Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Amend Rule 4702 To Adopt a New Retail Post-Only Order, 75862-75865 [2016-26301]

Download as PDF 75862 Federal Register / Vol. 81, No. 211 / Tuesday, November 1, 2016 / Notices Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. DATES: Effective date: November 1, Elizabeth A. Reed, 202–268–3179. The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on October 25, 2016, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Express Contract 43 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2017–12, CP2017–27. SUPPLEMENTARY INFORMATION: Stanley F. Mires, Attorney, Federal Compliance. [FR Doc. 2016–26274 Filed 10–31–16; 8:45 am] BILLING CODE 7710–12–P POSTAL SERVICE Product Change—Priority Mail Negotiated Service Agreement ACTION: Postal ServiceTM. [FR Doc. 2016–26277 Filed 10–31–16; 8:45 am] BILLING CODE 7710–12–P Notice. The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. DATES: Effective date: November 1, 2016. FOR FURTHER INFORMATION CONTACT: Elizabeth A. Reed, 202–268–3179. The United States Postal hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on October 25, 2016, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Contract 251 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2017–9, CP2017–24. SUPPLEMENTARY INFORMATION: Service® [FR Doc. 2016–26281 Filed 10–31–16; 8:45 am] Notice. BILLING CODE 7710–12–P The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. POSTAL SERVICE Product Change—Priority Mail Negotiated Service Agreement AGENCY: ACTION: Postal ServiceTM. Notice. Elizabeth A. Reed, 202–268–3179. The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on October 25, 2016, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Contract 252 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2017–10, CP2017–25. SUPPLEMENTARY INFORMATION: Stanley F. Mires, Attorney, Federal Compliance. [FR Doc. 2016–26278 Filed 10–31–16; 8:45 am] BILLING CODE 7710–12–P VerDate Sep<11>2014 The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. SUMMARY: FOR FURTHER INFORMATION CONTACT: 00:01 Nov 01, 2016 Jkt 241001 DATES: Effective date: November 1, 2016. FOR FURTHER INFORMATION CONTACT: Elizabeth A. Reed, 202–268–3179. The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on October 25, 2016, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Contract 250 to Competitive Product List. Documents are available at SUPPLEMENTARY INFORMATION: PO 00000 Frm 00058 Fmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79163; File No. SR– NASDAQ–2016–141] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Amend Rule 4702 To Adopt a New Retail Post-Only Order October 26, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 13, 2016, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ 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 Effective date: November 1, 2016. asabaliauskas on DSK3SPTVN1PROD with NOTICES Postal ServiceTM. Stanley F. Mires, Attorney, Federal Compliance. SUMMARY: DATES: AGENCY: Stanley F. Mires, Attorney, Federal Compliance. SUMMARY: FOR FURTHER INFORMATION CONTACT: AGENCY: Product Change—Priority Mail Negotiated Service Agreement ACTION: 2016. www.prc.gov, Docket Nos. MC2017–8, CP2017–23. POSTAL SERVICE Sfmt 4703 The Exchange proposes to amend Rule 4702 (Order Types) [sic] adopt a New Retail Post-Only Order. The text of the proposed rule change is available on the Exchange’s Web site at https:// nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\01NON1.SGM 01NON1 Federal Register / Vol. 81, No. 211 / Tuesday, November 1, 2016 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change asabaliauskas on DSK3SPTVN1PROD with NOTICES 1. Purpose The purpose of this filing is to amend Rule 4702 (Order Types) to adopt a new Retail Post-Only Order type. Although based on the Post-Only Order, the Retail Post-Only Order differs from the PostOnly Order in two ways. First, the Retail Post-Only Order can only be used in connection with orders sent on behalf of retail customers, whereas a Post-Only Order is available for use by any market participant. Second, if a Retail Post Only Order would remove liquidity or if posting the order would require an adjustment to the price of the order for any reason, the order will be cancelled. In contrast, a Post-Only Order is designed to have its price adjusted as needed, for example, in order to avoid locking or crossing a Protected Quotation. With the Retail Post-Only Order, Nasdaq is providing firms with another way of managing their retail customer order flow. Currently, if a firm does not want a retail customer order to remove liquidity from the Exchange upon entry, the firm