Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delay Implementation of Pending Amendments to Equity 4, Rules 4120, 4702 and 4703, 71712-71714 [2022-25472]
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71712
Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–PEARL–2022–51 and
should be submitted on or before
December 14, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.57
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–25471 Filed 11–22–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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 the
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–96341; File No. SR–
NASDAQ–2022–065]
1. Purpose
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Delay
Implementation of Pending
Amendments to Equity 4, Rules 4120,
4702 and 4703
November 17, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
14, 2022, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
lotter on DSK11XQN23PROD with NOTICES1
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delay
implementation of pending
amendments to Equity 4, Rules 4120,
4702 and 4703 3 in light of planned
changes to the System.
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.
57 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 References herein to Nasdaq Rules in the 4000
Series shall mean Rules in Nasdaq Equity 4.
1 15
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On November 14, 2022, the Exchange
plans introduce a new upgraded version
of the OUCH Order entry protocol 4 that
will, when fully implemented, enable
the Exchange to make functional
improvements to specific Order Types 5
and Order Attributes.6 The Exchange
filed its proposal (the ‘‘Proposal’’) for
these enhancements with the SEC on
September 14, 2022, and in the Proposal
the Exchange stated that its operative
date would be November 14.7 The
Exchange recently issued a reminder of
that operative date in an Equity Trader
Alert.8 The Exchange now wishes to
inform participants that while it intends
to proceed with introducing technical
upgrades to OUCH on November 14th,
the functional upgrades affecting Order
Types, Order Attributes, and Order
4 The OUCH Order entry protocol is a 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. Nonmatching 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.
5 An ‘‘Order Type’’ is a standardized set of
instructions associated with an Order that define
how it will behave with respect to pricing,
execution, and/or posting to the Exchange Book
when submitted to Nasdaq. See Equity 1, Section
1(a)(7).
6 An ‘‘Order Attribute’’ is a further set of variable
instructions that may be associated with an Order
to further define how it will behave with respect to
pricing, execution, and/or posting to the Exchange
Book when submitted to the Exchange. See id.
7 See Securities Exchange Act Release No. 34–
95768 (September 14, 2022); 87 FR 57534
(September 20, 2022) (SR–Nasdaq–2022–051).
8 See Equity Trader Alert 2022–96 (October 26,
2022), available at https://www.nasdaqtrader.com/
TraderNews.aspx?id=%20ETA2022-96.
PO 00000
Frm 00144
Fmt 4703
Sfmt 4703
Handling and trading behavior will not
be available on that date.
By way of background, the functional
enhancements to OUCH set forth in the
Proposal will enable the Exchange to
upgrade the logic and implementation
of certain of its Order Types and Order
Attributes so that the features are more
robust, streamlined, and harmonized
across the Exchange’s Systems and
Order entry protocols. The Exchange
developed OUCH with simplicity in
mind, and therefore, it presently lacks
certain complex order handling
capabilities. By contrast, the Exchange
specifically designed its RASH Order
Entry Protocol 9 to support advanced
functionality, including discretion,
random reserve, pegging and routing.
The introduction of OUCH upgrades
will enable participants to utilize
OUCH, in addition to RASH, to enter
Order Types that require advanced
functionality. Thus, the upgrades will
not introduce new functionality, but
rather, it will offer to OUCH users
advanced functionality that already
exists for RASH users.
Specifically, the Proposal will amend
Rule 4702 pertaining to Order Types to
specify that, going forward, OUCH may
be used to enter certain Order Types
together with certain Order Attributes,
whereas now, Rule 4702 specifies that
RASH, FIX, and QIX, but not OUCH,
may be used to enter such combinations
of Order Types and Attributes.10 The
Proposal will also adjust the current
functionality of the Pegging,11
Reserve,12 and Trade Now Order
Attributes,13 as described therein, so
that they align with how OUCH, once
upgraded, will handle these Order
Attributes going forward.
Unfortunately, none of these new
OUCH functionalities set forth in the
Proposal will be available on November
14, 2022, and they may not be available
for several months thereafter due to
delays in completing the necessary
9 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.
10 The planned upgrades will enable members to
utilize OUCH in additional circumstances,
including for the entry of: (1) Price to Comply and
Price to Display Orders with the Reserve Size,
Primary and Market Pegging, and Discretion Order
Attributes; (2) Non-Displayed Orders with the
Primary and Market Pegging, Midpoint Pegging (in
scenarios described in amended Rule 4703(d)), and
Discretion Order Attributes; and (3) Market Maker
Peg Orders.
