83_FR_19672 83 FR 19586 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Nasdaq Rule 4703(a) To Allow Members To Designate an Order with a RTFY or SCAN Routing Order Attribute To Activate at 7:00 a.m. ET

83 FR 19586 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Nasdaq Rule 4703(a) To Allow Members To Designate an Order with a RTFY or SCAN Routing Order Attribute To Activate at 7:00 a.m. ET

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 86 (May 3, 2018)

Page Range19586-19588
FR Document2018-09341

Federal Register, Volume 83 Issue 86 (Thursday, May 3, 2018) 
[Federal Register Volume 83, Number 86 (Thursday, May 3, 2018)]
[Notices]
[Pages 19586-19588]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-09341]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83125; File No. SR-NASDAQ-2017-088]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Amendment No. 2 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To 
Amend Nasdaq Rule 4703(a) To Allow Members To Designate an Order with a 
RTFY or SCAN Routing Order Attribute To Activate at 7:00 a.m. ET

April 27, 2018.

I. Introduction

    On August 30, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Nasdaq Rule 4703(a) relating to the times 
for activating an order with a RTFY or SCAN routing order attribute. 
The proposed rule change was published for comment in the Federal 
Register on September 18, 2017.\3\ On October 31, 2017, pursuant to 
Section 19(b)(2) of the Act,\4\ the Commission designated a longer 
period within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
disapprove the proposed rule change.\5\ On December 13, 2017, the 
Exchange filed Amendment No. 1 to the proposed rule change, which 
amended and superseded the proposed rule change as originally filed.\6\ 
On December 15, 2017, the Commission published notice of Amendment No. 
1 and instituted proceedings under Section 19(b)(2)(B) of the Act \7\ 
to determine whether to approve or disapprove the proposed rule change, 
as modified by Amendment No. 1.\8\ On March 14, 2018, pursuant to 
Section 19(b)(2) of the Act,\9\ the Commission designated a longer 
period within which to issue an order approving or disapproving the 
proposed rule change.\10\ On April 19, 2018, the Exchange filed 
Amendment No. 2 to the proposed rule change, which amended and 
superseded the proposed rule change, as modified by Amendment No. 
1.\11\ The Commission has received no

[[Page 19587]]

comments on the proposed rule change. The Commission is publishing this 
notice to solicit comments on Amendment No. 2 from interested persons, 
and is approving the proposed rule change, as modified by Amendment No. 
2, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81579 (September 12, 
2017), 82 FR 43584.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 81986, 82 FR 51453 
(November 6, 2017). The Commission designated December 17, 2017 as 
the date by which the Commission shall approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \6\ In Amendment No. 1, the Exchange: (1) Modified the proposal 
to allow members entering an order with a RTFY or SCAN routing order 
attribute to designate the order to activate at a specific time 
during Pre-Market Hours (rather than System Hours) on the same day; 
(2) specified that the proposed functionality would be offered on a 
port level basis; (3) stated that all of the times-in-force in 
Nasdaq Rule 4703(a) currently apply to orders with RTFY or SCAN 
routing order attributes and made corresponding clarifications and 
corrections throughout the proposal; (4) provided additional 
information regarding why members might use the proposed 
functionality; and (5) provided additional discussion regarding 
members' best execution obligations and the application of the 
Exchange's regulatory checks associated with the proposed 
functionality, and reminded members of their regulatory obligations 
(e.g., Market Access Rule, Regulation SHO) when using the proposed 
functionality. Amendment No. 1 is available at https://www.sec.gov/comments/sr-nasdaq-2017-088/nasdaq2017088-2798107-161689.pdf.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 82335, 82 FR 60637 
(December 21, 2017).
    \9\ 15 U.S.C. 78s(b)(2).
    \10\ See Securities Exchange Act Release No. 82871, 83 FR 12229 
(March 20, 2018). The Commission designated May 16, 2018 as the date 
by which the Commission shall either approve or disapprove the 
proposed rule change.
    \11\ In Amendment No. 2, the Exchange: (1) Further narrowed the 
proposal by allowing members to designate orders with RTFY or SCAN 
routing order attributes to activate at 7:00 a.m. ET; (2) provided 
additional information regarding why members might use the proposed 
functionality; and (3) compared the proposed functionality to 
existing functionalities on other exchanges. Amendment No. 2 is 
available at https://www.sec.gov/comments/sr-nasdaq-2017-088/nasdaq2017088-3476253-162214.pdf.
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II. Description of the Proposal