can select the RTFY routing option, which routes the order to destinations in the System routing table instead of immediately removing liquidity from the Exchange order book.3 Some firms, however, prefer to use their own routing infrastructure in seeking execution of a customer order rather than allowing that order to remove liquidity from the Exchange upon entry or instructing the Exchange to make a routing determination. In cancelling the order for any reason instead of adjusting its price, the Retail Post-Only Order will therefore provide firms with an alternative for handing [sic] retail customer orders. As noted above, the first key feature of the Retail Post-Only Order is that it is designed for use by retail customers. Accordingly, a Retail Post-Only Order must meet the criteria of a Designated Retail Order, as defined in Rule 7018, in addition to the criteria set forth in Rule 4702(b)(14).4 Nasdaq believes that 3 See Nasdaq Rule 4738(a)(1)(A)(v)(b); see also Securities Exchange Act Release No. 76718 (December 21, 2015), 80 FR 80847 (December 28, 2015) (SR–NASDAQ–2015–112). 4 Rule 7018 provides that a Designated Retail Order is ‘‘an agency or riskless principal order that meets the criteria of FINRA Rule 5320.03 and that originates from a natural person and is submitted to Nasdaq by a member that designates it pursuant to this rule, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized VerDate Sep<11>2014 00:01 Nov 01, 2016 Jkt 241001 defining a retail customer by reference to Rule 7018 is appropriate because this definition is already used in connection with other Nasdaq programs and fees, including the RTFY routing option, and defining a retail customer by reference to Rule 7018 will therefore keep the concept of ‘‘retail’’—either as applied to a type of order or to a type of customer—consistent across the Exchange. Nasdaq is offering this Order to retail customers because it will provide firms that handle retail customer order flow with an alternative to the methods of handling retail order flow that currently exist on the Exchange.5 By offering firms that handle retail order flow an additional choice, Nasdaq believes that the proposal could stimulate competition by attracting additional retail customer order flow to the Exchange. The second key feature of the Retail Post-Only Order is that it will cancel if the price of the Order would otherwise adjust for any reason. Rule 4702(b)(14) therefore states that when a new Retail Post-Only order is received, it will attempt to post on the Exchange Book. A Retail Post-Only order that cannot post to the Nasdaq Book at its limit price without having its price adjusted or removing liquidity will be cancelled.6 The Retail Post-Only Order is based on the Post-Only Order, and will therefore share most of the attributes of a Post-Only Order.7 For example, a methodology. An order from a ‘natural person’ can include orders on behalf of accounts that are held in a corporate legal form—such as an Individual Retirement Account, Corporation, or a Limited Liability Company—that has been established for the benefit of an individual or group of related family members, provided that the order is submitted by an individual. Members must submit a signed written attestation, in a form prescribed by Nasdaq, that they have implemented policies and procedures that are reasonably designed to ensure that substantially all orders designated by the member as ‘Designated Retail Orders’ comply with these requirements. Orders may be designated on an order-by-order basis, or by designating all orders on a particular order entry port as Designated Retail Orders.’’ 5 As noted above, there are various options a member may currently use to efficiently manage its order flow, such as utilizing the RTFY routing option or allowing that order to have its price adjusted and potentially remove liquidity. 6 An order may have its price adjusted, for example, to satisfy a regulatory obligation, such as the prohibition under Regulation NMS against locking or crossing a Protected Quotation. See 17 CFR 242.610(d). Another scenario where the price of an order may have to be adjusted for purposes of regulatory compliance is Rule 201 of Regulation SHO, which requires trading centers to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the execution or display of a short sale order at a price at or below the current National Best Bid under certain circumstances. See 17 CFR 242.201. 