82 FR 14056 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 11.27 To Modify the Date of Appendix B Web Site Data Publication Pursuant to the Regulation NMS Plan To Implement a Tick Size Pilot Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 50 (March 16, 2017)
Federal Register Volume 82, Issue 50 (March 16, 2017)
| Page Range | 14056-14058 | |
| FR Document | 2017-05214 |
[Federal Register Volume 82, Number 50 (Thursday, March 16, 2017)] [Notices] [Pages 14056-14058] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-05214] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80207; File No. SR-BatsBZX-2017-15] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 11.27 To Modify the Date of Appendix B Web Site Data Publication Pursuant to the Regulation NMS Plan To Implement a Tick Size Pilot Program March 10, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on February 28, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b- 4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with the Commission. 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. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend Rule11.27 to modify the date of Appendix B Web site data publication pursuant to the Regulation NMS Plan to Implement a Tick Size Pilot Program (``Plan''). The text of the proposed rule change is available at the Exchange's Web site at www.bats.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Rule 11.27(b) (Compliance with Data Collection Requirements) \5\ implements the data collection and Web site publication requirements of the Plan.\6\ Rule 11.27(b).08 provides, among other things, that the requirement that the Exchange or Designated Examining Authority (``DEA'') make certain data publicly available on their Web site pursuant to Appendix B and C to the Plan shall commence at the beginning of the Pilot Period,\7\ and that the Exchange or DEA shall make data for the Pre-Pilot Period publicly available on their Web site pursuant to Appendix B and C to the Plan by February 28, 2017.\8\ --------------------------------------------------------------------------- \5\ See Exchange Rule 11.27(b). See also Securities Exchange Act Release Nos. 77105 (February 10, 2016), 81 FR 8112 (February 17, 2016); 77310 (March 7, 2016), 81 FR 13012 (March 11, 2016); and 78795 (September 9, 2016), 81 FR 63508 (September 15, 2016). \6\ The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014. See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014 (``SRO Tick Size Plan Proposal''). See Securities Exchange Act Release No 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014); see also Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015). \7\ Unless otherwise defined herein, capitalized terms have the meaning ascribed to them in Rule 11.27. \8\ On November 30, 2016, the SEC granted exemptive relief to the Participants, and the Exchange filed proposed rule changes to, among other things, delay the publication of Web site data pursuant to Appendices B and C to the Plan until February 28, 2017, and to delay the ongoing Web site publication by ninety days such that data would be published within 120 calendar days following the end of the month. See 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 November 30, 2016; see also Securities Exchange Act Release No. 79533 (December 13, 2016), 81 FR 91990 (December 19, 2016) (Notice of Filing and Immediate Effectiveness of File No. SR-BatsBZX-2016-82). --------------------------------------------------------------------------- The Exchange is proposing amendments to Rule 11.27(b).08 to delay the date by which Pre-Pilot and Pilot Appendix B data is to be made publicly available on the Exchange or DEA's Web site from February 28, 2017, until April 28, 2017.\9\ Appendix C data for the Pre-Pilot Period through the month of January 2017, will be published on the Exchange or DEA's Web site on February 28, 2017, and, thereafter, on the original 30-day schedule. --------------------------------------------------------------------------- \9\ In addition, the Exchange is proposing an amendment to Rule 11.27(a)(6)(B) to clarify that no member, irrespective of whether that member operates a trading center, may execute orders in any Pilot Security in Test Group Three in price increments other than $0.05, unless an exception applies. This proposed amendment makes the rule consistent with the Plan and conforms subparagraph (a)(6)(B) with subparagraph (a)(5)(B). --------------------------------------------------------------------------- In the SRO Tick Size Plan Proposal, the Participants stated that the public data will be made available for free ``on a disaggregated basis by trading center'' on the Web sites of the Participants and the Designated Examining Authorities.\10\ However, market participants have expressed confidentiality concerns regarding this approach for over- the-counter (``OTC'') data.\11\ Thus, the Exchange is filing the instant proposed rule change to provide additional time to assess a means of addressing the confidentiality concerns raised in connection with the publication of Appendix B data related to OTC activity in furtherance of the objectives of the Plan.