Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 68745 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3For example, a Workstation subscription 

includes tools to assist member firms in complying 

with Regulation NMS short sale restrictions and 

compliance with the Limit Up/Limit Down process. 

See http://www.nasdaqtrader.com/

Trader.aspx?id=Workstation. 

4See Rule 4753(a)(3)(A). 

5See Rule 4753(a)(5). 

6See Rule 4753(a)(1). 

7See Rule 4753(b) for a description of the 

processing of the Halt Cross. 

8The Pre-Launch Period is the second phase of 

a two-phase process that NASDAQ uses for 

launching IPOs. The Pre-Launch Period follows a 

15-minute Display Only Period and is of no fixed 

duration. During both periods, the NOII is 

disseminated every five seconds. 

2014–084 and should be submitted on 

or before December 9, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27186 Filed 11–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73574; File No. SR– 

NASDAQ–2014–100] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing of a Proposed Rule Change To 

Amend NASDAQ Rule 7015(d) To 

Include the IPO Indicator as a New 

Enhancement to the NASDAQ 

Workstation 

November 12, 2014. 

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 

29, 2014 The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

NASDAQ proposes a rule change 

proposal to amend NASDAQ Rule 

7015(d) to include the IPO Indicator as 

a new enhancement to a NASDAQ 

Workstation subscription. 

The text of the proposed rule change 

is available at http://

nasdaq.cchwallstreet.com/, at 

NASDAQ’s principal office, 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, 

NASDAQ included statements 

concerning the purpose of, and basis for, 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of those 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

NASDAQ is amending Rule 7015(d) to 

include the IPO Indicator as a new 

enhancement to the NASDAQ 

Workstation. In addition to providing 

order entry and quote functionality, the 

NASDAQ Workstation also includes 

several features designed to assist 

subscribers with managing and 

monitoring their trading activity.3

NASDAQ is proposing to include a new 

feature designed to assist member firms 

in monitoring their orders in the 

NASDAQ Halt Cross process leading up 

to the launch of an initial public 

offering (‘‘IPO’’). 

Halt Cross Process 

The NASDAQ Halt Cross is designed 

to provide for an orderly, single-priced 

opening of securities subject to an 

intraday halt, including securities that 

are the subject of an IPO. Prior to the 

Cross execution, market participants 

enter quotes and orders eligible for 

participation in the Cross, and NASDAQ 

disseminates certain information 

regarding buying and selling interest 

entered and the indicative execution 

price information, known as the Net 

Order Imbalance Indicator or NOII. The 

NOII is disseminated every five seconds 

during a designated period prior to the 

completion of the Halt Cross, in order to 

provide market participants with 

information regarding the possible price 

and volume of the Cross. The 

information provided in the NOII 

message includes the Current Reference 

Price,4 which is the price at which the 

Cross would occur if it executed at the 

time of the NOII’s dissemination, and 

the number of shares of Eligible 

Interest,5 which is defined as any 

quotation or any order that may be 

entered into the system and designated 

with a time-in-force that would allow 

the order to be in force at the time of 

the Halt Cross, that would be paired at 

that price. 

NASDAQ also disseminates a Market 

Order Imbalance, which is defined as 

the number of shares of Eligible Interest 

entered through market orders that 

would not be matched with other order 

shares at the time of the dissemination 

of an NOII, if in fact there are such 

unexecutable market order shares. 

When there is a Market Order 

Imbalance, NASDAQ disseminates the 

imbalance and the buy/sell direction of 

the imbalance. For example, if a buydirection Market Order Imbalance is 

disseminated, potential sellers in the 

Cross would know that buy liquidity is 

available at a market price, potentially 

encouraging them to enter additional 

sell orders to allow the Cross to proceed. 

In addition to disseminating 

information about Market Order 

Imbalances, NASDAQ also disseminates 

information about the size and buy/sell 

direction of an Imbalance. An Imbalance 

is defined as the number of shares of 

Eligible Interest with a limit price equal 

to the Current Reference Price that may 

not be matched with other order shares 

at a particular price at any given time.6

As noted above, Eligible Interest is 

defined as any quotation or any order 

that may be entered into the system and 

designated with a time-in-force that 

would allow the order to be in force at 

the time of the Halt Cross. Thus, the 

provided information reflects all shares 

eligible for participation in the Cross, 

regardless of time-in-force, and includes 

non-displayed shares and reserve size. 

As such, the Imbalance information 

indicates the degree to which available 

liquidity on one or the other side of the 

market would not be executed if the 

Cross were to occur at that time. 

Generally, a Halt in a security is 

terminated when NASDAQ determines 

to release a security, at which time the 

Display Only Period begins, culminating 

in the Halt Cross whereby the security 

is released for regular hours trading at 

the price that maximizes the number of 

shares of trading interest eligible for 

participation in the Cross to be 

executed.7 In the case of an IPO, 

underwriters to an IPO make a 

determination to launch an IPO during 

the Pre-Launch Period 8 when they 

believe the security is ready to trade. 

