Document ID: SEC-2013-1900-0001
Agency: sec
Document Type: Notice
Title: Joint Industry Plans: BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange, Inc., et al.
Posted Date: 2013-11-06T05:00Z

[Federal Register Volume 78, Number 215 (Wednesday, November 6, 2013)]
[Notices]
[Pages 66788-66789]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-26556]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70793; File No. S7-24-89]

Joint Industry Plan; Order Approving Amendment No. 30 to the 
Joint Self-Regulatory Organization Plan Governing the Collection, 
Consolidation and Dissemination of Quotation and Transaction 
Information for Nasdaq-Listed Securities Traded on Exchanges on an 
Unlisted Trading Privileges Basis Submitted by the BATS Exchange, Inc., 
BATS Y-Exchange, Inc., Chicago Board Options Exchange, Incorporated, 
Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., 
Financial Industry Regulatory Authority, Inc., International Securities 
Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, Nasdaq Stock 
Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, 
NYSE MKT LLC, and NYSE Arca, Inc.

October 31, 2013.

I. Introduction

    On September 9, 2013, the operating committee (``Operating 
Committee'' or ``Committee'') \1\ of the Joint Self-Regulatory 
Organization Plan Governing the Collection, Consolidation, and 
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privilege 
Basis (``Nasdaq/UTP Plan'' or ``Plan'') filed with the Securities and 
Exchange Commission (``Commission'') pursuant to Section 11A of the 
Securities Exchange Act of 1934 (``Act''),\2\ and Rule 608 
thereunder,\3\ a proposal to amend the Plan.\4\ The proposal represents 
Amendment No. 30 to the Plan (``Amendment'') and reflects changes 
unanimously adopted by the Participants.\5\ The Amendment was published 
for comment in the Federal Register on September 23, 2013.\6\ No 
comment letters were received in response to the Notice. The Amendment 
would require that odd-lot transactions be reported to the consolidated 
tape. The Plan was amended to remove odd-lots from the list of 
transactions that are not to be reported for inclusion on the 
consolidated tape. This order approves the Amendment to the Plan.
---------------------------------------------------------------------------

    \1\ The Plan Participants (collectively, ``Participants'') are 
the: BATS Exchange, Inc.; BATS Y-Exchange, Inc.; Chicago Board 
Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; EDGA 
Exchange, Inc.; EDGX Exchange, Inc.; Financial Industry Regulatory 
Authority, Inc.; International Securities Exchange LLC; NASDAQ OMX 
BX, Inc.; NASDAQ OMX PHLX LLC; Nasdaq Stock Market LLC; National 
Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT LLC; and 
NYSE Arca, Inc. Each participant executed the proposed amendment.
    \2\ 15 U.S.C. 78k-1.
    \3\ 17 CFR 242.608.
    \4\ The Plan governs the collection, processing, and 
dissemination on a consolidated basis of quotation information and 
transaction reports in Eligible Securities for each of its 
Participants. This consolidated information informs investors of the 
current quotation and recent trade prices of Nasdaq securities. It 
enables investors to ascertain from one data source the current 
prices in all the markets trading Nasdaq securities. The Plan serves 
as the required transaction reporting plan for its Participants, 
which is a prerequisite for their trading Eligible Securities. See 
Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR 
20891 (April 26, 2007).
    \5\ The proposal was originally designated as Amendment No. 31. 
See Letter from Thomas P. Knorring, Chairman, Nasdaq/UTP Plan 
Operating Committee to Elizabeth M. Murphy, Secretary, Commission, 
dated September 9, 2013. On September 17, 2013, the Participants 
filed a letter to re-designate the proposal as Amendment No. 30 and 
to correct a marking error in the Plan language. See Letter from 
Thomas P. Knorring, Chairman, Nasdaq/UTP Plan Operating Committee to 
Katherine A. England, Assistant Director, Division of Trading and 
Markets, Commission, dated September 17, 2013.
    \6\ See Securities Exchange Act Release No. 70429 (September 17, 
2013), 78 FR 58352 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    Currently, Section XIII(B) (Transaction Reports) of the Nasdaq/UTP 
Plan provides that ``Each Participant shall, during the time it is open 
for trading, be responsible promptly to collect and transmit to the 
Processor Transaction Reports in Eligible Securities executed in its 
Market by means prescribed herein.'' However, that section also 
provides a list of transactions that ``are not to be reported for 
inclusion on the consolidated tape.'' That list includes odd-lot 
transactions. According to the Participants, ``because odd-lot 
transactions account for a not insignificant percentage of trading 
volume, the Participants have determined that including odd-lot 
transactions on the consolidated tape of Nasdaq/UTP last sale prices 
would add post-trade transparency to the marketplace.'' \7\ 
Accordingly, the Amendment proposes to add odd-lot transactions to the 
consolidated tape by removing them from Section XIII(B)'s list of 
transactions that are not to be reported for inclusion on the 
consolidated tape.
---------------------------------------------------------------------------

