81_FR_93130 81 FR 92886 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4770 (Compliance With Regulation NMS Plan To Implement a Tick Size Pilot)

81 FR 92886 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4770 (Compliance With Regulation NMS Plan To Implement a Tick Size Pilot)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 244 (December 20, 2016)

Page Range92886-92889
FR Document2016-30555

Federal Register, Volume 81 Issue 244 (Tuesday, December 20, 2016) 
[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Notices]
[Pages 92886-92889]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30555]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79549; File No. SR-BX-2016-067]


Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4770 
(Compliance With Regulation NMS Plan To Implement a Tick Size Pilot)

December 14, 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 30, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BX Rule 4770 to modify the Web site 
data publication requirements relating to the Regulation NMS Plan to 
Implement a Tick Size Pilot Program (``Plan'') and to clarify the 
timing and format of publishing Market Maker registration statistics.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqbx.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

[[Page 92887]]

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 August 25, 2014, BX, and several other self-regulatory 
organizations (the ``Participants'') filed with the Commission, 
pursuant to Section 11A of the Act \3\ and Rule 608 of Regulation NMS 
thereunder,\4\ the Plan to Implement a Tick Size Pilot Program.\5\ The 
Participants filed the Plan to comply with an order issued by the 
Commission on June 24, 2014.\6\ The Plan was published for comment in 
the Federal Register on November 7, 2014, and approved by the 
Commission, as modified, on May 6, 2015.\7\ The Commission approved the 
Pilot on a two-year basis, with implementation to begin no later than 
May 6, 2016.\8\ On November 6, 2015, the SEC exempted the Participants 
from implementing the Pilot until October 3, 2016.\9\ Under the revised 
Pilot implementation date, the Pre-Pilot data collection period 
commenced on April 4, 2016. On September 13, 2016, the SEC exempted the 
Participants from the requirement to fully implement the Pilot on 
October 3, 2016, to permit the Participants to implement the pilot on a 
phased-in basis, as described in the Participants' exemptive 
request.\10\
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    \3\ 15 U.S.C. 78k-1.
    \4\ 17 CFR 242.608.
    \5\ See Letter from Brendon J. Weiss, Vice President, 
Intercontinental Exchange, Inc., to Secretary, Commission, dated 
August 25, 2014.
    \6\ See Securities Exchange Act Release No 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
    \7\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 
80 FR 27513 (May 13, 2015) (``Approval Order'').
    \8\ See Approval Order at 27533 and 27545.
    \9\ See Securities Exchange Act Release No. 76382 (November 6, 
2015), 80 FR 70284 (November 13, 2015).
    \10\ See Letter from David S. Shillman, Associate Director, 
Division of Trading and Markets, Commission, to Eric Swanson, EVP, 
General Counsel and Secretary, Bats Global Markets, Inc., dated 
September 13, 2016; see also Letter from Eric Swanson, EVP, General 
Counsel and Secretary, Bats Global Markets, Inc., to Brent J. 
Fields, Secretary, Commission, dated September 9, 2016.
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    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stock of small-
capitalization companies. Each Participant is required to comply, and 
to enforce compliance by its member organizations, as applicable, with 
the provisions of the Plan.
    BX adopted rule amendments to implement the requirements of the 
Plan, including relating to the Plan's data collection requirements and 
requirements relating to Web site data publication.\11\ Specifically, 
with respect to the Web site data publication requirements pursuant to 
Section VII and Appendices B and C to the Plan, BX Rule 4770(b)(2)(B) 
provides, among other things, that BX shall make the data required by 
Items I and II of Appendix B to the Plan, and collected pursuant to 
paragraph (b)(2) of Rule 4770, publicly available on the BX Web site on 
a monthly basis at no charge and shall not identify the Trading Center 
that generated the data. BX Rule 4770(b)(3)(C), provides, among other 
