83_FR_28595 83 FR 28477 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Adopt the Route QCT Cross Routing Option

83 FR 28477 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Adopt the Route QCT Cross Routing Option

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 118 (June 19, 2018)

Page Range28477-28479
FR Document2018-13084

Federal Register, Volume 83 Issue 118 (Tuesday, June 19, 2018) 
[Federal Register Volume 83, Number 118 (Tuesday, June 19, 2018)]
[Notices]
[Pages 28477-28479]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13084]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83425; File No. SR-CHX-2018-001]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Instituting Proceedings To Determine Whether To Approve or 
Disapprove a Proposed Rule Change To Adopt the Route QCT Cross Routing 
Option

June 13, 2018.

I. Introduction

    On March 6, 2018, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to adopt the Route QCT Cross 
routing option. The proposed rule change was published for comment in 
the Federal Register on March 20, 2018.\3\ On May 1, 2018, pursuant to 
Section 19(b)(2) of the Exchange 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\ The 
Commission received no comment letters on the proposed rule change. 
This order institutes proceedings under Section 19(b)(2)(B) of the 
Exchange Act \6\ to determine whether to approve or disapprove the 
proposed rule change.
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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. 82870 (March 14, 
2018), 83 FR 12214 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 83143, 83 FR 20123 
(May 7, 2018). The Commission designated June 18, 2018, as the date 
by which the Commission shall approve or disapprove, or institute 
proceedings to determine whether to disapprove, the proposed rule 
change.
    \6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change

