Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4703 (Order Attributes), Rule 4752 (Opening Process), Rule 4753 (Nasdaq Halt Cross) and Rule 4754 (Nasdaq Closing Cross), 18196-18199 [2017-07633]
Download as PDF
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IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,87 that the
proposed rule change (SR–ISE–2017–
03), as modified by Amendment No. 1,
be, and hereby is, approved.
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.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.88
Eduardo A. Aleman,
Assistant Secretary.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2017–07638 Filed 4–14–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80425; File No. SR–
NASDAQ–2017–031]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
4703 (Order Attributes), Rule 4752
(Opening Process), Rule 4753 (Nasdaq
Halt Cross) and Rule 4754 (Nasdaq
Closing Cross)
April 11, 2017.
mstockstill on DSK30JT082PROD with NOTICES
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 March 31,
2017, 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
The Exchange proposes to amend
Rule 4752 (Opening Process), Rule 4753
(Nasdaq Halt Cross) and Rule 4754
(Nasdaq Closing Cross) to specify the
execution priority of an Order that has
been locked or crossed at its nondisplayed price by a Post-Only Order
and re-priced for purposes of the
Opening, Closing and Halt Cross.
Nasdaq is also proposing to amend Rule
4703 (Order Attributes) and Rule 4753
(Halt Cross) to clarify the effect of the repricing of an Order that has been locked
or crossed at its non-displayed price by
a Post-Only Order for purposes of the
Opening, Closing and Halt Cross.
87 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
88 17
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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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposal is to
amend Rule 4752 (Opening Process),
Rule 4753 (Nasdaq Halt Cross) and Rule
4754 (Nasdaq Closing Cross) to specify
the execution priority of an Order that
has been locked or crossed at its nondisplayed price by a Post-Only Order
and re-priced for purposes of the
Opening, Closing and Halt Cross.
Rule 4752, 4753 and 4754 set forth the
operation of the Opening Cross, the Halt
Cross, and the Closing Cross,
respectively. Each Rule specifies the
manner in which orders will be
executed if less than all available
interest is executed as part of the Cross.
Specifically, Rule 4752 states that, if the
Nasdaq Opening Cross price is selected
and fewer than all shares of Market On
Open (‘‘MOO’’), Limit On Open
(‘‘LOO’’), Opening Imbalance Only
Order (‘‘OIO’’) and Early Market Hours
Orders that are available in the Nasdaq
Market Center would be executed, all
Quotes and Orders shall be executed at
the Nasdaq Opening Cross price in the
following priority: (A) MOO and Early
Market Hours market peg orders, with
time as the secondary priority; (B) LOO
orders, Early Market Hours limit orders,
OIO orders, SDAY limit orders, SGTC
limit orders, GTMC limit orders, SHEX
limit orders, displayed quotes and
reserve interest priced more aggressively
than the Nasdaq Opening Cross price
based on limit price with time as the
secondary priority; (C) LOO orders, OIO
Orders, Early Market Hours and
displayed interest of quotes, SDAY limit
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Fmt 4703
Sfmt 4703
orders, SGTC limit orders, GTMC limit
orders, and SHEX limit orders at the
Nasdaq Opening Cross price with time
as the secondary priority; and (D)
reserve interest of quotes, SDAY limit
orders, SGTC limit orders, and GTMC
limit orders and SHEX limit orders at
the Nasdaq Opening Cross price with
time as the secondary priority.
Rule 4753 states that, if the Nasdaq
Halt Cross price is selected and fewer
than all shares of Eligible Interest that
are available in the Nasdaq Market
Center would be executed, all Eligible
Interest shall be executed at the Nasdaq
Halt Cross price in price/time priority.
Rule 4754 states that, if the Nasdaq
Closing Cross price is selected and
fewer than all Market On Close
(‘‘MOC’’), Limit On Close (‘‘LOC’’),
Imbalance Only (‘‘IO’’) and Close
Eligible Interest would be executed,
orders will be executed at the Nasdaq
Closing Cross price in the following
priority: (A) MOC orders, with time as
the secondary priority; (B) LOC orders,
limit orders, IO orders, displayed quotes
and reserve interest priced more
aggressively than the Nasdaq Closing
Cross price based on price with time as
the secondary priority; (C) LOC orders,
IO Orders displayed interest of limit
orders, and displayed interest of quotes
at the Nasdaq Closing Cross price with
time as the secondary priority; (D)
reserve interest at the Nasdaq Closing
Cross price with time as the secondary
priority; and (E) unexecuted MOC, LOC,
and IO orders will be canceled.
