82 FR 26559 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add a New Optional Order Instruction Known as Non-Displayed Swap
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 108 (June 7, 2017)
Federal Register Volume 82, Issue 108 (June 7, 2017)
| Page Range | 26559-26562 | |
| FR Document | 2017-11751 |
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)] [Notices] [Pages 26559-26562] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-11751] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80841; File No. SR-BatsEDGX-2017-25] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add a New Optional Order Instruction Known as Non-Displayed Swap June 1, 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 May 26, 2017, Bats EDGX Exchange, Inc. (``Exchange'' or ``EDGX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to: (i) Amend paragraph (n) of Exchange Rule 11.6, Routing/Posting Instructions to add a new optional order instruction to be known as Non-Displayed Swap; and (ii) make a related change to description of Limit Orders and MidPoint Peg Orders under Exchange Rule 11.8. 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 The Exchange proposes to: (i) Amend paragraph (n) of Exchange Rule 11.6, Routing/Posting Instructions to add a new optional order instruction to be known as Non-Displayed Swap; and (ii) make a related change to description of Limit Orders and MidPoint Peg Orders under Exchange Rule 11.8. The proposed amendments are substantially similar to the rules of the Nasdaq Stock [[Page 26560]] Market LLC (``Nasdaq'') and NYSE Arca, Inc. (``Arca'').\5\ --------------------------------------------------------------------------- \5\ See Nasdaq Rule 4703(m) (defining the Trade Now order modifier). See also Securities Exchange Act Release No. 79282 (November 10, 2016), 81 FR 81219 (November 17, 2016) (Notice of Filing and Immediate Effectiveness to add the Trade Now instruction to certain order types). See Arca Rule 7.31(d)(2)(B) (describing the Non-Display Remove Modifier). See also Securities Exchange Act Release No. 76267 (October 26, 2015), 80 FR 66951 (October 30, 2015). --------------------------------------------------------------------------- The proposed Non-Displayed Swap (``NDS'') instruction would provide orders with a Non-Displayed \6\ instruction resting on the EDGX Book \7\ with a greater ability to receive an execution when that resting order is locked by an incoming order (e.g., the price of the resting non-displayed order is equal to the price of the incoming order that is to be placed on the EDGX Book). The NDS instruction would be an optional order instruction which would allow Users \8\ to have their resting non-displayed orders execute against an incoming order with a Post Only instruction rather than have it be locked by the incoming order. NDS would be defined as an instruction that may be attached to an order with a Non-Displayed instruction that when such order is resting on the EDGX Book and would be locked by an incoming order with a Post Only instruction that does not remove liquidity pursuant to paragraph (4) of Exchange Rule 11.6(n),\9\ the order with a NDS instruction is converted to an executable order and will remove liquidity against such incoming order. An order with a NDS instruction would not be eligible for routing pursuant to Exchange Rule 11.11, Routing to Away Trading Centers. The proposed NDS instruction assists in the avoidance of an internally locked EDGX Book (though such lock would not be displayed by the Exchange) \10\ by facilitating the execution of orders that would otherwise lock each other. --------------------------------------------------------------------------- \6\ See Exchange Rule 11.6(e)(2). \7\ See Exchange Rule 1.5(d). \8\ See Exchange Rule 1.5(ee). \9\ Under Exchange Rule 11.6(n)(4), an order with a Post Only instruction will remove contra-side liquidity from the EDGX Book if the order is an order to buy or sell a security priced below $1.00 or if the value of such execution when removing liquidity equals or exceeds the value of such execution if the order instead posted to the EDGX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. To determine at the time of a potential execution whether the value of such execution when removing liquidity equals or exceeds the value of such execution if the order instead posted to the EDGX Book and subsequently provided liquidity, the Exchange will use the highest possible rebate paid and highest possible fee charged for such executions on the Exchange. \10\ See Exchange Rule 11.10(a)(4)(C). --------------------------------------------------------------------------- The following example illustrates the operation of an order with a NDS instruction. Assume the National Best Bid and Offer is $10.00 by $10.04. There is a Limit Order to buy with a Non-Displayed instruction resting on the EDGX Book at $10.03. An order to sell with a Post Only instruction priced at $10.03 is entered. Under current behavior, the incoming sell order with a Post Only instruction would post to the EDGX Book because it would not receive sufficient price improvement.\11\ This would result in the EDGX Book being internally locked.