Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.18 To Address the Exchange's Liability for System Failures; Amend Rule 2.11 To Provide for an Error Account Maintained by the Exchange's Routing Broker; Adopt Rule 11.11(e) To Allow Cancellation of Orders When a System Failure Occurs; Amend Rule 1.5 To Reposition the Definition of a Trading Center; and Make Other Non-Substantive and Conforming Changes, 62187-62192 [2016-21644]
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Federal Register / Vol. 81, No. 174 / Thursday, September 8, 2016 / Notices
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BatsEDGX–
2016–48, and should be submitted on or
before September 29, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–21487 Filed 9–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78761; File No. SR–NSX–
2016–04]
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Amend
Rule 11.18 To Address the Exchange’s
Liability for System Failures; Amend
Rule 2.11 To Provide for an Error
Account Maintained by the Exchange’s
Routing Broker; Adopt Rule 11.11(e)
To Allow Cancellation of Orders When
a System Failure Occurs; Amend Rule
1.5 To Reposition the Definition of a
Trading Center; and Make Other NonSubstantive and Conforming Changes
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September 2, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
29, 2016, National Stock Exchange, Inc.
(‘‘NSX’’ or the ‘‘Exchange’’) 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
13 17
CFR 200.30–3(a)(12).
15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1
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change pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(6)(iii) 4
thereunder, which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to: (i)
amend NSX Rule 11.18, entitled
‘‘LIMITATION OF LIABILITY,’’ to allow
the Exchange to provide compensation
for losses sustained as a result of an
Exchange trading system (‘‘System’’) 5
failure (‘‘System Failure’’) or through a
negligent act or omission of an
Exchange employee; (ii) adopt new NSX
Rule 11.11(e), entitled Cancellation of
Orders By NSX and NSX Securities,6 to
provide authority to cancel orders as
deemed to be necessary to maintain fair
and orderly markets if a System Failure
occurs; (iii) amend NSX Rule 2.11,
currently entitled NSX Securities, LLC,
to provide for an error account
maintained by NSX Securities, LLC
(‘‘NSXS’’); and (iv) make changes to
certain definitional sections and adopt
other non-substantive and ministerial
amendments. The Exchange has
designated this proposal as ‘‘noncontroversial’’ and provided the
Commission with the notice required by
Rule 19b–4(f)(6)(iii) under the Act.7
The text of the proposed Rule change
is available on the Exchange’s Web site
at https://www.nsx.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 statutory
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.
15 U.S.C. 78s(b)(3)(A).
17 CFR 240.19b–4(f)(6)(iii).
5 Rule 1.5S.(4) defines the ‘‘System’’ as the
‘‘. . .electronic securities communications and
trading facility designated by the Board through
which orders. . .are consolidated for ranking and
execution.’’
6 NSX Securities, LLC is a facility of the Exchange
as defined in Section 3(a)(2) of the Exchange Act,
15 U.S.C. 78c(a)(2) and, as such, is subject to
Section 6 of the Exchange Act, 15 U.S.C. 78f. The
Exchange is responsible for filing with the
Commission rule changes and fees relating to the
outbound router function of NSXS.
7 17 CFR 240.19b–4(f)(6)(iii).
3
4
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62187
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to: (i) amend
NSX Rule 11.18 to establish a procedure
to compensate Equity Trading Permit
(‘‘ETP’’) Holders 8 for System Failures;
(ii) adopt Rule 11.11(e), Cancellation of
Orders By NSX or NSX Securities, to
provide that NSX or NSXS may cancel
orders as deemed necessary to maintain
fair and orderly markets if a System
Failure occurs at NSX, or at a routing
broker in connection with the routing
function provided under NSX Rules
2.11 and 11.15, or at another trading
center to which an NSX order has been
routed; (iii) amend NSX Rule 2.11 to
describe the operation of an error
account maintained by NSXS as the
Exchange’s outbound order routing
facility and by other routing brokerdealers that may be used to liquidate
unmatched executions when a System
Failure occurs; and (iv) amend NSX
Rule 1.5 to add the definition of a
‘‘Trading Center’’ by repositioning the
definition from its current placement in
NSX Rule 2.11(a) and make changes to
NSX Rule 11.15(a)(ii)(A) and
11.15(a)(ii)(B) in connection therewith.
The Exchange is also proposing certain
non-substantive, ministerial
amendments to Rules 1.5, 2.11 and
11.18.
Proposed Amendments to NSX Rule
11.18—Limitation of Liability
Currently, Rule 11.18 provides that
neither the Exchange nor Exchangerelated persons, which are defined in
current NSX Rule 11.18(A) as the
Exchange’s ‘‘agents, employees,
contractors, officers, directors,
committee members or affiliates,’’ shall
be liable to any User,9 ETP Holder or
persons associated therewith, for any
loss, damage, claim or expense growing
out of, inter alia, the use or enjoyment
of the System or any facility of the
Exchange. The Exchange is proposing to
amend Rule 11.18 to provide for the
payment of claims by ETP Holders for
losses sustained either as a result of a
8 Rule 1.5E.(1) defines ‘‘ETP’’ as an Equity
Trading Permit issued by the Exchange to a
registered broker or dealer for effecting approved
securities transactions on the Exchange’s trading
facilities.
9 A ‘‘User’’ is defined in Exchange Rule 1.5U.(1)
as ‘‘. . .any ETP Holder or Sponsored Participant
who is authorized to obtain access to the System[.]’’
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System Failure, which is defined in
proposed paragraph (d)(2) of NSX Rule
11.18 as ‘‘an actual malfunction in the
physical equipment and/or
programming in the Exchange’s system
or facilities that results in an incorrect
execution or no execution of a valid,
marketable order that was received and
acknowledged by Exchange systems,’’ or
losses sustained through the negligent
acts or omissions of an Exchange
employee. The proposal will allow the
Exchange to compensate an ETP Holder,
subject to specific monetary limits, for
losses that can be established as having
resulted from such an occurrence.
The Exchange proposes that, as to any
one or more claims made by a single
ETP Holder under the proposed rule for
losses occurring on a single trading day,
the Exchange shall not be liable in
excess of the greater of $100,000 or the
amount of any recovery obtained by the
Exchange under any applicable
insurance maintained by the
Exchange.10
As to the aggregate of all claims made
by all ETP Holders under the proposed
rule for losses occurring on a single
trading day, the Exchange shall not be
liable in excess of the greater of
$250,000 or the amount of any recovery
obtained by the Exchange under any
applicable insurance maintained by the
Exchange.11 For the aggregate of all
claims made by all ETP Holders under
the proposed rule during a single
calendar month, the Exchange shall not
be liable in excess of the greater of
$500,000 or the amount of any recovery
obtained by the Exchange under any
applicable insurance maintained by the
Exchange.12
As proposed in new subparagraph
(d)(6) of the rule, in the event that all
of the claims made under Rule 11.18
cannot be fully satisfied because in the
aggregate they exceed the applicable
maximum limitations provided in the
rule, then the maximum permitted
amount will be proportionally allocated
among all such claims arising during a
single trading day or single calendar
month based on the proportion that
each such claim bears to the total
amount of all such claims.
Further, the Exchange is proposing in
new subparagraph (d)(7) of the rule to
require that any claims for
reimbursement shall be in writing and
must be submitted before the close of
Regular Trading Hours 13 on the next
business day following the day on
10 Proposed
Rule 11.18(d)(3).
11 Proposed Rule 11.18(d)(4).
12 Proposed Rule 11.18(d)(5).
13 Rule 1.5R.(1) defines ‘‘Regular Trading Hours’’
as the time between 9:30 a.m. and 4:00 p.m. Eastern
Time.
