Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 21.8, Order Display and Book Processing, 68371-68373 [2015-28025]
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asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
Independent Trustee Requirement
generally prevents applicant from
serving as trustee for the Issuer.
Applicant states that the Independent
Trustee Requirement imposes an
unnecessary regulatory limitation on
trustee selection and causes market
distortions by leading to the selection of
trustees for reasons other than
customary market considerations of
pricing and expertise. This result is
disadvantageous to the ABS market and
to ABS investors.
5. Applicant submits that due to the
nature and timing of the roles of the
trustee and the underwriter, applicant’s
affiliation with an underwriter would
not result in a conflict of interest or
possibility of overreaching that could
harm investors. Applicant states that the
trustee’s role begins with the Issuer’s
issuance of its securities, and the trustee
performs its role over the life of the
Issuer. Applicant states that, in contrast,
the underwriter is chosen early in the
ABS Transaction process, may help to
structure the ABS Transaction,
distributes the Issuer’s securities to
investors, and generally has no role
subsequent to the distribution of the
Issuer’s securities. Applicant further
states that an ABS trustee does not
monitor the distribution of securities or
any other activity performed by
underwriters and there is no
opportunity for a trustee and an
affiliated underwriter to act in concert
to benefit themselves at the expense of
holders of the ABS either prior to or
after the closing of the ABS Transaction.
6. Applicant states that the trustee’s
role is narrowly defined, and that the
trustee is neither expected nor required
to exercise discretion or judgment
except after a default in the ABS
transaction, which rarely occurs.
Applicant states that the duties of a
trustee after a default are limited to
enforcing the terms of the Agreement for
the benefit of debt holders as a ‘‘prudent
person’’ would enforce such interests
for his own benefit. Applicant further
states that the trustee of the Issuer has
virtually no discretion to pursue anyone
in any regard other than preserving and
realizing on the assets. In any event,
Applicant states that any role taken by
the Trustee in the event of a default
would occur after the underwriter has
terminated its role in the transaction.
7. Applicant submits that the
concerns underlying the Independent
Trustee Requirement are not implicated
if the trustee for an Issuer is
independent of the sponsor, servicer,
and credit enhancer for the Issuer, but
is affiliated with an underwriter for the
Issuer, because in that situation no
single entity would act in all capacities
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in the issuance of the ABS and the
operation of an Issuer. Applicant states
that applicant would continue to act as
an independent party safeguarding the
assets of any Issuer regardless of an
affiliation with an underwriter of the
ABS. Applicant submits that the
concern that affiliation could lead to a
trustee monitoring the activities of an
affiliate also is not implicated by a
trustee’s affiliation with an underwriter,
because, in practice, a trustee for an
Issuer does not monitor the distribution
of securities or any other activity
performed by underwriters. Applicant
further states that the requested relief
would be consistent with the broader
purpose of Rule 3a–7 of not hampering
the growth and development of the ABS
market, to the extent consistent with
investor protection.
8. Applicant states that the conditions
set forth below provide additional
protections against conflicts and
overreaching. For example, the
conditions ensure that the Applicant
will continue to act as an independent
party safeguarding the assets of an
Issuer regardless of an affiliation with
the underwriter of the ABS and would
not allow the underwriter any greater
access to the assets, or cash flows
derived from the assets, of the Issuer
than if there were no affiliation.
Applicant’s Conditions:
The applicant agrees that any order
granting the requested relief will be
subject to the following conditions:
1. The applicant will not be affiliated
with any person involved in the
organization or operation of the Issuer
in an ABS Transaction other than the
underwriter.
2. The applicant’s relationship to an
affiliated underwriter will be disclosed
in writing to all parties involved in an
ABS Transaction, including the rating
agencies and the ABS holders.
3. An underwriter affiliated with the
applicant will not be involved in the
operation of an Issuer, and its
involvement in the organization of an
Issuer will extend only to determining
the assets to be pooled, assisting in
establishing the terms of the ABS to be
underwritten, and/or providing the
sponsor with a line of credit for the
assets to be transferred to the Issuer in
connection with, and prior to, the
related securitization.
4. An affiliated person of the
applicant, including an affiliated
underwriter, will not provide credit or
credit enhancement to an Issuer if the
applicant serves as trustee to the Issuer.
5. An underwriter affiliated with the
applicant will not engage in any
remarketing agent activities, including
involvement in any auction process in
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68371
which ABS interest rates, yields, or
dividends are reset at designated
intervals in any ABS Transaction for
which the applicant serves as trustee to
the Issuer.
