66 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 

15For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

16 15 U.S.C. 78s(b)(2)(B). 17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

BATS Trading as the Exchange’s routing 

broker-dealer upon migration of the 

Exchange to the BATS technology 

platform, thereby enabling BATS 

Trading to act as the routing brokerdealer for each of the BGM Affiliated 

Exchanges in a timely manner and 

simplifying the technology integration 

for Members of the Exchange that are 

also participants on EDGA, BZX and 

BYX. In this regard, the Exchange notes 

that, since completion of the Merger, 

both Members and the BGM Affiliated 

Exchanges have made numerous 

systems changes in preparation for the 

technology migration occurring on 

January 12, 2015, the Exchange has 

issued frequent updates to Members 

informing them of the BGM Affiliated 

Exchange technology migration as well 

as its anticipated time line so that 

Members may make the requisite system 

changes, and the Exchange has 

conducted multiple testing 

opportunities for Members to ensure 

that both Members’ and the Exchange’s 

systems will operate in accordance with 

the proposed rule change on January 12, 

2015. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Therefore, the Commission hereby 

waives the operative delay and 

designates the proposed rule change 

operative upon filing.15

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) of the Act 16 to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

EDGX–2014–35 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–EDGX–2014–35. 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 at 100 F Street NE., 

Washington, DC 20549–1090 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 

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–EDGX– 

2014–35, and should be submitted on or 

January 23, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30699 Filed 12–31–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73935; File No. SR–BATS– 

2014–073] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 2.12 To 

Remove References to ‘‘Direct Edge 

ECN LLC’’ and ‘‘DE Route’’ 

December 24, 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 December 

22, 2014, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The 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 filed a proposed rule 

change to amend Rule 2.12 to remove 

references to ‘‘Direct Edge ECN LLC’’ 

and ‘‘DE Route.’’ The Exchange does not 

propose to amend the requirements of 

this rule. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 parts of such 

statements. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 67 

3See Securities Exchange Act Release No. 71375 

(January 23, 2014), 79 FR 4771 (January 29, 2014) 

(SR–BATS–2013–059; SR–BYX–2013–039). 4See Exchange Rule 2.12(a)(2). 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78k–1(a)(1). 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Earlier this year, the Exchange and its 

affiliate BATS Y-Exchange, Inc. (‘‘BYX’’) 

received approval to affect a merger (the 

‘‘Merger’’) of the Exchange’s parent 

company, BATS Global Markets, Inc., 

with Direct Edge Holdings LLC, the 

indirect parent of EDGX Exchange, Inc. 

(‘‘EDGX’’) and EDGA Exchange, Inc. 

(‘‘EDGA,’’ and together with BZX, BYX 

and EDGX, the ‘‘BGM Affiliated 

Exchanges’’).3 As a result, the Exchange 

amended Rule 2.12 to reflect that DE 

Route, the affiliated EDGA and EDGX 

routing broker-dealer, would also act as 

the inbound router for routing orders 

from EDGA and EDGX to the Exchange. 

In the context of the Merger, the BGM 

Affiliated Exchanges are working to 

migrate EDGX and EDGA onto the BATS 

technology platform, and align certain 

system functionality, retaining only 

intended differences between the BGM 

Affiliated Exchanges. As a result of 

these efforts, the Exchange proposes to 

amend to amend [sic] Rule 2.12 to 

remove references to ‘‘Direct Edge ECN 

LLC’’ and ‘‘DE Route’’ to reflect that 

BATS Trading, Inc. will be the 

Exchange’s sole routing broker-dealer as 

of January 12, 2015. Thereafter, BATS 

Trading will serve as the sole inbound 

routing broker-dealer for the Exchange. 

The Exchange does not propose to 

amend the requirements of the rule. 

DE Route and BATS Trading provide 

Members of the Exchange, EDGA, EDGX 

and BYX with optional routing services 

to other market centers. Thus, in certain 

circumstances, DE Route and BATS 

Trading provides inbound routing from 

EDGA, EDGX, or BYX to the Exchange. 

