Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change Amending Rule 11.1, Hours of Trading, To Rescind Interpretations and Policies .01, “Cessation of Trading Operations on NSX;” Adopting Rule 11.25 Relating to Use of Market Data Feeds; Amending NSX Rule 11.13 Relating to the Order Delivery Mode of Order Interaction; Amending NSX Rule 11.11 To Remove Certain Order Types and Correct Technical Deficiencies in the Numbering of Certain Sections of the Rule; and Amending Rule 11.12, Cross Message and Making Conforming Amendments to NSX Rules 11.11(c) and 16.2, 70261-70268 [2015-28811]
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<![CDATA[
Federal Register / Vol. 80, No. 219 / Friday, November 13, 2015 / Notices
Dates
January 1, 2016 to February 15, 2016
Nadene G. Kennedy,
Polar Coordination Specialist, Division of
Polar Programs.
[FR Doc. 2015–28799 Filed 11–12–15; 8:45 am]
BILLING CODE 7555–01–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2016–14 and CP2016–17;
Order No. 2809]
New Postal Product
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing concerning
the addition of Priority Mail Express &
Priority Mail Contract 21 negotiated
service agreement to the competitive
product list. This notice informs the
public of the filing, invites public
comment, and takes other
administrative steps.
DATES: Comments are due: November
16, 2015.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Notice of Commission Action
III. Ordering Paragraphs
jstallworth on DSK7TPTVN1PROD with NOTICES
I. Introduction
In accordance with 39 U.S.C. 3642
and 39 CFR 3020.30 et seq., the Postal
Service filed a formal request and
associated supporting information to
add Priority Mail Express & Priority
Mail Contract 21 to the competitive
product list.1
The Postal Service
contemporaneously filed a redacted
contract related to the proposed new
product under 39 U.S.C. 3632(b)(3) and
39 CFR 3015.5. Request, Attachment B.
1 Request of the United States Postal Service to
Add Priority Mail Express & Priority Mail Contract
21 to Competitive Product List and Notice of Filing
(Under Seal) of Unredacted Governors’ Decision,
Contract, and Supporting Data, November 6, 2015
(Request).
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To support its Request, the Postal
Service filed a copy of the contract, a
copy of the Governors’ Decision
authorizing the product, proposed
changes to the Mail Classification
Schedule, a Statement of Supporting
Justification, a certification of
compliance with 39 U.S.C. 3633(a), and
an application for non-public treatment
of certain materials. It also filed
supporting financial workpapers.
II. Notice of Commission Action
The Commission establishes Docket
Nos. MC2016–14 and CP2016–17 to
consider the Request pertaining to the
proposed Priority Mail Express &
Priority Mail Contract 21 product and
the related contract, respectively.
The Commission invites comments on
whether the Postal Service’s filings in
the captioned dockets are consistent
with the policies of 39 U.S.C. 3632,
3633, or 3642, 39 CFR part 3015, and 39
CFR part 3020, subpart B. Comments are
due no later than November 16, 2015.
The public portions of these filings can
be accessed via the Commission’s Web
site (https://www.prc.gov).
The Commission appoints Curtis E.
Kidd to serve as Public Representative
in these dockets.
70261
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Effective date: November 13,
2015.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on November 6,
2015, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Express & Priority Mail Contract 21
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2016–14, CP2016–17.
SUPPLEMENTARY INFORMATION:
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2015–28783 Filed 11–12–15; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76390; File No. SR–NSX–
2015–05]
III. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
Nos. MC2016–14 and CP2016–17 to
consider the matters raised in each
docket.
2. Pursuant to 39 U.S.C. 505, Curtis E.
Kidd is appointed to serve as an officer
of the Commission to represent the
interests of the general public in these
proceedings (Public Representative).
3. Comments are due no later than
November 16, 2015.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Ruth Ann Abrams,
Acting Secretary.
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing of Proposed Rule Change
Amending Rule 11.1, Hours of Trading,
To Rescind Interpretations and
Policies .01, ‘‘Cessation of Trading
Operations on NSX;’’ Adopting Rule
11.25 Relating to Use of Market Data
Feeds; Amending NSX Rule 11.13
Relating to the Order Delivery Mode of
Order Interaction; Amending NSX Rule
11.11 To Remove Certain Order Types
and Correct Technical Deficiencies in
the Numbering of Certain Sections of
the Rule; and Amending Rule 11.12,
Cross Message and Making
Conforming Amendments to NSX
Rules 11.11(c) and 16.2
November 9, 2015.
[FR Doc. 2015–28881 Filed 11–12–15; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—Priority Mail Express
and Priority Mail Negotiated Service
Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
SUMMARY:
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Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (the ‘‘Exchange Act’’ or ‘‘Act’’) 1
and Rule 19b–4 thereunder,2 notice is
hereby given that on November 3, 2015,
National Stock Exchange, Inc. (‘‘NSX®’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change, as described in Items I and II
below, which Items have been
substantially prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 80, No. 219 / Friday, November 13, 2015 / Notices
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 proposing to amend
NSX Rule 11.1, Hours of Trading, to
rescind Interpretations and Policies .01,
‘‘Cessation of Trading Operations on
NSX.’’ The Exchange is also proposing
to: (i) Adopt new Rule 11.25, Use of
Market Data Feeds; (ii) amend NSX Rule
11.13 and Interpretations and Policies
.01 with respect to the order delivery
mode of order interaction with the
Exchange’s trading system (‘‘Order
Delivery’’); (iii) amend NSX Rule 11.11,
Orders and Modifiers, to remove
descriptions of certain order types that
the Exchange will not offer upon a
resumption of trading and to correct
technical deficiencies in the numbering
of certain subparagraphs of the rule; and
(v) amend Rule 11.12, Cross Message, to
delete the rule in its entirety and make
conforming amendments to NSX Rules
11.11(c) and 16.2.
The text of the proposed rule change
is available on the Exchange’s Web site
at www.nsx.com, at the Exchange’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
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 those 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
jstallworth on DSK7TPTVN1PROD with NOTICES
1. Purpose
NSX, a corporation organized under
the laws of the State of Delaware,3 is a
registered national securities exchange
3 NSX was founded in 1885 as the Cincinnati
Stock Exchange and changed its name to ‘‘National
Stock Exchange’’ in 2003. See Securities Exchange
Act Release No. 48774 (November 12, 2003), 68 FR
65332 (November 19, 2003) (SR–CSE–2003–12). In
2006, the Exchange de-mutualized and changed its
corporate organizational structure from a non-stock,
not-for-profit Ohio corporation to a Delaware forprofit stock corporation. See Securities Exchange
Act Release No. 53963 (June 8, 2006), 71 FR 34660
(June 15, 2006) (SR–NSX–2006–03).
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under Section 6 of the Exchange Act 4
and operates as a self-regulatory
organization governed by the
requirements of Section 19 of the
Exchange Act.5 The Exchange is filing
this rule proposal to rescind
Interpretations and Policies .01 of Rule
11.1 (hereinafter referred to as
‘‘I&P.01’’), ‘‘Cessation of Trading
Operations on the Exchange.’’ I&P.01
currently states that, as of the close of
business on May 30, 2014 (the ‘‘Closing
Date’’), NSX shall cease trading activity
on its trading system (the ‘‘System’’); 6
that all NSX Rules will remain in full
force and effect through and after the
Closing Date; and that the Exchange
shall file a proposed rule change
pursuant to Rule 19b–4 of the Exchange
Act prior to any resumption of trading
on the Exchange pursuant to Chapter XI
(Trading Rules).7 Rescinding I&P.01 will
permit the Exchange to resume trading
activity on the System as soon as
practicable after the instant rule
amendment is operative, thereby
restoring NSX to its status as an
operating, all-electronic national
securities exchange as it had been for
many years prior to ceasing trading
operations
In connection with the proposed
resumption of trading on the System,
the Exchange is proposing several other
rule amendments. Specifically, the
Exchange is proposing in new Rule
11.25 to describe the Exchange’s use of
certain data feeds for order handling
and execution, order routing and
regulatory compliance. The Exchange is
also proposing amendments to: (i) Rule
11.11 to eliminate the Double Play and
Auto-Ex Only Order types; (ii) Rule
11.13 and the Interpretations and
Policies under the rule to eliminate rule
text relating to Order Delivery; and (iii)
Rule 11.16, Cross Message, to rescind
the rule text in its entirety. The
Exchange is further proposing nonsubstantive or conforming amendments
to Rules 11.11 and 16.2.
The details of these proposed rule
changes are discussed below.
Proposed Resumption of Trading on
NSX
At the time that NSX ceased trading
operations, the Exchange operated as a
wholly-owned subsidiary of CBOE
4 15
U.S.C. 78f.
U.S.C. 78s.
6 Exchange Rule 1.5S.(4) defined the term
‘‘System’’ as ‘‘. . . the electronic securities
communications and trading facility designated by
the Board [of Directors] through which orders . . .
are consolidated for ranking and execution.’’
7 See Securities Exchange Act Release No. 72107
(May 6, 2014), 79 FR 27017 (May 12, 2014) (SR–
NSX–2014–14).
5 15
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Stock Exchange, LLC (‘‘CBSX’’).8
Thereafter, on February 13, 2015,9 the
Commission issued an Order granting
its approval of a transaction in which
National Stock Exchange Holdings, Inc.
(‘‘NSX Holdings’’), a Delaware
corporation, purchased all of the
outstanding shares of NSX from the
CBSX (the ‘‘Approval Order’’). The
Commission noted in the Approval
Order that ‘‘[t]he Exchange is, and will
remain, registered as a national
securities exchange under Section 6 of
the Act 10 and a self-regulatory
organization [‘‘SRO’’] . . . as defined in
[S]ection 3(a)(26) of the Act 11after the
Closing [of the Transaction].’’ The
Commission further noted that ‘‘. . .
[t]he Exchange states that it plans to
reopen its trading operations as soon as
practicable after the Closing and plans
to operate the Exchange using its
existing . . . [S]ystem pursuant to the
rules of the Exchange currently in effect
. . . .’’12
After the Closing of the Transaction
up to the date of the instant rule filing,
the Exchange has continued to
discharge its applicable SRO
responsibilities in anticipation of
resuming trading operations on the
Exchange. Specifically, as outlined
below, the Exchange has continued as a
party to the National Market System
(‘‘NMS’’) Plans 13 and has updated its
8 See Securities Exchange Act Release No. 66071
(December 29, 2011); 77 FR 521 (January 5,
2012)(SR–CBOE–2011–107 and SR–NSX–2011–14),
Order Granting Accelerated Approval to Proposed
Rule Changes in Connection with the Proposed
Acquisition of the National Stock Exchange, Inc. by
the CBOE Stock Exchange, LLC.
9 See Securities Exchange Act Release No. 74270
(February 13, 2015), 80 FR 9286 (February 20, 2015)
(SR–NSX–2014–017), Order Granting Approval of
Proposed Rule Change in Connection With a
Proposed Transaction in Which National Stock
Exchange Holdings, Inc. Will Acquire Ownership of
the Exchange from the CBOE Stock Exchange, LLC.
The Approval Order described in detail, inter alia,
the ownership structure of the Exchange upon its
acquisition by NSX Holdings and the requirement
that NSX Holdings give due regard to the
preservation of the independence of the Exchange’s
self-regulatory function.
10 See 15 U.S.C. 78f.
11 See 15 U.S.C. 78s.
12 See Order Granting Approval of Proposed Rule
Change in Connection With a Proposed Transaction
in Which National Stock Exchange Holdings, Inc.
Will Acquire Ownership of the Exchange from the
CBOE Stock Exchange, LLC, 80 FR at 9287.
