81 FR 75464 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to BZX Rule 11.13, Order Execution and Routing

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 210 (October 31, 2016)

Page Range		75464-75466
FR Document		2016-26132
Federal Register, Volume 81 Issue 210 (Monday, October 31, 2016)
[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Notices]
[Pages 75464-75466]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26132]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79149; File No. SR-BatsBZX-2016-65]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to BZX 
Rule 11.13, Order Execution and Routing

October 25, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 12, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated this proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend Exchange Rule 11.13(b)(1) to 
describe when an order marked as ``short'' may be eligible for routing 
when a short sale price test restriction is in effect.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Exchange Rule 11.13(b)(1) to 
describe when an order to sell marked \5\ as ``short'' \6\ may be 
eligible for routing when a short sale price test restriction is in 
effect. Under Rule 201 of Regulation SHO,\7\ a short sale order in a 
covered security \8\ generally cannot be executed or displayed by a 
Trading Center,\9\ such as the Exchange, at a price that is at or below 
the current national best bid (``NBB'') \10\ when a short sale circuit 
breaker is in effect for the covered security (the ``short sale price 
test restriction'').\11\
---------------------------------------------------------------------------

    \5\ 17 CFR 242.200(g).
    \6\ The term ``short sale'' is defined as ``any sale of a 
security which the seller does not own or any sale which is 
consummated by the delivery of a security borrowed by, or for the 
account of, the seller.'' 17 CFR 242.200(a).
    \7\ See 17 CFR 242.201; Securities Exchange Act Release No. 
61595 (February 26, 2010), 75 FR 11232 (March 10, 2010).
    \8\ Rule 201(a)(1) of Regulation SHO defines the term ``covered 
security'' to mean any ``NMS stock'' as defined under Rule 
600(b)(47) of Regulation NMS. Rule 600(b)(47) of Regulation NMS 
defines an ``NMS stock'' as ``any NMS security other than an 
option.'' Rule 600(b)(46) of Regulation NMS defines an ``NMS 
security'' as ``any security or class of securities for which 
transaction reports are collected, processed, and made available 
pursuant to an effective transaction reporting plan, or an effective 
national market system plan for reporting transactions in listed 
options.'' 17 CFR 242.201(a)(1); 17 CFR 242.600(b)(46); and 17 CFR 
242.600(b)(47).
    \9\ Rule 201(a)(9) of Regulation SHO states that the term 
``Trading Center'' shall have the same meaning as in Rule 600(b)(78) 
of Regulation NMS. Rule 600(b)(78) of 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.'' 17 CFR 
242.200(a)(9); 17 CFR 242.600(b)(78).
    \10\ 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42).
    \11\ 17 CFR 242.201(b)(1).
---------------------------------------------------------------------------

    Under Rule 11.13(b)(1), an order marked ``short'' when a short sale 
price test restriction is in effect is not eligible for routing by the 
Exchange. If an order is ineligible for routing due to a short sale 
price test restriction and such order is an Immediate or Cancel 
(``IOC'') Order \12\ or a BZX Market Order,\13\ then

[[Page 75465]]

the order will be cancelled. If an order is ineligible for routing due 
to a short sale price test restriction and such order is a Limit 
Order,\14\ the Exchange will post the unfilled balance of the order to 
the BZX Book,\15\ subject to the price sliding process as defined in 
paragraph (g) of Exchange Rule 11.9.\16\
---------------------------------------------------------------------------

