Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the Definition of Designated Retail Order in Nasdaq Rule 7018, 40098-40100 [2015-16976]

Download as PDF 40098 Federal Register / Vol. 80, No. 133 / Monday, July 13, 2015 / Notices of BrokerCheck. While such suggestions are beyond the scope of this proposal, FINRA intends to continue to consider ways to increase investor knowledge and usage of BrokerCheck. 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 such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be 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: asabaliauskas on DSK5VPTVN1PROD with NOTICES Electronic Comments • 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– FINRA–2015–022 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–FINRA–2015–022. 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 VerDate Sep<11>2014 19:27 Jul 10, 2015 Jkt 235001 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 FINRA. 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–FINRA– 2015–022 and should be submitted on or before August 3, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.42 Brent J. Fields, Secretary. [FR Doc. 2015–16978 Filed 7–10–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75375; File No. SR– NASDAQ–2015–066] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the Definition of Designated Retail Order in Nasdaq Rule 7018 July 7, 2015. 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 24, 2015, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in in Items I and II below, which Items have been prepared by Nasdaq. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to amend the definition of ‘‘Designated Retail Order’’ in Nasdaq Rule 7018. The text of the proposed rule change is available at https:// nasdaq.cchwallstreet.com/, at Nasdaq’s principal office, and at the Commission’s Public Reference Room. PO 00000 42 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00107 Fmt 4703 Sfmt 4703 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below, and is set forth in Sections A, B, and C below. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the definition of ‘‘Designated Retail Order’’ (‘‘DRO’’) in Nasdaq Rule 7018 in order to clarify it and make it more consistent with the definition of ‘‘Retail Order’’ as previously set forth in Nasdaq Rule 4780(a)(2) (eliminated by the recently approved SR–NASDAQ–2015–024), BATS Y-Exchange, Inc. (‘‘BATS’’) Rule 11.24(a)(2) 3 and NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule 7.44(a)(3) 4, as well as how it is defined in within the BATS Retail Member Organization Application Form (‘‘BATS Form’’).5 The Exchange will also update its Designated Retail Order Attestation form 6 (‘‘Attestation Form’’) to be consistent with the proposed rule change. Pursuant to previous approvals, any and all members are required to submit a retail order attestation form to the specific exchange before submitting a retail order to that exchange.7 As mentioned above, the proposed changes to the DRO definition in Nasdaq Rule 7018, as well as the corresponding changes to Nasdaq’s Attestation Form, will be consistent with the recently eliminated Nasdaq Rule 4780 and in line with the revisions made by BATS to the BATS Form. Specifically, BATS updated its BATS Form to include three key elements: 8 (1) To ensure that the order is a riskless principal order that meets the criteria of 3 See BATS Rule 11.24(a)(2). NYSE Arca Rule 7.44(a)(3). 5 See https://cdn.batstrading.com/resources/ membership/BYX_Retail_Member_Organization_ Application.pdf. 6 See https://www.nasdaqtrader.com/content/ AdministrationSupport/AgreementsTrading/dro_ eligibility_form.pdf. 7 See e.g., Securities Exchange Act Release No. 69719 (June 7, 2013), 78 FR 35656 (June 13, 2014) (SR–NASDAQ–2013–031); Securities Exchange Act Release No. 69643 (May 28, 2013), 78 FR 33136 (June 3, 2014) (SR–BYX–2013–008); and Securities Exchange Act Release No. 69513 (May 3, 2013), 78 FR 27261 (May 9, 2014) (SR–NYSE–2013–08). 8 Supra note 5. 