[Federal Register Volume 81, Number 243 (Monday, December 19, 2016)]
[Notices]
[Pages 91990-91993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30386]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79533; File No. SR-BatsBZX-2016-82]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Amend 
Exchange Rule 11.27(b) Regarding the Data Collection Requirements of 
the Regulation NMS Plan to Implement a Tick Size Pilot Program

December 13, 2016
    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 30, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend Exchange Rule 11.27(b) 
regarding the data collection requirements of the Regulation NMS

[[Page 91991]]

Plan to Implement a Tick Size Pilot Program (``Plan'').
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the 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 parts of such 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On August 25, 2014, the Exchange, and several other self-regulatory 
organizations (the ``Participants'') filed with the Commission, 
pursuant to Section 11A of the Act \5\ and Rule 608 of Regulation NMS 
thereunder,\6\ the Plan to Implement a Tick Size Pilot Program.\7\ The 
Participants filed the Plan to comply with an order issued by the 
Commission on June 24, 2014.\8\ The Plan was published for comment in 
the Federal Register on November 7, 2014, and approved by the 
Commission, as modified, on May 6, 2015.\9\ The Commission approved the 
Pilot on a two-year basis, with implementation to begin no later than 
May 6, 2016.\10\ On November 6, 2015, the SEC exempted the Participants 
from implementing the Pilot until October 3, 2016.\11\ Under the 
revised Pilot implementation date, the Pre-Pilot data collection period 
commenced on April 4, 2016. On September 13, 2016, the SEC exempted the 
Participants from the requirement to fully implement the Pilot on 
October 3, 2016, to permit the Participants to implement the pilot on a 
phased-in basis, as described in the Participants' exemptive 
request.\12\
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    \5\ 15 U.S.C. 78k-1.
    \6\ 17 CFR 242.608.
    \7\ See Letter from Brendon J. Weiss, Vice President, 
Intercontinental Exchange, Inc., to Secretary, Commission, dated 
August 25, 2014.
    \8\ See Securities Exchange Act Release No 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
    \9\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 
80 FR 27513 (May 13, 2015) (``Approval Order'').
    \10\ See Approval Order at 27533 and 27545.
    \11\ See Securities Exchange Act Release No. 76382 (November 6, 
2015), 80 FR 70284 (November 13, 2015).
    \12\ See Letter from David S. Shillman, Associate Director, 
Division of Trading and Markets, Commission, to Eric Swanson, EVP, 
General Counsel and Secretary, Exchange, dated September 13, 2016; 
see also Letter from Eric Swanson, EVP, General Counsel and 
Secretary, Exchange, to Brent J. Fields, Secretary, Commission, 
dated September 9, 2016.
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    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stock of small-
capitalization companies. Each Participant is required to comply, and 
to enforce compliance by its member organizations, as applicable, with 
the provisions of the Plan.
    The Exchange adopted rule amendments to implement the requirements 
of the Plan, including relating to the Plan's data collection 
requirements and requirements relating to Web site data 
publication.\13\ Specifically, with respect to the Web site data 
publication requirements pursuant to Section VII and Appendices B and C 
to the Plan, Exchange Rule 11.27(b)(2) provides, among other things, 
that the Exchange shall make the data required by Items I and II of 
Appendix B to the Plan, and collected pursuant to paragraph (b)(2)(A) 
of Rule 11.27, publicly available on the Exchange's Web site on a 
monthly basis at no charge and shall not identify the Trading Center 
that generated the data. Exchange Rule 11.27(b)(3)(C), provides, among 
other things, that the Exchange shall make the data required by Item IV 
of Appendix B to the Plan, and collected pursuant to paragraph (b)(3) 
of Rule 11.27, publicly available on the Exchange's Web site on a 
monthly basis at no charge and shall not identify the Trading Center 
that generated the data. Exchange Rule 11.27(b)(5) provides, among 
other things, shall collect and transmit to the Commission data 
described in Item III of Appendix B of the Plan relating to daily 
Market Maker registration statistics, but does not currently include a 
provision requiring the Exchange to publish such data to its Web 
site.\14\ Interpretation and Policy .08 to Exchange Rule 11.27(b) 
provides, among other things, that the requirement that Exchange or 
Designated Examining Authority (``DEA'') make certain data publicly 
available on their Web site pursuant to Appendix B and C to the Plan 
shall commence at the beginning of the Pilot Period.\15\
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    \13\ See, e.g., Securities Exchange Act Release Nos. 77105 
(February 10, 2016), 81 FR 8112 (February 17, 2016); 77310 (March 7, 
2016), 81 FR 13012 (March 11, 2016); and 78795 (September 9, 2016), 
81 FR 63508 (September 15, 2016). See also Letter from David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, to Marcia E. Asquith, Senior Vice President and 
Corporate Secretary, FINRA, dated February 17, 2016.
    \14\ Section VII.A. 4 of the Plan.
    \15\ The Exchange understands that some Market Makers may 
utilize a DEA that is not a Participant to the Plan and that their 
DEA would not be subject to the Plan's data collection requirements. 
Exchange rules require members that are Market Makers whose DEA is 
not a Participant to the Plan to transmit transaction data for 
Market Maker participation and profitability calculations to FINRA. 
See paragraphs (3)(B) and (4)(B) of Exchange Rule 11.27(b).
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    The Exchange is proposing amendments to Rule 11.27(b)(2) (regarding 
Appendix B.I and B.II data) and Rule 11.27(b)(3)(C) (regarding Appendix 
B.IV data), to provide that data required to be made available on 
Exchange's or DEA's Web site be published within 120 calendar days 
following month end. The Exchange also proposes to add a provision to 
Rule 11.27(b)(5) to state that the Exchange shall make data collected 
under Appendix B.III publicly available on the Exchange Web site within 
120 calendar days following month end at no charge. In addition, the 
proposed amendments to Interpretation and Policy .08 to Exchange Rule 
11.27(b) would provide that, notwithstanding the provisions of 
paragraphs (b)(2), (b)(3)(C), and (b)(5), the Exchange and DEA shall 
make data for the Pre-Pilot period publicly available on their Web site 
pursuant to Appendix B and C to the Plan by February 28, 2017.\16\ The 
purpose of delaying the publication of the Web site data is to address 
confidentiality concerns by providing for the passage of additional 
time between the market information reflected in the data and the 
public availability of such information. The Exchange has filed the 
proposed rule change for immediate effectiveness and has requested that 
the Commission waive the 30-day operative delay. If the Commission 
waives the 30-day operative delay, the operative date of the proposed 
rule change will be the date of filing.
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    \16\ With respect to data for the Pilot Period, the requirement 
that the Exchange and DEA make data publicly available on their Web 
site pursuant to Appendix B and C to the Plan shall continue to 
commence at the beginning of the Pilot Period. Thus, the first Web 
site publication date for Pilot Period data (covering October 2016) 
would be published on the Exchange's or DEA's Web site by February 
28, 2017, which is 120 days following the end of October 2016.

