Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add Interpretation and Policy .01 to Rule 16.1 To Specify the Calculation Methodology for Counting Professional Orders, 44903-44907 [2016-16270]
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Federal Register / Vol. 81, No. 132 / Monday, July 11, 2016 / Notices
The Commission is extending this 45day time period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to section
19(b)(2) of the Act,5 designates August
29, 2016, as the date by which the
Commission should either approve or
disapprove or institute proceedings to
determine whether to disapprove the
proposed rule change (File Number SR–
NASDAQ–2016–072), as modified by
Amendment No. 1 thereto.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Brent J. Fields,
Secretary.
[FR Doc. 2016–16269 Filed 7–8–16; 8:45 am]
reporting; a discussion regarding
investment company reporting
modernization; and a nonpublic
administrative work session during
lunch.
Dated: July 6, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016–16311 Filed 7–8–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
BILLING CODE 8011–01–P
Extension:
Rule 17a–7, SEC File No. 270–147, OMB
Control No. 3235–0131.
SECURITIES AND EXCHANGE
COMMISSION
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17a–7 (17 CFR
240.17a–7) under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.) (‘‘Exchange Act’’). The
Commission plans to submit this
existing collection of information to the
Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–7 requires a non-resident
broker-dealer (generally, a broker-dealer
with its principal place of business in a
place not subject to the jurisdiction of
the United States) registered or applying
for registration pursuant to section 15 of
the Exchange Act to maintain—in the
United States—complete and current
copies of books and records required to
be maintained under any rule adopted
under the Exchange Act and furnish to
the Commission a written notice
specifying the address where the copies
are located. Alternatively, Rule 17a–7
provides that non-resident brokerdealers may file with the Commission a
written undertaking to furnish the
requisite books and records to the
Commission upon demand within 14
days of the demand.
There are approximately 45 nonresident brokers and dealers. Based on
the Commission’s experience, the
Commission estimates that the average
amount of time necessary to comply
with Rule 17a–7 is one hour per year.
Accordingly, the total industry-wide
reporting burden is approximately 45
[Release Nos. 33–10102A; 34–78127A; File
No. 265–28]
Investor Advisory Committee Meeting
Securities and Exchange
Commission.
ACTION: Notice of meeting of Securities
and Exchange Commission Dodd-Frank
Investor Advisory Committee;
correction.
AGENCY:
The Securities and Exchange
Commission published a document in
the Federal Register on June 27, 2016,
providing notice that the Securities and
Exchange Commission Investor
Advisory Committee would hold a
public meeting on Thursday, July 14,
2016. The document contained an
incorrect description of the agenda for
the meeting.
FOR FURTHER INFORMATION CONTACT:
Marc Oorloff Sharma, Senior Special
Counsel, Office of the Investor
Advocate, at (202) 551–3302, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549.
sradovich on DSK3GDR082PROD with NOTICES
SUMMARY:
Correction
In the Federal Register of June 27,
2016, in FR Doc. 2016–15109, on page
41629, in the first column, correct the
description of the meeting agenda to
read:
The agenda for the meeting includes:
Remarks from Commissioners; a
discussion of the state of sustainability
5 15
6 17
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(31).
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hours per year. Assuming an average
cost per hour of approximately $291 for
a compliance manager, the total internal
cost of compliance for the respondents
is approximately $13,095 per year.1
Written comments are invited on: (a)
Whether the collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information shall have
practical utility; (b) the accuracy of the
Commission’s estimate of the burden of
the collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: July 5, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016–16192 Filed 7–8–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78226; File No. SR–
BatsBZX–2016–31]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Add
Interpretation and Policy .01 to Rule
16.1 To Specify the Calculation
Methodology for Counting
Professional Orders
July 5, 2016.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
1 $291 per hour for a compliance manager is from
SIFMA’s Management & Professional Earnings in
the Securities Industry 2013, modified by
Commission staff for an 1800-hour work-year,
multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead, and adjusted for
inflation.
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Federal Register / Vol. 81, No. 132 / Monday, July 11, 2016 / Notices
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 1,
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 proposes to add
Interpretation and Policy .01 to Rule
16.1 to specify the manner in which the
Exchange calculates average daily order
submissions for purposes of counting
Professional orders, as further described
below.
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.
sradovich on DSK3GDR082PROD with NOTICES
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 add
Interpretation and Policy .01 to Rule
16.1 to specify the methodology for
counting average daily order
submissions in listed options to
determine whether a person or entity
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).