7 As defined in Rule 4703, the potential attributes that may apply to an order are (1) time-in-force; (2) size; (3) price; (4) pegging; (5) minimum quantity; PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 75863 Retail Post-Only Order may be entered with reserve size. As with the Post-Only Order, a Retail Post-Only Order may be entered in any whole share size between one share and 999,999 shares. Orders for fractional shares are not permitted. With respect to Time-in-Force (the period of time that the Nasdaq Market Center will hold the Order for potential execution), the Retail Post-Only Order may be entered with all times permitted by Time-in-Force;8 however, a Retail Post-Only Order that is entered as ‘‘Immediate or Cancel’’ will be canceled (because an Immediate or Cancel order is incapable of posting to the Nasdaq Book). Unlike the Post-Only Order, Retail Post-Only Orders cannot be designated as Intermarket Sweep Orders (‘‘ISO’’). The purpose of the Order is to allow firms to utilize their own routing infrastructure in deciding how to execute a retail customer order. Retail Post Only orders will therefore not route and have no routing strategies used in conjunction with the order, and will also not support the ISO attribute. Unlike the Post-Only Order, the Retail Post-Only Order will also not utilize the ‘‘display’’ attribute, since a Retail PostOnly Order may be either displayed or non-displayed. As with Post-Only Orders, Retail PostOnly Orders will support attribution, which permits a Participant to designate that the price and size of the Order will be displayed next to the Participant’s MPID in market data disseminated by Nasdaq. A Retail Post-Only order may also participate in the Nasdaq Opening Cross and/or the Nasdaq Closing Cross. As with Post-Only Orders, Retail Post Only Orders will not support pegging (the attribute by which the price of the Order is automatically set with (6) routing; (7) discretion; (8) reserve size; (9) attribution; (10) Intermarket Sweep Order; (11) display; and (12) participation in the Nasdaq Opening Cross or the Nasdaq Closing Cross. 8 Under Rule 4703(a), Participants specify an Order’s Time-in-Force by designating a time at which the Order will become active and a time at which the Order will cease to be active. The available times for activating Orders are (1) time of the Order’s receipt by the Nasdaq Market Center; (2) the Nasdaq Opening Cross (or 9:30 a.m. ET in the case of a security for which no Nasdaq Opening Cross occurs); (3) Market Hours, beginning after the completion of the Nasdaq Opening Cross (or at 9:30 a.m. ET in the case of a security for which no Nasdaq Opening Cross occurs); (4) the Nasdaq Closing Cross (or the end of Market Hours in the case of a security for which no Nasdaq Closing Cross occurs); (5) 8:00 a.m. ET, in the case of an Order using the SCAN or RTFY routing strategy that is entered prior to 8:00 a.m. ET; (6) the beginning of the Display-Only Period, in the case of a security that is the subject of a trading halt and for which trading will resume pursuant to a halt cross; and (7) the resumption of trading, in the case of a security that is the subject of a trading halt and for which trading resumes without a halt cross. E:\FR\FM\01NON1.SGM 01NON1 75864 Federal Register / Vol. 81, No. 211 / Tuesday, November 1, 2016 / Notices reference to the National Best Bid or Offer), since the purpose of this Order is to cancel if the price of the Order needs to be adjusted. For the same reason, Retail Post Only Orders will also not support discretion (where an order has a non-displayed discretionary price range within which the entering Participant is willing to trade). The Retail Post-Only Order will be available for entry through Nasdaq’s RASH, FIX and QIX order entry protocols. Nasdaq notes that almost all Designated Retail Orders received by the Exchange are entered through the RASH and FIX protocols. A user may also enter a Retail Post-Only Order during Pre-Market and Post-Market Hours.9 During these times, a Retail Post-Only Order will be processed in a manner identical to Market Hours. asabaliauskas on DSK3SPTVN1PROD with NOTICES 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,10 in general, and furthers the objectives of Section 6(b)(5) of the Act,11 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The Exchange believes that this proposal is consistent with the Act because it will add a new functionality (cancelling an order for any reason instead of adjusting its price) that is not currently available on the Exchange. The Exchange believes that this new functionality is consistent with the Act because it will allow firms that use this Order to utilize their own routing infrastructure in determining how to execute a retail customer order, which will facilitate the efficient execution of those orders. Nasdaq believes