Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 4756(a)(3), in Light of Planned Changes to the System as Well as To Address Existing Issues, 18405-18409 [2022-06511]
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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Within 10 days of becoming an Access
Person, a dated initial holdings report
that sets forth certain information with
respect to the Access Person’s securities
and accounts; (ii) dated quarterly
transaction reports within 30 days of the
end of each calendar quarter providing
certain information with respect to any
securities transactions during the
quarter and any account established by
the Access Person in which any
securities were held during the quarter;
and (iii) dated annual holding reports
providing information with respect to
each Covered Security the Access
Person beneficially owns and accounts
in which securities are held for his or
her benefit. In addition, rule 17j–1
requires investment personnel of a fund
or its investment adviser, before
acquiring beneficial ownership in
securities through an initial public
offering (IPO) or in a private placement,
to obtain approval from the fund or the
fund’s investment adviser.
The requirements that the
management of a rule 17j–1 organization
provide the fund’s board with new and
amended codes of ethics and an annual
issues and certification report are
intended to enhance board oversight of
personal investment policies applicable
to the fund and the personal investment
activities of Access Persons. The
requirements that Access Persons
provide initial holdings reports,
quarterly transaction reports, and
annual holdings reports and request
approval for purchases of securities
through IPOs and private placements
are intended to help fund compliance
personnel and the Commission’s
examinations staff monitor potential
conflicts of interest and detect
potentially abusive activities. The
requirement that each rule 17j–1
of the fund, who would otherwise be required to
report solely by reason of being a fund director and
who does not have information with respect to the
fund’s transactions in a particular security, does not
have to file an initial holdings report or a quarterly
transaction report; (iii) an Access Person of a
principal underwriter of the fund does not have to
file reports if the principal underwriter is not
affiliated with the fund (unless the fund is a unit
investment trust) or any investment adviser of the
fund and the principal underwriter of the fund does
not have any officer, director, or general partner
who serves in one of those capacities for the fund
or any investment adviser of the fund; (iv) an
Access Person to an investment adviser need not
make quarterly reports if the report would duplicate
information provided under the reporting
provisions of the Investment Adviser’s Act of 1940;
(v) an Access Person need not make quarterly
transaction reports if the information provided in
the report would duplicate information received by
the 17j–1 organization in the form of broker trade
confirmations or account statements or information
otherwise in the records of the 17j–1 organization;
and (vi) an Access Person need not make quarterly
transaction reports with respect to transactions
effected pursuant to an Automatic Investment Plan.
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organization maintain certain records is
intended to assist the organization and
the Commission’s examinations staff in
determining if there have been
violations of rule 17j–1.
We estimate that annually there are
approximately 85,297 respondents
under rule 17j–1, of which 15,297 are
rule 17j–1 organizations and 70,000 are
Access Persons. In the aggregate, these
respondents make approximately
107,363 responses annually. We
estimate that the total annual burden of
complying with the information
collection requirements in rule 17j–1 is
approximately 376,628 hours. This hour
burden represents time spent by Access
Persons that must file initial and annual
holdings reports and quarterly
transaction reports, investment
personnel that must obtain approval
before acquiring beneficial ownership in
any securities through an IPO or private
placement, and the responsibilities of
Rule 17j–1 organizations arising from
information collection requirements
under rule 17j–1. These include
notifying Access Persons of their
reporting obligations, preparing an
annual rule 17j–1 report and
certification for the board, documenting
their approval or rejection of IPO and
private placement requests, maintaining
annual rule 17j–1 records, maintaining
electronic reporting and recordkeeping
systems, amending their codes of ethics
as necessary, and, for new fund
complexes, adopting a code of ethics.
We estimate that there is an annual
cost burden of approximately $5,000 per
fund complex, for a total of $4,020,000
associated with complying with the
information collection requirements in
rule 17j–1. This represents the costs of
purchasing and maintaining computers
and software to assist funds in carrying
out rule 17j–1 recordkeeping.
These burden hour and cost estimates
are based upon the Commission staff’s
experience and discussions with the
fund industry. The estimates of average
burden hours and costs are made solely
for the purposes of the Paperwork
Reduction Act. These estimates are not
derived from a comprehensive or even
a representative survey or study of the
costs of Commission rules.
Compliance with the collection of
information requirements of the rule is
mandatory and is necessary to comply
with the requirements of the rule in
general. 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. Rule 17j–1 requires that
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18405
records be maintained for at least five
years in an easily accessible place.7
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
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 by May 31, 2022.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O John
Pezzullo, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: March 25, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06706 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94492; File No. SR–
NASDAQ–2022–020]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
4756(a)(3), in Light of Planned
Changes to the System as Well as To
Address Existing Issues
March 23, 2022.
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 11,
2022, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
7 If information collected pursuant to the rule is
reviewed by the Commission’s examination staff, it
will be accorded the same level of confidentiality
accorded to other responses provided to the
Commission in the context of its examination and
oversight program. See section 31(c) of the
Investment Company Act (15 U.S.C. 80a–30(c)).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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 amend
Rule 4756(a)(3), in light of planned
changes to the System as well as to
address existing issues, as described
further below. The text of the proposed
rule change is available on the
Exchange’s website at https://
listingcenter.nasdaq.com/rulebook/
nasdaq/rules, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
Presently, the Exchange is making
functional enhancements and
improvements to specific Order Types 3
and Order Attributes 4 that are currently
only available via the RASH Order entry
protocol.5 Specifically, the Exchange
will be upgrading the logic and
implementation of these Order Types
and Order Attributes so that the features
3 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 Nasdaq Book when
submitted to Nasdaq. See Equity 1, Section 1(a)(7).
