Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment Nos. 2 and 3 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 2 and 3, To Establish the “Midpoint Extended Life Order + Continuous Book” as a New Order Type, 48978-48981 [2019-20018]
Download as PDF
<![CDATA[
48978
Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Notices
jbell on DSK3GLQ082PROD with NOTICES
adjustments to the VaR Floor Percentage
in a more timely manner. Additionally,
as described above in Section II.B.,
FICC’s proposed ability to adjust the
VaR Floor Percentage within the range
of 5 to 30 basis points is designed to
better enable FICC to limit its credit
exposure to certain Clearing Member
portfolios in the event that the modelbased volatility calculation (or Margin
Proxy, if used) yield too low a VaR
Charge for such portfolios. As described
above in Sections II.B. and C., FICC’s
proposals for the ability to adjust the
VaR Floor Percentage within the range
of 5 to 30 basis points, as well as the
provision of prior notice of such
adjustments to Clearing Members, are
designed to help FICC better manage its
credit exposure to Clearing Members by
collecting sufficient margin with respect
to each Clearing Member portfolio.
Accordingly, the Commission finds the
proposed changes are consistent with
the requirements of Rule 17Ad–
22(e)(4)(i) under the Act.51
C. Consistency With Rule 17Ad–
22(e)(6)(i) Under the Act
Rule 17Ad–22(e)(6)(i) under the Act
requires a covered clearing agency to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to cover, if the
covered clearing agency provides
central counterparty services, its credit
exposures to its participants by
establishing a risk-based margin system
that, at a minimum, considers, and
produces margin levels commensurate
with, the risks and particular attributes
of each relevant product, portfolio, and
market.52
FICC’s proposals to: (1) Monitor the
VaR Floor Percentage; (2) adjust the VaR
Floor Percentage in the event that other
calculations result in VaR Charges that
do not adequately cover the risks
presented by certain Clearing Member
portfolios; and (3) notify Clearing
Members in advance of any adjustment
to the VaR Floor Percentage, are
designed to cover FICC’s credit
exposure to Clearing Member portfolios
where such exposure has not been
adequately covered in the past.
Specifically, the proposal to allow FICC
to adjust the VaR Floor Percentage from
5 basis points up to 30 basis points
should help FICC to collect margin
amounts commensurate with its credit
exposure to the types of Clearing
Member portfolios not adequately
covered using a VaR Floor Percentage of
5 basis points. FICC’s proposal to
provide Clearing Members with notice
in advance of implementing any
adjustment to the VaR Floor Percentage
should help Clearing Members prepare
to meet their margin obligations, and
thereby facilitate FICC’s collection of
margin amounts commensurate with
affected Clearing Member portfolios.
FICC’s proposal to increase the
frequency with which it reviews the
VaR Floor Percentage from annually to
monthly should alert FICC of the need
to adjust the VaR Floor Percentage and
make such adjustments in a more timely
manner. Thus, the increased frequency
of review would further help FICC
ensure that it collects margin amounts
commensurate with the credit risks
presented by each Clearing Member
portfolio. For these reasons, the
Commission finds the proposed changes
are consistent with the requirements of
Rule 17Ad–22(e)(6)(i) under the Act.53
D. Consistency With Rule 17Ad–
22(e)(23)(ii) Under the Act
Rule 17Ad–22(e)(23)(ii) under the Act
requires a covered clearing agency to
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to provide
sufficient information to enable
participants to identify and evaluate the
risks, fees, and other material costs they
incur by participating in the covered
clearing agency.54
As described above in Section II.E.,
FICC’s proposed technical changes to
the MBSD Rules would provide more
details as to how the VaR Floor is
calculated than is currently set forth in
the MBSD Rules. Providing more
comprehensive written information in
the MBSD Rules regarding the VaR
Floor would enable Clearing Members
to better understand how the VaR Floor
operates, which, in turn, should enable
Clearing Members to better evaluate the
costs of participating in FICC.
Accordingly, the Commission finds the
proposed technical changes to the
MBSD Rules are consistent with Rule
17Ad–22(e)(23)(ii) under the Act.55
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and, in
particular, with the requirements of
Section 17A of the Act 56 and the rules
and regulations promulgated
thereunder.
53 Id.
54 17
51 Id.
52 17
CFR 240.17Ad–22(e)(23)(ii).
55 Id.
CFR 240.17Ad–22(e)(6)(i).
VerDate Sep<11>2014
17:05 Sep 16, 2019
56 15
Jkt 247001
PO 00000
U.S.C. 78q–1.
Frm 00074
Fmt 4703
Sfmt 4703
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 57 that
proposed rule change SR–FICC–2019–
003, be, and hereby is, approved.58
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.59
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–20011 Filed 9–16–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86938; File No. SR–
NASDAQ–2019–048]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Amendment Nos. 2 and 3 and
Order Granting Accelerated Approval
of a Proposed Rule Change, as
Modified by Amendment Nos. 2 and 3,
To Establish the ‘‘Midpoint Extended
Life Order + Continuous Book’’ as a
New Order Type
September 11, 2019.
I. Introduction
On May 29, 2019, The Nasdaq Stock
Market LLC (‘‘Exchange’’ or ‘‘Nasdaq’’)
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 establish the Midpoint
Extended Life Order + Continuous Book
(‘‘M–ELO+CB’’) as a new order type.
The proposed rule change was
published for comment in the Federal
Register on June 17, 2019.3 On July 1,
2019, the Exchange filed Amendment
No. 1 to the proposed rule change,
which amended and superseded the
proposed rule change as originally filed.