\12\ Pursuant to this amendment, Appendix B data publication will be delayed until April 28, 2017. The Participants anticipate filing an additional proposed rule change in the near future to address the Appendix B data publication. --------------------------------------------------------------------------- \10\ See Securities Exchange Act Release No. 73511 (November 3, 2014), 79 FR 66423 (November 7, 2014) (Notice of Filing of Proposed National Market System Plan to Implement a Tick Size Pilot Program on a One-Year Pilot Basis, File No. 4-657) (``Tick Size Plan Proposal''). \11\ See letters from Adam C. Cooper, Senior Managing Director and Chief Legal Officer, Citadel Securities, to Brent J. Fields, Secretary, Commission, dated December 21, 2016 (``Citadel letter''); and William Hebert, Managing Director, Financial Information Forum, to Robert W. Errett, Deputy Secretary, Commission, dated December 21, 2016 (``FIF letter''). \12\ FINRA, on behalf of the Exchange, also is submitting an exemptive request with the SEC in connection with the instant filing. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \13\ in general, and furthers the objectives of Section 6(b)(5) of the Act \14\ in particular, in that it is designed to promote just and equitable principles of [[Page 14057]] trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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. The Exchange believes that this proposal is consistent with the Act because it is in furtherance of the objectives of Section VII(A) of the Plan in that it is designed to provide the Exchange with additional time to assess a means of addressing the confidentiality concerns raised in connection with the publication of Appendix B data, to comply with the Plan's requirements that the data made publicly available will not identify the trading center that generated the data. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements the provisions of the Plan. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor 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 \15\ and Rule 19b- 4(f)(6) thereunder.\16\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has filed the proposed rule change for immediate effectiveness and has requested that the Commission waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing so that it may become operative on February 28, 2017. The Exchange notes that the proposed rule change is intended to address confidentiality concerns raised in connection with the publication of OTC Appendix B data by permitting the Exchange to delay Web site publication of its Appendix B data from February 28, 2017 to April 28, 2017.\17\ The Exchange notes that the delay would provide additional time to assess a means of addressing the confidentiality concerns. The Exchange notes that it expects Participants to file proposed rule changes related to publishing Appendix B data. --------------------------------------------------------------------------- \17\ See supra note 11. The Commission notes that FINRA has submitted a proposed rule change to delay the publication of OTC Appendix B data. See SR-FINRA-2017-005. --------------------------------------------------------------------------- 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 delay publication of its Appendix B data until April 28, 2017. As noted above, commenters continue to raise concerns about the publication of OTC Appendix B data.\18\ Delaying publication of Exchange's Appendix B data \19\ will prevent the publication of partial (i.e., Exchange-only) Appendix B data required under the Plan. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative on February 28, 2017.\20\ --------------------------------------------------------------------------- \18\ The Commission notes that FINRA has filed a proposed rule change that is intended to mitigate confidentiality concerns raised by commenters regarding the publication of OTC Appendix B data. See SR-FINRA-2017-006. \19\ The Commission notes that other Participants have proposed to delay the publication of their Appendix B data until April 28, 2017. See SR-BatsBYX-2017-05; SR-BatsEDGA-2017-05; SR-BatsEDGX-2017- 13; SR-BX-2017-016; SR-CHX-2017-05; SR-FINRA-2017-005; SR-IEX-2017- 07; SR-NASDAQ-2017-024; SR-Phlx-2017-22; SR-NYSE-2017-10; SR- NYSEArca-2017-19; SR-NYSEMKT-2017-11. \20\ For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or 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 proposal 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 No. SR-BatsBZX-2017-15 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-BatsBZX-2017-15. 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 such filing will also 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 No. SR-BatsBZX- [[Page 14058]] 2017-15 and should be submitted on or before April 6, 2017. --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-05214 Filed 3-15-17; 8:45 am] BILLING CODE 8011-01-P
![14056 Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 / Notices
For the Commission, by the Division of II. Self-Regulatory Organization’s The Exchange is proposing
Trading and Markets, pursuant to delegated Statement of the Purpose of, and amendments to Rule 11.27(b).08 to
authority.22 Statutory Basis for, the Proposed Rule delay the date by which Pre-Pilot and
Eduardo A. Aleman, Change Pilot Appendix B data is to be made
Assistant Secretary. In its filing with the Commission, the publicly available on the Exchange or
[FR Doc. 2017–05225 Filed 3–15–17; 8:45 am] Exchange included statements DEA’s Web site from February 28, 2017,
concerning the purpose of and basis for until April 28, 2017.9 Appendix C data
BILLING CODE 8011–01–P
the proposed rule change and discussed for the Pre-Pilot Period through the
any comments it received on the month of January 2017, will be
proposed rule change. The text of these published on the Exchange or DEA’s
SECURITIES AND EXCHANGE
statements may be examined at the Web site on February 28, 2017, and,
COMMISSION
places specified in Item IV below. The thereafter, on the original 30-day
Exchange has prepared summaries, set schedule.
