81 FR 69878 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Partial Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Partial Amendment No. 2, To Amend Rule 67 Relating to the Tick Size Pilot Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 195 (October 7, 2016)
Federal Register Volume 81, Issue 195 (October 7, 2016)
| Page Range | 69878-69881 | |
| FR Document | 2016-24284 |
[Federal Register Volume 81, Number 195 (Friday, October 7, 2016)] [Notices] [Pages 69878-69881] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-24284] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79030; File No. SR-NYSE-2016-62] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Partial Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Partial Amendment No. 2, To Amend Rule 67 Relating to the Tick Size Pilot Program October 3, 2016. I. Introduction On August 25, 2016, New York Stock Exchange LLC (``NYSE'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to: (1) Change system functionality to implement the Plan to Implement a Tick Size Pilot Program (``Plan'' or ``Pilot'') \3\ submitted to the Commission pursuant to Rule 608 of Regulation NMS \4\ under the Act; (2) clarify the operation of certain exceptions to the Trade-at Prohibition \5\ on Pilot Securities in Test Group Three; (3) amend the Limit Up/Limit Down (``LULD'') price controls set forth in Exchange Rule 80C regarding the Regulation NMS Plan to Address Extraordinary Market Volatility (``LULD Plan''); \6\ and (4) amend the Exchange's trading collar calculation in Exchange Rule 1000. The proposed rule change was published for comment in the Federal Register on September 15, 2016.\7\ The Commission received two comments letter on the proposal.\8\ On September 27, 2016, the Exchange filed Partial Amendment No. 1 to the proposed rule change (``Amendment No. 1''). On September 30, 2016, the Exchange withdrew Amendment No. 1 and filed Partial Amendment No. 2 to the proposed rule change (``Amendment No. 2'').\9\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (``Approval Order''). Unless otherwise specified, capitalized terms used in this order are defined as set forth in the Plan. \4\ 17 CFR 242.608. \5\ Exchange Rule 67(e)(4)(A) defines the ``Trade-at Prohibition'' as the prohibition against executions by a Trading Center of a sell order for a Pilot Security at the price of a Protected Bid or the execution of a buy order for a Pilot Security at the price of a Protected Offer during regular trading hours. See also Plan Section I(LL) and Plan Section VI(D). \6\ See Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012) (File No. 4-631). \7\ See Securities Exchange Act Release No. 78802 (September 9, 2016), 81 FR 63515. \8\ See Letters from Eric Swanson, EVP, General Counsel, Bats Global Markets, Inc., Elizabeth K. King, General Counsel and Corporate Secretary, New York Stock Exchange; and Thomas A. Wittman, EVP, Global Head of Equities, Nasdaq, Inc., dated September 9, 2016 (``Comment Letter No. 1''); and Eric Swanson, EVP, General Counsel, Bats Global Markets, Inc., dated September 12, 2016 (``Comment Letter No. 2''). \9\ In Amendment No. 2, the Exchange proposes to: (1) Specify that in all Pilot Securities, d-Quotes to buy (sell) would not exercise discretion if (A) exercising discretion would result in an execution equal to or higher (lower) than the price of a protected offer (bid) or (B) the price of a protected bid (offer) is equal to or higher (lower) than the filed price of the d-Quote; and (2) correct cross references. --------------------------------------------------------------------------- This order provides notice of Amendment No. 2, and approves the proposal, as modified by Amendment No. 2, on an accelerated basis. II. Description of the Amended Proposal The Exchange proposes to amend Exchange Rule 67 to: (1) Change system functionality to implement the Plan; (2) clarify the operation of certain exceptions to the Trade-at Prohibition on Pilot Securities in Test Group Three; (3) amend the LULD price controls set forth in Exchange Rule 80C; and (4) amend the Exchange's trading collar calculation set forth in Exchange Rule 1000. A. Amendments to Exchange Systems Functionality To Implement the Plan 1. Trade-at Intermarket Sweep Order \10\ --------------------------------------------------------------------------- \10\ See proposed Exchange Rule 67(f)(1). --------------------------------------------------------------------------- The Exchange proposes to accept Trade-at Intermarket Sweep Orders (``TAISO'') in all securities, and that TAISOs must be designated as immediate or cancel (``IOC''), may include a minimum trade size, and do not route. The Exchange would immediately and automatically execute a TAISO against the displayed and non-displayed bid (offer) up to its full size in accordance with and to the extent provided by Exchange Rules 1000--1004 and will then sweep the Exchange's book as provided in Rule 1000(e)(iii), and the portion not so executed will be immediately and automatically cancelled. The Exchange would accept TAISOs before the Exchange opens and would allow TAISOs to be eligible to participate in the