82 FR 11385 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Implementation Date of Its Functionality Relating to Post-Only Orders and Orders With Midpoint Pegging, and Its Trade-Now Functionality

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 34 (February 22, 2017)

Page Range		11385-11386
FR Document		2017-03401
Federal Register, Volume 82 Issue 34 (Wednesday, February 22, 2017)
[Federal Register Volume 82, Number 34 (Wednesday, February 22, 2017)]
[Notices]
[Pages 11385-11386]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03401]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80046; File No. SR-BX-2017-008]


Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the 
Implementation Date of Its Functionality Relating to Post-Only Orders 
and Orders With Midpoint Pegging, and Its Trade-Now Functionality

February 15, 2017.
    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 February 3, 2017, 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 extend the implementation date of its 
functionality relating to Post-Only Orders and Orders with Midpoint 
Pegging, and its Trade-Now functionality.
    There is no rule text for this proposed rule change.

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
    BX is filing this proposal to extend the implementation date of its 
functionality relating to Post-Only Orders and Orders with Midpoint 
Pegging, and its Trade-Now functionality. The functionality relating to 
Post-Only Orders and Orders with Midpoint Pegging was approved by the 
SEC on November 10, 2016,\3\ and the Trade-Now functionality was 
submitted on an immediately effective basis on November 8, 2016.\4\
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    \3\ See Securities Exchange Act Release No. 79290 (November 10, 
2016), 81 FR 81184 (November 17, 2016) (SR-BX-2016-046) (``Post-Only 
Approval Order'').
    \4\ See Securities Exchange Act Release No. 79281 (November 10, 
2016), 81 FR 81203 (November 17, 2016) (SR-BX-2016-059).
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    Under the new Post-Only functionality, the behavior of Post-Only 
orders would be altered when the adjusted price of such orders lock or 
cross a non-displayed price on the Exchange's Book. Specifically, if 
the adjusted price of the Post-Only Order would lock or cross a non-
displayed price on the Exchange's Book, the Post-Only order would be 
posted in the same manner as a Price to Comply Order. However, the 
Post-Only Order would execute if (i) it is priced at $1.00 or more, or 
(ii) it is priced below $1.00 and the value of price improvement 
associated with executing against an Order on the Exchange Book (as 
measured against the original limit price of the Order) equals or 
exceeds the sum of fees charged for such execution and the value of any 
rebate that would be provided if the Order posted to the Exchange Book 
and subsequently provided liquidity.\5\
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    \5\ See Post-Only Approval Order, supra note 3.
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    Additionally, if the Post-Only Order would not lock or cross a 
Protected Quotation but would lock or cross a Non-Displayed Order on 
the Exchange's Book, the Post-Only Order would be posted, ranked, and 
displayed at its limit price. The Post-Only Order would execute if (i) 
it is priced at $1.00 or more, or (ii) it is priced below $1.00 and the 
value of price improvement associated with executing against an Order 
on the Exchange Book equals or exceeds the sum of fees charged for such 
execution and the value of any rebate that would be provided if the 
Order posted to the Exchange Book and subsequently provided 
liquidity.\6\
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    \6\ Id.
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    BX also proposed to change its Midpoint Peg Post-Only Order, so 
that, if the Inside Bid and Inside Offer are crossed, any existing 
Order with Midpoint Pegging would be rejected and any new Order with 
Midpoint Pegging would be cancelled.\7\
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    \7\ Id.
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    Under BX's Trade-Now functionality, participants could enter an 
instruction to have a locked resting buy (sell) order execute against 
the locking sell (buy) order. BX proposed to offer the functionality on 
its OUCH, RASH, FLITE and FIX protocols. Depending on the protocol used 
by the participant to access the BX system, the participant could 
either specify that the order execute against locking interest 
automatically, or the participant would be required to send a Trade Now 
instruction to the Exchange once the order has become locked. BX 
proposed to offer the Trade Now instruction for all orders that may be 
sent to the BX book and that are not subject to other BX rules 
regarding the display and execution of those orders.\8\
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    \8\ See Securities Exchange Act Release No. 79281 (November 10, 
2016), 81 FR 81203 (November 17, 2016) (SR-BX-2016-059).
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    BX initially proposed to implement the new Post-Only, Midpoint 
Pegging and Trade-Now functionality on

[[Page 11386]]