    \12\ See Exchange Rule 11.9(b)(1).
    \13\ See Exchange Rule 11.9(a)(2). The Exchange also proposes to 
remove the reference to BZX Market Orders in Rule 11.13(b)(1) as BZX 
Market Orders with a time-in-force of Day that are ineligible for 
routing due to a short sale price test restriction pursuant to Rule 
201 of Regulation SHO are not cancelled, but rather posted to the 
BZX Book pursuant to Exchange Rule 11.9(a)(2). All other BZX Market 
Orders are handled in accordance with Exchange Rule 11.13(a).
    \14\ See Exchange Rule 11.9(a)(1).
    \15\ See Exchange Rule 1.5(e).
    \16\ In sum, under Exchange Rule 11.9(g), a short sale order 
that, at the time of entry, could not be executed or displayed in 
compliance with Rule 201 of Regulation SHO will be re-priced by the 
System at one minimum price variation above the current NBB 
(``Permitted Price''). See Exchange Rule 11.9(g) for a full 
description of the Exchange's Short Sale Price Sliding Process.
---------------------------------------------------------------------------

    The Exchange proposes to specify in Rule 11.13 that orders marked 
``short'' may be eligible for routing by the Exchange when a short sale 
price test restriction is in effect where the User \17\ selects either 
the Post to Away \18\ or ROOC \19\ routing options.\20\ In contrast to 
all other routing strategies, which are routed to other Trading Centers 
for immediate execution, the Post to Away and ROOC routing options are 
orders that are sent to other Trading Centers for posting and/or later 
execution as further described below. Under the Post to Away routing 
option, the remainder of a routed order is routed to and posted to the 
order book of a destination on the System routing table,\21\ as 
specified by the User. ROOC is a routing option for orders that the 
User wishes to designate for participation in the opening, re-opening 
(following a halt, suspension, or pause), or closing process of a 
primary listing market other than the Exchange (e.g., the New York 
Stock Exchange, Inc. (``NYSE''), Nasdaq Stock Market LLC (``Nasdaq''), 
NYSE MKT LLC, or NYSE Arca, Inc. (``NYSE Arca'')) if received before 
the opening/re-opening/closing time of such market. If shares remain 
unexecuted after attempting to execute in the opening, re-opening, or 
closing process, they are either posted to the BZX Book, executed, or 
routed to destinations on the System routing table.\22\ Orders routed 
pursuant to the Post to Away and ROOC routing options that are 
identified as ``short'' are subject to the receiving Trading Center's 
processes for handling short sale orders in compliance with Rule 201 of 
Regulation SHO.\23\
---------------------------------------------------------------------------

    \17\ See Exchange Rule 1.5(cc).
    \18\ See 11.13(b)(3)(H).
    \19\ See 11.13(b)(3)(N).
    \20\ The Exchange also proposes to specify within Rule 
11.13(b)(1) that the short sale price test restriction is declared 
pursuant to Rule 201 of Regulation SHO.
    \21\ The term ``System routing table'' is defined as the ``the 
proprietary process for determining the specific trading venues to 
which the System routes orders and the order in which it routes 
them.'' See Exchange Rule 11.13(b)(3).
    \22\ Shares returned to the Exchange after routing are handled 
in accordance with Exchange Rules, including Rule 11.13(a).
    \23\ See, e.g., Nasdaq Rule 4763; NYSE Rule 440B; and Nasdaq's 
Regulation SHO Frequently Asked Questions (updated March 10, 2011), 
available at https://nasdaqtrader.com/content/marketregulation/regsho/regshoFAQs.pdf.
---------------------------------------------------------------------------

    Under Exchange Rule 11.13(b)(1), IOC Orders marked ``short'' that 
are not eligible for routing during a short sale price test restriction 
will continue to be cancelled.\24\ The unfilled portions of Limit 
Orders marked ``short'' that are ineligible for routing due to a short 
sale price test restriction Exchange will continue to be posted to the 
BZX Book subject to the price sliding process as defined in paragraph 
(g) of Exchange Rule 11.9.
---------------------------------------------------------------------------

