82 FR 47065 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.9, Orders and Modifiers, To Add New Optional Functionality to Minimum Quantity Orders
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 194 (October 10, 2017)
Federal Register Volume 82, Issue 194 (October 10, 2017)
| Page Range | 47065-47069 | |
| FR Document | 2017-21674 |
[Federal Register Volume 82, Number 194 (Tuesday, October 10, 2017)] [Notices] [Pages 47065-47069] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-21674] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81807; File No. SR-BatsBZX-2017-62] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.9, Orders and Modifiers, To Add New Optional Functionality to Minimum Quantity Orders October 3, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on September 26, 2017, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The 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 Substance of the Proposed Rule Change The Exchange filed a proposal to add new optional functionality to Minimum Quantity Orders by amending paragraph (c)(5) of Exchange Rule 11.9, Orders and Modifiers. The Exchange also proposes to amend paragraph (e)(3) of Exchange Rule 11.9 to make certain clarifying, non- substantive changes. The proposed amendments are identical changes its affiliate, Bats EDGX Exchange, Inc. (``EDGX''), recently filed with and were published by the Commission for immediate effectiveness.\5\ The Exchange also proposes to add language to the description of Minimum Quantity Orders to further describe their current operation on BZX and to harmonize the rule with that of EDGX.\6\ --------------------------------------------------------------------------- \5\ See EDGX Rules 11.6(h), 11.8(b)(3), and 11.10(e)(3). See also Securities Exchange Act Release No. 81457 (August 22, 2017), 82 FR 40812 (August 28, 2017) (SR-BatsEDGX-2017-34). \6\ See EDGX Rule 11.9(h) (describing the operation of the Minimum Execution Quantity order instructions, which is functionally identical to the BZX Minimum Quantity Order). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's Web site [[Page 47066]] 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 add new optional functionality to Minimum Quantity Orders by amending paragraph (c)(5) of Exchange Rule 11.9, Orders and Modifiers. The Exchange also proposes to amend paragraph (e)(3) of Exchange Rule 11.9 to make certain clarifying, non- substantive changes. The proposed amendments are identical to changes recently filed by Exchange's affiliate EDGX and were published by the Commission for immediate effectiveness.\7\ The Exchange also proposes to add language to the description of Minimum Quantity Orders to further describe their current operation on BZX and to harmonize the rule with that of EDGX.\8\ The Exchange does not propose to implement new or unique functionality that has not been previously filed with the Commission or is not available on EDGX. The Exchange notes that the proposed rule text is based on BZX rules and is different only to the extent necessary to conform to the Exchange's current rules. Each of these changes are described in detail below. --------------------------------------------------------------------------- \7\ See supra note 5. \8\ See EDGX Rule 11.9(h) [sic] (describing the operation of the Minimum Execution Quantity order instructions, which is functionally identical to the BZX Minimum Quantity Order). --------------------------------------------------------------------------- Exchange Rule 11.9(c)(5), Proposed Individual Minimum Size and Harmonization With EDGX Rule 11.6(h) A Minimum Quantity Order enables a User \9\ to specify a minimum share amount at which the order will execute. A Minimum Quantity Order will not execute unless the volume of contra-side liquidity available to execute against the order meets or exceeds the designated minimum. Specifically, a Minimum Quantity Order is a limit order to buy or sell that will only execute if a specified minimum quantity of shares can be obtained. Orders with a specified minimum quantity will only execute against multiple, aggregated orders if such executions would occur simultaneously.\10\ The Exchange will only honor a specified minimum quantity on BZX Only Orders \11\ that are non-displayed or Immediate- or-Cancel (``IOC'') Orders \12\ and will disregard a minimum quantity on any other order. --------------------------------------------------------------------------- \9\ The term ``User'' is defined as ``any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.3.'' See Exchange Rule 1.5(cc). \10\ Today, the System will aggregate multiple resting orders to satisfy the incoming order's minimum quantity and a User cannot elect for the incoming order to execute against a single resting contra-side order. \11\ See Exchange Rule 11.9(c)(4). \12\ See Exchange Rule 11.9(b)(1). --------------------------------------------------------------------------- First, the Exchange proposes to add new optional functionality that would enhance the utility of Minimum Quantity Orders by amending paragraph (c)(5) of Exchange Rule 11.9. In sum, the proposal would permit an incoming Minimum Quantity Order to forego executions where multiple resting orders could otherwise be aggregated to satisfy the order's minimum quantity. The Exchange has observed that some market participants avoid sending large Minimum Quantity Orders to the Exchange out of concern that such orders may interact with small orders entered by professional traders, possibly adversely impacting the execution of their larger order. Institutional orders are often much larger in size than the average order in the marketplace. To facilitate the liquidation or acquisition of a large position, market participants tend to submit multiple orders into the market that may only represent a fraction of the overall institutional position to be executed. Various strategies used by institutional market participants to execute large orders are intended to limit price movement of the security at issue. Executing in small sizes, even if in the aggregate it meets the order's minimum quantity, may impact the market for that security such that the additional orders the market participant has yet to enter into the market may be more costly to execute. If an institution is able to execute in larger sizes, the contra-party to the execution is less likely to be a participant that reacts to short term changes in the stock price, and as such, the price impact to the stock may be less acute when larger individual executions are obtained.\13\ As a result, these orders are often executed away from the Exchange in dark pools or other exchanges that offer the same functionality as proposed herein,\14\ or via broker-dealer internalization. --------------------------------------------------------------------------- \13\ The Commission has long recognized this concern: ``[a]nother type of implicit transaction cost reflected in the price of a security is short-term price volatility caused by temporary imbalances in trading interest. For example, a significant implicit cost for large investors (who often represent the consolidated investments of many individuals) is the price impact that their large trades can have on the market. Indeed, disclosure of these large orders can reduce the likelihood of their being filled.'' See Securities Exchange Act Release No. 42450 (February 23, 2000), 65 FR 10577, 10581 (February 28, 2000) (SR-NYSE-99-48). \14\ See supra note 5. --------------------------------------------------------------------------- To attract larger Minimum Quantity Orders, the Exchange proposes to add new optional functionality that would enhance the utility of Minimum Quantity Orders. In sum, the proposal would permit a User to elect that its incoming Minimum Quantity Order execute solely against one or more resting individual orders, each of which must satisfy the order's minimum quantity condition. In such case, the order would forego executions where multiple resting orders could otherwise be aggregated to satisfy the order's minimum quantity, but do not individually satisfy the minimum quantity condition.