Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.27(b) Regarding the Data Collection Requirements of the Regulation NMS Plan To Implement a Tick Size Pilot Program, 63561-63565 [2016-22146]

Download as PDF Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices respondent, for a total burden of 2.5 hours per year. The staff estimates that the average internal compliance cost per hour is approximately $343. Therefore, the estimated total cost of compliance for the respondents is approximately $858. Providing the information on the application is mandatory in order to withdraw from registration with the Commission as a bank municipal securities dealer. The information contained in the notice will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: September 9, 2016. Brent J. Fields, Secretary. [FR Doc. 2016–22170 Filed 9–14–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736. sradovich on DSK3GMQ082PROD with NOTICES Extension: Rule 15Ba2–1 and Form MSD; SEC File No. 270–0088; OMB Control No. 3235–0083. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for extension of the previously approved collection of VerDate Sep<11>2014 17:34 Sep 14, 2016 Jkt 238001 information provided for in Rule 15Ba2–1 (17 CFR 240.15Ba2–1) and Form MSD (17 CFR 249.1100) under the Securities Exchange Act of 1934 (‘‘Exchange Act’’) (17 U.S.C. 78a et seq.). Rule 15Ba2–1 provides that an application for registration with the Commission by a bank municipal securities dealer must be filed on Form MSD. The Commission uses the information obtained from Form MSD filings to determine whether bank municipal securities dealers meet the standards for registration set forth in the Act, to maintain a central registry where members of the public may obtain information about particular bank municipal securities dealers, and to develop risk assessment information about bank municipal securities dealers. Based upon past submissions, the staff estimates that approximately 21 respondents will utilize this application procedure annually. The staff estimates that the average number of hours necessary to comply with the requirements of Rule 15Ba2–1 and Form MSD is 1.5 hours per respondent, for a total burden of approximately 31.5 hours per year. The staff estimates that the average internal compliance cost per hour is approximately $343. Therefore, the estimated total annual cost of compliance for the respondents is approximately $10,805. Rule 15Ba2–1 does not contain an explicit recordkeeping requirement, but the rule does require the prompt correction of any information on Form MSD that becomes inaccurate, meaning that bank municipal securities dealers need to maintain a current copy of Form MSD indefinitely. Providing the information on the application is mandatory in order to register with the Commission as a bank municipal securities dealer. The information contained in the application will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 63561 100 F Street NE., Washington, DC 20549, or by sending an email to: PRA_ Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: September 9, 2016. Brent J. Fields, Secretary. [FR Doc. 2016–22169 Filed 9–14–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78796; File No. SR– BatsBZX–2016–55] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.27(b) Regarding the Data Collection Requirements of the Regulation NMS Plan To Implement a Tick Size Pilot Program September 9, 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 August 26, 2016, Bats BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6)(iii) thereunder,4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend Exchange Rule 11.27(b) regarding the data collection requirements of the Regulation NMS Plan to Implement a Tick Size Pilot Program (‘‘Plan’’).5 The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.com, at the principal office of the Exchange, and at 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6)(iii). 5 See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (‘‘Approval Order’’). 2 17 E:\FR\FM\15SEN1.SGM 15SEN1 63562 Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose On August 25, 2014, the Exchange, and several other self-regulatory organizations (the ‘‘Participants’’) filed with the Commission, pursuant to Section 11A of the Act 6 and Rule 608 of Regulation NMS thereunder,7 the Plan to Implement a Tick Size Pilot Program (the ‘‘Plan’’).8 The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014.9 The Plan was published for comment in the Federal Register on November 7, 2014, and approved by the Commission, as modified, on May 6, 2015.10 The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stock of small-capitalization companies. Each Participant is required to comply, and to enforce compliance by its member organizations, as applicable, with the provisions of the Plan. The Plan provides for the creation of a group of Pilot Securities, which shall be placed in a control group and three separate test groups, with each subject to varying quoting and trading increments. Pilot Securities in the control group will be quoted at the current tick size increment of $0.01 per share and will trade at the currently 6 15 U.S.C. 78k–1. CFR 242.608. 8 See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014. 9 See Securities Exchange Act Release No. 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). 10 See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (‘‘Approval Order’’). 7 17 VerDate Sep<11>2014 17:34 Sep 14, 2016 Jkt 238001 permitted increments. Pilot Securities in the first test group will be quoted in $0.05 minimum increments but will continue to trade at any price increment that is currently permitted.11 Pilot Securities in the second test group (‘‘Test Group Two’’) will be quoted in $0.05 minimum increments and will trade at $0.05 minimum increments subject to a midpoint exception, a retail investor order exception, and a negotiated trade exception.12 Pilot Securities in the third test group (‘‘Test Group Three’’) will be subject to the same quoting and trading increments as Test Group Two, and also will be subject to the ‘‘Trade-at’’ requirement to prevent price matching by a market participant that is not displaying at the price of a Trading Center’s ‘‘Best Protected Bid’’ or ‘‘Best Protected Offer,’’ unless an enumerated exception applies.13 In addition to the exceptions provided under Test Group Two, an exception for Block Size orders and exceptions that mirror those under Rule 611 of Regulation NMS 14 will apply to the Trade-at requirement. The Plan also requires a Trading Center 15 or a Market Maker 16 to collect and transmit certain data to its designated examining authority (‘‘DEA’’), and requires DEAs to transmit this data to the Commission. Participants that operate a Trading Center also are required under the Plan to collect certain data, which is then transmitted directly to the Commission. With respect to Trading Centers, Appendix B.I to the Plan (Market Quality Statistics) requires a Trading Center to submit to the Participant that is its DEA a variety of market quality statistics. Appendix B.II to the Plan (Market and Marketable Limit Order Data) requires a Trading Center to submit information to its DEA relating to market orders and marketable limit orders, including the time of order receipt, order type, the order size, and 11 See Section VI(B) of the Plan. Section VI(C) of the Plan. 13 See Section VI(D) of the Plan. 14 17 CFR 242.611. 