81 FR 52922 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to AIM Retained Orders
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 154 (August 10, 2016)
Federal Register Volume 81, Issue 154 (August 10, 2016)
| Page Range | 52922-52925 | |
| FR Document | 2016-18909 |
[Federal Register Volume 81, Number 154 (Wednesday, August 10, 2016)] [Notices] [Pages 52922-52925] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-18909] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78478; File No. SR-C2-2016-014] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to AIM Retained Orders August 4, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on July 27, 2016, C2 Options Exchange, Incorporated (the ``Exchange'' or ``C2'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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. \3\ 15 U.S.C. 78s(b)(3)(A)(iii). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The text of the proposed rule change is available on the Exchange's Web site (http://www.c2exchange.com/Legal/), at the Exchange's Office of the Secretary, 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 Rule 6.51 (Automated Improvement Mechanism (``AIM'')) to: (1) Clarify how orders submitted for electronic crossing into the AIM auction are treated if an auction cannot occur; (2) adopt Interpretation and Policy .10 to Rule 6.51 (AIM Retained Order Functionality) to describe the Exchange's AIM Retained Order (``A:AIR'') functionality in the Rules; and (3) make minor edits to Interpretation and Policy .04 to Rule 6.13 (Price Check Parameters) relating to the treatment of complex AIM orders marked A:AIR and correct certain typographical errors. The Exchange notes that this filing is based upon and, in all material respects, substantially similar to a recent filing of Chicago Board Options Exchange, Incorporated (``CBOE'') regarding A:AIR functionality.\5\ Both AIM and A:AIR functionality are active on CBOE. --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 77848 (May 17, 2016), 81 FR 31978 (May 20, 2016) (SR-CBOE-2016-024) (Order Approving Proposed Rule Change, as Modified by Amendment No. 2 Thereto, Relating to AIM Retained Orders). See also Interpretation and Policy .09 to CBOE Rule 6.74A (AIM Retained Order Functionality). --------------------------------------------------------------------------- [[Page 52923]] Under Rule 6.51 (Automated Improvement Mechanism (``AIM'')), a Permit Holder (``Participant'') that represents agency orders may electronically execute an order it represents as agent (``Agency Order'') against principal interest or against a solicited order provided it submits the Agency Order for electronic execution into the AIM auction (``Auction'') for processing. Matched Agency Orders may be processed via AIM subject to certain eligibility requirements contained in Rule 6.51(a). Specifically, to be eligible for processing via AIM, the Agency Order must be: (1) In a class designated as eligible for AIM Auctions as determined by the Exchange and within the designated Auction order eligibility size parameters as such size parameters are determined by the Exchange; and (2) stopped as principal or with a solicited order at the better of the national best bid or offer (``NBBO'') or the Agency Order's limit price (if the order is a limit order).\6\ Orders submitted for crossing into AIM, which are ineligible for Auction processing will result in both the Agency Order and the matching contra order(s) being cancelled. --------------------------------------------------------------------------- \6\ See Rule 6.51(a). --------------------------------------------------------------------------- Under Rule 6.51(a)(1), an Auction may be conducted in a class designated as eligible for Auctions as determined by the Exchange. Any determinations made by the Exchange, such as eligible classes, will be communicated in a Regulatory Circular pursuant to Interpretation and Policy .05 to Rule 6.51. Notably, AIM functionality is currently not activated in any class on the Exchange. A:AIR functionality is an enhancement to AIM, which if activated, would allow Participants the flexibility to choose, on an order-by- order basis, whether an Agency Order should continue into the System \7\ for processing rather than cancel in the event that an Auction cannot occur.\8\ A:AIR functionality essentially allows for the entry of Agency Orders into AIM with contingency processing instructions for handling in the event that the order cannot be processed via Auction. For example, using A:AIR functionality, a Permit Holder enters an Agency Order to buy 10 standard contracts at the market along with a matched solicited contra order to sell 10 standard contracts at $1.21. At the time the A:AIR order is entered, the NBBO is $1.00 to $1.20, with a Customer order to sell 30 contracts at $1.20 resting at the top of the book alone. Here, the order would not be eligible for submission into AIM because the Agency Order was not stopped with a solicited order priced better than the NBBO.