Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.340 To Modify Certain Data Collection Requirements of the Regulation NMS Plan To Implement a Tick Size Pilot Program, 64234-64238 [2016-22417]
Download as PDF
<![CDATA[
mstockstill on DSK3G9T082PROD with NOTICES
64234
Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
8. (a) If any Affiliated Fund or any
Regulated Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired in a Co-Investment
Transaction, the applicable AB–PCI
Advisers will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed transaction
at the earliest practical time; and
(ii) formulate a recommendation as to
the proposed participation, including
the amount of the proposed Follow-On
Investment, by each Regulated Fund.
(b) A Regulated Fund may participate
in such Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i) The proposed
participation of each Regulated Fund
and each Affiliated Fund in such
investment is proportionate to its
outstanding investments in the issuer
immediately preceding the Follow-On
Investment; and (ii) the Board of the
Regulated Fund has approved as being
in the best interests of the Regulated
Fund the ability to participate in
Follow-On Investments on a pro rata
basis (as described in greater detail in
the application). In all other cases, the
AB–PCI Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such Follow-On
Investment solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(c) If, with respect to any Follow-On
Investment:
(i) The amount of the opportunity is
not based on the Regulated Funds’ and
the Affiliated Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the AB–PCI Adviser to
be invested by each Regulated Fund in
the Follow-On Investment, together
with the amount proposed to be
invested by the participating Affiliated
Funds in the same transaction, exceeds
the amount of the opportunity; then the
amount invested by each such party will
be allocated among them pro rata based
on each participant’s capital available
for investment in the asset class being
allocated, up to the amount proposed to
be invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that the Regulated
Fund considered but declined to
participate in, so that the Non-Interested
Directors may determine whether all
investments made during the preceding
quarter, including those investments
that the Regulated Fund considered but
declined to participate in, comply with
the conditions of the Order. In addition,
the Non-Interested Directors will
consider at least annually the continued
appropriateness for the Regulated Fund
of participating in new and existing CoInvestment Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a BDC and each
of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f) of
the Act.
11. No Non-Interested Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of an
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
registered for sale under the Securities
Act) will, to the extent not payable by
the AB–PCI Advisers under their
respective investment advisory
agreements with Affiliated Funds and
the Regulated Funds, be shared by the
Regulated Funds and the Affiliated
Funds in proportion to the relative
amounts of the securities held or to be
acquired or disposed of, as the case may
be.
13. Any transaction fee 12 (including
break-up or commitment fees but
excluding broker’s fees contemplated
section 17(e) or 57(k) of the Act, as
applicable), received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an AB–PCI Adviser pending
consummation of the transaction, the
fee will be deposited into an account
12 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
PO 00000
Frm 00109
Fmt 4703
Sfmt 4703
maintained by such AB–PCI Adviser at
a bank or banks having the
qualifications prescribed in section
26(a)(1) of the Act, and the account will
earn a competitive rate of interest that
will also be divided pro rata among the
participating Regulated Funds and
Affiliated Funds based on the amounts
they invest in such Co-Investment
Transaction. None of the Affiliated
Funds, the AB–PCI Advisers, the other
Regulated Funds or any affiliated person
of the Regulated Funds or Affiliated
Funds will receive additional
compensation or remuneration of any
kind as a result of or in connection with
a Co-Investment Transaction (other than
(a) in the case of the Regulated Funds
and the Affiliated Funds, the pro rata
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(C); and (b) in the case
of an AB–PCI Adviser, investment
advisory fees paid in accordance with
the agreement between the AB–PCI
Adviser and the Regulated Fund or
Affiliated Fund.
14. If the Holders own in the aggregate
more than 25% of the Shares of a
Regulated Fund, then the Holders will
vote such Shares as directed by an
independent third party when voting on
(1) the election of directors; (2) the
removal of one or more directors; or (3)
any other matter under either the Act or
applicable State law affecting the
Board’s composition, size or manner of
election.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–22427 Filed 9–16–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78820; File No. SR–IEX–
2016–13]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
11.340 To Modify Certain Data
Collection Requirements of the
Regulation NMS Plan To Implement a
Tick Size Pilot Program
September 13, 2016.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
E:\FR\FM\19SEN1.SGM
19SEN1
Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
notice is hereby given that, on August
30, 2016, the Investors Exchange LLC
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. 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
Pursuant to the provisions of Section
19(b)(1) under the Securities Exchange
Act of 1934 (‘‘Act’’),4 and Rule 19b–4
thereunder,5 Investors Exchange LLC
(‘‘IEX’’ or ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend Rule 11.340 to modify certain
data collection requirements of the
Regulation NMS Plan to Implement a
Tick Size Pilot Program (‘‘Plan’’).6
IEX has filed the proposed rule
change for immediate effectiveness. IEX
has requested that the SEC waive the 30day operative period so that the
proposed rule change can become
operative on August 30, 2016.