Nasdaq now proposes to amend the
provisions of Rules 4752, 4753 and 4754
to specifically describe the execution
priority an Order that was entered on
the Nasdaq Book and has been locked or
crossed at its non-displayed price by a
Post-Only Order and re-priced for
purposes of the Opening, Closing or
Halt Cross.
In November 2016, the Commission
approved changes to the functionality of
Post-Only Orders.3 As a result of this
3 See Securities Exchange Act Release No. 79290
(November 10, 2016), 81 FR 81184 (November 17,
2016) (SR–NASDAQ–2016–111).
Under the new Post-Only functionality, the
behavior of Post-Only orders would be altered when
the adjusted price of such orders lock or cross a
non-displayed price on the Exchange’s Book.
Specifically, if the adjusted price of the Post-Only
Order would lock or cross a non-displayed price on
the Exchange’s Book, the Post-Only order would be
posted in the same manner as a Price to Comply
Order. However, the Post-Only Order would
execute if (i) it is priced below $1.00 and the value
of price improvement associated with executing
against an Order on the Nasdaq Book (as measured
against the original limit price of the Order) equals
or exceeds the sum of fees charged for such
execution and the value of any rebate that would
be provided if the Order posted to the Nasdaq Book
and subsequently provided liquidity, or (ii) it is
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mstockstill on DSK30JT082PROD with NOTICES
new Post-Only functionality, Nasdaq
recently amended Rule 4703 and Rule
4753 to address the treatment of an
Order that and has been locked or
crossed at its non-displayed price by a
Post-Only Order for purposes of the
Opening, Closing and Halt Cross.
Nasdaq amended Rule 4703 and Rule
4753 to specify that, if an Order to buy
(sell) that is entered on the Nasdaq Book
is locked or crossed at its non-displayed
price by a Post-Only Order, that Order
will be deemed to have a price at one
minimum increment below (above) the
price of the Post-Only for purposes of
selecting the price of the Opening Cross,
the Closing Cross, and the Halt Cross.4
This functionality applies to NonDisplayed Orders, Post-Only Orders,
Price to Comply Orders and Midpoint
Peg Post-Only Orders when the nondisplayed price of that Order is locked
or crossed by a Post-Only Order.5
Nasdaq is now proposing to amend
Rules 4752, 4753 and 4754 to specify
the execution priority of an Order that
has been locked or crossed at its nondisplayed price by a Post-Only Order
and re-priced for purposes of the
Opening, Closing and Halt Cross.
Accordingly, Nasdaq proposes to amend
Rule 4752(d)(3)(B) to state that Orders to
buy (sell) that are locked or crossed at
their non-displayed price by a Post-Only
Order on the Nasdaq Book in Early
Market Hours, and which have been
deemed to have a price at one minimum
price increment below (above) the price
of the Post-Only Order, shall be ranked
in time priority ahead of all orders one
minimum price increment below
(above) the price of the Post-Only Order
priced at $1.00 or more and the value of price
improvement associated with executing against an
Order on the Nasdaq Book (as measured against the
original limit price of the Order) equals or exceeds
$0.01 per share.
Additionally, if the Post-Only Order would not
lock or cross a Protected Quotation but would lock
or cross a Non-Displayed Order on the Exchange’s
Book, the Post-Only Order would be posted, ranked,
and displayed at its limit price. The Post-Only
Order would execute if (i) it is priced below $1.00
and the value of price improvement associated with
executing against an Order on the Nasdaq Book
equals or exceeds the sum of fees charged for such
execution and the value of any rebate that would
be provided if the Order posted to the Nasdaq Book
and subsequently provided liquidity, or (ii) it is
priced at $1.00 or more and the value of price
improvement associated with executing against an
Order on the Nasdaq Book equals or exceeds $0.01
per share.
4 See Securities Exchange Act Release No. 80216
(March 10, 2017), 82 FR 14074 (March 16, 2017)
(SR–NASDAQ–2017–028) (‘‘Cross Proposal’’).
