Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Memorialize Order and Execution Available to Participants Into Chapter VI, Section 19, Entitled Data Feeds

 
CONTENT

Federal Register, Volume 83 Issue 94 (Tuesday, May 15, 2018)

Federal Register Volume 83, Number 94 (Tuesday, May 15, 2018)

Notices

Pages 22570-22572

From the Federal Register Online via the Government Publishing Office www.gpo.gov

FR Doc No: 2018-10258

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SECURITIES AND EXCHANGE COMMISSION

Release No. 34-83198; File No. SR-NASDAQ-2018-035

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Memorialize Order and Execution Available to Participants Into Chapter VI, Section 19, Entitled Data Feeds

May 9, 2018.

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 April 27, 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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  1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

    The Exchange proposes to amend the Nasdaq Options Market LLC (``NOM'') Rules to memorialize its order and execution information into Chapter VI, Section 19, entitled ``Data Feeds.''

    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.

  2. Self-Regulatory Organization's Statement of the Purpose of, and the 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.

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

      1. Purpose

        The Exchange proposes to memorialize its order and execution information into Chapter VI, Section 19, entitled ``Data Feeds.'' The Exchange proposes to rename this rule ``Data Feeds and Trade Information.'' The Exchange proposes other grammatical corrections in Section 19(a) as well.

        Section 19(b)

        First, the Exchange proposes to adopt a new Section 19(b) and memorialize the following order and execution information which was previously filed by the Exchange: (1) CTI; (2) TradeInfo; (3) FIX DROP; and (4) OTTO DROP.\3\

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        \3\ See Securities Exchange Act Release No. 65180 (August 22, 2011), 76 FR 53521 (August 26, 2011) (SR-NASDAQ-2011-111) (``Information Filing'').

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        The Exchange originally noted in the Information Filing that CTI offers real-time clearing trade updates. The message containing the trade details is also simultaneously sent to the The Options Clearing Corporation. The trade messages are routed to a member's connection containing certain information. The administrative and market event messages include, but are not limited to: System event messages to communicate operational-related events; options directory messages to relay basic option symbol and contract information for options traded on the Exchange; complex strategy messages to relay information for those strategies traded on the Exchange; trading action messages to inform market participants when a specific option or strategy is halted or released for trading on the Exchange; and an indicator which distinguishes electronic and non-electronically delivered orders.

        The Exchange is proposing to more specifically describe the CTI offering and memorialize it within Section 19(b)(1). The description provides more detail as to the current functionality of CTI, which is not changing. The description would continue to state that CTI is a real-time clearing trade update message that is sent to a Participant after an execution has occurred and contains trade details specific to that Participant. The information includes, among other things, the following: (i) The Clearing Member Trade Agreement or ``CMTA'' or The Options Clearing Corporation or ``OCC'' number; (ii) Exchange badge or house number; (iii) the Exchange

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        internal firm identifier; (iv) an indicator which will distinguish electronic and non-electronically delivered orders; (v) liquidity indicators and transaction type for billing purposes; and (vi) capacity. The Exchange proposes to not add the sentence which states, ``The message containing the trade details is also simultaneously sent to The Options Clearing Corporation.'' The Exchange's System sends clearing information to OCC for each transaction. This sentence does not add information that is useful or relevant and therefore the Exchange proposes to remove it. The Exchange notes that while the description is being amended, it retains more broadly the former descriptions. The information provided is specific to a market participant. The Exchange is expressing more specifically the type of data contained in CTI. The CTI offering is not changing. The Exchange is providing more details regarding the CTI offering than was originally filed in the Information Filing.

        The Exchange originally noted in the Information Filing that TradeInfo allows users to scan for their NASDAQ-listed orders submitted in NASDAQ. Users can then perform actions on their orders. Users can scan for all orders in a particular security or all orders of a particular type, regardless of their status (open, canceled, executed, etc.). For example, after scanning for open orders the user is then able to select an open order and is allowed to make corrections to the order or cancel the order. TradeInfo also allows the users to scan other orders, such as executed, cancelled, broken, rejected and suspended orders.