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meets the definition of a Professional
(‘‘Professional order counting’’). The
proposed rule change is designed to
harmonize Professional order counting
with the recently adopted rules of
competing options exchanges—
specifically the Chicago Board of
Options Exchange, Inc. (‘‘CBOE’’) and
NASDAQ OMX PHLX LLC (‘‘PHLX’’).5
Rule 16.1(a)(46) defines a Professional
‘‘as any person or entity that (A) is not
a broker or dealer in securities; and (B)
places more than 390 orders in listed
options per day on average during a
calendar month for its own beneficial
account(s).’’ In adopting Rule
16.1(a)(46), the Exchange believed that
identifying Professional accounts based
upon the average number of orders
entered in qualified accounts is an
appropriate, objective approach that
will reasonably distinguish such
persons and entities from nonprofessional, retail investors or market
participants. In order to properly
represent orders entered on the
Exchange, Options Members are
required to indicate whether Customer
orders are ‘‘Professional’’ orders.6 To
comply with this requirement, Options
Members are required to review their
Customers’ activity on at least a
quarterly basis to determine whether
orders that are not for the account of a
broker-dealer should be represented as
Customer orders or Professional orders.7
5 See Securities Exchange Act Release Nos. 77450
(March 25, 2016), 81 FR 18668, (March 31, 2016)
(SR–CBOE–2016–005); 77449 (March 25, 2016), 81
FR 18665, (March 31, 2016) (SR–Phlx–2016–10)
(approval orders). The Exchange notes that it
recently issued guidance regarding Professional
order counting. See e.g., Bats BZX Exchange, Inc.
and Bats EDGX Exchange Inc., Regulatory Circular
(RC–2015–012, respectively) dated December 21,
2015. This proposal codifies that guidance in a
manner that is consistent with CBOE and PHLX’s
approved rules. The Exchange notes that various
other options exchanges refer to Professionals as
‘‘Professional Customers.’’ The Exchange has
proposed to continue to use the term Professional,
as is currently the case in Exchange rules.
6 See e.g., Rule 18.2(a)(6) (Conduct and
Compliance with the Rules) (requiring that accurate
information is input into the System, including but
not limited to, the Options Member’s capacity).
7 Orders for any customer that had an average of
more than 390 orders per day during any month of
a calendar quarter must be represented as
Professional orders for the next calendar quarter.
Option Members would be required to conduct a
quarterly review and make any appropriate changes
to the way in which they are representing orders
within five business days after the end of each
calendar quarter. While Option Members only
would be required to review their accounts on a
quarterly basis, if during a quarter the Exchange
identifies a customer for which orders are being
represented as Customer orders but that has
averaged more than 390 orders per day during a
month, the Exchange would notify the Option
Member would be required to change the manner
in which it is representing the customer’s orders
within five business days.
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The advent of new multi-leg spread
products and the proliferation of the use
of complex orders and algorithmic
execution strategies by both
institutional and retail market
participants has raised questions as to
what should be counted as an ‘‘order’’
for Professional order counting
purposes. The proposed changes would
specifically address the counting of
multi-leg spread products, algorithm
generated orders, and complex orders
for purposes of determining Professional
status. In addition, the proposal is
intended to provide guidance regarding
the methodology used by the Exchange
when calculating average daily orders
for Professional order counting
purposes.8
As proposed, the rule would provide
that an order would count as one order
for Professional counting purposes,
unless one of the exceptions
enumerated in the proposed rule
stipulates otherwise (each an
‘‘Exception’’). The first Exception relates
to the treatment of complex orders for
purposes of computing orders for
Professional order counting purposes.
Specifically, the proposed rule provides
that a complex order of eight (8) option
legs or less would count as one order,
whereas a complex order comprised of
nine (9) option legs or more counts as
multiple orders with each option leg
counting as its own separate order.9 The
Exchange believes the distinction
between complex orders with up to
eight option legs from those with nine
or more option legs is appropriate in
light of the purposes for which Rule
16.1(a)(46) was adopted. In particular,
the Exchange notes that multi-leg
complex order strategies with nine or
more option legs are more complex in
nature and thus, more likely to be used
by professional traders than traditional
two, three, and four option leg complex
order strategies such as the strangle,
straddle, butterfly, collar, and condor
strategies, and combinations thereof
with eight option legs or fewer, which
are generally not algorithmically
generated and are frequently used by
non-professional, retail investors. Thus,
the types of complex orders
traditionally placed by retail investors
would continue to count as only one
order while the more complex strategy
orders that are typically used by
professional traders would count as
multiple orders for Professional order
counting purposes.10
8 This proposal is consistent with CBOE and
PHLX’s approved rules. See supra note 5.
9 See proposed Interpretation and Policy
.01(a)(1)–(2).