    \24\ See supra note 13.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \25\ and furthers the objectives of 
Section 6(b)(5) of the Act \26\ because it is designed to promote just 
and equitable principles of trade, remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and, in general, protect 
investors and the public interest. Specifically, the proposed changes 
are designed to ensure clarity in the Exchange's rulebook with respect 
to the routing of orders in compliance with Rule 201 of Regulation SHO. 
In addition, providing Users the ability to send short sale orders that 
are routable pursuant to the Post to Away and ROOC routing options 
provides them additional flexibility with regard to the handling of 
their orders. The Exchange notes that short sale orders routed pursuant 
to the Post to Away or ROOC routing options are identified as ``short'' 
and, therefore, subject to the receiving Trading Center's processes for 
handling short sale orders in compliance with Regulation SHO.\27\ The 
Exchange also notes that other national securities exchanges do not 
expressly prohibit the routing of short sale orders. For example, 
Nasdaq and NYSE Arca allow for the routing of short sale orders 
generally, and do not limit a short sale order's ability to route to 
certain routing options.\28\ Thus, the proposal is directly targeted at 
removing impediments to and perfecting the mechanism of a free and open 
market and national market system. The proposed rule change also is 
designed to support the principles of Section 11A(a)(1) \29\ of the Act 
in that it seeks to assure fair competition among brokers and dealers 
and among exchange markets.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
    \27\ See supra note 22.
    \28\ See e.g., Nasdaq Rules 4702(a) (stating generally that an 
``[o]rder may . . . may be routed to other market centers for 
potential execution if designated as `Routable' '') and 4763 (not 
prohibiting the routing of a short sale order during a short sale 
price test). See also e.g., NYSE Arca Rule 7.6P (not prohibiting the 
routing of a short sale order during a short sale price test).
    \29\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. The Exchange is 
simply proposing to reflect in its rules that orders marked ``short'' 
may be routed to an away market for execution under two specific 
routing strategies offered by the Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Not applicable.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) 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 it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \30\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\31\ the Exchange has 
designated this rule filing as non-controversial. The Exchange has 
given the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(3)(A).
    \31\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if

[[Page 75466]]

it appears to the Commission that such action is: (1) Necessary or 
appropriate in the public interest; (2) for the protection of 
investors; or (3) otherwise in furtherance of the purposes of the Act. 
If the Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.

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 Comments

     Use 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-BatsBZX-2016-65 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBZX-2016-65. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BatsBZX-2016-65, and should 
be submitted on or before November 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-26132 Filed 10-28-16; 8:45 am]
 BILLING CODE 8011-01-P
75464 Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices

Electronic Comments SECURITIES AND EXCHANGE the most significant parts of such
COMMISSION statements.
• Use the Commission’s Internet
comment form (http://www.sec.gov/ A. Self-Regulatory Organization’s
[Release No. 34–79149; File No. SR– Statement of the Purpose of, and
rules/sro.shtml); or BatsBZX–2016–65] Statutory Basis for, the Proposed Rule
• Send an email to rule-comments@ Change
sec.gov. Please include File No. SR– Self-Regulatory Organizations; Bats
OPRA–2016–01 on the subject line. BZX Exchange, Inc.; Notice of Filing 1. Purpose
and Immediate Effectiveness of a The Exchange proposes to amend
Paper Comments Proposed Rule Change to BZX Rule Exchange Rule 11.13(b)(1) to describe
11.13, Order Execution and Routing when an order to sell marked 5 as
• Send paper comments in triplicate
to Secretary, Securities and Exchange October 25, 2016. ‘‘short’’ 6 may be eligible for routing
Commission, 100 F Street NE., Pursuant to Section 19(b)(1) of the when a short sale price test restriction
Washington, DC 20549–1090. Securities Exchange Act of 1934 (the is in effect. Under Rule 201 of
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Regulation SHO,7 a short sale order in
All submissions should refer to File a covered security 8 generally cannot be
notice is hereby given that on October
Number SR–OPRA–2016–01. This file 12, 2016, Bats BZX Exchange, Inc. (the executed or displayed by a Trading
number should be included on the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Center,9 such as the Exchange, at a price
subject line if email is used. To help the Securities and Exchange Commission that is at or below the current national
Commission process and review your (‘‘Commission’’) the proposed rule best bid (‘‘NBB’’) 10 when a short sale
comments more efficiently, please use change as described in Items I, II, and circuit breaker is in effect for the
only one method. The Commission will III below, which Items have been covered security (the ‘‘short sale price
post all comments on the Commission’s prepared by the Exchange. The test restriction’’).11
Internet Web site (http://www.sec.gov/ Under Rule 11.13(b)(1), an order
Exchange has designated this proposal
rules/sro.shtml). Copies of the marked ‘‘short’’ when a short sale price
as a ‘‘non-controversial’’ proposed rule
submission, all subsequent test restriction is in effect is not eligible
change pursuant to Section 19(b)(3)(A)
for routing by the Exchange. If an order
amendments, all written statements of the Act 3 and Rule 19b–4(f)(6)(iii)
is ineligible for routing due to a short
with respect to the OPRA Plan thereunder,4 which renders it effective
sale price test restriction and such order
amendment that are filed with the upon filing with the Commission. The
is an Immediate or Cancel (‘‘IOC’’)
Commission, and all written Commission is publishing this notice to
Order 12 or a BZX Market Order,13 then
communications relating to the OPRA solicit comments on the proposed rule
Plan amendment between the change from interested persons. 5 17 CFR 242.200(g).
Commission and any person, other than I. Self-Regulatory Organization’s 6 The term ‘‘short sale’’ is defined as ‘‘any sale of
those that may be withheld from the a security which the seller does not own or any sale
Statement of the Terms of the Substance which is consummated by the delivery of a security
public in accordance with the of the Proposed Rule Change borrowed by, or for the account of, the seller.’’ 17
provisions of 5 U.S.C. 552, will be CFR 242.200(a).
The Exchange filed a proposal to
available for Web site viewing and 7 See 17 CFR 242.201; Securities Exchange Act
amend Exchange Rule 11.13(b)(1) to Release No. 61595 (February 26, 2010), 75 FR 11232
printing in the Commission’s Public
describe when an order marked as (March 10, 2010).
Reference Room, 100 F Street NE., ‘‘short’’ may be eligible for routing when 8 Rule 201(a)(1) of Regulation SHO defines the
Washington, DC 20549, on official a short sale price test restriction is in term ‘‘covered security’’ to mean any ‘‘NMS stock’’
business days between the hours of effect. as defined under Rule 600(b)(47) of Regulation
10:00 a.m. and 3:00 p.m. Copies of such NMS. Rule 600(b)(47) of Regulation NMS defines an
The text of the proposed rule change ‘‘NMS stock’’ as ‘‘any NMS security other than an
filing also will be available for is available at the Exchange’s Web site option.’’ Rule 600(b)(46) of Regulation NMS defines
inspection and copying at the principal at www.batstrading.com, at the an ‘‘NMS security’’ as ‘‘any security or class of
office of OPRA. All comments received securities for which transaction reports are
principal office of the Exchange, and at collected, processed, and made available pursuant
will be posted without change; the the Commission’s Public Reference to an effective transaction reporting plan, or an
Commission does not edit personal Room. effective national market system plan for reporting
identifying information from transactions in listed options.’’ 17 CFR
II. Self-Regulatory Organization’s 242.201(a)(1); 17 CFR 242.600(b)(46); and 17 CFR
submissions. You should submit only
Statement of the Purpose of, and 242.600(b)(47).
information that you wish to make 9 Rule 201(a)(9) of Regulation SHO states that the
Statutory Basis for, the Proposed Rule
available publicly. All submissions Change term ‘‘Trading Center’’ shall have the same meaning
should refer to File Number SR–OPRA– as in Rule 600(b)(78) of Regulation NMS. Rule
In its filing with the Commission, the 600(b)(78) of Regulation NMS defines a ‘‘Trading
2016–01 and should be submitted on or Center’’ as ‘‘a national securities exchange or
before November 21, 2016. Exchange included statements national securities association that operates an SRO
concerning the purpose of and basis for trading facility, an alternative trading system, an
By the Commission. the proposed rule change and discussed exchange market maker, an OTC market maker, or
Brent J. Fields, any comments it received on the any other broker or dealer that executes orders
internally by trading as principal or crossing orders
Secretary. proposed rule change. The text of these as agent.’’ 17 CFR 242.200(a)(9); 17 CFR
[FR Doc. 2016–26135 Filed 10–28–16; 8:45 am] statements may be examined at the 242.600(b)(78).
sradovich on DSK3GMQ082PROD with NOTICES

