82 FR 8241 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt a New Exception in Phlx Rule 1000(f) for Sub-MPV Split-Price Orders
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 14 (January 24, 2017)
Federal Register Volume 82, Issue 14 (January 24, 2017)
| Page Range | 8241-8244 | |
| FR Document | 2017-01460 |
[Federal Register Volume 82, Number 14 (Tuesday, January 24, 2017)] [Notices] [Pages 8241-8244] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-01460] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79805; File No. SR-Phlx-2016-82] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt a New Exception in Phlx Rule 1000(f) for Sub-MPV Split-Price Orders January 17, 2017. I. Introduction On August 3, 2016, NASDAQ PHLX LLC (the ``Exchange'' or ``Phlx'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to provide an additional exception to the mandatory use of the Exchange's Floor Broker Management System (``FBMS'') pursuant to Rule 1000(f)(iii) to permit Floor Brokers to execute certain sub-minimum price variation (``sub-MPV'') split-price orders in the trading crowd. The proposed rule change was published for comment in the Federal Register on August 22, 2016.\3\ On October 3, 2016, the Commission extended the time period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change to November 20, 2016.\4\ On November 17, 2016, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act to determine whether to approve or disapprove the proposed rule change.\5\ On December 9, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.\6\ The Commission received no comments on the proposed rule change. This order provides notice of filing of Amendment No. 1 and approves the proposal, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 78593 (August 16, 2016), 81 FR 56724 (``Notice''). \4\ See Securities Exchange Act Release No. 79023 (October 3, 2016), 81 FR 69877 (October 7, 2016). \5\ See Securities Exchange Act Release No. 79345 (November 17, 2016), 81 FR 84629 (November 23, 2016). \6\ Amendment No. 1 updated the original filing to: (1) Reflect the implementation of the Exchange's new Floor Broker Management System (``FBMS 3'') on November 3, 2016; (2) modify proposed Rule 1000(f)(iii)(D) to provide additional detail regarding how certain split-price orders will be rounded; and (3) offer three examples to illustrate how split-price orders will be handled pursuant to the proposed exception. Amendment No. 1 replaced the original proposed rule change in its entirety. To promote transparency of its proposed amendment, when Phlx filed Amendment No. 1 with the Commission, it also submitted Amendment No. 1 as a comment letter to the file, which the Commission posted on its Web site and placed in the public comment file for SR-Phlx-2016-82 (available at https://www.sec.gov/comments/sr=phlx-2016-82/phlx201682-1.pdf https://www.sec.gov/comments/sr-cboe-2016-071/cboe2016071.shtml). The Exchange also posted a copy of its Amendment No. 1 on its Web site (http://nasdaqphlx.cchwallstreet.com/NASDAQPHLX/pdf/phlx-filings/2016/SR-Phlx-2016-82_Amendment_1.pdf) when it filed Amendment No.1 with the Commission. --------------------------------------------------------------------------- II. Description of the Proposal \7\ --------------------------------------------------------------------------- \7\ A more detailed description of the proposal appears in the Notice and in Amendment No. 1. --------------------------------------------------------------------------- A. Background Currently, Phlx Rule 1000(f) requires that all Exchange options transactions be executed in one of the following three ways: ``(i) [a]utomatically by the Exchange Trading System pursuant to Rule 1080 and other applicable options rules; (ii) by and among members in the Exchange's options trading crowd none of whom is a Floor Broker; or (iii) through the Options [FBMS] for trades involving at least one Floor Broker.'' \8\ Although a Floor Broker may represent orders in the trading crowd, a Floor Broker is not permitted to execute an order in the trading crowd unless one of three exceptions applies.\9\ The exceptions to the mandatory use of the FBMS \10\ are set forth in Phlx Rule 1000(f)(iii). These exceptions allow a Floor Broker to execute a transaction in the trading crowd (rather than through the FBMS) if: (i) There is a problem with Exchange's systems; (ii) the Floor Broker is executing the trade pursuant to Phlx Rule 1059 (``Accommodation Transactions'') or Phlx Rule 1079 (``Flex Index, Equity and Currency Options''); or (iii) the transaction involves a multi-leg order with more than 15 legs.\11\ --------------------------------------------------------------------------- \8\ See Phlx Rule 1000(f). \9\ See Phlx Rule 1000(f)(iii). \10\ The original FBMS (``FBMS 1'') began operating in 2005. The Exchange retired FBMS 1 on March 31, 2016 after operating it concurrently with the Exchange's enhanced FBMS (``FBMS 2''), which was made available on March 7, 2014. As of April 1, 2016, the Exchange only operated FBMS 2. See Notice, supra note 3, at 56725. On November 3, 2016, the Exchange implemented FBMS 3 and retired FBMS 2. According to the Exchange, FBMS 3 is currently the sole operating version of FBMS on the Exchange. See Amendment No. 1, supra note 6, at 3 and 8-10. References throughout this Order to ``FBMS'' refer to FBMS 3. \11\ See Notice, supra note 3, at 56726. See also Phlx Rule 1000(f)(iii)(A)-(C). According to the Exchange, each time a Floor Broker uses one of the current exceptions to Phlx Rule 1000(f)(iii), the Floor Broker is required by Phlx Rule 1063(e)(ii), to record the information required by Phlx Rule 1063(e)(i) on paper trade tickets. The Exchange further represents that a Floor Broker may only represent an order for execution that has been timestamped with the time of entry on the trading floor. In addition, according to the Exchange, once an execution occurs, the trade ticket must be stamped with the time of execution of such order. See Notice, supra note 3, at 56726 and Amendment No. 1, supra note 6, at 11. --------------------------------------------------------------------------- B. Split-Price Order Exception Proposal Phlx Rule 1014(g)(i)(B) provides a priority rule regarding open outcry split-price transactions in equity options and options overlying ETFs to permit a member who is responding to an order for at least 100 contracts who buys (sells) at least 50 contracts at a particular price to have priority over all others in purchasing (selling) up to an equivalent number of contracts of the same order at the next lower (higher) price without being required to yield to existing customer interest in the limit order book.