Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change To Adopt a Kill Switch for NOM, 62591-62592 [2015-26327]

Download as PDF Federal Register / Vol. 80, No. 200 / Friday, October 16, 2015 / Notices whether a consulting fee would be charged. Listing Fees and Annual Fees applicable to Derivatives Securities Products would remain unchanged. 2. Statutory Basis NYSE Arca believes that the proposal is consistent with Section 6(b) 7 of the Act, in general, and Section 6(b)(4) 8 of the Act in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among its issuers and other persons using its facilities. In addition, the Exchange believes the proposal is consistent with the requirement under Section 6(b)(5) 9 that an exchange have rules that are 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, in general, to protect investors and the public interest. The proposed elimination of the Sponsor Fee is equitable and does not unfairly discriminate between issuers because it would apply uniformly to all Sponsors. The Exchange believes elimination of the Sponsor Fee is reasonable in that it constitutes a reduction in fees for Sponsors. Notwithstanding the elimination of the Sponsor Fee, the Exchange will continue to be able to fund its regulatory obligations. B. Self-Regulatory Organization’s Statement on Burden on Competition 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 believes the proposed rule change would promote competition because it will permit the Exchange to better compete with other exchanges that do not charge a fee similar to the Sponsor Fee. srobinson on DSK5SPTVN1PROD with NOTICES 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 The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 10 of the Act and 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4). 9 15 U.S.C. 78f(b)(5). 10 15 U.S.C. 78s(b)(3)(A). VerDate Sep<11>2014 18:54 Oct 15, 2015 subparagraph (f)(2) of Rule 19b–4 11 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 12 of the Act to determine whether the proposed rule change 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, as modified by Amendment No. 1, 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– NYSEArca–2015–91 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–NYSEArca–2015–91. 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 11 17 12 15 Jkt 238001 PO 00000 CFR 240.19b–4(f)(2). U.S.C. 78s(b)(2)(B). Frm 00079 Fmt 4703 Sfmt 4703 62591 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–2015–91 and should be submitted on or before November 6, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–26324 Filed 10–15–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76123; File No. SRNASDAQ-2015-096] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change To Adopt a Kill Switch for NOM October 9, 2015. I. Introduction On August 7, 2015, The NASDAQ Stock Market LLC 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 adopt a risk protection functionality referred to as a kill switch that will be available to all Participants of the NASDAQ Options Market (‘‘Exchange’’ or ‘‘NOM’’). The proposed rule change was published for comment in the FEDERAL REGISTER on August 26, 2015.3 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. II. Description of the Proposed Rule Change The Exchange proposes to offer to all its members a new optional risk protection functionality for options to 13 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. 75743 (August 26, 2015), 80 FR 51850 (‘‘Notice’’). 1 15 E:\FR\FM\16OCN1.SGM 16OCN1 62592 Federal Register / Vol. 80, No. 200 / Friday, October 16, 2015 / Notices help members control their quote and order activity on NOM.4 Referred to as a ‘‘Kill Switch,’’ the functionality will allow NOM Participants to remove quotes and cancel open orders, and will prevent the submission of new quotes and orders until the Exchange reenables access to the NOM System for the Participant.5 To use the Kill Switch, a Participant will send a message 6 to the NOM System to: (i) Promptly remove quotes; and/or (ii) promptly cancel orders for certain specified Identifiers (e.g., a particular Exchange account, port, or badge or mnemonic, or for a group of Identifiers).7 The Exchange’s proposal does not allow Participants to remove quotes or cancel orders by symbol. The NOM System will send an automated message to the Participant when it has processed a Kill Switch request. The NOM Participant will be unable to enter any new quotes or orders using the affected Identifier(s) until the Participant makes a verbal request to the Exchange and Exchange staff enables reentry. Once enabled for re-entry, the Exchange will send a message to the Participant and, if it requests to receive such notifications, to the Participant’s clearing firm as well. 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,8 and, in particular, the requirements of Section 6 of the Act.