81 FR 64234 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.340 To Modify Certain Data Collection Requirements of the Regulation NMS Plan To Implement a Tick Size Pilot Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 181 (September 19, 2016)
Federal Register Volume 81, Issue 181 (September 19, 2016)
| Page Range | 64234-64238 | |
| FR Document | 2016-22417 |
[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)] [Notices] [Pages 64234-64238] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-22417] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78820; File No. SR-IEX-2016-13] Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.340 To Modify Certain Data Collection Requirements of the Regulation NMS Plan To Implement a Tick Size Pilot Program September 13, 2016. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ [[Page 64235]] notice is hereby given that, on August 30, 2016, the Investors Exchange LLC (``IEX'' or the ``Exchange'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. 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\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the Securities and Exchange Commission (``Commission'') a proposed rule change to amend Rule 11.340 to modify certain data collection requirements of the Regulation NMS Plan to Implement a Tick Size Pilot Program (``Plan'').\6\ --------------------------------------------------------------------------- \4\ 15 U.S.C. 78s(b)(1). \5\ 17 CFR 240.19b-4. \6\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (``Approval Order''). --------------------------------------------------------------------------- IEX has filed the proposed rule change for immediate effectiveness. IEX has requested that the SEC waive the 30-day operative period so that the proposed rule change can become operative on August 30, 2016. The text of the proposed rule change is available at the Exchange's Web site at www.iextrading.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 the Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization 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 statement may be examined at the places specified in Item IV below. The self-regulatory organization 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose On August 25, 2014, FINRA, and several other self-regulatory organizations (the ``Participants'') filed with the Commission, pursuant to Section 11A of the Act \7\ and Rule 608 of Regulation NMS thereunder,\8\ the Plan to Implement a Tick Size Pilot Program (the ``Plan'').\9\ The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014.\10\ The Plan was published for comment in the Federal Register on November 7, 2014, and approved by the Commission, as modified, on May 6, 2015.\11\ An amendment to the Plan adding IEX as a Participant was filed with the Commission on August 4, 2016.\12\ --------------------------------------------------------------------------- \7\ 15 U.S.C. 78k-1. \8\ 17 CFR 242.608. \9\ See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014. \10\ See Securities Exchange Act Release No 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). \11\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (``Approval Order''). \12\ Pursuant to the terms of the Plan, the amendment was effective upon filing pursuant to Rule 608(b)(3)(iii) of the Exchange Act because it involves solely technical or ministerial matters. --------------------------------------------------------------------------- The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stock of small- capitalization companies. Each Participant is required to comply, and to enforce compliance by its member organizations, as applicable, with the provisions of the Plan. The Plan provides for the creation of a group of Pilot Securities, which shall be placed in a control group and three separate test groups, with each subject to varying quoting and trading increments. Pilot Securities in the control group will be quoted at the current tick size increment of $0.01 per share and will trade at the currently permitted increments. Pilot Securities in the first test group will be quoted in $0.05 minimum increments but will continue to trade at any price increment that is currently permitted.\13\ Pilot Securities in the second test group (``Test Group Two'') will be quoted in $0.05 minimum increments and will trade at $0.05 minimum increments subject to a midpoint exception, a retail investor order exception, and a negotiated trade exception.\14\ Pilot Securities in the third test group (``Test Group Three'') will be subject to the same quoting and trading increments as Test Group Two, and also will be subject to the ``Trade-at'' requirement to prevent price matching by a market participant that is not displaying at the price of a Trading Center's ``Best Protected Bid'' or ``Best Protected Offer,'' unless an enumerated exception applies.\15\ In addition to the exceptions provided under Test Group Two, an exception for Block Size orders and exceptions that mirror those under Rule 611 of Regulation NMS \16\ will apply to the Trade-at requirement. --------------------------------------------------------------------------- \13\ See Section VI(B) of the Plan. \14\ See Section VI(C) of the Plan. \15\ See Section VI(D) of the Plan. \16\ 17 CFR 242.611. --------------------------------------------------------------------------- The Plan also requires a Trading Center \17\ or a Market Maker \18\ to collect and transmit certain data to its designated examining authority (``DEA''), and requires DEAs to transmit this data to the Commission. Participants that operate a Trading Center also are required under the Plan to collect certain data, which is then transmitted directly to the Commission. With respect to Trading Centers, Appendix B.I to the Plan (Market Quality Statistics) requires a Trading Center to submit to the Participant that is its DEA a variety of market quality statistics. Appendix B.II to the Plan (Market and Marketable Limit Order Data) requires a Trading Center to submit information to its DEA relating to market orders and marketable limit orders, including the