6. All of an affiliated underwriter’s
contractual obligations pursuant to the
underwriting agreement will be
enforceable by the sponsor, the Issuer
and/or one of their affiliates.
7. Consistent with the requirements of
Rule 3a–7(a)(4)(i), the applicant will
resign as trustee for the Issuer if
applicant becomes obligated to enforce
any of an affiliated underwriter’s
obligations to the Issuer.
8. The applicant will not price its
services as trustee in a manner designed
to facilitate its affiliate being named
underwriter.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–28069 Filed 11–3–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76302 ; File No. SR–EDGX–
2015–52]
Self-Regulatory Organizations; EDGX
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change to Rule 21.8, Order
Display and Book Processing
October 29, 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 October
28, 2015, EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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 ‘‘noncontroversial’’ 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).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
2 17
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68372
Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
authorize the Exchange’s equity options
platform (‘‘EDGX Options’’) to make a
modification to Rule 21.8 (Order
Display and Book Processing).
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, 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, 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.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to modify
Rule 21.8, Order Display and Book
Processing, which sets forth the priority
rules applicable to EDGX Options.
Specifically, Rule 21.8 describes the
general priority rules for EDGX Options,
including that quotes and orders are
prioritized by price and then on a prorata basis according to size. Rule 21.8
also describes additional priority
overlays, including special priority
provisions for Customer orders, Directed
Market Makers and Primary Market
Makers. The purpose of this rule filing
is to make a minor modification to the
Directed Market Maker and Primary
Market Maker priority overlays, as
described below.
The Directed Market Maker overlay
provides the Directed Market Maker
with priority over other participants for
a certain percentage of contracts
allocated at the same price (60% or 40%
depending upon the number of other
Market Maker quotes at the NBBO).
Similarly, the Primary Market Maker
overlay provides Primary Market
Makers with priority over other
participants for a certain percentage of
contracts allocated at the same price
(60% or 40% depending upon the
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number of other Market Maker quotes at
the NBBO) and for small size orders.
The Exchange proposes to modify both
of these priority overlays so that the
percentage allocation (60% or 40%) is
dependent on the number of Market
Maker quotations or other non-Customer
orders at the NBBO rather than simply
the number of other Market Maker
quotations at the NBBO. The Exchange
believes that the amended rule would
appropriately recognize that other
professional market participants, not
just Market Makers, may compete on the
Exchange. Further, the rule as amended
would be consistent with the priority
rules of both the International Securities
Exchange LLC (‘‘ISE’’) 5 and NASDAQ
OMX PHLX LLC (‘‘PHLX’’).6 The
Exchange believes that the proposed
change will have a positive competitive
impact on quoting by reducing the
likelihood of a Primary Market Maker or
Directed Market Maker will receive the
higher 60% allocation by increasing the
types of other participants and, in turn,
the number of orders from participants,
that are considered when allocating
executions. In other words, because
other non-Customer orders will be
considered, not just the quotes of other
Market Makers, such other nonCustomers will be better incentivized to
provide liquidity at the NBBO.
2. Statutory Basis
The Exchange 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.7
In particular, the proposal is consistent
with Section 6(b)(5) of the Act 8 because
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, to
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system and, in
5 See ISE Rule 713(e) and Supplementary Material
.01(b) to Rule 713, which count the number of other
‘‘Professional Orders’’ for application of the priority
rule. Professional Orders, in turn, are defined in ISE
Rule 100(a)(37C) as orders ‘‘for the account of a
person or entity that is not a Priority Customer,’’
and are thus equivalent to non-Customer orders on
the Exchange.
6 See PHLX Rule 1014(g)(ii), which counts the
number of ‘‘controlled accounts’’ for application of
the priority rule. Controlled accounts are accounts
‘‘controlled by or under common control with a
broker-dealer’’, and thus, apply to a broader range
of participants than just market makers or the
equivalent.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
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Sfmt 4703
general, to protect investors and the
public interest.