        The Exchange proposes to amend and memorialize TradeInfo within Section 19(b)(2). The Exchange proposes to note that TradeInfo is a user interface, as compared to a data stream, to add more detail to the description. While some descriptive language is being removed from the rules, such as permitting a subscribing member to scan other order statuses, such as executed, cancelled, broken, rejected and suspended orders, the Exchange believes that this language is covered in the current description in that the text indicates that all orders may be searched regardless of their status. The Exchange is also adding more information to the TradeInfo description to provide Participants greater transparency.

        The Exchange originally noted in the Information Filing that the Order Entry DROP provides real time information regarding orders sent to NOM and executions that occurred on NOM. The DROP interface is not a trading interface and does not accept order messages. The ``Order Entry DROP'' interface is being renamed ``FIX DROP'' for clarity as it relates to FIX ports.

        The Exchange proposes to amend and memorialize FIX DROP within Section 19(b)(3). The Exchange is expanding on the original description by providing more detail by stating that it is a real-time order and execution update message that is sent to a Participant after an order has been received/modified or an execution has occurred and contains trade details specific to that Participant. The information includes, among other things, the following: (1) Executions; (2) cancellations; (3) modifications to an existing order; and (4) busts or post-trade corrections.

        The Exchange originally noted in the Information Filing that OTTO DROP provides real-time information regarding orders entered through OTTO and the execution of those orders. The OTTO DROP data feed is not a trading interface and does not accept order messages. The Exchange is not amending this description rather the Exchange is memorializing the description within Section 19(b)(4).

        The Exchange considers it appropriate to memorialize the order and execution information available on NOM within a rule so that Participants may understand the trade information which is available on the Exchange as it pertains to a firm's trading information. This data is available to all Participants regarding that Participant's transactions. Pricing for these products is included in the Exchange's fee schedule at Chapter XV, Section 3.\4\

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        \4\ See also SR-NASDAQ-2018-036 (not yet published) which proposes conforming changes to the fee schedule.

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        Section 19(a)

        The Exchange proposes minor changes to Section 19(a)(1) and (2) to change the language to indicate the Nasdaq ITCH to Trade Options and Best of Nasdaq Options each separately are data feeds and removing the ``A'' before the description.

      2. Statutory Basis

        The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\5\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\6\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest, by providing greater transparency as to the order and execution information offered on Nasdaq. The Exchange notes that it described this information in prior rule changes.\7\ The Exchange believes that memorializing this information within a rule and updating the information will provide market participants with a list of information available specific to their trading on NOM. The Exchange believes that this proposal is consistent with the Act because it provides information on the content available to market participants regarding the trades they execute on NOM.

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        \5\ 15 U.S.C. 78f(b).

        \6\ 15 U.S.C. 78f(b)(5).

        \7\ See note 3 above.

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    2. Self-Regulatory Organization's Statement on Burden on Competition

      In accordance with Section 6(b)(8) of the Act,\8\ the Exchange does not believe that the proposed rule change will impose any burden on intermarket or intra-market competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange's proposal does not impose an undue burden on competition, rather the Exchange is seeking to provide greater transparency within its rules with respect to the various order and execution information offered on NOM.

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      \8\ 15 U.S.C. 78f(b)(8).

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    3. 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.

  3. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

    Because the 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, if consistent with the protection of investors and the public interest, the proposed rule change 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 the Exchange to give the Commission written notice of the Exchange's 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) \9\ normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\10\ 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 Exchange states that such waiver will allow it to update its rules immediately to provide more information regarding the order and execution information it offers and further the protection of investors and the public interest because it will provide greater transparency as to the trade detail available to members. For this reason, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest and, therefore, the Commission designates the proposed rule change to be operative upon filing.\11\

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    \9\ 17 CFR 240.19b-4(f)(6).

    \10\ 17 CFR 240.19b-4(f)(6)(iii).

    \11\ For purposes only of waiving the 30-day operative delay, the Commission has also 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 should be approved or disapproved.

  4. 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-2018-035 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-2018-035. 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 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-2018-035 and should be submitted on or before June 5, 2018.

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\

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    \12\ 17 CFR 200.30-3(a)(12).

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    Eduardo A. Aleman,

    Assistant Secretary.

    FR Doc. 2018-10258 Filed 5-14-18; 8:45 am

    BILLING CODE 8011-01-P