Exchange Rule 2.12 governs this 

inbound routing of orders by DE Route 

and BATS Trading to the Exchange in 

DE Route’s and BATS Trading’s 

capacity as a facility of the Exchange. 

The Exchange proposes to amend Rule 

2.12 to remove all references to DE 

Route as BATS Trading will be the sole 

inbound routing service for the 

Exchange upon migration of EDGA and 

EDGX onto the BATS technology 

platform. The Exchange does not 

propose to amend the requirements of 

this rule. Therefore, the conditions and 

limitations set forth in Exchange Rule 

2.12(a) will continue to require that: 

• The Exchange enter into (a) a plan 

pursuant to Rule 17d–2 under the Act 

with a non-affiliated self-regulatory 

organization (‘‘SRO’’) to relieve the 

Exchange of regulatory responsibilities 

for BATS Trading with respect to rules 

that are common rules between the 

Exchange and the non-affiliated SRO, 

and (b) a regulatory services contract 

(‘‘Regulatory Contract’’) with a nonaffiliated SRO to perform regulatory 

responsibilities for BATS Trading for 

unique Exchange rules. 

• The Regulatory Contract require the 

Exchange to provide the non-affiliated 

SRO with information, in an easily 

accessible manner, regarding all 

exception reports, alerts, complaints, 

trading errors, cancellations, 

investigations, and enforcement matters 

(collectively ‘‘Exceptions’’) in which 

BATS Trading is identified as a 

participant that has potentially violated 

Exchange or Commission rules, and 

requires that the non-affiliated SRO 

provide a report, at least quarterly, to 

the Exchange quantifying all Exceptions 

in which BATS Trading is identified as 

a participant that has potentially 

violated Exchange or Commission rules. 

• The Exchange, on behalf of holding 

company indirectly owning the 

Exchange, establish and maintain 

procedures and internal controls 

reasonably designed to ensure that 

BATS Trading does not develop or 

implement changes to its system based 

on non-public information obtained as a 

result of its affiliation with the 

Exchange, until such information is 

available generally to similarly situated 

Members of the Exchange. 

• The Exchange furnish to BATS 

Trading only the same information and 

on the same terms as the Exchange 

makes available in the normal course of 

business to other users.4

In addition, provided the conditions 

in Exchange Rule 2.12 are complied 

with, and provided further that BATS 

Trading operates as an outbound router 

on behalf of BYX on the same terms and 

conditions as it does for the Exchange, 

and in accordance with the rules of 

BYX, BATS Trading may provide 

inbound routing services to the 

Exchange from BYX. BATS Trading 

provides members of the BGM Affiliated 

Exchanges (including BYX) with 

optional routing services to other market 

centers, which may include routing 

from a BGM Affiliated Exchange to the 

Exchange. Therefore, the Exchange 

proposes to remove reference to BYX as 

BATS Trading will be required under 

Exchange Rule 2.12 to operate as an 

outbound router on behalf of each BATS 

Exchange on the same terms and 

conditions as it does for the Exchange, 

and in accordance with the rules of each 

BATS Exchange, BATS Trading may 

provide inbound routing services to the 

Exchange from each BATS Exchange. 

The Exchange believes that Rule 2.12 

will continue to adequately manage the 

potential for conflicts of interest that 

could arise from BATS Trading routing 

orders to the Exchange. 

Implementation Date 

The Exchange intends to implement 

the proposed rule change on or about 

January 12, 2015, which is the 

anticipated date upon which the 

migration of the EDGA and EDGX to the 

BATS technology platform will be 

complete and BATS Trading, Inc. will 

act as the BGM Affiliated Exchange’s 

sole routing broker-dealer. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule changes are consistent 

with Section 6(b) of the Act 5 and further 

the objectives of Section 6(b)(5) of the 

Act 6 because they are designed 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, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and, in general, to protect investors and 

the public interest. The proposed rule 

change also is designed to support the 

principles of Section 11A(a)(1) 7 of the 

Act in that it seeks to assure fair 

competition among brokers and dealers 

and among exchange markets. The 

Exchange does not propose to amend 

the requirements of the rule and the 

proposed rule change is intended only 

to reflect that BATS Trading will be the 

Exchange’s sole routing broker-dealer 

upon migration of the EDGA and EDGX 

to the BATS technology platform. A 

consistent technology offering through 

the use of a single routing broker-dealer 

by each of the BGM Affiliated Exchange 

will, in turn, simplify the technology 

implementation, changes and 

maintenance by users of the Exchange 

that are also participants on BYX, 

EDGA, and EDGX. As such, the 

proposed rule change would foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities and would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
68 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4. 