that it is reasonable to offer this Order to retail customers only, as this Order will provide firms that handle retail customer orders with an alternative to the functionality for handling retail order flow that currently exists on the Exchange. The Exchange also notes that it already offers functionalities that are tailored to retail customer order flow, such as the RTFY routing option. In offering firms that 9 The term ‘‘Market Hours’’ means the period of time beginning at 9:30 a.m. ET and ending at 4:00 p.m. ET (or such earlier time as may be designated by Nasdaq on a day when Nasdaq closes early). The term ‘‘Pre-Market Hours’’ means the period of time beginning at 4:00 a.m. ET and ending immediately prior to the commencement of Market Hours. The term ‘‘Post-Market Hours’’ means the period of time beginning immediately after the end of Market Hours and ending at 8:00 p.m. ET. See Rule 4701(g). 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 00:01 Nov 01, 2016 Jkt 241001 handle retail customer orders an alternative to the functionality that currently exists on Nasdaq for retail customer orders, the Exchange believes that it may attract additional retail customer order flow to the Exchange, which would increase the diversity of order flow on the Exchange and enhance the Exchange’s market quality. Nasdaq believes that the attributes of the Retail Post-Only Order are also consistent with the Act. Nasdaq notes that some of the Order’s attributes, such as size and attribution, are the same as the attributes of the Post-Only Order, upon which the Retail Post-Only Order is based. Nasdaq also notes that the Order’s attributes reflect the functionality of the Retail Post-Only Order. For example, pegging will not be offered as an order attribute, given that the purpose of the Order is to cancel rather than have its price adjusted. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Retail Post-Only Order is an optional order type that will be available for entry through Nasdaq’s order entry protocols that are most commonly used to submit retail customer orders. The Retail PostOnly Order will provide retail customers with an order type and a resulting functionality that is not currently available on the Exchange. Although the Retail Post-Only Order will be offered to retail customers only, Nasdaq believes that this does not impose a burden on competition that is not necessary or appropriate. In providing an alternative to the Exchange’s current methods of handling retail customer orders, Nasdaq believes that the proposal could stimulate competition by attracting additional retail customer order flow to the Exchange, which would increase the diversity of order flow on the Exchange and enhance the Exchange’s market quality. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: A. By order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2016–141 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–NASDAQ–2016–141. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make E:\FR\FM\01NON1.SGM 01NON1 Federal Register / Vol. 81, No. 211 / Tuesday, November 1, 2016 / Notices available publicly. All submissions should refer to File Number SR– NASDAQ–2016–141 and should be submitted on or before November 22, 2016 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Brent J. Fields, Secretary. [FR Doc. 2016–26301 Filed 10–31–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79165; File Nos. SR–DTC– 2016–007; SR–FICC–2016–005; SR–NSCC– 2016–003] Self-Regulatory Organizations; The Depository Trust Company; Fixed Income Clearing Corporation; National Securities Clearing Corporation; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Changes Relating to Clearing Agency Investment Policy asabaliauskas on DSK3SPTVN1PROD with NOTICES October 26, 2016. On August 25, 2016, The Depository Trust Company (‘‘DTC’’), Fixed Income Clearing Corporation (‘‘FICC’’), and National Securities Clearing Corporation (‘‘NSCC’’, and together with DTC and FICC, the ‘‘Clearing Agencies’’) filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule changes SR–DTC–2016–007, SR– FICC–2016–005, and SR–NSCC–2016– 003 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 to adopt the Clearing Agency Investment Policy, which governs the investment of funds of the Clearing Agencies. The proposed rule changes were published for comment in the Federal Register on September 13, 2016.3 To date, the Commission has not received any comments on the proposed rule changes. Section 19(b)(2) of the Act 4 provides that, within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding, or as to which the self-regulatory organization consents, 12 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. 