11 See Rule 4703(d).
12 See Rule 4703(h).
13 See Rule 4703(m)–(n).
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Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices
development work. The Exchange still
will make the new version of OUCH
available for participant use on
November 14th, as the Exchange will be
in a position on that date to implement
certain technical enhancements to the
OUCH Protocol of value to participants.
However, these technical enhancements
will not affect existing Order Types,
Order Attributes, or Order handling or
trading behavior on the Exchange.
As such, the new Rules set forth in the
Proposal will not be operational on
November 14th. Instead, existing Rules
governing Order Types, Order Attributes
and Order handling and trading
behavior on the Exchange will continue
to apply as of November 14th and until
such date as all of the functional
upgrades to OUCH are complete and
ready for implementation. The
Exchange will announce the
implementation date of the new OUCH
functionalities, and of the new Rules set
forth in the Proposal, in an Equity
Trader Alert at least 30 days prior to
implementation. A present, the
Exchange expects that the new OUCH
functionality will be ready for full
implementation in the second or third
quarter of 2023, although that time
frame is subject to change.
lotter on DSK11XQN23PROD with NOTICES1
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,14 in general, and furthers the
objectives of Section 6(b)(5) of the Act,15
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.
It is consistent with the Act to delay
implementation of pending
amendments to the Exchange’s
Rulebook relating to effectuate
functional upgrades to OUCH because
such functional upgrades will not be
ready for implementation upon the
launch of the new version of the OUCH
protocol on November 14, 2022. The
Exchange believes that it is in the best
interests of investors and the public,
and consistent with the maintenance of
an orderly market, to avoid confusion by
maintaining its current Rulebook
governing OUCH until such time as the
Exchange is ready to implement the new
functionality.
14 15
15 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change will merely delay
the implementation schedule for the
Proposal as well as the Rules that will
apply to participants and their Orders in
the interim period.
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 prior to 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 16 and
Rule 19b–4(f)(6) thereunder.17
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii), the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing.
The Commission believes that a
waiver of the operative delay is
consistent with the protection of
investors and the public interest
because it allow the Exchange to avoid
confusion that might otherwise arise on
November 14, 2022, the date when the
Proposal is currently scheduled to
become operative, if the Exchange’s
Rulebook was to suggest to participants
that OUCH Orders will behave in a
manner that is not yet accurate.
Accordingly, the Commission hereby
16 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) 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.
17 17
PO 00000
Frm 00145
Fmt 4703
Sfmt 4703
71713
waives the 30-day operative delay and
designates the proposal operative upon
filing.
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
under Section 19(b)(2)(B) 18 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2022–065 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–2022–065. 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
18 15
E:\FR\FM\23NON1.SGM
U.S.C. 78s(b)(2)(B).
23NON1
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Federal Register / Vol. 87, No. 225 / Wednesday, November 23, 2022 / Notices
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2022–065 and
should be submitted on or before
December 14,2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
2022, the Commission published notices
designating a longer period of time for
Commission action and a longer period
for public comment on the Proposed
Rule Changes.4 On September 9, 2022,
the Commission issued orders
instituting proceedings on the Proposed
Rule Changes.5 The Commission has
received comments on the changes
proposed therein.6 This order approves
the Proposed Rule Changes.
I. Description of the Proposed Rule
Changes
A. Background and Overview of the
Changes
The Clearing Agencies adopted the
Clearing Agency Stress Testing
Framework (Market Risk) (‘‘ST
Framework’’) to set forth the manner in
[FR Doc. 2022–25472 Filed 11–22–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96345; File Nos. SR–DTC–
2022–006; SR–FICC–2022–004; SR–NSCC–
2022–006]
Self-Regulatory Organizations; The
Depository Trust Company; Fixed
Income Clearing Corporation; National
Securities Corporation; Order Granting
Proposed Rule Changes To Amend the
Stress Testing Framework and
Liquidity Risk Management Framework
lotter on DSK11XQN23PROD with NOTICES1
November 17, 2022.
