Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Correct and Clarify Rules 4702(b)(3)(B) and 4703(d), 14252-14256 [2020-04913]
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Federal Register / Vol. 85, No. 48 / Wednesday, March 11, 2020 / Notices
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
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Extension:
Form 144, SEC File No. 270–112, OMB
Control No. 3235–0101.
16:37 Mar 10, 2020
Jkt 250001
[FR Doc. 2020–04944 Filed 3–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form 144 (17 CFR 239.144) is used to
report the sale of securities during any
three-month period that exceeds 5,000
shares or other units or has an aggregate
sales price that does not exceed $50,000.
Under Sections 2(a)(11), 4(a)(1), 4a(2),
4(a)(4) and 19(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)(11), 77d(a)(1),
77d(a)(2), 77d(a)(4) and 77s (a)) and
Rule 144 (17 CFR 230.144) there under,
the Commission is authorize to solicit
the information required to be supplied
by Form 144. Form 144 takes
approximately 1 burden hour per
response and is filed by 400
respondents for a total of 400 total
burden hours.
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collections
of information on respondents,
including through the use of automated
collection techniques or other forms of
information technology. Consideration
will be given to comments and
suggestions submitted in writing within
60 days of this publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
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Dated: March 6, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[Release No. 34–88331; File No. SR–
NYSEAMER–2020–03]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Designation
of Longer Period for Commission
Action on Proposed Rule Change To
Amend the Rule 6800 Series, the
Exchange’s Compliance Rule
Regarding the National Market System
Plan Governing the Consolidated Audit
Trail
March 5, 2020.
On January 3, 2020, NYSE American
LLC (‘‘NYSE American’’ 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 the Exchange’s
compliance rule regarding the National
Market System Plan Governing the
Consolidated Audit Trail. The proposed
rule change was published for comment
in the Federal Register on January 23,
2020.3 The Commission has received no
comment letters on the proposed rule
change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is March 8, 2020.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 87989
(January 16, 2020), 85 FR 3995.
4 15 U.S.C. 78s(b)(2).
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
19(b)(2)(A)(ii)(I) of the Act 5 and for the
reasons stated above, the Commission
designates April 22, 2020, as the date by
which the Commission shall either
approve, disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NYSEAMER–2020–03).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–04909 Filed 3–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88322; File No. SR–BX–
2020–003]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Correct and Clarify
Rules 4702(b)(3)(B) and 4703(d)
March 5, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
26, 2020, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to a proposal
to correct and clarify Rules 4702(b)(3)(B)
and 4703(d).
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqbx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
1 15
2 17
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Sfmt 4703
5 15
U.S.C. 78s(b)(2)(A)(ii)(I).
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
6 17
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Federal Register / Vol. 85, No. 48 / Wednesday, March 11, 2020 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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The Exchange proposes to amend
Rules 4702 and 4703 to correct and
clarify its various descriptions of the
circumstances in which the Exchange
will cancel certain types of midpoint
pegged Orders 3 after they post to the
Exchange Book 4 and the National Best
Bid and National Best Offer (‘‘NBBO’’)
or the Inside Bid and Inside Offer
subsequently shifts.5 The Exchange
intended for these descriptions to be
consistent and comprehensive, but upon
review, they are somewhat discordant
and confusing.
In 2015, the Exchange restated its
Rules that describe its Order Types
(Rule 4702) and Attributes (Rule 4703).6
Among the topics that the restated Rules
described were the circumstances in
which the Exchange cancels orders
3 Pursuant to Rule 4701(e), the term ‘‘Order’’
means an instruction to trade a specified number
of shares in a specified System Security submitted
to the System by a Participant. An ‘‘Order Type’’
is a standardized set of instructions associated with
an Order that define how it will behave with
respect to pricing, execution, and/or posting to the
Exchange Book when submitted to the System. An
‘‘Order Attribute’’ is a further set of variable
instructions that may be associated with an Order
to further define how it will behave with respect to
pricing, execution, and/or posting to the Exchange
Book when submitted to the System.
4 Pursuant to Rule 4701(a)(1), the ‘‘Exchange
Book’’ refers to a montage for Quotes and Orders
that collects and ranks all Quotes and Orders
submitted by Participants. The term ‘‘Quote’’ means
a single bid or offer quotation submitted to the
System by a Market Maker or Equities ECN and
designated for display (price and size) next to the
Participant’s MPID in the Exchange Book. See Rule
4701(d).
5 Pursuant to Rule 4703(d), the terms ‘‘Inside Bid’’
and ‘‘Inside Offer’’ mean the price to which an
Order is pegged for purposes of Rule 4703. The term
‘‘Midpoint’’ means the midpoint of the NBBO or the
Inside Bid and Inside Offer.
6 See Securities Exchange Act Release No. 34–
75291 (June 24, 2015), 80 FR 37698 (July 1, 2015)
(SR–BX–2015–015).