opening transaction at its limit price, but would not be accept TAISOs during a trading halt or pause for participation in a reopening transaction. Finally, the Exchange would not allow TAISOs to be entered as e-Quotes, d-Quotes, or g-Quotes. [[Page 69879]] 2. Pilot Securities in Test Groups One, Two, and Three \11\ --------------------------------------------------------------------------- \11\ See proposed Exchange Rule 67(f)(2). --------------------------------------------------------------------------- The Exchange proposes that references in Exchange rules to the minimum price variation (``MPV'') would mean the quoting minimum price variation as specified in Exchange Rule 67 (c), (d), and (e). Pre- opening indications \12\ would be published in $0.05 pricing increments for Pilot Securities in Test Groups One, Two, and Three. Mid-Point Passive Liquidity (``MPL'') Orders, which are undisplayed limit orders that automatically execute at the mid-point of the protected best bid (``PBB'') and the protected best offer (``PBO'') (``PBBO''),\13\ must be entered with a limit price in a $0.05 pricing increment. Trading collars that are not in the trading MPV for the security would be moved to the nearest price in the trading MPV for that security. --------------------------------------------------------------------------- \12\ See Exchange Rule 15(a) (providing that pre-opening indications will include the security and the price range within which the opening price is anticipated to occur and will be published via the securities information processor and proprietary data feeds). \13\ See Exchange Rule 13(d)(1)(A). --------------------------------------------------------------------------- 3. Retail Price Improvement Orders in Test Groups Two and Three \14\ --------------------------------------------------------------------------- \14\ See proposed Exchange Rule 67(f)(3). --------------------------------------------------------------------------- The Exchange proposes that Retail Price Improvement orders must be entered with a limit price and an offset in a $0.005 increment. 4. Pilot Securities in Test Group Three The Exchange proposes procedures for handling, executing, re- pricing and displaying of certain order types and order type instructions applicable to Pilot Securities in Test Group Three. a. Change in Priority \15\ --------------------------------------------------------------------------- \15\ See proposed Exchange Rule 67(f)(4)(A). --------------------------------------------------------------------------- The Exchange proposes that incoming automatically executing order to sell (buy) will trade with displayable bids (offers) and route to protected bids (offers) before trading with an unexecuted Market Order held undisplayed at the same price. After trading or routing, or both, any remaining balance of such an incoming automatically executing order would satisfy any unexecuted Market Orders in time priority before trading with non-displayable interest on parity. b. ISOs \16\ --------------------------------------------------------------------------- \16\ See proposed Exchange Rule 67(f)(4)(B). --------------------------------------------------------------------------- The Exchange proposes that on entry, Day ISOs will be eligible for the TAISO exception to the Trade-at Prohibition. In addition, an IOC ISO to buy (sell) would not trade with non-displayed interest to sell (buy) that is the same price as a protected offer (bid) unless the limit price of such IOC ISO is higher (lower) than the price of the protected offer (bid). c. Non-Displayed Resting Orders \17\ --------------------------------------------------------------------------- \17\ See proposed Exchange Rule 67(f)(4)(C). --------------------------------------------------------------------------- The Exchange proposes restrictions applicable to resting non- displayed interest, i.e., a resting order to buy (sell) that is not displayed at the price at which it is eligible to trade. Resting non- displayed interest on the Exchange could include Non-Display Reserve Orders,\18\ Non-Display Reserve e-Quotes,\19\ the reserve interest of Minimum Display Reserve Orders and Minimum Display Reserve e- Quotes,\20\ and pegging interest that is not displayed.\21\ The proposed rule changes are intended to assure that these orders would not price match a protected quotation. --------------------------------------------------------------------------- \18\ A ``Non Displayed Reserve Order'' is a Limit Order that is not displayed, but remains available for potential execution against all incoming automatically executing orders until executed in full or cancelled. See Rule 13(d)(1)(A). \19\ See Rule 70(f)(ii). \20\ A ``Minimum Display Reserve Order'' is a Limit Order that will have a portion of the interest displayed when the order is or becomes the Exchange BBO and a portion of the interest (``reserve interest'') that is not displayed. See Rules 13(d)(2)(C) and 70(f)(i). \21\ See Rule 13(f)(1)(A) (Pegging interest includes non- displayable interest to buy or sell at a price to track the same- side PBBO). d-Quotes enable Floor brokers to enter