Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4120 (Limit Up-Limit Down Plan and Trading Halts) To Reduce the Length of the “Display-Only Period” for the Initial Pricing on Nasdaq of a Security That Is the Subject of an Initial Public Offering, 60429-60430 [2017-27348]

Download as PDF Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices applicable investment objectives, policies and restrictions. 2. An investor who purchases Units under the Exchange Option or Rollover Option will pay a lower sales charge than that which would be paid for the Units by a new investor. 3. The prospectus of each Series offering exchanges or rollovers and any sales literature or advertising that mentions the existence of the Exchange Option or Rollover Option will disclose that the Exchange Option and the Rollover Option are subject to modification, termination or suspension without notice, except in certain limited cases. 4. Any DSC imposed on a Series’ Units will comply with the requirements of subparagraphs (1), (2) and (3) of rule 6c–10(a) under the Act. 5. Each Series offering Units subject to a DSC will include in its prospectus the disclosure required by Form N–1A relating to deferred sales charges (modified as appropriate to reflect the differences between UITs and open-end management investment companies) and a schedule setting forth the number and date of each Installment Payment. B. Net Worth Requirement Applicants will comply in all respects with the requirements of rule 14a–3 under the Act, except that the Structured Series will not restrict their portfolio investments to ‘‘eligible trust securities.’’ For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–27337 Filed 12–19–17; 8:45 am] BILLING CODE 8011–01–P sradovich on DSK3GMQ082PROD with NOTICES [Release No. 34–82327; File No. SR– NASDAQ–2017–129] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4120 (Limit Up-Limit Down Plan and Trading Halts) To Reduce the Length of the ‘‘Display-Only Period’’ for the Initial Pricing on Nasdaq of a Security That Is the Subject of an Initial Public Offering 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. Purpose The purpose of this proposal is to amend Rule 4120 (Limit Up-Limit Down Plan and Trading Halts) to reduce the length of the Display-Only Period for the initial pricing on Nasdaq of a security that is the subject of an IPO from 15 minutes to 10 minutes. In all other respects, the process for conducting the initial pricing of an IPO security will remain unchanged. Initial pricing of an IPO security on Nasdaq occurs by means of the IPO Halt 1 15 December 14, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 21:36 Dec 19, 2017 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 4120 (Limit Up-Limit Down Plan and Trading Halts) 3 to reduce the length of the ‘‘Display-Only Period’’ for the initial pricing on Nasdaq of a security that is the subject of an initial public offering (‘‘IPO’’). The text of the proposed rule change is available on the Exchange’s website at https://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION VerDate Sep<11>2014 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 8, 2017, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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. Jkt 244001 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 References to rules are to Nasdaq rules, unless otherwise noted. 2 17 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 60429 Cross provided for in Rule 4753. Prior to the IPO Halt Cross, trading in the security is halted, pursuant to Rule 4120(a)(7), until such time as the conditions in Rule 4120(c)(8) are satisfied and Nasdaq releases the security for trading. Market participants may enter orders in the security for participation in the IPO Halt Cross beginning at 4:00 a.m. As the scheduled time for the IPO Halt Cross approaches, the security enters a Display-Only Period during which indicative information about the potential outcome of the IPO Halt Cross is displayed to market participants and during which market participants may continue to enter orders. After the conclusion of the DisplayOnly Period, the security enters a ‘‘PreLaunch Period’’ of indeterminate duration, during which indicative information continues to be disseminated.4 The Pre-Launch Period ends and the security is released for trading by Nasdaq when the conditions described in paragraphs (c)(8)(A)(i), (ii), and (iii) of Rule 4120 are all met: • Nasdaq receives notice from the underwriter of the IPO that the security is ready to trade. The Nasdaq system then calculates the Current Reference Price at that time (the ‘‘Expected Price’’) and displays it to the underwriter. If the underwriter then approves proceeding, the Nasdaq