\15\ As discussed above, under the current rule a Minimum Quantity Order will execute upon entry against any number of smaller contra-side orders that, in aggregate, meet the minimum quantity set by the User. This default behavior will remain. For example, assume there are two orders to sell resting on the BZX Book \16\--the first for 300 shares and a second for 400 shares, with the 300 share order having time priority ahead of the 400 share order. If a User entered a Minimum Quantity Order to buy 1,000 shares at $10.00 with a minimum quantity of 500 shares, and the order was marketable against the two resting sell orders for 300 and 400 shares, the System \17\ would aggregate both sell orders for purposes of meeting the minimum quantity, thus resulting in executions of 300 shares and then 400 shares respectively with the remaining 300 shares of the Minimum Quantity [[Page 47067]] Order being posted to the BZX Book with a minimum quantity restriction of 300 shares. --------------------------------------------------------------------------- \15\ If no election is made, the System will aggregate multiple resting orders to satisfy the incoming order's minimum quantity. \16\ The term ``BZX Book'' is defined as ``the System's electronic file of orders.'' See Exchange Rule 1.5(e). \17\ The term ``System'' is defined as ``the electronic communications and trading facility designated by the Board through which securities orders of Users are consolidated for ranking, execution and, when applicable, routing away. See Exchange Rule 1.5(aa). --------------------------------------------------------------------------- The proposed new optional functionality will not allow aggregation of smaller executions to satisfy the minimum quantity of an incoming Minimum Quantity Order. Using the same scenario as above, but with the proposed new functionality and a minimum quantity requirement of 400 shares selected by the User, the Minimum Quantity Order would not execute against the two sell orders because the 300 share order with time priority at the top of the BZX Book is less than the incoming order's 400 share Minimum Execution Quantity [sic]. The new functionality will cause the Minimum Quantity Order to be cancelled or posted to the BZX Book, non-displayed, in accordance with the characteristics of the underlying order type \18\ when encountering an order with time priority that is of insufficient size to satisfy the minimum execution requirement. If posted, the Minimum Quantity Order will operate as it does currently and will only execute against individual orders that satisfy its minimum quantity as proposed herein. The Exchange notes that the User entering the Minimum Quantity Order has expressed its intention not to execute against liquidity below a certain minimum size, and therefore, cedes execution priority when it would lock an order against which it would otherwise execute if it were not for the minimum execution size restriction. The Exchange proposes to add language to paragraph (c)(5) of Rule 11.9 to make clear that the order would cede execution priority in such in [sic] scenario. --------------------------------------------------------------------------- \18\ See supra notes 11 and 12 for a description of the functionality associated with orders that may also be Minimum Quantity Orders. --------------------------------------------------------------------------- As amended, the description of a Minimum Quantity Order under paragraph (c)(5) of Exchange Rule 11.9 would set forth the default behavior of Minimum Quantity Orders that execute upon entry against a single order or multiple aggregated orders simultaneously. Amended Rule 11.9(c)(5) would set forth the proposed optional functionality where a User may alternatively specify that the incoming order's minimum quantity condition be satisfied by each order resting on the BZX Book that would execute against the order with the minimum quantity condition. If there are such orders, but there are also orders that do not satisfy the minimum quantity condition, the incoming Minimum Quantity Order will execute against orders resting on the BZX Book in accordance with Rule 11.12, Priority of Orders, until it reaches an order that does not satisfy the minimum quantity condition at which point it would be posted to the BZX Book or cancelled in accordance with the terms of the order. If, upon entry, there are no orders that satisfy the minimum quantity condition resting on the BZX Book, the order will either be posted to the BZX Book or cancelled in accordance with the terms of the order. The Exchange also proposes to re-price incoming Minimum Quantity Orders where that order may cross an order posted on the BZX Book. Specifically, where there is insufficient size to satisfy an incoming order's minimum quantity condition and that incoming order, if posted at its limit price, would cross an order(s) resting on the BZX Book, the order with the minimum quantity condition will be re-priced to and ranked at the locking price. For example, an order to buy at $11.00 with a minimum quantity condition of 500 shares is entered and there is an order resting on the BZX Book to sell 200 shares at $10.99. The resting order to sell does not contain sufficient size to satisfy the incoming order's minimum quantity condition of 500 shares. The price of the incoming buy order, if posted to the BZX Book, would cross the price of the resting sell order. In such case, to avoid an internally crossed book, the System will re-price the incoming buy order to $10.99, the locking price. This behavior is similar to how the Exchange currently reprices non-displayed orders that cross the Protected Quotation of an external market.\19\ In addition, both the Investors Exchange, Inc. (``IEX'') and the Nasdaq Stock Market LLC (``Nasdaq'') also re-price similar orders to avoid an internally crossed book.\20\ --------------------------------------------------------------------------- \19\ See Exchange Rule 11.9(g)(4). \20\ See Nasdaq Rule 4703(e). See IEX Rule 11.190(h)(2). --------------------------------------------------------------------------- Second, the Exchange proposes to add language to the description of Minimum Quantity Orders to further describe their current operation on BZX and to harmonize the rule with that of its affiliate, EDGX, as described in EDGX Rule 11.6(h).\21\ The Exchange does not propose to implement new or unique functionality that has not been previously filed with the Commission or is not available on EDGX. The Exchange notes that the proposed rule text is based on BZX rules and is different only to the extent necessary to conform to the Exchange's current rules. The Exchange notes that, but for the proposed changes discussed above, the current operation of Minimum Quantity Orders on the Exchange and the Minimum Execution Quantity instruction on EDGX is identical. --------------------------------------------------------------------------- \21\ See EDGX Rule 11.9(h) [sic] describing the operation of the Minimum Execution Quantity order instructions, which is functionally identical to the BZX Minimum Quantity Order. --------------------------------------------------------------------------- The Exchange, therefore, proposes to amend the description of the Minimum Execution Quantity [sic] instruction to clarify its operation upon order entry and when the order is posted to the BZX Book. The Exchange proposes to clarify that upon entry, and by default, an order with a Minimum Execution Quantity [sic] will execute against a single order or multiple aggregated orders simultaneously. A User may also specify that the order only against [sic] orders that individually satisfy the order's minimum quantity condition, as proposed herein. Once posted to the BZX Book,\22\ the order may only execute against individual incoming orders with a size that satisfies the minimum quantity condition. Any shares remaining after a partial execution will continue to be executed at a size that is equal to or exceeds the quantity provided in the instruction. Where the number of shares remaining after a partial execution are [sic] less than the quantity provided in the order, the Minimum Quantity Order shall be equal to the number of shares remaining. The Exchange also proposed to clarify that a Minimum Quantity Order is not eligible to be routed to another Trading Center in accordance with Exchange Rule 11.13, Order Execution and Routing. These proposed changes would provide additional specificity to the operation of Minimum Quantity Orders and would harmonize the rule with the description of the Minimum Execution Quantity instruction under EDX [sic] Rule 11.6(h). --------------------------------------------------------------------------- \22\ Orders will only post to the BZX Book if they are designated with a TIF instruction that allows for posting. For example, an order with a TIF of IOC or FOK will never post to the BZX Book. --------------------------------------------------------------------------- Exchange Rule 11.9(e)(3), Replace Messages The Exchange also proposes to amend paragraph (e)(3) of Rule 11.9 to make certain clarifying, non-substantive changes. The proposed change would harmonize the description of Replace messages under Exchange Rule 11.9(e)(3) with EDGX Rule 11.10(e)(3). Exchange Rule 11.9(e)(3) currently states that other than changing a limit order to a market order, only the price, stop price, the sell long or sell short indicator, Max Floor \23\ of a Reserve Order [sic], and quantity terms of the order may be changed with a Replace message. If a User desires to change any [[Page 47068]] other terms of an existing order, the existing order must be cancelled and a new order must be entered. As amended, paragraph (e)(3) of Rule 11.9 would specify that the Max Floor is associated with a Reserve Order and to replace the phrase ``and quantity terms'' with the word ``size''. The Exchange believes these changes will provide additional specificity to the rule and ensure the rule uses terminology consistent with the description of Replace messages and their impact on an order's priority under Exchange Rule 11.12(a)(4). --------------------------------------------------------------------------- \23\ See Exchange Rule 11.9(c)(1). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \24\ in general, and furthers the objectives of Section 6(b)(5) of the Act \25\ 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. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78f(b). \25\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Exchange Rule 11.6(h), Proposed Individual Minimum Size The proposed rule change would remove impediments to and promote just and equitable principles of trade because it would provide Users with optional functionality that enhances the use of the Minimum Execution Quantity [sic] instruction. These proposed amendments are identical to changes recently proposed by EDGX that were published by the Commission for immediate effectiveness.\26\ The proposed change to the functioning of Minimum Quantity Orders will provide market participants, including institutional firms who ultimately represent individual retail investors in many cases, with better control over their orders, thereby providing them with greater potential to improve the quality of their order executions. Currently, the rule allows Users to designate a minimum acceptable quantity on an order that may aggregate multiple executions to meet the minimum quantity requirement. Once posted to the book, however, the minimum quantity requirement is equivalent to a minimum execution size requirement. The Exchange is now proposing to provide Users with control over the execution of their Minimum Quantity Orders by allowing them an option to designate the minimum individual execution size upon entry. The control offered by the proposed change is consistent with the various types of control currently provided by exchange order types. For example, the Exchange and other exchanges offer limit orders, which allow a market participant control over the price it will pay or receive for a stock.\27\ Similarly, exchanges offer order types that allow market participants to structure their trading activity in a manner that is more likely to avoid certain transaction cost related economic outcomes.\28\ --------------------------------------------------------------------------- \26\ See supra note 5. \27\ See Exchange Rule 11.9(a)(1). \28\ For example, the BZX Post Only Order. See Exchange Rule 11.9(c)(6). --------------------------------------------------------------------------- As discussed above, the functionality proposed herein would enable Users to avoid transacting with smaller orders that they believe ultimately increases the cost of the transaction. Because the Exchange does not have this functionality, market participants, such as large institutions that transact a large number of orders on behalf of retail investors, have avoided sending large orders to the Exchange to avoid potentially more expensive transactions.\29\ In this regard, the Exchange notes that the proposed new optional functionality may improve the Exchange's market by attracting more order flow. Such new order flow will further enhance the depth and liquidity on the Exchange, which supports just and equitable principals of trade. Furthermore, the proposed modification to Minimum Quantity Orders is consistent with providing market participants with greater control over the nature of their executions so that they may achieve their trading goals and improve the quality of their executions. Moreover, the proposed optional functionality for Minimum Quantity Orders is also substantially similar to that offered by Nasdaq and IEX, both of which have been recently approved by the Commission.\30\ --------------------------------------------------------------------------- \29\ As noted, the proposal is designed to attract liquidity to the Exchange by allowing market participants to designate a minimum size of a contra-side order to interact with, thus providing them with functionality available to them on dark markets. \30\ See Nasdaq Rule 4703(e) (defining Minimum Quantity). See also Securities Exchange Act Release No. 73959 (December 30, 2014), 80 FR 582 (January 6, 2015) (order approving new optional functionality for Minimum Quantity Orders). See IEX Rule 11.190(b)(11) and Supplementary Material .03 (defining Minimum Quantity Orders and MinExec with Cancel Remaining and MinExec with AON Remaining). See also Securities Exchange Act Release No. 78101 (June 17, 2016), 81 FR 41141 (June 23, 2016) (order approving the IEX exchange application, which included IEX's Minimum Quantity Orders). See also IEX Rule 11.190(d)(3) (allowing the minimum quantity size of an order to be changed via a replace message). --------------------------------------------------------------------------- The Exchange also believes that re-pricing incoming Minimum Quantity Orders where they may cross an order posted on the BZX Book promotes just and equitable principles of trade because it enables the Exchange to avoid an internally crossed book. The proposed re-pricing is identical to how EDGX reprices orders with a Minimum Quantity instruction \31\ and is similar to how BZX reprices non-displayed orders that cross an external market.\32\ In addition, both IEX and Nasdaq also re-price minimum quantity orders to avoid an internally crossed book. In certain circumstances, Nasdaq re-prices buy (sell) orders to one minimum price increment below (above) the lowest (highest) price of such orders.\33\ IEX re-prices non-displayed orders, such as minimum quantity orders, that include a limit price more aggressive than the midpoint of the NBBO to the midpoint of the NBBO.\34\ --------------------------------------------------------------------------- \31\ See supra note 5. \32\ See BZX Rule 11.9(g)(4). \33\ See Nasdaq Rule 4703(e). \34\ See IEX Rule 11.190(h)(2). --------------------------------------------------------------------------- In addition, the additional proposed changes to the description of Minimum Quantity Orders would better align Exchange rules and system functionality with identical functionality and rules on its affiliate, EDGX. Consistent descriptions of identical functionality between the Exchange and EDGX will reduce complexity and avoid potential investor confusion. The proposed rule changes do not propose to implement new or unique functionality that has not been previously filed with the Commission or is not available on EDGX. The Exchange notes that the proposed rule text is based on applicable BZX rules; the proposed language of the Exchange's Rules differs only to extent necessary to conform to existing Exchange rule text or to account for details or descriptions included in the Exchange's Rules. Clarification to Exchange Rule 11.9(e)(3) The Exchange believes the proposed amendments to paragraph (e)(3) of Rule 11.9 are also consistent with the Act in that they will provide additional specificity to the rules. In particular, the amendments to paragraph (e)(3) of Rule 11.10 [sic] will ensure the rule uses terminology consistent with the description of Replace messages and their impact on an order's priority under Exchange Rule 11.12(a)(4). Also, the Exchange notes that the proposed change would harmonize the description of Replace messages under [[Page 47069]] Exchange Rule 11.9(e)(3) with EDGX Rule 11.10(e)(3). 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 IEX.\35\ In addition, the proposed amendments to paragraph (e)(3) of Rule 11.10 [sic] would not have any impact on competition as they simply provide additional details to the rule and do not alter current System functionality. 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. --------------------------------------------------------------------------- \35\ See supra note 30. --------------------------------------------------------------------------- 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: (A) Significantly affect the protection of investors or the public interest; (B) impose any significant burden on competition; and (C) by its terms, 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 \36\ and paragraph (f)(6) of Rule 19b-4 thereunder.\37\ As required by Rule 19b- 4(f)(6)(iii), the Exchange has given the Commission 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 of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- \36\ 15 U.S.C. 78s(b)(3)(A). \37\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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: (1) Necessary or appropriate in the public interest; (2) for the protection of investors; or (3) 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 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-BatsBZX-2017-62 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BatsBZX-2017-62. 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-BatsBZX-2017-62, and should be submitted on or before October 31, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\38\ --------------------------------------------------------------------------- \38\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-21674 Filed 10-6-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Notices 47065
open market and a national market arguments concerning the foregoing, SECURITIES AND EXCHANGE
system, and, in general to protect including whether the proposed rule COMMISSION
investors and the public interest, by change is consistent with the Act.