\9\ As a result, pursuant to Rule 6.51(a)(2), the Auction would not begin. Whereas both the Agency Order and solicited order would have cancelled if the order were not marked A:AIR, in this case, because the order was marked A:AIR, the Agency Order would route to the automated trading system for processing and trade against the resting Customer--the solicited order would still be cancelled. Again, however, had the Permit Holder not marked this order A:AIR, both the Agency Order and solicited order would cancel. --------------------------------------------------------------------------- \7\ The System refers to the Exchange's automated trading system as defined in Rule 1.1 (Definitions). \8\ There are a variety of circumstances in which an AIM order may be submitted to the Exchange for processing, but an auction may not occur. For example, a Participant may submit an order for AIM processing, which is not AIM eligible because one or more of the conditions required for an AIM auction to occur pursuant to Rule 6.51(a) is not present. In addition, an order that is otherwise AIM eligible may not be able to process for a variety of reasons, including, but not limited to circumstances in which AIM functionality is suspended. In either of such cases, A:AIR functionality may allow the Agency Order to process despite the overall order not being AIM eligible. \9\ See Rule 6.51(a)(2). --------------------------------------------------------------------------- Currently, A:AIR functionality is not explicitly defined in the Exchange's AIM rules.\10\ Accordingly, this filing is intended to further codify, clarify, and describe A:AIR functionality in the Rules. Specifically, the Exchange proposes to adopt Interpretation and Policy .10 to Rule 6.51 (AIM Retained Order Functionality), under which the Exchange would define an A:AIR order as the transmission of two or more orders for crossing pursuant to Rule 6.51, with the Agency Order priced at the market or a limit price in the standard increment for the option series and marked with a contingency instruction to route the Agency Order for processing and cancel any contra orders if an Auction cannot occur (including if the conditions described in Rule 6.51(a) are not met). --------------------------------------------------------------------------- \10\ A:AIR functionality is generally referred to in the Rules, although not using that term. See Interpretation and Policy .04 to Rule 6.13 (Price Check Parameters) at paragraphs (c)(5), (d), (f)(3), and (h)(4) referring to orders that instruct the System to process the Agency Order as an unpaired order if an AIM Auction cannot be initiated. --------------------------------------------------------------------------- Furthermore, to ensure that A:AIR orders are properly priced to allow the Exchange to book the Agency Order in the event an Auction cannot occur, proposed Interpretation and Policy .10 to Rule 6.51 would provide that orders marked ``A:AIR'' with Agency Orders that are not priced at the market or that are priced with a limit price not in the standard increment for the option series in which they are entered would be rejected. For example, if a Participant were to submit a matched Agency Order into AIM for processing in a class with a minimum increment of a nickel, which was stopped with a contra order at $0.07, both the Agency Order and the contra order would be rejected because the order, which is not priced in the minimum increment for the class, would not eligible for AIM processing and because the System would not be able to book an order at $0.07 in a class with a minimum increment of a nickel. Notably, this provision of proposed Interpretation and Policy .10 to Rule 6.51 is consistent with Exchange rules that only permit orders at the standard increment to enter the book.\11\ Finally, proposed Interpretation and Policy .10 to Rule 6.51 would provide that A:AIR order functionality could be made available on those order management platforms as determined by the Exchange and announced via Regulatory Circular. This provision is intended to make clear that A:AIR functionality may not be available on all trading platforms in use on the Exchange.