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which the use of the System or
Exchange facilities, or the purported
negligent acts or omissions of an
Exchange employee, gave rise to the
claim. Additionally, pursuant to
proposed new subparagraph (d)(8), in
reviewing claims by ETP Holders
pursuant to NSX Rule 11.18(d), the
Exchange will verify that: (i) a valid
order was entered by the ETP Holder
and accepted and acknowledged by the
System; (ii) a System Failure or a
negligent act or omission by an
Exchange employee occurred during the
handling or execution of that order; and
(iii) the ETP Holder’s loss resulted from
the System Failure or negligent act or
omission by an Exchange employee. The
Exchange will also assess the extent to
which the conduct of the ETP Holder
may have contributed to the loss and
may adjust the amount to be paid on the
claim accordingly.
The Exchange’s proposed rule
amendments are similar to rules
adopted by a number of other national
securities exchanges that allow for
limited compensation for losses
resulting from system malfunctions or
negligent acts or omissions of exchange
employees.14 For example, NYSE Arca
Equities (‘‘NYSE Arca’’) Rule 13.2(b) is
substantively the same as proposed NSX
Rule 11.18(d)(1) in its description of the
occurrences that give rise to a claim for
compensation. The process that the
Exchange proposes to use in order to
verify a claim for compensation by an
ETP Holder under proposed Rules
11.18(d)(7) and (d)(8) is similar to the
process described in the rules of Bats
BZX Exchange, Inc. (‘‘BZX’’),15 Bats
BYX Exchange, Inc. (‘‘BYX’’),16 Bats
EDGA Exchange, Inc. (‘‘EDGA’’),17 and
Bats EDGX Exchange, Inc. (‘‘EDGX’’).18
In each of these exchange’s rule sets, the
exchange verifies that: (i) a valid order
was entered and accepted and
acknowledged by the exchange’s
system; and (ii) a system failure or
negligent act or omission of an exchange
employee occurred during the handling
or execution of that order. The
Exchange’s proposed Rule 11.18(d)(8),
14 See Securities Exchange Act Release No. 56085
(July 17, 2007), 72 FR 40348 (July 24, 2007) (SR–
NYSE–2007–09) (relating to amendments to New
York Stock Exchange Rule 18); Securities Exchange
Act Release No. 60794 (October 6, 2009), 74 FR
52522 (October 13, 2009) (SR–NASDAQ–2009–084)
(relating to amendments to NASDAQ Rule 4626);
Securities Exchange Act Release No. 58872 (October
28, 2008), 73 FR 65901 (November 5, 2008) (SR–
BATS–2008–008 (relating to amendments to Bats
Exchange, Inc. Rule 11.16); see also NYSE Arca
Equities Rule 13.2.
15 See BZX Rule 11.16(f).
16 See BYX Rule 11.16(f).
17 See EDGA Rule 11.14(f).
18 See EDGX Rule 11.14(f).
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however, specifies that the review
process of claims will include
verification that the ETP Holder’s loss
resulted from a System Failure or a
negligent act or omission by an
Exchange employee, as well as the
extent to which the ETP Holder’s
conduct may have contributed to the
loss; the amount to be paid on the claim
may be adjusted by the Exchange as a
result. In this regard, the proposed rule
is similar to New York Stock Exchange
(‘‘NYSE’’) Rule 18(d), which provides,
in relevant part, that the review of a
claim for compensation ‘‘will determine
whether the amount claimed should be
reduced based on the actions or
inactions of the claiming member
organization, including whether the
member organization made appropriate
efforts to mitigate its loss.’’
Additionally, the Exchange provides
for the same monetary compensation
formula under proposed subparagraphs
(d)(3)–(5) of Rule 11.18 as do the BZX,19
BYX,20 EDGA,21 and EDGX 22 exchanges
in their respective liability rules. The
Exchange proposes to adopt the rule
amendments proposed in this filing in
order to have similar authority as other
national securities exchanges in those
circumstances, and thereby promote
consistency among exchange rules.
The Exchange also proposes
ministerial amendments to amend Rule
11.18(A)–(C) to adjust the lettering from
its current all upper case format to
lower case (i.e., Rule 11.18(a), 11.18(b)
and 11.18(c)) and to adjust the text in
those paragraphs to be consistent with
style of text used throughout the
Exchange’s rule book.
Proposed NSX Rule 11.11(e)
The Exchange is proposing to adopt
NSX Rule 11.11(e), entitled Cancellation
of Orders By NSX or NSX Securities. As
proposed, the rule will provide that
NSX, NSXS, or a third-party routing
broker may cancel orders as deemed to
be necessary to maintain fair and
orderly markets if and when a systems,
technical, or operational issue occurs at
NSX, NSXS, or at a third-party routing
broker in connection with the routing
function provided under NSX Rules
2.11 and 11.15 23 or at another Trading
Center to which an NSX order has been
routed. A routing broker may only
cancel orders routed to another Trading
Center based on NSX’s standing or
specific instructions or as otherwise
19 See
BZX Rule 11.16(d)(1)–(3).
BYX Rule 11.16(d)(1)–(3).
21 See EDGA Rule 11.14(d)(1)–(3).
22 See EDGX Rule 11.14(d)(1)–(3).
23 Rule 11.15, Order Execution, describes the
process for the execution of orders on NSX and for
orders routed to other Trading Centers.
20 See
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provided in the Exchange’s rules.24 NSX
shall provide notice of the cancellation
to each affected ETP Holder via
telephonic communication and/or
electronic mail as soon as practicable.
The Exchange is proposing Rule
11.11(e) to gain the explicit authority to
cancel orders in the event of a System
Failure that, if not promptly addressed,
could be detrimental to the maintenance
of fair and orderly markets.25 This
provision would apply in all situations,
and not be limited to the routing
function. Other national securities
exchanges have adopted rules that, like
proposed Rule 11.11(e), provide the
authority to cancel orders as deemed
necessary for the maintenance of fair
and orderly markets.26 The requirement
for NSX to provide notice of any such
cancellation to the affected ETP Holders
as soon as practicable will benefit
market participants by allowing them to
determine alternatives in the handling
of their orders.
In addition, the Exchange is
proposing to make ministerial, nonsubstantive amendments to Rule
11.11(d) by renumbering current
subparagraphs (i) through (iv) as
subparagraphs (1) through (4). NSX is
not proposing any changes to the rule
text of these subparagraphs. The
Exchange is making this change to align
the subparagraph numbering under NSX
Rule 11.11(d) with the numbering used
in other sections of Rule 11.11.
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Proposed Amendments to NSX Rule
2.11
NSXS is the Exchange’s outbound
order routing facility. From time to time,
the Exchange, NSXS or one or more
unaffiliated third-party routing brokerdealers used by the Exchange to access
other Trading Centers may encounter
situations in which it becomes
necessary to cancel orders and resolve
one or more error positions.
The Exchange proposes to amend
Rule 2.11 to provide that NSXS and any
third-party routing broker-dealer used
by the Exchange to route orders to other
Trading Centers (collectively, the
‘‘Routing Broker’’) shall maintain an
24 See, e.g., Rule 11.11(d), Cancel/Replace
Messages and Rule 11.15(c), Special Rules for
Orders Routed to Other Trading Centers.
25 The definition of ‘‘maintenance of fair and
orderly markets’’ includes, but is not limited to, the
prevention of situations that would create a
potential market dislocation or result in executions
that would operate to cause an economic harm to
a market participant were the order or orders at
issue to be executed.
26 Examples of other exchange rules providing
authority to cancel orders to maintain fair and
orderly markets include NYSE Arca Rule 7.45(d)(1);
BZX Rule 2.11(a)(6); BYX Rule 2.11(a)(6); EDGA
Rule 2.11(a)(6); EDGX Rule 2.11(a)(6); and Chicago
Stock Exchange Article 20, Rule 12(a).
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account for the purpose of addressing
positions that result from a systems,
technical or operational issue at the
Exchange, the Routing Broker, or the
destination Trading Center that affects
one or more orders (‘‘Error Position’’).27
Specifically, under proposed Rule
2.11(a)(5), the Routing Broker would be
required to maintain an error account
for the purpose of liquidating an Error
Position acquired as a result of a System
Failure experienced by the Routing
Broker, the Exchange or at a Trading
Center, in connection with the order
routing process. The proposed
amendments provide that the Routing
Broker would only assume an Error
Position in its error account under
documented circumstances when the
Error Position could not fairly and
practicably be assigned to one or more
ETP Holders or if the Exchange
determines to cancel all orders affected
by the technical or systems issue. Such
circumstances include if an economic
harm would result or it would otherwise
be to the economic detriment of the ETP
Holder or its customer.
