Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Nasdaq Rule 4703(a) To Allow Members To Designate an Order with a RTFY or SCAN Routing Order Attribute To Activate at 7:00 a.m. ET, 19586-19588 [2018-09341]

Download as PDF 19586 Federal Register / Vol. 83, No. 86 / Thursday, May 3, 2018 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments 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– NYSEArca–2018–25 on the subject line. sradovich on DSK3GMQ082PROD with NOTICES 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–NYSEArca–2018–25. 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 17:29 May 02, 2018 Jkt 244001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Robert W. Errett, Deputy Secretary. [FR Doc. 2018–09340 Filed 5–2–18; 8:45 am] 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: VerDate Sep<11>2014 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–NYSEArca-2018–25 and should be submitted on or before May 24, 2018. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83125; File No. SR– NASDAQ–2017–088] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Nasdaq Rule 4703(a) To Allow Members To Designate an Order with a RTFY or SCAN Routing Order Attribute To Activate at 7:00 a.m. ET April 27, 2018. I. Introduction On August 30, 2017, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Nasdaq Rule 4703(a) relating to the times for activating an order with a RTFY or SCAN routing order attribute. The proposed rule change was published for comment in the Federal Register on September 18, 2017.3 On 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 81579 (September 12, 2017), 82 FR 43584. 1 15 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 October 31, 2017, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On December 13, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, which amended and superseded the proposed rule change as originally filed.6 On December 15, 2017, the Commission published notice of Amendment No. 1 and instituted proceedings under Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1.8 On March 14, 2018, pursuant to Section 19(b)(2) of the Act,9 the Commission designated a longer period within which to issue an order approving or disapproving the proposed rule change.10 On April 19, 2018, the Exchange filed Amendment No. 2 to the proposed rule change, which amended and superseded the proposed rule change, as modified by Amendment No. 1.11 The Commission has received no 4 15 U.S.C. 78s(b)(2). Securities Exchange Act Release No. 81986, 82 FR 51453 (November 6, 2017). The Commission designated December 17, 2017 as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. 6 In Amendment No. 1, the Exchange: (1) Modified the proposal to allow members entering an order with a RTFY or SCAN routing order attribute to designate the order to activate at a specific time during Pre-Market Hours (rather than System Hours) on the same day; (2) specified that the proposed functionality would be offered on a port level basis; (3) stated that all of the times-inforce in Nasdaq Rule 4703(a) currently apply to orders with RTFY or SCAN routing order attributes and made corresponding clarifications and corrections throughout the proposal; (4) provided additional information regarding why members might use the proposed functionality; and (5) provided additional discussion regarding members’ best execution obligations and the application of the Exchange’s regulatory checks associated with the proposed functionality, and reminded members of their regulatory obligations (e.g., Market Access Rule, Regulation SHO) when using the proposed functionality. Amendment No. 1 is available at https://www.sec.gov/comments/sr-nasdaq-2017088/nasdaq2017088-2798107-161689.pdf. 7 15 U.S.C. 78s(b)(2)(B). 8 See Securities Exchange Act Release No. 82335, 82 FR 60637 (December 21, 2017). 9 15 U.S.C. 78s(b)(2). 10 See Securities Exchange Act Release No. 82871, 83 FR 12229 (March 20, 2018). The Commission designated May 16, 2018 as the date by which the Commission shall either approve or disapprove the proposed rule change. 11 In Amendment No. 2, the Exchange: (1) Further narrowed the proposal by allowing members to designate orders with RTFY or SCAN routing order attributes to activate at 7:00 a.m. ET; (2) provided additional information regarding why members might use the proposed functionality; and (3) compared the proposed functionality to existing 5 See E:\FR\FM\03MYN1.SGM 03MYN1 Federal Register / Vol. 83, No. 86 / Thursday, May 3, 2018 / Notices comments on the proposed rule change. The Commission is publishing this notice to solicit comments on Amendment No. 2 from interested persons, and is approving the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. II. Description of the Proposal sradovich on DSK3GMQ082PROD with NOTICES The Exchange proposes to amend Nasdaq Rule 4703(a) to allow members to designate a 7:00 a.m. ET activation time for an order with a RTFY or SCAN routing order attribute. RTFY is a routing option available for an order that qualifies as a designated retail order under which orders check the system for available shares only if so instructed by the entering firm and are thereafter routed to destinations on the system routing table.12 If shares remain unexecuted after routing, they are posted to the Nasdaq book.13 Once on the book, should the order subsequently be locked or crossed by another market center, the system