\12\ --------------------------------------------------------------------------- \11\ See Rule 6.4. \12\ A:AIR functionality is not currently supported on the PULSe trader workstation. PULSe is an order handling tool used for the manual handling of orders. Thus, when ineligible AIM orders would be rejected back to PULSe users, a person is present to decide how best to handle such orders. PULSe users can either re-route such orders to be booked or for alternative electronic processing on the Exchange. --------------------------------------------------------------------------- The Exchange also notes that although orders submitted into AIM, which are not marked A:AIR and are ineligible for Auction processing will result in both the Agency Order and the matching contra order(s) being cancelled, the Rules do not explicitly provide as much. Accordingly, the Exchange proposes to add language to Rule 6.51(a) to provide that in the event that a Participant submits a matched Agency Order for electronic execution into the Auction that is ineligible for processing because it does not meet the conditions described in paragraph (a), both the Agency Order and any solicited contra orders will be cancelled unless marked as an AIM Retained order pursuant to proposed Interpretation and Policy .10 to Rule 6.51.\13\ --------------------------------------------------------------------------- \13\ Notably, the A:AIR functionality may be primarily used by smart router technology to ensure that ineligible AIM orders are submitted into the System for processing and not cancelled. Whereas traditional brokers and dealers are equipped to manually handle cancelled orders that are returned to them and may revise the cancelled orders' terms or contact their customers for further instructions, smart routers are generally all electronic algorithmic systems that may not allow for manual handling of cancelled orders. --------------------------------------------------------------------------- [[Page 52924]] The Exchange also proposes to make minor changes to Interpretation and Policy .04 to Rule 6.13 regarding price reasonability checks on complex orders to harmonize references to A:AIR functionality in Rule 6.13 with the language in proposed Interpretation and Policy .10 to Rule 6.51. Specifically, the Exchange proposes to modify Interpretation and Policy .04(c)(5), (d), (f)(3), and (h)(4) to Rule 6.13 (Price Check Parameters) to change references to AIM orders that instruct the System to process the Agency Order as an unpaired order if an AIM auction cannot be initiated, to instead refer to A:AIR orders as defined in proposed Interpretation and Policy .10 to Rule 6.51. These changes are non-substantive and intended only to harmonize existing references to A:AIR functionality currently in the Rules with the definition of A:AIR orders set forth in proposed Interpretation and Policy .10 to Rule 6.51. The proposed rule change also makes non-substantive changes in these paragraphs to capitalize the defined term Agency Order, consistent with Rule 6.51. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\14\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \15\ requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \16\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). \16\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes that A:AIR functionality makes the Exchange's price improvement mechanisms [sic] easier to use and minimizes the risk of orders being mishandled on the Exchange. The A:AIR functionality provides opportunities for execution of Customer orders that a Participant submits for crossing via AIM that cannot be auctioned. The Exchange believes that this functionality mitigates the risk that inadvertent mishandling of Agency Orders (i.e. Customer orders) will cause marketable Customer orders to go unfilled. The Exchange believes that such outcomes serve to protect investors' interests by helping to ensure that ineligible AIM Agency Orders are processed in accordance with customer instructions rather than cancelled. Accordingly, the Exchange believes that the proposed rule change is consistent with the purposes of the Act. In addition, the Exchange believes that A:AIR functionality promotes competition amongst market participants by allowing more orders to be processed. Finally, the proposed rule change seeks to provide additional clarity and completeness in the Rules regarding functionalities that may be made available on the Exchange. The Exchange is continuously updating the Rules to provide additional detail, clarity, and transparency regarding its operations and trading systems. The Exchange believes that the adoption of detailed, clear, and transparent rules reduces burdens on competition and promotes just and equitable principles of trade. 