82 FR 22364 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4702 (Order Types)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 92 (May 15, 2017)
Federal Register Volume 82, Issue 92 (May 15, 2017)
| Page Range | 22364-22368 | |
| FR Document | 2017-09713 |
[Federal Register Volume 82, Number 92 (Monday, May 15, 2017)] [Notices] [Pages 22364-22368] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-09713] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80630; File No. SR-NASDAQ-2017-043] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4702 (Order Types) May 9, 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 April 26, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 4702 (Order Types) to modify the behavior of Post-Only Orders in certain situations. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. [[Page 22365]] II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposal is to amend Rule 4702 (Order Types) to modify the behavior of Post-Only Orders in certain situations. As stated in Rule 4702(b)(4)(A), a Post-Only order is designed to have its price adjusted as needed to post to the Nasdaq Book in compliance with Rule 610(d) under Regulation NMS by avoiding the display of quotations that lock or cross any Protected Quotation in a System Security during Market Hours, or to execute against locking or crossing quotations in circumstances where economically beneficial to the Participant entering the Post-Only Order. The purpose of this proposal is to provide members with the option of cancelling their order if the price of the Post Only Order would otherwise have its price adjusted. This functionality will apply when (1) an incoming Post-Only Order locks or crosses a Protected Quotation; (2) an adjusted Post-Only Order locks or crosses a displayed Order at its displayed price on the Nasdaq Book; or (3) a Post-Only Order would not lock or cross a Protected Quotation but would lock or cross a displayed Order at its displayed price on the Nasdaq Book. This functionality will be offered as a port setting and may be applied to all orders entered under the same MPID for Orders entered through RASH, QIX and FIX, or, in the case of market participants using the OUCH or FLITE order entry protocol, may be applied to all Orders entered through a specific order entry port and under the same MPID. The first change relates to incoming Post-Only Orders that lock or cross a Protected Quotation. Currently, Rule 4702(b)(4)(A) states that, if a Post-Only Order would lock or cross a Protected Quotation, the price of the Order will first be adjusted. If the Order is Attributable, its adjusted price will be one minimum price increment lower than the current Best Offer (for bids) or higher than the current Best Bid (for offers).\3\ If the Order is not Attributable, its adjusted price will be equal to the current Best Offer (for bids) or the current Best Bid (for offers). However, the Order will not post or execute until the Order, as adjusted, is evaluated with respect to Orders on the Nasdaq Book. --------------------------------------------------------------------------- \3\ As set forth in Rule 4703(i), an Order with Attribution is referred to as an ``Attributable Order'' and an Order without attribution is referred to as a ``Non- Attributable Order.'' Rule 4703(i) defines Attribution as an Order Attribute that permits a Participant to designate that the price and size of the Order will be displayed next to the Participant's MPID in market data disseminated by Nasdaq. --------------------------------------------------------------------------- Nasdaq proposes to amend the behavior for both incoming Non- Attributable and Attributable Post-Only Orders that lock or cross a Protected Quotation on an away market center. In both cases, the Post- Only Order may either be adjusted or be cancelled back to the Participant, depending on the Participant's choice. However, the Post- Only Order will execute if (i) it is priced below $1.00 and the value of price improvement associated with executing against an Order on the Nasdaq 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 Nasdaq Book and subsequently provided liquidity, or (ii) it is priced at $1.00 or more and the value of price improvement associated with executing against an Order on the Nasdaq Book (as measured against the original limit price of the Order) equals or exceeds $0.01 per share. As with the current rule text, the price of the Order will first be adjusted if the Participant elects to have the Post-Only Order adjusted. Similarly, if the Order is Attributable, its adjusted price will be one minimum price increment lower than the current Best Offer (for bids) or higher than the current Best Bid (for offers). If the Order is not Attributable, its adjusted price will be equal to the current Best Offer (for bids) or the current Best Bid (for offers). However, the Order will not post or execute until the Order, as adjusted, is evaluated with respect to Orders on the Nasdaq Book. In addition to offering the new cancel functionality where an incoming Post-Only Order locks or crosses a Protected Quotation on an away market center, Nasdaq is proposing to amend Rule 4702(b)(4)(A) to state when that Order would execute, as described above. Nasdaq is making this change because it believes that the instances pursuant to which a locking or crossing Post-Only order will execute in other scenarios (such as a Post-Only Order that locks or crosses a displayed Order at its displayed price on the Nasdaq Book) also apply here, e.g., the execution of the Post-Only Order would be economically beneficial to the participant that entered the Order while contributing to the price discovery process.