10 See also supra note 5.
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The second Exception relates to
calculations for parent/child orders. As
proposed, if a parent order submitted for
the beneficial account(s) of a person or
entity other than a broker or dealer is
subsequently broken up into multiple
child orders on the same side (buy/sell)
and series by a broker or dealer, or by
an algorithm housed at the broker or
dealer, or by an algorithm licensed from
the broker or dealer but housed with the
customer, then the order would count as
one order even if the child orders are
routed across several exchanges.11 The
Exchange believes this proposed change
would allow the orders of public
customers to be ‘‘worked’’ by a broker
(or a broker’s algorithm) in order to
achieve best execution without counting
the multiple child orders as separate
orders for Professional order counting
purposes. Conversely, if a parent order,
including a strategy order,12 is broken
into multiple child orders on both sides
(buy/sell) of a series and/or multiple
series, then each child order would
count as a separate new order per side
and series.13 This proposed change
would allow the Exchange, for
Professional order counting purposes, to
count as multiple orders those ‘‘child’’
orders of ‘‘parent’’ orders generated by
algorithms that are typically used by
sophisticated traders to continuously
update their orders in concert with
market updates in order to keep their
overall trading strategies in balance.
The third Exception would govern the
counting methodology for cancel/
replace orders. As proposed, any order
that cancels and replaces an existing
order would count as a separate order
(or multiple orders in the case of
complex orders of nine option legs or
more) for Professional order counting
purposes.14 However, the Exchange
proposes that an order to cancel and
replace a child order would not count
as a new order if the parent order that
was placed for the beneficial account(s)
of a non-broker or dealer had been
subsequently broken into multiple child
orders on the same side and series as the
parent order by a broker or dealer,
algorithm at a broker or dealer, or
algorithm licensed from a broker or
dealer but housed at the customer.15 By
11 See proposed Interpretation and Policy
.01(b)(1).
12 The term ‘‘strategy order’’ refers to an execution
strategy, trading instruction, or algorithm whereby
multiple ‘‘child’’ orders on both sides of a series
and/or multiple series are generated prior to being
sent to an options exchange(s).
13 See proposed Interpretation and Policy
.01(b)(2).
14 See proposed Interpretation and Policy
.01(c)(1).
15 See proposed Interpretation and Policy
.01(c)(2).
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contrast, the Exchange proposes that an
order that cancels and replaces a child
order resulting from a parent order,
including a strategy order, that
generated child orders on both sides
(buy/sell) of a series and/or in multiple
series would count as a new order per
side and series (‘‘Both Sides/Multiple
Series’’).16 Finally, the Exchange
proposes that, notwithstanding the
treatment of a cancel/replace relating to
Same Sides/Same Series orders, an
order that cancels and replaces any
child order resulting from a parent order
being pegged to the Exchange’s best bid
or offer (‘‘BBO’’) or the national best bid
or offer (‘‘NBBO’’) or that cancels and
replaces any child order pursuant to an
algorithm that uses the BBO or NBBO in
the calculation of child orders and
attempts to move with or follow the
BBO or NBBO of a particular options
series would count as a new order each
time the order cancels and replaces in
order to attempt to move with or follow
the BBO or NBBO.17
Implementation
The Exchange proposes to implement
the rule on July 1, 2016, which would
be announced in a circular distributed
to Members.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,18 in general, and
furthers the objectives of section
6(b)(5),19 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the requirement set forth in section
6(b)(5) 20 of the Act that the rules of an
exchange not be designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
Specifically, the Exchange believes
that the proposal is designed to adopt a
reasonable and objective approach to
determine Professional status that is
consistent with the approach being
utilized on other options exchanges,
which benefits market participants by
providing consistency across exchanges
16 See proposed Interpretation and Policy
.01(c)(3).
17 See proposed Interpretation and Policy
.01(c)(4).
18 15 U.S.C. 78f(b).
19 15 U.S.C. 78f(b)(5).
20 15 U.S.C. 78f(b)(5).
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44905
regarding the Professional order
counting.21 In this regard, the Exchange
believes that codifying the manner in
which the Exchange would conduct
Professional order counting would
provide Option Members with certainty
and provide them with insight as they
conduct their own quarterly reviews for
purposes of designating orders.
The Exchange notes that it is not
amending the threshold of 390 orders in
listed options per day but, consistent
with other exchanges, is revising the
method for counting Professional orders
in the context of multi-part orders and
cancel/replace activity. In short, the
proposal addresses how to account for
complex orders, parent/child orders,
and cancel/replace orders. The
Exchange believes that distinguishing
between complex orders with nine or
more option legs and those orders with
eight or fewer option legs is a reasonable
and objective approach. In addition, the
Exchange believes the proposal
appropriately distinguishes between
parent/child orders that are generated
by a broker’s efforts to obtain an
execution on a larger size order while
minimizing market impact and multipart orders that used by more
sophisticated market participants.
Similarly, the Exchange believes that
the proposal that cancel/replace orders
would count as separate orders with
limited exceptions is a reasonable and
objective approach to distinguish the
orders of retail customers that are
‘‘worked’’ by a broker from orders
generated by algorithms used by more
sophisticated market participants.