On July 30, 2019, 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 July 31, 2019, the
57 15
U.S.C. 78s(b)(2).
approving the proposed rule change, the
Commission considered the proposals’ impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
59 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 86083
(June 11, 2019), 84 FR 28107.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 86512,
84 FR 38078 (August 5, 2019). The Commission
58 In
E:\FR\FM\17SEN1.SGM
17SEN1
Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Notices
II. Description of the Proposal
Currently, the Exchange offers the
Midpoint Extended Life Order (‘‘M–
ELO’’).8 A M–ELO is a non-displayed
order priced at the midpoint between
the National Best Bid and National Best
Offer (‘‘NBBO’’) that is not eligible for
execution until it completes a one-half
second holding period (‘‘Holding
Period’’).9 Once eligible to trade, M–
ELOs may only execute against other
M–ELOs.10
The Exchange now proposes to adopt
M–ELO+CB as a variation on the M–
ELO concept. That is, a M–ELO+CB
would be an order type that has all of
the characteristics and attributes of a M–
ELO, except that, in addition to
executing against other M–ELO+CBs
and M–ELOs, it would also be able to
execute against certain ‘‘M–ELO-like’’
orders on the Exchange’s continuous
book.11 Specifically, a M–ELO+CB
would be subject to the same one-half
second Holding Period as a M–ELO. A
M–ELO+CB that satisfies the Holding
Period would be eligible to execute, at
the NBBO midpoint, against other
eligible M–ELO+CBs and eligible M–
ELOs.12 However, unlike a M–ELO, the
M–ELO+CB would also be eligible to
execute, at the NBBO midpoint, against
non-displayed orders with midpoint
pegging and midpoint peg post-only
orders (collectively, ‘‘Midpoint Orders’’)
resting on the Exchange’s continuous
book, if: (1) The Midpoint Order has the
midpoint trade now order attribute
enabled; 13 (2) the Midpoint Order has
rested on the continuous book for at
least one-half second after the NBBO
midpoint falls within the limit price set
by the participant; 14 (3) no other order
is resting on the continuous book that
has a more aggressive price than the
current NBBO midpoint; and (4) the
Midpoint Order satisfies any minimum
quantity requirement of the M–
ELO+CB.15 A buy (sell) M–ELO+CB
would be ranked in time order at the
NBBO midpoint among other buy (sell)
M–ELO+CBs, buy (sell) M–ELOs, and
designated September 15, 2019 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. 2, the Exchange revised the
proposal to: (1) Explain in greater detail the order
entry protocols available for M–ELO+CBs; (2)
provide additional specificity about the resting
period for midpoint orders; (3) provide additional
specificity about the execution priority of M–
ELO+CBs, M–ELOs, and midpoint orders; (4)
conform the proposal to a recently approved
proposed rule change permitting M–ELOs to be
entered in odd-lot sizes; (5) specify that any
punitive fees or participant requirements
determined to be necessary by the Exchange for M–
ELO+CB usage would be implemented pursuant to
a future proposed rule change; and (6) make
technical, clarifying, and conforming changes.
Amendment No. 2 is available at https://
www.sec.gov/comments/sr-nasdaq-2019-048/
srnasdaq2019048-5898749-188829.pdf.
7 In Amendment No. 3, the Exchange further
revised the proposal to: (1) Clarify that the
statistical information it proposes to publish for M–
ELO+CBs would be aggregated with the statistical
information it currently publishes for M–ELOs; (2)
clarify the circumstances in which modification of
a M–ELO+CB or midpoint order would trigger a
new holding or resting period; and (3) make
technical and conforming changes. Amendment No.
3 is available at https://www.sec.gov/comments/srnasdaq-2019-048/srnasdaq2019048-6049836191368.pdf.
8 See Rule 4702(b)(14)(A). See also Securities
Exchange Act Release No. 82825 (March 7, 2018),
83 FR 10937 (March 13, 2018) (‘‘Original M–ELO
Approval Order’’) (order approving SR–NASDAQ–
2017–074).
9 See Rule 4702(b)(14)(A).
10 See id.
11 See proposed Rule 4702(b)(15). Also, unlike
M–ELOs, M–ELO+CBs may be entered via any of
the Exchange’s order entry protocols except for QIX.
See id.; Amendment No. 2, supra note 6, at 5 n.6,
7. The type of protocol used would not affect how
the system handles M–ELO+CBs. See Amendment
No. 2, supra note 6, at 7.
12 See proposed Rule 4702(b)(15).
13 The midpoint trade now order attribute
currently allows a resting order that becomes locked
at its non-displayed price by an incoming midpoint
peg post-only order to automatically execute against
crossing or locking interest, including potentially
against the locking midpoint peg post-only order, as
a liquidity taker. See Rule 4703(n). The Exchange
proposes to amend the midpoint trade now order
attribute to provide that, in addition to the
functionality the attribute currently provides,
enabling the attribute would also permit a Midpoint
Order to execute against a M–ELO+CB, provided
that the Midpoint Order meets the eligibility
requirements for doing so. See proposed Rule
4703(n). The Exchange also proposes to specify
that, if there is a resting Midpoint Order on the
Nasdaq book without the midpoint trade now order
attribute, a new incoming Midpoint Order with the
midpoint trade now order attribute will be able to
execute against a M–ELO+CB (after meeting the
eligibility requirements). See id. The resting
Midpoint Order without the midpoint trade now
order attribute will thereafter remain on the Nasdaq
book and retain its priority relative to other resting
orders on the same side of the market. See id.
14 If a Midpoint Order with the midpoint trade
now order attribute enabled is modified during its
resting period or after its resting period elapses,
other than to decrease the size of the order or to
modify the marking of a sell order as long, short,
or short exempt, such modification would trigger a
new resting period for the Midpoint Order. See
Amendment No. 3, supra note 7, at 4.