On May 26, 2022, The Depository
Trust Company (‘‘DTC’’), Fixed Income
Clearing Corporation (‘‘FICC’’), and
National Securities Clearing Corporation
(‘‘NSCC’’) (each a ‘‘Clearing Agency,’’
and collectively, the ‘‘Clearing
Agencies’’), filed with the Securities and
Exchange Commission (‘‘Commission’’)
proposed rule changes SR–DTC–2022–
006, SR–FICC–2022–004, and SR–
NSCC–2022–006 (the ‘‘Proposed Rule
Changes’’) pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder 2 to
amend the Stress Testing Framework
and Liquidity Risk Management
Framework adopted by the Clearing
Agencies, as well as to update the FICC
Mortgage-Backed Securities Division
(‘‘MBSD’’) Rules.
The Proposed Rule Changes were
published for comment in the Federal
Register on June 15, 2022.3 On July 14,
19 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 95080
(June 9, 2022), 87 FR 36191 (June 15, 2022) (File
No. SR–DTC–2022–006) (‘‘DTC Notice’’); Securities
1 15
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Jkt 259001
Exchange Act Release No. 95079 (June 9, 2022), 87
FR 36182 (June 15, 2022) (File No. SR–FICC–2022–
004) (‘‘FICC Notice’’); Securities Exchange Act
Release No. 95078 (June 10, 2022), 87 FR 36158
(June 15, 2022) (File No. SR–NSCC–2022–006)
(‘‘NSCC Notice’’).
4 Securities Exchange Act Release No. 95282 (July
14, 2022), 87 FR 43354 (July 20, 2022) (SR–DTC–
006); Securities Exchange Act Release No. 95283
(July 14, 2022), 87 FR 43364 (July 20, 2022) (SR–
FICC–2022–004); Securities Exchange Act Release
No. (July 14, 2022), 87 FR 43354 (July 20, 2022)
(SR–NSCC–2022–006).
5 Securities Exchange Act Release No. 95729
(Sept. 9, 2022), 87 FR 56733 (Sept. 15, 2022) (SR–
DTC–2022–006); Securities Exchange Act Release
No. 95724 (Sept. 9, 2022), 87 FR 56732 (Sept. 15,
2022) (SR–FICC–2022–004); Securities Exchange
Act Release No. 95725 (Sept. 9, 2022), 87 FR 56735
(Sept. 15, 2022) (SR–NSCC–2022–006).
6 Specifically, the Commission received
comments only on the DTC Notice, and the
comment is available at https://www.sec.gov/
comments/sr-dtc-2022-006/srdtc2022006.htm. The
commenter raised a concern regarding the
confidentiality of the proposed rule. Id. DTC
asserted that the exhibits to the filing, including the
proposed rule, were entitled to confidential
treatment because, if released, they could cause
harm to the Clearing Agencies and their
participants. Under Section 23(a)(3) of the Exchange
Act, the Commission is not required to make public
statements filed with the Commission in connection
with a proposed rule change of a self-regulatory
organization if the Commission could withhold the
statements from the public in accordance with the
Freedom of Information Act (‘‘FOIA’’), 5 U.S.C. 552.
15 U.S.C. 78w(a)(3). The Commission has reviewed
the documents for which DTC requests confidential
treatment and concludes that they could be
withheld from the public under the FOIA. FOIA
Exemption 4 protects confidential commercial or
financial information. 5 U.S.C. 552(b)(4). Under
Exemption 4, information is confidential if it ‘‘is
both customarily and actually treated as private by
its owner and provided to government under an
assurance of privacy.’’ Food Marketing Institute v.
Argus Leader Media, 139 S. Ct. 2356, 2366 (2019).
The Commission understands that DTC has not
disclosed the confidential exhibits to the public,
and believes that the information is the type that
would not customarily be disclosed to the public.
In addition, by requesting confidential treatment,
DTC had an assurance of privacy because the
Commission generally protects information that can
be withheld under Exemption 4. Thus, the
Commission has determined to accord confidential
treatment to the confidential exhibits.