    The Exchange proposes to amend Nasdaq Rule 4703(a) to allow members 
to designate a 7:00 a.m. ET activation time for an order with a RTFY or 
SCAN routing order attribute.
    RTFY is a routing option available for an order that qualifies as a 
designated retail order under which orders check the system for 
available shares only if so instructed by the entering firm and are 
thereafter routed to destinations on the system routing table.\12\ If 
shares remain unexecuted after routing, they are posted to the Nasdaq 
book.\13\ Once on the book, should the order subsequently be locked or 
crossed by another market center, the system will not route the order 
to the locking or crossing market center.\14\ RTFY is designed to allow 
orders to participate in the opening, reopening, and closing process of 
the primary listing market for a security.\15\ SCAN is a routing option 
under which orders check the system for available shares and 
simultaneously route the remaining shares to destinations on the system 
routing table.\16\ If shares remain unexecuted after routing, they are 
posted on the Nasdaq book.\17\ Once on the book, should the order 
subsequently be locked or crossed by another market center, the system 
will not route the order to the locking or crossing market center.\18\
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    \12\ See Nasdaq Rule 4758(a)(1)(A)(v)b.
    \13\ See id.
    \14\ See id.
    \15\ See id.
    \16\ See Nasdaq Rule 4758(a)(1)(A)(iv).
    \17\ See id.
    \18\ See id.
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    Nasdaq Rule 4703(a) provides the times-in-force that may be 
assigned to orders entered into the system. According to Nasdaq Rule 
4703(a), members specify an order's time-in-force by designating a time 
at which the order will become active and a time at which the order 
will cease to be active. All of the times-in-force currently described 
in Nasdaq Rule 4703(a) are applicable to orders with RTFY or SCAN 
routing order attributes.\19\ According to the Exchange, during Pre-
Market Hours,\20\ members usually designate orders with RTFY or SCAN 
routing order attributes to activate upon entry or at 8:00 a.m. ET.\21\ 
The Exchange now proposes to amend Nasdaq Rule 4703(a) to provide that 
a member entering an order with a RTFY or SCAN routing order attribute 
may designate the order to activate at 7:00 a.m. ET if entered prior to 
7:00 a.m. ET on the same day.\22\ As with the existing 8:00 a.m. ET 
activation time, the Exchange proposes to offer the 7:00 a.m. ET 
activation time on a port level basis.\23\
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    \19\ See Amendment No. 2 at n.12.
    \20\ ``Pre-Market Hours'' means the period of time beginning at 
4:00 a.m. ET and ending immediately prior to the commencement of 
Market Hours. See Nasdaq Rule 4701(g). ``Market Hours'' means the 
period of time beginning at 9:30 a.m. ET and ending at 4:00 p.m. ET 
(or such earlier time as may be designated by Nasdaq on a day when 
Nasdaq closes early). See id.
    \21\ See Amendment No. 2 at 5.
    \22\ Orders can be entered into the system from 4:00 a.m. ET 
until 8:00 p.m. ET. See Nasdaq Rule 4756(a)(3).
    \23\ See Amendment No. 2 at n.14. As a result, if, for example, 
a member cancels an order entered through a port set for 7:00 a.m. 
ET activation and wishes the order to instead activate at 8:00 a.m. 
ET, it must either have another port set for activation at 8:00 a.m. 
ET or, alternatively, enter the order at that time for immediate 
activation. See id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 2, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\24\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\25\ which requires, among other things, 
that the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. The Commission notes that the 
proposal would provide Exchange members with an additional time for 
activating orders with RTFY or SCAN routing order attributes, and could 
facilitate the entry of these orders.\26\
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    \24\ 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).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ The Exchange states that, should it become aware of other 
orders that would also benefit from this change, it would consider 
filing another rule change to extend the proposed activation 
functionality to such other orders. See Amendment No. 2 at 13-14.
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    The Commission notes that, as amended, the proposal would allow 
members to activate orders with RTFY or SCAN routing order attributes 
specifically at 7:00 a.m. ET. According to the Exchange, market 
participants have coded their systems for trading during Pre-Market 
Hours, such as 7:00 a.m. ET, as evidenced by trading sessions on other 
exchanges \27\ that start at 7:00 a.m. ET.\28\ The Commission believes 
that Exchange members may wish to activate orders with RTFY or SCAN 
routing order attributes at 7:00 a.m. ET to benefit from the liquidity 
at that time. The Commission also notes that the 7:00 a.m. ET 
activation time is similar to existing functionalities on certain other 
exchanges where orders can activate at 7:00 a.m. ET.\29\
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    \27\ See infra note 29.
    \28\ See Amendment No. 2 at 7.
    \29\ See Cboe BZX Exchange, Inc. Rule 1.5(ee); Cboe BYX 
Exchange, Inc. Rule 1.5(ee); Cboe EDGA Exchange, Inc. Rule 1.5(ii); 
and Cboe EDGX Exchange, Inc. Rule 1.5(ii).
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    The Exchange represents that as of the time that an order with a 
RTFY or SCAN routing order attribute is activated, the Exchange would 
subject orders that are eligible for display or execution to all of the 
Exchange's standard regulatory checks, as it currently does with all 
orders upon entry.\30\ These checks include compliance with Regulation 
NMS, Regulation SHO, and relevant Exchange rules.\31\ Moreover, the 
Exchange reminds its members of their regulatory obligations when 
submitting an order with a RTFY or SCAN routing order attribute.\32\ In 
particular, the Exchange reminds that members must comply with the 
Market Access Rule, which requires, among other things, pre-trade 
controls and procedures that are reasonably designed to assure 
compliance with Exchange trading rules and Commission rules pursuant to 
Regulation SHO and Regulation NMS.\33\ The Exchange also notes that a 
member's procedures must be reasonably designed to ensure compliance 
with the applicable regulatory requirements, not just at the time the 
order is routed to the Exchange, but also at the time the order is 
activated and becomes eligible for execution.\34\
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    \30\ See Amendment No. 2 at 10.
    \31\ See id.
    \32\ See id.
    \33\ See id. at 10-11.
    \34\ See id. at 11.
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    The Commission further notes the Exchange's discussion of the best 
execution obligations of members

