Self-Regulatory Organizations; The Nasdaq Stock Market, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Trade Now Order Attribute, at Equity 4, Rules 4702 and 4703, 21065-21068 [2024-06328]
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Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
unattractive to market participants, it is
likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed changes will impair the ability
of Members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.15 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: (i)
necessary or appropriate in the public
interest; (ii) for the protection of
investors; or (iii) 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:
ddrumheller on DSK120RN23PROD with NOTICES1
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–
MRX–2024–08 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–MRX–2024–08. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–MRX–2024–08 and should be
submitted on or before April 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–06321 Filed 3–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99792; File No. SR–
NASDAQ–2024–014]
Self-Regulatory Organizations; The
Nasdaq Stock Market, LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Trade Now Order Attribute, at Equity 4,
Rules 4702 and 4703
March 20, 2024.
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 18,
2024, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
15 15
U.S.C. 78s(b)(3)(A)(ii).
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21065
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 the
Trade Now Order Attribute, at Equity 4,
Rule 4703,3 as well as to make
conforming changes to Rule 4702, 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
The Exchange proposes to amend
Rule 4703(m), which governs the Trade
Now Order Attribute.4 Under the
Exchange’s rules, as amended by SR–
NASDAQ–2022–051,5 Trade Now is an
Attribute that allows a resting Order
‘‘that becomes locked or crossed, as
applicable, at its non-displayed price by
the posted price of an incoming
Displayed Order or a Midpoint Peg PostOnly Order to execute against the
locking or crossing Order(s) as a
liquidity taker automatically.’’ The
Exchange proposes to amend this rule
text to state instead that Trade Now
allows ‘‘a resting Order that is locked or
crossed, as applicable, at its nondisplayed price by the posted price of
3 References herein to Nasdaq Rules in the 4000
Series shall mean Rules in Nasdaq Equity 4.
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 Exchange
Book when submitted to the Exchange. See id.
5 See Securities Exchange Act Release No. 34–
95768 (September 14, 2022); 87 FR 57534
(September 20, 2022) (SR–Nasdaq–2022–051).
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an incoming Displayed Order or a
Midpoint Peg Post-Only Order or
another Order or Orders (where such
locking or crossing Order(s) or the order
with Trade Now satisfies a Minimum
Quantity condition) to execute as a
liquidity taker automatically, when such
Orders become marketable.’’ These
proposed amendments serve several
purposes.
First, the proposed amended text
broadens the scope of the Rule so that
it provides for Trade Now to also
activate in circumstances where Orders
possessing the Trade Now Order
Attribute cannot execute at the point of
initial interaction due to a Minimum
Quantity condition 6 on the resting
Order. The existing rule text suggests
that Trade Now will activate only where
it can do so immediately upon
interaction with an incoming Displayed
Order or a Midpoint Peg Post-Only
Order, rather than after waiting for any
conditions that preclude immediate
execution from occurring. Under the
proposed amendment, Trade Now
would activate and execute against the
locking or crossing Orders when the
Minimum Quantity condition that
prevented the immediate execution is
satisfied, provided that the other
requirements for activation of Trade
Now functionality remain satisfied at
that time.7
This proposed amendment enables
Trade Now to better achieve its
underlying purpose—which is to help
clear the Exchange Book of locking or
crossing orders. The Exchange perceives
no logical basis to preclude activation of
Trade Now when two (or more) Orders
meet the conditions for activation, but
for the fact that one of them has a
Minimum Quantity condition that
precluded it from executing
(immediately upon entry and/or against
subsequent incoming contra-side
orders). Provided that the conditions for
Trade Now to activate remain satisfied
6 Pursuant to Rule 4703(e), ‘‘Minimum Quantity’’
is an Order Attribute that allows a Participant to
provide that an Order will not execute unless a
specified minimum quantity of shares can be
obtained. The Rule provides for two types of
Minimum Quantity Attributes: one in which a
participant specifies that the condition may be
satisfied by execution against one or more orders
with an aggregate size of at least the minimum
quantity; and another in which the condition must
be satisfied by execution against one or more
Orders, each of which must have a size of at least
the minimum quantity. Id. This proposed rule
change concerns the first of these two alternatives.
