[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Notices]
[Pages 40782-40785]
[FR Doc No: 2013-16228]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69897; File No. SR-NASDAQ-2013-092]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend NASDAQ Rule 4120(c)(7) To Modify the Parameters for Releasing IPO
Securities for Trading Pursuant to the IPO Halt Cross Under NASDAQ Rule
4753

July 1, 2013.
    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 June 25, 2013, 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, II, and III 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 amend NASDAQ Rule 4120(c)(7) \3\ to modify
the parameters for releasing IPO securities for trading pursuant to the
IPO Halt Cross under NASDAQ Rule 4753. NASDAQ will implement the
proposed changes in mid-to-late August 2013. Public notice of the
implementation date will be provided by NASDAQ in an Equity Trader
Alert at least one week prior to implementation.
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    \3\ The rule text reflects changes that are effective as of June
14, 2013, but not yet operative. See SR-NASDAQ-2013-086 (pending
publication in the Federal Register). The text of the rule change is
available on the Exchange's Web site at http://nasdaq.cchwallstreet.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.
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    The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are in brackets.
* * * * *

4120. Limit Up-Limit Down Plan and Trading Halts

    (a)-(b) No change.
    (c) Procedure for Initiating and Terminating a Trading Halt
    (1)-(6) No change.
    (7)(A) A trading halt or pause initiated under Rule 4120(a)(1),
(4), (5), (6), (9), (10), (11), or (12)(F) shall be terminated when
Nasdaq releases the security for trading. For any such security
listed on Nasdaq, prior to terminating the halt or pause, there will
be a 5-minute Display Only Period during which market participants
may enter quotations and orders in that security in Nasdaq systems.
In addition, in instances where a trading halt is in effect prior to
the commencement of the Display Only Period, market participants may
enter orders in a security that is the subject of the trading halt
on Nasdaq and designate such orders to be held until the beginning
of the Display Only Period. Such orders will be held in a suspended
state until the beginning of the Display Only Period, at which time
they will be entered into the system. At the conclusion of the 5-
minute Display Only Period, the security shall be released for
trading unless Nasdaq extends the Display Only Period for an
additional 1-minute period pursuant to subparagraph (C) below. At
the conclusion of the Display Only Period, trading shall immediately
resume pursuant to Rule 4753.
    (B) A trading halt initiated under Rule 4120(a)(7) shall be
terminated when Nasdaq releases the security for trading. Prior to
terminating the halt, there will be a 15-minute Display Only Period
during which market participants may enter quotes and orders in that
security in Nasdaq systems. In addition, beginning at 4:00 a.m.,
market participants may enter orders in a security that is the
subject of an Initial Public Offering (``IPO'') on Nasdaq and
designate such orders to be held until the beginning of the Display
Only Period, at which time they will be entered into the system.
[At]After the conclusion of the 15-minute Display Only Period (the
time after conclusion of the Display Only Period is hereafter
referred to as the ``Pre-Launch Period''), the security shall be
released for trading by Nasdaq at such time as both of the following
conditions are simultaneously met: (i) Nasdaq receives notice from
the underwriter of the IPO that the security is ready to trade and
(ii) there is no order imbalance in the security as defined in
subparagraph (C) below. The underwriter, with concurrence of Nasdaq,
may determine at any point during the IPO Halt Cross process up
through the Pre-Launch Period to postpone and reschedule the IPO.[
unless Nasdaq extends the Display Only Period for up to six
additional 5-minute Display Only Periods pursuant to subparagraph
(C) or (D) below. At the conclusion of the Display Only Period(s),
there shall be an additional delay of between zero and 15 seconds
(randomly selected) and then trading shall resume pursuant to Rule
4753.] Market participants may continue to enter orders and order
cancellations for participation in the cross auction during the Pre-
Launch Period up to the point that the cross auction process
commences.
    (C) If at the end of a Display Only Period, Nasdaq detects an
order imbalance in the security, Nasdaq will extend the Display Only
Period as permitted under subparagraph[s] (A) [and (B) above]. In
the case of subparagraph (B), any order imbalance during the Pre-
Launch Period will result in a delay of the release for trading of
the IPO until the end of the order imbalance and satisfaction of the
other requirements for release of the IPO contained in subparagraph
(B). Order imbalances under subparagraph (A) shall be established
when (i) the Current Reference Prices, as defined in Rule
4753(a)(2)(A), disseminated 15 seconds and immediately prior to the
end of the Display Only Period differ by more than the greater of 5
percent or 50 cents, or (ii) all buy or sell market orders will not
be executed in the cross. Order imbalances under subparagraph (B)
shall be established when (i) the Current Reference Prices, as
defined in Rule 4753(a)(2)(A), disseminated 15 seconds and
immediately prior to commencing the release of the IPO for trading
during the Pre-Launch Period differ by more than the greater of 5
percent or 50 cents, or (ii) all buy or sell market orders will not
be executed in the cross.
    [(D) At any time within the last five minutes prior to the end
of a Display Only Period, Nasdaq may extend the Display Only Period
as permitted under subparagraph (B) above at the request of an
underwriter of an IPO.]
* * * * *