15 See proposed Rule 4702(b)(15).
jbell on DSK3GLQ082PROD with NOTICES
Exchange filed Amendment No. 2 to the
proposed rule change, which amended
and superseded the proposed rule
change, as modified by Amendment No.
1.6 On August 30, 2019, the Exchange
filed Amendment No. 3 to the proposed
rule change.7 The Commission received
no comment letters on the proposed rule
change. The Commission is publishing
this notice to solicit comments on
Amendment Nos. 2 and 3 from
interested persons, and is approving the
proposed rule change, as modified by
Amendment Nos. 2 and 3, on an
accelerated basis.
VerDate Sep<11>2014
17:05 Sep 16, 2019
Jkt 247001
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
48979
buy (sell) Midpoint Orders, as of the
time when such orders become eligible
to execute (i.e., the time at which they
exit their respective one-half second
Holding Periods or resting periods, as
applicable, and satisfy any other
conditions for marketability).16
In all other respects, a M–ELO+CB
would be identical to a M–ELO. For
example, a M–ELO+CB may be assigned
a limit price, in which case it would be:
(1) Eligible for execution in time priority
after satisfying the Holding Period if,
upon acceptance of the order by the
system, the midpoint price is within the
limit price set by the participant; or (2)
held until the midpoint falls within the
limit price set by the participant, at
which time the Holding Period would
commence and thereafter the system
would make the order eligible for
execution in time priority.17 If a M–
ELO+CB is modified by a member (other
than to decrease the size of the order or
to modify the marking of a sell order as
long, short, or short exempt) during the
Holding Period, the system would
restart the Holding Period.18 If a M–
ELO+CB is modified by a member (other
than to decrease the size of the order or
to modify the marking of a sell order as
long, short, or short exempt) after it is
eligible to execute, the order would
have to satisfy a new Holding Period to
become eligible to execute. If the NBBO
changes while a M–ELO+CB is in the
Holding Period, the Holding Period
would not reset, even if, as a result of
the NBBO change, the M–ELO+CB’s
limit price is less aggressive than the
NBBO midpoint.19 If a M–ELO+CB
satisfies the Holding Period, but the
NBBO midpoint is no longer within its
limit, it would nonetheless be ranked in
time priority among other M–ELO+CBs,
M–ELOs, and Midpoint Orders if the
NBBO later moves such that the
midpoint is within the order’s limit
price (i.e., the Holding Period would not
reset).20
If there is no National Best Bid or
National Best Offer, the Exchange would
accept M–ELO+CBs but would not
allow M–ELO+CB executions until there
is an NBBO.21 M–ELO+CBs would be
eligible to execute if the NBBO is
locked.22 If the NBBO is crossed, M–
ELO+CBs would be held by the system
until the NBBO is no longer crossed, at
which time they would be eligible to
16 See
id.; Amendment No. 2, supra note 6, at 6.
Amendment No. 2, supra note 6, at 6–7.
18 See id. at 7.
19 See id.
20 See id.
21 See id.
22 See id.
17 See
E:\FR\FM\17SEN1.SGM
17SEN1
48980
Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Notices
trade.23 M–ELO+CBs may be cancelled
at any time, including during the
Holding Period.24
M–ELO+CBs would only be active
during market hours.25 Specifically, M–
ELO+CBs entered during pre-market
hours would be held by the system in
time priority until market hours begin,
M–ELO+CBs entered during post-market
hours would not be accepted by the
system, and M–ELO+CBs remaining
unexecuted after 4:00 p.m. Eastern time
would be cancelled by the system.26 M–
ELO+CBs would not be eligible for the
Exchange’s opening, halt, and closing
crosses.27 M–ELO+CBs may be entered
in any size and may have a minimum
quantity order attribute.28 M–ELO+CBs
may not be designated with a time-inforce of immediate or cancel, are
ineligible for routing, and may not have
the discretion, reserve size, attribution,
intermarket sweep order, display, trade
now, or midpoint trade now order
attributes.29
M–ELO+CB executions would be
reported to securities information
processors and provided in the
Exchange’s proprietary data feed
without any new or special indication.30
The Exchange would, however, include
in its existing volume reports delayed
weekly aggregated statistics, as well as
delayed monthly aggregated block-sized
trading statistics, for M–ELO+CB
executions.31 Specifically, the Exchange
would include M–ELO+CB executions
in the existing reports it publishes on
Nasdaqtrader.com that provide weekly
aggregated statistics showing the
number of shares and transactions of M–
ELOs executed on the Exchange by
security.32 The Exchange would also
include M–ELO+CB executions in the
existing reports it publishes on
Nasdaqtrader.com that provide monthly
aggregated block-sized trading statistics
23 See
id.
id.
25 See id.
26 See id. at 7–8.
27 See proposed Rule 4703(l).
28 See Amendment No. 2, supra note 6, at 8. See
also Securities Exchange Act Release No. 86416
(July 19, 2019), 84 FR 35918 (July 25, 2019) (order
approving SR–NASDAQ–2019–044 to allow M–
ELOs to be odd lot-sized).
