Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Pre-Market Session and Regular Market Session Opening Process for Non-LTSE-Primary-Listed Securities, 19033-19037 [2020-06958]
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Federal Register / Vol. 85, No. 65 / Friday, April 3, 2020 / Notices
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
2. Docket No(s).: MC2020–110 and
CP2020–116; Filing Title: USPS Request
to Add Priority Mail Contract 601 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: March 27, 2020; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3020.30 et seq., and 39 CFR 3015.5;
Public Representative: Curtis E. Kidd;
Comments Due: April 6, 2020.
This Notice will be published in the
Federal Register.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2020–109 and
CP2020–115; Filing Title: USPS Request
to Add Priority Mail Contract 600 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: March 27, 2020; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3020.30 et seq., and 39 CFR 3015.5;
Public Representative: Curtis E. Kidd;
Comments Due: April 6, 2020.
LTSE proposes a rule change to (i)
amend how the Pre-Market Session and
Regular Market Session Opening
Process for Non-LTSE-Primary-Listed
Securities will operate, and (ii) make
certain non-substantive, technical
changes.
The text of the proposed rule change
is available at the Exchange’s website at
https://longtermstockexchange.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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Erica A. Barker,
Secretary.
[FR Doc. 2020–06938 Filed 4–2–20; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88515; File No. SR–LTSE–
2020–08]
Self-Regulatory Organizations; LongTerm Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Pre-Market Session and Regular
Market Session Opening Process for
Non-LTSE-Primary-Listed Securities
March 30, 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 March 27,
2020, Long-Term Stock Exchange, Inc.
(‘‘LTSE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
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
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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
self-regulatory organization 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 self-regulatory organization 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
LTSE Rules 11.190, 11.220, and 11.231
to revise how its Pre-Market Session and
Regular Market Session Opening
Process for Non-LTSE-Primary-Listed
Securities 3 will operate, and to make
certain non-substantive, technical
changes. The Exchange has three trading
sessions: Pre-Market Session,4 Regular
Market Session,5 and Post-Market
Session.6
Existing LTSE Rule 11.190 provides
that limit orders with a time-in-force
(‘‘TIF’’) of DAY or GTX,7 and market
orders with a TIF of DAY,8 if received
prior to the open of the Regular Market
Session, are queued in time priority
until the open of the Regular Market
Session.9 The Exchange proposes to
amend LTSE Rule 11.190(a)(2)(E) to
state that market orders may only be
submitted during the Regular Market
Session and that market orders
submitted in the Pre-Market Session or
Post-Market Session will be rejected by
the System. Specifically, the text of the
opening paragraph in proposed LTSE
Rule 11.190(a)(2)(E) would be amended
to state that that a market order ‘‘[m]ay
only be submitted during the Regular
3 The term ‘‘Non-LTSE-Primary-Listed Security’’
refers to: (i) Any UTP Security; and (ii) any DuallyListed Securities, as provided for in LTSE Rule
14.210, which are not LTSE-Primary-Listed
Securities. See LTSE Rule 1.160(z).
4 The term ‘‘Pre-Market Session’’ refers to the
time between 8:00 a.m. and 9:30 a.m. Eastern Time.
See LTSE Rule 1.160(dd).
5 The term ‘‘Regular Market Session’’ refers to the
time between 9:30 a.m. and 4:00 p.m. Eastern Time.
See LTSE Rule 1.160(kk).
6 The term ‘‘Post-Market Session’’ refers to the
time between 4:00 p.m. and 5:00 p.m. Eastern Time.
See LTSE Rule 1.160(ee).
7 See LTSE Rule 11.190(a)(1)(E)(ii), (iv).
8 See LTSE 11.190(a)(2)(E)(ii).
9 Market orders with a TIF of GTX are rejected.
See LTSE Rule 11.190(a)(2)(E)(iv).
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Market Session. Market orders
submitted in the Pre-Market Session or
Post-Market Session will be rejected by
the System.’’ 10 In a conforming change
to subparagraph (ii) of the rule, the
Exchange proposes to remove references
to market orders with a TIF of DAY
being queued by the System because, as
noted in the proposed opening
paragraph of LTSE Rule 11.190(a)(2)(E),
such orders when submitted in the PreMarket and Post-Market Session are
proposed to be rejected. Thus, the
beginning of subparagraph (ii) of the
rule would be revised to state that
‘‘Market orders marked DAY are
rejected during the Pre-Market Session
and Post-Market Session.’’ The
remainder of subparagraph (ii) of the
rule would be deleted, except the last
sentence, which is proposed to remain
unchanged. This proposed rule text
tracks subparagraph (i) of the existing
rule for orders marked IOC,11 because,
as noted in LTSE Rule 11.190(a)(2)(E)(ii),
market orders marked DAY are treated
by the System as having a TIF of IOC.
Proposed LTSE Rule 11.190(d) would
be identical to existing LTSE Rule
11.190(d), but for the capitalization of
the defined term ‘‘Order Amendment’’
in proposed LTSE Rule 11.190(d)(6).12
The Exchange also proposes to amend
existing LTSE Rule 11.190(e) to
capitalize the term ‘‘Cancel/Replace.’’ In
clarifying this approach to the Opening
Process, the Exchange also proposes to
amend existing LTSE Rule 11.190(f)(1)
to eliminate references to Cross Book,
which would no longer be used.