Proposed subparagraph (a)(5)(i) of
Rule 2.11 provides that errors to which
the rule applies include those caused by
any act or omission by NSX, a Routing
Broker, or at another Trading Center to
which an order has been routed and that
results in an unmatched trade position,
i.e., an execution of a routed order for
which there is no corresponding order
with which to pair the execution (each
a ‘‘routing error’’). Such routing errors
would include, without limitation,
positions resulting from determinations
by NSX or a Routing Broker to cancel an
order pursuant to proposed NSX Rule
11.11(e).
As proposed in Rule 2.11(a)(5)(ii), if
the Exchange or the Routing Broker
reasonably determines that there is
accurate and sufficient information
(including valid clearing information) to
assign the positions to all of the ETP
Holders affected by that systems,
technical or operational issue, sufficient
time pursuant to normal clearance and
settlement deadlines to evaluate the
information necessary to assign the
positions to all of the ETP Holders
affected by that systems, technical or
operational issue, and has not
determined to cancel all orders affected
by that systems, technical or operational
27 The Exchange notes that, in connection with
providing the routing function, a non-affiliated
Routing Broker currently may utilize its own error
account to liquidate Error Positions. It is reasonable
and appropriate to address routing errors through
the error account maintained by a non-affiliated
Routing Broker because, among other reasons, the
non-affiliated Routing Broker is, in fact, the
executing broker associated with these transactions.
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62189
issue, the Exchange or NSXS [sic] will
assign the full amount of the resulting
Error Position to one or more ETP
Holders. The ETP Holder would then be
responsible for liquidating the position
in its own error account. To the extent
that the Error Position resulted from a
System Failure at the Exchange or the
Routing Broker, the affected ETP Holder
would have the ability to file a claim for
reimbursement pursuant to the
proposed amendments to NSX Rule
11.18 discussed above.
As an example of such a situation, if
ETP Holder A placed an order to buy
100 shares of symbol XYZ, and a System
Failure caused the Routing Broker to
route an order for the wrong number of
shares (e.g., 1,000 shares), or route an
order for the correct number of shares
but in the wrong symbol (e.g., symbol
XYY instead of XYZ) then, in either
situation, the Routing Broker would
assign to ETP Holder A the full amount
of the resulting Error Position (in the
above examples, with respect to the
incorrect size, 1,000 shares of XYZ, of
which 900 shares would be the Error
Position or, with respect to the incorrect
symbol, 100 shares of XYY). Under
these circumstances, because the Error
Position would have been caused by an
Exchange or Routing Broker System
Failure, ETP Holder A would be
permitted to submit a claim for
reimbursement to the Exchange, subject
to the requirements and limitations of
proposed NSX Rule 11.18(d), to the
extent that ETP Holder A incurred a loss
after trading out of the Error Position.
Proposed Rule 2.11(a)(5)(iv) states
that, except to facilitate the clearing and
settlement process where a systems,
technical or operational issue prevents
an ETP Holder from providing valid
clearing instructions, the Routing Broker
shall not accept any positions in such
error account from an account of an ETP
Holder or permit any ETP Holder to
transfer any positions from the ETP
Holder’s account to a Routing Broker
error account. The exception is set forth
in Rule 2.11(a)(5)(v) and permits the
Routing Broker, in the absence of valid
clearing information attributable to a
systems, technical or operational issue,
to assume that ETP Holder’s side of the
trade so that the trade can be
automatically processed for clearing and
settlement on a locked-in basis pursuant
to Rule 11.17(b).
Proposed Rule 2.11(a)(6) requires the
Routing Broker to liquidate the Error
Positions as soon as practicable. The
Routing Broker could determine to
liquidate the position itself or have a
third-party broker-dealer liquidate the
position on the Routing Broker’s behalf.
Further, proposed subparagraph (a)(6)(i)
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requires that NSX and NSXS provide
complete time and price discretion for
the trading to liquidate the Error
Positions to a third-party broker-dealer
and shall not attempt to exercise any
influence or control over the timing or
methods of such trading. Subparagraph
(a)(6)(ii) provides that NSX and NSXS
shall establish, maintain, and enforce
written policies and procedures
reasonably designed to restrict the flow
of confidential and proprietary
information associated with the
liquidation of the Error Positions in
accordance with NSX Rule 2.11,28 and
prevent the use of information
associated with other orders subject to
the routing service when making
determinations regarding the liquidation
of Error Positions. In addition,
subparagraph (a)(6)(iii) provides that
NSX and NSXS shall make and keep
records to document all determinations
to treat positions as Error Positions and
all determinations for the assignment of
Error Positions to ETP Holders or the
liquidation of Error Positions, as well as
records associated with the liquidation
of Error Positions through a third-party
broker dealer in accordance with Rule
17a–4 under the Exchange Act.29
The Exchange notes that, in certain
circumstances, NSX and its Routing
Broker may not learn about an Error
Position until the following business
day (‘‘T+1’’). Examples of such
situations include (i) during the clearing
process when a routing destination has
submitted to Depository Trust Clearing
Corporation (‘‘DTCC’’) a transaction for
clearance and settlement for which NSX
or the Routing Broker never received an
execution confirmation; or (ii) when
another Trading Center does not
recognize a transaction submitted by a
Routing Broker to DTCC for clearance
and settlement. The affected ETP
Holder’s trade(s) cannot be nullified
absent express authority under
Exchange Rules.30 Accordingly, the
Exchange believes that the use of an
error account to liquidate the Error
Positions that may occur in these
circumstances is reasonable and
appropriate.
The Exchange’s proposed assignment
process is designed to ensure that an
28 Proposed Rule 2.11(a)(6)(ii) provides that NSX
or NSXS shall establish, maintain and enforce
written policies and procedures reasonably
designed to restrict the flow of confidential and
proprietary information associated with the
liquidation of the Error Positions in accordance
with Rule 2.11, and prevent the use of information
associated with other orders subject to the routing
services when making determinations regarding the
liquidation of Error Positions.
29 See 17 CFR 240.17a–4.
30 See, e.g., Rule 11.19, Clearly Erroneous
Executions.
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Error Position is assigned to ETP
Holders in a non-discriminatory manner
because the Exchange would attempt to
assign an Error Position to an ETP
Holder in every instance. If the Routing
Broker reasonably concludes that it is
unable to trace each erroneous
execution comprising an Error Position
back to one or more ETP Holder’s
orders, then the Routing Broker will
assume the entire amount of the Error
Position in its error account. Moreover,
under proposed Rule 2.11(a)(5)(iii), if
the Routing Broker reasonably
concludes, due to the number of
erroneous executions and/or the number
of ETP Holders potentially affected, that
it would not be able to trace each
erroneous execution comprising an
Error Position back to such ETP Holders
in a timely manner (which will be
defined to mean by the end of Regular
Trading Hours on the first business day
following the trade date on which the
Error Position was established (T+1)),
then the Routing Broker will assume the
entire amount of the Error Position in its
error account. When an Error Position is
acquired in the NSXS error account or
the error account of an unaffiliated
routing broker-dealer, it will be
liquidated as soon as practicable
pursuant to proposed subparagraph
(a)(6) of NSX Rule 2.11.
The Exchange also proposes two
ministerial amendments to Rule 2.11.
First, the Exchange proposes to remove
the comma in the title of the Rule to
align with the actual corporate name of
NSX Securities. Second, the Exchange
proposes to amend Rule 2.11(a) to add
‘‘NSXS’’ as an abbreviated term for NSX
Securities LLC.