PO 00000
Frm 00146
Fmt 4703
Sfmt 4703
which they identify, measure, monitor,
and manage their credit exposures to
participants and those arising from their
respective payment, clearing, and
settlement processes by, for example,
maintaining sufficient prefunded
financial resources to cover its credit
exposures to each participant fully with
a high degree of confidence and testing
the sufficiency of those prefunded
financial resources through stress
testing.7 The ST Framework describes
the stress testing activities of each of the
Clearing Agencies. The Clearing
Agencies adopted the Clearing Agency
Liquidity Risk Management Framework
(‘‘LRM Framework,’’ and, together with
the ST Framework, the ‘‘Frameworks’’)
to set forth the manner in which they
measure, monitor and manage the
liquidity risks that arise in or are borne
by each of the Clearing Agencies by, for
example, (1) maintaining sufficient
liquid resources to effect same-day
settlement of payment obligations with
a high degree of confidence under a
wide range of foreseeable stress
scenarios that includes, but is not
limited to, the default of the participant
family that would generate the largest
aggregate payment obligation for each
Clearing Agency in extreme but
plausible market conditions, and (2)
determining the amount and regularly
testing the sufficiency of qualifying
liquid resources by conducting stress
testing of those resources.8 The LRM
Framework describes the liquidity risk
management activities of each of the
Clearing Agencies.
First, the proposed rule change would
amend both the ST Framework and the
LRM Framework to move descriptions
of the Clearing Agencies’ liquidity stress
testing activities,9 from the LRM
Framework to the ST Framework. In
connection with this proposed change,
the Clearing Agencies are also proposing
to recategorize the liquidity stress
scenarios by removing the Level 1, Level
2 and Level 3 labels and instead
categorizing all stress scenarios as either
regulatory or informational.
Second, the proposed changes would
amend the ST Framework to (1) enhance
stress testing for GSD to obtain certain
data utilized in stress testing from
external vendors and implement a backup stress testing calculation that would
7 Securities Exchange Act Release No. 82368 (Dec.
19, 2017), 82 FR 61082 (Dec. 26, 2017) (SR–DTC–
2017–005; SR–FICC–2017–009; SR–NSCC–2017–
006) (‘‘Initial ST Framework Order’’).
8 Securities Exchange Act Release Nos. 82377
(December 21, 2017), 82 FR 61617 (December 28,
2017) (File Nos. SR–DTC–2017–004; SR–FICC–
2017–008; SR–NSCC–2017–005) (‘‘Initial LRM
Framework Order’’).
9 17 CFR 240.17Ad–22(e)(7)(vi).
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]]>Agencies
[Federal Register Volume 87, Number 225 (Wednesday, November 23, 2022)]
[Notices]
[Pages 71712-71714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25472]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96341; File No. SR-NASDAQ-2022-065]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Delay Implementation of Pending Amendments to Equity 4, Rules 4120,
4702 and 4703
November 17, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 14, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delay implementation of pending amendments
to Equity 4, Rules 4120, 4702 and 4703 \3\ in light of planned changes
to the System.
---------------------------------------------------------------------------
\3\ References herein to Nasdaq Rules in the 4000 Series shall
mean Rules in Nasdaq Equity 4.
---------------------------------------------------------------------------
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
On November 14, 2022, the Exchange plans introduce a new upgraded
version of the OUCH Order entry protocol \4\ that will, when fully
implemented, enable the Exchange to make functional improvements to
specific Order Types \5\ and Order Attributes.\6\ The Exchange filed
its proposal (the ``Proposal'') for these enhancements with the SEC on
September 14, 2022, and in the Proposal the Exchange stated that its
operative date would be November 14.\7\ The Exchange recently issued a
reminder of that operative date in an Equity Trader Alert.\8\ The
Exchange now wishes to inform participants that while it intends to
proceed with introducing technical upgrades to OUCH on November 14th,
the functional upgrades affecting Order Types, Order Attributes, and
Order Handling and trading behavior will not be available on that date.
---------------------------------------------------------------------------
\4\ The OUCH Order entry protocol is a 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.
\5\ An ``Order Type'' is a standardized set of instructions
associated with an Order that define how it will behave with respect
to pricing, execution, and/or posting to the Exchange Book when
submitted to Nasdaq. See Equity 1, Section 1(a)(7).
\6\ An ``Order Attribute'' is a further set of variable
instructions that may be associated with an Order to further define
how it will behave with respect to pricing, execution, and/or
posting to the Exchange Book when submitted to the Exchange. See id.
\7\ See Securities Exchange Act Release No. 34-95768 (September
14, 2022); 87 FR 57534 (September 20, 2022) (SR-Nasdaq-2022-051).
\8\ See Equity Trader Alert 2022-96 (October 26, 2022),
available at https://www.nasdaqtrader.com/TraderNews.aspx?id=%20ETA2022-96.