4 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 Nasdaq
Book when submitted to Nasdaq. See id.
5 The RASH (Routing and Special Handling)
Order entry protocol is a proprietary protocol that
allows members to enter Orders, cancel existing
Orders and receive executions. RASH allows
participants to use advanced functionality,
including discretion, random reserve, pegging and
routing. See https://nasdaqtrader.com/content/
technicalsupport/specifications/TradingProducts/
rash_sb.pdf.
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are more streamlined across the Nasdaq
Systems and order entry protocols, and
will enable the Exchange to process
these Orders more quickly and
efficiently. Additionally, this System
upgrade will pave the way for the
Exchange to enhance the OUCH Order
entry protocol 6 so that Participants may
enter such Order Types and Order
Attributes via OUCH, in addition to the
RASH Order entry protocol.7 The
Exchange plans to implement its
enhancement of the OUCH protocol
sequentially, by Order Type and Order
Attribute.8
To support and prepare for these
upgrades and enhancements, the
Exchange previously submitted four
rule filings to the Commission that
amended its rules pertaining to, among
other things, Market Maker Peg Orders,
Orders with Reserve Size, Orders with
Pegging and Trade Now Attributes, and
Discretionary Orders.9 The Exchange
now proposes to amend Rule 4756(a)(3),
which governs the entry of Orders, so
that it aligns with how the System, once
upgraded, will handle the partial
cancellation of Orders to reduce their
share size. The proposed filing also
addresses issues with the existing Rule
6 The OUCH Order entry protocol is a Nasdaq
proprietary protocol that allows subscribers to
quickly enter orders into the System and receive
executions. OUCH accepts limit Orders from
members, and if there are matching Orders, they
will execute. Non-matching Orders are added to the
Limit Order Book, a database of available limit
Orders, where they are matched in price-time
priority. OUCH only provides a method for
members to send Orders and receive status updates
on those Orders. See https://www.nasdaqtrader.
com/Trader.aspx?id=OUCH.
7 The Exchange designed the OUCH protocol to
enable members to enter Orders quickly into the
System. As such, the Exchange developed OUCH
with simplicity in mind, and it therefore lacks more
complex order handling capabilities. By contrast,
the Exchange specifically designed RASH to
support advanced functionality, including
discretion, random reserve, pegging and routing.
Once the System upgrades occur, then the Exchange
intends to propose further changes to its Rules to
permit participants to utilize OUCH, in addition to
RASH, to enter order types that require advanced
functionality.
8 The Exchange notes that its sister exchanges,
Nasdaq BX and Nasdaq PSX, plan to file similar
proposed rule changes with the Commission
shortly. However, certain Order Types affected by
the proposed rule change are associated with the
Nasdaq Opening and Closing Crosses (LOC, MOC,
LOO, MOO, IO, and OIO Orders, discussed below),
and thus are not applicable to either Nasdaq BX or
Nasdaq PSX.
9 See Securities Exchange Act Release No. 34–
93245 (October 4, 2021), 86 FR 56302 (October 8,
2021) (SR–NASDAQ–2021–075); Securities
Exchange Act Release No. 34–92180 (June 15,
2021), 86 FR 33420 (June 24, 2021) (SR–NASDAQ–
2021–044); Securities Exchange Act Release No. 34–
91109 (February 11, 2021), 86 FR 10141 (February
18, 2021) (SR–NASDAQ–2020–090); Securities
Exchange Act Release No. 34–90389 (November 10,
2020), 85 FR 73304 (November 17, 2020) (SR–
NASDAQ–2020–071).
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text and the current implementation of
that Rule text by the System.
In pertinent part, existing Rule
4756(a)(3) states as follows, with respect
how the Exchange handles partial Order
cancellations to reduce share size:
In addition, a partial cancellation of an
Order to reduce its share size will not affect
the priority of the Order on the book;
provided, however, that such a partial
cancellation may not be made with respect to
an MOO Order, an LOO Order, an OIO Order,
an MOC Order, an LOC Order, an IO Order,
or a Pegged Order (including a Discretionary
Order that is Pegged).
The first clause of this text states the
general rule that participants may
instruct the Exchange to partially cancel
their Orders to reduce share size, and
when handling such partial cancellation
instructions, the Exchange will adjust
the size of the Orders without affecting
their existing priority. The second
clause states an exception to this general
rule, which the Exchange intends to
mean that when the Exchange processes
partial cancellations of Market On Open
(‘‘MOO’’), Limit on Open (‘‘LOO’’),
Opening Imbalance Only (‘‘OIO’’),
Market on Close (‘‘MOC’’), Limit on
Close (‘‘LOC’’), and Imbalance Only
Orders (‘‘IO’’), as well as Orders with
the Pegging Attribute (including
Discretionary Orders with Pegging) that
participants enter via RASH or FIX or
QIX (as opposed to OUCH or FLITE), the
partially cancelled Orders will lose their
priority.
