82 FR 43264 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rules 4702 and 4754 Relating to the Nasdaq Closing Cross and To Make Other Related Changes
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 177 (September 14, 2017)
Federal Register Volume 82, Issue 177 (September 14, 2017)
| Page Range | 43264-43267 | |
| FR Document | 2017-19478 |
[Federal Register Volume 82, Number 177 (Thursday, September 14, 2017)] [Notices] [Pages 43264-43267] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-19478] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81556; File No. SR-NASDAQ-2017-061] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rules 4702 and 4754 Relating to the Nasdaq Closing Cross and To Make Other Related Changes September 8, 2017. I. Introduction On July 13, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend Exchange Rules 4702 and 4754 relating to the Nasdaq Closing Cross and to make other related changes. The proposed rule change was published for comment in the Federal Register on July 27, 2017.\3\ On August 22, 2017, the Exchange filed Amendment No. 1 to the proposed rule change.\4\ The Commission received no comment letters on the proposed rule change. The Commission is publishing this notice to solicit comments on Amendment No. 1 from interested persons, and is approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 81188 (July 21, 2017), 82 FR 35014 (``Notice''). \4\ In Amendment No. 1, the Exchange proposes to remove a reference to Retail Order from Exchange Rule 4702(b)(12)(B) and to remove a reference to Retail Orders and RPI Orders from Exchange Rule 4703(l), as these two order types are no longer available on the Exchange. The Exchange also provides an example to illustrate its assertion that permitting members to submit Limit On Close (``LOC'') Orders until immediately prior to 3:55 p.m. would facilitate price discovery in the Nasdaq Closing Cross. Amendment No. 1 is available at https://www.sec.gov/comments/sr-nasdaq-2017-061/nasdaq2017061.htm. --------------------------------------------------------------------------- II. Description of the Proposed Rule Change, as Modified by Amendment No. 1 5 --------------------------------------------------------------------------- \5\ For a more detailed description of the proposal, see Notice, supra note 3 and Amendment No. 1, supra note 4. --------------------------------------------------------------------------- As described in more detail below, the Exchange proposes to enhance the operation of the Nasdaq Closing Cross by extending the time period during which members may submit LOC Orders,\6\ and to make other changes relating to the Nasdaq Closing Cross and the Nasdaq Opening Cross. --------------------------------------------------------------------------- \6\ See Exchange Rule 4702(b)(12) (defining LOC Order). --------------------------------------------------------------------------- A. Acceptance of LOC Orders and Related Changes Currently, Exchange Rule 4702(b)(12)(A) provides that LOC Orders may be entered between 4:00 a.m. ET and immediately prior to 3:50 p.m. ET. The Exchange proposes to amend this rule to permit LOC orders to be entered between 3:50 p.m. ET and immediately prior to 3:55 p.m. ET, provided that there is a First Reference Price.\7\ The Exchange proposes to define the First Reference Price to mean the [[Page 43265]] Current Reference Price \8\ in the first Order Imbalance Indicator \9\ disseminated at or after 3:50 p.m. ET.\10\ As proposed, a LOC Order entered between 3:50 p.m. ET and immediately prior to 3:55 p.m. ET would be accepted at its limit price, unless the limit price is higher (lower) than the First Reference Price for a LOC order to buy (sell), in which case the LOC order would be re-priced to the First Reference Price.\11\ If the First Reference Price is not at a permissible minimum increment of $0.01 or $0.0001, as applicable, the First Reference Price would be rounded (i) to the nearest permitted minimum increment (with midpoint prices being rounded up) if there is no imbalance, (ii) up if there is a buy imbalance, or (iii) down if there is a sell imbalance.