BATS Exchange

Amendments to Process for Opening Trading are Approved

On November 10th, the SEC approved BATS Exchange’s proposed amendment of BATS Rule 21.7 (“Market Opening Procedures”) to modify the process by which the BATS Exchange’s equity options trading platform (“BATS Options”) opens trading at the beginning of the day and after trading halts. The BATS proposal would modify the Opening Process in the following manner: (1) orders in the Opening Process will be executed based on time priority instead of price-time priority; (2) certain orders that are not executed during the Opening Process will be treated as if they had been entered by a User rather than canceled; and (3) add certain clarifying language to BATS Rule 21.7 in order to make the Opening Process more clear. The changes do not amend the process by which orders are entered or the Opening Price is determined or validated. SEC Release No. 34-73571.

Financial Industry Regulatory Authority

FINRA Proposes Publication of OTC Equity Volume Executed Outside Alternative Trading Systems

On November 12th, the Financial Industry Regulatory Authority published for comment a proposal that would expand the alternative trading system (“ATS”) of the Financial Industry Regulatory Authority (“FINRA”) transparency initiative to publish the remaining equity volume executed over-the-counter, including non-ATS electronic trading systems and internalized trades. Comments should be submitted on or before January 9, 2015.FINRA Regulatory Notice 14-48.

FINRA Proposes to Tighten Business Clock Synchronization Requirements

On November 12th, FINRA published for comment a proposal that would reduce the synchronization tolerance for computer clocks. Comments should be submitted on or before January 9, 2015. FINRA Regulatory Notice 14-47.

FINRA OTC Equity Trade Reporting Change Proposed

On November 12th, FINRA published for comments a proposal that would identify over-the-counter trades in NMS stocks reported more than two seconds following trade execution as “out of sequence” and not last sale eligible for public dissemination purposes. Comments should be submitted on or before January 9, 2015. FINRA Regulatory Notice 14-46.

International Swaps and Derivatives Association

ISDA Resolution Stay Protocol

On November 12th, the International Swaps and Derivatives Association (“ISDA”) announced that the ISDA 2014 Resolution Stay Protocol is open for adherence. The Protocol will come into effect on January 1, 2015 for the 18 banks that have signed on to the Protocol. Although adherence is voluntary, a U.S. bankruptcy component of the Protocol will come into effect once relevant rules have been issued by U.S. regulators. The Protocol incorporates certain restrictions on creditor contractual rights that would apply when a U.S. financial holding company becomes subject to U.S. bankruptcy proceedings. This includes a stay on cross-default rights that would restrict the counterparty of a non-bankrupt affiliate of an insolvent U.S. financial holding company from immediately terminating its derivatives contracts with that affiliate. A non-defaulting party’s right to terminate derivatives trades with a direct counterparty that is under insolvency proceedings is unaffected by the Protocol. ISDA Press Release.

NASDAQ Stock Market

Additions to NASDAQ Workstation Proposed

On November 12th, the SEC provided notice of NASDAQ Stock Market’s filing of a proposed amendment to 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. 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. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of November 17. SEC Release No. 34-73574.

NYSE

New Fees Proposed for Qualified Contingent Cross Transactions

On November 7th, the SEC provided notice of NYSE Arca’s filing of a proposed rule change to modify the NYSE Arca Options fees for qualified contingent cross transactions. The Exchange proposes to implement the fee changes on November 1, 2014. Currently, the Exchange charges $0.10 per contract side for QCC transactions, regardless of whether a customer is part of the transaction. The Exchange proposes to adopt a differentiated fee schedule and to instead charge $0.00 per contract side for Customers and $0.20 per contract side for non-Customers. Comments should be submitted on or before December 5, 2014. SEC Release No. 34-73557.

Collar Protection Mechanism

On November 6th, the SEC provided notice of NYSE Arca’s and NYSE MKT’s separately filed proposals to amend their respective rules to clarify and conform with the functionality of the trade collar protection mechanism in use on each exchange. The amendments specify (a) how marketable Limit Orders behave when received in a wide market, (b) how subsequently-arriving Market Orders effect collared orders, and (c) the values associated with a Trading Collar. Comments should be submitted on or before December 4, 2014.

The Options Clearing Corporation

Notice of Emergency Resizing of Clearing Fund

On November 12th, the SEC provided notice of The Options Clearing Corporation’s (the “OCC”) filing of 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. OCC believes that the change was appropriate and is now filing an emergency notice in accordance with the requirements of Sections 806(e)(2)(B) and (C) of the Payment, Clearing and Settlement Supervision Act. On October 15, 2014, OCC increased the size of the Clearing Fund for the remainder of October 2014 from $3.8 billion to approximately $5.6 billion. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of November 17. SEC Release No. 34-73579.