Going forward, planned upgrades will
provide for the Exchange to process
partial cancellations of all Order Types
and Attributes entered through all of its
available and applicable Order Entry
Protocols, including RASH, OUCH, FIX,
QIX and FLITE,10 and it will do so
without loss of priority, such that the
existing exception to the general rule in
4756(a)(3) will no longer be necessary.
Thus, the Exchange proposes to
eliminate this exception by deleting the
following text from the Rule: ‘‘provided,
however, that such a partial cancellation
may not be made with respect to an
MOO Order, an LOO Order, an OIO
Order, an MOC Order, an LOC Order, an
IO Order, or a Pegged Order (including
a Discretionary Order that is Pegged).’’
This proposal will provide better
outcomes to participants by enabling
them to reduce the share size of their
Orders without the need to sacrifice the
priority of their Orders.
The Exchange believes that it is
reasonable to allow the partial
10 The Exchange notes that while the QIX Order
Entry Protocol still exists, the Exchange plans to
retire it in the near future and has begun
transitioning participants away from its use.
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cancellation of an Order without the
Order losing priority because the
participant that entered the Order
continues to express its willingness to
trade at the price entered when the
Order first came onto the Book.
Moreover, if the Order is displayed,
other participants quoting at the same
price are aware of the priority of their
Orders relative to the partially cancelled
Order. While a partial cancellation may
provide these other participants with
greater opportunities to provide a fill,
the Exchange does not believe that it
would be reasonable for these
participants to jump ahead of an Order
with time priority merely because the
size of the Order has been reduced.
Similarly, if the partially cancelled
Order is non-displayed, other
participants would have no awareness
of its price, its original size, or its
reduced size. Again, while other
participants at that price may have an
increased opportunity to provide a fill
when the Order’s size is reduced, they
would not have an expectation that the
priority of their Orders would change
vis-a`-vis that of an Order that arrived on
the Book at an earlier time.
Moreover, the Exchange notes that the
proposal will simplify and harmonize
the Exchange’s processing of partial
cancellations across its Order Entry
Protocols.
Additionally, the proposed Rule
change will address ambiguities in the
existing Rule text. The existing Rule text
does not state expressly the Exchange’s
current practice of restricting the loss of
priority following a partial cancellation
to LOO, MOO, MOC, LOC, and Pegged
Orders when such Orders are entered
through RASH or FIX or QIX. The
existing language suggests that partial
cancellations of these Orders cause a
loss of priority in all cases, regardless of
the Exchange’s Order Entry Protocol
utilized to enter the Orders. In fact, the
Exchange does process partial
cancellations of these Orders without
loss of priority when the Orders are
entered through OUCH and FLITE. The
proposed Rule change will address this
issue by providing for consistent
handling of partial cancellations across
all Orders and all applicable and
available Order Entry Protocols and by
eliminating exceptions in the existing
Rule text.
Similarly, the existing Rule is
ambiguous as to the intended scope of
its exception to the general rule for
‘‘Pegged Orders.’’ Although the Rule
states that the exception applies to
‘‘Pegged Orders (including a
Discretionary Order that is Pegged),’’ the
Exchange does not intend for Orders
with Midpoint Pegging to be part of this
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exception, and it applies the Rule
accordingly. In other words, the
Exchange processes partial cancellations
for Orders with Midpoint Pegging (i.e.,
Midpoint Peg Post-Only Orders,
Midpoint Extended Life Orders, and
Midpoint Extended Life Plus
Continuous Book Orders, as well as
Non-Display Orders assigned the
Midpoint Peg Attribute) without loss of
priority. The Exchange recognizes that
the Rule text does not specifically
address Orders with Midpoint Pegging.
Again, the proposed Rule change will
eliminate this issue going forward
because the Exchange will adopt
consistent handling of partial
cancellations across all Orders and
available and applicable Order Entry
Protocols.
Finally, the proposed Rule change
will address a problem that the
Exchange has uncovered with the
manner in which the System presently
processes OIO and IO Orders entered
though RASH and FIX and QIX. As
noted above, the Exchange intends for
the existing Rule to mean that partially
cancelled OIO and IO Orders entered
through RASH or FIX or QIX lose
priority. Nevertheless, the Exchange
discovered, during the course of
preparing its upgrades that the System
presently processes partial cancellations
of OIO and IO Orders entered through
RASH or FIX or QIX without loss of
priority. The Exchange believes that the
proposed Rule will render the existing
Rule text problem moot, and will better
serve participants by improving the
efficiency of their activity on the
Exchange as well as their potential
outcomes.
The Exchange intends to implement
the foregoing changes during the Second
Quarter of 2022. The Exchange will
issue an Equity Trader Alert at least 7
days in advance of implementing the
changes.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,11 in general, and furthers the
objectives of Section 6(b)(5) of the Act,12
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 Exchange believes that its
proposed amendment to Rule 4756(a)(3)
is consistent with the Act. Eliminating
the exception to the general Rule
11 15
12 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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18407
providing for the Exchange to process
partial cancellations without loss of
priority will benefit participants by
enabling them to reduce the share size
of their Orders without the need to
sacrifice the priority of their Orders.
