Federal Register / Vol. 79, No. 207 / Monday, October 27, 2014 / Notices 63981 

14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 72961 

(September 3, 2014), 79 FR 53500 (‘‘Notice’’). 

4See id. 

5See Securities Exchange Act Release No. 69897 

(July 1, 2013), 78 FR 40782, 40783 (July 8, 2013). 

6See Notice, supra note 3, at 53501. 

7See id. 

8See id. According to the Exchange, under the 

current rule, an ‘‘order imbalance’’ in an IPO 

security exists if: (1) The Current Reference Price 

disseminated immediately prior to commencing the 

release of the IPO for trading during the Pre-Launch 

Period and any of the three preceding Current 

Reference Prices differ by more than the greater of 

5 percent or 50 cents; (2) upon completion of the 

Cross calculation, the calculated price at which the 

security would be released for trading and any of 

the three preceding Current Reference Prices 

disseminated immediately prior to the initiation of 

the Cross calculation differ by more than the greater 

of 5 percent or 50 cents; or (3) all market orders will 

not be executed in the Cross. See id.; and NASDAQ 

Rule 4120(c)(7)(C). 

9The ‘‘Expected Price,’’ according to the 

Exchange, is the Current Reference Price displayed 

to the underwriter after the Exchange receives 

notice from the underwriter that the security is 

ready to trade. See Notice, supra note 3, at 53501, 

and Proposed NASDAQ Rule 4120(c)(8)(A)(i). 

10See Notice, supra note 3, at 53501. The 

Exchange is also proposing to reorganize certain 

provisions of NASDAQ Rule 4120 relating to the 

process for ending a trading halt of securities other 

than IPO securities, but is not making substantive 

modifications to these rules. See id. 

11See id. 

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 rulecomments@sec.gov. Please include File 

Number SR–MIAX–2014–53 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2014–53. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–MIAX– 

2014–53 and should be submitted on or 

before November 17, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–25431 Filed 10–24–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73399; File No. SR– 

NASDAQ–2014–081] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving a Proposed Rule Change 

Related to Proposed Changes to 

NASDAQ Rule 4120(c) To Modify the 

Parameters for Releasing Securities 

for Trading Upon the Termination of a 

Trading Halt in a Security That Is the 

Subject of an Initial Public Offering 

October 21, 2014. 

I. Introduction 

On August 20, 2014, The NASDAQ 

Stock Market LLC (‘‘NASDAQ’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change 

relating to its initial public offering 

(‘‘IPO’’) process. The proposed rule 

change was published for comment in 

the Federal Register on September 9, 

2014.3 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

The Exchange proposes to amend 

NASDAQ Rule 4120(c) to modify the 

parameters for releasing securities for 

trading upon the termination of a 

trading halt in a security that is the 

subject of an IPO (the ‘‘IPO Halt Cross’’ 

or the ‘‘Cross’’).4 Currently, NASDAQ 

Rule 4120(c)(7)(B) governs the launch of 

trading of IPO securities approved for 

listing on the Exchange.5 NASDAQ Rule 

4120(c)(7)(B) provides a two-phase 

process in which there is a 15 minute 

Display Only Period in which market 

participants may enter quotes and 

orders in that IPO security in the 

NASDAQ systems, which is then 

followed by a ‘‘Pre-Launch Period’’ that 

is not of a fixed duration.6 According to 

the Exchange, the Pre-Launch Period 

continues until: (1) NASDAQ receives 

notice from the underwriter of the IPO 

that the security is ready to trade and 

there is no ‘‘order imbalance’’ 7 in the 

security, in which case the security is 

released for trading; or (2) the 

underwriter, with concurrence of 

NASDAQ, determines to postpone and 

reschedule the IPO. The Exchange states 

that it disseminates the ‘‘Current 

Reference Price,’’ which is an indication 

of the price at which the IPO Halt Cross 

would execute if it occurred at that 

time, every five seconds during the 

Display Only Period and the Pre-Launch 

Period.8

The Exchange proposes to replace its 

current process with a procedure under 

which the ‘‘Expected Price’’ 9 of the IPO 

Halt Cross will be displayed to the 

underwriter, who will then select price 

bands to ensure that the actual 

calculated price at which the IPO Halt 

Cross would occur does not deviate 

from the Expected Price by more than 

the selected amounts.10 According to 

the Exchange, price deviations between 

the Expected Price and the actual 

calculated price of the Cross can occur 

because market participants may 

continue to enter and cancel orders 

during the period between the display 

of the Expected Price to the underwriter 

and the commencement of the Cross 

calculation, a period of up to five 

seconds in duration.11

Under the proposal, the process for 

determining the end of the Pre-Launch 

Period and when the IPO security will 

be released for trading will be as 

follows: (1) NASDAQ receives notice 

from the underwriter of the IPO that the 

security is ready to trade; (2) the 

NASDAQ system will then calculate the 

Current Reference Price and display it to 

the underwriter (i.e., the Expected 

Price); (3) the underwriter agrees to go 

forward; (4) the NASDAQ system 

determines that all market orders will be 

executed in the cross; and (5) the 


tkelley on DSK3SPTVN1PROD with NOTICES
63982 Federal Register / Vol. 79, No. 207 / Monday, October 27, 2014 / Notices 

12See id. 

