83 FR 31198 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.9, Orders and Modifiers
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 128 (July 3, 2018)
Federal Register Volume 83, Issue 128 (July 3, 2018)
| Page Range | 31198-31201 | |
| FR Document | 2018-14297 |
[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)] [Notices] [Pages 31198-31201] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14297] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83537; File No. SR-CboeBZX-2018-042] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.9, Orders and Modifiers June 28, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on June 18, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to add a new optional order type modifier to be known as Non-Displayed Swap. The proposed amendments are substantively identical to the rules of Cboe EDGX Exchange, Inc. (``EDGX'') \5\ and substantially similar to the rules of the Nasdaq Stock Market LLC (``Nasdaq'') \6\ and NYSE Arca, Inc. (``Arca'').\7\ --------------------------------------------------------------------------- \5\ See EDGX Rules 11.6(n)(7), 11.8(b)(7) and 11.8(d)(5); see also Securities Exchange Act Release No. 80841 (June 1, 2017), 82 FR 26559 (June 7, 2017), (Notice of Filing and Immediate Effectiveness To Add a New Optional Order Instruction Known as Non-Displayed Swap). \6\ See Nasdaq Rule 4703(m) (defining the Trade Now order modifier); see also Securities Exchange Act Release No. 79282 (November 10, 2016), 81 FR 81219 (November 17, 2016) (Notice of Filing and Immediate Effectiveness of Proposed Rule change to Amend Rule 4702 and Rule 4703 to Add a ``Trade Now'' Instruction to Certain Order Types). \7\ See Arca Rule 7.31-E(d)(2)(B) (describing the Non-Display Remove Modifier); see also Securities Exchange Act Release No. 76267 (October 26, 2015), 80 FR 66951 (October 30, 2015) (Order Approving Proposed Rule change Adopting New Equity Trading Rules Relating to Orders and Modifiers and Retail Liquidity Program To Reflect the Implementation of Pillar, the Exchange's New Trading Technology Platform). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's website at [[Page 31199]] www.markets.cboe.com, at the Exchange's principal office and at the Public Reference Room of the Commission. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to add a new optional order type modifier to be known as Non-Displayed Swap. The proposed amendments are substantively identical to the rules of EDGX \8\ and substantially similar to the rules of Nasdaq and Arca.\9\ --------------------------------------------------------------------------- \8\ See supra note 5. \9\ See supra notes 6 and 7. --------------------------------------------------------------------------- The proposed Non-Displayed Swap (``NDS'') instruction would provide resting limit orders that are not displayed on the Exchange \10\ and Mid-Point Peg Orders resting on the BZX Book \11\ with a greater ability to receive an execution when that resting order is locked by an incoming order (e.g., the price of the resting non-displayed order is equal to the price of the incoming order that is to be placed on the BZX Book). The NDS instruction would be an optional order instruction that would allow Users \12\ to have their resting non-displayed orders execute against an incoming order with a Post Only instruction rather than have it be locked by the incoming order. NDS would be defined as an instruction on an order resting on the BZX Book that, when locked by an incoming order with a Post Only instruction that does not remove liquidity pursuant to paragraph (c)(6) of Exchange Rule 11.9,\13\ causes such order to be converted to an executable order that removes liquidity against such incoming order. An NDS instruction would only be eligible for inclusion on a non-displayed limit order or a Mid-Point Peg Order. An order with a NDS instruction would not be eligible for routing pursuant to Exchange Rule 11.13, Order Execution and Routing. The proposed NDS instruction assists in the avoidance of an internally locked BZX Book (though such lock would not be displayed by the Exchange) \14\ by facilitating the execution of orders that would otherwise lock each other. --------------------------------------------------------------------------- \10\ See Exchange Rule 11.9(c)(11). \11\ See Exchange Rule 1.5(e). \12\ See Exchange Rule 1.5(cc). \13\ Under Exchange Rule 11.9(c)(6), a BZX Post Only Order will remove contra-side liquidity from the BZX Book if the order is an order to buy or sell a security priced below $1.00 or if the value of such execution when removing liquidity equals or exceeds the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. To determine at the time of a potential execution whether the value of such execution when removing liquidity equals or exceeds the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, the Exchange will use the highest possible rebate paid and highest possible fee charged for such executions on the Exchange. \14\ See Exchange Rule 11.13(a)(4)(C). --------------------------------------------------------------------------- The following example illustrates the operation of an order with a NDS instruction. Assume the National Best Bid and Offer is $10.00 by $10.04. There is a non-displayed limit order to buy resting on the BZX Book at $10.03. A BZX Post Only Order to sell priced at $10.03 is entered. Under current behavior, the incoming sell order marked as Post Only would post to the BZX Book because it would not receive sufficient price improvement.