80 FR 12221 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Specifying in Exchange Rules the Exchange's Use of Certain Data Feeds for Order Handling and Execution, Order Routing, and Regulatory Compliance

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 44 (March 6, 2015)

Page Range		12221-12223
FR Document		2015-05163

Federal Register, Volume 80 Issue 44 (Friday, March 6, 2015)

[Federal Register Volume 80, Number 44 (Friday, March 6, 2015)]
[Notices]
[Pages 12221-12223]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-05163]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74409; File No. SR-NYSEARCA-2015-11]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Specifying in
Exchange Rules the Exchange's Use of Certain Data Feeds for Order
Handling and Execution, Order Routing, and Regulatory Compliance

March 2, 2015.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on February 24, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 specify in Exchange rules the Exchange's
use of certain data feeds for order handling and execution, order
routing, and regulatory compliance. The text of the proposed rule
change is available on the Exchange's Web site at www.nyse.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 self-regulatory organization
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
On June 5, 2014, in a speech entitled ``Enhancing Our Market Equity
Structure,'' Mary Jo White, Chair of the Securities and Exchange
Commission (``SEC'' or the ``Commission'') requested the equity
exchanges to file with the Commission the data feeds used for purposes
of (1) order handling and execution (e.g., with pegged or midpoint
orders); (2) order routing, and (3) regulatory compliance, if
applicable.\4\ Subsequent to the Chair's speech, the Division of
Trading and Markets stated that it ``believes there is a need for
clarity regarding whether (1) the SIP data feeds, (2) proprietary data
feeds, or (3) a combination thereof,'' are used for these purposes and
requested that proposed rule changes be filed that disclose such
information.\5\ The stated goal of disclosing this information was to
provide broker-dealers and investors with enhanced transparency to
better assess the quality of an exchange's execution and routing
services.
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\4\ See Mary Jo White, Chair, Securities and Exchange
Commission, Speech at the Sandler, O'Neill & Partners, L.P. Global
Exchange and Brokerage Conference (June 5, 2014) (available at
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
\5\ See Letter from James Burns, Deputy Director, Division of
Trading and Markets, Securities and Exchange Commission, to Jeffrey
C. Sprecher, Chief Executive Officer, Intercontinental Exchange,
Inc., dated June 20, 2014.
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On July 18, 2014, in response to the above request, the Exchange
filed a proposed rule change that clarified the Exchange's use of
certain data feeds for order handling and execution, order routing, and
regulatory compliance.\6\ As noted in that filing, the data feeds
available for the purposes of order handling and execution, order
routing, and regulatory compliance at the Exchange include the
exclusive securities information processor (``SIP'') data feeds \7\ or
proprietary data feeds from individual market centers (``Direct
Feed'').
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\6\ See Securities Exchange Act Release No. 72708 (July 29,
2014), 79 FR 45572 (Aug. 5, 2014) (SR-NYSEArca-2014-82) (``July 2014
Data Feed Filing'').
\7\ The SIP feeds are disseminated pursuant to effective joint-
industry plans as required by Rule 603(b) of Regulation NMS. 17 CFR
242.603(b). The three joint-industry plans are: (1) The CTA Plan,
which is operated by the Consolidated Tape Association and
disseminates transaction information for securities with the primary
listing market on exchanges other than NASDAQ Stock Market LLC
(``Nasdaq''): (2) The CQ Plan, which disseminates consolidated
quotation information for securities with their primary listing on
exchanges other than Nasdaq; and (3) the Nasdaq UTP Plan, which
disseminates consolidated transaction and quotation information for
securities with their primary listing on Nasdaq.
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SEC staff has requested that the Exchange file a supplemental
proposed rule change to specify in Exchange rules which data feeds the
Exchange uses for the above-described purposes. Accordingly, the
Exchange is filing this proposed rule change.
At the time of the July 2014 Data Feed Filing, the Exchange used
only the SIP data feeds for BATS Y-Exchange, Inc., Chicago Stock
Exchange, Inc., and NYSE MKT LLC and uses a combination of Direct Feeds
and the SIP data feeds for the other exchanges trading NMS stocks,
i.e., BATS Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc.
NASDAQ OMX BX LLC, NASDAQ OMX PHLX LLC, NASDAQ Stock Market LLC and New
York Stock Exchange LLC.\8\ These data feeds are used by the Exchange
to:
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\8\ The Exchange notes that because the FINRA Alternate Display
Facility (``ADF'') does not currently display any quotations, the
Exchange does not need any data feeds to provide it with ADF quotes.