    Currently, under the Exchange's rules, Routable Orders \7\ 
submitted to the CHX matching system (``Matching System'') \8\ for 
execution are routed away from the Matching System automatically if a 
Routing Event \9\ is triggered. The Exchange's current rules provide 
that all Routable Orders \10\ are limit orders. Market \11\ and cross 
orders \12\ are never routable. The Exchange does not currently permit 
orders to be directly routed to an away Trading Center \13\ without 
first being submitted to the Matching System.
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    \7\ See CHX Article 1, Rule 1(oo).
    \8\ The Matching System is part of the Exchange's ``Trading 
Facilities,'' as defined under CHX Article 1, Rule 1(z).
    \9\ See CHX Article 19, Rule 3(a)(1)-(5).
    \10\ See CHX Article 1, Rule 1(oo) defining ``Routable Order.''
    \11\ See CHX Article 1, Rule 2(a)(3) defining ``market order.''
    \12\ See CHX Article 1, Rule 2(a)(2) defining ``cross order.''
    \13\ See CHX Article 1, Rule 1(nn) defining ``Trading Center.''
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    Because Qualifed Contingent Trade (``QCT'') Crosses \14\ are exempt 
from the trade-through prohibition of Rule 611 of Regulation NMS,\15\ 
the Matching System permits QCT Crosses to trade-through protected 
quotes of away markets. Under the Exchange's current rules, QCT Crosses 
are handled IOC \16\ and can never rest on the CHX book. Moreover, a 
QCT Cross submitted to the Matching System will be cancelled back to 
the order sender as ``blocked'' if a precedent limit order priced at or 
better than the QCT Cross is resting on the CHX book,\17\ except that a 
QCT Cross priced at the top of the CHX book (i.e., the best-ranked 
order on the CHX book pursuant to Article 20, Rule 8(b)) that qualifies 
for Cross With Size \18\ handling will be permitted to execute.
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    \14\ QCT Crosses are cross orders that are component orders to 
Qualified Contingent Trades that are submitted by an Institutional 
Broker. See CHX Article 1, Rule 2(b)(2)(E) defining ``Qualified 
Contingent Trade.'' See also CHX Article 1, Rule 2(a)(2) defining 
``cross order.''
    \15\ See Securities Exchange Act Release No. 57620 (April 4, 
2008), 73 FR 19271 (April 4, 2008).
    \16\ See CHX Article 1, Rule 2(a)(2)
    \17\ See CHX Article 1, Rule 2(a)(2). See also CHX Article 20, 
Rule 8(e)(1).
    \18\ See CHX Article 1, Rule 2(g)(1).
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    The Exchange has proposed to adopt the Route QCT Cross routing 
option, which will permit only Institutional Brokers (``IBs'') \19\ to 
directly route a QCT Cross to a non-affiliated third-party broker-
dealer designated by the IB (``designated executing broker'') for 
execution. Route QCT Cross orders will be handled like current Routable 
Orders,\20\ except that the Route QCT Cross order will never be 
submitted to the Matching System for execution. Specifically, upon 
receipt of a Route QCT Cross order, the Exchange will cause the order 
to be routed IOC \21\ from the Exchange, through CHXBD, LLC 
(``CHXBD''), the Exchange's affiliated routing broker, to the 
designated executing broker identified by the IB.\22\ The Exchange 
states that the relationship between a designated executing broker and 
CHXBD will be governed by applicable CHX Rules \23\ and customary 
interbroker agreements, such as fully-disclosed clearing and customer 
agreements. The Exchange represents that at all times, the use of Route 
QCT Cross will be optional.\24\ The Exchange also states that Route QCT 
Cross is similar to the routing options available on the Nasdaq Stock 
Market \25\ and Cboe BYX and Cboe BZX exchanges.\26\
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    \19\ The Exchange states that it has proposed to limit use of 
Route QCT Cross to IBs to be consistent with the fact that only IBs 
are currently permitted to submit QCT Crosses to the Matching 
System. See CHX Article 1, Rule 2(b)(2)(E).
    \20\ See CHX Article 1, Rule 1(oo).
    \21\ See CHX Article 1, Rule 2(a)(2).
    \22\ The Exchange states that IBs will be permitted to identify 
only one designated executing broker to which all Route QCT Cross 
orders submitted by the IB will be routed, subject to additional 
requirements, as described below.
    \23\ See e.g., CHX Article 19, Rule 2(a).
    \24\ See Notice, supra note 3 at 12215.
    \25\ See id. The Exchange states that like Route QCT Cross, the 
``Directed Order'' routing option offered by the Nasdaq Stock Market 
(``Nasdaq'') permits an order sender to route an order to another 
market center while bypassing the Nasdaq's order book, which may 
result in the routed order executing at a price through Nasdaq's top 
of book. See id.
    \26\ The Exchange states that like Route QCT Cross, the ``DRT'' 
routing option offered by the Cboe BYX and Cboe BZX exchanges 
permits an order to be routed to one or more away alternative 
trading systems. See id.
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    Specifically, the Exchange has proposed to adopt proposed Article 
19, Rule 4 (Routing Options) to provide that routing options may be 
combined with all available order types, modifiers and related terms, 
except for order types, modifiers, and related terms that are 
inconsistent with the terms of a routing option, and that the Exchange 
may activate or deactivate any routing option at its discretion and, if 
practicable, after notice to Participants.\27\ Article 19, Rule 4(a)(1) 
provides that Route QCT Cross is

[[Page 28478]]