\15\ This would result in the BZX Book being internally locked.\16\ As proposed, if the non-displayed limit order to buy also included a NDS instruction, the orders would instead execute against each other at $10.03, with the resting buy order with the NDS instruction becoming the remover of liquidity and the incoming BZX Post Only Order to sell becoming the liquidity provider. --------------------------------------------------------------------------- \15\ Id. [sic] \16\ In the event the incoming order with a Post Only instruction was to be displayed, it would post and display at $10.03 and the resting buy order with a Non-Displayed instruction would not execute against it or subsequent incoming sell orders at $10.03 for so long as the sell order was displayed on the Exchange. See Exchange Rule 11.13(a)(4)(C) and (D). --------------------------------------------------------------------------- Assume the same facts as above, but that a non-displayed limit order to buy at $10.03 (``Order A'') is also resting on the BZX Book with time priority ahead of the non-displayed limit order mentioned above (``Order B''). Like above, a BZX Post Only Order to sell priced at $10.03 is entered. Under current behavior, the incoming BZX Post Only Order to sell would post to the BZX Book because the value of such execution against the resting buy interest when removing liquidity does not equal or exceed the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. As proposed, if Order B also included a NDS instruction, the incoming sell order would execute against Order B and such order would become the remover of liquidity and the BZX Post Only Order to sell would become the liquidity provider. In such case, Order A cedes time priority to Order B because Order A did not also include a NDS instruction and thus the User that submitted Order A did not indicate the preference to be treated as the remover of liquidity in favor of an execution; instead, by not using NDS, a User indicates the preference to remain posted on the BZX Book as a liquidity provider.\17\ However, if the incoming sell order was priced at $10.02, it would receive sufficient price improvement to execute upon entry against all resting buy limit orders in time priority at $10.03.\18\ --------------------------------------------------------------------------- \17\ Should the limit order to buy at $10.03 with time priority (i.e., Order A) be displayed on the BZX Book, the incoming BZX Post Only Order to sell at $10.03 will not execute against the non- displayed buy order with a NDS instruction because displayed orders have priority over non-displayed orders. In such a case, the incoming limit order would be handled as it is today in accordance with existing Exchange rules. See, e.g., Exchange Rules 11.9 and 11.13(a). \18\ The execution occurs here because the value of the execution against the buy order when removing liquidity exceeds the value of such execution if the order instead posted to the BZX Book and subsequently provided liquidity, including the applicable fees charged or rebates provided. See supra note 13. --------------------------------------------------------------------------- If the order with a NDS instruction is only partially executed, the unexecuted portion of that order remains on the BZX Book and maintains its priority, as is the case today for an order that is partially executed and not cancelled by the User.\19\ The Exchange is proposing to make the NDS instruction available to limit orders \20\ that are not displayed on the Exchange \21\ and MidPoint Peg Orders.\22\ Because the NDS instruction would be only available to limit orders not displayed on the Exchange and to MidPoint Peg Orders, the NDS instruction would not be available to other order types provided by the Exchange under its Rule 11.9, such as BZX Market Orders, Reserve Orders, and Market Maker Peg Orders,\23\ as the NDS instruction would be inconsistent with the use of those order types. The NDS instruction could, however, be combined with other instructions also [[Page 31200]] available to non-displayed limit orders, such as the Minimum Quantity Order instruction, the Primary Pegged Order instruction, the Market Pegged Order instruction or the Discretionary Order instruction.