29 See Amendment No. 2, supra note 6, at 8.
30 See id.
31 See id.
32 See id.; Amendment No. 3, supra note 7, at 5,
8 (clarifying that the weekly statistical information
published by the Exchange would aggregate both
M–ELO and M–ELO+CB executions). This
information would be published with a two-week
delay for NMS stocks in Tier 1 of the LULD Plan,
and a four-week delay for all other NMS stocks. See
Amendment No. 2, supra note 6, at 8.
jbell on DSK3GLQ082PROD with NOTICES
24 See
VerDate Sep<11>2014
17:05 Sep 16, 2019
Jkt 247001
of total shares and total transactions of
M–ELOs executed on the Exchange.33
The Exchange represents that, as part
of the surveillance it currently performs,
M–ELO+CBs would be subject to realtime surveillance to determine if they
are being abused by market
participants.34 In addition, as is the case
for M–ELOs, the Exchange represents
that it will monitor the use of M–
ELO+CBs with the intent to apply
additional measures, as necessary, to
ensure their usage is appropriately tied
to the intent of the order type.35
According to the Exchange,
manipulative abuse is subject to
potential disciplinary action under the
Exchange’s rules, and other behavior
that is not necessarily manipulative but
nonetheless frustrates the purposes of
the M–ELO+CB order type may be
subject to penalties or other participant
requirements to discourage such
behavior, should it occur.36
The Exchange plans to implement M–
ELO+CB within thirty days after its
approval, and will announce the
specific implementation date by Equity
Trader Alert.37 The Exchange states that
it will make M–ELO+CB available to all
members and to all securities upon
implementation.38
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment Nos. 2 and 3,
is consistent with the requirements of
the Act and the rules and regulations
33 See Amendment No. 2, supra note 6, at 8–9;
Amendment No. 3, supra note 7, at 5, 8 (clarifying
that the monthly statistical information published
by the Exchange would aggregate both M–ELO and
M–ELO+CB executions). A transaction would be
considered ‘‘block-sized’’ if it meets any of the
following criteria: (1) 10,000 or more shares; (2)
$200,000 or more in value; (3) 10,000 or more
shares and $200,000 or more in value; (4) 2,000 to
9,999 shares; (5) $100,000 to $199,999 in value; or
(6) 2,000 to 9,999 shares and $100,000 to $199,999
in value. See Amendment No. 2, supra note 6, at
9. This information would be published no earlier
than one month following the end of the month for
which trading was aggregated. See id.
34 See Amendment No. 2, supra note 6, at 9.
35 See id. The Exchange states that this
monitoring may include metrics tied to participant
behavior, such as the percentage of M–ELO+CBs
that are cancelled prior to the completion of the
Holding Period, the average duration of M–
ELO+CBs, and the percentage of M–ELO+CBs
where the NBBO midpoint is within the limit price
when received. See id.
36 See id. Should the Exchange determine that
they are necessary to maintain a fair and orderly
market, any punitive fees or other participant
requirements tied to M–ELO+CB usage would be
implemented by rule filing under Section 19(b) of
the Act. See id. at 9 n.11.
37 See id. at 11. The Exchange notes that it plans
to propose a fee structure for M–ELO+CB in a
subsequent proposed rule change. See id. at 11 n.13.
38 See id. at 11.
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
thereunder applicable to a national
securities exchange.39 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,40 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, and that the rules are
not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers; and Section
6(b)(8) of the Act,41 which requires that
the rules of a national securities
exchange not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
The Commission has carefully
considered the proposal and finds that
it is consistent with the Act. In its
original order approving M–ELO on the
Exchange, the Commission noted its
belief that the M–ELO order type could
create additional and more efficient
trading opportunities on the Exchange
for investors with longer investment
time horizons, including institutional
investors, and could provide these
investors with an ability to limit the
information leakage and the market
impact that could result from their
orders.42 While M–ELOs are currently
limited to executing only against other
M–ELOs, the Commission believes that
the Exchange’s proposal to introduce
M–ELO+CBs, which would be able to
interact with eligible Midpoint Orders,
in addition to M–ELO+CBs and M–
ELOs, could create opportunities for
Exchange participants to utilize a
variation of the M–ELO order type
consistent with the intended purpose of
the order type. In particular, the
proposal would provide Exchange
participants with the flexibility to allow
their orders to interact with ‘‘M–ELOlike’’ interest on the Exchange’s order
book. As with M–ELOs, the Commission
believes that M–ELO+CBs represent a
reasonable effort to further enhance the
39 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).
40 15 U.S.C. 78f(b)(5).
41 15 U.S.C. 78f(b)(8).
42 See Original M–ELO Approval Order, supra
note 8, at 10938–39.
E:\FR\FM\17SEN1.SGM
17SEN1
Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Notices
ability of longer-term trading interest to
participate effectively on an exchange.
The Commission also believes that the
proposal to use the midpoint trade now
order attribute to allow Midpoint Orders
to execute against M–ELO+CBs would
provide Exchange participants entering
Midpoint Orders with additional control
over the execution of their orders,
specifically by allowing participants to
choose whether to enable the order
attribute in order to execute against M–
ELO+CBs.
The Commission believes that the
proposal to include M–ELO+CB
executions in the Exchange’s published
statistics for M–ELO executions is
reasonably designed to provide
additional transparency regarding M–
ELO+CB executions on the Exchange
without undermining the usefulness of
the M–ELO and M–ELO+CB order types
by limiting the potential information
leakage and the resulting market impact
that could be associated with nondelayed identification of individual M–
ELO or M–ELO+CB executions.
Finally, the Commission believes that
the Exchange’s proposed surveillance
measures are reasonably designed to
deter potential improper use of the
proposed M–ELO+CB order type. In
particular, the Commission notes that
the Exchange has represented that, as it
does for M–ELOs, it will conduct realtime surveillance to monitor the use of
M–ELO+CBs and ensure that such usage
is appropriately tied to the intent of the
order type.43 The Exchange has also
represented that it will continue to
evaluate whether additional measures
may be necessary to ensure that M–
ELO+CBs are used in a manner
consistent with the intended purpose of
the order type.44
Based on the foregoing and the
Exchange’s representations in its
proposal, the Commission finds that the
proposed rule change, as modified by
Amendment Nos. 2 and 3, is consistent
with the Act.
jbell on DSK3GLQ082PROD with NOTICES
IV. Solicitation of Comments on
Amendment Nos. 2 and 3 to the
Proposed Rule Change
Amendment No 2, supra note 6, at 9.
