[Federal Register Volume 85, Number 202 (Monday, October 19, 2020)]
[Notices]
[Pages 66379-66384]
[FR Doc No: 2020-23015]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90164; File No. SR-NASDAQ-2020-067]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Equity 7, Section 114 and Equity 7, Section 118 of the Fee
Schedule

October 13, 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 October 1, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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 (i) amend the Exchange's additional rebate
to Qualified Market Maker (``QMM'') at Equity 7, Section 114(e); (ii)
remove a rebate provided through the Nasdaq Growth Program at Equity 7,
Section 114(j); and (iii) establish and amend certain credits and fees
at Equity 7, Section 118, as described further below.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 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 purpose of the proposed rule change is to make modifications to
the Exchange's pricing schedule in a further attempt to improve the
attractiveness of the market to new and existing market participants.
Accordingly, the Exchange proposes to amend its schedule of fees and
credits pursuant to Equity 7, Section 114 and Section 118 in several
respects. The Exchange also proposes to make certain non-substantive
changes to Equity 7, Section 118.
Changes to Section 114
    Currently, the Exchange provides an additional rebate of $0.00005
per share executed when a QMM's MPID meets certain requirements in
Section 114(e). The Exchange is proposing to amend the rebate to
provide $0.000075 per share executed in Tapes A and C, while
maintaining the current rebate amount for Tape B in order to
incentivize firms to increase their liquidity providing activity on the
Exchange, thereby encouraging market quality.
    The Nasdaq Growth Program discussed in Section 114(j), which was
established in 2016,\3\ presently provides a member with credits of
$0.0025 per share executed and a $0.0027 per share executed to
qualified members. The credit of $0.0027 per share executed was
introduced in 2017 to provide members with additional flexibility in
qualifying for the Growth Program and incentive to provide greater
Consolidated Volume, thereby furthering the Growth Program's goal of
incentivizing participation on the Exchange.\4\ The Exchange proposes
to eliminate the credit of $0.0027 per share executed because the
thresholds for the pricing incentive is no longer effective in
incentivizing liquidity adding activity.
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    \3\ See Securities Exchange Act Release No. 78977 (September 29,
2016), 81 FR 69140 (October 5, 2016) (SR-NASDAQ-2016-132).
    \4\ See Securities Exchange Act Release No. 80997 (June 22,
2017), 82 FR 29348 (June 28, 2017) (SR-NASDAQ-2017-060).
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Changes to Section 118(a)
    The Exchange is also proposing to amend the schedule of fees and
credits provided to member organizations, pursuant to Equity 7, Section
118(a), in several respects.
    First, by way of background, when the Exchange initially
established the RTFY order type,\5\ the Exchange explained that it
would allow Designated Retail Orders to post on the exchange or be
routed externally to seek price improvement. The Exchange routes to
several destinations that are ineligible for a protected quotation
under Regulation NMS when seeking price improvement. Over time the
Exchange has seen more orders remove liquidity on Nasdaq and route to
other exchanges. When introduced, the fees associated with removing
liquidity on Nasdaq and routing away were covered by the Exchange as a
promotion to incentivize usage of the order type. Since its inception,
RTFY has become more widely used and the Exchange has waived more fees
for removing liquidity on Nasdaq and incurred more fees for routing to
other exchanges. As a result, the Exchange established a $0.0020 per
share executed fee in August 2020.\6\
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    \5\ RTFY is a routing option designed to enhance execution
quality and benefit retail investors by providing price improvement
opportunities to retail order flows. This routing strategy is
available for an order that qualifies as a Designated Retail Order
under which orders check the System for available shares only if so
instructed by the entering firm and are thereafter routed to
destinations on the System routing table. If shares remain
unexecuted after routing, they are posted to the book. Once on the
book, should the order subsequently be locked or crossed by another
market center, the System will not route the order to the locking or
crossing market center. RTFY is designed to allow orders to
participate in the opening, reopening and closing process of the
primary listing market for a security. See Rule 4748(a)(1)(A)(v)(b).
    \6\ See Securities Exchange Act Release No. 89781 (September 8,
2020), 85 FR 56663 (September 14, 2020) (SR-NASDAQ-2020-059).
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    Currently, the Exchange charges a fee of $0.0020 per share executed
to a member entering RTFY orders that remove liquidity from the Nasdaq
Market Center or that execute in a venue other than the Nasdaq Market
Center and has less than a 75% ratio of its RTFY liquidity adding
activity to its RTFY total volume. The fee is applicable to Tape A,
Tape B and Tape C and only applies to orders submitted with the RTFY
routing option. The Exchange continued to charge a $0.0000 per share
executed fee to other members entering a RTFY order that removes
liquidity on the Nasdaq Market Center or executes in a venue other than
the Nasdaq Market Center.
    The Exchange is proposing to increase the fee to $0.0030 per share
executed and to amend the requirement by charging a member for shares
executed above 4 million shares during the month for RTFY orders that
remove liquidity from the Nasdaq Market Center or that execute in a
venue with a protected quotation under Regulation NMS other than the
Nasdaq Market Center. Although the Exchange will continue to not charge
a fee for RTFY orders in all other instances, the Exchange is also

proposing to amend the descriptions of its two RTFY fees of $0.0000 per
share executed, to reflect that members will not incur a fee for shares
up to 4 million, during the month, that remove from the Exchange or a
venue with a protected quotation under Regulation NMS, or if executed
in a venue ineligible for a protected quotation under Regulation NMS.
    Second, the Exchange currently provides a $0.0029 per share credit
to members with shares of liquidity provided in all securities through
one or more of its Nasdaq Market Center MPIDs that represent more than
0.40% of Consolidated Volume during the month, including shares of
liquidity provided with respect to securities that are listed on
exchanges other than Nasdaq or NYSE that represent more than 0.10% of
Consolidated Volume. The Exchange is proposing to amend the threshold
for the $0.0029 per share executed credit to apply to a member (i) with
shares of liquidity provided in all securities through one or more of
its Nasdaq Market Center MPIDs that represent more than 0.50% of
Consolidated Volume during the month, including shares of liquidity
provided with respect to securities that are listed on exchanges other
than Nasdaq or NYSE that represent more than 0.10% of Consolidated
Volume, and (ii) with a ratio of at least 15% volume that sets the NBBO
provided through one or more of its Nasdaq Market Center MPIDs to all
displayed volume that provides liquidity through one or more of its
Nasdaq Market Center MPIDs during the month. This change will apply to
Tapes A, B and C. The Exchange hopes that this proposed amendment will
incentivize firms to increase their liquidity providing activity on
Nasdaq, to set the NBBO, and will promote tighter spreads and improve
market quality.
    Third, the Exchange proposes to add a new supplemental credit for
displayed quotes/orders (other than Supplemental Orders \7\ or
Designated Retail Orders) that provide liquidity. The proposed credit
would provide $0.000025 per share executed to a member with (i) shares
of liquidity provided in Tape A securities during the month
representing at least 1.40% of Consolidated Volume during the month,
and (ii) shares of liquidity provided in Tape C representing at least
1.40% of Consolidated Volume during the month. This supplemental credit
only applies to Tapes A and C securities because the Exchange hopes to
incentivize firms to increase their display liquidity added in Tapes A
and C securities.
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    \7\ A Supplemental Order is an Order Type with a Non-Display
Order Attribute that is held on the Nasdaq Book in order to provide
liquidity at the NBBO through a special execution process described
in Rule 4757(a)(1)(D). See Rule 4702(b)(6).
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    Fourth, the Exchange proposes in Section 118(a) to add two new
credits across Tapes A, B and C for certain non-displayed orders (other
than Supplemental Orders) that provide liquidity. The Exchange proposes
to adopt a credit for such non-displayed orders if the member, during
the month (i) provides 0.30% or more of Consolidated Volume through
non-displayed orders (including midpoint orders) and through M-ELO
orders; and (ii) increases providing liquidity through non-displayed
orders (including midpoint orders) and through M-ELO orders by 0.06% or
more relative to the member's August 2020 Consolidated Volume provided
through non-displayed orders (including midpoint orders) and through M-
ELO (``credit 1''). Additionally, the Exchange proposes to adopt a
credit for such non-displayed orders if the member, during the month
(i) provides 0.30% or more of Consolidated Volume through non-displayed
orders (including midpoint orders) and through M-ELO orders; and (ii)
increases providing liquidity through non-displayed orders (including
midpoint orders) and through M-ELO orders by 0.10% or more relative to
the member's August 2020 Consolidated Volume provided through non-
displayed orders (including midpoint orders) and through M-ELO
(``credit 2''). The Exchange will provide a credit of $0.00075 per
share executed to Tape C and a credit of $0.0010 per share executed to
Tapes A and B for credit 1. The Exchange will provide a credit of
$0.0010 per share executed to Tape C and a credit of $0.00125 per share
executed to Tapes A and B for credit 2. The Exchange hopes that by
proposing these new credits it will incentive firms to increase their
non-display volume on the Exchange.
    Lastly, the Exchange is making certain non-conforming changes to
remove the duplicative words ``during the month'' from the $0.0027 per
share executed credit to members for displayed quotes/orders (other
than Supplemental Orders or Designated Retail Orders) that provide
liquidity in Tape A. Additionally, the Exchange is adding the word
``and'' to the $0.0025 per share executed credit for non-displayed
orders (other than Supplemental Orders) that provide liquidity in Tape
B.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\9\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The proposal is also consistent with
Section 11A of the Act relating to the establishment of the national
market system for securities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposal Is Reasonable
    The Exchange's proposed changes to its schedule of fees and credits
are reasonable in several respects. As a threshold matter, the Exchange
is subject to significant competitive forces in the market for equity
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . .'' \10\
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    \10\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its

