81 FR 87091 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend 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 232 (December 2, 2016)
Federal Register Volume 81, Issue 232 (December 2, 2016)
| Page Range | 87091-87094 | |
| FR Document | 2016-28932 |
[Federal Register Volume 81, Number 232 (Friday, December 2, 2016)] [Notices] [Pages 87091-87094] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-28932] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79409; File No. SR-BX-2016-061] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Commentary .14 to Rule 4770 (Compliance With Regulation NMS Plan To Implement a Tick Size Pilot) November 28, 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 November 14, 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 amend 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\ --------------------------------------------------------------------------- \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 italicized; deleted text is in brackets. * * * * * [[Page 87092]] NASDAQ BX Rules * * * * * 4770. Compliance With Regulation NMS Plan To Implement a Tick Size Pilot (a) through (d) No Change. Commentary .01-.13 No change. .14 Until [November 14, 2016] December 12, 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. 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. 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. On October 17, 2016, BX filed a proposal to extend the date by which it would complete the re-programing of 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.\7\ In that proposal, BX stated that it anticipated that this re-programming shall be complete on or before October 31, 2016.\8\ --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 79154 (October 25, 2016) (SR-BX-2016-054). Subsequent to the approval of SR-BX-2016-050, BX 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 included those Orders as part of SR-BX- 2016-054 accordingly. Price to Display Orders will be treated in the same manner as Price to Comply Orders under the re-pricing functionality. \8\ Id. --------------------------------------------------------------------------- On October 31, 2016, BX submitted a proposed rule change to extend the date by which it would eliminate the re-pricing functionality to November 14, 2016.\9\ In that proposal, BX stated that it was still determining how to modify its systems to eliminate the current re- pricing functionality in Test Group Three securities for Price to Comply [[Page 87093]] Orders, Price to Display Orders, Non-Displayed Orders, and Post-Only Orders that are entered through the OUCH or FLITE protocols. --------------------------------------------------------------------------- \9\ See Securities Exchange Act Release No. 79262 (November 8, 2016) (SR-BX-2016-153). --------------------------------------------------------------------------- At this time, BX is 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 December 12, 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. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\11\ 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 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, SR-BX-2016-054, and SR-BX- 2016-153 in proposing the removal of this functionality. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 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.\12\ The Exchange also notes that it is diligently working to eliminate the current 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, and that it anticipates this re-programming to be complete on or before December 12, 2016. --------------------------------------------------------------------------- \12\ For example, for the time period between October 17 and November 11, 2016, 0.08% of orders that were entered on the NASDAQ Stock Market LLC in Test Group Three securities were entered at a price that crossed the NBBO. --------------------------------------------------------------------------- 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, SR-BX- 2016-054 and SR-BX-2016-153. 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 change has become effective pursuant to Section 19(b)(3)(A)(iii) \13\ of the Act and Rule 19b-4(f)(6) \14\ thereunder, in that it effects a change that: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) by its terms, does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A)(iii). \14\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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-2016-061 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities [[Page 87094]] and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2016-061. 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-BX-2016-061 and should be submitted on or before December 23, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-28932 Filed 12-1-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 232 / Friday, December 2, 2016 / Notices 87091
with which Orders in Test Group Three Commission summarily may available publicly. All submissions
securities are entered with a limit price temporarily suspend such rule change if should refer to File Number SR–Phlx–
that would cross a Protected Quotation it appears to the Commission that such 2016–114 and should be submitted on
of another market center, and believes action is: (i) Necessary or appropriate in or before December 23, 2016.
that the re-pricing functionality will be the public interest; (ii) for the protection For the Commission, by the Division of
triggered infrequently.12 The Exchange of investors; or (iii) otherwise in Trading and Markets, pursuant to delegated
also notes that it is diligently working furtherance of the purposes of the Act. authority.15
to eliminate the current re-pricing If the Commission takes such action, the Robert W. Errett,
functionality in Test Group Three Commission shall institute proceedings Deputy Secretary.
securities for Price to Comply Orders, to determine whether the proposed rule
[FR Doc. 2016–28930 Filed 12–1–16; 8:45 am]
Price to Display Orders, Non-Displayed should be approved or disapproved.