The text of the proposed rule change
is available at the Exchange’s Web site
at www.iextrading.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 the
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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 statement may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
mstockstill on DSK3G9T082PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
7 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
6 See Securities Exchange Act Release No. 74892
(May 6, 2015), 80 FR 27513 (May 13, 2015)
(‘‘Approval Order’’).
5 17
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
U.S.C. 78k–1.
CFR 242.608.
9 See Letter from Brendon J. Weiss, Vice
President, Intercontinental Exchange, Inc., to
Secretary, Commission, dated August 25, 2014.
10 See Securities Exchange Act Release No 72460
(June 24, 2014), 79 FR 36840 (June 30, 2014).
11 See Securities Exchange Act Release No. 74892
(May 6, 2015), 80 FR 27513 (May 13, 2015)
(‘‘Approval Order’’).
12 Pursuant to the terms of the Plan, the
amendment was effective upon filing pursuant to
Rule 608(b)(3)(iii) of the Exchange Act because it
involves solely technical or ministerial matters.
13 See Section VI(B) of the Plan.
14 See Section VI(C) of the Plan.
8 17
1. Purpose
On August 25, 2014, FINRA, and
several other self-regulatory
organizations (the ‘‘Participants’’) filed
4 15
with the Commission, pursuant to
Section 11A of the Act 7 and Rule 608
of Regulation NMS thereunder,8 the
Plan to Implement a Tick Size Pilot
Program (the ‘‘Plan’’).9 The Participants
filed the Plan to comply with an order
issued by the Commission on June 24,
2014.10 The Plan was published for
comment in the Federal Register on
November 7, 2014, and approved by the
Commission, as modified, on May 6,
2015.11 An amendment to the Plan
adding IEX as a Participant was filed
with the Commission on August 4,
2016.12
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.13 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.14 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
PO 00000
Frm 00110
Fmt 4703
Sfmt 4703
64235
Protected Bid’’ or ‘‘Best Protected
Offer,’’ unless an enumerated exception
applies.15 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 16 will apply to
the Trade-at requirement.
The Plan also requires a Trading
Center 17 or a Market Maker 18 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.
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
15 See
Section VI(D) of the Plan.
CFR 242.611.
17 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).
18 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.’’
16 17
E:\FR\FM\19SEN1.SGM
19SEN1
64236
Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
May 6, 2016.19 On November 6, 2015,
the SEC exempted the Participants from
implementing the pilot until October 3,
2016.20 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 July 28, 2016, IEX filed with the
Commission a proposed rule change to
adopt IEX Rule 11.340(b) to implement
the data collection requirements of the
Plan and also requested that the
Commission grant it certain specified
exemptions that were previously
provided to other Plan Participants prior
to the time that IEX became a Plan
Participant.21
IEX now proposes to further amend
Rule 11.340(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. IEX 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. IEX, therefore, proposes to
modify Supplementary Material .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
19 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).
21 See Securities Exchange Act Release No. 78481
(August 4, 2016), 81 FR 52933 (August 10, 2016)
(Notice of Filing of File No. SR–IEX–2016–07).
IEX will also shortly submit a proposed rule
change to implement the quoting and trading
requirements of the Plan.
22 IEX notes that, in connection with this
proposed rule change, the Participants have
submitted a request seeking exemptive relief from
certain of the Plan’s data collection requirements.
mstockstill on DSK3G9T082PROD with NOTICES
20 See
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
which daily market quality statistics
must be reported. IEX 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. IEX therefore
proposes to amend Supplementary
Material .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 IEX 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). IEX 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.’’ IEX therefore, proposes to
amend Supplementary Material .06 to
make this change.
In the fourth change, IEX proposes to
add new Supplementary Material .08 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.
IEX 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.
FINRA [sic] is therefore proposing this
change as part of Supplementary
Material .10. 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. IEX 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 IEX is therefore proposing
PO 00000
Frm 00111
Fmt 4703
Sfmt 4703
this change as part of Supplementary
Material .10.
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
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 of National Best Offer
(NBBO) at the time of or immediately
before the trade for both share and trade
participation calculations. IEX 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-thequote share (trade) participation) solely
by reference to the NBBO in effect
immediately prior to the trade. IEX
therefore proposes to make this change
as part of Supplementary Material .08.
