[Federal Register Volume 85, Number 54 (Thursday, March 19, 2020)]
[Notices]
[Pages 15843-15844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05704]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88385; File No. S7-24-89]
Joint Industry Plan; Order Approving Forty-Fifth Amendment to the
Joint Self-Regulatory Organization Plan Governing the Collection,
Consolidation, and Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privileges Basis
March 13, 2020.
I. Introduction
On September 11, 2019, participants \1\ of the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation,
and Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privileges
Basis (``Nasdaq/UTP Plan'' or ``Plan'') filed \2\ with the Securities
and Exchange Commission (``SEC'' or ``Commission'') pursuant to Section
11A of the Securities Exchange Act of 1934 (``Act'') \3\ and Rule 608
of Regulation NMS thereunder,\4\ a proposal to amend the Nasdaq/UTP
Plan.\5\ This amendment represents the Forty-Fifth Amendment to the
Plan (``Amendment''). The Participants have proposed to resolve textual
inconsistencies in Plan provisions governing the dissemination of last-
sale price reports by the Processor \6\ during a Regulatory Halt.\7\
The Amendment was published for comment in the Federal Register on
January 28, 2020.\8\ One comment letter was received.\9\ This order
approves the Amendment to the Plan.
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\1\ These participants are: Cboe BYX Exchange, Inc.; Cboe BZX
Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.;
Cboe Exchange, Inc.; Financial Industry Regulatory Authority, Inc.;
The Investors' Exchange LLC; Long-Term Stock Exchange, Inc.; Nasdaq
BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX, Inc.; The Nasdaq Stock
Market LLC; New York Stock Exchange LLC; NYSE American LLC; NYSE
Arca, Inc.; NYSE Chicago, Inc.; and NYSE National, Inc. (each a
``Participant'' and collectively, the ``Participants'').
\2\ See Letter from Robert Books, Chairman, Operating Committee,
UTP Plan, to Vanessa Countryman, Secretary, Commission (dated
September 6, 2019).
\3\ 15 U.S.C 78k-1(a)(3).
\4\ 17 CFR 242.608.
\5\ The Nasdaq/UTP Plan, which governs the collection,
processing, and dissemination on a consolidated basis of quotation
information and transaction reports in Eligible Securities is a
``transaction reporting plan'' under Rule 601 of Regulation NMS, 17
CFR 242.601, and a ``national market system plan'' under Rule 608 of
Regulation NMS, 17 CFR 242.608. See Securities Exchange Act Release
No. 55647 (April 19, 2007), 72 FR at 20891 (April 26, 2007).
\6\ See Section III.Q of the Plan (defining ``Processor'').
\7\ See Section III.S of the Plan (defining ``Regulatory
Halt'').
\8\ See Securities Exchange Act Release No. 88017 (January 23,
2020), 85 FR at 5062 (January 28, 2020).
\9\ See Letter from Kelvin To, Founder and President, Data
Boiler Technologies LLC, to Vanessa Countryman, Secretary,
Commission (dated February 4, 2020). The comment letter is not
germane to the Amendment.
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II. Description of the Proposal
The Plan currently includes inconsistent language with respect to
the Processor's ability to disseminate last-sale price reports during a
Regulatory Halt. Section X.A of the Plan prohibits the Processor from
including in the consolidated tape during a Regulatory Halt any last-
sale reports. Section X.C, however, includes language that specifically
permits the Processor to ``collect and disseminate Transaction
Information'' during a Regulatory Halt.
The Participants have stated that, in practice, the Processor has
been following Section X.C during Regulatory Halts and will immediately
disseminate last-sale price reports during a Regulatory Halt. The
Participants believe that the Processor's current practice helps to
reduce inefficiencies and confusion among market participants with
respect to the operation of the Plan during ``race conditions,'' when
it might be unclear whether the trade reported by the Participant
occurred before or after the Participant had received notice of the
Regulatory Halt. As a result, the Participants have determined it
appropriate to amend the language of the Plan to resolve the
inconsistent language described above in order to confirm that the
Processor may continue to disseminate last-sale price reports during a
Regulatory Halt. In addition, the Amendment would align the Plan
language with a corresponding amendment being proposed by the CTA
Plan.\10\
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\10\ See Securities Exchange Act Release No. 88016 (January 23,
2020), 85 FR at 5060 (January 28, 2020) (proposal to amend CTA
Plan).
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III. Discussion
After careful review, the Commission finds that the Amendment is
consistent with the requirements of the Act and the rules and
regulations thereunder.\11\ In particular, the Commission finds that
the amendment is consistent with Section 11A of the Act which provides,
among other things, that the Commission may prescribe rules as
[[Page 15844]]
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act to
assure the prompt, accurate, reliable, and fair collection, processing,
distribution, and publication of information with respect to quotations
for and transactions in securities and the fairness and usefulness of
the form and content of such information.\12\ The Commission also finds
that the Amendment is consistent with Rule 608 of Regulation NMS, which
provides that the Commission shall approve an amendment to a Plan if it
finds that such plan or amendment is necessary or appropriate in the
public interest, for the protection of investors and the maintenance of
fair and orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system, or otherwise in furtherance of
the purposes of the Act.\13\
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\11\ The Commission has considered the Amendment's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\12\ See 15 U.S.C. 78k-1(c)(1)(B).
\13\ See 17 CFR 240.608(b)(2).
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The Commission believes that the Amendment furthers these goals by
eliminating any potential uncertainty in determining whether a trade
reported to the Processor during race conditions occurred before or
after the Participant who reported the trade had received notice of a
Regulatory Halt. Under the Amendment, the Processor could presume that
any such trades occurred before the Regulatory Halt, thereby allowing
the Processor to continue publishing those trade reports to the
consolidated tape. The Commission believes that market observers could
derive benefits from continuing to learn about trades occurring just
before a Regulatory Halt.
The Commission notes that it is also approving today a similar
proposal by the CTA Plan Participants to eliminate an ambiguity in that
Plan regarding how the Processor handles last-sale price reports during
a Regulatory Halt.\14\ As a result, both Plans will have uniform
provisions regarding how the Processor handles last-sale price reports
during race conditions. The Commission believes that approving these
two Plan amendments furthers the principle set forth in Section 11A of
the Act that ``[t]he linking of all markets for qualified securities
through communication and data processing facilities will foster
efficiency, enhance competition, increase the information available to
brokers, dealers, and investors, facilitate the offsetting of
investors' orders, and contribute to best execution of such orders''
\15\ by harmonizing across the entire national market system how last-
sale price reports for all NMS stocks are printed to the consolidated
tape during race conditions and by eliminating any ambiguity in the
duties of the Plan Processors in this regard.
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\14\ See Securities Exchange Act Release No. 88384 (March 13,
2020) (File No. SR-CTA-2019-02).
\15\ 15 U.S.C. 78k-1(a)(1)(D).
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VI. Conclusion
It is therefore ordered, pursuant to Section 11A of the Act \16\
and the rules thereunder, that the Amendment to the Nasdaq/UTP Plan
(File No. S7-24-89) is approved.
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\16\ 15 U.S.C. 78k-1.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(29).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05704 Filed 3-18-20; 8:45 am]
BILLING CODE 8011-01-P