5 As noted in the Cross Proposal, in this scenario,
the Post-Only Order would have locked or crossed
the Non-Displayed Order, Post-Only, Price to
Comply Order, or Midpoint Peg Post-Only Order at
its non-displayed price upon entry if the value of
price improvement associated with executing
against the Order is not met. Id.
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but behind all orders at the price at
which the Order was posted to the
Nasdaq Book. This re-pricing
functionality will apply to NonDisplayed Orders, Post-Only Orders,
and Price to Comply Orders when the
non-displayed price of that Order is
locked or crossed by a Post-Only Order.
Nasdaq proposes to amend Rule
4753(b)(3) to state that Orders to buy
(sell) that are locked or crossed at their
non-displayed price by a Post-Only
Order on the Nasdaq Book, and which
have been deemed to have a price at one
minimum price increment below
(above) the price of the Post-Only Order,
shall be ranked in time priority ahead of
all orders one minimum price increment
below (above) the price of the Post-Only
Order but behind all orders at the price
at which the Order was posted to the
Nasdaq Book. This re-pricing
functionality will apply to NonDisplayed Orders, Post-Only Orders,
Price to Comply Orders and Midpoint
Peg Post-Only Orders when the nondisplayed price of that Order is locked
or crossed by a Post-Only Order.
Finally, Nasdaq proposes to amend
Rule 4754(b)(3)(B) to state that Orders to
buy (sell) that are locked or crossed at
their non-displayed price by a Post-Only
Order on the Nasdaq Book, and which
have been deemed to have a price at one
minimum price increment below
(above) the price of the Post-Only Order,
shall be ranked in time priority ahead of
all orders one minimum price increment
below (above) the price of the Post-Only
Order but behind all orders at the price
at which the Order was posted to the
Nasdaq Book. This re-pricing
functionality will apply to NonDisplayed Orders, Post-Only Orders,
Price to Comply Orders and Midpoint
Peg Post-Only Orders when the nondisplayed price of that Order is locked
or crossed by a Post-Only Order.
Nasdaq also proposes to amend the
language in Rule 4703 (Order Attributes)
and Rule 4753 relating to the re-pricing
of Orders that are locked or crossed at
its non-displayed price by a Post-Only
Order for purposes of determining the
Opening, Closing or Halt Cross, as
described above. Rule 4703(l) describes
this re-pricing functionality as occurring
‘‘for purposes of selecting the Nasdaq
Opening Cross or Closing Cross price.’’
Rule 4753(d) similarly describes this repricing functionality as occurring ‘‘for
purposes of selecting the Nasdaq Halt
Cross Price.’’ Nasdaq proposes to amend
both 4703(l) and Rule 4753(d) to
describe this functionality as occurring
for purposes of the Nasdaq Opening,
Closing, or Halt Cross. Nasdaq is making
this change to clarify the effect of the repricing functionality, since the re-
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
18197
pricing of an Order pursuant to this
provision establishes both the price of
the Order for purposes of the Cross and
the execution priority of the Order as
part of the Cross (although that
execution priority may be modified
based on the changes being proposed
herein).
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,6 in general, and furthers the
objectives of Section 6(b)(5) of the Act,7
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. This
filing supplements the Cross Proposal to
re-price an Order that is locked or
crossed at its non-displayed price by a
Post-Only Order for purposes of the
Opening, Closing and Halt Cross. As
stated in that proposal, Nasdaq believed
that such re-pricing was consistent with
the Act because it, among other things,
reflected the intent of the Nasdaq
Opening and Closing Cross
functionality.
Nasdaq believes that this proposal is
consistent with the Act for several
reasons. First, the proposal adopts a
new execution priority, for an Order
that has a non-displayed price that is
locked or crossed by a Post-Only Order,
that reflects the configuration of Nasdaq
systems that is necessary to fulfill a
central premise of the Opening, Halt,
and Closing Cross. Specifically, given
the operation of the Opening, Halt and
Closing Cross, Orders cannot be locked
or crossed for purposes of the Cross. The
proposed changes here reflect this
premise, and the configuration of the
Nasdaq systems that is necessary to
achieve this result.