system will conduct two pricing validation checks. • First, the Nasdaq system must determine that all market orders will be executed in the IPO Halt Cross; and • Second, if the actual price calculated by the IPO Halt Cross differs from the Expected Price by an amount in excess of a price band previously selected by the underwriter, the security will not be released for trading and the Pre-Launch Period will continue. The failure to satisfy these conditions during the process to release the security for trading will result in a delay of the release for trading of the IPO security, and a continuation of the PreLaunch Period, until all conditions have been satisfied. Market participants may continue to enter orders and order cancellations for participation in the IPO Halt Cross during the Pre-Launch Period up to the point that the IPO Halt Cross auction process commences. Based on feedback from underwriters participating in the IPO process, Nasdaq is proposing to reduce the time of the Display-Only Period from 15 minutes to 10 minutes. As discussed above, market participants may begin entering orders in an IPO security at 4:00 a.m., while the initial pricing of IPOs occurs no 4 Nasdaq E:\FR\FM\20DEN1.SGM Rule 4753(b)(1). 20DEN1 60430 Federal Register / Vol. 82, No. 243 / Wednesday, December 20, 2017 / Notices earlier than 10 a.m. Thus, market participants have ample opportunity to enter order for participation in the IPO Halt Cross. Moreover, the IPO Halt Cross does not actually occur until the conditions described above, including a decision from the underwriter that the security is ready to commence trading, have been satisfied. The underwriter generally bases this decision upon a determination that expected trading interest with respect to the IPO Halt Cross has been entered and that the IPO Halt Cross will occur at a stable price and quantity consistent with the underwriter’s expectations. In some IPOs, particularly smaller ones, this determination can be made relatively quickly after the commencement of the Display-Only Period, but Rule 4120 does not allow the IPO Halt Cross to occur until after the end of the 15minute Display-Only Period. Thus, shortening the Display-Only Period to 10 minutes will provide the underwriter with greater flexibility to initiate trading more quickly where circumstances warrant. On the other hand, since the IPO Halt Cross will not occur until all of the conditions provided for by the rule (including underwriter approval) are satisfied, the change will not prevent the continuation of a longer pre-IPO Halt Cross period if more time is needed to allow further order entry and greater price stability. sradovich on DSK3GMQ082PROD with NOTICES 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,5 in general, and furthers the objectives of Section 6(b)(5) of the Act,6 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. In particular, Nasdaq believes that the change will facilitate the commencement of orderly trading in securities that are the subject of an IPO, by providing the underwriter with greater flexibility to allow an earlier commencement of trading in cases, such as smaller IPOs, where an extended preCross period is not required to allow order entry and the development of price stability. At the same time, the change will not constrain the underwriter from requiring a longer preCross period in cases where extensive order entry is still occurring or where price stability has not yet developed. 5 15 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 21:36 Dec 19, 2017 Jkt 244001 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. In particular, the Exchange believes that the change will enhance the competitiveness of its process for initial pricing of IPO securities without imposing any burdens on the ability of underwriters or other market participants to participate in that process. 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 7 and subparagraph (f)(6) of Rule 19b–4 thereunder.8 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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: 7 15 U.S.C. 78s(b)(3)(A)(iii). 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. 8 17 PO 00000 Frm 00062 Fmt 4703 Sfmt 9990 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–2017–129 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–2017–129. 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 website (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 website 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASDAQ–2017–129 and should be submitted on or before January 10, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–27348 Filed 12–19–17; 8:45 am] BILLING CODE 8011–01–P 9 17 E:\FR\FM\20DEN1.SGM CFR 200.30–3(a)(12). 20DEN1

