Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Paragraph (c)(5) of Exchange Rule 11.9 Describing the Operation of Minimum Quantity Orders, 13577-13580 [2018-06300]
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Federal Register / Vol. 83, No. 61 / Thursday, March 29, 2018 / Notices
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2018–008 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.
sradovich on DSK3GMQ082PROD with NOTICES
All submissions should refer to File
Number SR-CboeEDGX–2018–008. 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–CboeEDGX–2018–008, and
should be submitted on or before April
19, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Brent J. Fields,
Secretary.
[FR Doc. 2018–06301 Filed 3–28–18; 8:45 am]
BILLING CODE 8011–01–P
27 17
CFR 200.30–3(a)(12).
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13577
SECURITIES AND EXCHANGE
COMMISSION
the most significant parts of such
statements.
[Release No. 34–82942; File No. SR–
CboeBZX–2018–022]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend
Paragraph (c)(5) of Exchange Rule 11.9
Describing the Operation of Minimum
Quantity Orders
March 23, 2018.
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 March 16,
2018, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange has designated this proposal
as a ‘‘non-controversial’’ proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend paragraph (c)(5) of Exchange
Rule 11.9 describing the operation of
Minimum Quantity Orders.5
The text of the proposed rule change
is available at the Exchange’s website at
www.markets.cboe.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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
5 See Exchange Rule 11.9(c)(5) for a complete
description of the operation of Minimum Quantity
Orders.
2 17
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1. Purpose
The Exchange proposes to amend
paragraph (c)(5) of Exchange Rule 11.9
describing the operation of Minimum
Quantity Orders by removing language
that provided for the re-pricing of
incoming Minimum Quantity Orders to
avoid an internally crossed book. As a
result of this change, the Exchange
proposes to specify within the rule
when a Minimum Quantity Order
would not be eligible to trade to prevent
executions from occurring that may be
inconsistent with intra-market price
priority or that would cause a nondisplayed order to trade ahead of a
displayed order.
In sum, a Minimum Quantity Order is
a non-displayed order that enables a
User 6 to specify a minimum share
amount at which the order will
execute.7 A Minimum Quantity Order
will not execute unless the volume of
contra-side liquidity available to
execute against the order meets or
exceeds the designated minimum size.
By default, a Minimum Quantity Order
will execute upon entry against a single
order or multiple aggregated orders
simultaneously. The Exchange recently
amended the operation of Minimum
Quantity Orders to permit a User to
alternatively specify the order not
execute against multiple aggregated
orders simultaneously and that the
minimum quantity condition be
satisfied by each individual order
resting on the BZX Book.8
The Exchange also recently amended
the operation of Minimum Quantity
Orders to re-price incoming Minimum
Quantity Orders where that order may
cross an order posted on the BZX Book.9
Specifically, where there is insufficient
size to satisfy an incoming order’s
minimum quantity condition and that
incoming order, if posted at its limit
price, would cross an order(s), whether
6 The term ‘‘User’’ is defined as ‘‘any Member or
Sponsored Participant who is authorized to obtain
access to the System pursuant to Rule 11.3.’’ See
Exchange Rule 1.5(cc).
7 The Exchange will only honor a specified
minimum quantity on BZX Only Orders that are
non-displayed or Immediate-Or-Cancel and will
disregard a minimum quantity on any other order.
See Exchange Rule 11.9(c)(5).
8 See Securities Exchange Act Release No. 81807
(October 3, 2017), 82 FR 47065 (October 10, 2017)
(SR–BatsBZX–2017–62). This functionality is
pending deployment and the implementation date
will be announced via a trading notice.
9 Id.
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displayed or non-displayed, resting on
the BZX Book, the order with the
minimum quantity condition would be
re-priced to and ranked at the locking
price. This functionality has not yet
been implemented 10 and the Exchange
now proposes to amend paragraph (c)(5)
of Rule 11.9 to remove this re-pricing
requirement.
As a result of the above change, the
Exchange proposes to amend paragraph
(c)(5) of Rule 11.9 to describe when a
Minimum Quantity Order will not be
eligible to trade to prevent executions
from occurring that may be inconsistent
with intra-market price priority or
would result in a non-displayed order
trading ahead of a same-priced, sameside displayed order.11 The Exchange
would not permit a Minimum Quantity
Order that crosses other displayed or
non-displayed orders on the BZX Book
to trade at prices that are worse than the
price of such contra-side orders. The
Exchange would also not permit a
resting Minimum Quantity Order to
trade at a price equal to a contra-side
displayed order. This proposal is based
on recently adopted NYSE Arca, Inc.
