Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rules 11.17, Registration of Market Makers, and 11.20, Obligations of Market Makers, 1647-1651 [2016-00466]
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Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
4. Product Information—Environmental
Contraband Detection
a. Name and model number
b. Primary purpose of product
c. Physical dimensions (height × width ×
depth, in inches) of device
d. Operational dimensions (i.e., limitations to
the detection area)
e. Weight (in pounds and ounces) of device
f. Portability (e.g., fixed, portable, or
handheld)
g. Operating conditions or limitations (e.g.,
temperature, humidity, etc.)
h. Ability of the system/device to detect
metal objects
i. Types of metals that are detected by the
system
ii. Types of metals that are not detected by
the system
i. Ability of the system/device to detect nonmetal objects
i. Types of non-metal materials that can be
detected by the system/device (e.g.,
liquids, gels, plastic, wood, ceramic,
powder, paper, currency, etc.)
j. Ability of the system/device to detect other
types of contraband and related material
not specifically listed here (i.e., potential
next generation contraband detection)
k. Modes of operation (e.g., settings for
detecting different materials)
l. Number of detection areas (e.g., ability to
simultaneous detect threats)
m. Type of detector used (e.g., transmission
x-ray, active millimeter wave, pulse
induction detector, continuous wave
detector, passive, etc.)
n. Minimum size of objects that can be
detected (length × width × height in
inches, or weight in pounds and ounces)
o. Maximum size of objects that can be
detected (length × width × height in
inches, or weight in pounds and ounces)
p. Alert/alarm mechanism (e.g., alarm only,
anomaly image, full picture image, etc.)
q. Average time (in seconds) to process/
generate an alarm
r. Number of recommended operators
s. Safeguards for cyber security,
unintentional disassembly, jamming, or
intentional damage
t. Sturdiness/fragility of the technology
material
u. Ability for easy storage when not in use
v. Data management with respect to saving,
archiving, retrieving, and printing scan
information
w. Onboard memory storage (e.g., quantity of
data that can be stored on device in
number of files/alerts/days activity)
x. Power requirements (e.g., 120 volts)
y. Battery discharge time (hours of
continuous operation before needing a
charge), if applicable
z. Battery shelf life (in months), if applicable
aa. Battery recharge time (hours required to
fully charge battery after complete
discharge), if applicable
bb. Battery replacement procedure and where
it must be done (e.g., field or factory), if
applicable
cc. Availability of supplemental charger for
emergency battery charging (e.g., hand
crank, backup battery, solar, etc.), if
applicable
dd. Regulatory and Compliance safety
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requirements (e.g., FCC approved) and/or
NIJ Compliance (e.g., NIJ Standard
0602.02, and 0601.02)
ee. Radiation safety standards (e.g., ANSI,
ICRP, NCRP, EURATOM, etc.), if
applicable
ff. Length of warranty (in months) that comes
standard with the system/device and the
components that are covered
gg. Auxiliary equipment (e.g., car chargers,
emergency chargers, etc.)
hh. Manufacturer suggested retail price
(MSRP) without optional features,
accessories or service plans
ii. Availability of extended maintenance
plans
jj. Service contract costs
kk. Other information or notes that are
relevant to the system/device
5. Usability/Training
a. Types of processes used to ensure usability
of hardware and software products (e.g.,
requirements gathering, observation, task
analysis, interaction design, usability
testing, ergonomics, etc.)
b. Types of data gathered from the user
community (e.g., interviews,
observations during hands-on training,
survey, satisfaction surveys, repeat
customers, etc.) to evaluate your
products, and how often it is collected
c. Types of user-group meetings and
frequency of their occurrence
d. Categories of problems reported to vendor
and percentage of user community that
experienced them within the last three
(3) years
i. Resolution(s) to the problems identified
above
e. Hours of technology support and location
(e.g., telephone or at agency)
f. Calibration requirements (e.g., cost,
methodology, hours required)
g. Hours and type of training provided (e.g.,
on-site, web-based, pre-recorded, play
environment etc.)
6. Features and Functions
a. Types of reports that are available (e.g.,
standard information examples, extent
that reports are customizable, etc.)
b. Types of on-demand custom reports
7. Performance and Security
a. Average time to install and activate device
(in minutes, hours, or days)
b. False positive (alert generated when it
should not have been) and false negative
(alert was not generated when it should
have been) rates
c. Mean time to failure
d. Percent availability versus downtime of
the device
e. Data protection mechanism while in transit
and during storage (e.g., SSL, encryption,
password strength, etc.)
f. Types of database change record
maintenance practices for historical data
Nancy Rodriguez,
Director, National Institute of Justice.
[FR Doc. 2016–00503 Filed 1–12–16; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76851; File No. SR–EDGA–
2015–49]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change to Rules 11.17,
Registration of Market Makers, and
11.20, Obligations of Market Makers
January 7, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
24, 2015, EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend Rules 11.17, Registration of
Market Makers, and 11.20, Obligations
of Market Makers, in order to update
certain provisions and conform to the
rules of BATS Exchange, Inc. (‘‘BZX’’),
BATS Y-Exchange, Inc. (‘‘BYX’’), EDGX
Exchange, Inc.’s (‘‘EDGX’’) equity
options trading platform (‘‘EDGX
Options’’), BZX’s equity options trading
platform (‘‘BZX Options’’), and the
Nasdaq Stock Market LLC (‘‘Nasdaq’’).5
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
5 See BYX and BZX Rules 11.5 and 11.8; BZX
Options Rule 22.6(d)(4), (5), and (7); EDGX Options
Rule 22.6(d)(4), (5), and (7); and Nasdaq Rules Rule
4613(a)(2)(ii), 4613(a)(2)(D) and (E).
2 17
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Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In early 2014, the Exchange and its
affiliate, EDGX received approval to
effect a merger (the ‘‘Merger’’) of the
Exchange’s parent company, Direct Edge
Holdings LLC, with BATS Global
Markets, Inc., the parent of BZX and the
BYX (together with BZX, EDGA and
EDGX, the ‘‘BGM Affiliated
Exchanges’’).6 In the context of the
Merger, the BGM Affiliated Exchanges
are working to align their rules,
retaining only intended differences
between the BGM Affiliated Exchanges.
