\ BOX automatically cancels a market maker's quotes for all appointed classes when BOX loses communication with a market maker's trading host for a specified time period. BX also proposes to similarly cancel BX Options Market Makers open quotes associated with the same BX Options Market Makers ID and underlyings. BX proposes to cancel all BX Options Market Maker's quotes in options which are assigned to that particular BX Options Market Makers. BOX appears to similarly cancel all open quotes in options which are assigned to a specific market maker. BOX's timeframe is no less than 1 second or no greater than 9 seconds. BX proposes a default timeframe for SQF Ports of fifteen (15) seconds with the ability to modify this setting with a value between 100 milliseconds and 99,999 milliseconds. The proposal to permit BX Options Market Makers to amend the default setting at the beginning of each session of connectivity is consistent with the Act because it avoids unwarranted logoffs of BX Options Market Makers and provides BX Options Market Makers the opportunity to set a time, within the prescribed timeframe, to authorize the Exchange to disconnect the BX Options Market Maker. --------------------------------------------------------------------------- \17\ See BOX Rule 8140. --------------------------------------------------------------------------- Another distinction to note is that while BOX sets the time for participants, BX permits BX Participants to modify the default setting for SQF Ports to a more appropriate time within a set of parameters. While BOX does not offer the cancellations of orders, Chicago Board Options Exchange, Incorporated's (``CBOE'') does offer its participants a similar mechanism to cancel orders. CBOE's proposal is discussed further below. With respect to FIX Ports, the Exchange will offer this optional removal functionality to all market participants. Offering the removal feature on a voluntary basis to all other non-BX Options Market Makers is consistent with the Act because it permits them an opportunity to utilize this risk feature, if desired, and avoid risks associated with inadvertent executions in the event of a loss of connectivity with the Exchange. The removal feature is designed to mitigate the risk of missed and/or unintended executions associated with a loss in communication with a Client Application. The proposed rule change is designed to not permit unfair discrimination among market participants, as this removal feature will be offered uniformly to all BX Participants utilizing FIX. The Exchange will disconnect BX Participants from the Exchange and not cancel its orders if the removal feature [[Page 46743]] is disabled. The disconnect feature is mandatory and will cause the BX Participant to be disconnected within the default timeframe or the timeframe otherwise specified by the BX Participant. This feature is consistent with the Act because it enables FIX users the ability to disconnect from the Exchange, assess the situation and make a determination concerning their risk exposure. The Exchange notes that in the event that orders need to be removed, the BX Participant may elect to utilize the Kill Switch \18\ feature. It is consistent with the Act to require other market participants to be disconnected because the BX Participant is otherwise not connected to the Exchange's System and the BX Participant simply needs to reconnect to commence submitting and cancelling orders. Requiring a disconnect when a loss of communication is detected is a rational course of action for the Exchange to alert the BX Participant of the technical connectivity issue. --------------------------------------------------------------------------- \18\ See BX Rule at Chapter VI, Section 6(d). --------------------------------------------------------------------------- The Exchange's proposal to set a default timeframe of thirty (30) seconds and permit a FIX user to modify the timeframe for FIX ports to between 1 second and 30 seconds for the removal of orders is consistent with the Act and the protection of investors because the purpose of this optional feature is to mitigate the risk of potential erroneous or unintended executions associated with a loss in communication with a Client Application. BX Participants selecting the removal feature are able to better anticipate the appropriate time that they require prior to a logoff as compared to the Exchange, within the Exchange's prescribed timeframes. The Exchange does not desire to trigger unwarranted logoffs of BX Participants and therefore permits BX Participants to provide a time to the Exchange, within the Exchange's prescribed timeframe, to authorize the Exchange to disconnect the BX Participant and remove orders. The ``nn'' seconds serve as the BX Participant's instruction to the Exchange to act upon the loss of connection and remove orders from the System. The BX Participant is also best positioned to determine that they only desire the disconnect feature, which is mandatory, and do not desire to have their orders removed. The Exchange's proposal to offer other market participants the removal feature on a voluntary basis is similar to CBOE's Rule.