82 FR 23684 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 20.6, Nullification and Adjustment of Options Transactions Including Obvious Errors
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 98 (May 23, 2017)
Federal Register Volume 82, Issue 98 (May 23, 2017)
| Page Range | 23684-23690 | |
| FR Document | 2017-10465 |
[Federal Register Volume 82, Number 98 (Tuesday, May 23, 2017)] [Notices] [Pages 23684-23690] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-10465] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80709; File No. SR-BatsBZX-2017-35] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 20.6, Nullification and Adjustment of Options Transactions Including Obvious Errors May 17, 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 May 5, 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 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 filed a proposal to amend Rule 20.6, entitled ``Nullification and Adjustment of Options Transactions including Obvious Errors.'' Rule 20.6 relates to the adjustment and nullification of transactions that occur on the Exchange's equity options platform (``BZX Options''). 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 Background The Exchange and other options exchanges recently adopted a new, harmonized rule related to the adjustment and nullification of erroneous options transactions, including a specific provision related to coordination in connection with large-scale events involving erroneous options transactions.\3\ The Exchange believes that the changes the options exchanges implemented with the new, harmonized rule have led to increased transparency and finality with respect to the adjustment and nullification of erroneous options transactions. However, as part of the initial initiative, the Exchange and other options exchanges deferred a few specific matters for further discussion. Specifically, as described in the Initial Filing, the Exchange and all other options exchanges have been working to [[Page 23685]] further improve the review of potentially erroneous transactions as well as their subsequent adjustment by creating an objective and universal way to determine Theoretical Price in the event a reliable NBBO is not available. Because this initiative required additional exchange and industry discussion as well as additional time for development and implementation, the Exchange and the other options exchanges determined to proceed with the Initial Filing and to undergo a secondary initiative to complete any additional improvements to the applicable rule. In this filing, the Exchange proposes to adopt procedures that will lead to a more objective and uniform way to determine Theoretical Price in the event a reliable NBBO is not available. In addition to this change, the Exchange has proposed two additional minor changes to its rules. The Exchange understands that other options exchanges intend to file changes substantially similar to this proposal, if approved. Finally, the Exchange notes that options exchanges that offer complex orders on their options platforms have also been working on and have filed proposals related to rules for handling the adjustment and nullification of erroneous complex order transactions, which proposals have recently been approved by the Commission or filed on an immediately effective basis.\4\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 74556 (March 20, 2015), 80 FR 16031 (March 26, 2015) (SR-BATS-2014-067); see also Securities Exchange Act Release No. 73884 (December 18, 2014), 79 FR 77557 (December 24, 2014) (the ``Initial Filing''). \4\ See e.g., Securities Exchange Act Release Nos. 80040 (February 14, 2017), 82 FR 11248 (February 21, 2017) (SR-CBOE-2016- 088) (granting approval of CBOE proposal related to the nullification and adjustment of complex orders); 80298 (March 22, 2017), 82 FR 15393 (March 28, 2017) (SR-C2-2017-011) (notice of filing and immediate effectiveness of C2 proposal related to the nullification and adjustment of complex orders); 80284 (March 21, 2017), 82 FR 15251 (March 27, 2017) (SR-MIAX-2017-13) (notice of filing and immediate effectiveness of MIAX proposal related to the nullification and adjustment of complex orders). --------------------------------------------------------------------------- Calculation of Theoretical Price Using a Third Party Provider Under the harmonized rule, when reviewing a transaction as potentially erroneous, the Exchange needs to first determine the ``Theoretical Price'' of the option, i.e., the Exchange's estimate of the correct market price for the option. Pursuant to Rule 20.6, if the applicable option series is traded on at least one other options exchange, then the Theoretical Price of an option series is the last national best bid (``NBB'') just prior to the trade in question with respect to an erroneous sell transaction or the last national best offer (``NBO'') just prior to the trade in question with respect to an erroneous buy transaction unless one of the exceptions described below exists. Thus, whenever the Exchange has a reliable NBB or NBO, as applicable, just prior to the transaction, then the Exchange uses this NBB or NBO as the Theoretical Price. The Rule also contains various provisions governing specific situations where the NBB or NBO is not available or may not be reliable. Specifically, the Rule specifies situations in which there are no quotes or no valid quotes for comparison purposes, when the national best bid or offer (``NBBO'') is determined to be too wide to be reliable, and at the open of trading on each trading day. In each of these circumstances, in turn, because the NBB or NBO is not available or is deemed to be unreliable, the Exchange determines Theoretical Price. Under the current Rule, when determining Theoretical Price, Exchange personnel generally consult and refer to data such as the prices of related series, especially the closest strikes in the option in question. Exchange personnel may also take into account the price of the underlying security and the volatility characteristics of the option as well as historical pricing of the option and/or similar options. Although the Rule is administered by experienced personnel and the Exchange believes the process is currently appropriate, the Exchange recognizes that it is also subjective and could lead to disparate results for a transaction that spans multiple options exchanges. The Exchange proposes to adopt Interpretation and Policy .03 to specify how the Exchange will determine Theoretical Price when required by sub-paragraphs (b)(1)-(3) of the Rule (i.e., at the open, when there are no valid quotes or when there is a wide quote). In particular, the Exchange has been working with other options exchanges to identify and select a reliable third party vendor (``TP Provider'') that would provide Theoretical Price to the Exchange whenever one or more transactions is under review pursuant to Rule 20.6 and the NBBO is unavailable or deemed unreliable pursuant to Rule 20.6(b). The Exchange and other options exchanges have selected CBOE Livevol, LLC (``Livevol'') as the TP Provider, as described below. As further described below, proposed Interpretation and Policy .03 would codify the use of the TP Provider as well as limited exceptions where the Exchange would be able to deviate from the Theoretical Price given by the TP Provider. Pursuant to proposed Interpretation and Policy .03, when the Exchange must determine Theoretical Price pursuant to the sub- paragraphs (b)(1)-(3) of the Rule, the Exchange will request Theoretical Price from the third party vendor to which the Exchange and all other options exchanges have subscribed. Thus, as set forth in this proposed language, Theoretical Price would be provided to the Exchange by the TP Provider on request and not through a streaming data feed.