81_FR_75676 81 FR 75466 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to EDGA Rule 11.11, Routing to Away Trading Centers

81 FR 75466 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to EDGA Rule 11.11, Routing to Away Trading Centers

SECURITIES AND EXCHANGE COMMISSION

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

Page Range75466-75468
FR Document2016-26133

Federal Register, Volume 81 Issue 210 (Monday, October 31, 2016) 
[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Notices]
[Pages 75466-75468]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26133]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79150; File No. SR-BatsEDGA-2016-22]


Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change to EDGA 
Rule 11.11, Routing to Away Trading Centers

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 EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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.
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    \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).
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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 11.11(a) to 
describe when an order that includes a Short Sale instruction 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 11.11(a) to describe 
when an order that includes a Short Sale \5\ instruction may be 
eligible for routing when a short sale price test restriction is in 
effect. Under Rule 201 of Regulation SHO,\6\ a short sale order in 
covered security \7\ generally cannot be executed or displayed by a 
Trading Center,\8\ such as the Exchange, at a price that is at or below 
the current national best bid (``NBB'') \9\ when a short sale circuit 
breaker is in effect for the covered security (the ``short sale price 
test restriction'').\10\
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    \5\ See Exchange Rule 11.6(o). 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).
    \6\ See 17 CFR 242.201; Securities Exchange Act Release No. 
61595 (February 26, 2010), 75 FR 11232 (March 10, 2010).
    \7\ 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).
    \8\ 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).
    \9\ 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42).
    \10\ 17 CFR 242.201(b)(1).

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[[Page 75467]]

    Under Rule 11.11(a), an order that includes a Short Sale 
instruction when a short sale price test restriction pursuant to Rule 
201 of Regulation SHO is in effect is not eligible for routing by the 
Exchange. If an order is ineligible for routing due to a Short Sale 
Circuit Breaker \11\ being in effect and such order contains a Time-in-
Force of Immediate-or-Cancel (``IOC''),\12\ then the order will be 
cancelled. For any other order ineligible for routing due to a Short 
Sale Circuit Breaker being in effect, the Exchange will post the 
unfilled balance of the order to the EDGA Book,\13\ treat the order as 
if it included a Book Only \14\ or Post Only \15\ instruction, and 
subject it to the Re-Pricing Instructions to Comply with Rule 201 of 
Regulation SHO, as described in Rule Exchange 11.6(l)(2),\16\ unless 
the User has elected the order Cancel Back as described in Exchange 
Rule 11.6(b).
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    \11\ In order to use consistent terminology, the Exchange 
proposes to replace the term ``short sale price test restriction'' 
with ``Short Sale Circuit Breaker'' within the first sentence of 
Rule 11.11(a).
    \12\ See Exchange Rule 11.6(q)(1).
    \13\ See Exchange Rule 1.5(d).
    \14\ See Exchange Rule 11.6(n)(3).
    \15\ See Exchange Rule 11.6(n)(4).
    \16\ In sum, under Exchange Rule 11.6(l)(2), an order to sell 
with a Short Sale instruction 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 the Permitted Price. See 
Exchange Rule 11.6(l)(2) for a full description of the Exchange's 
Re-Pricing Instructions to Comply with Rule 201 of Regulation SHO.
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    The Exchange proposes to specify in Rule 11.11(a) that orders that 
include a Short Sale instruction may be eligible for routing by the 
Exchange when a Short Sale Circuit Breaker is in effect where the User 
\17\ selects the Post to Away \18\ routing option. In contrast to all 
other routing strategies, which are routed to other Trading Centers for 
immediate execution, the Post to Away routing option is an order that 
is 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,\19\ as specified by the 
User. Orders routed pursuant to the Post to Away routing option that 
include a Short Sale instruction 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.\20\
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    \17\ See Exchange Rule 1.5(cc).
    \18\ See 11.11(g)(15).
    \19\ 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 11.11(g).
    \20\ See, e.g., Nasdaq Stock Market LLC (``Nasdaq'') Rule 4763; 
New York Stock Exchange, Inc. (``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.
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    Under Exchange Rule 11.11(a), orders that include a Short Sale 
instruction and a Time-in-Force of IOC that are not eligible for 
routing during a Short Sale Circuit Breaker will continue to be 
cancelled. For any other order that includes a Short Sale instruction 
that is ineligible for routing due to a Short Sale Circuit Breaker 
being in effect, the Exchange will continue to post the unfilled 
balance of the order to the EDGA Book, treat the order as if it 
included a Book Only or Post Only instruction, and subject it to the 
Re-Pricing Instructions to Comply with Rule 201 of Regulation SHO, as 
described in Rule 11.6(l)(2), unless the User has elected the order 
Cancel Back as described in Rule 11.6(b).