\12\ As proposed, if the Limit Order to buy with Non-Displayed instruction also included a NDS instruction, the orders would instead execute against each other at $10.03, with the resting buy order with the NDS instruction becoming the remover of liquidity and the incoming sell order with a Post Only instruction becoming the liquidity provider. --------------------------------------------------------------------------- \11\ Id. \12\ In the event the incoming order with a Post Only instruction was to be displayed, it would post and display at $10.03 and the resting buy order with a Non-Displayed instruction would not execute against it or subsequent incoming sell orders at $10.03 for so long as the sell order was displayed on the Exchange. See Exchange Rule 11.10(a)(4)(C) and (D). --------------------------------------------------------------------------- Assume the same facts as above, but that a Limit Order with a Non- Displayed instruction to buy at $10.03 is also resting on the EDGX Book with time priority ahead of the Limit Order to buy with a Non-Displayed instruction mentioned above. Like above, an order to sell with a Post Only instruction priced at $10.03 is entered. Under current behavior, the incoming sell order with a Post Only instruction would post to the EDGX Book because the value of such execution against the resting buy order when removing liquidity does not equal or exceed the value of such execution if the order instead posted to the EDGX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. As proposed, if the Limit Order to buy with Non- Displayed instruction also included a NDS instruction, the incoming sell order would execute against the resting Limit Order with a NDS instruction at $10.03 with the resting buy order with the NDS instruction becoming the remover of liquidity and the incoming sell order with a Post Only instruction becoming the liquidity provider. In such case, the Limit Order with a Non-Displayed instruction to buy at $10.03 cedes time priority to the Limit Order with a Non-Displayed and NDS instruction because such order did not also include a NDS instruction \13\ and thus the User that submitted the order did not indicate the preference to be treated as the remover of liquidity in favor of an execution; instead, by not using NDS, a User indicates the preference to remain posted on the EDGX Book as a liquidity provider.\14\ However, if the incoming sell order was priced at $10.02, it would receive sufficient price improvement to execute upon entry against all resting buy Limit Orders in time priority at $10.03.\15\ --------------------------------------------------------------------------- \13\ This behavior is inherent in the operation of Nasdaq's Trade Now modifier and is identical to the interaction of ALO orders with orders that contain the Non-Display Remove Modifier on Arca. See Nasdaq Rule 4703(m) and Arca Rule 7.31(e)(2)(B)(iv)(b) (providing that unless a resting order is designated with a Non- Display Remove Modifier, an ALO Order will trade only with arriving interest). \14\ Should the Limit Order to buy at $10.03 with time priority be displayed on the EDGX Book, the incoming sell order at $10.03 with a Post Only instruction will not execute against the non- displayed buy order with a NDS instruction because displayed orders have priority over non-displayed orders. In such a case, the incoming Limit Order would be handled as it is today in accordance with existing Exchange rules. See, e.g., Exchange Rules 11.6(l), 11.9, and 11.10(a). \15\ The execution occurs here because the value of the execution against the buy order when removing liquidity exceeds the value of such execution if the order instead posted to the EDGX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. See supra note 9. --------------------------------------------------------------------------- If the order with a NDS instruction is only partially executed, the unexecuted portion of that order remains on the EDGX Book and maintains its priority, as is the case today for an order that is partially executed and not cancelled by the User.\16\ The Exchange is proposing to make the NDS instruction available to Limit Orders \17\ that include a Non-Displayed instruction and MidPoint Peg Orders.\18\ The NDS instruction would not be available to all other order types provided by the Exchange under its Rule 11.8, as the execution of these order types is governed by other Exchange rules and the NDS instruction would be inconsistent with the use of those order types. --------------------------------------------------------------------------- \16\ See Exchange Rule 11.9(a)(5). \17\ See Exchange Rule 11.8(b). \18\ See Exchange Rule 11.8(d). --------------------------------------------------------------------------- The Exchange notes that similar functionality exists on Nasdaq and Arca. Nasdaq refers to their functionality as the ``Trade Now'' instruction \19\ and Arca refers to their functionality as the ``Non- Display Remove Modifier''.\20\ On [[Page 26561]] Arca, a Limit Non-Displayed Order may be designated with a Non-Display Remove Modifier. If so designated, a Limit Non-Displayed Order to buy (sell) will trade as the remover of liquidity with an incoming Adding Liquidity Only Order (``ALO Order'') to sell (buy) that has a working price equal to the working price of the Limit Non-Displayed Order.\21\ On Nasdaq, Trade Now is an order attribute that allows a resting order that becomes locked by an incoming Displayed Order to execute against the available size of the contra-side locking order as a liquidity taker, and any remaining shares of the resting order will remain posted on the Nasdaq Book with the same priority.