November 21, 2016.\9\ However, following testing, BX has decided to 
delay the implementation of these new functionalities to provide 
additional time for systems testing. The new functionality shall be 
implemented no later than March 31, 2017. BX will announce the new 
implementation date by an Equity Trader Alert, which shall be issued 
prior to the implementation date.
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    \9\ See Equity Trader Alert #2016-291.
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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 proposal is to inform the SEC and market 
participants of the new implementation date for the Post-Only, Midpoint 
Pegging, and Trade Now functionalities. The functionalities themselves 
were previously proposed in rule filings that were submitted to the 
SEC, and this proposal does not change the substance of those 
functionalities.\12\ BX is delaying the implementation date of these 
functionalities to provide for further systems testing prior to 
implementing these functionalities.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ BX notes that the Trade-Now functionality was submitted to 
the SEC as an immediately effective filing, while the Post-Only and 
Midpoint Pegging functionalities were the subject of an SEC approval 
order. See supra notes 3 and 4.
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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. As noted above, the purpose of 
this proposal is to extend the implementation date for Post-Only, 
Midpoint Pegging and Trade-Now functionalities so that BX may perform 
additional systems testing prior to implementing these functionalities.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    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-2017-008 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-2017-008. 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-2017-008 and should be 
submitted on or before March 15, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03401 Filed 2-21-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 34 / Wednesday, February 22, 2017 / Notices 11385

rule’s permission for funds to maintain ‘‘Commission’’) the proposed rule Only order would be posted in the same
their assets in foreign custodians. change as described in Items I and II manner as a Price to Comply Order.
The estimate of average burden hours below, which Items have been prepared However, the Post-Only Order would
is made solely for the purposes of the by the Exchange. The Commission is execute if (i) it is priced at $1.00 or
Paperwork Reduction Act. The estimate publishing this notice to solicit more, or (ii) it is priced below $1.00 and
is not derived from a comprehensive or comments on the proposed rule change the value of price improvement
even a representative survey or study of from interested persons. associated with executing against an
the costs of Commission rules and I. Self-Regulatory Organization’s Order on the Exchange Book (as
forms. Statement of the Terms of Substance of measured against the original limit price
Written comments are invited on: (a) the Proposed Rule Change of the Order) equals or exceeds the sum
Whether the collection of information is of fees charged for such execution and
necessary for the proper performance of The Exchange proposes to extend the the value of any rebate that would be
the functions of the Commission, implementation date of its functionality provided if the Order posted to the
including whether the information has relating to Post-Only Orders and Orders Exchange Book and subsequently
practical utility; (b) the accuracy of the with Midpoint Pegging, and its Trade- provided liquidity.5
Commission’s estimate of the burden of Now functionality. Additionally, if the Post-Only Order
the collection of information; (c) ways to There is no rule text for this proposed would not lock or cross a Protected
enhance the quality, utility, and clarity rule change. Quotation but would lock or cross a
of the information collected; and (d) II. Self-Regulatory Organization’s Non-Displayed Order on the Exchange’s
ways to minimize the burden of the Statement of the Purpose of, and Book, the Post-Only Order would be
collection of information on Statutory Basis for, the Proposed Rule posted, ranked, and displayed at its
respondents, including through the use Change limit price. The Post-Only Order would
of automated collection techniques or In its filing with the Commission, the execute if (i) it is priced at $1.00 or
other forms of information technology. Exchange included statements more, or (ii) it is priced below $1.00 and
Consideration will be given to concerning the purpose of and basis for the value of price improvement
comments and suggestions submitted in the proposed rule change and discussed associated with executing against an
writing within 60 days of this any comments it received on the Order on the Exchange Book equals or
publication. proposed rule change. The text of these exceeds the sum of fees charged for such
Please direct your written comments statements may be examined at the execution and the value of any rebate
to Pamela Dyson, Director/Chief places specified in Item IV below. The that would be provided if the Order
Information Officer, Securities and Exchange has prepared summaries, set posted to the Exchange Book and
Exchange Commission, C/O Remi forth in sections A, B, and C below, of subsequently provided liquidity.6
Pavlik-Simon, 100 F Street NE., the most significant aspects of such BX also proposed to change its
Washington, DC 20549; or send an email statements. Midpoint Peg Post-Only Order, so that,
to: PRA_Mailbox@sec.gov. if the Inside Bid and Inside Offer are
A. Self-Regulatory Organization’s crossed, any existing Order with
Dated: February 15, 2017.
Statement of the Purpose of, and Midpoint Pegging would be rejected and
Eduardo A. Aleman, Statutory Basis for, the Proposed Rule any new Order with Midpoint Pegging
Assistant Secretary. Change would be cancelled.7
[FR Doc. 2017–03421 Filed 2–21–17; 8:45 am]
1. Purpose Under BX’s Trade-Now functionality,
BILLING CODE 8011–01–P
participants could enter an instruction
BX is filing this proposal to extend
to have a locked resting buy (sell) order
the implementation date of its
execute against the locking sell (buy)
SECURITIES AND EXCHANGE functionality relating to Post-Only
order. BX proposed to offer the
COMMISSION Orders and Orders with Midpoint
functionality on its OUCH, RASH,
Pegging, and its Trade-Now
[Release No. 34–80046; File No. SR–BX–
functionality. The functionality relating FLITE and FIX protocols. Depending on
2017–008] the protocol used by the participant to
to Post-Only Orders and Orders with
Midpoint Pegging was approved by the access the BX system, the participant
Self-Regulatory Organizations; could either specify that the order
NASDAQ BX, Inc.; Notice of Filing and SEC on November 10, 2016,3 and the
Trade-Now functionality was submitted execute against locking interest
Immediate Effectiveness of Proposed automatically, or the participant would
Rule Change To Extend the on an immediately effective basis on
November 8, 2016.4 be required to send a Trade Now
Implementation Date of Its instruction to the Exchange once the
Functionality Relating to Post-Only Under the new Post-Only
functionality, the behavior of Post-Only order has become locked. BX proposed
Orders and Orders With Midpoint to offer the Trade Now instruction for
Pegging, and Its Trade-Now orders would be altered when the
adjusted price of such orders lock or all orders that may be sent to the BX
Functionality book and that are not subject to other
cross a non-displayed price on the
February 15, 2017. Exchange’s Book. Specifically, if the BX rules regarding the display and
Pursuant to Section 19(b)(1) of the adjusted price of the Post-Only Order execution of those orders.8
Securities Exchange Act of 1934 would lock or cross a non-displayed BX initially proposed to implement
the new Post-Only, Midpoint Pegging
sradovich on DSK3GMQ082PROD with NOTICES