things, that BX shall make the data required by Item IV of Appendix B 
to the Plan, and collected pursuant to paragraph (b)(3) of Rule 4770, 
publicly available on the BX Web site on a monthly basis at no charge 
and shall not identify the Trading Center that generated the data. 
Commentary .08 to Rule 4770 provides, among other things, that the 
requirement that BX make certain data publicly available on the BX Web 
site pursuant to Appendix B and C to the Plan shall commence at the 
beginning of the Pilot Period.
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    \11\ See, e.g., Securities Exchange Act Release No. 77457 (March 
28, 2016), 81 FR 18913 (April 1, 2016) (SR-BX-2016-019); see also 
Letter from David S. Shillman, Associate Director, Division of 
Trading and Markets, Commission, to Marcia E. Asquith, Senior Vice 
President and Corporate Secretary, FINRA, dated February 17, 2016.
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    BX is proposing amendments to Rule 4770(b)(2)(B) (regarding 
Appendix B.I and B.II data) and Rule 4770(b)(3)(C) (regarding Appendix 
B.IV data) to provide that data required to be made available on BX's 
Web site be published within 120 calendar days following month end. In 
addition, the proposed amendments to Commentary .08 to Rule 4770 would 
provide that, notwithstanding the provisions of paragraphs (b)(2)(B), 
(b)(3)(C) and (b)(5), BX shall make data for the Pre-Pilot period 
publicly available on the BX Web site pursuant to Appendix B and C to 
the Plan by February 28, 2017.\12\
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    \12\ With respect to data for the Pilot Period, the requirement 
that BX make data publicly available on the BX Web site pursuant to 
Appendix B and C to the Plan shall continue to commence at the 
beginning of the Pilot Period. Thus, the first Web site publication 
date for Pilot Period data (covering October 2016) would be 
published on the BX Web site by February 28, 2017, which is 120 days 
following the end of October 2016.
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    The purpose of delaying the publication of the Web site data is to 
address confidentiality concerns by providing for the passage of 
additional time between the market information reflected in the data 
and the public availability of such information.
    BX also proposes to amend Rule 4770(b)(5), which relates to the 
collection and transmission of Market Maker registration statistics. 
Currently, Rule 4770(b)(5) provides that the Exchange shall collect and 
transmit to the SEC the data described in Item III of Appendix B of the 
Plan relating to daily Market Maker registration statistics in a pipe 
delimited format within 30 calendar days following month end for (1) 
transactions in each Pre-Pilot Data Collection Security for the period 
beginning six months prior to the Pilot Period through the trading day 
immediately preceding the Pilot Period; and (2) transactions in each 
Pilot Security for the period beginning on the first day of the Pilot 
Period through six months after the end of the Pilot Period. Although 
the Plan requires that such data be made publicly available,\13\ Rule 
4770(b)(5) does not currently include a provision requiring the 
Exchange to publish such data to its Web site. The Exchange therefore 
proposes to amend Rule 4770(b)(5) to provide that the Exchange shall 
make Market Maker registration data publicly available on the Exchange 
Web site within 120 calendar days following month end at no charge.
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    \13\ See Section VII.A. 4 of the Plan.
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    BX has filed the proposed rule change for immediate effectiveness 
and has requested that the Commission waive the 30-day operative delay. 
If the Commission waives the 30-day operative delay, the operative date 
of the proposed rule change will be the date of filing.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\15\ 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, because it is designed to assist the Participants in meeting 
their regulatory obligations pursuant to the Plan and is in furtherance 
of the objectives of the Plan, as identified by the SEC.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    In approving the Plan, the Commission recognized that requiring the 
publication of Market Maker data may raise confidentiality concerns, 
especially for Pilot Securities that may