time of order receipt, order type, the order size, and the National Best Bid and National Best Offer quoted price. --------------------------------------------------------------------------- \17\ The Plan incorporates the definition of a ``Trading Center'' from Rule 600(b)(78) of Regulation NMS. Regulation NMS defines a ``Trading Center'' as ``a national securities exchange or national securities association that operates an SRO trading facility, an alternative trading system, an exchange market maker, an OTC market maker, or any other broker or dealer that executes orders internally by trading as principal or crossing orders as agent.'' See 17 CFR 242.600(b). \18\ The Plan defines a Market Maker as ``a dealer registered with any self-regulatory organization, in accordance with the rules thereof, as (i) a market maker or (ii) a liquidity provider with an obligation to maintain continuous, two-sided trading interest.'' --------------------------------------------------------------------------- With respect to Market Makers, Appendix B.III requires a Participant that is a national securities exchange to collect daily Market Maker Registration statistics. Appendix B.IV requires a Participant to collect data related to Market Maker participation with respect to each Market Maker engaging in trading activity on a Trading Center operated by the Participant. Appendix C.I requires a Participant to collect data related to Market Maker profitability from each Market Maker for which it is the DEA. Appendix C.II requires the Participant, as DEA, to aggregate the Appendix C.I data, and to transmit this data to the Commission. The Commission approved the Pilot on a two-year basis, with implementation to begin no later than [[Page 64236]] May 6, 2016.\19\ On November 6, 2015, the SEC exempted the Participants from implementing the pilot until October 3, 2016.\20\ As set forth in Appendices B and C to the Plan, data that is reported pursuant to the appendices shall be provided for dates starting six months prior to the Pilot Period through six months after the end of the Pilot Period. Under the revised Pilot implementation date, the Pre-Pilot data collection period commenced on April 4, 2016. --------------------------------------------------------------------------- \19\ See Approval Order at 27533 and 27545. \20\ See Securities Exchange Act Release No. 76382 (November 6, 2015), 80 FR 70284 (November 13, 2015) (File No. 4-657). --------------------------------------------------------------------------- On July 28, 2016, IEX filed with the Commission a proposed rule change to adopt IEX Rule 11.340(b) to implement the data collection requirements of the Plan and also requested that the Commission grant it certain specified exemptions that were previously provided to other Plan Participants prior to the time that IEX became a Plan Participant.\21\ --------------------------------------------------------------------------- \21\ See Securities Exchange Act Release No. 78481 (August 4, 2016), 81 FR 52933 (August 10, 2016) (Notice of Filing of File No. SR-IEX-2016-07). IEX will also shortly submit a proposed rule change to implement the quoting and trading requirements of the Plan. --------------------------------------------------------------------------- IEX now proposes to further amend Rule 11.340(b) to modify additional data collection and reporting requirements.\22\ First, Appendix B.I.a(21) through B.I.a(27) currently requires that Trading Centers report the cumulative number of shares of cancelled orders during a specified duration of time after receipt of the order that was cancelled. IEX and the other Participants believe that, for purposes of reporting cancelled orders, it is appropriate to categorize unexecuted Immediate or Cancel orders separately as one bucket irrespective of the duration of time after order receipt, i.e., without a time increment, to better differentiate orders cancelled subsequent to entry from those where the customer's intent prior to order entry was to cancel the order if no execution could be immediately obtained. IEX, therefore, proposes to modify Supplementary Material .04 to provide that unexecuted Immediate or Cancel orders shall be categorized separately for purposes of Appendix B.I.a(21) through B.I.a(27). --------------------------------------------------------------------------- \22\ IEX notes that, in connection with this proposed rule change, the Participants have submitted a request seeking exemptive relief from certain of the Plan's data collection requirements. --------------------------------------------------------------------------- The second change relates to the reporting of daily market quality statistics pursuant to Appendix B.I. Currently, Appendix B.I sets forth categories of orders, including market orders, marketable limit orders, and inside-the-quote resting limit orders, for which daily market quality statistics must be reported. IEX and the other Participants have determined that it is appropriate to include an order type for limit orders priced more than $0.10 away from the NBBO for purposes of Appendix B reporting. IEX therefore proposes to amend Supplementary Material .06 to provide that limit orders priced more than $0.10 away from the NBBO shall be included as an order type for purposes of Appendix B reporting, and shall be assigned the number (22). These orders are not currently required to be reported pursuant to Appendix B, and IEX and the other Participants believe that requiring the reporting of such orders will produce a more comprehensive data set. The third change relates to the reporting of market quality statistics pursuant to Appendix B.I for a variety of order types, including inside-the-quote resting limit orders (12), at-the-quote resting limit orders (13), and near-the-quote resting limit orders (within $0.10 of the NBBO) (14). IEX and the other Participants believe that it is appropriate to require Trading Centers to report all orders that fall within these categories, and not just those orders that are ``resting.'' IEX therefore, proposes to amend Supplementary Material .06 to make