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 price on the Exchange’s Book, the Post-
notice is hereby given that on February and Trade-Now functionality on
3, 2017, NASDAQ BX, Inc. (‘‘BX’’ or 3 See Securities Exchange Act Release No. 79290
5 See
(November 10, 2016), 81 FR 81184 (November 17, Post-Only Approval Order, supra note 3.
‘‘Exchange’’) filed with the Securities 6 Id.
2016) (SR–BX–2016–046) (‘‘Post-Only Approval
and Exchange Commission (‘‘SEC’’ or Order’’). 7 Id.
4 See Securities Exchange Act Release No. 79281 8 See Securities Exchange Act Release No. 79281
1 15 U.S.C. 78s(b)(1). (November 10, 2016), 81 FR 81203 (November 17, (November 10, 2016), 81 FR 81203 (November 17,
2 17 CFR 240.19b–4. 2016) (SR–BX–2016–059). 2016) (SR–BX–2016–059).

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11386 Federal Register / Vol. 82, No. 34 / Wednesday, February 22, 2017 / Notices

November 21, 2016.9 However, III. Date of Effectiveness of the submission, all subsequent
following testing, BX has decided to Proposed Rule Change and Timing for amendments, all written statements
delay the implementation of these new Commission Action with respect to the proposed rule
functionalities to provide additional Because the foregoing proposed rule change that are filed with the
time for systems testing. The new change does not: (i) Significantly affect Commission, and all written
functionality shall be implemented no the protection of investors or the public communications relating to the
later than March 31, 2017. BX will interest; (ii) impose any significant proposed rule change between the
announce the new implementation date burden on competition; and (iii) become Commission and any person, other than
by an Equity Trader Alert, which shall operative for 30 days from the date on those that may be withheld from the
be issued prior to the implementation which it was filed, or such shorter time public in accordance with the
date. as the Commission may designate, it has provisions of 5 U.S.C. 552, will be
become effective pursuant to Section available for Web site viewing and
2. Statutory Basis 19(b)(3)(A) of the Act 13 and Rule 19b– printing in the Commission’s Public
Reference Room, 100 F Street NE.,
The Exchange believes that its 4(f)(6) thereunder.14
At any time within 60 days of the Washington, DC 20549, on official
proposal is consistent with Section 6(b) business days between the hours of
of the Act,10 in general, and furthers the filing of the proposed rule change, the
Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the
objectives of Section 6(b)(5) of the Act,11 filing also will be available for
temporarily suspend such rule change if
in particular, in that it is designed to inspection and copying at the principal
it appears to the Commission that such
promote just and equitable principles of office of the Exchange. All comments
action is: (i) Necessary or appropriate in
trade, to remove impediments to and received will be posted without change;
the public interest; (ii) for the protection
perfect the mechanism of a free and the Commission does not edit personal
of investors; or (iii) otherwise in
open market and a national market identifying information from
furtherance of the purposes of the Act.
system, and, in general to protect submissions. You should submit only
If the Commission takes such action, the
investors and the public interest. The information that you wish to make
Commission shall institute proceedings
purpose of this proposal is to inform the available publicly. All submissions
to determine whether the proposed rule
SEC and market participants of the new should refer to File Number SR–BX–
should be approved or disapproved.
implementation date for the Post-Only, 2017–008 and should be submitted on
Midpoint Pegging, and Trade Now IV. Solicitation of Comments or before March 15, 2017.
functionalities. The functionalities Interested persons are invited to For the Commission, by the Division of