15 The Plan incorporates the definition of a ‘‘Trading Center’’ from Rule 600(b)(78) of Regulation NMS. Regulation NMS defines a ‘‘Trading Center’’ as ‘‘a national securities exchange or national securities association that operates an SRO trading facility, an alternative trading system, an exchange market maker, an OTC market maker, or any other broker or dealer that executes orders internally by trading as principal or crossing orders as agent.’’ See 17 CFR 242.600(b). 16 The Plan defines a Market Maker as ‘‘a dealer registered with any self-regulatory organization, in accordance with the rules thereof, as (i) a market maker or (ii) a liquidity provider with an obligation to maintain continuous, two-sided trading interest.’’ 12 See PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 the National Best Bid and National Best Offer quoted price. With respect to Market Makers, Appendix B.III requires a Participant that is a national securities exchange to collect daily Market Maker Registration statistics. Appendix B.IV requires a Participant to collect data related to Market Maker participation with respect to each Market Maker engaging in trading activity on a Trading Center operated by the Participant. Appendix C.I requires a Participant to collect data related to Market Maker profitability from each Market Maker for which it is the DEA. Appendix C.II requires the Participant, as DEA, to aggregate the Appendix C.I data, and to transmit this data to the Commission. The Commission approved the Pilot on a two-year basis, with implementation to begin no later than May 6, 2016.17 On November 6, 2015, the SEC exempted the Participants from implementing the pilot until October 3, 2016.18 As set forth in Appendices B and C to the Plan, data that is reported pursuant to the appendices shall be provided for dates starting six months prior to the Pilot Period through six months after the end of the Pilot Period. Under the revised Pilot implementation date, the Pre-Pilot data collection period commenced on April 4, 2016. On November 13, 2015, the Exchange filed with the Commission a proposed rule change to adopt Exchange Rule 11.27(b) to implement the data collection requirements of the Plan.19 On December 9, 2015, FINRA, on behalf of the Plan Participants, submitted an exemptive request to the Commission, seeking an exemption from certain data collection and reporting requirements set forth in the Plan.20 On February 10, 17 See Approval Order at 27533 and 27545. Securities Exchange Act Release No. 76382 (November 6, 2015), 80 FR 70284 (November 13, 2015) (File No. 4–657). 19 See Securities Exchange Act Release No. 76524 (November 19, 2015), 80 FR 75141 (November 25, 2015) (Notice of Filing of File No. SR–BATS–2015– 102). The Exchange also submitted a proposed rule change to implement the quoting and trading requirements of the Plan. See Securities Exchange Act Release No. 76552 (December 3, 2015), 80 FR 76591 (December 9, 2015) (Notice of Filing of File No. SR–BATS–2015–108). The Commission approved that proposal on February 23, 2016. See Securities Exchange Act Release No. 77291 (March 3, 2016), 81 FR 12543 (March 9, 2016) (Order Approving File No. SR–BATS–2015–108). 20 See letter from Marcia E. Asquith, Senior Vice President and Corporate Secretary, FINRA dated December 9, 2015 to Robert W. Errett, Deputy Secretary, Commission (‘‘Exemption Request’’). The Commission, pursuant to its authority under Rule 608(e) of Regulation NMS, granted the Exchange a limited exemption from the requirement to comply with certain provisions of the Plan as specified in the letter and noted herein. See letter from David Shillman, Associate Director, Division of Trading 18 See E:\FR\FM\15SEN1.SGM 15SEN1 Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES 2016, the Commission approved the Exchange’s rule change, as amended, to implement the data collection requirements of the Plan, and also granted exemptive relief from complying with certain data collection and reporting requirements in the Plan.21 The Exchange now proposes to further amend Rule 11.27(b) to modify additional data collection and reporting requirements.22 First, Appendix B.I.a(21) through B.I.a(27) currently requires that Trading Centers report the cumulative number of shares of cancelled orders during a specified duration of time after receipt of the order that was cancelled. The Exchange and the other Participants believe that, for purposes of reporting cancelled orders, it is appropriate to categorize unexecuted Immediate or Cancel orders separately as one bucket irrespective of the duration of time after order receipt, i.e., without a time increment, to better differentiate orders cancelled subsequent to entry from those where the customer’s intent prior to order entry was to cancel the order if no execution could be immediately obtained. The Exchange, therefore, proposes to modify Supplementary Material [sic].04 to provide that unexecuted Immediate or Cancel orders shall be categorized separately for purposes of Appendix B.I.a(21) through B.I.a(27). The second change relates to the reporting of daily market quality statistics pursuant to Appendix B.I. Currently, Appendix B.I sets forth categories of orders, including market orders, marketable limit orders, and inside-the-quote resting limit orders, for which daily market quality statistics must be reported. The Exchange and the other Participants have determined that it is appropriate to include an order type for limit orders priced more than $0.10 away from the NBBO for purposes of Appendix B reporting. The Exchange therefore proposes to amend Supplementary Material [sic].06 to provide that limit orders priced more than $0.10 away from the NBBO shall be and Markets, Commission to Eric Swanson, General Counsel, the Exchange, dated February 10, 2016 (‘‘Exemption Letter’’). 21 See Securities Exchange Act No. 77105 (February 10, 2016), 81 FR 8112 (February 17, 2016) (Order Approving File No. SR–BATS–2015–102); see letter from David S. Shillman, Associate Director, Division of Trading and Markets, Commission, to Eric Swanson, Executive Vice President, General Counsel and, the Exchange, dated February 10, 2016. 22 The Exchange notes that, in connection with this proposed rule change, FINRA, on behalf of the Plan Participants, intends to file an exemptive request seeking relief from certain of the Plan’s data collection requirements. VerDate Sep<11>2014 17:34 Sep 14, 2016 Jkt 238001 included as an order type for purposes of Appendix B reporting, and shall be assigned the number (22). These orders are not currently required to be reported pursuant to Appendix B, and The Exchange and the other Participants believe that requiring the reporting of such orders will produce a more comprehensive data set. The third change relates to the reporting of market quality statistics pursuant to Appendix B.I for a variety of order types, including inside-thequote resting limit orders (12), at-thequote resting limit orders (13), and nearthe-quote resting limit orders (within $0.10 of the NBBO) (14). The Exchange and the other Participants believe that it is appropriate to require Trading Centers to report all orders that fall within these categories, and not just those orders that are ‘‘resting.’’ The Exchange, therefore, proposes to amend Supplementary Material .[sic]06 to make this change. In the fourth change, the Exchange proposes to add new Supplementary Material [sic].09 to modify the manner in which market maker participation statistics are calculated. Currently, Appendix B.IV provides that market maker participation statistics shall be calculated based on share participation, trade participation, cross-quote share (trade) participation, inside-the-quote share (trade) participation, at-the-quote share (trade) participation, and outsidethe-quote share (trade) participation. The Exchange and the other Participants have determined that it is appropriate to add the count of the number of Market Makers used in the calculation of share (trade) participation to each category. The Exchange is therefore proposing this change as part of Supplementary Material [sic].09. In addition, Appendix B.IV(b) and (c) currently require that, when aggregating across Market Makers, share participation and trade participation shall be calculated using the share-weighted average and tradeweighted average, respectively. The Exchange and the other Participants believe that it is more appropriate to calculate share and trade participation by providing the total count of shares or trades, as applicable, rather than weighted averages, and the Exchange is therefore proposing this change as part of Supplementary Material [sic].09. The fifth change relates to the NBBO that a Trading Center is required to use when performing certain quote-related calculations. When calculating crossquote share (trade) participation pursuant to Appendix B.IV(d) and inside-the-quote share (trade) participation pursuant to Appendix B.IV(e), the Plan requires the Trading PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 63563 Center to utilize the NBBO at the time of the trade for both share and trade participation calculations. When calculating at-the-quote share (trade) participation and outside-the-quote share (trade) participation pursuant to Appendix B.IV(f) and (g), the Plan allows the Trading Center to utilize the National Best Bid or National Best Offer (NBBO) at the time of or immediately before the trade for both share and trade participation calculations. The Exchange and the other Participants believe that it is appropriate to calculate all quote participation (cross-quote share (trade) participation, inside-thequote share (trade) participation, at-thequote share (trade) participation and outside-the-quote share (trade) participation) solely by reference to the NBBO in effect immediately prior to the trade. The Exchange therefore proposes to make this change as part of Supplementary Material [sic].09. Finally, the Exchange proposes to change the end date until which the PrePilot Data Collection Securities shall be used to fulfill the Plan’s data collection requirements. Currently, Supplementary Material [sic].10 provides that Pre-Pilot Data Collection Securities are the securities designated by the Participants for purposes of the data collection requirements described in Items I, II and IV of Appendix B and Item I of Appendix C to the Plan for the period beginning six months prior to the Pilot Period and ending on the trading day immediately preceding the Pilot Period. The Exchange and the other Participants believe that it is appropriate to use the Pilot Securities to satisfy the Plan’s data collection requirements prior to the commencement of the Pilot. According, the Exchange is revising Supplementary Material [sic].10 (which will be renumbered as Supplementary Material [sic].11) to provide that the Pre-Pilot Data Collection Securities shall be used to satisfy the Plan’s data collection requirements through thirty-one days prior to the Pilot Period, after which time the Pilot Securities shall be used for purposes of the data collection requirements.23 23 After regular trading hours on September 2, 2016, the national securities exchanges will establish which securities will be included as Pilot Securities for purposes of the Plan. The Exchange and the other Participants have determined that members should use the Pilot Securities list for data collection purposes once it becomes available. Thus, the proposed rule change requires that, beginning thirty days prior to the first day of the Pilot Period—i.e., September 3, 2016—the Exchange and the Exchange members will comply with the data collection obligations of the Plan by collecting data on the Pilot Securities. As a result, beginning on September 3, 2016, members must migrate from using the Exchange’s published Pre-Pilot Data E:\FR\FM\15SEN1.SGM Continued 15SEN1 63564 Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices As noted in Item 2 of this filing, the Exchange has filed the proposed rule change for immediate effectiveness. The Exchange has requested that the SEC waive the 30-day operative period so that the proposed rule change can become operative on August 30, 2016. sradovich on DSK3GMQ082PROD with NOTICES 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 24 in general, and furthers the objectives of Section 6(b)(5) of the Act 25 in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes that this proposal is consistent with the Act because it implements and clarifies the provisions of the Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant of the Plan. In approving the Plan, the SEC noted that the Pilot was an appropriate, data-driven test that was designed to evaluate the impact of a wider tick size on trading, liquidity, and the market quality of securities of smaller capitalization companies, and was therefore in furtherance of the purposes of the Act. The Exchange believes that this proposal is in furtherance of the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Act because the proposal implements and clarifies the requirements of the Plan and applies specific obligations to Members in furtherance of compliance with the Plan. (B) Self-Regulatory Organization’s Statement on Burden on Competition The Exchange notes that the proposed rule change implements the provisions of the Plan, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. The Exchange also notes that, other than the change to require use of the Pilot Securities beginning thirty days prior to the beginning of the Pilot Period, the proposed changes will not affect the data collection and reporting requirements for members that operate Trading Centers; the proposed changes Collection Security list and begin using the Pilot Securities list. September 2, 2016 will be the last day that members use the Pre-Pilot Data Collection Security list. 24 15 U.S.C. 78f(b). 