916 Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Notices 

24For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

25 15 U.S.C. 78s(b)(3)(C). 

26 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

Exchange has requested that the 

Commission waive the 30-day operative 

delay period so that the proposal may 

become operative before the pilot’s 

expiration. The Exchange stated that an 

immediate operative date is necessary in 

order to immediately implement the 

proposed rule change so that member 

organizations could continue to benefit 

from the pilot program without 

interruption after December 31, 2014. 

The Commission believes that waiver 

of the 30-day operative delay period is 

consistent with the protection of 

investors and the public interest. 

Specifically, the Commission believes 

that the proposal would allow the pilot 

to continue uninterrupted, thereby 

avoiding any potential investor 

confusion that could result from the 

temporary interruption in the pilot 

program. For these reasons, the 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest, and designates the 

proposed rule change to be operative on 

December 31, 2014.24

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.25

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– 

NYSEMKT–2014–112 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–NYSEMKT–2014–112. 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 

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– 

NYSEMKT–2014–112 and should be 

submitted on or before January 28, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30970 Filed 1–6–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73972; File No. SR– 

NASDAQ–2014–126] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market, LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify 

Nasdaq’s Rule Governing Modification 

of Orders in the Event of an Issuer 

Corporate Action Related to a 

Dividend, Payment or Distribution 

December 31, 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 

18, 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 the Substance 

of the Proposed Rule Change 

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 

Nasdaq Rule 4761 addresses the 

treatment of quotes/orders in securities 

that are the subject of issuer corporate 

actions related to a dividend, payment 

or distribution. The rule applies to any 

trading interest that is carried on the 

Nasdaq Market Center book overnight. 

As a general matter, Nasdaq cancels 

open quotes/orders in the event of any 

corporate action related to a dividend, 

payment or distribution, on the ex-date 

of the action. The cancellation occurs 

immediately prior to the opening of 

trading at 4 a.m. on the ex-date of the 

corporate action, and the member 

receives a cancellation notice, so that it 

can, if it desires, reenter the order at the 

commencement of trading on the exdate. 

Prior to 2013, Nasdaq Rule 4761 

provided for a complex variety of 

adjustments of quotes and orders carried 

on the Nasdaq book overnight; 

depending on the nature of the 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Notices 917 

3Securities Exchange Act Release No. 69454 

(April 25, 2013), 78 FR 25506 (May 1, 2013) (SR– 

NASDAQ–2013–068). 

4Securities Exchange Act Release No. 70113 

(August 5, 2013), 78 FR 48746 (August 9, 2013) 

(SR–NASDAQ–2013–096). 

5Nasdaq notes that the use of good-till-cancelled 

orders is not prevalent, accounting for significantly 

less than 1% of all orders entered into Nasdaq. The 

vast majority of orders expire by their terms at the 

end of regular market hours. 

6The member may opt for this processing on a 

port-by-port basis. Thus, the provisions providing 

for order adjustment are applied to all good-tillcancelled orders entered through a port that has 

been specified by the member for such processing. 

Because members may obtain multiple ports, 

however, members may opt to apply different 

processing to different orders based on the ports 

through which they are entered. 

7Nasdaq is also amending the example in the rule 

text to make it clear that the prices provided therein 

are per share prices. 

8For securities listed on Nasdaq, Nasdaq receives 

notice of corporate actions from the issuer and 

determines the applicable ex-date. See Rule 11140. 

For securities listed on other exchanges, Nasdaq 

receives notice from the listing exchange. 

9To the extent that multiple good-till-cancelled 

orders in a particular security are adjusted and reentered, such orders may not retain the same time 

priority vis-a`-vis one another that they had on the 

preceding day. Rather, because such orders are 

entered simultaneously through multiple order 

entry ports, their relative priority is a function of 

the duration of system processing associated with 

each individual order. 

10 15 U.S.C. 78f. 

11 15 U.S.C. 78f(b)(5). 

corporate action, these adjustments 

might result in the cancellation of a 

quote/order or an adjustment of its price 

and/or size to reflect the impact of the 

corporate action. In April 2013, Nasdaq 

filed an amendment to the rule to 

provide that Nasdaq would cancel all 

open quotes/orders in the event of any 

corporate action.3 The proposal 

reflected a conclusion that the rule was 

excessively complex and had given rise 

to certain non-material discrepancies 

between the rule as written and its 

application in Nasdaq’s systems. 