    \7\ Id. at 58362.
---------------------------------------------------------------------------

    Due to the lack of economic significance of many individual odd-lot 
orders, the Participants did not propose to include odd-lot 
transactions in calculations of last sale prices. Therefore, odd-lot 
transactions would not be included in calculations of high and low 
prices and would not be subject to the Limit Up-Limit Down Plan \8\ 
(i.e., the National Market System Plan to Address Extraordinary Market 
Volatility). Moreover, including odd-lot transactions on the 
consolidated tape would not trigger short sale restrictions or trading 
halts. However, odd-lot transactions would be included in calculations 
of daily consolidated volume.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 67091, 77 FR 33498 
(June 6, 2012) (File No. 4-631) (the Limit Up-Limit Down Plan, as 
originally approved).

---------------------------------------------------------------------------

[[Page 66789]]

    For purposes of allocating revenue among the Participants under the 
Nasdaq/UTP Plan, the Participants would include odd-lot transactions in 
the Security Income Allocation for each Eligible Security under 
Paragraph 2 (Security Income Allocation) of Exhibit 1 to the Nasdaq/UTP 
Plan. Just as with round lot transactions, an odd-lot transaction with 
a dollar value of $5000 or more would constitute one qualified 
transaction report and an odd-lot transaction with a dollar value of 
less than $5000 would constitute a fraction of a qualified transaction 
report that equals the dollar value of the transaction report divided 
by $5000. The Participants do not anticipate that this would produce a 
significant shift in revenue allocation among the Participants. 
According to the Participants, this treatment of odd-lot transactions 
for revenue allocation purposes does not require a change to the 
language of Exhibit 1 to the Nasdaq/UTP Plan.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the Amendment to 
the Nasdaq/UTP Plan is consistent with the requirements of the Act and 
the rules and regulations thereunder,\9\ and, in particular, Section 
11A(a)(1)(C)(iii) of the Act \10\ and Rule 608 thereunder \11\ in that 
it is in the public interest and appropriate for the protection of 
investors and the maintenance of fair and orderly markets to assure the 
availability to brokers, dealers, and investors of information with 
respect to transactions in securities. As the Participants stated in 
the proposal, odd-lot transactions comprise a noteworthy percentage of 
total trading volume. Thus, including odd-lot transactions on the 
consolidated tape will enhance post-trade transparency, as well as 
price discovery, and consequently would further the goals of the Act. 
The Commission believes that information about odd-lot transactions 
would provide important information to investors and other market 
participants and therefore represents a positive development in the 
provision of market data.
---------------------------------------------------------------------------

    \9\ In approving the Amendment, the Commission has considered 
the proposed Amendment's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \11\ 17 CFR 240.608.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act,\12\ 
and the rules thereunder, that the proposed amendment to the Nasdaq/UTP 
Plan (S7-24-89), be, and hereby is approved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78k-1.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(27).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-26556 Filed 11-5-13; 8:45 am]
BILLING CODE 8011-01-P