13 See, e.g., Securities Exchange Act Release No.
74323 (February 19, 2015), 80 FR 10169 (February
25, 2015) (File No. 4–631), Order Approving the
Eighth Amendment to the National Market System
Plan to Address Extraordinary Market Volatility
(the ‘‘Limit Up-Limit Down Plan’’); Securities
Exchange Act Release No. 75192 (June 17, 2015), 80
FR 36028 (June 23, 2015) (File No. 4–668), Order
Approving Amendment No. 1 to the National
Market System Plan Governing the Process of
Selecting a Plan Processor and Developing a Plan
for the Consolidated Audit Trail; Securities
Exchange Act Release No. 75505 (July 22, 2015), 80
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jstallworth on DSK7TPTVN1PROD with NOTICES
rules as appropriate.14 The Exchange
also filed with the Commission an
amendment to NSX Rule 2.5,
Application Procedures for an ETP
Holder or to become an Associated
Person of an ETP Holder, adding
Interpretations and Policies .01,
Expedited Process for Reinstatement as
an ETP Holder.15 The amendment
provided an expedited procedure,
available for a period of 90 days from
the date the rule amendment became
operative, for ETP Holders in good
standing as of the close of business on
May 30, 2014 to reinstate their status as
such and to register Associated
Persons.16
As noted above, the Exchange will
operate using the existing System and
FR 45254 (July 29, 2015) (File No. S7–24–89), Order
Approving Amendment No. 35 to the Joint SelfRegulatory Organization Plan Governing the
Collection, Consolidation and Dissemination of
Quotation and Transaction Information for NasdaqListed Securities Traded on Exchanges on an
Unlisted Trading Privileges Basis; Securities
Exchange Act Release No. 75504 (July 22, 2015), 80
FR 45252 (July 29, 2015) (SR–CTA/CQ 2015–01),
Order Approving the Twenty Second Substantive
Amendment to the Second Restatement of the CTA
Plan and Sixteenth Substantive Amendment to the
Restated CQ Plan; Securities Exchange Act Release
No. 75660 (August 11, 2015), 80 FR 48940 (August
14, 2015), (SR–CTA–2015–02), Order Approving the
Twenty Third Substantive Amendment to the
Second Restatement of the CTA Plan; Securities
Exchange Act Release No 75980 (September 25,
2015), 80 FR 58796 (September 30, 2015),Order
Approving Amendment No. 2 to the National
Market System Plan Governing the Process of
Selecting a Plan Processor and Developing a Plan
for the Consolidated Audit Trail.
14 See Securities Exchange Act Release No. 72434
(June 19, 2014), 79 FR 36110 (June 25, 2014) (SR–
NSX–2014–08), Order Granting Approval of
Proposed Rule Changes Relating to Clearly
Erroneous Executions; Securities Exchange Act
Release No. 72914 (August 26, 2014), 79 FR 52089
(September 2, 2014) (SR–NSX–2014–16), Notice of
Filing and Immediate Effectiveness of Proposed
Rule Change to Amend Rule 15.5 to Provide
Additional Clarity and Precision, Correct Certain
Citations, and Align the Rule with the Rules of
Other Exchanges With Respect to the Original and
Continued Listing Standards for Issuers’
Compensation Committees; Securities Exchange Act
Release No. 75355 (July 2, 2015), 80 FR 39460 (July
9, 2015) (SR–NSX–2015–03), Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to Amend Rule 4.3, Record of Written Complaints;
Securities Exchange Act Release No. 75554 (July 30,
2015), 80 FR 46620 (August 5, 2015) (SR–NSX–
2015–04), Notice of Filing and Immediate
Effectiveness of Proposed Rule Change Amending
Exchange Rule 11.21, Short Sales, to Describe the
Exchange’s Implementation of Rule 201 of
Regulation SHO Under the Securities Exchange Act
of 1934 and Relocate Certain Text from Rule 11.11,
Orders and Modifiers; and Amending Rule 13.2 to
Incorporate By Reference Rules 200,203 and 204 of
Regulation SHO.
15 The term ‘‘ETP Holder’’ refers to registered
brokers or dealers that have been issued an Equity
Trading Permit by the Exchange for effecting
approved securities transactions on the Exchange’s
trading facilities. See Exchange Rule 1.5E.(1).
16 See Securities Exchange Act Release No. 75098
(June 3, 2015), 80 FR 32644 (June 9, 2015) (SR–
NSX–2015–02).
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15:03 Nov 12, 2015
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pursuant to the rules in effect. The
Exchange has maintained the System’s
operability and has not made any
modification to the System’s
functionality, except to the extent
necessary to comply with regulatory
requirements.17 The functionality
relating to order entry and execution,
order routing, clearance and settlement
and market data distribution, as further
described below, remains the same. The
Exchange does not currently list any
securities and trades equity securities
on an Unlisted Trading Privileges
basis.18
The Exchange has implemented and
continues to execute a rigorous testing
process, including tests with industry
participants, to assure that all
components of the System function
effectively, that the Exchange has full
operational capability to re-open its
marketplace for the trading of equity
securities, and that the Exchange will
operate in compliance with all
applicable rules and regulations. This
testing plan included three weekend
tests of NSX’s interfaces with the
securities information processors, or
‘‘SIPs’’ (i.e., the Consolidated Quote
System or ‘‘CQS;’’ the Consolidated
Tape System or ‘‘CTS;’’ the UTP
Quotation Data Feed, or ‘‘UQDF;’’ and
the UTP Trade Data Feed, or ‘‘UTDF’’).
These tests, which were completed on
August 29, 2015, confirmed that NSX
will be ready to receive quote and trade
data and relevant national market
system plan information from, and
transmit its quote and trade information
to, the securities information processors
when it resumes trading operations on
the System.
The Exchange also tested for proper
functioning of client communication
systems with NSX, client order entry
connections, and depth of book.
Moreover, the Exchange tested its
matching engines, market data, trade
reporting, quote publication and trade
messages, and clearing systems. The
tests were conducted with actual market
data and clearing data. The Exchange
has also re-certified its connection with
the Depository Trust & Clearing
Corporation (‘‘DTCC’’) to assure
complete and accurate trade clearing
and settlement functions.
The Exchange has also performed a
thorough review of the hardware and
software components of the System and
has resumed the production status of
the System on a daily basis.
17 For example, the Exchange has made System
changes to comply with the new timestamp
requirements under the July 2015 amendments to
the UTP Plan and the Consolidated Tape and
Consolidated Quote Plans. See footnote 13, above.
18 See NSX Rule 15.9.
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70263
Furthermore, the Exchange made
enhancements to its connectivity and
certification processes. The Exchange
has created an automated certification
process, providing ETP Holders and
Users with a more efficient process of
connecting to the System. The Exchange
has also made enhancements to certain
internal processes and monitoring tools.
These enhancements include a message
bus upgrade and security master file
upgrade. The Exchange has also
enhanced its System monitoring tools to
provide for more effective monitoring of
System health to allow quicker response
within operations support.
Having conducted these tests and
made these enhancements and upon
receiving regulatory approval to resume
trading on the System, the Exchange
will execute a staged roll-out plan to
reach full operational capacity.19
Beginning one week and one day prior
to the date trading will resume on the
System, the Exchange will test the
System using only test symbols. On the
first day of trading the Exchange will
allow for trading in symbols within a
defined alphabetic range (for example,
symbols within the letter range X–Z).
After three days of trading in this range,
the Exchange will activate trading in
additional symbols within an alphabetic
range (for example, adding symbols
within the letter range A–K). Two days
later the Exchange will activate trading
in all remaining symbols and be fully
operational. The Exchange will provide
ETP Holders with advance notice of the
dates and the symbol ranges that will
comprise the staged roll-out.
The Exchange will also take
affirmative steps to assure that the date
that it intends to resume trading
operations is communicated broadly to
market participants and to the investing
public. Specifically, the Exchange has a
target date of on or about December 1,
2015 to resume trading operations on
the System. The Exchange will provide
timely written notice of the date and
other information concerning its
resumption of trading operations
directly to the following parties: (1) ETP
Holders; (2) other national securities
exchanges that trade NMS securities; (3)
the SIPs; and, (4) the operating
committees for the various NMS plans
(e.g., the Consolidated Tape Association
Plan/Consolidated Quote Plan; the Plan
Governing the Collection, Consolidation
and Dissemination of Quotation and
Transaction Information for NasdaqListed Securities Traded on Exchanges
on an Unlisted Trading Privileges Basis;
19 The Exchange will issue a notice to ETP
Holders with the precise details of the roll-out plan
prior to initiating the plan.
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Federal Register / Vol. 80, No. 219 / Friday, November 13, 2015 / Notices
and the Plan to Address Extraordinary
Market Volatility). Furthermore, the
Exchange will provide timely notice to
the public as a whole by way of widelydisseminated press releases issued by
the Exchange and notification through
the Exchange’s Web site and through
communications with financial and
industry press.
As required by Section 6(b)(1) of the
Act,20 the Exchange has the capacity to
be able to carry out the purposes of the
Act and to comply and to enforce
compliance by ETP Holders and persons
associated with ETP Holders, with the
provisions of the Act, the rules and
regulations thereunder, and the rules of
the Exchange. The Exchange has the
financial, technology and staff resources
to effectively surveil its marketplace and
to regulate ETP Holders’ trading on NSX
upon the resumption of trading
operations on the System. The Exchange
will continue to regularly assess its
regulatory resources to assure that they
continue to be sufficient to discharge its
SRO responsibilities. The Exchange
notes that, throughout the period from
the date that it ceased trading operations
through the date of the instant rule
filing, it has continued to be a party to
certain 17d–2 Plans for the Allocation of
Regulatory Responsibilities pursuant to
Section 17(d)(1) of the Exchange Act 21
and Rules 17d–1 and 17d–2
thereunder,22 specifically the 17d–2
Plan relating to the surveillance,
investigation and enforcement of insider
trading rules 23 and the 17d–2 Plan
relating to Regulation NMS Rules.24 The
Exchange will continue as a party to
these plans going forward.
In summary, since ceasing trading
operations on the System as of the close
of business on May 30, 2014, the
Exchange (i) continued to maintain the
operability of the System; (ii)
implemented and successfully executed
a rigorous internal testing program to
assure that the System will function as
designed and subject to NSX rules in
effect; (iii) successfully tested
connectivity to the securities
20 15
U.S.C. 78(f)(b)(1).
U.S.C. 78q(d)(1).
22 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
23 See Securities Exchange Act Release No. 65991
(December 16, 2010), 76 FR 79714 (December 22,
2011) (File No. 4–566), Notice of Filing and Order
Approving and Declaring Effective an Amendment
to the Plan for the Allocation of Regulatory
Responsibilities . . . Relating to the Surveillance,
Investigation, and Enforcement of Insider Trading
Rules.
24 See Securities Exchange Act Release No. 63430
(December 3, 2010), 75 FR 76758 (December 9,
2010) (File No. 4–618), Order Approving and
Declaring Effective a Plan for the Allocation of
Regulatory Responsibilities . . . Relating to
Regulation NMS Rules.
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21 15
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15:03 Nov 12, 2015
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information processors and to DTCC;
(iv) continued to discharge its SRO
responsibilities through, among other
things, remaining a party to NMS plans
and in the multi-party 17d–2 plans for
insider trading surveillance and certain
Regulation NMS requirements; and (v)
amended its rules to keep current with
industry regulatory initiatives (e.g.,
amendments to the market-wide rules
governing clearly erroneous executions),
and is proposing additional rule
changes in the instant rule proposal,
described below, that will align with the
System’s functionality when trading
operations resume. Further, the
Exchange has sufficient financial,
technology and staff resources to
effectively regulate ETP Holder activity
in the NSX marketplace and meet its
compliance obligations under the Act.