\12\ Absent Phlx Rule 1014(g)(i)(B), such orders would be required to yield priority. The Exchange states that ``[t]he purpose behind the split-price priority exception was `to bring about the execution of large orders, which by virtue of their size and the need to execute them at multiple [[Page 8242]] prices may be difficult to execute without a limited exception to the priority rules.' '' \13\ --------------------------------------------------------------------------- \12\ See Notice, supra note 3, at 56726 (citing Securities Exchange Act Release No. 51820 (June 10, 2005), 70 FR 35759 (June 21, 2005) (SR-Phlx-2005-28)) (approving pilot). See also Securities Exchange Act Release No. 55993 (June 29, 2007), 72 FR 37301 (July 9, 2007) (SR-Phlx-2007-44) (permanent approval)). \13\ See Notice, supra note 3, at 56726. Floor Brokers that avail themselves of the split-price priority rule are obligated to ensure compliance with Section 11(a) of the Exchange Act. See Amendment No. 1, supra note 6, at 12. --------------------------------------------------------------------------- According to the Exchange, split-price orders are currently processed using either FBMS or paper tickets. The use of FBMS or paper tickets depends on whether the split-price order can be evenly split using simple calculations or whether the split-price order involves non-even integers and sub-MPV price points, which requires a more complicated computation to determine the number of contracts to trade at two different price points.\14\ The Exchange represents that FBMS does not have the capability to calculate specific volumes at two different MPV prices for split-price orders placed in a sub-MPV price.\15\ To compensate for this system limitation, the Exchange is proposing to amend Phlx Rule 1000(f)(iii) to add a new exception from the mandatory use of the FBMS that would allow Floor Brokers to execute certain split-price orders in the trading crowd that would be validated by Phlx surveillance staff for compliance with applicable priority and trade-through rules. --------------------------------------------------------------------------- \14\ See Notice, supra note 3, at 56726. Today, when the computation is more complicated, surveillance staff allows a Floor Broker to execute split-price orders involving non-even integers and sub-MPV price points in open outcry using paper tickets pursuant to Phlx Rule 1000(f)(iii)(A). See id. \15\ See id. at 56727. See Amendment No. 1, supra note 6, at 20. --------------------------------------------------------------------------- Accordingly, the Exchange is proposing in Phlx Rule 1000(f)(iii)(D) to allow the following split-price orders to be executed in the trading crowd: (1) Simple orders not expressed in the applicable sub-MPV and that cannot be evenly split into two whole numbers to create a price at the midpoint of the MPV; and (2) complex and multi-leg orders with at least one option leg with an odd-numbered volume that must trade at a sub-MPV price or one leg that qualifies under (1) above.\16\ --------------------------------------------------------------------------- \16\ See Notice, supra note 3, at 56724. --------------------------------------------------------------------------- The Exchange represents that this exception ``is anticipated to be implemented infrequently and in the following [three] ways.'' \17\ Under the first scenario, a Floor Broker knows that, due to a system limitation, a sub-MPV split-price order cannot be handled by FBMS.\18\ In this case, the Floor Broker would comply with Phlx Rule 1063(e), expose the order in the trading crowd, and request the use of the proposed exception from the Options Exchange Official (``Official'').\19\ The Official would confirm his or her understanding of the order and the availability of the exemption, and if the Floor Broker's request is determined to be valid based on the split-price calculation, announce to application of the exemption to the Floor Broker and the trading crowd.\20\ After the Floor Broker negotiates and consummates the trade in the trading crowd, the Floor Broker would timestamp the paper ticket at the time the trade is consummated in the trading crowd, which would become the time of execution for the trade.\21\ The consummated trade would then be submitted to the Official to validate for compliance with priority and trade-through rules. If compliant, the Official would permit the Floor Broker to submit the manual split-price trade, via paper ticket, for trade reporting.\22\ --------------------------------------------------------------------------- \17\ See Amendment No. 1, supra note 6, at 13. \18\ See id. \19\ See id. \20\ See id. at 13-14. \21\ See id. at 14. The Exchange notes that, typically, the Official captures a timestamp reflecting the time the Official observed that the trade was consummated in the trading crowd and may, in its discretion, substitute this timestamp for the timestamp recorded by the Floor Broker at the time of consummation. See id. \22\ See Amendment No. 1, supra note 6, at 14-15. According to the Exchange, the paper ticket will reflect the timestamp captured by the Floor Broker or (as described above) the Official, which will reflect the time the trade was consummated in the trading crowd. See id. --------------------------------------------------------------------------- The second scenario involves a situation in which a Floor Broker submits a split-price order to FBMS, but the Floor Broker does not realize that FBMS cannot handle the order because the price is outside the MPV.\23\ In this case, the Floor Broker would comply with Phlx Rule 1063(e), expose the order in the trading crowd, and, upon consummation of the transaction, submit the order to FBMS for execution. Because FBMS cannot calculate the split-price for the order, FBMS would reject the submission and the Floor Broker would receive a rejection message.\24\ Upon the receipt of this message, the Floor Broker would inform the Official that FBMS rejected the split-price order. The Official would then review the terms of the consummated trade and, using the timestamp captured by the Floor Broker or Official,\25\ validate the consummated trade for compliance with priority and trade- through.\26\ If the consummated trade is compliant, the Official would permit the Floor Broker to submit the manual split-price trade, via paper ticket reflecting the timestamp captured by the Floor Broker (or Official), for trade reporting.\27\ --------------------------------------------------------------------------- \23\ See id. at 15. \24\ See id. According to the Exchange, this might occur if the order is not priced in the minimum price increment and consequently FBMS would reject the trade. See id. \25\ According to the Exchange, the Floor Broker captures a timestamp for the time that the Floor Broker submitted the proposed execution in FBMS. The Exchange further represents that, as in scenario 1, the Official also would typically capture a timestamp reflecting the time that the Official observed the Floor Broker's attempt to execute the transaction in FBMS. Surveillance staff may, in its discretion, substitute this timestamp for the timestamp recorded by the Floor Broker as the time that the trade was consummated. See Amendment No. 1, supra note 6, at 15. See also supra note 21. \26\ See id. at 15-16. \27\ See id. at 16. --------------------------------------------------------------------------- The third scenario is similar to the second scenario; however, neither the Floor Broker nor the Official captures a reliable time that the consummated trade was submitted to FBMS for execution.