[Release No. 34–80207; File No. SR– In the SRO Tick Size Plan Proposal,
BatsBZX–2017–15]
forth in Sections A, B, and C below, of
the most significant parts of such the Participants stated that the public
statements. data will be made available for free ‘‘on
Self-Regulatory Organizations; Bats a disaggregated basis by trading center’’
BZX Exchange, Inc.; Notice of Filing A. Self-Regulatory Organization’s on the Web sites of the Participants and
and Immediate Effectiveness of a Statement of the Purpose of, and the Designated Examining Authorities.10
Proposed Rule Change To Amend Statutory Basis for, the Proposed Rule However, market participants have
Exchange Rule 11.27 To Modify the Change expressed confidentiality concerns
Date of Appendix B Web Site Data regarding this approach for over-the-
1. Purpose
Publication Pursuant to the Regulation counter (‘‘OTC’’) data.11 Thus, the
NMS Plan To Implement a Tick Size Rule 11.27(b) (Compliance with Data Exchange is filing the instant proposed
Pilot Program Collection Requirements) 5 implements rule change to provide additional time
the data collection and Web site to assess a means of addressing the
March 10, 2017. publication requirements of the Plan.6 confidentiality concerns raised in
Pursuant to Section 19(b)(1) of the Rule 11.27(b).08 provides, among other connection with the publication of
Securities Exchange Act of 1934 (the things, that the requirement that the Appendix B data related to OTC activity
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange or Designated Examining in furtherance of the objectives of the
notice is hereby given that on February Authority (‘‘DEA’’) make certain data Plan.12 Pursuant to this amendment,
28, 2017, Bats BZX Exchange, Inc. (the publicly available on their Web site Appendix B data publication will be
‘‘Exchange’’ or ‘‘BZX’’) filed with the pursuant to Appendix B and C to the delayed until April 28, 2017. The
Securities and Exchange Commission Plan shall commence at the beginning of Participants anticipate filing an
(‘‘Commission’’) the proposed rule the Pilot Period,7 and that the Exchange additional proposed rule change in the
or DEA shall make data for the Pre-Pilot near future to address the Appendix B
change as described in Items I and II
Period publicly available on their Web data publication.
below, which Items have been prepared
site pursuant to Appendix B and C to
by the Exchange. The Exchange has 2. Statutory Basis
the Plan by February 28, 2017.8
designated this proposal as a ‘‘non-
controversial’’ proposed rule change The Exchange believes that its
5 See Exchange Rule 11.27(b). See also Securities
proposal is consistent with Section 6(b)
pursuant to Section 19(b)(3)(A) of the Exchange Act Release Nos. 77105 (February 10, of the Act 13 in general, and furthers the
Act 3 and Rule 19b–4(f)(6)(iii) 2016), 81 FR 8112 (February 17, 2016); 77310
(March 7, 2016), 81 FR 13012 (March 11, 2016); and objectives of Section 6(b)(5) of the Act 14
thereunder,4 which renders it effective
78795 (September 9, 2016), 81 FR 63508 (September in particular, in that it is designed to
upon filing with the Commission. The 15, 2016). promote just and equitable principles of
Commission is publishing this notice to 6 The Participants filed the Plan to comply with
solicit comments on the proposed rule an order issued by the Commission on June 24, 9 In addition, the Exchange is proposing an
change from interested persons. 2014. See Letter from Brendon J. Weiss, Vice
amendment to Rule 11.27(a)(6)(B) to clarify that no
President, Intercontinental Exchange, Inc., to
member, irrespective of whether that member
I. Self-Regulatory Organization’s Secretary, Commission, dated August 25, 2014
operates a trading center, may execute orders in any
(‘‘SRO Tick Size Plan Proposal’’). See Securities
Statement of the Terms of Substance of Exchange Act Release No 72460 (June 24, 2014), 79
Pilot Security in Test Group Three in price
the Proposed Rule Change increments other than $0.05, unless an exception
FR 36840 (June 30, 2014); see also Securities
applies. This proposed amendment makes the rule
Exchange Act Release No. 74892 (May 6, 2015), 80
consistent with the Plan and conforms
The Exchange filed a proposal to FR 27513 (May 13, 2015).
subparagraph (a)(6)(B) with subparagraph (a)(5)(B).
