81 FR 80701 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NBBO Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 221 (November 16, 2016)
Federal Register Volume 81, Issue 221 (November 16, 2016)
| Page Range | 80701-80703 | |
| FR Document | 2016-27472 |
[Federal Register Volume 81, Number 221 (Wednesday, November 16, 2016)] [Notices] [Pages 80701-80703] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-27472] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79277; File No. SR-NASDAQ-2016-150] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NBBO Program November 9, 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 31, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange's NBBO Program at Rule 7014(g) to change the qualification criteria required to receive the $0.0004 per share executed NBBO Program rebate in NYSE-listed securities and in Securities Listed on Exchanges other than Nasdaq and NYSE. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaq.cchwallstreet.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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend the Exchange's NBBO Program at Rule 7014(g) to change the qualification criteria required to receive the $0.0004 per share executed NBBO Program rebate in NYSE-listed securities and in Securities Listed on Exchanges other than Nasdaq and NYSE. The NBBO Program provides two rebates per share executed with respect to all other displayed orders (other than Designated Retail Orders, as defined in Rule 7018) in securities priced at $1 or more per share that provide liquidity, establish the NBBO, [[Page 80702]] and displayed a quantity of at least one round lot at the time of execution. The rebates provided are in addition to any rebate or credit payable under Rule 7018(a) and other programs under Rule 7014. The rebates are provided to executions from orders originating on ports that meet certain requirements. To qualify for the $0.0004 per share executed NBBO Program rebate in NYSE-listed securities and in Securities Listed on Exchanges other than Nasdaq and NYSE a member must execute shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represents 1.0% or more of Consolidated Volume during the month and the order must have been entered on a port that has a ratio of at least 25% NBBO liquidity provided\3\ to liquidity provided during the month. --------------------------------------------------------------------------- \3\ NBBO liquidity provided means liquidity provided from orders (other than Designated Retail Orders, as defined in Nasdaq Rule 7018), that establish the NBBO, and displayed a quantity of at least one round lot at the time of execution. --------------------------------------------------------------------------- The Exchange is proposing to amend one of the data points used in the calculation of the ratio required for a port to qualify for the $0.0004 per share executed NBBO Program rebate to now compare liquidity provided by displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) to NBBO liquidity provided. Thus, the Exchange is using a more limited category of liquidity (i.e., displayed quotes/orders) against which NBBO liquidity provided is compared to determine a member's ratio. For example, under the current rule if a member provides 100,000 shares of displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in a month (30,000 of which is NBBO liquidity) and it provides 100,000 of midpoint liquidity (non-displayed) during the same month, the member's ratio would be 15% (30,000 shares of NBBO liquidity divided by 200,000 shares of liquidity provided). Under the proposed change using this example, the ratio would be 30% based on 30,000 shares of NBBO liquidity provided divided by 100,000 shares of displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) provided (the member's 100,000 shares of non-displayed liquidity is not included). As a consequence, this member would not qualify for the $0.0004 per share executed NBBO Program rebate in NYSE-listed securities and in Securities Listed on Exchanges other than Nasdaq and NYSE under the current criteria, but would under the amended criteria. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\4\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that the proposed change is an equitable allocation and is not unfairly discriminatory because it makes it easier to qualify for the rebate. As a consequence, the Exchange is making the rebate more achievable for members, which may in turn, attract new members to the program. The Exchange notes that the program rewards members that provide liquidity that sets the NBBO, thus improving the market for all participants. To the extent the proposed change is successful in attracting more members to participate in the program, all participants will benefit from the increased competition in setting the NBBO. The Exchange further notes that a member that currently qualifies for the rebate would qualify for the rebate under the amended criteria. Last, the proposed change does not alter the amount of the rebate provided. Thus, the Exchange believes that the amount of the rebate continues to be reasonable for the reasons stated by the Exchange when the rebate was adopted. 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. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees and rebates in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed changes to the criteria required of members to receive a rebate under the NBBO Program make it easier for members to qualify for a rebate under the program, with the intent of making the program more attractive to members. Thus, the proposed change promotes competition for order flow among trading venues, and does not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues, which may provide similar incentives to their members. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.\6\ --------------------------------------------------------------------------- \6\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- 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: [[Page 80703]] Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-NASDAQ-2016-150 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-NASDAQ-2016-150. 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 available publicly. All submissions should refer to File Number SR-NASDAQ-2016-150 and should be submitted on or before December 7, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\7\ Brent J. Fields, Secretary. --------------------------------------------------------------------------- \7\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2016-27472 Filed 11-15-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 221 / Wednesday, November 16, 2016 / Notices 80701
Paper Comments at a price equal to or inferior than the notice is hereby given that on October
• Send paper comments in triplicate Opening Price and the Exchange would 31, 2016, The NASDAQ Stock Market
to Secretary, Securities and Exchange route orders that would execute through LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
Commission, 100 F Street NE., the Opening Price; (4) explaining that with the Securities and Exchange
Washington, DC 20549–1090. each Imbalance Message will be set for Commission (‘‘SEC’’ or ‘‘Commission’’)
All submissions should refer to File the same length of time; (5) including the proposed rule change as described
Number SR–Phlx–2016–79. This file additional rationale for proposed in Items I, II, and III, below, which Items
number should be included on the changes to routing during the Opening have been prepared by the Exchange.
subject line if email is used. To help the Process; (6) providing examples for how The Commission is publishing this
Commission process and review your certain parts of the Opening Process notice to solicit comments on the
comments more efficiently, please use operate; and (7) revising the filing and proposed rule change from interested
only one method. The Commission will Exhibit 5 to state that the Exchange may persons.
post all comments on the Commission’s open with the PBBO only if there are no
I. Self-Regulatory Organization’s
Internet Web site (http://www.sec.gov/ routable orders locking the ABBO.
Partial Amendment No. 2 Statement of the Terms of Substance of
rules/sro.shtml). Copies of the the Proposed Rule Change
supplements the proposed rule change
submission, all subsequent
by, among other things, clarifying the The Exchange proposes to amend the
amendments, all written statements
interest included in the Opening Exchange’s NBBO Program at Rule
with respect to the proposed rule
Process and providing additional 7014(g) to change the qualification
change that are filed with the
explanation and detail about several criteria required to receive the $0.0004
Commission, and all written
aspects of the Exchange’s Opening per share executed NBBO Program
communications relating to the
Process. It also helps the Commission rebate in NYSE-listed securities and in
proposed rule change between the
evaluate whether the proposed rule Securities Listed on Exchanges other
Commission and any person, other than
change would be consistent with the than Nasdaq and NYSE.
those that may be withheld from the
protection of investors and the public The text of the proposed rule change
public in accordance with the
interest. is available on the Exchange’s Web site
provisions of 5 U.S.C. 552, will be Accordingly, the Commission finds at http://nasdaq.cchwallstreet.com, at
available for Web site viewing and good cause, pursuant to Section 19(b)(2) the principal office of the Exchange, and
printing in the Commission’s Public of the Act,87 to approve the proposed at the Commission’s Public Reference
Reference Room, 100 F Street NE., rule change, as modified by Partial Room.
Washington, DC 20549 on official Amendment No. 2, on an accelerated
business days between the hours of basis. II. Self-Regulatory Organization’s
10:00 a.m. and 3:00 p.m. Copies of the Statement of the Purpose of, and
filing also will be available for VI. Conclusion Statutory Basis for, the Proposed Rule
inspection and copying at the principal It is therefore ordered, pursuant to Change
office of the Exchange. All comments Section 19(b)(2) of the Act,88 that the In its filing with the Commission, the
received will be posted without change; proposed rule change (SR–Phlx–2016– Exchange included statements
the Commission does not edit personal 79), as amended by Partial Amendment concerning the purpose of and basis for
identifying information from No. 2, be, and hereby is, approved. the proposed rule change and discussed
submissions. You should submit only any comments it received on the
For the Commission, by the Division of
information that you wish to make Trading and Markets, pursuant to delegated proposed rule change. The text of these
available publicly. All submissions authority.89 statements may be examined at the
should refer to File Number SR–Phlx– Brent J. Fields, places specified in Item IV below. The
2016–79 and should be submitted on or Exchange has prepared summaries, set
Secretary.
before December 7, 2016. forth in sections A, B, and C below, of
[FR Doc. 2016–27469 Filed 11–15–16; 8:45 am]
V. Accelerated Approval of Proposed BILLING CODE 8011–01–P the most significant aspects of such
Rule Change, as Modified by Partial statements.