The proposed rule change will allow
the Exchange to launch the EDGX
Options platform with a priority
allocation model that allocates a
different percentage of contracts to
Directed Market Makers and Primary
Market Makers, either 60% or 40%,
depending on whether there is more
than one non-Customer with an order at
the NBBO rather than whether there is
more than one Market Maker at the
NBBO. The Exchange believes that the
change is appropriate and consistent
with the Act because it recognizes that
other professional participants, not just
Market Makers, can compete for orders
with Directed Market Makers and
Primary Market Makers. As noted above,
certain other options exchanges operate
with a similar priority rule.9
(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 purposes of the Act. The
proposed rule change is not designed to
address any competitive issues but
rather to make a modification to the
Exchange’s priority rule prior to the
launch of EDGX Options. As noted
above, the change would make the
Exchange’s priority rule similar to that
of certain other options exchanges.10 As
noted above, the Exchange believes that
the proposed change will have a
positive competitive impact on quoting
by reducing the likelihood of a Primary
Market Maker or Directed Market Maker
will receive the higher 60% allocation
by increasing the types of other
participants and, in turn, the number of
orders from participants, that are
considered when allocating executions.
In other words, because other nonCustomer orders will be considered, not
just the quotes of other Market Makers,
such other non-Customers will be better
incentivized to provide liquidity at the
NBBO.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
9 See
supra notes 5 and 6.
10 Id.
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Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (A) Significantly affect
the protection of investors or the public
interest; (B) impose any significant
burden on competition; and (C) by its
terms, 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) of the
Act 11 and paragraph (f)(6) of Rule 19b–
4 thereunder.12
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative for 30 days after the
date of filing. However, Rule 19b–
4(f)(6)(iii) 14 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing. The Exchange
notes that the commencement of the
operations of EDGX Options is
scheduled for November 2, 2015, and
waiver of the 30-day operative delay
would permit the Exchange to launch
EDGX Options with the proposed
priority allocation model. The Exchange
also notes that the proposed rule change
is similar to priority rules already in
place on other options exchanges and
does not raise any new policy issues.
Based on the foregoing, the Commission
believes that waiving the 30-day
operative delay is consistent with the
protection of investors and the public
interest.15 The Commission hereby
grants the Exchange’s request and
designates the proposal operative upon
filing.
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: (1) Necessary or appropriate in
the public interest; (2) for the protection
of investors; or (3) otherwise in
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 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).
asabaliauskas on DSK5VPTVN1PROD with NOTICES
12 17
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68373
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.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Robert W. Errett,
Deputy Secretary.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
[FR Doc. 2015–28025 Filed 11–3–15; 8:45 am]
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 No. SR–
EDGX–2015–52 on the subject line.
Self-Regulatory Organizations: Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Adopt Rule 321 Business
Continuity and Disaster Recovery
Plans Testing Requirements for
Designated Members
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–EDGX–2015–52. 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–EDGX–
2015–52 and should be submitted on or
before November 25, 2015.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76303; File No. SR–MIAX–
2015–61]
October 29, 2015.
Pursuant to the provisions of 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 October 21, 2015, Miami
International Securities Exchange LLC
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I and II below,
which Items have been prepared by the
Exchange. 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
The Exchange is filing a proposal to
adopt Rule 321, Business Continuity
and Disaster Recovery Plans Testing
Requirements for Designated Members.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.miaxoptions.com/filter/
wotitle/rule_filing, at MIAX’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, 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
1 15
16 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00082
Fmt 4703
Sfmt 4703
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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]]>Agencies
[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)]
[Notices]
[Pages 68371-68373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28025]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76302 ; File No. SR-EDGX-2015-52]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule
21.8, Order Display and Book Processing
October 29, 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 October 28, 2015, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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).
---------------------------------------------------------------------------
[[Page 68372]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to authorize the Exchange's equity
options platform (``EDGX Options'') to make a modification to Rule 21.8
(Order Display and Book Processing).
The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, 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, 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 is proposing to modify Rule 21.8, Order Display and
Book Processing, which sets forth the priority rules applicable to EDGX
Options. Specifically, Rule 21.8 describes the general priority rules
for EDGX Options, including that quotes and orders are prioritized by
price and then on a pro-rata basis according to size. Rule 21.8 also
describes additional priority overlays, including special priority
provisions for Customer orders, Directed Market Makers and Primary
Market Makers. The purpose of this rule filing is to make a minor
modification to the Directed Market Maker and Primary Market Maker
priority overlays, as described below.
