81 FR 75468 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Commentary .14 to Rule 4770 (Compliance With Regulation NMS Plan To Implement a Tick Size Pilot)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 210 (October 31, 2016)
Federal Register Volume 81, Issue 210 (October 31, 2016)
| Page Range | 75468-75471 | |
| FR Document | 2016-26137 |
[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)] [Notices] [Pages 75468-75471] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-26137] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79154; File No. SR-BX-2016-054] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Commentary .14 to Rule 4770 (Compliance With Regulation NMS Plan To Implement a Tick Size Pilot) October 25, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on October 17, 2016, NASDAQ BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to add Commentary .14 to Rule 4770 (Compliance with Regulation NMS Plan to Implement a Tick Size Pilot) to provide the SEC with notice of its efforts to re-program its systems to eliminate a re-pricing functionality for certain orders in Test Group Three securities in connection with the Regulation NMS Plan to Implement a Tick Size Pilot Program (``Plan'' or ``Pilot'').\3\ BX also proposes to re-number current Commentary .12 relating to the Block Size exception to Commentary .13 as a technical correction. --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (``Approval Order''). --------------------------------------------------------------------------- The text of the proposed rule change is set forth below. Proposed new language is in italics; deleted text is in brackets. * * * * * NASDAQ BX Rules * * * * * 4770. Compliance With Regulation NMS Plan To Implement a Tick Size Pilot (a) through (d) No Change. Commentary: .01-.12 No change. .1[2]3 For purposes of qualifying for the Block Size exception under paragraph (c)(3)(D)(iii) of this Rule, the Order must have a size of 5,000 shares or more and the resulting execution upon entry must have a size of 5,000 shares or more in aggregate. .14 Until October 31, 2016, the treatment of Price to Comply Orders, Price to Display Orders, Non-Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE protocols in Test Group Three securities shall be as follows: Following entry, and if market conditions allow, a Price to Comply Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Comply Order is able to be ranked and displayed at its original entered limit price. Following entry, and if market conditions allow, a Price to Display Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Display Order is able to be ranked and displayed at its original entered limit price. Following entry, and if market conditions allow, a Non-Displayed Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO up (down) to the Order's limit price. Following entry, and if market conditions allow, the Post-Only Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO or the best price on the Exchange Book, as applicable until such time as the Post-Only Order is able to be ranked and displayed at its original entered limit price. * * * * * II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. [[Page 75469]] A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On September 7, 2016, the Exchange filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') a proposed rule change (``Proposal'') to adopt paragraph (d) to Exchange Rule 4770 to describe changes to system functionality necessary to implement the Plan. The Exchange also proposed amendments to Rule 4770(a) and (c) to clarify how the Trade-at exception may be satisfied. The SEC published the Proposal in the Federal Register for notice and comment on September 20, 2016.\4\ BX subsequently filed three Partial Amendments to clarify aspects of the Proposal. The Commission approved the Proposal, as amended, on October 7, 2016.\5\ --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 78838 (September 14, 2016), 81 FR 64566 (September 20, 2016) (SR-BX-2016-050). \5\ See Securities Exchange Act Release No. 79076 (October 7, 2016) (SR-BX-2016-050). --------------------------------------------------------------------------- In SR-BX-2016-050, BX had initially proposed a re-pricing functionality for Price to Comply Orders, Non-Displayed Orders, and Post-Only Orders entered through the OUCH and FLITE protocols in Group Three securities.\6\ BX subsequently determined that it would not offer this re-pricing functionality for Price to Comply Orders, Non-Displayed Orders, and Post-Only Orders entered through the OUCH and FLITE protocols in Group Three securities. As part of Partial Amendment No. 2 to SR-BX-2016-050, BX proposed to delete the relevant language from Rule 4770 related to this re-pricing functionality. --------------------------------------------------------------------------- \6\ As originally proposed, Rule 4770(d)(2) stated that Price to Comply Orders in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Comply Order is able to be ranked and displayed at its original entered limit price. Rule 4770(d)(3) stated that, if market conditions allow, a Non-Displayed Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO up (down) to the Order's limit price. Rule 4770(d)(4) stated that, if market conditions allow, the Post-Only Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO or the best price on the BX Book, as applicable until such time as the Post-Only Order is able to be ranked and displayed at its original entered limit price. --------------------------------------------------------------------------- In