44 See id.
VerDate Sep<11>2014
17:05 Sep 16, 2019
Jkt 247001
• 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–2019–048 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–2019–048. 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–2019–048, and
should be submitted on or before
October 8, 2019.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment Nos. 2 and 3
Interested persons are invited to
submit written data, views, and
arguments concerning whether
Amendment Nos. 2 and 3 are consistent
with the Act. Comments may be
submitted by any of the following
methods:
43 See
Electronic Comments
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment Nos. 2 and 3,
prior to the thirtieth day after the date
of publication of notice of the filing of
Amendment Nos. 2 and 3 in the Federal
Register. As discussed above, in
Amendment No. 2, the Exchange
revised the proposal to: (1) Explain in
greater detail the order entry protocols
PO 00000
Frm 00077
Fmt 4703
Sfmt 9990
48981
available for M–ELO+CBs; (2) provide
additional specificity about the resting
period for Midpoint Orders; (3) provide
additional specificity about the
execution priority of M–ELO+CBs, M–
ELOs, and Midpoint Orders; (4) conform
the proposal to a recently approved
proposed rule change permitting M–
ELOs to be entered in odd-lot sizes; (5)
specify that any punitive fees or
participant requirements determined to
be necessary by the Exchange for M–
ELO+CB usage would be implemented
pursuant to a future proposed rule
change; and (6) make technical,
clarifying, and conforming changes.
Also as discussed above, in Amendment
No. 3, the Exchange further revised the
proposal to: (1) Clarify that the
statistical information it proposes to
publish for M–ELO+CBs would be
aggregated with the statistical
information it currently publishes for
M–ELOs; (2) clarify the circumstances
in which modification of a M–ELO+CB
or Midpoint Order would trigger a new
holding or resting period; and (3) make
technical and conforming changes. The
Commission believes that Amendment
Nos. 2 and 3 do not raise any novel
regulatory issues or make any
significant substantive changes to the
original proposal, which was subject to
a full notice and comment period during
which no comments were received. The
Commission also notes that Amendment
Nos. 2 and 3 provide additional
accuracy, clarity, and justification to the
proposal. Accordingly, the Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,45 to approve the
proposed rule change, as modified by
Amendment Nos. 2 and 3, on an
accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,46 that the
proposed rule change (SR–NASDAQ–
2019–048), as modified by Amendment
Nos. 2 and 3, be, and hereby is,
approved on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.47
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–20018 Filed 9–16–19; 8:45 am]
BILLING CODE 8011–01–P
45 15
U.S.C. 78s(b)(2).
46 Id.
47 17
E:\FR\FM\17SEN1.SGM
CFR 200.30–3(a)(12).
17SEN1
]]>Agencies
[Federal Register Volume 84, Number 180 (Tuesday, September 17, 2019)]
[Notices]
[Pages 48978-48981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20018]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86938; File No. SR-NASDAQ-2019-048]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Amendment Nos. 2 and 3 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment Nos. 2 and 3, To Establish the ``Midpoint Extended Life Order
+ Continuous Book'' as a New Order Type
September 11, 2019.
I. Introduction
On May 29, 2019, The Nasdaq Stock Market LLC (``Exchange'' or
``Nasdaq'') 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 establish the Midpoint Extended Life Order +
Continuous Book (``M-ELO+CB'') as a new order type. The proposed rule
change was published for comment in the Federal Register on June 17,
2019.\3\ On July 1, 2019, the Exchange filed Amendment No. 1 to the
proposed rule change, which amended and superseded the proposed rule
change as originally filed. On July 30, 2019, 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 July 31, 2019, the
[[Page 48979]]
Exchange filed Amendment No. 2 to the proposed rule change, which
amended and superseded the proposed rule change, as modified by
Amendment No. 1.\6\ On August 30, 2019, the Exchange filed Amendment
No. 3 to the proposed rule change.\7\ The Commission received no
comment letters on the proposed rule change. The Commission is
publishing this notice to solicit comments on Amendment Nos. 2 and 3
from interested persons, and is approving the proposed rule change, as
modified by Amendment Nos. 2 and 3, 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. 86083 (June 11,
2019), 84 FR 28107.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 86512, 84 FR 38078
(August 5, 2019). The Commission designated September 15, 2019 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. 2, the Exchange revised the proposal to:
(1) Explain in greater detail the order entry protocols available
for M-ELO+CBs; (2) provide additional specificity about the resting
period for midpoint orders; (3) provide additional specificity about
the execution priority of M-ELO+CBs, M-ELOs, and midpoint orders;
(4) conform the proposal to a recently approved proposed rule change
permitting M-ELOs to be entered in odd-lot sizes; (5) specify that
any punitive fees or participant requirements determined to be
necessary by the Exchange for M-ELO+CB usage would be implemented
pursuant to a future proposed rule change; and (6) make technical,
clarifying, and conforming changes. Amendment No. 2 is available at
https://www.sec.gov/comments/sr-nasdaq-2019-048/srnasdaq2019048-5898749-188829.pdf.
\7\ In Amendment No. 3, the Exchange further revised the
proposal to: (1) Clarify that the statistical information it
proposes to publish for M-ELO+CBs would be aggregated with the
statistical information it currently publishes for M-ELOs; (2)
clarify the circumstances in which modification of a M-ELO+CB or
midpoint order would trigger a new holding or resting period; and
(3) make technical and conforming changes. Amendment No. 3 is
available at https://www.sec.gov/comments/sr-nasdaq-2019-048/srnasdaq2019048-6049836-191368.pdf.