this change. In the fourth change, IEX proposes to add new Supplementary Material .08 to modify the manner in which market maker participation statistics are calculated. Currently, Appendix B.IV provides that market maker participation statistics shall be calculated based on share participation, trade participation, cross-quote share (trade) participation, inside-the-quote share (trade) participation, at-the- quote share (trade) participation, and outside-the-quote share (trade) participation. IEX and the other Participants have determined that it is appropriate to add the count of the number of Market Makers used in the calculation of share (trade) participation to each category. FINRA [sic] is therefore proposing this change as part of Supplementary Material .10. In addition, Appendix B.IV(b) and (c) currently require that, when aggregating across Market Makers, share participation and trade participation shall be calculated using the share-weighted average and trade-weighted average, respectively. IEX and the other Participants believe that it is more appropriate to calculate share and trade participation by providing the total count of shares or trades, as applicable, rather than weighted averages, and IEX is therefore proposing this change as part of Supplementary Material .10. The fifth change relates to the NBBO that a Trading Center is required to use when performing certain quote-related calculations. When calculating cross-quote share (trade) participation pursuant to Appendix B.IV(d) and inside-the-quote share (trade) participation pursuant to Appendix B.IV(e), the Plan requires the Trading Center to utilize the NBBO at the time of the trade for both share and trade participation calculations. When calculating at-the-quote share (trade) participation and outside-the-quote share (trade) participation pursuant to Appendix B.IV(f) and (g), the Plan allows the Trading Center to utilize the National Best Bid of National Best Offer (NBBO) at the time of or immediately before the trade for both share and trade participation calculations. IEX and the other Participants believe that it is appropriate to calculate all quote participation (cross-quote share (trade) participation, inside-the-quote share (trade) participation, at-the-quote share (trade) participation and outside- the-quote share (trade) participation) solely by reference to the NBBO in effect immediately prior to the trade. IEX therefore proposes to make this change as part of Supplementary Material .08. Finally, IEX proposes to change the end date until which the Pre- Pilot Data Collection Securities shall be used to fulfill the Plan's data collection requirements. Currently, Supplementary Material .10 provides that Pre-Pilot Data Collection Securities are the securities designated by the Participants for purposes of the data collection requirements described in Items I, II and IV of Appendix B and Item I of Appendix C to the Plan for the period beginning six months prior to the Pilot Period and ending on the trading day immediately preceding the Pilot Period. IEX and the other Participants believe that it is appropriate to use the Pilot Securities to satisfy the Plan's data collection requirements prior to the commencement of the Pilot. According, IEX is revising Supplementary Material .10 (which will be re-numbered as Supplementary Material .11) to provide that the Pre- Pilot Data Collection Securities shall be used to satisfy the Plan's data collection requirements through thirty-one days prior to the Pilot Period, after which time the Pilot Securities shall be used for purposes of the data collection requirements.\23\ --------------------------------------------------------------------------- \23\ After regular trading hours on September 2, 2016, the national securities exchanges will establish which securities will be included as Pilot Securities for purposes of the Plan. FINRA and the other Participants have determined that members should use the Pilot Securities list for data collection purposes once it becomes available. Thus, the proposed rule change requires that, beginning thirty days prior to the first day of the Pilot Period--i.e., September 3, 2016--IEX and IEX members will comply with the data collection obligations of the Plan by collecting data on the Pilot Securities. As a result, beginning on September 3, 2016, members must migrate from using IEX's published Pre-Pilot Data Collection Security list and begin using the Pilot Securities list. September 2, 2016 will be the last day that members use the Pre-Pilot Data Collection Security list. --------------------------------------------------------------------------- [[Page 64237]] As noted in Item 2 of this filing, IEX has filed the proposed rule change for immediate effectiveness. IEX has requested that the SEC waive the 30-day operative period so that the proposed rule change can become operative on August 30, 2016. 2. Statutory Basis IEX believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\24\ in general and furthers the objectives of Sections 6(b)(5) of the Act \25\ in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78f(b). \25\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- IEX believes that this proposal is consistent with the Act because it implements and clarifies the provisions of the Plan, and is designed to assist IEX in meeting its regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Pilot was an appropriate, data-driven test that was designed to evaluate the impact of a wider tick size on trading, liquidity, and the market quality of securities of smaller capitalization companies, and was therefore in furtherance of the purposes of the Act. IEX believes that this proposal is in furtherance of the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Act because the proposal implements and clarifies the requirements of the Plan. B. Self-Regulatory Organization's Statement on Burden on Competition IEX notes that the proposed rule change implements the provisions of the Plan, and is designed to assist IEX in meeting its regulatory obligations pursuant to the Plan. IEX also notes that, other