Second, Nasdaq is proposing to rank
Orders that are subject to this proposal
in time priority ahead of all other
Orders at that same price. While Nasdaq
notes that, in certain scenarios, an Order
might not participate in a Cross at its repriced price when it might have
participated in the Cross at its posted
price on the Nasdaq Book, the proposal
increases the likelihood that such
interest will be executed as part of the
Cross than if such interest had been
assigned a different priority at its new
price.8 Nasdaq also notes that there are
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
8 For example, if the non-displayed price of a sell
Order was entered at $10.15, and was locked by a
7 15
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Federal Register / Vol. 82, No. 72 / Monday, April 17, 2017 / Notices
instances in which a locked or crossed
Order may participate in a Cross at its
posted price on the Nasdaq Book.9
Third, Nasdaq notes that re-priced
Orders that do not participate in the
Opening or Halt Cross remain on the
Nasdaq Book, and that the proposed
functionality would not impair the
ability of such Orders to participate in
the Regular Market Session after the
conclusion of the Cross.
Finally, this proposed change is
limited to an Order with a nondisplayed price that is locked by a PostOnly Order for purposes of the Open,
Halt and Closing Cross. While nondisplayed liquidity may enhance market
quality in other ways, such liquidity
does not contribute to the price
discovery process in the same manner
as displayed liquidity. Had the Order
been displayed, the priority of the Order
would not have changed, as the Order
would be setting the best displayed
price on the Exchange. Use of the
Nasdaq systems and Order types is
completely voluntary, and members
may always opt to use a different Order
type to achieve a different result.
Nasdaq believes that amending the
language in Rule 4703 and Rule 4753
relating to the re-pricing of an Order
that is locked or crossed at its nondisplayed price for purposes of the
Opening, Closing or Halt Cross is
consistent with the Act because it more
accurately describes the effect of this repricing functionality as it relates to the
Cross.
mstockstill on DSK30JT082PROD with NOTICES
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
proposed change adopts an execution
priority for a more aggressively-priced
Order that has been locked or crossed at
its non-displayed price by a Post-Only
Order and re-priced for purposes of the
Opening, Closing or Halt Cross that
reflects the configuration of Nasdaq
systems that is necessary to ensure that
Orders are not locked or crossed for
purposes of the Opening, Halt or
Post-Only Order to buy at $10.15, the price of the
sell Order would be adjusted to $10.16 for purposes
of the Cross. That Order would now have priority
over all other Orders at $10.16.
9 Pursuant to this functionality, an Order is only
re-priced at the time that the Cross price is being
calculated. To the extent that a member cancels any
locking Post-Only Orders prior to the calculation of
the Cross price, the locked Order would not be repriced. This might occur prior to the Opening,
Closing, or Halt Cross, which reduces the likelihood
that a locked Order will be re-priced and will be
unable to participate in the Cross.
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17:14 Apr 14, 2017
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Closing Cross. To the extent that such
Orders will be ranked in time priority
ahead of all other Orders at that same
price, the proposal increases the
likelihood that such interest will be
executed as part of the Cross than if
such interest had been assigned a
different priority at its new price. There
are instances where a locked or crossed
Order may participate in a Cross at its
posted price on the Nasdaq Book, and
re-priced Orders that do not participate
in the Opening or Halt Cross would
remain eligible to participate in the
Regular Market Session after the
conclusion of the Cross. Moreover, the
use of Exchange Order types and
attributes is voluntary, and no member
is required to use any specific Order
type or attribute or even to use any
Exchange Order type or attribute or any
Exchange functionality at all. If an
Exchange member believes for any
reason that the proposed rule change
will be detrimental, that perceived
detriment can be avoided by choosing
not to enter or interact with the Order
types modified by this proposed rule
change. Finally, the proposal will apply
equally to all Orders that meet its
criteria.
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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) thereunder.11
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 12 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 13
10 15
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange believes the
proposal reflects the configuration of
Nasdaq systems necessary to ensure that
Orders are not locked or crossed for
purposes of the Opening, Halt or
Closing Cross, while increasing the
likelihood that re-priced Orders will be
executed as part of the Cross than if
such interest had been assigned a
different priority at its new price. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Therefore, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.14
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2017–031 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2017–031. This
file number should be included on the
14 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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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
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2017–031 and should be
submitted on or before May 8, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–07633 Filed 4–14–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736
mstockstill on DSK30JT082PROD with NOTICES
Extension:
Rule 163, OMB Control No. 3235–0619,
SEC File No. 270–556
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
15 17
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 163 (17 CFR 230.163) provides
an exemption from Section 5(c) under
the Securities Act of 1933 (15 U.S.C. 77a
et seq.) for certain communications by
or on behalf of a well-known seasoned
issuer. The information filed under Rule
163 is publicly available. We estimate
that it takes approximately 0.24 burden
hours per response to provide the
information required under Rule 163
and that the information is filed by
approximately 53 respondents for a total
annual reporting burden of 13 hours.
