81 FR 66708 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing of Proposed Rule Change To Amend BX Rules 4702 and 4703
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 188 (September 28, 2016)
Federal Register Volume 81, Issue 188 (September 28, 2016)
| Page Range | 66708-66711 | |
| FR Document | 2016-23324 |
[Federal Register Volume 81, Number 188 (Wednesday, September 28, 2016)] [Notices] [Pages 66708-66711] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-23324] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78909; File No. SR-BX-2016-046] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing of Proposed Rule Change To Amend BX Rules 4702 and 4703 September 22, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on September 13, 2016, NASDAQ BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BX Rules 4702, Order Types, and 4703, Order Attributes, to change the way in which Post Only Orders interact with resting Non-Display orders and preventing the execution of midpoint pegged orders during a crossed market. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqbx.cchwallstreet.com/, at the principal office of the Exchange, [[Page 66709]] 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 offers various Order Types \3\ and Order Attributes \4\ to help members trade effectively on behalf of investors and themselves. This proposal would modify the manner in which two of those order types, Non-Display and Post Only, interact within BX's trading system. --------------------------------------------------------------------------- \3\ See Exchange Rule 4702. The Exchange also proposes a minor technical correction to add the word ``price'' after the word ``displayed'' in the second line of the second paragraph of Rule 4702(b)(4)(B). \4\ See Exchange Rule 4703. --------------------------------------------------------------------------- The Exchange's Non-Display Orders, described in Rule 4702(b)(3), help members minimize market impact when trading in larger-than-average size. For example, institutions often use Non-Display Orders that use pegging at the midpoint (Midpoint Peg Order) \5\ of the National Best Bid and Offer (NBBO) to reduce market impact because a midpoint execution does not indicate a price movement direction, as opposed to buying at the offer or selling at the bid (sometimes referred to as ``crossing the spread'') which may publicly indicate the direction of the stock price. --------------------------------------------------------------------------- \5\ See Exchange Rule 4702(b)(3)(C). --------------------------------------------------------------------------- The Exchange also offers Post Only Orders, described in Rule 4702(b)(4), which members, often market makers, use to rest liquidity on BX's Order Book. Resting displayed liquidity is essential to price formation and order interaction, two indicators of healthy and orderly markets. BX introduced Post Only Orders \6\ to enable and encourage this valuable behavior. A Post Only buy (sell) order entered at a price below $1.00 will execute against a resting sell (buy) order if the value of price improvement equals or exceeds the foregone rebate for liquidity provision and fee for removing liquidity. If a Post Only buy (sell) order is entered at a price below $1.00 and is equal to the price of a resting sell (buy) order, the buy (sell) order is repriced one minimum price increment (MPV), generally $0.0001 \7\ lower (higher) than the resting sell (buy) order's price. --------------------------------------------------------------------------- \6\ See Post Only order Factsheet: http://www.nasdaqtrader.com/content/ProductsServices/Trading/postonly_factsheet.pdf. \7\ Securities priced at or above $1 are quoted in $0.01 increments, below $1, they can be quoted in $0.0001 increments. Post Only behavior is slightly different below $1 because the fees and economics involved in the execution are distinct from those at or above $1. Specifically, executions in securities priced at or above $1 result in rebates for the accessor of liquidity and as such it is always in the best interest of the incoming Post-Only Order to execute in securities at or above $1. See Exchange Rule 4702(b)(4)(A). In contrast, executions in securities priced below $1 result in charges to the accessor of liquidity. Compare Rules 7018 (a) and (b). In both cases, the Exchange system is programmed to analyze the price improvement offered and to execute only where permitted under its rules. --------------------------------------------------------------------------- This repricing function, sometimes referred to as ``price- sliding,'' often occurs when a liquidity provider seeking to tighten the bid/offer spread on the Exchange encounters a Non-Display Order on the opposite side of market from the Post Only Order. When this occurs, the displayed spread on the Exchange may become wider than on competing exchanges therefore reducing market quality and the likelihood of execution on the Exchange. In addition, the member entering the Post Only Order learns through the repricing action both that there is a Non-Display Order resting on the book and also the price at which the Non-Display Order is resting. The Exchange believes that this interaction is inefficient and detrimental to investors, to members, and to the market. Accordingly, the Exchange proposes two changes to the manner in which certain Post Only Orders respond to certain Non-Display Orders resting on the opposite side of the market. In all other instances, there will be no change. For example, Post-Only Orders will continue to execute against resting Non-Display Orders provided the price improvement associated with the execution equals or exceeds the foregone rebate for liquidity provision and fee for removing liquidity for the member entering the Post Only Order, as they do today. First, a Post-Only Order that is entered with a price below $1.00 and is equal to the price of a resting Non-Display Order will be posted at its limit price (or its adjusted price if applicable),\8\ rather than being re-priced as it is today. This allows the Post Only Order to lock the resting Non-Display Order.