10 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). 

13For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

14 15 U.S.C. 78s(b)(2)(B). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange reiterates that the proposed 

rule change is being proposed in the 

context of the technology integration of 

the BGM Affiliated Exchanges. Thus, 

the Exchange believes this proposed 

rule change is necessary to permit fair 

competition among national securities 

exchanges. In addition, the Exchange 

believes the proposed rule change will 

benefit Exchange participants in that it 

is one of several changes necessary to 

achieve a consistent technology offering 

by the BGM Affiliated Exchanges. 

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 

The Exchange has designated this rule 

filing as non-controversial under 

Section 19(b)(3)(A) of the Act 8 and 

paragraph (f)(6) of Rule 19b–4 

thereunder.9 Because the proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative prior to 30 days from the date 

on which it was filed, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6) 

thereunder.10

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 11 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 12

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay in order to permit the 

Exchange to implement the proposed 

rule change on January 12, 2015, which 

is the anticipated date upon which the 

migration of EDGA and EDGX to the 

BATS technology platform will be 

complete and BATS Trading will serve 

as the Exchange’s sole routing brokerdealer. The Exchange states that waiver 

of the operative delay is consistent with 

the protection of investors and the 

public interest because it will allow 

BATS Trading to act as the BGM 

Affiliated Exchanges’ sole routing 

broker-dealer upon migration of EDGX 

and EDGA to the BATS technology 

platform, thereby simplifying the 

technology integration for Members of 

the Exchange that are also participants 

on EDGX, EDGA, and BYX. In this 

regard, the Exchange notes that, since 

completion of the Merger, both 

Members and the BGM Affiliated 

Exchanges have made numerous 

systems changes in preparation for the 

technology migration occurring on 

January 12, 2015, the Exchange has 

issued frequent updates to Members 

informing them of the BGM Affiliated 

Exchange technology migration as well 

as its anticipated time line so that 

Members may make the requisite system 

changes, and the Exchange has 

conducted multiple testing 

opportunities for Members to ensure 

that both Members’ and the Exchange’s 

systems will operate in accordance with 

the proposed rule change on January 12, 

2015. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Therefore, the Commission hereby 

waives the operative delay and 

designates the proposed rule change 

operative upon filing.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) of the Act 14 to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

BATS–2014–073 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–BATS–2014–073. 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 at 100 F Street NE., 

Washington, DC 20549–1090 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 

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–BATS– 

2014–073, and should be submitted on 

or before January 23, 2015. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 69 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3As defined by Rule 4120(b)(4)(D). 

4See Rule 4754. 

5See Rule 4754(a)(1) for a description of quotes 

and orders eligible for participation in the Closing 

Cross. 

6The Order Imbalance Indicator provides 

information about orders eligible to participate in 

the Closing Cross and the price at which those 

orders would execute at the time of dissemination. 

7Once the closing process is initiated, the System 

will execute crosses in each individual security 

traded on NASDAQ one by one. The order in which 

each security is processed is random and differs day 

by day. 

8This brief period is normally well under one 

second. 

9For example, a member firm that enters an order 

that is erroneous in price and/or size may cause 

significant order imbalances, which may cause the 

closing price of the security to be significantly 

different from what is anticipated. 

10A member firm that sends a cancellation 

request during the Lockdown Period will receive an 

execution message for that order if it is executed in 

the Closing Cross. 

11The closing process will still be initiated at 

4:00 p.m. Eastern Time, and the order in which 

securities enter into their individual Closing 

Crosses will continue to be random. 