25 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:34 Sep 14, 2016 Jkt 238001 will only affect how the Exchange and Participants that operate Trading Centers collect and report data. The Exchange notes that, with respect to the change to require the use of the Pilot Securities beginning thirty days prior to the start of the Pilot Period, the proposed change reduces the number of securities on which affected members otherwise would have been required to collect data pursuant to the Plan and Exchange Rule 11.27(b). In addition, the proposed rule change applies equally to all similarly situated members. Therefore, the Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 26 and Rule 19b–4(f)(6) 27 thereunder because the proposal does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) by its terms, 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. A proposed rule change filed under Rule 19b–4(f)(6) 28 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),29 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that so that the proposed rule change can become operative on August 30, 2016. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the Exchange to implement the proposed rules 26 15 U.S.C. 78s(b)(3)(A). 27 17 CFR 240.19b–4(f)(6). 28 17 CFR 240.19b–4(f)(6). 29 17 CFR 240.19b–4(f)(6)(iii). PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 immediately thereby preventing delays in the implementation of the Plan. The Commission notes that the Plan is scheduled to start on October 3, 2016. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposed rule change to be operative upon filing with the Commission.30 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.31 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–BatsBZX–2016–55 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BatsBZX–2016–55. 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 30 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 31 15 U.S.C. 78s(b)(3)(C). E:\FR\FM\15SEN1.SGM 15SEN1 Federal Register / Vol. 81, No. 179 / Thursday, September 15, 2016 / Notices available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– BatsBZX–2016–55 and should be submitted on or before October 6, 2016. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Brent J. Fields, Secretary. In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. [FR Doc. 2016–22146 Filed 9–14–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78800; File No. SR–FINRA– 2016–035] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 6191 Relating to the Data Collection Requirements of the Regulation NMS Plan To Implement A Tick Size Pilot Program sradovich on DSK3GMQ082PROD with NOTICES September 9, 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 August 26, 2016, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) 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 FINRA. FINRA has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 32 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 1 15 VerDate Sep<11>2014 17:34 Sep 14, 2016 Jkt 238001 FINRA is proposing to amend FINRA Rule 6191 to modify certain data collection requirements of the Regulation NMS Plan to Implement a Tick Size Pilot Program (Plan). The text of the proposed rule change is available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA 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 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On August 25, 2014, FINRA, and several other self-regulatory organizations (the ‘‘Participants’’) filed with the Commission, pursuant to Section 11A of the Act 4 and Rule 608 of Regulation NMS thereunder,5 the Plan to Implement a Tick Size Pilot Program (the ‘‘Plan’’).6 The Participants filed the Plan to comply with an order issued by the Commission on June 24, 2014.7 The Plan was published for comment in the Federal Register on November 7, 2014, and approved by the Commission, as modified, on May 6, 2015.8 The Plan is designed to allow the Commission, market participants, and the public to study and assess the impact of increment conventions on the liquidity and trading of the common stock of small-capitalization companies. Each Participant is required to comply, and to enforce compliance by its 4 15 U.S.C. 78k–1. CFR 242.608. 6 See Letter from Brendon J. Weiss, Vice President, Intercontinental Exchange, Inc., to Secretary, Commission, dated August 25, 2014. 7 See Securities Exchange Act Release No 72460 (June 24, 2014), 79 FR 36840 (June 30, 2014). 8 See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (‘‘Approval Order’’). 5 17 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 63565 member organizations, as applicable, with the provisions of the Plan. The Plan provides for the creation of a group of Pilot Securities, which shall be placed in a control group and three separate test groups, with each subject to varying quoting and trading increments. Pilot Securities in the control group will be quoted at the current tick size increment of $0.01 per share and will trade at the currently permitted increments. Pilot Securities in the first test group will be quoted in $0.05 minimum increments but will continue to trade at any price increment that is currently permitted.9 Pilot Securities in the second test group (‘‘Test Group Two’’) will be quoted in $0.05 minimum increments and will trade at $0.05 minimum increments subject to a midpoint exception, a retail investor order exception, and a negotiated trade exception.10 Pilot Securities in the third test group (‘‘Test Group Three’’) will be subject to the same quoting and trading increments as Test Group Two, and also will be subject to the ‘‘Trade-at’’ requirement to prevent price matching by a market participant that is not displaying at the price of a Trading Center’s ‘‘Best Protected Bid’’ or ‘‘Best Protected Offer,’’ unless an enumerated exception applies.11 In addition to the exceptions provided under Test Group Two, an exception for Block Size orders and exceptions that mirror those under Rule 611 of Regulation NMS 12 will apply to the Trade-at requirement. The Plan also requires a Trading Center 13 or a Market Maker 14 to collect and transmit certain data to its designated examining authority (‘‘DEA’’), and requires DEAs to transmit this data to the Commission. Participants that operate a Trading Center also are required under the Plan to collect certain data, which is then transmitted directly to the Commission. With respect to Trading Centers, Appendix B.I to the Plan (Market Quality Statistics) requires a Trading 9 See Section VI(B) of the Plan. Section VI(C) of the Plan. 11 See Section VI(D) of the Plan. 12 17 CFR 242.611. 13 The Plan incorporates the definition of a ‘‘Trading Center’’ from Rule 600(b)(78) of Regulation NMS. Regulation NMS defines a ‘‘Trading Center’’ as ‘‘a national securities exchange or national securities association that operates an SRO trading facility, an alternative trading system, an exchange market maker, an OTC market maker, or any other broker or dealer that executes orders internally by trading as principal or crossing orders as agent.’’ See 17 CFR 242.600(b). 14 The Plan defines a Market Maker as ‘‘a dealer registered with any self-regulatory organization, in accordance with the rules thereof, as (i) a market maker or (ii) a liquidity provider with an obligation to maintain continuous, two-sided trading interest.’’ 10 See E:\FR\FM\15SEN1.SGM 15SEN1