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 that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that price improvement mechanism enhancements such as A:AIR functionality are widely used across the national options exchanges. The Exchange believes that offering additional functionalities and enhancements to its price improvement mechanisms [sic] promotes intermarket competition. The exchanges have developed these mechanisms in order to provide market participants diverse opportunities to seek valuable price improvement and as a means to compete with one another for order flow. The U.S. options exchanges are continuously making enhancements and adding functionalities to their price improvement mechanisms in order to provide more competitive marketplaces for market participants and better compete with one another. The Exchange believes that enhancements to such mechanisms promote intermarket competition for order flow between the exchanges. A:AIR functionality is simply one of many enhancements that the Exchange has made to AIM for this purpose. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: A. Significantly affect the protection of investors or the public interest; B. impose any significant burden on competition; and C. 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 \17\ and Rule 19b-4(f)(6) \18\ thereunder. 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 will institute proceedings to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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-C2-2016-014 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. [[Page 52925]] All submissions should refer to File Number SR-C2-2016-014. 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 such 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-C2-2016-014, and should be submitted on or before August 31, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-18909 Filed 8-9-16; 8:45 am] BILLING CODE 8011-01-P
![52922 Federal Register / Vol. 81, No. 154 / Wednesday, August 10, 2016 / Notices
C. Self-Regulatory Organization’s Internet Web site (http://www.sec.gov/ ‘‘non-controversial’’ proposed rule
Statement on Comments on the rules/sro.shtml). Copies of the change pursuant to Section
Proposed Rule Change Received From submission, all subsequent 19(b)(3)(A)(iii) of the Act 3 and Rule
Members, Participants, or Others amendments, all written statements 19b–4(f)(6) thereunder.4 The
No written comments were solicited with respect to the proposed rule Commission is publishing this notice to
or received with respect to the proposed change that are filed with the solicit comments on the proposed rule
rule change. Commission, and all written change from interested persons.
communications relating to the
III. Date of Effectiveness of the I. Self-Regulatory Organization’s
proposed rule change between the
Proposed Rule Change and Timing for Statement of the Terms of Substance of
Commission and any person, other than
Commission Action the Proposed Rule Change
those that may be withheld from the
The foregoing rule change is effective public in accordance with the The text of the proposed rule change
upon filing pursuant to Section provisions of 5 U.S.C. 552, will be is available on the Exchange’s Web site
19(b)(3)(A) 17 of the Act and available for Web site viewing and (http://www.c2exchange.com/Legal/), at
subparagraph (f)(2) of Rule 19b–4 18 printing in the Commission’s Public the Exchange’s Office of the Secretary,
thereunder, because it establishes a due, Reference Room, 100 F Street NE., and at the Commission’s Public
fee, or other charge imposed by the Washington, DC 20549, on official Reference Room.
Exchange. business days between the hours of II. Self-Regulatory Organization’s
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the Statement of the Purpose of, and
filing of such proposed rule change, the filing also will be available for Statutory Basis for, the Proposed Rule
Commission summarily may inspection and copying at the principal Change
temporarily suspend such rule change if office of the Exchange. All comments
received will be posted without change; In its filing with the Commission, the
it appears to the Commission that such Exchange included statements
action is necessary or appropriate in the the Commission does not edit personal
identifying information from concerning the purpose of and basis for
public interest, for the protection of the proposed rule change and discussed
investors, or otherwise in furtherance of submissions. You should submit only
information that you wish to make any comments it received on the
the purposes of the Act. If the proposed rule change. The text of these
Commission takes such action, the available publicly. All submissions
should refer to File Number SR– statements may be examined at the
Commission shall institute proceedings places specified in Item IV below. The
under Section 19(b)(2)(B) 19 of the Act to NYSEArca–2016–105, and should be
submitted on or before August 31, 2016. Exchange has prepared summaries, set
determine whether the proposed rule forth in sections A, B, and C below, of
change should be approved or For the Commission, by the Division of
the most significant aspects of such
disapproved. Trading and Markets, pursuant to delegated
authority.20 statements.