Existing LTSE Rule 11.231 provides
for an auction-style Opening Match 13
for Non-LTSE-Primary-Listed Securities.
The proposed rule change would
eliminate the auction-style Opening
Match in LTSE Rule 11.231 by deleting
all of the existing rule text and replacing
it with an opening process modeled on
how IEX conducted its opening process
when it was approved as a national
securities exchange.14 The proposed
rule change would treat limit orders in
Non-LTSE-Primary-Listed Securities
that are eligible to queue during the PreMarket Session as incoming orders at
10 The opening paragraph of proposed LTSE Rule
11.190(a)(2)(E) would be identical to the opening
paragraph of Investors’ Exchange LLC (‘‘IEX’’) Rule
11.190(a)(2)(E). In this proposed rule change,
references to IEX’s rules are to the IEX rules as they
appeared when IEX was approved as a national
securities exchange. See IEX Form 1, Exhibit B.
11 See LTSE Rule 11.190(a)(2)(E)(i). IOC stands for
Immediate-or-Cancel. See LTSE Rule 11.190(c)(1).
12 See infra note 16.
13 See LTSE Rule 11.231(b)(1) (defining ‘‘Opening
Match’’).
14 See Securities Exchange Act Release No. 78101
(June 17, 2016), 81 FR 41141 (June 23, 2016) (File
No. 10–222).
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the start of the Regular Market Session
in their relative time priority, as
discussed below. The proposed rule
change also would make conforming
amendments to LTSE Rule 11.220, as
further described below.
Under proposed LTSE Rule 11.231(a),
orders for Non-LTSE-Primary-Listed
Securities not eligible for trading prior
to the commencement of the Regular
Market Session that are received and
queued during the Pre-Market Session,
as described in LTSE Rule 11.190(a),
would be queued in the time sequence
of their receipt by the System, pursuant
to LTSE Rule 11.220(a)(2).15 Under
proposed LTSE Rule 11.231(b), orders
queued prior to the Regular Market
Session would be able to be modified
consistent with LTSE Rule 11.190(d),
which establishes the process for
amending an order.16 Further, under
proposed LTSE Rule 11.231(b), any
modification to an order so queued may
result in the time of receipt being
updated to the time of receipt of the last
modification consistent with the
application of a new timestamp,
pursuant to proposed LTSE Rule
11.220(a)(2).17
Under proposed LTSE Rule 11.231(c),
at the commencement of the Regular
Hours Trading, orders for Non-LTSEPrimary-Listed Securities queued during
the Pre-Market Session would be
processed as incoming orders,
consistent with LTSE Rules 11.190 and
11.230 in their relative time priority,
pursuant to proposed LTSE Rule
11.220(a)(2).18
Under proposed LTSE Rule 11.231(d),
all messages in Non-LTSE-PrimaryListed Securities that are relevant to the
Order Book and are received after the
commencement of the Regular Market
Session would be processed after the
15 Proposed LTSE Rule 11.231(a) would be
identical to IEX Rule 11.231(a), except that
proposed LTSE Rule 11.231(a) would clarify that
the rule only applies ‘‘for Non-LTSE-Primary-Listed
Securities,’’ and would cross-reference to LTSE’s
rules and not IEX’s rules.
16 In what are purely technical changes to Rule
11.190(d), the Exchange proposes to capitalize the
defined term ‘‘Order Amendment.’’ See supra text
accompanying note 12.
17 Proposed LTSE Rule 11.231(b) would be
identical to IEX Rule 11.231(b), except that
proposed LTSE Rule 11.231(b) would crossreference to LTSE’s rules and not IEX’s rules, would
clarify that the ‘‘queue’’ refers to the ‘‘Pre-Market
Session order queue,’’ and would not incorporate
IEX Rule 11.231(b)(1) because the Exchange does
not route orders.
18 Proposed LTSE Rule 11.231(c) would be
identical to IEX Rule 11.231(c), except that
proposed LTSE Rule 11.231(c) would crossreference to LTSE’s rules and not IEX’s rules, would
clarify that the ‘‘queue’’ refers to the ‘‘Pre-Market
Session order queue,’’ and the phrase ‘‘Non-LTSEPrimary-Listed Securities’’ is proposed to be added
to reflect the scope of the proposed rule.
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completion of the Regular Market
Session Opening Process.19
Under proposed LTSE Rule 11.231(e),
if a security is subject to a halt,
suspension, or pause in trading during
the Pre-Market Session, the Exchange
would not accept orders for that security
for the Regular Market Session Opening
Process or otherwise. If the halt,
suspension, or pause remains in effect at
the time of the Regular Market Session
Opening Process, the Opening Process
would not occur at the normally
scheduled time. Once the security
resumes trading, the Exchange would
conduct the Regular Market Session
Opening Process for any orders in the
queue, and would then accept and
execute orders as usual in accordance
with prevailing market session rules.20
The Exchange believes that permitting
certain limit orders with a TIF which
makes them ineligible to trade during
the Pre-Market Session to become part
of the Pre-Market Session order queue
and to join the Order Book at the
commencement of the Regular Market
Session is consistent with an orderly
and predictable market opening.21
Proposed LTSE Rule 11.220(a)(2),
which would replace existing LTSE
Rule 11.220(a)(2) in its entirety, would
require that orders queued for the
Regular Market Session Opening
Process for Non-LTSE-Primary-Listed
Securities be ranked and maintained in
time priority. The order established as
the oldest in the System 22 would have
precedence among those queued for the
Opening Process, up to the number of
shares of the security specified in the
order.23 Orders would be ranked by the
19 Proposed LTSE Rule 11.231(d) would be
identical to IEX Rule 11.231(d), except the phrase
‘‘Non-LTSE-Primary-Listed Securities’’ is proposed
to be added to reflect the scope of the proposed
rule.