[[Page 19588]]

utilizing the proposed 7:00 a.m. ET activation time.\35\ The Exchange 
notes that members may cancel their inactive orders with RTFY or SCAN 
routing order attributes at any time prior to the time the order 
activates, which would allow members to react to conditions that may 
cause them to violate their best execution obligations to their 
customers should the orders activate and execute.\36\ The Exchange also 
notes that members may cancel their active orders with RTFY or SCAN 
routing order attributes and enter new orders at another time that the 
members believe will satisfy their best execution obligations.\37\ The 
Commission notes that Exchange members' use of the proposed 7:00 a.m. 
ET activation time must be consistent with their best execution 
obligations.
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    \35\ See id. at 8-10.
    \36\ See id. at 8.
    \37\ See id.
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IV. Solicitation of Comments on Amendment No. 2 to the Proposed Rule 
Change

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 2 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-2017-088 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-2017-088. 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 website (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 website 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 submissions 
should refer to File Number SR-NASDAQ-2017-088 and should be submitted 
on or before May 24, 2018.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 2

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 2, prior to the thirtieth day 
after the date of publication of notice of the filing of Amendment No. 
2 in the Federal Register. As noted above, in Amendment No. 2, the 
Exchange narrowed the proposal from allowing members to activate orders 
with RTFY or SCAN routing order attributes at any time during Pre-
Market Hours, to specifically allowing members to activate these orders 
at 7:00 a.m. ET, which is similar to existing functionalities on 
certain other exchanges. Moreover, Amendment No. 2 provided additional 
explanation regarding the potential benefits of a 7:00 a.m. ET 
activation time. Accordingly, the Commission finds good cause, pursuant 
to Section 19(b)(2) of the Act,\38\ to approve the proposed rule 
change, as modified by Amendment No. 2, on an accelerated basis.
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    \38\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\39\ that the proposed rule change (SR-NASDAQ-2017-088), as 
modified by Amendment No. 2, be, and hereby is, approved on an 
accelerated basis.
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    \39\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\40\
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    \40\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-09341 Filed 5-2-18; 8:45 am]
BILLING CODE 8011-01-P