Definition of Trading Center
The Exchange proposes to move the
definition of ‘‘Trading Center’’ from
NSX Rule 2.11, which pertains to NSXS,
to NSX Rule 1.5, which contains
definitions generally used throughout
the Exchange’s rules. Under NSX Rule
2.11(a), ‘‘Trading Center’’ is defined as
‘‘other securities exchanges, facilities of
securities exchanges, automated trading
systems, electronic communication
networks or other brokers or dealers.’’
The Exchange does not propose to
amend the definition of ‘‘Trading
Center.’’
The Exchange submits that relocating
the definition of ‘‘Trading Center’’ to the
Exchange’s general definitional rule will
enhance the clarity and ease of reference
of the Exchange’s Rules. With this
change, the Exchange will change NSX
Rule 11.15(a)(ii)(A) and (B) to remove
the clause ‘‘(as defined in NSX Rule
2.11)’’ in reference to the definition of
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Fmt 4703
Sfmt 4703
Trading Center, because the clause is no
longer applicable.
Lastly, the Exchange proposes to
remove the word ‘‘all’’ from the first
sentence of Rule 1.5, as the inclusion of
the word is unnecessary.
2. Statutory Basis
The Exchange submits that the
proposed rule change is consistent with
Section 6 of the Act 31 and the Rules and
regulations thereunder and, in
particular, the requirements of Section
6(b) of the Act.32 Specifically, the
Exchange submits that the proposal
furthers the objectives of Section
6(b)(5),33 in particular, as it is designed
to promote just and equitable principles
of trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, and
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,
brokers or dealers. The Exchange
submits that, in general, this proposal is
in keeping with those principles.
The proposed amendments to NSX
Rule 11.18 are consistent with Section
6(b)(5) of the Act in that they promote
just and equitable principles of trade by
providing the Exchange with the
authority to compensate ETP Holders
for losses resulting from System Failures
or the negligent conduct of an Exchange
employee, in amounts up to the
monetary limitations set forth in
subparagraphs (d)(3) through (d)(5) of
NSX Rule 11.18. Currently, market
participants experiencing a loss as a
result of such an occurrence have no
ability under Exchange rules to obtain
any compensation from the Exchange.
The proposed amendments would
enable the Exchange to provide
reasonable and equitable compensation
to parties who sustained losses as a
result of failure on the part of the
Exchange to properly handle an order.
Other exchanges have recognized the
need to provide such relief and have
amended their general liability rules to
permit limited compensation under
defined circumstances.34
The Exchange believes that the rule
provisions that establish the process for
an ETP Holder to obtain compensation
under the rule are consistent with
31 15
U.S.C. 78f.
U.S.C. 78f(b).
33 15 U.S.C. 78f(b)(5).
34 See note 14, supra.
32 15
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Federal Register / Vol. 81, No. 174 / Thursday, September 8, 2016 / Notices
Section 6(b)(5) of the Act in that they
provide a clear definition of what
constitutes a System Failure (i.e., an
actual malfunction in the physical
equipment and/or programming in the
Exchange’s systems or facilities that
results in an incorrect execution or no
execution of a valid, marketable order
that was received and acknowledged by
Exchange systems) and establish a
transparent process for ETP Holders to
submit a claim for compensation
pursuant to the rule. Specifically, a
claim for compensation must be
submitted by the close of Regular
Trading Hours on the next business day
following the occurrence that gives rise
to the claim. This time frame is
sufficient for ETP Holders to gather
information and submit a claim, while
also requiring that claims be submitted
in a timely manner. Thus, the time
window for submission of a claim is
reasonable because it balances the
Exchange’s interest in timely
submission with the ETP Holder’s
interest in having enough time to
prepare and submit a claim.
Similarly, the Exchange believes that
provisions of proposed Rule 11.18(d)(8)
that establish the criteria for reviewing
claims for compensation provide for a
transparent process in which the
Exchange will verify that: (i) A valid
order was entered by the ETP Holder
and accepted and acknowledged by the
Exchange’s system; (ii) an Exchange
system failure or a negligent act or
omission by an Exchange employee
occurred during the handling or
execution of that order; and (iii) that the
ETP Holder’s loss resulted from such
system failure or negligent act or
omission. The Exchange will assess the
extent to which the ETP Holder’s
conduct may have contributed to the
loss and may adjust the amount to be
paid on the claim by the Exchange.
The Exchange believes that these
provision are designed to, and will
operate to, further the objectives of
Section 6(b)(5) by promoting just and
equitable principles of trade, removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system and, in
general, protecting investors and the
public interest. The amendments
contained in NSX Rule 11.18(d) provide
clear standards for addressing claims
and are available to all ETP Holders,
and are not designed to permit unfair
discrimination between customers,
brokers or dealers, thus meeting the
requirement of Section 6(b)(5).
Proposed Rule 11.11(e) is consistent
with Section 6(b)(5) of the Act in that it
will allow NSX, NSXS, or a third-party
routing broker to cancel orders when it
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deems such action to be necessary for
the maintenance of fair and orderly
markets if a System Failure occurs. As
proposed, the Exchange submits that the
ability to take action to mitigate
potential harm to market participants in
cases where the handling of an order is
affected by a System Failure will
operate to promote just and equitable
principles of trade and protect investors
and the public interest.
The proposed amendments to Rule
2.11(a)(5) and (a)(6) governing the
process for liquidating errors resulting
from a technical or systems issue
affecting the routing function, and the
requirements for an error account
maintained by the Routing Broker, are
consistent with Section 6(b)(5) of the
Act in that they are designed to provide
a uniform and consistent approach to
handling such errors, thereby promoting
just and equitable principles of trade. As
noted above and as further described in
Section 8 of the Exchange’s rule filing,
the Exchange’s proposed rule
amendments align to a significant
degree with the rules of other national
securities exchanges and, in that regard,
the proposed amendments operate to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, protect investors and the public
interest.
Finally, the Exchange submits that its
proposed ministerial, non-substantive
amendments to certain rules, as
discussed above, are consistent with
Section 6(b)(5) of the Act. The changes
are designed to promote consistency,
transparency and ease of reference in
the Exchange’s Rules, and will thereby
operate to promote just and equitable
principles of trade and the protection of
investors and the public interest as
required by Section 6(b)(5).
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Exchange Act.
Allowing the Exchange to have the
authority to address System Failures in
a timely manner, including by canceling
an order where deemed necessary to
maintain fair and orderly markets, and
establishing a framework for
compensating market participants for
losses, will not burden competition
among ETP Holders or among NSX and
other exchanges. As noted above, other
national securities exchanges have
adopted similar rules and the Exchange
is seeking to align its error resolution
rules and processes with those already
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62191
widely adopted within the securities
industry.35
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited or
received any comments on the proposed
rule change from market participants or
others.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 36 and Rule 19b–4(f)(6)
thereunder.37
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NSX–2016–04 on the
subject line.
35 See
id.
U.S.C. 78s(b)(3)(A).
37 17 CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
36 15
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Federal Register / Vol. 81, No. 174 / Thursday, September 8, 2016 / Notices
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NSX–2016–04. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NSX–
2016–04 and should be submitted on or
before September 29, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
Brent J. Fields,
Secretary.
[FR Doc. 2016–21644 Filed 9–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78755; File No. SR–
NYSEArca–2016–103]
Self-Regulatory Organizations; NYSE
Arca Inc.; Notice of Designation of a
Longer Period for Commission Action
on Proposed Rule Change Amending
Rules 2.17(c) and 2.23(i) To Extend the
Time Within Which OTP Holders and
OTP Firms Must File a Uniform
Termination Notice for Securities
Industry Registration (‘‘U5’’)
September 1, 2016.
On July 14, 2016, NYSE Arca, Inc.
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 Rules 2.17(c) and
2.23(i) to extend the time within which
OTP Holders and OTP Firms must file
a U5. The proposed rule change was
published for comment in the Federal
Register on July 27, 2016.3 The
Commission received no comments in
response to the proposal. In response to
a related proposed rule change,4
however, the Commission received a
comment letter and a response to those
comments from the proposing
exchange.5
Section 19(b)(2) of the Act 6 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 September 10,
2016. The Commission is extending this
45-day time period.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 78381
(July 21, 2016), 81 FR 49286.