7 The Proposal also replaces the word ‘‘becomes’’
with ‘‘is’’ in the existing phrase ‘‘resting Order that
becomes locked or crossed, as applicable, at its nondisplayed price’’ to accommodate the fact that, with
the proposed amendment, Trade Now could
activate after an Order with Trade Now becomes
locked if it is not marketable at that initial point in
time.
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as of the time when the Orders become
marketable, the Exchange believes that
it is logical and consistent with the
purpose of Trade Now for these Orders
to execute such locking or crossing
orders when the Minimum Quantity
condition can be satisfied because doing
so will help clear the Order Book of
locked and crossed orders.
An example of a scenario in which
the proposed amendment would apply
is when an Order with Trade Now has
a Minimum Quantity condition that a
locking or crossing Order cannot
initially satisfy. By way of illustration,
assume that Participant A enters Order
1, which is a Displayed Order to sell 100
shares of XYZ at $10.00. Participant B
then enters Order 2, which is a NonDisplayed Trade Now order to buy 200
shares of XYZ at $10.00, with a
Minimum Quantity requirement of 200
shares. Order 2 will not automatically
remove Order 1 due to the Minimum
Quantity requirement. Participant C
thereafter enters Order 3, which is a
Non-Displayed Order to sell 100 shares
of XYZ at $10.00. Under the existing
Rule, Order 2 would not remove Order
3 using Trade Now due to the Minimum
Quantity requirement of Order 2. Under
the proposed amended Rule text,
however, Trade Now would be activated
for Order 2, and it would remove both
Orders 1 and 3.
Similarly, the amendment would
apply when it is an incoming locking
Order, or a resting locking Order, that
has a Minimum Quantity condition
which the Order with Trade Now
cannot satisfy immediately. In this
scenario, assume that Participant A
enters Order 1, which is a NonDisplayed Order to sell 300 shares of
XYZ at $10.00, with a Minimum
Quantity requirement of 200 shares.
Participant B then enters Order 2, which
is a Non-Displayed Order with Trade
Now to buy 100 shares of XYZ at
$10.00. Under the existing Rule, Order
2 will lock Order 1 but not execute due
to the Minimum Quantity requirement
associated with Order 1. If Participant C
thereafter enters Order 3, which is
another Displayed Order to buy 200
shares of XYZ at $10.00, then under the
existing Rule, Order 3 will execute
against Order 1 upon receipt, but Order
2 will not use Trade Now to trade
against the remaining shares of Order 1.
Under the proposal, however, once
Order 3 is entered, it will execute
against Order 1, satisfying the Minimum
Quantity requirement of Order 1 and
reducing the remaining size of Order 1
to 100 shares. At this point, Order 2 is
capable of executing against the reduced
size of Order 1. Order 2 will activate
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Sfmt 4703
Trade Now, execute against Order 1,
and clear the locked book.
In addition to the above, the proposed
amendments to Rule 4703(m), along
with corresponding amendments to
Rule 4702(b)(4) and (5), would
discontinue the applicability of Trade
Now to Midpoint Peg Post-Only Orders
and Post-Only Orders.8 The Exchange
proposes to eliminate the applicability
of Trade Now to these two Order Types
because Trade Now is incompatible
with the designs of these Order Types.
In other words, Midpoint Peg Post-Only
Orders and Post-Only Orders are
liquidity-adding Order Types, whereas
Orders with Trade Now are designed to
be liquidity taking Orders. Because of
this incompatibility, the Exchange finds
that market participants rarely, as a
practical matter, select Trade Now for
their Midpoint Peg Post-Only Orders or
their Post Only Orders. Insofar as Trade
Now serves no apparent utility as an
Attribute of these Order Types, the
Exchange proposes to eliminate its
applicability thereto.9
Lastly, the Exchange proposes to
modify existing language in the Rule
which states that only an incoming
Displayed Order whose displayed price
locks or crosses a resting Order with
Trade Now at its non-displayed price, or
an incoming Midpoint Peg Post-Only
Order, will trigger the Trade Now
functionality. The proposed Rule
amendment broadens this text to also
provide for another Order (including a
Displayed or a Non-Displayed Order)
whose price locks or crosses a resting
Order with Trade Now to trigger Trade
Now where the resting Order with Trade
Now has a Minimum Quantity
8 The existing rule text of Rule 4703(m) expressly
applies Trade Now to Midpoint Peg Post-Only
Orders, and implicitly applies Trade Now to PostOnly Orders by virtue of Trade Now’s applicability
to Displayed Orders (Post-Only Orders are
Displayed).