19586 Federal Register / Vol. 83, No. 86 / Thursday, May 3, 2018 / Notices C. Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be October 31, 2017, pursuant to Section Statement on Comments on the available for website viewing and 19(b)(2) of the Act,4 the Commission Proposed Rule Change Received From printing in the Commission’s Public designated a longer period within which Members, Participants, or Others Reference Room, 100 F Street NE, to approve the proposed rule change, No written comments were solicited Washington, DC 20549 on official disapprove the proposed rule change, or business days between the hours of institute proceedings to determine or received with respect to the proposed 10:00 a.m. and 3:00 p.m. Copies of the whether to disapprove the proposed rule change. filing also will be available for rule change.5 On December 13, 2017, III. Date of Effectiveness of the inspection and copying at the principal the Exchange filed Amendment No. 1 to Proposed Rule Change and Timing for office of the Exchange. All comments the proposed rule change, which Commission Action received will be posted without change. amended and superseded the proposed Within 45 days of the date of Persons submitting comments are rule change as originally filed.6 On publication of this notice in the Federal cautioned that we do not redact or edit December 15, 2017, the Commission Register or within such longer period personal identifying information from published notice of Amendment No. 1 up to 90 days (i) as the Commission may comment submissions. You should and instituted proceedings under submit only information that you wish Section 19(b)(2)(B) of the Act 7 to designate if it finds such longer period to make available publicly. All determine whether to approve or to be appropriate and publishes its submissions should refer to File disapprove the proposed rule change, as reasons for so finding or (ii) as to which Number SR–NYSEArca-2018–25 and modified by Amendment No. 1.8 On the self-regulatory organization should be submitted on or before May March 14, 2018, pursuant to Section consents, the Commission will: 24, 2018. 19(b)(2) of the Act,9 the Commission (A) By order approve or disapprove designated a longer period within which the proposed rule change, or For the Commission, by the Division of Trading and Markets, pursuant to delegated to issue an order approving or (B) institute proceedings to determine authority.22 disapproving the proposed rule whether the proposed rule change Robert W. Errett, change.10 On April 19, 2018, the should be disapproved. Exchange filed Amendment No. 2 to the Deputy Secretary. IV. Solicitation of Comments proposed rule change, which amended [FR Doc. 2018–09340 Filed 5–2–18; 8:45 am] and superseded the proposed rule Interested persons are invited to BILLING CODE 8011–01–P change, as modified by Amendment No. submit written data, views, and 1.11 The Commission has received no arguments concerning the foregoing, including whether the proposed rule SECURITIES AND EXCHANGE 4 15 U.S.C. 78s(b)(2). change is consistent with the Act. COMMISSION 5 See Securities Exchange Act Release No. 81986, Comments may be submitted by any of 82 FR 51453 (November 6, 2017). The Commission [Release No. 34–83125; File No. SR– the following methods: NASDAQ–2017–088] designated December 17, 2017 as the date by which the Commission shall approve or disapprove, or Electronic Comments institute proceedings to determine whether to Self-Regulatory Organizations; The disapprove, the proposed rule change. • Use the Commission’s internet Nasdaq Stock Market LLC; Notice of 6 In Amendment No. 1, the Exchange: (1) comment form (http://www.sec.gov/ Filing of Amendment No. 2 and Order Modified the proposal to