The Exchange believes that it is
reasonable to allow the partial
cancellation of an Order without the
Order losing priority because the
participant that entered the Order
continues to express its willingness to
trade at the price entered when the
Order first came onto the Book.
Moreover, if the Order is displayed,
other participants quoting at the same
price are aware of the priority of their
Orders relative to the partially cancelled
Order. While a partial cancellation may
provide these other participants with
greater opportunities to provide a fill,
the Exchange does not believe that it
would be reasonable for these
participants to jump ahead of an Order
with time priority merely because the
size of the Order has been reduced.
Similarly, if the partially cancelled
order is non-displayed, other
participants would have no awareness
of its price, its original size, or its
reduced size. Again, while other
participants at that price may have an
increased opportunity to provide a fill
when the Order’s size is reduced, they
would not have an expectation that the
priority of their Orders would change
vis-a`-vis that of an Order that arrived on
the Book at an earlier time.
Moreover, the proposal will simplify
and harmonize the Exchange’s
processing of partial cancellations
across its Order Entry Protocols. This
proposed amendment reflects planned
upgrades that will allow the Exchange
to process partial cancellation of Orders
entered through all pertinent and
available Order Entry Protocols without
loss of priority.
Additionally, the proposed Rule
change is consistent with the Act
because it will eliminate ambiguities in
the existing Rule text that do not fully
reflect the Exchange’s intended meaning
or application of the Rule. As noted
above, the existing Rule text does not
state that the Exchange limits the loss of
priority for partially cancelled Orders to
LOO, MOO, MOC, LOC, and Pegged
Orders when such Orders are entered
through RASH or FIX or QIX. The
existing language suggests that partial
cancellations of these Orders lose
priority in all cases, regardless of the
Exchange’s Order Entry Protocol
utilized to enter the Orders. In fact, the
Exchange does process partial
cancellations of these Orders without
loss of priority when the Orders are
entered through OUCH or FLITE. The
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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proposed Rule change will address this
issue by providing for consistent
handling of partial cancellations across
all applicable and available Orders and
Order Entry Protocols and by
eliminating exceptions in the existing
Rule text.
Similarly, the existing Rule does not
reflect the Exchange’s intent that Orders
with Midpoint Pegging are not included
in this exception, even though it applies
the Rule in this manner. In other words,
the Exchange processes partial
cancellations for Midpoint Pegging
Orders without loss of priority. The
Exchange recognizes that the Rule text
does not specifically address Orders
with Midpoint Pegging. Again, the
proposed Rule change will eliminate
this issue going forward because the
Exchange will adopt consistent
handling of partial cancellations across
all Orders and applicable and available
Order Entry Protocols.
The proposed Rule change is
consistent with the Act because it will
address a problem that the Exchange has
uncovered with the manner in which
the System presently processes OIO and
IO Orders entered though RASH and
FIX and QIX. As noted above, the
Exchange intends for the existing Rule
to mean that partially cancelled OIO
and IO Orders entered through RASH or
FIX or QIX lose priority. Nevertheless,
during the course of preparing its
upgrades, the Exchange discovered that
the System presently does process
partial cancellations of OIO and IO
Orders entered through RASH and FIX
and QIX without loss of priority. The
Exchange believes that the proposed
Rule will render the existing Rule text
problem moot, and will better serve
participants by improving the efficiency
of their activity on the Exchange as well
as their potential outcomes.
Furthermore, it is consistent with the
Act to ensure that the Exchange’s Rules
and practices are, and remain, in sync.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that its
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act. As a general
principle, the proposed changes are
reflective of the significant competition
among exchanges and non-exchange
venues for order flow. In this regard,
proposed changes that facilitate
enhancements to the Exchange’s System
and Order Entry Protocols as well as
those that amend and clarify the
Exchange’s Rules regarding its Order
Types and Attributes, are procompetitive because they bolster the
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efficiency, integrity, and overall
attractiveness of the Exchange in an
absolute sense and relative to its peers.
Moreover, the proposed changes will
not unduly burden intra-market
competition among various Exchange
participants. The Exchange’s proposal to
allow the partial cancellation of an
Order without the Order losing priority
will not impact intra-market
competition because the participant that
entered the Order continues to express
its willingness to trade at the price
entered when the Order first came onto
the Book. Moreover, if the Order is
displayed, other participants quoting at
the same price are aware of the priority
of their Orders relative to the partially
cancelled Order. While a partial
cancellation may provide these other
participants with greater opportunities
to provide a fill, the Exchange does not
believe that it would be reasonable for
these participants to jump ahead of an
Order with time priority merely because
the size of the Order has been reduced.
Similarly, if the partially cancelled
Order is non-displayed, other
participants would have no awareness
of its price, its original size, or its
reduced size. Again, while other
participants at that price may have an
increased opportunity to provide a fill
when the Order’s size is reduced, they
would not have an expectation that the
priority of their Orders would change
vis-a`-vis that of an Order that arrived on
the Book at an earlier time.
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 13 and Rule 19b–
4(f)(6) thereunder.14
13 15
U.S.C. 78s(b)(3)(A).
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.
14 17
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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
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–
NASDAQ–2022–020 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2022–020. 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
E:\FR\FM\30MRN1.SGM
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2022–020, and
should be submitted on or before April
20, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06511 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94497; File No. SR–FICC–
2021–009]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change To Enhance
Capital Requirements and Make Other
Changes
March 23, 2022.