In addition, the Exchange believes
that proposed changes to Rule 16.1
provide a more conservative order
counting regime for Professional order
counting purposes that would identify
more traders as Professionals to which
the Exchange’s definition of
Professional was designed to apply and
create a better competitive balance for
all participants on the Exchange,
consistent with the Act. As the options
markets have evolved to become more
electronic and more competitive, the
Exchange believes that the distinction
between registered broker-dealers and
professional traders who are currently
treated as public customers has become
increasingly blurred. More and more,
the category of public customer today
includes sophisticated algorithmic
traders including former market makers
and hedge funds that trade with a
frequency resembling that of brokerdealers. The Exchange believes that it is
reasonable under the Act to treat those
customers who meet the high level of
21 See
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supra note 5.
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Federal Register / Vol. 81, No. 132 / Monday, July 11, 2016 / Notices
trading activity established in the
proposal differently than customers who
do not meet that threshold and are more
typical retail investors to ensure that
professional traders do not take
advantage of priority and/or fee benefits
intended for public customers. The
Exchange notes that it is not unfair to
differentiate between different types of
investors in order to achieve certain
marketplace balances. The Exchange’s
Rules currently differentiate between
Customers, Order Entry Firms, Market
Makers, and the like.
These differentiations have been
recognized to be consistent with the
Act. The Exchange does not believe that
the rules of the Exchange or other
exchanges that accord priority or fee
benefits to public customers over
broker-dealers are unfairly
discriminatory. Nor does the Exchange
believe that it is unfairly discriminatory
to accord such benefits to only those
public customers who on average do not
place more than one order per minute
(390 per day) under the counting regime
that the Exchange proposes. The
Exchange believes that such
differentiations drive competition in the
marketplace and are within the business
judgment of the Exchange. Accordingly,
the Exchange also believes that its
proposal is consistent with the
requirement of section 6(b)(8) 22 of the
Act that the rules of an exchange not
impose an unnecessary or inappropriate
burden upon competition in that it
treats persons who should be deemed
Professionals, but who may not be so
under current Rule 16.1(a)(46), in a
manner so that they do not receive
special benefits. Furthermore, the
Exchange believes that the proposed
rule change will protect investors and
the public interest by helping to assure
that retail customers continue to receive
the appropriate marketplace advantages
on the Exchange and in the marketplace
as intended, while furthering
competition among marketplace
professionals by treating them in the
same manner as other similarly situated
market participants. The Exchange
believes that it is consistent with section
6(b)(5) 23 of the Act not to afford market
participants with similar access to
information and technology as that of
brokers and dealers of securities with
marketplace advantages over such
marketplace competitors. The Exchange
also believes that the proposed rule
change would help to remove burdens
on competition and promote a more
competitive marketplace by affording
certain marketplace advantages only to
22 15
23 15
those for whom they are intended.
Finally, the Exchange believes that the
proposed rule change sets forth a more
detailed and clear regulatory regime
with respect to calculating average daily
order entry for Professional order
counting purposes. The Exchange
believes that this additional clarity and
detail will eliminate confusion among
market participants, which is in the
interests of all investors and the general
public.
Based on the foregoing, the Exchange
believes the proposal, which establishes
an objective methodology for counting
average daily order submissions for
Professional order counting purposes, is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that its
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
rule change will help ensure fairness in
the marketplace and promote
competition among all market
participants. The Exchange believes that
this proposal would help establish more
competition among market participants
and promote the purposes for which the
Exchange’s Professional rule was
originally adopted. Moreover, the
proposal would ensure consistency and
help to eliminate confusion as to the
manner in which options exchanges
compute the Professional order volume.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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)(iii) of the Act 24 and
subparagraph (f)(6) of Rule 19b–4
U.S.C. 78f(b)(8).
U.S.C. 78f(b)(5).
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24 15
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U.S.C. 78s(b)(3)(a)(iii).
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thereunder.25 A proposed rule change
filed under Rule 19b–4(f)(6) normally
does not become operative prior to 30
days after the date of filing.26 Rule 19b–
4(f)(6)(iii), however, permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest.27
The Exchange has requested that the
Commission waive the 30-day operative
delay. The Commission notes that it has
considered a substantially similar
proposed rule change filed by CBOE and
PHLX which it approved after a notice
and comment period.28 This proposed
rule change does not raise any new or
novel issues from those considered in
the CBOE and PHLX proposals. Based
on the foregoing, the Commission
believes that it is consistent with the
protection of investors and the public
interest to waive the 30-day operative
delay and designate the proposed rule
change as operative upon filing with the
Commission.29
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under section 19(b)(2)(B) of the Act 30 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:
25 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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. The Exchange has satisfied this
requirement.
26 17 CFR 240.19b–4(f)(6)(iii).
27 Id.
28 See Securities Exchange Act Release Nos.
77450 (March 25, 2016) (Order Approving SR–
CBOE–2016–005); 77449 (March 25, 2016), 81 FR
18665, (March 31, 2016) (Order Approving SR–
Phlx–2016–10).