\12\ --------------------------------------------------------------------------- \7\ The Exchange proposes a related change to Exchange Rule 4702(b)(12)(B) to provide that LOC Orders and Closing Cross/Extended Hours Orders entered at or after 3:55 p.m. ET would be rejected. \8\ See Exchange Rule 4754(a)(7)(A) (defining Current Reference Price for the Nasdaq Closing Cross). \9\ See Exchange Rule 4754(a)(7) (defining Order Imbalance Indicator for the Nasdaq Closing Cross). \10\ See proposed Exchange Rule 4754(a)(9). According to the Exchange, if there is no First Reference Price, a value of zero will be disseminated in the first Order Imbalance Indicator, and a non- zero value indicates that there is a First Reference Price. See Notice, supra note 3, at 35015 n.16. The Exchange also states that the presence of a First Reference Price indicates that there is matched buy and sell interest that is eligible to participate in the Nasdaq Closing Cross. See id., at 35015. \11\ See proposed changes to Exchange Rule 4702(b)(12)(A). \12\ See id. --------------------------------------------------------------------------- The Exchange also proposes to amend its rules relating to the LULD Closing Cross \13\ and the Primary Contingency Procedures to reflect that LOC Orders can be entered until immediately prior to 3:55 p.m. Specifically, the Exchange proposes to amend Exchange Rule 4754(b)(6)(C)(i) to permit Market On Close (``MOC''), LOC, and Imbalance Only (``IO'') Orders intended for the Nasdaq Closing Cross that are entered into the system and placed on the book prior to a Trading Pause to remain on the book to participate in the LULD Closing Cross.\14\ As a result, if the Exchange conducts an LULD Closing Cross, LOC Orders would be eligible to be entered until the earlier of the Trading Pause or immediately prior to 3:55 p.m.\15\ Similarly, the Exchange proposes to amend Exchange Rule 4754(b)(7)(B) to permit LOC Orders entered prior to 3:55 p.m. to participate in the Contingency Closing Cross.\16\ --------------------------------------------------------------------------- \13\ The Exchange currently uses the LULD Closing Cross when a Trading Pause pursuant to Exchange Rule 4120(a)(12) is triggered at or after 3:50 p.m. and before 4:00 p.m. See Exchange Rule 4754(b)(6). The Commission recently approved a proposed rule change that provided that the LULD Closing Cross would be used when a Trading Pause exists at or after 3:50 p.m. and before 4:00 p.m. See Securities Exchange Act Release No. 79876 (January 25, 2017), 82 FR 8888 (January 31, 2017) (SR-NASDAQ-2016-131). The Exchange represents that the recently approved change is not yet operative, and the discussion in this proposed rule change is based on currently implemented functionality. See Notice, supra note 3, at 35015. n.19. \14\ The Exchange also proposes a conforming change to Exchange Rule 4754(b)(6)(C)(iii). \15\ See Notice, supra note 3, at 35015. This change would also correct the rule to reflect that, consistent with current functionality, IO Orders entered prior to a Trading Pause would participate in the LULD Closing Cross, instead of only those IO Orders entered prior to 3:50 p.m. See id. MOC Orders entered after 3:50 p.m. would continue to be rejected, and therefore would not be eligible for the LULD Closing Cross. See id., at 35015 n.21. \16\ The Exchange also proposes to correct a typographical error in Exchange Rule 4754(b)(7)(E). In addition, the Exchange proposes to amend Exchange Rule 4754(b)(5), related to auxiliary procedures for the Closing Cross, to correct an erroneous subparagraph cross- reference from (c)(2)(D) to (b)(2)(E). --------------------------------------------------------------------------- B. Closing Cross/Extended Hours Orders Currently, Exchange Rule 4702(b)(12)(B) states that, following the Nasdaq Closing Cross, a Closing Cross/Extended Hours Order \17\ may not operate as a Post-Only Order, Midpoint Peg Post-Only Order, Supplemental Order, Retail Order, or RPI Order. The Exchange proposes to amend this rule to provide that Post-Only Orders, Midpoint Peg Post- Only Orders, and Supplemental Orders may not operate as Closing Cross/ Extended Hours Orders. According to the Exchange, these order types are eligible to participate in the Nasdaq Closing Cross as part of the continuous book, but cannot be entered with a flag designating an on- close instruction, and therefore cannot be Closing Cross/Extended Hours Orders.\18\ The Exchange also proposes that Market Maker Peg Orders would no longer be eligible to be entered with a flag designating an on-close instruction, and therefore would no longer be able to operate as Closing Cross/Extended Hours Orders.