Agencies

[Federal Register Volume 81, Number 179 (Thursday, September 15, 2016)]
[Notices]
[Pages 63561-63565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22146]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78796; File No. SR-BatsBZX-2016-55]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 11.27(b) Regarding the Data Collection Requirements of the 
Regulation NMS Plan To Implement a Tick Size Pilot Program

September 9, 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 August 26, 2016, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange has designated this 
proposal as a ``non-controversial'' proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)(iii) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend Exchange Rule 11.27(b) 
regarding the data collection requirements of the Regulation NMS Plan 
to Implement a Tick Size Pilot Program (``Plan'').\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 
80 FR 27513 (May 13, 2015) (``Approval Order'').
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at

[[Page 63562]]

the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On August 25, 2014, the Exchange, and several other self-regulatory 
organizations (the ``Participants'') filed with the Commission, 
pursuant to Section 11A of the Act \6\ and Rule 608 of Regulation NMS 
thereunder,\7\ the Plan to Implement a Tick Size Pilot Program (the 
``Plan'').\8\ The Participants filed the Plan to comply with an order 
issued by the Commission on June 24, 2014.\9\ The Plan was published 
for comment in the Federal Register on November 7, 2014, and approved 
by the Commission, as modified, on May 6, 2015.\10\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 242.608.
    \8\ See Letter from Brendon J. Weiss, Vice President, 
Intercontinental Exchange, Inc., to Secretary, Commission, dated 
August 25, 2014.
    \9\ See Securities Exchange Act Release No. 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
    \10\ See Securities Exchange Act Release No. 74892 (May 6, 
2015), 80 FR 27513 (May 13, 2015) (``Approval Order'').
---------------------------------------------------------------------------

    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stock of small-
capitalization companies. Each Participant is required to comply, and 
to enforce compliance by its member organizations, as applicable, with 
the provisions of the Plan.
    The Plan provides for the creation of a group of Pilot Securities, 
which shall be placed in a control group and three separate test 
groups, with each subject to varying quoting and trading increments. 
Pilot Securities in the control group will be quoted at the current 
tick size increment of $0.01 per share and will trade at the currently 
permitted increments. Pilot Securities in the first test group will be 
quoted in $0.05 minimum increments but will continue to trade at any 
price increment that is currently permitted.\11\ Pilot Securities in 
the second test group (``Test Group Two'') will be quoted in $0.05 
minimum increments and will trade at $0.05 minimum increments subject 
to a midpoint exception, a retail investor order exception, and a 
negotiated trade exception.\12\ Pilot Securities in the third test 
group (``Test Group Three'') will be subject to the same quoting and 
trading increments as Test Group Two, and also will be subject to the 
``Trade-at'' requirement to prevent price matching by a market 
participant that is not displaying at the price of a Trading Center's 
``Best Protected Bid'' or ``Best Protected Offer,'' unless an 
enumerated exception applies.\13\ In addition to the exceptions 
provided under Test Group Two, an exception for Block Size orders and 
exceptions that mirror those under Rule 611 of Regulation NMS \14\ will 
apply to the Trade-at requirement.
---------------------------------------------------------------------------