(‘‘NYSE Arca’’) Rule 7.31–E(i)(3)(C).12
Paragraph (c)(5) of Rule 11.9 would
state that a Minimum Quantity Order to
buy (sell) that is ranked in the BZX
Book will not be eligible to trade: (i) At
a price equal to or above (below) any
sell (buy) orders that are displayed and
that have a ranked price equal to or
below (above) the price of such
Minimum Quantity Order; or (ii) at a
price above (below) any sell (buy) order
that is non-displayed and has a ranked
price below (above) the price of such
Minimum Quantity Order.13 However, a
10 See supra note 8. Exchange Rule 11.9(c)(5) does
not require re-pricing where the Minimum Quantity
Order is resting on the BZX Book. As such, an
internally crossed book may occur where the
incoming order is of insufficient size to satisfy the
resting order’s minimum quantity condition and
that incoming order, if posted at its limit price,
would cross that order with a minimum quantity
condition resting on the BZX Book.
11 Exchange Rule 11.12(a) states that orders on the
BZX Book are ranked and maintained by the
Exchange according to price-time priority.
Exchange Rule 11.12(a) further prohibits a nondisplayed order from trading ahead of a same-side,
same-priced displayed order. This proposed rule
change adds language to Exchange Rule 11.9(c)(5)
to clarify this priority scheme during an internally
crossed market.
12 See Securities Exchange Act Release No. 82504
(January 16, 2018), 83 FR 3038 (January 22, 2018)
(SR–NYSEArca–2018–01) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Amend Rule 7.31–E Relating to Mid-Point
Liquidity Orders and the Minimum Trade Size
Modifier and Rule 7.36–E To Add a Definition of
‘‘Aggressing Order’’).
13 A Minimum Quantity Order to buy (sell) may
execute at a price above (below) any sell (buy) order
that is Non-Displayed and has a ranked price below
(above) the price of such Minimum Quantity Order
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Minimum Quantity Order that crosses
an order on BZX Book may execute at
a price less aggressive than its ranked
price against an incoming order so long
as such execution is consistent with the
above restrictions.
The following examples describe the
proposed operation of a Minimum
Quantity Order during an internally
crossed market. This first example
addresses intra-market priority amongst
a Minimum Quantity Order and other
non-displayed orders in an internally
crossed market as well as when an
execution may occur at prices less
aggressive than the resting order’s
ranked price. Assume the NBBO is
$10.10 by $10.16. A non-displayed
order to sell 50 shares at $10.12 is
resting on the BZX Book (‘‘Order A’’). A
non-displayed order to sell 25 shares at
$10.11 is also resting on the BZX Book
(‘‘Order B’’). The Exchange receives a
Mid-Point Peg 14 order to buy at $10.14
with a minimum quantity condition to
execute against a single order of 100
shares (‘‘Order C’’). Because Order C’s
minimum quantity condition cannot be
met, Order C will not trade with Orders
A or B and will be posted and ranked
on the BZX Book at $10.13, the
midpoint of the NBBO. The Exchange
now has a non-displayed order crossing
both non-displayed orders on the BZX
Book. If the Exchange then receives a
non-displayed order to sell for 100
shares at $10.11 (‘‘Order D’’),15 although
Order D would be marketable against
Order C at $10.13, it would not trade at
$10.13 because it is above the price of
all resting sell orders. Order D will
instead execute against Order C at
$10.11, receiving price improvement
relative to the midpoint of the NBBO.
This second example addresses intramarket priority amongst displayed
orders, Minimum Quantity Orders and
other non-displayed orders. The
Exchange notes that the below behavior
is not unique to an internally crossed
market as the Exchange’s priority rule,
11.12(a), currently prohibits nondisplayed orders, including Minimum
Quantity Orders, from trading ahead of
same-priced, same-side displayed
orders. Assume the NBBO is $10.00 by
$10.04. A non-displayed order to buy
500 shares at $10.00 is resting on the
BZX Book (‘‘Order A’’). A displayed
order to buy 100 shares at $10.00 is then
entered and posted to the BZX Book
(‘‘Order B’’). The Exchange receives a
non-displayed order to sell 600 shares at
$10.00 with a minimum quantity
condition to execute against a single
order of 500 shares (‘‘Order C’’).