\19\ In addition, the Exchange proposes to delete the reference to Retail Order and RPI Order from Exchange Rule 4702(b)(12)(B), because these order types are no longer offered on the Exchange.\20\ --------------------------------------------------------------------------- \17\ See Exchange Rule 4702(b)(12)(B) (defining Closing Cross/ Extended Hours Order). \18\ See Notice, supra note 3, at 35016. \19\ See proposed changes to Exchange Rule 4702(b)(12)(B) and Notice, supra note 3, at 35016. \20\ See Amendment No. 1, supra note 4. See also proposed changes to Exchange Rule 4703(l) (deleting a reference to Retail Orders and RPI Orders). --------------------------------------------------------------------------- Finally, Exchange Rule 4702(b)(12)(B) currently provides that certain Closing Cross/Extended Hours Orders entered between 3:50 p.m. and the time of the Nasdaq Closing Cross are treated as IO Orders. The Exchange proposes to remove this functionality. C. Order Imbalance Indicator Currently, Exchange Rule 4752(a)(2) provides that the Order Imbalance Indicator for the Nasdaq Opening Cross includes, among other things, the Current Reference Price, the Imbalance, and the number of paired shares. The definitions of Imbalance,\21\ Current Reference Price,\22\ and the number of paired shares \23\ currently include Open Eligible Interest.\24\ The Exchange proposes to delete references to Open Eligible Interest from these definitions.\25\ According to the Exchange, in practice, Open Eligible Interest is not included in the Imbalance, the Current Reference Price, or the number of paired shares.\26\ --------------------------------------------------------------------------- \21\ See Exchange Rule 4752(a)(1) (defining Imbalance for the Nasdaq Opening Cross). \22\ See Exchange Rule 4752(a)(2)(A) (defining Current Reference Price for the Nasdaq Opening Cross). \23\ See Exchange Rule 4752(a)(2)(B) (describing the calculation of the number of paired shares for the Nasdaq Opening Cross). \24\ See Exchange Rule 4752(a)(8) (defining Open Eligible Interest). \25\ See proposed changes to Exchange Rules 4752(a)(1), 4752(a)(2)(A)(i), and 4752(a)(2)(B). \26\ See Notice, supra note 3, at 35016-17. --------------------------------------------------------------------------- Similarly, Exchange Rule 4754(a)(7) provides that the Order Imbalance Indicator for the Nasdaq Closing Cross includes, among other things, the Current Reference Price, the Imbalance, and the number of paired shares. The definitions of Imbalance,\27\ Current Reference Price,\28\ and the number of paired shares \29\ currently include Close Eligible Interest.\30\ The Exchange proposes to delete references to Close Eligible Interest from these definitions.\31\ According to the Exchange, in practice, Close Eligible Interest is not included in the Imbalance, the Current Reference Price, or the number of paired shares.\32\ --------------------------------------------------------------------------- \27\ See Exchange Rule 4754(a)(2) (defining Imbalance for the Nasdaq Closing Cross). \28\ See Exchange Rule 4754(a)(7)(A)(i) (defining Current Reference Price for the Nasdaq Closing Cross). \29\ See Exchange Rule 4754(a)(7)(B) (describing the calculation of the number of paired shares for the Nasdaq Closing Cross). \30\ See Exchange Rule 4754(a)(1) (defining Close Eligible Interest). \31\ See proposed changes to Exchange Rules 4754(a)(2), 4754(a)(7)(A)(i), and 4754(a)(7)(B). \32\ See Notice, supra note 3, at 35016-17. --------------------------------------------------------------------------- D. Implementation The Exchange proposes to implement the functionality described in the proposal in a symbol-by-symbol rollout in either Q3 or Q4 2017.\33\ The Exchange [[Page 43266]] will announce the implementation date and the symbol rollout in an Equity Trader Alert issued to members prior to the implementation date.\34\ --------------------------------------------------------------------------- \33\ See id., at 35017. \34\ See id. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\35\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\36\ which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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. --------------------------------------------------------------------------- \35\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \36\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- As discussed above, the Exchange proposes to permit members to submit LOC Orders between 3:50 p.m. and immediately prior to 3:55 p.m. if there is a First Reference Price. The Exchange also proposes to re- price LOC Orders entered during this time period to the First Reference Price if their limit price is more aggressive than the First Reference Price. The Commission believes that these changes could encourage additional participation in the Nasdaq Closing Cross, reduce imbalances, and promote price discovery, without creating a significant impact on the price of the Nasdaq Closing Cross. In addition, as discussed above, the Exchange proposes to permit MOC, LOC, and IO Orders intended for the Closing Cross that are entered into the system and placed on the book prior to the Trading Pause to remain on the book and participate in an LULD Closing Cross. Similarly, the Exchange proposes to permit LOC Orders entered prior to 3:55 p.m. to participate in a Contingency Closing Cross. The Commission believes that these changes are consistent with the proposal to permit members to submit LOC Orders between 3:50 p.m. and immediately prior to 3:55 p.m., and would allow these LOC Orders to participate in an LULD Closing Cross or Contingency Closing Cross.\37\ --------------------------------------------------------------------------- \37\ The Commission also notes that the proposal to correct a typographical error in Exchange Rule 4754(b)(7)(E) and to change a cross-reference in Exchange Rule 4754(b)(5) are technical corrections to the rules. --------------------------------------------------------------------------- As discussed above, the Exchange proposes to amend Exchange Rule 4702(b)(12)(B) to identify the order types that are currently not eligible to operate as Closing Cross/Extended Hours Orders, provide that Market Maker Peg Orders cannot operate as Closing Cross/Extended Hours Orders, and delete a reference to Retail Order and RPI Order. The Commission believes that these proposed changes are reasonable. The Commission notes that, according to the Exchange, Market Maker Peg Orders are designed to assist Nasdaq members in meeting their quoting obligations, and not to submit interest flagged with an on-close instruction.\38\ The Commission also notes that Retail Orders and RPI Orders are no longer available on the Exchange.\39\ --------------------------------------------------------------------------- \38\ See Notice, supra note 3, at 35018. The exchange also notes that the proposed changes to Closing Cross/Extended Hours Orders would align its on-close order handling with the characteristics of various order types. See id., at 35014. \39\ See Amendment No. 1, supra note 4. --------------------------------------------------------------------------- Moreover, as discussed above, the Exchange proposes to amend Exchange Rule 4702(b)(12)(B) to eliminate provisions that would treat certain Closing Cross/Extended Hours Orders entered between 3:50 p.m. and the time of the Nasdaq Closing Cross as IO Orders. The Commission notes that the proposal would allow Closing Cross/Extended Hours Orders entered between 3:50 p.m. and immediately prior to 3:55 p.m. to operate as LOC Orders,\40\ rather than converting to IO Orders, which, unlike LOC Orders, do not trade if there is no Imbalance and do not maintain price priority as a result being continuously re-priced to the best bid or offer.\41\ The Commission also notes that Nasdaq members may continue to enter IO Orders until the time of execution of the Nasdaq Closing Cross, and may continue to enter other Close Eligible Interest on the continuous book up until the time of the Nasdaq Closing Cross.\42\ --------------------------------------------------------------------------- \40\ As noted above, LOC Orders and Closing Cross/Extended Hours Orders entered after 3:55 p.m. would be rejected. \41\ See Notice, supra note 3, at 35018. \42\ See id., at 35014. --------------------------------------------------------------------------- Finally, as discussed above, the Exchange proposes to exclude Open Eligible Interest and Close Eligible Interest from certain information disseminated in the Order Imbalance Indicator for the Nasdaq Opening Cross and the Nasdaq Closing Cross. The Commission notes that, as proposed, the Imbalance, Current Reference Price, and paired shares calculations would not include types of orders that may be executed in the continuous market before the Opening Cross or the Closing Cross.