The Directed Market Maker overlay provides the Directed Market
Maker with priority over other participants for a certain percentage of
contracts allocated at the same price (60% or 40% depending upon the
number of other Market Maker quotes at the NBBO). Similarly, the
Primary Market Maker overlay provides Primary Market Makers with
priority over other participants for a certain percentage of contracts
allocated at the same price (60% or 40% depending upon the number of
other Market Maker quotes at the NBBO) and for small size orders. The
Exchange proposes to modify both of these priority overlays so that the
percentage allocation (60% or 40%) is dependent on the number of Market
Maker quotations or other non-Customer orders at the NBBO rather than
simply the number of other Market Maker quotations at the NBBO. The
Exchange believes that the amended rule would appropriately recognize
that other professional market participants, not just Market Makers,
may compete on the Exchange. Further, the rule as amended would be
consistent with the priority rules of both the International Securities
Exchange LLC (``ISE'') \5\ and NASDAQ OMX PHLX LLC (``PHLX'').\6\ The
Exchange believes that the proposed change will have a positive
competitive impact on quoting by reducing the likelihood of a Primary
Market Maker or Directed Market Maker will receive the higher 60%
allocation by increasing the types of other participants and, in turn,
the number of orders from participants, that are considered when
allocating executions. In other words, because other non-Customer
orders will be considered, not just the quotes of other Market Makers,
such other non-Customers will be better incentivized to provide
liquidity at the NBBO.
---------------------------------------------------------------------------
\5\ See ISE Rule 713(e) and Supplementary Material .01(b) to
Rule 713, which count the number of other ``Professional Orders''
for application of the priority rule. Professional Orders, in turn,
are defined in ISE Rule 100(a)(37C) as orders ``for the account of a
person or entity that is not a Priority Customer,'' and are thus
equivalent to non-Customer orders on the Exchange.
\6\ See PHLX Rule 1014(g)(ii), which counts the number of
``controlled accounts'' for application of the priority rule.
Controlled accounts are accounts ``controlled by or under common
control with a broker-dealer'', and thus, apply to a broader range
of participants than just market makers or the equivalent.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange 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.\7\ In particular, the
proposal is consistent with Section 6(b)(5) of the Act \8\ because 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, 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed rule change will allow the Exchange to launch the EDGX
Options platform with a priority allocation model that allocates a
different percentage of contracts to Directed Market Makers and Primary
Market Makers, either 60% or 40%, depending on whether there is more
than one non-Customer with an order at the NBBO rather than whether
there is more than one Market Maker at the NBBO. The Exchange believes
that the change is appropriate and consistent with the Act because it
recognizes that other professional participants, not just Market
Makers, can compete for orders with Directed Market Makers and Primary
Market Makers. As noted above, certain other options exchanges operate
with a similar priority rule.\9\
---------------------------------------------------------------------------
\9\ See supra notes 5 and 6.
---------------------------------------------------------------------------
(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 purposes of the Act. The proposed rule change is
not designed to address any competitive issues but rather to make a
modification to the Exchange's priority rule prior to the launch of
EDGX Options. As noted above, the change would make the Exchange's
priority rule similar to that of certain other options exchanges.\10\
As noted above, the Exchange believes that the proposed change will
have a positive competitive impact on quoting by reducing the
likelihood of a Primary Market Maker or Directed Market Maker will
receive the higher 60% allocation by increasing the types of other
participants and, in turn, the number of orders from participants, that
are considered when allocating executions. In other words, because
other non-Customer orders will be considered, not just the quotes of
other Market Makers, such other non-Customers will be better
incentivized to provide liquidity at the NBBO.
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\10\ Id.
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(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
[[Page 68373]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (A)
Significantly affect the protection of investors or the public
interest; (B) impose any significant burden on competition; and (C) by
its terms, 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) of the Act \11\ and
paragraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative for 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has asked the
Commission to waive the 30-day operative delay so that the proposal may
become operative immediately upon filing. The Exchange notes that the
commencement of the operations of EDGX Options is scheduled for
November 2, 2015, and waiver of the 30-day operative delay would permit
the Exchange to launch EDGX Options with the proposed priority
allocation model. The Exchange also notes that the proposed rule change
is similar to priority rules already in place on other options
exchanges and does not raise any new policy issues. Based on the
foregoing, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest.\15\ The Commission hereby grants the Exchange's request and
designates the proposal operative upon filing.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ 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).
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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: (1)
Necessary or appropriate in the public interest; (2) for the protection
of investors; or (3) 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 proposal 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 No. SR-EDGX-2015-52 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-EDGX-2015-52. 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-EDGX-2015-52 and should be
submitted on or before November 25, 2015.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28025 Filed 11-3-15; 8:45 am]
BILLING CODE 8011-01-P