We estimate that 25% of 0.24 hours per
response (0.06 hours) is prepared by the
respondent for a total annual burden of
3 hours (0.06 hours per response × 53
responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: April 11, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–07656 Filed 4–14–17; 8:45 am]
BILLING CODE 8011–01–P
17:14 Apr 14, 2017
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[Release No. 34–80430; File No. SR–C2–
2017–013]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to Complex Order
Price Protections
April 11, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 5,
2017, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend a
current price protection related to
complex orders. The text of the
proposed rule change is provided
below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
C2 Options Exchange, Incorporated
Rules
*
*
*
*
*
Rule 6.13. Complex Order Execution
(a)–(c) No change.
. . . Interpretations and Policies:
.01–.03 No change.
.04 Price Check Parameters: On a
class-by-class basis, the Exchange may
determine (and announce via Regulatory
Circular) which of the following price
check parameters will apply to eligible
complex orders. Paragraphs (b) and (g)
will not be applicable to stock-option
orders.
For purposes of this Interpretation
and Policy .04:
Vertical Spread. A ‘‘vertical’’ spread
is a two-legged complex order with one
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
SECURITIES AND EXCHANGE
COMMISSION
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Agencies
[Federal Register Volume 82, Number 72 (Monday, April 17, 2017)]
[Notices]
[Pages 18196-18199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07633]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80425; File No. SR-NASDAQ-2017-031]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 4703 (Order Attributes), Rule 4752 (Opening Process), Rule
4753 (Nasdaq Halt Cross) and Rule 4754 (Nasdaq Closing Cross)
April 11, 2017.
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 March 31, 2017, 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 4752 (Opening Process), Rule
4753 (Nasdaq Halt Cross) and Rule 4754 (Nasdaq Closing Cross) to
specify the execution priority of an Order that has been locked or
crossed at its non-displayed price by a Post-Only Order and re-priced
for purposes of the Opening, Closing and Halt Cross. Nasdaq is also
proposing to amend Rule 4703 (Order Attributes) and Rule 4753 (Halt
Cross) to clarify the effect of the re-pricing of an Order that has
been locked or crossed at its non-displayed price by a Post-Only Order
for purposes of the Opening, Closing and Halt Cross.
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposal is to amend Rule 4752 (Opening
Process), Rule 4753 (Nasdaq Halt Cross) and Rule 4754 (Nasdaq Closing
Cross) to specify the execution priority of an Order that has been
locked or crossed at its non-displayed price by a Post-Only Order and
re-priced for purposes of the Opening, Closing and Halt Cross.
Rule 4752, 4753 and 4754 set forth the operation of the Opening
Cross, the Halt Cross, and the Closing Cross, respectively. Each Rule
specifies the manner in which orders will be executed if less than all
available interest is executed as part of the Cross. Specifically, Rule
4752 states that, if the Nasdaq Opening Cross price is selected and
fewer than all shares of Market On Open (``MOO''), Limit On Open
(``LOO''), Opening Imbalance Only Order (``OIO'') and Early Market
Hours Orders that are available in the Nasdaq Market Center would be
executed, all Quotes and Orders shall be executed at the Nasdaq Opening
Cross price in the following priority: (A) MOO and Early Market Hours
market peg orders, with time as the secondary priority; (B) LOO orders,
Early Market Hours limit orders, OIO orders, SDAY limit orders, SGTC
limit orders, GTMC limit orders, SHEX limit orders, displayed quotes
and reserve interest priced more aggressively than the Nasdaq Opening
Cross price based on limit price with time as the secondary priority;
(C) LOO orders, OIO Orders, Early Market Hours and displayed interest
of quotes, SDAY limit orders, SGTC limit orders, GTMC limit orders, and
SHEX limit orders at the Nasdaq Opening Cross price with time as the
secondary priority; and (D) reserve interest of quotes, SDAY limit
orders, SGTC limit orders, and GTMC limit orders and SHEX limit orders
at the Nasdaq Opening Cross price with time as the secondary priority.