\9\ Both the displayed Post Only order and the resting Non-Display order will remain available for execution at the locking price. In this way, neither order is disadvantaged; the Exchange Bid/Offer spread is tightened; and no signal is sent to the member that entered the Post Only Order. In this scenario, efficacy is maintained or enhanced for both the Post Only Order user and the Non-Display Order user compared to today. For example, under the current rules if a Participant entered a Post-Only Order to buy at $0.95, the Best Offer \10\ was $0.97, and there was a Non-Displayed Order on the Exchange Book to sell at $0.95, the Post- Only Order would be ranked and displayed at $0.9499. Using the above scenario, the Exchange is proposing to instead rank and display the Post-Only Order to buy at its limit price of $0.95. --------------------------------------------------------------------------- \8\ If a Post-Only Order is received at a price that would lock or cross a Protected Quotations [sic], its price will be adjusted in the same manner as a Price to Comply order (if it is not Attributable) or a Price to Display Order (if it is Attributable). See Rules 4702(b)(1) and 4702(b)(4)(A). \9\ The Exchange believes that this condition is consistent with the Regulation NMS prohibition on locked and crossed markets because the Exchange will not be displaying a locked market. \10\ The term ``Best Offer'' is defined in Exchange Rule 4701(j). --------------------------------------------------------------------------- Second, the Exchange also proposes to modify processing when a Post Only Order, priced below $1.00, interacts with a Non-Display Order that is a Midpoint Peg Order. Specifically, when a Post Only buy (sell) order is priced higher (lower) than a resting Midpoint Peg Order but where the difference is less than the foregone rebate for liquidity provision and fee for removing liquidity, the Post Only Order will nonetheless be posted at its limit price. This proposal benefits investors and members because it results in a tighter Bid/Offer spread. Moreover, because the Post Only order is not re-priced relative to the resting Midpoint Peg order, as it is today, there is no information leakage. Additionally, the member entering the Midpoint Peg Order benefits because the new midpoint based on the new NBBO would now be a better price for the seller. Midpoint Peg orders are either cancelled or re-adjusted based on NBBO changes depending on the protocol used by the member to enter the Midpoint Peg Order.\11\ For example, under the current rules if the NBBO is $0.92 x $0.97 and a Participant enters a Midpoint Peg Order (which, as stated above, is Non-Displayed) to buy 200 shares with a limit price of $0.96, the [[Page 66710]] Midpoint Peg Order would post to the book at $0.945. If thereafter a Post-Only Order to sell 200 shares at $0.9449 is entered, the Post-Only Order would post and display at $0.9451 and Midpoint Peg Order would be cancelled or readjusted depending on the protocol used to enter the order. Under the proposed change and using the example above, the incoming Post-Only Order to sell 200 shares at $0.9449 would post and display at $0.9449 and the Midpoint Peg Order would be cancelled or re- adjusted depending on the protocol used to enter the order. --------------------------------------------------------------------------- \11\ See Exchange Rule 4703(d). --------------------------------------------------------------------------- In addition, the Exchange proposes to discontinue executing midpoint pegged orders when the NBBO is crossed. Today, the Exchange executes midpoint pegged orders when the NBBO is locked by executing at the locking price and when the NBBO is crossed by executing at the midpoint of the crossed price. Based upon feedback from members and the practice of other exchanges,\12\ the Exchange has determined that its current practice of executing midpoint pegged orders during such crossed markets produces sub-optimal execution prices for members and investors. The midpoint of a crossed market is not a clear and accurate indication of a valid price, nor is it indicative of a fair and orderly market. The better result is to simply not execute midpoint orders during crossed markets. To accomplish this, the Exchange will program the trading system to respond to the creation of a crossed NBBO by cancelling existing midpoint pegged orders and rejecting the entry of new midpoint pegged orders. After such order cancellation or rejection, members can resubmit their orders at their discretion without limitation. Accordingly, the Exchange proposes to modify the rule language describing the processing of Orders with the midpoint pegging attribute described in Rule 4703(d). --------------------------------------------------------------------------- \12\ See, e.g., BATS Rule 11.9(c)(9) (no midpoint execution during crossed market); NYSE Arca Rule 7.31(d)(4) (no midpoint execution when the market is locked or crossed). --------------------------------------------------------------------------- As set forth below, the Exchange believes the proposed changes will benefit investors and members by addressing certain market inefficiencies that exist on the Exchange, and by improving BX's competitive position against other exchanges that already offer similar processing of resting and non-displayed orders. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\13\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\14\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest in several ways. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- First, the proposed changes will benefit investors and members by tightening bid/offer spreads, thereby enhancing execution quality on the Exchange. Second, members entering Post Only Order users will be able to execute liquidity providing strategies more efficiently. Third, the proposed changes will reduce the signaling created today by the interaction of Post Only and Non-Display Order, and thereby minimize the market impact of larger orders. Fourth, the cancellation or rejection of midpoint pegged orders when the NBBO is crossed will avoid mispriced executions and result in higher overall execution quality for members. The Exchange believes the proposed changes have no detrimental impact on any member or class of members, or on users of the Post Only or Non-Display Order types or on users of other order types offered by the Exchange. First, the use of Exchange Order types and attributes is voluntary, in that no member is required to use any specific Order type or attribute or even to use any Exchange Order type or attribute or any Exchange functionality at all. If an Exchange member believes for any reason that the proposed rule change will be detrimental, that perceived detriment can be avoided by choosing not to enter or interact with the Order types modified by this proposed rule change. Second, the Exchange believes that the changes proposed herein will not result in any diminution of market quality (execution price, effective spread, fill rate, etc.) for any member entering or interacting with one of the Order types modified by this proposed rule change. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the Exchange believes the proposed rule changes are pro-competitive for several reasons. First, the proposed functionality is designed to compete with exchanges, including BATS and NYSE Arca, which already offer order types that behave similarly to how the Exchanges proposes Post Only and Non-Display Orders behave in the future. Second, the Exchange believes that the proposed rule change will make the Exchange a more competitive execution venue by creating tighter bid/offer spreads and by enhancing execution quality (i.e., achieving increased price improvement, reducing effective spreads, and increasing execution fill rates). Third, the Exchange proposes to offer the same functionality to all members, thereby eliminating potential competitive burden or differential treatment. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2016-046 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-BX-2016-046. This file number should be included on the subject line if email is used. To help the Commission process and review your [[Page 66711]] comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BX-2016-046 and should be submitted on or before October 19, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-23324 Filed 9-27-16; 8:45 am] BILLING CODE 8011-01-P
![66708 Federal Register / Vol. 81, No. 188 / Wednesday, September 28, 2016 / Notices
via a distribution to one or more of its III. Date of Effectiveness of the Reference Room, 100 F Street NE.,
executing Clearing Trading Permit Proposed Rule Change and Timing for Washington, DC 20549, on official
Holders will provide Professionals with Commission Action business days between the hours of
a convenient manner in which to The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of the
receive their rebates, which perfects the effective pursuant to Section 19(b)(3)(A) filing also will be available for
mechanism for a free and open market. of the Act 12 and paragraph (f) of Rule inspection and copying at the principal
19b–4 13 thereunder. At any time within office of the Exchange. All comments
Lastly, the Exchange believes the received will be posted without change;
proposed update to the Frequent Trader 60 days of the filing of the proposed rule
change, the Commission summarily may the Commission does not edit personal
Program—Volume Corrections Form identifying information from
along with the clarifying, non- temporarily suspend such rule change if
it appears to the Commission that such submissions. You should submit only
substantive and organizational changes information that you wish to make
action is necessary or appropriate in the
maintains clarity in the Form and Fees available publicly. All submissions
public interest, for the protection of
Schedule, respectively, and avoids investors, or otherwise in furtherance of should refer to File Number SR–CBOE–
potential confusion given the proposed the purposes of the Act. If the 2016–068, and should be submitted on
changes to expand the Frequent Trader Commission takes such action, the or before October 19, 2016.
