82 FR 58240 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4759

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 236 (December 11, 2017)

Page Range		58240-58243
FR Document		2017-26556
Federal Register, Volume 82 Issue 236 (Monday, December 11, 2017)
[Federal Register Volume 82, Number 236 (Monday, December 11, 2017)]
[Notices]
[Pages 58240-58243]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-26556]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82218; File No. SR-NASDAQ-2017-121]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 4759

December 5, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 28, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to add additional detail about the purposes 
for which the Exchange uses securities information processor data 
pursuant to Rule 4759, and to make other technical corrections to that 
rule.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to add additional detail 
about the purposes for which the Exchange uses securities information 
processor (``SIP'') data pursuant to Rule 4759, and to make other 
technical corrections to that rule. Rule 4759 lists the proprietary and 
network processor feeds that are utilized for the handling, routing, 
and execution of orders, as well as for the regulatory compliance 
processes related to those functions. The Nasdaq trading system 
utilizes proprietary market data as the Primary Source of quotation 
data for the following markets that provide a reliable direct feed: 
NYSE American, Nasdaq BX, CBOE EDGA, CBOE EDGX, CHX, NYSE, NYSE Arca, 
Nasdaq, Nasdaq PSX, CBOE BYX, and CBOE

[[Page 58241]]

BZX.\3\ For each of these markets, the Exchange uses SIP data as the 
Secondary Source of quotation data.\4\
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    \3\ Several of the exchanges mentioned in this filing have been 
renamed recently; the names used herein reflect the current names of 
the exchanges. This proposed rule change also includes amendments to 
reflect the new names for these exchanges.
    \4\ SIP data is used as the Primary Source for NYSE National, 
FINRA ADF, and IEX. There is no Secondary Source for these markets.
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    Generally, Rule 4759 provides that the Primary Source of data is 
used for the handling, routing, and execution of orders, as well as for 
the regulatory compliance processes related to those functions, unless 
it is delayed by a configurable amount compared to the Secondary Source 
of data. While this is true for quotation data used by the trading 
system for the handling, routing, and execution of orders, and also 
regulatory compliance processes related to those functions, including, 
for example, determination of trade-throughs under Rule 611 of 
Regulation NMS, the Exchange uses SIP data for certain trade and 
administrative messages. For example, the Exchange uses SIP data for 
limit-up limit-down price bands, market-wide circuit breaker decline 
and status messages, Regulation SHO state messages, trading state 
messages (i.e., halts and resumes), and trade messages (i.e., last 
sale). As described in more detail below, with the exception of last 
sale information, these messages originate from the SIP, and are often 
not available on the direct feeds. To mitigate risks associated with a 
potential SIP outage, however, where the information is available on a 
direct feed from one or more exchanges, the Exchange uses such direct 
feed data solely as a backup to the SIP data.
    The Exchange therefore proposes to amend Rule 4759 to provide that 
the Nasdaq System consumes quotation data from the listed proprietary 
and network processor feeds for the handling, routing, and execution of 
orders, as well as for the regulatory compliance processes related to 
those functions.\5\ Furthermore, with the proposed changes, Rule 4759 
will provide that the SIP is the Primary Source of certain trade and 
administrative messages such as limit-up limit-down price bands, 
market-wide circuit breaker decline and status messages, Regulation SHO 
state messages, halts and resumes, and last sale information, and that, 
where available, the direct feeds are the Secondary Source of such 
information. For the reasons discussed in this filing, the Exchange 
believes that it is appropriate to use the SIP as the Primary Source of 
data for these trade and administrative messages. Limit-up limit-down 
price bands, for instance, are not available on any of the direct feeds 
used by the Exchange as these bands are calculated and disseminated by 
the SIP pursuant to the Plan to Address Extraordinary Market 
Volatility. Similarly, market-wide circuit breaker decline and status 
messages, Regulation SHO state messages, and trading state messages are 
available on some but not other direct feeds. Again, the SIP is 
responsible for calculating any decline in the S&P 500 Index and 
disseminating halt messages for the market-wide circuit breaker, and 
also for disseminating other halts, resumes, and Regulation SHO state 
messages. In addition, the Exchange's trading system consumes last sale 
information from the SIP, which is used for the limited purposes of 
determining when the Exchange can open securities after an IPO,\6\ and 
to calculate the need to trigger a short sale price test under Nasdaq 
Rule 4763(c) and Rule 201 of Regulation SHO because a covered security 
for which the Exchange is the listing market has declined 10% or more 
in one day. Although last sale information is disseminated on 
proprietary market data feeds, this information is typically included 
in a different market data product than the Exchange uses for quotation 
data, and the Exchange's trading system therefore also consumes last 
sale information from the SIP for the limited purposes described above.
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    \5\ The Exchange notes that the rule language currently provides 
that the Exchange ``utilizes'' these feeds. As a non-substantive 
change, the Exchange is changing this word to ``consumes'' as this 
word fits better with language being added to the rule.