allow members entering rules/sro.shtml); or Granting Accelerated Approval of a an order with a RTFY or SCAN routing order • Send an email to rule-comments@ Proposed Rule Change, as Modified by attribute to designate the order to activate at a specific time during Pre-Market Hours (rather than sec.gov. Please include File Number SR– Amendment No. 2, To Amend Nasdaq System Hours) on the same day; (2) specified that NYSEArca–2018–25 on the subject line. Rule 4703(a) To Allow Members To the proposed functionality would be offered on a port level basis; (3) stated that all of the times-in- Paper Comments Designate an Order with a RTFY or force in Nasdaq Rule 4703(a) currently apply to SCAN Routing Order Attribute To orders with RTFY or SCAN routing order attributes • Send paper comments in triplicate Activate at 7:00 a.m. ET and made corresponding clarifications and to Secretary, Securities and Exchange corrections throughout the proposal; (4) provided Commission, 100 F Street NE, April 27, 2018. additional information regarding why members Washington, DC 20549–1090. might use the proposed functionality; and (5) I. Introduction provided additional discussion regarding members’ All submissions should refer to File best execution obligations and the application of Number SR–NYSEArca–2018–25. This On August 30, 2017, The Nasdaq the Exchange’s regulatory checks associated with file number should be included on the Stock Market LLC (‘‘Nasdaq’’ or the proposed functionality, and reminded members subject line if email is used. To help the ‘‘Exchange’’) filed with the Securities of their regulatory obligations (e.g., Market Access and Exchange Commission Rule, Regulation SHO) when using the proposed Commission process and review your functionality. Amendment No. 1 is available at comments more efficiently, please use (‘‘Commission’’), pursuant to Section https://www.sec.gov/comments/sr-nasdaq-2017- only one method. The Commission will 19(b)(1) of the Securities Exchange Act 088/nasdaq2017088-2798107-161689.pdf. post all comments on the Commission’s of 1934 (‘‘Act’’) 1 and Rule 19b–4 7 15 U.S.C. 78s(b)(2)(B). internet website (http://www.sec.gov/ thereunder,2 a proposed rule change to 8 See Securities Exchange Act Release No. 82335, amend Nasdaq Rule 4703(a) relating to 82 FR 60637 (December 21, 2017). rules/sro.shtml). Copies of the 9 15 U.S.C. 78s(b)(2). submission, all subsequent the times for activating an order with a 10 See Securities Exchange Act Release No. 82871, amendments, all written statements RTFY or SCAN routing order attribute. 83 FR 12229 (March 20, 2018). The Commission with respect to the proposed rule The proposed rule change was designated May 16, 2018 as the date by which the sradovich on DSK3GMQ082PROD with NOTICES change that are filed with the published for comment in the Federal Commission shall either approve or disapprove the Register on September 18, 2017.3 On proposed rule change. Commission, and all written 11 In Amendment No. 2, the Exchange: (1) Further communications relating to the 22 17 narrowed the proposal by allowing members to CFR 200.30–3(a)(12). designate orders with RTFY or SCAN routing order proposed rule change between the 1 15 U.S.C. 78s(b)(1). attributes to activate at 7:00 a.m. ET; (2) provided Commission and any person, other than 2 17 CFR 240.19b–4. additional information regarding why members those that may be withheld from the 3 See Securities Exchange Act Release No. 81579 might use the proposed functionality; and (3) public in accordance with the (September 12, 2017), 82 FR 43584. compared the proposed functionality to existing VerDate Sep<11>2014 17:29 May 02, 2018 Jkt 244001 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 E:\FR\FM\03MYN1.SGM 03MYN1