In view of the foregoing, the Exchange
is positioned to successfully reopen its
marketplace for the trading of equity
securities and accordingly is proposing
to rescind I&P.01 to allow the NSX to
resume trading operations as soon as
practicable after the instant rule
proposal becomes operative.
Adoption of NSX Rule 11.25
The Exchange is proposing to adopt
NSX Rule 11.25 to describe the sources
of market data used for purposes of
order handling and execution, order
routing, and regulatory compliance.
Paragraph (a) of the proposed Rule will
specify which data feeds the Exchange
utilizes for the handling, execution, and
routing of orders, as well as for
surveillance necessary to monitor
compliance with applicable securities
laws and Exchange rules. Proposed
paragraph (b) will state that the
Exchange may adjust its calculation of
the NBBO based on information about
orders sent to other venues with
protected quotations, execution reports
received from those venues, and certain
orders received by the Exchange. With
this rule and other functionalities in
place, the system will use market data
as follows.
Order Handling and Execution
In order to calculate the national best
bid and offer (‘‘NBBO’’) 25 the Exchange
uses only SIP data disseminated through
CQ and UQDF for all exchanges. NSX
does not use any exchange’s proprietary
data feeds. The Exchange does not
include its own quotes in the
calculation of the Exchange’s NBBO
because the system is designed such
that all incoming orders are separately
25 NSX Rule 1.5P.(2) defines the ‘‘Protected
NBBO’’ as the national best bid or offer that is a
protected quotation.
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compared to the Exchange’s Protected
Best Bid or Offer (‘‘PBBO’’) 26 and the
Exchange-calculated NBBO, which
together create a complete view of the
NBBO, prior to order display, execution,
or routing.
The Exchange offers three types of
‘‘pegged’’ Zero Display Reserve Orders,
which may be ‘‘pegged’’ to the buy-side
of the PBBO, the sell-side of the PBBO
or the midpoint of the PBBO.27 The
System calculates the PBBO using the
quotes from the SIPs, excluding quotes
disseminated by the SIPs that originated
from the NSX Book.28
Order Routing
When the Exchange has a marketable
order eligible to be routed and the
System identifies that there is no
matching price available on the
Exchange, but there is a matching price
represented at another trading center
displaying protected quotes, the System
will cause the order to be routed to that
trading center. The Exchange uses data
received from the SIPs to update the
System’s calculation of the NBBO for
purposes of routing decisions.
Regulatory Compliance
Locked or Crossed Markets: The
System determines whether the display
of an order would lock or cross the
market. At the time an order is entered
into the System, it will establish, based
upon its calculation of the NBBO from
SIP feeds, whether the order will lock or
cross the prevailing NBBO for a
security. In the event that the order
would produce a locking or crossing
condition, the System will cancel the
order or route the order based on the
ETP Holder’s order handling
instructions.
Pursuant to Regulation NMS, a
declaration of self-help can occur when
an exchange displaying protected quotes
is slow, as defined in Regulation NMS,
or non-responsive to the Exchange’s
routed orders. In this circumstance,
according to Rule 611(b) of Regulation
NMS,29 the Exchange may declare selfhelp against that exchange and display
a quotation that may lock or cross the
market that the Exchange invoked selfhelp against.30 The Exchange may also
26 NSX Rule 1.5P.(3) defines the ‘‘Protected BBO’’
as the Protected NBBO or the displayed Top of
Book on NSX.
27 See NSX Rule 11.11(c)(2)(A).
28 NSX Rule 1.5N.(1) defines the NSX Book as the
System’s electronic file of orders.
29 See 17 CFR 242.611.
30 See also Question 5.03 in the ‘‘Division of
Trading and Markets, Responses to Frequently
Asked Questions Concerning Rule 611 and Rule 610
of Regulation NMS’’ (last updated April 4, 2008)
available at https://www.sec.gov/divisions/
marketreg/nmsfaq610-11.htm.
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declare self-help where another
exchange’s SIP quotes are slow or nonresponsive resulting in a locked or
crossed market. Once the Exchange
declares self-help, the System will
ignore the quotes generated from that
exchange in its calculation of the NBBO
for execution and routing
determinations in compliance with
Regulation NMS. The Exchange will
also disable all routing to that exchange.
However, the System will continue to
receive and process that exchange’s
quotes in order to immediately include
the quote in the NBBO calculation and
enable routing once self-help is revoked.
Order Protection Rule: Pursuant to
Rule 611 of Regulation NMS,31 the
Exchange is required to establish,
maintain, and enforce written policies
and procedures that are reasonably
designed to prevent trade-throughs of
protected quotations in NMS stocks that
do not fall within a valid exception and,
if relying on such an exception, that are
reasonably designed to ensure
compliance with the terms of the
exception. The System does not permit
an execution on the Exchange if there
are better-priced protected quotations
displayed in the market unless the order
is an ISO. At the time an order is
entered on NSX, the System uses the
SIP data to determine if the NBBO is
priced better than what is on the NSX
Book. If the Exchange does not match
such order on the NSX Book,32 and
based on the ETP Holder’s order
handling instructions, the System
cancels or routes the order.
Regulation SHO: The Exchange is
required to establish, maintain and
enforce written policies and procedures
reasonably designed to prevent the
execution of a Short Sale Order in a
covered security at a price that is equal
to or below the current National Best
Bid (‘‘NBB’’) when a short sale price
restriction is in effect pursuant to Rule
201 of Regulation SHO under the
Exchange Act (‘‘Short Sale Circuit
Breaker’’).33 When a Short Sale Circuit
Breaker is in effect, the Exchange
utilizes information received from SIP
feeds and what is on the NSX Book, to
prevent the execution of a sell short
order in contravention of Rule 201 of
Regulation SHO.34
Limit Up-Limit Down: As stated in
Rule 11.24(c), the Exchange is a
participant in, and subject to the
applicable requirements of, the Limit
Up-Limit Down Plan. The System uses
31 17
CFR 242.611.
Rule 1.5N.(1) defines the term ‘‘NSX
Book’’ as the ‘‘System’s electronic file of orders.’’
33 17 CFR 242.201.
34 See Id.
32 NSX
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price band data received through the
SIP to comply with the requirements of
the Limit Up-Limit Down Plan.
Specifically, as provided in Rule
11.24(e) the System will not execute or
display orders for an NMS stock at
prices that are outside of a specified
price band (i.e., below the lower price
band or above the higher price band).
Amendments to NSX Rules 11.13 and
11.11
The Exchange is further proposing to
amend NSX Rule 11.13, Proprietary and
Agency Orders; Modes of Order
Interaction, to eliminate text relating to
two modes of order interaction available
to Users.35 The Exchange is also: (i)
Proposing a conforming amendment to
NSX Rule 11.11(c)(2)(C) to remove text
relating to a Zero Display Reserve
Order 36 entered through the order
delivery mode; and (ii) proposing to
amend NSX Rule 11.11, Orders and
Modifiers, to eliminate the Auto-Ex
Only Order 37 and the Double Play
Order 38 and make non-substantive
amendments to correct a numbering
defect with respect to certain
subparagraphs of NSX Rule 11.11(c).
On August 31, 2006, the Commission
approved amendments to NSX’s trading
rules to provide for a price-time priority
market with two modes of order
interaction: (1) Automatic execution
(‘‘Auto-Ex Mode’’) and (2) order
delivery and automated response
(previously referred to herein as ‘‘Order
Delivery’’).39 Every User is eligible to
use the Auto-Ex Mode, under which the
System matches and executes likepriced orders, including against Order
Delivery Orders resting on the NSX
Book. To use Order Delivery a User
must demonstrate that it can meet
certain eligibility criteria; specifically, a
User must demonstrate that its system
can automatically process the inbound
order and respond immediately. If no
response to an inbound order is
35 A ‘‘User’’ is any ETP Holder or Sponsored
Participant that is authorized to obtain access to the
System pursuant to NSX Rule 11.9. See NSX Rule
1.5U.(1).
36 NSX Rule 11.11(c)(2) defines a reserve order as
‘‘[a] limit order with a portion of the quantity
displayed . . . and with a reserve portion of the
quantity . . . that is not displayed.’’ Rule
11.11(c)(2)(A) provides a Reserve Order may be
entered with a zero display quantity, in which case
the Reserve Order is known as a Zero Display
Reserve Order.
37 See NSX Rule 11.11(c)(13).
38 See NSX Rule 11.11(c)(10).
39 See Securities Exchange Act Release No. 54391
(August 31, 2006), 71 FR 52836 (September 7, 2006)
(SR–NSX–2006–08), Order Approving a Proposed
Rule Change and Amendment No. 1 Thereto and
Notice of Filing and Order Granting Accelerated
Approval to Amendment Nos. 2 and 3 Thereto to
Amend Its Trading Rules to Provide for a PriceTime Priority Market and Other Related Changes.
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70265
received within 300 milliseconds, the
User’s displayed order will be canceled.
Interpretations and Policies .01 of Rule
11.13 provides that, in determining
whether a User’s system can
automatically process the inbound order
and respond immediately, the Exchange
requires that Users selecting Order
Delivery have system response times
that generally meet or exceed industry
standards (subject to exceptions for
occasional systems malfunctions that do
not, in the Exchange’s judgment,
materially impair the User’s ability to
process and respond to inbound orders
immediately).40
The Exchange maintained Order
Delivery as a mode of interaction with
the System through the cessation of
trading as of the close of business on
May 30, 2014. The Exchange has now
determined that, upon resuming trading
operations on the System, it will not
offer Order Delivery as a mode of order
interaction with the System and the
only mode of order interaction with the
System will be Auto-Ex Mode. The
Exchange made this decision as a
business judgment based on its
assessment of customer interest and
market structure considerations. The
Exchange proposes to amend Rule 11.13
to delete paragraph (b) and
Interpretations and Policies .01 relating
to Order Delivery as a mode of order
interaction.
The Exchange is further proposing to
amend Rule 11.11(c)(2)(C) to remove
certain text related to a Zero Display
Reserve Order entered through Order
Delivery. The relevant rule text
currently states that, if a Zero Display
Reserve Order is not designated as a
Post Only Order 41 and is entered using
the Order Delivery and such order is
immediately marketable upon entry into
the System, the order will have its mode
of order interaction converted to
Automatic Execution as described in
Rule 11.13(b)(1). This rule text is no
longer apposite in view of the
Exchange’s decision to eliminate Order
Delivery upon a resumption of trading
on the System.
The Exchange is also proposing to
amend Rule 11.11 to eliminate the AutoEx Only Order, which was implemented
by the Exchange in May 2013.42 An
40 The Exchange considered 100 milliseconds to
be the industry standard for response time to an
inbound order.
41 NSX Rule 11.11(c)(5) defines a Post Only Order
as ‘‘[a] limit order that is to be posted on the
Exchange and not routed away to another trading
center.’’
42 See Securities Exchange Act Release No. 69519
(May 6, 2013), 78 FR 27461 (May 10, 2013) (SR–
NSX–2013–02), Order Granting Approval of
Proposed Rule Change to Adopt a New Order Type
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Auto-Ex Only Order is an ‘‘immediate or
cancel’’ (‘‘IOC’’) Limit or Market
Order 43 that the System will
automatically execute exclusively
against other Auto-Ex Orders at a
marketable price. An Auto-Ex Only
Order does not interact with an Order
Delivery order or route away to other
Trading Centers. The System cancels
any shares remaining after executing
against all marketable Auto-Ex Orders.