I. Introduction
On December 13, 2021, Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2021–009 (the
‘‘Proposed Rule Change’’) pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The Proposed Rule
Change was published for comment in
the Federal Register on December 29,
2021,3 and the Commission received no
comment letters regarding the changes
proposed in the Proposed Rule Change.
On January 26, 2022, pursuant to
Section 19(b)(2) of the Act,4 the
Commission designated a longer period
within which to approve, disapprove, or
institute proceedings to determine
whether to approve or disapprove the
Proposed Rule Change.5 This order
institutes proceedings, pursuant to
Section 19(b)(2)(B) of the Act,6 to
khammond on DSKJM1Z7X2PROD with NOTICES
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 93857
(December 22, 2021), 86 FR 74130 (December 29,
2021) (SR–FICC–2021–009) (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 Securities Exchange Act Release No. 94066
(January 26, 2022), 87 FR 5523 (February 1, 2022)
(SR–FICC–2021–009).
6 15 U.S.C. 78s(b)(2)(B).
1 15
VerDate Sep<11>2014
17:14 Mar 29, 2022
Jkt 256001
18409
determine whether to approve or
disapprove the Proposed Rule Change.
order to improve the accessibility and
transparency of the Rules.
II. Summary of the Proposed Rule
Change
As described in the Notice, FICC
proposes to amend the Government
Securities Division (‘‘GSD’’) Rulebook
(the ‘‘GSD Rules’’) and the MortgageBacked Securities Division (‘‘MBSD’’)
Clearing Rules (the ‘‘MBSD Rules,’’ and
together with the GSD Rules, the
‘‘Rules’’) of FICC in order to (1) revise
its capital requirements for GSD
members and MBSD members
(collectively, ‘‘members’’), (2)
streamline its two credit risk monitoring
systems, Watch List and enhanced
surveillance list, and (3) make certain
other clarifying, technical, and
supplementary changes to implement
items (1) and (2).7
First, FICC proposes to revise various
aspects of its capital requirements for
several types of members. FICC
proposes to increase minimum capital
requirements for certain members. FICC
also proposes to revise how it measures
certain members’ capital by
incorporating common equity tier 1
capital and the standards established in
the capital adequacy rules and
regulations of the Federal Deposit
Insurance Corporation. FICC would
revise the reporting requirements
concerning the capital requirements for
certain members. In addition, for certain
types of members who currently do not
have specific amounts for their
minimum capital requirements, the
proposal would establish such a
requirement.
Second, FICC proposes to revise its
Watch List and enhanced surveillance
list, which are both currently used to
identify participants who would receive
additional or enhanced credit risk
monitoring. FICC proposes to revise its
Watch List and delete its enhanced
surveillance list. FICC also proposes to
clarify that members on the Watch List
are reported to FICC’s management
committees and regularly reviewed by
FICC’s senior management.
Third, FICC proposes to (1) revise or
add headings and sub-headings and
renumbering sections as appropriate, (2)
revise defined terms and add
appropriate defined terms to facilitate
the proposed changes, (3) rearrange and
consolidate paragraphs to promote
readability, (4) fix typographical and
other errors, and (5) other changes in
III. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Change and Grounds for
Disapproval Under Consideration
7 The description of the Proposed Rule Change is
based on the statements prepared by FICC in the
Notice. See Notice, supra note 3. Capitalized terms
used herein and not otherwise defined herein are
defined in the Rules, available at https://
www.dtcc.com/legal/rules-and-procedures.
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 8 to determine
whether the Proposed Rule Change
should be approved or disapproved.
Institution of proceedings is appropriate
at this time in view of the legal and
policy issues raised by the Proposed
Rule Change. Institution of proceedings
does not indicate that the Commission
has reached any conclusions with
respect to any of the issues involved.
Rather, the Commission seeks and
encourages interested persons to
comment on the Proposed Rule Change,
providing the Commission with
arguments to support the Commission’s
analysis as to whether to approve or
disapprove the Proposed Rule Change.
Pursuant to Section 19(b)(2)(B) of the
Act,9 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for
additional analysis of, and input from
commenters with respect to, the
Proposed Rule Change’s consistency
with Section 17A of the Act,10 and the
rules thereunder, including the
following provisions:
• Section 17A(b)(3)(F) of the Act,11
which requires, among other things, that
the rules of a clearing agency must be
designed to promote the prompt and
accurate clearance and settlement of
securities transactions, to assure the
safeguarding of securities and funds
which are in the custody or control of
the clearing agency or for which it is
responsible, and to protect investors and
the public interest;
• Section 17A(b)(3)(I) of the Act,12
which requires that the rules of a
clearing agency do not impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act;
• Rule 17Ad–22(e)(18) under the
Act,13 which requires that a covered
clearing agency establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to
establish objective, risk-based, and
publicly disclosed criteria for
participation, which permit fair and
8 15
U.S.C. 78s(b)(2)(B).
9 Id.
10 15
U.S.C. 78q–1.
U.S.C. 78q–1(b)(3)(F).
12 15 U.S.C. 78q–1(b)(3)(I).
13 17 CFR 240.17Ad–22(e)(18).