broader forms that are most important to investors and listed
companies.'' \11\
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    \11\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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    Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
equity security transaction services. The Exchange is only one of
several equity venues to which market participants may direct their
order flow. Competing equity exchanges offer similar tiered pricing
structures to that of the Exchange, including schedules of rebates and
fees that apply based upon members achieving certain volume
thresholds.\12\
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    \12\ As an example, CBOE EDGX provides a standard rebate for
liquidity adders of $0.00170 per share executed (or between $0.0020
and $0.0029 per share executed) if a member qualifies for a volume
tier.
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    Within this environment, market participants can freely and often
do shift their order flow among the Exchange and competing venues in
response to changes in their respective pricing schedules. As such, the
proposal represents a reasonable attempt by the Exchange to increase
its liquidity and market share relative to its competitors.
    The Exchange has designed its proposed schedule of credits and
charges to provide increased overall incentives to members to increase
their liquidity removal and adding activity on the Exchange. An
increase in liquidity removal and adding activity on the Exchange will,
in turn, improve the quality of the Nasdaq market and increase its
attractiveness to existing and prospective participants. Generally, the
proposed new credits and charges will be comparable to, if not
favorable to, those that its competitors provide.\13\ Moreover, the
Exchange believes that it is reasonable to modify certain fees and
credits within its fee schedule as a means of incentivizing market
participants to increase their contributions to the improvement of the
quality of the Exchange.
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    \13\ See n. 12, supra.
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    In particular, the Exchange believes that it is reasonable to
increase the additional QMM credit of $0.00005 per share executed to
$0.000075 per share executed for Tapes A and C in Section 114(e)
because with the launch of new exchanges this month, the Exchange hopes
to incentivize participants to maintain or increase their liquidity
adding activity and quoting at the NBBO in Tapes A and C. To the extent
that this proposal results in an increase in liquidity adding and
quoting activity on the Exchange, this will improve the quality of the
Nasdaq market and increase its attractiveness to existing and
prospective participants.
    Additionally, the Exchange believes it is reasonable to remove the
credit of $0.0027 per share executed for the Nasdaq Growth Program in
Section 114(j) because the credit did not accomplish the growth in
activity as originally intended because the thresholds for the pricing
incentive is no longer effective in incentivizing liquidity adding
activity.\14\ It is reasonable to evaluate and update the Exchange's
fee schedule to reflect the fees and rebates that are effective for the
Exchange and market participants.
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    \14\ See n. 4, supra.
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    The Exchange also believes it is reasonable to adjust the fee and
the qualifications for RTFY orders. Until August 2020,\15\ there had
been no charge to participants entering RTFY orders because there were
no fees charged to participants for removing liquidity from the
Exchange and fees charged by other venues with a protected quotation
under Regulation NMS for RTFY orders that are routed away to other
venues were covered by the Exchange as a promotion to incentivize usage
of the order type. Given that RTFY orders have become more widely used
and as a result, the Exchange has waived more fees for removing
liquidity from the Exchange and incurred more costs for covering the
fees for routing to other venues with a protected quotation under
Regulation NMS, the Exchange believes that it is reasonable to amend
its RTFY fees to cap the number of executed RTFY shares that members
receive for free when such orders remove liquidity from the Nasdaq
Market Center or execute in a venue with a protected quotation under
Regulation NMS. Similarly, the Exchange believes that it is reasonable
to amend the RTFY fee qualifications for the $0.0000 per share executed
to align with the qualifications for the proposed $0.0030 per share
executed fee. The Exchange hopes to continue to encourage market
participants to increase their RTFY usage while allowing the Exchange
to mitigate the costs it incurs by capping the number of shares that
members receive for free when such orders remove liquidity from the
Nasdaq Market Center or execute in a venue with a protected quotation
under Regulation NMS.
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    \15\ See n. 6, supra.
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    The Exchange also believes that it is reasonable to adjust the
qualifications for the $0.0029 per share executed credit in Section
118(a) provided to members for displayed quotes/orders (other than
Supplemental Order or Designated Retail Orders \16\) that provide
liquidity. The proposed change is intended to incentivize members to
increase liquidity and set the NBBO, which will further improve overall
market quality.
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    \16\ Pursuant to Rule Section 118, a ``Designated Retail Order''
is an agency or riskless principal order that meets the criteria of
FINRA Rule 5320.03 and that originates from a natural person and is
submitted to Nasdaq by a member that designates it pursuant to this
section, provided that no change is made to the terms of the order
with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology. An order from a ``natural person'' can include orders
on behalf of accounts that are held in a corporate legal form--such
as an Individual Retirement Account, Corporation, or a Limited
Liability Company--that has been established for the benefit of an
individual or group of related family members, provided that the
order is submitted by an individual. Members must submit a signed
written attestation, in a form prescribed by Nasdaq, that they have
implemented policies and procedures that are reasonably designed to
ensure that substantially all orders designated by the member as
``Designated Retail Orders'' comply with these requirements. Orders
may be designated on an order by-order basis, or by designating all
orders on a particular order entry port as Designated Retail Orders.
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    Additionally, the Exchange believes it is reasonable to add three
new credits to Section 118(a). The Exchange believes that the
availability of the new $0.000025 per share executed supplemental
credit for displayed quotes/orders (other than Supplemental Orders or
Designated Retail Orders) that provide liquidity, as well as the two
new credits for certain non-displayed orders (other than Supplemental
Orders) that provide liquidity will incentivize members to increase
their liquidity adding activity on the Exchange in order to qualify for
the new credits. An increase in liquidity adding activity on the
Exchange would help to improve the quality of the market for all
participants. Moreover, the Exchange believes that it is reasonable to
apply the supplemental credit only to Tapes A and C because the
Exchange's goal is to promote increased liquidity in Tapes A and C and
hopes to incentivize market participants to increase their liquidity
adding activity by providing these additional credits. Similarly, the
Exchange believes that it is reasonable to provide a higher credit
certain for non-displayed orders (other than Supplemental Orders) that
provide liquidity in Tapes A and B due to the Exchange's goal to
specifically promote increased non-displayed order liquidity in
securities in these Tapes because the Exchange is not seeing the level
of liquidity that it expected in Tapes A and B.