An Auto-Ex Only Order cannot be used
to comply with Rule 611 of Regulation
NMS pursuant to the Exchange Act
because the Auto-Ex Only Order did not
interact with Order Delivery orders that
may be protected quotations.
The Exchange notes that the Auto-Ex
Only order was implemented to offer
Users of the System the option of
interacting with marketable orders on
the NSX Book without having to incur
delays associated with Order Delivery.
Such delays could result from sending
an incoming order to an Order Delivery
participant and receiving a response
thereto. However, since NSX will no
longer offer Order Delivery the
underlying rationale for the Auto-Ex
Only Order will no longer exist.
The Exchange is also proposing to
amend NSX Rule 11.11(c)(10) to
eliminate the Double Play Order type.
The Double Play Order was
implemented by the Exchange in
November 2012.44 A Double Play Order
is a market or limit order for which a
User instructs the System to route to
designated away trading centers which
are approved by the Exchange from time
to time without first exposing the order
to the NSX Book. A Double Play Order
that does not execute in full after
routing away receives a new time stamp
upon return to the Exchange and is
ranked and maintained in the NSX Book
in accordance with NSX Rule 11.14,
Priority of Orders.
After assessing the use of the Double
Play Order since November 2012, the
Exchange has determined that the
Called the ‘‘Auto-Ex Only’’ Order and Add New
Definitions Regarding Automatic Execution Mode
and Automatic Execution Orders.
43 NSX Rule 11.11(a), General Order Types,
defines a market order as an order to buy or sell
a stated amount of a security that is to be executed
at the best price obtainable when the order reaches
the Exchange (NSX Rule 11.11(a)(1)); a limit order
is defined as an order to buy or sell a stated amount
of a security at a specified price or better (NSX Rule
11.11(a)(2)); NSX Rule 11.11(b), Time-in-Force,
defines an IOC order as a limit order that is to be
executed in whole or in part as soon as such order
is received and the portion not so executed is
canceled. IOC orders are not eligible to be routed
to an away trading center pursuant to NSX Rule
11.15, Order Execution.
44 See Securities Exchange Act Release No. 68317
(November 29, 2012), 77 FR 72423 (December 5,
2012) (SR–NSX–2012–22).
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Double Play Order was infrequently
used and that it is not an efficient use
of its resources to maintain and support
the Double Play Order as an active order
type.
Finally, the Exchange proposes
certain technical, non-substantive
amendments to NSX Rule 11.11 to
correct defective numbering. The
Exchange added the Midpoint Seeker
Order in March 2013 under NSX Rule
11.11(c)(13).45 As a result of an
administrative error by the Exchange,
the Auto-Ex Only order was assigned
the same subparagraph number (c)(13)
of Rule 11.11 when it was implemented
in May 2013. The Exchange is proposing
to renumber the Midpoint Seeker Order
as subparagraph (c)(12), which is
currently a ‘‘reserved’’ subparagraph.
With the proposed elimination of the
Auto-Ex Only Order, subparagraph
(c)(13) will now be ‘‘reserved.’’
Amendments to Rule 11.12
Currently, NSX Rule 11.12, Cross
Message, provides that subject to the
certain restrictions described in the rule,
Users are permitted to enter a cross
message instructing the System to match
for execution the identified buy-side of
the cross message with the identified
sell side of the cross message at a
specified price (a ‘‘Cross Trade’’).46
Pursuant to NSX Rule 11.12(b), the price
of the Cross Trade must, on the buy
side, be at least $0.01 less than the
lowest displayed order to sell on the
NSX Book and is at a price equal to or
less than the Protected NBBO offer; on
the sell side of the cross, the price must
be at least $0.01 greater than the highest
displayed order to buy on the NSX Book
and is at a price equal to or greater than
the Protected NBBO bid.
Rule 11.12 provides for three types of
Cross Trades: A Midpoint Cross, at
which the Cross Trade is priced at the
midpoint of the Protected NBBO and
improves each side of the NSX Top of
Book 47 by at least the minimum price
increment for the subject security; 48 a
Clean Cross, in which the Cross Trade
is for at least 5,000 shares with an
aggregate value of at least $100,000 and
is executed at a price that is equal to or
better than each side of the NSX Top of
Book and equal to or better than the
Protected NBBO; 49 and, a Cross/Sweep,
45 See Securities Exchange Act Release No. 69009
(February 28, 2013), 78 FR 14867 (March 7, 2013)
(SR–NSX–2013–07).
46 The Commission approved NSX Rule 11.12 in
August 2006. See footnote 39, supra.
47 The NSX Top of Book is the best-ranked order
to buy or sell in the NSX Book. See NSX Rule
1.5T.(1).
48 See NSX Rule 11.12(c).
49 See NSX Rule 11.12(d).
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in which the System, upon receipt of a
Cross/Sweep message from a user, will
enter a Protected Sweep Order 50 for the
User’s account in an amount necessary
to execute against all protected
quotations that, if not swept, would
prohibit the Cross Trade from being
executed by the System. Pursuant to
NSX Rule 11.12(f)(1), the Cross Trade
will be executed on the System
simultaneously with the Protected
Sweep Order, unless the size of such
order would exceed the size of the Cross
Trade, in which event both the
Protected Sweep Order and the order for
the Cross Trade would be canceled
without an execution.
The Exchange has determined in its
business judgment that, upon a
resumption of trading on the System, it
will not support the functionality for
Users to enter a Cross into the System.
This determination is based on the
Exchange’s assessment of its current
market structure requirements and the
technology resources needed to support
the functionality. In the event that the
Exchange determines to offer Cross
Message functionality in the future, it
will file a proposed rule change
pursuant to Rule 19b–4 of the Exchange
Act.
In view of the determination to no
longer offer Cross Message functionality,
the Exchange is proposing other
conforming amendments to its rules.
First, the Exchange proposes to delete
subparagraph (c)(7)(iii) of NSX Rule
11.11, which currently states that ‘‘[a]
Sweep Order entered as part of a Cross/
Sweep message pursuant to Rule 11.12
shall be treated identically to a Sweep
Order designated ‘Sweep and Cancel’
except as otherwise provided in Rule
11.12.’’ Similarly, the Exchange
proposes to rescind in its entirety the
text of NSX Rule 16.2, Crosses, which
currently provides that ‘‘[c]rosses
executed in Tape ‘‘A’’, ‘‘B’’ and ‘‘C’’
securities will not be subject to any
transaction fees.’’ The elimination of the
Cross Message functionality renders this
rule inapposite.
2. Statutory Basis
The Exchange’s proposed rule
changes are consistent with the
Exchange Act and the rules and
regulations thereunder applicable to the
Exchange and, in particular, the
requirements of Section 6(b) 51 of the
Exchange Act. Specifically, the
proposed rule change is consistent with
50 A Protected Sweep Order is a limit order that
instructed the System to ‘‘sweep’’ the market with
sizes equal to the order sizes in the NSX Book and
the order sizes at away trading centers. See NSX
Rule 11.11(c)(7)(i)(A).
51 15 U.S.C. 78f(b).
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the requirement of Section 6(b)(5) 52 of
the Exchange Act that the rules of an
exchange be designed to, among other
things, promote just and equitable
principles of trade, foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and 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.
The Exchange submits that the
proposed rescission of I&P.01, which
will operate to permit the re-opening of
the System for quoting and trading
equity securities, fulfills the purposes of
Section 6(b)(5).53 The Exchange’s rule
proposal will restore the Exchange to
the status of a fully operational national
securities exchange, as it was prior to
the close of business on May 30, 2014.
Notably, throughout the period from the
date that it ceased trading operations up
to the date of the instant rule filing, the
Exchange has continued to maintain its
status as a registered national securities
exchange and as an SRO. It has
continued its participation as a party in
the national market system plans.54
Upon the resumption of trading on
the System, the Exchange will operate
its marketplace pursuant to rules
currently in effect, as amended by the
rule changes proposed in this rule filing.
The Exchange has completed a rigorous
testing process, including tests with the
SIPs and market participants, to assure
that the System continues to send and
receive quote and trade data and other
information necessary to assure the
Exchange’s compliance with the
national market system plans. Restoring
NSX to its status as an operating
Exchange will promote the protection of
investors and the public interest by
providing an additional trading venue,
operating pursuant to an approved rule
set, and available to market participants
and the investing public for the trading
of equity securities. The Exchange has
sufficient financial and staff resources to
continue to discharge its obligations as
a national securities exchange and as an
SRO. The Exchange submits that the
proposed amendment will thus further
the purposes of Section 6(b)(5) of the
Act 55 in that it will operate to promote
just and equitable principles of trade
and perfect the mechanism of a free and
open market and a national market
system by providing investors with the
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(5).
54 See footnote 13, supra.
55 15 U.S.C. 78f(b)(5).
ability to execute trades in equity
securities on a regulated marketplace
operating pursuant to rules approved by
the Commission and subject to
regulatory oversight.
Additionally, the Exchange’s proposal
to describe the Exchange’s use of data
feeds as a part of this filing and through
the adoption of NSX Rule 11.25 is
consistent with the Section 6(b)(5) of the
Act.56 Further, the proposal removes
impediments to and perfects the
mechanism of a free and open market
and protects investors and the public
interest because it provides additional
specificity and transparency. The
Exchange’s proposal will enable
investors to better assess the quality of
the Exchange’s execution and routing
services. The proposal does not change
the operation of the Exchange or its use
of data feeds; rather it describes how,
and for what purposes, the Exchange
uses the quotes disseminated from data
feeds to calculate the NBBO for a
security for purposes of Regulation
NMS, Regulation SHO and various order
types that update based on changes to
the applicable NBBO. The additional
transparency into the operation of the
Exchange as described in the proposal
will 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.
The Exchange’s proposed
amendments to conform certain of its
rules to the planned operation of the
System upon a resumption of trading
are consistent with the Section 6(b)(5) of
the Act.57 Specifically, the Exchange is
proposing to amend NSX Rules 11.11
and 11.13, and Interpretations and
Policies .01 of Rule 11.13, to remove
text relating to Order Delivery, which
will not be available to Users as a mode
of order interaction with the System
upon a resumption of trading. The
Exchange is further proposing to amend
Rule 11.11 to eliminate the Auto-Ex
Only Order, which relates to the
handling of certain orders when
interacting with Order Delivery, and the
Double Play Order, which was an
infrequently used order type that the
Exchange no longer wishes to support.
The Exchange is also proposing to
correct defective numbering in Rule
11.11, which will promote clarity and
ease of reference in its rules. These
proposed amendments are consistent
with Section 6(b)(5) of the Act 58 in that
they will operate to align the Exchange’s
rules with the planned operation of the
52 15
53 15
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56 15
57 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(5).
58 Id.
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70267
System upon a resumption of trading,
thereby promoting just and equitable
principles of trade and the protection of
investors and the public interest.
The Exchange’s proposals to amend
NSX Rule 11.12 to rescind the rule text
governing Cross Trades on the System,
and making conforming amendments to
NSX Rules 11.11(c)(7)(iii), regarding a
Cross/Sweep Order, and 16.2, providing
that Cross Trades in Tape A, B, and C
securities are not subject to transaction
fees, are consistent with Section 6(b)(5)
of the Exchange Act because they will
remove from the NSX rule book
provisions that address a System
functionality that will not be supported
operationally upon a resumption of
trading on the System. The amendments
are designed to align the Exchange’s
rules with the System’s planned
functionality. The Exchange believes
that the amendments will further
promote just and equitable principles of
trade and the protection of investors and
the public interest.
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 Exchange Act.