Thus, the Exchange proposes to amend
Rules 11.17, Registration of Market
Makers, and 11.20, Obligations of
Market Makers, in order to update
certain provisions and conform to the
rules of BYX and BZX and provide a
consistent rule set across each of the
BGM Affiliated Exchanges.7 As
amended, Exchange Rules 11.17 and
11.20 would be identical to BYX and
BZX Rules 11.5 and 11.8 but for
different cross references to Exchange
Rules that are due to the different rule
numbering amongst the Exchange, BYX
and BZX.8
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Rule 11.17, Registration of Market
Makers
Like BYX and BZX Rule 11.5,
Exchange Rule 11.17 governs the
6 See Securities Exchange Act Release No. 71449
(January 30, 2014), 79 FR 6961 (February 5, 2014)
(SR–EDGX–2013–43; SR–EDGA–2013–34).
7 The Exchange notes that EDGX intends to file
an identical proposal with the Commission to
amend its Rules 11.17 and 11.20 to update certain
provisions and conform to BYX and BZX Rules 11.5
and 11.8. The Exchange notes that BYX and BZX
intend to file proposed rule changes to make related
changes to their Rules 11.5 and 11.8 to conform
with the changes proposed herein.
8 The Exchange notes that the substance of the
rules that are cross-referenced in Rule 11.17 and
11.20 are identical or substantially similar to the
corresponding BYX and BZX Rules.
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registration of Market Makers on the
Exchange. In particular, paragraphs (a)
and (b) of Rule 11.17 set forth the
application process for Members
seeking to register as Market Makers on
the Exchange. To harmonize Exchange
Rule 11.17(a) with BYX and BZX Rule
11.5(a), the Exchange proposes to
replace the word ‘‘under’’ with ‘‘of’’
when referencing Rule 15c3–1 of the
Exchange Act. But for different crossreferencing to Exchange rules that are
identical or substantially similar to
corresponding BYX and BZX rules, this
change would make Exchange Rule
11.17 identical to BYX and BZX Rule
11.5.
The Exchange also proposes to amend
paragraphs (c)(4) and (e) to update rule
cross-references to reflect the
renumbering of certain rules as part of
an earlier exchange rule filing.9 Within
paragraph (c)(4) to Rule 11.17, the
Exchange proposes to replace reference
to Rule 11.19(b)(5) with Rule
11.18(b)(5). The Exchange also proposes
to amend paragraph (e) to Rule 11.17 to
replace references to Rules 11.18, 11.19,
and 11.20 with Rules 11.17, 11.18, and
11.19.
Rule 11.20, Obligations of Market
Makers
Like BYX and BZX Rules 11.8,
Exchange Rule 11.20 sets forth the
obligations of Market Makers. In short,
Members who are registered as Market
Makers in one or more securities traded
on the Exchange must engage in a
course of dealings for their own account
to assist in the maintenance, insofar as
reasonably practicable, of fair and
orderly markets on the Exchange in
accordance with these Rules. The
Exchange proposes to make the
following changes to harmonize Rule
11.20(a), (c), and (d) with BYX and BZX
Rule 11.8:
• Amend subparagraph (a)(5) to
replace in the second sentence the word
‘‘entering’’ with ‘‘entry’’;
• amend paragraph (c) to replace in
the second sentence the word ‘‘limits’’
with ‘‘will limit’’;
• amend paragraph (d)(1) to: (i) add
the phrase ‘‘is identified to the
Exchange as the interest meeting the
obligation and’’ to the first sentence; (ii)
add the word ‘‘either’’ to the fourth
sentence; and (iii) add the phrase ‘‘or by
identifying existing interest on the
EDGA Book that will satisfy this
obligation’’ to the last sentence; and
• amend paragraphs (d)(2)(A) and (B)
to add to the last sentence of each
9 See Securities Exchange Act Release No. 73592
(November 13, 2014), 79 FR 68937 (November 19,
2014) (SR–EDGA–2014–20).
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paragraph the phrase ‘‘, or must be able
to identify to the Exchange current
resting interest that satisfies the TwoSided Obligation.’’
The Exchange also proposes to amend
Rule 11.20(d)(1) to clarify the scenarios
in which a Market Maker’s two-sided
quoting obligation may be temporarily
suspended or alleviated. The provisions
proposed to be added are each
substantially similar to the rules of BZX
Options and EDGX Options.10 Proposed
Rule 11.20(d)(1)(A) addresses a Market
Maker’s ability to satisfy the quoting
standard in the event of a technical
failure or system limitation. In
particular, if a technical failure or
limitation of a system of the Exchange
prevents the Market Maker from
maintaining or communicating to the
Exchange timely and accurate quotes in
each security in which a Member is
registered as a Market Maker, the
duration of such failure shall not be
considered in determining whether the
Market Maker has satisfied the quoting
standard with respect to that security.11
In addition, proposed Rule
11.20(d)(1)(B) addresses a Market
Maker’s ability to satisfy the quoting
standard during a halt, suspension or
pause. A Market Maker’s quoting
obligation under Rule 11.20 would be
suspended during a trading halt,
suspension, or pause in the security.12
A Market Maker’s quoting obligation
would re-commence after the first
regular way transaction on the primary
listing market following such halt,
suspension, or pause in the security, as
reported by the responsible single plan
processor.13 A Market Maker’s quoting
obligation would also be suspended
under Rule 11.20(d)(1)(B) for the
duration that an NMS stock is in a Limit
State or a Straddle State declared
pursuant to the Plan to Address
Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS
under the Act (the ‘‘Limit Up-Limit
Down Plan’’ or ‘‘Plan’’).14
10 See BZX Options Rule 22.6(d)(4), (5), and (7).
See also EDGX Options Rule 22.6(d)(4), (5), and (7).
11 See Securities Exchange Act Release No. 71229
(December 18, 2013), 78 FR 77736 (December 24,
2013) (SR–BATS–2013–062) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
to Modify BATS Options Market Maker Continuous
Quoting Obligation Rules).