4 See E:\FR\FM\13JYN1.SGM 13JYN1 Federal Register / Vol. 80, No. 133 / Monday, July 13, 2015 / Notices FINRA Rule 5320.03; 9 (2) to state that an order from a ‘‘natural person’’ can include orders on behalf of accounts that are held in a corporate legal form, such as an Individual Retirement Account (‘‘IRA’’), Corporation, or a Limited Liability Company (‘‘LLC’’) that has been established for the benefit of an individual or group of related family members, provided that the order is submitted by an individual; and (3) to include the standard that members have implemented policies and procedures that are reasonably designed to ensure that ‘‘substantially all’’ orders (rather than the previous standard that ‘‘every order’’) that are designated by the member as retail orders comply with these requirements. Nasdaq believes that inclusion in the DRO definition of an individual making the decision even if the account is held in corporate legal form qualifies as a ‘‘non-controversial’’ rule change under Rule 19b–4(f)(6) and is not a significant change from existing rules on other exchanges. Consequently, Nasdaq will amend Nasdaq Rule 7018 to reflect the changes to the definition of DRO discussed above and amend its Attestation Form accordingly. asabaliauskas on DSK5VPTVN1PROD with NOTICES 2. Statutory Basis Nasdaq believes that its proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.10 In particular, the Exchange believes the proposed change furthers the objectives of Section 6(b)(5) of the Act,11 in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. The Exchange also believes that the proposed rule change to amend and clarify the definition of DRO in Nasdaq Rule 7018 is consistent with these principles because it would remove impediments to and perfects the mechanism of a free and open market and a national market system, as well as increases competition among execution venues and encourages additional liquidity. Specifically, the amended 9 See FINRA Rule 5320.03 (the riskless principal exception to the ‘‘Prohibition Against Trading Ahead of Customer Orders’’ FINRA rule). 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 20:40 Jul 10, 2015 Jkt 235001 DRO definition is consistent with Nasdaq Rule 4780(a)(2) (eliminated by the recently approved SR–NASDAQ– 2015–024), NYSE Arca Rule 7.44(a)(3) and BATS Rule 11.24(a)(2), and as defined in the BATS Form.12 As BATS has done with its BATS Form, the Exchange’s proposed rule change amending the DRO definition will be more inclusive and benefits the individual investor who places his or her money into accounts that are held in a corporate legal form (e.g., an IRA, Corporation, or an LLC that has been established for the benefit of an individual or group of related family members), provided that the order has been submitted by an individual. As a result, the price discovery is enhanced as more retail investors will have the opportunity to avail themselves of DROs. Under the current rule and attestation, only a small segment of the retail market is included. The proposed rule change widens the net and affords more retail investors and their brokerdealers that route these orders greater opportunities. Further, although the change from ‘‘every order’’ to ‘‘substantially all orders’’ slightly reduces the monitoring risk placed on broker-dealers, the Exchange believes that this slightly lower burden will encourage and provide reasonable incentives for retailfocused broker-dealers to route retail orders to the Exchange for the benefit of the price discovery process and for all market participants with enhanced retail liquidity and trading opportunities. The Exchange believes that the amended DRO definition increases competition among execution venues and encourages additional liquidity by incentivizing more DROs to be routed to the Exchange, which will bring additional liquidity onto the Exchange. Additionally, the proposed rule change will improve the markets and create a more competitive environment, as well as bring more order flow, which, in turn, enhances the price discovery process on the Exchange. The Exchange believes that the transparency and competitiveness of the proposed rule change will result in better prices for retail investors. The Exchange also believes that the proposed rule change is consistent with these principles in that it creates a financial incentive to bring more than just retail order flow from individual or joint ownership accounts to the public market. The proposed rule change also encourages retail order flow that is in other forms of account registration PO 00000 12 Supra note 5. Frm 00108 Fmt 4703 employed by retail investors (as is the case with an IRA), which broadens it beyond just basic retail order flow. It also includes order flow from members that use other forms of account registration for tax reasons, retirement or pension savings, for families and other related retail investors. Nasdaq also believes that the proposed rule change to the definition of DRO in Nasdaq Rule 7018 qualifies as a ‘‘non-controversial’’ rule change under Rule 19b-4(f)(6) because it is not novel and serves to put the Exchange on equal footing with BATS. It simply recognizes that an order from a ‘‘natural person’’ may include orders based on an individual making the decision (rather than an algorithm), even if the account is held in an IRA, Corporation, or an LLC that has been established for the benefit of an individual or group of related family members. Nasdaq further believes that inclusion in the DRO definition of an individual making the decision even if the account is held in corporate legal form qualifies as a ‘‘noncontroversial’’ rule change under Rule 19b–4(f)(6) and is not a significant change from existing rules on other exchanges. The Exchange believes that this proposed rule change and the proposed rule change to modify the standard that members have implemented policies and procedures that are reasonably designed to ensure that ‘‘substantially all’’ rather than ‘‘every’’ order are minor enough changes to qualify the filing as noncontroversial, which is consistent with previous approvals. For the above reasons, Nasdaq believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act.13 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. The Exchange believes that competition improves by incentivizing more DROs to be routed to the Exchange, which will bring additional liquidity onto the Exchange as well. The definition of DRO, as amended, will improve the markets and create a more competitive environment, as well as bring more order flow and, therefore, more market makers onto the Exchange to provide liquidity and compete with robust competitive markets. 13 15 Sfmt 4703 40099 E:\FR\FM\13JYN1.SGM U.S.C. 78f(b)(5). 13JYN1 40100 Federal Register / Vol. 80, No. 133 / Monday, July 13, 2015 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments were neither solicited nor received. 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)(ii) of the Act 14 and subparagraph (f)(6) of Rule 19b–4 thereunder.15 At any time within 60 days of the filing of the proposed rule change, the 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. The Exchange has provided the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change. 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: asabaliauskas on DSK5VPTVN1PROD with NOTICES Electronic Comments • 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–NASDAQ–2015–066 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2015–066. 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 the filing also will be available for inspection and copying at the principal office of Nasdaq. 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–NASDAQ–2015–066 and should be submitted on or before August 3, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Brent J. Fields, Secretary. [FR Doc. 2015–16976 Filed 7–10–15; 8:45 am] BILLING CODE 8011–01–P 15 U.S.C. 78s(b)(3)(a)(ii). 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, along with a brief description and text of 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. 14 15 17 VerDate Sep<11>2014 19:27 Jul 10, 2015 Jkt 235001 PO 00000 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75374; File No. SR–BOX– 2015–22] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change to Implement the Governance Provisions of an Equity Rights Program July 7, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b-4 thereunder,2 notice is hereby given that, on June 25, 2015, BOX Options Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to implement the governance provisions of an equity rights program (the ‘‘VPR Program’’). Upon Commission approval of the proposed rule change, BOX Holdings Group LLC (‘‘Holdings’’), an affiliate of the Exchange and direct parent entity of BOX Market LLC, a facility of the Exchange (‘‘BOX’’), proposes to amend the existing Limited Liability Company Agreement of Holdings (the ‘‘Holdings LLC Agreement’’) by adopting an Amended and Restated Limited Liability Company Agreement of Holdings (the ‘‘Restated Holdings LLC Agreement’’). There are no other proposed changes to any rule text. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s Internet Web site at https:// boxexchange.com. 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 self-regulatory organization 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 1 15 16 17 CFR 200.30–3(a)(12). Frm 00109 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\13JYN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 13JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 133 (Monday, July 13, 2015)]
[Notices]
[Pages 40098-40100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16976]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75375; File No. SR-NASDAQ-2015-066]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Amend the Definition of Designated Retail Order in Nasdaq Rule 7018