\5\ This language also makes clear that the Exchange and all other options exchanges will use the same TP Provider. As noted above, the proposed TP Provider selected by the Exchange and other options exchanges is Livevol. The Exchange proposes to codify this selection in proposed paragraph (d) to Interpretation and Policy .03. As such, the Exchange would file a rule proposal and would provide notice to the options industry of any proposed change to the TP Provider. --------------------------------------------------------------------------- \5\ Though the Exchange and other options exchanges considered a streaming feed, it was determined that it would be more feasible to develop and implement an on demand service and that such a service would satisfy the goals of the initiative. --------------------------------------------------------------------------- The Exchange and other options exchanges have selected Livevol as the proposed TP Provider after diligence into various alternatives. Livevol has, since 2009, been the options industry leader in providing equity and index options market data and analytics services.\6\ The Exchange believes that Livevol has established itself within the options industry as a trusted provider of such services and notes that it and all other options exchanges already subscribe to various Livevol services. In connection with this proposal, Livevol will develop a new tool based on its existing technology and services that will supply Theoretical Price to the Exchange and other options exchanges upon request. The Theoretical Price tool will leverage current market data and surrounding strikes to assist in a relative value pricing approach to generating a Theoretical Price. When relative value methods are incapable of generating a valid Theoretical Price, the Theoretical Price tool will utilize historical trade and quote data to calculate Theoretical Price. --------------------------------------------------------------------------- \6\ The Exchange notes that in 2015, Livevol was acquired by CBOE Holdings, Inc., the ultimate parent company of the Chicago Board Options Exchange (``CBOE'') and C2 Options Exchange (``C2''). --------------------------------------------------------------------------- Because the purpose of the proposal is to move away from a subjective determination by Exchange personnel when the NBBO is unavailable or unreliable, the Exchange intends to use the Theoretical Price provided by the TP Provider in all such circumstances. However, the Exchange believes it is necessary to retain the ability to contact the TP Provider if it believes that the [[Page 23686]] Theoretical Price provided is fundamentally incorrect and to determine the Theoretical Price in the limited circumstance of a systems issue experienced by the TP Provider, as described below. As proposed, to the extent an Official \7\ of the Exchange believes that the Theoretical Price provided by the TP Provider is fundamentally incorrect and cannot be used consistent with the maintenance of a fair and orderly market, the Official shall contact the TP Provider to notify the TP Provider of the reason the Official believes such Theoretical Price is inaccurate and to request a review and correction of the calculated Theoretical Price. For example, if an Official received from the TP Provider a Theoretical Price of $80 in a series that the Official might expect to be instead in the range of $8 to $10 because of a recent corporate action in the underlying, the Official would request that the TP Provider review and confirm its calculation and determine whether it had appropriately accounted for the corporate action. In order to ensure that other options exchanges that may potentially be relying on the same Theoretical Price that, in turn, the Official believes to be fundamentally incorrect, the Exchange also proposes to promptly provide notice to other options exchanges that the TP Provider has been contacted to review and correct the calculated Theoretical Price at issue and to include a brief explanation of the reason for the request.\8\ Although not directly addressed by the proposed Rule, the Exchange expects that all other options exchanges once in receipt of this notification would await the determination of the TP Provider and would use the corrected price as soon as it is available. The Exchange further notes that it expects the TP Provider to cooperate with, but to be independent of, the Exchange and other options exchanges.\9\ --------------------------------------------------------------------------- \7\ For purposes of the Rule, an Official is an Officer of the Exchange or such other employee designee of the Exchange that is trained in the application of Rule 20.6. \8\ See proposed paragraph (b) to Interpretation and Policy .03. \9\ The Exchange expects any TP Provider selected by the Exchange and other options exchanges to act independently in its determination and calculation of Theoretical Price. With respect to Livevol specifically, the Exchange again notes that Livevol is a subsidiary of CBOE Holdings, Inc., which is also the ultimate parent company of multiple options exchanges. The Exchange expects Livevol to calculate Theoretical Price independent of its affiliated exchanges in the same way it will calculate Theoretical Price independent of non-affiliated exchanges. --------------------------------------------------------------------------- The Exchange believes that the proposed provision to allow an Official to contact the TP Provider if he or she believes the provided Theoretical Price is fundamentally incorrect is necessary, particularly because the Exchange and other options exchanges will be using the new process for the first time. Although the exchanges have conducted thorough diligence with respect to Livevol as the selected TP Provider and would do so with any potential replacement TP Provider, the Exchange is concerned that certain scenarios could arise where the Theoretical Price generated by the TP Provider does not take into account relevant factors and would result in an unfair result for market participants involved in a transaction. The Exchange notes that if such situations do indeed arise, to the extent practicable the Exchange will also work with the TP Provider and other options exchanges to improve the TP Provider's calculation of Theoretical Price in future situations. For instance, if the Exchange determines that a particular type of corporate action is not being appropriately captured by the TP Provider when such provider is generating Theoretical Price, while the Exchange believes that it needs the ability to request a review and correction of the Theoretical Price in connection with a specific review in order to provide a timely decision to market participants, the Exchange would share information regarding the specific situation with the TP Provider and other options exchanges in an effort to improve the Theoretical Price service for future use. The Exchange notes that it does not anticipate needing to rely on this provision frequently, if at all, but believes the provision is necessary nonetheless to best prepare for all potential circumstances. Further, the Theoretical Price used by the Exchange in connection with its rulings will always be that received from the TP Provider and the Exchange has not proposed the ability to deviate from such price.\10\ --------------------------------------------------------------------------- \10\ To the extent the TP Provider has been contacted by an Official of the Exchange, reviews the Theoretical Price provided but disagrees that there has been any error, then the Exchange would be bound to use the Theoretical Price provided by the TP Provider. --------------------------------------------------------------------------- Pursuant to proposed paragraph (c) to Interpretation and Policy .03, an Official of the Exchange may determine the Theoretical Price if the TP Provider has experienced a systems issue that has rendered its services unavailable to accurately calculate Theoretical Price and such issue cannot be corrected in a timely manner. The Exchange notes that it does not anticipate needing to rely on this provision frequently, if at all, but believes the provision is necessary nonetheless to best prepare for all potential circumstances. Further, consistent with existing text in Rule 20.6(e)(4), the Exchange has not proposed a specific time by which the service must be available in order to be considered timely.