    \11\ See Section VI(B) of the Plan.
    \12\ See Section VI(C) of the Plan.
    \13\ See Section VI(D) of the Plan.
    \14\ 17 CFR 242.611.
---------------------------------------------------------------------------

    The Plan also requires a Trading Center \15\ or a Market Maker \16\ 
to collect and transmit certain data to its designated examining 
authority (``DEA''), and requires DEAs to transmit this data to the 
Commission. Participants that operate a Trading Center also are 
required under the Plan to collect certain data, which is then 
transmitted directly to the Commission. With respect to Trading 
Centers, Appendix B.I to the Plan (Market Quality Statistics) requires 
a Trading Center to submit to the Participant that is its DEA a variety 
of market quality statistics. Appendix B.II to the Plan (Market and 
Marketable Limit Order Data) requires a Trading Center to submit 
information to its DEA relating to market orders and marketable limit 
orders, including the time of order receipt, order type, the order 
size, and the National Best Bid and National Best Offer quoted price.
---------------------------------------------------------------------------

    \15\ The Plan incorporates the definition of a ``Trading 
Center'' from Rule 600(b)(78) of Regulation NMS. Regulation NMS 
defines a ``Trading Center'' as ``a national securities exchange or 
national securities association that operates an SRO trading 
facility, an alternative trading system, an exchange market maker, 
an OTC market maker, or any other broker or dealer that executes 
orders internally by trading as principal or crossing orders as 
agent.'' See 17 CFR 242.600(b).
    \16\ The Plan defines a Market Maker as ``a dealer registered 
with any self-regulatory organization, in accordance with the rules 
thereof, as (i) a market maker or (ii) a liquidity provider with an 
obligation to maintain continuous, two-sided trading interest.''
---------------------------------------------------------------------------

    With respect to Market Makers, Appendix B.III requires a 
Participant that is a national securities exchange to collect daily 
Market Maker Registration statistics. Appendix B.IV requires a 
Participant to collect data related to Market Maker participation with 
respect to each Market Maker engaging in trading activity on a Trading 
Center operated by the Participant. Appendix C.I requires a Participant 
to collect data related to Market Maker profitability from each Market 
Maker for which it is the DEA. Appendix C.II requires the Participant, 
as DEA, to aggregate the Appendix C.I data, and to transmit this data 
to the Commission.
    The Commission approved the Pilot on a two-year basis, with 
implementation to begin no later than May 6, 2016.\17\ On November 6, 
2015, the SEC exempted the Participants from implementing the pilot 
until October 3, 2016.\18\ As set forth in Appendices B and C to the 
Plan, data that is reported pursuant to the appendices shall be 
provided for dates starting six months prior to the Pilot Period 
through six months after the end of the Pilot Period. Under the revised 
Pilot implementation date, the Pre-Pilot data collection period 
commenced on April 4, 2016.
---------------------------------------------------------------------------

    \17\ See Approval Order at 27533 and 27545.
    \18\ See Securities Exchange Act Release No. 76382 (November 6, 
2015), 80 FR 70284 (November 13, 2015) (File No. 4-657).
---------------------------------------------------------------------------

    On November 13, 2015, the Exchange filed with the Commission a 
proposed rule change to adopt Exchange Rule 11.27(b) to implement the 
data collection requirements of the Plan.\19\ On December 9, 2015, 
FINRA, on behalf of the Plan Participants, submitted an exemptive 
request to the Commission, seeking an exemption from certain data 
collection and reporting requirements set forth in the Plan.\20\ On 
February 10,

[[Page 63563]]

2016, the Commission approved the Exchange's rule change, as amended, 
to implement the data collection requirements of the Plan, and also 
granted exemptive relief from complying with certain data collection 
and reporting requirements in the Plan.\21\
---------------------------------------------------------------------------