IV. Solicitation of Comments Robert W. Errett, A. Self-Regulatory Organization’s
Interested persons are invited to Deputy Secretary. Statement of the Purpose of, and
submit written data, views, and [FR Doc. 2016–18910 Filed 8–9–16; 8:45 am] Statutory Basis for, the Proposed Rule
arguments concerning the foregoing, BILLING CODE 8011–01–P Change
including whether the proposed rule
change is consistent with the Act. 1. Purpose
Comments may be submitted by any of SECURITIES AND EXCHANGE The Exchange proposes to amend
the following methods: COMMISSION Rule 6.51 (Automated Improvement
Mechanism (‘‘AIM’’)) to: (1) Clarify how
Electronic Comments [Release No. 34–78478; File No. SR–C2– orders submitted for electronic crossing
2016–014]
• Use the Commission’s Internet into the AIM auction are treated if an
comment form (http://www.sec.gov/ Self-Regulatory Organizations; C2 auction cannot occur; (2) adopt
rules/sro.shtml); or. Options Exchange, Incorporated; Interpretation and Policy .10 to Rule
• Send an email to rule- Notice of Filing and Immediate 6.51 (AIM Retained Order
comments@sec.gov. Please include File Effectiveness of a Proposed Rule Functionality) to describe the
Number SR–NYSEArca–2016–105 on Change Relating to AIM Retained Exchange’s AIM Retained Order
the subject line. Orders (‘‘A:AIR’’) functionality in the Rules;
Paper Comments and (3) make minor edits to
August 4, 2016. Interpretation and Policy .04 to Rule
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the 6.13 (Price Check Parameters) relating to
to Secretary, Securities and Exchange Securities Exchange Act of 1934 (the the treatment of complex AIM orders
Commission, 100 F Street NE., ‘‘Act’’),1 and Rule 19b–4 thereunder,2 marked A:AIR and correct certain
Washington, DC 20549–1090. notice is hereby given that on July 27, typographical errors. The Exchange
All submissions should refer to File 2016, C2 Options Exchange, notes that this filing is based upon and,
Number SR–NYSEArca–2016–105. This Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) in all material respects, substantially
file number should be included on the filed with the Securities and Exchange similar to a recent filing of Chicago
subject line if email is used. To help the Commission (the ‘‘Commission’’) the Board Options Exchange, Incorporated
mstockstill on DSK3G9T082PROD with NOTICES
Commission process and review your proposed rule change as described in (‘‘CBOE’’) regarding A:AIR
comments more efficiently, please use Items I, II, and III below, which Items functionality.5 Both AIM and A:AIR
only one method. The Commission will have been prepared by the Exchange. functionality are active on CBOE.
post all comments on the Commission’s The Exchange filed the proposal as a
3 15 U.S.C. 78s(b)(3)(A)(iii).
17 15 U.S.C. 78s(b)(3)(A). 20 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(2). 1 15 U.S.C. 78s(b)(1). 5 See Securities Exchange Act Release No. 77848
19 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4. (May 17, 2016), 81 FR 31978 (May 20, 2016) (SR–
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The Exchange also proposes to make minimizes the risk of orders being competition for order flow between the
minor changes to Interpretation and mishandled on the Exchange. The exchanges. A:AIR functionality is
Policy .04 to Rule 6.13 regarding price A:AIR functionality provides simply one of many enhancements that
reasonability checks on complex orders opportunities for execution of Customer the Exchange has made to AIM for this
to harmonize references to A:AIR orders that a Participant submits for purpose.
functionality in Rule 6.13 with the crossing via AIM that cannot be
C. Self-Regulatory Organization’s
language in proposed Interpretation and auctioned. The Exchange believes that
Statement on Comments on the
Policy .10 to Rule 6.51. Specifically, the this functionality mitigates the risk that
Proposed Rule Change Received From
Exchange proposes to modify inadvertent mishandling of Agency
Members, Participants, or Others
Interpretation and Policy .04(c)(5), (d), Orders (i.e. Customer orders) will cause
(f)(3), and (h)(4) to Rule 6.13 (Price marketable Customer orders to go The Exchange neither solicited nor
Check Parameters) to change references unfilled. The Exchange believes that received written comments on the
to AIM orders that instruct the System such outcomes serve to protect proposed rule change.
to process the Agency Order as an investors’ interests by helping to ensure III. Date of Effectiveness of the
unpaired order if an AIM auction cannot that ineligible AIM Agency Orders are Proposed Rule Change and Timing for
be initiated, to instead refer to A:AIR processed in accordance with customer Commission Action
orders as defined in proposed instructions rather than cancelled.