[Release No. 34–81807; File No. SR–
removing obsolete rule text. Comments may be submitted by any of BatsBZX–2017–62]
The Exchange proposes to remove the following methods:
outdated references to ORF prior to Self-Regulatory Organizations; Bats
August 1, 2017. The Exchange believes Electronic Comments
BZX Exchange, Inc.; Notice of Filing
this rule change will provide clarity and • Use the Commission’s Internet and Immediate Effectiveness of a
ease of reference when Participants comment form (http://www.sec.gov/ Proposed Rule Change to Rule 11.9,
review the ORF rule. rules/sro.shtml); or Orders and Modifiers, To Add New
B. Self-Regulatory Organization’s • Send an email to rule-comments@ Optional Functionality to Minimum
Statement on Burden on Competition sec.gov. Please include File Number SR– Quantity Orders
The Exchange does not believe that BX–2017–040 on the subject line.
October 3, 2017.
the proposed rule change will impose Paper Comments Pursuant to Section 19(b)(1) of the
any burden on competition not Securities Exchange Act of 1934 (the
necessary or appropriate in furtherance • Send paper comments in triplicate
‘‘Act’’),1 and Rule 19b–4 thereunder,2
of the purposes of the Act. The to Brent J. Fields, Secretary, Securities
notice is hereby given that on
proposed change is a non-substantive and Exchange Commission, 100 F Street September 26, 2017, Bats BZX
amendment to remove obsolete rule NE., Washington, DC 20549–1090. Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’)
text. All submissions should refer to File filed with the Securities and Exchange
C. Self-Regulatory Organization’s Number SR–BX–2017–040. This file Commission (‘‘Commission’’) the
Statement on Comments on the number should be included on the proposed rule change as described in
Proposed Rule Change Received From subject line if email is used. To help the Items I and II below, which Items have
Members, Participants, or Others Commission process and review your been prepared by the Exchange. The
comments more efficiently, please use Exchange has designated this proposal
No written comments were either only one method. The Commission will as a ‘‘non-controversial’’ proposed rule
solicited or received. post all comments on the Commission’s change pursuant to Section 19(b)(3)(A)
III. Date of Effectiveness of the Internet Web site (http://www.sec.gov/ of the Act 3 and Rule 19b–4(f)(6)
Proposed Rule Change and Timing for rules/sro.shtml). Copies of the thereunder,4 which renders it effective
Commission Action submission, all subsequent upon filing with the Commission. The
amendments, all written statements Commission is publishing this notice to
Because the foregoing proposed rule
with respect to the proposed rule solicit comments on the proposed rule
change does not: (i) Significantly affect
change that are filed with the change from interested persons.
the protection of investors or the public
Commission, and all written I. Self-Regulatory Organization’s
interest; (ii) impose any significant
communications relating to the Statement of the Terms of Substance of
burden on competition; and (iii) become
proposed rule change between the the Proposed Rule Change
operative for 30 days from the date on
which it was filed, or such shorter time Commission and any person, other than
those that may be withheld from the The Exchange filed a proposal to add
as the Commission may designate, it has new optional functionality to Minimum
become effective pursuant to Section public in accordance with the
provisions of 5 U.S.C. 552, will be Quantity Orders by amending paragraph
19(b)(3)(A)(iii) of the Act 6 and (c)(5) of Exchange Rule 11.9, Orders and
subparagraph (f)(6) of Rule 19b–4 available for Web site viewing and
printing in the Commission’s Public Modifiers. The Exchange also proposes
thereunder.7 to amend paragraph (e)(3) of Exchange
At any time within 60 days of the Reference Room, 100 F Street NE.,
Washington, DC 20549, on official Rule 11.9 to make certain clarifying,
filing of the proposed rule change, the non-substantive changes. The proposed
Commission summarily may business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the amendments are identical changes its
temporarily suspend such rule change if affiliate, Bats EDGX Exchange, Inc.
it appears to the Commission that such filing also will be available for
inspection and copying at the principal (‘‘EDGX’’), recently filed with and were
action is: (i) Necessary or appropriate in published by the Commission for
the public interest; (ii) for the protection office of the Exchange. All comments
received will be posted without change; immediate effectiveness.5 The Exchange
of investors; or (iii) otherwise in also proposes to add language to the
furtherance of the purposes of the Act. the Commission does not edit personal
identifying information from description of Minimum Quantity
If the Commission takes such action, the Orders to further describe their current
Commission shall institute proceedings submissions. You should submit only
information that you wish to make operation on BZX and to harmonize the
to determine whether the proposed rule rule with that of EDGX.6
should be approved or disapproved. available publicly. All submissions
The text of the proposed rule change
should refer to File Number SR–BX–
IV. Solicitation of Comments is available at the Exchange’s Web site
2017–040 and should be submitted on
Interested persons are invited to or before October 31, 2017. 1 15 U.S.C. 78s(b)(1).
submit written data, views, and For the Commission, by the Division of 2 17 CFR 240.19b–4.
Trading and Markets, pursuant to delegated 3 15 U.S.C. 78s(b)(3)(A).
sradovich on DSK3GMQ082PROD with NOTICES
6 15 U.S.C. 78s(b)(3)(A)(iii). authority.8 4 17 CFR 240.19b–4(f)(6).