20 Proposed LTSE Rule 11.231(e) would be
identical to IEX Rule 11.231(e), except that
proposed LTSE Rule 11.231(e) would clarify that
the ‘‘queue’’ refers to the ‘‘Pre-Market Session order
queue,’’ and would add the phrase ‘‘that security
for’’ in the first sentence to clarify the scope of a
halt, suspension, or pause in trading.
21 The Exchange notes that this method was used
by IEX when it was approved as national securities
exchange. See supra note 14.
22 The term ‘‘System’’ refers to the electronic
communications and trading facility designated by
the Board through which securities orders of
Members are consolidated for ranking and
execution. See LTSE Rule 1.160(rr).
23 Proposed LTSE Rule 11.220(a)(2) would be
identical to the opening paragraph of IEX Rule
11.220(a)(2) and IEX Rule 11.220(a)(2)(A), except
that proposed LTSE Rule 11.220(a)(2) would: (1)
Use the phrase ‘‘Regular Market Session Opening
Process for Non-LTSE-Primary-Listed Securities’’
instead of simply the term ‘‘Opening Process’’ for
clarity; (2) not include the word ‘‘clearly’’ before
‘‘established’’ because the word ‘‘clearly’’ is
superfluous; and (3) use the term ‘‘security’’ instead
of ‘‘stock’’ because the Exchange believes the term
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the User by means of a Cancel/Replace
pursuant to LTSE Rule 11.190(d), except
in the event that the only change to the
order is a decrease in share quantity, in
which case the order would not receive
a new timestamp.24
time at which they are submitted to the
Pre-Market Session order queue, the
first in the queue being the oldest
submitted. Orders would maintain their
time priority once queued unless an
amendment to the order is submitted by
To illustrate how the proposed
Opening Process would operate,
consider the following example where
the Order Book prior to the start of
Regular Market Session is as follows: 25
Bid
Order
TIF
A ........................
C ........................
SYS ...................
SYS ...................
Offer
Time
Price
9:15
9:25
10
9.97
Order
TIF
Time
B ........................
D .......................
SYS ...................
SYS ...................
Price
9:15
9:29
10.05
10.07
And the Pre-Market Session queue is
as follows:
Order
TIF
E .....................................................................
F .....................................................................
G ....................................................................
H .....................................................................
DAY
DAY
DAY
DAY
The Order Book at the start of the
Regular Market Session would be as
follows, as each of the orders in the Pre-
Time in Queue
...............................................................
...............................................................
...............................................................
...............................................................
8:15
8:17
8:19
9:28
Market Session queue are treated as
incoming orders in relative time priority
(and for illustrative purposes only, the
TIF
E ........................
A ........................
C ........................
DAY ...................
SYS ...................
SYS ...................
Type
10.02
10.05
10.04
10.07
Bid.
Bid.
Offer.
Offer.
time to drain each order in the queue is
1 millisecond):
Bid
Order
Price
Offer
Time
Price
9:30:00001
9:15
9:25
10.02
10
9.97
Order
TIF
G .......................
D .......................
H .......................
DAY ...................
SYS ...................
DAY ...................
Order
TIF
I ......................................................................
J .....................................................................
DAY ...............................................................
DAY ...............................................................
Price
9:30:00003
9:29
9:30:00004
10.04
10.07
10.07
Session would become part of the Order
Book only after the Pre-Market Session
queue is completed. For example, if the
following orders are received at the start
Regular Market Session:
Order Book received after the
commencement of the Regular Market
Session would be processed after the
completion of the Regular Market
Session Opening Process. Orders
received during the Regular Market
Note that Orders F and B are gone;
that is because incoming Order F would
have executed against resting Order B.
As described in proposed LTSE Rule
11.231(d), all messages in Non-LTSEPrimary-Listed Securities relevant to the
Time
Time in Queue
Price
9:30:0001
9:30:0002
Type
10.03
10
Offer.
Bid.
Then the Order Book would be as
follows:
Bid
Order
TIF
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E ........................
A ........................
J .........................
C ........................
DAY
SYS
DAY
SYS
Time
...................
...................
...................
...................
‘‘security’’ more appropriately describes what is
intended.
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Offer
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Price
9:30:00001
9:15
9:30:0002
9:25
10.02
10
10
9.97
Order
I .........................
G .......................
D .......................
H .......................
TIF
DAY
DAY
SYS
DAY
24 Proposed LTSE Rule 11.220(a)(2) would not
include references to routable orders, see IEX Rule
11.220(a)(2)(A)(ii), because the Exchange does route
orders. See also supra note 17.
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Time
...................
...................
...................
...................
9:30:0001
9:30:00003
9:29
9:30:00004
Price
10.03
10.04
10.07
10.07
25 For purposes of these examples, all orders are
limit orders for 100 shares.
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The preceding example illustrates
how the proposed Opening Process
would operate solely for orders in NonLTSE-Primary-Listed Securities. The
Exchange has a different opening
process for LTSE-Primary-Listed
Securities in Rule 11.350, which would
remain unchanged.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,26
in general, and furthers the objectives of
Section 6(b)(5) of the Act,27 in
particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, 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.