\24\ --------------------------------------------------------------------------- \19\ See Exchange Rule 11.12(a)(5). \20\ See Exchange Rule 11.9(a)(1). \21\ See Exchange Rule 11.9(c)(11). \22\ See Exchange Rule 11.9(c)(9). \23\ See Exchange Rules 11.9(a)(2), 11.9(c)(1) and 11.9(c)(16), respectively. \24\ See Exchange Rules 11.9(c)(5), 11.9(c)(8)(A), 11.9(c)(8)(B) and 11.9(c)(10), respectively. --------------------------------------------------------------------------- The Exchange notes that similar functionality exists on Nasdaq and Arca. Nasdaq refers to their functionality as the ``Trade Now'' instruction \25\ and Arca refers to their functionality as the ``Non- Display Remove Modifier''.\26\ On Arca, a Limit Non-Displayed Order may be designated with a Non-Display Remove Modifier. If so designated, a Limit Non-Displayed Order to buy (sell) will trade as the remover of liquidity with an incoming Adding Liquidity Only Order (``ALO Order'') to sell (buy) that has a working price equal to the working price of the Limit Non-Displayed Order.\27\ On Nasdaq, Trade Now is an order attribute that allows a resting order that becomes locked by an incoming Displayed Order to execute against the available size of the contra-side locking order as a liquidity taker, and any remaining shares of the resting order will remain posted on the Nasdaq Book with the same priority.\28\ Nasdaq requires the contra-side order to be display eligible, while the Exchange proposes to enable an order with a NDS instruction to remove liquidity regardless of whether the incoming order would have ultimately been eligible for display consistent with Arca's Non-Display Remove Modifier. --------------------------------------------------------------------------- \25\ See Nasdaq Rule 4703(m). See also Securities and Exchange Act Release No. 79282 (November 10, 2016), 81 FR 81219 (November 17, 2016) (SR-Nasdaq-2016-156) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Rule 4703 and Rule 4703 to add a ``Trade Now'' Instruction to Certain Order Types). \26\ See Arca Rule 7.31-E(d)(2)(B). See also Securities and Exchange Act Release No. 76267 (October 26, 2015), 80 FR 66951 (October 30, 2015) (SR-NYSEArca-2015-56) (Order Approving Proposed Rule Change, and Notice of Filing and Order Granting Accelerated Approval of Amendment Nos. 1 and 2 Thereto, Adopting New Equity Trading Rules Relating to Orders and Modifiers and the Retail Liquidity Program To Reflect the Implementation of Pillar, the Exchange's New Trading Technology Platform) (including the Non- Display Remove Modifier). \27\ See Arca Rule 7.31-E(d)(2)(b). \28\ Arca provides their Non-Display Remove Modifier to their Mid-Point Liquidity Orders (``MPL Orders'') designated Day and MPL- ALO Orders and Arca Only Orders. Nasdaq's Trade Now functionality is available to Price to Comply Orders, Price to Display Orders, Non- Displayed Orders, Post-Only Orders, Midpoint Peg Post-Only Orders, and Market Maker Peg Orders. To the extent the NDS instruction is only available to non-displayed limit orders and MidPoint Peg Orders, the Exchange notes that the NDS instruction will apply to different order types than Arca's Non-Display Remove Modifier and Nasdaq's Trade Now functionality. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \29\ in general, and furthers the objectives of Section 6(b)(5) of the Act \30\ in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest by offering Users optional functionality that will facilitate the execution of orders that would otherwise remain unexecuted, thereby increasing the efficient functioning of the Exchange. The NDS instruction is an optional feature that is intended to reflect the order management practices of various market participants. The proposed NDS instruction assists in the avoidance of an internally locked BZX Book by facilitating the execution of orders that would otherwise post, or remain posted, to the BZX Book. --------------------------------------------------------------------------- \29\ 15 U.S.C. 78f(b). \30\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. On the contrary, the Exchange believes the proposed rule change promotes competition because it will enable the Exchange to offer functionality substantially similar to that offered by Nasdaq and Arca (in addition to the fact that such functionality is identical to that already offered by the Exchange's affiliate, EDGX).\31\ Therefore, the Exchange does not believe the proposed rule change will result in any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As the NDS feature will be equally available to all Users, the Exchange does not believe the proposed rule change will result in any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \31\ See supra notes 5-7. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No comments were solicited or received on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \32\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\33\ --------------------------------------------------------------------------- \32\ 15 U.S.C. 78s(b)(3)(A)(iii). \33\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of the filing. However, Rule 19b-4(f)(6)(iii) \34\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In its filing, BZX requested that the Commission waive the 30-day operative delay so that the Exchange can implement the proposed rule change promptly after filing. The Exchange noted that the proposed functionality is optional, may lead to increased order interaction on the Exchange, and is identical to functionality already provided on EDGX. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest, as such waiver will permit the Exchange to update its rule without delay so that it provides the same optional NDS functionality as is available on EDGX and potentially increase order interaction on the Exchange. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.\35\ --------------------------------------------------------------------------- \34\ 17 CFR 240.19b-4(f)(6)(iii). \35\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the [[Page 31201]] Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-CboeBZX-2018-042 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-CboeBZX-2018-042. 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-CboeBZX-2018-042, and should be submitted on or before July 24, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\36\ --------------------------------------------------------------------------- \36\ 17 CFR 200.30-3(a)(12) and (59). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-14297 Filed 7-2-18; 8:45 am] BILLING CODE 8011-01-P
![31198 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices
Regulatory Commission, Office of the officer of the Commission to represent SECURITIES AND EXCHANGE
Secretary, Washington, DC 20555 (301– the interests of the general public in the COMMISSION
415–1969), or you may email proceeding, pursuant to 39 U.S.C. 505
[Release No. 34–83537; File No. SR–
Patricia.Jimenez@nrc.gov or (Public Representative). Section II also CboeBZX–2018–042]
Wendy.Moore@nrc.gov. establishes comment deadline(s)
Dated: June 28, 2018. pertaining to each request. Self-Regulatory Organizations; Cboe
Denise L. McGovern, The public portions of the Postal BZX Exchange, Inc.; Notice of Filing
Policy Coordinator, Office of the Secretary. Service’s request(s) can be accessed via and Immediate Effectiveness of a
[FR Doc. 2018–14471 Filed 6–29–18; 4:15 pm] the Commission’s website (http:// Proposed Rule Change to Rule 11.9,
Orders and Modifiers
BILLING CODE 7590–01–P www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any, June 28, 2018.
can be accessed through compliance Pursuant to Section 19(b)(1) of the
POSTAL REGULATORY COMMISSION with the requirements of 39 CFR Securities Exchange Act of 1934
3007.40. (‘‘Act’’),1 and Rule 19b–4 thereunder,2
[Docket Nos. CP2018–163; MC2018–187 and
The Commission invites comments on notice is hereby given that on June 18,
CP2018–261]
2018, Cboe BZX Exchange, Inc. (the
whether the Postal Service’s request(s)
New Postal Products ‘‘Exchange’’ or ‘‘BZX’’) filed with the
in the captioned docket(s) are consistent
Securities and Exchange Commission
AGENCY: Postal Regulatory Commission. with the policies of title 39. For (‘‘Commission’’) the proposed rule
request(s) that the Postal Service states change as described in Items I and II
ACTION: Notice.
concern market dominant product(s), below, which Items have been prepared
SUMMARY: The Commission is noticing a applicable statutory and regulatory by the Exchange. The Exchange has
recent Postal Service filing for the requirements include 39 U.S.C. 3622, 39 designated this proposal as a ‘‘non-
Commission’s consideration concerning U.S.C. 3642, 39 CFR part 3010, and 39 controversial’’ proposed rule change
negotiated service agreements. This CFR part 3020, subpart B. For request(s) pursuant to Section 19(b)(3)(A) of the
notice informs the public of the filing, that the Postal Service states concern Act 3 and Rule 19b–4(f)(6) thereunder,4
invites public comment, and takes other competitive product(s), applicable which renders it effective upon filing
administrative steps. statutory and regulatory requirements with the Commission. The Commission
DATES: Comments are due: July 5, 2018. include 39 U.S.C. 3632, 39 U.S.C. 3633, is publishing this notice to solicit
ADDRESSES: Submit comments 39 U.S.C. 3642, 39 CFR part 3015, and comments on the proposed rule change
electronically via the Commission’s 39 CFR part 3020, subpart B. Comment from interested persons.