discretionary instructions as to the price at which the d-Quote may trade and the number of shares to which the discretionary price instructions apply. Executions of d-Quotes within a discretionary pricing instruction range are considered non-displayable interest for purposes of Rule 72. See Rule 70.25(a)(ii). --------------------------------------------------------------------------- First, the Exchange proposes that a resting non-displayed order to buy (sell) will not trade at the price of a protected offer (bid). Second, a resting non-displayed order to buy (sell) will not trade at the price of a protected bid (offer) unless the incoming order to sell (buy) is a TAISO, Day ISO, or IOC ISO that has a limit price lower (higher) than the price of the non-displayed orders. Finally, the Exchange proposes that resting non-displayed interest will be either routed, cancelled, or re-priced, consistent with the terms of the order. d. Block Size Exception to the Trade-at Prohibition \22\ --------------------------------------------------------------------------- \22\ See proposed Exchange Rule 67(f)(4)(E). --------------------------------------------------------------------------- The Exchange proposes that only buy and sell orders that are entered into the Cross Function pursuant to Supplementary Material .10 to Exchange Rule 76 and that satisfy the Block Size definition would be eligible for the Block Size exception to the Trade-at Prohibition. e. Self-Trade Prevention Modifiers \23\ --------------------------------------------------------------------------- \23\ See proposed Exchange Rule 67(f)(4)(F). --------------------------------------------------------------------------- The Exchange proposes that incoming orders designated with a certain self-trade prevention (``STP'') Modifier, STPN, would cancel before routing or trading with non-displayed orders if the opposite- side resting interest marked with an STP modifier with the same market participant identifier (``MPID'') is a displayed order. f. g-Quotes and Buy Minus/Zero Plus Orders \24\ --------------------------------------------------------------------------- \24\ See proposed Exchange Rule 67(f)(4)(G). --------------------------------------------------------------------------- The Exchange proposes that g-Quotes and Buy Minus/Zero Plus Orders would be rejected. 5. d-Quotes \25\ --------------------------------------------------------------------------- \25\ See proposed Exchange Rule 67(f)(5). See also Amendment No. 2. --------------------------------------------------------------------------- The Exchange proposes that in all Pilot Securities, d-Quotes to buy (sell) would not exercise discretion if (i) exercising discretion would result in an execution equal to or higher (lower) than the price of a protected offer (bid), or (ii) the price of a protected bid (offer) is equal to or higher (lower) than the filed price of the d-Quote. B. Operation of Certain Exceptions to the Trade-At Prohibition on Pilot Securities in Test Group Three 1. Trade-At Intermarket Sweep Orders \26\ --------------------------------------------------------------------------- \26\ See proposed Exchange Rule 67(a)(1)(D) and proposed Exchange Rule 67(e)(4)(C)(x). --------------------------------------------------------------------------- The Exchange proposes to add phrase ``or Intermarket Sweep Orders'' (``ISO'') to the definition of TAISO as well as to the TAISO exception to the Trade-At Prohibition to clarify that ISOs may be routed to execute against the full displayed size of the Protected Quotation that was traded at.\27\ --------------------------------------------------------------------------- \27\ The Exchange also proposes to add the word ``display'' to Exchange Rule 67(a)(1)(D) to correct a previous omission. --------------------------------------------------------------------------- 2. Block Size Exception to the Trade-At Prohibition \28\ --------------------------------------------------------------------------- \28\ See proposed Exchange Rule 67(e)(4)(C)(iii). --------------------------------------------------------------------------- The Exchange proposes to amend the Block Size Exception to the Trade-at Prohibition to allow execution on multiple Trading Centers to comply with Regulation NMS. C. LULD Price Bands \29\ --------------------------------------------------------------------------- \29\ See proposed Exchange Rule 80C(a)(8). --------------------------------------------------------------------------- The Exchange proposes that after the Exchange opens or reopens an Exchange-listed security but before receiving Price Bands from the Securities Information Processor (``SIP'') under the LULD Plan, the Exchange would calculate Price Bands based on the first Reference Price provided to the [[Page 69880]] SIP and, if such Price Bands are not in the MPV for the security, round such Price Bands to the nearest price at the applicable MPV. D. Trading Collars Rounding \30\ --------------------------------------------------------------------------- \30\ See proposed Exchange Rule 1000(c)(i). --------------------------------------------------------------------------- The