9 Another proposed conforming change would
amend Rule 4702(b)(15), which governs Midpoint
Extended Life Orders Plus Continuous Book (‘‘M–
ELO+CB’’), to address the fact that Trade Now
would no longer be available as an Attribute of
Midpoint Peg Post Only Orders, which in turn are
one of the Order Types with which M–ELO+CB
may interact. The existing Rule text states that
‘‘Non-Displayed Midpoint Pegging and Midpoint
Peg Post-Only Orders (collectively, ‘‘Midpoint
Orders’’) resting on the Exchange’s Continuous
Book’’ are eligible to execute against M–ELO+CB if,
among other things, ‘‘the Midpoint Order has the
Midpoint Trade Now Attribute enabled.’’ The
Exchange proposes to amend this language to delete
reference to Midpoint Peg Post Only Orders, such
that the pertinent text will refer instead only to
Midpoint Pegging Orders having such eligibility.
Moreover, the Exchange proposes to correct an
erroneous reference to ‘‘Midpoint’’ Trade Now,
which is a functionality that the Exchange
previously folded into Trade Now in a prior rule
filing. See Securities Exchange Act Release No. 34–
92180 (June 15, 2021), 86 FR 33420 (June 24, 2021)
(SR–NASDAQ–2021–044).
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ddrumheller on DSK120RN23PROD with NOTICES1
condition that the incoming Order
(either itself, or in aggregate with other
resting Orders) satisfies. The purpose of
this new language is to account for the
fact that a non-Displayed incoming
Order, in addition to a Displayed
incoming Order, can lock or cross a
resting Order with Trade Now if it
satisfies the Minimum Quantity
condition of the resting Trade Now
Order. The proposed amended Rule text
also accounts for scenarios in which the
Order with Trade Now does not possess
a Minimum Quantity condition, but
instead, the incoming locking/crossing
Order or another resting locking/
crossing Order possesses the Minimum
Quantity Attribute, and the Minimum
Quantity condition is reduced such that
the Order with Trade Now becomes able
to satisfy the condition. The proposed
amendments would provide for Trade
Now to activate in these scenarios as
well.
The Exchange will publish an Equity
Trader Alert at least seven days prior to
implementing the proposed
amendments.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and further the
objectives of Section 6(b)(5) of the Act,11
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.
Specifically, the Exchange believes
that it is consistent with the Act to
amend the Exchange’s Trade Now Rule
to allow for Trade Now to activate, not
only immediately upon receipt of a
locking or crossing contra Displayed or
Midpoint Peg Post-Only Order, but also
at such time when the Order with Trade
Now become marketable, if it was not
marketable initially due to a Minimum
Quantity Condition. The Exchange
believes that the proposed behavior is
consistent with the underlying intent of
Trade Now, which is to help to clear the
Exchange’s Order Book of locking and
crossing Orders. The Exchange
perceives no logical basis to preclude
activation of Trade Now when two
Orders meet the conditions for
activation, but for the fact that one of
them is not marketable, and thus cannot
interact with the other one immediately
upon entry. Provided that the
conditions for Trade Now to activate
remain satisfied as of the time when the
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Orders become marketable, the
Exchange believes that these Orders
should execute automatically at that
time. Moreover, the Exchange believes
that the proposed behavior is consistent
with the expectations of market
participants for Trade Now
functionality.