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 4 See id. srobinson on DSK5SPTVN1PROD with NOTICES 5 Orders submitted by NOM Market Makers over Ouch to Trade Options (‘‘OTTO’’) interface will be treated as quotes for purposes of this rule. See Notice, supra note 3, at 51850. 6 NOM Participants will be able to utilize an interface to send a message to the Exchange to initiate the Kill Switch, or they may contact the Exchange directly. See Notice, supra note 3, at note 3. 7 Permissible groups could be formed only within a single broker-dealer. For example, a group could include, but would not be limited to, all market maker accounts or all order entry ports. See Notice, supra note 3, at 51850. 8 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). 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 18:54 Oct 15, 2015 Jkt 238001 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 and that the rules are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. According to the Exchange, the proposed rule change is designed to protect Participants in the event that the Participant encounters a situation, like a systems issue, for which they would like to withdraw temporarily from the market.11 The Exchange further notes that the proposed Kill Switch is designed to increase systemic protections and, in so doing, should encourage liquidity generally while removing impediments to market participation.12 To the extent that the Exchange’s proposal provides member firms with greater control over their quotes and orders, and allows firms to remove quotes and cancel orders in an appropriate manner, then the proposal may encourage firms to provide liquidity on NOM and thus contribute to fair and orderly markets in a manner that protects the public interest, protects investors, and is not designed to permit unfair discrimination. Further, the Commission agrees that it would be appropriate to notify a Participant’s clearing member, at the clearing member’s request, once a Participant’s selected Identifiers are reenabled following the Participant’s use of the Kill Switch. Because the clearing member accepts financial responsibility for clearing the Participant’s trades, notifying the applicable clearing member of a Participant’s re-enabled Identifiers following use of the Kill Switch may be appropriate and help the clearing member manage the risk associated with the Participant’s trading activity. The Commission notes that the Exchange represented in its proposal that the Kill Switch will operate consistently with a broker-dealer’s firm quote obligations pursuant to Rule 602 of Regulation NMS,13 and that the proposal does not diminish a marketmaker’s obligation to provide continuous two-sided quotes on a daily basis under NOM rules.14 Specifically, the Exchange represents that ‘‘any interest that is executable against a Notice, supra note 3, at 51851. id. 13 See id. 14 See id. NOM Participant’s quotes and orders that are received by the Exchange prior to the time the Kill Switch is processed by the System will automatically execute at the price up to the NOM Participant’s size.’’ 15 In that respect, the Exchange further represented that ‘‘[t]he Kill Switch message will be accepted by the System in the order of receipt in the queue and will be processed in that order so that interest that is already accepted into the System will be processed prior to the Kill Switch message.’’ 16 Based on these representations, the Commission believes that the proposal is designed to promote just and equitable principles of trade and perfect the mechanism of a free and open market. Accordingly, the Commission finds that the Exchange’s proposal is consistent with the Act, including Section 6(b)(5) thereof, in that it is designed to promote just and equitable principles of trade, foster cooperation and coordination with persons engaged in facilitating transactions in securities, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,17 that the proposed rule change (SR–NASDAQ– 2015–096) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–26327 Filed 10–15–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76063A; File No. SR– NYSEARCA–2015–81] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change Amending Several Rules To Address Certain Order Handling Obligations on the Part of Its Floor Brokers October 9, 2015. Securities and Exchange Commission. ACTION: Notice; correction. AGENCY: 11 See 15 Id. 12 See 16 Id. PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 17 15 18 17 E:\FR\FM\16OCN1.SGM U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 16OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 200 (Friday, October 16, 2015)]
[Notices]
[Pages 62591-62592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26327]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76123; File No. SR-NASDAQ-2015-096]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Approving Proposed Rule Change To Adopt a Kill Switch for NOM