Program. Alleviation of confusion Commission will institute proceedings For the Commission, by the Division of
removes impediments to, and perfects to determine whether the proposed rule Trading and Markets, pursuant to delegated
the mechanism for a free and open change should be approved or authority.14
market and a national market system, disapproved. Brent J. Fields,
and, in general, protects investors and Secretary.
IV. Solicitation of Comments
the public interest of market [FR Doc. 2016–23322 Filed 9–27–16; 8:45 am]
participants. Interested persons are invited to BILLING CODE 8011–01–P
submit written data, views, and
B. Self-Regulatory Organization’s arguments concerning the foregoing,
Statement on Burden on Competition including whether the proposed rule SECURITIES AND EXCHANGE
change is consistent with the Act. COMMISSION
CBOE does not believe that the Comments may be submitted by any of
proposed rule change will impose any the following methods: [Release No. 34–78909; File No. SR–BX–
burden on competition that is not 2016–046]
necessary or appropriate in furtherance Electronic Comments
Self-Regulatory Organizations;
of the purposes of the Act because, • Use the Commission’s Internet
NASDAQ BX, Inc.; Notice of Filing of
while the rebates apply only to comment form (http://www.sec.gov/
Proposed Rule Change To Amend BX
Customers and Professionals, the rules/sro.shtml); or
• Send an email to rule-comments@ Rules 4702 and 4703
proposed change is designed to
encourage increased Customer and sec.gov. Please include File Number SR– September 22, 2016.
Professional VIX, SPX and RUT options CBOE–2016–068 on the subject line. Pursuant to Section 19(b)(1) of the
volume, which provides greater trading Paper Comments Securities Exchange Act of 1934
opportunities for all market (‘‘Act’’),1 and Rule 19b–4 thereunder,2
• Send paper comments in triplicate notice is hereby given that on
participants. Additionally, the Exchange to Secretary, Securities and Exchange
notes that incentive programs based on September 13, 2016, NASDAQ BX, Inc.
Commission, 100 F Street NE., (‘‘BX’’ or ‘‘Exchange’’) filed with the
Customer and Professional volume Washington, DC 20549–1090.
already exist elsewhere within the Securities and Exchange Commission
All submissions should refer to File (‘‘SEC’’ or ‘‘Commission’’) the proposed
industry.11 The Exchange believes that Number SR–CBOE–2016–068. This file
the proposed rule change will not cause rule change as described in Items I and
number should be included on the II below, which Items have been
an unnecessary burden on intermarket subject line if email is used. To help the prepared by the Exchange. The
competition because VIX and SPX Commission process and review your Commission is publishing this notice to
products are only traded on CBOE and comments more efficiently, please use solicit comments on the proposed rule
RUT products are only traded on CBOE only one method. The Commission will change from interested persons.
and C2 Options Exchange, Incorporated. post all comments on the Commission’s
To the extent that the proposed changes Internet Web site (http://www.sec.gov/ I. Self-Regulatory Organization’s
make CBOE a more attractive rules/sro.shtml). Copies of the Statement of the Terms of Substance of
marketplace for market participants at submission, all subsequent the Proposed Rule Change
other exchanges, such market amendments, all written statements The Exchange proposes to amend BX
participants are welcome to become with respect to the proposed rule Rules 4702, Order Types, and 4703,
CBOE market participants. change that are filed with the Order Attributes, to change the way in
Commission, and all written which Post Only Orders interact with
C. Self-Regulatory Organization’s communications relating to the resting Non-Display orders and
Statement on Comments on the proposed rule change between the preventing the execution of midpoint
Proposed Rule Change Received From Commission and any person, other than pegged orders during a crossed market.
mstockstill on DSK3G9T082PROD with NOTICES
Members, Participants, or Others those that may be withheld from the The text of the proposed rule change
public in accordance with the is available on the Exchange’s Web site
The Exchange neither solicited nor provisions of 5 U.S.C. 552, will be at http://nasdaqbx.cchwallstreet.com/,
received comments on the proposed available for Web site viewing and at the principal office of the Exchange,
rule change. printing in the Commission’s Public
14 17 CFR 200.30–3(a)(12).