2. Statutory Basis

    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \21\ and furthers the objectives of 
Section 6(b)(5) of the Act \22\ 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 routing option provides them 
additional flexibility with regard to the handling of their orders. The 
Exchange notes that orders that include a Short Sale instruction routed 
pursuant to the Post to Away routing option are identified as ``short'' 
and, therefore, subject to the receiving Trading Center's processes for 
handling short sale orders in compliance with Regulation SHO.\23\ 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, Inc. (``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.\24\ 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) \25\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets.
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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ See supra note 20.
    \24\ 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).
    \25\ 15 U.S.C. 78k-1(a)(1).
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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 that include a 
Short Sale instruction may be routed to an away marked for execution 
under one specific routing strategy 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 \26\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\27\ 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.
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    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4.

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[[Page 75468]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (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-BatsEDGA-2016-22 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-BatsEDGA-2016-22. 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-BatsEDGA-2016-22, and should 
be submitted on or before November 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-26133 Filed 10-28-16; 8:45 am]
 BILLING CODE 8011-01-P

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

Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices 75467 Under Rule 11.11(a), an order that in compliance with Rule 201 of not limit a short sale order’s ability to includes a Short Sale instruction when Regulation SHO.20 route to certain routing options.24 Thus, a short sale price test restriction Under Exchange Rule 11.11(a), orders the proposal is directly targeted at pursuant to Rule 201 of Regulation SHO that include a Short Sale instruction and removing impediments to and is in effect is not eligible for routing by a Time-in-Force of IOC that are not perfecting the mechanism of a free and the Exchange. If an order is ineligible for eligible for routing during a Short Sale open market and national market routing due to a Short Sale Circuit Circuit Breaker will continue to be system. The proposed rule change also Breaker 11 being in effect and such order cancelled. For any other order that is designed to support the principles of contains a Time-in-Force of Immediate- includes a Short Sale instruction that is Section 11A(a)(1) 25 of the Act in that it or-Cancel (‘‘IOC’’),12 then the order will ineligible for routing due to a Short Sale seeks to assure fair competition among be cancelled. For any other order Circuit Breaker being in effect, the brokers and dealers and among ineligible for routing due to a Short Sale Exchange will continue to post the exchange markets. Circuit Breaker being in effect, the unfilled balance of the order to the EDGA Book, treat the order as if it B. Self-Regulatory Organization’s Exchange will post the unfilled balance Statement on Burden on Competition included a Book Only or Post Only of the order to the EDGA Book,13 treat instruction, and subject it to the Re- The Exchange does not believe that the order as if it included a Book Only 14 Pricing Instructions to Comply with the proposed rule change will result in or Post Only 15 instruction, and subject Rule 201 of Regulation SHO, as any burden on competition that is not it to the Re-Pricing Instructions to described in Rule 11.6(l)(2), unless the Comply with Rule 201 of Regulation necessary or appropriate in furtherance User has elected the order Cancel Back of the purposes of the Act. The SHO, as described in Rule Exchange as described in Rule 11.6(b). 11.6(l)(2),16 unless the User has elected Exchange is simply proposing to reflect the order Cancel Back as described in 2. Statutory Basis in its rules that orders that include a Exchange Rule 11.6(b). Short Sale instruction may be routed to The Exchange believes that the an away marked for execution under The Exchange proposes to specify in proposed rule change is consistent with one specific routing strategy offered by Rule 11.11(a) that orders that include a Section 6(b) of the Act 21 and furthers the Exchange. Short Sale instruction may be eligible the objectives of Section 6(b)(5) of the for routing by the Exchange when a Act 22 because it is designed to promote C. Self-Regulatory Organization’s Short Sale Circuit Breaker is in effect just and equitable principles of trade, Statement on Comments on the where the User 17 selects the Post to remove impediments to and perfect the Proposed Rule Change Received From Away 18 routing option. In contrast to all mechanism of a free and open market Members, Participants, or Others other routing strategies, which are and a national market system, foster Not applicable. routed to other Trading Centers for cooperation and coordination with immediate execution, the Post to Away persons engaged in facilitating III. Date of Effectiveness of the routing option is