12 The Exchange notes that proposed Rule
11.20(d)(1)(B) would differ from BZX Options and
EDGX Options Rules 22.6(d)(5) in so far as
proposed Rule 11.20(d)(1)(B) references ‘‘security’’
rather than ‘‘underlying security’’ in order to
conform to the equities markets.
13 See also Nasdaq Stock Market LLC (‘‘Nasdaq’’)
Rule 4613(a)(2)(ii).
14 See EDGA and EDGX Rules 11.16(e). See also
BZX and BYX Rules 11.18(e). Securities Exchange
Act Release No. 67091 (May 31, 2012), 77 FR 33498
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Under proposed Rule 11.20(d)(1)(C),
the Exchange would have the ability to
consider other exceptions to the TwoSided Obligation based on demonstrated
legal or regulatory requirements or other
mitigating circumstances. For example,
a Market Maker must implement the
pre-trade and other risk controls
required by Rule 15c3–5 of the Act (the
‘‘Market Access Rule’’) with respect to
all of their quoting activity. These pretrade risk controls must be reasonably
designed to systemically limit financial
exposure and ensure compliance with
all regulatory requirements. The risk
controls a Market Maker may have in
place to comply with the Market Access
Rule may prevent that Market Maker
from satisfying its quoting obligation. In
such case, the Exchange would consider
whether the Market Maker’s failure to
satisfy its quoting obligation due to its
compliance with the Market Access
Rule was proper.
Lastly, the Exchange proposes to
amend its definitions of ‘‘Designated
Percentage’’ and ‘‘Defined Limit’’ under
Rules 11.8(d)(2)(D) and (E) respectively
to be substantially similar to Nasdaq
Rules 4613(a)(2)(D) and (E). The pricing
obligations applicable to quotations of
Market Makers are based on the
Designated Percentage and the Defined
Limit, which are determined based on
the applicable trigger percentage. The
amended definitions would include
additional specificity and updated
descriptions of the categories of
securities that are subject to those
percentages. Notably, the Exchange
proposes to replace references to the
terms Original Circuit Breaker Securities
(defined below) with Tier 1 or Tier 2
NMS Stocks under the Limit Up-Limit
Down Plan (also defined below), as the
Exchange believes these terms more
accurately describe the securities to
which a certain percentage applies. The
Exchange is not proposing new
percentages governing a Market Maker’s
quoting obligations; it is seeking to
adopt revised definitions that are
substantially similar to that of Nasdaq in
order to provide consistent rules with
regard to Market Maker’s quoting
obligations.15 The Exchange believes
consistent definitions would avoid
confusion amongst market participants
that make markets on multiple venues.
The Exchange currently defines
Designated Percentage under Rule
11.20(d)(2)(D) as 8% with respect to
securities included in the S&P 500®
Index and the Russell 1000® Index, as
well as a pilot list of Exchange Traded
Products for securities subject to an
individual stock pause trigger under the
applicable rules of a primary listing
market (‘‘Original Circuit Breaker
Securities’’). For times during Regular
Trading Hours 16 when stock pause
triggers are not in effect under the rules
of the primary listing market, the
Designated Percentage shall be 20% for
Original Circuit Breaker Securities.
Under Rule 11.20(d)(2)(E), the
Designated Percentage shall be 28% for
all NMS securities that are not Original
Circuit Breaker Securities with a price
equal to or greater than $1.00, and 30%
for all NMS securities that are not
Original Circuit Breaker Securities with
a price less than $1.00.
As amended, Designated Percentage
would be defined solely under
Exchange Rule 11.20(d)(2)(D) as 8% for
Tier 1 NMS Stocks under the Limit UpLimit Down Plan,17 28% for Tier 2 NMS
Stocks under the Limit Up-Limit Down
Plan 18 with a price equal to or greater
than $1.00, and 30% for Tier 2 NMS
Stocks under the Limit Up-Limit Down
Plan with a price less than $1.00, except
that between 9:30 a.m. and 9:45 a.m.
and between 3:35 p.m. and the close of
trading, when Exchange Rule 11.16(e) is
not in effect, the Designated Percentage
shall be 20% for Tier 1 NMS Stocks
under the Limit Up-Limit Down Plan,
28% for Tier 2 NMS Stocks under the
Limit Up-Limit Down Plan with a price
equal to or greater than $1.00, and 30%
for Tier 2 NMS Stocks under the Limit
Up-Limit Down Plan with a price less
than $1.00.
The Exchange currently defines
Defined Limit under Rule 11.20(d)(2)(F)
and (G) as 9.5% for Original Circuit
Breaker Securities. For times during
Regular Trading Hours when stock
pause triggers are not in effect under the
rules of the primary listing market, the
(June 6, 2012) (the ‘‘Limit Up-Limit Down
Release’’).
15 The Exchange proposed to categorize securities
included in the S&P 500® Index, Russell 1000®
Index, and a pilot list of Exchange Traded Products
as Tier 1 NMS Stocks under the under the Limit
Up-Limit Down Plan. Securities not included in the
S&P 500® Index, Russell 1000® Index, or in the
pilot list of Exchange Traded Products would be
categorized as Tier 2 NMS Stocks under the under
the Limit Up-Limit Down Plan. Nasdaq Rule
4613(a)(2)(D) and (E) references securities as
included in the S&P 500® Index, Russell 1000®
Index, and a pilot list of Exchange Traded Products
as such and those that are not as Tier 2 NMS Stocks.
The Exchange notes that BYX and BZX also intent
to amend their definitions of Designated Percentage
and Defined Limit to mirror that proposed herein.
16 See Exchange Rule 1.5(y).
17 Tier 1 NMS Stocks under the Limit Up-Limit
Down Plan are securities that are included in the
S&P 500® Index, Russell 1000® Index, and a pilot
list of Exchange Traded Products. See the Limit UpLimit Down Release supra note 14.
18 Tier 2 NMS Stocks under the Limit Up-Limit
Down Plan are securities that are not included in
the S&P 500® Index, Russell 1000® Index, and a
pilot list of Exchange Traded Products. Id.