Finally, IEX 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 .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.
IEX 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,
IEX is revising Supplementary Material
.10 (which will be re-numbered as
Supplementary Material .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. FINRA and the
E:\FR\FM\19SEN1.SGM
19SEN1
Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
As noted in Item 2 of this filing, IEX
has filed the proposed rule change for
immediate effectiveness. IEX 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
IEX believes that the proposed rule
change is consistent with the provisions
of Section 6 of the Act,24 in general and
furthers the objectives of Sections
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.
IEX believes that this proposal is
consistent with the Act because it
implements and clarifies the provisions
of the Plan, and is designed to assist IEX
in meeting its regulatory obligations
pursuant to 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. IEX 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.
mstockstill on DSK3G9T082PROD with NOTICES
B. Self-Regulatory Organization’s
Statement on Burden on Competition
IEX notes that the proposed rule
change implements the provisions of the
Plan, and is designed to assist IEX in
meeting its regulatory obligations
pursuant to the Plan. IEX also notes
that, other than the change to require
use of the Pilot Securities beginning
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—IEX and IEX
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 IEX’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.
24 15 U.S.C. 78f(b).
25 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
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 IEX and
other Participants that operate Trading
Centers collect and report data. IEX
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 IEX Rule
11.340(b). In addition, the proposed rule
change applies equally to all similarly
situated members. Therefore, IEX 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. IEX 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
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 00112
Fmt 4703
Sfmt 4703
64237
consistent with the protection of
investors and the public interest
because it will allow IEX 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
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 rule-comments@
sec.gov. Please include File Number SR–
IEX–2016–13 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–IEX–2016–03. This file
number should be included in 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
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\19SEN1.SGM
19SEN1
64238
Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
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 Section, 100 F Street NE.,
Washington, DC 20549–1090. Copies of
the filing will also be available for
inspection and copying at the IEX’s
principal office and on its Internet Web
site at www.iextrading.com. 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–IEX–2016–13 and should
be submitted on or before October 11,
2016.32
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–22417 Filed 9–16–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78829; File No. SR–
NYSEMKT–2016–86]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Deadline
for Implementing Rule 967.1NY(a)(2)
and (3) Until September 30, 2016
September 13, 2016.
mstockstill on DSK3G9T082PROD with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on
September 6, 2016, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
deadline for implementing Rule
32 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
21:47 Sep 16, 2016
Jkt 238001
967.1NY(a)(2) and (3) until September
30, 2016 The proposed rule change is
available on the Exchange’s Web site at
www.nyse.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
self-regulatory organization 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to extend
the deadline for implementing Rule
967.1NY(a)(2) and (3) until September
30, 2016. The Exchange has not met the
current implementation deadline of July
31, 2016.
In March 2015, the Commission
approved Rule 967.1NY, which
provides a price protection risk
mechanism for Market Maker quotes.4
Rule 967.1NY provides two layers of
price protection to incoming Market
Maker quotes, rejecting those Market
Maker quotes that exceed certain
parameters, as a risk mitigation tool.5
The Exchange has implemented the first
layer of price protection (the NBBO
Reasonability Check) and had until one
year from the date of the Approval
4 See Securities Exchange Act Release No. 74440
(March 4, 2015), 80 FR 12687 (March 10, 2015) (SR–
NYSEMKT–2014–116) (Approval Order); see also
Securities Exchange Act Release No. 74017 (January
8, 2015), 80 FR 1979 (January 14, 2015) (SR–
NYSEMKT–2014–116) (Notice).
5 The first layer of price protection assesses
incoming sell quotes against the NBB and incoming
buy quotes against the NBO (the ‘‘NBBO Price
Reasonability Check’’). Specifically, Rule
967.1NY(a)(1) provided that when an NBBO is
available, a Market Maker quote would be rejected
if it is priced a specified dollar amount or
percentage through the contra-side NBBO. The
second layer of price protection assesses the price
of call or put bids against a specified benchmark
(the ‘‘Underlying Stock Price/Strike Price Check’’),
per Rule 967.1NY(a)(2) and (3). This second layer
of protection applies to bids in call options or put
options when (1) there is no NBBO available, for
example, during pre-opening or prior to conducting
a re-opening after a trading halt, or (2) if the NBBO
is so wide as to not reflect an appropriate price for
the respective options series.