    \6\ The Exchange waits for a last sale from the listing market 
prior to starting the Exchange's opening process following an IPO on 
another market.
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    Finally, the Exchange proposes to make additional technical 
amendments to Rule 4759. Specifically, several of the exchanges and 
direct market data feeds described in the rule have been renamed since 
the Exchange adopted the rule. The Exchange therefore propose to: (1) 
Rename the exchanges described in the rule so that the exchanges are 
identified by their new names,\7\ and (2) replace the names of the 
individual direct feeds with a generic notation that the ``Direct 
Feed'' is used to avoid the need for future updates every time an 
exchange changes the name of its proprietary market data offerings. 
These changes are technical amendments and will have no impact on the 
operation of the Exchange or its use of the identified market data 
feeds.
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    \7\ The new names of each of the exchanges described in Rule 
4759 are used earlier in this filing. See notes 4-5 supra and 
accompanying text.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change removes 
impediments to and perfects the mechanism of a free and open market and 
protects investors and the public interest because it provides 
additional transparency around the purposes for which the Exchange uses 
SIP data. The proposed rule change does not change the operation of the 
Exchange or its use of data feeds; rather it clarifies the Exchange's 
rules with regard to information consumed from the SIP. Specifically, 
the proposed rule change indicates that the Exchange uses SIP data for 
certain administrative messages, including, limit-up limit-down price 
bands, market-wide circuit breaker decline and status messages, 
Regulation SHO state messages, and trading state messages (i.e., halts 
and resumes), as well as trade messages (i.e., last sale). At least one 
other exchange uses SIP data for these purposes, while continuing to 
use the direct feeds for quotation data where the direct feeds often 
offer reduced latency.\10\
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    \10\ See IEX Rule 11.410(a)(3).
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    The Exchange believes that it is appropriate to use SIP data as the 
primary source for administrative messages that originate from the SIP 
and may or may not be available on particular proprietary market data 
feeds. Although quote data used for the handling, routing, and 
execution of orders is typically available with a lower latency over 
the direct feeds, the same is not true for the administrative messages 
described above that originate from the SIP and are re-disseminated (or 
not disseminated at all) by the various direct feeds. The Exchange 
therefore believes that it is consistent with the public interest and 
protection of investors to get this information directly from the SIP, 
i.e., the official source of the information, rather than indirectly 
from proprietary market data feeds that may or may not redistribute 
such information. Furthermore, with respect

[[Page 58242]]

to last sale information, such information is used by the trading 
system for the limited purposes described in this filing, and is not 
typically available on the direct feeds that the Exchange uses for 
quotation data. The Exchange therefore also believes that it is 
appropriate to get last sale information from the SIP. Where the 
information described in this filing is available on a direct feed, 
however, direct feed data will be used in the event failover is 
necessary, thereby adding redundancy and mitigating risks associated 
with a potential SIP outage.
    The proposed rule change also makes certain technical amendments to 
Rule 4759, including updating the names of exchanges that have been 
renamed since the adoption of this rule. The Exchange believes that it 
is consistent with the public interest and the protection of investors 
to update the names of the exchanges listed in Rule 4759 as this change 
will make it easier for market participants to identify the exchanges 
for which the Exchange uses the direct feed and/or SIP for the purposes 
described in the rule. Furthermore, the proposed rule change replaces 
the names of the direct feeds with a generic notation that the ``Direct 
Feed'' is used. The Exchange believes that this change is consistent 
with the protection of investors and the public interest as the 
exchanges may change the names of their data feeds periodically, 
resulting in the list being out of date. Rather than update the list 
every time a market changes the names of their [sic] proprietary market 
data products, the Exchange believes that it is preferable to simply 
explain that the direct feed is used. Several other exchanges also 
similarly note that the direct feed is used rather than spelling out 
the names of each feed.\11\
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    \11\ See e.g. IEX Rule 11.410(a); CBOE BZX Rule 11.26.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issue but rather would provide 
members and other market participants with information about the 
purposes for which the Exchange uses SIP data, and make other technical 
corrections to Rule 4759. No changes to the Exchange's trading or other 
systems are being introduced with the proposed rule change, and the 
Exchange believes that the proposed changes will increase transparency 
around the operation of the Exchange and its use of market data feeds 
without any significant impact on competition.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will allow the 
Exchange to clarify the purposes for which the Exchange uses SIP data 
and avoid potential confusion among market participants. Accordingly, 
the Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2017-121 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-2017-121. 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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All