than the change to require use of the Pilot Securities beginning thirty days prior to the beginning of the Pilot Period, the proposed changes will not affect the data collection and reporting requirements for members that operate Trading Centers; the proposed changes will only affect how IEX and other Participants that operate Trading Centers collect and report data. IEX notes that, with respect to the change to require the use of the Pilot Securities beginning thirty days prior to the start of the Pilot Period, the proposed change reduces the number of securities on which affected members otherwise would have been required to collect data pursuant to the Plan and IEX Rule 11.340(b). In addition, the proposed rule change applies equally to all similarly situated members. Therefore, IEX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \26\ and Rule 19b-4(f)(6) \27\ thereunder because the proposal does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) by its terms, become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. --------------------------------------------------------------------------- \26\ 15 U.S.C. 78s(b)(3)(A). \27\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \28\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\29\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. IEX has asked the Commission to waive the 30-day operative delay so that so that the proposed rule change can become operative on August 30, 2016. --------------------------------------------------------------------------- \28\ 17 CFR 240.19b-4(f)(6). \29\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow IEX to implement the proposed rules immediately thereby preventing delays in the implementation of the Plan. The Commission notes that the Plan is scheduled to start on October 3, 2016. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative upon filing with the Commission.\30\ --------------------------------------------------------------------------- \30\ For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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.\31\ --------------------------------------------------------------------------- \31\ 15 U.S.C. 78s(b)(3)(C). --------------------------------------------------------------------------- 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-IEX-2016-13 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. All submissions should refer to File Number SR-IEX-2016-03. This file number should be included in 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 [[Page 64238]] 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 Section, 100 F Street NE., Washington, DC 20549-1090. Copies of the filing will also be available for inspection and copying at the IEX's principal office and on its Internet Web site at www.iextrading.com. 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-IEX-2016-13 and should be submitted on or before October 11, 2016.\32\ --------------------------------------------------------------------------- \32\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. Robert W. Errett, Deputy Secretary. [FR Doc. 2016-22417 Filed 9-16-16; 8:45 am] BILLING CODE 8011-01-P
![64234 Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
8. (a) If any Affiliated Fund or any concerning Potential Co-Investment maintained by such AB–PCI Adviser at
Regulated Fund desires to make a Transactions and Co-Investment a bank or banks having the
Follow-On Investment in a portfolio Transactions, including investments qualifications prescribed in section
company whose securities were made by other Regulated Funds or 26(a)(1) of the Act, and the account will
acquired in a Co-Investment Affiliated Funds that the Regulated earn a competitive rate of interest that
Transaction, the applicable AB–PCI Fund considered but declined to will also be divided pro rata among the
Advisers will: participate in, so that the Non-Interested participating Regulated Funds and
(i) Notify each Regulated Fund that Directors may determine whether all Affiliated Funds based on the amounts
participated in the Co-Investment investments made during the preceding they invest in such Co-Investment
Transaction of the proposed transaction quarter, including those investments Transaction. None of the Affiliated
at the earliest practical time; and that the Regulated Fund considered but Funds, the AB–PCI Advisers, the other
(ii) formulate a recommendation as to declined to participate in, comply with Regulated Funds or any affiliated person
the proposed participation, including the conditions of the Order. In addition, of the Regulated Funds or Affiliated
the amount of the proposed Follow-On the Non-Interested Directors will Funds will receive additional
Investment, by each Regulated Fund. consider at least annually the continued compensation or remuneration of any
(b) A Regulated Fund may participate appropriateness for the Regulated Fund kind as a result of or in connection with
in such Follow-On Investment without of participating in new and existing Co- a Co-Investment Transaction (other than
obtaining prior approval of the Required Investment Transactions. (a) in the case of the Regulated Funds
Majority if: (i) The proposed 10. Each Regulated Fund will and the Affiliated Funds, the pro rata
participation of each Regulated Fund maintain the records required by section transaction fees described above and
and each Affiliated Fund in such 57(f)(3) of the Act as if each of the fees or other compensation described in
investment is proportionate to its Regulated Funds were a BDC and each condition 2(c)(iii)(C); and (b) in the case
outstanding investments in the issuer of the investments permitted under of an AB–PCI Adviser, investment
immediately preceding the Follow-On these conditions were approved by the advisory fees paid in accordance with
Investment; and (ii) the Board of the Required Majority under section 57(f) of the agreement between the AB–PCI
Regulated Fund has approved as being the Act. Adviser and the Regulated Fund or
in the best interests of the Regulated 11. No Non-Interested Director of a Affiliated Fund.