Filing Online system at http:// deadline(s) for each request appear in I. Self-Regulatory Organization’s
www.prc.gov. Those who cannot submit section II. Statement of the Terms of Substance of
comments electronically should contact the Proposed Rule Change
II. Docketed Proceeding(s)
the person identified in the FOR FURTHER The Exchange filed a proposal to add
INFORMATION CONTACT section by 1. Docket No(s).: CP2018–163; Filing a new optional order type modifier to be
telephone for advice on filing Title: USPS Notice of Amendment to known as Non-Displayed Swap. The
alternatives. Priority Mail Express & First-Class proposed amendments are substantively
FOR FURTHER INFORMATION CONTACT: Package Service Contract 2, Filed Under identical to the rules of Cboe EDGX
David A. Trissell, General Counsel, at Seal; Filing Acceptance Date: June 26, Exchange, Inc. (‘‘EDGX’’) 5 and
202–789–6820. 2018; Filing Authority: 39 U.S.C. 3642 substantially similar to the rules of the
SUPPLEMENTARY INFORMATION: and 39 CFR 3020.30 et seq.; Public Nasdaq Stock Market LLC (‘‘Nasdaq’’) 6
Representative: Christopher C. Mohr, and NYSE Arca, Inc. (‘‘Arca’’).7
Table of Contents Comments Due: July 5, 2018. The text of the proposed rule change
I. Introduction is available at the Exchange’s website at
2. Docket No(s).: MC2018–187 and
II. Docketed Proceeding(s)
CP2018–261; Filing Title: USPS Request 1 15 U.S.C. 78s(b)(1).
I. Introduction to Add Priority Mail Express, Priority 2 17 CFR 240.19b–4.
The Commission gives notice that the Mail & First-Class Package Service 3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
Postal Service filed request(s) for the Contract 40 to Competitive Product List
5 See EDGX Rules 11.6(n)(7), 11.8(b)(7) and
Commission to consider matters related and Notice of Filing Materials Under 11.8(d)(5); see also Securities Exchange Act Release
to negotiated service agreement(s). The Seal; Filing Acceptance Date: June 26, No. 80841 (June 1, 2017), 82 FR 26559 (June 7,
request(s) may propose the addition or 2018; Filing Authority: 39 U.S.C. 3642 2017), (Notice of Filing and Immediate
and 39 CFR 3020.30 et seq.; Public Effectiveness To Add a New Optional Order
removal of a negotiated service Instruction Known as Non-Displayed Swap).
agreement from the market dominant or Representative: Christopher C. Mohr, 6 See Nasdaq Rule 4703(m) (defining the Trade
the competitive product list, or the Comments Due: July 5, 2018. Now order modifier); see also Securities Exchange
modification of an existing product Act Release No. 79282 (November 10, 2016), 81 FR
This Notice will be published in the 81219 (November 17, 2016) (Notice of Filing and
currently appearing on the market Federal Register. Immediate Effectiveness of Proposed Rule change to
dominant or the competitive product Amend Rule 4702 and Rule 4703 to Add a ‘‘Trade
list. Stacy L. Ruble, Now’’ Instruction to Certain Order Types).
sradovich on DSK3GMQ082PROD with NOTICES
7 See Arca Rule 7.31–E(d)(2)(B) (describing the
Section II identifies the docket Secretary.
Non-Display Remove Modifier); see also Securities
number(s) associated with each Postal [FR Doc. 2018–14228 Filed 7–2–18; 8:45 am] Exchange Act Release No. 76267 (October 26, 2015),
Service request, the title of each Postal BILLING CODE 7710–FW–P 80 FR 66951 (October 30, 2015) (Order Approving
Service request, the request’s acceptance Proposed Rule change Adopting New Equity
date, and the authority cited by the Trading Rules Relating to Orders and Modifiers and
Retail Liquidity Program To Reflect the
Postal Service for each request. For each Implementation of Pillar, the Exchange’s New
request, the Commission appoints an Trading Technology Platform).