In addition to the above, it is also
consistent with the Act to amend Rule
4703(m), along with Rule 4702(b)(4) and
(5), to discontinue the applicability of
Trade Now to Midpoint Peg Post-Only
Orders and Post-Only Orders. As noted
above, the Exchange proposes to
eliminate the applicability of Trade
Now to these two Order Types because
Trade Now, which classifies an Order as
a liquidity taker, is incompatible with
the designs of these Order Types as
liquidity maker Orders. Insofar as Trade
Now serves no apparent utility as an
Attribute of these Order Types, it is
reasonable and in the interests of the
markets and investors to eliminate its
applicability thereto.
Lastly, the Exchange believes it is
consistent with the Act to modify
existing language in the Rule which
states that only an incoming Displayed
Order whose displayed price locks or
crosses a resting Order with Trade Now
at its non-displayed price, or an
incoming Midpoint Peg Post-Only
Order, will trigger the Trade Now
functionality. As stated above, the
proposed Rule amendment broadens
this text to also provide for another
Order (including a Displayed or a NonDisplayed Order) whose price locks or
crosses a resting Order with Trade Now
to trigger Trade Now where the resting
Order with Trade Now has a Minimum
Quantity condition that the incoming
Order satisfies. This new language
would account for the fact that a nonDisplayed incoming Order, in addition
to a Displayed incoming Order, can lock
or cross a resting Order with Trade Now
if it satisfies the Minimum Quantity
condition. The proposed amended Rule
text also accounts for scenarios in which
the Order with Trade Now does not
possess a Minimum Quantity condition,
but instead, the incoming locking/
crossing Order or another resting
locking/crossing Order possesses the
Minimum Quantity Attribute, and the
Minimum Quantity condition is
reduced such that the Order with Trade
Now becomes able to satisfy the
condition. The proposed amendments
would provide for Trade Now to
activate in these scenarios as well.
Again, no purpose is served by
excluding these scenarios from
triggering Trade Now. To the contrary,
including them would further the
purpose of Trade Now, which is to aid
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21067
in the clearing the Exchange’s Order
Book of locked and crossing Orders.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. Although the
proposal will broaden the applicability
of Trade Now, the Exchange neither
intends nor perceives that this rule
change will have any significant impact
on competition other than to make the
Exchange’s Trade Now Attribute more
useful for participants, and thus the
Exchange a more attractive venue in
which to trade. Even as amended, Trade
Now will remain an optional
functionality that the Exchange offers at
no charge, and which may be used
equally by similarly-situated
participants.
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)(iii) of the Act 12 and
subparagraph (f)(6) of Rule 19b–4
thereunder.13
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.
12 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 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.
13 17
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Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
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–2024–014 on the subject line.
Paper Comments
ddrumheller on DSK120RN23PROD with NOTICES1
• 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–2024–014. 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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to file number SR–NASDAQ–2024–014,
and should be submitted on or before
April 16, 2024.
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For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.14
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–06328 Filed 3–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99805; File No. SR–FICC–
2024–006]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of Proposed Rule Change To
Amend the Clearing Agency Risk
Management Framework
March 20, 2024.