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priced at the Midpoint of the NBBO (the
Inside Bid and the Inside Offer) or
priced at their limit price when the
NBBO (the Inside Bid and the Inside
Offer) changes after the order posts to
the Exchange Book. The Exchange
described these circumstances in two
different provisions of its Rules
pertaining to Orders with Midpoint
pegging (‘‘Midpoint-Pegged Orders’’).
First, in Rule 4702(b)(3)(B), the
Exchange states as follows in describing
the cancellation of a Non-Displayed
Order with a Midpoint Pegging Order
Attribute assigned to it:
If a Non-Displayed Order entered
through OUCH or FLITE is assigned a
Midpoint Pegging Order Attribute, and
if, after being posted to the Exchange
Book, the NBBO changes so that the
Non-Displayed Order is no longer at the
Midpoint between the NBBO, the NonDisplayed Order will be cancelled back
to the Participant. In addition, if a NonDisplayed Order entered through OUCH
or FLITE is assigned a Midpoint Pegging
Attribute and also has a limit price that
is lower than the midpoint between the
NBBO for an Order to buy (higher than
the midpoint between the NBBO for an
Order to sell), the Order will
nevertheless be accepted at its limit
price and will be cancelled if the
midpoint between the NBBO moves
lower than (higher than) the price of an
Order to buy (sell).
Second, in describing the Midpoint
Pegging Attribute, Rule 4703(d) explains
when the Exchange will cancel an Order
with this Attribute enabled:
An Order entered through OUCH or
FLITE with Midpoint Pegging will have
its price set upon initial entry to the
Midpoint, unless the Order has a limit
price that is lower than the Midpoint for
an Order to buy (higher than the
Midpoint for an Order to sell), in which
case the Order will be ranked on the
Exchange Book at its limit price.
Thereafter, if the NBBO changes so that:
the Midpoint is lower than (higher than)
the price of an Order to buy (sell), the
Pegged Order will be cancelled back to
the Participant.
The Exchange intended for these two
Rules to be substantively identical. That
is, the Rules should have provided for
the Exchange to cancel Midpoint-Pegged
Orders in the same circumstances when
entered through OUCH or FLITE. Upon
review, however, the Exchange has
determined that the Rules provide
somewhat opaque descriptions of the
circumstances in which a change in the
NBBO/Inside Bid and Inside Offer will
and will not result in the cancellation of
a Midpoint-Pegged Order. Each Rule
states that the Exchange will cancel an
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14253
Order to buy (sell) if, after entry, the
NBBO/Inside Bid and Inside Offer shifts
so that the Midpoint is lower (higher)
than the price of the buy (sell) Order.
However, these descriptions in the
Rules do not clearly distinguish
between Midpoint-Pegged Orders that
post to the Exchange Book at the
Midpoint of the NBBO/Inside Bid and
Inside Offer (i.e., orders with limit
prices more aggressive than the
Midpoint) from those Orders that post to
the Book at their limit prices (i.e., orders
with limit prices at or less aggressive
than the Midpoint). In the former case,
any post-entry shift in the Midpoint of
the NBBO/Inside Bid and Inside Offer
will result in cancellation of the Order.
In the latter case, however, a post-entry
shift in the Midpoint of the NBBO/
Inside Bid and Inside Offer will result
in cancellation only if the Midpoint
shifts lower than (higher than) the limit
price of an Order to buy (sell). If the
Midpoint is higher than (lower than) the
limit price of an Order to buy (sell)
upon Order entry, and it remains so
after shifting, then the Order will
remain on the Book at its limit price.
The Exchange believes that this result is
implicit in the notion that these Order
Types may post to the Exchange Book
at their limit prices when the Midpoints
are higher (lower) than the limit prices
of Orders to buy (sell). Nevertheless, the
Rules do not describe this scenario
expressly.
Similarly, the Rules do not
distinguish the particular circumstances
in which a crossed Inside Bid and
Inside Offer will and will not result in
a cancellation of an Order. The
Midpoint Pegging Attribute rule simply
states that the Exchange will cancel
Orders when the Inside Bid and Inside
Offer becomes crossed after these Orders
are posted to the Exchange Book.
However, the Exchange will only cancel
a Midpoint-Pegged Order that is ranked
at its limit price where the Inside Bid
and Inside Offer become crossed, such
that the Midpoint of the crossed
quotation remains equal to or higher
(lower) than the limit price of the Order
to buy (sell), and a new sell (buy) Order
is received at a price that locks or
crosses the limit price of the resting
Midpoint-Pegged Order. If an Order to
buy (sell) posts to the Exchange Book at
its limit price, and the Inside Bid and
Inside Offer subsequently become
crossed but the Midpoint remains equal
to or higher than (lower than) the limit
price of the Order (and there are no
contra-side orders that lock or cross the
Order), then the Exchange will not
cancel the Order. Likewise, if a
Midpoint-Pegged Order is ranked at the
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Midpoint of the Inside Bid and Inside
Offer and the Inside Bid and Inside
Offer becomes crossed but the Midpoint
does not change, then the Exchange will
not cancel the order unless a new Order
is received at a price that locks or
crosses the Midpoint of the Inside Bid
and Inside Offer.
