[Federal Register Volume 85, Number 94 (Thursday, May 14, 2020)]
[Notices]
[Pages 29000-29005]
[FR Doc No: 2020-10288]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88844; File No. SR-CboeEDGA-2020-013]

Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Adopting Rule 14.12 Governing the Trading, Pursuant to Unlisted Trading
Privileges, of Exchange-Traded Fund Shares

May 8, 2020.
    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 May 7, 2020, Cboe EDGA Exchange, Inc. (``Exchange'' or ``EDGA'')
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 Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to adopt Rule 14.12 to permit the trading, pursuant to
unlisted trading privileges, of Exchange-Traded Fund Shares.
Additionally, the Exchange proposes to make corresponding changes to
Rule 14.1(a). The text of the proposed rule change is provided in
Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edga/), at the Exchange's Office of the Secretary, 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 Exchange proposes to adopt Rule 14.12 to permit the trading,
pursuant to unlisted trading privileges (``UTP''), of Exchange-Traded
Fund (also referred to as ``ETF'') Shares,\5\ which substantially
conforms to Cboe BZX Exchange, Inc. (``BZX'') Rule 14.11(l).\6\
Additionally, the Exchange proposes to make corresponding changes to
Rule 14.1(a) to reference Exchange-Traded Fund Shares and proposed Rule
14.12, where applicable.
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    \5\ ETF Shares means shares of stock issued by an Exchange-
Traded Fund. See proposed Rule 14.12(c)(1).
    \6\ See Securities and Exchange Act Release No. 88566 (April 6,
2020) 85 FR 20312 (April 10, 2020) (SR-CboeBZX-2019-097) (the ``BZX
Approval Order'').
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    The Exchange does not currently list any securities as a primary
listing market. Consistent with this fact, Exchange Rule 14.1(a)
currently states that all securities traded on the Exchange are traded
pursuant to UTP and that the Exchange will not list any securities
before first filing and obtaining Commission approval of rules that
incorporate qualitative listing criteria and comply with Rules 10A-3
\7\ (``Rule 10A-3'') and 10C-1 \8\ (``Rule 10C-1'') under the Act.
Therefore, the provisions of existing Rules 14.2 through 14.9, 14.11,
and proposed Rule 14.12 that permit the listing of certain Equity
Securities \9\ will not be effective until the Exchange files a
proposed rule change under Section 19(b)(2) under the Exchange Act to
amend its rules to comply with Rule 10A-3 and 10C-1 under the Exchange
Act and to incorporate qualitative listing criteria, and such proposed
rule change is approved by the Commission. Considering the foregoing,
the Exchange proposes to adopt Rule 14.12 as set forth below.
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    \7\ Rule 10A-3 obligates the Exchange to prohibit the initial or
continued listing of any security of an issuer that is not in
compliance with certain required standards. See 17 CFR 240.10A-3.
    \8\ Rule 10C-1 obligates the Exchange to establish listing
standards that require each member of a listed issuer's compensation
committee to be a member of the issuer's board and to be
independent, as well as establish certain factors that an issuer
must consider when evaluating the independence of a director. See 17
CFR 240.10C-1.
    \9\ As provided in Rule 14.1(a), the term ``Equity Security''
means, but is not limited to, common stock, secondary classes of
common stock, preferred stock and similar issues, shares or
certificates of beneficial interest of trusts, notes, limited
partnership interests, warrants, certificates of deposit for common
stock, convertible debt securities, ADRs, CVRs, Investment Company
Units, Trust Issued Receipts (including those based on Investment
Shares), Commodity-Based Trust Shares, Currency Trust Shares,
Partnership Units, Equity-Linked Securities, Commodity-Linked
Securities, Currency-Linked Securities, Portfolio Depositary
Receipts, Equity-Linked Debt Securities, and Managed Portfolio
Shares. Further, the Exchange now proposes to include the term
``Exchange-Traded Fund Shares'' to the definition of Equity
Security.
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Proposed Listing Rules
    Proposed Rule 14.12(a) provides that the Exchange will consider for
trading, whether by listing or pursuant to UTP, ETF Shares that meet
the criteria of Rule 14.12.
    Proposed Rule 14.12(b) provides that Rule 14.12 is applicable only
to ETF Shares and that, except to the extent inconsistent with Rule
14.12, or unless the context otherwise requires, the rules and
procedures of the Exchange's Board of Directors shall be applicable to
the trading on the Exchange of such securities. Proposed Rule 14.12(b)
provides further that ETF Shares are included within the definition of
``security'' or ``securities'' as such terms are used in the Rules of
the Exchange.
    Proposed Rule 14.12(b)(1) provides that transactions in ETF Shares
will occur throughout the Exchange's trading hours.
    Proposed Rule 14.12(b)(2) provides that the minimum price variation
for quoting and entry of orders in ETF Shares will be $0.01.
    Proposed Rule 14.12(b)(3) provides that the Exchange will implement
and maintain written surveillance procedures for ETF Shares.
    Proposed Rule 14.12(c)(1) defines the term ``ETF Shares'' as shares
of stock issued by an Exchange-Traded Fund.\10\
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    \10\ For purposes of this filing, references to a series of
Exchange-Traded Fund Shares are referred to interchangeably as a
series of Exchange-Traded Fund Shares or as a ``Fund'' and shares of
a series of Exchange-Traded Fund Shares are generally referred to as
the ``Shares''.
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    Proposed Rule 14.12(c)(2) defines the term ``Exchange-Traded Fund''
as having the same meaning as the term ``exchange-traded fund'' as
defined in Rule 6c-11 under the Investment Company Act of 1940.\11\
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    \11\ Per Rule 6c-11, an exchange-traded fund means a registered
open-end management company: (A) That issues (and redeems) creation
units to (and from) authorized participants in exchange for a basket
and a cash balancing amount if any; and (B) Whose shares are listed
on a national securities exchange and traded at market-determined
prices.
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    Proposed Rule 14.12(c)(3) defines the term ``Reporting Authority''
in respect of a particular series of ETF Shares means the Exchange, an
institution, or a reporting service designated by the Exchange or by
the exchange that lists a particular series of ETF Shares (if the
Exchange is trading such series pursuant to UTP) as the official source
for calculating and reporting information relating to such series,
including, but not limited to, the amount of any dividend equivalent
payment or cash distribution to holders of ETF Shares, the net asset
value (the ``NAV''), index or portfolio value, the current value of the
portfolio of securities required to be deposited in connection with
issuance of ETF Shares, or other information relating to the issuance,
redemption or trading of ETF