Although Order A satisfies Order C’s
minimum quantity condition and has
time priority ahead of Order B, no
execution occurs because Order B is a
displayed order and has execution
priority over Order A, a non-displayed
order. Order C does not execute against
Order B because Order B does not
satisfy Order C’s minimum quantity
condition. Order C is then posted to the
BZX Book at $10.00, non-displayed.
The Exchange also proposes two
clarifying changes to paragraph (c)(5) of
Exchange Rule 11.9. The rule currently
states that a Minimum Quantity Order
cedes execution priority when it would
lock an order against which it would
otherwise execute if it were not for the
minimum execution size restriction.16
The Exchange now proposes to add
additional language to the rule to clarify
when a resting non-displayed order may
cede execution priority to a subsequent
arriving same-side order. As amended,
paragraph (h) of Rule 11.6 would state
that if a resting non-displayed sell (buy)
order did not meet the minimum
quantity condition of a same-priced
resting Minimum Quantity Order to buy
(sell), a subsequently arriving sell (buy)
order that meets the minimum quantity
condition will trade ahead of such
resting non-displayed sell (buy) order at
that price. For example, assume the
NBBO is $10.00 by $10.10 and no orders
are resting on the BZX Book. A nondisplayed order to buy 700 shares at
$10.10 with a minimum quantity
condition to execute against a single
order of 500 shares is resting on the BZX
Book (Order A). A non-displayed order
to sell 100 shares at $10.10 is then
entered and posted to the BZX Book
(Order B). Order B does not execute
against Order A because Order B does
not satisfy Order A’s single minimum
quantity condition of 500 shares. As a
result, Order B is posted to the BZX
Book at $10.10, creating an internally
locked book. An order to sell 500 shares
at $10.10 is then entered and executes
against Order A at $10.10 for 500 shares
because the incoming order is of
sufficient size to satisfy Order A’s
minimum quantity condition of 500
shares. This clarification is also based
on recently adopted NYSE Arca Rule
7.31–E(i)(3)(E)(ii).17
if that Non-Displayed order itself included a
minimum quantity condition that prevented it from
executing. See infra note 16.
14 See Exchange Rule 11.9(c)(9).
15 On NYSE Arca, Order D will be posted to the
NYSE Arca book at $10.11 and not execute against
Order C at $10.13. See supra note 12.
16 The Exchange proposes to amend this
provision to clarify that a Minimum Quantity Order
would cede execution priority when it would also
cross an order against which it would otherwise
execute if it were not for the minimum execution
size restriction.
17 Supra note 12.
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Federal Register / Vol. 83, No. 61 / Thursday, March 29, 2018 / Notices
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Lastly, the Exchange proposes to
clarify that an incoming Minimum
Quantity Order would be canceled
where, if posted, it would cross the
displayed price of an order on the BZX
Book.18 Conversely, an incoming
Minimum Quantity Order would be
posted to the BZX Book where it would
not cross the displayed price of a resting
contra-side order. For example, an order
to buy at $11.00 with a minimum
quantity condition of 500 shares is
entered (Order A) and there is a
displayed order resting on the BZX
Book to sell 200 shares at $10.99 (Order
B). Order A would be cancelled because
it crosses the displayed price of Order
B and Order B does not contain
sufficient size to satisfy Order A’s
minimum quantity condition of 500
shares. However, should Order A be
priced at $10.99, it would not be
cancelled and would be posted to the
BZX Book, resulting in an internally
locked market. Order A would not be
executable at that price because it is
priced equal to a contra-side displayed
order. An internally crossed market may
subsequently occur should an order to
sell priced more aggressively than Order
A be entered but not be of sufficient size
to satisfy Order A’s minimum quantity
condition of 500 shares (e.g., an order to
sell 100 shares at $10.98) and posted to
the BZX Book.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 19 in general, and furthers the
objectives of Section 6(b)(5) of the Act 20
in particular, in that it is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, 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 proposed rule
change removes impediments to and
perfects the mechanism of a free and
open market and a national market
system because it would ensure that
Minimum Quantity Orders do not trade
through displayed orders or violate
intra-market price priority. Specifically,
the proposed rule change would protect
displayed orders by preventing a
Minimum Quantity Order from
executing where it is locked by a contraside Displayed order. The proposed rule
18 A
Minimum Quantity Order will be repriced in
accordance with Exchange Rule 11.9(g)(4) where it
would cross a protected quote displayed on an
away market center.