The Exchange believes that reopening
the System for the trading of equity
securities will enhance competition in
the national market system by providing
investors with the opportunity to trade
on a competitive trading venue that was
available to them prior to the close of
business May 30, 2014. The Exchange
submits that the proposed rule
amendment will thus operate to
enhance rather than burden competition
in the equity securities markets.
The Exchange’s proposed rule
changes to: (i) Eliminate Order Deliveryrelated rule text; (ii) Eliminate the AutoEx Only and Double Play Orders; (iii)
eliminate the Cross Trade rule; and (iv)
make other conforming rule
amendments and correct defecting
numbering of certain paragraphs of NSX
Rule 11.11, have no competitive impact
in that they are designed to assure that
the Exchange’s rules and its System
functionality align and to promote
clarity and transparency in the
Exchange’s rules.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited or
received comments on the proposed
rule change from market participants or
others.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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–NSX–
2015–05 and should be submitted on or
before December 4, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.59
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–28811 Filed 11–12–15; 8:45 am]
BILLING CODE 8011–01–P
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:
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76384; File No. SR–
NASDAQ–2015–131]
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–
NSX–2015–05 on the subject line.
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Regarding
NASDAQ Last Sale Plus
November 6, 2015.
jstallworth on DSK7TPTVN1PROD with NOTICES
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–NSX–2015–05. 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
VerDate Sep<11>2014
15:03 Nov 12, 2015
Jkt 238001
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 October
30, 2015, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III, 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 proposes to amend
NASDAQ Rule 7039 (NASDAQ Last
Sale and NASDAQ Last Sale Plus Data
Feeds) with language clarifying that the
data consolidation component of the
fees for NASDAQ Last Sale Plus (‘‘NLS
Plus’’), a comprehensive data feed
offered by NASDAQ OMX Information
LLC,3 will be charged solely to firms
59 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 NASDAQ OMX Information LLC is a subsidiary
of Nasdaq, Inc. (formerly, The NASDAQ OMX
Group, Inc.), separate and apart from The NASDAQ
Stock Market LLC. The primary purpose of
NASDAQ OMX Information LLC is to combine
publicly available data from the three filed last sale
1 15
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
that are Internal Distributors and
External Distributors (collectively,
‘‘Distributors’’ of the data feed) that
receive a NLS Plus direct data feed.4
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.cchwallstreet.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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposal is to
amend NASDAQ Rule 7039 with
language clarifying that the data
consolidation component of the fees for
NLS Plus will be charged solely to firms
that are Distributors that receive an NLS
Plus direct data feed.5
NLS Plus 6 allows data distributors to
access last sale products offered by each
products of the exchange subsidiaries of Nasdaq,
Inc. and from the network processors for the ease
and convenience of market data users and vendors,
and ultimately the investing public. In that role, the
function of NASDAQ OMX Information LLC is
analogous to that of other market data vendors, and
it has no competitive advantage over other market
data vendors; NASDAQ OMX Information LLC
performs precisely the same functions as
Bloomberg, Thomson Reuters, and other market
data vendors.
4 ‘‘Internal Distributors’’ are Distributors that
receive NASDAQ Last Sale Plus data and then
distribute that data to one or more Subscribers
within the Distributor’s own entity. ‘‘External
Distributors’’ are Distributors that receive NASDAQ
Last Sale Plus data and then distribute that data to
one or more Subscribers outside the Distributor’s
own entity. Internal Distributors and External
Distributors are together known as ‘‘Distributors’’.
Proposed NASDAQ Rule 7039(d)(1).
5 Thus, the fee does not apply to persons that
receive the NLS Plus data feed indirectly, through
an Internal Distributor or External Distributor.
6 See Securities Exchange Act Release Nos. 75257
(June 22, 2015), 80 FR 36862 (June 26, 2015) (SR–
NASDAQ–2015–055) (order approving proposed
rule change regarding NLS Plus); 75600 (August 4,
2015), 80 FR 47968 (August 10, 2015) (SR–
NASDAQ–2015–088) (notice of filing and
immediate effectiveness regarding fees for NLS
E:\FR\FM\13NON1.SGM
13NON1
]]>Agencies
[Federal Register Volume 80, Number 219 (Friday, November 13, 2015)]
[Notices]
[Pages 70261-70268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28811]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76390; File No. SR-NSX-2015-05]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change Amending Rule 11.1, Hours of
Trading, To Rescind Interpretations and Policies .01, ``Cessation of
Trading Operations on NSX;'' Adopting Rule 11.25 Relating to Use of
Market Data Feeds; Amending NSX Rule 11.13 Relating to the Order
Delivery Mode of Order Interaction; Amending NSX Rule 11.11 To Remove
Certain Order Types and Correct Technical Deficiencies in the Numbering
of Certain Sections of the Rule; and Amending Rule 11.12, Cross Message
and Making Conforming Amendments to NSX Rules 11.11(c) and 16.2
November 9, 2015.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (the ``Exchange Act'' or ``Act'') \1\ and Rule
19b-4 thereunder,\2\ notice is hereby given that on November 3, 2015,
National Stock Exchange, Inc. (``NSX[supreg]'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change, as described in Items I and II below, which
Items have been substantially prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the
[[Page 70262]]
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend NSX Rule 11.1, Hours of Trading,
to rescind Interpretations and Policies .01, ``Cessation of Trading
Operations on NSX.'' The Exchange is also proposing to: (i) Adopt new
Rule 11.25, Use of Market Data Feeds; (ii) amend NSX Rule 11.13 and
Interpretations and Policies .01 with respect to the order delivery
mode of order interaction with the Exchange's trading system (``Order
Delivery''); (iii) amend NSX Rule 11.11, Orders and Modifiers, to
remove descriptions of certain order types that the Exchange will not
offer upon a resumption of trading and to correct technical
deficiencies in the numbering of certain subparagraphs of the rule; and
(v) amend Rule 11.12, Cross Message, to delete the rule in its entirety
and make conforming amendments to NSX Rules 11.11(c) and 16.2.
The text of the proposed rule change is available on the Exchange's
Web site at www.nsx.com, at the Exchange'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 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 those 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
NSX, a corporation organized under the laws of the State of
Delaware,\3\ is a registered national securities exchange under Section
6 of the Exchange Act \4\ and operates as a self-regulatory
organization governed by the requirements of Section 19 of the Exchange
Act.\5\ The Exchange is filing this rule proposal to rescind
Interpretations and Policies .01 of Rule 11.1 (hereinafter referred to
as ``I&P.01''), ``Cessation of Trading Operations on the Exchange.''
I&P.01 currently states that, as of the close of business on May 30,
2014 (the ``Closing Date''), NSX shall cease trading activity on its
trading system (the ``System''); \6\ that all NSX Rules will remain in
full force and effect through and after the Closing Date; and that the
Exchange shall file a proposed rule change pursuant to Rule 19b-4 of
the Exchange Act prior to any resumption of trading on the Exchange
pursuant to Chapter XI (Trading Rules).\7\ Rescinding I&P.01 will
permit the Exchange to resume trading activity on the System as soon as
practicable after the instant rule amendment is operative, thereby
restoring NSX to its status as an operating, all-electronic national
securities exchange as it had been for many years prior to ceasing
trading operations
---------------------------------------------------------------------------
\3\ NSX was founded in 1885 as the Cincinnati Stock Exchange and
changed its name to ``National Stock Exchange'' in 2003. See
Securities Exchange Act Release No. 48774 (November 12, 2003), 68 FR
65332 (November 19, 2003) (SR-CSE-2003-12). In 2006, the Exchange
de-mutualized and changed its corporate organizational structure
from a non-stock, not-for-profit Ohio corporation to a Delaware for-
profit stock corporation. See Securities Exchange Act Release No.
53963 (June 8, 2006), 71 FR 34660 (June 15, 2006) (SR-NSX-2006-03).
\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78s.
\6\ Exchange Rule 1.5S.(4) defined the term ``System'' as ``. .
. the electronic securities communications and trading facility
designated by the Board [of Directors] through which orders . . .
are consolidated for ranking and execution.''
\7\ See Securities Exchange Act Release No. 72107 (May 6, 2014),
79 FR 27017 (May 12, 2014) (SR-NSX-2014-14).
---------------------------------------------------------------------------
In connection with the proposed resumption of trading on the
System, the Exchange is proposing several other rule amendments.
Specifically, the Exchange is proposing in new Rule 11.25 to describe
the Exchange's use of certain data feeds for order handling and
execution, order routing and regulatory compliance. The Exchange is
also proposing amendments to: (i) Rule 11.11 to eliminate the Double
Play and Auto-Ex Only Order types; (ii) Rule 11.13 and the
Interpretations and Policies under the rule to eliminate rule text
relating to Order Delivery; and (iii) Rule 11.16, Cross Message, to
rescind the rule text in its entirety. The Exchange is further
proposing non-substantive or conforming amendments to Rules 11.11 and
16.2.
The details of these proposed rule changes are discussed below.
Proposed Resumption of Trading on NSX
At the time that NSX ceased trading operations, the Exchange
operated as a wholly-owned subsidiary of CBOE Stock Exchange, LLC
(``CBSX'').\8\ Thereafter, on February 13, 2015,\9\ the Commission
issued an Order granting its approval of a transaction in which
National Stock Exchange Holdings, Inc. (``NSX Holdings''), a Delaware
corporation, purchased all of the outstanding shares of NSX from the
CBSX (the ``Approval Order''). The Commission noted in the Approval
Order that ``[t]he Exchange is, and will remain, registered as a
national securities exchange under Section 6 of the Act \10\ and a
self-regulatory organization [``SRO''] . . . as defined in [S]ection
3(a)(26) of the Act \11\after the Closing [of the Transaction].'' The
Commission further noted that ``. . . [t]he Exchange states that it
plans to reopen its trading operations as soon as practicable after the
Closing and plans to operate the Exchange using its existing . . .
[S]ystem pursuant to the rules of the Exchange currently in effect . .
. .''\12\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 66071 (December 29,
2011); 77 FR 521 (January 5, 2012)(SR-CBOE-2011-107 and SR-NSX-2011-
14), Order Granting Accelerated Approval to Proposed Rule Changes in
Connection with the Proposed Acquisition of the National Stock
Exchange, Inc. by the CBOE Stock Exchange, LLC.
\9\ See Securities Exchange Act Release No. 74270 (February 13,
2015), 80 FR 9286 (February 20, 2015) (SR-NSX-2014-017), Order
Granting Approval of Proposed Rule Change in Connection With a
Proposed Transaction in Which National Stock Exchange Holdings, Inc.
Will Acquire Ownership of the Exchange from the CBOE Stock Exchange,
LLC. The Approval Order described in detail, inter alia, the
ownership structure of the Exchange upon its acquisition by NSX
Holdings and the requirement that NSX Holdings give due regard to
the preservation of the independence of the Exchange's self-
regulatory function.
\10\ See 15 U.S.C. 78f.
\11\ See 15 U.S.C. 78s.
\12\ See Order Granting Approval of Proposed Rule Change in
Connection With a Proposed Transaction in Which National Stock
Exchange Holdings, Inc. Will Acquire Ownership of the Exchange from
the CBOE Stock Exchange, LLC, 80 FR at 9287.
