Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to EDGA Rule 11.11, Routing to Away Trading Centers, 75466-75468 [2016-26133]

Download as PDF 75466 Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices it appears to the Commission that such action is: (1) Necessary or appropriate in the public interest; (2) for the protection of investors; or (3) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: BatsBZX–2016–65, and should be submitted on or before November 21, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Brent J. Fields, Secretary. [FR Doc. 2016–26132 Filed 10–28–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79150; File No. SR– BatsEDGA–2016–22] sradovich on DSK3GMQ082PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BatsBZX–2016–65 on the subject line. Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to EDGA Rule 11.11, Routing to Away Trading Centers 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–2016–65. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 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– Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 12, 2016, Bats EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III 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. VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 October 25, 2016. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend Exchange Rule 11.11(a) to describe when an order that includes a Short Sale instruction may be eligible for routing when a short sale price test restriction is in effect. The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 32 17 CFR 200.30–3(a)(12). 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). 1 15 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 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 The Exchange proposes to amend Exchange Rule 11.11(a) to describe when an order that includes a Short Sale 5 instruction may be eligible for routing when a short sale price test restriction is in effect. Under Rule 201 of Regulation SHO,6 a short sale order in covered security 7 generally cannot be executed or displayed by a Trading Center,8 such as the Exchange, at a price that is at or below the current national best bid (‘‘NBB’’) 9 when a short sale circuit breaker is in effect for the covered security (the ‘‘short sale price test restriction’’).10 5 See Exchange Rule 11.6(o). The term ‘‘short sale’’ is defined as ‘‘any sale of a security which the seller does not own or any sale which is consummated by the delivery of a security borrowed by, or for the account of, the seller.’’ 17 CFR 242.200(a). 6 See 17 CFR 242.201; Securities Exchange Act Release No. 61595 (February 26, 2010), 75 FR 11232 (March 10, 2010). 7 Rule 201(a)(1) of Regulation SHO defines the term ‘‘covered security’’ to mean any ‘‘NMS stock’’ as defined under Rule 600(b)(47) of Regulation NMS. Rule 600(b)(47) of Regulation NMS defines an ‘‘NMS stock’’ as ‘‘any NMS security other than an option.’’ Rule 600(b)(46) of Regulation NMS defines an ‘‘NMS security’’ as ‘‘any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options.’’ 17 CFR 242.201(a)(1); 17 CFR 242.600(b)(46); and 17 CFR 242.600(b)(47). 8 Rule 201(a)(9) of Regulation SHO states that the term ‘‘Trading Center’’ shall have the same meaning as in Rule 600(b)(78) of Regulation NMS. Rule 600(b)(78) of 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.’’ 17 CFR 242.200(a)(9); 17 CFR 242.600(b)(78). 9 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42). 10 17 CFR 242.201(b)(1). E:\FR\FM\31OCN1.SGM 31OCN1 Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices sradovich on DSK3GMQ082PROD with NOTICES Under Rule 11.11(a), an order that includes a Short Sale instruction when a short sale price test restriction pursuant to Rule 201 of Regulation SHO is in effect is not eligible for routing by the Exchange. If an order is ineligible for routing due to a Short Sale Circuit Breaker 11 being in effect and such order contains a Time-in-Force of Immediateor-Cancel (‘‘IOC’’),12 then the order will be cancelled. For any other order ineligible for routing due to a Short Sale Circuit Breaker being in effect, the Exchange will post the unfilled balance of the order to the EDGA Book,13 treat the order as if it included a Book Only 14 or Post Only 15 instruction, and subject it to the Re-Pricing Instructions to Comply with Rule 201 of Regulation SHO, as described in Rule Exchange 11.6(l)(2),16 unless the User has elected the order Cancel Back as described in Exchange Rule 11.6(b). The Exchange proposes to specify in Rule 11.11(a) that orders that include a Short Sale instruction may be eligible for routing by the Exchange when a Short Sale Circuit Breaker is in effect where the User 17 selects the