Specifically, the Exchange believes
that the proposed rule change is
consistent with fostering cooperation
and coordination with persons engaged
in facilitating transactions in securities.
The simplicity and determinism of this
Opening Process for Non-LTSE-PrimaryListed Securities will facilitate trading
of NMS stocks without imposing
burdens on market participants to adapt
to, or adopt, another opening cross
methodology for securities where the
Exchange is not the primary listing
market. The Exchange also believes that
the streamlined approach of the
proposed rule change to commencing
trading in the Regular Market Session
removes impediments to and perfects
the mechanism of a free and open
market and a national market system by
providing a clear and transparent
process designed to provide a means for
trading in a Non-LTSE-Primary-Listed
Security to open in an orderly and
timely manner.
In addition, the Exchange also
believes that rejecting market orders
with a TIF of DAY received during the
Pre-Market Session will provide for a
more orderly Opening Process and
protect investors and the public interest.
The Exchange believes that market
orders marked DAY, which are treated
as having a TIF of IOC, should be
treated in the same way as market
orders marked IOC, which are
rejected.28
26 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
28 See LTSE Rule 11.190(a)(2)(E)(ii).
The Exchange further believes that the
proposed rule change aligns with the
philosophy and principles of the Very
Simple Market or VSMTM in that its
relatively simple and deterministic
model aims to reduce the complexity of
the trading process on the Exchange,
while acknowledging that alternatives
employed by other exchanges and
trading venues are part of a dynamic
and vibrant national market system. The
Exchange also believes that the
proposed rule change is consistent with
the protection of investors and the
public interest in that it would be
applied fairly and equitably across all
market participants, while also
providing for orderly and timely
openings for Non-LTSE-Primary-Listed
Securities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
LTSE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
Opening Process for Non-LTSE-PrimaryListed Securities is designed to promote
fair competition among brokers and
dealers and exchanges by offering an
alternative Opening Process, thereby
promoting intermarket competition
between exchanges in furtherance of the
principles of Section 11A(a)(1) of the
Act.29
With respect to intramarket
competition, the proposed Opening
Process would apply equally to all nonLTSE-Primary-Listed Securities, and all
Members and market participants that
send orders to LTSE through Members
in the Pre-Market Session. As described
above, Members are permitted to enter
orders for the Pre-Market Session queue,
and all orders received are maintained
in time priority. Consequently, LTSE
does not believe that the proposed rule
change would impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants, or Others
Written comments were neither
solicited nor 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
27 15
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29 15
PO 00000
U.S.C. 78k–1(a)(1).
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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)(iii) of the Act 30 and
subparagraph (f)(6) of Rule 19b–4
thereunder.31
At any time within 60 days of the
filing of such 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
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–
LTSE–2020–08 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–LTSE–2020–08. 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
30 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires the Exchange 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.
31 17
E:\FR\FM\03APN1.SGM
03APN1
Federal Register / Vol. 85, No. 65 / Friday, April 3, 2020 / Notices
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–LTSE–2020–08, and should
be submitted on or before April 24,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–06958 Filed 4–2–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88514; File No. SR–NSCC–
2020–007]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Revise the Clearing
Agency Investment Policy
jbell on DSKJLSW7X2PROD with NOTICES
March 30, 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 March 26,
2020, National Securities Clearing
Corporation (‘‘NSCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. NSCC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder.4 The
32 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
VerDate Sep<11>2014
17:45 Apr 02, 2020
Jkt 250001
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change would
revise the Clearing Agency Investment
Policy (‘‘Investment Policy’’) of NSCC
and its affiliates, The Depository Trust
Company (‘‘DTC’’) and Fixed Income
Clearing Corporation (‘‘FICC,’’ and
together with DTC and NSCC, the
‘‘Clearing Agencies’’) in order to (1)
include the proceeds of the issuance of
term debt by NSCC as part of the
description of ‘‘Default Liquidity
Funds’’ within the section for
‘‘Investable Funds’’; (2) clarify the
allowable investments for DTC’s
Participants Fund;5 and (3) enhance the
description of collateral that may be
posted in connection with investments
in reverse repurchase agreements; as
described in greater detail below.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The Clearing Agencies are proposing
to revise the Investment Policy, which
was adopted for each clearing agency in
December 2016 6 and is maintained in
compliance with Rule 17Ad–22(e)(16)
5 The respective Clearing Funds of NSCC and
FICC, and the DTC Participants Fund are described
in the Rules & Procedures of NSCC (‘‘NSCC Rules’’),
the DTC Rules, By-laws and Organization
Certificate (‘‘DTC Rules’’), the Clearing Rules of the
Mortgage-Backed Securities Division of FICC
(‘‘MBSD Rules’’) and the Rulebook of the
Government Securities Division of FICC (‘‘GSD
Rules’’), respectively, available at https://dtcc.com/
legal/rules-and-procedures. See Rule 4 (Clearing
Fund) of the NSCC Rules, Rule 4 (Participants Fund
and Participants Investment) of the DTC Rules, Rule
4 (Clearing Fund and Loss Allocation) of the GSD
Rules and Rule 4 (Clearing Fund and Loss
Allocation) of the MBSD Rules.