Rule 4753 states that, if the Nasdaq Halt Cross price is selected
and fewer than all shares of Eligible Interest that are available in
the Nasdaq Market Center would be executed, all Eligible Interest shall
be executed at the Nasdaq Halt Cross price in price/time priority.
Rule 4754 states that, if the Nasdaq Closing Cross price is
selected and fewer than all Market On Close (``MOC''), Limit On Close
(``LOC''), Imbalance Only (``IO'') and Close Eligible Interest would be
executed, orders will be executed at the Nasdaq Closing Cross price in
the following priority: (A) MOC orders, with time as the secondary
priority; (B) LOC orders, limit orders, IO orders, displayed quotes and
reserve interest priced more aggressively than the Nasdaq Closing Cross
price based on price with time as the secondary priority; (C) LOC
orders, IO Orders displayed interest of limit orders, and displayed
interest of quotes at the Nasdaq Closing Cross price with time as the
secondary priority; (D) reserve interest at the Nasdaq Closing Cross
price with time as the secondary priority; and (E) unexecuted MOC, LOC,
and IO orders will be canceled.
Nasdaq now proposes to amend the provisions of Rules 4752, 4753 and
4754 to specifically describe the execution priority an Order that was
entered on the Nasdaq Book and has been locked or crossed at its non-
displayed price by a Post-Only Order and re-priced for purposes of the
Opening, Closing or Halt Cross.
In November 2016, the Commission approved changes to the
functionality of Post-Only Orders.\3\ As a result of this
[[Page 18197]]
new Post-Only functionality, Nasdaq recently amended Rule 4703 and Rule
4753 to address the treatment of an Order that and has been locked or
crossed at its non-displayed price by a Post-Only Order for purposes of
the Opening, Closing and Halt Cross. Nasdaq amended Rule 4703 and Rule
4753 to specify that, if an Order to buy (sell) that is entered on the
Nasdaq Book is locked or crossed at its non-displayed price by a Post-
Only Order, that Order will be deemed to have a price at one minimum
increment below (above) the price of the Post-Only for purposes of
selecting the price of the Opening Cross, the Closing Cross, and the
Halt Cross.\4\ This functionality applies to Non-Displayed Orders,
Post-Only Orders, Price to Comply Orders and Midpoint Peg Post-Only
Orders when the non-displayed price of that Order is locked or crossed
by a Post-Only Order.\5\
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\3\ See Securities Exchange Act Release No. 79290 (November 10,
2016), 81 FR 81184 (November 17, 2016) (SR-NASDAQ-2016-111).
Under the new Post-Only functionality, the behavior of Post-Only
orders would be altered when the adjusted price of such orders lock
or cross a non-displayed price on the Exchange's Book. Specifically,
if the adjusted price of the Post-Only Order would lock or cross a
non-displayed price on the Exchange's Book, the Post-Only order
would be posted in the same manner as a Price to Comply Order.
However, the Post-Only Order would execute if (i) it is priced below
$1.00 and the value of price improvement associated with executing
against an Order on the Nasdaq Book (as measured against the
original limit price of the Order) equals or exceeds the sum of fees
charged for such execution and the value of any rebate that would be
provided if the Order posted to the Nasdaq Book and subsequently
provided liquidity, or (ii) it is priced at $1.00 or more and the
value of price improvement associated with executing against an
Order on the Nasdaq Book (as measured against the original limit
price of the Order) equals or exceeds $0.01 per share.
Additionally, if the Post-Only Order would not lock or cross a
Protected Quotation but would lock or cross a Non-Displayed Order on
the Exchange's Book, the Post-Only Order would be posted, ranked,
and displayed at its limit price. The Post-Only Order would execute
if (i) it is priced below $1.00 and the value of price improvement
associated with executing against an Order on the Nasdaq Book equals
or exceeds the sum of fees charged for such execution and the value
of any rebate that would be provided if the Order posted to the
Nasdaq Book and subsequently provided liquidity, or (ii) it is
priced at $1.00 or more and the value of price improvement
associated with executing against an Order on the Nasdaq Book equals
or exceeds $0.01 per share.
\4\ See Securities Exchange Act Release No. 80216 (March 10,
2017), 82 FR 14074 (March 16, 2017) (SR-NASDAQ-2017-028) (``Cross
Proposal'').