78778 (September 7, 2016), 81 FR 62963 (September 13, 2016) (SR–DTC–2016–007; SR–FICC–2016–005; SR–NSCC–2016–003). 4 15 U.S.C. 78s(b)(2). 1 15 VerDate Sep<11>2014 00:01 Nov 01, 2016 Jkt 241001 the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day after publication of the notice for these proposed rule changes is October 28, 2016. The Commission is extending this 45-day time period. In order to provide the Commission with sufficient time to consider the proposed rule changes, the Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule changes. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,5 designates December 12, 2016 as the date by which the Commission shall either approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule changes (File Nos. SR–DTC–2016–007; SR– FICC–2016–005; SR–NSCC–2016–003). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Brent J. Fields, Secretary. [FR Doc. 2016–26302 Filed 10–31–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79159; File No. TP 16–14] Order Granting Limited Exemptions From Exchange Act Rule 10b–17 and Rules 101 and 102 of Regulation M to Premise Capital Frontier Advantage Diversified Tactical ETF Pursuant to Exchange Act Rule 10b–17(b)(2) and Rules 101(d) and 102(e) of Regulation M October 26, 2016. By letter dated October 26, 2016 (the ‘‘Letter’’), as supplemented by conversations with the staff of the Division of Trading and Markets, counsel for ETF Series Solutions (the ‘‘Trust’’), on behalf of the Trust, Premise Capital Frontier Advantage Diversified Tactical ETF (the ‘‘Fund’’), any national securities exchange on or through which shares of the Fund (‘‘Shares’’) are listed and may subsequently trade, Quasar Distributors, LLC (the ‘‘Distributor’’), and persons engaging in transactions in Shares (collectively, the ‘‘Requestors’’), requested exemptions, or interpretive or no-action relief, from Rule 10b-17 of the Securities Exchange Act of 1934, as 5 Id. 6 17 PO 00000 CFR 200.30–3(a)(31). Frm 00061 Fmt 4703 Sfmt 4703 75865 amended (‘‘Exchange Act’’), and Rules 101 and 102 of Regulation M, in connection with secondary market transactions in Shares and the creation or redemption of aggregations of Shares of 50,000 shares (‘‘Creation Units’’). The Trust is registered with the Securities and Exchange Commission (‘‘Commission’’) under the Investment Company Act of 1940, as amended (‘‘1940 Act’’), as an open-end management investment company. The Fund seeks to track the performance of an underlying index, the Premise Capital Frontier Advantage Diversified Tactical Index (the ‘‘Underlying Index’’). The Underlying Index seeks to provide exposure to major U.S. and nonU.S. equity and fixed income asset classes. The Fund will seek to track the performance of its Underlying Index by normally investing at least 80% of its total assets in the ETFs that comprise the Underlying Index.1 Except for the fact that the Fund will operate as an ETF of ETFs, the Fund will operate in a manner identical to the underlying ETFs. The Requestors represent, among other things, the following: • Shares of the Fund will be issued by the Trust, an open-end management investment company that is registered with the Commission; • Creation Units will be continuously redeemable at the net asset value (‘‘NAV’’) next determined after receipt of a request for redemption by the Fund, and the secondary market price of the Shares should not vary substantially from the NAV of such Shares; • Shares of the Fund will be listed and traded on BATS Exchange, Inc., or another exchange in accordance with exchange listing standards that are, or will become, effective pursuant to Section 19(b) of the Exchange Act (the ‘‘Listing Exchange’’); 2 • All ETFs in which the Fund is invested will meet all conditions set forth in one or more class relief letters, will have received individual relief from the Commission, will be able to rely upon individual relief even though they are not named parties, or will be able to 1 The remaining 20% of the Fund’s total assets may be invested in securities (including other underlying funds) not included in the Underlying Index and in cash, money market instruments, or funds that invest exclusively in money market instruments, subject to applicable limitations under the 1940 Act. 2 Further, Requestors represent in the Letter that should the Shares also trade on a market pursuant to unlisted trading privileges, such trading will be conducted pursuant to self-regulatory organization rules that are, or will become, effective pursuant to Section 19(b) of the Exchange Act. E:\FR\FM\01NON1.SGM 01NON1