To address the foregoing issues and to
increase clarity, the Exchange proposes
to amend and restate Rules 4702(b)(3)(B)
and 4703(d), as follows.
First, the Exchange proposes to delete
entirely the language of Rule
4702(b)(3)(B) excerpted above. This
language, which again describes the
behavior of a Non-Displayed Order with
a Midpoint Pegging Attribute enabled, is
duplicative of the general description of
the behavior of a Midpoint Pegging
Attribute in Rule 4703(d). The Exchange
believes that the concept described in
these two Rules is best stated only once
to avoid unintended discrepancies. In
this instance, the Exchange believes that
the language is most appropriate for
inclusion in Rule 4703(d).
Second, the Exchange proposes to
restate the relevant language of Rule
4703(d) as follows:
An Order entered through OUCH or
FLITE with Midpoint Pegging will have
its price set upon initial entry to the
Midpoint, unless the Order has a limit
price, and that limit price is lower than
the Midpoint for an Order to buy (higher
than the Midpoint for an Order to sell),
in which case the Order will be ranked
on the Exchange Book at its limit price.
The price of the Order will not
thereafter be adjusted based on changes
to the Inside Bid or Offer. However, an
Order with Midpoint Pegging entered
through OUCH or FLITE will be
cancelled back to the Participant after
initial entry and posting to the Exchange
Book if any of the following conditions
are met:
• There is no Inside Bid and/or Inside
Offer;
• The Order to buy (sell) is entered
with a limit price above (below) the
Midpoint and is ranked at the Midpoint;
thereafter the Inside Bid and/or Inside
Offer change so that the Midpoint
changes and the Order is no longer at
the Midpoint;
• The Order to buy (sell) is entered at
a limit price that is equal to or less than
(greater than) the Midpoint and is
ranked at its limit price; thereafter, the
Inside Bid and/or Inside Offer change so
that the Midpoint is lower (higher) than
the limit price of the Order;
• The Order to buy (sell) is entered at
a limit price that is equal to or less than
(greater than) the Midpoint and is
ranked at its limit price; thereafter, the
Inside Bid and Inside Offer become
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crossed, such that the Midpoint of the
crossed Quotation remains equal to or
higher (lower) than the limit price of the
Order, and then a new sell (buy) Order
is received at a price that locks or
crosses the limit price of the resting
Order marked for Midpoint Pegging; or
• The Order to buy (sell) is entered at
a limit price that is greater than (less
than) the Midpoint and is therefore
ranked at the Midpoint; thereafter, the
Inside Bid and Inside Offer become
crossed but the Midpoint does not
change, and then a new sell (buy) Order
is received at a price that locks or
crosses the Midpoint of the Inside Bid
and Inside Offer.
The Exchange believes that the
restated language is more precise than
the existing language because it
specifies that the Exchange will cancel
an Order with Midpoint Pegging that
posts to the Exchange Book at its limit
price, when the Inside Bid and Inside
Offer later shift, only when the Inside
Bid and Inside Offer shift so that the
Midpoint of the Inside Bid and Inside
Offer becomes lower (higher) than the
limit price of an Order to buy (sell).
Again, where the Inside Bid and Inside
Offer shift after the Order posts such
that the Midpoint of the Inside Bid and
Inside Offer remains or becomes higher
(lower) than the limit price of an Order
to buy (sell), cancellation of the Order
is unnecessary because the Order can
simply remain on the Exchange Book at
its limit price. The restated language is
also more precise because it specifies
that for an Order with Midpoint Pegging
with a limit price that is more aggressive
than the Midpoint of the Inside Bid and
Inside Offer, any change to the Midpoint
will result in cancellation of the Order.
Likewise, the restated language is
more precise than the existing language
in that the restated language specifies
that the Exchange will cancel an Order
with Midpoint Pegging to buy (sell) that
posts at its limit price, when the Inside
Bid and Inside Offer subsequently
become crossed and the Midpoint of the
crossed Inside Bid and Inside Offer
remains equal to or higher (lower) than
the limit price of the Order to buy (sell),
only when a new sell (buy) Order is
received at a price that locks or crosses
the limit price of the resting Order. The
restated language also specifies that the
Exchange will cancel an Order with
Midpoint Pegging to buy (sell) that posts
at the Midpoint of the Inside Bid and
Inside Offer, when the Inside Bid and
Inside Offer subsequently become
crossed and the Midpoint of the crossed
Inside Bid and Inside Offer remains the
same, only when the Exchange receives
a new sell (buy) Order at a price that
locks or crosses the Midpoint of the
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Fmt 4703
Sfmt 4703
Inside Bid and Inside Offer. Other than
in these two circumstances, cancellation
of an Order simply because the Inside
Bid and Inside Offer cross is
unnecessary because the Order need not
be re-priced. When an Order to buy
(sell) is ranked at its limit price, and the
Inside Bid and Inside Offer become
crossed while the Midpoint remains at
or above (below) the limit price, the
crossed market does not impact the
Order, which can still rest on the
Exchange Book at its limit price because
the Inside Bid and Inside Offer could
uncross prior to the Order executing.