The Proposal Is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal will allocate its credits and
fees fairly among its market participants.
    In particular, it is equitable to increase the additional credit in
Section 114(e) for QMMs in securities in Tapes A and C in order to
incentivize members to increase their liquidity adding activity in
those Tapes because the Exchange is not seeing the volume that it had
hoped to see in Tapes A and C. Moreover, the fees will be applied
uniformly to all QMMs.
    The Exchange also believes that it is equitable to increase certain
fees and qualifications for RTFY orders in Section 118(a) because the
Exchange must balance providing a variety of order types, including
order types that allow market participants to remove liquidity and
route orders out of the Exchange, while ensuring that the Exchange is
not incurring significant costs as a result of providing a discounted
fee. Additionally, the Exchange is assessed various fees for the
execution of such orders at away venues and the proposed fee is
reflective of the value provided by the Exchange in providing this
functionality and the overall fees assessed by such venues. Moreover,
the fee and qualifications will apply uniformly to all participants
that enter RTFY orders.
    Moreover, it is equitable for the Exchange to remove the $0.0027
per share executed credit from the Growth Program in Section 114(j)
because, discussed above, the credit did not accomplish the growth in
activity as originally intended. When the fees and credits of the
Exchange are not meeting their expected goals, it is reasonable for the
Exchange to re-evaluate them, and equitable for the Exchange to amend
its fees and credits for all members.
    Furthermore, it is equitable for the Exchange to adjust the
qualifications for the $0.0029 per share executed credit for displayed
quotes/orders (other than Supplemental Orders and Designated Retail
Orders). The Exchange provides credits with varying qualifications to
provide its members with various ways for obtaining the credit. The
Exchange believes that it is equitable to adjust the qualifications for
a credit in order to incentivize an increase in liquidity adding
activity and setting the NBBO on the Exchange. As discussed above,
greater liquidity on the Exchange will further improve overall market
quality.
    The Exchange also believes that it is equitable to establish new
credits in Section 118(a). In particular, the Exchange believes it is
equitable to establish a new supplemental credit for members that
provide liquidity for displayed quotes/orders (other than Supplemental
Orders or Designated Retail Orders). Additionally, the Exchange
believes that it is equitable for the Exchange to establish two new
credits for members that provide liquidity for certain non-displayed
orders (other than Supplemental Orders). The Exchange hopes that these
credits will increase the incentive for participants to add liquidity.
An increase in overall liquidity adding activity on the Exchange will
improve the quality of the Nasdaq market and increase its
attractiveness to existing and prospective participants. Moreover, the
Exchange believes it is equitable to apply the $0.000025 per share
executed credit to Tapes A and C for members that provide liquidity for
displayed quotes/orders (other than Supplemental Orders or Designated
Retail Orders) because it is the Exchange's goal to specifically
promote increased liquidity in securities in Tapes A and C for
displayed quotes/orders (other than Supplemental Orders or Designated
Retail Orders). Additionally, the Exchange believes that it is
equitable to provide a higher credit to members with certain non-
displayed orders (other than Supplemental Orders) in securities in Tape
A and B due to the Exchange's goal to specifically promote increased
non-displayed order liquidity in securities in these tapes. An increase
in overall liquidity adding activity on the Exchange will improve the
quality of the Nasdaq market and increase its attractiveness to
existing and prospective participants.
The Proposed Amended Fees and Credits Are Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly
discriminatory. As an initial matter, the Exchange believes that
nothing about its volume-based tiered pricing model is inherently
unfair; instead, it is a rational pricing model that is well-
established and ubiquitous in today's economy among firms in various
industries--from co-branded credit cards to grocery stores to cellular
telephone data plans--that use it to reward the loyalty of their best
customers that provide high levels of business activity and incent
other customers to increase the extent of their business activity. It
is also a pricing model that the Exchange and its competitors have long
employed with the assent of the Commission. It is fair because it
incentivizes customer activity that increases liquidity, enhances price
discovery, and improves the overall quality of the equity markets.
    The Exchange intends for its proposal to improve market quality for
all members on the Exchange and by extension attract more liquidity to
the market, improving market wide quality and price discovery. Net
adders of liquidity to the Exchange stand to benefit directly from the
proposed changes. Moreover, to the extent that the proposed changes
increase liquidity adding and removing activity on the Exchange, this
will improve market quality and the attractiveness of the Nasdaq
market, to the benefit of all existing and prospective participants.
    More particularly, to the extent that Section 114(e) of the
Exchange's proposal to allow a QMM to qualify for a credit of $0.000075
per share executed in Tapes A and C will result in an increase in
liquidity on the Exchange, it will improve market-wide quality and
price discovery to the benefit of all participants. Moreover, to the
extent that the proposal causes members to increase the extent of their
liquidity adding and quoting activity on the Exchange, the Exchange
market quality will improve, and all market participants will benefit.
Moreover, any market participant that does not wish to receive the
higher credit is free to shift its order flow to a competing venue.
Additionally, the proposal to remove the Growth Program $0.0027 per
share executed credit in Section 114(j) is not unfairly discriminatory
because the credit will be removed for all market participants given
that it did not accomplish the growth in activity as originally
intended.
    Additionally, the Exchange does not believe that the proposed RTFY
fee increase in Section 118(a) is unfairly discriminatory because all
members sending Designated Retail Orders to Nasdaq for execution are
eligible to use RTFY. Each member may elect to use the RTFY routing
strategy and to execute as many shares as the member sees fit.
Furthermore, given that the Exchange only incurs a fee for RTFY orders
that route and execute at venues with a protected quotation under
Regulation NMS, the Exchange does not believe that it is unfairly
discriminatory to not charge a fee for RTFY orders that route and
execute at venues without a protected quotation under Regulation NMS
because the Exchange is not charged a fee for those RTFY orders.
Moreover, assessing different rates when a member elects to use a
routing strategy but executes on the venue where the order was
originally entered is not novel. For example, the Exchange charges fees
ranging from $0.0030 per share executed to no charge to a member

entering an MIDP Order.\17\ The fees vary based on whether the MIDP
Order routes and executes at venues with a protected quotation under
Regulation NMS other than BX or Nasdaq, or whether the MIDP Order
routes and executes at venues ineligible for a protected quotation
under Regulation NMS.\18\ The charge for MIDP Orders that route and
execute at venues with a protected quotation under Regulation NMS,
other than BX or Nasdaq, is the same as the proposed charge for RTFY
orders that route and execute at venues with a protected quotation
under Regulation NMS. Therefore, the Exchange is not seeking to charge
RTFY orders a greater amount than MIDP Orders; rather, the fees are
comparable.
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    \17\ The MIDP routing option allows Nasdaq members to seek
midpoint liquidity on Nasdaq and other markets on the Nasdaq system
routing table.
    \18\ See Rule Equity 7, Section 118(a). See also Securities
Exchange Act Release No. 87186 (October 1, 2019), 84 FR 53504
(October 7, 2019) (SR-Nasdaq-2019-080).
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    Moreover, the Exchange does not believe that it is unfairly
discriminatory to add new credits or to amend the qualifications for a
member to obtain a current credit in Section 118(a) because to the
extent that the proposal increases liquidity adding activity on the
Exchange, this will result in improved market quality, which will
benefit all existing and prospective participants.
    Furthermore, the Exchange does not believe it is unfairly
discriminatory for the Exchange to propose a supplemental credit for
members that provide liquidity for displayed quotes/orders (other than
Supplemental Orders or Designated Retail Orders) in Tapes A and C
because the Exchange seeks to promote increased liquidity adding
activity specifically in securities in Tapes A and C. Similarly, the
Exchange does not believe that it is unfairly discriminatory to provide
a higher credit to QMMs who provide liquidity adding activity in Tapes
A and C because the Exchange seeks to encourage liquidity adding
activity and quoting at the NBBO by QMMs in Tapes A and C. Likewise,
the Exchange does not believe that it is unfairly discriminatory to
provide a higher credit for certain non-displayed orders (other than
Supplemental Orders) that provide liquidity in Tapes A and B than it
proposes for participants with orders in Tape C because the Exchange
seeks to promote increased liquidity adding activity for certain non-
displayed orders (other than Supplemental Orders) specifically in
securities in Tapes A and B.
    Finally, any participant that is dissatisfied with the proposed
amended fees or credits is free to shift their order flow to competing
venues that provide more favorable pricing or less stringent qualifying
criteria.

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 not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition
    The Exchange does not believe that its proposals will place any
category of Exchange participant at a competitive disadvantage. To the
contrary, the proposed changes will provide opportunities for members
to receive new and amended credits based on their market-improving
behavior. Any member may elect to provide the levels of market activity
required in order to receive the new or amended credits. Furthermore,
all members of the Exchange will benefit from any increase in market
activity that the proposals effectuates. Additionally, As discussed
above, the $0.0027 per share executed Growth Program credit removal is
applicable to all members and does not place anyone at a competitive
disadvantage because the thresholds for the pricing incentive is no
longer effective in incentivizing liquidity adding activity.
    Moreover, members are free to trade on other venues to the extent
they believe that the credits provided are too low or the qualification
criteria are not attractive. As one can observe by looking at any
market share chart, price competition between exchanges is fierce, with
liquidity and market share moving freely between exchanges in reaction
to fee and credit changes. The Exchange notes that the tier structure
is consistent with broker-dealer fee practices as well as the other
industries, as described above.
Intermarket Competition
    The Exchange believes that its proposed modification to its
schedule of credits will not impose a burden on competition because the
Exchange's execution services are completely voluntary and subject to
extensive competition both from the other 14 live exchanges (soon to be
16) and from off-exchange venues, which include 34 alternative trading
systems. The Exchange notes that it operates in a highly competitive
market in which market participants can readily favor competing venues
if they deem fee levels at a particular venue to be excessive, or
rebate opportunities available at other venues to be more favorable. In
such an environment, the Exchange must continually adjust its fees and
credits to remain competitive with other exchanges and with alternative
trading systems that have been exempted from compliance with the
statutory standards applicable to exchanges. Because competitors are
free to modify their own fees in response, and because market
participants may readily adjust their order routing practices, the
Exchange believes that the degree to which fee and credit changes in
this market may impose any burden on competition is extremely limited.
    The proposed amended fees and credits are reflective of this
competition because, even as one of the largest U.S. equities exchanges
by volume, the Exchange has less than 18% market share, which in most
markets could hardly be categorized as having enough market power to
burden competition. Moreover, as noted above, price competition between
exchanges is fierce, with liquidity and market share moving freely
between exchanges in reaction to fee and credit changes. This is in
addition to free flow of order flow to and among off-exchange venues
which comprised more than 44% of industry volume for the month of
August 2020.
    The Exchange's proposals are pro-competitive in that the Exchange
intends for them to increase liquidity on the Exchange and thereby
render the Exchange a more attractive and vibrant venue to market
participants.
    In sum, if the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.