will not route the order to the locking or crossing market center.14 RTFY is designed to allow orders to participate in the opening, reopening, and closing process of the primary listing market for a security.15 SCAN is a routing option under which orders check the system for available shares and simultaneously route the remaining shares to destinations on the system routing table.16 If shares remain unexecuted after routing, they are posted on the Nasdaq book.17 Once on the book, should the order subsequently be locked or crossed by another market center, the system will not route the order to the locking or crossing market center.18 Nasdaq Rule 4703(a) provides the times-in-force that may be assigned to orders entered into the system. According to Nasdaq Rule 4703(a), members specify an order’s time-inforce by designating a time at which the order will become active and a time at which the order will cease to be active. All of the times-in-force currently described in Nasdaq Rule 4703(a) are applicable to orders with RTFY or SCAN routing order attributes.19 According to the Exchange, during Prefunctionalities on other exchanges. Amendment No. 2 is available at https://www.sec.gov/comments/srnasdaq-2017-088/nasdaq2017088-3476253162214.pdf. 12 See Nasdaq Rule 4758(a)(1)(A)(v)b. 13 See id. 14 See id. 15 See id. 16 See Nasdaq Rule 4758(a)(1)(A)(iv). 17 See id. 18 See id. 19 See Amendment No. 2 at n.12. VerDate Sep<11>2014 17:29 May 02, 2018 Jkt 244001 Market Hours,20 members usually designate orders with RTFY or SCAN routing order attributes to activate upon entry or at 8:00 a.m. ET.21 The Exchange now proposes to amend Nasdaq Rule 4703(a) to provide that a member entering an order with a RTFY or SCAN routing order attribute may designate the order to activate at 7:00 a.m. ET if entered prior to 7:00 a.m. ET on the same day.22 As with the existing 8:00 a.m. ET activation time, the Exchange proposes to offer the 7:00 a.m. ET activation time on a port level basis.23 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.24 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,25 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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 Commission notes that the proposal would provide Exchange members with an additional time for activating orders with RTFY or SCAN routing order attributes, and could facilitate the entry of these orders.26 20 ‘‘Pre-Market Hours’’ means the period of time beginning at 4:00 a.m. ET and ending immediately prior to the commencement of Market Hours. See Nasdaq Rule 4701(g). ‘‘Market Hours’’ means the period of time beginning at 9:30 a.m. ET and ending at 4:00 p.m. ET (or such earlier time as may be designated by Nasdaq on a day when Nasdaq closes early). See id. 21 See Amendment No. 2 at 5. 22 Orders can be entered into the system from 4:00 a.m. ET until 8:00 p.m. ET. See Nasdaq Rule 4756(a)(3). 23 See Amendment No. 2 at n.14. As a result, if, for example, a member cancels an order entered through a port set for 7:00 a.m. ET activation and wishes the order to instead activate at 8:00 a.m. ET, it must either have another port set for activation at 8:00 a.m. ET or, alternatively, enter the order at that time for immediate activation. See id. 24 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 25 15 U.S.C. 78f(b)(5). 26 The Exchange states that, should it become aware of other orders that would also benefit from PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 19587 The Commission notes that, as amended, the proposal would allow members to activate orders with RTFY or SCAN routing order attributes specifically at 7:00 a.m. ET. According to the Exchange, market participants have coded their systems for trading during Pre-Market Hours, such as 7:00 a.m. ET, as evidenced by trading sessions on other exchanges 27 that start at 7:00 a.m. ET.28 The Commission believes that Exchange members may wish to activate orders with RTFY or SCAN routing order attributes at 7:00 a.m. ET to benefit from the liquidity at that time. The Commission also notes that the 7:00 a.m. ET activation time is similar to existing functionalities on certain other exchanges where orders can activate at 7:00 a.m. ET.29 The Exchange represents that as of the time that an order with a RTFY or SCAN routing order attribute is activated, the Exchange would subject orders that are eligible for display or execution to all of the Exchange’s standard regulatory checks, as it currently does with all orders upon entry.30 These checks include compliance with Regulation NMS, Regulation SHO, and relevant Exchange rules.31 Moreover, the Exchange reminds its members of their regulatory obligations when submitting an order with a RTFY or SCAN routing order attribute.32 In particular, the Exchange reminds that members must comply with the Market Access Rule, which requires, among other things, pretrade controls and procedures that are reasonably designed to assure compliance with Exchange trading rules and Commission rules pursuant to Regulation SHO and Regulation NMS.33 The Exchange also notes that a member’s procedures must be reasonably designed to ensure compliance with the applicable regulatory requirements, not just at the time the order is routed to the Exchange, but also at the time the order is activated and becomes eligible for execution.34 The Commission further notes the Exchange’s discussion of the best execution obligations of members this change, it would consider filing another rule change to extend the proposed activation functionality to such other orders. See Amendment No. 2 at 13–14. 