Fund the ability to participate in Regulated Fund will also be a director, 14. If the Holders own in the aggregate
Follow-On Investments on a pro rata general partner, managing member or more than 25% of the Shares of a
basis (as described in greater detail in principal, or otherwise an ‘‘affiliated Regulated Fund, then the Holders will
the application). In all other cases, the person’’ (as defined in the Act) of an vote such Shares as directed by an
AB–PCI Adviser will provide its written Affiliated Fund. independent third party when voting on
recommendation as to the Regulated 12. The expenses, if any, associated (1) the election of directors; (2) the
Fund’s participation to the Eligible with acquiring, holding or disposing of removal of one or more directors; or (3)
Directors, and the Regulated Fund will any securities acquired in a Co- any other matter under either the Act or
participate in such Follow-On Investment Transaction (including, applicable State law affecting the
Investment solely to the extent that a without limitation, the expenses of the Board’s composition, size or manner of
Required Majority determines that it is distribution of any such securities election.
in the Regulated Fund’s best interests. registered for sale under the Securities For the Commission, by the Division of
(c) If, with respect to any Follow-On Act) will, to the extent not payable by Investment Management, under delegated
Investment: the AB–PCI Advisers under their authority.
(i) The amount of the opportunity is respective investment advisory Robert W. Errett,
not based on the Regulated Funds’ and agreements with Affiliated Funds and Deputy Secretary.
the Affiliated Funds’ outstanding the Regulated Funds, be shared by the [FR Doc. 2016–22427 Filed 9–16–16; 8:45 am]
investments immediately preceding the Regulated Funds and the Affiliated BILLING CODE 8011–01–P
Follow-On Investment; and Funds in proportion to the relative
(ii) the aggregate amount
amounts of the securities held or to be
recommended by the AB–PCI Adviser to SECURITIES AND EXCHANGE
acquired or disposed of, as the case may
be invested by each Regulated Fund in COMMISSION
be.
the Follow-On Investment, together
13. Any transaction fee 12 (including [Release No. 34–78820; File No. SR–IEX–
with the amount proposed to be
break-up or commitment fees but 2016–13]
invested by the participating Affiliated
excluding broker’s fees contemplated
Funds in the same transaction, exceeds
section 17(e) or 57(k) of the Act, as Self-Regulatory Organizations;
the amount of the opportunity; then the
applicable), received in connection with Investors Exchange LLC; Notice of
amount invested by each such party will
a Co-Investment Transaction will be Filing and Immediate Effectiveness of
be allocated among them pro rata based
distributed to the participating Proposed Rule Change To Amend Rule
on each participant’s capital available
Regulated Funds and Affiliated Funds 11.340 To Modify Certain Data
for investment in the asset class being
on a pro rata basis based on the amounts Collection Requirements of the
allocated, up to the amount proposed to
they invested or committed, as the case Regulation NMS Plan To Implement a
be invested by each.
(d) The acquisition of Follow-On may be, in such Co-Investment Tick Size Pilot Program
Investments as permitted by this Transaction. If any transaction fee is to
mstockstill on DSK3G9T082PROD with NOTICES
September 13, 2016.
condition will be considered a Co- be held by an AB–PCI Adviser pending
consummation of the transaction, the Pursuant to Section 19(b)(1) 1 of the
Investment Transaction for all purposes Securities Exchange Act of 1934 (the
and subject to the other conditions set fee will be deposited into an account
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
forth in the application. 12 Applicants are not requesting and the staff is
9. The Non-Interested Directors of not providing any relief for transaction fees
1 15 U.S.C. 78s(b)(1).
each Regulated Fund will be provided received in connection with any Co-Investment 2 15 U.S.C. 78a.
quarterly for review all information Transaction. 3 17 CFR 240.19b–4.