a routing option,\28\ which may only be utilized by IBs, that instructs 
the Exchange to route a cross order marked QCT directly to a non-
affiliated third-party broker-dealer designated by the IB without 
submitting the order into the Matching System for execution. In 
addition, each IB is permitted to identify only one designated 
executing broker to which all Route QCT Cross orders submitted by the 
IB would be routed. Furthermore, the Exchange represents that prior to 
the Exchange accepting any Route QCT Cross orders directed to a 
specific designated executing broker, the Exchange would confirm that 
the designated executing broker has established connectivity to the 
Exchange's routing systems.\29\ In addition, the IB would be 
responsible for all away execution fees resulting from the execution of 
Route QCT Cross orders, including any guaranteed payments to its 
designated executing broker.\30\ Moreover, Route QCT Cross orders would 
be routed IOC and a Route QCT Cross order that could not be executed by 
a designated executing broker, for any reason, would be cancelled back 
to the original order sender.\31\
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    \27\ See CHX Article 1, Rule 1(s).
    \28\ In addition, since the cross orders are not currently 
Routable Orders, the Exchange has proposed to amend Article 1, Rule 
1(oo) by adopting paragraph (oo)(2), which would expand the 
definition of Routable Orders to include any order marked by a 
routing option listed under proposed Article 19, Rule 4 (i.e., Route 
QCT Cross).
    \29\ See Notice, supra note 3 at 12215.
    \30\ See id.
    \31\ See id. at 12215-16.
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    As Route QCT Cross orders would be routed away from the Exchange 
without being submitted to the Matching System for execution, the 
Exchange proposes to amend Article 19, Rules 1(a) and (c), and Rule 
2(a) to replace the term ``Matching System'' with ``Exchange.'' 
Moreover, since Route QCT Cross orders are a subset of cross orders 
that will not be handled IOC upon receipt by the Exchange, and all 
cross orders currently received by the Exchange are deemed to have been 
received IOC, the Exchange proposes to amend the definition of ``cross 
orders'' under Article 1, Rule 2(a)(2) to provide that all cross orders 
submitted to the Matching System for execution shall be deemed to have 
been received IOC.
    The Exchange has also proposed to amend Article 19, Rule 3(a) to 
provide that a Routable Order that is submitted to the Matching System 
would be routed away from the Matching System pursuant to the CHX 
Routing Services if a Routing Event is triggered.\32\
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    \32\ To clarify this distinction, the Exchange has proposed to 
amend the title to Article 19, Rule 3 from ``Routing Events'' to 
``Mandatory Routing Events.'' Also, the Exchange has proposed to 
eliminate the word ``incoming'' from proposed Rule 1(oo)(1), which 
it states is redundant in light of the proposed clarifying 
amendments to Article 19, Rule 3.
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    In addition, the Exchange proposes non-substantive amendments to 
Article 19, Rules 3(a)(1)-(5) to clarify the current operation of the 
Routing Events.\33\
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    \33\ See Notice, supra note 3.
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II. Proceedings To Determine Whether To Approve or Disapprove SR-CHX-
2018-001 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Exchange Act \34\ to determine whether the proposed 
rule change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide comments 
on the proposed rule change.
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    \34\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Exchange Act,\35\ the 
Commission is providing notice of the grounds for disapproval under 
consideration. As discussed above, the Exchange has proposed to offer a 
new Route QCT Cross routing option, which would be available only to 
IBs. Route QCT Crosses would not check the CHX order book. In addition, 
Route QCT Crosses would only route to a single designated broker, as 
designated by each IB, for execution.
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    \35\ Id.
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    The Commission is instituting proceedings to allow for additional 
analysis of the proposed rule change's consistency with Sections 
6(b)(5) \36\ and 6(b)(8) \37\ of the Exchange Act. Section 6(b)(5) of 
the Exchange Act requires that the rules of a national securities 
exchange be designed, among other things, 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. Section 6(b)(8) of the Exchange Act requires that the rules of 
a national securities exchange not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Exchange Act.
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    \36\ 15 U.S.C. 78f(b)(5).
    \37\ 15 U.S.C. 78f(b)(8).
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III. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Sections 6(b)(5) and 6(b)(8), or any other provision of 
the Exchange Act, or the rules and regulations thereunder. Although 
there do not appear to be any issues relevant to approval or 
disapproval that would be facilitated by an oral presentation of views, 
data, and arguments, the Commission will consider, pursuant to Rule 
19b-4, any request for an opportunity to make an oral presentation.\38\
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    \38\ Section 19(b)(2) of the Exchange Act, as amended by the 
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975), 
grants the Commission flexibility to determine what type of 
proceeding--either oral or notice and opportunity for written 
comments--is appropriate for consideration of a particular proposal 
by a self-regulatory organization. See Securities Act Amendments of 
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 
75, 94th Cong., 1st Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by July 10, 2018. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by July 24, 
2018.
    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 rule-comments@sec.gov. Please include 
File Number SR-CHX-2018-001 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 Numbers SR-CHX-2018-001. 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

[[Page 28479]]