VerDate Sep<11>2014 17:07 Jul 02, 2018 Jkt 244001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\03JYN1.SGM 03JYN1](https://thefederalregister.org/doc/83_FR_31326/page/1.svg)
![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31199
www.markets.cboe.com, at the to be converted to an executable order execution if the order instead posted to
Exchange’s principal office and at the that removes liquidity against such the BZX Book and subsequently
Public Reference Room of the incoming order. An NDS instruction provided liquidity, including the
Commission. would only be eligible for inclusion on applicable fees charged or rebates
a non-displayed limit order or a Mid- provided. As proposed, if Order B also
II. Self-Regulatory Organization’s
Point Peg Order. An order with a NDS included a NDS instruction, the
Statement of the Purpose of, and
instruction would not be eligible for incoming sell order would execute
Statutory Basis for, the Proposed Rule
routing pursuant to Exchange Rule against Order B and such order would
Change
11.13, Order Execution and Routing. become the remover of liquidity and the
In its filing with the Commission, the The proposed NDS instruction assists in BZX Post Only Order to sell would
Exchange included statements the avoidance of an internally locked become the liquidity provider. In such
concerning the purpose of and basis for BZX Book (though such lock would not case, Order A cedes time priority to
the proposed rule change and discussed be displayed by the Exchange) 14 by Order B because Order A did not also
any comments it received on the facilitating the execution of orders that include a NDS instruction and thus the
proposed rule change. The text of these would otherwise lock each other. User that submitted Order A did not
statements may be examined at the The following example illustrates the indicate the preference to be treated as
places specified in Item IV below. The operation of an order with a NDS the remover of liquidity in favor of an
Exchange has prepared summaries, set instruction. Assume the National Best execution; instead, by not using NDS, a
forth in Sections A, B, and C below, of Bid and Offer is $10.00 by $10.04. There User indicates the preference to remain
the most significant parts of such is a non-displayed limit order to buy posted on the BZX Book as a liquidity
statements. resting on the BZX Book at $10.03. A provider.17 However, if the incoming
A. Self-Regulatory Organization’s BZX Post Only Order to sell priced at sell order was priced at $10.02, it would
Statement of the Purpose of, and $10.03 is entered. Under current receive sufficient price improvement to
Statutory Basis for, the Proposed Rule behavior, the incoming sell order execute upon entry against all resting
Change marked as Post Only would post to the buy limit orders in time priority at
BZX Book because it would not receive $10.03.18
1. Purpose sufficient price improvement.15 This If the order with a NDS instruction is
The Exchange proposes to add a new would result in the BZX Book being only partially executed, the unexecuted
optional order type modifier to be internally locked.16 As proposed, if the portion of that order remains on the
known as Non-Displayed Swap. The non-displayed limit order to buy also BZX Book and maintains its priority, as
proposed amendments are substantively included a NDS instruction, the orders is the case today for an order that is
identical to the rules of EDGX 8 and would instead execute against each partially executed and not cancelled by
substantially similar to the rules of other at $10.03, with the resting buy the User.19 The Exchange is proposing
Nasdaq and Arca.9 order with the NDS instruction to make the NDS instruction available to
The proposed Non-Displayed Swap becoming the remover of liquidity and limit orders 20 that are not displayed on
(‘‘NDS’’) instruction would provide the incoming BZX Post Only Order to the Exchange 21 and MidPoint Peg
resting limit orders that are not sell becoming the liquidity provider. Orders.22 Because the NDS instruction
displayed on the Exchange 10 and Mid- Assume the same facts as above, but would be only available to limit orders
Point Peg Orders resting on the BZX that a non-displayed limit order to buy not displayed on the Exchange and to
Book 11 with a greater ability to receive at $10.03 (‘‘Order A’’) is also resting on MidPoint Peg Orders, the NDS
an execution when that resting order is the BZX Book with time priority ahead instruction would not be available to
locked by an incoming order (e.g., the of the non-displayed limit order other order types provided by the
price of the resting non-displayed order mentioned above (‘‘Order B’’). Like Exchange under its Rule 11.9, such as
is equal to the price of the incoming above, a BZX Post Only Order to sell BZX Market Orders, Reserve Orders,
order that is to be placed on the BZX priced at $10.03 is entered. Under and Market Maker Peg Orders,23 as the
Book). The NDS instruction would be an current behavior, the incoming BZX NDS instruction would be inconsistent
optional order instruction that would Post Only Order to sell would post to with the use of those order types. The
allow Users 12 to have their resting non- the BZX Book because the value of such NDS instruction could, however, be
displayed orders execute against an execution against the resting buy combined with other instructions also
incoming order with a Post Only interest when removing liquidity does
17 Should the limit order to buy at $10.03 with
instruction rather than have it be locked not equal or exceed the value of such time priority (i.e., Order A) be displayed on the BZX
by the incoming order. NDS would be Book, the incoming BZX Post Only Order to sell at
defined as an instruction on an order instead posted to the BZX Book and subsequently $10.03 will not execute against the non-displayed
resting on the BZX Book that, when provided liquidity, including the applicable fees buy order with a NDS instruction because displayed
charged or rebates provided. To determine at the orders have priority over non-displayed orders. In
locked by an incoming order with a Post time of a potential execution whether the value of such a case, the incoming limit order would be
Only instruction that does not remove such execution when removing liquidity equals or handled as it is today in accordance with existing
liquidity pursuant to paragraph (c)(6) of exceeds the value of such execution if the order Exchange rules. See, e.g., Exchange Rules 11.9 and
instead posted to the BZX Book and subsequently 11.13(a).