July 7, 2015.
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 24, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in in Items I
and II below, which Items have been prepared by Nasdaq. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

Nasdaq proposes to amend the definition of ``Designated Retail
Order'' in Nasdaq Rule 7018.
The text of the proposed rule change is available at https://nasdaq.cchwallstreet.com/, at Nasdaq's principal office, and at the
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below, and is set forth in Sections A, B, and C below.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the definition of ``Designated
Retail Order'' (``DRO'') in Nasdaq Rule 7018 in order to clarify it and
make it more consistent with the definition of ``Retail Order'' as
previously set forth in Nasdaq Rule 4780(a)(2) (eliminated by the
recently approved SR-NASDAQ-2015-024), BATS Y-Exchange, Inc. (``BATS'')
Rule 11.24(a)(2) \3\ and NYSE Arca, Inc. (``NYSE Arca'') Rule
7.44(a)(3) \4\, as well as how it is defined in within the BATS Retail
Member Organization Application Form (``BATS Form'').\5\ The Exchange
will also update its Designated Retail Order Attestation form \6\
(``Attestation Form'') to be consistent with the proposed rule change.
Pursuant to previous approvals, any and all members are required to
submit a retail order attestation form to the specific exchange before
submitting a retail order to that exchange.\7\
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\3\ See BATS Rule 11.24(a)(2).
\4\ See NYSE Arca Rule 7.44(a)(3).
\5\ See https://cdn.batstrading.com/resources/membership/BYX_Retail_Member_Organization_Application.pdf.
\6\ See https://www.nasdaqtrader.com/content/AdministrationSupport/AgreementsTrading/dro_eligibility_form.pdf.
\7\ See e.g., Securities Exchange Act Release No. 69719 (June 7,
2013), 78 FR 35656 (June 13, 2014) (SR-NASDAQ-2013-031); Securities
Exchange Act Release No. 69643 (May 28, 2013), 78 FR 33136 (June 3,
2014) (SR-BYX-2013-008); and Securities Exchange Act Release No.
69513 (May 3, 2013), 78 FR 27261 (May 9, 2014) (SR-NYSE-2013-08).
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As mentioned above, the proposed changes to the DRO definition in
Nasdaq Rule 7018, as well as the corresponding changes to Nasdaq's
Attestation Form, will be consistent with the recently eliminated
Nasdaq Rule 4780 and in line with the revisions made by BATS to the
BATS Form. Specifically, BATS updated its BATS Form to include three
key elements: \8\ (1) To ensure that the order is a riskless principal
order that meets the criteria of

[[Page 40099]]

FINRA Rule 5320.03; \9\ (2) to state that an order from a ``natural
person'' can include orders on behalf of accounts that are held in a
corporate legal form, such as an Individual Retirement Account
(``IRA''), Corporation, or a Limited Liability Company (``LLC'') that
has been established for the benefit of an individual or group of
related family members, provided that the order is submitted by an
individual; and (3) to include the standard that members have
implemented policies and procedures that are reasonably designed to
ensure that ``substantially all'' orders (rather than the previous
standard that ``every order'') that are designated by the member as
retail orders comply with these requirements. Nasdaq believes that
inclusion in the DRO definition of an individual making the decision
even if the account is held in corporate legal form qualifies as a
``non-controversial'' rule change under Rule 19b-4(f)(6) and is not a
significant change from existing rules on other exchanges.
---------------------------------------------------------------------------

\8\ Supra note 5.
\9\ See FINRA Rule 5320.03 (the riskless principal exception to
the ``Prohibition Against Trading Ahead of Customer Orders'' FINRA
rule).
---------------------------------------------------------------------------

Consequently, Nasdaq will amend Nasdaq Rule 7018 to reflect the
changes to the definition of DRO discussed above and amend its
Attestation Form accordingly.
2. Statutory Basis
Nasdaq believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\10\ In particular,
the Exchange believes the proposed change furthers the objectives of
Section 6(b)(5) of the Act,\11\ in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
---------------------------------------------------------------------------

\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Exchange also believes that the proposed rule change to amend
and clarify the definition of DRO in Nasdaq Rule 7018 is consistent
with these principles because it would remove impediments to and
perfects the mechanism of a free and open market and a national market
system, as well as increases competition among execution venues and
encourages additional liquidity. Specifically, the amended DRO
definition is consistent with Nasdaq Rule 4780(a)(2) (eliminated by the
recently approved SR-NASDAQ-2015-024), NYSE Arca Rule 7.44(a)(3) and
BATS Rule 11.24(a)(2), and as defined in the BATS Form.\12\ As BATS has
done with its BATS Form, the Exchange's proposed rule change amending
the DRO definition will be more inclusive and benefits the individual
investor who places his or her money into accounts that are held in a
corporate legal form (e.g., an IRA, Corporation, or an LLC that has
been established for the benefit of an individual or group of related
family members), provided that the order has been submitted by an
individual. As a result, the price discovery is enhanced as more retail
investors will have the opportunity to avail themselves of DROs. Under
the current rule and attestation, only a small segment of the retail
market is included. The proposed rule change widens the net and affords
more retail investors and their broker-dealers that route these orders
greater opportunities.
---------------------------------------------------------------------------