27 See infra note 29. 28 See Amendment No. 2 at 7. 29 See Cboe BZX Exchange, Inc. Rule 1.5(ee); Cboe BYX Exchange, Inc. Rule 1.5(ee); Cboe EDGA Exchange, Inc. Rule 1.5(ii); and Cboe EDGX Exchange, Inc. Rule 1.5(ii). 30 See Amendment No. 2 at 10. 31 See id. 32 See id. 33 See id. at 10–11. 34 See id. at 11. E:\FR\FM\03MYN1.SGM 03MYN1 19588 Federal Register / Vol. 83, No. 86 / Thursday, May 3, 2018 / Notices utilizing the proposed 7:00 a.m. ET activation time.35 The Exchange notes that members may cancel their inactive orders with RTFY or SCAN routing order attributes at any time prior to the time the order activates, which would allow members to react to conditions that may cause them to violate their best execution obligations to their customers should the orders activate and execute.36 The Exchange also notes that members may cancel their active orders with RTFY or SCAN routing order attributes and enter new orders at another time that the members believe will satisfy their best execution obligations.37 The Commission notes that Exchange members’ use of the proposed 7:00 a.m. ET activation time must be consistent with their best execution obligations. 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–2017–088 and should be submitted on or before May 24, 2018. IV. Solicitation of Comments on Amendment No. 2 to the Proposed Rule Change Interested persons are invited to submit written data, views, and arguments concerning whether Amendment No. 2 is consistent with the Act. Comments may be submitted by any of the following methods: V. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 2, prior to the thirtieth day after the date of publication of notice of the filing of Amendment No. 2 in the Federal Register. As noted above, in Amendment No. 2, the Exchange narrowed the proposal from allowing members to activate orders with RTFY or SCAN routing order attributes at any time during Pre-Market Hours, to specifically allowing members to activate these orders at 7:00 a.m. ET, which is similar to existing functionalities on certain other exchanges. Moreover, Amendment No. 2 provided additional explanation regarding the potential benefits of a 7:00 a.m. ET activation time. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,38 to approve the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. sradovich on DSK3GMQ082PROD with 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– NASDAQ–2017–088 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–2017–088. 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 id. at 8–10. id. at 8. 37 See id. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,39 that the proposed rule change (SR–NASDAQ– 2017–088), as modified by Amendment No. 2, be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.40 Robert W. Errett, Deputy Secretary. [FR Doc. 2018–09341 Filed 5–2–18; 8:45 am] BILLING CODE 8011–01–P 35 See 38 15 36 See 39 Id. VerDate Sep<11>2014 17:29 May 02, 2018 40 17 Jkt 244001 PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00068 Fmt 4703 Sfmt 4703 SOCIAL SECURITY ADMINISTRATION [Docket No. SSA–2018–0012] Privacy Act of 1974; System of Records Office of Analytics, Review, and Oversight, Social Security Administration (SSA). ACTION: Notice of a new system of records. AGENCY: In accordance with the Privacy Act, we are issuing public notice of our intent to establish a new system of records entitled, Anti-Fraud Enterprise Solution (AFES) (60–0388), hereinafter called the AFES Record System. The AFES Record System is an agency-wide and overarching system that includes the ability to detect, prevent, and mitigate fraud in SSA’s programs. The AFES Record System will collect and maintain personally identifiable information (PII) to assist in identifying suspicious or potentially fraudulent activities performed by individuals across all the agency’s programs and service delivery methods. This notice publishes details of the system as set forth under the caption, SUPPLEMENTARY INFORMATION. DATES: The system of records notice (SORN) is applicable upon its publication in today’s Federal Register, with the exception of the routine uses, which are effective June 4, 2018. We invite public comment on the routine uses or other aspects of this SORN. In accordance with 5 U.S.C. 552a(e)(4) and (e)(11), the public is given a 30-day period in which to submit comments. Therefore, please submit any comments by June 4, 2018. ADDRESSES: The public, Office of Management and Budget (OMB), and Congress may comment on this publication by writing to the Executive Director, Office of Privacy and Disclosure, Office of the General Counsel, SSA, Room G–401 West High Rise, 6401 Security Boulevard, Baltimore, Maryland 21235–6401, or through the Federal e-Rulemaking Portal at https://www.regulations.gov, please reference docket number SSA–2018– 0012. All comments we receive will be available for public inspection at the above address and we will post them to https://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Neil Etter, Government Information Specialist, Privacy Implementation Division, Office of Privacy and Disclosure, Office of the General Counsel, SSA, Room G–401 West High Rise, 6401 Security Boulevard, Baltimore, Maryland 21235–6401, SUMMARY: E:\FR\FM\03MYN1.SGM 03MYN1