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[[Page 91992]]

2. Statutory Basis

    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \17\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \18\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that this proposal is consistent with the Act 
because it is designed to assist the Participants in meeting their 
regulatory obligations pursuant to the Plan and is in furtherance of 
the objectives of the Plan, as identified by the SEC. The Exchange 
believes that the instant proposal is consistent with the Act in that 
it is designed to addresses confidentiality concerns by permitting the 
Exchange to delay Web site publication to provide for passage of 
additional time between the market information reflected in the data 
and the public availability of such information.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
notes that the proposed rule change implements the provisions of the 
Plan, and is designed to assist the Participants in meeting their 
regulatory obligations pursuant to the Plan.
    The proposal is intended to addresses confidentiality concerns that 
may adversely impact competition, especially for Pilot Securities that 
may have a relatively small number of designated Market Makers, by 
permitting the Exchange to delay Web site publication to provide for 
passage of additional time between the market information reflected in 
the data and the public availability of such information. The proposal 
does not alter the information required to be submitted to the SEC.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.\19\
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    \19\ See Letter from Mary Lou Von Kaenel, Managing Director, 
Financial Information Forum, to David S. Shillman, Associate 
Director, Division of Trading and Markets, Commission, dated August 
16, 2016.
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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) \20\ of the Act and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\23\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has filed 
the proposed rule change for immediate effectiveness and has requested 
that the Commission waive the requirement that the proposed rule change 
not become operative for 30 days after the date of the filing so that 
it may become operative immediately.
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii)
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    The Exchange notes that the proposed rule change implements the 
provisions of the Plan, and is designed to assist the Participants in 
meeting their regulatory obligations pursuant to the Plan. The proposal 
is intended to address confidentiality concerns by permitting the 
Exchange to delay Web site publication to provide for passage of 
additional time between the market information reflected in the data 
and the public availability of such information. The proposal also does 
not alter the information required to be submitted to the SEC.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to implement proposed changes that 
are intended to address confidentiality concerns. The Commission notes 
that some Pilot data was scheduled to be published on November 30, 
2016. Therefore, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change to be operative as of 
November 30, 2016.\24\
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    \24\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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.\25\ If the 
Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.
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    \25\ 15 U.S.C. 78s(b)(3)(C).
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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 proposal is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BatsBZX-2016-82 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 No. SR-BatsBZX-2016-82. 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 Web site (http://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

[[Page 91993]]

provisions of 5 U.S.C. 552, will be available for Web site 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 such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsBZX-2016-82 and should be 
submitted on or before January 9, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-30386 Filed 12-16-16; 8:45 am]
 BILLING CODE 8011-01-P