11 15
E:\FR\FM\30MRN1.SGM
30MRN1
]]>Agencies
[Federal Register Volume 87, Number 61 (Wednesday, March 30, 2022)]
[Notices]
[Pages 18405-18409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06511]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94492; File No. SR-NASDAQ-2022-020]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 4756(a)(3), in Light of Planned Changes to the System as
Well as To Address Existing Issues
March 23, 2022.
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 11, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II
[[Page 18406]]
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 amend Rule 4756(a)(3), in light of planned
changes to the System as well as to address existing issues, as
described further below. The text of the proposed rule change is
available on the Exchange's website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Presently, the Exchange is making functional enhancements and
improvements to specific Order Types \3\ and Order Attributes \4\ that
are currently only available via the RASH Order entry protocol.\5\
Specifically, the Exchange will be upgrading the logic and
implementation of these Order Types and Order Attributes so that the
features are more streamlined across the Nasdaq Systems and order entry
protocols, and will enable the Exchange to process these Orders more
quickly and efficiently. Additionally, this System upgrade will pave
the way for the Exchange to enhance the OUCH Order entry protocol \6\
so that Participants may enter such Order Types and Order Attributes
via OUCH, in addition to the RASH Order entry protocol.\7\ The Exchange
plans to implement its enhancement of the OUCH protocol sequentially,
by Order Type and Order Attribute.\8\
---------------------------------------------------------------------------
\3\ 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 Nasdaq Book when
submitted to Nasdaq. See Equity 1, Section 1(a)(7).
\4\ 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 Nasdaq Book when submitted to Nasdaq. See id.
\5\ The RASH (Routing and Special Handling) Order entry protocol
is a proprietary protocol that allows members to enter Orders,
cancel existing Orders and receive executions. RASH allows
participants to use advanced functionality, including discretion,
random reserve, pegging and routing. See https://nasdaqtrader.com/content/technicalsupport/specifications/TradingProducts/rash_sb.pdf.
\6\ The OUCH Order entry protocol is a Nasdaq proprietary
protocol that allows subscribers to quickly enter orders into the
System and receive executions. OUCH accepts limit Orders from
members, and if there are matching Orders, they will execute. Non-
matching Orders are added to the Limit Order Book, a database of
available limit Orders, where they are matched in price-time
priority. OUCH only provides a method for members to send Orders and
receive status updates on those Orders. See https://www.nasdaqtrader.com/Trader.aspx?id=OUCH.
\7\ The Exchange designed the OUCH protocol to enable members to
enter Orders quickly into the System. As such, the Exchange
developed OUCH with simplicity in mind, and it therefore lacks more
complex order handling capabilities. By contrast, the Exchange
specifically designed RASH to support advanced functionality,
including discretion, random reserve, pegging and routing. Once the
System upgrades occur, then the Exchange intends to propose further
changes to its Rules to permit participants to utilize OUCH, in
addition to RASH, to enter order types that require advanced
functionality.
\8\ The Exchange notes that its sister exchanges, Nasdaq BX and
Nasdaq PSX, plan to file similar proposed rule changes with the
Commission shortly. However, certain Order Types affected by the
proposed rule change are associated with the Nasdaq Opening and
Closing Crosses (LOC, MOC, LOO, MOO, IO, and OIO Orders, discussed
below), and thus are not applicable to either Nasdaq BX or Nasdaq
PSX.
---------------------------------------------------------------------------
To support and prepare for these upgrades and enhancements, the
Exchange previously submitted four rule filings to the Commission that
amended its rules pertaining to, among other things, Market Maker Peg
Orders, Orders with Reserve Size, Orders with Pegging and Trade Now
Attributes, and Discretionary Orders.\9\ The Exchange now proposes to
amend Rule 4756(a)(3), which governs the entry of Orders, so that it
aligns with how the System, once upgraded, will handle the partial
cancellation of Orders to reduce their share size. The proposed filing
also addresses issues with the existing Rule text and the current
implementation of that Rule text by the System.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 34-93245 (October 4,
2021), 86 FR 56302 (October 8, 2021) (SR-NASDAQ-2021-075);
Securities Exchange Act Release No. 34-92180 (June 15, 2021), 86 FR
33420 (June 24, 2021) (SR-NASDAQ-2021-044); Securities Exchange Act
Release No. 34-91109 (February 11, 2021), 86 FR 10141 (February 18,
2021) (SR-NASDAQ-2020-090); Securities Exchange Act Release No. 34-
90389 (November 10, 2020), 85 FR 73304 (November 17, 2020) (SR-
NASDAQ-2020-071).
---------------------------------------------------------------------------
In pertinent part, existing Rule 4756(a)(3) states as follows, with
respect how the Exchange handles partial Order cancellations to reduce
share size:
In addition, a partial cancellation of an Order to reduce its
share size will not affect the priority of the Order on the book;
provided, however, that such a partial cancellation may not be made
with respect to an MOO Order, an LOO Order, an OIO Order, an MOC
Order, an LOC Order, an IO Order, or a Pegged Order (including a
Discretionary Order that is Pegged).