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![64236 Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
May 6, 2016.19 On November 6, 2015, which daily market quality statistics this change as part of Supplementary
the SEC exempted the Participants from must be reported. IEX and the other Material .10.
implementing the pilot until October 3, Participants have determined that it is The fifth change relates to the NBBO
2016.20 As set forth in Appendices B appropriate to include an order type for that a Trading Center is required to use
and C to the Plan, data that is reported limit orders priced more than $0.10 when performing certain quote-related
pursuant to the appendices shall be away from the NBBO for purposes of calculations. When calculating cross-
provided for dates starting six months Appendix B reporting. IEX therefore quote share (trade) participation
prior to the Pilot Period through six proposes to amend Supplementary pursuant to Appendix B.IV(d) and
months after the end of the Pilot Period. Material .06 to provide that limit orders inside-the-quote share (trade)
Under the revised Pilot implementation priced more than $0.10 away from the participation pursuant to Appendix
date, the Pre-Pilot data collection period NBBO shall be included as an order B.IV(e), the Plan requires the Trading
commenced on April 4, 2016. type for purposes of Appendix B Center to utilize the NBBO at the time
On July 28, 2016, IEX filed with the reporting, and shall be assigned the of the trade for both share and trade
Commission a proposed rule change to number (22). These orders are not participation calculations. When
adopt IEX Rule 11.340(b) to implement currently required to be reported calculating at-the-quote share (trade)
the data collection requirements of the pursuant to Appendix B, and IEX and participation and outside-the-quote
Plan and also requested that the the other Participants believe that share (trade) participation pursuant to
Commission grant it certain specified requiring the reporting of such orders Appendix B.IV(f) and (g), the Plan
exemptions that were previously will produce a more comprehensive allows the Trading Center to utilize the
provided to other Plan Participants prior data set. National Best Bid of National Best Offer
to the time that IEX became a Plan The third change relates to the (NBBO) at the time of or immediately
Participant.21 reporting of market quality statistics before the trade for both share and trade
IEX now proposes to further amend participation calculations. IEX and the
pursuant to Appendix B.I for a variety
Rule 11.340(b) to modify additional data other Participants believe that it is
of order types, including inside-the-
collection and reporting requirements.22 appropriate to calculate all quote
quote resting limit orders (12), at-the-
First, Appendix B.I.a(21) through participation (cross-quote share (trade)
quote resting limit orders (13), and near-
B.I.a(27) currently requires that Trading participation, inside-the-quote share
the-quote resting limit orders (within
Centers report the cumulative number of (trade) participation, at-the-quote share
$0.10 of the NBBO) (14). IEX and the
shares of cancelled orders during a (trade) participation and outside-the-
other Participants believe that it is
specified duration of time after receipt quote share (trade) participation) solely
appropriate to require Trading Centers
of the order that was cancelled. IEX and by reference to the NBBO in effect
to report all orders that fall within these
the other Participants believe that, for immediately prior to the trade. IEX
purposes of reporting cancelled orders, categories, and not just those orders that
are ‘‘resting.’’ IEX therefore, proposes to therefore proposes to make this change
it is appropriate to categorize as part of Supplementary Material .08.
unexecuted Immediate or Cancel orders amend Supplementary Material .06 to
make this change. Finally, IEX proposes to change the
separately as one bucket irrespective of end date until which the Pre-Pilot Data
the duration of time after order receipt, In the fourth change, IEX proposes to
add new Supplementary Material .08 to Collection Securities shall be used to
i.e., without a time increment, to better fulfill the Plan’s data collection
differentiate orders cancelled modify the manner in which market
maker participation statistics are requirements. Currently, Supplementary
subsequent to entry from those where Material .10 provides that Pre-Pilot Data
the customer’s intent prior to order calculated. Currently, Appendix B.IV
provides that market maker Collection Securities are the securities
entry was to cancel the order if no designated by the Participants for
execution could be immediately participation statistics shall be
calculated based on share participation, purposes of the data collection
obtained. IEX, therefore, proposes to requirements described in Items I, II and
modify Supplementary Material .04 to trade participation, cross-quote share
(trade) participation, inside-the-quote IV of Appendix B and Item I of
provide that unexecuted Immediate or Appendix C to the Plan for the period
Cancel orders shall be categorized share (trade) participation, at-the-quote
share (trade) participation, and outside- beginning six months prior to the Pilot
separately for purposes of Appendix Period and ending on the trading day
B.I.a(21) through B.I.a(27). the-quote share (trade) participation.
IEX and the other Participants have immediately preceding the Pilot Period.