---------------------------------------------------------------------------
After the Closing of the Transaction up to the date of the instant
rule filing, the Exchange has continued to discharge its applicable SRO
responsibilities in anticipation of resuming trading operations on the
Exchange. Specifically, as outlined below, the Exchange has continued
as a party to the National Market System (``NMS'') Plans \13\ and has
updated its
[[Page 70263]]
rules as appropriate.\14\ The Exchange also filed with the Commission
an amendment to NSX Rule 2.5, Application Procedures for an ETP Holder
or to become an Associated Person of an ETP Holder, adding
Interpretations and Policies .01, Expedited Process for Reinstatement
as an ETP Holder.\15\ The amendment provided an expedited procedure,
available for a period of 90 days from the date the rule amendment
became operative, for ETP Holders in good standing as of the close of
business on May 30, 2014 to reinstate their status as such and to
register Associated Persons.\16\
---------------------------------------------------------------------------
\13\ See, e.g., Securities Exchange Act Release No. 74323
(February 19, 2015), 80 FR 10169 (February 25, 2015) (File No. 4-
631), Order Approving the Eighth Amendment to the National Market
System Plan to Address Extraordinary Market Volatility (the ``Limit
Up-Limit Down Plan''); Securities Exchange Act Release No. 75192
(June 17, 2015), 80 FR 36028 (June 23, 2015) (File No. 4-668), Order
Approving Amendment No. 1 to the National Market System Plan
Governing the Process of Selecting a Plan Processor and Developing a
Plan for the Consolidated Audit Trail; Securities Exchange Act
Release No. 75505 (July 22, 2015), 80 FR 45254 (July 29, 2015) (File
No. S7-24-89), Order Approving Amendment No. 35 to the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation
and Dissemination of Quotation and Transaction Information for
Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading
Privileges Basis; Securities Exchange Act Release No. 75504 (July
22, 2015), 80 FR 45252 (July 29, 2015) (SR-CTA/CQ 2015-01), Order
Approving the Twenty Second Substantive Amendment to the Second
Restatement of the CTA Plan and Sixteenth Substantive Amendment to
the Restated CQ Plan; Securities Exchange Act Release No. 75660
(August 11, 2015), 80 FR 48940 (August 14, 2015), (SR-CTA-2015-02),
Order Approving the Twenty Third Substantive Amendment to the Second
Restatement of the CTA Plan; Securities Exchange Act Release No
75980 (September 25, 2015), 80 FR 58796 (September 30, 2015),Order
Approving Amendment No. 2 to the National Market System Plan
Governing the Process of Selecting a Plan Processor and Developing a
Plan for the Consolidated Audit Trail.
\14\ See Securities Exchange Act Release No. 72434 (June 19,
2014), 79 FR 36110 (June 25, 2014) (SR-NSX-2014-08), Order Granting
Approval of Proposed Rule Changes Relating to Clearly Erroneous
Executions; Securities Exchange Act Release No. 72914 (August 26,
2014), 79 FR 52089 (September 2, 2014) (SR-NSX-2014-16), Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Amend
Rule 15.5 to Provide Additional Clarity and Precision, Correct
Certain Citations, and Align the Rule with the Rules of Other
Exchanges With Respect to the Original and Continued Listing
Standards for Issuers' Compensation Committees; Securities Exchange
Act Release No. 75355 (July 2, 2015), 80 FR 39460 (July 9, 2015)
(SR-NSX-2015-03), Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to Amend Rule 4.3, Record of Written
Complaints; Securities Exchange Act Release No. 75554 (July 30,
2015), 80 FR 46620 (August 5, 2015) (SR-NSX-2015-04), Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Amending
Exchange Rule 11.21, Short Sales, to Describe the Exchange's
Implementation of Rule 201 of Regulation SHO Under the Securities
Exchange Act of 1934 and Relocate Certain Text from Rule 11.11,
Orders and Modifiers; and Amending Rule 13.2 to Incorporate By
Reference Rules 200,203 and 204 of Regulation SHO.
\15\ The term ``ETP Holder'' refers to registered brokers or
dealers that have been issued an Equity Trading Permit by the
Exchange for effecting approved securities transactions on the
Exchange's trading facilities. See Exchange Rule 1.5E.(1).
\16\ See Securities Exchange Act Release No. 75098 (June 3,
2015), 80 FR 32644 (June 9, 2015) (SR-NSX-2015-02).
---------------------------------------------------------------------------
As noted above, the Exchange will operate using the existing System
and pursuant to the rules in effect. The Exchange has maintained the
System's operability and has not made any modification to the System's
functionality, except to the extent necessary to comply with regulatory
requirements.\17\ The functionality relating to order entry and
execution, order routing, clearance and settlement and market data
distribution, as further described below, remains the same. The
Exchange does not currently list any securities and trades equity
securities on an Unlisted Trading Privileges basis.\18\
---------------------------------------------------------------------------
\17\ For example, the Exchange has made System changes to comply
with the new timestamp requirements under the July 2015 amendments
to the UTP Plan and the Consolidated Tape and Consolidated Quote
Plans. See footnote 13, above.
\18\ See NSX Rule 15.9.
---------------------------------------------------------------------------
The Exchange has implemented and continues to execute a rigorous
testing process, including tests with industry participants, to assure
that all components of the System function effectively, that the
Exchange has full operational capability to re-open its marketplace for
the trading of equity securities, and that the Exchange will operate in
compliance with all applicable rules and regulations. This testing plan
included three weekend tests of NSX's interfaces with the securities
information processors, or ``SIPs'' (i.e., the Consolidated Quote
System or ``CQS;'' the Consolidated Tape System or ``CTS;'' the UTP
Quotation Data Feed, or ``UQDF;'' and the UTP Trade Data Feed, or
``UTDF''). These tests, which were completed on August 29, 2015,
confirmed that NSX will be ready to receive quote and trade data and
relevant national market system plan information from, and transmit its
quote and trade information to, the securities information processors
when it resumes trading operations on the System.
The Exchange also tested for proper functioning of client
communication systems with NSX, client order entry connections, and
depth of book. Moreover, the Exchange tested its matching engines,
market data, trade reporting, quote publication and trade messages, and
clearing systems. The tests were conducted with actual market data and
clearing data. The Exchange has also re-certified its connection with
the Depository Trust & Clearing Corporation (``DTCC'') to assure
complete and accurate trade clearing and settlement functions.
The Exchange has also performed a thorough review of the hardware
and software components of the System and has resumed the production
status of the System on a daily basis. Furthermore, the Exchange made
enhancements to its connectivity and certification processes. The
Exchange has created an automated certification process, providing ETP
Holders and Users with a more efficient process of connecting to the
System. The Exchange has also made enhancements to certain internal
processes and monitoring tools. These enhancements include a message
bus upgrade and security master file upgrade. The Exchange has also
enhanced its System monitoring tools to provide for more effective
monitoring of System health to allow quicker response within operations
support.
Having conducted these tests and made these enhancements and upon
receiving regulatory approval to resume trading on the System, the
Exchange will execute a staged roll-out plan to reach full operational
capacity.\19\ Beginning one week and one day prior to the date trading
will resume on the System, the Exchange will test the System using only
test symbols. On the first day of trading the Exchange will allow for
trading in symbols within a defined alphabetic range (for example,
symbols within the letter range X-Z). After three days of trading in
this range, the Exchange will activate trading in additional symbols
within an alphabetic range (for example, adding symbols within the
letter range A-K). Two days later the Exchange will activate trading in
all remaining symbols and be fully operational. The Exchange will
provide ETP Holders with advance notice of the dates and the symbol
ranges that will comprise the staged roll-out.
---------------------------------------------------------------------------
\19\ The Exchange will issue a notice to ETP Holders with the
precise details of the roll-out plan prior to initiating the plan.
---------------------------------------------------------------------------
The Exchange will also take affirmative steps to assure that the
date that it intends to resume trading operations is communicated
broadly to market participants and to the investing public.
Specifically, the Exchange has a target date of on or about December 1,
2015 to resume trading operations on the System. The Exchange will
provide timely written notice of the date and other information
concerning its resumption of trading operations directly to the
following parties: (1) ETP Holders; (2) other national securities
exchanges that trade NMS securities; (3) the SIPs; and, (4) the
operating committees for the various NMS plans (e.g., the Consolidated
Tape Association Plan/Consolidated Quote Plan; the Plan Governing the
Collection, Consolidation and Dissemination of Quotation and
Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis;
[[Page 70264]]
and the Plan to Address Extraordinary Market Volatility). Furthermore,
the Exchange will provide timely notice to the public as a whole by way
of widely-disseminated press releases issued by the Exchange and
notification through the Exchange's Web site and through communications
with financial and industry press.
As required by Section 6(b)(1) of the Act,\20\ the Exchange has the
capacity to be able to carry out the purposes of the Act and to comply
and to enforce compliance by ETP Holders and persons associated with
ETP Holders, with the provisions of the Act, the rules and regulations
thereunder, and the rules of the Exchange. The Exchange has the
financial, technology and staff resources to effectively surveil its
marketplace and to regulate ETP Holders' trading on NSX upon the
resumption of trading operations on the System. The Exchange will
continue to regularly assess its regulatory resources to assure that
they continue to be sufficient to discharge its SRO responsibilities.
The Exchange notes that, throughout the period from the date that it
ceased trading operations through the date of the instant rule filing,
it has continued to be a party to certain 17d-2 Plans for the
Allocation of Regulatory Responsibilities pursuant to Section 17(d)(1)
of the Exchange Act \21\ and Rules 17d-1 and 17d-2 thereunder,\22\
specifically the 17d-2 Plan relating to the surveillance, investigation
and enforcement of insider trading rules \23\ and the 17d-2 Plan
relating to Regulation NMS Rules.\24\ The Exchange will continue as a
party to these plans going forward.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78(f)(b)(1).
\21\ 15 U.S.C. 78q(d)(1).
\22\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\23\ See Securities Exchange Act Release No. 65991 (December 16,
2010), 76 FR 79714 (December 22, 2011) (File No. 4-566), Notice of
Filing and Order Approving and Declaring Effective an Amendment to
the Plan for the Allocation of Regulatory Responsibilities . . .
Relating to the Surveillance, Investigation, and Enforcement of
Insider Trading Rules.
\24\ See Securities Exchange Act Release No. 63430 (December 3,
2010), 75 FR 76758 (December 9, 2010) (File No. 4-618), Order
Approving and Declaring Effective a Plan for the Allocation of
Regulatory Responsibilities . . . Relating to Regulation NMS Rules.
---------------------------------------------------------------------------
In summary, since ceasing trading operations on the System as of
the close of business on May 30, 2014, the Exchange (i) continued to
maintain the operability of the System; (ii) implemented and
successfully executed a rigorous internal testing program to assure
that the System will function as designed and subject to NSX rules in
effect; (iii) successfully tested connectivity to the securities
information processors and to DTCC; (iv) continued to discharge its SRO
responsibilities through, among other things, remaining a party to NMS
plans and in the multi-party 17d-2 plans for insider trading
surveillance and certain Regulation NMS requirements; and (v) amended
its rules to keep current with industry regulatory initiatives (e.g.,
amendments to the market-wide rules governing clearly erroneous
executions), and is proposing additional rule changes in the instant
rule proposal, described below, that will align with the System's
functionality when trading operations resume. Further, the Exchange has
sufficient financial, technology and staff resources to effectively
regulate ETP Holder activity in the NSX marketplace and meet its
compliance obligations under the Act.
In view of the foregoing, the Exchange is positioned to
successfully reopen its marketplace for the trading of equity
securities and accordingly is proposing to rescind I&P.01 to allow the
NSX to resume trading operations as soon as practicable after the
instant rule proposal becomes operative.
Adoption of NSX Rule 11.25
The Exchange is proposing to adopt NSX Rule 11.25 to describe the
sources of market data used for purposes of order handling and
execution, order routing, and regulatory compliance. Paragraph (a) of
the proposed Rule will specify which data feeds the Exchange utilizes
for the handling, execution, and routing of orders, as well as for
surveillance necessary to monitor compliance with applicable securities
laws and Exchange rules. Proposed paragraph (b) will state that the
Exchange may adjust its calculation of the NBBO based on information
about orders sent to other venues with protected quotations, execution
reports received from those venues, and certain orders received by the
Exchange. With this rule and other functionalities in place, the system
will use market data as follows.
