Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change To Provide a New Optional Functionality to Minimum Quantity Orders, 582-583 [2014-30895]

Download as PDF 582 Federal Register / Vol. 80, No. 3 / Tuesday, January 6, 2015 / Notices participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding the Fund’s holdings, the IOPV, the Disclosed Portfolio, and quotation and last sale information for the Shares. Electronic Comments B. Self-Regulatory Organization’s Statement on Burden on Competition All submissions should refer to File Number SR–NYSEArca–2014–143. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEArca–2014–143 and should be submitted on or before January 27, 2015. The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will invest in multiple asset classes and that will enhance competition among market participants, to the benefit of investors and the marketplace. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. tkelley on DSK3SPTVN1PROD with NOTICES 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: VerDate Sep<11>2014 19:38 Jan 05, 2015 Jkt 235001 • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2014–143 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.36 Brent J. Fields, Secretary. [FR Doc. 2014–30894 Filed 1–5–15; 8:45 am] BILLING CODE 8011–01–P 36 17 PO 00000 CFR 200.30–3(a)(12). Frm 00102 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–73959; File No. SR– NASDAQ–2014–095] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change To Provide a New Optional Functionality to Minimum Quantity Orders December 30, 2014. I. Introduction On September 18, 2014, 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 (‘‘Rule’’) 4751(f)(5) to provide a new optional functionality for Minimum Quantity Orders. The proposed rule change was published for comment in the Federal Register on October 6, 2014.3 On November 18, 2014, the Commission extended to January 4, 2015, the time period in which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved.4 The Commission received one comment letter regarding the proposed rule change.5 This order approves the proposed rule change. II. Description of the Proposal A Minimum Quantity Order (‘‘MQO’’) allows a market participant to specify a minimum share amount at which it will execute. A MQO will not execute unless the volume of contra-side liquidity available to execute against the order meets or exceeds the designated minimum. A MQO received by the Exchange will execute immediately if there is sufficient liquidity available on the Exchange within the limit price of the order. In addition, multiple orders may be aggregated to meet the minimum quantity. For example, a MQO will execute if the sum of the shares of one or more orders is equal to or greater than its minimum quantity. If a MQO does 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 73266 (September 30, 2014), 79 FR 60207 (‘‘Notice’’). 4 See Securities Exchange Act Release No. 73621, 79 FR 69957 (November 24, 2014). 5 See letter to SEC from James J. Angel, Associate Professor of Finance, Georgetown University, dated November 26, 2014 (‘‘Angel Letter’’). 2 17 E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 80, No. 3 / Tuesday, January 6, 2015 / Notices not execute immediately due to lack of contra-side liquidity that is equal to or greater than the designated minimum, the order will post to the NASDAQ order book as a Non-Displayed Order. Once posted, a MQO will execute only if an incoming order is marketable against the resting MQO and is equal to or greater than the minimum quantity set on the resting MQO. Once posted, multiple orders cannot be aggregated to meet the minimum quantity requirement of the Minimum Quantity Order. If a MQO executes partially and the number of shares remaining is less than the minimum quantity of the order, the minimum quantity of the order is reduced to the remaining share size. If a MQO is received that is marketable against a resting contra-side order with size that does not meet the minimum quantity requirement, the MQO will be posted on the book as a Non-Displayed Order at the locking price. The Exchange proposes to offer an optional order handling functionality that would permit an incoming MQO to forego executions where multiple resting orders could otherwise be aggregated to satisfy the minimum quantity designation. Under the proposed functionality, a MQO would only execute against a single contra-side order that would equal or exceed the minimum quantity designation of the MQO.6 In addition, if the minimum quantity designation of an incoming MQO could not be satisfied by a resting contra-side order, the MQO would be repriced one minimum price increment away from the resting liquidity and posted to the NASDAQ order book as a Non-Displayed Order.7 If an incoming MQO receives a partial execution, the remainder of the order would be cancelled if it would lock resting contraside liquidity that does not meet the minimum quantity designation.8 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.9 In particular, the Commission finds that the proposed rule change is consistent with Section tkelley on DSK3SPTVN1PROD with NOTICES 6 See Notice, 79 FR at 60209. 