\22\ Nasdaq requires the contra-side order to be display eligible, while the Exchange proposes to enable an order with a NDS instruction to remove liquidity regardless of whether the incoming order would have ultimately been eligible for display consistent with Arca's Non-Display Remove Modifier. --------------------------------------------------------------------------- \19\ See Nasdaq Rule 4703(m). See also Securities and Exchange Act Release No. 79282 (November 10, 2016), 81 FR 81219 (November 17, 2016) (SR-Nasdaq-2016-156) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Rule 4703 and Rule 4703 to add a ``Trade Now'' Instruction to Certain Order Types). \20\ See Arca Rule 7.31(d)(2)(B). See also Securities and Exchange Act Release No. 76267 (October 26, 2015), 80 FR 66951 (October 30, 2015) (SR-NYSEArca-2015-56) (Order Approving Proposed Rule Change, and Notice of Filing and Order Granting Accelerated Approval of Amendment Nos. 1 and 2 Thereto, Adopting New Equity Trading Rules Relating to Orders and Modifiers and the Retail Liquidity Program To Reflect the Implementation of Pillar, the Exchange's New Trading Technology Platform) (including the Non- Display Remove Modifier). \21\ See Arca Rule 7.31(d)(2)(b). \22\ Arca provides their Non-Display Remove Modifier to their Mid-Point Liquidity Orders (``MPL Orders'') designated Day and MPL- ALO Orders and Arca Only Orders. Nasdaq's Trade Now functionality is available to Price to Comply Orders, Price to Display Orders, Non- Displayed Orders, Post-Only Orders, Midpoint Peg Post-Only Orders, and Market Maker Peg Orders. To the extent the NDS instruction is only available to Limit Orders with a Non-Displayed instruction and MidPoint Peg Orders, the Exchange notes that the NDS instruction will apply to different order types than Arca's Non-Display Remove Modifier and Nasdaq's Trade Now functionality. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \23\ in general, and furthers the objectives of Section 6(b)(5) of the Act \24\ 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 by offering Users optional functionality that will facilitate the execution of orders that would otherwise remain unexecuted, thereby increasing the efficient functioning of the Exchange. The NDS instruction is an optional feature that is intended to reflect the order management practices of various market participants. The proposed NDS instruction assists in the avoidance of an internally locked EDGX Book by facilitating the execution of orders that would otherwise post, or remain posted, to the EDGX Book. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78f(b). \24\ 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 result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. On the contrary, the Exchange believes the proposed rule change promotes competition because it will enable the Exchange to offer functionality substantially similar to that offered by Nasdaq and Arca.\25\ Therefore, the Exchange does not believe the proposed rule change will result in any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As the NDS feature will be equally available to all Users, the Exchange does not believe the proposed rule change will result in any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \25\ See supra note 5. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No comments were solicited or received on the proposed rule change. 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 \26\ and Rule 19b- 4(f)(6) thereunder.\27\ --------------------------------------------------------------------------- \26\ 15 U.S.C. 78s(b)(3)(A). \27\ 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-BatsEDGX-2017-25 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-BatsEDGX-2017-25. 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- [[Page 26562]] BatsEDGX-2017-25, and should be submitted on or before June 28, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\28\ --------------------------------------------------------------------------- \28\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-11751 Filed 6-6-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 26559
10. The Non-Interested Directors of Funds, the Adviser, the other Regulated change as described in Items I and II
each Regulated Fund will be provided Funds or any affiliated person of the below, which Items have been prepared
quarterly for review all information Regulated Funds or Affiliated Funds by the Exchange. The Exchange has
concerning Potential Co-Investment will receive additional compensation or designated this proposal as a ‘‘non-
Transactions and Co-Investment remuneration of any kind as a result of controversial’’ proposed rule change
Transactions, including investments or in connection with a Co-Investment pursuant to Section 19(b)(3)(A) of the
made by other Regulated Funds or Transaction (other than (a) in the case Act 3 and Rule 19b–4(f)(6) thereunder,4
Affiliated Funds that the Regulated of the Regulated Funds and the which renders it effective upon filing
Fund considered but declined to Affiliated Funds, the pro rata with the Commission. The Commission
participate in, so that the Non-Interested transaction fees described above and is publishing this notice to solicit
Directors may determine whether all fees or other compensation described in comments on the proposed rule change
investments made during the preceding condition 2(c)(iii)(C); and (b) in the case from interested persons.