Likewise, when an Order to buy (sell) is
ranked at the Midpoint of the Inside Bid
and Inside Offer, and the Inside Bid and
Inside Offer become crossed but the
Midpoint does not change, the crossed
market also does not impact the Order,
which can continue to rest on the
Exchange Book at the Midpoint because
the Inside Bid and Inside Offer could
uncross (with the Midpoint still
remaining unchanged) prior to the
Order executing.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,7 in general, and furthers the
objectives of Section 6(b)(5) of the Act,8
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest.
The proposal will protect investors by
amending Rules 4702 and 4703 so that
they will describe more clearly what the
Rules currently imply with respect to
the circumstances in which the
Exchange will not cancel MidpointPegged Orders. That is, the Exchange
believes that concept of a limit price
fairly implies that the Exchange has no
need to and thus, it does not presently,
cancel a Midpoint-Pegged Order to buy
(sell) when such an Order is posted at
its limit price and the Inside Bid and
Inside Offer shifts thereafter but the
Midpoint remains above (below) the
limit price; however, Rule 4702(a)(3)(B)
merely states that any post-entry shift in
the Midpoint will result in the
cancellation of a Midpoint-Pegged
Order. To avoid confusion, the proposal
clarifies that the Exchange will cancel a
Midpoint-Pegged Order posted at its
limit price if the Inside Bid and Inside
Offer shifts after entry such that the
Midpoint becomes lower (higher) than
the limit price. In this circumstance,
7 15
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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cancellation is warranted because the
Order would need to be re-priced, and
a Midpoint-Pegged Order entered using
OUCH or FLITE cannot be re-priced.
Similarly, if a Midpoint-Pegged Order
posts to the Exchange Book at the
Midpoint of the Inside Bid and Inside
Offer and then the Midpoint shifts in
either direction, the Order will be
cancelled because it would need to be
re-priced, and again, OUCH or FLITE do
not allow for re-pricing to occur.
Similarly, the Exchange believes that
it is helpful to investors to clarify the
circumstances in which the Exchange
does and does not cancel MidpointPegged Orders in a crossed market. Rule
4703(d) states generally that the
Exchange will cancel Midpoint-Pegged
Orders if the Inside Bid and Inside Offer
become crossed. However, as discussed
above, the Exchange does not need to,
and thus it does not presently, cancel
Midpoint-Pegged Orders in all such
instances. Although cancellation is
warranted to prevent Orders from
actually executing in a crossed market,9
the Exchange does not believe that
cancellation is warranted simply
because the markets cross if there
remains a possibility that the markets
will uncross prior to an execution
occurring. Thus, the Exchange proposes
that it will not cancel a MidpointPegged Order to buy (sell) when the
Order is ranked at its limit price and the
Inside Bid and Inside Offer become
crossed thereafter (and the Midpoint
remains equal to or more aggressive
than its limit price), but no new sell
(buy) Order is received that locks or
crosses the limit price of the resting
Midpoint-Pegged Order. Unless or until
the Exchange receives a new Order that
locks or crosses the limit price of the
resting Midpoint-Pegged Order while
the market remains crossed,
cancellation is unnecessary because the
Midpoint-Pegged Order can continue to
rest at its limit price and the market may
uncross before the Midpoint-Pegged
Order executes. Likewise, as was also
discussed above, the Exchange proposes
that it will not cancel a MidpointPegged Order that is ranked at the
Midpoint of the Inside Bid and Inside
Offer where the market becomes
crossed, provided that while the market
is crossed, the Midpoint of the crossed
Inside Bid and Inside Offer does not
change, and the Exchange does not
receive a new Order that would lock or
cross the Midpoint. Again, cancellation
9 See Securities Exchange Act Release No. 34–
79290 (Nov. 10, 2016), 81 FR 81184, 81186 (Nov.
17, 2016) (stating that the ‘‘midpoint of a crossed
market is not a clear and accurate indication of a
valid price’’ and that cancellation in a crossed
market ‘‘would avoid mispriced executions’’).
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is unnecessary in this scenario because
the Midpoint-Pegged Order can
continue to rest at the Midpoint while
the market is crossed and because the
market may uncross (with the Midpoint
remaining unchanged) prior to
execution of the Order.10
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange intends for the proposal to
improve the precision with which the
Rules describe the circumstances in
which it will cancel Midpoint-Pegged
Orders after entry, as described above.
The Exchange does not expect that these
changes will have any impact
whatsoever on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) thereunder.12
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
10 If at any point after the Midpoint-Pegged Order
posts to the Exchange Book at the Midpoint, the
Inside Bid and Inside Offer changes so that the
price of the Order is no longer at the Midpoint, then
the order must be cancelled because orders entered
through OUCH or FLITE cannot be re-priced.
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
14255
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2020–003 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–BX–2020–003. 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
E:\FR\FM\11MRN1.SGM
11MRN1
14256
Federal Register / Vol. 85, No. 48 / Wednesday, March 11, 2020 / Notices
Number SR–BX–2020–003, and should
be submitted on or before April 1, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–04913 Filed 3–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–456, OMB Control No.