7 See proposed Rule 4751(f)(5); see also Notice, 79 FR at 60208. 8 See proposed Rule 4751(f)(5); see also Notice, 79 FR at 60209. The Exchange represents that the proposed functionality already exists on other trading venues. See Notice, 79 FR at 60208–09. 9 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). VerDate Sep<11>2014 19:38 Jan 05, 2015 Jkt 235001 6(b)(5) of the Act,10 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 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 are not designed to permit unfair discrimination between customers, issuers, brokers or dealers. The Exchange represents that some market participants have indicated that they currently avoid routing larger orders to NASDAQ due to the concern that such orders may interact against small orders entered by professional traders, potentially resulting in more expensive transactions. The Exchange represents that the optional minimum execution size functionality proposed for MQOs should enhance the utility of such orders for market participants and should facilitate the entry of larger MQOs on the Exchange.11 Specifically the Exchange believes that the proposed functionality would provide market participants, including institutional firms that ultimately represent individual retail investors in many cases, with better control over MQOs, thereby enhancing the potential to improve execution quality.12 The Commission notes that a commenter expressed strong support for the proposal.13 In particular, the commenter states that the proposed rule change would benefit institutional investors, such as mutual funds that invest on behalf of retail investors, by minimizing their transaction costs.14 For example, according to the commenter, the proposed functionality would improve large investors’ ability to manage their orders and thereby obtain better execution quality.15 The Commission believes that the proposal should provide market participants with enhanced capability to manage their order flow. For the reasons noted above, the Commission believes that the proposed rule change is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,16 that the proposed rule change (SR–NASDAQ– 10 15 U.S.C. 78f(b)(5). Notice, 79 FR at 60208, 60210. 12 Id. at 60210. 13 See Angel Letter, supra note 5. 14 Id. 15 Id. 16 15 U.S.C. 78s(b)(2). 11 See PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 583 2014–095) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Brent J. Fields, Secretary. [FR Doc. 2014–30895 Filed 1–5–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Release No. 34–73973; File No. SR– ISE–2014–43] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change Amending its Information Barrier Rules December 31, 2014. I. Introduction On September 15, 2014, International Securities Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’) 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 amending its information barrier rules. The proposed rule change was published for comment in the Federal Register on October 6, 2014.3 On November 17, 2014, the Commission extended the time period in which to either approve the Proposal, disapprove the Proposal, or institute proceedings to determine whether to approve or disapprove the proposed rule change to January 2, 2015.4 The Commission received one comment letter regarding the proposed rule change 5 and one response letter from ISE.6 This order institutes proceedings under Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change. 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 73261 (September 30, 2014), 79 FR 60226 (‘‘Notice’’). 4 See Securities Exchange Act Release No. 73614 (November 17, 2014), 79 FR 69547 (November 21, 2014). 5 See Letter from John Kinahan, Chief Executive Officer, Group One Trading, L.P., dated October 27, 2014 (‘‘Group One Letter’’). 6 See Letter from Michael J. Simon, Secretary and General Counsel, International Securities Exchange, LLC, dated November 14, 2014 (‘‘ISE Response Letter’’). 7 15 U.S.C. 78s(b)(2)(B). 1 15 E:\FR\FM\06JAN1.SGM 06JAN1