Shares. A series of ETF Shares may have more than one Reporting
Authority, each having different functions.
    Proposed Rule 14.12(d) provides for the initial and continued
listing and/or trading of ETF Shares, including trading pursuant to
UTP, pursuant to Rule 19b4-(e) under the Act. Proposed Rule 14.12(d)(1)
sets forth initial listing criteria applicable to ETF Shares.
Specifically, proposed Rule 14.12(d)(1) provides that the requirements
of Rule 6c-11 must be satisfied by a series of ETF Shares on an initial
and continued listing basis. Such securities must also satisfy the
criteria on an initial and, with the exception of proposed subparagraph
(d)(1)(A), a continued listing basis. Proposed Rule 14.12(d)(1)(A)
provides that for each series, the Exchange will establish a minimum
number of ETF Shares required to be outstanding at the time of
commencement of trading on the Exchange. However, as noted above, such
criteria is not applicable on a continued listing basis. Proposed rule
14.12(d)(1)(B) provides that if an index underlying a series of ETF
Shares is maintained by a broker-dealer or fund adviser, the broker-
dealer or fund adviser shall erect and maintain a ``fire wall'' around
the personnel who have access to information concerning changes and
adjustments to the index and the index shall be calculated by a third
party who is not a broker-dealer or fund adviser. If the investment
adviser to the investment company issuing an actively managed series of
ETF Shares is affiliated with a broker-dealer, such investment adviser
shall erect and maintain a ``fire wall'' between the investment adviser
and the broker-dealer with respect to access to information concerning
the composition and/or changes to such Exchange-Traded Fund's
portfolio. Additionally proposed rule 14.12(d)(1)(C) provides that any
advisory committee, supervisory board, or similar entity that advises a
Reporting Authority or that makes decisions on the composition,
methodology, and related matters of an index underlying a series of ETF
Shares, must implement and maintain, or be subject to, procedures
designed to prevent the use and dissemination of material non-public
information regarding the applicable index. For actively managed
Exchange-Traded Funds, personnel who make decisions on the portfolio
composition must be subject to procedures designed to prevent the use
and dissemination of material nonpublic information regarding the
applicable portfolio.
    Proposed Rule 14.12(d)(2) provides that each series of ETF Shares
will be listed and traded subject to application of the following
continued listing criteria. Proposed Rule 14.12(d)(2)(A) provides that
the Exchange will consider the suspension of trading in or removal from
listing of or termination of unlisted trading privileges for a series
of ETF Shares under any of the following circumstances: (i) If the
Exchange becomes aware that the issuer of the ETF Shares is no longer
eligible to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940; (ii) if any of the other listing requirements set
forth in this Rule 14.12 are not continuously maintained; (iii) if,
following the initial twelve month period after commencement of trading
on the Exchange of a series of ETF Shares, there are fewer than 50
beneficial holders of the series of ETF Shares for 30 or more
consecutive trading days; or (iv) if such other event shall occur or
condition exists which, in the opinion of the Exchange, makes further
dealings on the Exchange inadvisable. Proposed Rule 14.12(d)(2)(B)
provides that upon termination of an investment company, the Exchange
will require that ETF Shares issued in connection with such entity be
removed from Exchange listing.
    Proposed Rule 14.12(e), which relates to limitation of Exchange
liability, provides that neither the Exchange, the Reporting Authority,
nor any agent of the Exchange shall have any liability for damages,
claims, losses or expenses caused by any errors, omissions, or delays
in calculating or disseminating any current index or portfolio value;
the current value of the portfolio of securities required to be
deposited to the open-end management investment company in connection
with issuance of ETF Shares; the amount of any dividend equivalent
payment or cash distribution to holders of ETF Shares; net asset value;
or other information relating to the purchase, redemption, or trading
of ETF Shares, resulting from any negligent act or omission by the
Exchange, the Reporting Authority, or any agent of the Exchange, or any
act, condition, or cause beyond the reasonable control of the Exchange,
its agent, or the Reporting Authority, including, but not limited to,
an act of God; fire; flood; extraordinary weather conditions; war;
insurrection; riot; strike; accident; action of government;
communications or power failure; equipment or software malfunction; or
any error, omission, or delay in the reports of transactions in one or
more underlying securities.
    The Exchange does not propose to adopt BZX Rule 14.11(l)(6) because
it is not applicable as the Exchange does not currently have any listed
products.
Quantitative Standards
    The Exchange believes that the proposal is designed to prevent
fraudulent and manipulative acts and practices because the Exchange
will perform ongoing surveillance of ETF Shares listed on the Exchange
in order to ensure compliance with Rule 6c-11 and the 1940 Act on an
ongoing basis. While proposed Rule 14.12 does not include the
quantitative requirements applicable to an ETF or an ETF's holdings or
underlying index that are included in Rule 14.2, the Exchange believes
that the manipulation concerns that such standards are intended to
address are otherwise mitigated by a combination of the Exchange's
surveillance procedures and the Exchange's ability to suspend trading
or terminate unlisted trading privileges under the proposed Rule
14.12(d)(2)(A). The Exchange will also halt trading in ETF Shares under
the conditions specified in Rule 11.16, ``Trading Halts Due to
Extraordinary Market Volatility.'' The Exchange believes that such
concerns are further mitigated by enhancements to the arbitrage
mechanism that will come from Rule 6c-11, specifically the additional
flexibility provided to issuers of ETF Shares through the use of custom
baskets for creations and redemptions and the additional information
made available to the public through the additional daily website
disclosure obligations applicable under Rule 6c-11.\12\ The Exchange
believes that the combination of these factors will act to keep ETF
Shares trading near the value of their underlying holdings and further
mitigate concerns around manipulation of ETF Shares on the Exchange
without the inclusion of quantitative standards.\13\
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    \12\ The Exchange notes that the Commission came to a similar
conclusion in several places in the Rule 6c-11 Release. See Release
Nos. 33-10695; IC-33646; File No. S7-15-18 (Exchange-Traded Funds)
(September 25, 2019), 84 FR 57162 (October 24, 2019) (the ``Rule 6c-
11 Release'') at 15-18; 60-61; 69-70; 78-79; 82-84; and 95-96.
    \13\ The Exchange believes that this applies to all quantitative
standards, whether applicable to the portfolio holdings of a series
of ETF Shares or the distribution of the ETF Shares.
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Surveillance
    The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of ETF Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of ETF Shares
through the