Interpretation and Policy .10 to Rule Accordingly, the Exchange believes that Because the foregoing proposed rule
6.51. These changes are non-substantive the proposed rule change is consistent change does not:
and intended only to harmonize existing with the purposes of the Act. A. Significantly affect the protection
references to A:AIR functionality In addition, the Exchange believes of investors or the public interest;
that A:AIR functionality promotes B. impose any significant burden on
currently in the Rules with the
competition amongst market competition; and
definition of A:AIR orders set forth in C. become operative for 30 days from
proposed Interpretation and Policy .10 participants by allowing more orders to
the date on which it was filed, or such
to Rule 6.51. The proposed rule change be processed. Finally, the proposed rule
shorter time as the Commission may
also makes non-substantive changes in change seeks to provide additional
designate, it has become effective
these paragraphs to capitalize the clarity and completeness in the Rules
pursuant to Section 19(b)(3)(A) of the
defined term Agency Order, consistent regarding functionalities that may be
Act 17 and Rule 19b–4(f)(6) 18
with Rule 6.51. made available on the Exchange. The
thereunder. At any time within 60 days
Exchange is continuously updating the
2. Statutory Basis of the filing of the proposed rule change,
Rules to provide additional detail,
The Exchange believes the proposed the Commission summarily may
clarity, and transparency regarding its
rule change is consistent with the Act temporarily suspend such rule change if
operations and trading systems. The
and the rules and regulations it appears to the Commission that such
Exchange believes that the adoption of
thereunder applicable to the Exchange action is necessary or appropriate in the
detailed, clear, and transparent rules
and, in particular, the requirements of public interest, for the protection of
reduces burdens on competition and
Section 6(b) of the Act.14 Specifically, investors, or otherwise in furtherance of
promotes just and equitable principles
the Exchange believes the proposed rule the purposes of the Act. If the
of trade.
change is consistent with the Section Commission takes such action, the
6(b)(5) 15 requirements that the rules of B. Self-Regulatory Organization’s Commission will institute proceedings
an exchange be designed to prevent Statement on Burden on Competition to determine whether the proposed rule
fraudulent and manipulative acts and The Exchange does not believe that change should be approved or
practices, to promote just and equitable the proposed rule change will impose disapproved.
principles of trade, to foster cooperation any burden on competition that is not IV. Solicitation of Comments
and coordination with persons engaged necessary or appropriate in furtherance
Interested persons are invited to
in regulating, clearing, settling, of the purposes of the Act. The
submit written data, views, and
processing information with respect to, Exchange notes that price improvement
arguments concerning the foregoing,
and facilitating transactions in mechanism enhancements such as
including whether the proposed rule
securities, to remove impediments to A:AIR functionality are widely used
across the national options exchanges. change is consistent with the Act.
and perfect the mechanism of a free and
The Exchange believes that offering Comments may be submitted by any of
open market and a national market
additional functionalities and the following methods:
system, and, in general, to protect
investors and the public interest. enhancements to its price improvement Electronic Comments
Additionally, the Exchange believes the mechanisms [sic] promotes intermarket • Use the Commission’s Internet
proposed rule change is consistent with competition. The exchanges have comment form (http://www.sec.gov/
the Section 6(b)(5) 16 requirement that developed these mechanisms in order to rules/sro.shtml); or
the rules of an exchange not be designed provide market participants diverse • Send an email to rule-
to permit unfair discrimination between opportunities to seek valuable price comments@sec.gov. Please include File
customers, issuers, brokers, or dealers. improvement and as a means to Number SR–C2–2016–014 on the
In particular, the Exchange believes compete with one another for order subject line.