Order Handling and Execution
In order to calculate the national best bid and offer (``NBBO'')
\25\ the Exchange uses only SIP data disseminated through CQ and UQDF
for all exchanges. NSX does not use any exchange's proprietary data
feeds. The Exchange does not include its own quotes in the calculation
of the Exchange's NBBO because the system is designed such that all
incoming orders are separately compared to the Exchange's Protected
Best Bid or Offer (``PBBO'') \26\ and the Exchange-calculated NBBO,
which together create a complete view of the NBBO, prior to order
display, execution, or routing.
---------------------------------------------------------------------------
\25\ NSX Rule 1.5P.(2) defines the ``Protected NBBO'' as the
national best bid or offer that is a protected quotation.
\26\ NSX Rule 1.5P.(3) defines the ``Protected BBO'' as the
Protected NBBO or the displayed Top of Book on NSX.
---------------------------------------------------------------------------
The Exchange offers three types of ``pegged'' Zero Display Reserve
Orders, which may be ``pegged'' to the buy-side of the PBBO, the sell-
side of the PBBO or the midpoint of the PBBO.\27\ The System calculates
the PBBO using the quotes from the SIPs, excluding quotes disseminated
by the SIPs that originated from the NSX Book.\28\
---------------------------------------------------------------------------
\27\ See NSX Rule 11.11(c)(2)(A).
\28\ NSX Rule 1.5N.(1) defines the NSX Book as the System's
electronic file of orders.
---------------------------------------------------------------------------
Order Routing
When the Exchange has a marketable order eligible to be routed and
the System identifies that there is no matching price available on the
Exchange, but there is a matching price represented at another trading
center displaying protected quotes, the System will cause the order to
be routed to that trading center. The Exchange uses data received from
the SIPs to update the System's calculation of the NBBO for purposes of
routing decisions.
Regulatory Compliance
Locked or Crossed Markets: The System determines whether the
display of an order would lock or cross the market. At the time an
order is entered into the System, it will establish, based upon its
calculation of the NBBO from SIP feeds, whether the order will lock or
cross the prevailing NBBO for a security. In the event that the order
would produce a locking or crossing condition, the System will cancel
the order or route the order based on the ETP Holder's order handling
instructions.
Pursuant to Regulation NMS, a declaration of self-help can occur
when an exchange displaying protected quotes is slow, as defined in
Regulation NMS, or non-responsive to the Exchange's routed orders. In
this circumstance, according to Rule 611(b) of Regulation NMS,\29\ the
Exchange may declare self-help against that exchange and display a
quotation that may lock or cross the market that the Exchange invoked
self-help against.\30\ The Exchange may also
[[Page 70265]]
declare self-help where another exchange's SIP quotes are slow or non-
responsive resulting in a locked or crossed market. Once the Exchange
declares self-help, the System will ignore the quotes generated from
that exchange in its calculation of the NBBO for execution and routing
determinations in compliance with Regulation NMS. The Exchange will
also disable all routing to that exchange. However, the System will
continue to receive and process that exchange's quotes in order to
immediately include the quote in the NBBO calculation and enable
routing once self-help is revoked.
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\29\ See 17 CFR 242.611.
\30\ See also Question 5.03 in the ``Division of Trading and
Markets, Responses to Frequently Asked Questions Concerning Rule 611
and Rule 610 of Regulation NMS'' (last updated April 4, 2008)
available at https://www.sec.gov/divisions/marketreg/nmsfaq610-11.htm.
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Order Protection Rule: Pursuant to Rule 611 of Regulation NMS,\31\
the Exchange is required to establish, maintain, and enforce written
policies and procedures that are reasonably designed to prevent trade-
throughs of protected quotations in NMS stocks that do not fall within
a valid exception and, if relying on such an exception, that are
reasonably designed to ensure compliance with the terms of the
exception. The System does not permit an execution on the Exchange if
there are better-priced protected quotations displayed in the market
unless the order is an ISO. At the time an order is entered on NSX, the
System uses the SIP data to determine if the NBBO is priced better than
what is on the NSX Book. If the Exchange does not match such order on
the NSX Book,\32\ and based on the ETP Holder's order handling
instructions, the System cancels or routes the order.
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\31\ 17 CFR 242.611.
\32\ NSX Rule 1.5N.(1) defines the term ``NSX Book'' as the
``System's electronic file of orders.''
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Regulation SHO: The Exchange is required to establish, maintain and
enforce written policies and procedures reasonably designed to prevent
the execution of a Short Sale Order in a covered security at a price
that is equal to or below the current National Best Bid (``NBB'') when
a short sale price restriction is in effect pursuant to Rule 201 of
Regulation SHO under the Exchange Act (``Short Sale Circuit
Breaker'').\33\ When a Short Sale Circuit Breaker is in effect, the
Exchange utilizes information received from SIP feeds and what is on
the NSX Book, to prevent the execution of a sell short order in
contravention of Rule 201 of Regulation SHO.\34\
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\33\ 17 CFR 242.201.
\34\ See Id.
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Limit Up-Limit Down: As stated in Rule 11.24(c), the Exchange is a
participant in, and subject to the applicable requirements of, the
Limit Up-Limit Down Plan. The System uses price band data received
through the SIP to comply with the requirements of the Limit Up-Limit
Down Plan. Specifically, as provided in Rule 11.24(e) the System will
not execute or display orders for an NMS stock at prices that are
outside of a specified price band (i.e., below the lower price band or
above the higher price band).
Amendments to NSX Rules 11.13 and 11.11
The Exchange is further proposing to amend NSX Rule 11.13,
Proprietary and Agency Orders; Modes of Order Interaction, to eliminate
text relating to two modes of order interaction available to Users.\35\
The Exchange is also: (i) Proposing a conforming amendment to NSX Rule
11.11(c)(2)(C) to remove text relating to a Zero Display Reserve Order
\36\ entered through the order delivery mode; and (ii) proposing to
amend NSX Rule 11.11, Orders and Modifiers, to eliminate the Auto-Ex
Only Order \37\ and the Double Play Order \38\ and make non-substantive
amendments to correct a numbering defect with respect to certain
subparagraphs of NSX Rule 11.11(c).
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\35\ A ``User'' is any ETP Holder or Sponsored Participant that
is authorized to obtain access to the System pursuant to NSX Rule
11.9. See NSX Rule 1.5U.(1).
\36\ NSX Rule 11.11(c)(2) defines a reserve order as ``[a] limit
order with a portion of the quantity displayed . . . and with a
reserve portion of the quantity . . . that is not displayed.'' Rule
11.11(c)(2)(A) provides a Reserve Order may be entered with a zero
display quantity, in which case the Reserve Order is known as a Zero
Display Reserve Order.
\37\ See NSX Rule 11.11(c)(13).
\38\ See NSX Rule 11.11(c)(10).
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On August 31, 2006, the Commission approved amendments to NSX's
trading rules to provide for a price-time priority market with two
modes of order interaction: (1) Automatic execution (``Auto-Ex Mode'')
and (2) order delivery and automated response (previously referred to
herein as ``Order Delivery'').\39\ Every User is eligible to use the
Auto-Ex Mode, under which the System matches and executes like-priced
orders, including against Order Delivery Orders resting on the NSX
Book. To use Order Delivery a User must demonstrate that it can meet
certain eligibility criteria; specifically, a User must demonstrate
that its system can automatically process the inbound order and respond
immediately. If no response to an inbound order is received within 300
milliseconds, the User's displayed order will be canceled.
Interpretations and Policies .01 of Rule 11.13 provides that, in
determining whether a User's system can automatically process the
inbound order and respond immediately, the Exchange requires that Users
selecting Order Delivery have system response times that generally meet
or exceed industry standards (subject to exceptions for occasional
systems malfunctions that do not, in the Exchange's judgment,
materially impair the User's ability to process and respond to inbound
orders immediately).\40\
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\39\ See Securities Exchange Act Release No. 54391 (August 31,
2006), 71 FR 52836 (September 7, 2006) (SR-NSX-2006-08), Order
Approving a Proposed Rule Change and Amendment No. 1 Thereto and
Notice of Filing and Order Granting Accelerated Approval to
Amendment Nos. 2 and 3 Thereto to Amend Its Trading Rules to Provide
for a Price-Time Priority Market and Other Related Changes.
\40\ The Exchange considered 100 milliseconds to be the industry
standard for response time to an inbound order.
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The Exchange maintained Order Delivery as a mode of interaction
with the System through the cessation of trading as of the close of
business on May 30, 2014. The Exchange has now determined that, upon
resuming trading operations on the System, it will not offer Order
Delivery as a mode of order interaction with the System and the only
mode of order interaction with the System will be Auto-Ex Mode. The
Exchange made this decision as a business judgment based on its
assessment of customer interest and market structure considerations.
The Exchange proposes to amend Rule 11.13 to delete paragraph (b) and
Interpretations and Policies .01 relating to Order Delivery as a mode
of order interaction.
The Exchange is further proposing to amend Rule 11.11(c)(2)(C) to
remove certain text related to a Zero Display Reserve Order entered
through Order Delivery. The relevant rule text currently states that,
if a Zero Display Reserve Order is not designated as a Post Only Order
\41\ and is entered using the Order Delivery and such order is
immediately marketable upon entry into the System, the order will have
its mode of order interaction converted to Automatic Execution as
described in Rule 11.13(b)(1). This rule text is no longer apposite in
view of the Exchange's decision to eliminate Order Delivery upon a
resumption of trading on the System.
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\41\ NSX Rule 11.11(c)(5) defines a Post Only Order as ``[a]
limit order that is to be posted on the Exchange and not routed away
to another trading center.''
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The Exchange is also proposing to amend Rule 11.11 to eliminate the
Auto-Ex Only Order, which was implemented by the Exchange in May
2013.\42\ An
[[Page 70266]]
Auto-Ex Only Order is an ``immediate or cancel'' (``IOC'') Limit or
Market Order \43\ that the System will automatically execute
exclusively against other Auto-Ex Orders at a marketable price. An
Auto-Ex Only Order does not interact with an Order Delivery order or
route away to other Trading Centers. The System cancels any shares
remaining after executing against all marketable Auto-Ex Orders. An
Auto-Ex Only Order cannot be used to comply with Rule 611 of Regulation
NMS pursuant to the Exchange Act because the Auto-Ex Only Order did not
interact with Order Delivery orders that may be protected quotations.
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\42\ See Securities Exchange Act Release No. 69519 (May 6,
2013), 78 FR 27461 (May 10, 2013) (SR-NSX-2013-02), Order Granting
Approval of Proposed Rule Change to Adopt a New Order Type Called
the ``Auto-Ex Only'' Order and Add New Definitions Regarding
Automatic Execution Mode and Automatic Execution Orders.
\43\ NSX Rule 11.11(a), General Order Types, defines a market
order as an order to buy or sell a stated amount of a security that
is to be executed at the best price obtainable when the order
reaches the Exchange (NSX Rule 11.11(a)(1)); a limit order is
defined as an order to buy or sell a stated amount of a security at
a specified price or better (NSX Rule 11.11(a)(2)); NSX Rule
11.11(b), Time-in-Force, defines an IOC order as a limit order that
is to be executed in whole or in part as soon as such order is
received and the portion not so executed is canceled. IOC orders are
not eligible to be routed to an away trading center pursuant to NSX
Rule 11.15, Order Execution.