\43\ The Commission also notes that these changes would enhance transparency because they would reflect the information that is currently disseminated in the Order Imbalance Indicator. --------------------------------------------------------------------------- \43\ See id., at 35018. --------------------------------------------------------------------------- IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule Change Interested persons are invited to submit written data, views, and arguments concerning whether Amendment No. 1 is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NASDAQ-2017-061 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2017-061. 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; [[Page 43267]] the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR- NASDAQ-2017-061, and should be submitted on or before October 5, 2017. V. Accelerated Approval of the Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the thirtieth day after the date of publication of Amendment No. 1 in the Federal Register. In Amendment No. 1, the Exchange proposes to remove outdated references to Retail Orders and RPI Orders, which are no longer offered on the Exchange. The Commission believes that deleting these outdated references would help to bring clarity and accuracy to the Exchange rules. The Commission also believes that these changes are of a technical nature and do not materially or substantively alter the proposed rule change. In addition, in Amendment No. 1, the Exchange provides an example to illustrate and support its assertion that extending the time period for the entry of LOC orders until immediately prior to 3:55 p.m. should facilitate the price discovery mechanism of the Nasdaq Closing Cross. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,\44\ to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \44\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\45\ that the proposed rule change (SR-NASDAQ-2017-061), as modified by Amendment No. 1, be, and hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \45\ Id. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\46\ --------------------------------------------------------------------------- \46\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-19478 Filed 9-13-17; 8:45 am] BILLING CODE 8011-01-P
![43264 Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices
shares from trading at a material The purchase of Creation Units by a to Section 19(b)(1) of the Securities
discount or premium from NAV. Fund of Funds directly from a Fund will Exchange Act of 1934 (‘‘Act’’) 1 and Rule
6. With respect to Funds that hold be accomplished in accordance with the 19b–4 thereunder,2 a proposed rule
non-U.S. Portfolio Instruments and that policies of the Fund of Funds and will change to amend Exchange Rules 4702
effect creations and redemptions of be based on the NAVs of the Funds. and 4754 relating to the Nasdaq Closing
Creation Units in kind, applicants 9. Section 6(c) of the Act permits the Cross and to make other related
request relief from the requirement Commission to exempt any persons or changes. The proposed rule change was
imposed by section 22(e) in order to transactions from any provision of the published for comment in the Federal
allow such Funds to pay redemption Act if such exemption is necessary or Register on July 27, 2017.3 On August
proceeds within fourteen calendar days appropriate in the public interest and 22, 2017, the Exchange filed
following the tender of Creation Units consistent with the protection of Amendment No. 1 to the proposed rule
for redemption. Applicants assert that investors and the purposes fairly change.4 The Commission received no
the requested relief would not be intended by the policy and provisions of comment letters on the proposed rule
inconsistent with the spirit and intent of the Act. Section 12(d)(1)(J) of the Act change. The Commission is publishing
section 22(e) to prevent unreasonable, provides that the Commission may this notice to solicit comments on
undisclosed or unforeseen delays in the exempt any person, security, or Amendment No. 1 from interested
actual payment of redemption proceeds. transaction, or any class or classes of persons, and is approving the proposed
7. Applicants request an exemption to persons, securities, or transactions, from rule change, as modified by Amendment
permit Funds of Funds to acquire Fund any provision of section 12(d)(1) if the No. 1, on an accelerated basis.