The second change relates to the IEX and the other Participants believe
reporting of daily market quality determined that it is appropriate to add
the count of the number of Market that it is appropriate to use the Pilot
statistics pursuant to Appendix B.I. Securities to satisfy the Plan’s data
Currently, Appendix B.I sets forth Makers used in the calculation of share
(trade) participation to each category. collection requirements prior to the
categories of orders, including market commencement of the Pilot. According,
orders, marketable limit orders, and FINRA [sic] is therefore proposing this
change as part of Supplementary IEX is revising Supplementary Material
inside-the-quote resting limit orders, for .10 (which will be re-numbered as
Material .10. In addition, Appendix
19 See B.IV(b) and (c) currently require that, Supplementary Material .11) to provide
Approval Order at 27533 and 27545.
20 See Securities Exchange Act Release No. 76382 when aggregating across Market Makers, that the Pre-Pilot Data Collection
(November 6, 2015), 80 FR 70284 (November 13, share participation and trade Securities shall be used to satisfy the
2015) (File No. 4–657). participation shall be calculated using Plan’s data collection requirements
21 See Securities Exchange Act Release No. 78481
the share-weighted average and trade- through thirty-one days prior to the
mstockstill on DSK3G9T082PROD with NOTICES
(August 4, 2016), 81 FR 52933 (August 10, 2016) Pilot Period, after which time the Pilot
(Notice of Filing of File No. SR–IEX–2016–07). weighted average, respectively. IEX and
IEX will also shortly submit a proposed rule the other Participants believe that it is Securities shall be used for purposes of
change to implement the quoting and trading more appropriate to calculate share and the data collection requirements.23
requirements of the Plan. trade participation by providing the
22 IEX notes that, in connection with this 23 After regular trading hours on September 2,
proposed rule change, the Participants have
total count of shares or trades, as 2016, the national securities exchanges will
submitted a request seeking exemptive relief from applicable, rather than weighted establish which securities will be included as Pilot
certain of the Plan’s data collection requirements. averages, and IEX is therefore proposing Securities for purposes of the Plan. FINRA and the
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![64238 Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
those that may be withheld from the 967.1NY(a)(2) and (3) until September Order to implement the second layer of
public in accordance with the 30, 2016 The proposed rule change is protection (the Underlying Stock Price/
provisions of 5 U.S.C. 552, will be available on the Exchange’s Web site at Strike Price Check) pursuant to
available for Web site viewing and www.nyse.com, at the principal office of Commentary .01 to Rule 967.1NY,
printing in the Commission’s Public the Exchange, and at the Commission’s which was March 4, 2016.6
Reference Section, 100 F Street NE., Public Reference Room.
In March 2016, because the Exchange
Washington, DC 20549–1090. Copies of
II. Self-Regulatory Organization’s had not yet implemented the
the filing will also be available for
Statement of the Purpose of, and Underlying Stock Price/Strike Price
inspection and copying at the IEX’s
Statutory Basis for, the Proposed Rule Check, the Exchange extended the
principal office and on its Internet Web
Change deadline to implement Rule
site at www.iextrading.com. All
comments received will be posted In its filing with the Commission, the 967.1NY(a)(2) and (3) until July 31, 2016
without change; the Commission does self-regulatory organization included (the ‘‘July 31st Deadline’’).7 Subsequent
not edit personal identifying statements concerning the purpose of, to this extension, the Exchange
information from submissions. You and basis for, the proposed rule change modified Commentary .01 to Rule
should submit only information that and discussed any comments it received 967.1NY to exclude from the
you wish to make available publicly. All on the proposed rule change. The text Underlying Stock Price/Strike Price
submissions should refer to File of those statements may be examined at Check certain securities for which there
Number SR–IEX–2016–13 and should the places specified in Item IV below. was no reliable (or in some cases any)
be submitted on or before October 11, The Exchange has prepared summaries, last sale data.8 Although the Exchange
2016.32 set forth in sections A, B, and C below, had finalized the technology related to
of the most significant parts of such the Underlying Stock Price/Strike Price
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
statements. Check, because this technology was
authority. A. Self-Regulatory Organization’s packaged in a larger technology release
Robert W. Errett, Statement of the Purpose of, and the that is currently being rolled out, the
Deputy Secretary. Statutory Basis for, the Proposed Rule Exchange was not able to implement the
[FR Doc. 2016–22417 Filed 9–16–16; 8:45 am] Change technology by the July 31st Deadline.