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

    No written comments were either solicited or received.

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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\19\ the Exchange
has designated this proposal as establishing or changing a due, fee, or
other charge imposed by the self-regulatory organization on any person,
whether or not the person is a

member of the self-regulatory organization, which renders the proposed
rule change effective upon filing.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. 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-2020-067 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2020-067. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2020-067 and should be submitted
on or before November 9, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-23015 Filed 10-16-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 162 (Thursday, August 20, 2020)]
[Notices]
[Pages 51428-51430]
[FR Doc No: 2020-18207]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2020-0404; FRL 10013-80-OAR]

Alternative Methods for Calculating Off-Cycle Credits Under the
Light-Duty Vehicle Greenhouse Gas Emissions Program: Application From
American Honda Motor Company

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is requesting
comment on an application from Honda Motor Company (``Honda'') for off-
cycle carbon dioxide (CO2) credits under EPA's light-duty
vehicle greenhouse gas emissions standards. ``Off-cycle'' emission
reductions can be achieved by employing technologies that result in
real-world benefits, but where that benefit is not adequately captured
on the test procedures used by manufacturers to demonstrate compliance
with emission standards. EPA's light-duty vehicle greenhouse gas
program acknowledges these benefits by giving automobile manufacturers
several options for generating ``off-cycle'' CO2 credits.
Under the regulations, a manufacturer may apply for CO2
credits for off-cycle technologies that result in off-cycle benefits.
In these cases, a manufacturer must provide EPA with a proposed
methodology for determining the real-world off-cycle benefit. Honda has
submitted an application that describes a methodology for determining
off-cycle credits from technologies described in their application.
Pursuant to applicable regulations, EPA is making this off-cycle credit
calculation methodology available for public comment.

DATES: Comments must be received on or before September 21, 2020.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2020-0404, to the Federal eRulemaking Portal: https://www.regulations.gov. Follow the online instructions for submitting
comments. Once submitted, comments cannot be edited or withdrawn. The
EPA may publish any comment received to its public docket. Do not
submit electronically any information you consider to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Multimedia submissions (audio, video, etc.) must
be accompanied by a written comment. The written comment is considered
the official comment and should include discussion of all points you
wish to make. The EPA will generally not consider comments or comment
contents located outside of the primary submission (i.e. on the web,
cloud, or other file sharing system). For additional submission
methods, the full EPA public comment policy, information about CBI or
multimedia submissions, and general guidance on making effective
comments, please visit https://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Linc Wehrly, Office of Transportation
and Air Quality, Compliance Division, U.S. Environmental Protection
Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105. Telephone: (734)
214-4286. Fax:<PHONE_NUMBER>. Email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    EPA's light-duty vehicle greenhouse gas (GHG) program provides
three pathways by which a manufacturer may accrue off-cycle carbon
dioxide (CO2) credits for those technologies that achieve
CO2 reductions in the real world but where those reductions
are not adequately captured on the test used to determine compliance
with the CO2 standards, and which are not otherwise
reflected in the standards' stringency. The first pathway is a
predetermined list of credit values for specific off-cycle technologies
that may be used beginning in model year 2014.\1\ This pathway allows
manufacturers to use conservative credit values established by EPA for
a wide range of technologies, with minimal data submittal or testing

requirements, if the technologies meet EPA regulatory definitions. In
cases where the off-cycle technology is not on the menu but additional
laboratory testing can demonstrate emission benefits, a second pathway
allows manufacturers to use a broader array of emission tests (known as
``5-cycle'' testing because the methodology uses five different testing
procedures) to demonstrate and justify off-cycle CO2
credits.\2\ The additional emission tests allow emission benefits to be
demonstrated over some elements of real-world driving not adequately
captured by the GHG compliance tests, including high speeds, hard
accelerations, and cold temperatures. These first two methodologies
were completely defined through notice and comment rulemaking and
therefore no additional process is necessary for manufacturers to use
these methods. The third and last pathway allows manufacturers to seek
EPA approval to use an alternative methodology for determining the off-
cycle CO2 credits.\3\ This option is only available if the
benefit of the technology cannot be adequately demonstrated using the
5-cycle methodology. Manufacturers may also use this option to
demonstrate reductions that exceed those available via use of the
predetermined list.
---------------------------------------------------------------------------

    \1\ See 40 CFR 86.1869-12(b).
    \2\ See 40 CFR 86.1869-12(c).
    \3\ See 40 CFR 86.1869-12(d).
---------------------------------------------------------------------------

    Under the regulations, a manufacturer seeking to demonstrate off-
cycle credits with an alternative methodology (i.e., under the third
pathway described above) must describe a methodology that meets the
following criteria:
     Use modeling, on-road testing, on-road data collection, or
other approved analytical or engineering methods;
     Be robust, verifiable, and capable of demonstrating the
real-world emissions benefit with strong statistical significance;
     Result in a demonstration of baseline and controlled
emissions over a wide range of driving conditions and number of
vehicles such that issues of data uncertainty are minimized;
     Result in data on a model type basis unless the
manufacturer demonstrates that another basis is appropriate and
adequate.
    Further, the regulations specify the following requirements
regarding an application for off-cycle CO2 credits:
     A manufacturer requesting off-cycle credits must develop a
methodology for demonstrating and determining the benefit of the off-
cycle technology and carry out any necessary testing and analysis
required to support that methodology.
     A manufacturer requesting off-cycle credits must conduct
testing and/or prepare engineering analyses that demonstrate the in-use
durability of the technology for the full useful life of the vehicle.
     The application must contain a detailed description of the
off-cycle technology and how it functions to reduce CO2
emissions under conditions not represented on the compliance tests.
     The application must contain a list of the vehicle
model(s) which will be equipped with the technology.
     The application must contain a detailed description of the
test vehicles selected and an engineering analysis that supports the
selection of those vehicles for testing.
     The application must contain all testing and/or simulation
data required under the regulations, plus any other data the
manufacturer has considered in the analysis.
    Finally, the alternative methodology must be approved by EPA prior
to the manufacturer using it to generate credits. As part of the review
process defined by regulation, the alternative methodology submitted to
EPA for consideration must be made available for public comment.\4\ EPA
will consider public comments as part of its final decision to approve
or deny the request for off-cycle credits.
---------------------------------------------------------------------------

    \4\ See 40 CFR 86.1869-12(d)(2).
---------------------------------------------------------------------------

II. Off-Cycle Credit Application: GHG Credit for Cold Storage
Evaporator

    Using the alternative methodology approach discussed in their
application, Honda is applying for credits for all 2017 model year and
later Honda and Acura vehicles for a cold storage evaporator system
that results in idle start-stop credits beyond those provided in the
regulations. Honda's cold storage evaporators utilize a paraffin wax
material in the evaporator tank to sustain the evaporator's ability to
absorb heat from the cabin air when the engine is shut off,
consequently maintaining cooler air temperature and cabin comfort for a
longer period of time during engine shutoff as compared to the shorter
comfort period provided by a non-cold storage evaporator. The concept
behind this strategy is similar to the use of alternative passenger
warming technologies that maintain driver comfort longer during engine
off events at cold ambient temperatures in order to delay engine
startups for cabin heating. In particular, at ambient temperatures
where air conditioning is used for cooling the cabin, Honda's cold
storage evaporator implementation aims to reduce A/C compressor and
engine use during both extended engine off vehicle stops and multiple
short stops while also increasing the ambient temperature threshold
above which the idle start-stop system is disabled in order to maintain
cabin comfort.
    Honda has provided a methodology for and test data from two
different types of operational test conditions--extended stops and
multiple stops--as well as an alternative calculation method that
yields higher credit values than the primary method. Using the lower
values from the primary evaluation and calculations, Honda is
requesting EPA approval of an off-cycle GHG credit of 1.0 grams
CO2 per mile for the Cold Storage Evaporator equipped in MY
18-19 Honda Odyssey, 1.2 g/mile for the MY 17-19 Honda Pilot and Acura
MDX & MY 19 Honda Passport AWD, 1.0 g/mi for the MY 19 Acura RDX AWD,
0.7 g/mi for MY 19 Honda Passport FWD and 0.6 g/mi for MY 17-19 Acura
TLX & MY 19 Acura RDX FWD.
    EPA has previously approved credits determined by alternative GHG
credit calculation methods for idle start-stop systems for both
Mercedes and Hyunda-Kia. Details of the methodology, testing and
analysis can be found in Honda's application.