Exchange Rule 11.9,13 causes such order
provided liquidity, the Exchange will use the 18 The execution occurs here because the value of
highest possible rebate paid and highest possible the execution against the buy order when removing
8 See supra note 5. fee charged for such executions on the Exchange. liquidity exceeds the value of such execution if the
9 See supra notes 6 and 7. 14 See Exchange Rule 11.13(a)(4)(C). order instead posted to the BZX Book and
sradovich on DSK3GMQ082PROD with NOTICES
10 See Exchange Rule 11.9(c)(11). 15 Id. [sic] subsequently provided liquidity, including the
11 See Exchange Rule 1.5(e). 16 In the event the incoming order with a Post applicable fees charged or rebates provided. See
12 See Exchange Rule 1.5(cc). supra note 13.
Only instruction was to be displayed, it would post 19 See Exchange Rule 11.12(a)(5).
13 Under Exchange Rule 11.9(c)(6), a BZX Post and display at $10.03 and the resting buy order
20 See Exchange Rule 11.9(a)(1).
Only Order will remove contra-side liquidity from with a Non-Displayed instruction would not
21 See Exchange Rule 11.9(c)(11).
the BZX Book if the order is an order to buy or sell execute against it or subsequent incoming sell
22 See Exchange Rule 11.9(c)(9).
a security priced below $1.00 or if the value of such orders at $10.03 for so long as the sell order was
execution when removing liquidity equals or displayed on the Exchange. See Exchange Rule 23 See Exchange Rules 11.9(a)(2), 11.9(c)(1) and
exceeds the value of such execution if the order 11.13(a)(4)(C) and (D). 11.9(c)(16), respectively.
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![Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31201
Commission summarily may submit only information that you wish statements may be examined at the
temporarily suspend such rule change if to make available publicly. All places specified in Item IV below. The
it appears to the Commission that such submissions should refer to File Exchange has prepared summaries, set
action is: (i) Necessary or appropriate in Number SR–CboeBZX–2018–042, and forth in sections A, B, and C below, of
the public interest; (ii) for the protection should be submitted on or before July the most significant aspects of such
of investors; or (iii) otherwise in 24, 2018. statements.
furtherance of the purposes of the Act. For the Commission, by the Division of A. Self-Regulatory Organization’s
If the Commission takes such action, the Trading and Markets, pursuant to delegated Statement of the Purpose of, and
Commission shall institute proceedings authority.36 Statutory Basis for, the Proposed Rule
to determine whether the proposed rule Eduardo A. Aleman, Change
should be approved or disapproved. Assistant Secretary.
1. Purpose
IV. Solicitation of Comments [FR Doc. 2018–14297 Filed 7–2–18; 8:45 am]
BILLING CODE 8011–01–P The Exchange proposes to amend
Interested persons are invited to
Rule 1064 entitled ‘‘Crossing,
submit written data, views, and
Facilitation and Solicited Orders.’’
arguments concerning the foregoing,
SECURITIES AND EXCHANGE Specifically, the Exchange proposes to
including whether the proposed rule
COMMISSION amend Commentary .02(ii) to Rule 1064
change is consistent with the Act.
to amend the firm participation
Comments may be submitted by any of [Release No. 34–83547; File No. SR–Phlx–
2018–48] guarantee for a Floor Broker.