quarter, including those investments of the Adviser, investment advisory fees
that the Regulated Fund considered but paid in accordance with the agreement I. Self-Regulatory Organization’s
declined to participate in, comply with between the Adviser and the Regulated Statement of the Terms of the Substance
the conditions of the Order. In addition, Fund or Affiliated Fund). of the Proposed Rule Change
the Non-Interested Directors will 14. If the Holders own in the aggregate
consider at least annually the continued more than 25% of the Shares, then the The Exchange filed a proposal to: (i)
appropriateness for the Regulated Fund Holders will vote such Shares as Amend paragraph (n) of Exchange Rule
of participating in new and existing Co- directed by an independent third party 11.6, Routing/Posting Instructions to
Investment Transactions. when voting on (1) the election of add a new optional order instruction to
11. No Non-Interested Director of a directors; (2) the removal of one or more be known as Non-Displayed Swap; and
Regulated Fund will also be a director, directors; or (3) all other matters under (ii) make a related change to description
general partner, managing member or either the Act or applicable state law of Limit Orders and MidPoint Peg
principal, or otherwise an ‘‘affiliated affecting the Board’s composition, size Orders under Exchange Rule 11.8.
person’’ (as defined in the Act) of any or manner of election.
15. Each Regulated Fund’s chief The text of the proposed rule change
of the Affiliated Funds.
12. The expenses, if any, associated compliance officer, as defined in rule is available at the Exchange’s Web site
with acquiring, holding or disposing of 38a–1(a)(4) of the Act, will prepare an at www.bats.com, at the principal office
any securities acquired in a Co- annual report for its Board each year of the Exchange, and at the
Investment Transaction (including, that evaluates (and documents the basis Commission’s Public Reference Room.
without limitation, the expenses of the of that evaluation) the Regulated Fund’s II. Self-Regulatory Organization’s
distribution of any such securities compliance with the terms and Statement of the Purpose of, and
registered for sale under the 1933 Act) conditions of the application and the Statutory Basis for, the Proposed Rule
will, to the extent not payable by the procedures established to achieve such
Change
Adviser under its respective investment compliance.
advisory agreements with Affiliated For the Commission, by the Division of In its filing with the Commission, the
Funds and the Regulated Funds, be Investment Management, under delegated Exchange included statements
shared by the Regulated Funds and the authority. concerning the purpose of and basis for
Affiliated Funds in proportion to the Eduardo A. Aleman, the proposed rule change and discussed
relative amounts of the securities held Assistant Secretary. any comments it received on the
or to be acquired or disposed of, as the [FR Doc. 2017–11728 Filed 6–6–17; 8:45 am] proposed rule change. The text of these
case may be.
BILLING CODE 8011–01–P statements may be examined at the
13. Any transaction fee (including,
without limitation, break-up or places specified in Item IV below. The
commitment fees but excluding broker’s Exchange has prepared summaries, set
SECURITIES AND EXCHANGE forth in Sections A, B, and C below, of
fees contemplated by Section 17(e) of COMMISSION
the Act) received in connection with a the most significant parts of such
Co-Investment Transaction will be [Release No. 34–80841; File No. SR– statements.
distributed to the participating BatsEDGX–2017–25]
A. Self-Regulatory Organization’s
Regulated Funds and Affiliated Funds Statement of the Purpose of, and
Self-Regulatory Organizations; Bats
(who may, in turn, share their portion Statutory Basis for, the Proposed Rule
EDGX Exchange, Inc.; Notice of Filing
with affiliated persons) on a pro rata Change
and Immediate Effectiveness of a
basis based on the amounts they
Proposed Rule Change To Add a New
invested or committed, as the case may 1. Purpose
Optional Order Instruction Known as
be, in such Co-Investment Transaction.