III. EPA Decision Process

    EPA has reviewed the application for completeness and is now making
the application available for public review and comment as required by
the regulations. The off-cycle credit application submitted by Honda
(with confidential business information redacted) has been placed in
the public docket (see ADDRESSES section above) and on EPA's website at
https://www.epa.gov/vehicle-and-engine-certification/compliance-information-light-duty-greenhouse-gas-ghg-standards.
    EPA is providing a 30-day comment period on the application for
off-cycle credits described in this notice, as specified by the
regulations. The manufacturer may submit a written rebuttal of comments
for EPA's consideration, or may revise an application in response to
comments. After reviewing any public comments and any rebuttal of
comments submitted by manufacturers, EPA will make a final decision
regarding the credit request. EPA will make its decision available to
the public by placing a decision document in the docket and on EPA's
website at the same manufacturer-specific page shown above. While the
broad methodologies used by Honda could potentially be used for other
vehicles and by other manufacturers,

the vehicle specific data needed to demonstrate the off-cycle emissions
reductions would likely be different. In such cases, a new application
would be required, including an opportunity for public comment.

    Dated: August 14, 2020.
Mary Manners,
Acting Director, Compliance Division, Office of Transportation and Air
Quality, Office of Air and Radiation.
[FR Doc. 2020-18207 Filed 8-19-20; 8:45 am]
BILLING CODE 6560-50-P


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<META name="creation-date" content="13/06/2008 02:33:07 ">
<TITLE></TITLE>


[Federal Register Volume 87, Number 243 (Tuesday, December 20, 2022)]
[Notices]
[Pages 77915-77916]
[FR Doc No: 2022-27536]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2022-0038]

Qualification of Drivers; Exemption Applications; Hearing

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), Department
of Transportation (DOT).

ACTION: Notice of applications for exemption; request for comments.

-----------------------------------------------------------------------

SUMMARY: FMCSA announces receipt of applications from 15 individuals
for an exemption from the hearing requirement in the Federal Motor
Carrier Safety Regulations (FMCSRs) to operate a commercial motor
vehicle (CMV) in interstate commerce. If granted, the exemptions would
enable these hard of hearing and deaf individuals to operate CMVs in
interstate commerce.

DATES: Comments must be received on or before January 19, 2023.

ADDRESSES: You may submit comments identified by the Federal Docket
Management System Docket No. FMCSA-2022-0038 using any of the following
methods:
     Federal eRulemaking Portal: Go to www.regulations.gov/,
insert the docket number (FMCSA-2022-0038) in the keyword box and click
``Search.'' Next, sort the results by ``Posted (Newer-Older),'' choose
the first notice listed, and click on the ``Comment'' button. Follow
the online instructions for submitting comments.
     Mail: Dockets Operations; U.S. Department of
Transportation, 1200 New Jersey Avenue SE, West Building Ground Floor,
Room W12-140, Washington, DC 20590-0001.
     Hand Delivery: West Building Ground Floor, Room W12-140,
1200 New Jersey Avenue SE, Washington, DC 20590-0001, between 9 a.m.
and 5 p.m. ET Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    To avoid duplication, please use only one of these four methods.
See the ``Public Participation'' portion of the SUPPLEMENTARY
INFORMATION section for instructions on submitting comments.

FOR FURTHER INFORMATION CONTACT: Ms. Christine A. Hydock, Chief,
Medical Programs Division, FMCSA, DOT, 1200 New Jersey Avenue SE, Room
W64-224, Washington, DC 20590-0001,<PHONE_NUMBER>,
[email protected]. Office hours are 8:30 a.m. to 5 p.m. ET Monday
through Friday, except Federal holidays. If you have questions
regarding viewing or submitting material to the docket, contact Dockets
Operations,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Public Participation

A. Submitting Comments

    If you submit a comment, please include the docket number for this
notice (Docket No. FMCSA-2022-0038), indicate the specific section of
this document to which each comment applies, and provide a reason for
each suggestion or recommendation. You may submit your comments and
material online or by fax, mail, or hand delivery, but please use only
one of these means. FMCSA recommends that you include your name and a
mailing address, an email address, or a phone number in the body of
your document so that FMCSA can contact you if there are questions
regarding your submission.
    To submit your comment online, go to www.regulations.gov/docket?D=FMCSA-2022-0038. Next, sort the results by ``Posted (Newer-
Older),'' choose the first notice listed, click the ``Comment'' button,
and type your comment into the text box on the following screen. Choose
whether you are submitting your comment as an individual or on behalf
of a third party and then submit.
    If you submit your comments by mail or hand delivery, submit them
in an unbound format, no larger than 8\1/2\ by 11 inches, suitable for
copying and electronic filing.
    FMCSA will consider all comments and material received during the
comment period.

B. Viewing Comments

    To view comments go to www.regulations.gov. Insert the docket
number, (FMCSA-2022-0038) in the keyword box and click ``Search.''
Next, sort the results by ``Posted (Newer-Older),'' choose the first
notice listed, and click ``Browse Comments.'' If you do not have access
to the internet, you may view the docket online by visiting Dockets
Operations in Room W12-140 on the ground floor of the DOT West
Building, 1200 New Jersey Avenue SE, Washington, DC 20590-0001, between
9 a.m. and 5 p.m. ET Monday through Friday, except Federal holidays. To
be sure someone is there to help you, please call<PHONE_NUMBER> or
(202) 366-9826 before visiting Dockets Operations.

C. Privacy Act

    In accordance with 49 U.S.C. 31315(b)(6), DOT solicits comments
from the public on the exemption requests. DOT posts these comments,
without edit, including any personal information the commenter
provides, to www.regulations.gov. As described in the system of records
notice DOT/ALL 14 (Federal Docket Management System (FDMS)), which can
be reviewed at https://www.transportation.gov/individuals/privacy/privacy-act-system-records-notices, the comments are searchable by the
name of the submitter.

II. Background

    Under 49 U.S.C. 31136(e) and 31315(b), FMCSA may grant an exemption
from the FMCSRs for no longer than a 5-year period if it finds

such exemption would likely achieve a level of safety that is
equivalent to, or greater than, the level that would be achieved absent
such exemption. The statute also allows the Agency to renew exemptions
at the end of the 5-year period. FMCSA grants medical exemptions from
the FMCSRs for a 2-year period to align with the maximum duration of a
driver's medical certification.
    The 15 individuals listed in this notice have requested an
exemption from the hearing requirement in 49 CFR 391.41(b)(11).
Accordingly, the Agency will evaluate the qualifications of each
applicant to determine whether granting the exemption will achieve the
required level of safety mandated by statute.
    The physical qualification standard for drivers regarding hearing
found in Sec.  391.41(b)(11) states that a person is physically
qualified to drive a CMV if that person first perceives a forced
whispered voice in the better ear at not less than 5 feet with or
without the use of a hearing aid or, if tested by use of an audiometric
device, does not have an average hearing loss in the better ear greater
than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a
hearing aid when the audiometric device is calibrated to American
National Standard (formerly ASA Standard) Z24.5--1951.
    This standard was adopted in 1970 and was revised in 1971 to allow
drivers to be qualified under this standard while wearing a hearing
aid, 35 FR 6458, 6463 (Apr. 22, 1970) and 36 FR 12857 (July 3, 1971).
    On February 1, 2013, FMCSA announced in a Notice of Final
Disposition titled, ``Qualification of Drivers; Application for
Exemptions; National Association of the Deaf,'' (78 FR 7479), its
decision to grant requests from 40 individuals for exemptions from the
Agency's physical qualification standard concerning hearing for
interstate CMV drivers. Since that time the Agency has published
additional notices granting requests from hard of hearing and deaf
individuals for exemptions from the Agency's physical qualification
standard concerning hearing for interstate CMV drivers.

