Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 11.23, Opening Process, 39294-39296 [2016-14206]
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asabaliauskas on DSK3SPTVN1PROD with NOTICES
39294
Federal Register / Vol. 81, No. 116 / Thursday, June 16, 2016 / Notices
covered associate or otherwise an
employee of the investment adviser, or
was seeking such employment;
(4) The timing and amount of the
contribution which resulted in the
prohibition;
(5) The nature of the election (e.g.,
federal, state or local); and
(6) The contributor’s apparent intent
or motive in making the contribution
which resulted in the prohibition, as
evidenced by the facts and
circumstances surrounding such
contribution.
4. Applicant requests an order
pursuant to section 206A and rule
206(4)–5(e), exempting it from the twoyear prohibition on compensation
imposed by rule 206(4)–5(a)(1) with
respect to investment advisory services
provided to the Client within the twoyear period following the Contribution.
5. Applicant submits that the
exemption is necessary and appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Advisers Act.
Applicant further submits that the other
factors set forth in rule 206(4)–5(e)
similarly weigh in favor of granting an
exemption to the Applicant to avoid
consequences disproportionate to the
violation.
6. Applicant contends that given the
nature of the Rule violation and the lack
of any evidence that the Adviser or the
Contributor intended to, or actually did,
interfere with the Client’s merit-based
process for the selection or retention of
advisory services, the interests of the
Client are best served by allowing the
Adviser and the Client to continue their
relationship uninterrupted. Applicant
states that causing the Adviser to serve
without compensation for the remainder
of the two year period could result in a
financial loss that is more than 300
times the amount of the Contribution.
Applicant suggests that the policy
underlying the Rule is served by
ensuring that no improper influence is
exercised over investment decisions by
governmental entities as a result of
campaign contributions and not by
withholding compensation as a result of
unintentional violations.
7. Applicant represents that it had
adopted and implemented the Policy
which is fully compliant with, and more
rigorous than, the Rule’s requirements
and that it had also implemented a
political contribution questionnaire for
all new employees, and performed
compliance testing that included
random searches of campaign
contribution databases for the names of
employees. Applicant notes that it was
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this questionnaire that was effective in
identifying the Contribution.
8. Applicant asserts that actual
knowledge of the Contribution at the
time of its making cannot be imputed to
the Adviser, given that the Contributor
was not an employee of the Adviser and
had not yet participated in any of the
discussions that would ultimately lead
to his employment with the Adviser.
Applicant represents that at no time did
any employees of the Adviser other than
the Contributor have any knowledge
that the Contribution had been made
prior to its discovery by the Adviser in
October 2014 as part of its standard
employee onboarding process.
9. Applicant asserts that after learning
of the Contribution, the Adviser and the
Contributor took all available steps to
obtain a return of the Contribution and
implement additional measures to
prevent a future error, including
modification of the new employee
onboarding process to require the
completion of the political contribution
questionnaire before the Adviser’s final
decision to hire a new employee.
10. Applicant states that it informed
the Contributor that he could have no
contact with any representative of the
Client other than potentially making
substantive presentations to the Client’s
representatives and consultants about
the investment strategy the Contributor
manages in the event the Client
requested a presentation of that strategy.
The Contributor was directed to
maintain a log of such interactions in
accordance with the retention
requirements set forth in Rule 204–2(e).
Applicant further states that the
Contributor ultimately had no contact
with any representative of the Client
and no contact with any member of the
Client’s board.
11. Applicant notes that it has had
ongoing contacts with the Client that
predate the Contributor’s employment
with the Adviser, and that the
Contribution was consistent with the
political affiliation of the Contributor
and his wife. Applicant asserts that the
Contributor also had a legitimate
interest in the outcome of the campaign
given that he and his family live in
Illinois. Applicant also asserts that the
Contributor’s action in making a
contribution that would later trigger a
ban resulted from his lack of knowledge
about the Rule’s look-back provisions
and, thus, his failure to appreciate the
fact that the Contribution might impact
potential future activities for an
investment advisory firm.
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For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–14211 Filed 6–15–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78035; File No. SR–
BatsBYX–2016–13]
Self-Regulatory Organizations; Bats
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change to Rule 11.23,
Opening Process
June 10, 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 June 9,
2016, Bats BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) 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 Rule 11.23, Opening Process, to
await a two-sided quotation from the
listing exchange prior to re-opening a
security for trading following a halt,
suspension, or pause in trading.
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
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).
2 17
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Federal Register / Vol. 81, No. 116 / Thursday, June 16, 2016 / Notices
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 11.23, Opening Process, to await a
two-sided quotation from the listing
exchange prior to re-opening a security
for trading following a halt, suspension,
or pause in trading.