    \19\ See Securities Exchange Act Release No. 76524 (November 19, 
2015), 80 FR 75141 (November 25, 2015) (Notice of Filing of File No. 
SR-BATS-2015-102).
    The Exchange also submitted a proposed rule change to implement 
the quoting and trading requirements of the Plan. See Securities 
Exchange Act Release No. 76552 (December 3, 2015), 80 FR 76591 
(December 9, 2015) (Notice of Filing of File No. SR-BATS-2015-108). 
The Commission approved that proposal on February 23, 2016. See 
Securities Exchange Act Release No. 77291 (March 3, 2016), 81 FR 
12543 (March 9, 2016) (Order Approving File No. SR-BATS-2015-108).
    \20\ See letter from Marcia E. Asquith, Senior Vice President 
and Corporate Secretary, FINRA dated December 9, 2015 to Robert W. 
Errett, Deputy Secretary, Commission (``Exemption Request''). The 
Commission, pursuant to its authority under Rule 608(e) of 
Regulation NMS, granted the Exchange a limited exemption from the 
requirement to comply with certain provisions of the Plan as 
specified in the letter and noted herein. See letter from David 
Shillman, Associate Director, Division of Trading and Markets, 
Commission to Eric Swanson, General Counsel, the Exchange, dated 
February 10, 2016 (``Exemption Letter'').
    \21\ See Securities Exchange Act No. 77105 (February 10, 2016), 
81 FR 8112 (February 17, 2016) (Order Approving File No. SR-BATS-
2015-102); see letter from David S. Shillman, Associate Director, 
Division of Trading and Markets, Commission, to Eric Swanson, 
Executive Vice President, General Counsel and, the Exchange, dated 
February 10, 2016.
---------------------------------------------------------------------------

    The Exchange now proposes to further amend Rule 11.27(b) to modify 
additional data collection and reporting requirements.\22\ First, 
Appendix B.I.a(21) through B.I.a(27) currently requires that Trading 
Centers report the cumulative number of shares of cancelled orders 
during a specified duration of time after receipt of the order that was 
cancelled. The Exchange and the other Participants believe that, for 
purposes of reporting cancelled orders, it is appropriate to categorize 
unexecuted Immediate or Cancel orders separately as one bucket 
irrespective of the duration of time after order receipt, i.e., without 
a time increment, to better differentiate orders cancelled subsequent 
to entry from those where the customer's intent prior to order entry 
was to cancel the order if no execution could be immediately obtained. 
The Exchange, therefore, proposes to modify Supplementary Material 
[sic].04 to provide that unexecuted Immediate or Cancel orders shall be 
categorized separately for purposes of Appendix B.I.a(21) through 
B.I.a(27).
---------------------------------------------------------------------------

    \22\ The Exchange notes that, in connection with this proposed 
rule change, FINRA, on behalf of the Plan Participants, intends to 
file an exemptive request seeking relief from certain of the Plan's 
data collection requirements.
---------------------------------------------------------------------------

    The second change relates to the reporting of daily market quality 
statistics pursuant to Appendix B.I. Currently, Appendix B.I sets forth 
categories of orders, including market orders, marketable limit orders, 
and inside-the-quote resting limit orders, for which daily market 
quality statistics must be reported. The Exchange and the other 
Participants have determined that it is appropriate to include an order 
type for limit orders priced more than $0.10 away from the NBBO for 
purposes of Appendix B reporting. The Exchange therefore proposes to 
amend Supplementary Material [sic].06 to provide that limit orders 
priced more than $0.10 away from the NBBO shall be included as an order 
type for purposes of Appendix B reporting, and shall be assigned the 
number (22). These orders are not currently required to be reported 
pursuant to Appendix B, and The Exchange and the other Participants 
believe that requiring the reporting of such orders will produce a more 
comprehensive data set.
    The third change relates to the reporting of market quality 
statistics pursuant to Appendix B.I for a variety of order types, 
including inside-the-quote resting limit orders (12), at-the-quote 
resting limit orders (13), and near-the-quote resting limit orders 
(within $0.10 of the NBBO) (14). The Exchange and the other 
Participants believe that it is appropriate to require Trading Centers 
to report all orders that fall within these categories, and not just 
those orders that are ``resting.'' The Exchange, therefore, proposes to 
amend Supplementary Material .[sic]06 to make this change.
    In the fourth change, the Exchange proposes to add new 
Supplementary Material [sic].09 to modify the manner in which market 
maker participation statistics are calculated. Currently, Appendix B.IV 
provides that market maker participation statistics shall be calculated 
based on share participation, trade participation, cross-quote share 
(trade) participation, inside-the-quote share (trade) participation, 
at-the-quote share (trade) participation, and outside-the-quote share 
(trade) participation. The Exchange and the other Participants have 
determined that it is appropriate to add the count of the number of 
Market Makers used in the calculation of share (trade) participation to 
each category. The Exchange is therefore proposing this change as part 
of Supplementary Material [sic].09. In addition, Appendix B.IV(b) and 
(c) currently require that, when aggregating across Market Makers, 
share participation and trade participation shall be calculated using 
the share-weighted average and trade-weighted average, respectively. 
The Exchange and the other Participants believe that it is more 
appropriate to calculate share and trade participation by providing the 
total count of shares or trades, as applicable, rather than weighted 
averages, and the Exchange is therefore proposing this change as part 
of Supplementary Material [sic].09.
    The fifth change relates to the NBBO that a Trading Center is 
required to use when performing certain quote-related calculations. 
When calculating cross-quote share (trade) participation pursuant to 
Appendix B.IV(d) and inside-the-quote share (trade) participation 
pursuant to Appendix B.IV(e), the Plan requires the Trading Center to 
utilize the NBBO at the time of the trade for both share and trade 
participation calculations. When calculating at-the-quote share (trade) 
participation and outside-the-quote share (trade) participation 
pursuant to Appendix B.IV(f) and (g), the Plan allows the Trading 
Center to utilize the National Best Bid or National Best Offer (NBBO) 
at the time of or immediately before the trade for both share and trade 
participation calculations. The Exchange and the other Participants 
believe that it is appropriate to calculate all quote participation 
(cross-quote share (trade) participation, inside-the-quote share 
(trade) participation, at-the-quote share (trade) participation and 
outside-the-quote share (trade) participation) solely by reference to 
the NBBO in effect immediately prior to the trade. The Exchange 
therefore proposes to make this change as part of Supplementary 
Material [sic].09.
    Finally, the Exchange proposes to change the end date until which 
the Pre-Pilot Data Collection Securities shall be used to fulfill the 
Plan's data collection requirements. Currently, Supplementary Material 
[sic].10 provides that Pre-Pilot Data Collection Securities are the 
securities designated by the Participants for purposes of the data 
collection requirements described in Items I, II and IV of Appendix B 
and Item I of Appendix C to the Plan for the period beginning six 
months prior to the Pilot Period and ending on the trading day 
immediately preceding the Pilot Period. The Exchange and the other 
Participants believe that it is appropriate to use the Pilot Securities 
to satisfy the Plan's data collection requirements prior to the 
commencement of the Pilot. According, the Exchange is revising 
Supplementary Material [sic].10 (which will be re-numbered as 
Supplementary Material [sic].11) to provide that the Pre-Pilot Data 
Collection Securities shall be used to satisfy the Plan's data 
collection requirements through thirty-one days prior to the Pilot 
Period, after which time the Pilot Securities shall be used for 
purposes of the data collection requirements.\23\
---------------------------------------------------------------------------

