[Federal Register Volume 83, Number 227 (Monday, November 26, 2018)]
[Notices]
[Pages 60510-60512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25599]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84622; File No. SR-NASDAQ-2018-089]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Correct a Typographical Error in Rule 4702(b)(7)(A)
November 19, 2018.
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 November 8, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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 correct a typographical error in Rule
4702(b)(7)(A). The text of the proposed rule change is available on the
Exchange's website at http://nasdaq.cchwallstreet.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 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 purpose of this filing is to correct a typographical error in
Rule 4702(b)(7)(A). That provision describes the ``Market Maker Peg
Order'' order type,\3\ including by providing examples of how the order
type operates in practice. One of these examples, which contains the
typographical error in question, illustrates the principle that once a
Market Maker Peg Order has posted to the Nasdaq Book, it will be
repriced if needed as the Reference Price \4\ changes. In particular,
the principle states that when, as a result of a change to the
Reference Price, the difference between the displayed price of a Market
Maker Peg Order and the Reference Price reaches the Defined Limit,\5\
then a Market Maker Peg Order
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to buy (sell) will be repriced to the Designated Percentage \6\ away
from the Reference Price. The stated example of this principle in Rule
4702(b)(7)(A) presently states as follows:
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\3\ Rule 4702(b)(7) defines a Market Maker Peg Order as follows:
A ``Market Maker Peg Order'' is an Order Type designed to allow
a Market Maker to maintain a continuous two-sided quotation at a
displayed price that is compliant with the quotation requirements
for Market Makers set forth in Rule 4613(a)(2). The displayed price
of the Market Maker Peg Order is set with reference to a ``Reference
Price'' in order to keep the displayed price of the Market Maker Peg
Order within a bounded price range. A Market Maker Peg Order may be
entered through RASH, FIX or QIX only. A Market Maker Peg Order must
be entered with a limit price beyond which the Order may not be
priced. The Reference Price for a Market Maker Peg Order to buy
(sell) is the then-current National Best Bid (National Best Offer)
(including Nasdaq), or if no such National Best Bid or National Best
Offer, the most recent reported last-sale eligible trade from the
responsible single plan processor for that day, or if none, the
previous closing price of the security as adjusted to reflect any
corporate actions (e.g., dividends or stock splits) in the security.
\4\ See id. Rule 4613 states that the ``Designated Percentage''
shall be as follows: ``8% for securities subject to Rule
4120(a)(11)(A), 28% for securities subject to Rule 4120(a)(11)(B),
and 30% for securities subject to Rule 4120(a)(11)(C), except that
between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close
of trading, when Rule 4120(a)(11) is not in effect, the Designated
Percentage shall be 20% for securities subject to Rule
4120(a)(11)(A), 28% for securities subject to Rule 4120(a)(11)(B),
and 30% for securities subject to Rule 4120(a)(11)(C). The
Designated Percentage for rights and warrants shall be 30%.''
\5\ The ``Defined Limit'' is defined in Rule 4613 as ``9.5% for
securities subject to Rule 4120(a)(11)(A), 29.5% for securities
subject to Rule 4120(a)(11)(B), and 31.5% for securities subject to
Rule 4120(a)(11)(C), except that between 9:30 a.m. and 9:45 a.m. and
between 3:35 p.m. and the close of trading, when Rule 4120(a)(11) is
not in effect, the Defined Limit shall be 21.5% for securities
subject to Rule 4120(a)(11)(A), 29.5% for securities subject to Rule
4120(a)(11)(B), and 31.5% for securities subject to Rule
4120(a)(11)(C).''
\6\ Rule 4702(b)(7) states that ``[u]pon entry, the displayed
price of a Market Maker Peg Order to buy (sell) is automatically set
by the System at the Designated Percentage (as defined in Rule 4613)
away from the Reference Price in order to comply with the quotation
requirements for Market Makers set forth in Rule 4613(a)(2).''
In the foregoing example, if the Defined Limit is 9.5% and the
National Best Bid increased to $10.17, such that the displayed price
of the Market Maker Peg Order would be more than 9.5% away, the
Order will be repriced to $9.35, or 8% away from the National Best
Bid. Note that prices will be rounded in a manner to ensure that
they are calculated and displayed at a level that is consistent with
the Designated Percentage and the permissible minimum increment of
$0.01 or $0.0001, as applicable. If the limit price of the Order is
outside the Defined Limit, the Order will be sent back to the
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Participant.
The error in this example is that ``$9.35'' should be ``$9.36.''
The Exchange proposes to correct that inadvertent error in this
proposal. The correction is necessary to ensure that the price in the
example ($9.3564) is rounded up to the applicable minimum increment of
$0.01 and remains consistent with the Designated Percentage.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
The proposal would correct a typographical error that otherwise renders
inaccurate an example of the application of Rule 4702(b)(7)(A). The
Exchange believes that it is consistent with the interest of the
public, investors, and the market for the Exchange to take steps to
ensure that its Rulebook is accurate.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 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 is
non-substantive and it will have no impact on competition because it
simply corrects a typographical error in the Rule text to render the
text more accurate.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \11\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the
Commission to 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 Exchange can immediately correct the typographical error in Rule
4702(b)(7)(A) and avoid any potential confusion as to the operation of
the Market Maker Peg Order. For this reason, the Commission believes
that waiver of the 30-day operative delay is consistent with the
protection of investors and the public interest. Therefore, the
Commission hereby waives the operative delay and designates the
proposal as operative upon filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission also 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. If the Commission
takes such action, the Commission shall institute proceedings 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2018-089 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-2018-089. 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 (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 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
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business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NASDAQ-2018-089 and should be submitted on or before December 17, 2018.
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).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25599 Filed 11-23-18; 8:45 am]
BILLING CODE 8011-01-P