4 See Securities Exchange Act Release No. 78198
(June 30, 2016), 81 FR 44363.
5 See letter from Judith Shaw, President, North
American Securities Administrators Association,
Inc., to Brent J. Fields, Secretary, Securities and
Exchange Commission, dated August 3, 2016
(‘‘NASAA Letter’’) and letter from Elizabeth K.
King, General Counsel and Corporate Secretary,
New York Stock Exchange to Brent J. Fields,
Secretary, SEC, dated August 12, 2016.
6 15 U.S.C. 78s(b)(2).
mstockstill on DSK3G9T082PROD with NOTICES
2 17
38 17
CFR 200.30–3(a)(12).
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The Commission finds it 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 issues raised in the
NASAA Letter, as well as those in the
response from NYSE MKT LLC., in
connection with the proposed rule
change. Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,7
designates October 25, 2016, as the date
by which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NYSEArca–2016–103).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–21519 Filed 9–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78766; File No. SR–
BatsBYX–2016–17]
Self-Regulatory Organizations; Bats
BYX Exchange, Inc.; Notice of Filing of
Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed
Rule Change, as Modified by
Amendment No. 1, To Amend
Exchange Rule 11.27 To Describe
Changes to System Functionality
Necessary To Implement the
Regulation NMS Plan To Implement a
Tick Size Pilot Program
September 2, 2016.
I. Introduction
On June 29, 2016, Bats BYX
Exchange, Inc. (‘‘Exchange’’ or ‘‘BYX’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’
or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2
a proposed rule change to amend
Exchange Rule 11.27(a) to specify that
orders entered into the Exchange’s
Retail Price Improvement (‘‘RPI’’)
Program qualify for certain exceptions
to the Regulation NMS Plan to
Implement a Tick Size Pilot Program
(‘‘Plan’’ or ‘‘Pilot’’) and to adopt
Exchange Rule 11.27(c) to describe
changes to System 3 functionality to
7 Id.
8 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The term ‘‘System’’ is defined as the ‘‘electronic
communications and trading facility designated by
1 15
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]]>Agencies
[Federal Register Volume 81, Number 174 (Thursday, September 8, 2016)]
[Notices]
[Pages 62187-62192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21644]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78761; File No. SR-NSX-2016-04]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 11.18 To Address the Exchange's Liability for System
Failures; Amend Rule 2.11 To Provide for an Error Account Maintained by
the Exchange's Routing Broker; Adopt Rule 11.11(e) To Allow
Cancellation of Orders When a System Failure Occurs; Amend Rule 1.5 To
Reposition the Definition of a Trading Center; and Make Other Non-
Substantive and Conforming Changes
September 2, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 29, 2016, National Stock Exchange, Inc. (``NSX'' or the
``Exchange'') 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) \4\ thereunder, 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 is proposing to: (i) amend NSX Rule 11.18, entitled
``LIMITATION OF LIABILITY,'' to allow the Exchange to provide
compensation for losses sustained as a result of an Exchange trading
system (``System'') \5\ failure (``System Failure'') or through a
negligent act or omission of an Exchange employee; (ii) adopt new NSX
Rule 11.11(e), entitled Cancellation of Orders By NSX and NSX
Securities,\6\ to provide authority to cancel orders as deemed to be
necessary to maintain fair and orderly markets if a System Failure
occurs; (iii) amend NSX Rule 2.11, currently entitled NSX Securities,
LLC, to provide for an error account maintained by NSX Securities, LLC
(``NSXS''); and (iv) make changes to certain definitional sections and
adopt other non-substantive and ministerial amendments. The Exchange
has designated this proposal as ``non-controversial'' and provided the
Commission with the notice required by Rule 19b-4(f)(6)(iii) under the
Act.\7\
---------------------------------------------------------------------------
\5\ Rule 1.5S.(4) defines the ``System'' as the ``. .
.electronic securities communications and trading facility
designated by the Board through which orders. . .are consolidated
for ranking and execution.''
\6\ NSX Securities, LLC is a facility of the Exchange as defined
in Section 3(a)(2) of the Exchange Act, 15 U.S.C. 78c(a)(2) and, as
such, is subject to Section 6 of the Exchange Act, 15 U.S.C. 78f.
The Exchange is responsible for filing with the Commission rule
changes and fees relating to the outbound router function of NSXS.
\7\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The text of the proposed Rule change is available on the Exchange's
Web site at https://www.nsx.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 statutory basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The Exchange has prepared summaries, set
forth in sections A, B, and C below, of the most significant parts of
such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to: (i) amend NSX Rule 11.18 to establish a
procedure to compensate Equity Trading Permit (``ETP'') Holders \8\ for
System Failures; (ii) adopt Rule 11.11(e), Cancellation of Orders By
NSX or NSX Securities, to provide that NSX or NSXS may cancel orders as
deemed necessary to maintain fair and orderly markets if a System
Failure occurs at NSX, or at a routing broker in connection with the
routing function provided under NSX Rules 2.11 and 11.15, or at another
trading center to which an NSX order has been routed; (iii) amend NSX
Rule 2.11 to describe the operation of an error account maintained by
NSXS as the Exchange's outbound order routing facility and by other
routing broker-dealers that may be used to liquidate unmatched
executions when a System Failure occurs; and (iv) amend NSX Rule 1.5 to
add the definition of a ``Trading Center'' by repositioning the
definition from its current placement in NSX Rule 2.11(a) and make
changes to NSX Rule 11.15(a)(ii)(A) and 11.15(a)(ii)(B) in connection
therewith. The Exchange is also proposing certain non-substantive,
ministerial amendments to Rules 1.5, 2.11 and 11.18.
---------------------------------------------------------------------------
\8\ Rule 1.5E.(1) defines ``ETP'' as an Equity Trading Permit
issued by the Exchange to a registered broker or dealer for
effecting approved securities transactions on the Exchange's trading
facilities.
---------------------------------------------------------------------------
Proposed Amendments to NSX Rule 11.18--Limitation of Liability
Currently, Rule 11.18 provides that neither the Exchange nor
Exchange-related persons, which are defined in current NSX Rule
11.18(A) as the Exchange's ``agents, employees, contractors, officers,
directors, committee members or affiliates,'' shall be liable to any
User,\9\ ETP Holder or persons associated therewith, for any loss,
damage, claim or expense growing out of, inter alia, the use or
enjoyment of the System or any facility of the Exchange. The Exchange
is proposing to amend Rule 11.18 to provide for the payment of claims
by ETP Holders for losses sustained either as a result of a
[[Page 62188]]
System Failure, which is defined in proposed paragraph (d)(2) of NSX
Rule 11.18 as ``an actual malfunction in the physical equipment and/or
programming in the Exchange's system or facilities that results in an
incorrect execution or no execution of a valid, marketable order that
was received and acknowledged by Exchange systems,'' or losses
sustained through the negligent acts or omissions of an Exchange
employee. The proposal will allow the Exchange to compensate an ETP
Holder, subject to specific monetary limits, for losses that can be
established as having resulted from such an occurrence.
---------------------------------------------------------------------------
\9\ A ``User'' is defined in Exchange Rule 1.5U.(1) as ``. .
.any ETP Holder or Sponsored Participant who is authorized to obtain
access to the System[.]''
---------------------------------------------------------------------------
The Exchange proposes that, as to any one or more claims made by a
single ETP Holder under the proposed rule for losses occurring on a
single trading day, the Exchange shall not be liable in excess of the
greater of $100,000 or the amount of any recovery obtained by the
Exchange under any applicable insurance maintained by the Exchange.\10\
---------------------------------------------------------------------------
\10\ Proposed Rule 11.18(d)(3).