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1649
Defined Limit shall be 21.5% for
Original Circuit Breaker Securities. The
Defined Limit is 29.5% for all NMS
securities that are not Original Circuit
Breaker Securities with a price equal to
or greater than $1.00, and 31.5% for all
NMS securities that are not Original
Circuit Breaker Securities with a price
less than $1.00.
As amended, subparagraphs (d)(2)(F)
and (G) of Exchange Rule 11.20 would
be deleted and Defined Limit would be
defined solely under Exchange Rule
11.20(d)(2)(E) as 9.5% for Tier 1 NMS
Stocks under the Limit Up-Limit Down
Plan, 29.5% for Tier 2 NMS Stocks
under the Limit Up-Limit Down Plan
with a price equal to or greater than
$1.00, and 31.5% for Tier 2 NMS Stocks
under the Limit Up-Limit Down Plan
with a price less than $1.00, except that
between 9:30 a.m. and 9:45 a.m. and
between 3:35 p.m. and the close of
trading, when Exchange Rule 11.16(e) is
not in effect, the Defined Limit shall be
21.5% for Tier 1 NMS Stocks under the
Limit Up-Limit Down Plan, 29.5% for
Tier 2 NMS Stocks under the Limit UpLimit Down Plan with a price equal to
or greater than $1.00, and 31.5% for Tier
2 NMS Stocks under the Limit Up-Limit
Down Plan with a price less than $1.00.
Exchange Rule 11.8(d)(2)(E) also states
that for times during Regular Trading
Hours when stock pause triggers are not
in effect under the rules of the primary
listing market, the Defined Limit will be
21.5% for securities included in the S&P
500® Index, Russell 1000® Index, and a
pilot list of Exchange Traded Products.
The Defined Limit will remain the same
throughout Regular Trading Hours for
all other NMS stocks.
The Exchange proposes to delete
Interpretation and Policy .01 to Rule
11.20 as its content is not included in
BYX and BZX Rules 11.8 and its
requirement to furnished records to the
Exchange are duplicative with current
Exchange Rule 4.2.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder that
are applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the
Act.19 Specifically, the proposed change
is consistent with Section 6(b)(5) of the
Act,20 because it is designed to promote
just and equitable principles of trade, to
remove impediments to, and perfect the
mechanism of, a free and open market
and a national market system, and, in
19 15
20 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
13JAN1
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Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
general, to protect investors and the
public interest. As mentioned above, the
proposed rule changes, combined with
the planned filing for the BYX, BZX,
and EDGX would allow the BGM
Affiliated Exchanges to provide a
consistent set of rules as it relates to the
registration and obligations of Market
Makers. Consistent rules, in turn, will
simplify the regulatory requirements for
Market Makers on the Exchange that are
also Market Makers on EDGX, BZX,
and/or BYX. The proposed rule change
would provide greater harmonization
between rules of similar purpose on the
BGM Affiliated Exchanges, resulting in
greater uniformity and less burdensome
and more efficient regulatory
compliance and understanding of
Exchange Rules. As such, the proposed
rule change would foster cooperation
and coordination with persons engaged
in facilitating transactions in securities
and would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. Similarly, the Exchange also
believes that, by harmonizing the rules
across each BGM Affiliated Exchange,
the proposal will enhance the
Exchange’s ability to fairly and
efficiently regulate its Market Makers by
utilizing a consistent rule set and
obligations across each of the BGM
Affiliated Exchanges. Consistent rules
would enable the Exchange to apply
identical standards to that of its
affiliates, alleviating confusion by
Market Makers on who may also be
registered as such on BYX, BZX, or
EDGX, thereby promoting just and
equitable principles of trade in
accordance with Section 6(b)(5) of the
Act.21
The Exchange also believes the
proposed amendments to Rule 11.8(d)
are consistent with Section 6(b)(5) of the
Act,22 because they are designed to
promote just and equitable principles of
trade, to remove impediments to, and
perfect the mechanism of, a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
proposed amendments to Rule
11.8(d)(1) are meant to clarify the
scenarios in which a Market Maker’s
two-sided quoting obligation may be
temporarily suspended or alleviated.
The provisions proposed to be added
are each substantially similar to the
rules of the BZX Options, EDGX
Options and Nasdaq.23 The Exchange
believes it is appropriate to have
consistent rules across its equities and
21 Id.
22 15
U.S.C. 78f(b)(5).
supra notes 10 and 13.
23 See
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options platforms. Consistent rules
would aid in alleviating confusion
amongst those that are Members on both
platforms. The Exchange believes it is
reasonable to suspend or alleviate a
Market Maker’s quoting obligations in
the event of a technical or system
limitation, during a trading halt,
suspension or pause, as well as where
demonstrated legal or regulatory
requirements prevent the Market Maker
from quoting. In each scenario, the
Exchange will review the reasons
behind the Market Maker inability to
quote for compliance with the Rule. The
Exchange is not proposing new
percentages governing a Market Maker’s
quoting obligations; it is seeking to
adopt revised definitions that are
substantially similar to those of Nasdaq
in order to provide a consistent rules
with regard to Market Makers quoting
obligations.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the act. To the
contrary, allowing the Exchange to
implement substantively identical rules
across each of the BGM Affiliated
Exchanges regarding Market Maker
registration and their obligations does
not present any competitive issues, but
rather is designed to provide greater
harmonization among Exchange, BYX,
BZX, and EDGX rules of similar
purpose. The proposed rule change
should, therefore, result in less
burdensome and more efficient
regulatory compliance and
understanding of Exchange Rules for
common members of the BGM Affiliated
Exchanges and an enhanced ability of
the BGM Affiliated Exchanges to fairly
and efficiently regulate Market Makers.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
B. impose any significant burden on
competition; and
C. become operative for 30 days from
the date on which it was filed, or such
PO 00000
Frm 00053
Fmt 4703
Sfmt 4703
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 24 and Rule 19b–4(f)(6) 25
thereunder. The Exchange has given the
Commission written notice of its intent
to file the proposed rule change, along
with a brief description and text of the
proposed rule change, at least five
business days prior to the date of filing
of the proposed rule change,
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
EDGA–2015–49 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 No.