BILLING CODE 8011–01–P
The Exchange is in the process of
1. Purpose implementing the technology release
The Exchange is proposing to extend that includes the Underlying Stock
SECURITIES AND EXCHANGE the deadline for implementing Rule Price/Strike Price Check and plans to
COMMISSION 967.1NY(a)(2) and (3) until September complete this implementation no later
30, 2016. The Exchange has not met the than the end of September 2016. The
[Release No. 34–78829; File No. SR– current implementation deadline of July
NYSEMKT–2016–86] Exchange believes the proposed
31, 2016. extension of the July 31st Deadline until
Self-Regulatory Organizations; NYSE In March 2015, the Commission September 30, 2016 would provide the
MKT LLC; Notice of Filing and approved Rule 967.1NY, which Exchange with sufficient time to
Immediate Effectiveness of Proposed provides a price protection risk implement the functionality related to
Rule Change To Extend the Deadline mechanism for Market Maker quotes.4 the rule. Moreover, the proposed change
for Implementing Rule 967.1NY(a)(2) Rule 967.1NY provides two layers of would update the rule to reflect the
and (3) Until September 30, 2016 price protection to incoming Market extended deadline, thus making clear to
Maker quotes, rejecting those Market investors and the public that the
September 13, 2016. Maker quotes that exceed certain Underlying Stock Price/Strike Price
Pursuant to Section 19(b)(1) 1 of the parameters, as a risk mitigation tool.5 Check is not yet implemented.9
Securities Exchange Act of 1934 (the The Exchange has implemented the first
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 layer of price protection (the NBBO 6 See Securities Exchange Act Release No. 75151
notice is hereby given that on Reasonability Check) and had until one (June 11, 2015), 80 FR 34770 (June 17, 2015) (SR–
September 6, 2016, NYSE MKT LLC (the year from the date of the Approval NYSEMKT–2015–42).
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with 7 See Securities Exchange Act Release No. 77356
the Securities and Exchange 4 See Securities Exchange Act Release No. 74440 (March 14, 2016), 81 FR 14917 (March 18, 2016)
(March 4, 2015), 80 FR 12687 (March 10, 2015) (SR– (SR–NYSEMKT–2016–36).
Commission (the ‘‘Commission’’) the
NYSEMKT–2014–116) (Approval Order); see also 8 See Securities Exchange Act Release No. 77749
proposed rule change as described in Securities Exchange Act Release No. 74017 (January (April 29, 2016), 81 FR 27184 (May 5, 2016) (SR–
Items I and II below, which Items have 8, 2015), 80 FR 1979 (January 14, 2015) (SR– NYSEMKT–2016–47).
been prepared by the self-regulatory NYSEMKT–2014–116) (Notice). 9 The Exchange has issued Trader Updates
5 The first layer of price protection assesses informing its market participants that the
organization. The Commission is
incoming sell quotes against the NBB and incoming functionality related to the Underlying Stock Price/
publishing this notice to solicit buy quotes against the NBO (the ‘‘NBBO Price Strike Price Check is not yet available but is
comments on the proposed rule change Reasonability Check’’). Specifically, Rule currently being implemented (together with the
from interested persons. 967.1NY(a)(1) provided that when an NBBO is other technology updates with which it was
available, a Market Maker quote would be rejected packaged). See, e.g., Trader Updates regarding
I. Self-Regulatory Organization’s if it is priced a specified dollar amount or Enhancements to Risk Control Functionality in
Statement of the Terms of Substance of percentage through the contra-side NBBO. The Enhanced Certification Environment, dated 6/6/16,
the Proposed Rule Change second layer of price protection assesses the price available here, https://www.nyse.com/publicdocs/
mstockstill on DSK3G9T082PROD with NOTICES
of call or put bids against a specified benchmark nyse/notifications/trader-update/
The Exchange proposes to extend the (the ‘‘Underlying Stock Price/Strike Price Check’’), NYSE%20Amex%20and%20Arca%20-%20
deadline for implementing Rule per Rule 967.1NY(a)(2) and (3). This second layer Enhanced%20Risk%20Controls%20in%20
of protection applies to bids in call options or put Enhanced%20Cert.pdf and regarding Risk Controls/
32 17
options when (1) there is no NBBO available, for Series Lookup Table Enhancements, dated 8/25/16,
CFR 200.30–3(a)(12). example, during pre-opening or prior to conducting available here, https://www.nyse.com/publicdocs/
1 15 U.S.C.78s(b)(1). a re-opening after a trading halt, or (2) if the NBBO nyse/notifications/trader-update/NYSE%
2 15 U.S.C. 78a.
is so wide as to not reflect an appropriate price for 20Amex%20-%20Risk%20Controls%20
3 17 CFR 240.19b–4. the respective options series. Release%20details.pdf.
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Document Created: 2016-09-17 02:29:44
Document Modified: 2016-09-17 02:29:44
| 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 64234 |
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