12 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
11 Id. 13 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.
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and at the Commission’s Public $1.00 will execute against a resting sell applicable),8 rather than being re-priced
Reference Room. (buy) order if the value of price as it is today. This allows the Post Only
improvement equals or exceeds the Order to lock the resting Non-Display
II. Self-Regulatory Organization’s
foregone rebate for liquidity provision Order.9 Both the displayed Post Only
Statement of the Purpose of, and
and fee for removing liquidity. If a Post order and the resting Non-Display order
Statutory Basis for, the Proposed Rule
Only buy (sell) order is entered at a will remain available for execution at
Change
price below $1.00 and is equal to the the locking price. In this way, neither
In its filing with the Commission, the price of a resting sell (buy) order, the order is disadvantaged; the Exchange
Exchange included statements buy (sell) order is repriced one Bid/Offer spread is tightened; and no
concerning the purpose of and basis for minimum price increment (MPV), signal is sent to the member that entered
the proposed rule change and discussed generally $0.0001 7 lower (higher) than the Post Only Order. In this scenario,
any comments it received on the the resting sell (buy) order’s price. efficacy is maintained or enhanced for
proposed rule change. The text of these This repricing function, sometimes both the Post Only Order user and the
statements may be examined at the referred to as ‘‘price-sliding,’’ often Non-Display Order user compared to
places specified in Item IV below. The occurs when a liquidity provider today. For example, under the current
Exchange has prepared summaries, set seeking to tighten the bid/offer spread rules if a Participant entered a Post-Only
forth in sections A, B, and C below, of on the Exchange encounters a Non- Order to buy at $0.95, the Best Offer 10
the most significant aspects of such Display Order on the opposite side of was $0.97, and there was a Non-
statements. market from the Post Only Order. When Displayed Order on the Exchange Book
A. Self-Regulatory Organization’s this occurs, the displayed spread on the to sell at $0.95, the Post-Only Order
Statement of the Purpose of, and Exchange may become wider than on would be ranked and displayed at
Statutory Basis for, the Proposed Rule competing exchanges therefore reducing $0.9499. Using the above scenario, the
Change market quality and the likelihood of Exchange is proposing to instead rank
execution on the Exchange. In addition, and display the Post-Only Order to buy
1. Purpose at its limit price of $0.95.
the member entering the Post Only
The Exchange offers various Order Order learns through the repricing Second, the Exchange also proposes
Types 3 and Order Attributes 4 to help action both that there is a Non-Display to modify processing when a Post Only
members trade effectively on behalf of Order resting on the book and also the Order, priced below $1.00, interacts
investors and themselves. This proposal price at which the Non-Display Order is with a Non-Display Order that is a
would modify the manner in which two Midpoint Peg Order. Specifically, when
resting. The Exchange believes that this
of those order types, Non-Display and a Post Only buy (sell) order is priced
interaction is inefficient and detrimental
Post Only, interact within BX’s trading higher (lower) than a resting Midpoint
to investors, to members, and to the
system. Peg Order but where the difference is
market.
The Exchange’s Non-Display Orders, less than the foregone rebate for
Accordingly, the Exchange proposes liquidity provision and fee for removing
described in Rule 4702(b)(3), help two changes to the manner in which
members minimize market impact when liquidity, the Post Only Order will
certain Post Only Orders respond to nonetheless be posted at its limit price.
trading in larger-than-average size. For certain Non-Display Orders resting on
example, institutions often use Non- This proposal benefits investors and
the opposite side of the market. In all members because it results in a tighter
Display Orders that use pegging at the other instances, there will be no change.
midpoint (Midpoint Peg Order) 5 of the Bid/Offer spread. Moreover, because the
For example, Post-Only Orders will Post Only order is not re-priced relative
National Best Bid and Offer (NBBO) to continue to execute against resting Non-
reduce market impact because a to the resting Midpoint Peg order, as it
Display Orders provided the price is today, there is no information leakage.
midpoint execution does not indicate a improvement associated with the
price movement direction, as opposed Additionally, the member entering the
execution equals or exceeds the Midpoint Peg Order benefits because the
to buying at the offer or selling at the foregone rebate for liquidity provision
bid (sometimes referred to as ‘‘crossing new midpoint based on the new NBBO
and fee for removing liquidity for the would now be a better price for the
the spread’’) which may publicly member entering the Post Only Order,
indicate the direction of the stock price. seller. Midpoint Peg orders are either
as they do today. cancelled or re-adjusted based on NBBO
The Exchange also offers Post Only
First, a Post-Only Order that is changes depending on the protocol used
Orders, described in Rule 4702(b)(4),
entered with a price below $1.00 and is by the member to enter the Midpoint
which members, often market makers,
equal to the price of a resting Non- Peg Order.11 For example, under the
use to rest liquidity on BX’s Order Book.