amend Rule11.27 to modify the date of 7 Unless otherwise defined herein, capitalized
10 See Securities Exchange Act Release No. 73511
Appendix B Web site data publication terms have the meaning ascribed to them in Rule
(November 3, 2014), 79 FR 66423 (November 7,
11.27.
pursuant to the Regulation NMS Plan to 8 On November 30, 2016, the SEC granted
2014) (Notice of Filing of Proposed National Market
Implement a Tick Size Pilot Program System Plan to Implement a Tick Size Pilot Program
exemptive relief to the Participants, and the on a One-Year Pilot Basis, File No. 4–657) (‘‘Tick
(‘‘Plan’’). Exchange filed proposed rule changes to, among Size Plan Proposal’’).
other things, delay the publication of Web site data 11 See letters from Adam C. Cooper, Senior
The text of the proposed rule change pursuant to Appendices B and C to the Plan until
Managing Director and Chief Legal Officer, Citadel
is available at the Exchange’s Web site February 28, 2017, and to delay the ongoing Web
Securities, to Brent J. Fields, Secretary,
at www.bats.com, at the principal office site publication by ninety days such that data
Commission, dated December 21, 2016 (‘‘Citadel
would be published within 120 calendar days
mstockstill on DSK3G9T082PROD with NOTICES
of the Exchange, and at the following the end of the month. See Letter from
letter’’); and William Hebert, Managing Director,
Commission’s Public Reference Room. Financial Information Forum, to Robert W. Errett,
David S. Shillman, Associate Director, Division of
Trading and Markets, Commission, to Marcia E. Deputy Secretary, Commission, dated December 21,
Asquith, Senior Vice President and Corporate 2016 (‘‘FIF letter’’).
22 17 CFR 200.30–3(a)(12). 12 FINRA, on behalf of the Exchange, also is
1 15
Secretary, FINRA dated November 30, 2016; see
U.S.C. 78s(b)(1). also Securities Exchange Act Release No. 79533 submitting an exemptive request with the SEC in
2 17 CFR 240.19b–4. connection with the instant filing.
(December 13, 2016), 81 FR 91990 (December 19,
3 15 U.S.C. 78s(b)(3)(A). 13 15 U.S.C. 78f(b).
2016) (Notice of Filing and Immediate Effectiveness
4 17 CFR 240.19b–4(f)(6)(iii). of File No. SR–BatsBZX–2016–82). 14 15 U.S.C. 78f(b)(5).
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![14058 Federal Register / Vol. 82, No. 50 / Thursday, March 16, 2017 / Notices
2017–15 and should be submitted on or notice required by Rule 19b–4(f)(6)(iii) Midpoint Price or the order’s limit
before April 6,2017. under the Act.6 price, if any. When unexecuted shares
For the Commission, by the Division of The text of the proposed rule change of such order are posted to the Order
Trading and Markets, pursuant to delegated is available at the Exchange’s Web site Book, the price of the order is
authority.21 at www.iextrading.com, at the principal automatically adjusted by the System to
Eduardo A. Aleman, office of the Exchange, and at the be equal to and ranked at the less
Assistant Secretary.
Commission’s Public Reference Room. aggressive of the primary quote or the
order’s limit price and is automatically
[FR Doc. 2017–05214 Filed 3–15–17; 8:45 am] II. Self-Regulatory Organization’s
adjusted by the System in response to
BILLING CODE 8011–01–P Statement of the Purpose of, and
changes in the NBB (NBO) for buy (sell)
Statutory Basis for, the Proposed Rule
orders up (down) to the order’s limit
Change
price, if any. In order to meet the limit
SECURITIES AND EXCHANGE In its filing with the Commission, the price of active orders on the Order Book,
COMMISSION self-regulatory organization included a Discretionary Peg order will exercise
statements concerning the purpose of the least amount of price discretion
[Release No. 34–80202; File No. SR–IEX– and basis for the proposed rule change necessary from the Discretionary Peg
2017–06] and discussed any comments it received order’s resting price to its discretionary
on the proposed rule change. The text price (defined as the less aggressive of
Self-Regulatory Organizations; of these statement may be examined at the Midpoint Price or the Discretionary
Investors Exchange LLC; Notice of the places specified in Item IV below. Peg order’s limit price, if any), except
Filing and Immediate Effectiveness of The self-regulatory organization has during periods of quote instability (i.e.,
Proposed Rule Change To Amend Rule prepared summaries, set forth in when a crumbling quote exists) as
11.190(g) To Modify the Quote Sections A, B, and C below, of the most defined in paragraph Rule 11.190(g).