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(5).
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change protects intra-market price
priority by preventing a resting
Minimum Quantity Order from
executing where it is crossed by either
a displayed or non-displayed order on
the BZX Book. The proposed
clarifications remove impediments to
and perfect the mechanism of a free and
open market and a national market
system because they provide additional
specificity regarding the operation of a
Minimum Quantity Order, thereby
avoiding potential investor confusion.
In particular, the Exchange believes it is
reasonable for a resting non-displayed
order to cede execution priority to a
subsequent arriving same-side order
where that order is of sufficient size to
satisfy a resting contra-side order’s
minimum quantity condition because
doing so facilitates executions in
accordance with the terms and
conditions of each order. The proposed
rule change is also substantially similar
to a proposed rule change recently
submitted by NYSE Arca for immediate
effectiveness and published by the
Commission.21 The only differences
between the proposed rule change and
that of NYSE Arca is that: (i) NYSE Arca
does not cancel a minimum quantity
order that would cross a displayed order
on the NYSE Arca book; and (ii) NYSE
Arca will not execute resting orders at
prices less aggressive than their limit
prices in crossed markets. The Exchange
believes that these differences are
immaterial because they are designed to
reduce the occurrences of internally
crossed markets and facilitate
executions that may not otherwise
occur. These differences will also
continue to ensure that executions occur
in accordance with intra-market price
priority on the Exchange while
accounting for the differences in
functionality and order types.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
On the contrary, the proposed rule
change is not designed to address any
competitive issues because it is
intended to provide clarity regarding the
operation of Minimum Quantity Orders
and when such orders are eligible to
trade and not trade through displayed
orders or violate intra-market price
priority.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No comments were solicited or
received on the proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (A) Significantly affect
the protection of investors or the public
interest; (B) impose any significant
burden on competition; and (C) by its
terms, become operative for 30 days
from the date on which it was filed or
such shorter time as the Commission
may designate it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 22 and paragraph (f)(6) of Rule 19b–
4 thereunder,23 the Exchange has
designated this rule filing as noncontroversial. The Exchange has given
the Commission written notice of its
intent to file the proposed rule change,
along with a brief description and text
of the proposed rule change at least five
business days prior to the date of filing
of the proposed rule change, or such
shorter time as designated by the
Commission.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (1) Necessary or appropriate in
the public interest; (2) for the protection
of investors; or (3) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2018–022 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
22 15
21 See
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supra notes 12 and 15.
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23 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4.
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Federal Register / Vol. 83, No. 61 / Thursday, March 29, 2018 / Notices
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2018–022. 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–CboeBZX–2018–022, and
should be submitted on or before April
19, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Brent J. Fields,
Secretary.
[FR Doc. 2018–06300 Filed 3–28–18; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Reporting and Recordkeeping
Requirements Under OMB Review
Small Business Administration.
30-Day notice.
AGENCY:
ACTION:
The Small Business
Administration (SBA) is publishing this
notice to comply with requirements of
the Paperwork Reduction Act (PRA),
which requires agencies to submit
proposed reporting and recordkeeping
requirements to OMB for review and
approval, and to publish a notice in the
Federal Register notifying the public
that the agency has made such a
submission. This notice also allows an
additional 30 days for public comments.
DATES: Submit comments on or before
April 30, 2018.
ADDRESSES: Comments should refer to
the information collection by name and/
or OMB Control Number and should be
sent to: Agency Clearance Officer, Curtis
Rich, Small Business Administration,
409 3rd Street SW, 5th Floor,
Washington, DC 20416; and SBA Desk
Officer, Office of Information and
Regulatory Affairs, Office of
Management and Budget, New
Executive Office Building, Washington,
DC 20503.
FOR FURTHER INFORMATION CONTACT:
Curtis Rich, Agency Clearance Officer,
(202) 205–7030 curtis.rich@sba.gov.
Copies: A copy of the Form OMB 83–
1, supporting statement, and other
documents submitted to OMB for
review may be obtained from the
Agency Clearance Officer.
SUPPLEMENTARY INFORMATION:
Summary of Information Collections
The Small Business Act states that a
women-owned small (WOSB) or an
economically disadvantaged womenowned small business (EDWOSB) must
(1) be a Federal agency, a State
government, or a national certifying
entity as a WOSB. or, (2) certify to the
contracting office that it is a WOSB and
provide adequate documentation to
support such certification. These
documents will be used by the SBA,
contracting offices and third party
certifies to determine program eligibility
and compliance.