\5\ As noted in the Cross Proposal, in this scenario, the Post-
Only Order would have locked or crossed the Non-Displayed Order,
Post-Only, Price to Comply Order, or Midpoint Peg Post-Only Order at
its non-displayed price upon entry if the value of price improvement
associated with executing against the Order is not met. Id.
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Nasdaq is now proposing to amend Rules 4752, 4753 and 4754 to
specify the execution priority of an Order that has been locked or
crossed at its non-displayed price by a Post-Only Order and re-priced
for purposes of the Opening, Closing and Halt Cross. Accordingly,
Nasdaq proposes to amend Rule 4752(d)(3)(B) to state that Orders to buy
(sell) that are locked or crossed at their non-displayed price by a
Post-Only Order on the Nasdaq Book in Early Market Hours, and which
have been deemed to have a price at one minimum price increment below
(above) the price of the Post-Only Order, shall be ranked in time
priority ahead of all orders one minimum price increment below (above)
the price of the Post-Only Order but behind all orders at the price at
which the Order was posted to the Nasdaq Book. This re-pricing
functionality will apply to Non-Displayed Orders, Post-Only Orders, and
Price to Comply Orders when the non-displayed price of that Order is
locked or crossed by a Post-Only Order.
Nasdaq proposes to amend Rule 4753(b)(3) to state that Orders to
buy (sell) that are locked or crossed at their non-displayed price by a
Post-Only Order on the Nasdaq Book, and which have been deemed to have
a price at one minimum price increment below (above) the price of the
Post-Only Order, shall be ranked in time priority ahead of all orders
one minimum price increment below (above) the price of the Post-Only
Order but behind all orders at the price at which the Order was posted
to the Nasdaq Book. This re-pricing functionality will apply to Non-
Displayed Orders, Post-Only Orders, Price to Comply Orders and Midpoint
Peg Post-Only Orders when the non-displayed price of that Order is
locked or crossed by a Post-Only Order.
Finally, Nasdaq proposes to amend Rule 4754(b)(3)(B) to state that
Orders to buy (sell) that are locked or crossed at their non-displayed
price by a Post-Only Order on the Nasdaq Book, and which have been
deemed to have a price at one minimum price increment below (above) the
price of the Post-Only Order, shall be ranked in time priority ahead of
all orders one minimum price increment below (above) the price of the
Post-Only Order but behind all orders at the price at which the Order
was posted to the Nasdaq Book. This re-pricing functionality will apply
to Non-Displayed Orders, Post-Only Orders, Price to Comply Orders and
Midpoint Peg Post-Only Orders when the non-displayed price of that
Order is locked or crossed by a Post-Only Order.
Nasdaq also proposes to amend the language in Rule 4703 (Order
Attributes) and Rule 4753 relating to the re-pricing of Orders that are
locked or crossed at its non-displayed price by a Post-Only Order for
purposes of determining the Opening, Closing or Halt Cross, as
described above. Rule 4703(l) describes this re-pricing functionality
as occurring ``for purposes of selecting the Nasdaq Opening Cross or
Closing Cross price.'' Rule 4753(d) similarly describes this re-pricing
functionality as occurring ``for purposes of selecting the Nasdaq Halt
Cross Price.'' Nasdaq proposes to amend both 4703(l) and Rule 4753(d)
to describe this functionality as occurring for purposes of the Nasdaq
Opening, Closing, or Halt Cross. Nasdaq is making this change to
clarify the effect of the re-pricing functionality, since the re-
pricing of an Order pursuant to this provision establishes both the
price of the Order for purposes of the Cross and the execution priority
of the Order as part of the Cross (although that execution priority may
be modified based on the changes being proposed herein).
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ 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.
This filing supplements the Cross Proposal to re-price an Order that is
locked or crossed at its non-displayed price by a Post-Only Order for
purposes of the Opening, Closing and Halt Cross. As stated in that
proposal, Nasdaq believed that such re-pricing was consistent with the
Act because it, among other things, reflected the intent of the Nasdaq
Opening and Closing Cross functionality.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Nasdaq believes that this proposal is consistent with the Act for
several reasons. First, the proposal adopts a new execution priority,
for an Order that has a non-displayed price that is locked or crossed
by a Post-Only Order, that reflects the configuration of Nasdaq systems
that is necessary to fulfill a central premise of the Opening, Halt,
and Closing Cross. Specifically, given the operation of the Opening,
Halt and Closing Cross, Orders cannot be locked or crossed for purposes
of the Cross. The proposed changes here reflect this premise, and the
configuration of the Nasdaq systems that is necessary to achieve this
result.
