[Federal Register Volume 78, Number 215 (Wednesday, November 6, 2013)]
[Notices]
[Pages 66788-66789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-26556]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70793; File No. S7-24-89]
Joint Industry Plan; Order Approving Amendment No. 30 to the
Joint Self-Regulatory Organization Plan Governing the Collection,
Consolidation and Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privileges Basis Submitted by the BATS Exchange, Inc.,
BATS Y-Exchange, Inc., Chicago Board Options Exchange, Incorporated,
Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc.,
Financial Industry Regulatory Authority, Inc., International Securities
Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, Nasdaq Stock
Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC,
NYSE MKT LLC, and NYSE Arca, Inc.
October 31, 2013.
I. Introduction
On September 9, 2013, the operating committee (``Operating
Committee'' or ``Committee'') \1\ of the Joint Self-Regulatory
Organization Plan Governing the Collection, Consolidation, and
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privilege
Basis (``Nasdaq/UTP Plan'' or ``Plan'') filed with the Securities and
Exchange Commission (``Commission'') pursuant to Section 11A of the
Securities Exchange Act of 1934 (``Act''),\2\ and Rule 608
thereunder,\3\ a proposal to amend the Plan.\4\ The proposal represents
Amendment No. 30 to the Plan (``Amendment'') and reflects changes
unanimously adopted by the Participants.\5\ The Amendment was published
for comment in the Federal Register on September 23, 2013.\6\ No
comment letters were received in response to the Notice. The Amendment
would require that odd-lot transactions be reported to the consolidated
tape. The Plan was amended to remove odd-lots from the list of
transactions that are not to be reported for inclusion on the
consolidated tape. This order approves the Amendment to the Plan.
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\1\ The Plan Participants (collectively, ``Participants'') are
the: BATS Exchange, Inc.; BATS Y-Exchange, Inc.; Chicago Board
Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; EDGA
Exchange, Inc.; EDGX Exchange, Inc.; Financial Industry Regulatory
Authority, Inc.; International Securities Exchange LLC; NASDAQ OMX
BX, Inc.; NASDAQ OMX PHLX LLC; Nasdaq Stock Market LLC; National
Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT LLC; and
NYSE Arca, Inc. Each participant executed the proposed amendment.
\2\ 15 U.S.C. 78k-1.
\3\ 17 CFR 242.608.
\4\ The Plan governs the collection, processing, and
dissemination on a consolidated basis of quotation information and
transaction reports in Eligible Securities for each of its
Participants. This consolidated information informs investors of the
current quotation and recent trade prices of Nasdaq securities. It
enables investors to ascertain from one data source the current
prices in all the markets trading Nasdaq securities. The Plan serves
as the required transaction reporting plan for its Participants,
which is a prerequisite for their trading Eligible Securities. See
Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR
20891 (April 26, 2007).
\5\ The proposal was originally designated as Amendment No. 31.
See Letter from Thomas P. Knorring, Chairman, Nasdaq/UTP Plan
Operating Committee to Elizabeth M. Murphy, Secretary, Commission,
dated September 9, 2013. On September 17, 2013, the Participants
filed a letter to re-designate the proposal as Amendment No. 30 and
to correct a marking error in the Plan language. See Letter from
Thomas P. Knorring, Chairman, Nasdaq/UTP Plan Operating Committee to
Katherine A. England, Assistant Director, Division of Trading and
Markets, Commission, dated September 17, 2013.
\6\ See Securities Exchange Act Release No. 70429 (September 17,
2013), 78 FR 58352 (``Notice'').
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II. Description of the Proposal
Currently, Section XIII(B) (Transaction Reports) of the Nasdaq/UTP
Plan provides that ``Each Participant shall, during the time it is open
for trading, be responsible promptly to collect and transmit to the
Processor Transaction Reports in Eligible Securities executed in its
Market by means prescribed herein.'' However, that section also
provides a list of transactions that ``are not to be reported for
inclusion on the consolidated tape.'' That list includes odd-lot
transactions. According to the Participants, ``because odd-lot
transactions account for a not insignificant percentage of trading
volume, the Participants have determined that including odd-lot
transactions on the consolidated tape of Nasdaq/UTP last sale prices
would add post-trade transparency to the marketplace.'' \7\
Accordingly, the Amendment proposes to add odd-lot transactions to the
consolidated tape by removing them from Section XIII(B)'s list of
transactions that are not to be reported for inclusion on the
consolidated tape.
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\7\ Id. at 58362.
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Due to the lack of economic significance of many individual odd-lot
orders, the Participants did not propose to include odd-lot
transactions in calculations of last sale prices. Therefore, odd-lot
transactions would not be included in calculations of high and low
prices and would not be subject to the Limit Up-Limit Down Plan \8\
(i.e., the National Market System Plan to Address Extraordinary Market
Volatility). Moreover, including odd-lot transactions on the
consolidated tape would not trigger short sale restrictions or trading
halts. However, odd-lot transactions would be included in calculations
of daily consolidated volume.
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\8\ See Securities Exchange Act Release No. 67091, 77 FR 33498
(June 6, 2012) (File No. 4-631) (the Limit Up-Limit Down Plan, as
originally approved).
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[[Page 66789]]
For purposes of allocating revenue among the Participants under the
Nasdaq/UTP Plan, the Participants would include odd-lot transactions in
the Security Income Allocation for each Eligible Security under
Paragraph 2 (Security Income Allocation) of Exhibit 1 to the Nasdaq/UTP
Plan. Just as with round lot transactions, an odd-lot transaction with
a dollar value of $5000 or more would constitute one qualified
transaction report and an odd-lot transaction with a dollar value of
less than $5000 would constitute a fraction of a qualified transaction
report that equals the dollar value of the transaction report divided
by $5000. The Participants do not anticipate that this would produce a
significant shift in revenue allocation among the Participants.
According to the Participants, this treatment of odd-lot transactions
for revenue allocation purposes does not require a change to the
language of Exhibit 1 to the Nasdaq/UTP Plan.
III. Discussion and Commission's Findings
After careful review, the Commission finds that the Amendment to
the Nasdaq/UTP Plan is consistent with the requirements of the Act and
the rules and regulations thereunder,\9\ and, in particular, Section
11A(a)(1)(C)(iii) of the Act \10\ and Rule 608 thereunder \11\ in that
it is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure the
availability to brokers, dealers, and investors of information with
respect to transactions in securities. As the Participants stated in
the proposal, odd-lot transactions comprise a noteworthy percentage of
total trading volume. Thus, including odd-lot transactions on the
consolidated tape will enhance post-trade transparency, as well as
price discovery, and consequently would further the goals of the Act.
The Commission believes that information about odd-lot transactions
would provide important information to investors and other market
participants and therefore represents a positive development in the
provision of market data.
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\9\ In approving the Amendment, the Commission has considered
the proposed Amendment's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\11\ 17 CFR 240.608.
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IV. Conclusion
It is therefore ordered, pursuant to Section 11A of the Act,\12\
and the rules thereunder, that the proposed amendment to the Nasdaq/UTP
Plan (S7-24-89), be, and hereby is approved.
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\12\ 15 U.S.C. 78k-1.
For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(27).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-26556 Filed 11-5-13; 8:45 am]
BILLING CODE 8011-01-P