\19\ CBOE offers market participants, on a voluntary basis, the ability to cancel orders entered through FIX when a technical disconnect occurs, similar to the BX proposal. CBOE's Rule offers participants the opportunity to cancel orders within a timeframe determined by the Trading Permit Holder. The default value selected by the CBOE is no less than 5 seconds. The Exchange's default timeframe for the disconnect and removal of orders for FIX is 30 seconds with the ability to modify that timeframe to between 1 second and 30 seconds, on a session by session basis, in contrast to CBOE. Also, in contrast to CBOE, FIX users may choose to enable or disable the cancellation feature when a disconnect occurs. The proposed timeframe for the FIX feature is consistent with the Act because the Exchange seeks to provide BX Participants with the ability to select the amount of time that they desire for a loss of communication prior to taking action to cancel open orders or simply disconnect. The BX Participant should have the ability to select the appropriate time, within a prescribed timeframe, for authorizing the Exchange to cancel its open orders or simply disconnect from the Exchange. Inadvertent cancellations may create a greater risk of harm to investors and the BX Participant is better positioned to determine the appropriate time, with the prescribed timeframe, to remove orders or disconnect. CBOE's rule also offers participants the ability to cancel orders as proposed by BX, on a voluntary basis. --------------------------------------------------------------------------- \19\ See CBOE Rule 6.23C. --------------------------------------------------------------------------- The proposed rule change will help maintain a fair and orderly market which promotes efficiency and protects investors. This mandatory removal feature for BX Options Market Makers and optional removal for all other market participants will mitigate the risk of potential erroneous or unintended executions associated with a loss in communication with a Client Application. 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. Specifically, the Exchange does not believe the proposed rule change will cause an undue burden on intra-market competition because BX Options Market Makers, unlike other market participants, have greater risks in the market place. Quoting across many series in an option creates large principal positions that expose BX Options Market Makers, who are required to continuously quote in assigned options, to potentially significant market risk. Providing a broader timeframe for the disconnect and removal of orders for FIX as compared to the removal of quotes for SQF Ports does not create an undue burden on competition. BX Options Market Makers have quoting obligations \20\ and are more sensitive to price movements as compared to other market participants. The proposal is consistent with the Act because it provides a tighter timeframe for the disconnect and removal of quotes for SQF Ports as compared to the removal of orders for FIX Ports. --------------------------------------------------------------------------- \20\ See note 13 above. --------------------------------------------------------------------------- BX Options Market Makers need to remain vigilant of market conditions and react more quickly to market movements as compared to other BX Participants entering multiple orders into the System. The proposal reflects this sensitivity borne by BX Options Market Makers and reflects the reaction time of BX Options Market Makers as compared to other BX Participants entering orders. Offering the removal feature to other market participants on an optional basis does not create an undue burden on intra-market competition because unlike BX Options Market Makers, other market participants do not bear the same risks of potential erroneous or unintended executions. FIX users have the opportunity to disable the cancellation feature and simply disconnect from the Exchange. FIX users may also set a timeframe that is appropriate for their business. It is appropriate to offer this optional cancellation functionality to other market participants for open orders, because those orders are subject to risks of missed and/or unintended executions due to a lack of connectivity which the BX Participants need to weigh. Finally, the Exchange does not believe that such change will impose any burden on inter-market competition that is not necessary or appropriate in furtherance of the purposes of the Act. Other options exchanges offer similar functionality.\21\ --------------------------------------------------------------------------- \21\ See BOX's Rule 8140 and CBOE's Rule 6.23C. --------------------------------------------------------------------------- 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 [[Page 46744]] operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \22\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\23\ --------------------------------------------------------------------------- \22\ 15 U.S.C. 78s(b)(3)(a)(iii). \23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days from the date of filing. However, Rule 19b-4(f)(6)(iii) \24\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that it may immediately offer the proposed risk protection feature. The Commission believes that waiving the 30- day operative delay is consistent with the protection of investors and the public interest. The Exchange proposes to adopt a functionality designed to assist BX Participants with managing certain risks in the event that a BX Participant loses communication with its FIX or SQF Ports due to a loss of connectivity. The Commission notes that two other options exchanges currently have similar risk protection functionalities for their members.