29 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
30 15 U.S.C. 78s(b)(2)(B).
E:\FR\FM\11JYN1.SGM
11JYN1
Federal Register / Vol. 81, No. 132 / Monday, July 11, 2016 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BatsBZX–2016–31 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.
sradovich on DSK3GDR082PROD with NOTICES
All submissions should refer to File
Number SR–BatsBZX–2016–31. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
BatsBZX–2016–31, and should be
submitted on or before August 1, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Brent J. Fields,
Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78227; File No. SR–
NASDAQ–2016–061]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Designation of a Longer Period for
Commission Action on a Proposed
Rule Change To List and Trade Shares
of the First Trust Equity Market Neutral
ETF of the First Trust ExchangeTraded Fund VIII
On May 4, 2016, the NASDAQ Stock
Market LLC (‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares of the First Trust
Equity Market Neutral ETF of the First
Trust Exchange-Traded Fund VIII. The
proposed rule change was published for
comment in the Federal Register on
May 25, 2016.3 The Commission
received no comment letters on the
proposed rule change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is July 9, 2016.
The Commission is extending this 45day time period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to section
19(b)(2) of the Act,5 designates August
23, 2016, as the date by which the
Commission should either approve or
disapprove or institute proceedings to
determine whether to disapprove the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 77854
(May 19, 2016), 81 FR 33307.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2).
2 17
31 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
16:55 Jul 08, 2016
Jkt 238001
PO 00000
Frm 00070
proposed rule change (File Number SR–
NASDAQ–2016–061).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Brent J. Fields,
Secretary.
[FR Doc. 2016–16271 Filed 7–8–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78228; File No. SR–NYSE–
2016–24]
July 5, 2016.
[FR Doc. 2016–16270 Filed 7–8–16; 8:45 am]
BILLING CODE 8011–01–P
44907
Fmt 4703
Sfmt 4703
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Partial Amendment No. 3 and
Order Granting Accelerated Approval
of a Proposed Rule Change, as
Modified by Amendments No. 2 and 3,
Relating to Pre-Opening Indications
and Opening Procedures
July 5, 2016.
I. Introduction
On March 17, 2016, New York Stock
Exchange LLC (‘‘Exchange’’ or ‘‘NYSE’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend its rules relating to
pre-opening indications and opening
procedures. On March 30, 2016, the
Exchange filed Amendment No. 1 to the
proposed rule change.3 On March 31,
2016, the Exchange filed Amendment
No. 2 to the proposed rule change.4 The
proposed rule change, as modified by
Amendment No. 2, was published for
comment in the Federal Register on
April 6, 2016.5 On May 13, 2016, the
Commission designated a longer period
for action on the proposed rule change.6
The Commission has received no
comments on the proposed rule change.
On June 23, 2016, the Exchange filed
Partial Amendment No. 3 to the
proposed rule change.7 The Commission
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 superseded the original filing
in its entirety.
4 Amendment No. 2 superseded the original
filing, as modified by Amendment No. 1, in its
entirety.
5 See Securities Exchange Act Release No. 77491
(Mar. 31, 2016), 81 FR 20030 (‘‘Notice’’).
6 See Securities Exchange Act Release No. 77829,
81 FR 31670 (May 19, 2016).
7 In Partial Amendment No. 3, the Exchange: (1)
Stated its belief that securities with an average daily
volume of over 500,000 shares at the open warrant
manual openings because such a high volume is
1 15
E:\FR\FM\11JYN1.SGM
Continued
11JYN1
]]>Agencies
[Federal Register Volume 81, Number 132 (Monday, July 11, 2016)]
[Notices]
[Pages 44903-44907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16270]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78226; File No. SR-BatsBZX-2016-31]
Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Add
Interpretation and Policy .01 to Rule 16.1 To Specify the Calculation
Methodology for Counting Professional Orders
July 5, 2016.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the
[[Page 44904]]
``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 1, 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 ``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 proposes to add Interpretation and Policy .01 to Rule
16.1 to specify the manner in which the Exchange calculates average
daily order submissions for purposes of counting Professional orders,
as further described below.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to add Interpretation and Policy .01 to Rule
16.1 to specify the methodology for counting average daily order
submissions in listed options to determine whether a person or entity
meets the definition of a Professional (``Professional order
counting''). The proposed rule change is designed to harmonize
Professional order counting with the recently adopted rules of
competing options exchanges--specifically the Chicago Board of Options
Exchange, Inc. (``CBOE'') and NASDAQ OMX PHLX LLC (``PHLX'').\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release Nos. 77450 (March 25,
2016), 81 FR 18668, (March 31, 2016) (SR-CBOE-2016-005); 77449
(March 25, 2016), 81 FR 18665, (March 31, 2016) (SR-Phlx-2016-10)
(approval orders). The Exchange notes that it recently issued
guidance regarding Professional order counting. See e.g., Bats BZX
Exchange, Inc. and Bats EDGX Exchange Inc., Regulatory Circular (RC-
2015-012, respectively) dated December 21, 2015. This proposal
codifies that guidance in a manner that is consistent with CBOE and
PHLX's approved rules. The Exchange notes that various other options
exchanges refer to Professionals as ``Professional Customers.'' The
Exchange has proposed to continue to use the term Professional, as
is currently the case in Exchange rules.