III. Qualifications of Applicants

Sean Brodacz

    Sean Brodacz, 32, holds a class DM driver's license in Illinois.

Travis Bunn

    Travis Bunn, 42, holds a class D driver's license in Arkansas.

Allen Carrasco

    Allen Carrasco, 35, holds a class A CDL in California.

Matthew Kaschalk

    Matthew Kaschalk, 41, holds a class D driver's license in
Tennessee.

Jennifer Cowan

    Jennifer Cowan, 28, holds a class D driver's license in Arkansas.

Chad D'Amore

    Chad D'Amore, 21, holds a class C driver's license in Pennsylvania.

Fawina Dieteric

    Fawina Dieterich, 43, holds a class E driver's license in Florida.

Kathryn Dych

    Kathryn Dych, 34, holds a driver's license in Indiana.

Keith Hulse

    Keith Hulse, 51, holds a class DM driver's license in Tennessee.

Alexander Jones

    Alexander Jones, 21, holds a class R driver's license in
Mississippi.

Claudio Monegro

    Claudio Monegro, 32, holds a class C driver's license in Maryland.

Erica Muhm

    Erica Muhm, 42, holds a class D driver's license in Kentucky.

Brett Ripp

    Brett Ripp, 37, holds a class E driver's license in Florida.

Wayne Todd

    Wayne Todd, 62, holds a class A CDL in Nebraska.

Christopher Zrimsek

    Christopher Zrimsek, 45, holds a class E driver's license in
Florida.

IV. Request for Comments

    In accordance with 49 U.S.C. 31136(e) and 31315(b), FMCSA requests
public comment from all interested persons on the exemption petitions
described in this notice. We will consider all comments received before
the close of business on the closing date indicated under the DATES
section of the notice.

Larry W. Minor,
Associate Administrator for Policy.
[FR Doc. 2022-27536 Filed 12-19-22; 8:45 am]
BILLING CODE 4910-EX-P


[Federal Register Volume 81, Number 75 (Tuesday, April 19, 2016)]
[Notices]
[Pages 23035-23038]
[FR Doc No: 2016-08969]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77611; File No. SR-BATS-2016-14]

Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto,
To Adopt an Early Trading Session and Three New Time-in-Force
Instructions

April 13, 2016.

I. Introduction

    On February 12, 2016, BATS Exchange, Inc. (the ``Exchange'' or
``BATS'') (n/k/a Bats BZX Exchange, Inc.) filed with the Securities and
Exchange Commission (the ``Commission''), pursuant to section 19(b)(1)
\1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4
thereunder,\3\ a proposed rule change to amend its rules to: (i) Create
a new trading session to be known as the Early Trading Session, which
will run from 7:00 a.m. to 8:00 a.m. Eastern Time; and (ii) adopt three
new Time-in-Force (``TIF'') instructions. The proposed rule change was
published for comment in the Federal Register on February 29, 2016.\4\
On April 11, 2016, the Exchange filed Amendment No. 1 to the proposed
rule change.\5\ The Commission received no comments on the proposed
rule change. This order approves the proposed rule change, as modified
by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 77214 (February 23,
2016), 81 FR 10350 (``Notice'').
    \5\ Amendment No. 1 amended and replaced the proposed rule
change in its entirety. In Amendment No. 1, the Exchange made
technical nonsubstantive changes to the proposed rule text to
replace all references to ``BATS'' with ``BZX'' and to otherwise
revise Exhibit 5 so that the proposed rule text is consistent with
the Exchange's current rule text. See Securities Exchange Act
Release Nos. 77307 (March 7, 2016), 81 FR 12996 (March 11, 2016)
(SR-BATS-2016-25) and 77476 (March 30, 2016) 81 FR 19661 (April 5,
2016) (SR-BATS-2016-17). Because Amendment No. 1 adds clarification
and does not materially alter the substance of the proposed rule
change or raise unique or novel regulatory issues, Amendment No. 1
is not subject to notice and comment.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to amend its rules to: (i) Create a new
trading session, the Early Trading Session, which will run from 7:00
a.m. to 8:00 a.m. Eastern Time; and (ii) adopt three new TIF
instructions.

A. Early Trading Session

    The Exchange trading day is currently divided into three sessions:
(i) The Pre-Opening Session, which starts at 8:00 a.m. and ends at 9:30
a.m. Eastern Time; (ii) Regular Trading Hours, which run from 9:30 a.m.
to 4:00 p.m. Eastern Time; and (iii) the After Hours Session, which
runs from 4:00 p.m. to 5:00 p.m. Eastern Time.\6\ The Exchange proposes
to amend its rules to create the Early Trading Session. Exchange Rule
1.5 would be amended to add a new term, ``Early Trading Session,''
under proposed paragraph (ee). ``Early Trading Session'' would be
defined as ``the time between 7:00 a.m. and 8:00 a.m. Eastern Time.''
---------------------------------------------------------------------------

    \6\ See Notice, supra note 4, at 10350.
---------------------------------------------------------------------------

    The Exchange also proposes to amend Exchange Rule 11.1(a) to state
that orders may be entered or executed on, or routed away from, the
Exchange during the Early Trading Session and to reflect the start time
of the Early Trading Session as 7:00 a.m. Eastern Time. Other than the
proposal to adopt an Early Trading Session, the Exchange does not
propose to amend the substance or operation of Exchange Rule
11.1(a).\7\
---------------------------------------------------------------------------

    \7\ See id.
---------------------------------------------------------------------------

    Users \8\ currently designate when their orders are eligible for
execution by selecting a desired TIF instruction. Orders entered
between 6:00 a.m. and 8:00 a.m. Eastern Time are not eligible for
execution until the start of the Pre-Opening Session or Regular Trading
Hours, depending on the TIF selected by the User. A User may enter
orders in advance of the trading session for which its orders are
eligible. For example, Users may enter orders starting at 6:00 a.m.
Eastern Time with a TIF of Regular Hours Only (``RHO''), which
designates that the order only be eligible for execution during Regular
Trading Hours.\9\ Users may enter orders as early as 6:00 a.m. Eastern
Time, but those orders would not be eligible for execution until the
start of the Pre-Opening Session at 8:00 a.m. According to the
Exchange, some Users have requested the ability for their orders to be
eligible for execution starting at 7:00 a.m. Eastern Time. Therefore,
the Exchange is proposing to adopt the Early Trading Session.\10\
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    \8\ ``User'' is defined as ``any Member or Sponsored Participant
who is authorized to obtain access to the System pursuant to Rule
11.3.'' See Exchange Rule 1.5(cc).
    \9\ See Exchange Rule 11.9(b)(7).
    \10\ See Notice, supra note 4, at 10351.
---------------------------------------------------------------------------

    As amended, Exchange Rule 11.1(a) would state that orders entered
between 6:00 a.m. and 7:00 a.m. Eastern Time, rather than 6:00 a.m. and
8:00 a.m. Eastern Time, would not be eligible for execution until the
start of the Early Trading Session, Pre-Opening Session, or Regular
Trading Hours, depending on the TIF selected by the User. Exchange Rule
11.1(a) would also be amended to state that the Exchange would not
accept the following orders prior to 7:00 a.m. Eastern Time, rather
than 8:00 a.m.: (i) BZX Post Only Orders; \11\ (ii) Partial Post Only
at Limit Orders; \12\ (iii) Intermarket Sweep Orders (``ISOs''); \13\
(iv) BZX Market Orders \14\ that are not Eligible Auction Orders as
defined in Rule 11.23(a)(8); (v) Minimum Quantity Orders \15\ that also
include a TIF of RHO; and (vi) all orders with a TIF instruction of
Immediate-or-Cancel (``IOC'') \16\ or Fill-or-Kill (``FOK'').\17\ At
the commencement of the Early Trading Session, orders entered between
6:00 a.m. and 7:00 a.m. Eastern Time, rather than 6:00 a.m. and 8:00
a.m. Eastern Time, would be handled in time sequence, beginning with
the order with

the oldest time stamp, and would be placed on the BZX Book,\18\ routed,
cancelled, or executed in accordance with the terms of the order.\19\
As amended, Exchange Rule 11.1(a) would state that orders may be
executed on the Exchange or routed away from the Exchange during
Regular Trading Hours and during the Early Trading, Pre-Opening, and
After Hours Trading Sessions.\20\
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    \11\ See Exchange Rule 11.9(c)(6).
    \12\ See Exchange Rule 11.9(c)(7).
    \13\ See Exchange Rule 11.9(d).
    \14\ See Exchange Rule 11.9(a)(2).
    \15\ See Exchange Rule 11.9(c)(5).
    \16\ See Exchange Rule 11.9(b)(1).
    \17\ See Exchange Rule 11.9(b)(6).
    \18\ See Exchange Rule 1.5(e).
    \19\ See Notice, supra note 4, at 10351.
    \20\ See id. Amendment No. 1 updated Exhibit 5 so that the names
of orders, order modifiers, and the Exchange's book stated therein
conform with those used in the current Exchange Rules. See supra,
note 5. The Exchange also describes how the Early Trading Session
will affect its Members' operations and the Exchange's opening
process, order types, routing services, order processing, data
feeds, trade reporting, market surveillance, and clearly erroneous
trade processing. The Exchange clarifies that these processes would
operate in the same manner with the exception of changes in time to
reflect the adoption of the Early Trading Session. See Notice, supra
note 4, at 10351.
---------------------------------------------------------------------------