7 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 5 See EDGX Rules 11.6(h), 11.8(b)(3), and
Robert W. Errett,
4(f)(6) requires a self-regulatory organization to give 11.10(e)(3). See also Securities Exchange Act
the Commission written notice of its intent to file Deputy Secretary. Release No. 81457 (August 22, 2017), 82 FR 40812
the proposed rule change at least five business days [FR Doc. 2017–21671 Filed 10–6–17; 8:45 am] (August 28, 2017) (SR–BatsEDGX–2017–34).
prior to the date of filing of the proposed rule BILLING CODE 8011–01–P
6 See EDGX Rule 11.9(h) (describing the operation
change, or such shorter time as designated by the of the Minimum Execution Quantity order
Commission. The Exchange has satisfied this instructions, which is functionally identical to the
requirement. 8 17 CFR 200.30–3(a)(12). BZX Minimum Quantity Order).
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![47066 Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Notices
at www.bats.com, at the principal office A Minimum Quantity Order will not are obtained.13 As a result, these orders
of the Exchange, and at the execute unless the volume of contra- are often executed away from the
Commission’s Public Reference Room. side liquidity available to execute Exchange in dark pools or other
against the order meets or exceeds the exchanges that offer the same
II. Self-Regulatory Organization’s
designated minimum. Specifically, a functionality as proposed herein,14 or
Statement of the Purpose of, and
Minimum Quantity Order is a limit via broker-dealer internalization.
Statutory Basis for, the Proposed Rule To attract larger Minimum Quantity
Change order to buy or sell that will only
execute if a specified minimum quantity Orders, the Exchange proposes to add
In its filing with the Commission, the of shares can be obtained. Orders with new optional functionality that would
Exchange included statements a specified minimum quantity will only enhance the utility of Minimum
concerning the purpose of and basis for execute against multiple, aggregated Quantity Orders. In sum, the proposal
the proposed rule change and discussed orders if such executions would occur would permit a User to elect that its
any comments it received on the simultaneously.10 The Exchange will incoming Minimum Quantity Order
proposed rule change. The text of these only honor a specified minimum execute solely against one or more
statements may be examined at the quantity on BZX Only Orders 11 that are resting individual orders, each of which
places specified in Item IV below. The non-displayed or Immediate-or-Cancel must satisfy the order’s minimum
Exchange has prepared summaries, set (‘‘IOC’’) Orders 12 and will disregard a quantity condition. In such case, the
forth in Sections A, B, and C below, of minimum quantity on any other order. order would forego executions where
the most significant parts of such First, the Exchange proposes to add multiple resting orders could otherwise
statements. new optional functionality that would be aggregated to satisfy the order’s
A. Self-Regulatory Organization’s enhance the utility of Minimum minimum quantity, but do not
Statement of the Purpose of, and Quantity Orders by amending paragraph individually satisfy the minimum
Statutory Basis for, the Proposed Rule (c)(5) of Exchange Rule 11.9. In sum, the quantity condition.15 As discussed
Change proposal would permit an incoming above, under the current rule a
Minimum Quantity Order to forego Minimum Quantity Order will execute
1. Purpose upon entry against any number of
executions where multiple resting
The Exchange proposes to add new orders could otherwise be aggregated to smaller contra-side orders that, in
optional functionality to Minimum satisfy the order’s minimum quantity. aggregate, meet the minimum quantity
Quantity Orders by amending paragraph The Exchange has observed that some set by the User. This default behavior
(c)(5) of Exchange Rule 11.9, Orders and market participants avoid sending large will remain. For example, assume there
Modifiers. The Exchange also proposes Minimum Quantity Orders to the are two orders to sell resting on the BZX
to amend paragraph (e)(3) of Exchange Exchange out of concern that such Book 16—the first for 300 shares and a
Rule 11.9 to make certain clarifying, orders may interact with small orders second for 400 shares, with the 300
non-substantive changes. The proposed entered by professional traders, possibly share order having time priority ahead
amendments are identical to changes adversely impacting the execution of of the 400 share order. If a User entered
recently filed by Exchange’s affiliate their larger order. Institutional orders a Minimum Quantity Order to buy 1,000
EDGX and were published by the are often much larger in size than the shares at $10.00 with a minimum
Commission for immediate average order in the marketplace. To quantity of 500 shares, and the order
effectiveness.7 The Exchange also facilitate the liquidation or acquisition was marketable against the two resting
proposes to add language to the of a large position, market participants sell orders for 300 and 400 shares, the
description of Minimum Quantity tend to submit multiple orders into the System 17 would aggregate both sell
Orders to further describe their current market that may only represent a orders for purposes of meeting the
operation on BZX and to harmonize the fraction of the overall institutional minimum quantity, thus resulting in
rule with that of EDGX.8 The Exchange position to be executed. Various executions of 300 shares and then 400
does not propose to implement new or strategies used by institutional market shares respectively with the remaining
unique functionality that has not been participants to execute large orders are 300 shares of the Minimum Quantity
previously filed with the Commission or intended to limit price movement of the
is not available on EDGX. The Exchange security at issue. Executing in small
13 The Commission has long recognized this
notes that the proposed rule text is concern: ‘‘[a]nother type of implicit transaction cost
sizes, even if in the aggregate it meets reflected in the price of a security is short-term
based on BZX rules and is different only the order’s minimum quantity, may price volatility caused by temporary imbalances in
to the extent necessary to conform to the impact the market for that security such trading interest. For example, a significant implicit
Exchange’s current rules. Each of these that the additional orders the market cost for large investors (who often represent the
changes are described in detail below. consolidated investments of many individuals) is
participant has yet to enter into the the price impact that their large trades can have on
Exchange Rule 11.9(c)(5), Proposed market may be more costly to execute. the market. Indeed, disclosure of these large orders
Individual Minimum Size and If an institution is able to execute in can reduce the likelihood of their being filled.’’ See
larger sizes, the contra-party to the Securities Exchange Act Release No. 42450
Harmonization With EDGX Rule 11.6(h) (February 23, 2000), 65 FR 10577, 10581 (February
execution is less likely to be a 28, 2000) (SR–NYSE–99–48).
A Minimum Quantity Order enables a participant that reacts to short term 14 See supra note 5.