themselves were previously proposed in submit written data, views, and Trading and Markets, pursuant to delegated
rule filings that were submitted to the arguments concerning the foregoing, authority.15
SEC, and this proposal does not change including whether the proposed rule Eduardo A. Aleman,
the substance of those functionalities.12 change is consistent with the Act. Assistant Secretary.
BX is delaying the implementation date Comments may be submitted by any of [FR Doc. 2017–03401 Filed 2–21–17; 8:45 am]
of these functionalities to provide for the following methods: BILLING CODE 8011–01–P
further systems testing prior to Electronic Comments
implementing these functionalities.
• Use the Commission’s Internet SECURITIES AND EXCHANGE
B. Self-Regulatory Organization’s comment form (http://www.sec.gov/ COMMISSION
Statement on Burden on Competition rules/sro.shtml); or
• Send an email to rule-comments@ Proposed Collection; Comment
The Exchange does not believe that sec.gov. Please include File Number SR– Request
the proposed rule change will impose BX–2017–008 on the subject line. Upon Written Request, Copies Available
any burden on competition not
Paper Comments From: Securities and Exchange
necessary or appropriate in furtherance
• Send paper comments in triplicate Commission, Office of FOIA Services,
of the purposes of the Act. As noted
100 F Street NE., Washington, DC
above, the purpose of this proposal is to to Brent J. Fields, Secretary, Securities
20549–2736.
extend the implementation date for and Exchange Commission, 100 F Street
Post-Only, Midpoint Pegging and Trade- NE., Washington, DC 20549–1090. Extension:
Rule 19b–1, SEC File No. 270–312, OMB
Now functionalities so that BX may All submissions should refer to File Control No. 3235–0354.
perform additional systems testing prior Number SR–BX–2017–008. This file
to implementing these functionalities. number should be included on the Notice is hereby given that, pursuant
subject line if email is used. To help the to the Paperwork Reduction Act of 1995
C. Self-Regulatory Organization’s Commission process and review your (44 U.S.C. 3501–3520), the Securities
Statement on Comments on the comments more efficiently, please use and Exchange Commission
Proposed Rule Change Received From only one method. The Commission will (‘‘Commission’’) is soliciting comments
Members, Participants, or Others post all comments on the Commission’s on the collection of information
Internet Web site (http://www.sec.gov/ summarized below. The Commission
No written comments were either plans to submit this existing collection
solicited or received. rules/sro.shtml). Copies of the
of information to the Office of
sradovich on DSK3GMQ082PROD with NOTICES

13 15 U.S.C. 78s(b)(3)(A). Management and Budget for extension
9 See Equity Trader Alert #2016–291. 14 17 CFR 240.19b–4(f)(6). As required under Rule and approval.
10 15 U.S.C. 78f(b). 19b–4(f)(6)(iii), the Exchange provided the Section 19(b) of the Investment
11 15 U.S.C. 78f(b)(5).
Commission with written notice of its intent to file Company Act of 1940 (the ‘‘Act’’) (15
12 BX notes that the Trade-Now functionality was the proposed rule change, along with a brief U.S.C. 80a–19(b)) authorizes the
submitted to the SEC as an immediately effective description and the text of the proposed rule
filing, while the Post-Only and Midpoint Pegging change, at least five business days prior to the date Commission to regulate registered
functionalities were the subject of an SEC approval of filing of the proposed rule change, or such
order. See supra notes 3 and 4. shorter time as designated by the Commission. 15 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 16:05 Feb 21, 2017 Jkt 241001 PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 E:\FR\FM\22FEN1.SGM 22FEN1
Document Created: 2017-02-22 00:08:25
Document Modified: 2017-02-22 00:08:25
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		82 FR 11385