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,
2024, Fixed Income Clearing
Corporation (‘‘FICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
(a) The proposed rule change consists
of amendments to the Clearing Agency
Risk Management Framework (‘‘Risk
Management Framework’’, or
‘‘Framework’’) of FICC and its affiliates,
The Depository Trust Company (‘‘DTC’’)
and National Securities Clearing
Corporation (‘‘NSCC,’’ and together with
FICC and DTC, the ‘‘Clearing
Agencies’’).3
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release Nos. 81635
(Sep. 15, 2017), 82 FR 44224 (Sep. 21, 2017) (SR–
DTC–2017–013; SR–FICC–2017–016; SR–NSCC–
2017–012) (‘‘Initial Filing’’), Securities Exchange
Act Release No. 89271 (July 9, 2020), 85 FR 42933
(July 15, 2020) (SR–NSCC–2020–012); Securities
Exchange Act Release No. 89269 (July 9, 2020), 85–
42954 (July 15, 2020) (SR–DTC–2020–009);
Securities Exchange Act Release No. 89270 (July 9,
2020), 85–42927 (July 15, 2020) (SR–FICC–2020–
007); Securities Exchange Act Release No. 96799
(Feb. 03, 2023), 88 FR 8506 (Feb. 9, 2023) (SR–
DTC–2023–001); Securities Exchange Act Release
No. 96800 (Feb. 3, 2023), 88–8491 (Feb. 9, 2023)
(SR–FICC–2023–001); Securities Exchange Act
Release No. 96801 (Feb. 3, 2023), 88–8502 (Feb. 9,
2023) (SR–NSCC–2023–001); Securities Exchange
Act Release No. 99097 (Dec. 6, 2023), 88–86186
(Dec. 12, 2023) (SR–FICC–2023–016); Securities
1 15
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The proposed rule change would
amend the Framework to (1) describe
how the Clearing Agencies may solicit
the views of their participants and other
industry stakeholders, for example, in
developing new services or risk
management practices, and in
evaluating existing products or risk
management practices; (2) provide for
the annual assessment and subsequent
review of FICC’s Government Securities
Division (‘‘GSD’’) access models by
FICC’s Board of Directors (‘‘FICC
Board’’), in compliance with the
requirements of Rule 17Ad–
22(e)(18)(iv)(C) under the Act; and (3)
make other conforming and clean up
changes to the Framework, as described
below.4
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The Clearing Agency Risk
Management Framework provides an
outline for, among other things, how
each of the Clearing Agencies
comprehensively manages the risks,
including the legal, credit, liquidity,
operational, general business,
investment, custody, and other risks,
that arise in or are borne by it and, in
this way, supports the Clearing
Agencies’ compliance with certain
requirements of Rule 17Ad–22(e) under
the Act, as described in the Framework
Filings.5
Exchange Act Release No. 99098 (Dec. 6, 2023), 88–
86183 (Dec. 12, 2023) (SR–NSCC–2023–012); and
Securities Exchange Act Release No. 99108 (Dec.
07, 2023), 88 FR 86430 (Dec. 13, 2023) (SR–DTC–
2023–012) (together with the Initial Filing,
‘‘Framework Filings’’).
4 17 CFR 240.17Ad–22(e)(18)(iv)(C). See
Securities Exchange Act Release No. 99149 (Dec.
13, 2023), 89 FR 2714 (Jan. 16, 2024) (‘‘Adopting
Release,’’ and the rules adopted therein referred to
herein as ‘‘Treasury Clearing Rules’’). FICC must
implement the new requirements of Rule 17Ad–
22(e)(18)(iv)(C) by March 31, 2025.
5 See supra note 3. As described in the
Framework Filings, the Framework describes how
the Clearing Agencies address their respective
E:\FR\FM\26MRN1.SGM
26MRN1
Agencies
[Federal Register Volume 89, Number 59 (Tuesday, March 26, 2024)]
[Notices]
[Pages 21065-21068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06328]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99792; File No. SR-NASDAQ-2024-014]
Self-Regulatory Organizations; The Nasdaq Stock Market, LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Trade Now Order Attribute, at Equity 4, Rules 4702 and 4703
March 20, 2024.
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 18, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Trade Now Order Attribute, at
Equity 4, Rule 4703,\3\ as well as to make conforming changes to Rule
4702, as described further below.
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\3\ References herein to Nasdaq Rules in the 4000 Series shall
mean Rules in Nasdaq Equity 4.
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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
The Exchange proposes to amend Rule 4703(m), which governs the
Trade Now Order Attribute.\4\ Under the Exchange's rules, as amended by
SR-NASDAQ-2022-051,\5\ Trade Now is an Attribute that allows a resting
Order ``that becomes locked or crossed, as applicable, at its non-
displayed price by the posted price of an incoming Displayed Order or a
Midpoint Peg Post-Only Order to execute against the locking or crossing
Order(s) as a liquidity taker automatically.'' The Exchange proposes to
amend this rule text to state instead that Trade Now allows ``a resting
Order that is locked or crossed, as applicable, at its non-displayed
price by the posted price of
[[Page 21066]]
an incoming Displayed Order or a Midpoint Peg Post-Only Order or
another Order or Orders (where such locking or crossing Order(s) or the
order with Trade Now satisfies a Minimum Quantity condition) to execute
as a liquidity taker automatically, when such Orders become
marketable.'' These proposed amendments serve several purposes.