Agencies

[Federal Register Volume 81, Number 211 (Tuesday, November 1, 2016)]
[Notices]
[Pages 75862-75865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26301]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79163; File No. SR-NASDAQ-2016-141]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Amend Rule 4702 To Adopt a 
New Retail Post-Only Order

October 26, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 13, 2016, The Nasdaq Stock Market LLC (``Nasdaq'' 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.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend Rule 4702 (Order Types) [sic] adopt 
a New Retail Post-Only Order. The text of the proposed rule change is 
available on the Exchange's Web site at https://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

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

[[Page 75863]]

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

1. Purpose
    The purpose of this filing is to amend Rule 4702 (Order Types) to 
adopt a new Retail Post-Only Order type. Although based on the Post-
Only Order, the Retail Post-Only Order differs from the Post-Only Order 
in two ways. First, the Retail Post-Only Order can only be used in 
connection with orders sent on behalf of retail customers, whereas a 
Post-Only Order is available for use by any market participant. Second, 
if a Retail Post Only Order would remove liquidity or if posting the 
order would require an adjustment to the price of the order for any 
reason, the order will be cancelled. In contrast, a Post-Only Order is 
designed to have its price adjusted as needed, for example, in order to 
avoid locking or crossing a Protected Quotation. With the Retail Post-
Only Order, Nasdaq is providing firms with another way of managing 
their retail customer order flow. Currently, if a firm does not want a 
retail customer order to remove liquidity from the Exchange upon entry, 
the firm can select the RTFY routing option, which routes the order to 
destinations in the System routing table instead of immediately 
removing liquidity from the Exchange order book.\3\ Some firms, 
however, prefer to use their own routing infrastructure in seeking 
execution of a customer order rather than allowing that order to remove 
liquidity from the Exchange upon entry or instructing the Exchange to 
make a routing determination. In cancelling the order for any reason 
instead of adjusting its price, the Retail Post-Only Order will 
therefore provide firms with an alternative for handing [sic] retail 
customer orders.
---------------------------------------------------------------------------