SR–EDGA–2015–49. 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
24 15
25 17
E:\FR\FM\13JAN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
13JAN1
Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–EDGA–
2015–49 and should be submitted on or
before February 3, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–00466 Filed 1–12–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76853; File No. SR–EDGX–
2015–68]
Self-Regulatory Organizations; EDGX
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change to Rules 11.17,
Registration of Market Makers, and
11.20, Obligations of Market Makers
asabaliauskas on DSK5VPTVN1PROD with NOTICES
January 7, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
24, 2015, EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
16:59 Jan 12, 2016
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend Rules 11.17, Registration of
Market Makers, and 11.20, Obligations
of Market Makers, in order to update
certain provisions and conform to the
rules of BATS Exchange, Inc. (‘‘BZX’’),
BATS Y-Exchange, Inc. (‘‘BYX’’),
Exchange’s equity options trading
platform (‘‘EDGX Options’’), BZX’s
equity options trading platform (‘‘BZX
Options’’), and the Nasdaq Stock Market
LLC (‘‘Nasdaq’’).5
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In early 2014, the Exchange and its
affiliate, EDGA Exchange, Inc.
(‘‘EDGA’’) received approval to effect a
merger (the ‘‘Merger’’) of the Exchange’s
parent company, Direct Edge Holdings
LLC, with BATS Global Markets, Inc.,
the parent of BZX and the BYX (together
with BZX, EDGA and EDGX, the ‘‘BGM
Affiliated Exchanges’’).6 In the context
of the Merger, the BGM Affiliated
Exchanges are working to align their
rules, retaining only intended
differences between the BGM Affiliated
Exchanges. Thus, the Exchange
proposes to amend Rules 11.17,
5 See BYX and BZX Rules 11.5 and 11.8; BZX
Options Rule 22.6(d)(4), (5), and (7); EDGX Options
Rule 22.6(d)(4), (5), and (7); and Nasdaq Rules Rule
4613(a)(2)(ii), 4613(a)(2)(D) and (E).
6 See Securities Exchange Act Release No. 71449
(January 30, 2014), 79 FR 6961 (February 5, 2014)
(SR–EDGX–2013–43; SR–EDGA–2013–34).
26 17
VerDate Sep<11>2014
solicit comments on the proposed rule
change from interested persons.
Jkt 238001
PO 00000
Frm 00054
Fmt 4703
Sfmt 4703
1651
Registration of Market Makers, and
11.20, Obligations of Market Makers, in
order to update certain provisions and
conform to the rules of BYX and BZX
and provide a consistent rule set across
each of the BGM Affiliated Exchanges.7
As amended, Exchange Rules 11.17 and
11.20 would be identical to BYX and
BZX Rules 11.5 and 11.8 but for
different cross references to Exchange
Rules that are due to the different rule
numbering amongst the Exchange, BYX
and BZX.8
Rule 11.17, Registration of Market
Makers
Like BYX and BZX Rule 11.5,
Exchange Rule 11.17 governs the
registration of Market Makers on the
Exchange. In particular, paragraphs (a)
and (b) of Rule 11.17 set forth the
application process for Members
seeking to register as Market Makers on
the Exchange. To harmonize Exchange
Rule 11.17(a) with BYX and BZX Rule
11.5(a), the Exchange proposes to
replace the word ‘‘under’’ with ‘‘of’’
when referencing Rule 15c3–1 of the
Exchange Act. But for different crossreferencing to Exchange rules that are
identical or substantially similar to
corresponding BYX and BZX rules, this
change would make Exchange Rule
11.17 identical to BYX and BZX Rule
11.5.
The Exchange also proposes to amend
paragraphs (c)(4) and (e) to update rule
cross-references to reflect the
renumbering of certain rules as part of
an earlier exchange rule filing.9 Within
paragraph (c)(4) to Rule 11.17, the
Exchange proposes to replace reference
to Rule 11.19(b)(5) with Rule
11.18(b)(5). The Exchange also proposes
to amend paragraph (e) to Rule 11.17 to
replace references to Rules 11.18, 11.19,
and 11.20 with Rules 11.17, 11.18, and
11.19.
Rule 11.20, Obligations of Market
Makers
Like BYX and BZX Rules 11.8,
Exchange Rule 11.20 sets forth the
obligations of Market Makers. In short,
Members who are registered as Market
Makers in one or more securities traded
7 The Exchange notes that EDGA intends to file
an identical proposal with the Commission to
amend its Rules 11.17 and 11.20 to update certain
provisions and conform to BYX and BZX Rules 11.5
and 11.8. The Exchange notes that BYX and BZX
intend to file proposed rule changes to make related
changes to their Rules 11.5 and 11.8 to conform
with the changes proposed herein.
8 The Exchange notes that the substance of the
rules that are cross-referenced in Rule 11.17 and
11.20 are identical or substantially similar to the
corresponding BYX and BZX Rules.
9 See Securities Exchange Act Release No. 73468
(October 29, 2014), 79 FR 65450 (November 4, 2014)
(SR–EDGX–2014–18).