    \23\ After regular trading hours on September 2, 2016, the 
national securities exchanges will establish which securities will 
be included as Pilot Securities for purposes of the Plan. The 
Exchange and the other Participants have determined that members 
should use the Pilot Securities list for data collection purposes 
once it becomes available. Thus, the proposed rule change requires 
that, beginning thirty days prior to the first day of the Pilot 
Period--i.e., September 3, 2016--the Exchange and the Exchange 
members will comply with the data collection obligations of the Plan 
by collecting data on the Pilot Securities. As a result, beginning 
on September 3, 2016, members must migrate from using the Exchange's 
published Pre-Pilot Data Collection Security list and begin using 
the Pilot Securities list. September 2, 2016 will be the last day 
that members use the Pre-Pilot Data Collection Security list.

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[[Page 63564]]

    As noted in Item 2 of this filing, the Exchange has filed the 
proposed rule change for immediate effectiveness. The Exchange has 
requested that the SEC waive the 30-day operative period so that the 
proposed rule change can become operative on August 30, 2016.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \24\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \25\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that this proposal is consistent with the Act 
because it implements and clarifies the provisions of the Plan, and is 
designed to assist the Exchange in meeting its regulatory obligations 
pursuant of the Plan. In approving the Plan, the SEC noted that the 
Pilot was an appropriate, data-driven test that was designed to 
evaluate the impact of a wider tick size on trading, liquidity, and the 
market quality of securities of smaller capitalization companies, and 
was therefore in furtherance of the purposes of the Act. The Exchange 
believes that this proposal is in furtherance of the objectives of the 
Plan, as identified by the SEC, and is therefore consistent with the 
Act because the proposal implements and clarifies the requirements of 
the Plan and applies specific obligations to Members in furtherance of 
compliance with the Plan.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange notes that the proposed rule change implements the 
provisions of the Plan, and is designed to assist the Exchange in 
meeting its regulatory obligations pursuant to the Plan. The Exchange 
also notes that, other than the change to require use of the Pilot 
Securities beginning thirty days prior to the beginning of the Pilot 
Period, the proposed changes will not affect the data collection and 
reporting requirements for members that operate Trading Centers; the 
proposed changes will only affect how the Exchange and Participants 
that operate Trading Centers collect and report data. The Exchange 
notes that, with respect to the change to require the use of the Pilot 
Securities beginning thirty days prior to the start of the Pilot 
Period, the proposed change reduces the number of securities on which 
affected members otherwise would have been required to collect data 
pursuant to the Plan and Exchange Rule 11.27(b). In addition, the 
proposed rule change applies equally to all similarly situated members. 
Therefore, the Exchange does not believe that the proposed rule change 
will result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \26\ and Rule 19b-4(f)(6) \27\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \28\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\29\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that so that the 
proposed rule change can become operative on August 30, 2016.
---------------------------------------------------------------------------

    \28\ 17 CFR 240.19b-4(f)(6).
    \29\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to implement the proposed rules 
immediately thereby preventing delays in the implementation of the 
Plan. The Commission notes that the Plan is scheduled to start on 
October 3, 2016. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change to be operative 
upon filing with the Commission.\30\
---------------------------------------------------------------------------

    \30\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of 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.\31\
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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-BatsBZX-2016-55 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBZX-2016-55. 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

[[Page 63565]]

available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-BatsBZX-2016-55 and should be submitted on or before 
October 6, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22146 Filed 9-14-16; 8:45 am]
BILLING CODE 8011-01-P
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