Subsequently, in response to member 

demand for assistance with order 

management with respect to certain 

common types of corporate action, 

Nasdaq amended the rule again to offer 

limited, optional functionality to allow 

open orders to be adjusted, rather than 

cancelled.4 As written, the rule provides 

for the possibility of order adjustment in 

the case of cash dividends, forward 

stock splits, and combined cash 

dividends/forward stock splits. 

The proposal will expand the rule 

also to provide for adjustment in the 

case of stock dividends and combined 

cash dividends/stock dividends. The 

proposal reflects the conclusion, based 

on member feedback, that actions 

resulting in the distribution of 

additional stock should be treated 

similarly, regardless of whether they are 

denominated as forward stock splits or 

stock dividends. Nasdaq will make 

members aware of the effective date of 

the proposed change by the issuance of 

a widely disseminated Equity Trader 

Alert. 

Under the current rule, a member may 

designate that all orders with a time-inforce of good-till-cancelled 5 that are 

entered through one or more order entry 

ports specified by the member will be 

processed in the manner specified 

below.6

(1) Cash Dividend. If an issuer is 

paying a cash dividend, the price of an 

order to buy is reduced by the amount 

of the sum of all dividends payable, 

rounded up to the nearest whole cent; 

provided, however, that there will be no 

adjustment if the sum of all dividends 

is less than $0.01. For example, if the 

sum of all dividends is $0.381, the price 

of the order will be reduced by $0.39. 

An order to sell will be retained but will 

receive no price adjustment. 

(2) Forward Stock Split. If an issuer is 

implementing a forward stock split, the 

order is cancelled if its size is less than 

one round lot. If the order’s size is 

greater than one round lot, (i) the size 

of the order is multiplied by the ratio of 

post-split shares to pre-split shares, with 

the result rounded downward to the 

nearest whole share, and (ii) the price of 

the order will be multiplied by the ratio 

of pre-split shares to post-split shares, 

with the result rounded down to the 

nearest whole penny in the case of 

orders to buy and rounded up to the 

nearest whole penny in the case of 

orders to sell. 

Under the change proposed in this 

filing, stock dividends will be treated in 

the same manner as forward stock splits. 

Thus, any corporate action in which 

additional shares are issued to holders 

of outstanding shares will be treated in 

the manner described above. 

For example, if a member has entered 

a good-till-cancelled order to buy 375 

shares at $10.95 per share and the issuer 

implemented a split or dividend under 

which an additional 1.25 shares would 

be issued for each share outstanding, the 

size of the order would be adjusted to 

843 shares (375 × 2.25/1 = 843.75, 

rounded down to 843) and the price of 

the order would be adjusted to $4.86 per 

share ($10.95 per share × 1/2.25 = 

$4.8667 per share, rounded down to 

$4.86 per share). An order to sell at the 

same price and size would be adjusted 

to 843 shares with a price of $4.87 per 

share ($4.8667 per share, rounded up).7

(3) Combination of Cash Dividend and 

Forward Stock Split or Stock Dividend. 

Under the current rule, if an issuer is 

implementing a cash dividend and a 

forward stock split on the same date, the 

adjustments described above will both 

be applied, in the order described in the 

notice of the corporate actions received 

by Nasdaq.8 Under the proposed rule 

change, this provision is being 

expanded to cover stock dividends as 

well as forward stock splits. 

As is currently the case, changes to 

open orders will continue to be effected 

immediately prior to the opening of the 

System at 4:00 a.m. on the ex-date of the 

applicable corporate action. Open 

orders that are retained are re-entered by 

the System (as adjusted above) 

immediately prior to the opening of the 

System, such that they will retain time 

priority over new orders entered at or 

after 4:00 a.m.9 Under the proposed rule 

change, for corporate actions other than 

cash dividends, forward stock splits, 

and stock dividends (or any 

combination thereof), open orders are 

always cancelled, regardless of the port 

through which they were entered. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,10 in 

general, and with Section 6(b)(5) of the 

Act 11 in particular, in that the proposal 

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 

regulating, clearing, settling, processing 

information with respect to, and 

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. Specifically, Nasdaq 

believes that the change, which is 

responsive to member input, will 

facilitate transactions in securities and 

perfect the mechanism of a free and 

open market by providing members 

with additional optional functionality 

that may assist them with order 

management with respect to stock 

dividends in a manner similar to the 

current functionality with respect to 

cash dividends and forward splits. 