---------------------------------------------------------------------------
II. Description of the Proposal
Currently, the Exchange offers the Midpoint Extended Life Order
(``M-ELO'').\8\ A M-ELO is a non-displayed order priced at the midpoint
between the National Best Bid and National Best Offer (``NBBO'') that
is not eligible for execution until it completes a one-half second
holding period (``Holding Period'').\9\ Once eligible to trade, M-ELOs
may only execute against other M-ELOs.\10\
---------------------------------------------------------------------------
\8\ See Rule 4702(b)(14)(A). See also Securities Exchange Act
Release No. 82825 (March 7, 2018), 83 FR 10937 (March 13, 2018)
(``Original M-ELO Approval Order'') (order approving SR-NASDAQ-2017-
074).
\9\ See Rule 4702(b)(14)(A).
\10\ See id.
---------------------------------------------------------------------------
The Exchange now proposes to adopt M-ELO+CB as a variation on the
M-ELO concept. That is, a M-ELO+CB would be an order type that has all
of the characteristics and attributes of a M-ELO, except that, in
addition to executing against other M-ELO+CBs and M-ELOs, it would also
be able to execute against certain ``M-ELO-like'' orders on the
Exchange's continuous book.\11\ Specifically, a M-ELO+CB would be
subject to the same one-half second Holding Period as a M-ELO. A M-
ELO+CB that satisfies the Holding Period would be eligible to execute,
at the NBBO midpoint, against other eligible M-ELO+CBs and eligible M-
ELOs.\12\ However, unlike a M-ELO, the M-ELO+CB would also be eligible
to execute, at the NBBO midpoint, against non-displayed orders with
midpoint pegging and midpoint peg post-only orders (collectively,
``Midpoint Orders'') resting on the Exchange's continuous book, if: (1)
The Midpoint Order has the midpoint trade now order attribute enabled;
\13\ (2) the Midpoint Order has rested on the continuous book for at
least one-half second after the NBBO midpoint falls within the limit
price set by the participant; \14\ (3) no other order is resting on the
continuous book that has a more aggressive price than the current NBBO
midpoint; and (4) the Midpoint Order satisfies any minimum quantity
requirement of the M-ELO+CB.\15\ A buy (sell) M-ELO+CB would be ranked
in time order at the NBBO midpoint among other buy (sell) M-ELO+CBs,
buy (sell) M-ELOs, and buy (sell) Midpoint Orders, as of the time when
such orders become eligible to execute (i.e., the time at which they
exit their respective one-half second Holding Periods or resting
periods, as applicable, and satisfy any other conditions for
marketability).\16\
---------------------------------------------------------------------------
\11\ See proposed Rule 4702(b)(15). Also, unlike M-ELOs, M-
ELO+CBs may be entered via any of the Exchange's order entry
protocols except for QIX. See id.; Amendment No. 2, supra note 6, at
5 n.6, 7. The type of protocol used would not affect how the system
handles M-ELO+CBs. See Amendment No. 2, supra note 6, at 7.
\12\ See proposed Rule 4702(b)(15).
\13\ The midpoint trade now order attribute currently allows a
resting order that becomes locked at its non-displayed price by an
incoming midpoint peg post-only order to automatically execute
against crossing or locking interest, including potentially against
the locking midpoint peg post-only order, as a liquidity taker. See
Rule 4703(n). The Exchange proposes to amend the midpoint trade now
order attribute to provide that, in addition to the functionality
the attribute currently provides, enabling the attribute would also
permit a Midpoint Order to execute against a M-ELO+CB, provided that
the Midpoint Order meets the eligibility requirements for doing so.
See proposed Rule 4703(n). The Exchange also proposes to specify
that, if there is a resting Midpoint Order on the Nasdaq book
without the midpoint trade now order attribute, a new incoming
Midpoint Order with the midpoint trade now order attribute will be
able to execute against a M-ELO+CB (after meeting the eligibility
requirements). See id. The resting Midpoint Order without the
midpoint trade now order attribute will thereafter remain on the
Nasdaq book and retain its priority relative to other resting orders
on the same side of the market. See id.
\14\ If a Midpoint Order with the midpoint trade now order
attribute enabled is modified during its resting period or after its
resting period elapses, other than to decrease the size of the order
or to modify the marking of a sell order as long, short, or short
exempt, such modification would trigger a new resting period for the
Midpoint Order. See Amendment No. 3, supra note 7, at 4.
\15\ See proposed Rule 4702(b)(15).
\16\ See id.; Amendment No. 2, supra note 6, at 6.
---------------------------------------------------------------------------
In all other respects, a M-ELO+CB would be identical to a M-ELO.
For example, a M-ELO+CB may be assigned a limit price, in which case it
would be: (1) Eligible for execution in time priority after satisfying
the Holding Period if, upon acceptance of the order by the system, the
midpoint price is within the limit price set by the participant; or (2)
held until the midpoint falls within the limit price set by the
participant, at which time the Holding Period would commence and
thereafter the system would make the order eligible for execution in
time priority.\17\ If a M-ELO+CB is modified by a member (other than to
decrease the size of the order or to modify the marking of a sell order
as long, short, or short exempt) during the Holding Period, the system
would restart the Holding Period.\18\ If a M-ELO+CB is modified by a
member (other than to decrease the size of the order or to modify the
marking of a sell order as long, short, or short exempt) after it is
eligible to execute, the order would have to satisfy a new Holding
Period to become eligible to execute. If the NBBO changes while a M-
ELO+CB is in the Holding Period, the Holding Period would not reset,
even if, as a result of the NBBO change, the M-ELO+CB's limit price is
less aggressive than the NBBO midpoint.\19\ If a M-ELO+CB satisfies the
Holding Period, but the NBBO midpoint is no longer within its limit, it
would nonetheless be ranked in time priority among other M-ELO+CBs, M-
ELOs, and Midpoint Orders if the NBBO later moves such that the
midpoint is within the order's limit price (i.e., the Holding Period
would not reset).\20\
---------------------------------------------------------------------------
\17\ See Amendment No. 2, supra note 6, at 6-7.