\11\ The Exchange expects that it would await the TP Provider's services becoming available again so long as the Exchange was able to obtain information regarding the issue and the TP Provider had a reasonable expectation of being able to resume normal operations within the next several hours based on communications with the TP Provider. More specifically with respect to Livevol, Livevol has business continuity and disaster recovery procedures that will help to ensure that the Theoretical Price tool remains available or, in the event of an outage, that service is restored in a timely manner. --------------------------------------------------------------------------- \11\ In the context of a Significant Market Event, the Exchange may determine, ``in consultation with other options exchanges . . . that timely adjustment is not feasible due to the extraordinary nature of the situation.'' See Rule 20.6(e)(4). --------------------------------------------------------------------------- The Exchange also notes that if a wide-scale event occurred, even if such event did not qualify as a ``Significant Market Event'' pursuant to Rule 20.6(e), and the TP Provider was unavailable or otherwise experiencing difficulty, the Exchange believes that it and other options exchanges would seek to coordinate to the extent possible. In particular, the Exchange and other options exchanges now have a process, administered by the Options Clearing Corporation, to invoke a discussion amongst all options exchanges in the event of any widespread or significant market events. The Exchange believes that this process could be used in the event necessary if there were an issue with the TP Provider. The Exchange also proposes to adopt language in paragraph (d) of Interpretation and Policy .03 to Rule 20.6 to disclaim the liability of the Exchange and the TP Provider in connection with the proposed Rule, the TP Provider's calculation of Theoretical Price, and the Exchange's use of such Theoretical Price. Specifically, the proposed rule would state that neither the Exchange, the TP Provider, nor any affiliate of the TP Provider (the TP Provider and its affiliates are referred to collectively as the ``TP Provider''), makes any warranty, express or implied, as to the results to be obtained by any person or entity from the use of the TP Provider pursuant to Interpretation .03. The proposed rule would further state that the TP Provider does not guarantee the accuracy or completeness of the calculated Theoretical Price and that the [[Page 23687]] TP Provider disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to such Theoretical Price. Finally, the proposed Rule would state that neither the Exchange nor the TP Provider shall have any liability for any damages, claims, losses (including any indirect or consequential losses), expenses, or delays, whether direct or indirect, foreseen or unforeseen, suffered by any person arising out of any circumstance or occurrence relating to the use of such Theoretical Price or arising out of any errors or delays in calculating such Theoretical Price. This proposed language is modeled after existing language in Exchange Rules regarding ``reporting authorities'' that calculate indices.\12\ --------------------------------------------------------------------------- \12\ See, e.g., Rule 29.13, which relates to index options potentially listed and traded on the Exchange and disclaims liability for a reporting authority and their affiliates; see also, e.g., Rules 14.11(b)(10), 14.11(c)(10), which relate to certain types of equity securities potentially listed and traded on the Exchange and disclaim liability for the Exchange, a reporting authority and any agent of the Exchange. --------------------------------------------------------------------------- In connection with the proposed change described above, the Exchange proposes to modify Rule 20.6 to state that the Exchange will rely on paragraph (b) and Interpretation and Policy .03 when determining Theoretical Price. No Valid Quotes--Market Participant Quoting on Multiple Exchanges As described above, one of the times where the NBB or NBO is deemed to be unreliable for purposes of Theoretical Price is when there are no quotes or no valid quotes for the affected series. In addition to when there are no quotes, the Exchange does not consider the following to be valid quotes: (i) All quotes in the applicable option series published at a time where the last NBB is higher than the last NBO in such series (a ``crossed market''); (ii) quotes published by the Exchange that were submitted by either party to the transaction in question; and (iii) quotes published by another options exchange against which the Exchange has declared self-help. In recognition of today's market structure where certain participants actively provide liquidity on multiple exchanges simultaneously, the Exchange proposes to add an additional category of invalid quotes. Specifically, in order to avoid a situation where a market participant has established the market at an erroneous price on multiple exchanges, the Exchange proposes to consider as invalid the quotes in a series published by another options exchange if either party to the transaction in question submitted the quotes in the series representing such options exchange's best bid or offer. Thus, similar to being able to ignore for purposes of the Rule the quotes published by the Exchange if submitted by either party to the transaction in question, the Exchange would be able to ignore for purposes of the rule quotations on other options exchanges by that same market participant. In order to continue to apply the Rule in a timely and organized fashion, however, the Exchange proposes to initially limit the scope of this proposed provision in two ways. First, because the process will take considerable coordination with other options exchanges to confirm that the quotations in question on an away options exchange were indeed submitted by a party to a transaction on the Exchange, the Exchange proposes to limit this provision to apply to up to twenty-five (25) total options series (i.e., whether such series all relate to the same underlying security or multiple underlying securities). Second, the Exchange proposes to require the party that believes it established the best bid or offer on one or more other options exchanges to identify to the Exchange the quotes which were submitted by such party and published by other options exchanges. In other words, as proposed, the burden will be on the party seeking that the Exchange disregard their quotations on other options exchanges to identify such quotations. In turn, the Exchange will verify with such other options exchanges that such quotations were indeed submitted by such party. Below are examples of both the current rule and the rule as proposed to be amended. Example 1--Current Rule, Member Erroneously Quotes on One Exchange Assumptions For purposes of this example, assume the following:A Member acting as a Market Maker on the Exchange (``Market Maker A'') is quoting in twenty series of options underlying security ABCD on the Exchange (and only the Exchange). Market Maker A makes an error in calculating the market for options on ABCD, and publishes quotes in all twenty series to buy options at $1.00 and to sell options at $1.05. In fact, options on ABCD in these series are nearly worthless and no other market participant is quoting in such series. Therefore, the NBBO in the twenty series at issue is $1.00 x $1.05 (with the Exchange representing the NBBO based on Market Maker A's quotes). Assume Member A immediately enters sell orders and executes against Market Maker A's quotes at $1.00. Assume Market Maker A submits to the Exchange a timely request for review of the trades with Member A as potentially erroneous transactions