Federal Register / Vol. 83, No. 86 / Thursday, May 3, 2018 / Notices 19587 comments on the proposed rule change. Market Hours,20 members usually The Commission notes that, as The Commission is publishing this designate orders with RTFY or SCAN amended, the proposal would allow notice to solicit comments on routing order attributes to activate upon members to activate orders with RTFY Amendment No. 2 from interested entry or at 8:00 a.m. ET.21 The Exchange or SCAN routing order attributes persons, and is approving the proposed now proposes to amend Nasdaq Rule specifically at 7:00 a.m. ET. According rule change, as modified by Amendment 4703(a) to provide that a member to the Exchange, market participants No. 2, on an accelerated basis. entering an order with a RTFY or SCAN have coded their systems for trading routing order attribute may designate during Pre-Market Hours, such as 7:00 II. Description of the Proposal the order to activate at 7:00 a.m. ET if a.m. ET, as evidenced by trading The Exchange proposes to amend entered prior to 7:00 a.m. ET on the sessions on other exchanges 27 that start Nasdaq Rule 4703(a) to allow members same day.22 As with the existing 8:00 at 7:00 a.m. ET.28 The Commission to designate a 7:00 a.m. ET activation a.m. ET activation time, the Exchange believes that Exchange members may time for an order with a RTFY or SCAN proposes to offer the 7:00 a.m. ET wish to activate orders with RTFY or routing order attribute. activation time on a port level basis.23 SCAN routing order attributes at 7:00 RTFY is a routing option available for a.m. ET to benefit from the liquidity at III. Discussion and Commission an order that qualifies as a designated that time. The Commission also notes Findings that the 7:00 a.m. ET activation time is retail order under which orders check After careful review, the Commission similar to existing functionalities on the system for available shares only if so finds that the proposed rule change, as certain other exchanges where orders instructed by the entering firm and are modified by Amendment No. 2, is can activate at 7:00 a.m. ET.29 thereafter routed to destinations on the consistent with the requirements of the The Exchange represents that as of the system routing table.12 If shares remain Act and the rules and regulations time that an order with a RTFY or SCAN unexecuted after routing, they are thereunder applicable to a national routing order attribute is activated, the posted to the Nasdaq book.13 Once on securities exchange.24 In particular, the Exchange would subject orders that are the book, should the order subsequently Commission finds that the proposed eligible for display or execution to all of be locked or crossed by another market rule change is consistent with Section the Exchange’s standard regulatory center, the system will not route the 6(b)(5) of the Act,25 which requires, checks, as it currently does with all order to the locking or crossing market among other things, that the rules of a orders upon entry.30 These checks center.14 RTFY is designed to allow national securities exchange be include compliance with Regulation orders to participate in the opening, designed to prevent fraudulent and NMS, Regulation SHO, and relevant reopening, and closing process of the manipulative acts and practices, to Exchange rules.31 Moreover, the primary listing market for a security.15 promote just and equitable principles of Exchange reminds its members of their SCAN is a routing option under which trade, to foster cooperation and regulatory obligations when submitting orders check the system for available coordination with persons engaged in an order with a RTFY or SCAN routing shares and simultaneously route the facilitating transactions in securities, to order attribute.32 In particular, the remaining shares to destinations on the remove impediments