(1) Title: Certification for the WomenOwned Small Business Federal Contract
Program.
Description of Respondents: Women
owned Small Businesses.
Form Number’s: 2413, 2414.
Estimated Annual Responses: 16,688.
Estimated Annual Hour Burden:
33,376.
Curtis B. Rich,
Management Analyst.
[FR Doc. 2018–06365 Filed 3–28–18; 8:45 am]
BILLING CODE 8025–01–P
sradovich on DSK3GMQ082PROD with NOTICES
SUMMARY:
SMALL BUSINESS ADMINISTRATION
Solicitation of Nominations for
Appointment to Small Business
Regional Regulatory Fairness Boards
U.S. Small Business
Administration (SBA).
AGENCY:
24 17
CFR 200.30–3(a)(12).
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Solicit nominations of owners,
operators, and officers of small business
concerns to serve on 10 Regional
Regulatory Fairness Boards nationwide.
ACTION:
The SBA Office of the
National Ombudsman (ONO) is issuing
this notice to solicit nominations of
qualified owners, operators, and officers
of small business concerns to be
considered for appointment by the SBA
Administrator as a member of a Small
Business Regional Regulatory Fairness
Board (‘‘RegFair Board’’).
The RegFair Board members on the
ten regional boards serve as advisors to
the National Ombudsman on regulatory
enforcement and compliance issues of
concern to small business owners
within their respective regions and
surface those issues to the attention of
the National Ombudsman. Nominations
of qualified candidates are being sought
to fill vacancies on the RegFair Boards.
RegFair Board members are appointed
by, and serve at the pleasure of, the SBA
Administrator for terms of no longer
than three years. The Administrator may
reappoint an individual for additional
terms of service.
Board members serve without
compensation. They will, however, be
reimbursed for authorized travel-related
expenses at per diem rates established
by GSA when asked to perform official
duties as a Board member.
DATES: Nominations for membership on
the RegFair Board will be accepted on
a rolling basis.
ADDRESSES: All nominations should be
mailed to the Office of the National
Ombudsman, U.S. Small Business
Administration, 409 3rd Street SW,
Washington, DC 20416, or emailed to
ombudsman@sba.gov.
FOR FURTHER INFORMATION CONTACT: Ms.
Trina Mintern, Office of the National
Ombudsman, U.S. Small Business
Administration, 409 3rd Street SW,
Washington, DC 20416, Telephone:
(202) 205–6918; Email: trina.mintern@
sba.gov. A copy of the RegFair Board
Charter and a list of current Board
members may be obtained by contacting
Ms. Mintern. For more information on
ONO, please visit our website,
www.sba.gov/ombudsman.
SUPPLEMENTARY INFORMATION: As
established by the United States
Congress, the Small Business Regulatory
Enforcement Fairness Act of 1996
created ONO within the SBA and 10
Regional Regulatory Fairness Boards
nationwide. Pursuant to the statute,
ONO works with Federal agencies that
have regulatory authority over small
businesses subjected to an audit, on-site
inspection, fine or penalty, compliance
SUMMARY:
E:\FR\FM\29MRN1.SGM
29MRN1
]]>Agencies
[Federal Register Volume 83, Number 61 (Thursday, March 29, 2018)]
[Notices]
[Pages 13577-13580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06300]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82942; File No. SR-CboeBZX-2018-022]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Paragraph (c)(5) of Exchange Rule 11.9 Describing the Operation of
Minimum Quantity Orders
March 23, 2018.
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 March 16, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Exchange has designated this proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend paragraph (c)(5) of Exchange
Rule 11.9 describing the operation of Minimum Quantity Orders.\5\
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\5\ See Exchange Rule 11.9(c)(5) for a complete description of
the operation of Minimum Quantity Orders.
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The text of the proposed rule change is available at the Exchange's
website at www.markets.cboe.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend paragraph (c)(5) of Exchange Rule
11.9 describing the operation of Minimum Quantity Orders by removing
language that provided for the re-pricing of incoming Minimum Quantity
Orders to avoid an internally crossed book. As a result of this change,
the Exchange proposes to specify within the rule when a Minimum
Quantity Order would not be eligible to trade to prevent executions
from occurring that may be inconsistent with intra-market price
priority or that would cause a non-displayed order to trade ahead of a
displayed order.