shares beyond the limits of section exemption is consistent with the public
12(d)(1)(A) of the Act; and the Funds, interest and the protection of investors. II. Description of the Proposed Rule
and any principal underwriter for the Section 17(b) of the Act authorizes the Change, as Modified by Amendment
Funds, and/or any broker or dealer Commission to grant an order No. 1 5
registered under the Exchange Act, to permitting a transaction otherwise As described in more detail below,
sell shares to Funds of Funds beyond prohibited by section 17(a) if it finds the Exchange proposes to enhance the
the limits of section 12(d)(1)(B) of the that (a) the terms of the proposed operation of the Nasdaq Closing Cross
Act. The application’s terms and transaction are fair and reasonable and by extending the time period during
conditions are designed to, among other do not involve overreaching on the part which members may submit LOC
things, help prevent any potential (i) of any person concerned; (b) the Orders,6 and to make other changes
undue influence over a Fund through proposed transaction is consistent with relating to the Nasdaq Closing Cross and
control or voting power, or in the policies of each registered the Nasdaq Opening Cross.
connection with certain services, investment company involved; and (c)
transactions, and underwritings, (ii) the proposed transaction is consistent A. Acceptance of LOC Orders and
excessive layering of fees, and (iii) with the general purposes of the Act. Related Changes
overly complex fund structures, which For the Commission, by the Division of
are the concerns underlying the limits Currently, Exchange Rule
Investment Management, under delegated
in sections 12(d)(1)(A) and (B) of the 4702(b)(12)(A) provides that LOC
authority.
Act. Orders may be entered between 4:00
Eduardo A. Aleman,
8. Applicants request an exemption a.m. ET and immediately prior to 3:50
Assistant Secretary. p.m. ET. The Exchange proposes to
from sections 17(a)(1) and 17(a)(2) of the
[FR Doc. 2017–19537 Filed 9–13–17; 8:45 am] amend this rule to permit LOC orders to
Act to permit persons that are affiliated
persons, or second-tier affiliates, of the BILLING CODE 8011–01–P be entered between 3:50 p.m. ET and
Funds, solely by virtue of certain immediately prior to 3:55 p.m. ET,
ownership interests, to effectuate provided that there is a First Reference
SECURITIES AND EXCHANGE Price.7 The Exchange proposes to define
purchases and redemptions in-kind. The COMMISSION
deposit procedures for in-kind the First Reference Price to mean the
purchases of Creation Units and the [Release No. 34–81556; File No. SR–
redemption procedures for in-kind NASDAQ–2017–061] 1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
redemptions of Creation Units will be
the same for all purchases and Self-Regulatory Organizations; The 3 See Securities Exchange Act Release No. 81188
redemptions and Deposit Instruments NASDAQ Stock Market LLC; Notice of (July 21, 2017), 82 FR 35014 (‘‘Notice’’).
4 In Amendment No. 1, the Exchange proposes to
and Redemption Instruments will be Filing of Amendment No. 1 and Order
remove a reference to Retail Order from Exchange
valued in the same manner as those Granting Accelerated Approval of a Rule 4702(b)(12)(B) and to remove a reference to
Portfolio Instruments currently held by Proposed Rule Change, as Modified by Retail Orders and RPI Orders from Exchange Rule
the Funds. Applicants also seek relief Amendment No. 1, To Amend Rules 4703(l), as these two order types are no longer
4702 and 4754 Relating to the Nasdaq available on the Exchange. The Exchange also
from the prohibitions on affiliated provides an example to illustrate its assertion that
transactions in section 17(a) to permit a Closing Cross and To Make Other permitting members to submit Limit On Close
Fund to sell its shares to and redeem its Related Changes (‘‘LOC’’) Orders until immediately prior to 3:55
p.m. would facilitate price discovery in the Nasdaq
shares from a Fund of Funds, and to September 8, 2017. Closing Cross. Amendment No. 1 is available at
engage in the accompanying in-kind https://www.sec.gov/comments/sr-nasdaq-2017-
asabaliauskas on DSKBBXCHB2PROD with NOTICES
transactions with the Fund of Funds.3 I. Introduction 061/nasdaq2017061.htm.