to and perfect the Exchange reminds that members must system routing table.16 If shares remain mechanism of a free and open market comply with the Market Access Rule, unexecuted after routing, they are and a national market system and, in which requires, among other things, pre- posted on the Nasdaq book.17 Once on general, to protect investors and the trade controls and procedures that are the book, should the order subsequently public interest. The Commission notes reasonably designed to assure be locked or crossed by another market that the proposal would provide compliance with Exchange trading rules center, the system will not route the Exchange members with an additional and Commission rules pursuant to order to the locking or crossing market time for activating orders with RTFY or Regulation SHO and Regulation NMS.33 center.18 SCAN routing order attributes, and The Exchange also notes that a Nasdaq Rule 4703(a) provides the could facilitate the entry of these member’s procedures must be times-in-force that may be assigned to orders.26 reasonably designed to ensure orders entered into the system. compliance with the applicable According to Nasdaq Rule 4703(a), 20 ‘‘Pre-Market Hours’’ means the period of time regulatory requirements, not just at the members specify an order’s time-in- beginning at 4:00 a.m. ET and ending immediately time the order is routed to the Exchange, force by designating a time at which the prior to the commencement of Market Hours. See but also at the time the order is Nasdaq Rule 4701(g). ‘‘Market Hours’’ means the order will become active and a time at period of time beginning at 9:30 a.m. ET and ending activated and becomes eligible for which the order will cease to be active. at 4:00 p.m. ET (or such earlier time as may be execution.34 All of the times-in-force currently designated by Nasdaq on a day when Nasdaq closes The Commission further notes the described in Nasdaq Rule 4703(a) are early). See id. Exchange’s discussion of the best 21 See Amendment No. 2 at 5. applicable to orders with RTFY or execution obligations of members 22 Orders can be entered into the system from 4:00 SCAN routing order attributes.19 a.m. ET until 8:00 p.m. ET. See Nasdaq Rule According to the Exchange, during Pre- 4756(a)(3). this change, it would consider filing another rule 23 See Amendment No. 2 at n.14. As a result, if, change to extend the proposed activation functionality to such other orders. See Amendment functionalities on other exchanges. Amendment No. for example, a member cancels an order entered No. 2 at 13–14. 2 is available at https://www.sec.gov/comments/sr- through a port set for 7:00 a.m. ET activation and 27 See infra note 29. nasdaq-2017-088/nasdaq2017088-3476253- wishes the order to instead activate at 8:00 a.m. ET, 28 See Amendment No. 2 at 7. 162214.pdf. it must either have another port set for activation sradovich on DSK3GMQ082PROD with NOTICES 29 See Cboe BZX Exchange, Inc. Rule 1.5(ee); Cboe 12 See Nasdaq Rule 4758(a)(1)(A)(v)b. at 8:00 a.m. ET or, alternatively, enter the order at that time for immediate activation. See id. BYX Exchange, Inc. Rule 1.5(ee); Cboe EDGA 13 See id. 24 In approving this proposed rule change, the Exchange, Inc. Rule 1.5(ii); and Cboe EDGX 14 See id. Exchange, Inc. Rule 1.5(ii). Commission has considered the proposed rule’s 15 See id. 30 See Amendment No. 2 at 10. impact on efficiency, competition, and capital 16 See Nasdaq Rule 4758(a)(1)(A)(iv). 31 See id. formation. See 15 U.S.C. 78c(f). 17 See id. 25 15 U.S.C. 78f(b)(5). 32 See id. 18 See id. 26 The Exchange states that, should it become 33 See id. at 10–11. 19 See Amendment No. 2 at n.12. aware of other orders that would also benefit from 34 See id. at 11. VerDate Sep<11>2014 17:29 May 02, 2018 Jkt 244001 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 E:\FR\FM\03MYN1.SGM 03MYN1