In sum, a Minimum Quantity Order is a non-displayed order that
enables a User \6\ to specify a minimum share amount at which the order
will execute.\7\ A Minimum Quantity Order will not execute unless the
volume of contra-side liquidity available to execute against the order
meets or exceeds the designated minimum size. By default, a Minimum
Quantity Order will execute upon entry against a single order or
multiple aggregated orders simultaneously. The Exchange recently
amended the operation of Minimum Quantity Orders to permit a User to
alternatively specify the order not execute against multiple aggregated
orders simultaneously and that the minimum quantity condition be
satisfied by each individual order resting on the BZX Book.\8\
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\6\ The term ``User'' is defined as ``any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3.'' See Exchange Rule 1.5(cc).
\7\ The Exchange will only honor a specified minimum quantity on
BZX Only Orders that are non-displayed or Immediate-Or-Cancel and
will disregard a minimum quantity on any other order. See Exchange
Rule 11.9(c)(5).
\8\ See Securities Exchange Act Release No. 81807 (October 3,
2017), 82 FR 47065 (October 10, 2017) (SR-BatsBZX-2017-62). This
functionality is pending deployment and the implementation date will
be announced via a trading notice.
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The Exchange also recently amended the operation of Minimum
Quantity Orders to re-price incoming Minimum Quantity Orders where that
order may cross an order posted on the BZX Book.\9\ Specifically, where
there is insufficient size to satisfy an incoming order's minimum
quantity condition and that incoming order, if posted at its limit
price, would cross an order(s), whether
[[Page 13578]]
displayed or non-displayed, resting on the BZX Book, the order with the
minimum quantity condition would be re-priced to and ranked at the
locking price. This functionality has not yet been implemented \10\ and
the Exchange now proposes to amend paragraph (c)(5) of Rule 11.9 to
remove this re-pricing requirement.
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\9\ Id.
\10\ See supra note 8. Exchange Rule 11.9(c)(5) does not require
re-pricing where the Minimum Quantity Order is resting on the BZX
Book. As such, an internally crossed book may occur where the
incoming order is of insufficient size to satisfy the resting
order's minimum quantity condition and that incoming order, if
posted at its limit price, would cross that order with a minimum
quantity condition resting on the BZX Book.
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As a result of the above change, the Exchange proposes to amend
paragraph (c)(5) of Rule 11.9 to describe when a Minimum Quantity Order
will not be eligible to trade to prevent executions from occurring that
may be inconsistent with intra-market price priority or would result in
a non-displayed order trading ahead of a same-priced, same-side
displayed order.\11\ The Exchange would not permit a Minimum Quantity
Order that crosses other displayed or non-displayed orders on the BZX
Book to trade at prices that are worse than the price of such contra-
side orders. The Exchange would also not permit a resting Minimum
Quantity Order to trade at a price equal to a contra-side displayed
order. This proposal is based on recently adopted NYSE Arca, Inc.
(``NYSE Arca'') Rule 7.31-E(i)(3)(C).\12\
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\11\ Exchange Rule 11.12(a) states that orders on the BZX Book
are ranked and maintained by the Exchange according to price-time
priority. Exchange Rule 11.12(a) further prohibits a non-displayed
order from trading ahead of a same-side, same-priced displayed
order. This proposed rule change adds language to Exchange Rule
11.9(c)(5) to clarify this priority scheme during an internally
crossed market.
\12\ See Securities Exchange Act Release No. 82504 (January 16,
2018), 83 FR 3038 (January 22, 2018) (SR-NYSEArca-2018-01) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 7.31-E Relating to Mid-Point Liquidity Orders and the
Minimum Trade Size Modifier and Rule 7.36-E To Add a Definition of
``Aggressing Order'').
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Paragraph (c)(5) of Rule 11.9 would state that a Minimum Quantity
Order to buy (sell) that is ranked in the BZX Book will not be eligible
to trade: (i) At a price equal to or above (below) any sell (buy)
orders that are displayed and that have a ranked price equal to or
below (above) the price of such Minimum Quantity Order; or (ii) at a
price above (below) any sell (buy) order that is non-displayed and has
a ranked price below (above) the price of such Minimum Quantity
Order.\13\ However, a Minimum Quantity Order that crosses an order on
BZX Book may execute at a price less aggressive than its ranked price
against an incoming order so long as such execution is consistent with
the above restrictions.