3235–0515]
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
lotter on DSKBCFDHB2PROD with NOTICES
Extension:
Schedule TO
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Schedule TO (17 CFR 240.14d–100)
must be filed by a reporting company
that makes a tender offer for its own
securities. Also, persons other than the
reporting company making a tender
offer for equity securities registered
under Section 12 of the Exchange Act
(15 U.S.C. 78l) (which offer, if
consummated, would cause that person
to own over 5% of that class of the
securities) must file Schedule TO. The
purpose of Schedule TO is to improve
communications between public
companies and investors before
companies file registration statements
involving tender offer statements.
Schedule TO takes approximately 43.5
hours per response and is filed by
approximately 816 issuers annually. We
estimate that 50% of the 43.5 hours per
response (21.75 hours) is prepared by
the issuer for an annual reporting
burden of 17,748 hours (21.75 hours per
response × 816 responses).
Written comments are invited on: (a)
Whether this collection of information
is necessary for the proper performance
of the functions of the agency, including
whether the information will have
practical utility; (b) the accuracy of the
agency’s estimate of the burden imposed
by the collection of information; (c)
ways to enhance the quality, utility, and
clarity of the information collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: March 6, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–04951 Filed 3–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88335; File No. SR–
NYSECHX–2020–01]
Self-Regulatory Organizations; NYSE
Chicago, Inc.; Notice of Designation of
Longer Period for Commission Action
on Proposed Rule Change, as Modified
by Amendment No. 1, To Amend the
Rule 6.6800 Series, the Exchange’s
Compliance Rule Regarding the
National Market System Plan
Governing the Consolidated Audit Trail
March 5, 2020.
On January 3, 2020, NYSE Chicago,
Inc. (‘‘NYSE Chicago’’ 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 the Exchange’s
compliance rule regarding the National
Market System Plan Governing the
Consolidated Audit Trail. On January
14, 2020, the Exchange filed
Amendment No. 1 to the proposal. The
proposed rule change, as modified by
Amendment No. 1, was published for
comment in the Federal Register on
1 15
13 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
16:37 Mar 10, 2020
2 17
Jkt 250001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00073
Fmt 4703
Sfmt 4703
January 23, 2020.3 The Commission has
received no comment letters on the
proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is March 8, 2020.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change, as
modified by Amendment No. 1.
Accordingly, pursuant to Section
19(b)(2)(A)(ii)(I) of the Act 5 and for the
reasons stated above, the Commission
designates April 22, 2020, as the date by
which the Commission shall either
approve, disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change,
as modified by Amendment No. 1 (File
No. SR–NYSECHX–2020–01).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–04911 Filed 3–10–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Form D; SEC File No. 270–072, OMB
Control No. 3235–0076
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
3 See Securities Exchange Act Release No. 87988
(January 16, 2020), 85 FR 4028.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2)(A)(ii)(I).
6 17 CFR 200.30–3(a)(31).
E:\FR\FM\11MRN1.SGM
11MRN1
]]>Agencies
[Federal Register Volume 85, Number 48 (Wednesday, March 11, 2020)]
[Notices]
[Pages 14252-14256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04913]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88322; File No. SR-BX-2020-003]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Correct and
Clarify Rules 4702(b)(3)(B) and 4703(d)
March 5, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 26, 2020, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to a proposal to correct and clarify Rules
4702(b)(3)(B) and 4703(d).
The text of the proposed rule change is available on the Exchange's
website at https://nasdaqbx.cchwallstreet.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
[[Page 14253]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rules 4702 and 4703 to correct and
clarify its various descriptions of the circumstances in which the
Exchange will cancel certain types of midpoint pegged Orders \3\ after
they post to the Exchange Book \4\ and the National Best Bid and
National Best Offer (``NBBO'') or the Inside Bid and Inside Offer
subsequently shifts.\5\ The Exchange intended for these descriptions to
be consistent and comprehensive, but upon review, they are somewhat
discordant and confusing.
---------------------------------------------------------------------------
\3\ Pursuant to Rule 4701(e), the term ``Order'' means an
instruction to trade a specified number of shares in a specified
System Security submitted to the System by a Participant. An ``Order
Type'' is a standardized set of instructions associated with an
Order that define how it will behave with respect to pricing,
execution, and/or posting to the Exchange Book when submitted to the
System. An ``Order Attribute'' is a further set of variable
instructions that may be associated with an Order to further define
how it will behave with respect to pricing, execution, and/or
posting to the Exchange Book when submitted to the System.
\4\ Pursuant to Rule 4701(a)(1), the ``Exchange Book'' refers to
a montage for Quotes and Orders that collects and ranks all Quotes
and Orders submitted by Participants. The term ``Quote'' means a
single bid or offer quotation submitted to the System by a Market
Maker or Equities ECN and designated for display (price and size)
next to the Participant's MPID in the Exchange Book. See Rule
4701(d).
\5\ Pursuant to Rule 4703(d), the terms ``Inside Bid'' and
``Inside Offer'' mean the price to which an Order is pegged for
purposes of Rule 4703. The term ``Midpoint'' means the midpoint of
the NBBO or the Inside Bid and Inside Offer.