BILLING CODE 8011–01–P places specified in Item IV below. The 10 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42).

Exchange has prepared summaries, set 11 17 CFR 242.201(b)(1).

forth in Sections A, B, and C below, of 12 See Exchange Rule 11.9(b)(1).
13 See Exchange Rule 11.9(a)(2). The Exchange

1 15
also proposes to remove the reference to BZX
U.S.C. 78s(b)(1). Market Orders in Rule 11.13(b)(1) as BZX Market
2 17 CFR 240.19b–4. Orders with a time-in-force of Day that are
3 15 U.S.C. 78s(b)(3)(A).
ineligible for routing due to a short sale price test
4 17 CFR 240.19b–4(f)(6)(iii). restriction pursuant to Rule 201 of Regulation SHO

VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\31OCN1.SGM 31OCN1
Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices 75465

the order will be cancelled. If an order routed pursuant to the Post to Away and options.28 Thus, the proposal is directly
is ineligible for routing due to a short ROOC routing options that are targeted at removing impediments to
sale price test restriction and such order identified as ‘‘short’’ are subject to the and perfecting the mechanism of a free
is a Limit Order,14 the Exchange will receiving Trading Center’s processes for and open market and national market
post the unfilled balance of the order to handling short sale orders in system. The proposed rule change also
the BZX Book,15 subject to the price compliance with Rule 201 of Regulation is designed to support the principles of
sliding process as defined in paragraph SHO.23 Section 11A(a)(1) 29 of the Act in that it
(g) of Exchange Rule 11.9.16 Under Exchange Rule 11.13(b)(1), IOC seeks to assure fair competition among
The Exchange proposes to specify in Orders marked ‘‘short’’ that are not brokers and dealers and among
Rule 11.13 that orders marked ‘‘short’’ eligible for routing during a short sale exchange markets.
may be eligible for routing by the price test restriction will continue to be
Exchange when a short sale price test B. Self-Regulatory Organization’s
cancelled.24 The unfilled portions of Statement on Burden on Competition
restriction is in effect where the User 17 Limit Orders marked ‘‘short’’ that are
selects either the Post to Away 18 or The Exchange does not believe that
ineligible for routing due to a short sale
ROOC 19 routing options.20 In contrast the proposed rule change will result in
price test restriction Exchange will
to all other routing strategies, which are any burden on competition that is not
continue to be posted to the BZX Book
routed to other Trading Centers for necessary or appropriate in furtherance
subject to the price sliding process as
immediate execution, the Post to Away of the purposes of the Act. The
defined in paragraph (g) of Exchange
and ROOC routing options are orders Exchange is simply proposing to reflect
Rule 11.9. in its rules that orders marked ‘‘short’’
that are sent to other Trading Centers for
posting and/or later execution as further 2. Statutory Basis may be routed to an away market for
described below. Under the Post to execution under two specific routing
Away routing option, the remainder of The Exchange believes that the strategies offered by the Exchange.
a routed order is routed to and posted proposed rule change is consistent with
Section 6(b) of the Act 25 and furthers C. Self-Regulatory Organization’s
to the order book of a destination on the Statement on Comments on the
System routing table,21 as specified by the objectives of Section 6(b)(5) of the
Act 26 because it is designed to promote Proposed Rule Change Received From
the User. ROOC is a routing option for Members, Participants, or Others
orders that the User wishes to designate just and equitable principles of trade,
for participation in the opening, re- remove impediments to and perfect the Not applicable.