Post to Away 18 routing option. In contrast to all other routing strategies, which are routed to other Trading Centers for immediate execution, the Post to Away routing option is an order that is sent to other Trading Centers for posting and/ or later execution as further described below. Under the Post to Away routing option, the remainder of a routed order is routed to and posted to the order book of a destination on the System routing table,19 as specified by the User. Orders routed pursuant to the Post to Away routing option that include a Short Sale instruction are identified as ‘‘short’’ are subject to the receiving Trading Center’s processes for handling short sale orders 11 In order to use consistent terminology, the Exchange proposes to replace the term ‘‘short sale price test restriction’’ with ‘‘Short Sale Circuit Breaker’’ within the first sentence of Rule 11.11(a). 12 See Exchange Rule 11.6(q)(1). 13 See Exchange Rule 1.5(d). 14 See Exchange Rule 11.6(n)(3). 15 See Exchange Rule 11.6(n)(4). 16 In sum, under Exchange Rule 11.6(l)(2), an order to sell with a Short Sale instruction that, at the time of entry, could not be executed or displayed in compliance with Rule 201 of Regulation SHO will be re-priced by the System at the Permitted Price. See Exchange Rule 11.6(l)(2) for a full description of the Exchange’s Re-Pricing Instructions to Comply with Rule 201 of Regulation SHO. 17 See Exchange Rule 1.5(cc). 18 See 11.11(g)(15). 19 The term ‘‘System routing table’’ is defined as the ‘‘the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them.’’ See Exchange Rule 11.11(g). VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 in compliance with Rule 201 of Regulation SHO.20 Under Exchange Rule 11.11(a), orders that include a Short Sale instruction and a Time-in-Force of IOC that are not eligible for routing during a Short Sale Circuit Breaker will continue to be cancelled. For any other order that includes a Short Sale instruction that is ineligible for routing due to a Short Sale Circuit Breaker being in effect, the Exchange will continue to post the unfilled balance of the order to the EDGA Book, treat the order as if it included a Book Only or Post Only instruction, and subject it to the RePricing Instructions to Comply with Rule 201 of Regulation SHO, as described in Rule 11.6(l)(2), unless the User has elected the order Cancel Back as described in Rule 11.6(b). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 21 and furthers the objectives of Section 6(b)(5) of the Act 22 because it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, foster cooperation and coordination with persons engaged in facilitating transactions in securities, and, in general, protect investors and the public interest. Specifically, the proposed changes are designed to ensure clarity in the Exchange’s rulebook with respect to the routing of orders in compliance with Rule 201 of Regulation SHO. In addition, providing Users the ability to send short sale orders that are routable pursuant to the Post to Away routing option provides them additional flexibility with regard to the handling of their orders. The Exchange notes that orders that include a Short Sale instruction routed pursuant to the Post to Away routing option are identified as ‘‘short’’ and, therefore, subject to the receiving Trading Center’s processes for handling short sale orders in compliance with Regulation SHO.23 The Exchange also notes that other national securities exchanges do not expressly prohibit the routing of short sale orders. For example, Nasdaq and NYSE Arca, Inc. (‘‘NYSE Arca’’) allow for the routing of short sale orders generally, and do 20 See, e.g., Nasdaq Stock Market LLC (‘‘Nasdaq’’) Rule 4763; New York Stock Exchange, Inc. (‘‘NYSE’’) Rule 440B; and Nasdaq’s Regulation SHO Frequently Asked Questions (updated March 10, 2011), available at https://nasdaqtrader.com/ content/marketregulation/regsho/regshoFAQs.pdf. 21 15 U.S.C. 78f(b). 22 15 U.S.C. 78f(b)(5). 23 See supra note 20. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 75467 not limit a short sale order’s ability to route to certain routing options.24 Thus, the proposal is directly targeted at removing impediments to and perfecting the mechanism of a free and open market and national market system. The proposed rule change also is designed to support the principles of Section 11A(a)(1) 25 of the Act in that it seeks to assure fair competition among brokers and dealers and among exchange markets. B. Self-Regulatory Organization’s Statement on Burden on Competition 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. The Exchange is simply proposing to reflect in its rules that orders that include a Short Sale instruction may be routed to an away marked for execution under one specific routing strategy offered by the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Not applicable. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (A) Significantly affect the protection of investors or the public interest; (B) impose any significant burden on competition; and (C) 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 it has become effective pursuant to Section 19(b)(3)(A) of the Act 26 and paragraph (f)(6) of Rule 19b– 4 thereunder,27 the Exchange has designated this rule filing as noncontroversial. The Exchange has given the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 24 See e.g., Nasdaq Rules 4702(a) (stating generally that an ‘‘[o]rder may . . . may be routed to other market centers for potential execution if designated as ‘Routable’ ’’) and 4763 (not prohibiting the routing of a short sale order during a short sale price test). See also e.g., NYSE Arca Rule 7.6P (not prohibiting the routing of a short sale order during a short sale price test). 25 15 U.S.C. 78k–1(a)(1). 26 15 U.S.C. 78s(b)(3)(A). 27 17 CFR 240.19b–4. E:\FR\FM\31OCN1.SGM 31OCN1 75468 Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Notices 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: (1) Necessary or appropriate in the public interest; (2) for the protection of investors; or (3) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– BatsEDGA–2016–22, and should be submitted on or before November 21, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Brent J. Fields, Secretary. [FR Doc. 2016–26133 Filed 10–28–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79154; File No. SR–BX– 2016–054] sradovich on DSK3GMQ082PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BatsEDGA–2016–22 on the subject line. Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Commentary .14 to Rule 4770 (Compliance With Regulation NMS Plan To Implement a Tick Size Pilot) 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–BatsEDGA–2016–22. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 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 October 25, 2016. VerDate Sep<11>2014 17:53 Oct 28, 2016 Jkt 241001 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 October 17, 2016, NASDAQ BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to add Commentary .14 to Rule 4770 (Compliance with Regulation NMS Plan to Implement a Tick Size Pilot) to provide the SEC with notice of its efforts to re-program its systems to eliminate a re-pricing functionality for certain orders in Test Group Three securities in connection with the Regulation NMS Plan to Implement a Tick Size Pilot Program (‘‘Plan’’ or ‘‘Pilot’’).3 BX also proposes to re-number current Commentary .12 relating to the Block 28 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015) (‘‘Approval Order’’). 1 15 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 Size exception to Commentary .13 as a technical correction. The text of the proposed rule change is set forth below. Proposed new language is in italics; deleted text is in brackets. * * * * * NASDAQ BX Rules * * * * * 4770. Compliance With Regulation NMS Plan To Implement a Tick Size Pilot (a) through (d) No Change. Commentary: .01–.12 No change. .1[2]3 For purposes of qualifying for the Block Size exception under paragraph (c)(3)(D)(iii) of this Rule, the Order must have a size of 5,000 shares or more and the resulting execution upon entry must have a size of 5,000 shares or more in aggregate. .14 Until October 31, 2016, the treatment of Price to Comply Orders, Price to Display Orders, Non-Displayed Orders, and PostOnly Orders that are entered through the OUCH or FLITE protocols in Test Group Three securities shall be as follows: Following entry, and if market conditions allow, a Price to Comply Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Comply Order is able to be ranked and displayed at its original entered limit price. Following entry, and if market conditions allow, a Price to Display Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO until such time as the Price to Display Order is able to be ranked and displayed at its original entered limit price. Following entry, and if market conditions allow, a Non-Displayed Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO up (down) to the Order’s limit price. Following entry, and if market conditions allow, the Post-Only Order in a Test Group Three Pilot Security will be adjusted repeatedly in accordance with changes to the NBBO or the best price on the Exchange Book, as applicable until such time as the Post-Only Order is able to be ranked and displayed at its original entered limit price. * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. E:\FR\FM\31OCN1.SGM 31OCN1