Exchange proposes that Trading Collars for both buy and sell orders that are not in the MPV for the security would be rounded down to the nearest price at the applicable MPV. III. Summary of Comment Letters Both comment letters express support for the proposed rule change and suggest that the Commission should approve the proposal. In Comment Letter No. 1, the commenters stated that if the proposal is approved as proposed, then NYSE would be able to meet the October 3, 2016 implementation date. Further, in Comment Letter No. 1, the commenters stated their belief that the requirements from the Commission have been unclear. In Comment Letter No. 2, the commenter questioned Commission staff's authority. IV. Discussion and Commission's Findings After careful review of the proposed rule change, as modified by Amendment No. 2, and the comment letters, the Commission finds that the proposal, as modified by Amendment No. 2, is consistent with the requirements of the Act, Rule 608 of Regulation NMS,\31\ and the rules and regulations thereunder that are applicable to a national securities exchange.\32\ Specifically, the Commission finds that the rule change is consistent with Section 6(b)(5) of the Act, which requires that the rules of a national securities exchange be designed, among other things, to prevent fraudulent and manipulative acts and practices, 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 to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \31\ 17 CFR 242.608. \32\ In approving this rule change, the Commission has considered the rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- As noted in the Approval Order, the Plan is by design, an objective, data-driven test to evaluate how a wider tick size would impact trading, liquidity, and market quality of securities of smaller capitalization companies. In addition, the Plan is designed with three Test Groups and a Control Group, to allow analysis and comparison of incremental market structure changes on the Pilot Securities and is designed to produce empirical data that could inform future policy decisions. As such, any proposed changes targeted at particular Test Groups during the Pilot Period should be necessary for compliance with the Plan. The Exchange proposes changes to modify how the Exchange will handle orders during the Pilot Period. Specifically, the Exchange proposes to accept TAISOs in all securities. In addition, the Exchange proposes to make changes to d-Quotes for all Pilot Securities by limiting instances when d-Quotes would exercise discretion.\33\ Further, for Pilot Securities in the Test Groups, the Exchange proposes to specify references to the MPV, provide that pre-opening indications would be published in $0.05 increments, require that MPL Orders with a limit price must be entered in a $0.05 increment, and clarify how Trading Collars that are not in the trading MPV would be handled. The Exchange also proposes to specify that Retail Price Improvement Orders must be entered with a limit price and an offset in a $0.005 pricing increment in Test Groups Two and Three. --------------------------------------------------------------------------- \33\ See Amendment No. 2. The Exchange originally proposed to limit d-Quotes from exercising discretion only in Test Group Three. In Amendment No. 2, the Exchange proposes to apply the proposed limitation of discretion to all Pilot Securities. The Commission believes that the amendment to apply the proposed changes to the exercise of discretion by d-Quotes to all Pilot Securities modifies the proposal so that it does not have an unnecessary disparate impact on the different Test Groups and the Control Group. Thus, the Commission believes that the Exchange's proposal is consistent with the Pilot. The Exchange has committed to make the systems changes necessary to implement Amendment No. 2 no later than November 7, 2016. See Email from Clare Saperstein, Exchange to Kelly Riley, SEC date October 2, 2016. --------------------------------------------------------------------------- The Exchange proposes changes for Pilot Securities in Test Group Three to comply with the Trade-at Prohibition, including a different priority for execution of resting orders, how certain ISOs would be handled in Test Group Three, how resting non-displayed orders would trade, how order with a STPN Modifier would be handled, and that g- Quotes and Buy Minus/Zero Plus orders will be rejected. The Exchange proposes to only permit buy and sell orders that are entered into the Cross Function pursuant to Supplementary Material .10 to Rule 76 to be eligible for the Block Size order exception to the Trade-at Prohibition.