Amendment No. 2 A. Self-Regulatory Organization’s
The Commission finds good cause to SECURITIES AND EXCHANGE Statement of the Purpose of, and
approve the proposed rule change, as COMMISSION Statutory Basis for, the Proposed Rule
modified by Partial Amendment No. 2, [Release No. 34–79277; File No. SR– Change
prior to the 30th day after the date of NASDAQ–2016–150]
publication of notice of Partial 1. Purpose
Amendment No. 2 in the Federal Self-Regulatory Organizations; The The purpose of the proposed rule
Register. Partial Amendment No. 2 NASDAQ Stock Market LLC; Notice of change is to amend the Exchange’s
revised the proposed rule change by: (1) Filing and Immediate Effectiveness of NBBO Program at Rule 7014(g) to
Specifying that references to ‘‘quotes’’ Proposed Rule Change To Amend the change the qualification criteria
refer to two-sided quotes; (2) providing NBBO Program required to receive the $0.0004 per
additional rationale for the OQR and for November 9, 2016.
share executed NBBO Program rebate in
boundaries that protect the Opening NYSE-listed securities and in Securities
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Price from trading through the limit Listed on Exchanges other than Nasdaq
Securities Exchange Act of 1934
price(s) of interest within OQR which is and NYSE. The NBBO Program provides
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
unable to fully execute at the Opening two rebates per share executed with
Price; (3) stating that in the event the 87 15 U.S.C. 78s(b)(2).
respect to all other displayed orders
Exchange routes to away markets and 88 Id. (other than Designated Retail Orders, as
uses the away market price as the 89 17 CFR 200.30–3(a)(12). defined in Rule 7018) in securities
Opening Price, the Exchange will enter 1 15 U.S.C. 78s(b)(1). priced at $1 or more per share that
on its order book any unfilled interest 2 17 CFR 240.19b–4. provide liquidity, establish the NBBO,
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![Federal Register / Vol. 81, No. 221 / Wednesday, November 16, 2016 / Notices 80703
Electronic Comments SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
COMMISSION Statement of the Purpose of, and the
• Use the Commission’s Internet Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ Change
[Release No. 34–79275; File No. SR–
rules/sro.shtml); or
NYSEArca–2016–146] 1. Purpose
• Send an email to rule-comments@
sec.gov. Please include File Number SR– Self-Regulatory Organizations; NYSE The Exchange proposes to temporarily
NASDAQ–2016–150 on the subject line. Arca, Inc.; Notice of Filing and widen price collar thresholds for the
Immediate Effectiveness of Proposed Core Open Auction and Trading Halt
Paper Comments Auctions, which would be operative for
Rule Change To Temporarily Widen
November 9, 2016 only.
• Send paper comments in triplicate Price Collar Thresholds for the Core
Open Auction and Trading Halt On November 8, 2016, the United
to Secretary, Securities and Exchange
Auctions States held an election to decide, among
Commission, 100 F Street NE.,
other things, the next President of the
Washington, DC 20549–1090. United States. This election result has
November 9, 2016.
All submissions should refer to File caused market volatility. This spike in
Pursuant to Section 19(b)(1) 1 of the
Number SR–NASDAQ–2016–150. This market volatility has also impacted the
Securities Exchange Act of 1934 (the pricing of Exchange Traded Products
file number should be included on the ‘‘Act’’),2 and Rule 19b–4 thereunder,3
subject line if email is used. To help the (‘‘ETP’’), the majority of which are listed
notice is hereby given that on November on the Exchange.