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 these filings 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-CHX-2018-001 and should be submitted on 
or before July 10, 2018. Rebuttal comments should be submitted by July 
24, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(57).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13084 Filed 6-18-18; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 28477 inspection and copying at the principal letters on the proposed rule change. Brokers (‘‘IBs’’) 19 to directly route a office of the Exchange. All comments This order institutes proceedings under QCT Cross to a non-affiliated third-party received will be posted without change. Section 19(b)(2)(B) of the Exchange Act 6 broker-dealer designated by the IB Persons submitting comments are to determine whether to approve or (‘‘designated executing broker’’) for cautioned that we do not redact or edit disapprove the proposed rule change. execution. Route QCT Cross orders will personal identifying information from be handled like current Routable II. Description of the Proposed Rule comment submissions. You should Orders,20 except that the Route QCT Change submit only information that you wish Cross order will never be submitted to to make available publicly. All Currently, under the Exchange’s rules, the Matching System for execution. submissions should refer to File Routable Orders 7 submitted to the CHX Specifically, upon receipt of a Route Number SR–NASDAQ–2018–044 and matching system (‘‘Matching System’’) 8 QCT Cross order, the Exchange will should be submitted on or before July for execution are routed away from the cause the order to be routed IOC 21 from 10, 2018. Matching System automatically if a the Exchange, through CHXBD, LLC For the Commission, by the Division of Routing Event 9 is triggered. The (‘‘CHXBD’’), the Exchange’s affiliated Trading and Markets, pursuant to delegated Exchange’s current rules provide that all routing broker, to the designated authority.23 Routable Orders 10 are limit orders. executing broker identified by the IB.22 Eduardo A. Aleman, Market 11 and cross orders 12 are never The Exchange states that the Assistant Secretary. routable. The Exchange does not relationship between a designated currently permit orders to be directly executing broker and CHXBD will be [FR Doc. 2018–13080 Filed 6–18–18; 8:45 am] routed to an away Trading Center 13 governed by applicable CHX Rules 23 BILLING CODE 8011–01–P without first being submitted to the and customary interbroker agreements, Matching System. such as fully-disclosed clearing and SECURITIES AND EXCHANGE Because Qualifed Contingent Trade customer agreements. The Exchange COMMISSION (‘‘QCT’’) Crosses 14 are exempt from the represents that at all times, the use of trade-through prohibition of Rule 611 of Route QCT Cross will be optional.24 The [Release No. 34–83425; File No. SR–CHX– Regulation NMS,15 the Matching System 2018–001] Exchange also states that Route QCT permits QCT Crosses to trade-through Cross is similar to the routing options protected quotes of away markets. available on the Nasdaq Stock Market 25 Self-Regulatory Organizations; Under the Exchange’s current rules, Chicago Stock Exchange, Inc.; Order and Cboe BYX and Cboe BZX QCT Crosses are handled IOC 16 and can exchanges.26 Instituting Proceedings To Determine never rest on the CHX book. Moreover, Whether To Approve or Disapprove a a QCT Cross submitted to the Matching Specifically, the Exchange has Proposed Rule Change To Adopt the System will be cancelled back to the proposed to adopt proposed Article 19, Route QCT Cross Routing Option order sender as ‘‘blocked’’ if a precedent Rule 4 (Routing Options) to provide that June 13, 2018. limit order priced at or better than the routing options may be combined with QCT Cross is resting on the CHX book,17 all available order types, modifiers and I. Introduction except that a QCT Cross priced at the related terms, except for order types, On March 6, 2018, the Chicago Stock top of the CHX book (i.e., the best- modifiers, and related terms that are Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) ranked order on the CHX book pursuant inconsistent with the terms of a routing filed with the Securities and Exchange to Article 20, Rule 8(b)) that qualifies for option, and that the Exchange may Commission (‘‘Commission’’), pursuant Cross With Size 18 handling will be activate or deactivate any routing option to Section 19(b)(1) of the Securities permitted to execute. at its discretion and, if practicable, after Exchange Act of 1934 (‘‘Exchange The Exchange has proposed to adopt notice to Participants.27 Article 19, Rule Act’’) 1 and Rule 19b–4 thereunder,2 a the Route QCT Cross routing option, 4(a)(1) provides that Route QCT Cross is proposed rule change to adopt the Route which will permit only Institutional 19 The Exchange states that it has proposed to QCT Cross routing option. The proposed limit use of Route QCT Cross to IBs to be consistent rule change was published for comment 6 15 U.S.C. 78s(b)(2)(B). with the fact that only IBs are currently permitted in the Federal Register on March 20, 7 See CHX Article 1, Rule 1(oo). to submit QCT Crosses to the Matching System. See 8 The Matching System is part of the Exchange’s 2018.3 On May 1, 2018, pursuant to CHX Article 1, Rule 2(b)(2)(E). ‘‘Trading Facilities,’’ as defined under CHX Article Section 19(b)(2) of the Exchange Act,4 1, Rule 1(z). 20 See CHX Article 1, Rule 1(oo). 21 See CHX Article 1, Rule 2(a)(2). the Commission designated a longer 9 See CHX Article 19, Rule 3(a)(1)–(5). 22 The Exchange states that IBs will be permitted period within which to approve the 10 See CHX Article 1, Rule 1(oo) defining to identify only one designated executing broker to proposed rule change, disapprove the ‘‘Routable Order.’’ which all Route QCT Cross orders submitted by the proposed rule change, or institute 11 See CHX Article 1, Rule 2(a)(3) defining IB will be routed, subject to additional proceedings to determine whether to ‘‘market order.’’ requirements, as described below. 12 See CHX Article 1, Rule 2(a)(2) defining ‘‘cross 23 See e.g., CHX Article 19, Rule 2(a). disapprove the proposed rule change.5 order.’’ 24 See Notice, supra note 3 at 12215. The Commission received no comment 13 See CHX Article 1, Rule 1(nn) defining 25 See id. The Exchange states that like Route ‘‘Trading Center.’’ QCT Cross, the ‘‘Directed Order’’ routing option 23 17 CFR 200.30–3(a)(12). 14 QCT Crosses are cross orders that are offered by the Nasdaq Stock Market (‘‘Nasdaq’’) 1 15 U.S.C. 78s(b)(1). component orders to Qualified Contingent Trades permits an order sender to route an order to another 2 17 CFR 240.19b–4. that are submitted by an Institutional Broker. See market center while bypassing the Nasdaq’s order CHX Article 1, Rule 2(b)(2)(E) defining ‘‘Qualified daltland on DSKBBV9HB2PROD with NOTICES 3 See Securities Exchange Act Release No. 82870 book, which may result in the routed order (March 14, 2018), 83 FR 12214 (‘‘Notice’’). Contingent Trade.’’ See also CHX Article 1, Rule executing at a price through Nasdaq’s top of book. 4 15 U.S.C. 78s(b)(2). 2(a)(2) defining ‘‘cross order.’’ See id. 15 See Securities Exchange Act Release No. 57620 26 The Exchange states that like Route QCT Cross, 5 See Securities Exchange Act Release No. 83143, 83 FR 20123 (May 7, 2018). The Commission (April 4, 2008), 73 FR 19271 (April 4, 2008). the ‘‘DRT’’ routing option offered by the Cboe BYX 16 See CHX Article 1, Rule 2(a)(2) designated June 18, 2018, as the date by which the and Cboe BZX exchanges permits an order to be 17 See CHX Article 1, Rule 2(a)(2). See also CHX routed to one or more away alternative trading Commission shall approve or disapprove, or institute proceedings to determine whether to Article 20, Rule 8(e)(1). systems. See id. disapprove, the proposed rule change. 18 See CHX Article 1, Rule 2(g)(1). 27 See CHX Article 1, Rule 1(s). VerDate Sep<11>2014 17:55 Jun 18, 2018 Jkt 244001 PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 E:\FR\FM\19JNN1.SGM 19JNN1