\34\ --------------------------------------------------------------------------- \34\ The Commission notes that the orders entered into the Cross Function for purposes of relying on the Block Size exception must satisfy the provisions of the exception, including that it may not be an aggregation of non-block orders, or broken into orders smaller than Block Size prior to submitting the order the Trading Center for execution. See Exchange Rule 67(e)(4)(C)(iii). --------------------------------------------------------------------------- In addition, the Exchange proposes to amend provisions related to two exceptions to the Trade-at Prohibition. First, the Exchange proposes amend the TAISO definition to reflect that ISOs may be routed to the full displayed size of a Protected Quotation that is traded-at and to make the corresponding change to the specific trade-at exception. Second, the Exchange proposes to amend the exception for Block Size orders to allow an order of Block Size to be executed on multiple Trading Centers. The Commission believes that these changes are reasonably designed to comply with the Plan. Further, the Commission believes that the proposed changes that are targeted at particular Test Groups are necessary for compliance with the Plan. Accordingly, the Commission finds that these changes are consistent with Section 6(b)(5) of the Act \35\ and Rule 608 of Regulation NMS \36\ because they implement the Plan and clarify Exchange Rules. --------------------------------------------------------------------------- \35\ 15 U.S.C. 78f(b)(5). \36\ 17 CFR 242.608. --------------------------------------------------------------------------- In addition, the Exchange proposes to adopt a rule to specify how the Exchange will calculate LULD Price Bands after the Exchange opens or reopens. The Commission believes that this change should help to ensure that trading does not occur outside of Price Bands when LULD is in effect. Finally, the Exchange proposes to specify that Trading Collars that are not in the MPV would be rounded down to the nearest price. The Commission believes that this change should provide clarity in the Exchange's rules. For these reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with the requirements of the Act and Rule 608 of Regulation NMS. V. Solicitation of Comments on Amendment No. 2 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 2 is consistent with the Exchange 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 rule-comments@sec.gov. Please include File Number SR-NYSE-2016-62 on the subject line. [[Page 69881]] Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2016-62. 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 20549-1090, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also 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- NYSE-2016-62 and should be submitted on or before October 28, 2016. VI. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 2, prior to the thirtieth day after the date of publication of notice of Amendment No. 2 in the Federal Register. As described above, the Exchange proposes to amend its rules to comply with the Plan and clarify other rules related to LULD and Trading Collars. The Commission believes that the proposals related to LULD Price Bands and Trading Collars should provide clarity on instances where they are not in the MPV. The Commission believes that the proposals related to the Pilot are designed to ensure compliance with the Plan. The Commission notes that the Pilot is scheduled to start on October 3, 2016, and accelerated approval would ensure that the rules of the Exchange would be in place for the start of the Pilot. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,\37\ to approve the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. --------------------------------------------------------------------------- \37\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VII. Conclusion It is therefore ordered that, pursuant to Section 19(b)(2) of the Act,\38\ the proposed rule change (SR-NYSE-2016-62), as modified by Amendment No. 2, be and hereby is approved on an accelerated basis. --------------------------------------------------------------------------- \38\ Id. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\39\ --------------------------------------------------------------------------- \39\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-24284 Filed 10-6-16; 8:45 am] BILLING CODE 8011-01-P
![69878 Federal Register / Vol. 81, No. 195 / Friday, October 7, 2016 / Notices
thereunder,2 a proposed rule change to SECURITIES AND EXCHANGE September 27, 2016, the Exchange filed
provide an exception to the mandatory COMMISSION Partial Amendment No. 1 to the
use of the Floor Broker Management proposed rule change (‘‘Amendment No.
[Release No. 34–79030; File No. SR–NYSE– 1’’). On September 30, 2016, the
System pursuant to Rule 1000(f)(iii) to 2016–62]
permit Floor Brokers to execute certain Exchange withdrew Amendment No. 1
sub-minimum price variation (‘‘sub- Self-Regulatory Organizations; New and filed Partial Amendment No. 2 to
MPV’’) split-priced orders in the options York Stock Exchange LLC; Notice of the proposed rule change (‘‘Amendment
trading crowd rather than electronically. Filing of Partial Amendment No. 2 and No. 2’’).9
This order provides notice of
The proposed rule change was Order Granting Accelerated Approval
Amendment No. 2, and approves the
published for comment in the Federal of a Proposed Rule Change, as
proposal, as modified by Amendment
Register on August 22, 2016.3 The Modified by Partial Amendment No. 2,
No. 2, on an accelerated basis.