When the underwriter informs 


tkelley on DSK3SPTVN1PROD with NOTICES
68746 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 

9See Rules 4120(c)(8)(A)(ii) and 4120(c)(8)(B). 

10The information provided by the IPO Indicator 

is limited to the subscribing member firm’s orders. 

11The Exchange notes that, in situations where 

there is a Market Order Imbalance, the NOII does 

not provide a Current Reference Price, since not all 

market orders could be executed in the cross and 

therefore there is no price at which the IPO cross 

could occur. 

12 15 U.S.C. 78f (b). 

13 15 U.S.C. 78f(b)(4) and (5). 

NASDAQ that it is ready to launch the 

IPO, the NASDAQ system will calculate 

the Current Reference Price at that time 

(the ‘‘Expected Price’’) and display it to 

the underwriter. If the underwriter then 

approves proceeding, the NASDAQ 

system will conduct two validation 

checks. Specifically, the NASDAQ 

system will determine whether all 

market orders will be executed in the 

cross, and whether the Expected Price 

and the price calculated by the Cross 

differ by an amount in excess of the 

price band selected by the underwriter.9

If either of the validation checks fails, 

the security will not be released for 

trading and the Pre-Launch Period will 

continue seamlessly until all 

requirements are met. Alternatively, the 

underwriter may, with the concurrence 

of NASDAQ, determine to postpone and 

reschedule the IPO. 

New IPO Indicator 

NASDAQ is proposing the new IPO 

Indicator to provide member firms with 

more information about interest in an 

IPO security. Specifically, NASDAQ is 

proposing to provide information about 

the number and price at which shares of 

a member firm’s orders entered for 

execution in an IPO Halt Cross (‘‘IPO 

shares’’) would execute in an IPO if it 

were to price at the present time. The 

IPO Indicator will be offered through 

the NASDAQ Workstation and will use 

the NOII information already currently 

available through a Workstation 

subscription together with the 

information about the member firm’s 

orders on NASDAQ.10 Member firms 

will access the IPO Indicator from the 

main Workstation screen, which will 

allow the subscriber to select an IPO 

security by ticker and see the Current 

Reference Price,11 the number of paired 

shares, and the number of imbalance 

shares during the Display Only and PreLaunch Periods. The screen will also 

provide the total number of IPO shares 

the member firm has entered for 

execution in the IPO Halt Cross, the 

nature of such shares (buy or sell), and 

the number of IPO shares that would be 

executed in the Halt Cross at that time 

for each of those categories. Member 

firms will also be able to access further 

detail on its IPO shares presented by 

individual order or order block, which 

will include the number of IPO shares 

in a particular order or order block, the 

number and percentage of IPO shares of 

the order or order block that would be 

executed in the Halt Cross if it occurred 

at any given time in the process, based 

on the NOII disseminated every five 

seconds, and the price at which the 

order or order block was submitted. As 

such, the IPO Indicator will provide 

member firms with information 

consistent with what NASDAQ 

currently disseminates during the IPO 

launch process, but as it relates to a 

member firm’s orders and in greater 

detail. 

NASDAQ notes that the IPO Indicator 

will provide member firms with more 

information on their orders for 

participation in an IPO Halt Cross, 

which will, in turn, allow them to make 

better informed investment decisions. 

Although, NASDAQ believes the 

functionality provided by the IPO 

Indicator will be useful to all member 

firms seeking to participate in the IPO 

Halt Cross process, underwriters to an 

IPO may find the functionality 

particularly useful as they will have 

current and ongoing information on the 

nature of their order book in the IPO 

shares relative to the orders that would 

be executed at any given time, thus 

allowing them to make better informed 

decisions on the timing of the IPO’s 

launch. In this regard, the IPO Indicator 

may help an underwriter to make a 

determination to launch an IPO at a 

time when the IPO security would likely 

pass the validation checks, thus 

increasing the likelihood of a fair and 

orderly launch of the IPO when the 

underwriter informs NASDAQ that it is 

prepared to launch the IPO security. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act,12 in general, and furthers 

the objectives of Sections 6(b)(4) and 

6(b)(5) of the Act,13 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 or 

system which NASDAQ operates or 

controls and is designed to promote just 

and equitable principles of trade, 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The proposal is 

consistent with these requirements 

because it will expand the information 

made available to market participants 

about their orders and the interplay of 

supply and demand of buy and sell 

orders leading up to the completion of 

an IPO Halt Cross. The information 

provided by the proposed IPO Indicator 

is particularly useful to underwriters of 

IPOs, who ultimately make the decision 

to launch an IPO or to postpone it. In 

this regard, the IPO Indicator will 

provide underwriters with a near real 

time assessment of the number and 

price at which their IPO shares will 

execute at any given time, consequently 

allowing them to make better informed 

decisions with regard to the timing of an 

IPO’s launch. The change will thereby 

perfect the mechanisms of a free and 

open market by helping ensure the 

security price is reasonably stable at the 

time the underwriter determines to 

launch the IPO. Moreover, the change 

will protect investors and the public 

interest by providing additional 

transparency regarding the IPO Halt 

Cross, helping market participants to 

understand the degree of supply and 

demand for the security that is the 

subject of the IPO Halt Cross and the 

nature of the execution of IPO orders 

that they would receive at any given 

time in the IPO launch process. 