---------------------------------------------------------------------------
As to the aggregate of all claims made by all ETP Holders under the
proposed rule for losses occurring on a single trading day, the
Exchange shall not be liable in excess of the greater of $250,000 or
the amount of any recovery obtained by the Exchange under any
applicable insurance maintained by the Exchange.\11\ For the aggregate
of all claims made by all ETP Holders under the proposed rule during a
single calendar month, the Exchange shall not be liable in excess of
the greater of $500,000 or the amount of any recovery obtained by the
Exchange under any applicable insurance maintained by the Exchange.\12\
---------------------------------------------------------------------------
\11\ Proposed Rule 11.18(d)(4).
\12\ Proposed Rule 11.18(d)(5).
---------------------------------------------------------------------------
As proposed in new subparagraph (d)(6) of the rule, in the event
that all of the claims made under Rule 11.18 cannot be fully satisfied
because in the aggregate they exceed the applicable maximum limitations
provided in the rule, then the maximum permitted amount will be
proportionally allocated among all such claims arising during a single
trading day or single calendar month based on the proportion that each
such claim bears to the total amount of all such claims.
Further, the Exchange is proposing in new subparagraph (d)(7) of
the rule to require that any claims for reimbursement shall be in
writing and must be submitted before the close of Regular Trading Hours
\13\ on the next business day following the day on which the use of the
System or Exchange facilities, or the purported negligent acts or
omissions of an Exchange employee, gave rise to the claim.
Additionally, pursuant to proposed new subparagraph (d)(8), in
reviewing claims by ETP Holders pursuant to NSX Rule 11.18(d), the
Exchange will verify that: (i) a valid order was entered by the ETP
Holder and accepted and acknowledged by the System; (ii) a System
Failure or a negligent act or omission by an Exchange employee occurred
during the handling or execution of that order; and (iii) the ETP
Holder's loss resulted from the System Failure or negligent act or
omission by an Exchange employee. The Exchange will also assess the
extent to which the conduct of the ETP Holder may have contributed to
the loss and may adjust the amount to be paid on the claim accordingly.
---------------------------------------------------------------------------
\13\ Rule 1.5R.(1) defines ``Regular Trading Hours'' as the time
between 9:30 a.m. and 4:00 p.m. Eastern Time.
---------------------------------------------------------------------------
The Exchange's proposed rule amendments are similar to rules
adopted by a number of other national securities exchanges that allow
for limited compensation for losses resulting from system malfunctions
or negligent acts or omissions of exchange employees.\14\ For example,
NYSE Arca Equities (``NYSE Arca'') Rule 13.2(b) is substantively the
same as proposed NSX Rule 11.18(d)(1) in its description of the
occurrences that give rise to a claim for compensation. The process
that the Exchange proposes to use in order to verify a claim for
compensation by an ETP Holder under proposed Rules 11.18(d)(7) and
(d)(8) is similar to the process described in the rules of Bats BZX
Exchange, Inc. (``BZX''),\15\ Bats BYX Exchange, Inc. (``BYX''),\16\
Bats EDGA Exchange, Inc. (``EDGA''),\17\ and Bats EDGX Exchange, Inc.
(``EDGX'').\18\ In each of these exchange's rule sets, the exchange
verifies that: (i) a valid order was entered and accepted and
acknowledged by the exchange's system; and (ii) a system failure or
negligent act or omission of an exchange employee occurred during the
handling or execution of that order. The Exchange's proposed Rule
11.18(d)(8), however, specifies that the review process of claims will
include verification that the ETP Holder's loss resulted from a System
Failure or a negligent act or omission by an Exchange employee, as well
as the extent to which the ETP Holder's conduct may have contributed to
the loss; the amount to be paid on the claim may be adjusted by the
Exchange as a result. In this regard, the proposed rule is similar to
New York Stock Exchange (``NYSE'') Rule 18(d), which provides, in
relevant part, that the review of a claim for compensation ``will
determine whether the amount claimed should be reduced based on the
actions or inactions of the claiming member organization, including
whether the member organization made appropriate efforts to mitigate
its loss.''
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\14\ See Securities Exchange Act Release No. 56085 (July 17,
2007), 72 FR 40348 (July 24, 2007) (SR-NYSE-2007-09) (relating to
amendments to New York Stock Exchange Rule 18); Securities Exchange
Act Release No. 60794 (October 6, 2009), 74 FR 52522 (October 13,
2009) (SR-NASDAQ-2009-084) (relating to amendments to NASDAQ Rule
4626); Securities Exchange Act Release No. 58872 (October 28, 2008),
73 FR 65901 (November 5, 2008) (SR-BATS-2008-008 (relating to
amendments to Bats Exchange, Inc. Rule 11.16); see also NYSE Arca
Equities Rule 13.2.
\15\ See BZX Rule 11.16(f).
\16\ See BYX Rule 11.16(f).
\17\ See EDGA Rule 11.14(f).
\18\ See EDGX Rule 11.14(f).
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Additionally, the Exchange provides for the same monetary
compensation formula under proposed subparagraphs (d)(3)-(5) of Rule
11.18 as do the BZX,\19\ BYX,\20\ EDGA,\21\ and EDGX \22\ exchanges in
their respective liability rules. The Exchange proposes to adopt the
rule amendments proposed in this filing in order to have similar
authority as other national securities exchanges in those
circumstances, and thereby promote consistency among exchange rules.
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\19\ See BZX Rule 11.16(d)(1)-(3).
\20\ See BYX Rule 11.16(d)(1)-(3).
\21\ See EDGA Rule 11.14(d)(1)-(3).
\22\ See EDGX Rule 11.14(d)(1)-(3).
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The Exchange also proposes ministerial amendments to amend Rule
11.18(A)-(C) to adjust the lettering from its current all upper case
format to lower case (i.e., Rule 11.18(a), 11.18(b) and 11.18(c)) and
to adjust the text in those paragraphs to be consistent with style of
text used throughout the Exchange's rule book.
Proposed NSX Rule 11.11(e)
The Exchange is proposing to adopt NSX Rule 11.11(e), entitled
Cancellation of Orders By NSX or NSX Securities. As proposed, the rule
will provide that NSX, NSXS, or a third-party routing broker may cancel
orders as deemed to be necessary to maintain fair and orderly markets
if and when a systems, technical, or operational issue occurs at NSX,
NSXS, or at a third-party routing broker in connection with the routing
function provided under NSX Rules 2.11 and 11.15 \23\ or at another
Trading Center to which an NSX order has been routed. A routing broker
may only cancel orders routed to another Trading Center based on NSX's
standing or specific instructions or as otherwise
[[Page 62189]]
provided in the Exchange's rules.\24\ NSX shall provide notice of the
cancellation to each affected ETP Holder via telephonic communication
and/or electronic mail as soon as practicable.
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\23\ Rule 11.15, Order Execution, describes the process for the
execution of orders on NSX and for orders routed to other Trading
Centers.
\24\ See, e.g., Rule 11.11(d), Cancel/Replace Messages and Rule
11.15(c), Special Rules for Orders Routed to Other Trading Centers.
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The Exchange is proposing Rule 11.11(e) to gain the explicit
authority to cancel orders in the event of a System Failure that, if
not promptly addressed, could be detrimental to the maintenance of fair
and orderly markets.\25\ This provision would apply in all situations,
and not be limited to the routing function. Other national securities
exchanges have adopted rules that, like proposed Rule 11.11(e), provide
the authority to cancel orders as deemed necessary for the maintenance
of fair and orderly markets.\26\ The requirement for NSX to provide
notice of any such cancellation to the affected ETP Holders as soon as
practicable will benefit market participants by allowing them to
determine alternatives in the handling of their orders.
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\25\ The definition of ``maintenance of fair and orderly
markets'' includes, but is not limited to, the prevention of
situations that would create a potential market dislocation or
result in executions that would operate to cause an economic harm to
a market participant were the order or orders at issue to be
executed.
\26\ Examples of other exchange rules providing authority to
cancel orders to maintain fair and orderly markets include NYSE Arca
Rule 7.45(d)(1); BZX Rule 2.11(a)(6); BYX Rule 2.11(a)(6); EDGA Rule
2.11(a)(6); EDGX Rule 2.11(a)(6); and Chicago Stock Exchange Article
20, Rule 12(a).