opening (following a halt, suspension, mechanism of a free and open market
and a national market system, foster III. Date of Effectiveness of the
or pause), or closing process of a Proposed Rule Change and Timing for
primary listing market other than the cooperation and coordination with
Commission Action
Exchange (e.g., the New York Stock persons engaged in facilitating
Exchange, Inc. (‘‘NYSE’’), Nasdaq Stock transactions in securities, and, in Because the foregoing proposed rule
Market LLC (‘‘Nasdaq’’), NYSE MKT general, protect investors and the public change does not: (A) Significantly affect
LLC, or NYSE Arca, Inc. (‘‘NYSE Arca’’)) interest. Specifically, the proposed the protection of investors or the public
if received before the opening/re- changes are designed to ensure clarity in interest; (B) impose any significant
opening/closing time of such market. If the Exchange’s rulebook with respect to burden on competition; and (C) by its
shares remain unexecuted after the routing of orders in compliance with terms, become operative for 30 days
attempting to execute in the opening, re- Rule 201 of Regulation SHO. In from the date on which it was filed or
opening, or closing process, they are addition, providing Users the ability to such shorter time as the Commission
either posted to the BZX Book, send short sale orders that are routable may designate it has become effective
executed, or routed to destinations on pursuant to the Post to Away and ROOC pursuant to Section 19(b)(3)(A) of the
the System routing table.22 Orders routing options provides them Act 30 and paragraph (f)(6) of Rule 19b–
additional flexibility with regard to the 4 thereunder,31 the Exchange has
are not cancelled, but rather posted to the BZX handling of their orders. The Exchange designated this rule filing as non-
Book pursuant to Exchange Rule 11.9(a)(2). All notes that short sale orders routed controversial. The Exchange has given
other BZX Market Orders are handled in accordance pursuant to the Post to Away or ROOC the Commission written notice of its
with Exchange Rule 11.13(a). intent to file the proposed rule change,
14 See Exchange Rule 11.9(a)(1). routing options are identified as ‘‘short’’
15 See Exchange Rule 1.5(e). and, therefore, subject to the receiving along with a brief description and text
16 In sum, under Exchange Rule 11.9(g), a short Trading Center’s processes for handling of the proposed rule change at least five
sale order that, at the time of entry, could not be short sale orders in compliance with business days prior to the date of filing
executed or displayed in compliance with Rule 201 Regulation SHO.27 The Exchange also of the proposed rule change, or such
of Regulation SHO will be re-priced by the System shorter time as designated by the
at one minimum price variation above the current notes that other national securities
NBB (‘‘Permitted Price’’). See Exchange Rule 11.9(g) exchanges do not expressly prohibit the Commission.
for a full description of the Exchange’s Short Sale routing of short sale orders. For At any time within 60 days of the
Price Sliding Process.
example, Nasdaq and NYSE Arca allow filing of the proposed rule change, the
17 See Exchange Rule 1.5(cc).
for the routing of short sale orders Commission summarily may
18 See 11.13(b)(3)(H).
19 See 11.13(b)(3)(N). generally, and do not limit a short sale temporarily suspend such rule change if
20 The Exchange also proposes to specify within order’s ability to route to certain routing 28 See e.g., Nasdaq Rules 4702(a) (stating
Rule 11.13(b)(1) that the short sale price test
restriction is declared pursuant to Rule 201 of generally that an ‘‘[o]rder may . . . may be routed
sradovich on DSK3GMQ082PROD with NOTICES