\25\ Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.\26\ 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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. --------------------------------------------------------------------------- \24\ 17 CFR 240.19b-4(f)(6)(iii). \25\ See BOX Rule 8140 and CBOE Rule 6.23C. \26\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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-2016-040 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-2016-040. 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-2016-040 and should be submitted on or before August 8, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\27\ --------------------------------------------------------------------------- \27\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-16857 Filed 7-15-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices 46739
BZX Equities and BZX Options liquidity deem fee structures to be unreasonable All submissions should refer to File
pools, offering additional flexibility for or excessive. The proposed changes are Number SR–BatsBZX–2016–33. This file
all investors to enjoy cost savings, generally intended to enhance the number should be included on the
supporting the quality of price rebates for liquidity added to the subject line if email is used. To help the
discovery, promoting market Exchange, which is intended to draw Commission process and review your
transparency and improving investor additional liquidity to the Exchange. comments more efficiently, please use
protection. Such pricing programs The Exchange does not believe the only one method. The Commission will
thereby reward a Member’s growth proposed amendments would burden post all comments on the Commission’s
pattern on the Exchange and such intramarket competition as they would Internet Web site (http://www.sec.gov/
increased volume increases potential be available to all Members uniformly. rules/sro.shtml). Copies of the
revenue to the Exchange, and will allow The Exchange does not believe that submission, all subsequent
the Exchange to continue to provide and the proposed new Cross-Asset Add amendments, all written statements
potentially expand the incentive Volume Tier would burden competition, with respect to the proposed rule
programs operated by the Exchange. To but instead, enhances competition, as it change that are filed with the
the extent a Member participates on the is intended to increase the Commission, and all written
Exchange but not on BZX Options, the competitiveness of and draw additional communications relating to the
Exchange does believe that the proposal volume to the Exchange. proposed rule change between the
is still reasonable, equitably allocated C. Self-Regulatory Organization’s Commission and any person, other than
and non-discriminatory with respect to Statement on Comments on the those that may be withheld from the
such Member based on the overall Proposed Rule Change Received From public in accordance with the
benefit to the Exchange resulting from Members, Participants, or Others provisions of 5 U.S.C. 552, will be
the success of BZX Options. As noted available for Web site viewing and
above, such success allows the The Exchange has not solicited, and printing in the Commission’s Public
Exchange to continue to provide and does not intend to solicit, comments on Reference Room, 100 F Street NE.,
potentially expand its existing incentive this proposed rule change. The Washington, DC 20549, on official
programs to the benefit of all Exchange has not received any business days between the hours of
participants on the Exchange, whether unsolicited written comments from 10:00 a.m. and 3:00 p.m. Copies of the
they participate on BZX Options or not. Members or other interested parties. filing also will be available for
The proposed pricing program is also III. Date of Effectiveness of the inspection and copying at the principal
fair and equitable in that membership in Proposed Rule Change and Timing for office of the Exchange. All comments
BZX Options is available to all market Commission Action received will be posted without change;
participants which would provide them the Commission does not edit personal
with access to the benefits on BZX The foregoing rule change has become identifying information from
Options provided by the proposed effective pursuant to section 19(b)(3)(A) submissions. You should submit only
changes, as described above, even where of the Act 9 and paragraph (f) of Rule information that you wish to make
a member of BZX Options is not 19b–4 thereunder.10 At any time within available publicly. All submissions
necessarily eligible for the proposed 60 days of the filing of the proposed rule should refer to File Number SR–
increased rebates on the Exchange. change, the Commission summarily may BatsBZX–2016–33 and should be
Further, the proposed changes will temporarily suspend such rule change if submitted on or before August 8, 2016.
result in Members receiving either the it appears to the Commission that such
action is necessary or appropriate in the For the Commission, by the Division of
same or an increased rebate than they Trading and Markets, pursuant to delegated
would currently receive. public interest, for the protection of
authority.11
investors, or otherwise in furtherance of
B. Self-Regulatory Organization’s Robert W. Errett,
the purposes of the Act.