Commission has received no comment To Amend Rule 67 Relating to the Tick
letters on the proposed rule change. Size Pilot Program II. Description of the Amended
Proposal
Section 19(b)(2) of the Act 4 provides October 3, 2016.
that, within 45 days of the publication The Exchange proposes to amend
I. Introduction Exchange Rule 67 to: (1) Change system
of the notice of the filing of a proposed
rule change, or within such longer On August 25, 2016, New York Stock functionality to implement the Plan; (2)
period up to 90 days as the Commission Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) clarify the operation of certain
may designate if it finds such longer filed with the Securities and Exchange exceptions to the Trade-at Prohibition
Commission (‘‘Commission’’) pursuant on Pilot Securities in Test Group Three;
period to be appropriate and publishes
to Section 19(b)(1) of the Securities (3) amend the LULD price controls set
its reasons for so finding or as to which
Exchange Act of 1934 (‘‘Act’’) 1 and Rule forth in Exchange Rule 80C; and (4)
the self-regulatory organization amend the Exchange’s trading collar
consents, the Commission shall either 19b–4 thereunder,2 a proposed rule
change to: (1) Change system calculation set forth in Exchange Rule
approve the proposed rule change, 1000.
disapprove the proposed rule change, or functionality to implement the Plan to
Implement a Tick Size Pilot Program A. Amendments to Exchange Systems
institute proceedings to determine
(‘‘Plan’’ or ‘‘Pilot’’) 3 submitted to the Functionality To Implement the Plan
whether the proposed rule change
Commission pursuant to Rule 608 of
should be disapproved. The 45th day for Regulation NMS 4 under the Act; (2) 1. Trade-at Intermarket Sweep Order 10
this filing is October 6, 2016. clarify the operation of certain The Exchange proposes to accept
The Commission is extending the 45- exceptions to the Trade-at Prohibition 5 Trade-at Intermarket Sweep Orders
day time period for Commission action on Pilot Securities in Test Group Three; (‘‘TAISO’’) in all securities, and that
on the proposed rule change. The (3) amend the Limit Up/Limit Down TAISOs must be designated as
Commission finds that it is appropriate (‘‘LULD’’) price controls set forth in immediate or cancel (‘‘IOC’’), may
to designate a longer period within Exchange Rule 80C regarding the include a minimum trade size, and do
which to take action on the proposed Regulation NMS Plan to Address not route. The Exchange would
rule change so that it has sufficient time Extraordinary Market Volatility (‘‘LULD immediately and automatically execute
to consider and take action on the Plan’’); 6 and (4) amend the Exchange’s a TAISO against the displayed and non-
Exchange’s proposed rule change. trading collar calculation in Exchange displayed bid (offer) up to its full size
Rule 1000. The proposed rule change in accordance with and to the extent
Accordingly, pursuant to Section was published for comment in the provided by Exchange Rules 1000—
19(b)(2)(A)(ii)(I) of the Act 5 and for the Federal Register on September 15, 1004 and will then sweep the
reasons stated above, the Commission 2016.7 The Commission received two Exchange’s book as provided in Rule
designates November 20, 2016, as the comments letter on the proposal.8 On 1000(e)(iii), and the portion not so
date by which the Commission should executed will be immediately and
either approve or disapprove, or 1 15 U.S.C. 78s(b)(1). automatically cancelled. The Exchange
institute proceedings to determine 2 17 CFR 240.19b–4. would accept TAISOs before the
whether to disapprove, the proposed 3 See Securities Exchange Act Release No. 74892
Exchange opens and would allow
(May 6, 2015), 80 FR 27513 (May 13, 2015) TAISOs to be eligible to participate in
rule change (File No. SR–Phlx–2016– (‘‘Approval Order’’). Unless otherwise specified,
82). capitalized terms used in this order are defined as the opening transaction at its limit
set forth in the Plan. price, but would not be accept TAISOs
For the Commission, by the Division of 4 17 CFR 242.608. during a trading halt or pause for
Trading and Markets, pursuant to delegated 5 Exchange Rule 67(e)(4)(A) defines the ‘‘Trade-at
participation in a reopening transaction.
authority.6 Prohibition’’ as the prohibition against executions Finally, the Exchange would not allow
Robert W. Errett, by a Trading Center of a sell order for a Pilot
Security at the price of a Protected Bid or the
TAISOs to be entered as e-Quotes, d-
Deputy Secretary. execution of a buy order for a Pilot Security at the Quotes, or g-Quotes.