\4\ --------------------------------------------------------------------------- \4\ With this change, Nasdaq is not adding a new functionality to Post-Only Orders where the incoming Post-Only Order locks or crosses a Protected Quotation on an away market center, but is rather clarifying the instances in which the Post-Only Order in this scenario will execute. --------------------------------------------------------------------------- The second change relates to the adjusted price of the Post-Only Order if that price would lock or cross a displayed Order at its displayed price on the Nasdaq Book. Currently, Rule 4702(b)(4)(A) states that, if the adjusted price of the Post-Only Order would lock or cross a displayed Order at its displayed price on the Nasdaq Book, the Post Only Order will be repriced, ranked, and displayed at one minimum price increment below the current best displayed price to sell on the Nasdaq Book (for bids) or above the current best displayed price to buy on the Nasdaq Book (for offers). However, the Post-Only Order will execute if (i) it is priced below $1.00 and the value of price improvement associated with executing against an Order on the Nasdaq 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 Nasdaq Book and subsequently provided liquidity, or (ii) it is priced at $1.00 or more and the value of price improvement associated with executing against an Order on the Nasdaq Book (as measured against the original limit price of the Order) equals or exceeds $0.01 per share. Nasdaq proposes to amend this provision to allow the Post-Only Order to either be adjusted or be cancelled back to the Participant in this scenario, depending on the Participant's choice. As with the current language of this section, however, the Post-Only Order will execute if (i) it is priced below $1.00 and the value of price improvement associated with executing against an Order on the Nasdaq 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 Nasdaq Book and subsequently [[Page 22366]] provided liquidity, or (ii) it is priced at $1.00 or more and the value of price improvement associated with executing against an Order on the Nasdaq Book (as measured against the original limit price of the Order) equals or exceeds $0.01 per share. If the Participant elects to have the Post-Only Order adjusted, the Order will continue to be treated as specified today in the Rule, so that the Post Only Order will be repriced, ranked, and displayed at one minimum price increment below the current best displayed price to sell on the Nasdaq Book (for bids) or above the current best displayed price to buy on the Nasdaq Book (for offers). The third change relates to a Post-Only Order that would not lock or cross a Protected Quotation but would lock or cross a displayed Order at its displayed price on the Nasdaq Book. Currently, Rule 4702(b)(4)(A) states that such an Order will be repriced, ranked, and displayed at one minimum price increment below the current best-priced Order to sell on the Nasdaq Book (for bids) or above the current best- priced Order to buy on the Nasdaq Book (for offers). However, the Post- Only Order will execute if (i) it is priced below $1.00 and the value of price improvement associated with executing against an Order on the Nasdaq 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 Nasdaq Book and subsequently provided liquidity, or (ii) it is priced at $1.00 or more and the value of price improvement associated with executing against an Order on the Nasdaq Book equals or exceeds $0.01 per share. Nasdaq proposes to amend this provision so that the Order may either be adjusted or be cancelled back to the Participant, depending on the Participant's choice. However, the Post-Only Order will execute if (i) it is priced below $1.00 and the value of price improvement associated with executing against an Order on the Nasdaq 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 Nasdaq Book and subsequently provided liquidity, or (ii) it is priced at $1.00 or more and the value of price improvement associated with executing against an Order on the Nasdaq Book (as measured against the original limit price of the Order) equals or exceeds $0.01 per share. If the Participant elects to have the Post Only Order adjusted, the Post Only Order will be repriced, ranked, and displayed at one minimum price increment below the current best-priced Order to sell on the Nasdaq Book (for bids) or above the current best-priced Order to buy on the Nasdaq Book (for