Agencies

[Federal Register Volume 80, Number 3 (Tuesday, January 6, 2015)]
[Notices]
[Pages 582-583]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30895]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73959; File No. SR-NASDAQ-2014-095]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of Proposed Rule Change To Provide a New Optional 
Functionality to Minimum Quantity Orders

December 30, 2014.

I. Introduction

    On September 18, 2014, 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 (``Rule'') 4751(f)(5) to 
provide a new optional functionality for Minimum Quantity Orders. The 
proposed rule change was published for comment in the Federal Register 
on October 6, 2014.\3\ On November 18, 2014, the Commission extended to 
January 4, 2015, the time period in which to approve the proposed rule 
change, disapprove the proposed rule change, or institute proceedings 
to determine whether the proposed rule change should be disapproved.\4\ 
The Commission received one comment letter regarding the proposed rule 
change.\5\ This order approves 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. 73266 (September 30, 
2014), 79 FR 60207 (``Notice'').
    \4\ See Securities Exchange Act Release No. 73621, 79 FR 69957 
(November 24, 2014).
    \5\ See letter to SEC from James J. Angel, Associate Professor 
of Finance, Georgetown University, dated November 26, 2014 (``Angel 
Letter'').
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II. Description of the Proposal

    A Minimum Quantity Order (``MQO'') allows a market participant to 
specify a minimum share amount at which it will execute. A MQO will not 
execute unless the volume of contra-side liquidity available to execute 
against the order meets or exceeds the designated minimum. A MQO 
received by the Exchange will execute immediately if there is 
sufficient liquidity available on the Exchange within the limit price 
of the order. In addition, multiple orders may be aggregated to meet 
the minimum quantity. For example, a MQO will execute if the sum of the 
shares of one or more orders is equal to or greater than its minimum 
quantity. If a MQO does

[[Page 583]]

not execute immediately due to lack of contra-side liquidity that is 
equal to or greater than the designated minimum, the order will post to 
the NASDAQ order book as a Non-Displayed Order. Once posted, a MQO will 
execute only if an incoming order is marketable against the resting MQO 
and is equal to or greater than the minimum quantity set on the resting 
MQO. Once posted, multiple orders cannot be aggregated to meet the 
minimum quantity requirement of the Minimum Quantity Order. If a MQO 
executes partially and the number of shares remaining is less than the 
minimum quantity of the order, the minimum quantity of the order is 
reduced to the remaining share size. If a MQO is received that is 
marketable against a resting contra-side order with size that does not 
meet the minimum quantity requirement, the MQO will be posted on the 
book as a Non-Displayed Order at the locking price.
    The Exchange proposes to offer an optional order handling 
functionality that would permit an incoming MQO to forego executions 
where multiple resting orders could otherwise be aggregated to satisfy 
the minimum quantity designation. Under the proposed functionality, a 
MQO would only execute against a single contra-side order that would 
equal or exceed the minimum quantity designation of the MQO.\6\ In 
addition, if the minimum quantity designation of an incoming MQO could 
not be satisfied by a resting contra-side order, the MQO would be re-
priced one minimum price increment away from the resting liquidity and 
posted to the NASDAQ order book as a Non-Displayed Order.\7\ If an 
incoming MQO receives a partial execution, the remainder of the order 
would be cancelled if it would lock resting contra-side liquidity that 
does not meet the minimum quantity designation.\8\
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    \6\ See Notice, 79 FR at 60209.
    \7\ See proposed Rule 4751(f)(5); see also Notice, 79 FR at 
60208.
    \8\ See proposed Rule 4751(f)(5); see also Notice, 79 FR at 
60209. The Exchange represents that the proposed functionality 
already exists on other trading venues. See Notice, 79 FR at 60208-
09.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\9\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\10\ 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 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 are not designed to permit unfair discrimination between 
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \9\ 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).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange represents that some market participants have 
indicated that they currently avoid routing larger orders to NASDAQ due 
to the concern that such orders may interact against small orders 
entered by professional traders, potentially resulting in more 
expensive transactions. The Exchange represents that the optional 
minimum execution size functionality proposed for MQOs should enhance 
the utility of such orders for market participants and should 
facilitate the entry of larger MQOs on the Exchange.\11\ Specifically 
the Exchange believes that the proposed functionality would provide 
market participants, including institutional firms that ultimately 
represent individual retail investors in many cases, with better 
control over MQOs, thereby enhancing the potential to improve execution 
quality.\12\
---------------------------------------------------------------------------

    \11\ See Notice, 79 FR at 60208, 60210.
    \12\ Id. at 60210.
---------------------------------------------------------------------------

    The Commission notes that a commenter expressed strong support for 
the proposal.\13\ In particular, the commenter states that the proposed 
rule change would benefit institutional investors, such as mutual funds 
that invest on behalf of retail investors, by minimizing their 
transaction costs.\14\ For example, according to the commenter, the 
proposed functionality would improve large investors' ability to manage 
their orders and thereby obtain better execution quality.\15\
---------------------------------------------------------------------------

    \13\ See Angel Letter, supra note 5.
    \14\ Id.
    \15\ Id.
---------------------------------------------------------------------------

    The Commission believes that the proposal should provide market 
participants with enhanced capability to manage their order flow. For 
the reasons noted above, the Commission believes that the proposed rule 
change is consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NASDAQ-2014-095) be, and it 
hereby is, approved.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2014-30895 Filed 1-5-15; 8:45 am]
BILLING CODE 8011-01-P
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