23 See, e.g., Nasdaq Rule 4763; NYSE Rule 440B;
Regulation SHO. to other market centers for potential execution if
21 The term ‘‘System routing table’’ is defined as
and Nasdaq’s Regulation SHO Frequently Asked designated as ‘Routable’ ’’) and 4763 (not
Questions (updated March 10, 2011), available at prohibiting the routing of a short sale order during
the ‘‘the proprietary process for determining the
https://nasdaqtrader.com/content/ a short sale price test). See also e.g., NYSE Arca
specific trading venues to which the System routes
marketregulation/regsho/regshoFAQs.pdf. Rule 7.6P (not prohibiting the routing of a short sale
orders and the order in which it routes them.’’ See 24 See supra note 13.
Exchange Rule 11.13(b)(3). order during a short sale price test).
25 15 U.S.C. 78f(b). 29 15 U.S.C. 78k–1(a)(1).
22 Shares returned to the Exchange after routing
26 15 U.S.C. 78f(b)(5). 30 15 U.S.C. 78s(b)(3)(A).
are handled in accordance with Exchange Rules,
including Rule 11.13(a). 27 See supra note 22. 31 17 CFR 240.19b–4.

VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\31OCN1.SGM 31OCN1
75466 Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices

it appears to the Commission that such BatsBZX–2016–65, and should be II. Self-Regulatory Organization’s
action is: (1) Necessary or appropriate in submitted on or before November 21, Statement of the Purpose of, and
the public interest; (2) for the protection 2016. Statutory Basis for, the Proposed Rule
of investors; or (3) otherwise in For the Commission, by the Division of Change
furtherance of the purposes of the Act. Trading and Markets, pursuant to delegated In its filing with the Commission, the
If the Commission takes such action, the authority.32 Exchange included statements
Commission shall institute proceedings Brent J. Fields, concerning the purpose of and basis for
to determine whether the proposed rule Secretary. the proposed rule change and discussed
should be approved or disapproved. any comments it received on the
[FR Doc. 2016–26132 Filed 10–28–16; 8:45 am]
IV. Solicitation of Comments BILLING CODE 8011–01–P proposed rule change. The text of these
statements may be examined at the
Interested persons are invited to
places specified in Item IV below. The
submit written data, views, and
SECURITIES AND EXCHANGE Exchange has prepared summaries, set
arguments concerning the foregoing,
COMMISSION forth in Sections A, B, and C below, of
including whether the proposed rule
the most significant parts of such
change is consistent with the Act.
[Release No. 34–79150; File No. SR– statements.
Comments may be submitted by any of
the following methods: BatsEDGA–2016–22] A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Electronic Comments Self-Regulatory Organizations; Bats Statutory Basis for, the Proposed Rule
• Use the Commission’s Internet EDGA Exchange, Inc.; Notice of Filing Change
comment form (http://www.sec.gov/ and Immediate Effectiveness of a
rules/sro.shtml); or Proposed Rule Change to EDGA Rule 1. Purpose
• Send an email to rule-comments@ 11.11, Routing to Away Trading The Exchange proposes to amend
sec.gov. Please include File Number SR– Centers Exchange Rule 11.11(a) to describe
BatsBZX–2016–65 on the subject line. when an order that includes a Short
October 25, 2016.
Paper Comments Sale 5 instruction may be eligible for
Pursuant to Section 19(b)(1) of the routing when a short sale price test
• Send paper comments in triplicate Securities Exchange Act of 1934 (the restriction is in effect. Under Rule 201
to Secretary, Securities and Exchange ‘‘Act’’),1 and Rule 19b–4 thereunder,2 of Regulation SHO,6 a short sale order
Commission, 100 F Street NE., notice is hereby given that on October in covered security 7 generally cannot be
Washington, DC 20549–1090. 12, 2016, Bats EDGA Exchange, Inc. (the executed or displayed by a Trading
All submissions should refer to File ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Center,8 such as the Exchange, at a price
Number SR–BatsBZX–2016–65. This file Securities and Exchange Commission that is at or below the current national
number should be included on the (‘‘Commission’’) the proposed rule best bid (‘‘NBB’’) 9 when a short sale
subject line if email is used. To help the change as described in Items I, II, and circuit breaker is in effect for the
Commission process and review your III below, which Items have been covered security (the ‘‘short sale price
comments more efficiently, please use prepared by the Exchange. The test restriction’’).10
only one method. The Commission will Exchange has designated this proposal
post all comments on the Commission’s as a ‘‘non-controversial’’ proposed rule 5 See Exchange Rule 11.6(o). The term ‘‘short