that A:AIR functionality makes the flow. The U.S. options exchanges are
Exchange’s price improvement continuously making enhancements and Paper Comments
mstockstill on DSK3G9T082PROD with NOTICES
mechanisms [sic] easier to use and adding functionalities to their price • Send paper comments in triplicate
improvement mechanisms in order to to Brent J. Fields, Secretary, Securities
smart routers are generally all electronic provide more competitive marketplaces
algorithmic systems that may not allow for manual
and Exchange Commission, 100 F Street
handling of cancelled orders.
for market participants and better NE., Washington, DC 20549–1090.
14 15 U.S.C. 78f(b). compete with one another. The
15 15 U.S.C. 78f(b)(5). Exchange believes that enhancements to 17 15 U.S.C. 78s(b)(3)(A).
16 Id. such mechanisms promote intermarket 18 17 CFR 240.19b–4(f)(6).
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All submissions should refer to File sections 6(c) and 17(b) of the Act for an hearing on the matter, the reason for the
Number SR–C2–2016–014. This file exemption from sections 17(a)(1) and request, and the issues contested.
number should be included on the 17(a)(2) of the Act, and under section Persons who wish to be notified of a
subject line if email is used. To help the 12(d)(1)(J) for an exemption from hearing may request notification by
Commission process and review your sections 12(d)(1)(A) and 12(d)(1)(B) of writing to the Commission’s Secretary.
comments more efficiently, please use the Act. The requested order would ADDRESSES: Secretary, Securities and
only one method. The Commission will permit (a) actively-managed series of Exchange Commission, 100 F Street NE.,
post all comments on the Commission’s certain open-end management Washington, DC 20549–1090;
Internet Web site (http://www.sec.gov/ investment companies (‘‘Funds’’) to Applicants: The Trust and the Initial
rules/sro.shtml). Copies of the issue shares redeemable in large Adviser, 1345 Avenue of the Americas,
submission, all subsequent aggregations only (‘‘Creation Units’’); (b) Fl. 2, New York, NY 10105; the Initial
amendments, all written statements secondary market transactions in Fund Distributor, 3 Canal Plaza, Suite 100,
with respect to the proposed rule shares to occur at negotiated market Portland, ME 04101.
change that are filed with the prices rather than at net asset value FOR FURTHER INFORMATION CONTACT: Hae-
Commission, and all written (‘‘NAV’’); (c) certain Funds to pay Sung Lee, Attorney-Adviser, at (202)
communications relating to the redemption proceeds, under certain 551–7345, or Mary Kay Frech, Branch
proposed rule change between the circumstances, more than seven days Chief, at (202) 551–6821 (Division of
Commission and any person, other than after the tender of shares for Investment Management, Chief
those that may be withheld from the redemption; (d) certain affiliated Counsel’s Office).
public in accordance with the persons of a Fund to deposit securities SUPPLEMENTARY INFORMATION: The
provisions of 5 U.S.C. 552, will be into, and receive securities from, the following is a summary of the
available for Web site viewing and Fund in connection with the purchase application. The complete application
printing in the Commission’s Public and redemption of Creation Units; (e) may be obtained via the Commission’s
Reference Room, 100 F Street NE., certain registered management Web site by searching for the file
Washington, DC 20549 on official investment companies and unit number, or for an applicant using the
business days between the hours of investment trusts outside of the same Company name box, at http://
10:00 a.m. and 3:00 p.m. Copies of such group of investment companies as the www.sec.gov/search/search.htm or by
filing also will be available for Funds (‘‘Funds of Funds’’) to acquire calling (202) 551–8090.