    \3\ See Nasdaq Rule 4738(a)(1)(A)(v)(b); see also Securities 
Exchange Act Release No. 76718 (December 21, 2015), 80 FR 80847 
(December 28, 2015) (SR-NASDAQ-2015-112).
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    As noted above, the first key feature of the Retail Post-Only Order 
is that it is designed for use by retail customers. Accordingly, a 
Retail Post-Only Order must meet the criteria of a Designated Retail 
Order, as defined in Rule 7018, in addition to the criteria set forth 
in Rule 4702(b)(14).\4\ Nasdaq believes that defining a retail customer 
by reference to Rule 7018 is appropriate because this definition is 
already used in connection with other Nasdaq programs and fees, 
including the RTFY routing option, and defining a retail customer by 
reference to Rule 7018 will therefore keep the concept of ``retail''--
either as applied to a type of order or to a type of customer--
consistent across the Exchange. Nasdaq is offering this Order to retail 
customers because it will provide firms that handle retail customer 
order flow with an alternative to the methods of handling retail order 
flow that currently exist on the Exchange.\5\ By offering firms that 
handle retail order flow an additional choice, Nasdaq believes that the 
proposal could stimulate competition by attracting additional retail 
customer order flow to the Exchange.
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    \4\ Rule 7018 provides that a Designated Retail Order is ``an 
agency or riskless principal order that meets the criteria of FINRA 
Rule 5320.03 and that originates from a natural person and is 
submitted to Nasdaq by a member that designates it pursuant to this 
rule, provided that no change is made to the terms of the order with 
respect to price or side of market and the order does not originate 
from a trading algorithm or any other computerized methodology. An 
order from a `natural person' can include orders on behalf of 
accounts that are held in a corporate legal form--such as an 
Individual Retirement Account, Corporation, or a Limited Liability 
Company--that has been established for the benefit of an individual 
or group of related family members, provided that the order is 
submitted by an individual. Members must submit a signed written 
attestation, in a form prescribed by Nasdaq, that they have 
implemented policies and procedures that are reasonably designed to 
ensure that substantially all orders designated by the member as 
`Designated Retail Orders' comply with these requirements. Orders 
may be designated on an order-by-order basis, or by designating all 
orders on a particular order entry port as Designated Retail 
Orders.''
    \5\ As noted above, there are various options a member may 
currently use to efficiently manage its order flow, such as 
utilizing the RTFY routing option or allowing that order to have its 
price adjusted and potentially remove liquidity.
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    The second key feature of the Retail Post-Only Order is that it 
will cancel if the price of the Order would otherwise adjust for any 
reason. Rule 4702(b)(14) therefore states that when a new Retail Post-
Only order is received, it will attempt to post on the Exchange Book. A 
Retail Post-Only order that cannot post to the Nasdaq Book at its limit 
price without having its price adjusted or removing liquidity will be 
cancelled.\6\
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    \6\ An order may have its price adjusted, for example, to 
satisfy a regulatory obligation, such as the prohibition under 
Regulation NMS against locking or crossing a Protected Quotation. 
See 17 CFR 242.610(d). Another scenario where the price of an order 
may have to be adjusted for purposes of regulatory compliance is 
Rule 201 of Regulation SHO, which requires trading centers to 
establish, maintain, and enforce written policies and procedures 
reasonably designed to prevent the execution or display of a short 
sale order at a price at or below the current National Best Bid 
under certain circumstances. See 17 CFR 242.201.
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    The Retail Post-Only Order is based on the Post-Only Order, and 
will therefore share most of the attributes of a Post-Only Order.\7\ 
For example, a Retail Post-Only Order may be entered with reserve size. 
As with the Post-Only Order, a Retail Post-Only Order may be entered in 
any whole share size between one share and 999,999 shares. Orders for 
fractional shares are not permitted.
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    \7\ As defined in Rule 4703, the potential attributes that may 
apply to an order are (1) time-in-force; (2) size; (3) price; (4) 
pegging; (5) minimum quantity; (6) routing; (7) discretion; (8) 
reserve size; (9) attribution; (10) Intermarket Sweep Order; (11) 
display; and (12) participation in the Nasdaq Opening Cross or the 
Nasdaq Closing Cross.
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    With respect to Time-in-Force (the period of time that the Nasdaq 
Market Center will hold the Order for potential execution), the Retail 
Post-Only Order may be entered with all times permitted by Time-in-
Force;\8\ however, a Retail Post-Only Order that is entered as 
``Immediate or Cancel'' will be canceled (because an Immediate or 
Cancel order is incapable of posting to the Nasdaq Book).
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    \8\ Under Rule 4703(a), Participants specify an Order's Time-in-
Force by designating a time at which the Order will become active 
and a time at which the Order will cease to be active. The available 
times for activating Orders are (1) time of the Order's receipt by 
the Nasdaq Market Center; (2) the Nasdaq Opening Cross (or 9:30 a.m. 
ET in the case of a security for which no Nasdaq Opening Cross 
occurs); (3) Market Hours, beginning after the completion of the 
Nasdaq Opening Cross (or at 9:30 a.m. ET in the case of a security 
for which no Nasdaq Opening Cross occurs); (4) the Nasdaq Closing 
Cross (or the end of Market Hours in the case of a security for 
which no Nasdaq Closing Cross occurs); (5) 8:00 a.m. ET, in the case 
of an Order using the SCAN or RTFY routing strategy that is entered 
prior to 8:00 a.m. ET; (6) the beginning of the Display-Only Period, 
in the case of a security that is the subject of a trading halt and 
for which trading will resume pursuant to a halt cross; and (7) the 
resumption of trading, in the case of a security that is the subject 
of a trading halt and for which trading resumes without a halt 
cross.
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    Unlike the Post-Only Order, Retail Post-Only Orders cannot be 
designated as Intermarket Sweep Orders (``ISO''). The purpose of the 
Order is to allow firms to utilize their own routing infrastructure in 
deciding how to execute a retail customer order. Retail Post Only 
orders will therefore not route and have no routing strategies used in 
conjunction with the order, and will also not support the ISO 
attribute. Unlike the Post-Only Order, the Retail Post-Only Order will 
also not utilize the ``display'' attribute, since a Retail Post-Only 
Order may be either displayed or non-displayed.
    As with Post-Only Orders, Retail Post-Only Orders will support 
attribution, which permits a Participant to designate that the price 
and size of the Order will be displayed next to the Participant's MPID 
in market data disseminated by Nasdaq. A Retail Post-Only order may 
also participate in the Nasdaq Opening Cross and/or the Nasdaq Closing 
Cross.
    As with Post-Only Orders, Retail Post Only Orders will not support 
pegging (the attribute by which the price of the Order is automatically 
set with

