[Federal Register Volume 82, Number 63 (Tuesday, April 4, 2017)]
[Notices]
[Pages 16456-16458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06566]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80331; File No. SR-IEX-2017-08]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Correct
Typographical Errors in SR-IEX-2017-06
March 29, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on
March 17, 2017, the Investors Exchange LLC 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 self-regulatory organization. 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\ 15 U.S.C. 78a.
\3\ 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
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the
Commission a proposed rule change to correct several typographical
errors in Rule 11.190(g)(1)(A) and in the Purpose Section of SR-IEX-
2017-06 describing the changes to IEX Rule 11.190(g)(1)(A) proposed
therein. The Exchange has designated this proposal as non-controversial
and has satisfied the requirements of Rule 19b-4(f)(6)(iii) under the
Act.\6\
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 17 CFR 240.19b-4(f)(6)(iii).
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The text of the proposed rule change is available at the Exchange's
Web site at www.iextrading.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 self-regulatory organization
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 statement may be examined at
the places specified in Item IV below. The self-regulatory organization
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 recently filed with the Commission an immediately
effective proposed rule change to amend Rule 11.190(g) to modify the
quote instability coefficients and quote instability threshold included
in the quote instability calculation specified in subparagraph (g)(1)
of Rule 11.190 for purposes of determining whether a crumbling quote
exists. The rule filing was published on the Commission Web site on
March 10, 2017.\7\ Thereafter the Exchange identified that the formula
contained in Rule 11.190(g)(1)(A) (the ``formula'') contains several
minor typographical errors. First, the numerical references to the
Quote Stability Coefficients contained in the formula were each
represented as regular text rather than as subscript, as they are
specified in subparagraph (a) of Rule 11.190(g)(1)(A). Second, the
Quote Stability Variables NC and FC are incorrectly represented as NC-1
and FC-1 respectively in the formula. Exhibit 5 to this filing corrects
both of these typographical errors. In addition, Exhibit 5 to SR-IEX-
2017-06 contains inconsistent notations on text marked for deletion and
retention whereby the same phrase is marked for deletion and also
marked as retained and relocated in the following subparagraph.
Specifically, the phrase ``the quote instability factor result from the
quote stability calculation is greater than the defined quote
instability threshold'' is not clearly shown as relocated. Exhibit 5 to
this rule filing corrects this typographical error by showing the text
of the relocated phrase as new text, notwithstanding that it was
previously contained in the text of Rule
[[Page 16457]]
1.190(g)(1)(A) [sic] as amended by SR-IEX-2017-06.
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\7\ See Securities Exchange Act Release No. 34-80202; File No.
SR-IEX-2017-06.
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In addition, the Purpose Section of the filing contains two sets of
typographical errors which the Exchange proposes to correct with this
filing. First, numbered paragraph 1, beginning on page 8, which
describes one aspect of the proposed amendments to Rule 11.190(g)
inadvertently omits the Nasdaq Stock Market in the list of exchanges
for which protected quotations are included in the Crumbling Quote
determination described in subparagraph (1) of Rule 11.190(g). This
paragraph also uses the word ``protection'' rather than ``protected''
in the second sentence. The proposed rule text in Exhibit 5 to the rule
filing is correct in this respect. Accordingly, IEX proposes to restate
the relevant portion of the Purpose Section to read as follows:
1. Rule 11.190(g) states that the Exchange utilizes real time
relative quoting activity of Protected Quotations, not including IEX
protected quotations, in the quote instability calculation. As
proposed, the Exchange is proposing to include the protected
quotations of the following exchanges in the quote instability
calculation: New York Stock Exchange, NYSE Arca, Nasdaq Stock
Market, Nasdaq BX, Bats BZX Exchange, Bats BYX Exchange, Bats EDGX
Exchange, and Bats EDGA Exchange. In connection with our analysis of
market data, as described above, the Exchange considered several
different permutations of which exchanges to include in the model.
The research identified that using the Protected Quotations of these
specific eight exchanges in the aggregate resulted in the greatest
predictive power of all permutations of exchanges assessed for
determining a crumbling quote.
Second, the description in the Purpose Section of the filing in the
first and third sentences of numbered paragraph 3 on page 10, which
reference the quote stability variables to be retired, incorrectly
format N-1 and F-1 in regular text, when the
numeral 1 and preceding minus sign in each should be subscript.
Accordingly, IEX proposes to restate the first three sentences of the
paragraph to read as follows:
The Exchange proposes to revise the quote stability variables
currently specified in subparagraph (1)(D)(i)(b) of Rule 11.190(g)
by adding seven (7) new variables (NC, FC, Delta, EPos, ENeg,
EPosPrev, and ENegPrev) and retiring four (4) variables
(N-1, F-1, E, and D). Specifically, based on
our analysis of market data, as described above, the Exchange
identified that considering the maximum change over the course of
the previous millisecond up to the most recent Protected NBBO change
was a more accurate indicator of a crumbling quote than simply
looking at the absolute state of the market one millisecond
previously. The replacement of N-1, F-1, and D
with NC, FC, and Delta, respectively, reflects this finding.''
(internal footnote omitted)
2. Statutory Basis
IEX believes that the proposed rule change is consistent with
Section 6(b) of the Act \8\ in general, and furthers the objectives of
Section 6(b)(5) of the Act,\9\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, 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. Specifically, the correction
of inadvertent typographical errors in IEX Rule 11.190(g)(1)(A) and in
SR-IEX-2017-06 describing the changes to IEX Rule 11.190(g)(1)(A)
proposed therein will serve the goals of the Act by having rule text
accurately reflect system functionality and avoid the potential for
market participant confusion.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
IEX 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 believes that the
proposed correction does not impact competition in any respect since it
is designed to correct typographical errors.
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.
III. 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, it has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), IEX provided the Commission with written notice of its
intent to file the proposed rule change, along with a brief
description and the 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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, noting that the
proposal would correct typographical errors in SR-IEX-2017-06, and
stating that waiver would allow the Exchange to implement these
corrections upon effectiveness of the proposal and avoid potential
confusion that otherwise might occur. The Commission believes that
waiver of the 30-day operative delay is consistent with the protection
of investors and the public interest because the proposed rule change
would correct a number of typographical errors contained in IEX's
recent SR-IEX-2017-06 filing, but would not result in any substantive
changes to that proposal. Waiver of the operative delay will allow IEX
to correct these errors without delay, which should reduce the
potential for confusion regarding the operation of IEX's quote
instability calculation referenced in IEX Rule 11.190. Therefore, the
Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 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.
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.
[[Page 16458]]
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 SR-IEX-2017-08 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-IEX-2017-08. 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 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
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 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; 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 Number SR-IEX-2017-08 and should be
submitted on or before April 25, 2017.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-06566 Filed 4-3-17; 8:45 am]
BILLING CODE 8011-01-P