The first clause of this text states the general rule that participants
may instruct the Exchange to partially cancel their Orders to reduce
share size, and when handling such partial cancellation instructions,
the Exchange will adjust the size of the Orders without affecting their
existing priority. The second clause states an exception to this
general rule, which the Exchange intends to mean that when the Exchange
processes partial cancellations of Market On Open (``MOO''), Limit on
Open (``LOO''), Opening Imbalance Only (``OIO''), Market on Close
(``MOC''), Limit on Close (``LOC''), and Imbalance Only Orders
(``IO''), as well as Orders with the Pegging Attribute (including
Discretionary Orders with Pegging) that participants enter via RASH or
FIX or QIX (as opposed to OUCH or FLITE), the partially cancelled
Orders will lose their priority.
Going forward, planned upgrades will provide for the Exchange to
process partial cancellations of all Order Types and Attributes entered
through all of its available and applicable Order Entry Protocols,
including RASH, OUCH, FIX, QIX and FLITE,\10\ and it will do so without
loss of priority, such that the existing exception to the general rule
in 4756(a)(3) will no longer be necessary. Thus, the Exchange proposes
to eliminate this exception by deleting the following text from the
Rule: ``provided, however, that such a partial cancellation may not be
made with respect to an MOO Order, an LOO Order, an OIO Order, an MOC
Order, an LOC Order, an IO Order, or a Pegged Order (including a
Discretionary Order that is Pegged).'' This proposal will provide
better outcomes to participants by enabling them to reduce the share
size of their Orders without the need to sacrifice the priority of
their Orders.
---------------------------------------------------------------------------
\10\ The Exchange notes that while the QIX Order Entry Protocol
still exists, the Exchange plans to retire it in the near future and
has begun transitioning participants away from its use.
---------------------------------------------------------------------------
The Exchange believes that it is reasonable to allow the partial
[[Page 18407]]
cancellation of an Order without the Order losing priority because the
participant that entered the Order continues to express its willingness
to trade at the price entered when the Order first came onto the Book.
Moreover, if the Order is displayed, other participants quoting at the
same price are aware of the priority of their Orders relative to the
partially cancelled Order. While a partial cancellation may provide
these other participants with greater opportunities to provide a fill,
the Exchange does not believe that it would be reasonable for these
participants to jump ahead of an Order with time priority merely
because the size of the Order has been reduced. Similarly, if the
partially cancelled Order is non-displayed, other participants would
have no awareness of its price, its original size, or its reduced size.
Again, while other participants at that price may have an increased
opportunity to provide a fill when the Order's size is reduced, they
would not have an expectation that the priority of their Orders would
change vis-[agrave]-vis that of an Order that arrived on the Book at an
earlier time.
Moreover, the Exchange notes that the proposal will simplify and
harmonize the Exchange's processing of partial cancellations across its
Order Entry Protocols.
Additionally, the proposed Rule change will address ambiguities in
the existing Rule text. The existing Rule text does not state expressly
the Exchange's current practice of restricting the loss of priority
following a partial cancellation to LOO, MOO, MOC, LOC, and Pegged
Orders when such Orders are entered through RASH or FIX or QIX. The
existing language suggests that partial cancellations of these Orders
cause a loss of priority in all cases, regardless of the Exchange's
Order Entry Protocol utilized to enter the Orders. In fact, the
Exchange does process partial cancellations of these Orders without
loss of priority when the Orders are entered through OUCH and FLITE.
The proposed Rule change will address this issue by providing for
consistent handling of partial cancellations across all Orders and all
applicable and available Order Entry Protocols and by eliminating
exceptions in the existing Rule text.
Similarly, the existing Rule is ambiguous as to the intended scope
of its exception to the general rule for ``Pegged Orders.'' Although
the Rule states that the exception applies to ``Pegged Orders
(including a Discretionary Order that is Pegged),'' the Exchange does
not intend for Orders with Midpoint Pegging to be part of this
exception, and it applies the Rule accordingly. In other words, the
Exchange processes partial cancellations for Orders with Midpoint
Pegging (i.e., Midpoint Peg Post-Only Orders, Midpoint Extended Life
Orders, and Midpoint Extended Life Plus Continuous Book Orders, as well
as Non-Display Orders assigned the Midpoint Peg Attribute) without loss
of priority. The Exchange recognizes that the Rule text does not
specifically address Orders with Midpoint Pegging. Again, the proposed
Rule change will eliminate this issue going forward because the
Exchange will adopt consistent handling of partial cancellations across
all Orders and available and applicable Order Entry Protocols.
Finally, the proposed Rule change will address a problem that the
Exchange has uncovered with the manner in which the System presently
processes OIO and IO Orders entered though RASH and FIX and QIX. As
noted above, the Exchange intends for the existing Rule to mean that
partially cancelled OIO and IO Orders entered through RASH or FIX or
QIX lose priority. Nevertheless, the Exchange discovered, during the
course of preparing its upgrades that the System presently processes
partial cancellations of OIO and IO Orders entered through RASH or FIX
or QIX without loss of priority. The Exchange believes that the
proposed Rule will render the existing Rule text problem moot, and will
better serve participants by improving the efficiency of their activity
on the Exchange as well as their potential outcomes.
The Exchange intends to implement the foregoing changes during the
Second Quarter of 2022. The Exchange will issue an Equity Trader Alert
at least 7 days in advance of implementing the changes.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\12\ 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that its proposed amendment to Rule
4756(a)(3) is consistent with the Act. Eliminating the exception to the
general Rule providing for the Exchange to process partial
cancellations without loss of priority will benefit participants by
enabling them to reduce the share size of their Orders without the need
to sacrifice the priority of their Orders.