Second, Nasdaq is proposing to rank Orders that are subject to this
proposal in time priority ahead of all other Orders at that same price.
While Nasdaq notes that, in certain scenarios, an Order might not
participate in a Cross at its re-priced price when it might have
participated in the Cross at its posted price on the Nasdaq Book, the
proposal increases the likelihood that such interest will be executed
as part of the Cross than if such interest had been assigned a
different priority at its new price.\8\ Nasdaq also notes that there
are
[[Page 18198]]
instances in which a locked or crossed Order may participate in a Cross
at its posted price on the Nasdaq Book.\9\
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\8\ For example, if the non-displayed price of a sell Order was
entered at $10.15, and was locked by a Post-Only Order to buy at
$10.15, the price of the sell Order would be adjusted to $10.16 for
purposes of the Cross. That Order would now have priority over all
other Orders at $10.16.
\9\ Pursuant to this functionality, an Order is only re-priced
at the time that the Cross price is being calculated. To the extent
that a member cancels any locking Post-Only Orders prior to the
calculation of the Cross price, the locked Order would not be re-
priced. This might occur prior to the Opening, Closing, or Halt
Cross, which reduces the likelihood that a locked Order will be re-
priced and will be unable to participate in the Cross.
---------------------------------------------------------------------------
Third, Nasdaq notes that re-priced Orders that do not participate
in the Opening or Halt Cross remain on the Nasdaq Book, and that the
proposed functionality would not impair the ability of such Orders to
participate in the Regular Market Session after the conclusion of the
Cross.
Finally, this proposed change is limited to an Order with a non-
displayed price that is locked by a Post-Only Order for purposes of the
Open, Halt and Closing Cross. While non-displayed liquidity may enhance
market quality in other ways, such liquidity does not contribute to the
price discovery process in the same manner as displayed liquidity. Had
the Order been displayed, the priority of the Order would not have
changed, as the Order would be setting the best displayed price on the
Exchange. Use of the Nasdaq systems and Order types is completely
voluntary, and members may always opt to use a different Order type to
achieve a different result.
Nasdaq believes that amending the language in Rule 4703 and Rule
4753 relating to the re-pricing of an Order that is locked or crossed
at its non-displayed price for purposes of the Opening, Closing or Halt
Cross is consistent with the Act because it more accurately describes
the effect of this re-pricing functionality as it relates to the Cross.
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 proposed change adopts an
execution priority for a more aggressively-priced Order that has been
locked or crossed at its non-displayed price by a Post-Only Order and
re-priced for purposes of the Opening, Closing or Halt Cross that
reflects the configuration of Nasdaq systems that is necessary to
ensure that Orders are not locked or crossed for purposes of the
Opening, Halt or Closing Cross. To the extent that such Orders will be
ranked in time priority ahead of all other Orders at that same price,
the proposal increases the likelihood that such interest will be
executed as part of the Cross than if such interest had been assigned a
different priority at its new price. There are instances where a locked
or crossed Order may participate in a Cross at its posted price on the
Nasdaq Book, and re-priced Orders that do not participate in the
Opening or Halt Cross would remain eligible to participate in the
Regular Market Session after the conclusion of the Cross. Moreover, the
use of Exchange Order types and attributes is voluntary, and no member
is required to use any specific Order type or attribute or even to use
any Exchange Order type or attribute or any Exchange functionality at
all. If an Exchange member believes for any reason that the proposed
rule change will be detrimental, that perceived detriment can be
avoided by choosing not to enter or interact with the Order types
modified by this proposed rule change. Finally, the proposal will apply
equally to all Orders that meet its criteria.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and the text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \12\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
believes the proposal reflects the configuration of Nasdaq systems
necessary to ensure that Orders are not locked or crossed for purposes
of the Opening, Halt or Closing Cross, while increasing the likelihood
that re-priced Orders will be executed as part of the Cross than if
such interest had been assigned a different priority at its new price.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposal operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2017-031 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2017-031. This
file number should be included on the
[[Page 18199]]
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 available publicly. All submissions should refer to
File Number SR-NASDAQ-2017-031 and should be submitted on or before May
8, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07633 Filed 4-14-17; 8:45 am]
BILLING CODE 8011-01-P