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
Order to implement the second layer of
protection (the Underlying Stock Price/
Strike Price Check) pursuant to
Commentary .01 to Rule 967.1NY,
which was March 4, 2016.6
In March 2016, because the Exchange
had not yet implemented the
Underlying Stock Price/Strike Price
Check, the Exchange extended the
deadline to implement Rule
967.1NY(a)(2) and (3) until July 31, 2016
(the ‘‘July 31st Deadline’’).7 Subsequent
to this extension, the Exchange
modified Commentary .01 to Rule
967.1NY to exclude from the
Underlying Stock Price/Strike Price
Check certain securities for which there
was no reliable (or in some cases any)
last sale data.8 Although the Exchange
had finalized the technology related to
the Underlying Stock Price/Strike Price
Check, because this technology was
packaged in a larger technology release
that is currently being rolled out, the
Exchange was not able to implement the
technology by the July 31st Deadline.
The Exchange is in the process of
implementing the technology release
that includes the Underlying Stock
Price/Strike Price Check and plans to
complete this implementation no later
than the end of September 2016. The
Exchange believes the proposed
extension of the July 31st Deadline until
September 30, 2016 would provide the
Exchange with sufficient time to
implement the functionality related to
the rule. Moreover, the proposed change
would update the rule to reflect the
extended deadline, thus making clear to
investors and the public that the
Underlying Stock Price/Strike Price
Check is not yet implemented.9
6 See Securities Exchange Act Release No. 75151
(June 11, 2015), 80 FR 34770 (June 17, 2015) (SR–
NYSEMKT–2015–42).
7 See Securities Exchange Act Release No. 77356
(March 14, 2016), 81 FR 14917 (March 18, 2016)
(SR–NYSEMKT–2016–36).
8 See Securities Exchange Act Release No. 77749
(April 29, 2016), 81 FR 27184 (May 5, 2016) (SR–
NYSEMKT–2016–47).
9 The Exchange has issued Trader Updates
informing its market participants that the
functionality related to the Underlying Stock Price/
Strike Price Check is not yet available but is
currently being implemented (together with the
other technology updates with which it was
packaged). See, e.g., Trader Updates regarding
Enhancements to Risk Control Functionality in
Enhanced Certification Environment, dated 6/6/16,
available here, https://www.nyse.com/publicdocs/
nyse/notifications/trader-update/
NYSE%20Amex%20and%20Arca%20-%20
Enhanced%20Risk%20Controls%20in%20
Enhanced%20Cert.pdf and regarding Risk Controls/
Series Lookup Table Enhancements, dated 8/25/16,
available here, https://www.nyse.com/publicdocs/
nyse/notifications/trader-update/NYSE%
20Amex%20-%20Risk%20Controls%20
Release%20details.pdf.
E:\FR\FM\19SEN1.SGM
19SEN1
]]>Agencies
[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Pages 64234-64238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22417]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78820; File No. SR-IEX-2016-13]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 11.340 To Modify Certain Data Collection Requirements of the
Regulation NMS Plan To Implement a Tick Size Pilot Program
September 13, 2016.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\
[[Page 64235]]
notice is hereby given that, on August 30, 2016, the Investors Exchange
LLC (``IEX'' or the ``Exchange'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the self-regulatory organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the
Securities and Exchange Commission (``Commission'') a proposed rule
change to amend Rule 11.340 to modify certain data collection
requirements of the Regulation NMS Plan to Implement a Tick Size Pilot
Program (``Plan'').\6\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ See Securities Exchange Act Release No. 74892 (May 6, 2015),
80 FR 27513 (May 13, 2015) (``Approval Order'').
---------------------------------------------------------------------------
IEX has filed the proposed rule change for immediate effectiveness.
IEX has requested that the SEC waive the 30-day operative period so
that the proposed rule change can become operative on August 30, 2016.
The text of the proposed rule change is available at the Exchange's
Web site at www.iextrading.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 the
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 statement may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
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 \7\ and Rule 608 of Regulation NMS
thereunder,\8\ the Plan to Implement a Tick Size Pilot Program (the
``Plan'').\9\ The Participants filed the Plan to comply with an order
issued by the Commission on June 24, 2014.\10\ 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.\11\ An amendment to the
Plan adding IEX as a Participant was filed with the Commission on
August 4, 2016.\12\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78k-1.
\8\ 17 CFR 242.608.
\9\ See Letter from Brendon J. Weiss, Vice President,
Intercontinental Exchange, Inc., to Secretary, Commission, dated
August 25, 2014.