Agencies

[Federal Register Volume 83, Number 86 (Thursday, May 3, 2018)]
[Notices]
[Pages 19586-19588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09341]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83125; File No. SR-NASDAQ-2017-088]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Amendment No. 2 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To 
Amend Nasdaq Rule 4703(a) To Allow Members To Designate an Order with a 
RTFY or SCAN Routing Order Attribute To Activate at 7:00 a.m. ET

April 27, 2018.

I. Introduction

    On August 30, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Nasdaq Rule 4703(a) relating to the times 
for activating an order with a RTFY or SCAN routing order attribute. 
The proposed rule change was published for comment in the Federal 
Register on September 18, 2017.\3\ On October 31, 2017, pursuant to 
Section 19(b)(2) of the Act,\4\ the Commission designated a longer 
period within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
disapprove the proposed rule change.\5\ On December 13, 2017, the 
Exchange filed Amendment No. 1 to the proposed rule change, which 
amended and superseded the proposed rule change as originally filed.\6\ 
On December 15, 2017, the Commission published notice of Amendment No. 
1 and instituted proceedings under Section 19(b)(2)(B) of the Act \7\ 
to determine whether to approve or disapprove the proposed rule change, 
as modified by Amendment No. 1.\8\ On March 14, 2018, pursuant to 
Section 19(b)(2) of the Act,\9\ the Commission designated a longer 
period within which to issue an order approving or disapproving the 
proposed rule change.\10\ On April 19, 2018, the Exchange filed 
Amendment No. 2 to the proposed rule change, which amended and 
superseded the proposed rule change, as modified by Amendment No. 
1.\11\ The Commission has received no

[[Page 19587]]

comments on the proposed rule change. The Commission is publishing this 
notice to solicit comments on Amendment No. 2 from interested persons, 
and is approving the proposed rule change, as modified by Amendment No. 
2, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81579 (September 12, 
2017), 82 FR 43584.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 81986, 82 FR 51453 
(November 6, 2017). The Commission designated December 17, 2017 as 
the date by which the Commission shall approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \6\ In Amendment No. 1, the Exchange: (1) Modified the proposal 
to allow members entering an order with a RTFY or SCAN routing order 
attribute to designate the order to activate at a specific time 
during Pre-Market Hours (rather than System Hours) on the same day; 
(2) specified that the proposed functionality would be offered on a 
port level basis; (3) stated that all of the times-in-force in 
Nasdaq Rule 4703(a) currently apply to orders with RTFY or SCAN 
routing order attributes and made corresponding clarifications and 
corrections throughout the proposal; (4) provided additional 
information regarding why members might use the proposed 
functionality; and (5) provided additional discussion regarding 
members' best execution obligations and the application of the 
Exchange's regulatory checks associated with the proposed 
functionality, and reminded members of their regulatory obligations 
(e.g., Market Access Rule, Regulation SHO) when using the proposed 
functionality. Amendment No. 1 is available at https://www.sec.gov/comments/sr-nasdaq-2017-088/nasdaq2017088-2798107-161689.pdf.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 82335, 82 FR 60637 
(December 21, 2017).
    \9\ 15 U.S.C. 78s(b)(2).
    \10\ See Securities Exchange Act Release No. 82871, 83 FR 12229 
(March 20, 2018). The Commission designated May 16, 2018 as the date 
by which the Commission shall either approve or disapprove the 
proposed rule change.
    \11\ In Amendment No. 2, the Exchange: (1) Further narrowed the 
proposal by allowing members to designate orders with RTFY or SCAN 
routing order attributes to activate at 7:00 a.m. ET; (2) provided 
additional information regarding why members might use the proposed 
functionality; and (3) compared the proposed functionality to 
existing functionalities on other exchanges. Amendment No. 2 is 
available at https://www.sec.gov/comments/sr-nasdaq-2017-088/nasdaq2017088-3476253-162214.pdf.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to amend Nasdaq Rule 4703(a) to allow members 
to designate a 7:00 a.m. ET activation time for an order with a RTFY or 
SCAN routing order attribute.
    RTFY is a routing option available for an order that qualifies as a 
designated retail order under which orders check the system for 
available shares only if so instructed by the entering firm and are 
thereafter routed to destinations on the system routing table.\12\ If 
shares remain unexecuted after routing, they are posted to the Nasdaq 
book.\13\ Once on the book, should the order subsequently be locked or 
crossed by another market center, the system will not route the order 
to the locking or crossing market center.\14\ RTFY is designed to allow 
orders to participate in the opening, reopening, and closing process of 
the primary listing market for a security.\15\ SCAN is a routing option 
under which orders check the system for available shares and 
simultaneously route the remaining shares to destinations on the system 
routing table.\16\ If shares remain unexecuted after routing, they are 
posted on the Nasdaq book.\17\ Once on the book, should the order 
subsequently be locked or crossed by another market center, the system 
will not route the order to the locking or crossing market center.\18\
---------------------------------------------------------------------------