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\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 Exchange Book when submitted to the Exchange. See id.
\5\ See Securities Exchange Act Release No. 34-95768 (September
14, 2022); 87 FR 57534 (September 20, 2022) (SR-Nasdaq-2022-051).
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First, the proposed amended text broadens the scope of the Rule so
that it provides for Trade Now to also activate in circumstances where
Orders possessing the Trade Now Order Attribute cannot execute at the
point of initial interaction due to a Minimum Quantity condition \6\ on
the resting Order. The existing rule text suggests that Trade Now will
activate only where it can do so immediately upon interaction with an
incoming Displayed Order or a Midpoint Peg Post-Only Order, rather than
after waiting for any conditions that preclude immediate execution from
occurring. Under the proposed amendment, Trade Now would activate and
execute against the locking or crossing Orders when the Minimum
Quantity condition that prevented the immediate execution is satisfied,
provided that the other requirements for activation of Trade Now
functionality remain satisfied at that time.\7\
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\6\ Pursuant to Rule 4703(e), ``Minimum Quantity'' is an Order
Attribute that allows a Participant to provide that an Order will
not execute unless a specified minimum quantity of shares can be
obtained. The Rule provides for two types of Minimum Quantity
Attributes: one in which a participant specifies that the condition
may be satisfied by execution against one or more orders with an
aggregate size of at least the minimum quantity; and another in
which the condition must be satisfied by execution against one or
more Orders, each of which must have a size of at least the minimum
quantity. Id. This proposed rule change concerns the first of these
two alternatives.
\7\ The Proposal also replaces the word ``becomes'' with ``is''
in the existing phrase ``resting Order that becomes locked or
crossed, as applicable, at its non-displayed price'' to accommodate
the fact that, with the proposed amendment, Trade Now could activate
after an Order with Trade Now becomes locked if it is not marketable
at that initial point in time.
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This proposed amendment enables Trade Now to better achieve its
underlying purpose--which is to help clear the Exchange Book of locking
or crossing orders. The Exchange perceives no logical basis to preclude
activation of Trade Now when two (or more) Orders meet the conditions
for activation, but for the fact that one of them has a Minimum
Quantity condition that precluded it from executing (immediately upon
entry and/or against subsequent incoming contra-side orders). Provided
that the conditions for Trade Now to activate remain satisfied as of
the time when the Orders become marketable, the Exchange believes that
it is logical and consistent with the purpose of Trade Now for these
Orders to execute such locking or crossing orders when the Minimum
Quantity condition can be satisfied because doing so will help clear
the Order Book of locked and crossed orders.
An example of a scenario in which the proposed amendment would
apply is when an Order with Trade Now has a Minimum Quantity condition
that a locking or crossing Order cannot initially satisfy. By way of
illustration, assume that Participant A enters Order 1, which is a
Displayed Order to sell 100 shares of XYZ at $10.00. Participant B then
enters Order 2, which is a Non-Displayed Trade Now order to buy 200
shares of XYZ at $10.00, with a Minimum Quantity requirement of 200
shares. Order 2 will not automatically remove Order 1 due to the
Minimum Quantity requirement. Participant C thereafter enters Order 3,
which is a Non-Displayed Order to sell 100 shares of XYZ at $10.00.
Under the existing Rule, Order 2 would not remove Order 3 using Trade
Now due to the Minimum Quantity requirement of Order 2. Under the
proposed amended Rule text, however, Trade Now would be activated for
Order 2, and it would remove both Orders 1 and 3.