The Exchange is not proposing to 

increase the fee assessed for the 

Workstation under Rule 7015(d). The 

Exchange notes that it enhances the 

Workstation from time to time, offering 

new functionality it believes useful to 

subscribers, but does not necessarily 

adjust the charge for subscription with 

each enhancement. The Exchange 

believes that keeping the current fee is 

reasonable because the proposed 

enhancement to the Workstation will 

not result in an increase in the cost of 

a subscription. The Exchange believes 

that not increasing the Workstation fee 

is an equitable allocation as the fee 

remains unchanged for all subscribers. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

the proposed change serves merely to 

increase the information provided by 

NASDAQ regarding the nature of the 

execution they would receive in an IPO 

at any given time in the process, thereby 

assisting market participants in making 

informed investment decisions 

regarding their participation in the IPO 

Halt Cross. Moreover, the proposed 

change may enhance competition 

among exchanges by making the 

NASDAQ IPO process more appealing 

to market participants, thereby 

prompting other exchanges to improve 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 68747 

14 17 CFR 200.30–3(a)(12). 

1 12 U.S.C. 5465(e)(2). 

2 17 CFR 240.19b–4(n)(1)(i). 3 12 U.S.C. 5465(e)(2). 

their processes and the information 

provided during the launch of an IPO. 

Lastly, the change does not restrict the 

ability of market participants to 

participate in the IPO Halt Cross in any 

respect, and therefore does [sic] impose 

any burden on competition among 

market participants. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) By order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be 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 rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2014–100 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–NASDAQ–2014–100. 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 such 

filing also will be available for 

inspection and copying at the principal 

offices of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2014–100, and should be 

submitted on or before December 9, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27189 Filed 11–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73579; File No. SR–OCC– 

2014–807] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of an Emergency Change to OCC’s 

Procedures To Resize the Clearing 

Fund in Response to Market 

Conditions 

November 12, 2014. 

Pursuant to Section 806(e)(2) of Title 

VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, 

entitled Payment, Clearing, and 

Settlement Supervision Act of 2010 

(‘‘Payment, Clearing and Settlement 

Supervision Act’’) 1 and Rule 19b– 

4(n)(1)(i) under the Securities Exchange 

Act of 1934 (‘‘Act’’),2 notice is hereby 

given that on October 16, 2014, The 

Options Clearing Corporation (‘‘OCC’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

emergency notice as described in Items 

I and II below, which Items have been 

prepared by OCC. The Commission is 

publishing this notice to solicit 

comments on the emergency notice from 

interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Emergency 

Notice 

This notice is filed by OCC in 

connection an increase in the size of 

OCC’s Clearing Fund that it has 

implemented on an emergency basis 

pursuant to Section 806(e)(2) of the 

Payment, Clearing, and Settlement 

Supervision Act. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Emergency Notice 

In its filing with the Commission, 

OCC included statements concerning 

the purpose of and basis for the advance 

notice and discussed any comments it 

received on the advance notice. The text 

of these statements may be examined at 

the places specified in Item IV below. 

OCC has prepared summaries, set forth 

in sections A and B below, of the most 

significant aspects of these statements. 

(A) Clearing Agency’s Statement on 

Comments on the Emergency Notice 

Received From Members, Participants or 

Others 

Written comments were not and are 

not intended to be solicited with respect 

to the emergency notice and none have 

been received. 

(B) Emergency Notices Filed Pursuant to 

Section 806(e)(2) of the Payment, 

Clearing and Settlement Supervision 

Act 

Description of Change 

Emergency Notice 

This notice is being filed in 

connection with an emergency waiver of 

the provision of OCC’s Rules calling for 

monthly adjustments of its Clearing 

Fund that would otherwise have 

required an advance notice under 

Section 806(e)(1) of the Payment, 

Clearing and Settlement Supervision 

Act. Pursuant to Section 806(e)(2) of the 

Payment, Clearing, and Settlement 

Supervision Act, a designated financial 

market utility such as OCC may 

implement a change that would 

otherwise require an advance notice if it 

determines that an emergency exists and 

immediate implementation is necessary 

to continue to provide services in a safe 

and sound manner.3 For the reasons 

discussed below, OCC believes that the 

change was appropriate under this 

framework, and OCC is now filing this 

emergency notice in accordance with 


tkelley on DSK3SPTVN1PROD with NOTICES