    The Exchange also proposes to make the changes described below to
Exchange Rules 3.21, 11.9, 11.13, 11.17, 11.23, 14.6, 14.11 and 14.12
to reflect the adoption of the Early Trading Session:
     Exchange Rule 3.21, Customer Disclosures. Exchange Rule
3.21 prohibits Members from accepting an order from a customer for
execution in the Pre-Opening or After Hours Trading Session without
disclosing to their customer that extended hours trading involves
material trading risks, including the possibility of lower liquidity,
high volatility, changing prices, unlinked markets, an exaggerated
effect from news announcements, wider spreads and any other relevant
risk. The Exchange proposes to amend Exchange Rule 3.21 to also require
such disclosures for customer orders that are to be executed during the
Early Trading Session.\21\
---------------------------------------------------------------------------

    \21\ See id.
---------------------------------------------------------------------------

     Exchange Rule 11.9, Orders and Modifiers. The Exchange
proposes to amend the description of BZX Market Orders under Exchange
Rule 11.9(a)(2), Market Maker Peg Orders under Rule 11.9(c)(16), and
Supplementary Peg Orders under Rule 11.9(c)(19) to account for the
Early Trading Session. Every order type that is currently available
beginning at 8:00 a.m. would be available beginning at 7:00 a.m. for
inclusion in the Early Trading Session. All other order types, and all
order type behaviors, would otherwise remain unchanged. Therefore, each
of the above rules for BZX Market Orders, Market Maker Peg Orders, and
Supplemental Peg Orders would be amended to account for the Early
Trading Session.\22\
---------------------------------------------------------------------------

    \22\ See id. at 10351-52. Amendment No. 1 updated Exhibit 5 so
that the names of orders and order modifiers stated therein conform
with those used in the current Exchange Rules. See supra, note 5.
---------------------------------------------------------------------------

     Exchange Rule 11.13, Order Execution and Routing. Exchange
Rule 11.13(a)(2)(B) discusses compliance with Regulation NMS and Trade
Through Protections and states that the price of any execution
occurring during the Pre-Opening Session or the After Hours Trading
Session must be equal to or better than the highest Protected Bid or
lowest Protected Offer, unless the order is marked ISO or a Protected
Bid is crossing a Protected Offer. The Exchange proposes to amend
Exchange Rule 11.13(a)(2)(B) to expand the Exchange Rule's requirements
to the Early Trading Session.\23\
---------------------------------------------------------------------------

    \23\ See Notice, supra note 4, at 10352.
---------------------------------------------------------------------------

     Exchange Rule 11.17, Clearly Erroneous Executions.
Exchange Rule 11.17 outlines under which conditions the Exchange may
determine that an execution is clearly erroneous. The Exchange proposes
to amend Exchange Rule 11.17 to include executions that occur during
the Early Trading Session. Exchange Rule 11.17(c)(1) sets forth the
numerical guidelines the Exchange is to follow when determining whether
an execution was clearly erroneous during Regular Trading Hours or the
Pre-Opening or After Hours Trading Session. Exchange Rule 11.17(c)(3)
sets forth additional factors the Exchange may consider in determining
whether a transaction is clearly erroneous. These factors include
whether the transaction was executed during the Pre-Opening or After
Hours Trading Sessions. The Exchange proposes to amend Exchange Rule
11.17(c)(1) and (3) to include executions occurring during the Early
Trading Session.\24\
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    \24\ See id. The Exchange also proposes technical amendments to
Exchange Rules 11.17(c)(1) and (3) to delete the letter ``s'' from
the word ``Trading Sessions'' and the letter ``s'' from the word
``tapes,'' respectively.
---------------------------------------------------------------------------

     Exchange Rule 11.23, Auction. Exchange Rules 11.23(b) and
(c) describe the Exchange's Opening and Closing Auction processes. The
Exchange proposes to amend Exchange Rules 11.23(b)(1)(C) to reflect
that Orders eligible for execution in the Early Trading Session or Pre-
Opening Session may be cancelled or modified at any time prior to
execution.\25\
---------------------------------------------------------------------------

    \25\ The Commission notes that in the initial filing for this
proposed rule change, the Exchange proposed additional conforming
changes to Exchange Rules 11.23(b)(1)(A) and (c)(1)(A) to state that
Users may submit orders at the start of the Early Trading Session at
7:00 a.m., rather than 8:00 a.m., to participate in either the
Opening or Closing Auction. In Amendment No. 1, those proposed
amendments were removed from the proposal because the current rule
text for each rule no longer requires changes to conform with this
proposal due to recent amendments in a separate rule filing. See
Securities Exchange Act Release No. 77476 (March 30, 2016) 81 FR
19661 (April 5, 2016) (SR-BATS-2016-17).
---------------------------------------------------------------------------

     Rule 14.6, Obligations for Companies Listed on the
Exchange. The Exchange proposes to amend Exchange Rules 14.6(b)(1),
(b)(2), and Interpretation and Policies .01(a), (b), (c), and .02 to
require an Exchange-Listed Company that publicly releases material
information outside of the Exchange market hours to inform the
Exchange's Surveillance Department of that material information prior
to 6:50 a.m. rather than 7:50 a.m. Eastern Time. The Exchange proposes
to amend Exchange Rule 14.6, Interpretation and Policies .01(a), (b),
(c), and .02 to reflect the start of the Early Trading Session at 7:00
a.m. Eastern Time. The amended provisions of Exchange Rule 14.6,
Interpretation and Policies .01(a), (b), (c), and .02 require companies
to notify the Exchange's Surveillance Department of the release of
certain material information at least ten minutes prior to the release
of such information to the public when the public release of the
information is made during Exchange market hours.\26\
---------------------------------------------------------------------------

    \26\ See Notice, supra note 4, at 10352.
---------------------------------------------------------------------------

     Rule 14.11, Other Securities. The Exchange proposes to
amend Exchange Rules 14.11(b)(7) and (c)(7) to reflect the extension of
the pre-Opening session of the Exchange to 7:00 a.m. Eastern Time for
the trading of Portfolio Depository Receipts and Index Fund Shares,
respectively. The Exchange also proposes to amend the provisions of
Exchange Rules 14.11(d) and (e) that address the trading of the
following securities to include references to the Early Trading Session
or to state that transaction in the following products may occur during
the Early Trading Session, in addition to during Regular Trading Hours
and the Pre-Opening and After Hours Trading Sessions: (i) Securities
Linked to the Performance of Indexes and Commodities (Including
Currencies) (Exchange Rule 14.11(d)); (ii) Commodity-Based Trust Shares
(Exchange Rule 14.11(e)(4)); (iii) Currency Trust Shares (Exchange Rule
14.11(e)(5)); (iv) Commodity Index Trust Shares (Exchange Rule
14.11(e)(6)); (v) Commodity Futures Trust Shares (Exchange Rule
14.11(e)(7)); (vi) Trust Units (Exchange Rule 14.11(e)(9)); (vii)
Managed Trust Securities (Exchange Rule 14.11(e)(10)); and (viii)
Derivative Securities Traded under Unlisted

Trading Privileges (Exchange Rule 14.11(j)).\27\
---------------------------------------------------------------------------

    \27\ See id. at 10352-53. The Exchange also proposes to amend
Rule 14.11(j)(2) to correct an inaccurate description of the Pre-
Opening Session, which currently reads as 9:00 a.m. to 9:30 a.m.
rather than 8:00 a.m. to 9:30 a.m. as is set forth throughout
Exchange Rules. See id. at 10353
---------------------------------------------------------------------------