User 9 to specify a minimum share changes in the stock price, and as such, 15 If no election is made, the System will
amount at which the order will execute. the price impact to the stock may be less aggregate multiple resting orders to satisfy the
acute when larger individual executions incoming order’s minimum quantity.
sradovich on DSK3GMQ082PROD with NOTICES
7 See supra note 5. 16 The term ‘‘BZX Book’’ is defined as ‘‘the
8 See EDGX Rule 11.9(h) [sic] (describing the System’s electronic file of orders.’’ See Exchange
10 Today, the System will aggregate multiple
operation of the Minimum Execution Quantity Rule 1.5(e).
order instructions, which is functionally identical resting orders to satisfy the incoming order’s 17 The term ‘‘System’’ is defined as ‘‘the
to the BZX Minimum Quantity Order). minimum quantity and a User cannot elect for the electronic communications and trading facility
9 The term ‘‘User’’ is defined as ‘‘any Member or incoming order to execute against a single resting designated by the Board through which securities
Sponsored Participant who is authorized to obtain contra-side order. orders of Users are consolidated for ranking,
11 See Exchange Rule 11.9(c)(4).
access to the System pursuant to Rule 11.3.’’ See execution and, when applicable, routing away. See
Exchange Rule 1.5(cc). 12 See Exchange Rule 11.9(b)(1). Exchange Rule 1.5(aa).
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![Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Notices 47067
Order being posted to the BZX Book BZX Book in accordance with Rule notes that, but for the proposed changes
with a minimum quantity restriction of 11.12, Priority of Orders, until it reaches discussed above, the current operation
300 shares. an order that does not satisfy the of Minimum Quantity Orders on the
The proposed new optional minimum quantity condition at which Exchange and the Minimum Execution
functionality will not allow aggregation point it would be posted to the BZX Quantity instruction on EDGX is
of smaller executions to satisfy the Book or cancelled in accordance with identical.
minimum quantity of an incoming the terms of the order. If, upon entry, The Exchange, therefore, proposes to
Minimum Quantity Order. Using the there are no orders that satisfy the amend the description of the Minimum
same scenario as above, but with the minimum quantity condition resting on Execution Quantity [sic] instruction to
proposed new functionality and a the BZX Book, the order will either be clarify its operation upon order entry
minimum quantity requirement of 400 posted to the BZX Book or cancelled in and when the order is posted to the BZX
shares selected by the User, the accordance with the terms of the order. Book. The Exchange proposes to clarify
Minimum Quantity Order would not The Exchange also proposes to re- that upon entry, and by default, an order
execute against the two sell orders price incoming Minimum Quantity with a Minimum Execution Quantity
because the 300 share order with time Orders where that order may cross an [sic] will execute against a single order
priority at the top of the BZX Book is order posted on the BZX Book. or multiple aggregated orders
less than the incoming order’s 400 share Specifically, where there is insufficient simultaneously. A User may also specify
Minimum Execution Quantity [sic]. The size to satisfy an incoming order’s that the order only against [sic] orders
new functionality will cause the minimum quantity condition and that that individually satisfy the order’s
Minimum Quantity Order to be incoming order, if posted at its limit minimum quantity condition, as
cancelled or posted to the BZX Book, price, would cross an order(s) resting on proposed herein. Once posted to the
non-displayed, in accordance with the the BZX Book, the order with the BZX Book,22 the order may only execute
characteristics of the underlying order minimum quantity condition will be re- against individual incoming orders with
type 18 when encountering an order with priced to and ranked at the locking a size that satisfies the minimum
time priority that is of insufficient size price. For example, an order to buy at quantity condition. Any shares
to satisfy the minimum execution $11.00 with a minimum quantity remaining after a partial execution will
requirement. If posted, the Minimum condition of 500 shares is entered and continue to be executed at a size that is
Quantity Order will operate as it does there is an order resting on the BZX equal to or exceeds the quantity
currently and will only execute against Book to sell 200 shares at $10.99. The provided in the instruction. Where the
individual orders that satisfy its resting order to sell does not contain number of shares remaining after a
minimum quantity as proposed herein. sufficient size to satisfy the incoming partial execution are [sic] less than the
The Exchange notes that the User order’s minimum quantity condition of quantity provided in the order, the
entering the Minimum Quantity Order 500 shares. The price of the incoming Minimum Quantity Order shall be equal
has expressed its intention not to buy order, if posted to the BZX Book, to the number of shares remaining. The
execute against liquidity below a certain would cross the price of the resting sell Exchange also proposed to clarify that a
minimum size, and therefore, cedes order. In such case, to avoid an Minimum Quantity Order is not eligible
execution priority when it would lock internally crossed book, the System will to be routed to another Trading Center
an order against which it would re-price the incoming buy order to in accordance with Exchange Rule
otherwise execute if it were not for the $10.99, the locking price. This behavior 11.13, Order Execution and Routing.
minimum execution size restriction. is similar to how the Exchange currently These proposed changes would provide
The Exchange proposes to add language reprices non-displayed orders that cross additional specificity to the operation of
to paragraph (c)(5) of Rule 11.9 to make the Protected Quotation of an external Minimum Quantity Orders and would
clear that the order would cede market.19 In addition, both the Investors harmonize the rule with the description
execution priority in such in [sic] Exchange, Inc. (‘‘IEX’’) and the Nasdaq of the Minimum Execution Quantity
scenario. Stock Market LLC (‘‘Nasdaq’’) also re- instruction under EDX [sic] Rule
As amended, the description of a price similar orders to avoid an 11.6(h).
Minimum Quantity Order under internally crossed book.20
Second, the Exchange proposes to add Exchange Rule 11.9(e)(3), Replace
paragraph (c)(5) of Exchange Rule 11.9 Messages
would set forth the default behavior of language to the description of Minimum
Minimum Quantity Orders that execute Quantity Orders to further describe their The Exchange also proposes to amend
upon entry against a single order or current operation on BZX and to paragraph (e)(3) of Rule 11.9 to make
multiple aggregated orders harmonize the rule with that of its certain clarifying, non-substantive
simultaneously. Amended Rule affiliate, EDGX, as described in EDGX changes. The proposed change would
11.9(c)(5) would set forth the proposed Rule 11.6(h).21 The Exchange does not harmonize the description of Replace
optional functionality where a User may propose to implement new or unique messages under Exchange Rule
alternatively specify that the incoming functionality that has not been 11.9(e)(3) with EDGX Rule 11.10(e)(3).
order’s minimum quantity condition be previously filed with the Commission or Exchange Rule 11.9(e)(3) currently
is not available on EDGX. The Exchange states that other than changing a limit
satisfied by each order resting on the
notes that the proposed rule text is order to a market order, only the price,
BZX Book that would execute against
based on BZX rules and is different only stop price, the sell long or sell short
the order with the minimum quantity
to the extent necessary to conform to the indicator, Max Floor 23 of a Reserve
condition. If there are such orders, but
Order [sic], and quantity terms of the
sradovich on DSK3GMQ082PROD with NOTICES
there are also orders that do not satisfy Exchange’s current rules. The Exchange
order may be changed with a Replace
the minimum quantity condition, the 19 See Exchange Rule 11.9(g)(4). message. If a User desires to change any
incoming Minimum Quantity Order will 20 See Nasdaq Rule 4703(e). See IEX Rule
execute against orders resting on the 11.190(h)(2). 22 Orders will only post to the BZX Book if they
21 See EDGX Rule 11.9(h) [sic] describing the are designated with a TIF instruction that allows for
18 See supra notes 11 and 12 for a description of operation of the Minimum Execution Quantity posting. For example, an order with a TIF of IOC
the functionality associated with orders that may order instructions, which is functionally identical or FOK will never post to the BZX Book.
also be Minimum Quantity Orders. to the BZX Minimum Quantity Order. 23 See Exchange Rule 11.9(c)(1).