28478 Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices a routing option,28 which may only be In addition, the Exchange proposes burden on competition that is not utilized by IBs, that instructs the non-substantive amendments to Article necessary or appropriate in furtherance Exchange to route a cross order marked 19, Rules 3(a)(1)–(5) to clarify the of the purposes of the Exchange Act. QCT directly to a non-affiliated third- current operation of the Routing III. Procedure: Request for Written party broker-dealer designated by the IB Events.33 Comments without submitting the order into the II. Proceedings To Determine Whether The Commission requests that Matching System for execution. In To Approve or Disapprove SR–CHX– interested persons provide written addition, each IB is permitted to 2018–001 and Grounds for Disapproval submissions of their views, data, and identify only one designated executing Under Consideration arguments with respect to the issues broker to which all Route QCT Cross orders submitted by the IB would be The Commission is instituting identified above, as well as any other routed. Furthermore, the Exchange proceedings pursuant to Section concerns they may have with the represents that prior to the Exchange 19(b)(2)(B) of the Exchange Act 34 to proposal. In particular, the Commission accepting any Route QCT Cross orders determine whether the proposed rule invites the written views of interested directed to a specific designated change should be approved or persons concerning whether the executing broker, the Exchange would disapproved. Institution of such proposal is consistent with Sections confirm that the designated executing proceedings is appropriate at this time 6(b)(5) and 6(b)(8), or any other broker has established connectivity to in view of the legal and policy issues provision of the Exchange Act, or the the Exchange’s routing systems.29 In raised by the proposed rule change. rules and regulations thereunder. addition, the IB would be responsible Institution of proceedings does not Although there do not appear to be any for all away execution fees resulting indicate that the Commission has issues relevant to approval or from the execution of Route QCT Cross reached any conclusions with respect to disapproval that would be facilitated by orders, including any guaranteed any of the issues involved. Rather, as an oral presentation of views, data, and payments to its designated executing described below, the Commission seeks arguments, the Commission will broker.30 Moreover, Route QCT Cross and encourages interested persons to consider, pursuant to Rule 19b–4, any orders would be routed IOC and a Route provide comments on the proposed rule request for an opportunity to make an QCT Cross order that could not be change. oral presentation.38 executed by a designated executing Pursuant to Section 19(b)(2)(B) of the Interested persons are invited to broker, for any reason, would be Exchange Act,35 the Commission is submit written data, views, and cancelled back to the original order providing notice of the grounds for arguments regarding whether the sender.31 disapproval under consideration. As proposal should be approved or As Route QCT Cross orders would be discussed above, the Exchange has disapproved by July 10, 2018. Any routed away from the Exchange without proposed to offer a new Route QCT person who wishes to file a rebuttal to being submitted to the Matching System Cross routing option, which would be any other person’s submission must file for execution, the Exchange proposes to available only to IBs. Route QCT Crosses that rebuttal by July 24, 2018. amend Article 19, Rules 1(a) and (c), would not check the CHX order book. In Comments may be submitted by any and Rule 2(a) to replace the term addition, Route QCT Crosses would of the following methods: ‘‘Matching System’’ with ‘‘Exchange.’’ only route to a single designated broker, Electronic Comments Moreover, since Route QCT Cross orders as designated by each IB, for execution. are a subset of cross orders that will not The Commission is instituting • Use the Commission’s internet be handled IOC upon receipt by the proceedings to allow for additional comment form (http://www.sec.gov/ Exchange, and all cross orders currently analysis of the proposed rule change’s rules/sro.shtml); or received by the Exchange are deemed to consistency with Sections 6(b)(5) 36 and • Send an email to rule-comments@ have been received IOC, the Exchange 6(b)(8) 37 of the Exchange Act. Section sec.gov. Please include File Number SR– proposes to amend the definition of 6(b)(5) of the Exchange Act requires that CHX–2018–001 on the subject line. ‘‘cross orders’’ under Article 1, Rule the rules of a national securities Paper Comments 2(a)(2) to provide that all cross orders exchange be designed, among other submitted to the Matching System for things, to promote just and equitable • Send paper comments in triplicate execution shall be deemed to have been principles of trade, to remove to Secretary, Securities and Exchange received IOC. impediments to and perfect the Commission, 100 F Street NE, The Exchange has also proposed to mechanism of a free and open market Washington, DC 20549–1090. amend Article 19, Rule 3(a) to provide and a national market system and, in All submissions should refer to File that a Routable Order that is submitted general, to protect investors and the Numbers SR–CHX–2018–001. This file to the Matching System would be routed public interest, and not be designed to number should be included on the away from the Matching System permit unfair discrimination between subject line if email is used. To help the pursuant to the CHX Routing Services if customers, issuers, brokers, or dealers. Commission process and review your a Routing Event is triggered.32 Section 6(b)(8) of the Exchange Act comments more efficiently, please use requires that the rules of a national only one method. The Commission will 28 In addition, since the cross orders are not securities exchange not impose any post all comments on the Commission’s currently Routable Orders, the Exchange has proposed to amend Article 1, Rule 1(oo) by 38 Section 19(b)(2) of the Exchange Act, as adopting paragraph (oo)(2), which would expand Events.’’ Also, the Exchange has proposed to eliminate the word ‘‘incoming’’ from proposed Rule amended by the Securities Act Amendments of the definition of Routable Orders to include any daltland on DSKBBV9HB2PROD with NOTICES 1(oo)(1), which it states is redundant in light of the 1975, Public Law 94–29 (June 4, 1975), grants the order marked by a routing option listed under proposed clarifying amendments to Article 19, Commission flexibility to determine what type of proposed Article 19, Rule 4 (i.e., Route QCT Cross). 29 See Notice, supra note 3 at 12215. Rule 3. proceeding—either oral or notice and opportunity 33 See Notice, supra note 3. for written comments—is appropriate for 30 See id. 34 15 U.S.C. 78s(b)(2)(B). consideration of a particular proposal by a self- 31 See id. at 12215–16. regulatory organization. See Securities Act 32 To clarify this distinction, the Exchange has 35 Id. Amendments of 1975, Senate Comm. on Banking, 36 15 U.S.C. 78f(b)(5). proposed to amend the title to Article 19, Rule 3 Housing & Urban Affairs, S. Rep. No. 75, 94th from ‘‘Routing Events’’ to ‘‘Mandatory Routing 37 15 U.S.C. 78f(b)(8). Cong., 1st Sess. 30 (1975). VerDate Sep<11>2014 17:55 Jun 18, 2018 Jkt 244001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 E:\FR\FM\19JNN1.SGM 19JNN1