offers). Finally, Nasdaq is proposing to make a corresponding change to the provision in Rule 4702(b)(4)(A) relating to the treatment of Post-Only Orders during the Pre-Market and Post-Market Hours. Currently, that provision states that, during Pre-Market and Post-Market Hours, a Post- Only Order will be processed in a manner identical to Market Hours with respect to locking or crossing Orders on the Nasdaq Book, but will not have its price adjusted with respect to locking or crossing the quotations of other market centers. Nasdaq is proposing to amend this language to provide that a Post-Only Order that locks or crosses the quotation of another market center during the Pre-Market and Post- Market Hours will not be cancelled or have its price adjusted. The purpose of the proposed functionality is to allow a member to cancel its Post-Only Order in various circumstances rather than have that Order adjusted. To the extent that a Post-Only Order will not have its price adjusted if it locks or crosses the quotation of another market center during the Pre-Market or Post-Market Hours, there is not a need to offer the corresponding cancel functionality. With these changes, the Exchange is providing members with an added functionality by allowing a member to cancel a Post-Only Order when (1) an incoming Post-Only Order locks or crosses a Protected Quotation; (2) an adjusted Post-Only Order locks or crosses a displayed Order at its displayed price on the Nasdaq Book; and (3) a Post-Only Order would not lock or cross a Protected Quotation but would lock or cross a displayed Order at its displayed price on the Nasdaq Book, while still setting forth instances in which the Order will execute. Nasdaq notes that the proposed change only relates to situations where a Post-Only Order would lock or cross displayed interest. The proposed functionality is consistent with functionalities that are currently offered by other exchanges. For example, Bats BZX Exchange, Inc. (``BZX'') also offers a Post Only order type,\5\ and allows users to select a functionality that will cancel a Post Only Order if, upon entry, such order would create a violation of Rule 610(d) of Regulation NMS by crossing a Protected Quotation of an external market, rather than adjusting the price of that order.\6\ BZX also provides that any display-eligible Post-Only or Partial Post-Only Order that locks or crosses a Protected Quotation displayed by the Exchange upon entry will be executed pursuant to Rule 11.9(c)(6) or Rule 11.9(c)(7), as applicable, or cancelled.\7\ --------------------------------------------------------------------------- \5\ See BZX Rule 11.9(c)(6). That rule defines a Post Only Order as an order that is to be ranked and executed on BZX pursuant to Rule 11.12 and Rule 11.13(a)(4) or cancelled, as appropriate, without routing away to another trading center except that the order will not remove liquidity from the BZX Book, other than as described elsewhere in Rule 11.9. \6\ See BZX Rule 11.9(g)(1)(A); see also Securities Exchange Act Release No. 67657 (August 14, 2012), 77 FR 50199 (August 20, 2012) (SR-BATS-2012-35). \7\ See BZX Rule 11.9(g)(1)(D); see also Securities Exchange Act Release No. 67657 (August 14, 2012), 77 FR 50199 (August 20, 2012) (SR-BATS-2012-35). --------------------------------------------------------------------------- Similarly, Bats EDGX Exchange, Inc. (``EDGX'') provides that, if a Limit Order would lock or cross a protected quotation if displayed at its limit price at the time of entry into the EDGX system, the user may elect to have the order immediately cancel back.\8\ --------------------------------------------------------------------------- \8\ See EDGX Rule 11.8(b)(10); see also Securities Exchange Act Release No. 72676 (July 24, 2014), 79 FR 44520 (July 31, 2014) (SR- EDGX-2014-18). --------------------------------------------------------------------------- Nasdaq believes that this proposal will benefit liquidity providers and the market in general by, among other things, providing members with greater flexibility when managing their order flow, and thereby promoting the more efficient execution of orders. Market makers and liquidity providers are essential to displayed price formation on exchanges. The proposal seeks to provide market participants, including market makers and liquidity providers, additional flexibility with which to handle their orders. In some circumstances, a market maker may have its order prices adjusted due to locking or crossing an away market price (i.e., the displayed NBBO without Nasdaq) or it may have its order price adjusted due to locking or crossing a displayed order on the Nasdaq order book. In many cases, these liquidity providers do not want to have their price adjusted and would rather have their order cancelled so that they can reevaluate the market conditions at the time. Today, the market maker may therefore cancel its bid or offer once it has determined that the Exchange has repriced the order. Going forward, in support of efficient markets that drive price formation and price discovery via continuous trading, the Exchange believes that providing the flexibility when an incoming order would lock or cross an away displayed price or a displayed order on the Nasdaq book will increase efficiency and reduce message [[Page 22367]] traffic both internal to the Exchange and for external data feed consumers. The Exchange intends to implement this functionality on or before June 30, 2017. The Exchange will announce the new implementation date by an Equity Trader Alert, which shall be issued prior to the implementation date. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\9\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\10\ 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 Exchange is proposing to add a new functionality (cancelling a Post-Only Order instead of adjusting its price) that is not currently available on the Exchange, and that is consistent with functionalities that are currently offered by other exchanges. The Exchange believes that this new functionality is consistent with the Act because, as discussed above, it will provide members with greater flexibility when managing their order flow, which will promote the more efficient execution of orders. The proposal is also consistent with the stated intent of the Post-Only Order, which is to avoid the display of quotations that would lock or cross a Protected Quotation. Finally, Nasdaq believes that amending Rule 4702(b)(4)(A) to specify when an incoming Post-Only Order that locks or crosses a Protected Quotation on an away market center would execute is consistent with the Act because, as with other the instances pursuant to which a locking or crossing Post-Only order will execute, the execution of the Post-Only Order would be economically beneficial to the participant that entered the Order while contributing to the price discovery process. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f(b). \10\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Post-Only Order is an optional order type that is available for entry through multiple Nasdaq order entry protocols. No member is required to use any specific Order type or attribute or even to use any Exchange Order type or attribute or any Exchange functionality at all. If an Exchange member believes for any reason that the proposed rule change will be detrimental, that perceived detriment can be avoided by choosing not to enter or interact with the Order types modified by this proposed rule change. The proposed changes will provide members with a functionality that is not currently available on the Exchange, and that is consistent with functionalities that are currently offered by other exchanges. The proposed changes will apply equally to all Orders that meet the proposed criteria. This functionality will facilitate the more efficient execution of order flow, which could increase the Exchange's market quality and thereby promote competition by attracting additional liquidity to the Exchange. 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 \11\ and Rule 19b- 4(f)(6) thereunder.\12\ --------------------------------------------------------------------------- \11\ 15 U.S.C. 78s(b)(3)(A). \12\ 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. --------------------------------------------------------------------------- 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 change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NASDAQ-2017-043 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2017-043. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASDAQ-2017-043 and should be submitted on or before June 5, 2017. [[Page 22368]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\13\ --------------------------------------------------------------------------- \13\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-09713 Filed 5-12-17; 8:45 am] BILLING CODE 8011-01-P
![22364 Federal Register / Vol. 82, No. 92 / Monday, May 15, 2017 / Notices
days following publication of the III. Date of Effectiveness of the also will be available for inspection and
Regulatory Notice announcing Proposed Rule Change and Timing for copying at the principal office of
Commission approval. Commission Action FINRA. All comments received will be
Within 45 days of the date of posted without change; the Commission
2. Statutory Basis does not edit personal identifying
publication of this notice in the Federal
FINRA believes that the proposed rule Register or within such longer period (i) information from submissions. You
change is consistent with the provisions as the Commission may designate up to should submit only information that
of Section 15A(b)(6) of the Act,12 which 90 days of such date if it finds such you wish to make available publicly. All
requires, among other things, that longer period to be appropriate and submissions should refer to File
FINRA rules must be designed to publishes its reasons for so finding or Number SR–FINRA–2017–009 and
prevent fraudulent and manipulative (ii) as to which the self-regulatory should be submitted on or before June
acts and practices, to promote just and organization consents, the Commission 5, 2017.