Agencies

[Federal Register Volume 82, Number 243 (Wednesday, December 20, 2017)]
[Notices]
[Pages 60429-60430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27348]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82327; File No. SR-NASDAQ-2017-129]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 4120 (Limit Up-Limit Down Plan and Trading Halts) To Reduce 
the Length of the ``Display-Only Period'' for the Initial Pricing on 
Nasdaq of a Security That Is the Subject of an Initial Public Offering

December 14, 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 December 8, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II, below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 4120 (Limit Up-Limit Down Plan 
and Trading Halts) \3\ to reduce the length of the ``Display-Only 
Period'' for the initial pricing on Nasdaq of a security that is the 
subject of an initial public offering (``IPO'').
---------------------------------------------------------------------------

    \3\ References to rules are to Nasdaq rules, unless otherwise 
noted.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
website 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 4120 (Limit Up-Limit 
Down Plan and Trading Halts) to reduce the length of the Display-Only 
Period for the initial pricing on Nasdaq of a security that is the 
subject of an IPO from 15 minutes to 10 minutes. In all other respects, 
the process for conducting the initial pricing of an IPO security will 
remain unchanged.
    Initial pricing of an IPO security on Nasdaq occurs by means of the 
IPO Halt Cross provided for in Rule 4753. Prior to the IPO Halt Cross, 
trading in the security is halted, pursuant to Rule 4120(a)(7), until 
such time as the conditions in Rule 4120(c)(8) are satisfied and Nasdaq 
releases the security for trading. Market participants may enter orders 
in the security for participation in the IPO Halt Cross beginning at 
4:00 a.m. As the scheduled time for the IPO Halt Cross approaches, the 
security enters a Display-Only Period during which indicative 
information about the potential outcome of the IPO Halt Cross is 
displayed to market participants and during which market participants 
may continue to enter orders.
    After the conclusion of the Display-Only Period, the security 
enters a ``Pre-Launch Period'' of indeterminate duration, during which 
indicative information continues to be disseminated.\4\ The Pre-Launch 
Period ends and the security is released for trading by Nasdaq when the 
conditions described in paragraphs (c)(8)(A)(i), (ii), and (iii) of 
Rule 4120 are all met:
---------------------------------------------------------------------------

    \4\ Nasdaq Rule 4753(b)(1).
---------------------------------------------------------------------------

     Nasdaq receives notice from the underwriter of the IPO 
that the security is ready to trade. The Nasdaq system then calculates 
the Current Reference Price at that time (the ``Expected Price'') and 
displays it to the underwriter. If the underwriter then approves 
proceeding, the Nasdaq system will conduct two pricing validation 
checks.
     First, the Nasdaq system must determine that all market 
orders will be executed in the IPO Halt Cross; and
     Second, if the actual price calculated by the IPO Halt 
Cross differs from the Expected Price by an amount in excess of a price 
band previously selected by the underwriter, the security will not be 
released for trading and the Pre-Launch Period will continue.

The failure to satisfy these conditions during the process to release 
the security for trading will result in a delay of the release for 
trading of the IPO security, and a continuation of the Pre-Launch 
Period, until all conditions have been satisfied. Market participants 
may continue to enter orders and order cancellations for participation 
in the IPO Halt Cross during the Pre-Launch Period up to the point that 
the IPO Halt Cross auction process commences.
    Based on feedback from underwriters participating in the IPO 
process, Nasdaq is proposing to reduce the time of the Display-Only 
Period from 15 minutes to 10 minutes. As discussed above, market 
participants may begin entering orders in an IPO security at 4:00 a.m., 
while the initial pricing of IPOs occurs no

[[Page 60430]]

earlier than 10 a.m. Thus, market participants have ample opportunity 
to enter order for participation in the IPO Halt Cross. Moreover, the 
IPO Halt Cross does not actually occur until the conditions described 
above, including a decision from the underwriter that the security is 
ready to commence trading, have been satisfied. The underwriter 
generally bases this decision upon a determination that expected 
trading interest with respect to the IPO Halt Cross has been entered 
and that the IPO Halt Cross will occur at a stable price and quantity 
consistent with the underwriter's expectations. In some IPOs, 
particularly smaller ones, this determination can be made relatively 
quickly after the commencement of the Display-Only Period, but Rule 
4120 does not allow the IPO Halt Cross to occur until after the end of 
the 15-minute Display-Only Period. Thus, shortening the Display-Only 
Period to 10 minutes will provide the underwriter with greater 
flexibility to initiate trading more quickly where circumstances 
warrant. On the other hand, since the IPO Halt Cross will not occur 
until all of the conditions provided for by the rule (including 
underwriter approval) are satisfied, the change will not prevent the 
continuation of a longer pre-IPO Halt Cross period if more time is 
needed to allow further order entry and greater price stability.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\6\ 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. 
In particular, Nasdaq believes that the change will facilitate the 
commencement of orderly trading in securities that are the subject of 
an IPO, by providing the underwriter with greater flexibility to allow 
an earlier commencement of trading in cases, such as smaller IPOs, 
where an extended pre-Cross period is not required to allow order entry 
and the development of price stability. At the same time, the change 
will not constrain the underwriter from requiring a longer pre-Cross 
period in cases where extensive order entry is still occurring or where 
price stability has not yet developed.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. In particular, the Exchange 
believes that the change will enhance the competitiveness of its 
process for initial pricing of IPO securities without imposing any 
burdens on the ability of underwriters or other market participants to 
participate in that process.

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, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\7\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 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.
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 [email protected]. Please include 
File Number SR-NASDAQ-2017-129 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-2017-129. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2017-129 and should be submitted 
on or before January 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27348 Filed 12-19-17; 8:45 am]
 BILLING CODE 8011-01-P
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