Statement on Burden on Competition Deputy Secretary.
IV. Solicitation of Comments [FR Doc. 2016–16850 Filed 7–15–16; 8:45 am]
The Exchange does not believe its
proposed amendment to its Fee Interested persons are invited to BILLING CODE 8011–01–P
Schedule would impose any burden on submit written data, views and
competition that is not necessary or arguments concerning the foregoing,
including whether the proposed rule SECURITIES AND EXCHANGE
appropriate in furtherance of the
change is consistent with the Act. COMMISSION
purposes of the Act. The Exchange does
not believe that the proposed change Comments may be submitted by any of [Release No. 34–78298; File No. SR–BX–
represents a significant departure from the following methods: 2016–040]
previous pricing offered by the Electronic Comments
Exchange or pricing offered by the Self-Regulatory Organizations;
• Use the Commission’s Internet NASDAQ BX, Inc.; Notice of Filing and
Exchange’s competitors. Additionally, comment form (http://www.sec.gov/
Members may opt to disfavor the Immediate Effectiveness of Proposed
rules/sro.shtml); or Rule Change Relating to Detection of
Exchange’s pricing if they believe that • Send an email to rule-comments@
alternatives offer them better value. Loss of Connection
sec.gov. Please include File Number SR–
Accordingly, the Exchange does not BatsBZX–2016–33 on the subject line. July 12, 2016.
believe that the proposed change will
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
impair the ability of Members or Paper Comments Securities Exchange Act of 1934
competing venues to maintain their • Send paper comments in triplicate (‘‘Act’’),1 and Rule 19b–4 thereunder,2
competitive standing in the financial to Secretary, Securities and Exchange notice is hereby given that on July 8,
markets. Commission, 100 F Street NE., 2016, NASDAQ BX, Inc. (‘‘BX’’ or
The Exchange notes that it operates in Washington, DC 20549–1090.
a highly competitive market in which 11 17 CFR 200.30–3(a)(12).
market participants can readily direct 9 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
order flow to competing venues if they 10 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.
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![46744 Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices
operative for 30 days from the date on change is consistent with the Act. SECURITIES AND EXCHANGE
which it was filed, or such shorter time Comments may be submitted by any of COMMISSION
as the Commission may designate, it has the following methods:
[Release No. 34–78308; File No. 265–29]
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 22 and Electronic Comments
Equity Market Structure Advisory
subparagraph (f)(6) of Rule 19b–4 • Use the Commission’s Internet Committee
thereunder.23 comment form (http://www.sec.gov/
A proposed rule change filed under AGENCY: Securities and Exchange
rules/sro.shtml); or Commission.
Rule 19b–4(f)(6) normally does not
become operative for 30 days from the • Send an email to rule-comments@ ACTION: Notice of Meeting.
date of filing. However, Rule 19b– sec.gov. Please include File Number SR–
4(f)(6)(iii) 24 permits the Commission to BX–2016–040 on the subject line. SUMMARY: The Securities and Exchange
designate a shorter time if such action Commission Equity Market Structure
Paper Comments Advisory Committee is providing notice
is consistent with the protection of
that it will hold a public meeting on
investors and the public interest. The • Send paper comments in triplicate
Tuesday, August 2, 2016, in Multi-
Exchange has asked the Commission to to Secretary, Securities and Exchange
Purpose Room LL–006 at the
waive the 30-day operative delay so that Commission, 100 F Street NE., Commission’s headquarters, 100 F
it may immediately offer the proposed Washington, DC 20549–1090. Street NE., Washington, DC. The
risk protection feature. The Commission
All submissions should refer to File meeting will begin at 9:30 a.m. (EDT)
believes that waiving the 30-day
Number SR–BX–2016–040. This file and will be open to the public. The
operative delay is consistent with the
number should be included on the public portions of the meeting will be
protection of investors and the public
subject line if email is used. To help the webcast on the Commission’s Web site
interest. The Exchange proposes to at www.sec.gov. Persons needing special
adopt a functionality designed to assist Commission process and review your
comments more efficiently, please use accommodations to take part because of
BX Participants with managing certain a disability should notify the contact
risks in the event that a BX Participant only one method. The Commission will
post all comments on the Commission’s person listed below. The public is
loses communication with its FIX or invited to submit written statements to
SQF Ports due to a loss of connectivity. Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the the Committee. The meeting will focus
The Commission notes that two other on updates and potential
options exchanges currently have submission, all subsequent
recommendations from the four
similar risk protection functionalities amendments, all written statements
subcommittees.