---------------------------------------------------------------------------
Rule 16.1(a)(46) defines a Professional ``as any person or entity
that (A) is not a broker or dealer in securities; and (B) places more
than 390 orders in listed options per day on average during a calendar
month for its own beneficial account(s).'' In adopting Rule
16.1(a)(46), the Exchange believed that identifying Professional
accounts based upon the average number of orders entered in qualified
accounts is an appropriate, objective approach that will reasonably
distinguish such persons and entities from non-professional, retail
investors or market participants. In order to properly represent orders
entered on the Exchange, Options Members are required to indicate
whether Customer orders are ``Professional'' orders.\6\ To comply with
this requirement, Options Members are required to review their
Customers' activity on at least a quarterly basis to determine whether
orders that are not for the account of a broker-dealer should be
represented as Customer orders or Professional orders.\7\
---------------------------------------------------------------------------
\6\ See e.g., Rule 18.2(a)(6) (Conduct and Compliance with the
Rules) (requiring that accurate information is input into the
System, including but not limited to, the Options Member's
capacity).
\7\ Orders for any customer that had an average of more than 390
orders per day during any month of a calendar quarter must be
represented as Professional orders for the next calendar quarter.
Option Members would be required to conduct a quarterly review and
make any appropriate changes to the way in which they are
representing orders within five business days after the end of each
calendar quarter. While Option Members only would be required to
review their accounts on a quarterly basis, if during a quarter the
Exchange identifies a customer for which orders are being
represented as Customer orders but that has averaged more than 390
orders per day during a month, the Exchange would notify the Option
Member would be required to change the manner in which it is
representing the customer's orders within five business days.
---------------------------------------------------------------------------
The advent of new multi-leg spread products and the proliferation
of the use of complex orders and algorithmic execution strategies by
both institutional and retail market participants has raised questions
as to what should be counted as an ``order'' for Professional order
counting purposes. The proposed changes would specifically address the
counting of multi-leg spread products, algorithm generated orders, and
complex orders for purposes of determining Professional status. In
addition, the proposal is intended to provide guidance regarding the
methodology used by the Exchange when calculating average daily orders
for Professional order counting purposes.\8\
---------------------------------------------------------------------------
\8\ This proposal is consistent with CBOE and PHLX's approved
rules. See supra note 5.
---------------------------------------------------------------------------
As proposed, the rule would provide that an order would count as
one order for Professional counting purposes, unless one of the
exceptions enumerated in the proposed rule stipulates otherwise (each
an ``Exception''). The first Exception relates to the treatment of
complex orders for purposes of computing orders for Professional order
counting purposes. Specifically, the proposed rule provides that a
complex order of eight (8) option legs or less would count as one
order, whereas a complex order comprised of nine (9) option legs or
more counts as multiple orders with each option leg counting as its own
separate order.\9\ The Exchange believes the distinction between
complex orders with up to eight option legs from those with nine or
more option legs is appropriate in light of the purposes for which Rule
16.1(a)(46) was adopted. In particular, the Exchange notes that multi-
leg complex order strategies with nine or more option legs are more
complex in nature and thus, more likely to be used by professional
traders than traditional two, three, and four option leg complex order
strategies such as the strangle, straddle, butterfly, collar, and
condor strategies, and combinations thereof with eight option legs or
fewer, which are generally not algorithmically generated and are
frequently used by non-professional, retail investors. Thus, the types
of complex orders traditionally placed by retail investors would
continue to count as only one order while the more complex strategy
orders that are typically used by professional traders would count as
multiple orders for Professional order counting purposes.\10\
---------------------------------------------------------------------------
\9\ See proposed Interpretation and Policy .01(a)(1)-(2).
\10\ See also supra note 5.
---------------------------------------------------------------------------
[[Page 44905]]
The second Exception relates to calculations for parent/child
orders. As proposed, if a parent order submitted for the beneficial
account(s) of a person or entity other than a broker or dealer is
subsequently broken up into multiple child orders on the same side
(buy/sell) and series by a broker or dealer, or by an algorithm housed
at the broker or dealer, or by an algorithm licensed from the broker or
dealer but housed with the customer, then the order would count as one
order even if the child orders are routed across several exchanges.\11\
The Exchange believes this proposed change would allow the orders of
public customers to be ``worked'' by a broker (or a broker's algorithm)
in order to achieve best execution without counting the multiple child
orders as separate orders for Professional order counting purposes.