\18\ See id. at 7.
\19\ See id.
\20\ See id.
---------------------------------------------------------------------------
If there is no National Best Bid or National Best Offer, the
Exchange would accept M-ELO+CBs but would not allow M-ELO+CB executions
until there is an NBBO.\21\ M-ELO+CBs would be eligible to execute if
the NBBO is locked.\22\ If the NBBO is crossed, M-ELO+CBs would be held
by the system until the NBBO is no longer crossed, at which time they
would be eligible to
[[Page 48980]]
trade.\23\ M-ELO+CBs may be cancelled at any time, including during the
Holding Period.\24\
---------------------------------------------------------------------------
\21\ See id.
\22\ See id.
\23\ See id.
\24\ See id.
---------------------------------------------------------------------------
M-ELO+CBs would only be active during market hours.\25\
Specifically, M-ELO+CBs entered during pre-market hours would be held
by the system in time priority until market hours begin, M-ELO+CBs
entered during post-market hours would not be accepted by the system,
and M-ELO+CBs remaining unexecuted after 4:00 p.m. Eastern time would
be cancelled by the system.\26\ M-ELO+CBs would not be eligible for the
Exchange's opening, halt, and closing crosses.\27\ M-ELO+CBs may be
entered in any size and may have a minimum quantity order
attribute.\28\ M-ELO+CBs may not be designated with a time-in-force of
immediate or cancel, are ineligible for routing, and may not have the
discretion, reserve size, attribution, intermarket sweep order,
display, trade now, or midpoint trade now order attributes.\29\
---------------------------------------------------------------------------
\25\ See id.
\26\ See id. at 7-8.
\27\ See proposed Rule 4703(l).
\28\ See Amendment No. 2, supra note 6, at 8. See also
Securities Exchange Act Release No. 86416 (July 19, 2019), 84 FR
35918 (July 25, 2019) (order approving SR-NASDAQ-2019-044 to allow
M-ELOs to be odd lot-sized).
\29\ See Amendment No. 2, supra note 6, at 8.
---------------------------------------------------------------------------
M-ELO+CB executions would be reported to securities information
processors and provided in the Exchange's proprietary data feed without
any new or special indication.\30\ The Exchange would, however, include
in its existing volume reports delayed weekly aggregated statistics, as
well as delayed monthly aggregated block-sized trading statistics, for
M-ELO+CB executions.\31\ Specifically, the Exchange would include M-
ELO+CB executions in the existing reports it publishes on
Nasdaqtrader.com that provide weekly aggregated statistics showing the
number of shares and transactions of M-ELOs executed on the Exchange by
security.\32\ The Exchange would also include M-ELO+CB executions in
the existing reports it publishes on Nasdaqtrader.com that provide
monthly aggregated block-sized trading statistics of total shares and
total transactions of M-ELOs executed on the Exchange.\33\
---------------------------------------------------------------------------
\30\ See id.
\31\ See id.
\32\ See id.; Amendment No. 3, supra note 7, at 5, 8 (clarifying
that the weekly statistical information published by the Exchange
would aggregate both M-ELO and M-ELO+CB executions). This
information would be published with a two-week delay for NMS stocks
in Tier 1 of the LULD Plan, and a four-week delay for all other NMS
stocks. See Amendment No. 2, supra note 6, at 8.
\33\ See Amendment No. 2, supra note 6, at 8-9; Amendment No. 3,
supra note 7, at 5, 8 (clarifying that the monthly statistical
information published by the Exchange would aggregate both M-ELO and
M-ELO+CB executions). A transaction would be considered ``block-
sized'' if it meets any of the following criteria: (1) 10,000 or
more shares; (2) $200,000 or more in value; (3) 10,000 or more
shares and $200,000 or more in value; (4) 2,000 to 9,999 shares; (5)
$100,000 to $199,999 in value; or (6) 2,000 to 9,999 shares and
$100,000 to $199,999 in value. See Amendment No. 2, supra note 6, at
9. This information would be published no earlier than one month
following the end of the month for which trading was aggregated. See
id.
---------------------------------------------------------------------------
The Exchange represents that, as part of the surveillance it
currently performs, M-ELO+CBs would be subject to real-time
surveillance to determine if they are being abused by market
participants.\34\ In addition, as is the case for M-ELOs, the Exchange
represents that it will monitor the use of M-ELO+CBs with the intent to
apply additional measures, as necessary, to ensure their usage is
appropriately tied to the intent of the order type.\35\ According to
the Exchange, manipulative abuse is subject to potential disciplinary
action under the Exchange's rules, and other behavior that is not
necessarily manipulative but nonetheless frustrates the purposes of the
M-ELO+CB order type may be subject to penalties or other participant
requirements to discourage such behavior, should it occur.\36\
---------------------------------------------------------------------------
\34\ See Amendment No. 2, supra note 6, at 9.
\35\ See id. The Exchange states that this monitoring may
include metrics tied to participant behavior, such as the percentage
of M-ELO+CBs that are cancelled prior to the completion of the
Holding Period, the average duration of M-ELO+CBs, and the
percentage of M-ELO+CBs where the NBBO midpoint is within the limit
price when received. See id.
\36\ See id. Should the Exchange determine that they are
necessary to maintain a fair and orderly market, any punitive fees
or other participant requirements tied to M-ELO+CB usage would be
implemented by rule filing under Section 19(b) of the Act. See id.
at 9 n.11.