October 9, 2015.

I. Introduction

    On August 7, 2015, The NASDAQ Stock Market LLC 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 adopt a risk 
protection functionality referred to as a kill switch that will be 
available to all Participants of the NASDAQ Options Market 
(``Exchange'' or ``NOM''). The proposed rule change was published for 
comment in the Federal Register on August 26, 2015.\3\ The Commission 
received no comment letters on the proposed rule change. This order 
approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 75743 (August 26, 
2015), 80 FR 51850 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange proposes to offer to all its members a new optional 
risk protection functionality for options to

[[Page 62592]]

help members control their quote and order activity on NOM.\4\ Referred 
to as a ``Kill Switch,'' the functionality will allow NOM Participants 
to remove quotes and cancel open orders, and will prevent the 
submission of new quotes and orders until the Exchange re-enables 
access to the NOM System for the Participant.\5\
---------------------------------------------------------------------------

    \4\ See id.
    \5\ Orders submitted by NOM Market Makers over Ouch to Trade 
Options (``OTTO'') interface will be treated as quotes for purposes 
of this rule. See Notice, supra note 3, at 51850.
---------------------------------------------------------------------------

    To use the Kill Switch, a Participant will send a message \6\ to 
the NOM System to: (i) Promptly remove quotes; and/or (ii) promptly 
cancel orders for certain specified Identifiers (e.g., a particular 
Exchange account, port, or badge or mnemonic, or for a group of 
Identifiers).\7\ The Exchange's proposal does not allow Participants to 
remove quotes or cancel orders by symbol. The NOM System will send an 
automated message to the Participant when it has processed a Kill 
Switch request.
---------------------------------------------------------------------------

    \6\ NOM Participants will be able to utilize an interface to 
send a message to the Exchange to initiate the Kill Switch, or they 
may contact the Exchange directly. See Notice, supra note 3, at note 
3.
    \7\ Permissible groups could be formed only within a single 
broker-dealer. For example, a group could include, but would not be 
limited to, all market maker accounts or all order entry ports. See 
Notice, supra note 3, at 51850.
---------------------------------------------------------------------------

    The NOM Participant will be unable to enter any new quotes or 
orders using the affected Identifier(s) until the Participant makes a 
verbal request to the Exchange and Exchange staff enables re-entry. 
Once enabled for re-entry, the Exchange will send a message to the 
Participant and, if it requests to receive such notifications, to the 
Participant's clearing firm as well.

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,\8\ 
and, in particular, the requirements of Section 6 of the Act.\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 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 and that the rules are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \8\ 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).
    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    According to the Exchange, the proposed rule change is designed to 
protect Participants in the event that the Participant encounters a 
situation, like a systems issue, for which they would like to withdraw 
temporarily from the market.\11\ The Exchange further notes that the 
proposed Kill Switch is designed to increase systemic protections and, 
in so doing, should encourage liquidity generally while removing 
impediments to market participation.\12\ To the extent that the 
Exchange's proposal provides member firms with greater control over 
their quotes and orders, and allows firms to remove quotes and cancel 
orders in an appropriate manner, then the proposal may encourage firms 
to provide liquidity on NOM and thus contribute to fair and orderly 
markets in a manner that protects the public interest, protects 
investors, and is not designed to permit unfair discrimination.
---------------------------------------------------------------------------

    \11\ See Notice, supra note 3, at 51851.
    \12\ See id.
---------------------------------------------------------------------------

    Further, the Commission agrees that it would be appropriate to 
notify a Participant's clearing member, at the clearing member's 
request, once a Participant's selected Identifiers are re-enabled 
following the Participant's use of the Kill Switch. Because the 
clearing member accepts financial responsibility for clearing the 
Participant's trades, notifying the applicable clearing member of a 
Participant's re-enabled Identifiers following use of the Kill Switch 
may be appropriate and help the clearing member manage the risk 
associated with the Participant's trading activity.
    The Commission notes that the Exchange represented in its proposal 
that the Kill Switch will operate consistently with a broker-dealer's 
firm quote obligations pursuant to Rule 602 of Regulation NMS,\13\ and 
that the proposal does not diminish a market-maker's obligation to 
provide continuous two-sided quotes on a daily basis under NOM 
rules.\14\ Specifically, the Exchange represents that ``any interest 
that is executable against a NOM Participant's quotes and orders that 
are received by the Exchange prior to the time the Kill Switch is 
processed by the System will automatically execute at the price up to 
the NOM Participant's size.'' \15\ In that respect, the Exchange 
further represented that ``[t]he Kill Switch message will be accepted 
by the System in the order of receipt in the queue and will be 
processed in that order so that interest that is already accepted into 
the System will be processed prior to the Kill Switch message.'' \16\ 
Based on these representations, the Commission believes that the 
proposal is designed to promote just and equitable principles of trade 
and perfect the mechanism of a free and open market.
---------------------------------------------------------------------------

    \13\ See id.
    \14\ See id.
    \15\ Id.
    \16\ Id.
---------------------------------------------------------------------------

    Accordingly, the Commission finds that the Exchange's proposal is 
consistent with the Act, including Section 6(b)(5) thereof, in that it 
is designed to promote just and equitable principles of trade, foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, protect investors and the public interest.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NASDAQ-2015-096) be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(2).
    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Robert W. Errett,
Deputy Secretary.
 [FR Doc. 2015-26327 Filed 10-15-15; 8:45 am]
 BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.