E:\FR\FM\13JAN1.SGM
13JAN1
]]>Agencies
[Federal Register Volume 81, Number 8 (Wednesday, January 13, 2016)]
[Notices]
[Pages 1647-1651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00466]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76851; File No. SR-EDGA-2015-49]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rules
11.17, Registration of Market Makers, and 11.20, Obligations of Market
Makers
January 7, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 24, 2015, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend Rules 11.17, Registration of
Market Makers, and 11.20, Obligations of Market Makers, in order to
update certain provisions and conform to the rules of BATS Exchange,
Inc. (``BZX''), BATS Y-Exchange, Inc. (``BYX''), EDGX Exchange, Inc.'s
(``EDGX'') equity options trading platform (``EDGX Options''), BZX's
equity options trading platform (``BZX Options''), and the Nasdaq Stock
Market LLC (``Nasdaq'').\5\
---------------------------------------------------------------------------
\5\ See BYX and BZX Rules 11.5 and 11.8; BZX Options Rule
22.6(d)(4), (5), and (7); EDGX Options Rule 22.6(d)(4), (5), and
(7); and Nasdaq Rules Rule 4613(a)(2)(ii), 4613(a)(2)(D) and (E).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
[[Page 1648]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In early 2014, the Exchange and its affiliate, EDGX received
approval to effect a merger (the ``Merger'') of the Exchange's parent
company, Direct Edge Holdings LLC, with BATS Global Markets, Inc., the
parent of BZX and the BYX (together with BZX, EDGA and EDGX, the ``BGM
Affiliated Exchanges'').\6\ In the context of the Merger, the BGM
Affiliated Exchanges are working to align their rules, retaining only
intended differences between the BGM Affiliated Exchanges. Thus, the
Exchange proposes to amend Rules 11.17, Registration of Market Makers,
and 11.20, Obligations of Market Makers, in order to update certain
provisions and conform to the rules of BYX and BZX and provide a
consistent rule set across each of the BGM Affiliated Exchanges.\7\ As
amended, Exchange Rules 11.17 and 11.20 would be identical to BYX and
BZX Rules 11.5 and 11.8 but for different cross references to Exchange
Rules that are due to the different rule numbering amongst the
Exchange, BYX and BZX.\8\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
\7\ The Exchange notes that EDGX intends to file an identical
proposal with the Commission to amend its Rules 11.17 and 11.20 to
update certain provisions and conform to BYX and BZX Rules 11.5 and
11.8. The Exchange notes that BYX and BZX intend to file proposed
rule changes to make related changes to their Rules 11.5 and 11.8 to
conform with the changes proposed herein.
\8\ The Exchange notes that the substance of the rules that are
cross-referenced in Rule 11.17 and 11.20 are identical or
substantially similar to the corresponding BYX and BZX Rules.
---------------------------------------------------------------------------
Rule 11.17, Registration of Market Makers
Like BYX and BZX Rule 11.5, Exchange Rule 11.17 governs the
registration of Market Makers on the Exchange. In particular,
paragraphs (a) and (b) of Rule 11.17 set forth the application process
for Members seeking to register as Market Makers on the Exchange. To
harmonize Exchange Rule 11.17(a) with BYX and BZX Rule 11.5(a), the
Exchange proposes to replace the word ``under'' with ``of'' when
referencing Rule 15c3-1 of the Exchange Act. But for different cross-
referencing to Exchange rules that are identical or substantially
similar to corresponding BYX and BZX rules, this change would make
Exchange Rule 11.17 identical to BYX and BZX Rule 11.5.
The Exchange also proposes to amend paragraphs (c)(4) and (e) to
update rule cross-references to reflect the renumbering of certain
rules as part of an earlier exchange rule filing.\9\ Within paragraph
(c)(4) to Rule 11.17, the Exchange proposes to replace reference to
Rule 11.19(b)(5) with Rule 11.18(b)(5). The Exchange also proposes to
amend paragraph (e) to Rule 11.17 to replace references to Rules 11.18,
11.19, and 11.20 with Rules 11.17, 11.18, and 11.19.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 73592 (November 13,
2014), 79 FR 68937 (November 19, 2014) (SR-EDGA-2014-20).
---------------------------------------------------------------------------
Rule 11.20, Obligations of Market Makers
Like BYX and BZX Rules 11.8, Exchange Rule 11.20 sets forth the
obligations of Market Makers. In short, Members who are registered as
Market Makers in one or more securities traded on the Exchange must
engage in a course of dealings for their own account to assist in the
maintenance, insofar as reasonably practicable, of fair and orderly
markets on the Exchange in accordance with these Rules. The Exchange
proposes to make the following changes to harmonize Rule 11.20(a), (c),
and (d) with BYX and BZX Rule 11.8:
Amend subparagraph (a)(5) to replace in the second
sentence the word ``entering'' with ``entry'';
amend paragraph (c) to replace in the second sentence the
word ``limits'' with ``will limit'';
amend paragraph (d)(1) to: (i) add the phrase ``is
identified to the Exchange as the interest meeting the obligation and''
to the first sentence; (ii) add the word ``either'' to the fourth
sentence; and (iii) add the phrase ``or by identifying existing
interest on the EDGA Book that will satisfy this obligation'' to the
last sentence; and
amend paragraphs (d)(2)(A) and (B) to add to the last
sentence of each paragraph the phrase ``, or must be able to identify
to the Exchange current resting interest that satisfies the Two-Sided
Obligation.''
The Exchange also proposes to amend Rule 11.20(d)(1) to clarify the
scenarios in which a Market Maker's two-sided quoting obligation may be
temporarily suspended or alleviated. The provisions proposed to be
added are each substantially similar to the rules of BZX Options and
EDGX Options.\10\ Proposed Rule 11.20(d)(1)(A) addresses a Market
Maker's ability to satisfy the quoting standard in the event of a
technical failure or system limitation. In particular, if a technical
failure or limitation of a system of the Exchange prevents the Market
Maker from maintaining or communicating to the Exchange timely and
accurate quotes in each security in which a Member is registered as a
Market Maker, the duration of such failure shall not be considered in
determining whether the Market Maker has satisfied the quoting standard
with respect to that security.\11\
---------------------------------------------------------------------------
\10\ See BZX Options Rule 22.6(d)(4), (5), and (7). See also
EDGX Options Rule 22.6(d)(4), (5), and (7).
\11\ See Securities Exchange Act Release No. 71229 (December 18,
2013), 78 FR 77736 (December 24, 2013) (SR-BATS-2013-062) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Modify BATS Options Market Maker Continuous Quoting Obligation
Rules).