     Rule 14.12, Failure to Meet Listing Standards. The
Exchange proposes to amend Exchange Rules 14.12(e) and (m)(11) to
require that companies that publicly announce the receipt of a
notification of deficiency, Staff Delisting Determination, Public
Reprimand Letter, or Adjudicatory Body Decision that serves as a Public
Reprimand Letter outside of Exchange market hours inform the Exchange's
Surveillance Department of the material information prior to 6:50 a.m.
rather than 7:50 a.m. Eastern Time. If the public announcement is made
during Exchange market hours, both Exchange Rules would continue to
require that the company inform the Exchange's Surveillance Department
at least 10 minutes prior to the announcement.\28\
---------------------------------------------------------------------------

    \28\ See id.
---------------------------------------------------------------------------

B. TIF Instructions

    The Exchange proposes to adopt three new TIF instructions under
Exchange Rule 11.9(b). As discussed above, a User may designate when
its order is eligible for execution by selecting the desired TIF
instruction under Exchange Rule 11.9(b).\29\
---------------------------------------------------------------------------

    \29\ See Exchange Rule 11.1(a).
---------------------------------------------------------------------------

    Although the Exchange states that the proposal to adopt an Early
Trading Session is in response to User requests for their orders to be
eligible for execution starting at 7:00 a.m. Eastern Time, the Exchange
states that some Users have requested that their orders continue to not
be eligible for execution until the start of the Pre-Opening Session at
8:00 a.m. Therefore, the Exchange proposes to adopt the following three
new TIF instructions under Exchange Rule 11.9(b): \30\
---------------------------------------------------------------------------

    \30\ See Notice, supra note 4, at 10353.
---------------------------------------------------------------------------

     Pre-Opening Session Plus (``PRE''). A limit order that is
designated for execution during the Pre-Opening Session and Regular
Trading Hours. Like the current Good `til Cancel TIF instruction,\31\
any portion not executed would expire at the end of Regular Trading
Hours.
---------------------------------------------------------------------------

    \31\ See Exchange Rule 11.9(b)(3).
---------------------------------------------------------------------------

     Pre-Opening Session `til Extended Day (``PTX''). A limit
order that is designated for execution during the Pre-Opening Session,
Regular Trading Hours, and the After Hours Session. Like the current
Good `til Extended Day TIF instruction,\32\ any portion not executed
would expire at the end of the After Hours Session.
---------------------------------------------------------------------------

    \32\ See Exchange Rule 11.9(b)(5).
---------------------------------------------------------------------------

     Pre-Opening Session `til Day (``PTD''). A limit order that
is designated for execution during the Pre-Opening Session, Regular
Trading Hours, and the After Hours Session. Like the current Good `til
Day TIF instruction,\33\ any portion not executed would be cancelled at
the expiration time assigned to the order, which can be no later than
the close of the After Hours Trading Session.
---------------------------------------------------------------------------

    \33\ See Exchange Rule 11.9(b)(4).
---------------------------------------------------------------------------

    Under each proposed TIF instruction, Users may designate that their
orders only be eligible for execution starting with the Pre-Opening
Session. Users may continue to enter orders as early as 6:00 a.m., but
orders with the proposed TIF instructions would not be eligible for
execution until 8:00 a.m. Eastern Time, which is the start of the Pre-
Opening Session. At the commencement of the Pre-Opening Session, orders
entered between 6:00 a.m. and 8:00 a.m. Eastern Time with one of the
proposed TIF instructions would be handled in time sequence, beginning
with the order with the oldest time stamp, and would be placed on the
BZX Book, routed, cancelled, or executed in accordance with the terms
of the order.\34\
---------------------------------------------------------------------------

    \34\ See Notice, supra note 4, at 10353. Amendment No. 1 updated
Exhibit 5 so that the name of the Exchange's book stated therein
conforms with the name used in the current Exchange Rules. See
supra, note 5. Orders utilizing one of the proposed TIF instructions
would not be eligible for execution during the Early Trading
Session. See Notice, supra note 4, at 10353, n.32.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful consideration, the Commission finds that the proposed
rule change, as modified by Amendment No.1, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\35\ The Commission
believes that the proposed rule change is consistent with section
6(b)(5) \36\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------

    \35\ In approving this rule change, the Commission notes that it
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
    \36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange proposes to adopt an Early Trading Session and three
new TIF instructions and to make related changes to its rules as
discussed above.\37\ The Commission believes that the proposed rules
would provide Users with additional options for trading on the
Exchange. The Commission notes that the proposed Early Trading Session
hours are similar to those of other exchanges,\38\ and that the
proposed TIF instructions would offer functionality similar to existing
functionality available on the Exchange and other exchanges that allows
Members to select when their orders become eligible for execution.\39\
---------------------------------------------------------------------------

    \37\ See supra section II.
    \38\ For example, NYSE Arca, Inc. operates an Opening Session
that starts at 4:00 a.m. Eastern Time and ends at 9:30 a.m. Eastern
Time, and Nasdaq Stock Market LLC operates a pre-market session that
also opens at 4:00 a.m. and ends at 9:30 a.m. Eastern Time. See NYSE
Arca Rule 7.34(a)(1); Nasdaq Rule 4701(g). See also Securities
Exchange Act Release No. 60605 (September 1, 2009), 74 FR 46277
(September 8, 2009) (SR-CHX-2009-13) (adopting bifurcated post-
trading session on the Chicago Stock Exchange, Inc.).
    \39\ Specifically, on the Exchange, Users may enter an order
starting at 6:00 a.m. Eastern Time with a TIF of Regular Hours Only,
which designates that the order only be eligible for execution
during Regular Trading Hours, which begin at 9:30 a.m. Eastern Time.
See Exchange Rule 11.b(7); see also NASDAQ Rule 4703(a)(7).
---------------------------------------------------------------------------

    The Commission notes that the Exchange has represented that it
would subject orders that are eligible for execution as of the start of
the Pre-Opening Session to all of the Exchange's standard regulatory
checks, as it currently does with all orders upon entry.\40\
Specifically, the Exchange would subject such orders to checks for
compliance with, including but not limited to, Regulation NMS,\41\
Regulation SHO,\42\ and relevant Exchange rules.\43\ Moreover, the
Exchange reminds its Members of their regulatory obligations when
submitting an order with one of the proposed TIF instructions.\44\ In
particular, the Exchange states that Members must comply with the
Market Access Rule,\45\ which requires, among other things, pre-trade
controls and procedures that are reasonably designed to assure
compliance with Exchange trading rules and Commission rules pursuant to
Regulation SHO and Regulation NMS. The Exchange also notes that a
Member's procedures must be reasonably designed to ensure

compliance with the applicable regulatory requirements, not just at the
time the order is routed to the Exchange, but also at the time the
order becomes eligible for execution.\46\
---------------------------------------------------------------------------

    \40\ See Notice, supra note 4, at 10355.
    \41\ See 17 CFR 242.600-613.
    \42\ See 17 CFR 242.200-204.
    \43\ See Notice, supra note 4, at 10355.
    \44\ See id.
    \45\ See 17 CFR 240.15c3-5.
    \46\ See Notice, supra note 4, at 10355.
---------------------------------------------------------------------------

    The Commission further notes the Exchange's discussion of the best
execution obligations of Members utilizing the proposed TIF
instructions.\47\ Specifically, the Exchange states that a Member's
best execution obligations may include cancelling an order when market
conditions deteriorate and could result in an inferior execution or
informing customers when the execution of their order may be delayed
intentionally while the Member utilizes reasonable diligence to
ascertain the best market for the security.\48\ The Exchange further
notes that Members will maintain the ability to cancel or modify the
terms of an order utilizing any of the proposed TIF instructions at any
time, including during the time from when the order is routed to the
Exchange until the start of the Pre-Opening Session.\49\ As a result,
the Exchange states that a Member who utilizes the proposed TIF
instructions, but later determines that market conditions favor
execution during Early Trading Session, can cancel the order residing
at the Exchange and enter a separate order to execute during the Early
Trading Session.\50\
---------------------------------------------------------------------------

    \47\ See id. at 10354-55.
    \48\ See id. n.41.
    \49\ See id. at 10354.
    \50\ See id.
---------------------------------------------------------------------------

    Furthermore, the Exchange proposes technical amendments to its
Rules to correct erroneous plural words and an inaccurate description
of the Pre-Opening Session times in Exchange Rules 11.17 and 14.11,
respectively. The Commission believes these proposed amendments would
help alleviate potential confusion among Users and Members regarding
the operation of Exchange Rules and are, therefore, consistent with the
Act.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act
\51\ that the proposed rule change (SR-BATS-2016-14), as modified by
Amendment No.1, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\52\
---------------------------------------------------------------------------

    \52\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08969 Filed 4-18-16; 8:45 am]
 BILLING CODE 8011-01-P