inspection and copying at the principal shares of the Funds; and (f) certain
office of the Exchange. All comments Funds (‘‘Feeder Funds’’) to create and Summary of the Application
received will be posted without change; redeem Creation Units in-kind in a 1. Applicants request an order that
the Commission does not edit personal master-feeder structure. would allow Funds to operate as
identifying information from actively-managed exchange traded
submissions. You should submit only APPLICANTS: TrimTabs ETF Trust (the funds (‘‘ETFs’’).1 Fund shares will be
information that you wish to make ‘‘Trust’’), a Delaware statutory trust that purchased and redeemed at their NAV
available publicly. All submissions is registered under the Act as an open- in Creation Units only. All orders to
should refer to File Number SR–C2– end management investment company purchase Creation Units and all
2016–014, and should be submitted on with multiple series, TrimTabs Asset redemption requests will be placed by
or before August 31, 2016. Management, LLC (the ‘‘Initial or through an ‘‘Authorized Participant’’,
For the Commission, by the Division of
Adviser’’), a Delaware limited liability which will have signed a participant
Trading and Markets, pursuant to delegated company registered as an investment agreement with the Distributor. Shares
authority.19 adviser under the Investment Advisers will be listed and traded individually on
Robert W. Errett, Act of 1940, and Foreside Fund a national securities exchange, where
Deputy Secretary.
Services, LLC (the ‘‘Distributor’’), a share prices will be based on the current
Delaware limited liability company and bid/offer market. Certain Funds may
[FR Doc. 2016–18909 Filed 8–9–16; 8:45 am]
broker-dealer registered under the operate as Feeder Funds in a master-
BILLING CODE 8011–01–P
Securities Exchange Act of 1934 feeder structure. Any order granting the
(‘‘Exchange Act’’). requested relief would be subject to the
SECURITIES AND EXCHANGE FILING DATES: The application was filed terms and conditions stated in the
COMMISSION on June 8, 2016, and amended on July application.
1, 2016. 2. Each Fund will consist of a
[Investment Company Act Release No.
HEARING OR NOTIFICATION OF HEARING: An portfolio of securities and other assets
32208; 812–14661] and investment positions (‘‘Portfolio
order granting the requested relief will
be issued unless the Commission orders Holdings’’). Each Fund will disclose on
TrimTabs ETF Trust, et al.; Notice of its Web site the identities and quantities
Application a hearing. Interested persons may
request a hearing by writing to the of the Portfolio Holdings that will form
August 4, 2016. Commission’s Secretary and serving 1 Applicants request that the order apply to an
applicants with a copy of the request, initial series and any future series of the Trust
AGENCY: Securities and Exchange personally or by mail. Hearing requests offering exchange-traded Shares, as well as other
Commission (‘‘Commission’’). should be received by the Commission existing or future open-end management companies
ACTION: Notice of an application for an by 5:30 p.m. on August 29, 2016, and or existing or future series thereof offering
mstockstill on DSK3G9T082PROD with NOTICES
exchange-traded Shares (and their respective
order under section 6(c) of the should be accompanied by proof of existing or future Master Funds, as defined below)
Investment Company Act of 1940 (the service on applicants, in the form of an that may utilize active management investment
‘‘Act’’) for an exemption from sections affidavit, or for lawyers, a certificate of strategies (collectively, ‘‘Future Funds’’). Any
2(a)(32), 5(a)(1), 22(d), and 22(e) of the service. Pursuant to rule 0–5 under the Future Fund will (a) be advised by the Initial
Adviser or an entity controlling, controlled by, or
Act and rule 22c–1 under the Act, under Act, hearing requests should state the under common control with the Initial Adviser
nature of the writer’s interest, any facts (each, an ‘‘Adviser’’), and (b) comply with the terms
19 17 CFR 200.30–3(a)(12). bearing upon the desirability of a and conditions of the application.
VerDate Sep<11>2014 17:34 Aug 09, 2016 Jkt 238001 PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 E:\FR\FM\10AUN1.SGM 10AUN1](https://thefederalregister.org/doc/81_FR_53076/page/4.svg)
Document Created: 2016-08-10 01:59:49
Document Modified: 2016-08-10 01:59:49
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 52922 |
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