to buy. Result Based on the Exchange's current rules, the Exchange would identify Market Maker A as a participant to the trades at issue and would consider Market Maker A's quotations invalid pursuant to Rule 20.6(b)(2). As there were no other valid quotes to use as a reference price, the Exchange would then determine Theoretical Price. Assume the Exchange determines a Theoretical Price of $0.05. [cir] The execution price of $1.00 exceeds the $0.25 minimum amount set forth in the Exchange's table to determine whether an obvious error has occurred (i.e., $0.05 + $0.25 = $0.30) so any execution at or above this price is an obvious error. [cir] Accordingly, the executions in all series would be adjusted by the Exchange to executions at $0.20 per contract (Theoretical Price of $0.05 plus $0.15) to the extent the incoming orders submitted by Member A were non-Customer orders. [cir] The executions in all series would be nullified to the extent the incoming orders submitted by Member A were Customer orders. Example 2--Current Rule, Member Erroneously Quotes on Multiple Exchanges Assumptions For purposes of this example, assume the following: A Member acting as a Market Maker on the Exchange (``Market Maker A'') is quoting in twenty series of options underlying security ABCD on the Exchange and on a second exchange (``Away Exchange''). Market Maker A makes an error in calculating the market for options on ABCD, and publishes quotes on both the Exchange and the Away Exchange in all twenty series to buy options at $1.00 and to sell options at $1.05. In fact, options on ABCD in these series are nearly worthless and no other market participant is quoting in such series. Therefore, the NBBO in the twenty series at issue is $1.00 x $1.05 (with the Exchange and the Away Exchange representing the NBBO based on Market Maker A's quotes). [[Page 23688]] Assume Member A immediately enters sell orders and executes against Market Maker A's quotes at $1.00. Assume Market Maker A submits to the Exchange and to the Away Exchange timely requests for review of the trades with Member A as potentially erroneous transactions to buy. Result Based on the Exchange's current rules, the Exchange would identify Market Maker A as a participant to the trades at issue and would consider Market Maker A's quotations on the Exchange invalid pursuant to Rule 20.6(b)(2). The Exchange, however, would view the Away Exchange's quotations as valid, and would thus determine Theoretical Price to be $1.05 (i.e., the NBO in the case of a potentially erroneous buy transaction). The execution price of $1.00 does not exceed the $0.25 minimum amount set forth in the Exchange's table to determine whether an obvious error has occurred (i.e., $1.05 + $0.25 = $1.30) so any execution at or above this price is an obvious error. The transactions on the Exchange would not be nullified or adjusted. As the Exchange and all other options exchanges have identical rules with respect to the process described above, the transactions on the Away Exchange would not be nullified or adjusted. Example 3--Proposed Rule, Member Erroneously Quotes on Multiple Exchanges \13\ Assumptions --------------------------------------------------------------------------- \13\ The Exchange notes that its proposed rule will not impact the proposed handling of a request for review where a market participant is quoting only on the Exchange, thus, the Exchange has not included a separate example for such a fact-pattern. --------------------------------------------------------------------------- For purposes of this example, assume the following: A Member acting as a Market Maker on the Exchange (``Market Maker A'') is quoting in twenty series of options underlying security ABCD on the Exchange and on a second exchange (``Away Exchange'').\14\ --------------------------------------------------------------------------- \14\ The Exchange notes that the proposed rule would operate the same if Market Maker A was quoting on more than two exchanges. The Exchange has limited the example to two exchanges for simplicity. --------------------------------------------------------------------------- Market Maker A makes an error in calculating the market for options on ABCD, and publishes quotes on both the Exchange and the Away Exchange in all twenty series to buy options at $1.00 and to sell options at $1.05. In fact, options on ABCD in these series are nearly worthless and no other market participant is quoting in such series. Therefore, the NBBO in the twenty series at issue is $1.00 x $1.05 (with the Exchange and the Away Exchange representing the NBBO based on Market Maker A's quotes). Assume Member A immediately enters sell orders and executes against Market Maker A's quotes at $1.00. Assume Market Maker A submits to the Exchange and to the Away Exchange timely requests for review of the trades with Member A as potentially erroneous transactions to buy. At the time of submitting the requests for review to the Exchange and the Away Exchange, Market Maker A identifies to the Exchange the quotes on the Away Exchange as quotes also represented by Market Maker A (and to the Away Exchange, the quotes on the Exchange as quotes also represented by Market Maker A). Result Based on the proposed rules, the Exchange would identify Market Maker A as a participant to the trades at issue and would consider Market Maker A's quotations on the Exchange invalid pursuant to Rule 20.6(b)(2). The Exchange and the Away Exchange would also coordinate to confirm that the quotations identified by Market Maker A on the other exchange were indeed Market Maker A's quotations. Once confirmed, each of the Exchange and the Away Exchange would also consider invalid the quotations published on the other exchange. As there were no other valid quotes to use as a reference price, the Exchange would then determine Theoretical Price. Assume the Exchange determines a Theoretical Price of $0.05. [cir] The execution price of $1.00 exceeds the $0.25 minimum amount set forth in the Exchange's table to determine whether an obvious error has occurred (i.e., $0.05 + $0.25 = $0.30) so any execution at or above this price is an obvious error. [cir] Accordingly, the executions in all series would be adjusted by the Exchange to executions at $0.20 per contract (Theoretical Price of $0.05 plus $0.15) to the extent the incoming orders submitted by Member A were non-Customer orders. [cir] The executions in all series would be nullified to the extent the incoming orders submitted by Member A were Customer orders. As the Exchange and all other options exchanges would have identical rules with respect to the process described above, as other options exchanges intend to adopt the same rule if the proposed rule is approved, the transactions on the Away Exchange would also be nullified or adjusted as set forth above. If this example was instead modified such that Market Maker A was quoting in 200 series rather than 20, the Exchange notes that Market Maker A could only request that the Exchange consider as invalid their quotations in 25 of those series on other exchanges. As noted above, the Exchange has proposed to limit the proposed rule to 25 series in order to continue to process requests for review in a timely and organized fashion in order to provide certainty to market participants. This is due to the amount of coordination that will be necessary in such a scenario to confirm that the quotations in question on an away options exchange were indeed submitted by a party to a transaction on the Exchange. Trading Halts--Clarifying Change to Rule 20.3 Exchange Rule 20.3 describes the Exchange's authority to declare trading halts in one or more options traded on the Exchange. Currently, Rule 20.3 states that the Exchange shall nullify any transaction that occurs during a trading halt in the affected option on the Exchange or, with respect to equity options, during a trading halt on the primary listing market for the underlying security. The Exchange proposes to make clear with respect to equity options that it shall nullify any transaction that occurs during a regulatory halt as declared by the primary listing market for the underlying security. The Exchange believes this change is necessary to distinguish a declared regulatory halt, where the underlying security should not be actively trading on any venue, from an operational issue on the primary listing exchange where the security continues to safely trade on other trading venues. Implementation Date In order to ensure that other options exchanges are able to adopt rules consistent with this proposal, if approved, and to coordinate the effectiveness of such harmonized rules, including the necessary implementation of technology to apply the harmonized rules using information received from the TP Provider, the Exchange proposes to delay the operative date of this proposal to a date within ninety (90) days following the approval of the proposal. The Exchange will announce the operative date in a Regulatory Circular made available to its Members. [[Page 23689]] 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.