    \12\ See Nasdaq Rule 4758(a)(1)(A)(v)b.
    \13\ See id.
    \14\ See id.
    \15\ See id.
    \16\ See Nasdaq Rule 4758(a)(1)(A)(iv).
    \17\ See id.
    \18\ See id.
---------------------------------------------------------------------------

    Nasdaq Rule 4703(a) provides the times-in-force that may be 
assigned to orders entered into the system. According to Nasdaq Rule 
4703(a), members specify an order's time-in-force by designating a time 
at which the order will become active and a time at which the order 
will cease to be active. All of the times-in-force currently described 
in Nasdaq Rule 4703(a) are applicable to orders with RTFY or SCAN 
routing order attributes.\19\ According to the Exchange, during Pre-
Market Hours,\20\ members usually designate orders with RTFY or SCAN 
routing order attributes to activate upon entry or at 8:00 a.m. ET.\21\ 
The Exchange now proposes to amend Nasdaq Rule 4703(a) to provide that 
a member entering an order with a RTFY or SCAN routing order attribute 
may designate the order to activate at 7:00 a.m. ET if entered prior to 
7:00 a.m. ET on the same day.\22\ As with the existing 8:00 a.m. ET 
activation time, the Exchange proposes to offer the 7:00 a.m. ET 
activation time on a port level basis.\23\
---------------------------------------------------------------------------

    \19\ See Amendment No. 2 at n.12.
    \20\ ``Pre-Market Hours'' means the period of time beginning at 
4:00 a.m. ET and ending immediately prior to the commencement of 
Market Hours. See Nasdaq Rule 4701(g). ``Market Hours'' means the 
period of time beginning at 9:30 a.m. ET and ending at 4:00 p.m. ET 
(or such earlier time as may be designated by Nasdaq on a day when 
Nasdaq closes early). See id.
    \21\ See Amendment No. 2 at 5.
    \22\ Orders can be entered into the system from 4:00 a.m. ET 
until 8:00 p.m. ET. See Nasdaq Rule 4756(a)(3).
    \23\ See Amendment No. 2 at n.14. As a result, if, for example, 
a member cancels an order entered through a port set for 7:00 a.m. 
ET activation and wishes the order to instead activate at 8:00 a.m. 
ET, it must either have another port set for activation at 8:00 a.m. 
ET or, alternatively, enter the order at that time for immediate 
activation. See id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 2, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\24\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\25\ which requires, among other things, 
that the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, 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 Commission notes that the 
proposal would provide Exchange members with an additional time for 
activating orders with RTFY or SCAN routing order attributes, and could 
facilitate the entry of these orders.\26\
---------------------------------------------------------------------------

    \24\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ The Exchange states that, should it become aware of other 
orders that would also benefit from this change, it would consider 
filing another rule change to extend the proposed activation 
functionality to such other orders. See Amendment No. 2 at 13-14.
---------------------------------------------------------------------------