6 See Securities Exchange Act Release No. 79528
(December 12, 2016), 81 FR 91232 (December 16,
2016) (SR–DTC–2016–007, SR–FICC–2016–005,
SR–NSCC–2016–003).
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
19037
under the Act,7 in order to (1) include
the proceeds of the issuance of term
debt by NSCC as part of the description
of ‘‘Default Liquidity Funds’’ within the
section for ‘‘Investable Funds’’; (2)
clarify the allowable investments for
DTC’s Participants Fund; and (3)
enhance the description of collateral
that may be posted in connection with
investments in reverse repurchase
agreements; as described in greater
detail below.
Overview of the Investment Policy
The Investment Policy governs the
management, custody and investment of
cash deposited to the respective NSCC
and FICC Clearing Funds, and the DTC
Participants Fund, the proprietary
liquid net assets (cash and cash
equivalents) of the Clearing Agencies,
and other funds held by the Clearing
Agencies pursuant to their respective
rules.
The Investment Policy identifies the
guiding principles for investments and
defines the roles and responsibilities of
DTCC staff in administering the
Investment Policy pursuant to those
principles. The Investment Policy is coowned by DTCC’s Treasury group
(‘‘Treasury’’) 8 and the Counterparty
Credit Risk team (‘‘CCR’’) within
DTCC’s Group Chief Risk Office
(‘‘GCRO’’).9 Treasury is responsible for
identifying potential counterparties to
investment transactions, establishing
and managing investment relationships
with approved investment
counterparties, and making and
monitoring all investment transactions
with respect to the Clearing Agencies.
CCR is responsible for conducting a
credit review of any potential
counterparty, updating those reviews on
a quarterly basis, and establishing an
investment limit for each counterparty.
The Investment Policy also identifies
sources of funds that may be invested,
and the permitted investments of those
funds, including the authority required
to make such investments and the
parameters of, and limitations on, each
type of investment. Allowable
investments include bank deposits,
reverse repurchase agreements, direct
obligations of the U.S. government,
7 17 CFR 240.17Ad–22(e)(16). As discussed in
this filing, the Investment Policy also addresses
compliance with the requirements of the Rule
17Ad–22(e)(3). 17 CFR 240.17Ad–22(e)(3).
8 Treasury is a part of the DTCC Finance
Department and is responsible for the safeguarding,
investment and disbursement of funds on behalf of
the Clearing Agencies and in accordance with the
principles outlined in the Investment Policy.
9 Among other responsibilities, GCRO is generally
responsible for the systems and processes designed
to identify and manage credit, market and liquidity
risks to the Clearing Agencies.
E:\FR\FM\03APN1.SGM
03APN1
]]>Agencies
[Federal Register Volume 85, Number 65 (Friday, April 3, 2020)]
[Notices]
[Pages 19033-19037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06958]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88515; File No. SR-LTSE-2020-08]
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Pre-Market Session and Regular Market Session Opening
Process for Non-LTSE-Primary-Listed Securities
March 30, 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 March 27, 2020, Long-Term Stock Exchange, Inc. (``LTSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
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
LTSE proposes a rule change to (i) amend how the Pre-Market Session
and Regular Market Session Opening Process for Non-LTSE-Primary-Listed
Securities will operate, and (ii) make certain non-substantive,
technical changes.
The text of the proposed rule change is available at the Exchange's
website at https://longtermstockexchange.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 self-regulatory organization
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 LTSE Rules 11.190, 11.220, and
11.231 to revise how its Pre-Market Session and Regular Market Session
Opening Process for Non-LTSE-Primary-Listed Securities \3\ will
operate, and to make certain non-substantive, technical changes. The
Exchange has three trading sessions: Pre-Market Session,\4\ Regular
Market Session,\5\ and Post-Market Session.\6\
---------------------------------------------------------------------------
\3\ The term ``Non-LTSE-Primary-Listed Security'' refers to: (i)
Any UTP Security; and (ii) any Dually-Listed Securities, as provided
for in LTSE Rule 14.210, which are not LTSE-Primary-Listed
Securities. See LTSE Rule 1.160(z).
\4\ The term ``Pre-Market Session'' refers to the time between
8:00 a.m. and 9:30 a.m. Eastern Time. See LTSE Rule 1.160(dd).
\5\ The term ``Regular Market Session'' refers to the time
between 9:30 a.m. and 4:00 p.m. Eastern Time. See LTSE Rule
1.160(kk).
\6\ The term ``Post-Market Session'' refers to the time between
4:00 p.m. and 5:00 p.m. Eastern Time. See LTSE Rule 1.160(ee).
---------------------------------------------------------------------------
Existing LTSE Rule 11.190 provides that limit orders with a time-
in-force (``TIF'') of DAY or GTX,\7\ and market orders with a TIF of
DAY,\8\ if received prior to the open of the Regular Market Session,
are queued in time priority until the open of the Regular Market
Session.\9\ The Exchange proposes to amend LTSE Rule 11.190(a)(2)(E) to
state that market orders may only be submitted during the Regular
Market Session and that market orders submitted in the Pre-Market
Session or Post-Market Session will be rejected by the System.