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![47068 Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Notices
other terms of an existing order, the Quantity Orders by allowing them an The Exchange also believes that re-
existing order must be cancelled and a option to designate the minimum pricing incoming Minimum Quantity
new order must be entered. As individual execution size upon entry. Orders where they may cross an order
amended, paragraph (e)(3) of Rule 11.9 The control offered by the proposed posted on the BZX Book promotes just
would specify that the Max Floor is change is consistent with the various and equitable principles of trade
associated with a Reserve Order and to types of control currently provided by because it enables the Exchange to avoid
replace the phrase ‘‘and quantity terms’’ exchange order types. For example, the an internally crossed book. The
with the word ‘‘size’’. The Exchange Exchange and other exchanges offer proposed re-pricing is identical to how
believes these changes will provide limit orders, which allow a market EDGX reprices orders with a Minimum
additional specificity to the rule and participant control over the price it will Quantity instruction 31 and is similar to
ensure the rule uses terminology pay or receive for a stock.27 Similarly, how BZX reprices non-displayed orders
consistent with the description of exchanges offer order types that allow that cross an external market.32 In
Replace messages and their impact on market participants to structure their addition, both IEX and Nasdaq also re-
an order’s priority under Exchange Rule trading activity in a manner that is more price minimum quantity orders to avoid
11.12(a)(4). likely to avoid certain transaction cost an internally crossed book. In certain
2. Statutory Basis related economic outcomes.28 circumstances, Nasdaq re-prices buy
As discussed above, the functionality (sell) orders to one minimum price
The Exchange believes that its increment below (above) the lowest
proposed herein would enable Users to
proposal is consistent with Section 6(b) (highest) price of such orders.33 IEX re-
avoid transacting with smaller orders
of the Act 24 in general, and furthers the prices non-displayed orders, such as
that they believe ultimately increases
objectives of Section 6(b)(5) of the Act 25 minimum quantity orders, that include
the cost of the transaction. Because the
in particular, in that it is designed to a limit price more aggressive than the
Exchange does not have this
promote just and equitable principles of midpoint of the NBBO to the midpoint
functionality, market participants, such
trade, to foster cooperation and of the NBBO.34
as large institutions that transact a large
coordination with persons engaged in In addition, the additional proposed
number of orders on behalf of retail
facilitating transactions in securities, to changes to the description of Minimum
investors, have avoided sending large
remove impediments to and perfect the Quantity Orders would better align
orders to the Exchange to avoid
mechanism of a free and open market Exchange rules and system functionality
potentially more expensive
and a national market system and, in with identical functionality and rules on
transactions.29 In this regard, the
general, to protect investors and the its affiliate, EDGX. Consistent
public interest. Exchange notes that the proposed new
optional functionality may improve the descriptions of identical functionality
Exchange Rule 11.6(h), Proposed Exchange’s market by attracting more between the Exchange and EDGX will
Individual Minimum Size order flow. Such new order flow will reduce complexity and avoid potential
The proposed rule change would further enhance the depth and liquidity investor confusion. The proposed rule
remove impediments to and promote on the Exchange, which supports just changes do not propose to implement
just and equitable principles of trade and equitable principals of trade. new or unique functionality that has not
because it would provide Users with Furthermore, the proposed modification been previously filed with the
optional functionality that enhances the to Minimum Quantity Orders is Commission or is not available on
use of the Minimum Execution Quantity consistent with providing market EDGX. The Exchange notes that the
[sic] instruction. These proposed participants with greater control over proposed rule text is based on
amendments are identical to changes the nature of their executions so that applicable BZX rules; the proposed
recently proposed by EDGX that were they may achieve their trading goals and language of the Exchange’s Rules differs
published by the Commission for improve the quality of their executions. only to extent necessary to conform to
immediate effectiveness.26 The Moreover, the proposed optional existing Exchange rule text or to account
functionality for Minimum Quantity for details or descriptions included in
proposed change to the functioning of
Orders is also substantially similar to the Exchange’s Rules.
Minimum Quantity Orders will provide
market participants, including that offered by Nasdaq and IEX, both of Clarification to Exchange Rule 11.9(e)(3)
institutional firms who ultimately which have been recently approved by
the Commission.30 The Exchange believes the proposed
represent individual retail investors in amendments to paragraph (e)(3) of Rule
many cases, with better control over 11.9 are also consistent with the Act in
27 See Exchange Rule 11.9(a)(1).
their orders, thereby providing them 28 For that they will provide additional
example, the BZX Post Only Order. See
with greater potential to improve the Exchange Rule 11.9(c)(6). specificity to the rules. In particular, the
quality of their order executions. 29 As noted, the proposal is designed to attract
amendments to paragraph (e)(3) of Rule
Currently, the rule allows Users to liquidity to the Exchange by allowing market
11.10 [sic] will ensure the rule uses
designate a minimum acceptable participants to designate a minimum size of a
contra-side order to interact with, thus providing terminology consistent with the
quantity on an order that may aggregate them with functionality available to them on dark description of Replace messages and
multiple executions to meet the markets. their impact on an order’s priority under
minimum quantity requirement. Once 30 See Nasdaq Rule 4703(e) (defining Minimum
Exchange Rule 11.12(a)(4). Also, the
posted to the book, however, the Quantity). See also Securities Exchange Act Release
Exchange notes that the proposed
minimum quantity requirement is No. 73959 (December 30, 2014), 80 FR 582 (January
6, 2015) (order approving new optional change would harmonize the
sradovich on DSK3GMQ082PROD with NOTICES
equivalent to a minimum execution size functionality for Minimum Quantity Orders). See description of Replace messages under
requirement. The Exchange is now IEX Rule 11.190(b)(11) and Supplementary Material
proposing to provide Users with control .03 (defining Minimum Quantity Orders and
(allowing the minimum quantity size of an order to
over the execution of their Minimum MinExec with Cancel Remaining and MinExec with
be changed via a replace message).