12See Rule 4751(h)(6). 

13 Id. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30694 Filed 12–31–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73943; File No. SR– 

NASDAQ–2014–123] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change to Rules 

4751(h) and 4754(b) Relating to the 

Closing Process 

December 24, 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 December 

16, 2014, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to make 

changes to Rules 4751(h) and 4754(b) 

relating to the closing process. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaq.cchwallstreet.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to adopt 

changes related to the close of Regular 

Market Session 3 on NASDAQ, which 

are designed to bring consistency and 

stability to the processing of securities 

in the NASDAQ Closing Cross.4 Each 

trading day, NASDAQ accepts orders 

designated to participate in the Closing 

Cross.5 The Closing Cross is the process 

by which NASDAQ determines the 

price at which orders will be executed 

at market close. Beginning at 3:50 p.m. 

Eastern Time, NASDAQ disseminates an 

Order Imbalance Indicator 6 every five 

seconds until market close, which 

allows market participants to see the 

nature of interest in a security and make 

investment decisions accordingly. The 

NASDAQ closing process is initiated at 

4:00 p.m. Eastern Time.7 During the 

brief period between the initiation of the 

closing process and the conclusion of 

the last Closing Cross,8 the continuous 

order book is open to accept orders and 

cancellations in a security until the 

Closing Cross for that security is 

complete. These orders can affect the 

ultimate closing price of the security. 

Although accepting orders and 

cancellations through the completion of 

a security’s Closing Cross allows the 

greatest interest to participate in the 

Closing Cross, the Exchange has 

observed that in cases where there is 

aberrant volatility in a security due to 

an error,9 accepting such order activity 

may also significantly alter the closing 

price. In normal trading, NASDAQ has 

observed that allowing order entry and 

cancellation in a security up to the 

completion of a security’s Closing Cross 

provides little additional price 

discovery to offset the greater risk in 

allowing such order activity. 

Accordingly, NASDAQ is proposing to 

close the order book for participation in 

the Closing Cross once the closing 

process is initiated at 4:00 p.m. Eastern 

Time (the ‘‘Lockdown Period’’). As a 

consequence of closing the order book, 

orders entered for participation in the 

continuous market after the Lockdown 

Period has begun, but prior to 

completion of the Closing Cross, will 

not be accepted by the System. 

Under the proposed process, at 4:00 

p.m. Eastern Time, when the closing 

process is initiated, the Lockdown 

Period is triggered at which point the 

order book will no longer accept new 

orders for execution, and will cease to 

process order cancellation requests for 

resting orders. New orders received for 

participation in the Closing Cross after 

initiation of the Lockdown Period will 

be cancelled back to the member firm, 

and cancellations of resting orders will 

be processed after the Closing Cross is 

complete.10 NASDAQ notes that the 

processing and calculation of the 

Closing Cross will remain unchanged.11

Moreover, in proposing the Lockdown 

Period, NASDAQ is not altering how 

orders are processed prior to the Closing 

Cross, and after it is completed. Rather, 

NASDAQ is merely providing a precise 

time at which orders will not participate 

in the Closing Cross, in lieu of the 

uncertain, albeit brief, time under the 

current process. In addition to 

amending Rule 4754(b) to reflect the 

changes discussed above, NASDAQ is 

making a clarifying change to the rule 

text to make it clear that the Closing 

Cross begins at 4:00:00 p.m.. [sic] 

In a related change, the Exchange is 

also proposing to harmonize the 

processing of Market Hours Day 

(‘‘MDAY’’) orders 12 in the Closing 

Cross. MDAY is a time-in-force 

characteristic of orders, which allows 

the order to be executed during the 

Regular Market Session. Under 

NASDAQ rules, MDAY-designated 

orders are available from 4:00 a.m. to 

4:00 p.m. Eastern Time.13 Currently, an 

order designated as MDAY entered after 

completion of the Closing Cross in a 

particular security may be rejected, 

cancelled, or modified to an order with 

a time-in-force of Immediate or Cancel, 


asabaliauskas on DSK5VPTVN1PROD with NOTICES