\12\ Supra note 5.
---------------------------------------------------------------------------

Further, although the change from ``every order'' to
``substantially all orders'' slightly reduces the monitoring risk
placed on broker-dealers, the Exchange believes that this slightly
lower burden will encourage and provide reasonable incentives for
retail-focused broker-dealers to route retail orders to the Exchange
for the benefit of the price discovery process and for all market
participants with enhanced retail liquidity and trading opportunities.
The Exchange believes that the amended DRO definition increases
competition among execution venues and encourages additional liquidity
by incentivizing more DROs to be routed to the Exchange, which will
bring additional liquidity onto the Exchange. Additionally, the
proposed rule change will improve the markets and create a more
competitive environment, as well as bring more order flow, which, in
turn, enhances the price discovery process on the Exchange. The
Exchange believes that the transparency and competitiveness of the
proposed rule change will result in better prices for retail investors.
The Exchange also believes that the proposed rule change is
consistent with these principles in that it creates a financial
incentive to bring more than just retail order flow from individual or
joint ownership accounts to the public market. The proposed rule change
also encourages retail order flow that is in other forms of account
registration employed by retail investors (as is the case with an IRA),
which broadens it beyond just basic retail order flow. It also includes
order flow from members that use other forms of account registration
for tax reasons, retirement or pension savings, for families and other
related retail investors.
Nasdaq also believes that the proposed rule change to the
definition of DRO in Nasdaq Rule 7018 qualifies as a ``non-
controversial'' rule change under Rule 19b-4(f)(6) because it is not
novel and serves to put the Exchange on equal footing with BATS. It
simply recognizes that an order from a ``natural person'' may include
orders based on an individual making the decision (rather than an
algorithm), even if the account is held in an IRA, Corporation, or an
LLC that has been established for the benefit of an individual or group
of related family members. Nasdaq further believes that inclusion in
the DRO definition of an individual making the decision even if the
account is held in corporate legal form qualifies as a ``non-
controversial'' rule change under Rule 19b-4(f)(6) and is not a
significant change from existing rules on other exchanges. The Exchange
believes that this proposed rule change and the proposed rule change to
modify the standard that members have implemented policies and
procedures that are reasonably designed to ensure that ``substantially
all'' rather than ``every'' order are minor enough changes to qualify
the filing as non-controversial, which is consistent with previous
approvals.
For the above reasons, Nasdaq believes the proposed rule change is
consistent with the requirements of Section 6(b)(5) of the Act.\13\
---------------------------------------------------------------------------

\13\ 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. The Exchange
believes that competition improves by incentivizing more DROs to be
routed to the Exchange, which will bring additional liquidity onto the
Exchange as well. The definition of DRO, as amended, will improve the
markets and create a more competitive environment, as well as bring
more order flow and, therefore, more market makers onto the Exchange to
provide liquidity and compete with robust competitive markets.

[[Page 40100]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others

Written comments were neither solicited nor received.

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)(ii) of the Act \14\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(a)(ii).
\15\ 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, along
with a brief description and text of 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.
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At any time within 60 days of the filing of the proposed rule
change, the 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. The Exchange has
provided the Commission written notice of its intent to file the
proposed rule change, along with a brief description and text of the
proposed rule change, at least five business days prior to the date of
filing of the proposed rule change.

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 Comments

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-NASDAQ-2015-066 on the subject line.

Paper Comments

Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street NE., Washington,
DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-066.
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 the filing also will be available for inspection
and copying at the principal office of Nasdaq. 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-NASDAQ-2015-066 and
should be submitted on or before August 3, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-16976 Filed 7-10-15; 8:45 am]
BILLING CODE 8011-01-P

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