for their members.25 Therefore, the with respect to the proposed rule
Commission hereby waives the 30-day change that are filed with the DATES: The public meeting will be held
operative delay and designates the Commission, and all written on Tuesday, August 2, 2016. Written
proposal operative upon filing.26 At any communications relating to the statements should be received on or
time within 60 days of the filing of the proposed rule change between the before July 27, 2016.
proposed rule change, the Commission Commission and any person, other than ADDRESSES: The meeting will be held at
summarily may temporarily suspend those that may be withheld from the the Commission’s headquarters, 100 F
such rule change if it appears to the public in accordance with the Street NE., Washington, DC. Written
Commission that such action is provisions of 5 U.S.C. 552, will be statements may be submitted by any of
necessary or appropriate in the public available for Web site viewing and the following methods:
interest, for the protection of investors, printing in the Commission’s Public Electronic Statements
or otherwise in furtherance of the Reference Room, 100 F Street NE.,
Washington, DC 20549, on official • Use the Commission’s Internet
purposes of the Act. If the Commission
submission form (http://www.sec.gov/
takes such action, the Commission shall business days between the hours of
rules/other.shtml); or
institute proceedings to determine 10:00 a.m. and 3:00 p.m. Copies of the • Send an email message to rule-
whether the proposed rule should be filing also will be available for comments@sec.gov. Please include File
approved or disapproved. inspection and copying at the principal Number 265–29 on the subject line; or
office of the Exchange. All comments
IV. Solicitation of Comments Paper Statements
received will be posted without change;
Interested persons are invited to the Commission does not edit personal • Send paper statements in triplicate
submit written data, views, and identifying information from to Brent J. Fields, Federal Advisory
arguments concerning the foregoing, submissions. You should submit only Committee Management Officer,
including whether the proposed rule information that you wish to make Securities and Exchange Commission,
available publicly. All submissions 100 F Street NE., Washington, DC
22 15 U.S.C. 78s(b)(3)(a)(iii).
23 17
should refer to File Number SR–BX– 20549–1090.
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
2016–040 and should be submitted on All submissions should refer to File No.
the Commission written notice of its intent to file or before August 8, 2016. 265–29. This file number should be
the proposed rule change at least five business days included on the subject line if email is
prior to the date of filing of the proposed rule
For the Commission, by the Division of
used. To help us process and review
asabaliauskas on DSK3SPTVN1PROD with NOTICES
change, or such shorter time as designated by the Trading and Markets, pursuant to delegated
Commission. The Exchange has satisfied this authority.27 your statement more efficiently, please
requirement. Robert W. Errett, use only one method. The Commission
24 17 CFR 240.19b–4(f)(6)(iii).
will post all statements on the
25 See BOX Rule 8140 and CBOE Rule 6.23C. Deputy Secretary.
Commission’s Internet Web site at SEC
26 For purposes only of waiving the 30-day [FR Doc. 2016–16857 Filed 7–15–16; 8:45 am]
Web site at (http://www.sec.gov/
operative delay, the Commission has also
considered the proposed rule’s impact on
BILLING CODE 8011–01–P comments/265-29/265-29.shtml).
efficiency, competition, and capital formation. See Statements also will be available for
15 U.S.C. 78c(f). 27 17 CFR 200.30–3(a)(12). Web site viewing and printing in the
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Document Created: 2016-07-16 02:28:15
Document Modified: 2016-07-16 02:28:15
| 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 46739 |
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