Specifically, the text of the opening paragraph in proposed LTSE Rule
11.190(a)(2)(E) would be amended to state that that a market order
``[m]ay only be submitted during the Regular
[[Page 19034]]
Market Session. Market orders submitted in the Pre-Market Session or
Post-Market Session will be rejected by the System.'' \10\ In a
conforming change to subparagraph (ii) of the rule, the Exchange
proposes to remove references to market orders with a TIF of DAY being
queued by the System because, as noted in the proposed opening
paragraph of LTSE Rule 11.190(a)(2)(E), such orders when submitted in
the Pre-Market and Post-Market Session are proposed to be rejected.
Thus, the beginning of subparagraph (ii) of the rule would be revised
to state that ``Market orders marked DAY are rejected during the Pre-
Market Session and Post-Market Session.'' The remainder of subparagraph
(ii) of the rule would be deleted, except the last sentence, which is
proposed to remain unchanged. This proposed rule text tracks
subparagraph (i) of the existing rule for orders marked IOC,\11\
because, as noted in LTSE Rule 11.190(a)(2)(E)(ii), market orders
marked DAY are treated by the System as having a TIF of IOC.
---------------------------------------------------------------------------
\7\ See LTSE Rule 11.190(a)(1)(E)(ii), (iv).
\8\ See LTSE 11.190(a)(2)(E)(ii).
\9\ Market orders with a TIF of GTX are rejected. See LTSE Rule
11.190(a)(2)(E)(iv).
\10\ The opening paragraph of proposed LTSE Rule 11.190(a)(2)(E)
would be identical to the opening paragraph of Investors' Exchange
LLC (``IEX'') Rule 11.190(a)(2)(E). In this proposed rule change,
references to IEX's rules are to the IEX rules as they appeared when
IEX was approved as a national securities exchange. See IEX Form 1,
Exhibit B.
\11\ See LTSE Rule 11.190(a)(2)(E)(i). IOC stands for Immediate-
or-Cancel. See LTSE Rule 11.190(c)(1).
---------------------------------------------------------------------------
Proposed LTSE Rule 11.190(d) would be identical to existing LTSE
Rule 11.190(d), but for the capitalization of the defined term ``Order
Amendment'' in proposed LTSE Rule 11.190(d)(6).\12\ The Exchange also
proposes to amend existing LTSE Rule 11.190(e) to capitalize the term
``Cancel/Replace.'' In clarifying this approach to the Opening Process,
the Exchange also proposes to amend existing LTSE Rule 11.190(f)(1) to
eliminate references to Cross Book, which would no longer be used.
---------------------------------------------------------------------------
\12\ See infra note 16.
---------------------------------------------------------------------------
Existing LTSE Rule 11.231 provides for an auction-style Opening
Match \13\ for Non-LTSE-Primary-Listed Securities. The proposed rule
change would eliminate the auction-style Opening Match in LTSE Rule
11.231 by deleting all of the existing rule text and replacing it with
an opening process modeled on how IEX conducted its opening process
when it was approved as a national securities exchange.\14\ The
proposed rule change would treat limit orders in Non-LTSE-Primary-
Listed Securities that are eligible to queue during the Pre-Market
Session as incoming orders at the start of the Regular Market Session
in their relative time priority, as discussed below. The proposed rule
change also would make conforming amendments to LTSE Rule 11.220, as
further described below.
---------------------------------------------------------------------------
\13\ See LTSE Rule 11.231(b)(1) (defining ``Opening Match'').
\14\ See Securities Exchange Act Release No. 78101 (June 17,
2016), 81 FR 41141 (June 23, 2016) (File No. 10-222).
---------------------------------------------------------------------------
Under proposed LTSE Rule 11.231(a), orders for Non-LTSE-Primary-
Listed Securities not eligible for trading prior to the commencement of
the Regular Market Session that are received and queued during the Pre-
Market Session, as described in LTSE Rule 11.190(a), would be queued in
the time sequence of their receipt by the System, pursuant to LTSE Rule
11.220(a)(2).\15\ Under proposed LTSE Rule 11.231(b), orders queued
prior to the Regular Market Session would be able to be modified
consistent with LTSE Rule 11.190(d), which establishes the process for
amending an order.\16\ Further, under proposed LTSE Rule 11.231(b), any
modification to an order so queued may result in the time of receipt
being updated to the time of receipt of the last modification
consistent with the application of a new timestamp, pursuant to
proposed LTSE Rule 11.220(a)(2).\17\
---------------------------------------------------------------------------
\15\ Proposed LTSE Rule 11.231(a) would be identical to IEX Rule
11.231(a), except that proposed LTSE Rule 11.231(a) would clarify
that the rule only applies ``for Non-LTSE-Primary-Listed
Securities,'' and would cross-reference to LTSE's rules and not
IEX's rules.
\16\ In what are purely technical changes to Rule 11.190(d), the
Exchange proposes to capitalize the defined term ``Order
Amendment.'' See supra text accompanying note 12.
\17\ Proposed LTSE Rule 11.231(b) would be identical to IEX Rule
11.231(b), except that proposed LTSE Rule 11.231(b) would cross-
reference to LTSE's rules and not IEX's rules, would clarify that
the ``queue'' refers to the ``Pre-Market Session order queue,'' and
would not incorporate IEX Rule 11.231(b)(1) because the Exchange
does not route orders.