[FR Doc. 2016–24277 Filed 10–6–16; 8:45 am] price of a Protected Offer during regular trading
hours. See also Plan Section I(LL) and Plan Section No. 1’’); and Eric Swanson, EVP, General Counsel,
BILLING CODE 8011–01–P
VI(D). Bats Global Markets, Inc., dated September 12, 2016
6 See Securities Exchange Act Release No. 67091
(‘‘Comment Letter No. 2’’).
(May 31, 2012), 77 FR 33498 (June 6, 2012) (File 9 In Amendment No. 2, the Exchange proposes to:
mstockstill on DSK3G9T082PROD with NOTICES
No. 4–631). (1) Specify that in all Pilot Securities, d-Quotes to
7 See Securities Exchange Act Release No. 78802 buy (sell) would not exercise discretion if (A)
2 17 CFR 240.19b–4. (September 9, 2016), 81 FR 63515. exercising discretion would result in an execution
3 See Securities Exchange Act Release No. 78593
8 See Letters from Eric Swanson, EVP, General equal to or higher (lower) than the price of a
Counsel, Bats Global Markets, Inc., Elizabeth K. protected offer (bid) or (B) the price of a protected
(August 16, 2016), 81 FR 56724.
King, General Counsel and Corporate Secretary, bid (offer) is equal to or higher (lower) than the filed
4 15 U.S.C. 78s(b)(2).
New York Stock Exchange; and Thomas A. price of the d-Quote; and (2) correct cross
5 15 U.S.C. 78s(b)(2)(A)(ii)(I).
Wittman, EVP, Global Head of Equities, Nasdaq, references.
6 17 CFR 200.30–3(a)(31). Inc., dated September 9, 2016 (‘‘Comment Letter 10 See proposed Exchange Rule 67(f)(1).
VerDate Sep<11>2014 17:36 Oct 06, 2016 Jkt 241001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\07OCN1.SGM 07OCN1](https://thefederalregister.org/doc/81_FR_70073/page/1.svg)
![Federal Register / Vol. 81, No. 195 / Friday, October 7, 2016 / Notices 69881
Paper Comments ensure that the rules of the Exchange at http://nasdaq.cchwallstreet.com, at
• Send paper comments in triplicate would be in place for the start of the the principal office of the Exchange, and
to Secretary, Securities and Exchange Pilot. Accordingly, the Commission at the Commission’s Public Reference
Commission, 100 F Street NE., finds good cause, pursuant to Section Room.
Washington, DC 20549–1090. 19(b)(2) of the Act,37 to approve the
II. Self-Regulatory Organization’s
All submissions should refer to File proposed rule change, as modified by
Statement of the Purpose of, and
Number SR–NYSE–2016–62. This file Amendment No. 2, on an accelerated
Statutory Basis for, the Proposed Rule
number should be included on the basis.
Change
subject line if email is used. To help the VII. Conclusion In its filing with the Commission, the
Commission process and review your It is therefore ordered that, pursuant Exchange included statements
comments more efficiently, please use to Section 19(b)(2) of the Act,38 the concerning the purpose of and basis for
only one method. The Commission will proposed rule change (SR–NYSE–2016– the proposed rule change and discussed
post all comments on the Commission’s 62), as modified by Amendment No. 2, any comments it received on the
Internet Web site (http://www.sec.gov/ be and hereby is approved on an proposed rule change. The text of these
rules/sro.shtml). Copies of the accelerated basis. statements may be examined at the
submission, all subsequent places specified in Item IV below. The
amendments, all written statements For the Commission, by the Division of
Trading and Markets, pursuant to delegated Exchange has prepared summaries, set
with respect to the proposed rule forth in sections A, B, and C below, of
authority.39
change that are filed with the the most significant aspects of such
Commission, and all written Robert W. Errett,
Deputy Secretary. statements.
communications relating to the
proposed rule change between the [FR Doc. 2016–24284 Filed 10–6–16; 8:45 am] A. Self-Regulatory Organization’s
Commission and any person, other than BILLING CODE 8011–01–P Statement of the Purpose of, and the
those that may be withheld from the Statutory Basis for, the Proposed Rule
public in accordance with the Change
provisions of 5 U.S.C. 552, will be SECURITIES AND EXCHANGE
COMMISSION 1. Purpose
available for Web site viewing and
printing in the Commission’s Public [Release No. 34–79025; File No. SR–
Nasdaq proposes to modify IM–5900–
Reference Room, 100 F Street NE., NASDAQ–2016–106] 7 to change the treatment of acquisition
Washington, DC 20549–1090, on official companies under that rule.