Agencies

[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Notices]
[Pages 75466-75468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26133]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79150; File No. SR-BatsEDGA-2016-22]


Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change to EDGA 
Rule 11.11, Routing to Away Trading Centers

October 25, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 12, 2016, Bats EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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.
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    \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 the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend Exchange Rule 11.11(a) to 
describe when an order that includes a Short Sale instruction may be 
eligible for routing when a short sale price test restriction is in 
effect.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Exchange Rule 11.11(a) to describe 
when an order that includes a Short Sale \5\ instruction may be 
eligible for routing when a short sale price test restriction is in 
effect. Under Rule 201 of Regulation SHO,\6\ a short sale order in 
covered security \7\ generally cannot be executed or displayed by a 
Trading Center,\8\ such as the Exchange, at a price that is at or below 
the current national best bid (``NBB'') \9\ when a short sale circuit 
breaker is in effect for the covered security (the ``short sale price 
test restriction'').\10\
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    \5\ See Exchange Rule 11.6(o). The term ``short sale'' is 
defined as ``any sale of a security which the seller does not own or 
any sale which is consummated by the delivery of a security borrowed 
by, or for the account of, the seller.'' 17 CFR 242.200(a).
    \6\ See 17 CFR 242.201; Securities Exchange Act Release No. 
61595 (February 26, 2010), 75 FR 11232 (March 10, 2010).
    \7\ Rule 201(a)(1) of Regulation SHO defines the term ``covered 
security'' to mean any ``NMS stock'' as defined under Rule 
600(b)(47) of Regulation NMS. Rule 600(b)(47) of Regulation NMS 
defines an ``NMS stock'' as ``any NMS security other than an 
option.'' Rule 600(b)(46) of Regulation NMS defines an ``NMS 
security'' as ``any security or class of securities for which 
transaction reports are collected, processed, and made available 
pursuant to an effective transaction reporting plan, or an effective 
national market system plan for reporting transactions in listed 
options.'' 17 CFR 242.201(a)(1); 17 CFR 242.600(b)(46); and 17 CFR 
242.600(b)(47).
    \8\ Rule 201(a)(9) of Regulation SHO states that the term 
``Trading Center'' shall have the same meaning as in Rule 600(b)(78) 
of Regulation NMS. Rule 600(b)(78) of 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.'' 17 CFR 
242.200(a)(9); 17 CFR 242.600(b)(78).
    \9\ 17 CFR 242.201(a)(4); 17 CFR 242.600(b)(42).
    \10\ 17 CFR 242.201(b)(1).

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[[Page 75467]]

    Under Rule 11.11(a), an order that includes a Short Sale 
instruction when a short sale price test restriction pursuant to Rule 
201 of Regulation SHO is in effect is not eligible for routing by the 
Exchange. If an order is ineligible for routing due to a Short Sale 
Circuit Breaker \11\ being in effect and such order contains a Time-in-
Force of Immediate-or-Cancel (``IOC''),\12\ then the order will be 
cancelled. For any other order ineligible for routing due to a Short 
Sale Circuit Breaker being in effect, the Exchange will post the 
unfilled balance of the order to the EDGA Book,\13\ treat the order as 
if it included a Book Only \14\ or Post Only \15\ instruction, and 
subject it to the Re-Pricing Instructions to Comply with Rule 201 of 
Regulation SHO, as described in Rule Exchange 11.6(l)(2),\16\ unless 
the User has elected the order Cancel Back as described in Exchange 
Rule 11.6(b).
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    \11\ In order to use consistent terminology, the Exchange 
proposes to replace the term ``short sale price test restriction'' 
with ``Short Sale Circuit Breaker'' within the first sentence of 
Rule 11.11(a).
    \12\ See Exchange Rule 11.6(q)(1).
    \13\ See Exchange Rule 1.5(d).
    \14\ See Exchange Rule 11.6(n)(3).
    \15\ See Exchange Rule 11.6(n)(4).
    \16\ In sum, under Exchange Rule 11.6(l)(2), an order to sell 
with a Short Sale instruction that, at the time of entry, could not 
be executed or displayed in compliance with Rule 201 of Regulation 
SHO will be re-priced by the System at the Permitted Price. See 
Exchange Rule 11.6(l)(2) for a full description of the Exchange's 
Re-Pricing Instructions to Comply with Rule 201 of Regulation SHO.
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    The Exchange proposes to specify in Rule 11.11(a) that orders that 
include a Short Sale instruction may be eligible for routing by the 
Exchange when a Short Sale Circuit Breaker is in effect where the User 
\17\ selects the Post to Away \18\ routing option. In contrast to all 
other routing strategies, which are routed to other Trading Centers for 
immediate execution, the Post to Away routing option is an order that 
is sent to other Trading Centers for posting and/or later execution as 
further described below. Under the Post to Away routing option, the 
remainder of a routed order is routed to and posted to the order book 
of a destination on the System routing table,\19\ as specified by the 
User. Orders routed pursuant to the Post to Away routing option that 
include a Short Sale instruction are identified as ``short'' are 
subject to the receiving Trading Center's processes for handling short 
sale orders in compliance with Rule 201 of Regulation SHO.\20\
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    \17\ See Exchange Rule 1.5(cc).
    \18\ See 11.11(g)(15).
    \19\ The term ``System routing table'' is defined as the ``the 
proprietary process for determining the specific trading venues to 
which the System routes orders and the order in which it routes 
them.'' See Exchange Rule 11.11(g).
    \20\ See, e.g., Nasdaq Stock Market LLC (``Nasdaq'') Rule 4763; 
New York Stock Exchange, Inc. (``NYSE'') Rule 440B; and Nasdaq's 
Regulation SHO Frequently Asked Questions (updated March 10, 2011), 
available at https://nasdaqtrader.com/content/marketregulation/regsho/regshoFAQs.pdf.
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    Under Exchange Rule 11.11(a), orders that include a Short Sale 
instruction and a Time-in-Force of IOC that are not eligible for 
routing during a Short Sale Circuit Breaker will continue to be 
cancelled. For any other order that includes a Short Sale instruction 
that is ineligible for routing due to a Short Sale Circuit Breaker 
being in effect, the Exchange will continue to post the unfilled 
balance of the order to the EDGA Book, treat the order as if it 
included a Book Only or Post Only instruction, and subject it to the 
Re-Pricing Instructions to Comply with Rule 201 of Regulation SHO, as 
described in Rule 11.6(l)(2), unless the User has elected the order 
Cancel Back as described in Rule 11.6(b).