---------------------------------------------------------------------------
The Exchange plans to implement M-ELO+CB within thirty days after
its approval, and will announce the specific implementation date by
Equity Trader Alert.\37\ The Exchange states that it will make M-ELO+CB
available to all members and to all securities upon implementation.\38\
---------------------------------------------------------------------------
\37\ See id. at 11. The Exchange notes that it plans to propose
a fee structure for M-ELO+CB in a subsequent proposed rule change.
See id. at 11 n.13.
\38\ See id. at 11.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment Nos. 2 and 3, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\39\ In particular, the
Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\40\ 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, and that the rules are not designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers; and Section 6(b)(8) of the Act,\41\ which requires that the
rules of a national securities exchange not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
---------------------------------------------------------------------------
\39\ 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).
\40\ 15 U.S.C. 78f(b)(5).
\41\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Commission has carefully considered the proposal and finds that
it is consistent with the Act. In its original order approving M-ELO on
the Exchange, the Commission noted its belief that the M-ELO order type
could create additional and more efficient trading opportunities on the
Exchange for investors with longer investment time horizons, including
institutional investors, and could provide these investors with an
ability to limit the information leakage and the market impact that
could result from their orders.\42\ While M-ELOs are currently limited
to executing only against other M-ELOs, the Commission believes that
the Exchange's proposal to introduce M-ELO+CBs, which would be able to
interact with eligible Midpoint Orders, in addition to M-ELO+CBs and M-
ELOs, could create opportunities for Exchange participants to utilize a
variation of the M-ELO order type consistent with the intended purpose
of the order type. In particular, the proposal would provide Exchange
participants with the flexibility to allow their orders to interact
with ``M-ELO-like'' interest on the Exchange's order book. As with M-
ELOs, the Commission believes that M-ELO+CBs represent a reasonable
effort to further enhance the
[[Page 48981]]
ability of longer-term trading interest to participate effectively on
an exchange.
---------------------------------------------------------------------------
\42\ See Original M-ELO Approval Order, supra note 8, at 10938-
39.
---------------------------------------------------------------------------
The Commission also believes that the proposal to use the midpoint
trade now order attribute to allow Midpoint Orders to execute against
M-ELO+CBs would provide Exchange participants entering Midpoint Orders
with additional control over the execution of their orders,
specifically by allowing participants to choose whether to enable the
order attribute in order to execute against M-ELO+CBs.
The Commission believes that the proposal to include M-ELO+CB
executions in the Exchange's published statistics for M-ELO executions
is reasonably designed to provide additional transparency regarding M-
ELO+CB executions on the Exchange without undermining the usefulness of
the M-ELO and M-ELO+CB order types by limiting the potential
information leakage and the resulting market impact that could be
associated with non-delayed identification of individual M-ELO or M-
ELO+CB executions.
Finally, the Commission believes that the Exchange's proposed
surveillance measures are reasonably designed to deter potential
improper use of the proposed M-ELO+CB order type. In particular, the
Commission notes that the Exchange has represented that, as it does for
M-ELOs, it will conduct real-time surveillance to monitor the use of M-
ELO+CBs and ensure that such usage is appropriately tied to the intent
of the order type.\43\ The Exchange has also represented that it will
continue to evaluate whether additional measures may be necessary to
ensure that M-ELO+CBs are used in a manner consistent with the intended
purpose of the order type.\44\
---------------------------------------------------------------------------
\43\ See Amendment No 2, supra note 6, at 9.
\44\ See id.
---------------------------------------------------------------------------
Based on the foregoing and the Exchange's representations in its
proposal, the Commission finds that the proposed rule change, as
modified by Amendment Nos. 2 and 3, is consistent with the Act.
IV. Solicitation of Comments on Amendment Nos. 2 and 3 to the Proposed
Rule Change
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment Nos. 2 and 3 are 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-2019-048 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-2019-048. 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-2019-048, and should be submitted
on or before October 8, 2019.
V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment Nos. 2 and 3
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment Nos. 2 and 3, prior to the thirtieth
day after the date of publication of notice of the filing of Amendment
Nos. 2 and 3 in the Federal Register. As discussed above, in Amendment
No. 2, the Exchange revised the proposal to: (1) Explain in greater
detail the order entry protocols available for M-ELO+CBs; (2) provide
additional specificity about the resting period for Midpoint Orders;
(3) provide additional specificity about the execution priority of M-
ELO+CBs, M-ELOs, and Midpoint Orders; (4) conform the proposal to a
recently approved proposed rule change permitting M-ELOs to be entered
in odd-lot sizes; (5) specify that any punitive fees or participant
requirements determined to be necessary by the Exchange for M-ELO+CB
usage would be implemented pursuant to a future proposed rule change;
and (6) make technical, clarifying, and conforming changes. Also as
discussed above, in Amendment No. 3, the Exchange further revised the
proposal to: (1) Clarify that the statistical information it proposes
to publish for M-ELO+CBs would be aggregated with the statistical
information it currently publishes for M-ELOs; (2) clarify the
circumstances in which modification of a M-ELO+CB or Midpoint Order
would trigger a new holding or resting period; and (3) make technical
and conforming changes. The Commission believes that Amendment Nos. 2
and 3 do not raise any novel regulatory issues or make any significant
substantive changes to the original proposal, which was subject to a
full notice and comment period during which no comments were received.
The Commission also notes that Amendment Nos. 2 and 3 provide
additional accuracy, clarity, and justification to the proposal.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\45\ to approve the proposed rule change, as
modified by Amendment Nos. 2 and 3, on an accelerated basis.
---------------------------------------------------------------------------
\45\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\46\ that the proposed rule change (SR-NASDAQ-2019-048), as
modified by Amendment Nos. 2 and 3, be, and hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------
\46\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\47\
---------------------------------------------------------------------------
\47\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-20018 Filed 9-16-19; 8:45 am]
BILLING CODE 8011-01-P