Federal Register / Vol. 83, No. 118 / Tuesday, June 19, 2018 / Notices 28479 internet website (http://www.sec.gov/ Items I, II, and III below, which Items As proposed, member organizations rules/sro.shtml). Copies of the have been prepared by the self- that meet the current requirements for submission, all subsequent regulatory organization. The the Non-Tier Adding Credit, Tier 3 amendments, all written statements Commission is publishing this notice to Adding Credit, and Tier 4 Adding Credit with respect to the proposed rule solicit comments on the proposed rule on Tape A would be eligible to receive change that are filed with the change from interested persons. an additional $0.0001 per share if the Commission, and all written member organization adds liquidity, I. Self-Regulatory Organization’s communications relating to the excluding liquidity added as an SLP, in Statement of the Terms of Substance of proposed rule change between the UTP Securities of at least 0.20% of Tape the Proposed Rule Change Commission and any person, other than B and Tape C consolidated average daily those that may be withheld from the The Exchange proposes to amend its volume (‘‘CADV’’) combined. public in accordance with the Price List to (1) add a new incentive for Similarly, SLPs that (1) meet the provisions of 5 U.S.C. 552, will be member organizations and current requirements for SLP Tier 3, available for website viewing and Supplemental Liquidity Providers SLP Tier 2 and SLP Tier 1A credits, and printing in the Commission’s Public (‘‘SLP’’) in Tape A securities when (2) add liquidity in UTP Securities of at Reference Room, 100 F Street NE, adding liquidity in securities traded least 0.30% of Tape B and Tape C CADV Washington, DC 20549, on official pursuant to Unlisted Trading Privileges combined, would be eligible for an business days between the hours of (‘‘UTP’’) (Tapes B and C) on the Pillar additional $0.0001 per share in 10:00 a.m. and 3:00 p.m. Copies of these Trading Platform; (2) add a new Tier 4 securities with a per share price of $1.00 filings also will be available for for SLPs; and (3) make non-substantive or more that meet the 10% average or inspection and copying at the principal changes to eliminate obsolete footnotes. more quoting requirement in an office of the Exchange. All comments The Exchange proposes to implement assigned security pursuant to Rule 107B received will be posted without change. these changes to its Price List effective (quotes of an SLP-Prop and an SLMM of Persons submitting comments are June 1, 2018. The proposed rule change the same member organization would cautioned that we do not redact or edit is available on the Exchange’s website at not be aggregated). personal identifying information from www.nyse.com, at the principal office of comment submissions. You should the Exchange, and at the Commission’s New SLP Tier 4 submit only information that you wish Public Reference Room. The Exchange proposes a new, fifth to make available publicly. All II. Self-Regulatory Organization’s SLP Tier designated ‘‘4’’ that would submissions should refer to File Statement of the Purpose of, and provide that an SLP that either (1) is in Number SR–CHX–2018–001 and should Statutory Basis for, the Proposed Rule the first two calendar months as an SLP, be submitted on or before July 10, 2018. Change or (2) adds liquidity for all assigned SLP Rebuttal comments should be submitted securities in the aggregate (including by July 24, 2018. In its filing with the Commission, the shares of both an SLP-Prop and an self-regulatory organization included SLMM 4 of the same or an affiliated For the Commission, by the Division of statements concerning the purpose of, Trading and Markets, pursuant to delegated member organization) of an ADV of and basis for, the proposed rule change authority.39 more than 0.03% of NYSE CADV after and discussed any comments it received Eduardo A. Aleman, averaging less an adding ADV 5 of than on the proposed rule change. The text Assistant Secretary. 