Because forward splits and stock 

dividends both involve the distribution 

of additional stock to current 

stockholders, providing them with 

similar treatment under the rule is 

logical and may help to prevent 

confusion on the part of members that 

expect both types of corporate events to 

receive consistent treatment. 


rljohnson on DSK3VPTVN1PROD with NOTICES
918 Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Notices 

12 15 U.S.C. 78s(b)(3)(a)(ii). 

13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. The Exchange has satisfied this 

requirement. 14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4(n)(1)(i). 

3NSCC and DTC filed Amendment Nos. 1 to 

provide additional description of the changes 

proposed in advance notices SR–NSCC–2014–811 

and SR–DTC–2014–812, respectively. 

4FICC withdrew Amendment No. 1 to advance 

notice SR–FICC–2014–810 due to an error in filing 

the amendment. FICC filed Amendment No. 2 to 

advance notice SR–FICC–2014–810 in order to 

provide additional description of the changes 

proposed in the advance notice. 

5See Release No. 34–73755 (Dec. 5, 2014), 79 FR 

73665 (Dec. 11, 2014). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq 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, as amended. 

Specifically, by offering market 

participants additional options with 

regard to management of open orders, 

the change has the potential to enhance 

Nasdaq’s competitiveness with respect 

to other trading venues, thereby 

promoting greater competition. 

Moreover, the change does not burden 

competition in that it does not restrict 

the ability of members to enter and 

update trading interest in Nasdaq. 

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 

Because the foregoing 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 for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 12 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.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: (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 rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2014–126 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–2014–126. 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 

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– 

NASDAQ–2014–126, and should be 

submitted on or before January 28, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30971 Filed 1–6–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73975; File Nos. SR–FICC– 

2014–810; SR–NSCC–2014–811; SR–DTC– 

2014–812] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; National 

Securities Clearing Corporation; The 

Depository Trust Company; Notice of 

Extension of Review Period of 

Advance Notices, as Amended, To 

Amend and Restate the Third 

Amended and Restated Shareholders 

Agreement, Dated as of December 7, 

2005 

December 31, 2014. 

On November 5, 2014, Fixed Income 

Clearing Corporation (‘‘FICC’’), National 

Securities Clearing Corporation 

(‘‘NSCC’’), and The Depository Trust 

Company (‘‘DTC,’’ together with FICC 

and NSCC, ‘‘Operating Subsidiaries’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) advance 

notices SR–FICC–2014–810, SR–NSCC– 

2014–811 and SR–DTC–2014–812 

(‘‘Advance Notices’’), pursuant to 

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

Clearing, and Settlement Supervision 

Act of 2010 (‘‘Clearing Supervision 

Act’’) 1 and Rule 19b–4(n)(1)(i) under 

the Securities Exchange Act of 1934 

(‘‘Exchange Act’’).2 On November 17, 

2014, the Operating Subsidiaries each 

filed Amendments No. 1 to the Advance 

Notices.3 On November 17, 2014, FICC 

withdrew Amendment No. 1 and filed 

Amendment No. 2 to advance notice 

SR–FICC–2014–810.4 The Advance 

Notices were published for comment in 

the Federal Register on December 11, 

2014.5 As of December 31, 2014, the 

Commission had not received any 

comment letters on the proposal 

contained in the Advance Notices. 

Section 806(e)(1)(G) of the Clearing 

Supervision Act provides that the 

Operating Subsidiaries may implement 

the changes proposed in the Advance 

Notices if they have not received an 

objection to the proposed changes 

within 60 days of the later of (i) the date 

that the Commission receives the 

Advance Notices or (ii) the date that any 


rljohnson on DSK3VPTVN1PROD with NOTICES