\28\ In this case, the Official would require the Floor Broker to ``re-trade'' the order using a paper ticket in the sequence described in the first scenario above.\29\ --------------------------------------------------------------------------- \28\ See id. \29\ See id. --------------------------------------------------------------------------- The Exchange also proposes that, in addition to split-price orders executed pursuant to proposed Phlx Rule 1000(f)(iii)(D), Phlx surveillance staff would approve all executions submitted under Phlx Rule 1000(f)(iii) to validate that such executions abide by applicable priority and trade-through rules.\30\ The Exchange also proposes to round prices if necessary to execute the trade at the MPV, but only to the benefit of a customer order, or, where multiple customer orders are involved, for the customer order that is earliest in time.\31\ Where no customer order is involved, the rounding of prices will be applied to the non-customer order that is earliest in time.\32\ --------------------------------------------------------------------------- \30\ See proposed Phlx Rule 1000(f)(iii). \31\ See proposed Phlx Rule 1000(f)(iii); see also Notice, supra note 3, at 56727. \32\ See Amendment No. 1, supra note 6, at 3 and 7. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of Section 6 of the Act \33\ and the rules and regulations thereunder applicable to a national securities exchange.\34\ Specifically, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\35\ which requires, among other things, that the rules of a national securities exchange [[Page 8243]] be designed to prevent fraudulent and manipulative acts and practices, 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; and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \33\ 15 U.S.C. 78f. \34\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \35\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission notes that the Exchange is proposing a new exception in Phlx Rule 1000(f)(iii)(D) that is designed to enable Floor Brokers to execute two types of split-price orders in the trading crowd that cannot be processed by FBMS because of a system limitation.\36\ The Exchange represents that its surveillance staff will oversee Floor Brokers' use of the proposed Phlx Rule 1000(f)(iii)(D) exception, which they do today for current exceptions provided under Phlx Rule 1000(f)(iii).\37\ The Exchange further represents that for each execution pursuant to Phlx Rule 1000(f)(iii): (1) Exchange surveillance staff will verify that the conditions of the exception under Phlx Rule 1000(f)(iii) are met and will ensure that the proposed exception for split-price orders will be used only rarely; \38\ (2) Exchange surveillance staff will approve executions pursuant to Phlx Rule 1000(f)(iii) and validate compliance with applicable priority rules of the Exchange and trade-through rules of the Options Order Protection and Locked/Crossed Market Plan; \39\ and (3) all relevant trade data resulting from executions pursuant to Phlx Rule 1000(f)(iii) will be recorded on both paper tickets and in FBMS to ensure a proper audit trail for timely surveillance.\40\ The Commission notes that the activities of Phlx Surveillance under Rule 1000(f)(iii), including the substitution of timestamps, should be carried out in an objective manner and with due regard to the Exchange's obligations under the Act.\41\ --------------------------------------------------------------------------- \36\ The Commission notes that the exception for split-price orders is similar in purpose to the current exceptions provided in Phlx Rule 1000(f)(iii)(B) and (C). See Securities Exchange Act Release No. 68960 (February 20, 2013), 78 FR 13132 (February 26, 2013) (SR-Phlx-2013-09) (recognizing exceptions for certain executions to occur manually in the trading crowd and not through FBMS. ``[ ] FLEX orders will continue to be executable by Floor Brokers in the trading crowd pursuant to Rule 1079 and 1079A, rather than through FBMS. This is because FBMS will not be able to accept FLEX orders, which have varied and complicated terms. Similarly, accommodation transactions (also known as cabinet trades) will continue to be executable by Floor Brokers in the trading crowd pursuant to Rule 1059. Neither FLEX nor accommodation transactions are executed through Exchange systems today. Floor Brokers will also be permitted to execute orders in the trading crowd if they are handling an order with more than 15 legs, because the Exchange determined to limit the complexity of FBMS functionality and does not believe that many orders fall into this category or that Floor Brokers will be adversely affected.''). \37\ See Notice, supra note 3, at 56726. See also Amendment No. 1, supra note 6, at 17. The Exchange notes its belief that it is ``necessary and appropriate for the surveillance Staff to exercise independent judgment with respect to the proper timestamp for the consummation of trades on the floor of the Exchange.'' See Amendment No. 1, supra note 6, at 14, n.17. According to the Exchange, ``[t]he surveillance Staff is trained to observe objectively the conduct of floor participants, to detect conduct that improperly advantages floor participants, and to enforce Exchange rules.'' Id. Finally, the Exchange notes that it believes that ``[t]he absence of engaged and empowered surveillance Staff would undermine the integrity of the trading floor on the Exchange.'' Id. \38\ See Notice, supra note 3, at 56728. See also Amendment No. 1, supra note 6, at 23. \39\ See Notice, supra note 3, at 56727. See also Amendment No. 1, supra note 6, at 22. The Options Order Protection and Locked/ Crossed Market Plan is available at http://www.optionsclearing.com/components/docs/clearing/services/options_order_protection_plan.pdf. \40\ See Notice, supra note 3, at 56727. See also Amendment No. 1, supra note 6, at 22. \41\ The Commission notes that Phlx surveillance staff might substitute the timestamp it captures for the timestamp captured by a Floor Broker if necessary to prevent conduct that would improperly advantage floor participants or to enforce compliance with the Exchange's rules. It is the Commission's understanding that such a substitution would happen only rarely and only if consistent with the authority conferred upon surveillance staff by the Exchange's rules. See Amendment No. 1., supra note 6, at 14, n.17. --------------------------------------------------------------------------- For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6(b)(5) of the Act and the rules and regulations thereunder applicable to national securities exchanges. IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule Change Interested persons are invited to submit written data, views, and arguments concerning whether Amendment No. 1 to 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 rule-comments@sec.gov. Please include File No. SR-Phlx-2016-82 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 No. SR-Phlx-2016-82. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also 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 No. SR-Phlx-2016-82 and should be submitted on or before February 14, 2017. V. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the thirtieth day after the date of publication of notice of the amended proposal in the Federal Register. As described above, in Amendment No. 1, Phlx updated its proposal to reflect the implementation of FBMS 3 and the retirement of FBMS 2; clarified how prices may be rounded for non-customer split- price orders; and provided three examples that explain how split-price orders will be handled by the Exchange under the proposed exception.\42\ The Commission believes that Amendment No. 1 provided additional specificity regarding the operation of the new proposed exception in Phlx Rule 1000(f)(iii)(D). Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,\43\ to approve the proposed rule change, as [[Page 8244]] modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \42\ See Amendment No. 1, supra note 6, at 3-4. \43\ 15 U.S.C. 78s(b)(2) --------------------------------------------------------------------------- VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\44\ that the proposed rule change (SR-Phlx-2016-82), as modified by Amendment No. 1, be, and hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \44\ See id. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\45\ --------------------------------------------------------------------------- \45\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-01460 Filed 1-23-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices 8241
communications relating to the change was published for comment in Broker is not permitted to execute an
proposed rule change between the the Federal Register on August 22, order in the trading crowd unless one of
Commission and any person, other than 2016.3 On October 3, 2016, the three exceptions applies.9 The
those that may be withheld from the Commission extended the time period exceptions to the mandatory use of the
public in accordance with the within which to approve the proposed FBMS 10 are set forth in Phlx Rule
provisions of 5 U.S.C. 552, will be rule change, disapprove the proposed 1000(f)(iii). These exceptions allow a
available for Web site viewing and rule change, or institute proceedings to Floor Broker to execute a transaction in
printing in the Commission’s Public determine whether to approve or the trading crowd (rather than through
Reference Room, 100 F Street NE., disapprove the proposed rule change to the FBMS) if: (i) There is a problem with
Washington, DC 20549 on official November 20, 2016.4 On November 17, Exchange’s systems; (ii) the Floor Broker
business days between the hours of 2016, the Commission instituted is executing the trade pursuant to Phlx
10:00 a.m. and 3:00 p.m. Copies of the proceedings under Section 19(b)(2)(B) of Rule 1059 (‘‘Accommodation
filing also will be available for the Act to determine whether to approve Transactions’’) or Phlx Rule 1079 (‘‘Flex
inspection and copying at the principal or disapprove the proposed rule Index, Equity and Currency Options’’);
office of the Exchange. All comments change.5 On December 9, 2016, the or (iii) the transaction involves a multi-
received will be posted without change; Exchange filed Amendment No. 1 to the leg order with more than 15 legs.11
the Commission does not edit personal proposed rule change.6 The Commission
B. Split-Price Order Exception Proposal
identifying information from received no comments on the proposed
submissions. You should submit only rule change. This order provides notice Phlx Rule 1014(g)(i)(B) provides a
information that you wish to make of filing of Amendment No. 1 and priority rule regarding open outcry split-
available publicly. All submissions approves the proposal, as modified by price transactions in equity options and
should refer to File Number SR–C2– Amendment No. 1, on an accelerated options overlying ETFs to permit a
2017–002 and should be submitted on basis. member who is responding to an order
or before February 14, 2017. for at least 100 contracts who buys
II. Description of the Proposal 7 (sells) at least 50 contracts at a
For the Commission, by the Division of
Trading and Markets, pursuant to delegated A. Background particular price to have priority over all
authority.11 others in purchasing (selling) up to an
Currently, Phlx Rule 1000(f) requires
Eduardo A. Aleman, equivalent number of contracts of the
that all Exchange options transactions
same order at the next lower (higher)
Assistant Secretary. be executed in one of the following
price without being required to yield to
[FR Doc. 2017–01462 Filed 1–23–17; 8:45 am] three ways: ‘‘(i) [a]utomatically by the
existing customer interest in the limit
BILLING CODE 8011–01–P Exchange Trading System pursuant to
order book.12 Absent Phlx Rule
Rule 1080 and other applicable options
1014(g)(i)(B), such orders would be
rules; (ii) by and among members in the
required to yield priority. The Exchange
SECURITIES AND EXCHANGE Exchange’s options trading crowd none
states that ‘‘[t]he purpose behind the
COMMISSION of whom is a Floor Broker; or (iii)
split-price priority exception was ‘to
through the Options [FBMS] for trades
[Release No. 34–79805; File No. SR–Phlx– bring about the execution of large
2016–82] involving at least one Floor Broker.’’ 8
orders, which by virtue of their size and
Although a Floor Broker may represent
the need to execute them at multiple
Self-Regulatory Organizations; orders in the trading crowd, a Floor
NASDAQ PHLX LLC; Notice of Filing of 9 See Phlx Rule 1000(f)(iii).
3 See Securities Exchange Act Release No. 78593
Amendment No. 1, and Order Granting 10 The original FBMS (‘‘FBMS 1’’) began operating
(August 16, 2016), 81 FR 56724 (‘‘Notice’’).
Accelerated Approval of a Proposed 4 See Securities Exchange Act Release No. 79023
in 2005. The Exchange retired FBMS 1 on March
Rule Change, as Modified by 31, 2016 after operating it concurrently with the
(October 3, 2016), 81 FR 69877 (October 7, 2016). Exchange’s enhanced FBMS (‘‘FBMS 2’’), which
Amendment No. 1, To Adopt a New 5 See Securities Exchange Act Release No. 79345
was made available on March 7, 2014. As of April
Exception in Phlx Rule 1000(f) for Sub- (November 17, 2016), 81 FR 84629 (November 23, 1, 2016, the Exchange only operated FBMS 2. See
MPV Split-Price Orders 2016). Notice, supra note 3, at 56725. On November 3,
6 Amendment No. 1 updated the original filing to:
2016, the Exchange implemented FBMS 3 and
January 17, 2017. (1) Reflect the implementation of the Exchange’s retired FBMS 2. According to the Exchange, FBMS
new Floor Broker Management System (‘‘FBMS 3’’) 3 is currently the sole operating version of FBMS
I. Introduction on November 3, 2016; (2) modify proposed Rule on the Exchange. See Amendment No. 1, supra note
1000(f)(iii)(D) to provide additional detail regarding 6, at 3 and 8–10. References throughout this Order
On August 3, 2016, NASDAQ PHLX how certain split-price orders will be rounded; and to ‘‘FBMS’’ refer to FBMS 3.