---------------------------------------------------------------------------
In 2015, the Exchange restated its Rules that describe its Order
Types (Rule 4702) and Attributes (Rule 4703).\6\ Among the topics that
the restated Rules described were the circumstances in which the
Exchange cancels orders priced at the Midpoint of the NBBO (the Inside
Bid and the Inside Offer) or priced at their limit price when the NBBO
(the Inside Bid and the Inside Offer) changes after the order posts to
the Exchange Book. The Exchange described these circumstances in two
different provisions of its Rules pertaining to Orders with Midpoint
pegging (``Midpoint-Pegged Orders'').
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 34-75291 (June 24,
2015), 80 FR 37698 (July 1, 2015) (SR-BX-2015-015).
---------------------------------------------------------------------------
First, in Rule 4702(b)(3)(B), the Exchange states as follows in
describing the cancellation of a Non-Displayed Order with a Midpoint
Pegging Order Attribute assigned to it:
If a Non-Displayed Order entered through OUCH or FLITE is assigned
a Midpoint Pegging Order Attribute, and if, after being posted to the
Exchange Book, the NBBO changes so that the Non-Displayed Order is no
longer at the Midpoint between the NBBO, the Non-Displayed Order will
be cancelled back to the Participant. In addition, if a Non-Displayed
Order entered through OUCH or FLITE is assigned a Midpoint Pegging
Attribute and also has a limit price that is lower than the midpoint
between the NBBO for an Order to buy (higher than the midpoint between
the NBBO for an Order to sell), the Order will nevertheless be accepted
at its limit price and will be cancelled if the midpoint between the
NBBO moves lower than (higher than) the price of an Order to buy
(sell).
Second, in describing the Midpoint Pegging Attribute, Rule 4703(d)
explains when the Exchange will cancel an Order with this Attribute
enabled:
An Order entered through OUCH or FLITE with Midpoint Pegging will
have its price set upon initial entry to the Midpoint, unless the Order
has a limit price that is lower than the Midpoint for an Order to buy
(higher than the Midpoint for an Order to sell), in which case the
Order will be ranked on the Exchange Book at its limit price.
Thereafter, if the NBBO changes so that: the Midpoint is lower than
(higher than) the price of an Order to buy (sell), the Pegged Order
will be cancelled back to the Participant.
The Exchange intended for these two Rules to be substantively
identical. That is, the Rules should have provided for the Exchange to
cancel Midpoint-Pegged Orders in the same circumstances when entered
through OUCH or FLITE. Upon review, however, the Exchange has
determined that the Rules provide somewhat opaque descriptions of the
circumstances in which a change in the NBBO/Inside Bid and Inside Offer
will and will not result in the cancellation of a Midpoint-Pegged
Order. Each Rule states that the Exchange will cancel an Order to buy
(sell) if, after entry, the NBBO/Inside Bid and Inside Offer shifts so
that the Midpoint is lower (higher) than the price of the buy (sell)
Order. However, these descriptions in the Rules do not clearly
distinguish between Midpoint-Pegged Orders that post to the Exchange
Book at the Midpoint of the NBBO/Inside Bid and Inside Offer (i.e.,
orders with limit prices more aggressive than the Midpoint) from those
Orders that post to the Book at their limit prices (i.e., orders with
limit prices at or less aggressive than the Midpoint). In the former
case, any post-entry shift in the Midpoint of the NBBO/Inside Bid and
Inside Offer will result in cancellation of the Order. In the latter
case, however, a post-entry shift in the Midpoint of the NBBO/Inside
Bid and Inside Offer will result in cancellation only if the Midpoint
shifts lower than (higher than) the limit price of an Order to buy
(sell). If the Midpoint is higher than (lower than) the limit price of
an Order to buy (sell) upon Order entry, and it remains so after
shifting, then the Order will remain on the Book at its limit price.
The Exchange believes that this result is implicit in the notion that
these Order Types may post to the Exchange Book at their limit prices
when the Midpoints are higher (lower) than the limit prices of Orders
to buy (sell). Nevertheless, the Rules do not describe this scenario
expressly.
Similarly, the Rules do not distinguish the particular
circumstances in which a crossed Inside Bid and Inside Offer will and
will not result in a cancellation of an Order. The Midpoint Pegging
Attribute rule simply states that the Exchange will cancel Orders when
the Inside Bid and Inside Offer becomes crossed after these Orders are
posted to the Exchange Book. However, the Exchange will only cancel a
Midpoint-Pegged Order that is ranked at its limit price where the
Inside Bid and Inside Offer become crossed, such that the Midpoint of
the crossed quotation remains equal to or higher (lower) than the limit
price of the Order to buy (sell), and a new sell (buy) Order is
received at a price that locks or crosses the limit price of the
resting Midpoint-Pegged Order. If an Order to buy (sell) posts to the
Exchange Book at its limit price, and the Inside Bid and Inside Offer
subsequently become crossed but the Midpoint remains equal to or higher
than (lower than) the limit price of the Order (and there are no
contra-side orders that lock or cross the Order), then the Exchange
will not cancel the Order. Likewise, if a Midpoint-Pegged Order is
ranked at the
[[Page 14254]]
Midpoint of the Inside Bid and Inside Offer and the Inside Bid and
Inside Offer becomes crossed but the Midpoint does not change, then the
Exchange will not cancel the order unless a new Order is received at a
price that locks or crosses the Midpoint of the Inside Bid and Inside
Offer.