0.01% in each of the prior 3 months, of those statements may be examined at [FR Doc. 2018–13084 Filed 6–18–18; 8:45 am] after a discount of the percentage for the the places specified in Item IV below. prior quarter of NYSE CADV in DMM BILLING CODE 8011–01–P The Exchange has prepared summaries, assigned securities as of the last set forth in sections A, B, and C below, business day of the prior month, would of the most significant parts of such SECURITIES AND EXCHANGE receive a credit of $0.0029, or $0.00105 statements. COMMISSION if a Non-Displayed Reserve Order, if the A. Self-Regulatory Organization’s SLP meets the 10% average or more [Release No. 34–83424; File No. SR–NYSE– Statement of the Purpose of, and the 2018–27] quoting requirement in an assigned Statutory Basis for, the Proposed Rule security pursuant to Rule 107B when Self-Regulatory Organizations; New Change adding liquidity to the NYSE with York Stock Exchange LLC; Notice of 1. Purpose orders, other than Mid-Point Liquidity Filing and Immediate Effectiveness of (‘‘MPL’’) orders, in securities with a per The Exchange proposes to amend its share price of $1.00 or more. For Proposed Rule Change To Amend Its Price List to (1) add a new incentive for Price List member organizations and SLPs on 4 Under Rule 107B, an SLP can be either a June 13, 2018. Tape A when adding liquidity in UTP proprietary trading unit of a member organization Pursuant to Section 19(b)(1) 1 of the Securities (Tapes B and C) on the Pillar (‘‘SLP-Prop’’) or a registered market maker at the Exchange (‘‘SLMM’’). For purposes of the 10% Securities Exchange Act of 1934 (the Trading Platform; (2) add a new Tier 4 average or more quoting requirement in assigned ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 for SLPs; and (3) make non-substantive securities pursuant to Rule 107B, quotes of an SLP- notice is hereby given that, on June 1, changes to eliminate obsolete footnotes. Prop and an SLMM of the same member 2018, New York Stock Exchange LLC The Exchange proposes to implement organization are not aggregated. However, for these changes to its Price List effective purposes of adding liquidity for assigned SLP (‘‘NYSE’’ or the ‘‘Exchange’’) filed with securities in the aggregate, shares of both an SLP- the Securities and Exchange June 1, 2018. daltland on DSKBBV9HB2PROD with NOTICES Prop and an SLMM of the same member Commission (the ‘‘Commission’’) the New Cross Tape Incentive organization are included. 5 The phrase ‘‘Adding ADV’’ in the proposed tier proposed rule change as described in The Exchange proposes an additional would have a citation to footnote 4 in the current 39 17 incentive to member organizations and Price List, which provides ‘‘For purposes of CFR 200.30–3(a)(57). transaction fees and Supplemental Liquidity 1 15 U.S.C. 78s(b)(1). SLPs in Tape A securities that add Provider liquidity credits, ADV calculations 2 15 U.S.C. 78a. liquidity to the Exchange in UTP exclude early closing days.’’ The text of current 3 17 CFR 240.19b–4. Securities, as follows. footnote 4 would remain unchanged. VerDate Sep<11>2014 17:55 Jun 18, 2018 Jkt 244001 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 E:\FR\FM\19JNN1.SGM 19JNN1


Document Created: 2018-07-02 11:21:27
Document Modified: 2018-07-02 11:21:27
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 28477 
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