Exchange will be subject to the Exchange's surveillance procedures for
derivative products. The Exchange will require the issuer of each
series of ETF Shares listed on the Exchange to represent to the
Exchange that it will advise the Exchange of any failure by a Fund to
comply with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing requirements.
    Specifically, the Exchange intends to utilize its existing
surveillance procedures applicable to derivative products, which are
currently applicable to Investment Company Units, among other product
types, to monitor trading in ETF Shares. The Exchange or the Financial
Industry Regulatory Authority, Inc. (``FINRA''), on behalf of the
Exchange, will communicate as needed regarding trading in ETF Shares
and certain of their applicable underlying components with other
markets that are members of the Intermarket Surveillance Group
(``ISG'') or with which the Exchange has in place a comprehensive
surveillance sharing agreement. In addition, the Exchange may obtain
information regarding trading in ETF Shares and certain of their
applicable underlying components from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement. Additionally, FINRA, on
behalf of the Exchange, is able to access, as needed, trade information
for certain fixed income securities that may be held by a series of ETF
Shares reported to FINRA's Trade Reporting and Compliance Engine
(``TRACE''). FINRA also can access data obtained from the Municipal
Securities Rulemaking Board's (``MSRB'') Electronic Municipal Market
Access (``EMMA'') system relating to municipal bond trading activity
for surveillance purposes in connection with trading in a series of ETF
Shares, to the extent that a series of ETF Shares holds municipal
securities.
Trading Halts
    As proposed above, the Exchange may consider all relevant factors
in exercising its discretion to halt trading in a series of Managed
Portfolio Shares. Trading may be halted because of market conditions or
for reasons that, in the view of the Exchange, make trading in the
series of ETF Shares inadvisable. These may include: (i) The extent to
which trading is not occurring in the securities and/or the financial
instruments composing the portfolio; or (ii) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. Additionally, the Exchange would halt
trading as soon as practicable where the Exchange becomes aware that:
(i) If the Exchange becomes aware that the issuer of the ETF Shares is
no longer eligible to operate in reliance on Rule 6c-11 under the
Investment Company Act of 1940; (ii) if any of the other listing
requirements set forth in this Rule 14.12 are not continuously
maintained; (iii) if, following the initial twelve month period after
commencement of trading on the Exchange of a series of ETF Shares,
there are fewer than 50 beneficial holders of the series of ETF Shares
for 30 or more consecutive trading days; or (iv) if such other event
shall occur or condition exists which, in the opinion of the Exchange,
makes further dealings on the Exchange inadvisable.
Trading Rules
    The Exchange deems ETF Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. ETF Shares will trade
on the Exchange throughout the Exchange's trading hours. As provided in
proposed Rule 14.12(b)(2), the minimum price variation for quoting and
entry of orders in ETF Shares traded on the Exchange is $0.01.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act \14\ in general and Section 6(b)(5) of the Act \15\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, 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.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that proposed Rule 14.12 will remove
impediments to and perfect the mechanism of a free and open market and
national market system. Specifically, the proposed amendment raises no
substantive issues that have not otherwise been considered by the
Commission in either the BZX Approval Order or in the context of other
similar Exchange Rules. This proposal is substantively similar to the
BZX Approval Order, with the exception that the Exchange is only
proposing to trade series of ETF Shares pursuant to unlisted trading
privileges, while BZX will both list and trade series of ETF Shares.
Further, while proposed Rule 14.12(d)(2)(A) provides that the Exchange
may terminate unlisted trading privileges and BZX Rule 14.11(l) does
not, the proposed rule text is substantially similar to existing
Exchange Rules 14.3(g)(2) and 14.11(d)(2)(B) and therefore raises no
novel issues.
    The Exchange believes that proposed Rule 14.12 is designed to
prevent fraudulent and manipulative acts and practices in that the
proposed rules relating to listing and trading ETF Shares on the
Exchange provide specific initial and continued listing criteria
required to be met by such securities. Proposed Rule 14.12(d) sets
forth initial and continued listing criteria applicable to ETF Shares,
specifically providing that the Exchange may approve a series of ETF
Shares for listing and/or trading (including pursuant to unlisted
trading privileges) on the Exchange pursuant to Rule 19b-4(e) under the
Act, provided such series of ETF Shares is eligible to operate in
reliance on Rule 6c-11 under the Investment Company Act of 1940 and
must satisfy the requirements of this Rule 14.12 on an initial and
continued listing basis.
    Proposed Rule 14.12(d)(1) provides that initial listing criteria
which includes (A) for each series, the Exchange will establish a
minimum number of ETF Shares required to be outstanding at the time of
commencement of trading on the Exchange; (B) if an index underlying a
series of ETF Shares is maintained by a broker-dealer or fund adviser,
the broker-dealer or fund adviser shall erect and maintain a ``fire
wall'' around the personnel who have access to information concerning
changes and adjustments to the index and the index shall be calculated
by a third party who is not a broker-dealer or fund adviser. If the
investment adviser to the investment company issuing an actively
managed series of ETF Shares is affiliated with a broker-dealer, such
investment adviser shall erect and maintain a ``fire wall'' between the
investment adviser and the broker-dealer with respect to access to
information concerning the composition and/or changes to such Exchange-
Traded Fund's portfolio; and (C) any advisory committee, supervisory
board, or similar entity that advises a Reporting Authority or that
makes decisions on the composition, methodology, and related matters of
an index underlying a series of ETF Shares, must implement and
maintain, or be subject to, procedures designed to prevent the use

and dissemination of material non-public information regarding the
applicable index. For actively managed Exchange-Traded Funds, personnel
who make decisions on the portfolio composition must be subject to
procedures designed to prevent the use and dissemination of material
nonpublic information regarding the applicable portfolio.
    Proposed Rule 14.12(d)(2) provides that each series of ETF Shares
will be listed and traded on the Exchange subject to application of
Proposed Rule 14.12(d)(2)(A) and (B). Proposed Rule 14.12(d)(2)(A)
provides that the Exchange will consider the suspension of trading in
or removal from listing of or termination of UTP for a series of ETF
Shares under any of the following circumstances: (i) If the Exchange
becomes aware that the issuer of the ETF Shares is no longer eligible
to operate in reliance on Rule 6c-11 under the Investment Company Act
of 1940; (ii) if any of the other listing requirements set forth in
this Rule 14.12 are not continuously maintained; (iii) if, following
the initial twelve month period after commencement of trading on the
Exchange of a series of ETF Shares, there are fewer than 50 beneficial
holders of the series of ETF Shares for 30 or more consecutive trading
days; or (iv) if such other event shall occur or condition exists
which, in the opinion of the Exchange, makes further dealings on the
Exchange inadvisable. Proposed Rule 14.12(d)(2)(B) provides that upon
termination of an investment company, the Exchange requires that ETF
Shares issued in connection with such entity be removed from Exchange
listing.
    The Exchange further believes that proposed Rule 14.12 is designed
to prevent fraudulent and manipulative acts and practices because of
the robust surveillances in place on the Exchange as required under
proposed Rule 14.12(b)(3) along with the similarities of proposed Rule
14.12 to the rules related to other securities that are already traded
on the Exchange pursuant to UTP and which would qualify as ETF Shares.
Proposed Rule 14.12 is based in large part on Rule 14.2 related to the
listing and trading of Investment Company Units on the Exchange, which
are issued under the 1940 Act and would qualify as ETF Shares after
Rule 6c-11 is effective. As such, the Exchange believes that using Rule
14.2 (the ``Current ETF Standards'') as the basis for proposed Rule
14.12 is appropriate because they are generally designed to address the
issues associated with ETF Shares. The only substantial differences
between proposed Rule 14.12 and the Current ETF Standards that are not
otherwise required under Rule 6c-11 are as follows: (i) proposed Rule
14.12 does not include the quantitative standards applicable to a fund
or an index that are included in the Current ETF Standards; and (ii)
proposed Rule 14.12 does not include any requirements related to the
dissemination of a fund's intraday indicative value.\16\
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    \16\ For purposes of this filing, the term ``intraday indicative
value'' or ``IIV'' shall mean an intraday estimate of the value of a
share of each series Investment Company Units.
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    Further, the Exchange also represents that its surveillance
procedures are adequate to properly monitor the trading of the ETF
Shares in all trading sessions and to deter and detect violations of
Exchange rules and applicable federal securities laws. Specifically,
the Exchange intends to utilize its existing surveillance procedures
applicable to derivative products, which are currently applicable to
Investment Company Units, among other product types, to monitor trading
in ETF Shares. The Exchange or the FINRA, on behalf of the Exchange,
will communicate as needed regarding trading in ETF Shares and certain
of their applicable underlying components with other markets that are
members of the ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement. In addition, the Exchange
may obtain information regarding trading in ETF Shares and certain of
their applicable underlying components from markets and other entities
that are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement. Additionally, FINRA, on
behalf of the Exchange, is able to access, as needed, trade information
for certain fixed income securities that may be held by a series of ETF
Shares reported to FINRA's TRACE. FINRA also can access data obtained
from the MSRB EMMA system relating to municipal bond trading activity
for surveillance purposes in connection with trading in a series of ETF
Shares, to the extent that a series of ETF Shares holds municipal
securities.
    For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

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 that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change, rather will facilitate the trading, pursuant to
UTP, of ETF Shares that will enhance competition among both market
participants and listing venues, to the benefit of investors and the
marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the
proposed rule change.