Commission process and review your 9, 2016, NYSE Arca, Inc. (the
comments more efficiently, please use Because of the level of market
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with volatility, the Exchange believes that
only one method. The Commission will the Securities and Exchange
post all comments on the Commission’s widening the Auction Collars for the
Commission (the ‘‘Commission’’) the Core Open Auction and Trading Halt
Internet Web site (http://www.sec.gov/ proposed rule change as described in
rules/sro.shtml). Copies of the Auctions for November 9, 2016 only
Items I and II below, which Items have would assist the Exchange in
submission, all subsequent been prepared by the self-regulatory conducting fair and orderly auctions.
amendments, all written statements organization. The Commission is As set forth in Rule 7.35(a)(10), the
with respect to the proposed rule publishing this notice to solicit price collar thresholds for the Core
change that are filed with the comments on the proposed rule change Open Auction and Trading Halt
Commission, and all written from interested persons. Auctions are currently set at 10% for
communications relating to the securities with an Auction Reference
proposed rule change between the I. Self-Regulatory Organization’s Price of $25.00 or less, 5% for securities
Commission and any person, other than Statement of the Terms of Substance of with an Auction Reference Price greater
those that may be withheld from the the Proposed Rule Change than $25.00 but less than or equal to
public in accordance with the $50.00, and 3% for securities with an
provisions of 5 U.S.C. 552, will be The Exchange proposes to temporarily
widen price collar thresholds for the Auction Reference Price greater than
available for Web site viewing and $50.00.4
printing in the Commission’s Public Core Open Auction and Trading Halt
Auctions, which would be operative on The Exchange proposes to apply
Reference Room, 100 F Street NE., Auction Collars of 10% for all Auction-
Washington, DC 20549, on official November 9, 2016 only. The proposed
Eligible Securities,5 regardless of the
business days between the hours of rule change is available on the
Auction Reference Price. The Exchange
10:00 a.m. and 3:00 p.m. Copies of the Exchange’s Web site at www.nyse.com, believes that for securities priced greater
filing also will be available for at the principal office of the Exchange, than $25.00, the proposed wider price
inspection and copying at the principal and at the Commission’s Public collar threshold will allow for
office of the Exchange. All comments Reference Room. additional price movements that is
received will be posted without change; II. Self-Regulatory Organization’s expected because of the volatility in the
the Commission does not edit personal Statement of the Purpose of, and market, while continuing to prevent
identifying information from Statutory Basis for, the Proposed Rule auctions from occurring at prices
submissions. You should submit only Change significantly away from the applicable
information that you wish to make Auction Reference Price. The proposed
available publicly. All submissions In its filing with the Commission, the 10% price collar threshold for the Core
should refer to File Number SR– self-regulatory organization included Open Auction is the same as currently
NASDAQ–2016–150 and should be statements concerning the purpose of,
submitted on or before December 7, and basis for, the proposed rule change 4 The Auction Reference Price for the Core Open
Auction is the midpoint of the Auction NBBO or,
2016. and discussed any comments it received if the Auction NBBO is locked, the locked price. If
on the proposed rule change. The text there is no Auction NBBO, the prior trading day’s
For the Commission, by the Division of
of those statements may be examined at Official Closing Price. The Auction Reference Price
Trading and Markets, pursuant to delegated for the Trading Halt Auction is the last consolidated
authority.7
the places specified in Item IV below.
round-lot price of that trading day, and if none, the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
The Exchange has prepared summaries, prior trading day’s Official Closing Price. See NYSE
Brent J. Fields,
set forth in sections A, B, and C below, Arca Equities Rule 7.35(a)(8).
Secretary. of the most significant parts of such 5 For the Core Open Auction, Auction-Eligible
[FR Doc. 2016–27472 Filed 11–15–16; 8:45 am] Securities are all securities for which the Exchange
statements. is the primary listing market and UTP Securities
BILLING CODE 8011–01–P
designated by the Exchange. For the Trading Halt
1 15
Auction, Auction-Eligible Securities are securities
U.S.C. 78s(b)(1).
for which the Exchange is the primary listing
2 15 U.S.C. 78a. market. See NYSE Arca Equities Rule 7.35(a)(1)(A)
7 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. and (B).
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Document Created: 2016-11-16 00:57:49
Document Modified: 2016-11-16 00:57:49
| 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 80701 |
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