[[Page 58243]]

submissions should refer to File Number SR-NASDAQ-2017-121 and should 
be submitted on or before January 2, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26556 Filed 12-8-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 236 / Monday, December 11, 2017 / Notices 58243

submissions should refer to File concerning the purpose of and basis for adviser, Cboe Vest Financial, LLC (the
Number SR–NASDAQ–2017–121 and the proposed rule change and discussed ‘‘Adviser’’), and index provider, Cboe
should be submitted on or before any comments it received on the Exchange, Inc. (‘‘Cboe Options’’ or the
January 2, 2018. proposed rule change. The text of these ‘‘Index Provider’’), are not registered as
For the Commission, by the Division of statements may be examined at the broker-dealers, but are affiliated with a
Trading and Markets, pursuant to delegated places specified in Item IV below. The broker-dealer. The Index Provider has
authority.17 Exchange has prepared summaries, set implemented and will maintain a ‘‘fire
Eduardo A. Aleman, forth in Sections A, B, and C below, of wall’’ with respect to such broker-dealer
Assistant Secretary. the most significant parts of such and its personnel regarding access to
[FR Doc. 2017–26556 Filed 12–8–17; 8:45 am]
statements. information concerning the composition
BILLING CODE 8011–01–P (A) Self-Regulatory Organization’s and/or changes to the Indexes. In
Statement of the Purpose of, and addition, Index Provider personnel who
Statutory Basis for, the Proposed Rule make decisions regarding the Index
SECURITIES AND EXCHANGE Change composition or methodology are subject
COMMISSION to procedures designed to prevent the
1. Purpose use and dissemination of material
[Release No. 34–82217; File No. SR–
CboeBZX–2017–005] The Exchange proposes to list and nonpublic information regarding the
trade shares (‘‘Shares’’) of each series of Index, pursuant to Rule
Self-Regulatory Organizations; Cboe the Cboe Vest S&P 500® Buffer Protect 14.11(c)(3)(B)(iii). The Adviser has also
BZX Exchange, Inc.; Notice of Filing of Strategy ETF (each a ‘‘Fund’’ and, implemented and will maintain a ‘‘fire
a Proposed Rule Change To List and collectively, the ‘‘Funds’’) under Rule wall’’ with respect to such broker-dealer
Trade Shares of a Series of the Cboe 14.11(c)(3), which governs the listing and its personnel regarding access to
Vest S&P 500 Buffer Protect Strategy and trading of Index Fund Shares based information concerning the composition
ETF Under the ETF Series Solutions on equity securities indexes on the and/or changes to the portfolio. In
Trust, Under Rule 14.11(c)(3), Index Exchange. In total, the Exchange is addition, Adviser personnel who make
Fund Shares proposing to list and trade Shares of decisions regarding a Fund’s portfolio
twelve monthly series of the Cboe Vest are subject to procedures designed to
December 5, 2017. S&P 500® Buffer Protect Strategy ETF. prevent the use and dissemination of
Pursuant to Section 19(b)(1) of the Each Fund will be an index-based material nonpublic information
Securities Exchange Act of 1934 exchange traded fund (‘‘ETF’’). The regarding a Fund’s portfolio. In the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Funds will include the following: Cboe event that (a) the Adviser becomes
notice is hereby given that on November Vest S&P 500® Buffer Protect Strategy registered as a broker-dealer or newly
21, 2017, Cboe BZX Exchange, Inc. (the (January) ETF; Cboe Vest S&P 500® affiliated with another broker-dealer; or
‘‘Exchange’’ or ‘‘BZX’’) filed with the Buffer Protect Strategy (February) ETF; (b) any new adviser or sub-adviser is a
Securities and Exchange Commission Cboe Vest S&P 500® Buffer Protect registered broker-dealer or becomes
(‘‘Commission’’) the proposed rule Strategy (March) ETF; Cboe Vest S&P affiliated with a broker-dealer; it will