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 \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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 under Rule 19b-4(f)(6) \19\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\20\ 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 to immediately allow
ETF Shares to be traded on another venue. The Commission believes that
waiver of the 30-day operative delay for this purpose is consistent
with the protection of investors and the public interest and hereby
waives the 30-day operative delay and designates the proposed rule
change operative upon filing.\21\
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    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ For purposes only of waiving the operative delay, the
Commission 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 will 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_ADDRESS>Please include
File Number SR-CboeEDGA-2020-013 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-CboeEDGA-2020-013. 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-CboeEDGA-2020-013 and should be
submitted on or before June 4, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10288 Filed 5-13-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: July 9, 2010 (Volume 75, Number 131)]
[Proposed Rules]
[Page 39625-39628]
[DOCID:fr09jy10-12]

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Part II

Securities and Exchange Commission

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17 CFR Part 242

Elimination of Flash Order Exception From Rule 602 of Regulation NMS;
Proposed Rule

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 242

[Release No. 34-62445; File No. S7-21-09]
RIN 3235-AK40

Elimination of Flash Order Exception From Rule 602 of Regulation
NMS

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule; reopening of comment period.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is
reopening the period for public comment on a proposal to eliminate the
flash order exception with respect to listed options from Rule 602 of
Regulation NMS under the Securities Exchange Act of 1934 (``Exchange
Act''). The proposal originally was published in Securities Exchange
Act Release No. 60684 (September 18, 2009), 74 FR 48632 (September 23,
2009).

DATES: Comments should be received on or before August 9, 2010.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/proposed.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File No. S7-21-09 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

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 No. S7-21-09. This file number
should be included on the subject line if e-mail is used. To help us
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/proposed.shtml). Comments
are also 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 a.m. and 3
p.m. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Theodore S. Venuti, Special Counsel,
at<PHONE_NUMBER>, Arisa Tinaves, Special Counsel, at<PHONE_NUMBER>,
Gary M. Rubin, Attorney, at<PHONE_NUMBER>, Division of Trading and
Markets, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-7010.

SUPPLEMENTARY INFORMATION:

I. Introduction

    Rule 602 of Regulation NMS \1\ and Rule 301(b) of Regulation ATS
\2\ require exchanges and alternative trading systems (``ATSs''),
respectively, to provide their best-priced quotations to the
consolidated quotation data that is widely disseminated to the
public.\3\ In September 2009, the Commission proposed to amend Rule
602(a)(1)(i)(A) to eliminate an exception for the use of flash orders
with respect to trading in both NMS stocks and listed options
(``Proposal'').\4\ The exception applies to quotations that are
executed immediately after communication, or cancelled or withdrawn if
not executed immediately after communication. Flash orders are exposed
to some market participants for a brief period of time (generally less
than one second), but are not included in the consolidated quotation
data pursuant to the Rule 602 exception. Moreover, flash orders
generally are immediately executable at prices that equal (or ``lock'')
the best displayed quotations on the contra side of the market, yet the
orders are flashed rather than being immediately routed away to another
market to execute against the quotations that establish the best
prices.
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    \1\ 17 CFR 242.602.
    \2\ 17 CFR 242.301(b).
    \3\ Consolidated quotation data captures the best-priced
quotations from exchanges, ATSs, and other trading centers for
listed cash equities and options. This core data for a security is
consolidated and distributed to the public by a single central
processor pursuant to Commission rules.
    \4\ Securities Exchange Act Release No. 60684 (September 18,
2009), 74 FR 48632 (September 23, 2009) (``Proposing Release''). The
Proposing Release contains a detailed description of a flash order.
See Proposing Release at 48633-48634.
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    With respect to listed options, the Commission is reopening the
comment period to invite additional comment on the issues set forth in
this release, as well as any other issues that the public wishes to
address with respect to the Proposal as it would affect the listed
options markets.
    Of the 93 commenters that submitted views on the Proposal to the
Commission, 67 generally supported the Proposal, 12 generally opposed
the Proposal, and another 9 opposed the Proposal specifically for
trading in listed options.\5\ Supporters generally believed that
eliminating the flash order exception would address the potential for
two-tiered access to information concerning the best available prices
for a security, encourage the public display of liquidity, and enhance
the fairness of the markets for investors.\6\ Those opposing the
Proposal generally believed that flash orders can benefit investors by
attracting additional liquidity and by helping to minimize trading
fees.\7\
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    \5\ In addition to the supporting and opposing commenters, five
commenters neither supported nor opposed the Proposal. Copies of
comments received on the Proposal are available on the Commission's
Internet Web site, located at http://www.sec.gov/comments/s7-21-09/
s72109.shtml, and in the Commission's Public Reference Room at its
Washington, DC headquarters.
    \6\ Supporting commenters included individuals, industry groups,
exchanges, and broker-dealers.
    \7\ Opposing commenters included 6 individuals, exchanges, an
electronic communication network (``ECN''), a broker-dealer, and two
academics.
---------------------------------------------------------------------------

    Specifically with respect to listed options, those opposing the
Proposal focused on the differences between the cash equity and the
listed options markets. For example, four commenters addressing the
Proposal for listed options emphasized that there is no regulatory cap
on the fees charged by listed options exchanges to access their best
displayed quotations,\8\ in contrast to access fees in the cash equity
markets which generally are capped at $0.003 cents per share by Rule
610(c) of Regulation NMS. Moreover, a commenter emphasized that access
fees are significantly higher in the options markets than in the cash
equity markets, on both an absolute basis ($0.003 per share for cash
equities and $0.0045 (per share equivalent) for options on one
exchange) and a percentage basis (0.0176% of the average stock price
for retail investors and 0.266% of the average option price for retail
investors).\9\ Commenters also were concerned that, in the absence of a
fee cap for options, elimination of the flash

order exception could lead to even higher access fees.\10\
---------------------------------------------------------------------------

