Document ID: SEC-2018-1818-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2018-11-26T05:00Z

[Federal Register Volume 83, Number 227 (Monday, November 26, 2018)]
[Notices]
[Pages 60510-60512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25599]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84622; File No. SR-NASDAQ-2018-089]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Correct a Typographical Error in Rule 4702(b)(7)(A)

November 19, 2018.
    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 November 8, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to correct a typographical error in Rule 
4702(b)(7)(A). The text of the proposed rule change is available on the 
Exchange's website 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 purpose of this filing is to correct a typographical error in 
Rule 4702(b)(7)(A). That provision describes the ``Market Maker Peg 
Order'' order type,\3\ including by providing examples of how the order 
type operates in practice. One of these examples, which contains the 
typographical error in question, illustrates the principle that once a 
Market Maker Peg Order has posted to the Nasdaq Book, it will be 
repriced if needed as the Reference Price \4\ changes. In particular, 
the principle states that when, as a result of a change to the 
Reference Price, the difference between the displayed price of a Market 
Maker Peg Order and the Reference Price reaches the Defined Limit,\5\ 
then a Market Maker Peg Order

[[Page 60511]]

to buy (sell) will be repriced to the Designated Percentage \6\ away 
from the Reference Price. The stated example of this principle in Rule 
4702(b)(7)(A) presently states as follows:
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    \3\ Rule 4702(b)(7) defines a Market Maker Peg Order as follows:
    A ``Market Maker Peg Order'' is an Order Type designed to allow 
a Market Maker to maintain a continuous two-sided quotation at a 
displayed price that is compliant with the quotation requirements 
for Market Makers set forth in Rule 4613(a)(2). The displayed price 
of the Market Maker Peg Order is set with reference to a ``Reference 
Price'' in order to keep the displayed price of the Market Maker Peg 
Order within a bounded price range. A Market Maker Peg Order may be 
entered through RASH, FIX or QIX only. A Market Maker Peg Order must 
be entered with a limit price beyond which the Order may not be 
priced. The Reference Price for a Market Maker Peg Order to buy 
(sell) is the then-current National Best Bid (National Best Offer) 
(including Nasdaq), or if no such National Best Bid or National Best 
Offer, the most recent reported last-sale eligible trade from the 
responsible single plan processor for that day, or if none, the 
previous closing price of the security as adjusted to reflect any 
corporate actions (e.g., dividends or stock splits) in the security.
    \4\ See id. Rule 4613 states that the ``Designated Percentage'' 
shall be as follows: ``8% for securities subject to Rule 
4120(a)(11)(A), 28% for securities subject to Rule 4120(a)(11)(B), 
and 30% for securities subject to Rule 4120(a)(11)(C), except that 
between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close 
of trading, when Rule 4120(a)(11) is not in effect, the Designated 
Percentage shall be 20% for securities subject to Rule 
4120(a)(11)(A), 28% for securities subject to Rule 4120(a)(11)(B), 
and 30% for securities subject to Rule 4120(a)(11)(C). The 
Designated Percentage for rights and warrants shall be 30%.''
    \5\ The ``Defined Limit'' is defined in Rule 4613 as ``9.5% for 
securities subject to Rule 4120(a)(11)(A), 29.5% for securities 
subject to Rule 4120(a)(11)(B), and 31.5% for securities subject to 
Rule 4120(a)(11)(C), except that between 9:30 a.m. and 9:45 a.m. and 
between 3:35 p.m. and the close of trading, when Rule 4120(a)(11) is 
not in effect, the Defined Limit shall be 21.5% for securities 
subject to Rule 4120(a)(11)(A), 29.5% for securities subject to Rule 
4120(a)(11)(B), and 31.5% for securities subject to Rule 
4120(a)(11)(C).''
    \6\ Rule 4702(b)(7) states that ``[u]pon entry, the displayed 
price of a Market Maker Peg Order to buy (sell) is automatically set 
by the System at the Designated Percentage (as defined in Rule 4613) 
away from the Reference Price in order to comply with the quotation 
requirements for Market Makers set forth in Rule 4613(a)(2).''

    In the foregoing example, if the Defined Limit is 9.5% and the 
National Best Bid increased to $10.17, such that the displayed price 
of the Market Maker Peg Order would be more than 9.5% away, the 
Order will be repriced to $9.35, or 8% away from the National Best 
Bid. Note that prices will be rounded in a manner to ensure that 
they are calculated and displayed at a level that is consistent with 
the Designated Percentage and the permissible minimum increment of 
$0.01 or $0.0001, as applicable. If the limit price of the Order is 
outside the Defined Limit, the Order will be sent back to the 
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Participant.

    The error in this example is that ``$9.35'' should be ``$9.36.'' 
The Exchange proposes to correct that inadvertent error in this 
proposal. The correction is necessary to ensure that the price in the 
example ($9.3564) is rounded up to the applicable minimum increment of 
$0.01 and remains consistent with the Designated Percentage.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is 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, and, in general to protect investors and the public interest. 
The proposal would correct a typographical error that otherwise renders 
inaccurate an example of the application of Rule 4702(b)(7)(A). The 
Exchange believes that it is consistent with the interest of the 
public, investors, and the market for the Exchange to take steps to 
ensure that its Rulebook is accurate.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is 
non-substantive and it will have no impact on competition because it 
simply corrects a typographical error in the Rule text to render the 
text more accurate.

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) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and 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. 
The Exchange has satisfied this requirement.
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    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 so that 
the Exchange can immediately correct the typographical error in Rule 
4702(b)(7)(A) and avoid any potential confusion as to the operation of 
the Market Maker Peg Order. For this reason, the Commission believes 
that waiver of 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 
proposal as operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 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 [email protected]. Please include 
File Number SR-NASDAQ-2018-089 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-NASDAQ-2018-089. 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official

[[Page 60512]]

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. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASDAQ-2018-089 and should be submitted on or before December 17, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25599 Filed 11-23-18; 8:45 am]
 BILLING CODE 8011-01-P