Similarly, the amendment would apply when it is an incoming locking
Order, or a resting locking Order, that has a Minimum Quantity
condition which the Order with Trade Now cannot satisfy immediately. In
this scenario, assume that Participant A enters Order 1, which is a
Non-Displayed Order to sell 300 shares of XYZ at $10.00, with a Minimum
Quantity requirement of 200 shares. Participant B then enters Order 2,
which is a Non-Displayed Order with Trade Now to buy 100 shares of XYZ
at $10.00. Under the existing Rule, Order 2 will lock Order 1 but not
execute due to the Minimum Quantity requirement associated with Order
1. If Participant C thereafter enters Order 3, which is another
Displayed Order to buy 200 shares of XYZ at $10.00, then under the
existing Rule, Order 3 will execute against Order 1 upon receipt, but
Order 2 will not use Trade Now to trade against the remaining shares of
Order 1. Under the proposal, however, once Order 3 is entered, it will
execute against Order 1, satisfying the Minimum Quantity requirement of
Order 1 and reducing the remaining size of Order 1 to 100 shares. At
this point, Order 2 is capable of executing against the reduced size of
Order 1. Order 2 will activate Trade Now, execute against Order 1, and
clear the locked book.
In addition to the above, the proposed amendments to Rule 4703(m),
along with corresponding amendments to Rule 4702(b)(4) and (5), would
discontinue the applicability of Trade Now to Midpoint Peg Post-Only
Orders and Post-Only Orders.\8\ The Exchange proposes to eliminate the
applicability of Trade Now to these two Order Types because Trade Now
is incompatible with the designs of these Order Types. In other words,
Midpoint Peg Post-Only Orders and Post-Only Orders are liquidity-adding
Order Types, whereas Orders with Trade Now are designed to be liquidity
taking Orders. Because of this incompatibility, the Exchange finds that
market participants rarely, as a practical matter, select Trade Now for
their Midpoint Peg Post-Only Orders or their Post Only Orders. Insofar
as Trade Now serves no apparent utility as an Attribute of these Order
Types, the Exchange proposes to eliminate its applicability thereto.\9\
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\8\ The existing rule text of Rule 4703(m) expressly applies
Trade Now to Midpoint Peg Post-Only Orders, and implicitly applies
Trade Now to Post-Only Orders by virtue of Trade Now's applicability
to Displayed Orders (Post-Only Orders are Displayed).
\9\ Another proposed conforming change would amend Rule
4702(b)(15), which governs Midpoint Extended Life Orders Plus
Continuous Book (``M-ELO+CB''), to address the fact that Trade Now
would no longer be available as an Attribute of Midpoint Peg Post
Only Orders, which in turn are one of the Order Types with which M-
ELO+CB may interact. The existing Rule text states that ``Non-
Displayed Midpoint Pegging and Midpoint Peg Post-Only Orders
(collectively, ``Midpoint Orders'') resting on the Exchange's
Continuous Book'' are eligible to execute against M-ELO+CB if, among
other things, ``the Midpoint Order has the Midpoint Trade Now
Attribute enabled.'' The Exchange proposes to amend this language to
delete reference to Midpoint Peg Post Only Orders, such that the
pertinent text will refer instead only to Midpoint Pegging Orders
having such eligibility. Moreover, the Exchange proposes to correct
an erroneous reference to ``Midpoint'' Trade Now, which is a
functionality that the Exchange previously folded into Trade Now in
a prior rule filing. See Securities Exchange Act Release No. 34-
92180 (June 15, 2021), 86 FR 33420 (June 24, 2021) (SR-NASDAQ-2021-
044).
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Lastly, the Exchange proposes to modify existing language in the
Rule which states that only an incoming Displayed Order whose displayed
price locks or crosses a resting Order with Trade Now at its non-
displayed price, or an incoming Midpoint Peg Post-Only Order, will
trigger the Trade Now functionality. The proposed Rule amendment
broadens this text to also provide for another Order (including a
Displayed or a Non-Displayed Order) whose price locks or crosses a
resting Order with Trade Now to trigger Trade Now where the resting
Order with Trade Now has a Minimum Quantity
[[Page 21067]]
condition that the incoming Order (either itself, or in aggregate with
other resting Orders) satisfies. The purpose of this new language is to
account for the fact that a non-Displayed incoming Order, in addition
to a Displayed incoming Order, can lock or cross a resting Order with
Trade Now if it satisfies the Minimum Quantity condition of the resting
Trade Now Order. The proposed amended Rule text also accounts for
scenarios in which the Order with Trade Now does not possess a Minimum
Quantity condition, but instead, the incoming locking/crossing Order or
another resting locking/crossing Order possesses the Minimum Quantity
Attribute, and the Minimum Quantity condition is reduced such that the
Order with Trade Now becomes able to satisfy the condition. The
proposed amendments would provide for Trade Now to activate in these
scenarios as well.