    \8\ Letter from John C. Nagel, Managing Director and Deputy
General Counsel, Citadel Investment Group, Inc. (``Citadel'') dated
November 20, 2009 (``Citadel Letter'') at 2; Letter from Peter
Bottini, EVP Trading and Customer Service, and Hillary Victor,
Associate General Counsel, optionsXpress, Inc. (``optionsXpress'')
dated November 25, 2009 (``optionsXpress Letter'') at 3; Letter from
Thomas F. Price, Managing Director, Securities Industry and
Financial Markets Association (``SIFMA'') dated December 1, 2009
(``SIFMA Letter'') at 5; Letter from Christopher Nagy, Managing
Director Order Strategy, TD Ameritrade, Inc. (``TD Ameritrade''),
dated November 23, 2009 (``TD Ameritrade Letter'') at 2.
    \9\ Citadel Letter at 5.
    \10\ Citadel Letter at 6; TD Ameritrade Letter at 4.
---------------------------------------------------------------------------

    To assess further these commenter concerns and other issues, the
Commission is reopening the comment period for the proposed elimination
of the flash order exception with respect to listed options. Additional
comment is requested below on, among other things the effect of a
proposed cap on access fees for listed options,\11\ and on the
execution quality that flash orders receive in the options markets. The
Commission is particularly interested in the extent to which flash
orders, if they fail to receive an execution in the flash process,
``miss the market'' by either receiving an inferior price through an
execution against a displayed quotation or no execution at all. No
useful data was provided on this crucial execution quality issue during
the initial comment period. Two exchanges that use flash order
mechanisms indicated that their fill rates for flash orders were in the
range of 60-70%.\12\ They did not, however, provide data on the
execution quality, including implementation shortfall, of orders that
failed to receive an execution in the flash process.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 61902 (April 14,
2010), 75 FR 20738 (April 20, 2010) (``Access Fee Release'')
(proposing a new rule relating to access to quotations for listed
options that would cap access fees). Commenters on this release and
on the Access Fee Release should be aware that the flash order and
access fee issues, though related, are not necessarily linked. In
formulating their views, commenters should recognize that the
Commission will assess each proposal individually and could decide
to take further action on one or both.
    \12\ Letter from Tony McCormick, Chief Executive Officer, Boston
Options Exchange Group, LLC (``BOX''), dated November 23, 2009
(``BOX Letter'') at 1; Letter from Michael J. Simon, General
Counsel, Secretary and Chief Regulatory Officer, International
Securities Exchange, LLC (``ISE''), dated November 23, 2009 (``ISE
Letter'') at 4.
---------------------------------------------------------------------------

II. Requests for Comment

    1. Commenters argued that flash orders were necessary in the
options markets to avoid the access fees that otherwise would be
charged if the orders were routed to other exchanges. If the Commission
adopted a cap on access fees for listed options, would the change
remove the need for exchanges to use flash orders to prevent their
customers from incurring high access fees? Would the reduction in
benefits of flash orders for listed options go beyond the direct effect
of the reduction in access fees, such as through an impact on spreads
or order book liquidity? If so, how much weight should be given to this
net reduction in benefits of flash orders in the Commission's analysis
of the costs and benefits of the Proposal to eliminate the flash order
exception for listed options?
    2. Comment and data are requested on the execution quality,
including implementation shortfall of latency or nonexecution, received
by investor orders in listed options that are placed in a flash
mechanism.\13\ What percentage of such orders are executed in the flash
mechanism (that is, by execution against a flash responder)? How do the
average access fees paid by these flashed orders compare to the average
access fees the orders would have paid if they had been routed to an
exchange posting the best quote? For orders that do not receive an
execution in the flash mechanism, what percentage are routed to other
exchanges, and what percentage of orders routed to other exchanges
receive an execution? What proportions of flashed orders that received
a flash execution, or that were executed at other markets,
respectively, received an execution at a price better than, equal to,
or worse than the national best bid or offer (``NBBO'') at the time of
order receipt at the exchange that flashed the order? Are flash orders
used more often in certain market conditions, such as at times with
wider bid-ask spreads? If so, please divide the statistics above by
those market conditions.
---------------------------------------------------------------------------

    \13\ Implementation shortfall measures two components of order
execution quality for marketable flash orders. First, for orders
that are executed (whether at the flashing exchange or after routing
to another exchange), it measures the difference between the trade
price and the relevant quotation at the time of order receipt at the
flashing exchange (the national best offer for buy orders and the
national best bid for sell orders). Second, for orders that are
cancelled without any execution or with only a partial execution,
implementation shortfall measures the difference between the
relevant quotation (as described for executed orders) and an imputed
price based on the relevant quotation when the order is cancelled.
---------------------------------------------------------------------------

    3. Comment and data are requested on the execution quality received
by investor orders in listed options that are not flashed. To what
extent do marketable orders receive executions at prices that are
better than, equal to, or worse than the NBBO at the time of order
receipt at the exchange that initially receives the order? We
understand that execution quality statistics comparable to those
requested above are not widely available to investors and brokers in
the listed options markets. Are they available to any investors or
brokers to assess the execution quality of flashed orders? To the
extent that they are not available, how are investors and brokers able
to assess execution quality for flashed orders? For example, if
investors and brokers do not have execution quality statistics for non-
flashed orders in the options markets, how would they be able to
compare the execution quality of flashed orders with the execution
quality of orders that are not flashed?
    4. What steps do brokers take to assess whether flashed orders in
listed options ``miss the market'' by failing to receive either any
execution or an execution at the NBBO price when the flashing exchange
initially received the order? What data or other objective evidence do
brokers use to assess whether flashed orders receive best execution?
\14\
---------------------------------------------------------------------------

    \14\ The Commission notes that the ``Recommendations for Quality
of Execution Reports for Options Exchanges'' issued by the SIFMA
Equity Options Trading Committee on July 17, 2008 (``SIFMA
Recommendations'') do not appear to provide relevant information on
whether flashed orders miss the market. The SIFMA Recommendations
specifically exclude orders that an exchange routes away for
execution elsewhere from the exchange's execution quality
statistics. The SIFMA Recommendations are available at http://
www.sifma.org/assets/0/232/234/274/bbc1f723-af5b-45ed-b2f2-
1ae7d2f2127d.pdf.
---------------------------------------------------------------------------

    5. One commenter suggested that only in ``rare'' instances do
flashed orders that are routed away ``miss the NBBO market,'' and that
in those rare instances the brokers typically honor the NBBO for their
customers.\15\ Do commenters agree with this statement? Does your
answer depend on whether the NBBO benchmark that is honored is
understood to be the NBBO at the time of order receipt at the flashing
exchange, or the NBBO at some other time? Do commenters have any data
to support their conclusion?
---------------------------------------------------------------------------

    \15\ CBOE Letter at 5 n. 5.
---------------------------------------------------------------------------

    6. Several commenters stated that liquidity providers at ``maker/
taker'' options exchanges quote more aggressively--that is, by
displaying quotations that either improve the NBBO or are alone at the
NBBO--because of the rebates paid to liquidity providers that are
funded from the access fees charged to liquidity takers.\16\ Do
commenters agree that liquidity providers on maker/taker exchanges
quote more aggressively than other exchanges once their displayed
quotations are adjusted to account for the effect of access fees on the
``all in'' cost to the investor? If so, are liquidity rebates the only
reason that liquidity providers on maker/taker exchanges are willing to
quote aggressively? For example, does the absence of order flow
captured by payments to routing brokers and the absence of guaranteed
allocations for liquidity providers also contribute significantly to
aggressive

quoting by liquidity providers on maker/taker exchanges?
---------------------------------------------------------------------------