\10\ See Securities Exchange Act Release No 72460 (June 24,
2014), 79 FR 36840 (June 30, 2014).
\11\ See Securities Exchange Act Release No. 74892 (May 6,
2015), 80 FR 27513 (May 13, 2015) (``Approval Order'').
\12\ Pursuant to the terms of the Plan, the amendment was
effective upon filing pursuant to Rule 608(b)(3)(iii) of the
Exchange Act because it involves solely technical or ministerial
matters.
---------------------------------------------------------------------------
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.\13\ 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.\14\ 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.\15\ 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 \16\ will
apply to the Trade-at requirement.
---------------------------------------------------------------------------
\13\ See Section VI(B) of the Plan.
\14\ See Section VI(C) of the Plan.
\15\ See Section VI(D) of the Plan.
\16\ 17 CFR 242.611.
---------------------------------------------------------------------------
The Plan also requires a Trading Center \17\ or a Market Maker \18\
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.
---------------------------------------------------------------------------
\17\ 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).
\18\ 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
[[Page 64236]]
May 6, 2016.\19\ On November 6, 2015, the SEC exempted the Participants
from implementing the pilot until October 3, 2016.\20\ 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.
---------------------------------------------------------------------------
\19\ See Approval Order at 27533 and 27545.
\20\ See Securities Exchange Act Release No. 76382 (November 6,
2015), 80 FR 70284 (November 13, 2015) (File No. 4-657).
---------------------------------------------------------------------------
On July 28, 2016, IEX filed with the Commission a proposed rule
change to adopt IEX Rule 11.340(b) to implement the data collection
requirements of the Plan and also requested that the Commission grant
it certain specified exemptions that were previously provided to other
Plan Participants prior to the time that IEX became a Plan
Participant.\21\
---------------------------------------------------------------------------
\21\ See Securities Exchange Act Release No. 78481 (August 4,
2016), 81 FR 52933 (August 10, 2016) (Notice of Filing of File No.
SR-IEX-2016-07).
IEX will also shortly submit a proposed rule change to
implement the quoting and trading requirements of the Plan.
---------------------------------------------------------------------------
IEX now proposes to further amend Rule 11.340(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. IEX 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. IEX, therefore,
proposes to modify Supplementary Material .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\ IEX notes that, in connection with this proposed rule
change, the Participants have submitted a request seeking exemptive
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. IEX 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. IEX therefore proposes to amend Supplementary
Material .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 IEX 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). IEX 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.'' IEX therefore, proposes to amend Supplementary Material
.06 to make this change.
In the fourth change, IEX proposes to add new Supplementary
Material .08 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. IEX 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. FINRA
[sic] is therefore proposing this change as part of Supplementary
Material .10. 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. IEX 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 IEX is therefore
proposing this change as part of Supplementary Material .10.
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 of National Best Offer (NBBO)
at the time of or immediately before the trade for both share and trade
participation calculations. IEX 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. IEX therefore proposes to
make this change as part of Supplementary Material .08.
Finally, IEX 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 .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. IEX 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, IEX is revising Supplementary Material .10 (which will be
re-numbered as Supplementary Material .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. FINRA 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--IEX and IEX 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 IEX'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.
---------------------------------------------------------------------------
[[Page 64237]]
As noted in Item 2 of this filing, IEX has filed the proposed rule
change for immediate effectiveness. IEX 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
IEX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\24\ in general and furthers the
objectives of Sections 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).
---------------------------------------------------------------------------
IEX believes that this proposal is consistent with the Act because
it implements and clarifies the provisions of the Plan, and is designed
to assist IEX in meeting its regulatory obligations pursuant to 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. IEX 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.
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX notes that the proposed rule change implements the provisions
of the Plan, and is designed to assist IEX in meeting its regulatory
obligations pursuant to the Plan. IEX 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
IEX and other Participants that operate Trading Centers collect and
report data. IEX 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 IEX Rule 11.340(b). In addition, the
proposed rule change applies equally to all similarly situated members.
Therefore, IEX 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. IEX 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 IEX 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-IEX-2016-13 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-IEX-2016-03. This file
number should be included in 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
[[Page 64238]]
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 Section, 100 F Street
NE., Washington, DC 20549-1090. Copies of the filing will also be
available for inspection and copying at the IEX's principal office and
on its Internet Web site at www.iextrading.com. 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-IEX-2016-13 and should be submitted on
or before October 11, 2016.\32\
---------------------------------------------------------------------------
\32\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-22417 Filed 9-16-16; 8:45 am]
BILLING CODE 8011-01-P