---------------------------------------------------------------------------
In addition, proposed Rule 11.20(d)(1)(B) addresses a Market
Maker's ability to satisfy the quoting standard during a halt,
suspension or pause. A Market Maker's quoting obligation under Rule
11.20 would be suspended during a trading halt, suspension, or pause in
the security.\12\ A Market Maker's quoting obligation would re-commence
after the first regular way transaction on the primary listing market
following such halt, suspension, or pause in the security, as reported
by the responsible single plan processor.\13\ A Market Maker's quoting
obligation would also be suspended under Rule 11.20(d)(1)(B) for the
duration that an NMS stock is in a Limit State or a Straddle State
declared pursuant to the Plan to Address Extraordinary Market
Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the
``Limit Up-Limit Down Plan'' or ``Plan'').\14\
---------------------------------------------------------------------------
\12\ The Exchange notes that proposed Rule 11.20(d)(1)(B) would
differ from BZX Options and EDGX Options Rules 22.6(d)(5) in so far
as proposed Rule 11.20(d)(1)(B) references ``security'' rather than
``underlying security'' in order to conform to the equities markets.
\13\ See also Nasdaq Stock Market LLC (``Nasdaq'') Rule
4613(a)(2)(ii).
\14\ See EDGA and EDGX Rules 11.16(e). See also BZX and BYX
Rules 11.18(e). Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down
Release'').
---------------------------------------------------------------------------
[[Page 1649]]
Under proposed Rule 11.20(d)(1)(C), the Exchange would have the
ability to consider other exceptions to the Two-Sided Obligation based
on demonstrated legal or regulatory requirements or other mitigating
circumstances. For example, a Market Maker must implement the pre-trade
and other risk controls required by Rule 15c3-5 of the Act (the
``Market Access Rule'') with respect to all of their quoting activity.
These pre-trade risk controls must be reasonably designed to
systemically limit financial exposure and ensure compliance with all
regulatory requirements. The risk controls a Market Maker may have in
place to comply with the Market Access Rule may prevent that Market
Maker from satisfying its quoting obligation. In such case, the
Exchange would consider whether the Market Maker's failure to satisfy
its quoting obligation due to its compliance with the Market Access
Rule was proper.
Lastly, the Exchange proposes to amend its definitions of
``Designated Percentage'' and ``Defined Limit'' under Rules
11.8(d)(2)(D) and (E) respectively to be substantially similar to
Nasdaq Rules 4613(a)(2)(D) and (E). The pricing obligations applicable
to quotations of Market Makers are based on the Designated Percentage
and the Defined Limit, which are determined based on the applicable
trigger percentage. The amended definitions would include additional
specificity and updated descriptions of the categories of securities
that are subject to those percentages. Notably, the Exchange proposes
to replace references to the terms Original Circuit Breaker Securities
(defined below) with Tier 1 or Tier 2 NMS Stocks under the Limit Up-
Limit Down Plan (also defined below), as the Exchange believes these
terms more accurately describe the securities to which a certain
percentage applies. The Exchange is not proposing new percentages
governing a Market Maker's quoting obligations; it is seeking to adopt
revised definitions that are substantially similar to that of Nasdaq in
order to provide consistent rules with regard to Market Maker's quoting
obligations.\15\ The Exchange believes consistent definitions would
avoid confusion amongst market participants that make markets on
multiple venues.
---------------------------------------------------------------------------
\15\ The Exchange proposed to categorize securities included in
the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot
list of Exchange Traded Products as Tier 1 NMS Stocks under the
under the Limit Up-Limit Down Plan. Securities not included in the
S&P 500[supreg] Index, Russell 1000[supreg] Index, or in the pilot
list of Exchange Traded Products would be categorized as Tier 2 NMS
Stocks under the under the Limit Up-Limit Down Plan. Nasdaq Rule
4613(a)(2)(D) and (E) references securities as included in the S&P
500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of
Exchange Traded Products as such and those that are not as Tier 2
NMS Stocks. The Exchange notes that BYX and BZX also intent to amend
their definitions of Designated Percentage and Defined Limit to
mirror that proposed herein.
---------------------------------------------------------------------------
The Exchange currently defines Designated Percentage under Rule
11.20(d)(2)(D) as 8% with respect to securities included in the S&P
500[supreg] Index and the Russell 1000[supreg] Index, as well as a
pilot list of Exchange Traded Products for securities subject to an
individual stock pause trigger under the applicable rules of a primary
listing market (``Original Circuit Breaker Securities''). For times
during Regular Trading Hours \16\ when stock pause triggers are not in
effect under the rules of the primary listing market, the Designated
Percentage shall be 20% for Original Circuit Breaker Securities. Under
Rule 11.20(d)(2)(E), the Designated Percentage shall be 28% for all NMS
securities that are not Original Circuit Breaker Securities with a
price equal to or greater than $1.00, and 30% for all NMS securities
that are not Original Circuit Breaker Securities with a price less than
$1.00.
---------------------------------------------------------------------------
\16\ See Exchange Rule 1.5(y).
---------------------------------------------------------------------------
As amended, Designated Percentage would be defined solely under
Exchange Rule 11.20(d)(2)(D) as 8% for Tier 1 NMS Stocks under the
Limit Up-Limit Down Plan,\17\ 28% for Tier 2 NMS Stocks under the Limit
Up-Limit Down Plan \18\ with a price equal to or greater than $1.00,
and 30% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a
price less than $1.00, except that between 9:30 a.m. and 9:45 a.m. and
between 3:35 p.m. and the close of trading, when Exchange Rule 11.16(e)
is not in effect, the Designated Percentage shall be 20% for Tier 1 NMS
Stocks under the Limit Up-Limit Down Plan, 28% for Tier 2 NMS Stocks
under the Limit Up-Limit Down Plan with a price equal to or greater
than $1.00, and 30% for Tier 2 NMS Stocks under the Limit Up-Limit Down
Plan with a price less than $1.00.
---------------------------------------------------------------------------
\17\ Tier 1 NMS Stocks under the Limit Up-Limit Down Plan are
securities that are included in the S&P 500[supreg] Index, Russell
1000[supreg] Index, and a pilot list of Exchange Traded Products.
See the Limit Up-Limit Down Release supra note 14.
\18\ Tier 2 NMS Stocks under the Limit Up-Limit Down Plan are
securities that are not included in the S&P 500[supreg] Index,
Russell 1000[supreg] Index, and a pilot list of Exchange Traded
Products. Id.