equitable principles of trade, and, in will: For the Commission, by the Division of
general, to protect investors and the (A) By order approve or disapprove Trading and Markets, pursuant to delegated
public interest. The proposed rule such proposed rule change, or authority.13
change is consistent with Section (B) institute proceedings to determine Eduardo A. Aleman,
whether the proposed rule change
15A(b)(6) of the Act. The proposal Assistant Secretary.
should be disapproved.
would enable the parties, or their [FR Doc. 2017–09716 Filed 5–12–17; 8:45 am]
counsel, to evaluate and rank the IV. Solicitation of Comments BILLING CODE 8011–01–P
arbitrator list or lists at the same time Interested persons are invited to
that they prepare their responses in submit written data, views and
those circumstances where the parties arguments concerning the foregoing, SECURITIES AND EXCHANGE
request an extension to answer. Thus, including whether the proposed rule COMMISSION
the proposal would shorten the time it change is consistent with the Act.
takes for such arbitrations to conclude Comments may be submitted by any of [Release No. 34–80630; File No. SR–
and, thereby, make the forum more the following methods: NASDAQ–2017–043]
efficient and the case administration
Electronic Comments
process more expeditious for investors. Self-Regulatory Organizations; The
• Use the Commission’s Internet NASDAQ Stock Market LLC; Notice of
B. Self-Regulatory Organization’s comment form (http://www.sec.gov/ Filing and Immediate Effectiveness of
Statement on Burden on Competition rules/sro.shtml); or Proposed Rule Change To Amend Rule
• Send an email to rule-comments@ 4702 (Order Types)
FINRA does not believe that the
sec.gov. Please include File Number SR–
proposed rule change will result in any May 9, 2017.
FINRA–2017–009 on the subject line.
burden on competition that is not
necessary or appropriate in furtherance Paper Comments Pursuant to Section 19(b)(1) of the
of the purposes of the Act. Where Securities Exchange Act of 1934
• Send paper comments in triplicate (‘‘Act’’),1 and Rule 19b–4 thereunder,2
parties agree to an extension or to Secretary, Securities and Exchange
modification of any deadline for serving notice is hereby given that on April 26,
Commission, 100 F Street NE.,
answers, the proposal would likely 2017, The NASDAQ Stock Market LLC
Washington, DC 20549–1090.
result in parties, or their counsels, (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
All submissions should refer to File Securities and Exchange Commission
evaluating the arbitrator list or lists and Number SR–FINRA–2017–009. This file (‘‘SEC’’ or ‘‘Commission’’) the proposed
ranking their selections, while number should be included on the rule change as described in Items I and
simultaneously preparing their subject line if email is used. To help the II below, which Items have been
responses. Currently, these activities Commission process and review your prepared by the Exchange. The
occur serially. However, FINRA notes comments more efficiently, please use Commission is publishing this notice to
that parties often jointly request that the only one method. The Commission will solicit comments on the proposed rule
ODR Director send the list or lists before post all comments on the Commission’s change from interested persons.
the last answer due date deadline. Internet Web site (http://www.sec.gov/
Therefore, FINRA believes that the rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s
proposed rule change would not be submission, all subsequent Statement of the Terms of Substance of
burdensome. As noted, the benefit to amendments, all written statements the Proposed Rule Change
parties arises from concluding arbitrator with respect to the proposed rule
change that are filed with the The Exchange proposes to amend
selection earlier, thereby expediting the
Commission, and all written Rule 4702 (Order Types) to modify the
arbitration process. FINRA anticipates behavior of Post-Only Orders in certain
that this proposal would impose no communications relating to the
proposed rule change between the situations.
significant costs to forum users.
Commission and any person, other than The text of the proposed rule change
C. Self-Regulatory Organization’s those that may be withheld from the is available on the Exchange’s Web site
Statement on Comments on the public in accordance with the
jstallworth on DSK7TPTVN1PROD with NOTICES
at http://nasdaq.cchwallstreet.com, at
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be the principal office of the Exchange, and
Members, Participants, or Others available for Web site viewing and at the Commission’s Public Reference
printing in the Commission’s Public Room.