Internet Web site (http://www.sec.gov/ change pursuant to Section 19(b)(3)(A) sale’’ is defined as ‘‘any sale of a security which the
seller does not own or any sale which is
rules/sro.shtml). Copies of the of the Act 3 and Rule 19b–4(f)(6)(iii) consummated by the delivery of a security
submission, all subsequent thereunder,4 which renders it effective borrowed by, or for the account of, the seller.’’ 17
amendments, all written statements upon filing with the Commission. The CFR 242.200(a).
with respect to the proposed rule Commission is publishing this notice to 6 See 17 CFR 242.201; Securities Exchange Act

change that are filed with the solicit comments on the proposed rule Release No. 61595 (February 26, 2010), 75 FR 11232
(March 10, 2010).
Commission, and all written change from interested persons. 7 Rule 201(a)(1) of Regulation SHO defines the
communications relating to the term ‘‘covered security’’ to mean any ‘‘NMS stock’’
I. Self-Regulatory Organization’s
proposed rule change between the as defined under Rule 600(b)(47) of Regulation
Statement of the Terms of the Substance NMS. Rule 600(b)(47) of Regulation NMS defines an
Commission and any person, other than
of the Proposed Rule Change ‘‘NMS stock’’ as ‘‘any NMS security other than an
those that may be withheld from the option.’’ Rule 600(b)(46) of Regulation NMS defines
public in accordance with the The Exchange filed a proposal to an ‘‘NMS security’’ as ‘‘any security or class of
provisions of 5 U.S.C. 552, will be amend Exchange Rule 11.11(a) to securities for which transaction reports are
available for Web site viewing and collected, processed, and made available pursuant
describe when an order that includes a to an effective transaction reporting plan, or an
printing in the Commission’s Public Short Sale instruction may be eligible effective national market system plan for reporting
Reference Room, 100 F Street NE., for routing when a short sale price test transactions in listed options.’’ 17 CFR
Washington, DC 20549 on official restriction is in effect. 242.201(a)(1); 17 CFR 242.600(b)(46); and 17 CFR
242.600(b)(47).
business days between the hours of The text of the proposed rule change 8 Rule 201(a)(9) of Regulation SHO states that the
10:00 a.m. and 3:00 p.m. Copies of such is available at the Exchange’s Web site term ‘‘Trading Center’’ shall have the same meaning
filing also will be available for at www.batstrading.com, at the as in Rule 600(b)(78) of Regulation NMS. Rule
inspection and copying at the principal principal office of the Exchange, and at 600(b)(78) of Regulation NMS defines a ‘‘Trading
office of the Exchange. All comments Center’’ as ‘‘a national securities exchange or
sradovich on DSK3GMQ082PROD with NOTICES

the Commission’s Public Reference national securities association that operates an SRO
received will be posted without change; Room. trading facility, an alternative trading system, an
the Commission does not edit personal exchange market maker, an OTC market maker, or
identifying information from any other broker or dealer that executes orders
32 17 CFR 200.30–3(a)(12). internally by trading as principal or crossing orders
submissions. You should submit only 1 15 U.S.C. 78s(b)(1). as agent.’’ 17 CFR 242.200(a)(9); 17 CFR
information that you wish to make 2 17 CFR 240.19b–4. 242.600(b)(78).
available publicly. All submissions 3 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42).

should refer to File Number SR– 4 17 CFR 240.19b–4(f)(6)(iii). 10 17 CFR 242.201(b)(1).

VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\31OCN1.SGM 31OCN1
Document Created: 2018-02-02 12:13:39
Document Modified: 2018-02-02 12:13:39
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 75464