Conversely, if a parent order, including a strategy order,\12\ is
broken into multiple child orders on both sides (buy/sell) of a series
and/or multiple series, then each child order would count as a separate
new order per side and series.\13\ This proposed change would allow the
Exchange, for Professional order counting purposes, to count as
multiple orders those ``child'' orders of ``parent'' orders generated
by algorithms that are typically used by sophisticated traders to
continuously update their orders in concert with market updates in
order to keep their overall trading strategies in balance.
---------------------------------------------------------------------------
\11\ See proposed Interpretation and Policy .01(b)(1).
\12\ The term ``strategy order'' refers to an execution
strategy, trading instruction, or algorithm whereby multiple
``child'' orders on both sides of a series and/or multiple series
are generated prior to being sent to an options exchange(s).
\13\ See proposed Interpretation and Policy .01(b)(2).
---------------------------------------------------------------------------
The third Exception would govern the counting methodology for
cancel/replace orders. As proposed, any order that cancels and replaces
an existing order would count as a separate order (or multiple orders
in the case of complex orders of nine option legs or more) for
Professional order counting purposes.\14\ However, the Exchange
proposes that an order to cancel and replace a child order would not
count as a new order if the parent order that was placed for the
beneficial account(s) of a non-broker or dealer had been subsequently
broken into multiple child orders on the same side and series as the
parent order by a broker or dealer, algorithm at a broker or dealer, or
algorithm licensed from a broker or dealer but housed at the
customer.\15\ By contrast, the Exchange proposes that an order that
cancels and replaces a child order resulting from a parent order,
including a strategy order, that generated child orders on both sides
(buy/sell) of a series and/or in multiple series would count as a new
order per side and series (``Both Sides/Multiple Series'').\16\
Finally, the Exchange proposes that, notwithstanding the treatment of a
cancel/replace relating to Same Sides/Same Series orders, an order that
cancels and replaces any child order resulting from a parent order
being pegged to the Exchange's best bid or offer (``BBO'') or the
national best bid or offer (``NBBO'') or that cancels and replaces any
child order pursuant to an algorithm that uses the BBO or NBBO in the
calculation of child orders and attempts to move with or follow the BBO
or NBBO of a particular options series would count as a new order each
time the order cancels and replaces in order to attempt to move with or
follow the BBO or NBBO.\17\
---------------------------------------------------------------------------
\14\ See proposed Interpretation and Policy .01(c)(1).
\15\ See proposed Interpretation and Policy .01(c)(2).
\16\ See proposed Interpretation and Policy .01(c)(3).
\17\ See proposed Interpretation and Policy .01(c)(4).
---------------------------------------------------------------------------
Implementation
The Exchange proposes to implement the rule on July 1, 2016, which
would be announced in a circular distributed to Members.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\18\ in general, and furthers the
objectives of section 6(b)(5),\19\ in particular, in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and in general, to protect investors and the public
interest. Additionally, the Exchange believes the proposed rule change
is consistent with the requirement set forth in section 6(b)(5) \20\ of
the Act that the rules of an exchange not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Specifically, the Exchange believes that the proposal is designed
to adopt a reasonable and objective approach to determine Professional
status that is consistent with the approach being utilized on other
options exchanges, which benefits market participants by providing
consistency across exchanges regarding the Professional order
counting.\21\ In this regard, the Exchange believes that codifying the
manner in which the Exchange would conduct Professional order counting
would provide Option Members with certainty and provide them with
insight as they conduct their own quarterly reviews for purposes of
designating orders.
---------------------------------------------------------------------------
\21\ See supra note 5.
---------------------------------------------------------------------------
The Exchange notes that it is not amending the threshold of 390
orders in listed options per day but, consistent with other exchanges,
is revising the method for counting Professional orders in the context
of multi-part orders and cancel/replace activity. In short, the
proposal addresses how to account for complex orders, parent/child
orders, and cancel/replace orders. The Exchange believes that
distinguishing between complex orders with nine or more option legs and
those orders with eight or fewer option legs is a reasonable and
objective approach. In addition, the Exchange believes the proposal
appropriately distinguishes between parent/child orders that are
generated by a broker's efforts to obtain an execution on a larger size
order while minimizing market impact and multi-part orders that used by
more sophisticated market participants. Similarly, the Exchange
believes that the proposal that cancel/replace orders would count as
separate orders with limited exceptions is a reasonable and objective
approach to distinguish the orders of retail customers that are
``worked'' by a broker from orders generated by algorithms used by more
sophisticated market participants.