To address the foregoing issues and to increase clarity, the
Exchange proposes to amend and restate Rules 4702(b)(3)(B) and 4703(d),
as follows.
First, the Exchange proposes to delete entirely the language of
Rule 4702(b)(3)(B) excerpted above. This language, which again
describes the behavior of a Non-Displayed Order with a Midpoint Pegging
Attribute enabled, is duplicative of the general description of the
behavior of a Midpoint Pegging Attribute in Rule 4703(d). The Exchange
believes that the concept described in these two Rules is best stated
only once to avoid unintended discrepancies. In this instance, the
Exchange believes that the language is most appropriate for inclusion
in Rule 4703(d).
Second, the Exchange proposes to restate the relevant language of
Rule 4703(d) as follows:
An Order entered through OUCH or FLITE with Midpoint Pegging will
have its price set upon initial entry to the Midpoint, unless the Order
has a limit price, and that limit price is lower than the Midpoint for
an Order to buy (higher than the Midpoint for an Order to sell), in
which case the Order will be ranked on the Exchange Book at its limit
price. The price of the Order will not thereafter be adjusted based on
changes to the Inside Bid or Offer. However, an Order with Midpoint
Pegging entered through OUCH or FLITE will be cancelled back to the
Participant after initial entry and posting to the Exchange Book if any
of the following conditions are met:
There is no Inside Bid and/or Inside Offer;
The Order to buy (sell) is entered with a limit price
above (below) the Midpoint and is ranked at the Midpoint; thereafter
the Inside Bid and/or Inside Offer change so that the Midpoint changes
and the Order is no longer at the Midpoint;
The Order to buy (sell) is entered at a limit price that
is equal to or less than (greater than) the Midpoint and is ranked at
its limit price; thereafter, the Inside Bid and/or Inside Offer change
so that the Midpoint is lower (higher) than the limit price of the
Order;
The Order to buy (sell) is entered at a limit price that
is equal to or less than (greater than) the Midpoint and is ranked at
its limit price; thereafter, the Inside Bid and Inside Offer become
crossed, such that the Midpoint of the crossed Quotation remains equal
to or higher (lower) than the limit price of the Order, and then a new
sell (buy) Order is received at a price that locks or crosses the limit
price of the resting Order marked for Midpoint Pegging; or
The Order to buy (sell) is entered at a limit price that
is greater than (less than) the Midpoint and is therefore ranked at the
Midpoint; thereafter, the Inside Bid and Inside Offer become crossed
but the Midpoint does not change, and then a new sell (buy) Order is
received at a price that locks or crosses the Midpoint of the Inside
Bid and Inside Offer.
The Exchange believes that the restated language is more precise
than the existing language because it specifies that the Exchange will
cancel an Order with Midpoint Pegging that posts to the Exchange Book
at its limit price, when the Inside Bid and Inside Offer later shift,
only when the Inside Bid and Inside Offer shift so that the Midpoint of
the Inside Bid and Inside Offer becomes lower (higher) than the limit
price of an Order to buy (sell). Again, where the Inside Bid and Inside
Offer shift after the Order posts such that the Midpoint of the Inside
Bid and Inside Offer remains or becomes higher (lower) than the limit
price of an Order to buy (sell), cancellation of the Order is
unnecessary because the Order can simply remain on the Exchange Book at
its limit price. The restated language is also more precise because it
specifies that for an Order with Midpoint Pegging with a limit price
that is more aggressive than the Midpoint of the Inside Bid and Inside
Offer, any change to the Midpoint will result in cancellation of the
Order.