business days between the hours of Self-Regulatory Organizations; The Nasdaq offers complimentary services
10:00 a.m. and 3:00 p.m. Copies of such Nasdaq Stock Market LLC; Notice of under IM–5900–7 to companies listing
filing will also be available for Filing of Proposed Rule Change To on the Nasdaq Global and Global Select
inspection and copying at the principal Modify Rule IM–5900–7 To Adjust the Markets in connection with an initial
office of the Exchange. All comments Entitlement to Services of Acquisition public offering, upon emerging from
received will be posted without change; Companies bankruptcy, or in connection with a
the Commission does not edit personal spin-off or carve-out from another
October 3, 2016. company (‘‘Eligible New Listings’’) and
identifying information from
Pursuant to Section 19(b)(1) 1 of the to companies that switch their listing
submissions. You should submit only
Securities Exchange Act of 1934 from the New York Stock Exchange
information that you wish to make
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3 (‘‘NYSE’’) to the Global or Global Select
available publicly. All submissions
notice is hereby given that, on Markets (‘‘Eligible Switches’’).4
should refer to File Number SR–NYSE–
September 22, 2016, The Nasdaq Stock Nasdaq believes that the
2016–62 and should be submitted on or
Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) complimentary service program offers
before October 28, 2016.
filed with the Securities and Exchange valuable services to newly listing
VI. Accelerated Approval of Proposed Commission (‘‘Commission’’) the companies, designed to help ease the
Rule Change, as Modified by proposed rule change as described in transition of becoming a public
Amendment No. 2 Items I, II, and III below, which Items company or switching markets, makes
The Commission finds good cause to have been prepared by the self- listing on Nasdaq more attractive to
approve the proposed rule change, as regulatory organization. The these companies, and also provides
modified by Amendment No. 2, prior to Commission is publishing this notice to Nasdaq Corporate Solutions the
the thirtieth day after the date of solicit comments on the proposed rule opportunity to demonstrate the value of
publication of notice of Amendment No. change from interested persons. its services and forge a relationship with
2 in the Federal Register. As described I. Self-Regulatory Organization’s the company. The services offered
above, the Exchange proposes to amend Statement of the Terms of Substance of include a whistleblower hotline,
its rules to comply with the Plan and the Proposed Rule Change investor relations Web site, disclosure
clarify other rules related to LULD and services for earnings or other press
The Exchange proposes to modify the releases, webcasting, market analytic
Trading Collars.
The Commission believes that the treatment of acquisition companies tools, and may include market advisory
proposals related to LULD Price Bands under IM–5900–7.
and Trading Collars should provide The text of the proposed rule change 4 See Exchange Act Release No. 65963 (December
mstockstill on DSK3G9T082PROD with NOTICES
clarity on instances where they are not is available on the Exchange’s Web site 15, 2011), 76 FR 79262 (December 21, 2011) (SR–
NASDAQ–2011–122) (adopting IM–5900–7);
in the MPV. The Commission believes 37 15 Exchange Act Release No. 72669 (July 24, 2014), 79
U.S.C. 78s(b)(2).
that the proposals related to the Pilot are 38 Id. FR 44234 (July 30, 2014) (SR–NASDAQ–2014–058)
designed to ensure compliance with the 39 17
(adopting changes to IM–5900–7); Exchange Act
CFR 200.30–3(a)(12). Release No. 78806 (September 9, 2016), 81 FR
Plan. The Commission notes that the 1 15 U.S.C. 78s(b)(1). 63523 (September 15, 2016) (SR–NASDAQ–2016–
Pilot is scheduled to start on October 3, 2 15 U.S.C. 78a.
098). These adopting releases are collectively
2016, and accelerated approval would 3 17 CFR 240.19b–4. referred to as the ‘‘Prior Filings.’’
VerDate Sep<11>2014 17:36 Oct 06, 2016 Jkt 241001 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 E:\FR\FM\07OCN1.SGM 07OCN1](https://thefederalregister.org/doc/81_FR_70073/page/4.svg)
Document Created: 2018-02-13 16:31:48
Document Modified: 2018-02-13 16:31:48
| 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 69878 |
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