change as described in Items I and II 500® Buffer Protect Strategy (April) implement a fire wall with respect to its
below, which Items have been prepared ETF; Cboe Vest S&P 500® Buffer Protect relevant personnel or such broker-dealer
by the Exchange. The Commission is Strategy (May) ETF; Cboe Vest S&P 500® affiliate, as applicable, regarding access
publishing this notice to solicit Buffer Protect Strategy (June) ETF; Cboe
to information concerning the
comments on the proposed rule change Vest S&P 500® Buffer Protect Strategy
composition and/or changes to the
from interested persons. (July) ETF; Cboe Vest S&P 500® Buffer
portfolio, and will be subject to
Protect Strategy (August) ETF; Cboe
I. Self-Regulatory Organization’s procedures designed to prevent the use
Vest S&P 500® Buffer Protect Strategy
Statement of the Terms of Substance of and dissemination of material non-
(September) ETF; Cboe Vest S&P 500®
the Proposed Rule Change public information regarding such
Buffer Protect Strategy (October) ETF;
The Exchange filed a proposal to list Cboe Vest S&P 500® Buffer Protect portfolio.
and trade shares of a series of the Cboe Strategy (November) ETF; and Cboe Vest The Exchange also notes that the
Vest S&P 500® Buffer Protect Strategy S&P 500® Buffer Protect Strategy Adviser is a BZX Affiliate as defined in
ETF under the ETF Series Solutions (December) ETF. Each Fund will be Rule 14.3(e)(1)(A),4 but the Funds are
Trust (the ‘‘Trust’’), under Rule based on the Cboe S&P 500 Buffer not Affiliate Securities, as defined in
14.11(c)(3) (‘‘Index Fund Shares’’). Protect Index (Month) Series, where
The text of the proposed rule change ‘‘Month’’ is the corresponding month Funds and the Shares contained herein are based,
is available at the Exchange’s Web site associated with the roll date of the in part, on information in the Registration
at www.markets.cboe.com, at the applicable Fund (each an ‘‘Index’’ and, Statement. The Commission has not yet issued an
principal office of the Exchange, and at order granting exemptive relief to the Trust under
collectively, the ‘‘Indexes’’). the Investment Company Act of 1940 (15 U.S.C.
the Commission’s Public Reference The Shares will be offered by the 80a–1) applicable to the activities of the Funds, but
Room. Trust, which was established as a the Funds will not be listed on the Exchange until
Delaware statutory trust on February 9, such an order is issued and any conditions
II. Self-Regulatory Organization’s contained therein are satisfied [sic]
Statement of the Purpose of, and 2012. The Trust is registered with the 4 As defined in Rule 14.3(e)(1)(A), the term ‘‘BZX

Statutory Basis for, the Proposed Rule Commission as an open-end investment Affiliate’’ means the Exchange and any entity that
daltland on DSKBBV9HB2PROD with NOTICES

Change company and has filed a registration directly or indirectly, through one or more
statement on behalf of the Funds on intermediaries, controls, is controlled by, or is
In its filing with the Commission, the Form N–1A (‘‘Registration Statement’’) under common control with the Exchange, where
Exchange included statements ‘‘control’’ means that one entity possesses, directly
with the Commission.3 The Funds’ or indirectly, voting control of the other entity
either through ownership of capital stock or other
17 17 CFR 200.30–3(a)(12). 3 See Registration Statement on Form N–1A for equity securities or through majority representation
1 15 U.S.C. 78s(b)(1). the Trust, dated October 24, 2017 (File Nos. 333– on the board of directors or other management body
2 17 CFR 240.19b–4. 179562 and 811–22668). The descriptions of the of such entity.

VerDate Sep<11>2014 17:54 Dec 08, 2017 Jkt 244001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 E:\FR\FM\11DEN1.SGM 11DEN1
Document Created: 2017-12-09 01:49:21
Document Modified: 2017-12-09 01:49:21
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 58240