2. Statutory Basis

    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \21\ and furthers the objectives of 
Section 6(b)(5) of the Act \22\ because it is designed to promote just 
and equitable principles of trade, remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and, in general, protect 
investors and the public interest. Specifically, the proposed changes 
are designed to ensure clarity in the Exchange's rulebook with respect 
to the routing of orders in compliance with Rule 201 of Regulation SHO. 
In addition, providing Users the ability to send short sale orders that 
are routable pursuant to the Post to Away routing option provides them 
additional flexibility with regard to the handling of their orders. The 
Exchange notes that orders that include a Short Sale instruction routed 
pursuant to the Post to Away routing option are identified as ``short'' 
and, therefore, subject to the receiving Trading Center's processes for 
handling short sale orders in compliance with Regulation SHO.\23\ The 
Exchange also notes that other national securities exchanges do not 
expressly prohibit the routing of short sale orders. For example, 
Nasdaq and NYSE Arca, Inc. (``NYSE Arca'') allow for the routing of 
short sale orders generally, and do not limit a short sale order's 
ability to route to certain routing options.\24\ Thus, the proposal is 
directly targeted at removing impediments to and perfecting the 
mechanism of a free and open market and national market system. The 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \25\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets.
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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ See supra note 20.
    \24\ See e.g., Nasdaq Rules 4702(a) (stating generally that an 
``[o]rder may . . . may be routed to other market centers for 
potential execution if designated as `Routable' '') and 4763 (not 
prohibiting the routing of a short sale order during a short sale 
price test). See also e.g., NYSE Arca Rule 7.6P (not prohibiting the 
routing of a short sale order during a short sale price test).
    \25\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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. The Exchange is 
simply proposing to reflect in its rules that orders that include a 
Short Sale instruction may be routed to an away marked for execution 
under one specific routing strategy offered by the Exchange.

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

    Not applicable.

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

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) 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 it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \26\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\27\ the Exchange has 
designated this rule filing as non-controversial. The Exchange has 
given the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission.
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    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4.

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[[Page 75468]]

    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: (1) 
Necessary or appropriate in the public interest; (2) for the protection 
of investors; or (3) otherwise in furtherance of the purposes of the 
Act. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BatsEDGA-2016-22 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-BatsEDGA-2016-22. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of 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-BatsEDGA-2016-22, and should 
be submitted on or before November 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-26133 Filed 10-28-16; 8:45 am]
 BILLING CODE 8011-01-P
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