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In addition, the Exchange is proposing to make ministerial, non-
substantive amendments to Rule 11.11(d) by renumbering current
subparagraphs (i) through (iv) as subparagraphs (1) through (4). NSX is
not proposing any changes to the rule text of these subparagraphs. The
Exchange is making this change to align the subparagraph numbering
under NSX Rule 11.11(d) with the numbering used in other sections of
Rule 11.11.
Proposed Amendments to NSX Rule 2.11
NSXS is the Exchange's outbound order routing facility. From time
to time, the Exchange, NSXS or one or more unaffiliated third-party
routing broker-dealers used by the Exchange to access other Trading
Centers may encounter situations in which it becomes necessary to
cancel orders and resolve one or more error positions.
The Exchange proposes to amend Rule 2.11 to provide that NSXS and
any third-party routing broker-dealer used by the Exchange to route
orders to other Trading Centers (collectively, the ``Routing Broker'')
shall maintain an account for the purpose of addressing positions that
result from a systems, technical or operational issue at the Exchange,
the Routing Broker, or the destination Trading Center that affects one
or more orders (``Error Position'').\27\ Specifically, under proposed
Rule 2.11(a)(5), the Routing Broker would be required to maintain an
error account for the purpose of liquidating an Error Position acquired
as a result of a System Failure experienced by the Routing Broker, the
Exchange or at a Trading Center, in connection with the order routing
process. The proposed amendments provide that the Routing Broker would
only assume an Error Position in its error account under documented
circumstances when the Error Position could not fairly and practicably
be assigned to one or more ETP Holders or if the Exchange determines to
cancel all orders affected by the technical or systems issue. Such
circumstances include if an economic harm would result or it would
otherwise be to the economic detriment of the ETP Holder or its
customer.
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\27\ The Exchange notes that, in connection with providing the
routing function, a non-affiliated Routing Broker currently may
utilize its own error account to liquidate Error Positions. It is
reasonable and appropriate to address routing errors through the
error account maintained by a non-affiliated Routing Broker because,
among other reasons, the non-affiliated Routing Broker is, in fact,
the executing broker associated with these transactions.
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Proposed subparagraph (a)(5)(i) of Rule 2.11 provides that errors
to which the rule applies include those caused by any act or omission
by NSX, a Routing Broker, or at another Trading Center to which an
order has been routed and that results in an unmatched trade position,
i.e., an execution of a routed order for which there is no
corresponding order with which to pair the execution (each a ``routing
error''). Such routing errors would include, without limitation,
positions resulting from determinations by NSX or a Routing Broker to
cancel an order pursuant to proposed NSX Rule 11.11(e).
As proposed in Rule 2.11(a)(5)(ii), if the Exchange or the Routing
Broker reasonably determines that there is accurate and sufficient
information (including valid clearing information) to assign the
positions to all of the ETP Holders affected by that systems, technical
or operational issue, sufficient time pursuant to normal clearance and
settlement deadlines to evaluate the information necessary to assign
the positions to all of the ETP Holders affected by that systems,
technical or operational issue, and has not determined to cancel all
orders affected by that systems, technical or operational issue, the
Exchange or NSXS [sic] will assign the full amount of the resulting
Error Position to one or more ETP Holders. The ETP Holder would then be
responsible for liquidating the position in its own error account. To
the extent that the Error Position resulted from a System Failure at
the Exchange or the Routing Broker, the affected ETP Holder would have
the ability to file a claim for reimbursement pursuant to the proposed
amendments to NSX Rule 11.18 discussed above.
As an example of such a situation, if ETP Holder A placed an order
to buy 100 shares of symbol XYZ, and a System Failure caused the
Routing Broker to route an order for the wrong number of shares (e.g.,
1,000 shares), or route an order for the correct number of shares but
in the wrong symbol (e.g., symbol XYY instead of XYZ) then, in either
situation, the Routing Broker would assign to ETP Holder A the full
amount of the resulting Error Position (in the above examples, with
respect to the incorrect size, 1,000 shares of XYZ, of which 900 shares
would be the Error Position or, with respect to the incorrect symbol,
100 shares of XYY). Under these circumstances, because the Error
Position would have been caused by an Exchange or Routing Broker System
Failure, ETP Holder A would be permitted to submit a claim for
reimbursement to the Exchange, subject to the requirements and
limitations of proposed NSX Rule 11.18(d), to the extent that ETP
Holder A incurred a loss after trading out of the Error Position.
Proposed Rule 2.11(a)(5)(iv) states that, except to facilitate the
clearing and settlement process where a systems, technical or
operational issue prevents an ETP Holder from providing valid clearing
instructions, the Routing Broker shall not accept any positions in such
error account from an account of an ETP Holder or permit any ETP Holder
to transfer any positions from the ETP Holder's account to a Routing
Broker error account. The exception is set forth in Rule 2.11(a)(5)(v)
and permits the Routing Broker, in the absence of valid clearing
information attributable to a systems, technical or operational issue,
to assume that ETP Holder's side of the trade so that the trade can be
automatically processed for clearing and settlement on a locked-in
basis pursuant to Rule 11.17(b).
Proposed Rule 2.11(a)(6) requires the Routing Broker to liquidate
the Error Positions as soon as practicable. The Routing Broker could
determine to liquidate the position itself or have a third-party
broker-dealer liquidate the position on the Routing Broker's behalf.
Further, proposed subparagraph (a)(6)(i)
[[Page 62190]]
requires that NSX and NSXS provide complete time and price discretion
for the trading to liquidate the Error Positions to a third-party
broker-dealer and shall not attempt to exercise any influence or
control over the timing or methods of such trading. Subparagraph
(a)(6)(ii) provides that NSX and NSXS shall establish, maintain, and
enforce written policies and procedures reasonably designed to restrict
the flow of confidential and proprietary information associated with
the liquidation of the Error Positions in accordance with NSX Rule
2.11,\28\ and prevent the use of information associated with other
orders subject to the routing service when making determinations
regarding the liquidation of Error Positions. In addition, subparagraph
(a)(6)(iii) provides that NSX and NSXS shall make and keep records to
document all determinations to treat positions as Error Positions and
all determinations for the assignment of Error Positions to ETP Holders
or the liquidation of Error Positions, as well as records associated
with the liquidation of Error Positions through a third-party broker
dealer in accordance with Rule 17a-4 under the Exchange Act.\29\
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\28\ Proposed Rule 2.11(a)(6)(ii) provides that NSX or NSXS
shall establish, maintain and enforce written policies and
procedures reasonably designed to restrict the flow of confidential
and proprietary information associated with the liquidation of the
Error Positions in accordance with Rule 2.11, and prevent the use of
information associated with other orders subject to the routing
services when making determinations regarding the liquidation of
Error Positions.
\29\ See 17 CFR 240.17a-4.
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The Exchange notes that, in certain circumstances, NSX and its
Routing Broker may not learn about an Error Position until the
following business day (``T+1''). Examples of such situations include
(i) during the clearing process when a routing destination has
submitted to Depository Trust Clearing Corporation (``DTCC'') a
transaction for clearance and settlement for which NSX or the Routing
Broker never received an execution confirmation; or (ii) when another
Trading Center does not recognize a transaction submitted by a Routing
Broker to DTCC for clearance and settlement. The affected ETP Holder's
trade(s) cannot be nullified absent express authority under Exchange
Rules.\30\ Accordingly, the Exchange believes that the use of an error
account to liquidate the Error Positions that may occur in these
circumstances is reasonable and appropriate.
---------------------------------------------------------------------------
\30\ See, e.g., Rule 11.19, Clearly Erroneous Executions.