The Exchange believes that it is reasonable to allow the partial
cancellation of an Order without the Order losing priority because the
participant that entered the Order continues to express its willingness
to trade at the price entered when the Order first came onto the Book.
Moreover, if the Order is displayed, other participants quoting at the
same price are aware of the priority of their Orders relative to the
partially cancelled Order. While a partial cancellation may provide
these other participants with greater opportunities to provide a fill,
the Exchange does not believe that it would be reasonable for these
participants to jump ahead of an Order with time priority merely
because the size of the Order has been reduced. Similarly, if the
partially cancelled order is non-displayed, other participants would
have no awareness of its price, its original size, or its reduced size.
Again, while other participants at that price may have an increased
opportunity to provide a fill when the Order's size is reduced, they
would not have an expectation that the priority of their Orders would
change vis-[agrave]-vis that of an Order that arrived on the Book at an
earlier time.
Moreover, the proposal will simplify and harmonize the Exchange's
processing of partial cancellations across its Order Entry Protocols.
This proposed amendment reflects planned upgrades that will allow the
Exchange to process partial cancellation of Orders entered through all
pertinent and available Order Entry Protocols without loss of priority.
Additionally, the proposed Rule change is consistent with the Act
because it will eliminate ambiguities in the existing Rule text that do
not fully reflect the Exchange's intended meaning or application of the
Rule. As noted above, the existing Rule text does not state that the
Exchange limits the loss of priority for partially cancelled Orders to
LOO, MOO, MOC, LOC, and Pegged Orders when such Orders are entered
through RASH or FIX or QIX. The existing language suggests that partial
cancellations of these Orders lose priority in all cases, regardless of
the Exchange's Order Entry Protocol utilized to enter the Orders. In
fact, the Exchange does process partial cancellations of these Orders
without loss of priority when the Orders are entered through OUCH or
FLITE. The
[[Page 18408]]
proposed Rule change will address this issue by providing for
consistent handling of partial cancellations across all applicable and
available Orders and Order Entry Protocols and by eliminating
exceptions in the existing Rule text.
Similarly, the existing Rule does not reflect the Exchange's intent
that Orders with Midpoint Pegging are not included in this exception,
even though it applies the Rule in this manner. In other words, the
Exchange processes partial cancellations for Midpoint Pegging Orders
without loss of priority. The Exchange recognizes that the Rule text
does not specifically address Orders with Midpoint Pegging. Again, the
proposed Rule change will eliminate this issue going forward because
the Exchange will adopt consistent handling of partial cancellations
across all Orders and applicable and available Order Entry Protocols.
The proposed Rule change is consistent with the Act because it will
address a problem that the Exchange has uncovered with the manner in
which the System presently processes OIO and IO Orders entered though
RASH and FIX and QIX. As noted above, the Exchange intends for the
existing Rule to mean that partially cancelled OIO and IO Orders
entered through RASH or FIX or QIX lose priority. Nevertheless, during
the course of preparing its upgrades, the Exchange discovered that the
System presently does process partial cancellations of OIO and IO
Orders entered through RASH and FIX and QIX without loss of priority.
The Exchange believes that the proposed Rule will render the existing
Rule text problem moot, and will better serve participants by improving
the efficiency of their activity on the Exchange as well as their
potential outcomes. Furthermore, it is consistent with the Act to
ensure that the Exchange's Rules and practices are, and remain, in
sync.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that its proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. As a general principle, the
proposed changes are reflective of the significant competition among
exchanges and non-exchange venues for order flow. In this regard,
proposed changes that facilitate enhancements to the Exchange's System
and Order Entry Protocols as well as those that amend and clarify the
Exchange's Rules regarding its Order Types and Attributes, are pro-
competitive because they bolster the efficiency, integrity, and overall
attractiveness of the Exchange in an absolute sense and relative to its
peers.
Moreover, the proposed changes will not unduly burden intra-market
competition among various Exchange participants. The Exchange's
proposal to allow the partial cancellation of an Order without the
Order losing priority will not impact intra-market competition because
the participant that entered the Order continues to express its
willingness to trade at the price entered when the Order first came
onto the Book. Moreover, if the Order is displayed, other participants
quoting at the same price are aware of the priority of their Orders
relative to the partially cancelled Order. While a partial cancellation
may provide these other participants with greater opportunities to
provide a fill, the Exchange does not believe that it would be
reasonable for these participants to jump ahead of an Order with time
priority merely because the size of the Order has been reduced.
Similarly, if the partially cancelled Order is non-displayed, other
participants would have no awareness of its price, its original size,
or its reduced size. Again, while other participants at that price may
have an increased opportunity to provide a fill when the Order's size
is reduced, they would not have an expectation that the priority of
their Orders would change vis-[agrave]-vis that of an Order that
arrived on the Book at an earlier time.
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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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.
---------------------------------------------------------------------------
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 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-NASDAQ-2022-020 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2022-020. 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
[[Page 18409]]
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2022-020, and should
be submitted on or before April 20, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06511 Filed 3-29-22; 8:45 am]
BILLING CODE 8011-01-P