LLC (the ‘‘Exchange’’ or ‘‘Phlx’’) filed (3) offer three examples to illustrate how split-price 11 See Notice, supra note 3, at 56726. See also
with the Securities and Exchange orders will be handled pursuant to the proposed Phlx Rule 1000(f)(iii)(A)–(C). According to the
exception. Amendment No. 1 replaced the original Exchange, each time a Floor Broker uses one of the
Commission (‘‘Commission’’), pursuant proposed rule change in its entirety. To promote current exceptions to Phlx Rule 1000(f)(iii), the
to Section 19(b)(1) of the Securities transparency of its proposed amendment, when Floor Broker is required by Phlx Rule 1063(e)(ii), to
Exchange Act of 1934 (‘‘Act’’) 1 and Rule Phlx filed Amendment No. 1 with the Commission, record the information required by Phlx Rule
19b–4 thereunder,2 a proposed rule it also submitted Amendment No. 1 as a comment 1063(e)(i) on paper trade tickets. The Exchange
letter to the file, which the Commission posted on further represents that a Floor Broker may only
change to provide an additional its Web site and placed in the public comment file represent an order for execution that has been
exception to the mandatory use of the for SR–Phlx–2016–82 (available at https:// timestamped with the time of entry on the trading
Exchange’s Floor Broker Management www.sec.gov/comments/sr=phlx-2016-82/ floor. In addition, according to the Exchange, once
phlx201682-1.pdf https://www.sec.gov/comments/ an execution occurs, the trade ticket must be
System (‘‘FBMS’’) pursuant to Rule sr-cboe-2016-071/cboe2016071.shtml). The stamped with the time of execution of such order.
sradovich on DSK3GMQ082PROD with NOTICES
1000(f)(iii) to permit Floor Brokers to Exchange also posted a copy of its Amendment No. See Notice, supra note 3, at 56726 and Amendment
execute certain sub-minimum price 1 on its Web site (http:// No. 1, supra note 6, at 11.
variation (‘‘sub-MPV’’) split-price orders nasdaqphlx.cchwallstreet.com/NASDAQPHLX/pdf/ 12 See Notice, supra note 3, at 56726 (citing
phlx-filings/2016/SR-Phlx-2016-82_ Securities Exchange Act Release No. 51820 (June
in the trading crowd. The proposed rule Amendment_1.pdf) when it filed Amendment No.1 10, 2005), 70 FR 35759 (June 21, 2005) (SR–Phlx–
with the Commission. 2005–28)) (approving pilot). See also Securities
11 17 CFR 200.30–3(a)(12). 7 A more detailed description of the proposal
Exchange Act Release No. 55993 (June 29, 2007), 72
1 15 U.S.C. 78s(b)(1). appears in the Notice and in Amendment No. 1. FR 37301 (July 9, 2007) (SR–Phlx–2007–44)
2 17 CFR 240.19b–4. 8 See Phlx Rule 1000(f). (permanent approval)).
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![8242 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices
prices may be difficult to execute Official (‘‘Official’’).19 The Official validate the consummated trade for
without a limited exception to the would confirm his or her understanding compliance with priority and trade-
priority rules.’ ’’ 13 of the order and the availability of the through.26 If the consummated trade is
According to the Exchange, split-price exemption, and if the Floor Broker’s compliant, the Official would permit the
orders are currently processed using request is determined to be valid based Floor Broker to submit the manual split-
either FBMS or paper tickets. The use of on the split-price calculation, announce price trade, via paper ticket reflecting
FBMS or paper tickets depends on to application of the exemption to the the timestamp captured by the Floor
whether the split-price order can be Floor Broker and the trading crowd.20 Broker (or Official), for trade
evenly split using simple calculations or After the Floor Broker negotiates and reporting.27
whether the split-price order involves consummates the trade in the trading The third scenario is similar to the
non-even integers and sub-MPV price crowd, the Floor Broker would second scenario; however, neither the
points, which requires a more timestamp the paper ticket at the time Floor Broker nor the Official captures a
complicated computation to determine the trade is consummated in the trading reliable time that the consummated
the number of contracts to trade at two crowd, which would become the time of trade was submitted to FBMS for
different price points.14 The Exchange execution for the trade.21 The execution.28 In this case, the Official
represents that FBMS does not have the consummated trade would then be would require the Floor Broker to ‘‘re-
capability to calculate specific volumes submitted to the Official to validate for trade’’ the order using a paper ticket in
at two different MPV prices for split- compliance with priority and trade- the sequence described in the first
price orders placed in a sub-MPV through rules. If compliant, the Official scenario above.29
price.15 To compensate for this system would permit the Floor Broker to submit The Exchange also proposes that, in
limitation, the Exchange is proposing to the manual split-price trade, via paper addition to split-price orders executed
amend Phlx Rule 1000(f)(iii) to add a ticket, for trade reporting.22 pursuant to proposed Phlx Rule
new exception from the mandatory use The second scenario involves a 1000(f)(iii)(D), Phlx surveillance staff
of the FBMS that would allow Floor situation in which a Floor Broker would approve all executions submitted
Brokers to execute certain split-price submits a split-price order to FBMS, but under Phlx Rule 1000(f)(iii) to validate
orders in the trading crowd that would the Floor Broker does not realize that that such executions abide by applicable
be validated by Phlx surveillance staff FBMS cannot handle the order because priority and trade-through rules.30 The
for compliance with applicable priority the price is outside the MPV.23 In this Exchange also proposes to round prices
and trade-through rules. case, the Floor Broker would comply if necessary to execute the trade at the
Accordingly, the Exchange is with Phlx Rule 1063(e), expose the MPV, but only to the benefit of a
proposing in Phlx Rule 1000(f)(iii)(D) to order in the trading crowd, and, upon customer order, or, where multiple
allow the following split-price orders to consummation of the transaction, customer orders are involved, for the
be executed in the trading crowd: (1) submit the order to FBMS for execution. customer order that is earliest in time.31
Simple orders not expressed in the Because FBMS cannot calculate the Where no customer order is involved,
applicable sub-MPV and that cannot be split-price for the order, FBMS would the rounding of prices will be applied
evenly split into two whole numbers to reject the submission and the Floor to the non-customer order that is earliest
create a price at the midpoint of the Broker would receive a rejection in time.32
MPV; and (2) complex and multi-leg message.24 Upon the receipt of this
message, the Floor Broker would inform III. Discussion and Commission
orders with at least one option leg with
the Official that FBMS rejected the split- Findings
an odd-numbered volume that must
trade at a sub-MPV price or one leg that price order. The Official would then After careful review, the Commission
qualifies under (1) above.16 review the terms of the consummated finds that the proposed rule change, as
The Exchange represents that this trade and, using the timestamp captured modified by Amendment No. 1, is
exception ‘‘is anticipated to be by the Floor Broker or Official,25 consistent with the requirements of