\15\ Specifically, the proposal is consistent with Section 6(b)(5) of the Act \16\ because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b). \16\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- As described above, the Exchange and other options exchanges are seeking to further modify their harmonized rules related to the adjustment and nullification of erroneous options transactions. The Exchange believes that the proposal to utilize a TP Provider in the event the NBBO is unavailable or unreliable will provide greater transparency and clarity with respect to the adjustment and nullification of erroneous options transactions. Particularly, the proposed changes seek to achieve consistent results for participants across U.S. options exchanges while maintaining a fair and orderly market, protecting investors and protecting the public interest. Thus, the Exchange believes that the proposal is consistent with Section 6(b)(5) of the Act \17\ in that the proposed Rule will foster cooperation and coordination with persons engaged in regulating and facilitating transactions. --------------------------------------------------------------------------- \17\ Id. --------------------------------------------------------------------------- The Exchange again reiterates that it has retained the standard of the current rule for most reviews of options transactions pursuant to Rule 20.6, which is to rely on the NBBO to determine Theoretical Price if such NBBO can reasonably be relied upon. The proposal to use a TP Provider when the NBBO is unavailable or unreliable is consistent with Section 6(b)(5) of the Act \18\ in that the proposed Rule will foster cooperation and coordination with persons engaged in regulating and facilitating transactions by further reducing the possibility of disparate results between options exchanges and increasing the objectivity of the application of Rule 20.6. Further, the Exchange believes that the proposed Rule is transparent with respect to the limited circumstances under which the Exchange will request a review and correction of Theoretical Price from the TP Provider, and has sought to limit such circumstances as much as possible. The Exchange notes that under the current Rule, Exchange personnel are required to determine Theoretical Price in certain circumstances and yet rarely do so because such circumstances have already been significantly limited under the harmonized rule (for example, because the wide quote provision of the harmonized rule only applies if the quote was narrower and then gapped but does not apply if the quote had been persistently wide). Thus, the Exchange believes it will need to request Theoretical Price from the TP Provider only in very rare circumstances and in turn, the Exchange anticipates that the need to contact the TP Provider for additional review of the Theoretical Price provided by the TP Provider will be even rarer. Similarly, the Exchange believes it is unlikely that an Exchange Official will ever be required to determine Theoretical Price, as such circumstance would only be in the event of a systems issue that has rendered the TP Provider's services unavailable and such issue cannot be corrected in a timely manner. --------------------------------------------------------------------------- \18\ Id. --------------------------------------------------------------------------- The Exchange also believes its proposal to adopt language in paragraph (d) of Interpretation and Policy .03 to Rule 20.6 to disclaim the liability of the Exchange and the TP Provider in connection with the proposed Rule, the TP Provider's calculation of Theoretical Price, and the Exchange's use of such Theoretical Price is consistent with the Act. As noted above, this proposed language is modeled after existing language in Exchange Rules regarding ``reporting authorities'' that calculate indices,\19\ and is consistent with Section 6(b)(5) of the Act \20\ in that the proposed Rule will foster cooperation and coordination with persons engaged in regulating and facilitating transactions. --------------------------------------------------------------------------- \19\ See supra, note 12. \20\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- As described above, the Exchange proposes a modification to the valid quotes provision to also exclude quotes in a series published by another options exchange if either party to the transaction in question submitted the orders or [sic] quotes in the series representing such options exchange's best bid or offer. The Exchange believes this proposal is consistent with Section 6(b)(5) of the Act \21\ because the application of the rule will foster cooperation and coordination with persons engaged in regulating and facilitating transactions by allowing the Exchange to coordinate with other options exchanges to determine whether a market participant that is party to a potentially erroneous transaction on the Exchange established the market in an option on other options exchanges; to the extent this can be established, the Exchange believes such participant's quotes should be excluded in the same way such quotes are excluded on the Exchange. The Exchange also believes it is reasonable to limit the scope of this provision to twenty-five (25) series and to require the party that believes it established the best bid or offer on one or more other options exchanges to identify to the Exchange the quotes which were submitted by that party and published by other options exchanges. The Exchange believes these limitations are consistent with Section 6(b)(5) of the Act \22\ because they will ensure that the Exchange is able to continue to apply the Rule in a timely and organized fashion, thus fostering cooperation and coordination with persons engaged in regulating and facilitating transactions and also removing impediments to and perfecting the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f(b)(5). \22\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Finally, with respect to the proposed modification to the Exchange's trading halt rule, Rule 20.3, the Exchange believes that this proposal is consistent with Section 6(b)(5) of the Act \23\ because such proposal clarifies the provision by distinguishing between a trading halt in an underlying security where the security has halted trading across the industry (i.e., a regulatory halt) from a situation where the primary exchange has experienced a technical issue but the underlying security continues to trade on other equities platforms. The Exchange notes that this distinction is already clear in the rules of certain other options exchanges, and thus, has been found to be consistent with the Act.\24\ --------------------------------------------------------------------------- \23\ Id. \24\ See, e.g., Interpretation and Policy .07 to CBOE Rule 6.3. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes the entire proposal is consistent with Section 6(b)(8) of the Act \25\ in that it does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act as explained below. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- Importantly, the Exchange does not believe that the proposal will impose a burden on intermarket competition but rather that it will alleviate any burden on competition because it is the result [[Page 23690]] of a collaborative effort by all options exchanges to further harmonize and improve the process related to the adjustment and nullification of erroneous options transactions. The Exchange does not believe that the rules applicable to such process is an area where options exchanges should compete, but rather, that all options exchanges should have consistent rules to the extent possible. Particularly where a market participant trades on several different exchanges and an erroneous trade may occur on multiple markets nearly simultaneously, the Exchange believes that a participant should have a consistent experience with respect to the nullification or adjustment of transactions. To that end, the selection and implementation of a TP Provider utilized by all options exchanges will further reduce the possibility that participants with potentially erroneous transactions that span multiple options exchanges are handled differently on such exchanges. Similarly, the proposed ability to consider quotations invalid on another options exchange if ultimately originating from a party to a potentially erroneous transaction on the Exchange represents a proposal intended to further foster cooperation by the options exchanges with respect to market events. The Exchange understands that all other options exchanges intend to file proposals that are substantially similar to this proposal. The Exchange does not believe that the proposed rule change imposes a burden on intramarket competition because the proposed provisions apply to all market participants equally. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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-BatsBZX-2017-35 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-BatsBZX-2017-35. 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 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-BatsBZX-2017-35, and should be submitted on or before June 13, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\26\ --------------------------------------------------------------------------- \26\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-10465 Filed 5-22-17; 8:45 am] BILLING CODE 8011-01-P
![23684 Federal Register / Vol. 82, No. 98 / Tuesday, May 23, 2017 / Notices
requiring that Participants register and Commission, and all written I. Self-Regulatory Organization’s
have a presence on the Trading Floor. communications relating to the Statement of the Terms of Substance of
Therefore, the proposed rule changes do proposed rule change between the the Proposed Rule Change
not impose a burden on intra-market Commission and any person, other than The Exchange filed a proposal to
competition. those that may be withheld from the amend Rule 20.6, entitled ‘‘Nullification
Overall, the proposal is pro- public in accordance with the and Adjustment of Options Transactions
competitive for several reasons. In provisions of 5 U.S.C. 552, will be including Obvious Errors.’’ Rule 20.6
particular, by helping Floor Brokers at available for Web site viewing and relates to the adjustment and
the Exchange compete for executions printing in the Commission’s Public nullification of transactions that occur
against floor brokers at other exchanges, Reference Room, 100 F Street NE., on the Exchange’s equity options
it also helps them to be more efficient Washington, DC 20549, on official platform (‘‘BZX Options’’).
and provide a better audit trail of their business days between the hours of The text of the proposed rule change
executions on the Trading Floor. This, 10:00 a.m. and 3:00 p.m. Copies of such is available at the Exchange’s Web site
in turn, helps the Exchange compete filing also will be available for at www.bats.com, at the principal office
against other exchanges in a deeply of the Exchange, and at the
inspection and copying at the principal
competitive landscape. The Exchange Commission’s Public Reference Room.
office of the Exchange. All comments
believes its proposed unique features for
received will be posted without change; II. Self-Regulatory Organization’s
open-outcry trading will provide value
to Floor Participants, which in turn, will the Commission does not edit personal Statement of the Purpose of, and
help the Exchange compete.272 identifying information from Statutory Basis for, the Proposed Rule
submissions. You should submit only Change
C. Self-Regulatory Organization’s information that you wish to make
Statement on Comments on the available publicly. All submissions In its filing with the Commission, the
Proposed Rule Change Received From should refer to File Number SR–BOX– Exchange included statements
Members, Participants, or Others 2016–48 and should be submitted on or concerning the purpose of and basis for
before June 13, 2017. the proposed rule change and discussed
The Exchange has neither solicited
any comments it received on the
nor received comments on the proposed For the Commission, by the Division of proposed rule change. The text of these
rule change. Trading and Markets, pursuant to delegated statements may be examined at the
III. Solicitation of Comments authority.273 places specified in Item IV below. The
Interested persons are invited to Eduardo A. Aleman, Exchange has prepared summaries, set
submit written data, views and Assistant Secretary. forth in Sections A, B, and C below, of
arguments concerning Amendment No. [FR Doc. 2017–10588 Filed 5–22–17; 8:45 am] the most significant parts of such
2, including whether the proposed rule BILLING CODE 8011–01–P
statements.
change is consistent with the Act. A. Self-Regulatory Organization’s
Comments may be submitted by any of Statement of the Purpose of, and
the following methods: SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule
COMMISSION Change
Electronic Comments
• Use the Commission’s Internet [Release No. 34–80709; File No. SR–
1. Purpose
comment form (http://www.sec.gov/ BatsBZX–2017–35] Background
rules/sro.shtml); or
• Send an email to rule- The Exchange and other options
Self-Regulatory Organizations; Bats exchanges recently adopted a new,
comments@sec.gov. Please include File BZX Exchange, Inc.; Notice of Filing of
Number SR–BOX–2016–48 on the harmonized rule related to the
a Proposed Rule Change To Amend adjustment and nullification of
subject line. Rule 20.6, Nullification and Adjustment erroneous options transactions,
Paper Comments of Options Transactions Including including a specific provision related to
• Send paper comments in triplicate Obvious Errors coordination in connection with large-
to Secretary, Securities and Exchange scale events involving erroneous
May 17, 2017.
Commission, 100 F Street NE., options transactions.3 The Exchange
Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the believes that the changes the options
All submissions should refer to File Securities Exchange Act of 1934 (the exchanges implemented with the new,
Number SR–BOX–2016–48. This file ‘‘Act’’),1 and Rule 19b–4 thereunder,2 harmonized rule have led to increased
number should be included on the notice is hereby given that on May 5, transparency and finality with respect to
subject line if email is used. To help the 2017, Bats BZX Exchange, Inc. (the the adjustment and nullification of
Commission process and review your ‘‘Exchange’’ or ‘‘BZX’’) filed with the erroneous options transactions.
comments more efficiently, please use Securities and Exchange Commission However, as part of the initial initiative,
only one method. The Commission will (‘‘Commission’’) the proposed rule the Exchange and other options
post all comments on the Commission’s change as described in Items I and II exchanges deferred a few specific
Internet Web site (http://www.sec.gov/ below, which Items have been prepared matters for further discussion.