The Exchange will publish an Equity Trader Alert at least seven
days prior to implementing the proposed amendments.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and further the objectives of Section
6(b)(5) of the Act,\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that it is consistent with the
Act to amend the Exchange's Trade Now Rule to allow for Trade Now to
activate, not only immediately upon receipt of a locking or crossing
contra Displayed or Midpoint Peg Post-Only Order, but also at such time
when the Order with Trade Now become marketable, if it was not
marketable initially due to a Minimum Quantity Condition. The Exchange
believes that the proposed behavior is consistent with the underlying
intent of Trade Now, which is to help to clear the Exchange's Order
Book of locking and crossing Orders. The Exchange perceives no logical
basis to preclude activation of Trade Now when two Orders meet the
conditions for activation, but for the fact that one of them is not
marketable, and thus cannot interact with the other one immediately
upon entry. Provided that the conditions for Trade Now to activate
remain satisfied as of the time when the Orders become marketable, the
Exchange believes that these Orders should execute automatically at
that time. Moreover, the Exchange believes that the proposed behavior
is consistent with the expectations of market participants for Trade
Now functionality.
In addition to the above, it is also consistent with the Act to
amend Rule 4703(m), along with Rule 4702(b)(4) and (5), to discontinue
the applicability of Trade Now to Midpoint Peg Post-Only Orders and
Post-Only Orders. As noted above, the Exchange proposes to eliminate
the applicability of Trade Now to these two Order Types because Trade
Now, which classifies an Order as a liquidity taker, is incompatible
with the designs of these Order Types as liquidity maker Orders.
Insofar as Trade Now serves no apparent utility as an Attribute of
these Order Types, it is reasonable and in the interests of the markets
and investors to eliminate its applicability thereto.
Lastly, the Exchange believes it is consistent with the Act to
modify existing language in the Rule which states that only an incoming
Displayed Order whose displayed price locks or crosses a resting Order
with Trade Now at its non-displayed price, or an incoming Midpoint Peg
Post-Only Order, will trigger the Trade Now functionality. As stated
above, the proposed Rule amendment broadens this text to also provide
for another Order (including a Displayed or a Non-Displayed Order)
whose price locks or crosses a resting Order with Trade Now to trigger
Trade Now where the resting Order with Trade Now has a Minimum Quantity
condition that the incoming Order satisfies. This new language would
account for the fact that a non-Displayed incoming Order, in addition
to a Displayed incoming Order, can lock or cross a resting Order with
Trade Now if it satisfies the Minimum Quantity condition. The proposed
amended Rule text also accounts for scenarios in which the Order with
Trade Now does not possess a Minimum Quantity condition, but instead,
the incoming locking/crossing Order or another resting locking/crossing
Order possesses the Minimum Quantity Attribute, and the Minimum
Quantity condition is reduced such that the Order with Trade Now
becomes able to satisfy the condition. The proposed amendments would
provide for Trade Now to activate in these scenarios as well. Again, no
purpose is served by excluding these scenarios from triggering Trade
Now. To the contrary, including them would further the purpose of Trade
Now, which is to aid in the clearing the Exchange's Order Book of
locked and crossing Orders.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Although the proposal will
broaden the applicability of Trade Now, the Exchange neither intends
nor perceives that this rule change will have any significant impact on
competition other than to make the Exchange's Trade Now Attribute more
useful for participants, and thus the Exchange a more attractive venue
in which to trade. Even as amended, Trade Now will remain an optional
functionality that the Exchange offers at no charge, and which may be
used equally by similarly-situated participants.
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)(iii) of the Act \12\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 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 at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
[[Page 21068]]
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-2024-014 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-2024-014. 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. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to file number SR-NASDAQ-2024-014, and
should be submitted on or before April 16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06328 Filed 3-25-24; 8:45 am]
BILLING CODE 8011-01-P