Likewise, the restated language is more precise than the existing
language in that the restated language specifies that the Exchange will
cancel an Order with Midpoint Pegging to buy (sell) that posts at its
limit price, when the Inside Bid and Inside Offer subsequently become
crossed and the Midpoint of the crossed Inside Bid and Inside Offer
remains equal to or higher (lower) than the limit price of the Order to
buy (sell), only when a new sell (buy) Order is received at a price
that locks or crosses the limit price of the resting Order. The
restated language also specifies that the Exchange will cancel an Order
with Midpoint Pegging to buy (sell) that posts at the Midpoint of the
Inside Bid and Inside Offer, when the Inside Bid and Inside Offer
subsequently become crossed and the Midpoint of the crossed Inside Bid
and Inside Offer remains the same, only when the Exchange receives a
new sell (buy) Order at a price that locks or crosses the Midpoint of
the Inside Bid and Inside Offer. Other than in these two circumstances,
cancellation of an Order simply because the Inside Bid and Inside Offer
cross is unnecessary because the Order need not be re-priced. When an
Order to buy (sell) is ranked at its limit price, and the Inside Bid
and Inside Offer become crossed while the Midpoint remains at or above
(below) the limit price, the crossed market does not impact the Order,
which can still rest on the Exchange Book at its limit price because
the Inside Bid and Inside Offer could uncross prior to the Order
executing. Likewise, when an Order to buy (sell) is ranked at the
Midpoint of the Inside Bid and Inside Offer, and the Inside Bid and
Inside Offer become crossed but the Midpoint does not change, the
crossed market also does not impact the Order, which can continue to
rest on the Exchange Book at the Midpoint because the Inside Bid and
Inside Offer could uncross (with the Midpoint still remaining
unchanged) prior to the Order executing.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposal will protect investors by amending Rules 4702 and 4703
so that they will describe more clearly what the Rules currently imply
with respect to the circumstances in which the Exchange will not cancel
Midpoint-Pegged Orders. That is, the Exchange believes that concept of
a limit price fairly implies that the Exchange has no need to and thus,
it does not presently, cancel a Midpoint-Pegged Order to buy (sell)
when such an Order is posted at its limit price and the Inside Bid and
Inside Offer shifts thereafter but the Midpoint remains above (below)
the limit price; however, Rule 4702(a)(3)(B) merely states that any
post-entry shift in the Midpoint will result in the cancellation of a
Midpoint-Pegged Order. To avoid confusion, the proposal clarifies that
the Exchange will cancel a Midpoint-Pegged Order posted at its limit
price if the Inside Bid and Inside Offer shifts after entry such that
the Midpoint becomes lower (higher) than the limit price. In this
circumstance,
[[Page 14255]]
cancellation is warranted because the Order would need to be re-priced,
and a Midpoint-Pegged Order entered using OUCH or FLITE cannot be re-
priced. Similarly, if a Midpoint-Pegged Order posts to the Exchange
Book at the Midpoint of the Inside Bid and Inside Offer and then the
Midpoint shifts in either direction, the Order will be cancelled
because it would need to be re-priced, and again, OUCH or FLITE do not
allow for re-pricing to occur.
Similarly, the Exchange believes that it is helpful to investors to
clarify the circumstances in which the Exchange does and does not
cancel Midpoint-Pegged Orders in a crossed market. Rule 4703(d) states
generally that the Exchange will cancel Midpoint-Pegged Orders if the
Inside Bid and Inside Offer become crossed. However, as discussed
above, the Exchange does not need to, and thus it does not presently,
cancel Midpoint-Pegged Orders in all such instances. Although
cancellation is warranted to prevent Orders from actually executing in
a crossed market,\9\ the Exchange does not believe that cancellation is
warranted simply because the markets cross if there remains a
possibility that the markets will uncross prior to an execution
occurring. Thus, the Exchange proposes that it will not cancel a
Midpoint-Pegged Order to buy (sell) when the Order is ranked at its
limit price and the Inside Bid and Inside Offer become crossed
thereafter (and the Midpoint remains equal to or more aggressive than
its limit price), but no new sell (buy) Order is received that locks or
crosses the limit price of the resting Midpoint-Pegged Order. Unless or
until the Exchange receives a new Order that locks or crosses the limit
price of the resting Midpoint-Pegged Order while the market remains
crossed, cancellation is unnecessary because the Midpoint-Pegged Order
can continue to rest at its limit price and the market may uncross
before the Midpoint-Pegged Order executes. Likewise, as was also
discussed above, the Exchange proposes that it will not cancel a
Midpoint-Pegged Order that is ranked at the Midpoint of the Inside Bid
and Inside Offer where the market becomes crossed, provided that while
the market is crossed, the Midpoint of the crossed Inside Bid and
Inside Offer does not change, and the Exchange does not receive a new
Order that would lock or cross the Midpoint. Again, cancellation is
unnecessary in this scenario because the Midpoint-Pegged Order can
continue to rest at the Midpoint while the market is crossed and
because the market may uncross (with the Midpoint remaining unchanged)
prior to execution of the Order.\10\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 34-79290 (Nov. 10,
2016), 81 FR 81184, 81186 (Nov. 17, 2016) (stating that the
``midpoint of a crossed market is not a clear and accurate
indication of a valid price'' and that cancellation in a crossed
market ``would avoid mispriced executions'').
\10\ If at any point after the Midpoint-Pegged Order posts to
the Exchange Book at the Midpoint, the Inside Bid and Inside Offer
changes so that the price of the Order is no longer at the Midpoint,
then the order must be cancelled because orders entered through OUCH
or FLITE cannot be re-priced.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange intends for the
proposal to improve the precision with which the Rules describe the
circumstances in which it will cancel Midpoint-Pegged Orders after
entry, as described above. The Exchange does not expect that these
changes will have any impact whatsoever on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BX-2020-003 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-BX-2020-003. 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
[[Page 14256]]
Number SR-BX-2020-003, and should be submitted on or before April 1,
2020.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04913 Filed 3-10-20; 8:45 am]
BILLING CODE 8011-01-P