Exchange Rule 11.23 describes the
Exchange’s current Opening and ReOpening Process. Subparagraph (e) to
Rule 11.23 states that while a security
is subject to a halt, suspension, or pause
in trading, the Exchange will accept
orders for queuing prior to the
resumption of trading in the security for
participation in the Re-Opening Process.
Subparagraph (a) to Rule 11.23 states
that, prior to the beginning of the
Regular Trading Hours, Users 5 who
wish to participate in the Opening
Process may enter orders to buy or sell.6
Subparagraph (a)(2) to Rule 11.23
provides that, with certain exceptions,7
all orders with a time-in-force
instruction of Regular Hours Only may
participate in the Opening Process.
Subparagraph (e)(1) to Rule 11.23 states
that the Re-Opening Process will occur
in the same manner described in Rule
5 See
Exchange Rule 1.5(cc).
cancelled prior to the Opening Process
will not participate in the Opening Process.
7 The following order types and instruction may
not participate in the opening process: BYX Post
Only Orders, ISOs not modified by Rule 11.23(a)(1)
above, and Minimum Quantity Orders. See
Exchange Rule 11.23(a)(2). Limit orders with a
Reserve Quantity may participate to the full extent
of their displayed size and Reserve Quantity. Id.
Discretionary Orders may participate only up to
their ranked price for buy orders or down to their
ranked price for sell orders. Id. The discretionary
range of such orders will not be eligible for
participation in the Opening Process. Id. All Pegged
Orders and Mid-Point Peg Orders, as defined in
Rule 11.9(c)(8) and (9), will be eligible for execution
in the Opening Process based on their pegged
prices. Id.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
6 Orders
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11.23(a)(2) and (b) described above,8
also with certain exceptions.9
Subparagraph (e)(1) to Exchange Rule
11.23 also sets forth the process by
which the System sets the price of the
Re-Opening Process. Currently, the
System 10 sets the price of the ReOpening Process at the midpoint of the:
(i) First NBBO subsequent to the first
reported trade on the listing exchange
following the resumption of trading
after a halt, suspension, or pause; or (ii)
NBBO when the first two-sided
quotation is published by the listing
exchange following the resumption of
trading after a halt, suspension, or pause
if no first trade is reported by the listing
exchange within one second of
publication of the first two-sided
quotation by the listing exchange.
The Exchange proposes to amend
subparagraph (e)(1) to Rule 11.23 to now
await a two-sided quotation from the
listing exchange prior to opening a
security for trading. As amended,
subparagraph (e)(1) to Rule 11.23 would
state that the System would set the price
of the Re-Opening Process at the
midpoint of the first NBBO subsequent
to the first reported trade and first twosided quotation on the listing exchange
following the resumption of trading
after a halt, suspension, or pause. The
Exchange will utilize the current NBBO
to calculate the security’s re-opening
price once a trade and two-sided
quotation are received from the listing
exchange, regardless of the order in
which the trade or quotation are
received. The Exchange believes the
proposed rule change will enable the
listing market’s quotation to be
incorporated into the NBBO, which the
Exchange would, in turn, utilize in its
calculation of the midpoint of the
NBBO. The Exchange believes doing so
8 Subparagraph (b) to Rule 11.23 states that the
Exchange will open by performing the Opening
Process in which the System will attempt to match
buy and sell orders that are executable at the
midpoint of the National Best Bid and Offer
(‘‘NBBO’’). Furthermore, subparagraph (b) of Rule
11.23 also states that all orders executable at the
midpoint of the NBBO will continue to be
processed in time sequence, beginning with the
order with the oldest time stamp. Matches occur
until there are no remaining contra-side orders or
there is an imbalance of orders. An imbalance of
orders may result in orders that cannot be executed
in whole or in part. Any unexecuted orders may
then be placed by the System on the BYX Book,
cancelled, executed, or routed to away Trading
Centers in accordance with the Users’ instructions
pursuant to Exchange Rule 11.13(a)(2).
9 Orders without a time-in-force instruction of
Regular Hours Only are eligible to participate in the
Re-Opening Process, but IOC, FOK, BYX Post Only
Orders, and Minimum Quantity Orders will be
cancelled or rejected, as applicable, and any ISO
that is not IOC or FOK will be converted into a nonISO and be queued for participation in the ReOpening Process. See Exchange Rule 11.23(e)(1).