the following methods: Today, Phlx offers certain firm
Electronic Comments Self-Regulatory Organizations; Nasdaq participation guarantees to a Floor
• Use the Commission’s internet PHLX LLC; Notice of Filing and Broker who holds an equity, index or
comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed U.S. dollar-settled foreign currency
rules/sro.shtml); or Rule Change To Amend the Firm option order of the eligible order size or
• Send an email to rule-comments@ Participation Guarantee for a Floor greater (‘‘original order’’), the Floor
sec.gov. Please include File Number SR– Broker Broker is entitled to cross a certain
CboeBZX–2018–042 on the subject line. percentage of the original order with
June 28, 2018. other orders that he is holding or in the
Paper Comments Pursuant to Section 19(b)(1) of the case of a public customer order, with a
• Send paper comments in triplicate Securities Exchange Act of 1934 facilitation order of the originating firm
to Secretary, Securities and Exchange (‘‘Act’’),1 and Rule 19b–4 thereunder,2 (i.e., the firm from which the original
Commission, 100 F Street NE, notice is hereby given that on June 14, customer order originated). Today, the
Washington, DC 20549–1090. 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or Exchange may determine, on an option
All submissions should refer to File ‘‘Exchange’’) filed with the Securities by option basis, the eligible size for an
Number SR–CboeBZX–2018–042. This and Exchange Commission (‘‘SEC’’ or order that may be transacted pursuant to
file number should be included on the ‘‘Commission’’) the proposed rule this Commentary, however, the eligible
subject line if email is used. To help the change as described in Items I and II, order size may not be less than 500
Commission process and review your below, which Items have been prepared contracts. Orders for less than 500
comments more efficiently, please use by the Exchange. The Commission is contracts may be crossed pursuant to
only one method. The Commission will publishing this notice to solicit Rule 1064 but are not subject to
post all comments on the Commission’s comments on the proposed rule change Commentary .02, subsection (iii) to Rule
internet website (http://www.sec.gov/ from interested persons. 1064 pertaining to participation
rules/sro.shtml). Copies of the guarantees. Similar to Cboe Exchange,
I. Self-Regulatory Organization’s Inc. (‘‘CBOE’’) the Exchange proposes to
submission, all subsequent Statement of the Terms of Substance of
amendments, all written statements lower the eligible minimum order size
the Proposed Rule Change from 500 to not less than 50 contracts.3
with respect to the proposed rule
The Exchange proposes to amend The Commission noted in an approval
change that are filed with the
Commentary .02 to Rule 1064. of the reduction from 500 to 50 for
Commission, and all written The text of the proposed rule change
communications relating to the CBOE that it had already approved the
is available on the Exchange’s website at facilitation mechanism of ISE, which
proposed rule change between the http://nasdaqphlx.cchwallstreet.com/,
Commission and any person, other than guarantees 40% of orders to facilitating
at the principal office of the Exchange, firms for order sizes of 50 or more
those that may be withheld from the and at the Commission’s Public
public in accordance with the contracts.4 In that approval order the
Reference Room. Exchange approved the reduction in the
provisions of 5 U.S.C. 552, will be
available for website viewing and II. Self-Regulatory Organization’s size requirement, from 500 to 50
printing in the Commission’s Public Statement of the Purpose of, and contracts, because the CBOE proposal
Reference Room, 100 F Street NE, Statutory Basis for, the Proposed Rule raised no new regulatory issues.5 The
Washington, DC 20549, on official Change Commission noted that it will benefit
business days between the hours of options market participants by allowing
In its filing with the Commission, the
10:00 a.m. and 3:00 p.m. Copies of the Exchange included statements 3 See CBOE Rule 6.74(d).
filing also will be available for
sradovich on DSK3GMQ082PROD with NOTICES
concerning the purpose of and basis for 4 See Securities Exchange Act Release No. 42835
inspection and copying at the principal the proposed rule change and discussed (May 26, 2000), 65 FR 35683 (June 5, 2000) (SR–
office of the Exchange. All comments any comments it received on the CBOE–99–10) (Order Approving Proposed Rule
received will be posted without change. proposed rule change. The text of these Change and Notice of Filing and Order Granting
Persons submitting comments are Accelerated Approval to Amendment Nos. 1, 2, and
3 to the Proposed Rule Change by the Chicago
cautioned that we do not redact or edit 36 17 CFR 200.30–3(a)(12) and (59). Board Options Exchange, Inc., Relating to
personal identifying information from 1 15 U.S.C. 78s(b)(1). Participation Rights for Firms Crossing Orders.)
comment submissions. You should 2 17 CFR 240.19b–4. 5 Id.
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Document Created: 2018-07-02 23:55:29
Document Modified: 2018-07-02 23:55:29
| 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 | 83 FR 31198 |
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