Commission Interpretation Regarding Automated Quotations Under Regulation NMS

Document Headings Document headings vary by document type but may contain the following: the agency or agencies that issued and signed a document the number of the CFR title and the number of each part the document amends, proposes to amend, or is directly related to the agency docket number / agency internal file number the RIN which identifies each regulatory action listed in the Unified Agenda of Federal Regulatory and Deregulatory Actions See the Document Drafting Handbook for more details. Securities and Exchange Commission 17 CFR Part 241 [Release No. 34-78102; File No. S7-03-16] AGENCY: Securities and Exchange Commission. ACTION: Final interpretation. SUMMARY: The Securities and Exchange Commission is issuing a final interpretation with respect to the definition of automated quotation under Rule 600(b)(3) of Regulation NMS. DATES: Effective June 23, 2016. FOR FURTHER INFORMATION CONTACT: Richard Holley III, Assistant Director, Michael Bradley, Special Counsel, or Michael Ogershok, Attorney-Adviser, Office of Market Supervision, at 202-551-5777, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-7010. SUPPLEMENTARY INFORMATION: I. Background Rule 611 of Regulation NMS provides intermarket protection against trade-throughs for “automated” (as opposed to “manual”) quotations of NMS stocks. Under Regulation NMS, an “automated” quotation is one that, among other things, can be executed “immediately and automatically” against an incoming immediate-or-cancel order. The Regulation NMS Adopting Release issued in 2005 makes clear that this formulation was intended to distinguish and exclude from protection quotations on manual markets that produced delays measured in seconds in responding to an incoming order, because delays of that magnitude would impair fair and efficient access to an ( printed page 40786) exchange's quotations. [ 1 ] In the Regulation NMS Adoptin…