implemented infrequently and in the Section 6 of the Act 33 and the rules and
19 See id.
following [three] ways.’’ 17 Under the regulations thereunder applicable to a
20 See id. at 13–14.
first scenario, a Floor Broker knows that, 21 See id. at 14. The Exchange notes that,
national securities exchange.34
due to a system limitation, a sub-MPV typically, the Official captures a timestamp
Specifically, the Commission finds that
split-price order cannot be handled by reflecting the time the Official observed that the the proposed rule change is consistent
FBMS.18 In this case, the Floor Broker trade was consummated in the trading crowd and with Section 6(b)(5) of the Act,35 which
may, in its discretion, substitute this timestamp for requires, among other things, that the
would comply with Phlx Rule 1063(e), the timestamp recorded by the Floor Broker at the
expose the order in the trading crowd, time of consummation. See id. rules of a national securities exchange
and request the use of the proposed 22 See Amendment No. 1, supra note 6, at 14–15.
exception from the Options Exchange According to the Exchange, the paper ticket will timestamp recorded by the Floor Broker as the time
reflect the timestamp captured by the Floor Broker that the trade was consummated. See Amendment
13 See Notice, supra note 3, at 56726. Floor
or (as described above) the Official, which will No. 1, supra note 6, at 15. See also supra note 21.
reflect the time the trade was consummated in the 26 See id. at 15–16.
Brokers that avail themselves of the split-price trading crowd. See id. 27 See id. at 16.
priority rule are obligated to ensure compliance 23 See id. at 15. 28 See id.
with Section 11(a) of the Exchange Act. See 24 See id. According to the Exchange, this might 29 See id.
Amendment No. 1, supra note 6, at 12.
14 See Notice, supra note 3, at 56726. Today,
occur if the order is not priced in the minimum 30 See proposed Phlx Rule 1000(f)(iii).
price increment and consequently FBMS would
when the computation is more complicated, 31 See proposed Phlx Rule 1000(f)(iii); see also
reject the trade. See id.
sradovich on DSK3GMQ082PROD with NOTICES
surveillance staff allows a Floor Broker to execute 25 According to the Exchange, the Floor Broker
Notice, supra note 3, at 56727.
split-price orders involving non-even integers and 32 See Amendment No. 1, supra note 6, at 3 and
captures a timestamp for the time that the Floor
sub-MPV price points in open outcry using paper 7.
Broker submitted the proposed execution in FBMS.
tickets pursuant to Phlx Rule 1000(f)(iii)(A). See id. 33 15 U.S.C. 78f.
15 See id. at 56727. See Amendment No. 1, supra
The Exchange further represents that, as in scenario
34 In approving this proposed rule change, the
1, the Official also would typically capture a
note 6, at 20. timestamp reflecting the time that the Official Commission has considered the proposed rule’s
16 See Notice, supra note 3, at 56724.
observed the Floor Broker’s attempt to execute the impact on efficiency, competition, and capital
17 See Amendment No. 1, supra note 6, at 13. formation. See 15 U.S.C. 78c(f).
transaction in FBMS. Surveillance staff may, in its
18 See id. discretion, substitute this timestamp for the 35 15 U.S.C. 78f(b)(5).
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![Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices 8243
be designed to prevent fraudulent and executions pursuant to Phlx Rule should be included on the subject line
manipulative acts and practices, to 1000(f)(iii) and validate compliance if email is used. To help the
promote just and equitable principles of with applicable priority rules of the Commission process and review your
trade, to remove impediments to and Exchange and trade-through rules of the comments more efficiently, please use
perfect the mechanism of a free and Options Order Protection and Locked/ only one method. The Commission will
open market and a national market Crossed Market Plan; 39 and (3) all post all comments on the Commission’s
system, and, in general, to protect relevant trade data resulting from Internet Web site (http://www.sec.gov/
investors and the public interest; and executions pursuant to Phlx Rule rules/sro.shtml). Copies of the
not be designed to permit unfair 1000(f)(iii) will be recorded on both submission, all subsequent
discrimination between customers, paper tickets and in FBMS to ensure a amendments, all written statements
issuers, brokers, or dealers. proper audit trail for timely with respect to the proposed rule
The Commission notes that the surveillance.40 The Commission notes change that are filed with the
Exchange is proposing a new exception that the activities of Phlx Surveillance Commission, and all written
in Phlx Rule 1000(f)(iii)(D) that is under Rule 1000(f)(iii), including the communications relating to the
designed to enable Floor Brokers to substitution of timestamps, should be proposed rule change between the
execute two types of split-price orders carried out in an objective manner and Commission and any person, other than
in the trading crowd that cannot be with due regard to the Exchange’s
processed by FBMS because of a system those that may be withheld from the
obligations under the Act.41 public in accordance with the
limitation.36 The Exchange represents For the foregoing reasons, the
that its surveillance staff will oversee provisions of 5 U.S.C. 552, will be
Commission finds that the proposed available for Web site viewing and
Floor Brokers’ use of the proposed Phlx rule change, as modified by Amendment
Rule 1000(f)(iii)(D) exception, which printing in the Commission’s Public
No. 1, is consistent with Section 6(b)(5)
they do today for current exceptions Reference Room, 100 F Street NE.,
of the Act and the rules and regulations
provided under Phlx Rule 1000(f)(iii).37 Washington, DC 20549, on official
thereunder applicable to national
The Exchange further represents that for business days between the hours of
securities exchanges.