Specifically, as described in the Initial
sradovich on DSK3GMQ082PROD with NOTICES
rules/sro.shtml). Copies of the by the Exchange. The Commission is
submission, all subsequent publishing this notice to solicit Filing, the Exchange and all other
amendments, all written statements comments on the proposed rule change options exchanges have been working to
with respect to the proposed rule from interested persons.
3 See Securities Exchange Act Release No. 74556
change that are filed with the (March 20, 2015), 80 FR 16031 (March 26, 2015)
273 17CFR 200.30–3(a)(12). (SR–BATS–2014–067); see also Securities Exchange
272 Unique 1 15 U.S.C. 78s(b)(1).
features include proposed Rules Act Release No. 73884 (December 18, 2014), 79 FR
7600(h) and 100(b)(5). 2 17 CFR 240.19b–4. 77557 (December 24, 2014) (the ‘‘Initial Filing’’).
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![Federal Register / Vol. 82, No. 98 / Tuesday, May 23, 2017 / Notices 23689
2. Statutory Basis TP Provider, and has sought to limit a market participant that is party to a
The Exchange believes that its such circumstances as much as possible. potentially erroneous transaction on the
proposal is consistent with the The Exchange notes that under the Exchange established the market in an
requirements of the Act and the rules current Rule, Exchange personnel are option on other options exchanges; to
and regulations thereunder that are required to determine Theoretical Price the extent this can be established, the
applicable to a national securities in certain circumstances and yet rarely Exchange believes such participant’s
exchange, and, in particular, with the do so because such circumstances have quotes should be excluded in the same
requirements of Section 6(b) of the already been significantly limited under way such quotes are excluded on the
Act.15 Specifically, the proposal is the harmonized rule (for example, Exchange. The Exchange also believes it
consistent with Section 6(b)(5) of the because the wide quote provision of the is reasonable to limit the scope of this
Act 16 because it would promote just harmonized rule only applies if the provision to twenty-five (25) series and
and equitable principles of trade, quote was narrower and then gapped to require the party that believes it
remove impediments to, and perfect the but does not apply if the quote had been established the best bid or offer on one
mechanism of, a free and open market persistently wide). Thus, the Exchange or more other options exchanges to
and a national market system, and, in believes it will need to request identify to the Exchange the quotes
general, protect investors and the public Theoretical Price from the TP Provider which were submitted by that party and
interest. only in very rare circumstances and in published by other options exchanges.
As described above, the Exchange and turn, the Exchange anticipates that the The Exchange believes these limitations
other options exchanges are seeking to need to contact the TP Provider for are consistent with Section 6(b)(5) of the
further modify their harmonized rules additional review of the Theoretical Act 22 because they will ensure that the
related to the adjustment and Price provided by the TP Provider will Exchange is able to continue to apply
nullification of erroneous options be even rarer. Similarly, the Exchange the Rule in a timely and organized
transactions. The Exchange believes that believes it is unlikely that an Exchange fashion, thus fostering cooperation and
the proposal to utilize a TP Provider in Official will ever be required to coordination with persons engaged in
the event the NBBO is unavailable or determine Theoretical Price, as such regulating and facilitating transactions
unreliable will provide greater circumstance would only be in the and also removing impediments to and
transparency and clarity with respect to event of a systems issue that has perfecting the mechanism of a free and
the adjustment and nullification of rendered the TP Provider’s services open market and a national market
erroneous options transactions. unavailable and such issue cannot be system.
Particularly, the proposed changes seek corrected in a timely manner. Finally, with respect to the proposed
to achieve consistent results for The Exchange also believes its modification to the Exchange’s trading
participants across U.S. options proposal to adopt language in paragraph halt rule, Rule 20.3, the Exchange
exchanges while maintaining a fair and (d) of Interpretation and Policy .03 to believes that this proposal is consistent
orderly market, protecting investors and Rule 20.6 to disclaim the liability of the with Section 6(b)(5) of the Act 23
protecting the public interest. Thus, the Exchange and the TP Provider in because such proposal clarifies the
Exchange believes that the proposal is connection with the proposed Rule, the provision by distinguishing between a
consistent with Section 6(b)(5) of the TP Provider’s calculation of Theoretical trading halt in an underlying security
Act 17 in that the proposed Rule will Price, and the Exchange’s use of such where the security has halted trading
foster cooperation and coordination Theoretical Price is consistent with the across the industry (i.e., a regulatory
with persons engaged in regulating and Act. As noted above, this proposed halt) from a situation where the primary
facilitating transactions. language is modeled after existing exchange has experienced a technical
The Exchange again reiterates that it language in Exchange Rules regarding issue but the underlying security
has retained the standard of the current ‘‘reporting authorities’’ that calculate continues to trade on other equities
rule for most reviews of options indices,19 and is consistent with Section platforms. The Exchange notes that this
transactions pursuant to Rule 20.6, 6(b)(5) of the Act 20 in that the proposed distinction is already clear in the rules
which is to rely on the NBBO to Rule will foster cooperation and of certain other options exchanges, and
determine Theoretical Price if such coordination with persons engaged in thus, has been found to be consistent
NBBO can reasonably be relied upon. regulating and facilitating transactions. with the Act.24
The proposal to use a TP Provider when As described above, the Exchange
the NBBO is unavailable or unreliable is proposes a modification to the valid B. Self-Regulatory Organization’s
consistent with Section 6(b)(5) of the quotes provision to also exclude quotes Statement on Burden on Competition
Act 18 in that the proposed Rule will in a series published by another options The Exchange believes the entire
foster cooperation and coordination exchange if either party to the proposal is consistent with Section
with persons engaged in regulating and transaction in question submitted the 6(b)(8) of the Act 25 in that it does not
facilitating transactions by further orders or [sic] quotes in the series impose any burden on competition that
reducing the possibility of disparate representing such options exchange’s is not necessary or appropriate in
results between options exchanges and best bid or offer. The Exchange believes furtherance of the purposes of the Act
increasing the objectivity of the this proposal is consistent with Section as explained below.
application of Rule 20.6. Further, the 6(b)(5) of the Act 21 because the Importantly, the Exchange does not
Exchange believes that the proposed application of the rule will foster believe that the proposal will impose a
Rule is transparent with respect to the cooperation and coordination with burden on intermarket competition but
sradovich on DSK3GMQ082PROD with NOTICES
limited circumstances under which the persons engaged in regulating and rather that it will alleviate any burden
Exchange will request a review and facilitating transactions by allowing the on competition because it is the result
correction of Theoretical Price from the Exchange to coordinate with other
options exchanges to determine whether 22 15 U.S.C. 78f(b)(5).
15 15 U.S.C. 78f(b). 23 Id.
16 15 U.S.C. 78f(b)(5). 19 See supra, note 12. 24 See, e.g., Interpretation and Policy .07 to CBOE
17 Id. 20 15 U.S.C. 78f(b)(5). Rule 6.3.
18 Id. 21 15 U.S.C. 78f(b)(5). 25 15 U.S.C. 78f(b)(8).
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![23690 Federal Register / Vol. 82, No. 98 / Tuesday, May 23, 2017 / Notices
of a collaborative effort by all options IV. Solicitation of Comments For the Commission, by the Division of
exchanges to further harmonize and Trading and Markets, pursuant to delegated
improve the process related to the Interested persons are invited to authority.26
adjustment and nullification of submit written data, views, and Eduardo A. Aleman,
erroneous options transactions. The arguments concerning the foregoing, Assistant Secretary.
Exchange does not believe that the rules including whether the proposed rule [FR Doc. 2017–10465 Filed 5–22–17; 8:45 am]
applicable to such process is an area change is consistent with the Act. BILLING CODE 8011–01–P
where options exchanges should Comments may be submitted by any of
compete, but rather, that all options the following methods:
exchanges should have consistent rules SECURITIES AND EXCHANGE
to the extent possible. Particularly Electronic Comments COMMISSION
where a market participant trades on • Use the Commission’s Internet
several different exchanges and an comment form (http://www.sec.gov/ [Release No. 34–80708; File No. SR–
erroneous trade may occur on multiple NASDAQ–2017–040]
rules/sro.shtml); or
markets nearly simultaneously, the
Exchange believes that a participant • Send an email to rule-comments@ Self-Regulatory Organizations; The
should have a consistent experience sec.gov. Please include File Number SR– NASDAQ Stock Market LLC; Notice of
with respect to the nullification or BatsBZX–2017–35 on the subject line. Filing and Immediate Effectiveness of
adjustment of transactions. To that end, Proposed Rule Change Relating to
Paper Comments
the selection and implementation of a Continued Listing Standards for
TP Provider utilized by all options • Send paper comments in triplicate Exchange-Traded Products
exchanges will further reduce the to Secretary, Securities and Exchange
possibility that participants with May 17, 2017.
Commission, 100 F Street NE.,
potentially erroneous transactions that Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
span multiple options exchanges are Securities Exchange Act of 1934
handled differently on such exchanges. All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Similarly, the proposed ability to Number SR–BatsBZX–2017–35. This file notice is hereby given that on May 3,
consider quotations invalid on another number should be included on the 2017, The NASDAQ Stock Market LLC
options exchange if ultimately subject line if email is used. To help the (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
originating from a party to a potentially Commission process and review your Securities and Exchange Commission
erroneous transaction on the Exchange comments more efficiently, please use (‘‘Commission’’) the proposed rule
represents a proposal intended to only one method. The Commission will change as described in Items I and II
further foster cooperation by the options post all comments on the Commission’s below, which Items have been prepared
exchanges with respect to market Internet Web site (http://www.sec.gov/ by the Exchange. The Commission is
events. The Exchange understands that rules/sro.shtml). Copies of the publishing this notice to solicit
all other options exchanges intend to submission, all subsequent comments on the proposed rule change
file proposals that are substantially amendments, all written statements from interested persons.
similar to this proposal. with respect to the proposed rule
The Exchange does not believe that I. Self-Regulatory Organization’s
change that are filed with the Statement of the Terms of Substance of
the proposed rule change imposes a
Commission, and all written the Proposed Rule Change
burden on intramarket competition
communications relating to the
because the proposed provisions apply The Exchange proposes to amend the
to all market participants equally. proposed rule change between the
Commission and any person, other than previously approved continued listing
C. Self-Regulatory Organization’s those that may be withheld from the requirements for exchange-traded
Statement on Comments on the public in accordance with the products (‘‘ETPs’’) in the Nasdaq Rule
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be 5700 Series, as well as Nasdaq Rule
Members, Participants, or Others available for Web site viewing and 5810 (Notification of Deficiency by the
The Exchange has neither solicited printing in the Commission’s Public Listing Qualifications Department), to
nor received written comments on the make a number of conforming and
Reference Room, 100 F Street NE.,
proposed rule change. housekeeping changes.3
Washington, DC 20549 on official
business days between the hours of The Exchange also proposes to delay
III. Date of Effectiveness of the the implementation date of the
Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for previously approved changes to the
Commission Action continued listing standards from August
inspection and copying at the principal
Within 45 days of the date of 1, 2017 to October 1, 2017.
office of the Exchange. All comments
publication of this notice in the Federal The text of the proposed rule change
received will be posted without change;
Register or within such longer period is available on the Exchange’s Web site
up to 90 days (i) as the Commission may the Commission does not edit personal
identifying information from at http://nasdaq.cchwallstreet.com, at
designate if it finds such longer period the principal office of the Exchange, and
to be appropriate and publishes its submissions. You should submit only
information that you wish to make at the Commission’s Public Reference
sradovich on DSK3GMQ082PROD with NOTICES
reasons for so finding or (ii) as to which Room.
the Exchange consents, the Commission available publicly. All submissions
will: should refer to File Number SR–
26 17 CFR 200.30–3(a)(12).
(A) By order approve or disapprove BatsBZX–2017–35, and should be 1 15 U.S.C. 78s(b)(1).
such proposed rule change, or submitted on or before June 13, 2017. 2 17 CFR 240.19b–4.
(B) institute proceedings to determine 3 See Securities Exchange Act Release No. 79784
whether the proposed rule change (Jan. 12, 2017), 82 FR 6664 (Jan. 19, 2017) (SR–
should be disapproved. NASDAQ–2016–135).
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Document Created: 2017-05-23 02:14:37
Document Modified: 2017-05-23 02:14:37
| 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 23684 |
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