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 Exchange proposes to amend Rule 4120(c)(7)(B) and (C) and to
delete Rule 4120(c)(7)(D) to modify the process by which a company's
securities approved for listing on NASDAQ in an initial public offering
(``IPO'') are released for trading pursuant to NASDAQ's IPO Halt Cross
under NASDAQ Rule 4753. Rule 4120(c)(7)(B) governs the orderly launch
of trading of IPO securities approved for listing on NASDAQ in an
initial public offering. Rule 4120(c)(7)(B), provides a fifteen-minute
``Display Only Period'' prior to terminating the halt imposed on an IPO
security before it opens for trading for the first time on NASDAQ
pursuant to the IPO Halt Cross. Under Rule 4120(c)(7)(B), at the
conclusion of the fifteen-minute Display Only Period NASDAQ may extend
the period for up to six additional five-minute Display Only Periods,
pursuant to the basis described under Rule 4120(c)(7)(C). Rule
4120(c)(7)(C) allows an extension when NASDAQ detects an order
imbalance in the security. Rule 4120(c)(7)(D) permits NASDAQ to extend
any of these Display-Only Periods for an additional five-minute Display
Only Period (up to the maximum of six additional periods) at the
request of an underwriter of the IPO.
    NASDAQ believes that the existing rule has worked well in matching
investor interest in an auction to establish the price at which the
security is released for trading on NASDAQ. The rule also recognizes
the critical role played by the underwriter, with its unique knowledge
of the issuer and the market, in establishing the appropriate