[[Page 75864]]

reference to the National Best Bid or Offer), since the purpose of this 
Order is to cancel if the price of the Order needs to be adjusted. For 
the same reason, Retail Post Only Orders will also not support 
discretion (where an order has a non-displayed discretionary price 
range within which the entering Participant is willing to trade).
    The Retail Post-Only Order will be available for entry through 
Nasdaq's RASH, FIX and QIX order entry protocols. Nasdaq notes that 
almost all Designated Retail Orders received by the Exchange are 
entered through the RASH and FIX protocols. A user may also enter a 
Retail Post-Only Order during Pre-Market and Post-Market Hours.\9\ 
During these times, a Retail Post-Only Order will be processed in a 
manner identical to Market Hours.
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    \9\ The term ``Market Hours'' means the period of time beginning 
at 9:30 a.m. ET and ending at 4:00 p.m. ET (or such earlier time as 
may be designated by Nasdaq on a day when Nasdaq closes early). The 
term ``Pre-Market Hours'' means the period of time beginning at 4:00 
a.m. ET and ending immediately prior to the commencement of Market 
Hours. The term ``Post-Market Hours'' means the period of time 
beginning immediately after the end of Market Hours and ending at 
8:00 p.m. ET. See Rule 4701(g).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest. The Exchange believes that this proposal is consistent with 
the Act because it will add a new functionality (cancelling an order 
for any reason instead of adjusting its price) that is not currently 
available on the Exchange. The Exchange believes that this new 
functionality is consistent with the Act because it will allow firms 
that use this Order to utilize their own routing infrastructure in 
determining how to execute a retail customer order, which will 
facilitate the efficient execution of those orders. Nasdaq believes 
that it is reasonable to offer this Order to retail customers only, as 
this Order will provide firms that handle retail customer orders with 
an alternative to the functionality for handling retail order flow that 
currently exists on the Exchange. The Exchange also notes that it 
already offers functionalities that are tailored to retail customer 
order flow, such as the RTFY routing option. In offering firms that 
handle retail customer orders an alternative to the functionality that 
currently exists on Nasdaq for retail customer orders, the Exchange 
believes that it may attract additional retail customer order flow to 
the Exchange, which would increase the diversity of order flow on the 
Exchange and enhance the Exchange's market quality.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Nasdaq believes that the attributes of the Retail Post-Only Order 
are also consistent with the Act. Nasdaq notes that some of the Order's 
attributes, such as size and attribution, are the same as the 
attributes of the Post-Only Order, upon which the Retail Post-Only 
Order is based. Nasdaq also notes that the Order's attributes reflect 
the functionality of the Retail Post-Only Order. For example, pegging 
will not be offered as an order attribute, given that the purpose of 
the Order is to cancel rather than have its price adjusted.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Retail Post-Only Order is 
an optional order type that will be available for entry through 
Nasdaq's order entry protocols that are most commonly used to submit 
retail customer orders. The Retail Post-Only Order will provide retail 
customers with an order type and a resulting functionality that is not 
currently available on the Exchange. Although the Retail Post-Only 
Order will be offered to retail customers only, Nasdaq believes that 
this does not impose a burden on competition that is not necessary or 
appropriate. In providing an alternative to the Exchange's current 
methods of handling retail customer orders, Nasdaq believes that the 
proposal could stimulate competition by attracting additional retail 
customer order flow to the Exchange, which would increase the diversity 
of order flow on the Exchange and enhance the Exchange's market 
quality.

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

    No written comments were either solicited or received.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2016-141 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-NASDAQ-2016-141. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make

[[Page 75865]]

available publicly. All submissions should refer to File Number SR-
NASDAQ-2016-141 and should be submitted on or before November 22, 2016

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Brent J. Fields,
Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-26301 Filed 10-31-16; 8:45 am]
 BILLING CODE 8011-01-P
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