---------------------------------------------------------------------------
Under proposed LTSE Rule 11.231(c), at the commencement of the
Regular Hours Trading, orders for Non-LTSE-Primary-Listed Securities
queued during the Pre-Market Session would be processed as incoming
orders, consistent with LTSE Rules 11.190 and 11.230 in their relative
time priority, pursuant to proposed LTSE Rule 11.220(a)(2).\18\
---------------------------------------------------------------------------
\18\ Proposed LTSE Rule 11.231(c) would be identical to IEX Rule
11.231(c), except that proposed LTSE Rule 11.231(c) would cross-
reference to LTSE's rules and not IEX's rules, would clarify that
the ``queue'' refers to the ``Pre-Market Session order queue,'' and
the phrase ``Non-LTSE-Primary-Listed Securities'' is proposed to be
added to reflect the scope of the proposed rule.
---------------------------------------------------------------------------
Under proposed LTSE Rule 11.231(d), all messages in Non-LTSE-
Primary-Listed Securities that are relevant to the Order Book and are
received after the commencement of the Regular Market Session would be
processed after the completion of the Regular Market Session Opening
Process.\19\
---------------------------------------------------------------------------
\19\ Proposed LTSE Rule 11.231(d) would be identical to IEX Rule
11.231(d), except the phrase ``Non-LTSE-Primary-Listed Securities''
is proposed to be added to reflect the scope of the proposed rule.
---------------------------------------------------------------------------
Under proposed LTSE Rule 11.231(e), if a security is subject to a
halt, suspension, or pause in trading during the Pre-Market Session,
the Exchange would not accept orders for that security for the Regular
Market Session Opening Process or otherwise. If the halt, suspension,
or pause remains in effect at the time of the Regular Market Session
Opening Process, the Opening Process would not occur at the normally
scheduled time. Once the security resumes trading, the Exchange would
conduct the Regular Market Session Opening Process for any orders in
the queue, and would then accept and execute orders as usual in
accordance with prevailing market session rules.\20\
---------------------------------------------------------------------------
\20\ Proposed LTSE Rule 11.231(e) would be identical to IEX Rule
11.231(e), except that proposed LTSE Rule 11.231(e) would clarify
that the ``queue'' refers to the ``Pre-Market Session order queue,''
and would add the phrase ``that security for'' in the first sentence
to clarify the scope of a halt, suspension, or pause in trading.
---------------------------------------------------------------------------
The Exchange believes that permitting certain limit orders with a
TIF which makes them ineligible to trade during the Pre-Market Session
to become part of the Pre-Market Session order queue and to join the
Order Book at the commencement of the Regular Market Session is
consistent with an orderly and predictable market opening.\21\
---------------------------------------------------------------------------
\21\ The Exchange notes that this method was used by IEX when it
was approved as national securities exchange. See supra note 14.
---------------------------------------------------------------------------
Proposed LTSE Rule 11.220(a)(2), which would replace existing LTSE
Rule 11.220(a)(2) in its entirety, would require that orders queued for
the Regular Market Session Opening Process for Non-LTSE-Primary-Listed
Securities be ranked and maintained in time priority. The order
established as the oldest in the System \22\ would have precedence
among those queued for the Opening Process, up to the number of shares
of the security specified in the order.\23\ Orders would be ranked by
the
[[Page 19035]]
time at which they are submitted to the Pre-Market Session order queue,
the first in the queue being the oldest submitted. Orders would
maintain their time priority once queued unless an amendment to the
order is submitted by the User by means of a Cancel/Replace pursuant to
LTSE Rule 11.190(d), except in the event that the only change to the
order is a decrease in share quantity, in which case the order would
not receive a new timestamp.\24\
---------------------------------------------------------------------------
\22\ The term ``System'' refers to the electronic communications
and trading facility designated by the Board through which
securities orders of Members are consolidated for ranking and
execution. See LTSE Rule 1.160(rr).
\23\ Proposed LTSE Rule 11.220(a)(2) would be identical to the
opening paragraph of IEX Rule 11.220(a)(2) and IEX Rule
11.220(a)(2)(A), except that proposed LTSE Rule 11.220(a)(2) would:
(1) Use the phrase ``Regular Market Session Opening Process for Non-
LTSE-Primary-Listed Securities'' instead of simply the term
``Opening Process'' for clarity; (2) not include the word
``clearly'' before ``established'' because the word ``clearly'' is
superfluous; and (3) use the term ``security'' instead of ``stock''
because the Exchange believes the term ``security'' more
appropriately describes what is intended.
\24\ Proposed LTSE Rule 11.220(a)(2) would not include
references to routable orders, see IEX Rule 11.220(a)(2)(A)(ii),
because the Exchange does route orders. See also supra note 17.
---------------------------------------------------------------------------
To illustrate how the proposed Opening Process would operate,
consider the following example where the Order Book prior to the start
of Regular Market Session is as follows: \25\
---------------------------------------------------------------------------
\25\ For purposes of these examples, all orders are limit orders
for 100 shares.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bid Offer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Order TIF Time Price Order TIF Time Price
--------------------------------------------------------------------------------------------------------------------------------------------------------
A............................. SYS.............. 9:15 10 B................ SYS.............. 9:15 10.05
C............................. SYS.............. 9:25 9.97 D................ SYS.............. 9:29 10.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
And the Pre-Market Session queue is as follows:
----------------------------------------------------------------------------------------------------------------
Order TIF Time in Queue Price Type
----------------------------------------------------------------------------------------------------------------
E................................. DAY................. 8:15 10.02 Bid.
F................................. DAY................. 8:17 10.05 Bid.
G................................. DAY................. 8:19 10.04 Offer.