---------------------------------------------------------------------------
The Exchange's proposed assignment process is designed to ensure
that an Error Position is assigned to ETP Holders in a non-
discriminatory manner because the Exchange would attempt to assign an
Error Position to an ETP Holder in every instance. If the Routing
Broker reasonably concludes that it is unable to trace each erroneous
execution comprising an Error Position back to one or more ETP Holder's
orders, then the Routing Broker will assume the entire amount of the
Error Position in its error account. Moreover, under proposed Rule
2.11(a)(5)(iii), if the Routing Broker reasonably concludes, due to the
number of erroneous executions and/or the number of ETP Holders
potentially affected, that it would not be able to trace each erroneous
execution comprising an Error Position back to such ETP Holders in a
timely manner (which will be defined to mean by the end of Regular
Trading Hours on the first business day following the trade date on
which the Error Position was established (T+1)), then the Routing
Broker will assume the entire amount of the Error Position in its error
account. When an Error Position is acquired in the NSXS error account
or the error account of an unaffiliated routing broker-dealer, it will
be liquidated as soon as practicable pursuant to proposed subparagraph
(a)(6) of NSX Rule 2.11.
The Exchange also proposes two ministerial amendments to Rule 2.11.
First, the Exchange proposes to remove the comma in the title of the
Rule to align with the actual corporate name of NSX Securities. Second,
the Exchange proposes to amend Rule 2.11(a) to add ``NSXS'' as an
abbreviated term for NSX Securities LLC.
Definition of Trading Center
The Exchange proposes to move the definition of ``Trading Center''
from NSX Rule 2.11, which pertains to NSXS, to NSX Rule 1.5, which
contains definitions generally used throughout the Exchange's rules.
Under NSX Rule 2.11(a), ``Trading Center'' is defined as ``other
securities exchanges, facilities of securities exchanges, automated
trading systems, electronic communication networks or other brokers or
dealers.'' The Exchange does not propose to amend the definition of
``Trading Center.''
The Exchange submits that relocating the definition of ``Trading
Center'' to the Exchange's general definitional rule will enhance the
clarity and ease of reference of the Exchange's Rules. With this
change, the Exchange will change NSX Rule 11.15(a)(ii)(A) and (B) to
remove the clause ``(as defined in NSX Rule 2.11)'' in reference to the
definition of Trading Center, because the clause is no longer
applicable.
Lastly, the Exchange proposes to remove the word ``all'' from the
first sentence of Rule 1.5, as the inclusion of the word is
unnecessary.
2. Statutory Basis
The Exchange submits that the proposed rule change is consistent
with Section 6 of the Act \31\ and the Rules and regulations thereunder
and, in particular, the requirements of Section 6(b) of the Act.\32\
Specifically, the Exchange submits that the proposal furthers the
objectives of Section 6(b)(5),\33\ in particular, as it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, and 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, brokers or
dealers. The Exchange submits that, in general, this proposal is in
keeping with those principles.
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\31\ 15 U.S.C. 78f.
\32\ 15 U.S.C. 78f(b).
\33\ 15 U.S.C. 78f(b)(5).
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The proposed amendments to NSX Rule 11.18 are consistent with
Section 6(b)(5) of the Act in that they promote just and equitable
principles of trade by providing the Exchange with the authority to
compensate ETP Holders for losses resulting from System Failures or the
negligent conduct of an Exchange employee, in amounts up to the
monetary limitations set forth in subparagraphs (d)(3) through (d)(5)
of NSX Rule 11.18. Currently, market participants experiencing a loss
as a result of such an occurrence have no ability under Exchange rules
to obtain any compensation from the Exchange. The proposed amendments
would enable the Exchange to provide reasonable and equitable
compensation to parties who sustained losses as a result of failure on
the part of the Exchange to properly handle an order. Other exchanges
have recognized the need to provide such relief and have amended their
general liability rules to permit limited compensation under defined
circumstances.\34\
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\34\ See note 14, supra.
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The Exchange believes that the rule provisions that establish the
process for an ETP Holder to obtain compensation under the rule are
consistent with
[[Page 62191]]
Section 6(b)(5) of the Act in that they provide a clear definition of
what constitutes a System Failure (i.e., an actual malfunction in the
physical equipment and/or programming in the Exchange's systems or
facilities that results in an incorrect execution or no execution of a
valid, marketable order that was received and acknowledged by Exchange
systems) and establish a transparent process for ETP Holders to submit
a claim for compensation pursuant to the rule. Specifically, a claim
for compensation must be submitted by the close of Regular Trading
Hours on the next business day following the occurrence that gives rise
to the claim. This time frame is sufficient for ETP Holders to gather
information and submit a claim, while also requiring that claims be
submitted in a timely manner. Thus, the time window for submission of a
claim is reasonable because it balances the Exchange's interest in
timely submission with the ETP Holder's interest in having enough time
to prepare and submit a claim.
Similarly, the Exchange believes that provisions of proposed Rule
11.18(d)(8) that establish the criteria for reviewing claims for
compensation provide for a transparent process in which the Exchange
will verify that: (i) A valid order was entered by the ETP Holder and
accepted and acknowledged by the Exchange's system; (ii) an Exchange
system failure or a negligent act or omission by an Exchange employee
occurred during the handling or execution of that order; and (iii) that
the ETP Holder's loss resulted from such system failure or negligent
act or omission. The Exchange will assess the extent to which the ETP
Holder's conduct may have contributed to the loss and may adjust the
amount to be paid on the claim by the Exchange.
The Exchange believes that these provision are designed to, and
will operate to, further the objectives of Section 6(b)(5) by promoting
just and equitable principles of trade, removing impediments to and
perfecting the mechanism of a free and open market and a national
market system and, in general, protecting investors and the public
interest. The amendments contained in NSX Rule 11.18(d) provide clear
standards for addressing claims and are available to all ETP Holders,
and are not designed to permit unfair discrimination between customers,
brokers or dealers, thus meeting the requirement of Section 6(b)(5).
Proposed Rule 11.11(e) is consistent with Section 6(b)(5) of the
Act in that it will allow NSX, NSXS, or a third-party routing broker to
cancel orders when it deems such action to be necessary for the
maintenance of fair and orderly markets if a System Failure occurs. As
proposed, the Exchange submits that the ability to take action to
mitigate potential harm to market participants in cases where the
handling of an order is affected by a System Failure will operate to
promote just and equitable principles of trade and protect investors
and the public interest.
The proposed amendments to Rule 2.11(a)(5) and (a)(6) governing the
process for liquidating errors resulting from a technical or systems
issue affecting the routing function, and the requirements for an error
account maintained by the Routing Broker, are consistent with Section
6(b)(5) of the Act in that they are designed to provide a uniform and
consistent approach to handling such errors, thereby promoting just and
equitable principles of trade. As noted above and as further described
in Section 8 of the Exchange's rule filing, the Exchange's proposed
rule amendments align to a significant degree with the rules of other
national securities exchanges and, in that regard, the proposed
amendments operate to remove impediments to and perfect the mechanism
of a free and open market and a national market system and, in general,
protect investors and the public interest.
Finally, the Exchange submits that its proposed ministerial, non-
substantive amendments to certain rules, as discussed above, are
consistent with Section 6(b)(5) of the Act. The changes are designed to
promote consistency, transparency and ease of reference in the
Exchange's Rules, and will thereby operate to promote just and
equitable principles of trade and the protection of investors and the
public interest as required by Section 6(b)(5).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. Allowing the
Exchange to have the authority to address System Failures in a timely
manner, including by canceling an order where deemed necessary to
maintain fair and orderly markets, and establishing a framework for
compensating market participants for losses, will not burden
competition among ETP Holders or among NSX and other exchanges. As
noted above, other national securities exchanges have adopted similar
rules and the Exchange is seeking to align its error resolution rules
and processes with those already widely adopted within the securities
industry.\35\
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\35\ See id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited or received any comments on the
proposed rule change from market participants or others.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \36\ and Rule 19b-4(f)(6)
thereunder.\37\
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\36\ 15 U.S.C. 78s(b)(3)(A).
\37\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NSX-2016-04 on the subject line.
[[Page 62192]]
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSX-2016-04. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NSX-2016-04 and should be
submitted on or before September 29, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-21644 Filed 9-7-16; 8:45 am]
BILLING CODE 8011-01-P