10 See Exchange Rule 1.5(aa).
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39295
would result in a re-opening price that
more closely reflects the market prices
and conditions for that security. Under
subparagraph (e)(1) to Rule 11.23, the
Exchange will continue to alternatively
set the price of the Re-Opening Process
at the midpoint of the NBBO when the
first two-sided quotation is published by
the listing exchange following the
resumption of trading after a halt,
suspension, or pause if no first trade is
reported by the listing exchange within
one second of publication of the first
two-sided quotation by the listing
exchange.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 11 in general, and furthers the
objectives of Section 6(b)(5) of the Act 12
in particular, in that it is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. The Exchange believes
the proposed rule change will promote
just and equitable principles of trade,
removes impediments to, and perfect
the mechanism of, a free and open
market and a national market system
because it enables the System to execute
the Re-Opening Process at a price that
is objectively established by the market
for the security. The proposal would
enable the listing market’s quotation to
be incorporated into the NBBO, which
the Exchange would, in turn, utilize in
its calculation of the midpoint of the
NBBO. The Exchange believes doing so
would result in a re-opening price that
more closely reflect the market prices
and conditions for that security.
Therefore, the Exchange believes the
proposed rule change promotes just and
equitable principles of trade because it
ensures a midpoint price that the
Exchange believes would accurately
reflect the market for the security.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposal will impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. The proposed rule
change will enable the Exchange to
incorporate the listing market’s
quotation into its calculation of the
midpoint of the NBBO, resulting in a re11 15
12 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Federal Register / Vol. 81, No. 116 / Thursday, June 16, 2016 / Notices
opening price that would more closely
reflect the opening market prices and
conditions for that security. Therefore,
the Exchange believes the proposed rule
change will promote competition by
enhancing the quality of the Exchange’s
opening process.
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 proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 15 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 16
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange states that waiver
of the 30-day operative delay would
allow market participants to
immediately realize the benefits of what
may be more accurate re-opening prices.
Based on the foregoing, the Commission
believes the waiver of the operative
delay is consistent with the protection
of investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposal operative upon
filing.17
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change 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–
BatsBYX–2016–13 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–BatsBYX–2016–13. 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
PO 00000
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identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BatsBYX–
2016–13, and should be submitted on or
before July 7, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–14206 Filed 6–15–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78034; File No. SR–
BatsBZX–2016–25]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change to Rule 11.24,
Opening Process for Non-BZX-Listed
Securities
June 10, 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 June 9,
2016, Bats BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) 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 is proposing to amend
Rule 11.24, Opening Process for NonBZX-Listed Securities, to await a twosided quotation from the listing
exchange prior to re-opening a security
for trading following a halt, suspension,
or pause in trading. The Exchange has
designated this proposal as noncontroversial and provided the
Commission with the notice required by
18 17
CFR 200.30–3(a)(12).
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).
1 15
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]]>Agencies
[Federal Register Volume 81, Number 116 (Thursday, June 16, 2016)]
[Notices]
[Pages 39294-39296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14206]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78035; File No. SR-BatsBYX-2016-13]
Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule
11.23, Opening Process
June 10, 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 June 9, 2016, Bats BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 Rule 11.23, Opening Process,
to await a two-sided quotation from the listing exchange prior to re-
opening a security for trading following a halt, suspension, or pause
in trading.
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
[[Page 39295]]
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 11.23, Opening Process, to
await a two-sided quotation from the listing exchange prior to re-
opening a security for trading following a halt, suspension, or pause
in trading.
Exchange Rule 11.23 describes the Exchange's current Opening and
Re-Opening Process. Subparagraph (e) to Rule 11.23 states that while a
security is subject to a halt, suspension, or pause in trading, the
Exchange will accept orders for queuing prior to the resumption of
trading in the security for participation in the Re-Opening Process.
Subparagraph (a) to Rule 11.23 states that, prior to the beginning of
the Regular Trading Hours, Users \5\ who wish to participate in the
Opening Process may enter orders to buy or sell.\6\ Subparagraph (a)(2)
to Rule 11.23 provides that, with certain exceptions,\7\ all orders
with a time-in-force instruction of Regular Hours Only may participate
in the Opening Process. Subparagraph (e)(1) to Rule 11.23 states that
the Re-Opening Process will occur in the same manner described in Rule
11.23(a)(2) and (b) described above,\8\ also with certain
exceptions.\9\
---------------------------------------------------------------------------
\5\ See Exchange Rule 1.5(cc).
\6\ Orders cancelled prior to the Opening Process will not
participate in the Opening Process.
\7\ The following order types and instruction may not
participate in the opening process: BYX Post Only Orders, ISOs not
modified by Rule 11.23(a)(1) above, and Minimum Quantity Orders. See
Exchange Rule 11.23(a)(2). Limit orders with a Reserve Quantity may
participate to the full extent of their displayed size and Reserve
Quantity. Id. Discretionary Orders may participate only up to their
ranked price for buy orders or down to their ranked price for sell
orders. Id. The discretionary range of such orders will not be
eligible for participation in the Opening Process. Id. All Pegged
Orders and Mid-Point Peg Orders, as defined in Rule 11.9(c)(8) and
(9), will be eligible for execution in the Opening Process based on
their pegged prices. Id.