H................................. DAY................. 9:28 10.07 Offer.
----------------------------------------------------------------------------------------------------------------
The Order Book at the start of the Regular Market Session would be
as follows, as each of the orders in the Pre-Market Session queue are
treated as incoming orders in relative time priority (and for
illustrative purposes only, the time to drain each order in the queue
is 1 millisecond):
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bid Offer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Order TIF Time Price Order TIF Time Price
--------------------------------------------------------------------------------------------------------------------------------------------------------
E............................. DAY.............. 9:30:00001 10.02 G................ DAY.............. 9:30:00003 10.04
A............................. SYS.............. 9:15 10 D................ SYS.............. 9:29 10.07
C............................. SYS.............. 9:25 9.97 H................ DAY.............. 9:30:00004 10.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note that Orders F and B are gone; that is because incoming Order F
would have executed against resting Order B.
As described in proposed LTSE Rule 11.231(d), all messages in Non-
LTSE-Primary-Listed Securities relevant to the Order Book received
after the commencement of the Regular Market Session would be processed
after the completion of the Regular Market Session Opening Process.
Orders received during the Regular Market Session would become part of
the Order Book only after the Pre-Market Session queue is completed.
For example, if the following orders are received at the start Regular
Market Session:
----------------------------------------------------------------------------------------------------------------
Order TIF Time in Queue Price Type
----------------------------------------------------------------------------------------------------------------
I................................. DAY................. 9:30:0001 10.03 Offer.
J................................. DAY................. 9:30:0002 10 Bid.
----------------------------------------------------------------------------------------------------------------
Then the Order Book would be as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bid Offer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Order TIF Time Price Order TIF Time Price
--------------------------------------------------------------------------------------------------------------------------------------------------------
E............................. DAY.............. 9:30:00001 10.02 I................ DAY.............. 9:30:0001 10.03
A............................. SYS.............. 9:15 10 G................ DAY.............. 9:30:00003 10.04
J............................. DAY.............. 9:30:0002 10 D................ SYS.............. 9:29 10.07
C............................. SYS.............. 9:25 9.97 H................ DAY.............. 9:30:00004 10.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 19036]]
The preceding example illustrates how the proposed Opening Process
would operate solely for orders in Non-LTSE-Primary-Listed Securities.
The Exchange has a different opening process for LTSE-Primary-Listed
Securities in Rule 11.350, which would remain unchanged.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\26\ in general, and
furthers the objectives of Section 6(b)(5) of the Act,\27\ in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, 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.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f.
\27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Specifically, the Exchange believes that the proposed rule change
is consistent with fostering cooperation and coordination with persons
engaged in facilitating transactions in securities. The simplicity and
determinism of this Opening Process for Non-LTSE-Primary-Listed
Securities will facilitate trading of NMS stocks without imposing
burdens on market participants to adapt to, or adopt, another opening
cross methodology for securities where the Exchange is not the primary
listing market. The Exchange also believes that the streamlined
approach of the proposed rule change to commencing trading in the
Regular Market Session removes impediments to and perfects the
mechanism of a free and open market and a national market system by
providing a clear and transparent process designed to provide a means
for trading in a Non-LTSE-Primary-Listed Security to open in an orderly
and timely manner.
In addition, the Exchange also believes that rejecting market
orders with a TIF of DAY received during the Pre-Market Session will
provide for a more orderly Opening Process and protect investors and
the public interest. The Exchange believes that market orders marked
DAY, which are treated as having a TIF of IOC, should be treated in the
same way as market orders marked IOC, which are rejected.\28\
---------------------------------------------------------------------------
\28\ See LTSE Rule 11.190(a)(2)(E)(ii).
---------------------------------------------------------------------------
The Exchange further believes that the proposed rule change aligns
with the philosophy and principles of the Very Simple Market or
VSMTM in that its relatively simple and deterministic model
aims to reduce the complexity of the trading process on the Exchange,
while acknowledging that alternatives employed by other exchanges and
trading venues are part of a dynamic and vibrant national market
system. The Exchange also believes that the proposed rule change is
consistent with the protection of investors and the public interest in
that it would be applied fairly and equitably across all market
participants, while also providing for orderly and timely openings for
Non-LTSE-Primary-Listed Securities.
B. Self-Regulatory Organization's Statement on Burden on Competition
LTSE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
proposed Opening Process for Non-LTSE-Primary-Listed Securities is
designed to promote fair competition among brokers and dealers and
exchanges by offering an alternative Opening Process, thereby promoting
intermarket competition between exchanges in furtherance of the
principles of Section 11A(a)(1) of the Act.\29\
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------
With respect to intramarket competition, the proposed Opening
Process would apply equally to all non-LTSE-Primary-Listed Securities,
and all Members and market participants that send orders to LTSE
through Members in the Pre-Market Session. As described above, Members
are permitted to enter orders for the Pre-Market Session queue, and all
orders received are maintained in time priority. Consequently, LTSE
does not believe that the proposed rule change would impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
Written comments were neither solicited nor 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)(iii) of the Act \30\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\31\
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\30\ 15 U.S.C. 78s(b)(3)(A)(iii).
\31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange 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 such 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 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-LTSE-2020-08 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-LTSE-2020-08. 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
[[Page 19037]]
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-LTSE-2020-08, and should be submitted on
or before April 24, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06958 Filed 4-2-20; 8:45 am]
BILLING CODE 8011-01-P