19588 Federal Register / Vol. 83, No. 86 / Thursday, May 3, 2018 / Notices utilizing the proposed 7:00 a.m. ET provisions of 5 U.S.C. 552, will be SOCIAL SECURITY ADMINISTRATION activation time.35 The Exchange notes available for website viewing and [Docket No. SSA–2018–0012] that members may cancel their inactive printing in the Commission’s Public orders with RTFY or SCAN routing Reference Room, 100 F Street NE, Privacy Act of 1974; System of order attributes at any time prior to the Washington, DC 20549, on official Records time the order activates, which would business days between the hours of allow members to react to conditions 10:00 a.m. and 3:00 p.m. Copies of the AGENCY: Office of Analytics, Review, that may cause them to violate their best filing also will be available for and Oversight, Social Security execution obligations to their customers inspection and copying at the principal Administration (SSA). should the orders activate and office of the Exchange. All comments ACTION: Notice of a new system of execute.36 The Exchange also notes that received will be posted without change. records. members may cancel their active orders Persons submitting comments are with RTFY or SCAN routing order cautioned that we do not redact or edit SUMMARY: In accordance with the attributes and enter new orders at personal identifying information from Privacy Act, we are issuing public another time that the members believe comment submissions. You should notice of our intent to establish a new will satisfy their best execution submit only information that you wish system of records entitled, Anti-Fraud obligations.37 The Commission notes to make available publicly. All Enterprise Solution (AFES) (60–0388), that Exchange members’ use of the submissions should refer to File hereinafter called the AFES Record proposed 7:00 a.m. ET activation time Number SR–NASDAQ–2017–088 and System. The AFES Record System is an must be consistent with their best should be submitted on or before May agency-wide and overarching system execution obligations. 24, 2018. that includes the ability to detect, prevent, and mitigate fraud in SSA’s IV. Solicitation of Comments on V. Accelerated Approval of Proposed programs. The AFES Record System Amendment No. 2 to the Proposed Rule Rule Change, as Modified by will collect and maintain personally Change Amendment No. 2 identifiable information (PII) to assist in Interested persons are invited to The Commission finds good cause to identifying suspicious or potentially submit written data, views, and approve the proposed rule change, as fraudulent activities performed by arguments concerning whether modified by Amendment No. 2, prior to individuals across all the agency’s Amendment No. 2 is consistent with the the thirtieth day after the date of programs and service delivery methods. Act. Comments may be submitted by publication of notice of the filing of This notice publishes details of the any of the following methods: Amendment No. 2 in the Federal system as set forth under the caption, Register. As noted above, in SUPPLEMENTARY INFORMATION. Electronic Comments Amendment No. 2, the Exchange DATES: The system of records notice • Use the Commission’s internet narrowed the proposal from allowing (SORN) is applicable upon its comment form (http://www.sec.gov/ members to activate orders with RTFY publication in today’s Federal Register, rules/sro.shtml); or or SCAN routing order attributes at any with the exception of the routine uses, • Send an email to rule-comments@ time during Pre-Market Hours, to which are effective June 4, 2018. We sec.gov. Please include File Number SR– specifically allowing members to invite public comment on the routine NASDAQ–2017–088 on the subject line. activate these orders at 7:00 a.m. ET, uses or other aspects of this SORN. In which is similar to existing accordance with 5 U.S.C. 552a(e)(4) and Paper Comments functionalities on certain other • Send paper comments in triplicate (e)(11), the public is given a 30-day exchanges. Moreover, Amendment No. 2 to Secretary, Securities and Exchange period in which to submit comments. provided additional explanation Commission, 100 F Street NE, Therefore, please submit any comments regarding the potential benefits of a 7:00 Washington, DC 20549–1090. by June 4, 2018. a.m. ET activation time. Accordingly, the Commission finds good cause, ADDRESSES: The public, Office of All submissions should refer to File Number SR–NASDAQ–2017–088. This pursuant to Section 19(b)(2) of the Management and Budget (OMB), and file number should be included on the Act,38 to approve the proposed rule Congress may comment on this subject line if email is used. To help the change, as modified by Amendment No. publication by writing to the Executive Commission process and review your 2, on an accelerated basis. Director, Office of Privacy and comments more efficiently, please use Disclosure, Office of the General VI. Conclusion Counsel, SSA, Room G–401 West High only one method. The Commission will post all comments on the Commission’s It is therefore ordered, pursuant to Rise, 6401 Security Boulevard, internet website (http://www.sec.gov/ Section 19(b)(2) of the Act,39 that the Baltimore, Maryland 21235–6401, or rules/sro.shtml). Copies of the proposed rule change (SR–NASDAQ– through the Federal e-Rulemaking Portal submission, all subsequent 2017–088), as modified by Amendment at http://www.regulations.gov, please amendments, all written statements No. 2, be, and hereby is, approved on an reference docket number SSA–2018– with respect to the proposed rule accelerated basis. 0012. All comments we receive will be change that are filed with the For the Commission, by the Division of available for public inspection at the Commission, and all written Trading and Markets, pursuant to delegated above address and we will post them to communications relating to the authority.40 http://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Neil sradovich on DSK3GMQ082PROD with NOTICES proposed rule change between the Robert W. Errett, Commission and any person, other than Deputy Secretary. Etter, Government Information those that may be withheld from the [FR Doc. 2018–09341 Filed 5–2–18; 8:45 am] Specialist, Privacy Implementation public in accordance with the BILLING CODE 8011–01–P Division, Office of Privacy and Disclosure, Office of the General 35 See id. at 8–10. 38 15 U.S.C. 78s(b)(2). Counsel, SSA, Room G–401 West High 36 See id. at 8. 39 Id. Rise, 6401 Security Boulevard, 37 See id. 40 17 CFR 200.30–3(a)(12). Baltimore, Maryland 21235–6401, VerDate Sep<11>2014 17:29 May 02, 2018 Jkt 244001 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 E:\FR\FM\03MYN1.SGM 03MYN1


Document Created: 2018-05-02 23:48:42
Document Modified: 2018-05-02 23:48:42
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 19586 
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