each execution pursuant to Phlx Rule 10:00 a.m. and 3:00 p.m. Copies of such
1000(f)(iii): (1) Exchange surveillance IV. Solicitation of Comments on filing will also be available for
staff will verify that the conditions of Amendment No. 1 to the Proposed Rule inspection and copying at the principal
the exception under Phlx Rule Change office of the Exchange. All comments
1000(f)(iii) are met and will ensure that Interested persons are invited to received will be posted without change;
the proposed exception for split-price submit written data, views, and the Commission does not edit personal
orders will be used only rarely; 38 (2) arguments concerning whether identifying information from
Exchange surveillance staff will approve Amendment No. 1 to the proposed rule submissions. You should submit only
change is consistent with the Act. information that you wish to make
36 The Commission notes that the exception for
Comments may be submitted by any of available publicly. All submissions
split-price orders is similar in purpose to the should refer to File No. SR–Phlx–2016–
current exceptions provided in Phlx Rule the following methods:
1000(f)(iii)(B) and (C). See Securities Exchange Act 82 and should be submitted on or before
Release No. 68960 (February 20, 2013), 78 FR 13132
Electronic Comments February 14, 2017.
(February 26, 2013) (SR–Phlx–2013–09) • Use the Commission’s Internet
(recognizing exceptions for certain executions to
comment form (http://www.sec.gov/ V. Accelerated Approval of Proposed
occur manually in the trading crowd and not Rule Change, as Modified by
through FBMS. ‘‘[ ] FLEX orders will continue to rules/sro.shtml); or
be executable by Floor Brokers in the trading crowd • Send an email to rule-comments@ Amendment No. 1
pursuant to Rule 1079 and 1079A, rather than sec.gov. Please include File No. SR–
through FBMS. This is because FBMS will not be The Commission finds good cause to
able to accept FLEX orders, which have varied and
Phlx–2016–82 on the subject line. approve the proposed rule change, as
complicated terms. Similarly, accommodation Paper Comments modified by Amendment No. 1, prior to
transactions (also known as cabinet trades) will
the thirtieth day after the date of
continue to be executable by Floor Brokers in the • Send paper comments in triplicate
trading crowd pursuant to Rule 1059. Neither FLEX publication of notice of the amended
to Secretary, Securities and Exchange
nor accommodation transactions are executed proposal in the Federal Register. As
through Exchange systems today. Floor Brokers will Commission, 100 F Street NE.,
described above, in Amendment No. 1,
also be permitted to execute orders in the trading Washington, DC 20549–1090.
crowd if they are handling an order with more than
Phlx updated its proposal to reflect the
All submissions should refer to File No. implementation of FBMS 3 and the
15 legs, because the Exchange determined to limit
the complexity of FBMS functionality and does not SR–Phlx–2016–82. This file number retirement of FBMS 2; clarified how
believe that many orders fall into this category or prices may be rounded for non-customer
that Floor Brokers will be adversely affected.’’). 39 See Notice, supra note 3, at 56727. See also
37 See Notice, supra note 3, at 56726. See also Amendment No. 1, supra note 6, at 22. The Options split-price orders; and provided three
Amendment No. 1, supra note 6, at 17. The Order Protection and Locked/Crossed Market Plan examples that explain how split-price
Exchange notes its belief that it is ‘‘necessary and is available at http://www.optionsclearing.com/ orders will be handled by the Exchange
appropriate for the surveillance Staff to exercise components/docs/clearing/services/options_order_ under the proposed exception.42 The
independent judgment with respect to the proper protection_plan.pdf.
timestamp for the consummation of trades on the 40 See Notice, supra note 3, at 56727. See also Commission believes that Amendment
floor of the Exchange.’’ See Amendment No. 1, Amendment No. 1, supra note 6, at 22. No. 1 provided additional specificity
supra note 6, at 14, n.17. According to the 41 The Commission notes that Phlx surveillance regarding the operation of the new
Exchange, ‘‘[t]he surveillance Staff is trained to staff might substitute the timestamp it captures for proposed exception in Phlx Rule
sradovich on DSK3GMQ082PROD with NOTICES
observe objectively the conduct of floor the timestamp captured by a Floor Broker if
participants, to detect conduct that improperly necessary to prevent conduct that would
1000(f)(iii)(D). Accordingly, the
advantages floor participants, and to enforce improperly advantage floor participants or to Commission finds good cause, pursuant
Exchange rules.’’ Id. Finally, the Exchange notes enforce compliance with the Exchange’s rules. It is to Section 19(b)(2) of the Act,43 to
that it believes that ‘‘[t]he absence of engaged and the Commission’s understanding that such a approve the proposed rule change, as
empowered surveillance Staff would undermine the substitution would happen only rarely and only if
integrity of the trading floor on the Exchange.’’ Id. consistent with the authority conferred upon
38 See Notice, supra note 3, at 56728. See also 42 See Amendment No. 1, supra note 6, at 3–4.
surveillance staff by the Exchange’s rules. See
Amendment No. 1, supra note 6, at 23. Amendment No. 1., supra note 6, at 14, n.17. 43 15 U.S.C. 78s(b)(2)
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![8244 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices
modified by Amendment No. 1, on an notice of the filing of a proposed rule Items I, II, and III, below, which Items
accelerated basis. change, or within such longer period up have been prepared by the Exchange.
to 90 days as the Commission may The Commission is publishing this
VI. Conclusion
designate if it finds such longer period notice to solicit comments on the
It is therefore ordered, pursuant to to be appropriate and publishes its proposed rule change from interested
Section 19(b)(2) of the Act,44 that the reasons for so finding or as to which the persons.
proposed rule change (SR–Phlx–2016– self-regulatory organization consents,
82), as modified by Amendment No. 1, the Commission shall either approve the I. Self-Regulatory Organization’s
be, and hereby is, approved on an proposed rule change, disapprove the Statement of the Terms of Substance of
accelerated basis. proposed rule change, or institute the Proposed Rule Change
For the Commission, by the Division of proceedings to determine whether the The Exchange proposes to amend the
Trading and Markets, pursuant to delegated proposed rule change should be Schedule of Fees as described in more
authority.45 disapproved. The 45th day for this filing detail below.