Instability Coefficients and Quote significant aspects of such statements. In determining whether a crumbling
Instability Threshold Included in the quote exists, the Exchange utilizes real
Quote Instability Calculation Specified A. Self-Regulatory Organization’s
time relative quoting activity of
in Subparagraph (g)(1) for Purposes of Statement of the Purpose of, and Protected Quotations (not including
Determining Whether a Crumbling Statutory Basis for, the Proposed Rule quotations of the Exchange) and a
Quote Exists Change proprietary mathematical calculation
March 10, 2017. 1. Purpose (the ‘‘quote instability calculation’’) to
assess the probability of an imminent
Pursuant to Section 19(b)(1) 1 of the Overview
change to the current Protected NBB to
Securities Exchange Act of 1934 2 and The purpose of the proposed rule a lower price or Protected NBO to a
Rule 19b–4 thereunder,3 notice is change is to amend Rule 11.190(g) to higher price for a particular security
hereby given that, on Februrary 28, modify the quote instability coefficients (‘‘quote instability factor’’). When the
2017, the Investors Exchange LLC filed and quote instability threshold included quoting activity meets predefined
with the Securities and Exchange in the quote instability calculation criteria and the quote instability factor
Commission (‘‘Commission’’) the specified in subparagraph (g)(1) for calculated is greater than the Exchange’s
proposed rule change as described in purposes of determining whether a defined threshold (‘‘quote instability
Items I and II below, which Items have crumbling quote exists. When the threshold’’), the System treats the quote
been prepared by the self-regulatory Exchange determines that the quote in as not stable (‘‘quote instability’’ or a
organization. The Commission is a particular security is crumbling from ‘‘crumbling quote’’). During all other
publishing this notice to solicit the national best bid, as comprised of times, the quote is considered stable
comments on the proposed rule change Protected Quotations (‘‘Protected (‘‘quote stability’’). The System
from interested persons. NBB’’), Discretionary Peg buy orders are independently assesses the stability of
restricted from exercising price the Protected NBB and Protected NBO
I. Self-Regulatory Organization’s
discretion to trade against interest above for each security.
Statement of the Terms of Substance of
the NBB. Similarly, when the Exchange When the System determines that a
the Proposed Rule Change
determines that the quote in a particular quote, either the Protected NBB or the
Pursuant to the provisions of Section security is crumbling from the national Protected NBO, is unstable, the
19(b)(1) under the Securities Exchange best offer, as comprised of Protected determination remains in effect at that
Act of 1934 (‘‘Act’’),4 and Rule 19b–4 Quotations (‘‘Protected NBO’’ and price level for two (2) milliseconds. The
thereunder,5 Investors Exchange LLC collectively with the Protected NBB the System will only treat one side of the
(‘‘IEX’’ or ‘‘Exchange’’) is filing with the ‘‘Protected NBBO’’), Discretionary Peg Protected NBBO as unstable in a
Commission a proposed rule change to sell orders are restricted from exercising particular security at any given time.7
amend Rule 11.190(g) to incrementally price discretion to trade against interest By not permitting resting Discretionary
optimize and enhance the effectiveness below the NBO. Peg orders to execute at a price that is
of the quote instability calculation in more aggressive than the near-side
Discretionary Peg Order protected NBB or NBO (as applicable)
determining whether a crumbling quote
exists. The Exchange has designated this The manner in which Discretionary during periods of quote instability, the
proposal as non-controversial and Peg orders operate is described in Rule Exchange System is intended to attempt
11.190(b)(10). Specifically, a to protect such orders from unfavorable
mstockstill on DSK3G9T082PROD with NOTICES
provided the Commission with the
Discretionary Peg order is a non- executions when the market is moving
21 17 CFR 200.30–3(a)(12).
displayed, pegged order that upon entry against them. Once the market has
1 15 U.S.C. 78s(b)(1). into the System, the price of the order moved and the Exchange System deems
2 15 U.S.C. 78a. is automatically adjusted by the System the near-side Protected NBB or NBO (as
3 17 CFR 240.19b–4. to be equal to the less aggressive of the applicable) to be stable (pursuant to a
4 15 U.S.C. 78s(b)(1).
5 17 CFR 240.19b–4. 6 17 CFR 240.19b–4(f)(6)(iii). 7 See, Rule 11.190(g).
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Document Created: 2017-03-16 02:18:54
Document Modified: 2017-03-16 02:18:54
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 14056 |
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