Written comments were neither Reference Room, 100 F Street NE.,
solicited nor received. Washington, DC 20549, on official 13 17 CFR 200.30–3(a)(12).
business days between the hours of 10 1 15 U.S.C. 78s(b)(1).
12 15 U.S.C. 78o–3(b)(6). a.m. and 3 p.m. Copies of such filing 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 13:51 May 12, 2017 Jkt 241001 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 E:\FR\FM\15MYN1.SGM 15MYN1](https://thefederalregister.org/doc/82_FR_22456/page/1.svg)
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For the Commission, by the Division of II. Self-Regulatory Organization’s under footnote 1, which provide an
Trading and Markets, pursuant to delegated Statement of the Purpose of, and enhanced rebate ranging from $0.40 to
authority.13 Statutory Basis for, the Proposed Rule $0.53 per contract for qualifying
Eduardo A. Aleman, Change Customer orders that add liquidity in
Assistant Secretary.
In its filing with the Commission, the Penny Pilot Securities and yield fee
[FR Doc. 2017–09713 Filed 5–12–17; 8:45 am] Exchange included statements code PY. The Exchange now proposes to
BILLING CODE 8011–01–P concerning the purpose of and basis for modify Tier 3’ [sic] required criteria and
the proposed rule change and discussed rebateas [sic] well as to add new Tier 7.
• Currently under Tier 3, a Member
any comments it received on the
SECURITIES AND EXCHANGE may receive a rebate of $0.50 per
proposed rule change. The text of these
COMMISSION contract where they have an ADV 11
statements may be examined at the
greater than or equal to 1.30% of
places specified in Item IV below. The
[Release No. 34–80629; File No. SR– average OCV.12 As amended, a Member
Exchange has prepared summaries, set
BatsBZX–2017–29] may receive a rebate of $0.51 per
forth in Sections A, B, and C below, of
contract where they have an: (i)
Self-Regulatory Organizations; Bats the most significant parts of such
ADAV 13 in Customer orders greater
BZX Exchange, Inc.; Notice of Filing statements.
than or equal to 0.50% of average OCV;
and Immediate Effectiveness of a A. Self-Regulatory Organization’s and (ii) ADAV in Market Maker 14 orders
Proposed Rule Change Related to Fees Statement of the Purpose of, and greater than or equal to 2.75% of
for Use on the Exchange’s Equity Statutory Basis for, the Proposed Rule average OCV.
Options Platform Change • Under proposed Tier 7, a Member
would receive a rebate of $0.53 per
May 9, 2017. 1. Purpose contract where they have an: (i) ADAV
Pursuant to Section 19(b)(1) of the The Exchange proposes to amend its in Customer orders greater than or equal
Securities Exchange Act of 1934 (the fee schedule for its equity options to 0.50% of average OCV; (ii) ADAV in
‘‘Act’’),1 and Rule 19b–4 thereunder,2 platform (‘‘BZX Options’’) to: (i) Market Maker orders greater than or
notice is hereby given that on May 1, Decrease the standard rebate provided equal to 2.75% of average OCV; and (iii)
2017, Bats BZX Exchange, Inc. (the by fee code PF; and (ii) amend certain ADAV in Firm orders in Non-Penny
‘‘Exchange’’ or ‘‘BZX’’) filed with the (A) Customer Penny Pilot Add Tiers Pilot Securities greater than or equal to
Securities and Exchange Commission under footnote 1; (B) Quoting Incentive 0.05% of average OCV.