an order that is sent to transactions in securities, and, in Proposed Rule Change and Timing for other Trading Centers for posting and/ general, protect investors and the public Commission Action or later execution as further described interest. Specifically, the proposed Because the foregoing proposed rule below. Under the Post to Away routing changes are designed to ensure clarity in change does not: (A) Significantly affect option, the remainder of a routed order the Exchange’s rulebook with respect to the protection of investors or the public is routed to and posted to the order book the routing of orders in compliance with interest; (B) impose any significant of a destination on the System routing Rule 201 of Regulation SHO. In burden on competition; and (C) by its table,19 as specified by the User. Orders addition, providing Users the ability to terms, become operative for 30 days routed pursuant to the Post to Away send short sale orders that are routable from the date on which it was filed or routing option that include a Short Sale pursuant to the Post to Away routing such shorter time as the Commission instruction are identified as ‘‘short’’ are option provides them additional may designate it has become effective subject to the receiving Trading Center’s flexibility with regard to the handling of pursuant to Section 19(b)(3)(A) of the processes for handling short sale orders their orders. The Exchange notes that Act 26 and paragraph (f)(6) of Rule 19b– orders that include a Short Sale 4 thereunder,27 the Exchange has 11 In order to use consistent terminology, the instruction routed pursuant to the Post designated this rule filing as non- Exchange proposes to replace the term ‘‘short sale to Away routing option are identified as controversial. The Exchange has given price test restriction’’ with ‘‘Short Sale Circuit ‘‘short’’ and, therefore, subject to the the Commission written notice of its Breaker’’ within the first sentence of Rule 11.11(a). receiving Trading Center’s processes for 12 See Exchange Rule 11.6(q)(1). intent to file the proposed rule change, handling short sale orders in along with a brief description and text 13 See Exchange Rule 1.5(d). 14 See Exchange Rule 11.6(n)(3). compliance with Regulation SHO.23 The of the proposed rule change at least five 15 See Exchange Rule 11.6(n)(4). Exchange also notes that other national business days prior to the date of filing 16 In sum, under Exchange Rule 11.6(l)(2), an securities exchanges do not expressly of the proposed rule change, or such order to sell with a Short Sale instruction that, at prohibit the routing of short sale orders. shorter time as designated by the the time of entry, could not be executed or For example, Nasdaq and NYSE Arca, Commission. displayed in compliance with Rule 201 of Inc. (‘‘NYSE Arca’’) allow for the routing Regulation SHO will be re-priced by the System at the Permitted Price. See Exchange Rule 11.6(l)(2) of short sale orders generally, and do 24 See e.g., Nasdaq Rules 4702(a) (stating for a full description of the Exchange’s Re-Pricing generally that an ‘‘[o]rder may . . . may be routed sradovich on DSK3GMQ082PROD with NOTICES Instructions to Comply with Rule 201 of Regulation 20 See, e.g., Nasdaq Stock Market LLC (‘‘Nasdaq’’) to other market centers for potential execution if SHO. Rule 4763; New York Stock Exchange, Inc. designated as ‘Routable’ ’’) and 4763 (not 17 See Exchange Rule 1.5(cc). (‘‘NYSE’’) Rule 440B; and Nasdaq’s Regulation SHO prohibiting the routing of a short sale order during 18 See 11.11(g)(15). Frequently Asked Questions (updated March 10, a short sale price test). See also e.g., NYSE Arca 19 The term ‘‘System routing table’’ is defined as 2011), available at https://nasdaqtrader.com/ Rule 7.6P (not prohibiting the routing of a short sale the ‘‘the proprietary process for determining the content/marketregulation/regsho/regshoFAQs.pdf. order during a short sale price test). 21 15 U.S.C. 78f(b). 25 15 U.S.C. 78k–1(a)(1). specific trading venues to which the System routes 22 15 U.S.C. 78f(b)(5). 26 15 U.S.C. 78s(b)(3)(A). orders and the order in which it routes them.’’ See Exchange Rule 11.11(g). 23 See supra note 20. 27 17 CFR 240.19b–4. 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75468 Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices At any time within 60 days of the submissions. You should submit only Size exception to Commentary .13 as a filing of the proposed rule change, the information that you wish to make technical correction. Commission summarily may available publicly. All submissions The text of the proposed rule change temporarily suspend such rule change if should refer to File Number SR– is set forth below. Proposed new it appears to the Commission that such BatsEDGA–2016–22, and should be language is in italics; deleted text is in action is: (1) Necessary or appropriate in submitted on or before November 21, brackets. the public interest; (2) for the protection 2016. of investors; or (3) otherwise in * * * * * For the Commission, by the Division of furtherance of the purposes of the Act. Trading and Markets, pursuant to delegated NASDAQ BX Rules If the Commission takes such action, the authority.28 * * * * * Commission shall institute proceedings Brent J. Fields, to determine whether the proposed rule 4770. Compliance With Regulation NMS Secretary. Plan To Implement a Tick Size Pilot should be approved or disapproved. [FR Doc. 2016–26133 Filed 10–28–16; 8:45 am] (a) through (d) No Change. IV. Solicitation of Comments BILLING CODE 8011–01–P Commentary: .01–.12 No change. Interested persons are invited to .1[2]3 For purposes of qualifying for the submit written data, views, and Block Size exception under paragraph arguments concerning the foregoing, SECURITIES AND EXCHANGE (c)(3)(D)(iii) of this Rule, the Order must have COMMISSION a size of 5,000 shares or more and the including whether the proposed rule resulting execution upon entry must have a change is consistent with the Act. size of 5,000 shares or more in aggregate. Comments may be submitted by any of [Release No. 34–79154; File No. SR–BX– .14 Until October 31, 2016, the treatment the following methods: 2016–054] of Price to Comply Orders, Price to Display Electronic Comments Orders, Non-Displayed Orders, and Post- Self-Regulatory Organizations; Only Orders that are entered through the • Use the Commission’s Internet NASDAQ BX, Inc.; Notice of Filing and OUCH or FLITE protocols in Test Group comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed Three securities shall be as follows: rules/sro.shtml); or Rule Change To Add Commentary .14 Following entry, and if market conditions • Send an email to rule-comments@ to Rule 4770 (Compliance With allow, a Price to Comply Order in a Test sec.gov. Please include File Number SR– Regulation NMS Plan To Implement a Group Three Pilot Security will be adjusted BatsEDGA–2016–22 on the subject line. Tick Size Pilot) repeatedly in accordance with changes to the NBBO until such time as the Price to Comply Paper Comments October 25, 2016. Order is able to be ranked and displayed at • Send paper comments in triplicate Pursuant to Section 19(b)(1) of the its original entered limit price. Securities Exchange Act of 1934 Following entry, and if market conditions to Secretary, Securities and Exchange (‘‘Act’’),1 and Rule 19b–4 thereunder,2 allow, a Price to Display Order in a Test Commission, 100 F Street NE., Group Three Pilot Security will be adjusted Washington, DC 20549–1090. notice is hereby given that on October repeatedly in accordance with changes to the All submissions should refer to File 17, 2016, NASDAQ BX, Inc. (‘‘BX’’ or NBBO until such time as the Price to Display Number SR–BatsEDGA–2016–22. This ‘‘Exchange’’) filed with the Securities Order is able to be ranked and displayed at file number should be included on the and Exchange Commission (‘‘SEC’’ or its original entered limit price. subject line if email is used. To help the ‘‘Commission’’) the proposed rule Following entry, and if market conditions Commission process and review your change as described in Items I and II, allow, a Non-Displayed Order in a Test below, which Items have been prepared Group Three Pilot Security will be adjusted comments more efficiently, please use by the Exchange. The Commission is repeatedly in accordance with changes to the only one method. The Commission will NBBO up (down) to the Order’s limit price. post all comments on the Commission’s publishing this notice to solicit Following entry, and if market conditions Internet Web site (http://www.sec.gov/ comments on the proposed rule change allow, the Post-Only Order in a Test Group rules/sro.shtml). Copies of the from interested persons. Three Pilot Security will be adjusted submission, all subsequent I. Self-Regulatory Organization’s repeatedly in accordance with changes to the amendments, all written statements Statement of the Terms of Substance of NBBO or the best price on the Exchange with respect to the proposed rule Book, as applicable until such time as the the Proposed Rule Change change that are filed with the Post-Only Order is able to be ranked and Commission, and all written The Exchange proposes to add displayed at its original entered limit price. communications relating to the Commentary .14 to Rule 4770 * * * * * proposed rule change between the (Compliance with Regulation NMS Plan to Implement a Tick Size Pilot) to II. Self-Regulatory Organization’s Commission and any person, other than Statement of the Purpose of, and those that may be withheld from the provide the SEC with notice of its efforts to re-program its systems to eliminate a Statutory Basis for, the Proposed Rule public in accordance with the Change provisions of 5 U.S.C. 552, will be re-pricing functionality for certain available for Web site viewing and orders in Test Group Three securities in In its filing with the Commission, the printing in the Commission’s Public connection with the Regulation NMS Exchange included statements Reference Room, 100 F Street NE., Plan to Implement a Tick Size Pilot concerning the purpose of and basis for Washington, DC 20549 on official Program (‘‘Plan’’ or ‘‘Pilot’’).3 BX also the proposed rule change and discussed business days between the hours of proposes to re-number current any comments it received on the sradovich on DSK3GMQ082PROD with NOTICES 10:00 a.m. and 3:00 p.m. Copies of such Commentary .12 relating to the Block proposed rule change. The text of these filing also will be available for statements may be examined at the 28 17 CFR 200.30–3(a)(12). inspection and copying at the principal 1 15 places specified in Item IV below. The U.S.C. 78s(b)(1). office of the Exchange. All comments 2 17 CFR 240.19b–4. Exchange has prepared summaries, set received will be posted without change; 3 See Securities Exchange Act Release No. 74892 forth in sections A, B, and C below, of the Commission does not edit personal (May 6, 2015), 80 FR 27513 (May 13, 2015) the most significant aspects of such identifying information from (‘‘Approval Order’’). statements. VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\31OCN1.SGM 31OCN1


Document Created: 2018-02-02 12:13:33
Document Modified: 2018-02-02 12:13:33
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 75466 
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