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The Exchange notes that the Auto-Ex Only order was implemented to
offer Users of the System the option of interacting with marketable
orders on the NSX Book without having to incur delays associated with
Order Delivery. Such delays could result from sending an incoming order
to an Order Delivery participant and receiving a response thereto.
However, since NSX will no longer offer Order Delivery the underlying
rationale for the Auto-Ex Only Order will no longer exist.
The Exchange is also proposing to amend NSX Rule 11.11(c)(10) to
eliminate the Double Play Order type. The Double Play Order was
implemented by the Exchange in November 2012.\44\ A Double Play Order
is a market or limit order for which a User instructs the System to
route to designated away trading centers which are approved by the
Exchange from time to time without first exposing the order to the NSX
Book. A Double Play Order that does not execute in full after routing
away receives a new time stamp upon return to the Exchange and is
ranked and maintained in the NSX Book in accordance with NSX Rule
11.14, Priority of Orders.
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\44\ See Securities Exchange Act Release No. 68317 (November 29,
2012), 77 FR 72423 (December 5, 2012) (SR-NSX-2012-22).
---------------------------------------------------------------------------
After assessing the use of the Double Play Order since November
2012, the Exchange has determined that the Double Play Order was
infrequently used and that it is not an efficient use of its resources
to maintain and support the Double Play Order as an active order type.
Finally, the Exchange proposes certain technical, non-substantive
amendments to NSX Rule 11.11 to correct defective numbering. The
Exchange added the Midpoint Seeker Order in March 2013 under NSX Rule
11.11(c)(13).\45\ As a result of an administrative error by the
Exchange, the Auto-Ex Only order was assigned the same subparagraph
number (c)(13) of Rule 11.11 when it was implemented in May 2013. The
Exchange is proposing to renumber the Midpoint Seeker Order as
subparagraph (c)(12), which is currently a ``reserved'' subparagraph.
With the proposed elimination of the Auto-Ex Only Order, subparagraph
(c)(13) will now be ``reserved.''
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\45\ See Securities Exchange Act Release No. 69009 (February 28,
2013), 78 FR 14867 (March 7, 2013) (SR-NSX-2013-07).
---------------------------------------------------------------------------
Amendments to Rule 11.12
Currently, NSX Rule 11.12, Cross Message, provides that subject to
the certain restrictions described in the rule, Users are permitted to
enter a cross message instructing the System to match for execution the
identified buy-side of the cross message with the identified sell side
of the cross message at a specified price (a ``Cross Trade'').\46\
Pursuant to NSX Rule 11.12(b), the price of the Cross Trade must, on
the buy side, be at least $0.01 less than the lowest displayed order to
sell on the NSX Book and is at a price equal to or less than the
Protected NBBO offer; on the sell side of the cross, the price must be
at least $0.01 greater than the highest displayed order to buy on the
NSX Book and is at a price equal to or greater than the Protected NBBO
bid.
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\46\ The Commission approved NSX Rule 11.12 in August 2006. See
footnote 39, supra.
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Rule 11.12 provides for three types of Cross Trades: A Midpoint
Cross, at which the Cross Trade is priced at the midpoint of the
Protected NBBO and improves each side of the NSX Top of Book \47\ by at
least the minimum price increment for the subject security; \48\ a
Clean Cross, in which the Cross Trade is for at least 5,000 shares with
an aggregate value of at least $100,000 and is executed at a price that
is equal to or better than each side of the NSX Top of Book and equal
to or better than the Protected NBBO; \49\ and, a Cross/Sweep, in which
the System, upon receipt of a Cross/Sweep message from a user, will
enter a Protected Sweep Order \50\ for the User's account in an amount
necessary to execute against all protected quotations that, if not
swept, would prohibit the Cross Trade from being executed by the
System. Pursuant to NSX Rule 11.12(f)(1), the Cross Trade will be
executed on the System simultaneously with the Protected Sweep Order,
unless the size of such order would exceed the size of the Cross Trade,
in which event both the Protected Sweep Order and the order for the
Cross Trade would be canceled without an execution.
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\47\ The NSX Top of Book is the best-ranked order to buy or sell
in the NSX Book. See NSX Rule 1.5T.(1).
\48\ See NSX Rule 11.12(c).
\49\ See NSX Rule 11.12(d).
\50\ A Protected Sweep Order is a limit order that instructed
the System to ``sweep'' the market with sizes equal to the order
sizes in the NSX Book and the order sizes at away trading centers.
See NSX Rule 11.11(c)(7)(i)(A).
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The Exchange has determined in its business judgment that, upon a
resumption of trading on the System, it will not support the
functionality for Users to enter a Cross into the System. This
determination is based on the Exchange's assessment of its current
market structure requirements and the technology resources needed to
support the functionality. In the event that the Exchange determines to
offer Cross Message functionality in the future, it will file a
proposed rule change pursuant to Rule 19b-4 of the Exchange Act.
In view of the determination to no longer offer Cross Message
functionality, the Exchange is proposing other conforming amendments to
its rules. First, the Exchange proposes to delete subparagraph
(c)(7)(iii) of NSX Rule 11.11, which currently states that ``[a] Sweep
Order entered as part of a Cross/Sweep message pursuant to Rule 11.12
shall be treated identically to a Sweep Order designated `Sweep and
Cancel' except as otherwise provided in Rule 11.12.'' Similarly, the
Exchange proposes to rescind in its entirety the text of NSX Rule 16.2,
Crosses, which currently provides that ``[c]rosses executed in Tape
``A'', ``B'' and ``C'' securities will not be subject to any
transaction fees.'' The elimination of the Cross Message functionality
renders this rule inapposite.
2. Statutory Basis
The Exchange's proposed rule changes are consistent with the
Exchange Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) \51\ of
the Exchange Act. Specifically, the proposed rule change is consistent
with
[[Page 70267]]
the requirement of Section 6(b)(5) \52\ of the Exchange Act that the
rules of an exchange be designed to, among other things, promote just
and equitable principles of trade, foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and 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.
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\51\ 15 U.S.C. 78f(b).
\52\ 15 U.S.C. 78f(b)(5).
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The Exchange submits that the proposed rescission of I&P.01, which
will operate to permit the re-opening of the System for quoting and
trading equity securities, fulfills the purposes of Section
6(b)(5).\53\ The Exchange's rule proposal will restore the Exchange to
the status of a fully operational national securities exchange, as it
was prior to the close of business on May 30, 2014. Notably, throughout
the period from the date that it ceased trading operations up to the
date of the instant rule filing, the Exchange has continued to maintain
its status as a registered national securities exchange and as an SRO.
It has continued its participation as a party in the national market
system plans.\54\
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\53\ 15 U.S.C. 78f(b)(5).
\54\ See footnote 13, supra.
---------------------------------------------------------------------------
Upon the resumption of trading on the System, the Exchange will
operate its marketplace pursuant to rules currently in effect, as
amended by the rule changes proposed in this rule filing. The Exchange
has completed a rigorous testing process, including tests with the SIPs
and market participants, to assure that the System continues to send
and receive quote and trade data and other information necessary to
assure the Exchange's compliance with the national market system plans.
Restoring NSX to its status as an operating Exchange will promote the
protection of investors and the public interest by providing an
additional trading venue, operating pursuant to an approved rule set,
and available to market participants and the investing public for the
trading of equity securities. The Exchange has sufficient financial and
staff resources to continue to discharge its obligations as a national
securities exchange and as an SRO. The Exchange submits that the
proposed amendment will thus further the purposes of Section 6(b)(5) of
the Act \55\ in that it will operate to promote just and equitable
principles of trade and perfect the mechanism of a free and open market
and a national market system by providing investors with the ability to
execute trades in equity securities on a regulated marketplace
operating pursuant to rules approved by the Commission and subject to
regulatory oversight.
---------------------------------------------------------------------------
\55\ 15 U.S.C. 78f(b)(5).
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Additionally, the Exchange's proposal to describe the Exchange's
use of data feeds as a part of this filing and through the adoption of
NSX Rule 11.25 is consistent with the Section 6(b)(5) of the Act.\56\
Further, the proposal removes impediments to and perfects the mechanism
of a free and open market and protects investors and the public
interest because it provides additional specificity and transparency.
The Exchange's proposal will enable investors to better assess the
quality of the Exchange's execution and routing services. The proposal
does not change the operation of the Exchange or its use of data feeds;
rather it describes how, and for what purposes, the Exchange uses the
quotes disseminated from data feeds to calculate the NBBO for a
security for purposes of Regulation NMS, Regulation SHO and various
order types that update based on changes to the applicable NBBO. The
additional transparency into the operation of the Exchange as described
in the proposal will 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.
---------------------------------------------------------------------------
\56\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange's proposed amendments to conform certain of its rules
to the planned operation of the System upon a resumption of trading are
consistent with the Section 6(b)(5) of the Act.\57\ Specifically, the
Exchange is proposing to amend NSX Rules 11.11 and 11.13, and
Interpretations and Policies .01 of Rule 11.13, to remove text relating
to Order Delivery, which will not be available to Users as a mode of
order interaction with the System upon a resumption of trading. The
Exchange is further proposing to amend Rule 11.11 to eliminate the
Auto-Ex Only Order, which relates to the handling of certain orders
when interacting with Order Delivery, and the Double Play Order, which
was an infrequently used order type that the Exchange no longer wishes
to support. The Exchange is also proposing to correct defective
numbering in Rule 11.11, which will promote clarity and ease of
reference in its rules. These proposed amendments are consistent with
Section 6(b)(5) of the Act \58\ in that they will operate to align the
Exchange's rules with the planned operation of the System upon a
resumption of trading, thereby promoting just and equitable principles
of trade and the protection of investors and the public interest.
---------------------------------------------------------------------------
\57\ 15 U.S.C. 78f(b)(5).
\58\ Id.
---------------------------------------------------------------------------
The Exchange's proposals to amend NSX Rule 11.12 to rescind the
rule text governing Cross Trades on the System, and making conforming
amendments to NSX Rules 11.11(c)(7)(iii), regarding a Cross/Sweep
Order, and 16.2, providing that Cross Trades in Tape A, B, and C
securities are not subject to transaction fees, are consistent with
Section 6(b)(5) of the Exchange Act because they will remove from the
NSX rule book provisions that address a System functionality that will
not be supported operationally upon a resumption of trading on the
System. The amendments are designed to align the Exchange's rules with
the System's planned functionality. The Exchange believes that the
amendments will further promote just and equitable principles of trade
and the protection of investors and the public interest.
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 Exchange Act. The Exchange
believes that reopening the System for the trading of equity securities
will enhance competition in the national market system by providing
investors with the opportunity to trade on a competitive trading venue
that was available to them prior to the close of business May 30, 2014.
The Exchange submits that the proposed rule amendment will thus operate
to enhance rather than burden competition in the equity securities
markets.
The Exchange's proposed rule changes to: (i) Eliminate Order
Delivery-related rule text; (ii) Eliminate the Auto-Ex Only and Double
Play Orders; (iii) eliminate the Cross Trade rule; and (iv) make other
conforming rule amendments and correct defecting numbering of certain
paragraphs of NSX Rule 11.11, have no competitive impact in that they
are designed to assure that the Exchange's rules and its System
functionality align and to promote clarity and transparency in the
Exchange's rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited or received comments on the proposed
rule change from market participants or others.
[[Page 70268]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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-NSX-2015-05 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-NSX-2015-05. 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 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-NSX-2015-05 and should be
submitted on or before December 4, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\59\
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\59\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28811 Filed 11-12-15; 8:45 am]
BILLING CODE 8011-01-P