---------------------------------------------------------------------------
By way of background, the functional enhancements to OUCH set forth
in the Proposal will enable the Exchange to upgrade the logic and
implementation of certain of its Order Types and Order Attributes so
that the features are more robust, streamlined, and harmonized across
the Exchange's Systems and Order entry protocols. The Exchange
developed OUCH with simplicity in mind, and therefore, it presently
lacks certain complex order handling capabilities. By contrast, the
Exchange specifically designed its RASH Order Entry Protocol \9\ to
support advanced functionality, including discretion, random reserve,
pegging and routing. The introduction of OUCH upgrades will enable
participants to utilize OUCH, in addition to RASH, to enter Order Types
that require advanced functionality. Thus, the upgrades will not
introduce new functionality, but rather, it will offer to OUCH users
advanced functionality that already exists for RASH users.
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\9\ 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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Specifically, the Proposal will amend Rule 4702 pertaining to Order
Types to specify that, going forward, OUCH may be used to enter certain
Order Types together with certain Order Attributes, whereas now, Rule
4702 specifies that RASH, FIX, and QIX, but not OUCH, may be used to
enter such combinations of Order Types and Attributes.\10\ The Proposal
will also adjust the current functionality of the Pegging,\11\
Reserve,\12\ and Trade Now Order Attributes,\13\ as described therein,
so that they align with how OUCH, once upgraded, will handle these
Order Attributes going forward.
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\10\ The planned upgrades will enable members to utilize OUCH in
additional circumstances, including for the entry of: (1) Price to
Comply and Price to Display Orders with the Reserve Size, Primary
and Market Pegging, and Discretion Order Attributes; (2) Non-
Displayed Orders with the Primary and Market Pegging, Midpoint
Pegging (in scenarios described in amended Rule 4703(d)), and
Discretion Order Attributes; and (3) Market Maker Peg Orders.
\11\ See Rule 4703(d).
\12\ See Rule 4703(h).
\13\ See Rule 4703(m)-(n).
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Unfortunately, none of these new OUCH functionalities set forth in
the Proposal will be available on November 14, 2022, and they may not
be available for several months thereafter due to delays in completing
the necessary
[[Page 71713]]
development work. The Exchange still will make the new version of OUCH
available for participant use on November 14th, as the Exchange will be
in a position on that date to implement certain technical enhancements
to the OUCH Protocol of value to participants. However, these technical
enhancements will not affect existing Order Types, Order Attributes, or
Order handling or trading behavior on the Exchange.
As such, the new Rules set forth in the Proposal will not be
operational on November 14th. Instead, existing Rules governing Order
Types, Order Attributes and Order handling and trading behavior on the
Exchange will continue to apply as of November 14th and until such date
as all of the functional upgrades to OUCH are complete and ready for
implementation. The Exchange will announce the implementation date of
the new OUCH functionalities, and of the new Rules set forth in the
Proposal, in an Equity Trader Alert at least 30 days prior to
implementation. A present, the Exchange expects that the new OUCH
functionality will be ready for full implementation in the second or
third quarter of 2023, although that time frame is subject to change.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\14\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\15\ 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.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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It is consistent with the Act to delay implementation of pending
amendments to the Exchange's Rulebook relating to effectuate functional
upgrades to OUCH because such functional upgrades will not be ready for
implementation upon the launch of the new version of the OUCH protocol
on November 14, 2022. The Exchange believes that it is in the best
interests of investors and the public, and consistent with the
maintenance of an orderly market, to avoid confusion by maintaining its
current Rulebook governing OUCH until such time as the Exchange is
ready to implement the new functionality.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change will
merely delay the implementation schedule for the Proposal as well as
the Rules that will apply to participants and their Orders in the
interim period.
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 prior to 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 \16\ and Rule
19b-4(f)(6) thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii), the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
The Commission believes that a waiver of the operative delay is
consistent with the protection of investors and the public interest
because it allow the Exchange to avoid confusion that might otherwise
arise on November 14, 2022, the date when the Proposal is currently
scheduled to become operative, if the Exchange's Rulebook was to
suggest to participants that OUCH Orders will behave in a manner that
is not yet accurate. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon filing.
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 under
Section 19(b)(2)(B) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\18\ 15 U.S.C. 78s(b)(2)(B).
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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-2022-065 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-2022-065. 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
[[Page 71714]]
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2022-065 and should
be submitted on or before December 14, 2022.
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\19\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25472 Filed 11-22-22; 8:45 am]
BILLING CODE 8011-01-P
