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