---------------------------------------------------------------------------
The Exchange currently defines Defined Limit under Rule
11.20(d)(2)(F) and (G) as 9.5% for Original Circuit Breaker Securities.
For times during Regular Trading Hours when stock pause triggers are
not in effect under the rules of the primary listing market, the
Defined Limit shall be 21.5% for Original Circuit Breaker Securities.
The Defined Limit is 29.5% for all NMS securities that are not Original
Circuit Breaker Securities with a price equal to or greater than $1.00,
and 31.5% for all NMS securities that are not Original Circuit Breaker
Securities with a price less than $1.00.
As amended, subparagraphs (d)(2)(F) and (G) of Exchange Rule 11.20
would be deleted and Defined Limit would be defined solely under
Exchange Rule 11.20(d)(2)(E) as 9.5% for Tier 1 NMS Stocks under the
Limit Up-Limit Down Plan, 29.5% for Tier 2 NMS Stocks under the Limit
Up-Limit Down Plan with a price equal to or greater than $1.00, and
31.5% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a
price less than $1.00, except that between 9:30 a.m. and 9:45 a.m. and
between 3:35 p.m. and the close of trading, when Exchange Rule 11.16(e)
is not in effect, the Defined Limit shall be 21.5% for Tier 1 NMS
Stocks under the Limit Up-Limit Down Plan, 29.5% for Tier 2 NMS Stocks
under the Limit Up-Limit Down Plan with a price equal to or greater
than $1.00, and 31.5% for Tier 2 NMS Stocks under the Limit Up-Limit
Down Plan with a price less than $1.00. Exchange Rule 11.8(d)(2)(E)
also states that for times during Regular Trading Hours when stock
pause triggers are not in effect under the rules of the primary listing
market, the Defined Limit will be 21.5% for securities included in the
S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of
Exchange Traded Products. The Defined Limit will remain the same
throughout Regular Trading Hours for all other NMS stocks.
The Exchange proposes to delete Interpretation and Policy .01 to
Rule 11.20 as its content is not included in BYX and BZX Rules 11.8 and
its requirement to furnished records to the Exchange are duplicative
with current Exchange Rule 4.2.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6(b) of the Act.\19\
Specifically, the proposed change is consistent with Section 6(b)(5) of
the Act,\20\ because it is designed to promote just and equitable
principles of trade, to remove impediments to, and perfect the
mechanism of, a free and open market and a national market system, and,
in
[[Page 1650]]
general, to protect investors and the public interest. As mentioned
above, the proposed rule changes, combined with the planned filing for
the BYX, BZX, and EDGX would allow the BGM Affiliated Exchanges to
provide a consistent set of rules as it relates to the registration and
obligations of Market Makers. Consistent rules, in turn, will simplify
the regulatory requirements for Market Makers on the Exchange that are
also Market Makers on EDGX, BZX, and/or BYX. The proposed rule change
would provide greater harmonization between rules of similar purpose on
the BGM Affiliated Exchanges, resulting in greater uniformity and less
burdensome and more efficient regulatory compliance and understanding
of Exchange Rules. As such, the proposed rule change would foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and would remove impediments to and perfect
the mechanism of a free and open market and a national market system.
Similarly, the Exchange also believes that, by harmonizing the rules
across each BGM Affiliated Exchange, the proposal will enhance the
Exchange's ability to fairly and efficiently regulate its Market Makers
by utilizing a consistent rule set and obligations across each of the
BGM Affiliated Exchanges. Consistent rules would enable the Exchange to
apply identical standards to that of its affiliates, alleviating
confusion by Market Makers on who may also be registered as such on
BYX, BZX, or EDGX, thereby promoting just and equitable principles of
trade in accordance with Section 6(b)(5) of the Act.\21\
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\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
\21\ Id.
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The Exchange also believes the proposed amendments to Rule 11.8(d)
are consistent with Section 6(b)(5) of the Act,\22\ because they are
designed to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system, and, in general, to protect investors and
the public interest. The proposed amendments to Rule 11.8(d)(1) are
meant to clarify the scenarios in which a Market Maker's two-sided
quoting obligation may be temporarily suspended or alleviated. The
provisions proposed to be added are each substantially similar to the
rules of the BZX Options, EDGX Options and Nasdaq.\23\ The Exchange
believes it is appropriate to have consistent rules across its equities
and options platforms. Consistent rules would aid in alleviating
confusion amongst those that are Members on both platforms. The
Exchange believes it is reasonable to suspend or alleviate a Market
Maker's quoting obligations in the event of a technical or system
limitation, during a trading halt, suspension or pause, as well as
where demonstrated legal or regulatory requirements prevent the Market
Maker from quoting. In each scenario, the Exchange will review the
reasons behind the Market Maker inability to quote for compliance with
the Rule. The Exchange is not proposing new percentages governing a
Market Maker's quoting obligations; it is seeking to adopt revised
definitions that are substantially similar to those of Nasdaq in order
to provide a consistent rules with regard to Market Makers quoting
obligations.
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\22\ 15 U.S.C. 78f(b)(5).
\23\ See supra notes 10 and 13.
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(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 not necessary or appropriate in
furtherance of the purposes of the act. To the contrary, allowing the
Exchange to implement substantively identical rules across each of the
BGM Affiliated Exchanges regarding Market Maker registration and their
obligations does not present any competitive issues, but rather is
designed to provide greater harmonization among Exchange, BYX, BZX, and
EDGX rules of similar purpose. The proposed rule change should,
therefore, result in less burdensome and more efficient regulatory
compliance and understanding of Exchange Rules for common members of
the BGM Affiliated Exchanges and an enhanced ability of the BGM
Affiliated Exchanges to fairly and efficiently regulate Market Makers.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
A. Significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \24\ and
Rule 19b-4(f)(6) \25\ thereunder. The Exchange has given the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change,
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\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal is
consistent with the Act. Comments may be submitted by any of the
following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File No. SR-EDGA-2015-49 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 No. SR-EDGA-2015-49. 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
[[Page 1651]]
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-EDGA-2015-49 and should be
submitted on or before February 3, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00466 Filed 1-12-16; 8:45 am]
BILLING CODE 8011-01-P