Non-Displayed Swap The Exchange proposes to: (i) Amend
If any transaction fee is to be held by the
Adviser pending consummation of the June 1, 2017. paragraph (n) of Exchange Rule 11.6,
transaction, the fee will be deposited Pursuant to Section 19(b)(1) of the Routing/Posting Instructions to add a
into an account maintained by the Securities Exchange Act of 1934 new optional order instruction to be
Adviser at a bank or banks having the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 known as Non-Displayed Swap; and (ii)
qualifications prescribed in Section make a related change to description of
sradovich on DSK3GMQ082PROD with NOTICES
notice is hereby given that on May 26,
26(a)(1) of the Act, and the account will 2017, Bats EDGX Exchange, Inc. Limit Orders and MidPoint Peg Orders
earn a competitive rate of interest that (‘‘Exchange’’ or ‘‘EDGX’’) filed with the under Exchange Rule 11.8. The
will also be divided pro rata among the Securities and Exchange Commission proposed amendments are substantially
participating Regulated Funds and (‘‘Commission’’) the proposed rule similar to the rules of the Nasdaq Stock
Affiliated Funds based on the amounts
they invest in such Co-Investment 1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78s(b)(3)(A).
Transaction. None of the Affiliated 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–4(f)(6).
VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 E:\FR\FM\07JNN1.SGM 07JNN1](https://thefederalregister.org/doc/82_FR_26667/page/1.svg)
![26562 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
BatsEDGX–2017–25, and should be and discussed any comments it received submit RPIs to interact with Retail
submitted on or before June 28, 2017. on the proposed rule change. The text Orders. Such competition has the ability
For the Commission, by the Division of of those statements may be examined at to promote efficiency by facilitating the
Trading and Markets, pursuant to delegated the places specified in Item IV below. price discovery process and generating
authority.28 The Exchange has prepared summaries, additional investor interest in trading
Eduardo A. Aleman, set forth in sections A, B, and C below, securities, thereby promoting capital
Assistant Secretary. of the most significant parts of such formation. The Exchange believes that
[FR Doc. 2017–11751 Filed 6–6–17; 8:45 am] statements. extending the pilot is appropriate
because it will allow the Exchange and
BILLING CODE 8011–01–P A. Self-Regulatory Organization’s the Commission additional time to
Statement of the Purpose of, and analyze data regarding the Program that
Statutory Basis for, the Proposed Rule the Exchange has committed to
SECURITIES AND EXCHANGE Change
COMMISSION provide.6 As such, the Exchange
1. Purpose believes that it is appropriate to extend
[Release No. 34–80844; File No. SR–NYSE– the current operation of the Program.7
2017–26] The purpose of this filing is to extend
Through this filing, the Exchange seeks
the pilot period of the Retail Liquidity to amend NYSE Rule 107C(m) and
Self-Regulatory Organizations; New Program, currently scheduled to expire extend the current pilot period of the
York Stock Exchange LLC; Notice of on June 30, 2017,4 until December 31, Program until December 31, 2017.
Filing and Immediate Effectiveness of 2017.