    The Commission notes that, as amended, the proposal would allow 
members to activate orders with RTFY or SCAN routing order attributes 
specifically at 7:00 a.m. ET. According to the Exchange, market 
participants have coded their systems for trading during Pre-Market 
Hours, such as 7:00 a.m. ET, as evidenced by trading sessions on other 
exchanges \27\ that start at 7:00 a.m. ET.\28\ The Commission believes 
that Exchange members may wish to activate orders with RTFY or SCAN 
routing order attributes at 7:00 a.m. ET to benefit from the liquidity 
at that time. The Commission also notes that the 7:00 a.m. ET 
activation time is similar to existing functionalities on certain other 
exchanges where orders can activate at 7:00 a.m. ET.\29\
---------------------------------------------------------------------------

    \27\ See infra note 29.
    \28\ See Amendment No. 2 at 7.
    \29\ See Cboe BZX Exchange, Inc. Rule 1.5(ee); Cboe BYX 
Exchange, Inc. Rule 1.5(ee); Cboe EDGA Exchange, Inc. Rule 1.5(ii); 
and Cboe EDGX Exchange, Inc. Rule 1.5(ii).
---------------------------------------------------------------------------

    The Exchange represents that as of the time that an order with a 
RTFY or SCAN routing order attribute is activated, the Exchange would 
subject orders that are eligible for display or execution to all of the 
Exchange's standard regulatory checks, as it currently does with all 
orders upon entry.\30\ These checks include compliance with Regulation 
NMS, Regulation SHO, and relevant Exchange rules.\31\ Moreover, the 
Exchange reminds its members of their regulatory obligations when 
submitting an order with a RTFY or SCAN routing order attribute.\32\ In 
particular, the Exchange reminds that members must comply with the 
Market Access Rule, which requires, among other things, pre-trade 
controls and procedures that are reasonably designed to assure 
compliance with Exchange trading rules and Commission rules pursuant to 
Regulation SHO and Regulation NMS.\33\ The Exchange also notes that a 
member's procedures must be reasonably designed to ensure compliance 
with the applicable regulatory requirements, not just at the time the 
order is routed to the Exchange, but also at the time the order is 
activated and becomes eligible for execution.\34\
---------------------------------------------------------------------------

    \30\ See Amendment No. 2 at 10.
    \31\ See id.
    \32\ See id.
    \33\ See id. at 10-11.
    \34\ See id. at 11.
---------------------------------------------------------------------------

    The Commission further notes the Exchange's discussion of the best 
execution obligations of members

[[Page 19588]]

utilizing the proposed 7:00 a.m. ET activation time.\35\ The Exchange 
notes that members may cancel their inactive orders with RTFY or SCAN 
routing order attributes at any time prior to the time the order 
activates, which would allow members to react to conditions that may 
cause them to violate their best execution obligations to their 
customers should the orders activate and execute.\36\ The Exchange also 
notes that members may cancel their active orders with RTFY or SCAN 
routing order attributes and enter new orders at another time that the 
members believe will satisfy their best execution obligations.\37\ The 
Commission notes that Exchange members' use of the proposed 7:00 a.m. 
ET activation time must be consistent with their best execution 
obligations.
---------------------------------------------------------------------------

    \35\ See id. at 8-10.
    \36\ See id. at 8.
    \37\ See id.
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendment No. 2 to the Proposed Rule 
Change

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 2 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-2017-088 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-2017-088. 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-2017-088 and should be submitted 
on or before May 24, 2018.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 2

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 2, prior to the thirtieth day 
after the date of publication of notice of the filing of Amendment No. 
2 in the Federal Register. As noted above, in Amendment No. 2, the 
Exchange narrowed the proposal from allowing members to activate orders 
with RTFY or SCAN routing order attributes at any time during Pre-
Market Hours, to specifically allowing members to activate these orders 
at 7:00 a.m. ET, which is similar to existing functionalities on 
certain other exchanges. Moreover, Amendment No. 2 provided additional 
explanation regarding the potential benefits of a 7:00 a.m. ET 
activation time. Accordingly, the Commission finds good cause, pursuant 
to Section 19(b)(2) of the Act,\38\ to approve the proposed rule 
change, as modified by Amendment No. 2, on an accelerated basis.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\39\ that the proposed rule change (SR-NASDAQ-2017-088), as 
modified by Amendment No. 2, be, and hereby is, approved on an 
accelerated basis.
---------------------------------------------------------------------------

    \39\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\40\
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-09341 Filed 5-2-18; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.