Eduardo A. Aleman, is January 19, 2017. The text of the proposed rule change
Assistant Secretary. The Commission is extending the 45- is available on the Exchange’s Web site
[FR Doc. 2017–01460 Filed 1–23–17; 8:45 am] day time period for Commission action at http://www.ise.com, at the principal
BILLING CODE 8011–01–P
on the proposed rule change. The office of the Exchange, and at the
Commission finds that it is appropriate Commission’s Public Reference Room.
to designate a longer period within
which to take action on the proposed II. Self-Regulatory Organization’s
SECURITIES AND EXCHANGE Statement of the Purpose of, and
COMMISSION rule change so that it has sufficient time
to consider the Exchange’s proposal, the Statutory Basis for, the Proposed Rule
[Release No. 34–79810; File No. SR– comments received, and any response to Change
NASDAQ–2016–161]
the comments by the Exchange. In its filing with the Commission, the
Accordingly, pursuant to Section Exchange included statements
Self-Regulatory Organizations; The
19(b)(2) of the Act 6 and for the reasons concerning the purpose of and basis for
Nasdaq Stock Market LLC; Notice of
stated above, the Commission the proposed rule change and discussed
Designation of Longer Period for
designates March 5, 2017, as the date by any comments it received on the
Commission Action on Proposed Rule
which the Commission shall either proposed rule change. The text of these
Change To Adopt a New Extended Life
approve or disapprove, or institute statements may be examined at the
Priority Order Attribute Under Rule
proceedings to determine whether to places specified in Item IV below. The
4703, and To Make Related Changes to
disapprove, the proposed rule change Exchange has prepared summaries, set
Rules 4702, 4752, 4753, 4754, and 4757
(File No. SR–NASDAQ–2016–161). forth in sections A, B, and C below, of
January 17, 2017. For the Commission, by the Division of the most significant aspects of such
On November 17, 2016, The Nasdaq Trading and Markets, pursuant to delegated statements.
Stock Market LLC (‘‘Nasdaq’’ or authority.7
‘‘Exchange’’) filed with the Securities A. Self-Regulatory Organization’s
Eduardo A. Aleman,
and Exchange Commission Statement of the Purpose of, and
Assistant Secretary.
(‘‘Commission’’), pursuant to Section Statutory Basis for, the Proposed Rule
[FR Doc. 2017–01465 Filed 1–23–17; 8:45 am] Change
19(b)(1) of the Securities Exchange Act BILLING CODE 8011–01–P
of 1934 (‘‘Act’’) 1 and Rule 19b–4 1. Purpose
thereunder,2 a proposed rule change to
The purpose of the proposed rule
adopt a new Extended Life Priority SECURITIES AND EXCHANGE change is to amend the Exchange’s
Order Attribute. The proposed rule COMMISSION Schedule of Fees to eliminate, for all
change was published for comment in
[Release No. 34–79811; File No. SR–ISE– symbols other than FX symbols, the
the Federal Register on December 5, 2017–01] $0.20 per contract fee applicable to
2016.3 The Commission has received six
Professional Customers 3 for the
comment letters on the proposal.4 Self-Regulatory Organizations;
Section 19(b)(2) of the Act 5 provides initiating or contra side of Qualified
International Securities Exchange, Contingent Cross (‘‘QCC’’) orders or
that within 45 days of the publication of LLC; Notice of Filing and Immediate orders executed in the Solicitation
Effectiveness of Proposed Rule Mechanism (‘‘Solicitation’’ orders). The
44 See id.
45 17
Change To Amend the Schedule of proposed rule change will lower the
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
Fees rebates that the Exchange provides to
2 17 CFR 240.19b–4.
January 17, 2017. members acting as agent when
3 See Securities Exchange Act Release No. 79428
Pursuant to Section 19(b)(1) of the Professional Customers trade with other
(November 30, 2016), 81 FR 87628. Professional Customers and when they
4 See Letters to Brent J. Fields, Secretary, Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 trade with Priority Customers for QCC
Commission, from Joseph Saluzzi and Sal Arnuk,
Partners, Themis Trading LLC, dated December 19, notice is hereby given that on January 3, and other solicited crossing orders 4 to
2016; Eric Swanson, EVP, General Counsel and 2017, the International Securities the same per contract rates and volume
Secretary, Bats Global Markets, Inc., dated
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) tiers that the Exchange presently
December 22, 2016; Adam Nunes, Head of Business provides to members acting as agent
sradovich on DSK3GMQ082PROD with NOTICES
Development, Hudson River Trading LLC, dated filed with the Securities and Exchange
December 22, 2016; Joanna Mallers, Secretary, FIA Commission (‘‘Commission’’) the
Principal Traders Group, dated December 23, 2016; proposed rule change as described in 3 A ‘‘Professional Customer’’ is a person or entity
Adam C. Cooper, Senior Managing Director and that is not a broker/dealer and is not a Priority
Chief Legal Officer, Citadel Securities, dated Customer. See ISE Rule 100(37C).
6 15 U.S.C. 78s(b)(2).
December 27, 2016; and Andrew Stevens, General 4 As used herein, the phrase ‘‘other solicited
7 17 CFR 200.30–3(a)(31).
Counsel, IMC Financial Markets, dated December crossing orders’’ refers to solicited crossing orders
28, 2016. 1 15 U.S.C. 78s(b)(1).
executed in the Solicitation, Facilitation, and Price
5 15 U.S.C. 78s(b)(2). 2 17 CFR 240.19b–4. Improvement Mechanisms.
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Document Created: 2018-02-01 15:12:27
Document Modified: 2018-02-01 15:12:27
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 8241 |
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