BILLING CODE 8011–01–P
Orders, and Post-Only Orders that are IV. Solicitation of Comments
entered through the OUCH or FLITE
protocols, and that it anticipates this re- Interested persons are invited to
submit written data, views, and SECURITIES AND EXCHANGE
programming to be complete on or COMMISSION
before December 12, 2016. arguments concerning the foregoing,
including whether the proposed rule
B. Self-Regulatory Organization’s change is consistent with the Act. [Release No. 34–79409; File No. SR–BX–
Statement on Burden on Competition 2016–061]
Comments may be submitted by any of
The Exchange does not believe that the following methods: Self-Regulatory Organizations;
the proposed rule change will impose Electronic Comments NASDAQ BX, Inc.; Notice of Filing and
any burden on competition not Immediate Effectiveness of Proposed
necessary or appropriate in furtherance • Use the Commission’s Internet
comment form (http://www.sec.gov/ Rule Change To Amend Commentary
of the purposes of the Act. The purpose .14 to Rule 4770 (Compliance With
of this proposal is to provide the SEC rules/sro.shtml); or
• Send an email to rule-comments@ Regulation NMS Plan To Implement a
and market participants with notice of Tick Size Pilot)
Phlx’s efforts to remove its re-pricing sec.gov. Please include File Number SR–
functionality in Test Group Three Phlx–2016–114 on the subject line. November 28, 2016.
securities for Price to Comply Orders, Paper Comments Pursuant to Section 19(b)(1) of the
Price to Display Orders, Non-Displayed Securities Exchange Act of 1934
• Send paper comments in triplicate
Orders, and Post-Only Orders that are (‘‘Act’’),1 and Rule 19b–4 thereunder,2
to Brent J. Fields, Secretary, Securities
entered through the OUCH or FLITE notice is hereby given that on November
and Exchange Commission, 100 F Street
protocols, consistent with its statements 14, 2016, NASDAQ BX, Inc. (‘‘BX’’ or
NE., Washington, DC 20549–1090.
in SR–Phlx–2016–92, SR–Phlx–2016– ‘‘Exchange’’) filed with the Securities
All submissions should refer to File and Exchange Commission (‘‘SEC’’ or
106, and SR–Phlx–2016–110.
Number SR–Phlx–2016–114. This file ‘‘Commission’’) the proposed rule
C. Self-Regulatory Organization’s number should be included on the change as described in Items I and II
Statement on Comments on the subject line if email is used. To help the below, which Items have been prepared
Proposed Rule Change Received From Commission process and review your by the Exchange. The Commission is
Members, Participants, or Others comments more efficiently, please use publishing this notice to solicit
No written comments were either only one method. The Commission will comments on the proposed rule change
solicited or received. post all comments on the Commission’s from interested persons.
Internet Web site (http://www.sec.gov/
III. Date of Effectiveness of the rules/sro.shtml). I. Self-Regulatory Organization’s
Proposed Rule Change and Timing for Copies of the submission, all Statement of the Terms of Substance of
Commission Action subsequent amendments, all written the Proposed Rule Change
The foregoing change has become statements with respect to the proposed The Exchange proposes to amend
effective pursuant to Section rule change that are filed with the Commentary .14 to Rule 4770
19(b)(3)(A)(iii) 13 of the Act and Rule Commission, and all written (Compliance with Regulation NMS Plan
19b–4(f)(6) 14 thereunder, in that it communications relating to the to Implement a Tick Size Pilot) to
effects a change that: (i) Does not proposed rule change between the provide the SEC with notice of its efforts
significantly affect the protection of Commission and any person, other than to re-program its systems to eliminate a
investors or the public interest; (ii) does those that may be withheld from the re-pricing functionality for certain
not impose any significant burden on public in accordance with the orders in Test Group Three securities in
competition; and (iii) by its terms, does provisions of 5 U.S.C. 552, will be connection with the Regulation NMS
not become operative for 30 days after available for Web site viewing and Plan to Implement a Tick Size Pilot
the date of the filing, or such shorter printing in the Commission’s Public Program (‘‘Plan’’ or ‘‘Pilot’’).3
time as the Commission may designate Reference Room, 100 F Street NE., The text of the proposed rule change
if consistent with the protection of Washington, DC 20549, on official is set forth below. Proposed new
investors and the public interest. business days between the hours of language is italicized; deleted text is in
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
brackets.
filing of the proposed rule change, the filing also will be available for
inspection and copying at the principal * * * * *
12 For example, for the time period between office of the Exchange. All comments
15 17 CFR 200.30–3(a)(12).
October 17 and November 11, 2016, 0.08% of orders received will be posted without change;
that were entered on the NASDAQ Stock Market 1 15 U.S.C. 78s(b)(1).
LLC in Test Group Three securities were entered at
the Commission does not edit personal 2 17 CFR 240.19b–4.
a price that crossed the NBBO. identifying information from 3 See Securities Exchange Act Release No. 74892
13 15 U.S.C. 78s(b)(3)(A)(iii). submissions. You should submit only (May 6, 2015), 80 FR 27513 (May 13, 2015)
14 17 CFR 240.19b–4(f)(6). information that you wish to make (‘‘Approval Order’’).
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NASDAQ BX Rules A. Self-Regulatory Organization’s are already subject to this re-pricing
* * * * * Statement of the Purpose of, and functionality and will remain subject to
Statutory Basis for, the Proposed Rule this functionality under the Pilot.
4770. Compliance With Regulation Change In the Amendment, BX further noted
NMS Plan To Implement a Tick Size that its systems are currently
1. Purpose programmed so that Price to Comply
Pilot
On September 7, 2016, the Exchange Orders, Non-Displayed Orders and Post-
(a) through (d) No Change.
filed with the Securities and Exchange Only Orders entered through the OUCH
Commentary Commission (‘‘SEC’’ or ‘‘Commission’’) and FLITE protocols in Test Group
.01–.13 No change. a proposed rule change (‘‘Proposal’’) to Three Securities may be adjusted
.14 Until [November 14, 2016] adopt paragraph (d) to Exchange Rule repeatedly to reflect changes to the
December 12, 2016, the treatment of 4770 to describe changes to system NBBO and/or the best price on the BX
Price to Comply Orders, Price to Display functionality necessary to implement book. BX stated that it is re-
the Plan. The Exchange also proposed programming its systems to remove this
Orders, Non-Displayed Orders, and
amendments to Rule 4770(a) and (c) to functionality for Price to Comply
Post-Only Orders that are entered
clarify how the Trade-at exception may Orders, Non-Displayed Orders and Post-
through the OUCH or FLITE protocols
be satisfied. The SEC published the Only Orders entered through the OUCH
in Test Group Three securities shall be
Proposal in the Federal Register for and FLITE protocols in Test Group
as follows:
notice and comment on September 20, Three Securities. In the Amendment, BX
Following entry, and if market
2016.4 BX subsequently filed three stated that it anticipated that this re-
conditions allow, a Price to Comply
Partial Amendments to clarify aspects of programming shall be completed no
Order in a Test Group Three Pilot
the Proposal. The Commission approved later than November 30, 2016. If it
Security will be adjusted repeatedly in
the Proposal, as amended, on October 7, appears that this functionality will
accordance with changes to the NBBO
2016.5 remain operational by October 17, 2016,
until such time as the Price to Comply In SR–BX–2016–050, BX had initially
Order is able to be ranked and displayed BX indicated that it would file a
proposed a re-pricing functionality for proposed rule change with the SEC and
at its original entered limit price. Price to Comply Orders, Non-Displayed
Following entry, and if market will provide notice to market
Orders, and Post-Only Orders entered participants sufficiently in advance of
conditions allow, a Price to Display through the OUCH and FLITE protocols
Order in a Test Group Three Pilot that date to provide effective notice. The
in Group Three securities.6 BX rule change and the notice to market
Security will be adjusted repeatedly in subsequently determined that it would
accordance with changes to the NBBO participants will describe the current
not offer this re-pricing functionality for operation of the BX systems in this
until such time as the Price to Display Price to Comply Orders, Non-Displayed
Order is able to be ranked and displayed regard, and the timing related to the re-
Orders, and Post-Only Orders entered programming.
at its original entered limit price. through the OUCH and FLITE protocols On October 17, 2016, BX filed a
Following entry, and if market in Group Three securities. As part of proposal to extend the date by which it
conditions allow, a Non-Displayed Partial Amendment No. 2 to SR–BX– would complete the re-programing of its
Order in a Test Group Three Pilot 2016–050, BX proposed to delete the systems to eliminate the re-pricing
Security will be adjusted repeatedly in relevant language from Rule 4770 functionality in Test Group Three
accordance with changes to the NBBO related to this re-pricing functionality. securities for Price to Comply Orders,
up (down) to the Order’s limit price. In that amendment, BX noted that this Price to Display Orders, Non-Displayed
Following entry, and if market change would only impact the treatment Orders, and Post-Only Orders that are
conditions allow, the Post-Only Order of Price to Comply Orders, Non- entered through the OUCH or FLITE
in a Test Group Three Pilot Security Displayed Orders, and Post-Only orders protocols.7 In that proposal, BX stated
will be adjusted repeatedly in that are submitted through the OUCH that it anticipated that this re-
accordance with changes to the NBBO and FLITE protocols in Test Group programming shall be complete on or
or the best price on the Exchange Book, Three Pilot Securities, as these types of before October 31, 2016.8
as applicable until such time as the Orders that are currently submitted to On October 31, 2016, BX submitted a
Post-Only Order is able to be ranked and BX through the RASH or FIX protocols proposed rule change to extend the date
displayed at its original entered limit by which it would eliminate the re-
price. 4 See Securities Exchange Act Release No. 78838
pricing functionality to November 14,
* * * * * (September 14, 2016), 81 FR 64566 (September 20,
2016.9 In that proposal, BX stated that
2016) (SR–BX–2016–050).
II. Self-Regulatory Organization’s 5 See Securities Exchange Act Release No. 79076 it was still determining how to modify
Statement of the Purpose of, and (October 7, 2016) (SR–BX–2016–050). its systems to eliminate the current re-
Statutory Basis for, the Proposed Rule 6 As originally proposed, Rule 4770(d)(2) stated pricing functionality in Test Group
that Price to Comply Orders in a Test Group Three Three securities for Price to Comply
Change Pilot Security will be adjusted repeatedly in
In its filing with the Commission, the accordance with changes to the NBBO until such 7 See Securities Exchange Act Release No. 79154
time as the Price to Comply Order is able to be
Exchange included statements ranked and displayed at its original entered limit (October 25, 2016) (SR–BX–2016–054).
concerning the purpose of and basis for price. Rule 4770(d)(3) stated that, if market Subsequent to the approval of SR–BX–2016–050,
the proposed rule change and discussed BX become aware that this re-pricing functionality
asabaliauskas on DSK3SPTVN1PROD with NOTICES
conditions allow, a Non-Displayed Order in a Test
Group Three Pilot Security will be adjusted also applies to Price to Display Orders that are
any comments it received on the entered through the OUCH and FLITE protocols in
repeatedly in accordance with changes to the NBBO
proposed rule change. The text of these up (down) to the Order’s limit price. Rule Test Group Three Securities, and included those
statements may be examined at the 4770(d)(4) stated that, if market conditions allow, Orders as part of SR–BX–2016–054 accordingly.
places specified in Item IV below. The the Post-Only Order in a Test Group Three Pilot Price to Display Orders will be treated in the same
Security will be adjusted repeatedly in accordance manner as Price to Comply Orders under the re-
Exchange has prepared summaries, set pricing functionality.
with changes to the NBBO or the best price on the
forth in sections A, B, and C below, of BX Book, as applicable until such time as the Post- 8 Id.
the most significant aspects of such Only Order is able to be ranked and displayed at 9 See Securities Exchange Act Release No. 79262
statements. its original entered limit price. (November 8, 2016) (SR–BX–2016–153).
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![87094 Federal Register / Vol. 81, No. 232 / Friday, December 2, 2016 / Notices
and Exchange Commission, 100 F Street notice is hereby given that on November ECOs during Core Trading Hours 4 to
NE., Washington, DC 20549–1090. 14, 2016, NYSE Arca, Inc. (‘‘Exchange’’ provide specificity and transparency
All submissions should refer to File or ‘‘NYSE Arca’’) filed with the regarding such order processing,
Number SR–BX–2016–061. This file Securities and Exchange Commission without modifying the substance of
number should be included on the (the ‘‘Commission’’) the proposed rule such processing. The Exchange also
subject line if email is used. To help the change as described in Items I, II, and proposes to amend the rules governing
Commission process and review your III below, which Items have been how ECOs that are eligible for a COA
comments more efficiently, please use prepared by the Exchange. The Process are executed and allocated to
only one method. The Commission will Commission is publishing this notice to clarify the description of current
post all comments on the Commission’s solicit comments on the proposed rule functionality and to provide additional
Internet Web site (http://www.sec.gov/ change from interested persons. detail regarding order processing. The
rules/sro.shtml). Exchange also proposes additional
Copies of the submission, all I. Self-Regulatory Organization’s
amendments to Rule 6.91 to clarify and
subsequent amendments, all written Statement of the Terms of Substance of
add transparency to the COA Process, as
statements with respect to the proposed the Proposed Rule Change
described below.
rule change that are filed with the The Exchange proposes to amend
Commission, and all written Rule 6.91NY (Electronic Complex Order Execution of ECOs during Core Trading
communications relating to the Trading) to clarify the priority of Hours
proposed rule change between the Electronic Complex Orders and to The Exchange proposes to streamline
Commission and any person, other than modify aspects of its Complex Order its description of the priority of ECOs
those that may be withheld from the Auction Process. The proposed rule during Core Trading Hours, which the
public in accordance with the change is available on the Exchange’s Exchange believes would add specificity
provisions of 5 U.S.C. 552, will be Web site at www.nyse.com, at the and transparency to Exchange rules.
available for Web site viewing and principal office of the Exchange, and at Every ECO, upon entry to the System, is
printing in the Commission’s Public the Commission’s Public Reference routed to the CME for possible
Reference Room, 100 F Street NE., Room. execution against other ECOs or against
Washington, DC 20549, on official II. Self-Regulatory Organization’s individual quotes and orders residing in
business days between the hours of Statement of the Purpose of, and the Consolidated Book (‘‘leg markets’’).5
10:00 a.m. and 3:00 p.m. Copies of the Statutory Basis for, the Proposed Rule The Exchange ranks and allocates ECOs
filing also will be available for Change residing in the Consolidated Book
inspection and copying at the principal according to price/time priority based
office of the Exchange. All comments In its filing with the Commission, the on the total or net debit or credit and the
received will be posted without change; Exchange included statements time of entry of the order.6 Paragraph
the Commission does not edit personal concerning the purpose of and basis for (a)(2) to the Rule sets forth how ECOs
identifying information from the proposed rule change and discussed are executed, including that ECOs
submissions. You should submit only any comments it received on the submitted to the System may be
information that you wish to make proposed rule change. The text of these executed without consideration of
available publicly. statements may be examined at the prices of the same complex order that
All submissions should refer to File places specified in Item IV below. The might be available on other exchanges.7
Number SR–BX–2016–061 and should Exchange has prepared summaries, set The Exchange proposes to specify that
be submitted on or before December 23, forth in sections A, B, and C below, of ECOs may be executed without regard to
2016. the most significant aspects of such prices of ‘‘either single-legged or the
statements. same complex order strategy’’ that might
For the Commission, by the Division of
Trading and Markets, pursuant to delegated A. Self-Regulatory Organization’s be available on other exchanges, which
authority.15 Statement of the Purpose of, and adds specificity and transparency to
Robert W. Errett, Statutory Basis for, the Proposed Rule Exchange rules.8 The Exchange
Deputy Secretary. Change proposes to amend Rule 6.91(a)(2) by re-
[FR Doc. 2016–28932 Filed 12–1–16; 8:45 am] 1. Purpose 4 Core Trading Hours are the regular trading hours
BILLING CODE 8011–01–P
The Exchange proposes to amend for business set forth in the rules of the primary
Rule 6.91 to clarify the priority of markets underlying those option classes listed on
the Exchange. See Rule 6.1A(a)(3).
SECURITIES AND EXCHANGE Electronic Complex Orders (‘‘ECO’’) 3 5 See proposed Rule 6.91(a) (the Exchange
COMMISSION and to modify aspects of its Complex proposes to define ‘‘leg markets’’ in reference to
Order Auction (‘‘COA’’) Process. individual quotes and orders in the Consolidated
[Release No. 34–79404; File No. SR– Rule 6.91 sets forth how the Exchange Book as used throughout the rule text). The
NYSEArca–2016–149] conducts trading of ECOs in its Complex Exchange also proposes to define ‘‘System’’ as a
shorthand reference to the term ‘‘NYSE Arca
Matching Engine (‘‘CME’’). The System’’ and replace uses of the term ‘‘NYSE Arca
Self-Regulatory Organizations; NYSE
Exchange proposes to streamline the System’’ with the term ‘‘System’’ throughout the
Arca, Inc.; Notice of Filing of a
rule text governing the execution of rule text. See, e.g., proposed Rule 6.91(preamble)
Proposed Rule Change Amending Rule and paragraph (a).
6.91NY 6 See Rule 6.91(a)(1).
asabaliauskas on DSK3SPTVN1PROD with NOTICES
3 Per Rule 6.91, ‘‘an ‘Electronic Complex Order’
7 See Rule 6.91(a)(2). The Rule also provides that
means any Complex Order as defined in Rule
November 28, 2016. ‘‘[n]o leg of a [ECO] will be executed at a price
6.62(e) that is entered into the NYSE Arca System.’’
Pursuant to Section 19(b)(1) of the Rule 6.62(e) defines Complex Order as ‘‘any order outside the NYSE Arca best bid/offer for that leg.’’
Securities Exchange Act of 1934 (the involving the simultaneous purchase and/or sale of See id.
two or more different option series in the same 8 Rule 6.91(a)(2)(i) governs the execution of ECOs
‘‘Act’’),1 and Rule 19b–4 thereunder,2
underlying security, for the same account, in a ratio at the Open. The Exchange proposes a non-
that is equal to or greater than one-to-three (.333) substantive amendment to add the term
15 17 CFR 200.30–3(a)(12). and less than or equal to three-to-one (3.00) and for ‘‘Electronic’’ so that the rule text would read,
1 15 U.S.C. 78s(b)(1). the purpose of executing a particular investment ‘‘Execution of Electronic Complex orders at the
2 17 CFR 240.19b–4. strategy.’’ Open.’’
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Document Created: 2018-02-14 09:02:03
Document Modified: 2018-02-14 09:02:03
| 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 87091 |
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