82 FR 25027 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Certain Appendix B Web Site Publication Requirements Pursuant to the Regulation NMS Plan To Implement a Tick Size Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 103 (May 31, 2017)

[Federal Register Volume 82, Number 103 (Wednesday, May 31, 2017)]
[Notices]
[Pages 25027-25029]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11143]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80754; File No. SR-CHX-2017-10]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify Certain Appendix B Web Site Publication Requirements Pursuant 
to the Regulation NMS Plan To Implement a Tick Size Pilot Program

May 24, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on May 15, 2017, the Chicago Stock Exchange, Inc. (``CHX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CHX proposes to amend Article 20, Rule 13(b) of the Rules of the 
Exchange (``CHX Rules'') to modify certain Appendix B Web site data 
publication requirements pursuant to the Regulation NMS Plan to 
Implement a Tick Size Pilot Program (``Plan'').
    The text of this proposed rule change is available on the 
Exchange's Web site at (www.chx.com) and in 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 CHX included statements 
concerning the purpose of and basis for the proposed rule changes and 
discussed any comments it received on the proposed rule change. The 
text of these

[[Page 25028]]

statements may be examined at the places specified in Item IV below. 
The CHX 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Article 20, Rule 13(b) (Compliance with Data Collection 
Requirements) \3\ implements the data collection and Web site 
publication requirements of the Plan.\4\ Article 20, Rule 13(b)(2)(A) 
requires, among other things, that a CHX Participant \5\ that operates 
a Trading Center subject to the Plan and for which the Exchange is the 
designated examining authority (``DEA'') shall collect and transmit to 
the Exchange data described under Items I and II of Appendix B of the 
Plan. Subparagraph (v) under Article 20, Rule 13(b)(2)(A) provides, 
among other things, that the Exchange shall publish such Appendix B.I. 
and B.II. data on the CHX Web site within 120 calendar days following 
month end at no charge and shall not identify the Trading Center that 
generated the data. Paragraph .08 of the Interpretations and Policies 
under Article 20, Rule 13(b) provides, among other things, that the 
requirement that the Exchange make certain data publicly available on 
the Exchange or DEA's Web site pursuant to Appendix B and C to the Plan 
shall commence at the beginning of the Pilot Period,\6\ and that the 
Exchange shall make Appendix C.I data available to the Financial 
Industry Regulatory Authority (``FINRA'') for aggregation and 
publication on the FINRA Web site pursuant to FINRA Rules and the 
Exchange will publish Appendix B data on the Exchange Web site, which 
shall commence on August 31, 2017.\7\
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    \3\ See Securities Exchange Act Release No. 79538 (December 13, 
2016), 81 FR 91979 (December 19, 2016) (SR-CHX-2016-21); see also 
Securities Exchange Act Release No. 77469 (March 29, 2016), 81 FR 
19275 (April 4, 2016) (SR-CHX-2016-03).
    \4\ The Plan Participants filed the Plan to comply with an order 
issued by the Commission on June 24, 2014. See Letter from Brendon 
J. Weiss, Vice President, Intercontinental Exchange, Inc., to 
Secretary, Commission, dated August 25, 2014 (``SRO Tick Size Plan 
Proposal''). See Securities Exchange Act Release No 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014); see also Securities Exchange Act 
Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015).
    \5\ A ``Participant'' is a ``member'' of the Exchange for 
purposes of the Act. See CHX Article 1, Rule 1(s). For clarity, the 
Exchange proposes to utilize the term ``CHX Participant'' when 
referring to members of the Exchange and the term ``Plan 
Participant'' when referring to Participants of the Plan.
    \6\ Unless otherwise defined herein, capitalized terms have the 
meaning ascribed to them in CHX Article 20, Rule 13.
    \7\ On November 30, 2016, the SEC granted exemptive relief to 
the Plan Participants to, among other things, delay the publication 
of Web site data pursuant to Appendices B and C to the Plan until 
February 28, 2017, and to delay the ongoing Web site publication by 
ninety days such that data would be published within 120 calendar 
days following the end of the month. See Letter from David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, to Marcia E. Asquith, Senior Vice President and 
Corporate Secretary, FINRA, dated November 30, 2016; see also SR-
CHX-2016-21, supra note 3. The Exchange filed a proposed rule change 
for immediate effectiveness that, among other things, delayed the 
date by which Pre-Pilot and Pilot Appendix B data is to be made 
publicly available on the Exchange's Web site from February 28, 
2017, until April 28, 2017. See Securities Exchange Act Release No. 
80227 (March 13, 2017), 82 FR 14263 (March 17, 2017) (SR-CHX-2017-
05). The Exchange recently filed a proposed rule change for 
immediate effectiveness that delayed the date by which Pre-Pilot and 
Pilot Appendix B data is to be made publicly available on the 
Exchange's Web site from April 28, 2017, until August 31, 2017. See 
Securities Exchange Act Release No. 80647 (May 10, 2017) (SR-CHX-
2017-07). The SEC granted exemptive relief to the Plan Participants 
to delay the publication of their Appendix B data until August 31, 
2017. See Letter from David S. Shillman, Associate Director, 
Division of Trading and Markets, Commission, to Jennifer Piorko 
Mitchell, Vice President and Deputy Corporate Secretary, FINRA, 
dated April 28, 2017.
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    The Exchange is proposing to amend certain provisions under Article 
20, Rule 13(b) to comport to recent amendments to FINRA Rule 6191 \8\ 
that were adopted to mitigate confidentiality concerns previously 
raised by commenters \9\ regarding the publication of data related to 
over-the-counter (``OTC'') activity. Given that the Exchange is the DEA 
for a relatively small number of OTC Trading Centers, publishing their 
data, whether on an aggregated or a disaggregated basis, raises 
concerns that the identities of these Trading Centers could be 
determined. In order to address these concerns, pursuant to paragraph 
.15 of the Supplementary Materials of FINRA Rule 6191, FINRA will 
incorporate the firms for which the Exchange is the DEA into the 
anonymous, grouped masked methodology and publish OTC-wide statistics 
for Appendix B.I, B.II. and B.IV. data on the FINRA Web site.\10\ The 
Exchange will publish Appendix B data with respect to any Trading 
Center operated by the Exchange on the Exchange Web site. Thus, the 
Exchange proposes to amend the CHX Rules as follows:
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    \8\ See Securities Exchange Act Release No. 80551 (April 28, 
2017), 82 FR 20948 (May 4, 2017) (``Approval Order''); see also 
Securities Exchange Act Release No. 80193 (March 9, 2017), 82 FR 
13901 (March 15, 2017) (SR-FINRA-2017-006); see also infra note 10.
    \9\ See Letter from William Hebert, Managing Director, Financial 
Information Forum (``FIF''), to Robert W. Errett, Deputy Secretary, 
Commission, dated December 21, 2016 (``FIF letter''); see also 
Letter from Adam C. Cooper, Senior Managing Director and Chief Legal 
Officer, Citadel Securities, to Brent J. Fields, Secretary, 
Commission, dated December 21, 2016 (``Citadel letter''); see also 
SR-CHX-2016-21, supra note 3.
    \10\ On April 28, 2017, the SEC granted exemptive relief to 
FINRA and CHX to permit the publication of Appendix B data related 
to OTC trading activity on an aggregated basis using the anonymous, 
grouped masking methodology adopted by FINRA. See Letter from David 
S. Shillman, Associate Director, Division of Trading and Markets, 
Commission, to Marcia E. Asquith, Executive Vice President Board and 
External Relations, FINRA, dated April 28, 2017; see also Approval 
Order, supra note 8.
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     Amend Article 20, Rule 13(b)(2)(A)(v) to modify the Web 
site publication requirement to provide that the Exchange shall make 
the Appendix B.I. and B.II. data collected pursuant to current Article 
20, Rule 13(b)(2)(A) available to FINRA for aggregation and publication 
on the FINRA Web site pursuant to FINRA Rules.
     Amend paragraph .08 of the Interpretations and Policies of 
Article 20, Rule 13(b) to provide that notwithstanding the provisions 
of Article 20, Rule 13(b)(2) and (b)(3), with respect to data for the 
Pre-Pilot Period and the Pilot Period, the Exchange shall make the 
Appendix B.I. and B.II. data collected pursuant to Article 20, Rule 
13(b)(2)(A) and the Appendix C.I. data collected pursuant to Article 
20, Rule 13(b)(4)(A) available to FINRA for aggregation and publication 
on the FINRA Web site pursuant to FINRA Rules and the Exchange will 
publish Appendix B data with respect to any Trading Center operated by 
the Exchange on the Exchange Web site, which shall commence on August 
31, 2017.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \12\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the