(the ‘‘Commission’’) the proposed rule Program (‘‘QIP’’) Tiers under footnote 5;
change as described in Items I, II, and QIP Tiers
and (C) Customer Non-Penny Pilot Add
III below, which Items have been Volume Tiers under footnote 12. The Exchange currently offers four
prepared by the Exchange. The QIP Tiers under footnote 5, which
Exchange has designated the proposed Fee Code PF provide an additional rebate ranging
rule change as one establishing or Currently, fee code PF provides a from $0.02 to $0.05 per contract for
changing a member due, fee, or other standard rebate of $0.26 per contract for qualifying Market Maker orders that add
charge imposed by the Exchange under Firm,6 Broker Dealer 7 and Joint Back liquidity in: (i) Penny Pilot Securities
Section 19(b)(3)(A)(ii) of the Act 3 and Office 8 orders that add liquidity on the that yield fee code PM and; (ii) Non-
Rule 19b–4(f)(2) thereunder,4 which Exchange in Penny-Pilot securities.9 Penny Pilot Securities that yield fee
renders the proposed rule change The Exchange proposes to reduce this code NM. The additional rebate per
effective upon filing with the srebate [sic] to $0.25 per contract. The contract is for an order that adds
Commission. The Commission is Exchange also proposes to update the liquidity to the BZX Options in options
publishing this notice to solicit Standard Rates table accordingly to classes in which a Member is a Market
comments on the proposed rule change reflect new rate. Maker registered pursuant to Exchange
from interested persons. Rule 22.2. A Market Maker must be
Customer Penny Pilot Add Tiers
I. Self-Regulatory Organization’s registered with BZX Options in an
The Exchange currently offers seven average of 20% or more of the
Statement of the Terms of Substance of
Customer 10 Penny Pilot Add Tiers
the Proposed Rule Change
Broker Dealer or a ‘‘Professional’’ as defined in
The Exchange filed a proposal to 6 ‘‘Firm’’ applies to any transaction identified by Exchange Rule 16.1. Id.
amend the fee schedule applicable to a Member for clearing in the Firm range at the OCC, 11 ‘‘ADV’’ means average daily volume calculated
excluding any Joint Back Office transaction. See the as the number of contracts added or removed,
Members 5 and non-members of the Exchange’s fee schedule available at http:// combined, per day. See the Exchange’s fee schedule
Exchange pursuant to BZX Rules 15.1(a) www.bats.com/us/options/membership/fee_ available at http://www.bats.com/us/options/
and (c). schedule/bzx/. membership/fee_schedule/bzx/.
The text of the proposed rule change 7 ‘‘Broker Dealer’’ applies to any order for the 12 ‘‘OCV’’ means the total equity and ETF options
is available at the Exchange’s Web site account of a broker dealer, including a foreign volume that clears in the Customer range at the
broker dealer, that clears in the Customer range at Options Clearing Corporation (‘‘OCC’’) for the
at www.bats.com, at the principal office the Options Clearing Corporation (‘‘OCC’’). Id. month for which the fees apply, excluding volume
of the Exchange, and at the 8 ‘‘Joint Back Office’’ applies to any transaction on any day that the Exchange experiences an
Commission’s Public Reference Room. identified by a Member for clearing in the Firm Exchange System Disruption and on any day with
range at the OCC that is identified with an origin a scheduled early market close. Id.
code as Joint Back Office. A Joint Back Office 13 ‘‘ADAV’’ means average daily added volume
jstallworth on DSK7TPTVN1PROD with NOTICES
13 17 CFR 200.30–3(a)(12). participant is a Member that maintains a Joint Back calculated as the number of contracts added and
1 15 U.S.C. 78s(b)(1). Office arrangement with a clearing broker-dealer. ‘‘ADV’’ means average daily volume calculated as
2 17 CFR 240.19b–4.
Id. the number of contracts added or removed,
3 15 U.S.C. 78s(b)(3)(A)(ii). 9 ‘‘Penny Pilot Securities’’ are those issues quoted combined, per day. Id.
4 17 CFR 240.19b–4(f)(2). pursuant to Exchange Rule 21.5, Interpretation and 14 ‘‘Market Maker’’ applies to any transaction
5 The term ‘‘Member’’ is defined as ‘‘any Policy .01. Id. identified by a Member for clearing in the Market
registered broker or dealer that has been admitted 10 ‘‘Customer’’ applies to any transaction Maker range at the OCC, where such Member is
to membership in the Exchange.’’ See Exchange identified by a Member for clearing in the Customer registered with the Exchange as a Market Maker as
Rule 1.5(n). range at the OCC, excluding any transaction for a defined in Rule 16.1(a)(37). Id.
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Document Created: 2017-05-13 02:38:55
Document Modified: 2017-05-13 02:38:55
| 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 22364 |
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