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\13\ A Minimum Quantity Order to buy (sell) may execute at a
price above (below) any sell (buy) order that is Non-Displayed and
has a ranked price below (above) the price of such Minimum Quantity
Order if that Non-Displayed order itself included a minimum quantity
condition that prevented it from executing. See infra note 16.
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The following examples describe the proposed operation of a Minimum
Quantity Order during an internally crossed market. This first example
addresses intra-market priority amongst a Minimum Quantity Order and
other non-displayed orders in an internally crossed market as well as
when an execution may occur at prices less aggressive than the resting
order's ranked price. Assume the NBBO is $10.10 by $10.16. A non-
displayed order to sell 50 shares at $10.12 is resting on the BZX Book
(``Order A''). A non-displayed order to sell 25 shares at $10.11 is
also resting on the BZX Book (``Order B''). The Exchange receives a
Mid-Point Peg \14\ order to buy at $10.14 with a minimum quantity
condition to execute against a single order of 100 shares (``Order
C''). Because Order C's minimum quantity condition cannot be met, Order
C will not trade with Orders A or B and will be posted and ranked on
the BZX Book at $10.13, the midpoint of the NBBO. The Exchange now has
a non-displayed order crossing both non-displayed orders on the BZX
Book. If the Exchange then receives a non-displayed order to sell for
100 shares at $10.11 (``Order D''),\15\ although Order D would be
marketable against Order C at $10.13, it would not trade at $10.13
because it is above the price of all resting sell orders. Order D will
instead execute against Order C at $10.11, receiving price improvement
relative to the midpoint of the NBBO.
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\14\ See Exchange Rule 11.9(c)(9).
\15\ On NYSE Arca, Order D will be posted to the NYSE Arca book
at $10.11 and not execute against Order C at $10.13. See supra note
12.
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This second example addresses intra-market priority amongst
displayed orders, Minimum Quantity Orders and other non-displayed
orders. The Exchange notes that the below behavior is not unique to an
internally crossed market as the Exchange's priority rule, 11.12(a),
currently prohibits non-displayed orders, including Minimum Quantity
Orders, from trading ahead of same-priced, same-side displayed orders.
Assume the NBBO is $10.00 by $10.04. A non-displayed order to buy 500
shares at $10.00 is resting on the BZX Book (``Order A''). A displayed
order to buy 100 shares at $10.00 is then entered and posted to the BZX
Book (``Order B''). The Exchange receives a non-displayed order to sell
600 shares at $10.00 with a minimum quantity condition to execute
against a single order of 500 shares (``Order C''). Although Order A
satisfies Order C's minimum quantity condition and has time priority
ahead of Order B, no execution occurs because Order B is a displayed
order and has execution priority over Order A, a non-displayed order.
Order C does not execute against Order B because Order B does not
satisfy Order C's minimum quantity condition. Order C is then posted to
the BZX Book at $10.00, non-displayed.
The Exchange also proposes two clarifying changes to paragraph
(c)(5) of Exchange Rule 11.9. The rule currently states that a Minimum
Quantity Order cedes execution priority when it would lock an order
against which it would otherwise execute if it were not for the minimum
execution size restriction.\16\ The Exchange now proposes to add
additional language to the rule to clarify when a resting non-displayed
order may cede execution priority to a subsequent arriving same-side
order. As amended, paragraph (h) of Rule 11.6 would state that if a
resting non-displayed sell (buy) order did not meet the minimum
quantity condition of a same-priced resting Minimum Quantity Order to
buy (sell), a subsequently arriving sell (buy) order that meets the
minimum quantity condition will trade ahead of such resting non-
displayed sell (buy) order at that price. For example, assume the NBBO
is $10.00 by $10.10 and no orders are resting on the BZX Book. A non-
displayed order to buy 700 shares at $10.10 with a minimum quantity
condition to execute against a single order of 500 shares is resting on
the BZX Book (Order A). A non-displayed order to sell 100 shares at
$10.10 is then entered and posted to the BZX Book (Order B). Order B
does not execute against Order A because Order B does not satisfy Order
A's single minimum quantity condition of 500 shares. As a result, Order
B is posted to the BZX Book at $10.10, creating an internally locked
book. An order to sell 500 shares at $10.10 is then entered and
executes against Order A at $10.10 for 500 shares because the incoming
order is of sufficient size to satisfy Order A's minimum quantity
condition of 500 shares. This clarification is also based on recently
adopted NYSE Arca Rule 7.31-E(i)(3)(E)(ii).\17\
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\16\ The Exchange proposes to amend this provision to clarify
that a Minimum Quantity Order would cede execution priority when it
would also cross an order against which it would otherwise execute
if it were not for the minimum execution size restriction.