\8\ Subparagraph (b) to Rule 11.23 states that the Exchange will
open by performing the Opening Process in which the System will
attempt to match buy and sell orders that are executable at the
midpoint of the National Best Bid and Offer (``NBBO''). Furthermore,
subparagraph (b) of Rule 11.23 also states that all orders
executable at the midpoint of the NBBO will continue to be processed
in time sequence, beginning with the order with the oldest time
stamp. Matches occur until there are no remaining contra-side orders
or there is an imbalance of orders. An imbalance of orders may
result in orders that cannot be executed in whole or in part. Any
unexecuted orders may then be placed by the System on the BYX Book,
cancelled, executed, or routed to away Trading Centers in accordance
with the Users' instructions pursuant to Exchange Rule 11.13(a)(2).
\9\ Orders without a time-in-force instruction of Regular Hours
Only are eligible to participate in the Re-Opening Process, but IOC,
FOK, BYX Post Only Orders, and Minimum Quantity Orders will be
cancelled or rejected, as applicable, and any ISO that is not IOC or
FOK will be converted into a non-ISO and be queued for participation
in the Re-Opening Process. See Exchange Rule 11.23(e)(1).
---------------------------------------------------------------------------
Subparagraph (e)(1) to Exchange Rule 11.23 also sets forth the
process by which the System sets the price of the Re-Opening Process.
Currently, the System \10\ sets the price of the Re-Opening Process at
the midpoint of the: (i) First NBBO subsequent to the first reported
trade on the listing exchange following the resumption of trading after
a halt, suspension, or pause; or (ii) NBBO when the first two-sided
quotation is published by the listing exchange following the resumption
of trading after a halt, suspension, or pause if no first trade is
reported by the listing exchange within one second of publication of
the first two-sided quotation by the listing exchange.
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\10\ See Exchange Rule 1.5(aa).
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The Exchange proposes to amend subparagraph (e)(1) to Rule 11.23 to
now await a two-sided quotation from the listing exchange prior to
opening a security for trading. As amended, subparagraph (e)(1) to Rule
11.23 would state that the System would set the price of the Re-Opening
Process at the midpoint of the first NBBO subsequent to the first
reported trade and first two-sided quotation on the listing exchange
following the resumption of trading after a halt, suspension, or pause.
The Exchange will utilize the current NBBO to calculate the security's
re-opening price once a trade and two-sided quotation are received from
the listing exchange, regardless of the order in which the trade or
quotation are received. The Exchange believes the proposed rule change
will enable the listing market's quotation to be incorporated into the
NBBO, which the Exchange would, in turn, utilize in its calculation of
the midpoint of the NBBO. The Exchange believes doing so would result
in a re-opening price that more closely reflects the market prices and
conditions for that security. Under subparagraph (e)(1) to Rule 11.23,
the Exchange will continue to alternatively set the price of the Re-
Opening Process at the midpoint of the NBBO when the first two-sided
quotation is published by the listing exchange following the resumption
of trading after a halt, suspension, or pause if no first trade is
reported by the listing exchange within one second of publication of
the first two-sided quotation by the listing exchange.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \11\ in general, and furthers the objectives of Section
6(b)(5) of the Act \12\ in particular, in that it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest. The Exchange believes the
proposed rule change will promote just and equitable principles of
trade, removes impediments to, and perfect the mechanism of, a free and
open market and a national market system because it enables the System
to execute the Re-Opening Process at a price that is objectively
established by the market for the security. The proposal would enable
the listing market's quotation to be incorporated into the NBBO, which
the Exchange would, in turn, utilize in its calculation of the midpoint
of the NBBO. The Exchange believes doing so would result in a re-
opening price that more closely reflect the market prices and
conditions for that security. Therefore, the Exchange believes the
proposed rule change promotes just and equitable principles of trade
because it ensures a midpoint price that the Exchange believes would
accurately reflect the market for the security.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The proposed rule change will enable the
Exchange to incorporate the listing market's quotation into its
calculation of the midpoint of the NBBO, resulting in a re-
[[Page 39296]]
opening price that would more closely reflect the opening market prices
and conditions for that security. Therefore, the Exchange believes the
proposed rule change will promote competition by enhancing the quality
of the Exchange's opening process.
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 proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
states that waiver of the 30-day operative delay would allow market
participants to immediately realize the benefits of what may be more
accurate re-opening prices. Based on the foregoing, the Commission
believes the waiver of the operative delay is consistent with the
protection of investors and the public interest. Therefore, the
Commission hereby waives the operative delay and designates the
proposal operative upon filing.\17\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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-BatsBYX-2016-13 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-BatsBYX-2016-13. 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 No. SR-BatsBYX-2016-13, and should be
submitted on or before July 7, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14206 Filed 6-15-16; 8:45 am]
BILLING CODE 8011-01-P