time to release the security for trading. While issuers and
underwriters have provided positive feedback on the current process
that NASDAQ believes has worked successfully in hundreds of IPOs, we
have periodically heard suggestions regarding potential changes to the
IPO Halt Cross. For example, certain market participants have
questioned whether the six extension limit to the Display Only Period--
limiting the launch process to a total of 30 minutes--creates an
unnecessary deadline within which the IPO must be launched or otherwise
rescheduled. NASDAQ has had one situation where all six extensions have
been used and several where four or five extensions have occurred and
it is possible that underwriters in the future would want to extend
beyond six Display Only Periods if permitted by the rule.
    Others have questioned whether there should be more flexibility
with respect to the Display Only Periods, which under the current rule
can only be extended in fixed five-minute increments. The current rule
would prevent trading from commencing if conditions improve within the
five-minute period. NASDAQ agrees that the rule should be modified to
permit the launch of trading whenever conditions are appropriate.
    NASDAQ believes that its proposed changes to Rule 4120(c)(7) will
increase its flexibility to commence trading when appropriate while
retaining a transparent process that has been the hallmark of the rule.
In particular, NASDAQ proposes to delete the requirement in Rule
4120(c)(7)(B) that limits the number of extensions of the Display Only
Period to six five-minute periods. Instead, IPOs coming out of the
initial 15-minute Display Only Period would enter what is defined as
the ``Pre-Launch Period'' that will not be of a fixed duration. The
Pre-Launch Period will continue until:
    (1) the IPO is released when the following two conditions are
simultaneously met:
     Nasdaq receives notice from the underwriter of the IPO
that the security is ready to trade, and
     there is no order imbalance in the security (as discussed
below); or
    (2) the underwriter, with concurrence of Nasdaq, determines at any
point during the IPO Halt Cross process up through the Pre-Launch
Period to postpone and reschedule the IPO.
    The underwriter's involvement in timing the commencement of trading
is consistent with current practice. In administering the IPO cross
process since 2006, NASDAQ has found that underwriters possess valuable
information about the pending IPO given their unique position in the
market, including the status of IPO orders on the underwriter's book.
NASDAQ believes that it is in the best interest of the markets to give
underwriters input into the timing of the IPO Halt Cross to help to
ensure the fair and orderly launch of trading in the IPO security. The
condition that there be no order imbalance in the security is designed
to ensure that the security price is reasonably stable at the time
trading commences. Under Rule 4120(c)(7)(C), an order imbalance occurs
when (1) the Current Reference Prices \4\ disseminated 15 seconds and
immediately prior to the end of the Display Only Period differ by more
than the greater of 5 percent or 50 cents, or (2) all buy or sell
market orders will not be executed in the cross. This protection, as
modified below to extend to the Pre-Launch Period, would also prevent
circumstances where a misunderstanding by the underwriter as to the
state of the order book risked launching trading at a time of material
volatility in the book for the security. As is currently the case, this
measurement would be calculated by the IPO Halt Cross system, which
would automatically prevent launch of the IPO when an order imbalance
existed. The proposed language allowing an underwriter to postpone and
reschedule the IPO with the concurrence of NASDAQ is designed to allow
flexibility if unforeseen market events make it inadvisable to proceed
with the IPO.
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    \4\ The Current Reference Price is defined in Rule 4753(a)(2)(A)
as the price at which the maximum number of shares can be paired. In
situations where more than one price exists, the rule establishes
the Current Reference Price in a number of scenarios.
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    NASDAQ also proposes to modify the language of Rule 4120(c)(7)(C)
to extend the protections in the event of an order imbalance to the
Pre-Launch Period. The proposed modification is not designed to
substantively modify how order imbalances are handled in the IPO Halt
Cross. It is instead designed to apply the same principles to the Pre-
Launch Period which, unlike in the existing Display Only Period, has no
fixed duration. Therefore, the existing language with respect to
element (1) of the definition of order imbalance--measuring two points
in time 15 seconds before and immediately before the end of the
period--would not work during the Pre-Launch Period. The proposed
language would use a rolling measurement point during the Pre-Launch
Period and compare the Current Reference Price at that point in time
against the Current Reference Price 15 seconds earlier. The system
would prevent launch of the IPO in the event of an order imbalance at
any point in the Pre-Launch Period until the end of the order
imbalance, whereupon the IPO would launch once the requirements of Rule
4120(c)(7)(B) are satisfied.\5\
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    \5\ Order imbalances in crosses other than IPO Halt Crosses
would continue to be handled in the same manner as is currently the
case under Rule 4120(c)(7)(A).
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    NASDAQ proposes to delete several elements of the existing Rule
4120(c)(7). The existing language in Rule 4120(c)(7)(B) that provides
for a randomization period of between zero and 15 seconds at the
conclusion of the Display Only Period would be eliminated. The
randomization period was designed to reduce the risk that market
participants might try to game the system around the end of a Display
Only Period, the timing of which is fixed in the rule. Because the
proposed changes would eliminate fixed Display Only Periods and make it
harder for someone with malicious intent to time activity to influence
the IPO Halt Cross, NASDAQ believes that the current randomization
language is duplicative and unnecessary. NASDAQ also proposes to delete
Rule 4120(c)(7)(D) that memorializes the ability of underwriters to
request an extension of the Display Only Period. The underwriter's role
in the process has been moved to the proposed language of Rule
4120(c)(7)(B), as discussed above.
    NASDAQ's proposed changes would not alter pricing and cross
information publicly available to market participants seeking to
participate in the IPO Halt Cross. NASDAQ would continue to disseminate
throughout the Display Only Period and the Pre-Launch Period updated
electronic messages in five second intervals containing information on
the eligible interest and the price at which such interest would
execute at time of dissemination.\6\ Market participants will continue
to be able to submit and cancel orders during the Pre-Launch Period as
they are currently able to do during Display Only Periods and any
extensions. Messages to submit or cancel orders will not be eligible to
participate in the cross auction once the cross auction process
commences, as is currently the case.
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    \6\ The information disseminated in accordance with Rule
4753(a)(2) includes the Current Reference Price, the shares paired
at the Current Reference Price, any order imbalance (shares that are
not paired), the buy/sell direction of any imbalance and the
indicative price at which the cross would occur at that point in
time.
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    The changes to NASDAQ's IPO process are consistent with how we
understand IPOs are handled at other exchanges. For example, we
understand