Resting displayed liquidity is essential
Display Order will be posted at its limit current rules if the NBBO is $0.92 ×
price (or its adjusted price if $0.97 and a Participant enters a
to price formation and order interaction,
two indicators of healthy and orderly Midpoint Peg Order (which, as stated
markets. BX introduced Post Only
7 Securities priced at or above $1 are quoted in above, is Non-Displayed) to buy 200
$0.01 increments, below $1, they can be quoted in shares with a limit price of $0.96, the
Orders 6 to enable and encourage this $0.0001 increments. Post Only behavior is slightly
valuable behavior. A Post Only buy different below $1 because the fees and economics 8 If a Post-Only Order is received at a price that
(sell) order entered at a price below involved in the execution are distinct from those at
or above $1. Specifically, executions in securities would lock or cross a Protected Quotations [sic], its
priced at or above $1 result in rebates for the price will be adjusted in the same manner as a Price
3 See Exchange Rule 4702. The Exchange also to Comply order (if it is not Attributable) or a Price
accessor of liquidity and as such it is always in the
mstockstill on DSK3G9T082PROD with NOTICES
proposes a minor technical correction to add the best interest of the incoming Post-Only Order to to Display Order (if it is Attributable). See Rules
word ‘‘price’’ after the word ‘‘displayed’’ in the execute in securities at or above $1. See Exchange 4702(b)(1) and 4702(b)(4)(A).
second line of the second paragraph of Rule Rule 4702(b)(4)(A). In contrast, executions in
9 The Exchange believes that this condition is
4702(b)(4)(B). securities priced below $1 result in charges to the consistent with the Regulation NMS prohibition on
4 See Exchange Rule 4703. locked and crossed markets because the Exchange
accessor of liquidity. Compare Rules 7018 (a) and
5 See Exchange Rule 4702(b)(3)(C).
(b). In both cases, the Exchange system is will not be displaying a locked market.
6 See Post Only order Factsheet: http:// 10 The term ‘‘Best Offer’’ is defined in Exchange
programmed to analyze the price improvement
www.nasdaqtrader.com/content/ProductsServices/ offered and to execute only where permitted under Rule 4701(j).
Trading/postonly_factsheet.pdf. its rules. 11 See Exchange Rule 4703(d).
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comments more efficiently, please use Administration, Processing And disaster for Public Assistance Only for
only one method. The Commission will Disbursement Center, 14925 Kingsport the State of Maryland (FEMA–4279–
post all comments on the Commission’s Road, Fort Worth, TX 76155. DR), dated 09/16/2016.
Internet Web site (http://www.sec.gov/ FOR FURTHER INFORMATION CONTACT: A. Incident: Severe Storms and Flooding.
rules/sro.shtml). Escobar, Office of Disaster Assistance, Incident Period: 07/30/2016 through
Copies of the submission, all U.S. Small Business Administration, 07/31/2016.
subsequent amendments, all written 409 3rd Street SW., Suite 6050, Effective Date: 09/16/2016.
statements with respect to the proposed Washington, DC 20416. Physical Loan Application Deadline
rule change that are filed with the SUPPLEMENTARY INFORMATION: Notice is Date: 11/15/2016.
Commission, and all written hereby given that as a result of the Economic Injury (EIDL) Loan
communications relating to the Administrator’s disaster declaration, Application Deadline Date: 06/16/2017.
proposed rule change between the applications for disaster loans may be ADDRESSES: Submit completed loan
Commission and any person, other than filed at the address listed above or other applications to: U.S. Small Business
those that may be withheld from the locally announced locations. Administration, Processing And
public in accordance with the The following areas have been Disbursement Center, 14925 Kingsport
provisions of 5 U.S.C. 552, will be determined to be adversely affected by Road, Fort Worth, TX 76155.
available for Web site viewing and the disaster:
printing in the Commission’s Public FOR FURTHER INFORMATION CONTACT: A.
Primary Counties: Sumner Escobar, Office of Disaster Assistance,
Reference Room, 100 F Street NE., Contiguous Counties:
Washington, DC 20549, on official U.S. Small Business Administration,
Kansas: Butler, Cowley, Harper, 409 3rd Street SW., Suite 6050,
business days between the hours of Kingman, Sedgwick
10:00 a.m. and 3:00 p.m. Copies of the Washington, DC 20416.