\17\ Supra note 12.
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[[Page 13579]]
Lastly, the Exchange proposes to clarify that an incoming Minimum
Quantity Order would be canceled where, if posted, it would cross the
displayed price of an order on the BZX Book.\18\ Conversely, an
incoming Minimum Quantity Order would be posted to the BZX Book where
it would not cross the displayed price of a resting contra-side order.
For example, an order to buy at $11.00 with a minimum quantity
condition of 500 shares is entered (Order A) and there is a displayed
order resting on the BZX Book to sell 200 shares at $10.99 (Order B).
Order A would be cancelled because it crosses the displayed price of
Order B and Order B does not contain sufficient size to satisfy Order
A's minimum quantity condition of 500 shares. However, should Order A
be priced at $10.99, it would not be cancelled and would be posted to
the BZX Book, resulting in an internally locked market. Order A would
not be executable at that price because it is priced equal to a contra-
side displayed order. An internally crossed market may subsequently
occur should an order to sell priced more aggressively than Order A be
entered but not be of sufficient size to satisfy Order A's minimum
quantity condition of 500 shares (e.g., an order to sell 100 shares at
$10.98) and posted to the BZX Book.
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\18\ A Minimum Quantity Order will be repriced in accordance
with Exchange Rule 11.9(g)(4) where it would cross a protected quote
displayed on an away market center.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \19\ in general, and furthers the objectives of Section
6(b)(5) of the Act \20\ in particular, in that it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, 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 proposed rule change
removes impediments to and perfects the mechanism of a free and open
market and a national market system because it would ensure that
Minimum Quantity Orders do not trade through displayed orders or
violate intra-market price priority. Specifically, the proposed rule
change would protect displayed orders by preventing a Minimum Quantity
Order from executing where it is locked by a contra-side Displayed
order. The proposed rule change protects intra-market price priority by
preventing a resting Minimum Quantity Order from executing where it is
crossed by either a displayed or non-displayed order on the BZX Book.
The proposed clarifications remove impediments to and perfect the
mechanism of a free and open market and a national market system
because they provide additional specificity regarding the operation of
a Minimum Quantity Order, thereby avoiding potential investor
confusion. In particular, the Exchange believes it is reasonable for a
resting non-displayed order to cede execution priority to a subsequent
arriving same-side order where that order is of sufficient size to
satisfy a resting contra-side order's minimum quantity condition
because doing so facilitates executions in accordance with the terms
and conditions of each order. The proposed rule change is also
substantially similar to a proposed rule change recently submitted by
NYSE Arca for immediate effectiveness and published by the
Commission.\21\ The only differences between the proposed rule change
and that of NYSE Arca is that: (i) NYSE Arca does not cancel a minimum
quantity order that would cross a displayed order on the NYSE Arca
book; and (ii) NYSE Arca will not execute resting orders at prices less
aggressive than their limit prices in crossed markets. The Exchange
believes that these differences are immaterial because they are
designed to reduce the occurrences of internally crossed markets and
facilitate executions that may not otherwise occur. These differences
will also continue to ensure that executions occur in accordance with
intra-market price priority on the Exchange while accounting for the
differences in functionality and order types.
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\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
\21\ See supra notes 12 and 15.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. On
the contrary, the proposed rule change is not designed to address any
competitive issues because it is intended to provide clarity regarding
the operation of Minimum Quantity Orders and when such orders are
eligible to trade and not trade through displayed orders or violate
intra-market price priority.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No comments were solicited or received on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (A)
Significantly affect the protection of investors or the public
interest; (B) impose any significant burden on competition; and (C) by
its terms, become operative for 30 days from the date on which it was
filed or such shorter time as the Commission may designate it has
become effective pursuant to Section 19(b)(3)(A) of the Act \22\ and
paragraph (f)(6) of Rule 19b-4 thereunder,\23\ the Exchange has
designated this rule filing as non-controversial. The Exchange has
given the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission.
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\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (1)
Necessary or appropriate in the public interest; (2) for the protection
of investors; or (3) otherwise in furtherance of the purposes of the
Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2018-022 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 13580]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2018-022. 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-CboeBZX-2018-022, and should be
submitted on or before April 19, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-06300 Filed 3-28-18; 8:45 am]
BILLING CODE 8011-01-P