[[Page 25029]]

impact of increment conventions on the liquidity and trading of the 
common stock of small-capitalization companies. The Exchange believes 
that this proposal is consistent with the Act and Section VII(A) of the 
Plan because it mitigates confidentiality concerns regarding the 
identity of certain OTC Trading Centers for which the Exchange is the 
DEA.\13\
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    \13\ See supra note 9.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
notes that the proposed rule change implements the provisions of the 
Plan.

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

    No written comments were either solicited or received.

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

    The Exchange asserts that the proposed rule change: (1) Will not 
significantly affect the protection of investors or the public 
interest, (2) will not impose any significant burden on competition, 
and (3) and will not become operative for 30 days from the date on 
which it was filed, or such shorter time as the Commission may 
designate. In addition, the Exchange provided the Commission with 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing, or such shorter time as 
designated by the Commission.\14\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange believes that the proposed rule change raises no novel 
issues. The Exchange notes that the proposed rule change is intended to 
address the requirement in Section VII(A) of the Plan that the data 
made publicly available will not identify the Trading Center that 
generated the data, as well as the confidentiality concerns raised in 
connection with the publication of Appendix B data.\15\ The Exchange 
also notes that the proposal does not alter the information required to 
be submitted to the SEC. As such, the Exchange has designated this rule 
filing as non-controversial under Section 19(b)(3)(A) of the Act \16\ 
and paragraph (f)(6) of Rule 19b-4 thereunder.\17\
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    \15\ See supra note 9.
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is 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 under 
Section 19(b)(2)(B) of the Act to determine whether the proposed rule 
should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CHX-2017-10 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-CHX-2017-10. 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-CHX-2017-10 and should be 
submitted on or before June 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11143 Filed 5-30-17; 8:45 am]
 BILLING CODE 8011-01-P