AON Remaining). See also Securities Exchange Act 31 See supra note 5.
Release No. 78101 (June 17, 2016), 81 FR 41141
24 15 U.S.C. 78f(b). 32 See BZX Rule 11.9(g)(4).
(June 23, 2016) (order approving the IEX exchange
25 15 U.S.C. 78f(b)(5). 33 See Nasdaq Rule 4703(e).
application, which included IEX’s Minimum
26 See supra note 5. Quantity Orders). See also IEX Rule 11.190(d)(3) 34 See IEX Rule 11.190(h)(2).
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![Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Notices 47069
Exchange Rule 11.9(e)(3) with EDGX the public interest; (2) for the protection submitted on or before October 31,
Rule 11.10(e)(3). of investors; or (3) otherwise in 2017.
furtherance of the purposes of the Act. For the Commission, by the Division of
B. Self-Regulatory Organization’s
If the Commission takes such action, the Trading and Markets, pursuant to delegated
Statement on Burden on Competition
Commission shall institute proceedings authority.38
The Exchange does not believe that to determine whether the proposed rule Robert W. Errett,
the proposed rule change will result in should be approved or disapproved. Deputy Secretary.
any burden on competition that is not
necessary or appropriate in furtherance IV. Solicitation of Comments [FR Doc. 2017–21674 Filed 10–6–17; 8:45 am]
BILLING CODE 8011–01–P
of the purposes of the Act, as amended. Interested persons are invited to
On the contrary, the Exchange believes submit written data, views, and
the proposed rule change promotes arguments concerning the foregoing,
competition because it will enable the including whether the proposed rule SMALL BUSINESS ADMINISTRATION
Exchange to offer functionality change is consistent with the Act. [Disaster Declaration #15338 and #15339;
substantially similar to that offered by Comments may be submitted by any of Georgia Disaster Number GA–00101]
Nasdaq and IEX.35 In addition, the the following methods:
proposed amendments to paragraph Presidential Declaration of a Major
(e)(3) of Rule 11.10 [sic] would not have Electronic Comments Disaster for Public Assistance Only for
any impact on competition as they • Use the Commission’s Internet the State of Georgia
simply provide additional details to the comment form (http://www.sec.gov/
AGENCY: U.S. Small Business
rule and do not alter current System rules/sro.shtml); or
Administration.
functionality. Therefore, the Exchange • Send an email to rule-comments@
does not believe the proposed rule sec.gov. Please include File Number SR– ACTION: Notice.
change will result in any burden on BatsBZX–2017–62 on the subject line. SUMMARY: This is a Notice of the
intermarket competition that is not Presidential declaration of a major
Paper Comments
necessary or appropriate in furtherance disaster for Public Assistance Only for
of the purposes of the Act. • Send paper comments in triplicate
the State of Georgia (FEMA–4338–DR),
to Secretary, Securities and Exchange
C. Self-Regulatory Organization’s dated 09/28/2017.
Commission, 100 F Street NE.,
Statement on Comments on the Incident: Hurricane Irma.
Washington, DC 20549–1090.
Proposed Rule Change Received From Incident Period: 09/07/2017 through
Members, Participants, or Others All submissions should refer to File 09/20/2017.
Number SR–BatsBZX–2017–62. This file DATES: Issued on 09/28/2017.
No comments were solicited or
number should be included on the Physical Loan Application Deadline
received on the proposed rule change.
subject line if email is used. To help the Date: 11/27/2017.
III. Date of Effectiveness of the Proposed Commission process and review your Economic Injury (EIDL) Loan
Rule Change and Timing for comments more efficiently, please use Application Deadline Date: 06/28/2018.
Commission Action only one method. The Commission will
ADDRESSES: Submit completed loan
Because the foregoing proposed rule post all comments on the Commission’s
applications to: U.S. Small Business
change does not: (A) Significantly affect Internet Web site (http://www.sec.gov/
Administration, Processing and
the protection of investors or the public rules/sro.shtml). Copies of the
Disbursement Center, 14925 Kingsport
interest; (B) impose any significant submission, all subsequent
Road, Fort Worth, TX 76155.
burden on competition; and (C) by its amendments, all written statements
with respect to the proposed rule FOR FURTHER INFORMATION CONTACT: A.
terms, become operative for 30 days Escobar, Office of Disaster Assistance,
from the date on which it was filed or change that are filed with the
Commission, and all written U.S. Small Business Administration,
such shorter time as the Commission 409 3rd Street SW., Suite 6050,
may designate, it has become effective communications relating to the
proposed rule change between the Washington, DC 20416, (202) 205–6734.
pursuant to Section 19(b)(3)(A) of the
Commission and any person, other than SUPPLEMENTARY INFORMATION: Notice is
Act 36 and paragraph (f)(6) of Rule 19b–
those that may be withheld from the hereby given that as a result of the
4 thereunder.37 As required by Rule
public in accordance with the President’s major disaster declaration on
19b–4(f)(6)(iii), the Exchange has given
provisions of 5 U.S.C. 552, will be 09/28/2017, Private Non-Profit
the Commission written notice of its
available for Web site viewing and organizations that provide essential
intent to file the proposed rule change,
printing in the Commission’s Public services of a governmental nature may
along with a brief description and text
Reference Room, 100 F Street NE., file disaster loan applications at the
of the proposed rule change, at least five
Washington, DC 20549 on official address listed above or other locally
business days prior to the date of filing
business days between the hours of announced locations.
of the proposed rule change, or such
10:00 a.m. and 3:00 p.m. Copies of the The following areas have been
shorter time as designated by the
filing also will be available for determined to be adversely affected by
Commission.
At any time within 60 days of the inspection and copying at the principal the disaster:
filing of the proposed rule change, the office of the Exchange. All comments Primary Counties: Appling, Atkinson,
received will be posted without change;
sradovich on DSK3GMQ082PROD with NOTICES
Commission summarily may Bacon, Baker, Baldwin, Banks,
temporarily suspend such rule change if the Commission does not edit personal Barrow, Ben Hill, Berrien, Brantley,
it appears to the Commission that such identifying information from Brooks, Bryan, Bulloch, Burke,
action is: (1) Necessary or appropriate in submissions. You should submit only Butts, Calhoun, Camden, Candler,
information that you wish to make Charlton, Chatham, Clay, Coffee,
35 See supra note 30. available publicly. All submissions Colquitt, Cook, Coweta, Crawford,
36 15 U.S.C. 78s(b)(3)(A). should refer to File Number SR–
37 17 CFR 240.19b–4. BatsBZX–2017–62, and should be 38 17 CFR 200.30–3(a)(12).
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Document Created: 2017-10-07 10:32:18
Document Modified: 2017-10-07 10:32:18
| 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 47065 |
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