On July 13, 2017, The NASDAQ Stock 5 For a more detailed description of the proposal,
3 The requested relief would apply to direct sales
Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) see Notice, supra note 3 and Amendment No. 1,
of shares in Creation Units by a Fund to a Fund of supra note 4.
filed with the Securities and Exchange 6 See Exchange Rule 4702(b)(12) (defining LOC
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a) Commission (‘‘Commission’’), pursuant Order).
for, and the requested relief will not apply to, 7 The Exchange proposes a related change to
transactions where a Fund could be deemed an controlling, controlled by or under common control Exchange Rule 4702(b)(12)(B) to provide that LOC
affiliated person, or a second-tier affiliate, of a Fund with an Advisor provides investment advisory Orders and Closing Cross/Extended Hours Orders
of Funds because an Advisor or an entity services to that Fund of Funds. entered at or after 3:55 p.m. ET would be rejected.
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![Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 43267
the Commission does not edit personal SECURITIES AND EXCHANGE Vanguard Massachusetts Tax-Exempt
identifying information from COMMISSION Funds, Vanguard Money Market
submissions. You should submit only Reserves, Vanguard Montgomery Funds,
[Investment Company Act Release No. Vanguard Morgan Growth Fund,
information that you wish to make 32810; File No. 812–14691]
available publicly. All submissions Vanguard Municipal Bond Funds,
should refer to File Number SR– The Vanguard Group, Inc., et al. Vanguard New Jersey Tax-Free Funds,
NASDAQ–2017–061, and should be Vanguard New York Tax-Free Funds,
submitted on or before October 5, 2017. September 8, 2017. Vanguard Ohio Tax-Free Funds,
AGENCY: Securities and Exchange Vanguard Pennsylvania Tax-Free Funds,
V. Accelerated Approval of the Commission (‘‘Commission’’). Vanguard Quantitative Funds, Vanguard
Proposed Rule Change, as Modified by ACTION: Notice.
Scottsdale Funds, Vanguard Specialized
Amendment No. 1 Funds, Vanguard STAR Funds,
Notice of an application for an order Vanguard Tax-Managed Funds,
The Commission finds good cause to under section 6(c) of the Investment Vanguard Trustees’ Equity Fund,
approve the proposed rule change, as Company Act of 1940 (the ‘‘Act’’) for an Vanguard Valley Forge Funds, Vanguard
modified by Amendment No. 1, prior to exemption from sections 2(a)(32), Variable Insurance Funds, Vanguard
the thirtieth day after the date of 5(a)(1), 22(d), and 22(e) of the Act and Wellesley Income Fund, Vanguard
publication of Amendment No. 1 in the rule 22c–1 under the Act, under Wellington Fund, Vanguard Whitehall
Federal Register. In Amendment No. 1, sections 6(c) and 17(b) of the Act for an Funds, Vanguard Windsor Funds, and
the Exchange proposes to remove exemption from sections 17(a)(1) and Vanguard World Fund, each a Delaware
outdated references to Retail Orders and 17(a)(2) of the Act, and under section statutory trust registered under the Act
RPI Orders, which are no longer offered 12(d)(1)(J) for an exemption from as an open-end management investment
on the Exchange. The Commission sections 12(d)(1)(A) and 12(d)(1)(B) of company with multiple series (each a
believes that deleting these outdated the Act. The requested order would ‘‘Trust,’’ and together, the ‘‘Trusts’’).
references would help to bring clarity permit (a) actively-managed series of FILING DATE: The application was filed
and accuracy to the Exchange rules. The certain open-end management on August 17, 2016, and amended on
Commission also believes that these investment companies (‘‘Funds’’) to May 19, 2017, August 22, 2017, and
changes are of a technical nature and do issue shares redeemable in large September 7, 2017.