that amendment, BX noted that this change would only impact the treatment of Price to Comply Orders, Non-Displayed Orders, and Post- Only orders that are submitted through the OUCH and FLITE protocols in Test Group Three Pilot Securities, as these types of Orders that are currently submitted to BX through the RASH or FIX protocols are already subject to this re-pricing functionality and will remain subject to this functionality under the Pilot. In the Amendment, BX further noted that its systems are currently programmed so that Price to Comply Orders, Non-Displayed Orders and Post-Only Orders entered through the OUCH and FLITE protocols in Test Group Three Securities may be adjusted repeatedly to reflect changes to the NBBO and/or the best price on the BX book. BX stated that it is re- programming its systems to remove this functionality for Price to Comply Orders, Non-Displayed Orders and Post-Only Orders entered through the OUCH and FLITE protocols in Test Group Three Securities.\7\ In the Amendment, BX stated that it anticipated that this re- programming shall be completed no later than November 30, 2016. If it appears that this functionality will remain operational by October 17, 2016, BX indicated that it would file a proposed rule change with the SEC and will provide notice to market participants sufficiently in advance of that date to provide effective notice. The rule change and the notice to market participants will describe the current operation of the BX systems in this regard, and the timing related to the re- programming. --------------------------------------------------------------------------- \7\ BX has become aware that this re-pricing functionality also applies to Price to Display Orders that are entered through the OUCH and FLITE protocols in Test Group Three Securities, and is including those Orders as part of this proposal accordingly. Price to Display Orders will be treated in the same manner as Price to Comply Orders under the re-pricing functionality. --------------------------------------------------------------------------- At this time, BX is still in the process of re-programming its systems to eliminate the re-pricing functionality in Test Group Three securities for Price to Comply Orders, Price to Display Orders, Non- Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE protocols. BX anticipates that this re-programming shall be complete on or before October 31, 2016. Therefore, the current treatment of Price to Comply Orders, Price to Display Orders, Non-Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE protocols in Test Group Three securities shall be as follows: Following entry, and if market conditions allow, a Price to Comply Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Comply Order is able to be ranked and displayed at its original entered limit price. Following entry, and if market conditions allow, a Price to Display Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Display Order is able to be ranked and displayed at its original entered limit price. Following entry, and if market conditions allow, a Non-Displayed Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO up (down) to the Order's limit price. Following entry, and if market conditions allow, a Post-Only Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO or the best price on the BX Book, as applicable until such time as the Post-Only Order is able to be ranked and displayed at its original entered limit price. In addition to this proposal, BX will also issue an Equity Trader Alert that describes the current operation of the BX systems in this regard, and the timing related to the removal of this re-pricing functionality.\8\ --------------------------------------------------------------------------- \8\ BX anticipates providing additional specificity to market participants as to the timing of the new functionality at a later date. --------------------------------------------------------------------------- BX also proposes to re-number Commentary .12, which relates to the Block Size exception, to Commentary .13. A previous filing (SR-BX-2016- 048) added Commentary to Rule 4770 that resulted in Commentary .11, which addresses the effective date of the Rule, being re-numbered as Commentary .12. BX therefore proposes to re-number the Commentary .12 that addresses the Block Size exception as Commentary .13. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\9\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The purpose of this filing is to inform the SEC and market participants of the status of BX's attempts to re-program its systems to remove the re-pricing functionality in Test Group Three securities for Price to Comply Orders, Price to Display Orders, Non-Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE [[Page 75470]] protocols, and the current treatment of such orders pending the removal of this functionality. This proposal is consistent with the Act because it provides the SEC and market participants with notice of BX's efforts in this regard, and is being submitted in connection with the statements made by BX in SR-BX-2016-050 in proposing the removal of this functionality. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f(b). \10\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- BX also believes that the proposal is consistent with the Act because the re-pricing functionality will not significantly impact the data gathered pursuant to the Pilot. BX notes that this re-pricing functionality only affects Price to Comply Orders, Price to Display Orders, Non-Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE protocols for Test Group Three securities until the re-pricing functionality is eliminated, and only becomes relevant when an Order in a Test Group Three security would cross a Protected Quotation of another market center. BX has analyzed data relating to the frequency with which Orders in Test Group Three securities are entered with a limit price that would cross a Protected Quotation of another market center, and believes that the re-pricing functionality will be triggered infrequently once Test Group Three becomes operational.\11\ The Exchange also notes that it is diligently working to re-program its systems to remove this re-pricing functionality, and that it anticipates this re-programming to be complete on or before October 31, 2016. --------------------------------------------------------------------------- \11\ For example, on September 23, 2016, 0.3% of orders in Test Group Three securities were entered on the NASDAQ Stock Market LLC at a price that crossed the NBBO. BX believes that this number will be even lower starting October 17, 2016, when the $0.05 tick increment for Test Group Three securities is in place. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The purpose of this proposal is to provide the SEC and market participants with notice of BX's efforts to remove its re-pricing functionality in Test Group Three securities for Price to Comply Orders, Price to Display Orders, Non-Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE protocols, consistent with its statements in SR-BX-2016-050. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) 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)(iii) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\13\ --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A)(iii). \13\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative prior to 30 days after the date of filing. Rule 19b-4(f)(6)(iii), however, permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay contained in Rule 19b- 4(f)(6)(iii) so that this proposed change will be in operative as of October 17, 2016, the date that Test Group Three securities begin to be subject to the quoting and trading restrictions of the Plan and, therefore, the relevant language in Rule 4770. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the Exchange to implement the proposed rules immediately thereby preventing delays in the implementation of the Plan. The Commission notes that the Pilot started implementation on October 3, 2016, Test Group Three securities were phased into the Pilot starting on October 17, 2016, and waiving the 30-day operative delay would ensure that the rules of the Exchange would be in place during implementation. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative upon filing with the Commission.\14\ --------------------------------------------------------------------------- \14\ For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2016-054 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-BX-2016-054. 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make [[Page 75471]] available publicly. All submissions should refer to File Number SR-BX- 2016-054, and should be submitted on or before November 21, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-26137 Filed 10-28-16; 8:45 am] BILLING CODE 8011-01-P
![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](https://thefederalregister.org/doc/81_FR_75678/page/1.svg)
![Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices 75471
available publicly. All submissions Size exception to Commentary .13 as a A. Self-Regulatory Organization’s
should refer to File Number SR–BX– technical correction. Statement of the Purpose of, and
2016–054, and should be submitted on Statutory Basis for, the Proposed Rule
or before November 21, 2016. * * * * * Change
For the Commission, by the Division of The NASDAQ Stock Market Rules 1. Purpose
Trading and Markets, pursuant to delegated * * * * *
authority.15 On September 7, 2016, The Nasdaq
Brent J. Fields, 4770. Compliance With Regulation NMS Stock Market LLC (‘‘Nasdaq’’ or
Plan To Implement a Tick Size Pilot ‘‘Exchange’’) filed with the Securities
Secretary.
(a) through (d) No Change.
and Exchange Commission (‘‘SEC’’ or
[FR Doc. 2016–26137 Filed 10–28–16; 8:45 am] ‘‘Commission’’) a proposed rule change
Commentary: .01–.12 No change.
BILLING CODE 8011–01–P
.1[2]3 For purposes of qualifying for the (‘‘Proposal’’) to adopt paragraph (d) and
Block Size exception under paragraph Commentary .12 to Exchange Rule 4770
(c)(3)(D)(iii) of this Rule, the Order must have to describe changes to system
SECURITIES AND EXCHANGE functionality necessary to implement
COMMISSION a size of 5,000 shares or more and the
resulting execution upon entry must have a the Plan. The Exchange also proposed
[Release No. 34–79155; File No. SR– size of 5,000 shares or more in aggregate. amendments to Rule 4770(a) and (c) to
NASDAQ–2016–143] .14 Until October 31, 2016, the treatment clarify how the Trade-at exception may
of Price to Comply Orders, Price to Display be satisfied. The SEC published the
Self-Regulatory Organizations; The Orders, Non-Displayed Orders, and Post- Proposal in the Federal Register for
NASDAQ Stock Market LLC; Notice of Only Orders that are entered through the notice and comment on September 20,
Filing and Immediate Effectiveness of OUCH or FLITE protocols in Test Group 2016.5 Nasdaq subsequently filed three
Proposed Rule Change To Add Three securities shall be as follows: Partial Amendments to clarify aspects of
Commentary .14 to Rule 4770 Following entry, and if market conditions the Proposal. The Commission approved
(Compliance With Regulation NMS allow, a Price to Comply Order in a Test the Proposal, as amended, on October 7,
Plan To Implement a Tick Size Pilot) Group Three Pilot Security will be adjusted 2016.6
repeatedly in accordance with changes to the In SR–NASDAQ–2016–126, Nasdaq
October 25, 2016. had initially proposed a re-pricing
NBBO until such time as the Price to Comply
Pursuant to Section 19(b)(1) of the Order is able to be ranked and displayed at functionality for Price to Comply
Securities Exchange Act of 1934 its original entered limit price. Orders, Non-Displayed Orders, and
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Following entry, and if market conditions Post-Only Orders entered through the
notice is hereby given that on October allow, a Price to Display Order in a Test OUCH and FLITE protocols in Group
17, 2016, The NASDAQ Stock Market Group Three Pilot Security will be adjusted Three securities.7 Nasdaq subsequently
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed repeatedly in accordance with changes to the determined that it would not offer this
with the Securities and Exchange NBBO until such time as the Price to Display re-pricing functionality for Price to
Commission (‘‘SEC’’ or ‘‘Commission’’) Order is able to be ranked and displayed at Comply Orders, Non-Displayed Orders,
the proposed rule change as described its original entered limit price. and Post-Only Orders entered through
in Items I and II, below, which Items Following entry, and if market conditions the OUCH and FLITE protocols in
have been prepared by the Exchange. allow, a Non-Displayed Order in a Test Group Three securities. As part of
The Commission is publishing this Group Three Pilot Security will be adjusted Partial Amendment No. 2 to SR–
notice to solicit comments on the repeatedly in accordance with changes to the NASDAQ–2016–126, Nasdaq proposed
proposed rule change from interested NBBO up (down) to the Order’s limit price. to delete the relevant language from
persons.3 Following entry, and if market conditions Rule 4770 related to this re-pricing
I. Self-Regulatory Organization’s allow, the Post-Only Order in a Test Group functionality.
Three Pilot Security will be adjusted In that amendment, Nasdaq noted that
Statement of the Terms of Substance of
repeatedly in accordance with changes to the this change would only impact the
the Proposed Rule Change
NBBO or the best price on the Nasdaq Book, treatment of Price to Comply Orders,
The Exchange proposes to add as applicable until such time as the Post- Non-Displayed Orders, and Post-Only
Commentary .14 to Rule 4770 Only Order is able to be ranked and orders that are submitted through the
(Compliance with Regulation NMS Plan displayed at its original entered limit price.
to Implement a Tick Size Pilot) to * * * * * 5 See Securities Exchange Act Release No. 78837
provide the SEC with notice of its efforts (September 14, 2016), 81 FR 64544 (September 20,
to re-program its systems to eliminate a II. Self-Regulatory Organization’s 2016) (SR–NASDAQ–2016–126).
6 See Securities Exchange Act Release No. 79075
re-pricing functionality for certain Statement of the Purpose of, and
(October 7, 2016) (SR–NASDAQ–2016–126).
orders in Test Group Three securities in Statutory Basis for, the Proposed Rule 7 As originally proposed, Rule 4770(d)(2) stated
connection with the Regulation NMS Change that Price to Comply Orders in a Test Group Three
Plan to Implement a Tick Size Pilot Pilot Security will be adjusted repeatedly in
Program (‘‘Plan’’ or ‘‘Pilot’’).4 Nasdaq In its filing with the Commission, the accordance with changes to the NBBO until such
Exchange included statements time as the Price to Comply Order is able to be
also proposes to re-number current ranked and displayed at its original entered limit
Commentary .12 relating to the Block concerning the purpose of and basis for price. Rule 4770(d)(3) stated that, if market
the proposed rule change and discussed conditions allow, a Non-Displayed Order in a Test
any comments it received on the Group Three Pilot Security will be adjusted
sradovich on DSK3GMQ082PROD with NOTICES
15 17 CFR 200.30–3(a)(12).
1 15 proposed rule change. The text of these repeatedly in accordance with changes to the NBBO
U.S.C. 78s(b)(1). up (down) to the Order’s limit price. Rule
2 17 CFR 240.19b–4. statements may be examined at the 4770(d)(4) stated that, if market conditions allow,
3 The text of the proposed rule change is set forth places specified in Item IV below. The the Post-Only Order in a Test Group Three Pilot
below. Proposed new language is in italics; deleted Exchange has prepared summaries, set Security will be adjusted repeatedly in accordance
text is in brackets. with changes to the NBBO or the best price on the
4 See Securities Exchange Act Release No. 74892
forth in sections A, B, and C below, of Nasdaq Book, as applicable until such time as the
(May 6, 2015), 80 FR 27513 (May 13, 2015) the most significant aspects of such Post-Only Order is able to be ranked and displayed
(‘‘Approval Order’’). statements. at its original entered limit price.
VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\31OCN1.SGM 31OCN1](https://thefederalregister.org/doc/81_FR_75678/page/4.svg)
Document Created: 2018-02-02 12:13:46
Document Modified: 2018-02-02 12:13:46
| 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 75468 |
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