that the New York Stock Exchange (``NYSE'') operates a similar process
that includes substantial input from underwriters and does not contain
fixed time limits within which to launch the IPO.\7\ During this
indefinite period the NYSE disseminates similar information concerning
the state of the auction as that disseminated by NASDAQ.\8\ Similarly,
BATS Exchange permits extension to its IPO Auction Quote-Only period
upon the request of an underwriter and for other reasons similar to
those contained in Rule 4120(c)(7)(B) and (C), with no limit on the
number or length of extensions.\9\ We believe these changes to NASDAQ's
IPO Halt Cross will assist market participants and underwriters who
participate in IPOs on several exchanges.
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    \7\ NYSE Rule 123D. See NYSE, Inside the IPO Process, available
at https://usequities.nyx.com/page/inside-nyse-ipo-process.
    \8\ NYSE Rule 15(a).
    \9\ BATS Exchange Chapter XI, Rule 11.23(d)(2)(B)(ii).
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 2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\10\ in general, and with
Section 6(b)(5) of the Act,\11\ in particular, in that it is designed
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transaction 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,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The proposed rule change promotes this
goal by establishing in NASDAQ's rules an IPO process that protects
investors and the public interest by ensuring an orderly opening of
trading in IPOs on NASDAQ and eliminates unnecessary fixed time limits
that could impact the success of IPOs. NASDAQ also believes that the
proposal is consistent with rules of other exchanges and will avoid
confusion among participants in the process. NASDAQ notes that the
criteria it applies in launching IPOs are applied consistently to every
IPO, and therefore do not permit NASDAQ to discriminate in any manner.
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    \10\ 15 U.S.C. 78f.
    \11\ 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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange believes that the proposal is irrelevant to competition
because it is not driven by, nor impactful to, competition.

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 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)(ii) of the Act \12\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \13\ 17 CFR 240.19b-4(f)(6).
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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. The Exchange has
provided 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.

 IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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_ADDRESS>Please include
File Number SR-NASDAQ-2013-092 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASDAQ-2013-092.
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-
NASDAQ-2013-092 and should be submitted on or before July 29, 2013.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16228 Filed 7-5-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 141 (Monday, July 23, 2018)]
[Rules and Regulations]
[Pages 34763-34764]
[FR Doc No: 2018-15737]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 73

[Docket No. FAA-2017-0144; Airspace Docket No. 17-ASW-2]
RIN-2120-AA66

Establishment of Restricted Areas R-5602A and R-5602B; Fort Sill,
OK

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; correction.

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SUMMARY: This action corrects a final rule published in the Federal
Register of July 11, 2018, that establishes restricted areas R-5602A
and R-5602B, over a portion of the Fort Sill, OK, R-5601 restricted
area complex. The restricted areas using agency listed in the rule is
corrected to reflect the military unit responsible for ensuring the
restricted areas are used for their designated purpose, scheduling the
restricted areas, and coordinating the restricted area airspace use
with the controlling agency.

DATES: Effective date 0901 UTC, September 13, 2018.

FOR FURTHER INFORMATION CONTACT: Colby Abbott, Airspace Policy Group,
Office of Airspace Services, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783.

SUPPLEMENTARY INFORMATION:

History

    The FAA published a final rule in the Federal Register for Docket
No. FAA-2017-0144 (83 FR 32061, July 11, 2018), establishing restricted
areas R-5602A and R-5602B over a portion of the Fort Sill, OK,
restricted area complex.

Subsequent to publication, the FAA identified an editorial error in the
using agency information listed in the restricted area legal
descriptions. To accurately reflect the using agency responsible for
the scheduling, using, and coordinating with the controlling agency,
this correction changes the using agency from ``U.S. Army, Commanding
General, U.S. Army Fires Center of Excellence (USAFCOE) and Fort Sill,
Fort Sill, OK'' to read ``U.S. Army, U.S. Army Fires Center of
Excellence (USAFCOE), Fort Sill, OK.''

Correction to Final Rule

    Accordingly, pursuant to the authority delegated to me, in the
Federal Register of July 11, 2018 (83 FR 32061) FR Doc. 2018-14783,
Establishment of Restricted Areas R-5602A and R-5602B; Fort Sill, OK,
is corrected as follows:

Sec.  73.56  [Amended]

R-5602A Fort Sill, OK [Corrected]

0
On page 32062, column 3, lines 10, 11, 12, and 13, under Using agency,
remove the text that reads ``U.S. Army, Commanding General, U.S. Army
Fires Center of Excellence (USAFCOE) and Fort Sill, Fort Sill, OK.''
and add in its place ``U.S. Army, U.S. Army Fires Center of Excellence
(USAFCOE), Fort Sill, OK.''

R-5602B Fort Sill, OK [Corrected]

0
On page 32062, column 3, lines 27, 28, 29, and 30, under Using agency,
remove the text that reads ``U.S. Army, Commanding General, U.S. Army
Fires Center of Excellence (USAFCOE) and Fort Sill, Fort Sill, OK.''
and add in its place ``U.S. Army, U.S. Army Fires Center of Excellence
(USAFCOE), Fort Sill, OK.''

    Issued in Washington, DC, on July 17, 2018.
Rodger A. Dean Jr.,
Manager, Airspace Policy Group.
[FR Doc. 2018-15737 Filed 7-20-18; 8:45 am]
BILLING CODE 4910-13-P