13The underwriter can select the price bands at 

any time during the Display Only Period or the PreLaunch Period, and may modify them at any time 

prior to the Pre-Launch Period. See id. at n.6. 

14Specifically, the underwriter will select an 

upper price band (i.e., an amount by which the 

actual price may not exceed the Expected Price) and 

a lower price band (i.e., an amount by which the 

actual price may not be lower than the Expected 

Price). The Exchange notes that the underwriter 

may select different price bands above and below 

the Expected Price. See id. 

15See Notice, supra note 3, at 53501. 

16See id. 

17See id. at 53502. 

18See id. 

19See id. Under the proposal, an underwriter may 

select a price band of $0.00 (i.e., no change from 

the Expected Price would be permitted). See id. 

20See Notice, supra note 3, at 53502. The 

Exchange states that it will notify member 

organizations and the public of changes in available 

price band or increments through a notice that is 

widely disseminated at least one week in advance 

of the change. See id. 

21 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

22 15 U.S.C. 78f(b)(5). 

23See supra note 11 and accompanying text. 

24See supra note 16 and accompanying text. 

25 15 U.S.C. 78s(b)(2). 

26 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

NASDAQ system determines that the 

security satisfies a ‘‘price validation 

test,’’ as described below.12

Under the proposal, prior to the 

conclusion of the Pre-Launch Period,13

the underwriter will select price 

bands 14 and, as noted above, the system 

will then compare the Expected Price 

with the actual price calculated by the 

Cross.15 If the actual price calculated by 

the Cross differs from the Expected 

Price by an amount in excess of the 

price band selected by the underwriter, 

the security will not be released for 

trading and the Pre-Launch Period will 

continue.16 Under the proposal, if a 

security does not satisfy the price 

validation test, the underwriter may, but 

is not required to, select different price 

bands before recommencing the process 

to release the security for trading.17

According to the proposal, the 

available price bands the underwriter 

may select for the price validation test 

will include increments and price 

points established by the Exchange, 

which may be modified by the Exchange 

from time to time.18 Under the proposal, 

the initial available price bands will 

range from $0 to $0.50, with increments 

of $0.01.19 Under the proposal, the 

Exchange reserves the right to stipulate 

wider increments (such as $0.05) or 

price bands that include certain price 

points, but exclude others (for example, 

increments of $0.01 up to $0.10, and 

increments of $0.05 thereafter).20

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.21 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,22 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

As noted above, the proposal is 

designed to offer an additional 

safeguard against an unexpected 

deviation between the Expected Price 

and the actual price of the Cross by 

providing the underwriter with the 

authority to set price bands based on the 

characteristics of and expectations for 

each IPO. The Exchange represents that 

such price deviations can occur because 

market participants may continue to 

enter and cancel orders during the 

period of up to five seconds between the 

display of the Expected Price to the 

underwriter and the commencement of 

the Cross calculation.23 The 

Commission notes that, if the actual 

price calculated by the Cross differs 

from the Expected Price by an amount 

in excess of the price band selected by 

the underwriter, the security will not be 

released for trading and the Pre-Launch 

Period will continue.24 The Commission 

believes that the proposed rule change 

is designed to protect investors and the 

public interest by limiting unexpected 

volatility in the pricing of an IPO 

security at the conclusion of the PreLaunch Period. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,25 that the 

proposed rule change (SR–NASDAQ– 

2014–081) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–25435 Filed 10–24–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73397; File No. SR–BOX– 

2014–24] 

Self-Regulatory Organizations; BOX 

Options Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Amend 

the Fee Schedule on the BOX Market 

LLC (‘‘BOX’’) Options Facility 

October 21, 2014. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on October 

9, 2014, BOX Options Exchange LLC 

(the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act,3 and Rule 19b–4(f)(2) thereunder,4

which renders the proposal effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend the Fee Schedule on the BOX 

Market LLC (‘‘BOX’’) options facility. 

The text of the proposed rule change is 

available from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s Internet Web site at http:// 

boxexchange.com. 

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. 


tkelley on DSK3SPTVN1PROD with NOTICES