    \16\ ISE Letter at 8; Letter from Larry Harris, Professor of
Finance and Business Economics, USC Marshall School of Business,
dated December 4, 2009 (``Harris Letter'') at 2.
---------------------------------------------------------------------------

    7. The Commission notes the distinction between ``aggressive''
quotations and ``matching'' quotations. Aggressive quotations are price
leaders and help narrow the NBBO spread (by either improving the NBBO
or remaining alone at the NBBO). Matching quotations follow prices set
elsewhere and add size to the NBBO, but do not narrow the spread. To
what extent do liquidity providers on payment for order flow options
exchanges quote aggressively rather than merely matching the NBBO set
elsewhere? Would eliminating the flash order exception lead one or both
types of options exchange to quote more aggressively and thereby narrow
NBBO spreads for listed options? Does your answer change depending on
whether the Commission adopts a cap on access fees in the options
markets that is substantially less than the access fees currently
charged?
    8. Does the availability of the flash mechanism at payment for
order flow options exchanges play a significant role in enabling such
exchanges to compete for order flow through broker payments, rather
than through offering better prices for the execution of investor
orders? Would eliminating the flash order exception lead payment for
order flow options exchanges to respond competitively by more
aggressive quoting or through greater use of price improvement
mechanisms targeted at non-professional customer order flow?\17\
---------------------------------------------------------------------------

    \17\ In general, a price improvement mechanism exposes incoming
marketable orders to a competitive auction that provides an
opportunity for the orders to be executed at better prices than the
NBBO.
---------------------------------------------------------------------------

    9. One commenter noted that there is no over-the-counter (``OTC'')
trading in listed options and that, as a result, more ``good'' order
flow (that is, order flow relatively uninformed about future prices)
reaches the options exchanges than the cash equity exchanges.\18\
Another noted that, because quotations must be available for execution
to all incoming order flow--both informed and uninformed--the
quotations must be wider than the prices that could be offered
exclusively to uninformed order flow.\19\ (Prices that could be offered
exclusively to uninformed order flow could incorporate tighter spreads
because the market maker does not need to protect itself from adverse
selection by informed traders by building in a wider spread.) Do
commenters agree with these statements? If so, do mechanisms that offer
price improvement attract a large percentage of customer order flow in
listed options? Why or why not?
---------------------------------------------------------------------------

    \18\ ISE Letter, Appendix B at 2.
    \19\ Harris Letter at 4.
---------------------------------------------------------------------------

    In this regard, what percentage of order flow in listed options
participates in the price improvement mechanisms offered by exchanges?
Is it less than 1% of order flow at most exchanges? Would the figure be
higher if the Commission eliminated the flash order exception? Are
there other reasons why price improvement mechanisms do not attract
significant order flow? Do exchanges need more flexibility in
distinguishing between informed and uninformed order flow as a means to
offer better prices to customers that are not professional traders?
Must price improvement mechanisms guarantee the NBBO to attract order
flow?
    10. What is the effect on order execution quality, as well as on
the nature of competition in the options markets, of the absence of
publicly available order execution quality data comparable to the data
that is available for cash equities under Rule 605 of Regulation NMS?
How do investors and customers assess best execution issues for flash
orders in the absence of mandatory execution quality statistics?

III. Conclusion

    The Commission requests comment and data on the issues discussed
above, as well as reiterating its discussion and all requests for
comment in the Proposing Release with respect to listed options. It is
reopening the comment period on the Proposal to obtain the advantage of
the public's views on all these issues.

    Dated: July 2, 2010.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-16698 Filed 7-8-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register Volume 81, Number 119 (Tuesday, June 21, 2016)]
[Notices]
[Pages 40338-40339]
[FR Doc No: 2016-14633]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[Docket No. USCG-2016-0125]

Collection of Information Under Review by Office of Management
and Budget; OMB Control Number: 1625-0105

AGENCY: Coast Guard, DHS.

ACTION: Thirty-day notice requesting comments.

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SUMMARY: In compliance with the Paperwork Reduction Act of 1995 the
U.S. Coast Guard is forwarding an Information Collection Request (ICR),
abstracted below, to the Office of Management and Budget (OMB), Office
of Information and Regulatory Affairs (OIRA), requesting approval of a
revision to the following collection of information: 1625-0105,
Regulated Navigation Area; Reporting Requirements for Barges Loaded
with Certain Dangerous Cargoes, Inland Rivers, Eighth Coast Guard
District and the Illinois Waterway, Ninth Coast Guard District. Our ICR
describes the information we seek to collect from the public. Review
and comments by OIRA ensure we only impose paperwork burdens
commensurate with our performance of duties.

DATES: Comments must reach the Coast Guard and OIRA on or before July
21, 2016.

ADDRESSES: You may submit comments identified by Coast Guard docket
number [USCG-2016-0125] to the Coast Guard using the Federal
eRulemaking Portal at http://www.regulations.gov. Alternatively, you
may submit comments to OIRA using one of the following means:
    (1) Email<EMAIL_ADDRESS>    (2) Mail: OIRA, 725 17th Street NW., Washington, DC 20503,
attention Desk Officer for the Coast Guard.
    (3) Fax:<PHONE_NUMBER>. To ensure your comments are received in a
timely manner, mark the fax, attention Desk Officer for the Coast
Guard.
    A copy of the ICR is available through the docket on the Internet
at http://www.regulations.gov. Additionally, copies are available from:
Commandant (CG-612), Attn: Paperwork Reduction Act Manager, U.S. Coast
Guard, 2703 Martin Luther King Jr. Ave. SE., Stop 7710, Washington, DC
20593-7710.

FOR FURTHER INFORMATION CONTACT: Mr. Anthony Smith, Office of
Information Management, telephone<PHONE_NUMBER>, or fax<PHONE_NUMBER>,
for questions on these documents.

SUPPLEMENTARY INFORMATION:

Public Participation and Request for Comments

    This Notice relies on the authority of the Paperwork Reduction Act
of 1995; 44 U.S.C. Chapter 35, as amended. An ICR is an application to
OIRA seeking the approval, extension, or renewal of a Coast Guard
collection of information (Collection). The ICR contains information
describing the Collection's purpose, the Collection's likely burden on
the affected public, an explanation of the necessity of the Collection,
and other important information describing the Collection. There is one
ICR for each Collection. The Coast Guard invites comments on whether
this ICR should be granted based on the Collection being necessary for
the proper performance of Departmental functions. In particular, the
Coast Guard would appreciate comments addressing: (1) The practical
utility of the Collection; (2) the accuracy of the estimated burden of
the Collection; (3) ways to enhance the quality, utility, and clarity
of information subject to the Collection; and (4) ways to minimize the
burden of the Collection on respondents, including the use of automated
collection techniques or other forms of information technology. These
comments will help OIRA determine whether to approve the ICR referred
to in this Notice.
    We encourage you to respond to this request by submitting comments
and related materials. Comments to Coast Guard or OIRA must contain the
OMB Control Number of the ICR. They must also contain the docket number
of this request, [USCG-2016-0125], and must be received by July 21,
2016.