Proposed Rule Change To Extend the 2. Statutory Basis
Pilot Period for the Exchange’s Retail Background
The proposed rule change is
Liquidity Program Until December 31, In July 2012, the Commission consistent with Section 6(b) of the Act,8
2017 approved the Retail Liquidity Program in general, and furthers the objectives of
on a pilot basis.5 The Program is Section 6(b)(5),9 in particular, in that it
June 1, 2017. designed to attract retail order flow to
Pursuant to Section 19(b)(1) 1 of the is designed to promote just and
the Exchange, and allows such order equitable principles of trade, to remove
Securities Exchange Act of 1934 (the flow to receive potential price
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 impediments to and perfect the
improvement. The Program is currently mechanism of a free and open market
notice is hereby given that on May 23, limited to trades occurring at prices
2017, New York Stock Exchange LLC and a national market system, and, in
equal to or greater than $1.00 per share. general, to protect investors and the
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with Under the Program, Retail Liquidity
the Securities and Exchange public interest. The Exchange believes
Providers (‘‘RLPs’’) are able to provide that extending the pilot period for the
Commission (the ‘‘Commission’’) the potential price improvement in the form
proposed rule change as described in Retail Liquidity Program is consistent
of a non-displayed order that is priced with these principles because the
Items I, II, and III below, which Items better than the Exchange’s best
have been prepared by the self- Program is reasonably designed to
protected bid or offer (‘‘PBBO’’), called attract retail order flow to the exchange
regulatory organization. The a Retail Price Improvement Order environment, while helping to ensure
Commission is publishing this notice to (‘‘RPI’’). When there is an RPI in a that retail investors benefit from the
solicit comments on the proposed rule particular security, the Exchange better price that liquidity providers are
change from interested persons. disseminates an indicator, known as the willing to give their orders.
I. Self-Regulatory Organization’s Retail Liquidity Identifier, indicating Additionally, as previously stated, the
Statement of the Terms of the Substance that such interest exists. Retail Member competition promoted by the Program
of the Proposed Rule Change Organizations (‘‘RMOs’’) can submit a may facilitate the price discovery
The Exchange proposes to extend the Retail Order to the Exchange, which process and potentially generate
pilot period for the Exchange’s Retail would interact, to the extent possible, additional investor interest in trading
Liquidity Program (the ‘‘Retail Liquidity with available contra-side RPIs. securities. The extension of the pilot
Program’’ or the ‘‘Program’’), which is The Retail Liquidity Program was period will allow the Commission and
currently scheduled to expire on June approved by the Commission on a pilot the Exchange to continue to monitor the
30, 2017, until December 31, 2017. The basis. Pursuant to NYSE Rule 107C(m), Program for its potential effects on
proposed rule change is available on the the pilot period for the Program is public price discovery, and on the
Exchange’s Web site at www.nyse.com, scheduled to end on June 30, 2017. broader market structure.
at the principal office of the Exchange, Proposal To Extend the Operation of the B. Self-Regulatory Organization’s
and at the Commission’s Public Program Statement on Burden on Competition
Reference Room. The Exchange does not believe that
The Exchange established the Retail
II. Self-Regulatory Organization’s Liquidity Program in an attempt to the proposed rule change will impose
Statement of the Purpose of, and attract retail order flow to the Exchange any burden on competition that is not
Statutory Basis for, the Proposed Rule by potentially providing price
Change improvement to such order flow. The 6 See id. at 40681.
7 Concurrently with this filing, the Exchange has
In its filing with the Commission, the Exchange believes that the Program
submitted a request for an extension of the
promotes competition for retail order
sradovich on DSK3GMQ082PROD with NOTICES
self-regulatory organization included exemption under Regulation NMS Rule 612
statements concerning the purpose of, flow by allowing Exchange members to previously granted by the Commission that permits
it to accept and rank the undisplayed RPIs. See
and basis for, the proposed rule change 4 See Securities Exchange Act Release No. 79493 Letter from Martha Redding, Asst. Corporate
(December 7, 2016), 81 FR 90019 (December 13, Secretary, NYSE Group, Inc. to Brent J. Fields,
28 17 CFR 200.30–3(a)(12). 2016) (SR–NYSE–2016–82). Secretary, Securities and Exchange Commission,
1 15 U.S.C. 78s(b)(1). 5 See Securities Exchange Act Release No. 67347 dated May 23, 2017.
2 15 U.S.C. 78a. 8 15 U.S.C. 78f(b).
(July 3, 2012), 77 FR 40673 (July 10, 2012) (‘‘RLP
3 17 CFR 240.19b–4. Approval Order’’) (SR–NYSE–2011–55). 9 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 E:\FR\FM\07JNN1.SGM 07JNN1](https://thefederalregister.org/doc/82_FR_26667/page/4.svg)
Document Created: 2017-06-07 02:00:54
Document Modified: 2017-06-07 02:00:54
| 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 26559 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR