Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend PRISM Pilot Program Through January 18, 2017, 45334-45336 [2016-16491]
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Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices
jstallworth on DSK7TPTVN1PROD with NOTICES
open market and a national market
system, and, in general to protect
investors and the public interest, by
mitigating risks to market participants of
human error in entering Limit Orders at
clearly unintended prices. The
proposals are appropriate and
reasonable, because they offer
protections for Limit Orders which
should encourage price continuity and,
in turn, protect investors and the public
interest by reducing executions
occurring at dislocated prices.
The proposed LOP feature would
assist with the maintenance of fair and
orderly markets by mitigating the risks
associated with errors resulting in
executions at prices that are away from
the Best Bid or Offer and potentially
erroneous. Further the proposal protects
investors from potentially receiving
executions away from the prevailing
prices at any given time. The Exchange
proposes LOP to avoid a series of
improperly priced aggressive orders
transacting in the Order Book. The LOP
Limit is appropriate because it seeks to
capture improperly priced Limit Orders
and reject them to reduce the risk of,
and to potentially prevent, the
automatic execution of Orders at prices
that may be considered clearly
erroneous. The System will only
execute Limit Orders priced within the
LOP Limit. The Exchange’s proposed
LOP Limit is a reasonable measure to
ensure prices remain within the
reasonable limits. This protection will
bolster the normal resilience and market
behavior that persistently produces
robust reference prices. This feature
should create a level of protection that
prevents the Limit Orders from entering
the Order Book outside of an acceptable
range for the Limit Order to execute.
The LOP will reduce the negative
impacts of sudden, unanticipated
volatility, and serve to preserve an
orderly market in a transparent and
uniform manner, increase overall
market confidence, and promote fair
and orderly markets and the protection
of investors. This feature is not optional
and is applicable to all members
submitting Limit Orders.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The LOP
feature will provide market participants
with additional price protection from
anomalous executions. This feature is
not optional and is applicable to all
members submitting Limit Orders.
Thus, the Exchange does not believe the
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proposal creates any significant impact
on competition. This type of risk
protection is in place today for NOM
Options Participants.12 Offering this
protection to the Nasdaq Market Center
will not impose any undue burden on
intra-market competition, rather, it
would permit equities and options
members to be protected in a similar
manner from erroneous executions.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2016–067 on the subject line.
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–
NASDAQ–2016–067 and should be
submitted on or before August 3, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Brent J. Fields,
Secretary.
[FR Doc. 2016–16487 Filed 7–12–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78249; File No. SR–BX–
2016–038]
Self-Regulatory Organizations;
NASDAQ BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend PRISM Pilot
Program Through January 18, 2017
July 7, 2016.
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–NASDAQ–2016–067. 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
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 29,
2016, NASDAQ BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
13 17
NOM Rules at Chapter VI, Section 6(c) and
Section 18.
PO 00000
12 See
Frm 00061
Fmt 4703
Sfmt 4703
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend BX
rules at Chapter VI, Section 9,
concerning a price-improvement
mechanism, ‘‘PRISM’’ to extend,
through January 18, 2017, a pilot
program (the ‘‘pilot’’) concerning (i) the
early conclusion of the PRISM Auction
(as described below); (ii) an unrelated
market or marketable limit order
(against the BX BBO) on the opposite
side of the market from the PRISM
Order received during the Auction will
not cause the Auction to end early and
will execute against interest outside of
the Auction; and (iii) no minimum size
requirement of orders. The current pilot
is scheduled to expire July 18, 2016.3
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqbx.cchwallstreet.com/,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
jstallworth on DSK7TPTVN1PROD with NOTICES
1. Purpose
The purpose of this proposed rule
change is to extend certain pilots within
Chapter VI, Section 9, entitled ‘‘Price
Improvement Auction (‘‘PRISM’’),
through January 18, 2017.
Background
The Exchange adopted PRISM in
November 2015 as a price-improvement
mechanism on the Exchange.4 This
mechanism permits a Participant (an
‘‘Initiating Participant’’) to
3 See Securities Exchange Release No. 76301
(October 29, 2015), 80 FR 68347 (November 4, 2015)
(SR–BX–2015–032).
4 Id.
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15:08 Jul 12, 2016
Jkt 238001
electronically submit for execution an
order it represents as agent on behalf of
a Public Customer,5 Professional
customer, broker dealer, or any other
entity (‘‘PRISM Order’’) against
principal interest or against any other
order it represents as agent (an
‘‘Initiating Order’’), provided it submits
the PRISM Order for electronic
execution into the PRISM Auction
(‘‘Auction’’) pursuant to the Chapter VI,
Section 9.6 All options traded on the
Exchange are eligible for PRISM.
Pilot Program
Three components of PRISM were
approved by the Commission on a pilot
basis: (1) The early conclusion of the
PRISM Auction; 7 (2) an unrelated
market or marketable limit order
(against the BX BBO) on the opposite
side of the market from the PRISM
Order received during the Auction will
not cause the Auction to end early and
will execute against interest outside of
the Auction; 8 and (3) no minimum size
requirement of orders. The Exchange
has provided the following additional
information on a monthly basis.9 The
pilots were approved for a pilot period
expiring on July 18, 2016.10
The Exchange notes that during the
pilot period it has been required to
submit, and has been submitting, certain
data periodically as required by the
Commission, to provide supporting
evidence that, among other things, there
is meaningful competition for all size
orders and that there is an active and
liquid market functioning on the
Exchange outside of the Auction
mechanism. Specifically, the Exchange
has submitted the following data as
specified in its approval order: 11
(1) The number of contracts (of orders
of 50 contracts or greater) entered into
the PRISM;
5 A Public Customer order does not include a
Professional order, and therefore a Professional
would not be entitled to Public Customer priority
as described herein. A Public Customer means a
person that is not a broker or dealer in securities.
See BX Options Rules at Chapter I, Section 1(a)(50).
A Public Customer order does not include a
Professional order for purposes of BX Rule at
Chapter VI, Section 10(1)(C)(1)(a), which governs
allocation priority. A ‘‘Professional’’ means any
person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in
listed options per day on average during a calendar
month for its own beneficial account(s). A
Participant or a Public Customer may, without
limitation, be a Professional. All Professional orders
shall be appropriately marked by Participants. See
BX Rules at Chapter I, Section 1(a)(49).
6 BX will only conduct an auction for Simple
Orders.
7 See Chapter VI, Section 9(ii)(B)(4).
8 See Chapter VI, Section 9(ii)(D).
9 See Chapter VI, Section 9(vii).
10 See note 3 above.
11 Id.
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Fmt 4703
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45335
(2) The number of contracts (of orders
of fewer than 50 contracts) entered into
the PRISM;
(3) The number of orders of 50
contracts or greater entered into the
PRISM; and
(4) The number of orders of fewer
than 50 contracts entered into the
PRISM.
The Exchange will continue to
provide such data. The Exchange
believes that, because the pilot has been
operating for a relatively short amount
of time, the proposed extension should
afford the Commission additional time
to evaluate the pilot. The Exchange
proposes to extend the pilot through
January 18, 2017.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,12
in general and with Section 6(b)(5) of
the Act,13 in that it is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and is not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers,
or to regulate by virtue of any authority
conferred by the Act matters not related
to the purposes of the Act or the
administration of the Exchange.
The Exchange believes that the
proposed rule change is also consistent
with Section 6(b)(8) of the Act 14 in that
it does not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
Specifically, the Exchange believes
that PRISM, including the rules to
which the pilot applies, results in
increased liquidity available at
improved prices, with competitive final
pricing out of the Initiating Participant’s
complete control. The Exchange
believes that PRISM promotes and
fosters competition and affords the
opportunity for price improvement to
more options contracts. The extension
proposal allows additional time for the
Commission to evaluate the pilot.
12 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
14 15 U.S.C. 78f(b)(8).
13 15
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45336
Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The proposal
extends existing pilots that apply to all
Exchange members, and enables the
Exchange to be competitive in respect of
other option exchanges that have similar
programs.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
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) of the Act 15 and
subparagraph (f)(6) of Rule 19b–4
thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii),18 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange requested that the
Commission waive the 30-day operative
delay. The Exchange stated that the
proposed rule change does not involve
any substantive changes to the
Exchange’s Rules and only seeks to
extend the previously approved PRISM
pilot. The Exchange also stated that the
extension will ensure fair competition
among exchanges by allowing the
Exchange to continue with this pilot
similar to other options exchanges that
operate auctions. Finally, the Exchange
stated that the waiver is consistent with
the protection of investors and the
jstallworth on DSK7TPTVN1PROD with NOTICES
15 15
U.S.C. 78s(b)(3)(a).
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.
17 17 CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(6)(iii).
16 17
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15:08 Jul 12, 2016
Jkt 238001
public interest because it will permit the
PRISM pilot to continue without
interruption and will allow the
Exchange to gather more information in
connection with the pilot.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest, as it
will allow the PRISM pilot to continue
uninterrupted, thereby avoiding any
potential investor confusion that could
result from a temporary interruption in
the pilot. Therefore, the Commission
designates the proposed rule change to
be operative on July 18, 2016.19
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.
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:
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–BX–
2016–038 and should be submitted on
or before August 3, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Brent J. Fields,
Secretary.
[FR Doc. 2016–16491 Filed 7–12–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–78215A]
• 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–
BX–2016–038 on the subject line.
Corrected Order Extending a
Temporary Exemption From
Compliance With Rules 13n–1 to 13n–
12 Under the Securities Exchange Act
of 1934
June 30, 2016.
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–BX–2016–038. 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
19 For purposes only of waiving the operative
delay, the Commission has considered the proposed
rule’s impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
I. Introduction
On March 18, 2016, under its
authority in section 36 of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’),
the Securities and Exchange
Commission (‘‘Commission’’) granted a
temporary exemption from compliance
with Rules 13n–1 to 13n–12 (‘‘SDR
Rules’’) until June 30, 2016. The
Commission also granted an extension
of the exemptions from Exchange Act
sections 13(n)(5)(D)(i), 13(n)(5)(F),
13(n)(5)(G), 13(n)(5)(H), 13(n)(7)(A),
13(n)(7)(B), 13(n)(7)(C) and 29(b)
provided in the DFA Effective Date
Order 1 (‘‘SDR Relief’’), as described in
the Commission’s March 18, 2016 order,
20 17
CFR 200.30–3(a)(12).
Temporary Exemptions and Other
Temporary Relief, Together with Information on
Compliance Dates for New Provisions of the
Exchange Act Applicable to Security-Based Swaps,
Exchange Act Release No. 64678 (June 15, 2011), 76
FR 36287 (June 22, 2011) (the ‘‘DFA Effective Date
Order’’).
1 See
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]]>Agencies
[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Notices]
[Pages 45334-45336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16491]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78249; File No. SR-BX-2016-038]
Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend PRISM
Pilot Program Through January 18, 2017
July 7, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 29, 2016, NASDAQ BX, Inc. (``BX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit
[[Page 45335]]
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend BX rules at Chapter VI, Section 9,
concerning a price-improvement mechanism, ``PRISM'' to extend, through
January 18, 2017, a pilot program (the ``pilot'') concerning (i) the
early conclusion of the PRISM Auction (as described below); (ii) an
unrelated market or marketable limit order (against the BX BBO) on the
opposite side of the market from the PRISM Order received during the
Auction will not cause the Auction to end early and will execute
against interest outside of the Auction; and (iii) no minimum size
requirement of orders. The current pilot is scheduled to expire July
18, 2016.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Release No. 76301 (October 29,
2015), 80 FR 68347 (November 4, 2015) (SR-BX-2015-032).
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqbx.cchwallstreet.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to extend certain
pilots within Chapter VI, Section 9, entitled ``Price Improvement
Auction (``PRISM''), through January 18, 2017.
Background
The Exchange adopted PRISM in November 2015 as a price-improvement
mechanism on the Exchange.\4\ This mechanism permits a Participant (an
``Initiating Participant'') to electronically submit for execution an
order it represents as agent on behalf of a Public Customer,\5\
Professional customer, broker dealer, or any other entity (``PRISM
Order'') against principal interest or against any other order it
represents as agent (an ``Initiating Order''), provided it submits the
PRISM Order for electronic execution into the PRISM Auction
(``Auction'') pursuant to the Chapter VI, Section 9.\6\ All options
traded on the Exchange are eligible for PRISM.
---------------------------------------------------------------------------
\4\ Id.
\5\ A Public Customer order does not include a Professional
order, and therefore a Professional would not be entitled to Public
Customer priority as described herein. A Public Customer means a
person that is not a broker or dealer in securities. See BX Options
Rules at Chapter I, Section 1(a)(50). A Public Customer order does
not include a Professional order for purposes of BX Rule at Chapter
VI, Section 10(1)(C)(1)(a), which governs allocation priority. A
``Professional'' means any person or entity that (i) is not a broker
or dealer in securities, and (ii) places more than 390 orders in
listed options per day on average during a calendar month for its
own beneficial account(s). A Participant or a Public Customer may,
without limitation, be a Professional. All Professional orders shall
be appropriately marked by Participants. See BX Rules at Chapter I,
Section 1(a)(49).
\6\ BX will only conduct an auction for Simple Orders.
---------------------------------------------------------------------------
Pilot Program
Three components of PRISM were approved by the Commission on a
pilot basis: (1) The early conclusion of the PRISM Auction; \7\ (2) an
unrelated market or marketable limit order (against the BX BBO) on the
opposite side of the market from the PRISM Order received during the
Auction will not cause the Auction to end early and will execute
against interest outside of the Auction; \8\ and (3) no minimum size
requirement of orders. The Exchange has provided the following
additional information on a monthly basis.\9\ The pilots were approved
for a pilot period expiring on July 18, 2016.\10\
---------------------------------------------------------------------------
\7\ See Chapter VI, Section 9(ii)(B)(4).
\8\ See Chapter VI, Section 9(ii)(D).
\9\ See Chapter VI, Section 9(vii).
\10\ See note 3 above.
---------------------------------------------------------------------------
The Exchange notes that during the pilot period it has been
required to submit, and has been submitting, certain data periodically
as required by the Commission, to provide supporting evidence that,
among other things, there is meaningful competition for all size orders
and that there is an active and liquid market functioning on the
Exchange outside of the Auction mechanism. Specifically, the Exchange
has submitted the following data as specified in its approval order:
\11\
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
(1) The number of contracts (of orders of 50 contracts or greater)
entered into the PRISM;
(2) The number of contracts (of orders of fewer than 50 contracts)
entered into the PRISM;
(3) The number of orders of 50 contracts or greater entered into
the PRISM; and
(4) The number of orders of fewer than 50 contracts entered into
the PRISM.
The Exchange will continue to provide such data. The Exchange
believes that, because the pilot has been operating for a relatively
short amount of time, the proposed extension should afford the
Commission additional time to evaluate the pilot. The Exchange proposes
to extend the pilot through January 18, 2017.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\12\ in general and with
Section 6(b)(5) of the Act,\13\ in that it is designed to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest; and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers, or to regulate by virtue of any authority conferred by the Act
matters not related to the purposes of the Act or the administration of
the Exchange.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is also
consistent with Section 6(b)(8) of the Act \14\ in that it does not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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\14\ 15 U.S.C. 78f(b)(8).
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Specifically, the Exchange believes that PRISM, including the rules
to which the pilot applies, results in increased liquidity available at
improved prices, with competitive final pricing out of the Initiating
Participant's complete control. The Exchange believes that PRISM
promotes and fosters competition and affords the opportunity for price
improvement to more options contracts. The extension proposal allows
additional time for the Commission to evaluate the pilot.
[[Page 45336]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposal extends existing
pilots that apply to all Exchange members, and enables the Exchange to
be competitive in respect of other option exchanges that have similar
programs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
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) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(a).
\16\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay. The Exchange
stated that the proposed rule change does not involve any substantive
changes to the Exchange's Rules and only seeks to extend the previously
approved PRISM pilot. The Exchange also stated that the extension will
ensure fair competition among exchanges by allowing the Exchange to
continue with this pilot similar to other options exchanges that
operate auctions. Finally, the Exchange stated that the waiver is
consistent with the protection of investors and the public interest
because it will permit the PRISM pilot to continue without interruption
and will allow the Exchange to gather more information in connection
with the pilot.
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will allow the PRISM pilot to continue uninterrupted, thereby
avoiding any potential investor confusion that could result from a
temporary interruption in the pilot. Therefore, the Commission
designates the proposed rule change to be operative on July 18,
2016.\19\
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\19\ For purposes only of waiving the operative delay, the
Commission has 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BX-2016-038 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-BX-2016-038. 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-BX-2016-038 and should be
submitted on or before August 3, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-16491 Filed 7-12-16; 8:45 am]
BILLING CODE 8011-01-P