In addition, the Exchange believes that proposed changes to Rule
16.1 provide a more conservative order counting regime for Professional
order counting purposes that would identify more traders as
Professionals to which the Exchange's definition of Professional was
designed to apply and create a better competitive balance for all
participants on the Exchange, consistent with the Act. As the options
markets have evolved to become more electronic and more competitive,
the Exchange believes that the distinction between registered broker-
dealers and professional traders who are currently treated as public
customers has become increasingly blurred. More and more, the category
of public customer today includes sophisticated algorithmic traders
including former market makers and hedge funds that trade with a
frequency resembling that of broker-dealers. The Exchange believes that
it is reasonable under the Act to treat those customers who meet the
high level of
[[Page 44906]]
trading activity established in the proposal differently than customers
who do not meet that threshold and are more typical retail investors to
ensure that professional traders do not take advantage of priority and/
or fee benefits intended for public customers. The Exchange notes that
it is not unfair to differentiate between different types of investors
in order to achieve certain marketplace balances. The Exchange's Rules
currently differentiate between Customers, Order Entry Firms, Market
Makers, and the like.
These differentiations have been recognized to be consistent with
the Act. The Exchange does not believe that the rules of the Exchange
or other exchanges that accord priority or fee benefits to public
customers over broker-dealers are unfairly discriminatory. Nor does the
Exchange believe that it is unfairly discriminatory to accord such
benefits to only those public customers who on average do not place
more than one order per minute (390 per day) under the counting regime
that the Exchange proposes. The Exchange believes that such
differentiations drive competition in the marketplace and are within
the business judgment of the Exchange. Accordingly, the Exchange also
believes that its proposal is consistent with the requirement of
section 6(b)(8) \22\ of the Act that the rules of an exchange not
impose an unnecessary or inappropriate burden upon competition in that
it treats persons who should be deemed Professionals, but who may not
be so under current Rule 16.1(a)(46), in a manner so that they do not
receive special benefits. Furthermore, the Exchange believes that the
proposed rule change will protect investors and the public interest by
helping to assure that retail customers continue to receive the
appropriate marketplace advantages on the Exchange and in the
marketplace as intended, while furthering competition among marketplace
professionals by treating them in the same manner as other similarly
situated market participants. The Exchange believes that it is
consistent with section 6(b)(5) \23\ of the Act not to afford market
participants with similar access to information and technology as that
of brokers and dealers of securities with marketplace advantages over
such marketplace competitors. The Exchange also believes that the
proposed rule change would help to remove burdens on competition and
promote a more competitive marketplace by affording certain marketplace
advantages only to those for whom they are intended. Finally, the
Exchange believes that the proposed rule change sets forth a more
detailed and clear regulatory regime with respect to calculating
average daily order entry for Professional order counting purposes. The
Exchange believes that this additional clarity and detail will
eliminate confusion among market participants, which is in the
interests of all investors and the general public.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b)(8).
\23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Based on the foregoing, the Exchange believes the proposal, which
establishes an objective methodology for counting average daily order
submissions for Professional order counting purposes, is consistent
with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that its proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will help ensure fairness in the marketplace
and promote competition among all market participants. The Exchange
believes that this proposal would help establish more competition among
market participants and promote the purposes for which the Exchange's
Professional rule was originally adopted. Moreover, the proposal would
ensure consistency and help to eliminate confusion as to the manner in
which options exchanges compute the Professional order volume.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from Members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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)(iii) of the Act \24\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\25\ A proposed rule
change filed under Rule 19b-4(f)(6) normally does not become operative
prior to 30 days after the date of filing.\26\ Rule 19b-4(f)(6)(iii),
however, permits the Commission to designate a shorter time if such
action is consistent with the protection of investors and the public
interest.\27\
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78s(b)(3)(a)(iii).
\25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
The Exchange has satisfied this requirement.
\26\ 17 CFR 240.19b-4(f)(6)(iii).
\27\ Id.
---------------------------------------------------------------------------
The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission notes that it has considered a
substantially similar proposed rule change filed by CBOE and PHLX which
it approved after a notice and comment period.\28\ This proposed rule
change does not raise any new or novel issues from those considered in
the CBOE and PHLX proposals. Based on the foregoing, the Commission
believes that it is consistent with the protection of investors and the
public interest to waive the 30-day operative delay and designate the
proposed rule change as operative upon filing with the Commission.\29\
---------------------------------------------------------------------------
\28\ See Securities Exchange Act Release Nos. 77450 (March 25,
2016) (Order Approving SR-CBOE-2016-005); 77449 (March 25, 2016), 81
FR 18665, (March 31, 2016) (Order Approving SR-Phlx-2016-10).
\29\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
section 19(b)(2)(B) of the Act \30\ to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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:
[[Page 44907]]
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BatsBZX-2016-31 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BatsBZX-2016-31. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BatsBZX-2016-31, and should
be submitted on or before August 1, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-16270 Filed 7-8-16; 8:45 am]
BILLING CODE 8011-01-P