Oklahoma: Grant, Kay
filing also will be available for The Interest Rates are: SUPPLEMENTARY INFORMATION: Notice is
inspection and copying at the principal hereby given that as a result of the
office of the Exchange. All comments Percent President’s major disaster declaration on
received will be posted without change; 09/16/2016, Private Non-Profit
the Commission does not edit personal For Physical Damage: organizations that provide essential
identifying information from Homeowners With Credit Avail- services of governmental nature may file
able Elsewhere ......................... 3.125 disaster loan applications at the address
submissions. You should submit only
Homeowners Without Credit
information that you wish to make Available Elsewhere .................. 1.563
listed above or other locally announced
available publicly. Businesses With Credit Available locations.
All submissions should refer to File Elsewhere ................................. 6.250 The following areas have been
Number SR–BX–2016–046 and should Businesses Without Credit Avail- determined to be adversely affected by
be submitted on or before October 19, able Elsewhere ......................... 4.000 the disaster:
2016. Non-Profit Organizations With Primary Counties: Howard
Credit Available Elsewhere ....... 2.625
For the Commission, by the Division of Non-Profit Organizations Without
The Interest Rates are:
Trading and Markets, pursuant to delegated Credit Available Elsewhere ....... 2.625
authority.15 For Economic Injury: Percent
Brent J. Fields, Businesses & Small Agricultural
Secretary. Cooperatives Without Credit For Physical Damage:
Available Elsewhere .................. 4.000 Non-Profit Organizations With
[FR Doc. 2016–23324 Filed 9–27–16; 8:45 am] Credit Available Elsewhere ....... 2.625
BILLING CODE 8011–01–P
Non-Profit Organizations Without
Credit Available Elsewhere ....... 2.625 Non-Profit Organizations Without
Credit Available Elsewhere ....... 2.625
For Economic Injury:
The number assigned to this disaster
SMALL BUSINESS ADMINISTRATION Non-Profit Organizations Without
for physical damage is 14854 B and for Credit Available Elsewhere ....... 2.625
[Disaster Declaration #14854 and #14855] economic injury is 14855 0.
The States which received an EIDL The number assigned to this disaster
Kansas Disaster #KS–00097 Declaration # are Kansas, Oklahoma. for physical damage is 148596 and for
(Catalog of Federal Domestic Assistance economic injury is 148606.
AGENCY: U.S. Small Business
Number 59008)
Administration. (Catalog of Federal Domestic Assistance
ACTION: Notice.
Dated: September 16, 2016. Number 59008)
Maria Contreras-Sweet,
SUMMARY: This is a notice of an Administrator. James E. Rivera,
Administrative declaration of a disaster [FR Doc. 2016–23375 Filed 9–27–16; 8:45 am] Associate Administrator for Disaster
for the State of Kansas dated 09/16/ Assistance.
BILLING CODE 8025–01–P
2016. [FR Doc. 2016–23383 Filed 9–27–16; 8:45 am]
Incident: Severe Storms and Flooding. BILLING CODE 8025–01–P
Incident Period: 08/19/2016 through SMALL BUSINESS ADMINISTRATION
09/11/2016.
Effective Date: 09/16/2016. [Disaster Declaration #14859 and #14860] SMALL BUSINESS ADMINISTRATION
Physical Loan Application Deadline
mstockstill on DSK3G9T082PROD with NOTICES
Date: 11/15/2016. Maryland Disaster #MD–00034 [Disaster Declaration # 14857 and # 14858]
Economic Injury (EIDL) Loan AGENCY: U.S. Small Business
Application Deadline Date: 06/16/2017. Pennsylvania Disaster # PA–00071
Administration.
ADDRESSES: Submit completed loan ACTION: Notice. AGENCY: U.S. Small Business
applications to: U.S. Small Business Administration.
SUMMARY: This is a Notice of the
ACTION: Notice.
15 17 CFR 200.30–3(a)(12). Presidential declaration of a major
VerDate Sep<11>2014 18:04 Sep 27, 2016 Jkt 238001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\28SEN1.SGM 28SEN1](https://thefederalregister.org/doc/81_FR_66896/page/4.svg)
Document Created: 2016-09-28 01:08:32
Document Modified: 2016-09-28 01:08:32
| 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 66708 |
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