Submitting Comments

    We encourage you to submit comments through the Federal eRulemaking
Portal at http://www.regulations.gov. If your material cannot be
submitted using http://www.regulations.gov, contact the person

in the FOR FURTHER INFORMATION CONTACT section of this document for
alternate instructions. Documents mentioned in this notice, and all
public comments, are in our online docket at http://www.regulations.gov
and can be viewed by following that Web site's instructions.
Additionally, if you go to the online docket and sign up for email
alerts, you will be notified when comments are posted.
    We accept anonymous comments. All comments received will be posted
without change to http://www.regulations.gov and will include any
personal information you have provided. For more about privacy and the
docket, you may review a Privacy Act notice regarding the Federal
Docket Management System in the March 24, 2005, issue of the Federal
Register (70 FR 15086).
    OIRA posts its decisions on ICRs online at http://www.reginfo.gov/public/do/PRAMain after the comment period for each ICR. An OMB Notice
of Action on each ICR will become available via a hyperlink in the OMB
Control Number: 1625-0105.

Previous Request for Comments

    This request provides a 30-day comment period required by OIRA. The
Coast Guard published the 60-day notice (81 FR 15325, March 22, 2016)
required by 44 U.S.C. 3506(c)(2). That Notice elicited no comments.
Accordingly, no changes have been made to the Collection.

Information Collection Request

    Title: Regulated Navigation Area; Reporting Requirements for Barges
Loaded with Certain Dangerous Cargoes, Inland Rivers, Eighth Coast
Guard District and the Illinois Waterway, Ninth Coast Guard District.
    Omb Control Number: 1625-0105.
    Summary: The Coast Guard requires position and intended movement
reporting, and fleeting operations reporting, from barges carrying
certain dangerous cargoes (CDCs) in the inland rivers within the Eighth
and Ninth Coast Guard Districts.
    Need: This information is used to ensure port safety and security
and to ensure the uninterrupted flow of commerce.
    Forms: None.
    Respondents: Owners, agents, masters, towing vessel operators, or
persons in charge of barges loaded with CDCs or having CDC residue
operating on the inland rivers located within the Eighth and Ninth
Coast Guard Districts.
    Frequency: On occasion.
    Hour Burden Estimate: The estimated burden has decreased from 1,901
hours to 4 hours a year due to a decrease in the estimated number of
responses. The change in responses is due to recent District 8 and
District 9 administrative changes to the reporting requirements.

    Authority:  The Paperwork Reduction Act of 1995; 44 U.S.C.
Chapter 35, as amended.

    Dated: June 16, 2016.
Marilyn Scott-Perez,
Acting Deputy Chief Information Officer, U.S. Coast Guard.
[FR Doc. 2016-14633 Filed 6-20-16; 8:45 am]
 BILLING CODE 9110-04-P


[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67455-67458]
[FR Doc No: 2018-28190]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84893; File No. SR-NYSE-2018-63]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List To Extend for One Year a Fee Discount for the
Partial Cabinet Solution Bundles Offered in Connection With the
Exchange's Co-Location Services

December 20, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 12, 2018, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its Price List to extend for one
year a fee discount for the Partial Cabinet Solution bundles offered in
connection with the Exchange's co-location services. The proposed rule
change is available on the Exchange's website at www.nyse.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 those 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 parts of such statements.

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

1. Purpose
    The Exchange proposes to amend the Exchange's Fee Schedules to
extend a fee discount for the Partial Cabinet Solution bundles offered
in connection with the Exchange's co-location services.\4\ The Exchange
offers the four Partial Cabinet Solution bundles to attract smaller
Users, such as those with minimal power or cabinet space demands, or
those for which the attendant costs of having a dedicated cabinet and
related connectivity are too burdensome.\5\
---------------------------------------------------------------------------

    \4\ The Exchange initially filed rule changes relating to its
co-location services with the Commission in 2010. See Securities
Exchange Act Release No. 62960 (September 21, 2010), 75 FR 59310
(September 27, 2010) (SR-NYSE-2010-56). The Exchange operates a data
center in Mahwah, New Jersey (the ``data center'') from which it
provides co-location services to Users.
    \5\ See Securities Exchange Act Release No. 77072 (February 5,
2016), 81 FR 7394 (February. 11, 2016) (SR-NYSE-2015-53).
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    The Exchange offers Users \6\ that purchase a Partial Cabinet
Solution bundle on or before December 31, 2018 a 50% reduction in the
monthly recurring charges (``MRC'') for the first 24 months.\7\ The
Exchange proposes to extend the 50% fee reduction to those Users that
purchase a Partial Cabinet Solution bundle on or before December 31,
2019.\8\ The Exchange does not propose to amend the length of the
discount period.
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    \6\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76008 (September 29, 2015), 80 FR 60190
(October 5, 2015) (SR-NYSE-2015-40). As specified in the Price List,
a User that incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to co-location fees
for the same co-location service charged by the Exchange's
affiliates NYSE American LLC (``NYSE American''), NYSE National,
Inc. (``National''), and NYSE Arca, Inc. (``NYSE Arca'' and,
together with NYSE American and NYSE National, the ``Affiliate
SROs''). See Securities Exchange Act Release No. 70206 (August 15,
2013), 78 FR 51765 (August 21, 2013) (SR-NYSE-2013-59).
    \7\ See Securities Exchange Act Release No. 79715 (December 30,
2016), 82 FR 1777 (January. 6, 2017) (SR-NYSE-2016-91).
    \8\ The Exchange previously extended the MRC reduction for one
year. See Securities Exchange Act Release No. 82223 (December 6,
2017), 82 FR 58459 (December 12, 2017) (SR-NYSE-2017-62). See also
Securities Exchange Act Release Nos. 82224 (December 6, 2017), 82 FR
58465 (December 12, 2017) (SR-NYSEAmer-2017-35), and 82226 (December
6, 2017), 82 FR 58462 (December 12, 2017) (SR-NYSEArca-2017-134).
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    The amended portions of the Fee Schedules would read as follows:

------------------------------------------------------------------------
       Type of service             Description        Amount of charge
------------------------------------------------------------------------
Partial Cabinet Solution      Option A:1 kW         $7,500 initial
 bundles.                      partial cabinet, 1    charge per bundle
Note: A User and its           LCN connection (1     plus monthly charge
 Affiliates are limited to     Gb), 1 IP network     per bundle as
 one Partial Cabinet           connection (1 Gb),    follows:
 Solution bundle at a time.    2 fiber cross         For Users
 A User and its Affiliates     connections and       that order on or
 must have an Aggregate        either the Network    before December 31,
 Cabinet Footprint of 2 kW     Time Protocol Feed    2019: $3,000
 or less to qualify for a      or Precision Timing   monthly for first
 Partial Cabinet Solution      Protocol.             24 months of
 bundle. See Note 2 under                            service, and $6,000
 ``General Notes.''.                                 monthly thereafter.
                                                     For Users
                                                     that order after
                                                     December 31, 2019:
                                                     $6,000 monthly.
                              Option B: 2 kW        $7,500 initial
                               partial cabinet, 1    charge per bundle
                               LCN connection (1     plus monthly charge
                               Gb), 1 IP network     per bundle as
                               connection (1 Gb),    follows:
                               2 fiber cross         For Users
                               connections and       that order on or
                               either the Network    before December 31,
                               Time Protocol Feed    2019: $3,500
                               or Precision Timing   monthly for first
                               Protocol.             24 months of
                                                     service, and $7,000
                                                     monthly thereafter.
                                                     For Users
                                                     that order after
                                                     December 31, 2019:
                                                     $7,000 monthly.
                              Option C: 1 kW        $10,000 initial
                               partial cabinet, 1    charge per bundle
                               LCN connection (10    plus monthly charge
                               Gb), 1 IP network     per bundle as
                               connection (10 Gb),   follows:
                               2 fiber cross         For Users
                               connections and       that order on or
                               either the Network    before December 31,
                               Time Protocol Feed    2019: $7,000
                               or Precision Timing   monthly for first
                               Protocol.             24 months of
                                                     service, and
                                                     $14,000 monthly
                                                     thereafter.
                                                     For Users
                                                     that order after
                                                     December 31, 2019:
                                                     $14,000 monthly.
                              Option D: 2 kW        $10,000 initial
                               partial cabinet, 1    charge per bundle
                               LCN connection (10    plus monthly charge
                               Gb), 1 IP network     per bundle as
                               connection (10 Gb),   follows:
                               2 fiber cross         For Users
                               connections and       that order on or
                               either the Network    before December 31,
                               Time Protocol Feed    2019: $7,500
                               or Precision Timing   monthly for first
                               Protocol.             24 months of
                                                     service, and
                                                     $15,000 monthly
                                                     thereafter.
                                                     For Users
                                                     that order after
                                                     December 31, 2019:
                                                     $15,000 monthly.
------------------------------------------------------------------------

    As is the case with all Exchange co-location arrangements, (i)
neither a User nor any of the User's customers would be permitted to
submit orders directly to the Exchange unless such User or customer is
a member organization, a Sponsored Participant or an agent thereof
(e.g., a service bureau providing order entry services); (ii) use of
the co-location services proposed herein would be completely voluntary
and available to all Users on a non-discriminatory basis; \9\ and (iii)
a User would only incur one charge for the particular co-location
service described herein, regardless of whether the User connects only
to the Exchange or to the Exchange and one or both of its
affiliates.\10\
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    \9\ As is currently the case, Users that receive co-location
services from the Exchange will not receive any means of access to
the Exchange's trading and execution systems that is separate from,
or superior to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange's trading and execution systems
through the same order gateway, regardless of whether the sender is
co-located in the data center or not. In addition, co-located Users
do not receive any market data or data service product that is not
available to all Users, although Users that receive co-location
services normally would expect reduced latencies in sending orders
to, and receiving market data from, the Exchange.
    \10\ See SR-NYSE-2013-59, supra note 6 at 51766. The Exchange's
affiliates have also submitted substantially the same proposed rule
change to propose the changes described herein. See SR-NYSEAmer-
2018-55 and SR-NYSEArca-2018-93, and SR-NYSENAT-2018-26.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of
Sections 6(b)(4) \12\ and 6(b)(5) \13\ of the Act, in particular. The
proposal is consistent with Section 6(b)(4) of the Act because it
provides for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers or dealers. The Proposal is also consistent with
Section 6(b)(5) of the Act because it is designed to promote just and
equitable principles of trade, remove impediments to, and perfect the
mechanisms of, a free and open market and a national market system and
is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposal provides for the equitable
allocation of reasonable dues, fees, and other charges because it would
extend the existing eligibility for a 50% MRC reduction for another
year, providing smaller Users with minimal power or cabinet space
demands with additional time to purchase a Partial Cabinet Solution at
a discounted rate. The Exchange believes that it is reasonable to
continue to offer the fee reduction as an incentive to Users to utilize
the service, including both new and past Users. As is currently the
case, the purchase of any colocation service (including Partial Cabinet
Solution bundles) is completely voluntary. All Users that order a
bundle on or before December 31, 2019 would have their MRC reduced by
50% for the first 24 months.
    The proposal would remove impediments to, and perfects the
mechanisms of, a free and open market and a national market system
because extending the 50% MRC reduction would continue to make it more
cost effective for Users to utilize co-location by offering a cost
effective, convenient way to create a colocation environment, through
the choice of four Partial Cabinet Solution bundles with different
cabinet footprints and network connections options. As mentioned above,
the Exchange expects that such Users would include those with minimal
power or cabinet space demands and Users for which the costs attendant
with having a dedicated cabinet or greater network connection bandwidth
are too burdensome.

    The proposal would not unfairly discriminate between customers,
issuers, brokers or dealers because it would apply to all Users
equally. The Exchange would continue to offer the same four different
Partial Cabinet Solution bundles with different cabinet footprints and
network connections options. Users that require other sizes or
combinations of cabinets, network connections and cross connects could
still request them.
    For the reasons above, the proposed changes do not unfairly
discriminate between or among market participants that are otherwise
capable of satisfying any applicable co-location fees, requirements,
terms and conditions established from time to time by the Exchange.
    Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
    For these reasons, the Exchange believes that the proposal is
consistent with the Act.

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

    The proposed rule changes will not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
Section 6(b)(8) of the Act.\14\ The proposal changes will enhance
competition by continuing to offer cost effective options for Users to
create a colocation environment through four Partial Cabinet Solution
bundles. Partial Cabinet Solution bundles allow Users to select their
desired cabinet footprint and network connections at a reduced MRC for
the first 24 months. Such Users may choose, in turn, to pass on such
cost savings to their customers. In addition to the proposed services
being completely voluntary, they are available to all Users on an equal
basis (i.e. the same products and services are available to all Users,
and the extension of the 50% reduction for the MRC for the Partial
Cabinet Solution bundles, would apply to all Users).
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market in which
exchanges offer co-location services as a means to facilitate the
trading and other market activities of those market participants who
believe that co-location enhances the efficiency of their operations.
Accordingly, fees charged for co-location services are constrained by
the active competition for the order flow of, and other business from,
such market participants. If a particular exchange charges excessive
fees for co-location services, affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies, including placing their
servers in a physically proximate location outside the exchange's data
center (which could be a competing exchange), or pursuing strategies
less dependent upon the lower exchange-to-participant latency
associated with co-location. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also the liquidity of the formerly co-located trading firms, which
could have additional follow-on effects on the market share and revenue
of the affected exchange. In such an environment, the Exchange must
continually review, and consider adjusting, its services and related
fees and credits to remain competitive with other exchanges.
    For the reasons described above, the Exchange believes that the
proposed rule changes reflect this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \15\ of the Act and subparagraph (f)(2) of Rule
19b-4 \16\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File Number SR-NYSE-2018-63 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-NYSE-2018-63. 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-NYSE-2018-63 and should be submitted on
or before January 18, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28190 Filed 12-27-18; 8:45 am]
 BILLING CODE 8011-01-P