not materially or substantively alter the aggregations only (‘‘Creation Units’’); (b) HEARING OR NOTIFICATION OF HEARING: An
proposed rule change. In addition, in secondary market transactions in Fund order granting the requested relief will
Amendment No. 1, the Exchange shares to occur at negotiated market be issued unless the Commission orders
provides an example to illustrate and prices rather than at net asset value a hearing. Interested persons may
(‘‘NAV’’); (c) certain Funds to pay request a hearing by writing to the
support its assertion that extending the
redemption proceeds, under certain Commission’s Secretary and serving
time period for the entry of LOC orders applicants with a copy of the request,
circumstances, more than seven days
until immediately prior to 3:55 p.m. personally or by mail. Hearing requests
after the tender of Creation Units for
should facilitate the price discovery redemption; (d) certain affiliated should be received by the Commission
mechanism of the Nasdaq Closing Cross. persons of a Fund to deposit securities by 5:30 p.m. on October 3, 2017, and
Accordingly, the Commission finds into, and receive securities from, the should be accompanied by proof of
good cause, pursuant to Section 19(b)(2) Fund in connection with the purchase service on applicants, in the form of an
of the Act,44 to approve the proposed and redemption of Creation Units; and affidavit, or for lawyers, a certificate of
rule change, as modified by Amendment (e) certain registered management service. Pursuant to rule 0–5 under the
No. 1, on an accelerated basis. investment companies and unit Act, hearing requests should state the
investment trusts outside of the same nature of the writer’s interest, any facts
VI. Conclusion
group of investment companies as the bearing upon the desirability of a
It is therefore ordered, pursuant to Funds (‘‘Acquiring Funds’’) to acquire hearing on the matter, the reason for the
Section 19(b)(2) of the Act,45 that the shares of the Funds. request, and the issues contested.
proposed rule change (SR–NASDAQ– APPLICANTS: The Vanguard Group, Inc. Persons who wish to be notified of a
2017–061), as modified by Amendment (‘‘Initial Adviser’’), a Pennsylvania hearing may request notification by
No. 1, be, and hereby is, approved on an corporation registered as an investment writing to the Commission’s Secretary.
accelerated basis. adviser under the Investment Advisers ADDRESSES: Secretary, Securities and
Act of 1940, Vanguard Marketing Exchange Commission, 100 F Street NE.,
For the Commission, by the Division of Washington, DC 20549–1090;
Trading and Markets, pursuant to delegated
Corporation (‘‘Distributor’’), a wholly-
owned subsidiary of the Initial Adviser Applicants: Brian P. Murphy, Esq., The
authority.46 Vanguard Group, Inc., Mail Stop V26,
and a broker-dealer registered under the
Eduardo A. Aleman, Securities Exchange Act of 1934 P.O. Box 2600, Valley Forge, PA 19482–
Assistant Secretary. (‘‘Exchange Act’’), and Vanguard 2600.
[FR Doc. 2017–19478 Filed 9–13–17; 8:45 am] Admiral Funds, Vanguard Bond Index FOR FURTHER INFORMATION CONTACT:
BILLING CODE 8011–01–P Funds, Vanguard California Tax-Free Asen Parachkevov, Senior Counsel, or
Daniele Marchesani, Assistant Chief
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Funds, Vanguard Charlotte Funds,
Vanguard Chester Funds, Vanguard Counsel, at (202) 551–6821 (Division of
Convertible Securities Fund, Vanguard Investment Management, Chief
Explorer Fund, Vanguard Fenway Counsel’s Office).
Funds, Vanguard Fixed Income SUPPLEMENTARY INFORMATION: The
Securities Funds, Vanguard Horizon following is a summary of the
44 15 U.S.C. 78s(b)(2). Funds, Vanguard Index Funds, application. The complete application
45 Id. Vanguard International Equity Index may be obtained via the Commission’s
46 17 CFR 200.30–3(a)(12). Funds, Vanguard Malvern Funds, Web site by searching for the file
VerDate Sep<11>2014 16:41 Sep 13, 2017 Jkt 241001 PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 E:\FR\FM\14SEN1.SGM 14SEN1](https://thefederalregister.org/doc/82_FR_43441/page/4.svg)
Document Created: 2017-09-13 23:49:28
Document Modified: 2017-09-13 23:49:28
| 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 43264 |
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