[[Page 92888]]

have a relatively small number of designated Market Makers.\16\ For 
this reason, the Commission modified the Plan so that the data that 
would be made publicly available would not contain profitability 
measures for each security, but would be aggregated by the Control 
Group and each Test Group. BX believes that this proposal is consistent 
with the Act in that it is designed to address confidentiality concerns 
by permitting BX to delay Web site publication to provide for passage 
of additional time between the market information reflected in the data 
and the public availability of such information. With respect to the 
change to Rule 4770(b)(5), BX believes this change will clarify the 
timing and format of publishing Market Maker registration statistics.
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    \16\ See Approval Order at 27543-27544.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. BX notes that the proposed rule 
change implements the provisions of the Plan, and is designed to assist 
the Participants in meeting their regulatory obligations pursuant to 
the Plan.
    The proposal is intended to address confidentiality concerns that 
may adversely impact competition, especially for Pilot Securities that 
may have a relatively small number of designated Market Makers, by 
permitting BX to delay Web site publication to provide for passage of 
additional time between the market information reflected in the data 
and the public availability of such information. The proposal also does 
not alter the information required to be submitted to the SEC.

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.\17\
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    \17\ BX notes that Financial Information Forum (FIF) submitted a 
letter to the staff of the Commission raising concerns regarding the 
publication of certain Appendix B statistics on a disaggregated 
basis using a unique masked market participant identifier. See 
Letter from Mary Lou Von Kaenel, Managing Director, FIF, to David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, dated August 16, 2016, available at https://www.fif.com/
comment-letters.
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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 \18\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. In this filing, the 
Exchange has asked that the Commission waive the requirement that the 
proposed rule change not become operative for 30 days after the date of 
the filing.
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    \20\ Id.
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange notes that the proposed rule change implements the 
provisions of the Plan, and is designed to assist the Participants in 
meeting their regulatory obligations pursuant to the Plan. The proposal 
is intended to address confidentiality concerns by permitting the 
Exchange to delay Web site publication to provide for passage of 
additional time between the market information reflected in the data 
and public availability of such information. The proposal does not 
alter the information required to be submitted to the Commission.
    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 these proposed changes 
that are intended to address confidentiality concerns. The Commission 
notes that some Pilot data was scheduled to be published on November 
30, 2016. Therefore, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change to be operative on 
November 30, 2016.\22\
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    \22\ 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).
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    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 Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BX-2016-067 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2016-067. 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

[[Page 92889]]

should refer to File Number SR-BX-2016-067 and should be submitted on 
or before January 10, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-30555 Filed 12-19-16; 8:45 am]
 BILLING CODE 8011-01-P

92886 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Notices PCAOB to further develop their mission. The Commission directs the By the Commission. understanding of the PCAOB’s budget PCAOB during 2017 to continue Brent J. Fields, and operations. During the course of providing quarterly updates to the Secretary. this review, Commission staff relied Commission on the Center’s activities [FR Doc. 2016–30537 Filed 12–19–16; 8:45 am] upon representations and supporting and progress towards its stated goals. BILLING CODE 8011–01–P documentation from the PCAOB. Based The Commission directs the Board on this review, the Commission issued during 2017 to continue to provide in its a ‘‘pass back’’ letter to the PCAOB. On quarterly reports to the Commission SECURITIES AND EXCHANGE November 17, 2016, the PCAOB detailed information about the state of COMMISSION approved its 2017 budget during an the PCAOB’s information technology open meeting, and subsequently (‘‘IT’’) program, including planned, [Release No. 34–79549; File No. SR–BX– 2016–067] submitted that budget to the estimated, and actual costs for IT Commission for approval. projects, and the level of involvement of Self-Regulatory Organizations; After considering the above, the consultants. These reports also should NASDAQ BX, Inc.; Notice of Filing and Commission did not identify any continue to include: (a) A discussion of Immediate Effectiveness of Proposed proposed disbursements in the 2017 the Board’s assessment of the IT Rule Change To Amend Rule 4770 budget adopted by the PCAOB that are program; and (b) the quarterly IT report (Compliance With Regulation NMS not properly recoverable through the that is prepared by PCAOB staff and Plan To Implement a Tick Size Pilot) annual accounting support fee, and the submitted to the Board. Commission believes that the aggregate The Commission also directs the December 14, 2016. proposed 2017 annual accounting Board during 2017 to continue to Pursuant to Section 19(b)(1) of the support fee does not exceed the include in its quarterly reports to the Securities Exchange Act of 1934 PCAOB’s aggregate recoverable budget Commission information about the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 expenses for 2017. The Commission also PCAOB’s inspections program. Such notice is hereby given that on November acknowledges the PCAOB’s updated information is to include: (a) Statistics 30, 2016, NASDAQ BX, Inc. (‘‘BX’’ or strategic plan and encourages the relative to the numbers and types of ‘‘Exchange’’) filed with the Securities PCAOB to continue keeping the firms budgeted and expected to be and Exchange Commission (‘‘SEC’’ or Commission and its staff apprised of inspected in 2017, including by location ‘‘Commission’’) the proposed rule significant new developments. The and by year the inspections are required change as described in Items I and II Commission looks forward to providing to be conducted in accordance with the below, which Items have been prepared views to the PCAOB as future updates Sarbanes-Oxley Act and PCAOB rules; by the Exchange. The Commission is are made to the plan. In addition, the (b) information about the timing of the publishing this notice to solicit PCAOB should submit its 2016 annual issuance of inspections reports for comments on the proposed rule change report to the Commission by April 1, domestic and non-U.S. inspections; and from interested persons. 2017. (c) updates on the PCAOB’s efforts to We understand that the Board establish cooperative arrangements with I. Self-Regulatory Organization’s continues to take steps to implement respective non-U.S. authorities for Statement of the Terms of Substance of improvements to the performance and inspections required in those countries. the Proposed Rule Change management of the PCAOB’s standard- The Commission understands that the The Exchange proposes to amend BX setting process. The Commission directs Office of Management and Budget Rule 4770 to modify the Web site data the PCAOB to continue to provide (‘‘OMB’’) has determined the 2017 publication requirements relating to the timely updates throughout the year on budget of the PCAOB to be sequestrable Regulation NMS Plan to Implement a the progress of this initiative as well as under the Budget Control Act of 2011.4 Tick Size Pilot Program (‘‘Plan’’) and to on any significant recommended or For 2016, the PCAOB sequestered $16 clarify the timing and format of anticipated changes to processes or million. That amount will become publishing Market Maker registration funding. available in 2017. For 2017, the statistics. The Commission emphasizes the sequestration amount will be $17 The text of the proposed rule change importance of the PCAOB’s identifying million. Accordingly, the PCAOB is available on the Exchange’s Web site efficiencies, process improvements, and should submit a revised spending plan at http://nasdaqbx.cchwallstreet.com/, cost savings wherever possible. for 2017 reflecting a $1 million at the principal office of the Exchange, Accordingly, the Commission directs reduction to budgeted expenditures as a and at the Commission’s Public the Board to conduct a study assessing result of the increase in sequestration Reference Room. its operational efficiency and budgetary amount from 2016 to 2017. needs and submit a supplemental report The Commission has determined that II. Self-Regulatory Organization’s to the Commission of the Board’s the PCAOB’s 2017 budget and annual Statement of the Purpose of, and assessment in connection with the start accounting support fee are consistent Statutory Basis for, the Proposed Rule of the 2018 budget cycle. The report with Section 109 of the Sarbanes-Oxley Change should identify any areas where specific Act. Accordingly, In its filing with the Commission, the savings may be achieved while It is ordered, pursuant to Section 109 Exchange included statements continuing to enable the PCAOB to fully of the Sarbanes-Oxley Act, that the concerning the purpose of and basis for perform its mission. The PCAOB should PCAOB budget and annual accounting the proposed rule change and discussed submit the report to the Commission support fee for calendar year 2017 are mstockstill on DSK3G9T082PROD with NOTICES any comments it received on the along with its 2018 budgetary outlook approved. proposed rule change. The text of these letter. statements may be examined at the As part of its review of the 2017 4 See ‘‘OMB Report to the Congress on the Joint places specified in Item IV below. The budget, the Commission notes that the Committee Reductions for Fiscal Year 2017’’, Appendix page 15 of 16 at: https:// Exchange has prepared summaries, set Board’s management of the Center for www.whitehouse.gov/sites/default/files/omb/assets/ Economic Analysis (‘‘Center’’) should legislative_reports/sequestration/jc_sequestration_ 1 15 U.S.C. 78s(b)(1). continue to advance the PCAOB’s report_2017_house.pdf. 2 17 CFR 240.19b–4. VerDate Sep<11>2014 19:36 Dec 19, 2016 Jkt 241001 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 E:\FR\FM\20DEN1.SGM 20DEN1

Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Notices 92887 forth in sections A, B, and C below, of BX adopted rule amendments to reflected in the data and the public the most significant aspects of such implement the requirements of the Plan, availability of such information. statements. including relating to the Plan’s data BX also proposes to amend Rule collection requirements and 4770(b)(5), which relates to the A. Self-Regulatory Organization’s collection and transmission of Market requirements relating to Web site data Statement of the Purpose of, and Maker registration statistics. Currently, Statutory Basis for, the Proposed Rule publication.11 Specifically, with respect to the Web site data publication Rule 4770(b)(5) provides that the Change Exchange shall collect and transmit to requirements pursuant to Section VII 1. Purpose and Appendices B and C to the Plan, BX the SEC the data described in Item III of On August 25, 2014, BX, and several Rule 4770(b)(2)(B) provides, among Appendix B of the Plan relating to daily other self-regulatory organizations (the other things, that BX shall make the data Market Maker registration statistics in a ‘‘Participants’’) filed with the required by Items I and II of Appendix pipe delimited format within 30 Commission, pursuant to Section 11A of B to the Plan, and collected pursuant to calendar days following month end for the Act 3 and Rule 608 of Regulation paragraph (b)(2) of Rule 4770, publicly (1) transactions in each Pre-Pilot Data NMS thereunder,4 the Plan to available on the BX Web site on a Collection Security for the period Implement a Tick Size Pilot Program.5 monthly basis at no charge and shall not beginning six months prior to the Pilot The Participants filed the Plan to identify the Trading Center that Period through the trading day comply with an order issued by the generated the data. BX Rule immediately preceding the Pilot Period; Commission on June 24, 2014.6 The 4770(b)(3)(C), provides, among other and (2) transactions in each Pilot Plan was published for comment in the things, that BX shall make the data Security for the period beginning on the Federal Register on November 7, 2014, required by Item IV of Appendix B to first day of the Pilot Period through six and approved by the Commission, as the Plan, and collected pursuant to months after the end of the Pilot Period. modified, on May 6, 2015.7 The paragraph (b)(3) of Rule 4770, publicly Although the Plan requires that such Commission approved the Pilot on a available on the BX Web site on a data be made publicly available,13 Rule two-year basis, with implementation to monthly basis at no charge and shall not 4770(b)(5) does not currently include a begin no later than May 6, 2016.8 On identify the Trading Center that provision requiring the Exchange to November 6, 2015, the SEC exempted generated the data. Commentary .08 to publish such data to its Web site. The the Participants from implementing the Rule 4770 provides, among other things, Exchange therefore proposes to amend Pilot until October 3, 2016.9 Under the that the requirement that BX make Rule 4770(b)(5) to provide that the revised Pilot implementation date, the certain data publicly available on the Exchange shall make Market Maker Pre-Pilot data collection period BX Web site pursuant to Appendix B registration data publicly available on commenced on April 4, 2016. On and C to the Plan shall commence at the the Exchange Web site within 120 September 13, 2016, the SEC exempted beginning of the Pilot Period. calendar days following month end at the Participants from the requirement to BX is proposing amendments to Rule no charge. fully implement the Pilot on October 3, 4770(b)(2)(B) (regarding Appendix B.I BX has filed the proposed rule change 2016, to permit the Participants to and B.II data) and Rule 4770(b)(3)(C) for immediate effectiveness and has implement the pilot on a phased-in (regarding Appendix B.IV data) to requested that the Commission waive basis, as described in the Participants’ provide that data required to be made the 30-day operative delay. If the exemptive request.10 available on BX’s Web site be published Commission waives the 30-day The Plan is designed to allow the within 120 calendar days following operative delay, the operative date of Commission, market participants, and month end. In addition, the proposed the proposed rule change will be the the public to study and assess the amendments to Commentary .08 to Rule date of filing. impact of increment conventions on the 4770 would provide that, 2. Statutory Basis liquidity and trading of the common notwithstanding the provisions of stock of small-capitalization companies. The Exchange believes that its paragraphs (b)(2)(B), (b)(3)(C) and (b)(5), Each Participant is required to comply, proposal is consistent with Section 6(b) BX shall make data for the Pre-Pilot and to enforce compliance by its of the Act,14 in general, and furthers the period publicly available on the BX Web member organizations, as applicable, objectives of Section 6(b)(5) of the Act,15 site pursuant to Appendix B and C to with the provisions of the Plan. in particular, in that it is designed to the Plan by February 28, 2017.12 promote just and equitable principles of The purpose of delaying the 3 15 U.S.C. 78k–1. trade, to remove impediments to and publication of the Web site data is to 4 17 CFR 242.608. perfect the mechanism of a free and address confidentiality concerns by 5 See Letter from Brendon J. Weiss, Vice open market and a national market President, Intercontinental Exchange, Inc., to providing for the passage of additional system, and, in general to protect Secretary, Commission, dated August 25, 2014. time between the market information 6 See Securities Exchange Act Release No 72460 investors and the public interest, (June 24, 2014), 79 FR 36840 (June 30, 2014). 11 See, e.g., Securities Exchange Act Release No. because it is designed to assist the 7 See Securities Exchange Act Release No. 74892 77457 (March 28, 2016), 81 FR 18913 (April 1, Participants in meeting their regulatory (May 6, 2015), 80 FR 27513 (May 13, 2015) 2016) (SR–BX–2016–019); see also Letter from obligations pursuant to the Plan and is (‘‘Approval Order’’). David S. Shillman, Associate Director, Division of in furtherance of the objectives of the 8 See Approval Order at 27533 and 27545. Trading and Markets, Commission, to Marcia E. Plan, as identified by the SEC. 9 See Securities Exchange Act Release No. 76382 Asquith, Senior Vice President and Corporate (November 6, 2015), 80 FR 70284 (November 13, Secretary, FINRA, dated February 17, 2016. In approving the Plan, the mstockstill on DSK3G9T082PROD with NOTICES 2015). 12 With respect to data for the Pilot Period, the Commission recognized that requiring 10 See Letter from David S. Shillman, Associate requirement that BX make data publicly available the publication of Market Maker data Director, Division of Trading and Markets, on the BX Web site pursuant to Appendix B and may raise confidentiality concerns, Commission, to Eric Swanson, EVP, General C to the Plan shall continue to commence at the especially for Pilot Securities that may Counsel and Secretary, Bats Global Markets, Inc., beginning of the Pilot Period. Thus, the first Web dated September 13, 2016; see also Letter from Eric site publication date for Pilot Period data (covering 13 See Section VII.A. 4 of the Plan. Swanson, EVP, General Counsel and Secretary, Bats October 2016) would be published on the BX Web 14 15 U.S.C. 78f(b). Global Markets, Inc., to Brent J. Fields, Secretary, site by February 28, 2017, which is 120 days Commission, dated September 9, 2016. following the end of October 2016. 15 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 19:36 Dec 19, 2016 Jkt 241001 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 E:\FR\FM\20DEN1.SGM 20DEN1

92888 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Notices have a relatively small number of III. Date of Effectiveness of the temporarily suspend such rule change if designated Market Makers.16 For this Proposed Rule Change and Timing for it appears to the Commission that such reason, the Commission modified the Commission Action action is: (i) Necessary or appropriate in Plan so that the data that would be Because the foregoing proposed rule the public interest; (ii) for the protection made publicly available would not change does not: (i) Significantly affect of investors; or (iii) otherwise in contain profitability measures for each the protection of investors or the public furtherance of the purposes of the Act. security, but would be aggregated by the interest; (ii) impose any significant If the Commission takes such action, the Control Group and each Test Group. BX burden on competition; and (iii) become Commission shall institute proceedings believes that this proposal is consistent operative for 30 days from the date on to determine whether the proposed rule which it was filed, or such shorter time should be approved or disapproved. with the Act in that it is designed to address confidentiality concerns by as the Commission may designate, it has IV. Solicitation of Comments permitting BX to delay Web site become effective pursuant to Section Interested persons are invited to publication to provide for passage of 19(b)(3)(A)(iii) of the Act 18 and submit written data, views, and additional time between the market subparagraph (f)(6) of Rule 19b–4 arguments concerning the foregoing, information reflected in the data and the thereunder.19 A proposed rule change filed under including whether the proposed rule public availability of such information. change is consistent with the Act. Rule 19b–4(f)(6) 20 normally does not With respect to the change to Rule become operative prior to 30 days after Comments may be submitted by any of 4770(b)(5), BX believes this change will the date of the filing. However, pursuant the following methods: clarify the timing and format of to Rule 19b–4(f)(6)(iii),21 the Electronic Comments publishing Market Maker registration Commission may designate a shorter statistics. • Use the Commission’s Internet time if such action is consistent with the comment form (http://www.sec.gov/ B. Self-Regulatory Organization’s protection of investors and the public rules/sro.shtml); or Statement on Burden on Competition interest. In this filing, the Exchange has • Send an email to rule-comments@ asked that the Commission waive the sec.gov. Please include File Number SR– The Exchange does not believe that requirement that the proposed rule BX–2016–067 on the subject line. the proposed rule change will impose change not become operative for 30 days any burden on competition not after the date of the filing. Paper Comments necessary or appropriate in furtherance The Exchange notes that the proposed • Send paper comments in triplicate of the purposes of the Act. BX notes that rule change implements the provisions to Brent J. Fields, Secretary, Securities of the Plan, and is designed to assist the and Exchange Commission, 100 F Street the proposed rule change implements Participants in meeting their regulatory NE., Washington, DC 20549–1090. the provisions of the Plan, and is obligations pursuant to the Plan. The All submissions should refer to File designed to assist the Participants in proposal is intended to address meeting their regulatory obligations Number SR–BX–2016–067. This file confidentiality concerns by permitting number should be included on the pursuant to the Plan. the Exchange to delay Web site subject line if email is used. To help the The proposal is intended to address publication to provide for passage of Commission process and review your confidentiality concerns that may additional time between the market comments more efficiently, please use adversely impact competition, information reflected in the data and only one method. The Commission will especially for Pilot Securities that may public availability of such information. post all comments on the Commission’s have a relatively small number of The proposal does not alter the Internet Web site (http://www.sec.gov/ designated Market Makers, by information required to be submitted to rules/sro.shtml). permitting BX to delay Web site the Commission. Copies of the submission, all publication to provide for passage of The Commission believes that subsequent amendments, all written waiving the 30-day operative delay is additional time between the market statements with respect to the proposed consistent with the protection of information reflected in the data and the rule change that are filed with the investors and the public interest public availability of such information. Commission, and all written because it will allow the Exchange to The proposal also does not alter the implement these proposed changes that communications relating to the information required to be submitted to are intended to address confidentiality proposed rule change between the the SEC. concerns. The Commission notes that Commission and any person, other than some Pilot data was scheduled to be those that may be withheld from the C. Self-Regulatory Organization’s public in accordance with the Statement on Comments on the published on November 30, 2016. Therefore, the Commission hereby provisions of 5 U.S.C. 552, will be Proposed Rule Change Received From available for Web site viewing and waives the 30-day operative delay and Members, Participants, or Others printing in the Commission’s Public designates the proposed rule change to be operative on November 30, 2016.22 Reference Room, 100 F Street NE., No written comments were either Washington, DC 20549, on official solicited or received.17 At any time within 60 days of the filing of the proposed rule change, the business days between the hours of Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the 16 See Approval Order at 27543–27544. 17 BX filing also will be available for notes that Financial Information Forum inspection and copying at the principal mstockstill on DSK3G9T082PROD with NOTICES 18 15 U.S.C. 78s(b)(3)(A)(iii). (FIF) submitted a letter to the staff of the Commission raising concerns regarding the 19 17 CFR 240.19b–4(f)(6). office of the Exchange. All comments publication of certain Appendix B statistics on a 20 Id. received will be posted without change; disaggregated basis using a unique masked market 21 17 CFR 240.19b–4(f)(6)(iii). the Commission does not edit personal participant identifier. See Letter from Mary Lou 22 For purposes only of waiving the operative identifying information from Von Kaenel, Managing Director, FIF, to David S. delay for this proposal, the Commission has Shillman, Associate Director, Division of Trading considered the proposed rule’s impact on submissions. You should submit only and Markets, Commission, dated August 16, 2016, efficiency, competition, and capital formation. See information that you wish to make available at https://www.fif.com/comment-letters. 15 U.S.C. 78c(f). available publicly. All submissions VerDate Sep<11>2014 19:36 Dec 19, 2016 Jkt 241001 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 E:\FR\FM\20DEN1.SGM 20DEN1

Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Notices 92889 should refer to File Number SR–BX– of those statements may be examined at • Third, the Exchange proposes that 2016–067 and should be submitted on the places specified in Item IV below. OFPs qualifying for new Tier 1 would or before January 10, 2017. The Exchange has prepared summaries, also be eligible for the ACE Initiating For the Commission, by the Division of set forth in sections A, B, and C below, Participant Rebate, which is currently Trading and Markets, pursuant to delegated of the most significant parts of such available to OFPs that achieve Tiers authority.23 statements. 2–5 of the ACE Program.8 Robert W. Errett, A. Self-Regulatory Organization’s • Fourth, the Exchange proposes that Deputy Secretary. Statement of the Purpose of, and the OFPs that achieve Tier 2 would receive [FR Doc. 2016–30555 Filed 12–19–16; 8:45 am] Statutory Basis for, the Proposed Rule a $0.19 per contract credit on electronic BILLING CODE 8011–01–P Change Customer Complex Orders. In this regard, the Exchange proposes to define 1. Purpose Complex Order in the Key Terms and SECURITIES AND EXCHANGE The purpose of this filing is to amend Definitions section of the Fee Schedule, COMMISSION Section I. E. of the Fee Schedule,4 as ‘‘. . . any order involving the effective December 1, 2016. simultaneous purchase and/or sale of [Release No. 34–79558; File No. SR– Section I. E. of the Fee Schedule two or more different option series in NYSEMKT–2016–114] describes the Exchange’s ACE Program. the same underlying security, for the Self-Regulatory Organizations; NYSE The ACE Program features five tiers, same account, in a ratio that is equal to MKT LLC; Notice of Filing and expressed as a percentage of total or greater than one-to-three (.333) and Immediate Effectiveness of Proposed industry Customer equity and Exchange less than or equal to three-to-one (3.00) Change Modifying the NYSE Amex Traded Fund (‘‘ETF’’) option average and for the purpose of executing a Options Fee Schedule daily volume (‘‘CADV’’) 5 and provides particular investment strategy, per Rule two alternative methods through which 900.3NY(e).’’ OFPs that achieve Tier 2 December 14, 2016. Order Flow Providers (each an ‘‘OFP’’) would continue to receive a $0.18 per Pursuant to Section 19(b)(1) 1 of the may receive per contract credits for contract credit on electronic Customer Securities Exchange Act of 1934 (the Electronic Customer volume that the volume (i.e., non-Complex Customer ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 OFP, as agent, submits to the Exchange. order flow). notice is hereby given that, on December The Exchange proposes to make the The Exchange is not proposing any 1, 2016, NYSE MKT LLC (the following changes to the ACE Program: other changes to the alternative ACE ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with • First, the Exchange proposes to add Program Credit Tiers at this time.9 the Securities and Exchange a credit tier and re-designate current The proposed additional Tier would Commission (the ‘‘Commission’’) the Tier 1 as the ‘‘Base Tier.’’ 6 Currently, to not impact the Firm Monthly Fee Cap of proposed rule change as described in achieve any credit under the ACE $100,000 per month per Firm, but the Items I, II, and III below, which Items Program, an OFP must achieve Tier 2 Exchange proposes to add reference to have been prepared by the self- (which offers an $0.18 per contract the Base Tier in Section I of the Fee regulatory organization. The credit). To qualify for Tier 2, an OFP Schedule to add clarity and Commission is publishing this notice to must execute at least 0.75% to 1.00% of transparency to Exchange fees.10 solicit comments on the proposed rule CADV or 0.35% over October 2015 The proposed modifications to the change from interested persons. CADV. The Exchange proposes a new tiers of the ACE Program as well as the Tier 1, for which an OFP to qualify I. Self-Regulatory Organization’s additional rebate for electronic would have to execute at least 0.20% Statement of the Terms of Substance of Customer Complex Orders are designed over October 2015 CADV. the Proposed Rule Change • Second, OFPs that qualify for to further encourage OFPs to direct proposed new Tier 1 would be eligible additional order flow to the Exchange, The Exchange proposes to modify the to receive a $0.14 per contract credit. As which additional volume and liquidity NYSE Amex Options Fee Schedule with all other current tiers of the ACE would benefit all Exchange participants (‘‘Fee Schedule’’). The Exchange Program, the take liquidity multiplier through increased opportunities to trade proposes to implement the fee change would also apply to proposed new Tier as well as enhancing price discovery. effective December 1, 2016. The proposed change is available on the 1.7 2. Statutory Basis Exchange’s Web site at www.nyse.com, 4 See Fee Schedule, Section I. E. (Amex Customer The Exchange believes that the at the principal office of the Exchange, Engagement (‘‘ACE’’) Program—Standard Options), proposed rule change is consistent with and at the Commission’s Public available here, https://www.nyse.com/publicdocs/ Section 6(b) of the Act,11 in general, and Reference Room. nyse/markets/amex-options/ NYSE_Amex_Options_Fee_Schedule.pdf. II. Self-Regulatory Organization’s 5 The volume thresholds are based on an OFP’s 8 See proposed Fee Schedule, Section I. G. at n.2 Statement of the Purpose of, and Customer volume transacted Electronically as a (‘‘The ACE Initiating Participant Rebate is applied Statutory Basis for, the Proposed Rule percentage of total industry CADV as reported by to each of the first 5,000 Customer contracts of a the Options Clearing Corporation (the ‘‘OCC’’). See CUBE Order executed in a CUBE Auction. This Change Rebate is in addition to any additional credits set OCC Monthly Statistics Reports, available here, In its filing with the Commission, the http://www.theocc.com/webapps/monthly-volume- forth above. Only ATP Holders who qualify for reports. Tiers 1, 2, 3, 4 or 5 of the ACE Program are eligible self-regulatory organization included 6 The Exchange notes that that the qualification to receive the Rebate’’). statements concerning the purpose of, basis for the proposed Base Tier remains the same 9 OFPs that achieve a qualification level in one mstockstill on DSK3G9T082PROD with NOTICES and basis for, the proposed rule change as it is under current Tier 1 (i.e., an OFP must tier, and achieve an alternative qualification level and discussed any comments it received execute at least 0.00% to 0.75% of CADV) and there in another tier, will continue to be paid a credit are still no credits available under this tier. based on the highest achieved tier. See Fee on the proposed rule change. The text Schedule, Section I.E., supra note 4. 7 See Fee Schedule, Section I. E., supra note 4 10 See Fee Schedule, Section I. I. (Firm Monthly 23 17 (‘‘In calculating an OFP’s Electronic volume, each CFR 200.30–3(a)(12). Customer order that takes liquidity will be weighted Fee Cap), supra note 4. The Monthly Firm Fee Cap 1 15 U.S.C. 78s(b)(1). as 50% greater (i.e., 1.5 times the contract volume) decreases if Firms achieve Tiers 2–5 of the ACE 2 15 U.S.C. 78a. Program (i.e., greater than the Base Tier or Tier 1). for determining Customer Electronic ADV and Total 3 17 CFR 240.19b–4. Electronic ADV’’). 11 15 U.S.C. 78f(b). VerDate Sep<11>2014 19:36 Dec 19, 2016 Jkt 241001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\20DEN1.SGM 20DEN1


Document Created: 2018-02-14 09:10:06
Document Modified: 2018-02-14 09:10:06
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 92886 
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