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[[Page 12222]]

Determine protected quotations on markets other than the
Exchange for purposes of compliance with Rule 611 and Rule 610(d),
including identifying where to route ISOs, to calculate the protected
best bid or offer (``PBBO'') or national best bid or offer (``NBBO'')
for purposes of order types that are priced based on the PBBO or NBBO;
\9\
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\9\ The NBBO is defined as the best bid and best offer of an NMS
security. 17 CFR 242.600(b)(3). The Exchange notes that the NBBO may
differ from the PBBO because the NBBO includes Manual Quotations,
which are defined as any quotation other than an automated
quotation. 17 CFR 242.600(b)(37). By contrast, a protected quotation
is an automated quotation that is the best bid or offer of a
national securities exchange. 17 CFR 242.60)(b)(57)(iii).
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Route interest pursuant to NYSE Arca Equities Rule
7.37(d)(2); \10\ and
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\10\ NYSE Arca Equities Rule 7.37(d)(2) specifies that if an
order has not been executed on the Exchange and is not designated as
a PNP Order, IOC, MPL Order, or Intermarket Sweep Order, it will be
routed for execution.
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Determine the national best bid (``NBB'') for purposes of
complying with Rule 201 of Regulation SHO and NYSE Arca Equities Rule
7.16(f).\11\
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\11\ NYSE Arca Equities Rule 7.16(f) requires that Exchange
systems not execute or display a short sale order with respect to a
covered security at a price that is less than or equal to the
current NBB if the price of that security decreases by 10% or more,
as determined by the Exchange, from the security's closing price on
the Exchange at the end of regular trading hours on the prior day.
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The Exchange notes that when it routes interest to a protected
quotation, the Exchange adjusts the PBBO. In addition, when calculating
the PBBO or NBBO, the Exchange aggregates odd-lot interest available on
Direct Feeds at a single price level into round lot quotations.
The Exchange proposes to add new Commentary .01 to NYSE Arca
Equities Rule 7.37, which would state the following:
(a) The Exchange uses the following data feeds for the handing,
execution, and routing of orders, as well as for regulatory compliance:

------------------------------------------------------------------------
Market center Primary source Secondary source
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BATS Exchange, Inc.............. Direct Feed....... SIP Data Feed.
BATS Y-Exchange, Inc............ Direct Feed....... SIP Data Feed.
Chicago Stock Exchange, Inc..... SIP Data Feed..... n/a.
EDGA Exchange, Inc.............. Direct Feed....... SIP Data Feed.
EDGX Exchange, Inc.............. Direct Feed....... SIP Data Feed.
NASDAQ OMX BX LLC............... Direct Feed....... SIP Data Feed.
NASDAQ OMX PHLX LLC............. Direct Feed....... SIP Data Feed.
NASDAQ Stock Market LLC......... Direct Feed....... SIP Data Feed.
New York Stock Exchange LLC..... Direct Feed....... SIP Data Feed.
NYSE MKT LLC.................... Direct Feed....... SIP Data Feed.
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As noted above, at the time of the July 2014 Data Feed Filing, the
Exchange was using the SIP Data Feed for BATS Y-Exchange, Inc. and NYSE
MKT LLC. The Exchange has since changed its data sources for those
markets, and as reflected above, now uses the Direct Feed as the
primary source for those markets.
The Exchange further proposes to specify in new Commentary .02 to
Rule 7.37 that the Exchange receives data feeds directly from broker
dealers for purposes of routing interest pursuant to NYSE Arca Equities
Rule 7.37(d)(2).
2. Statutory Basis
The proposed rule change is consistent with section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\12\ in general, and
furthers the objectives of section 6(b)(5),\13\ in particular, because
it 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 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. The Exchange
believes that the proposed rule change removes impediments to and
perfects the mechanism of a free and open market because it provides
enhanced transparency to better assess the quality of an exchange's
execution and routing services.
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\12\ 15 U.S.C. 78f(b).
\13\ 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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed change is not
designed to address any competitive issue but rather would provide the
public and investors with information about which data feeds the
Exchange uses for execution and routing decisions.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

Because the 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, the proposed rule change has become effective
pursuant to section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6)
thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \16\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 proposal may become operative immediately upon filing. The Exchange
stated that waiver of the operative delay will permit the Exchange to
immediately provide the enhanced transparency in Exchange rules. The
Commission believes the

[[Page 12223]]

waiver of the 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 operative upon
filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 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-NYSEARCA-2015-11 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-NYSEARCA-2015-11. 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 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; 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-NYSEARCA-2015-11 and should
be submitted on or before March 27, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-05163 Filed 3-5-15; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 44 / Friday, March 6, 2015 / Notices 12223

waiver of the operative delay is provisions of 5 U.S.C. 552, will be their securities under the Securities Act
consistent with the protection of available for Web site viewing and of 1933 (15 U.S.C. 77a et seq.). Section
investors and the public interest. printing in the Commission’s Public 5 of the Securities Act (15 U.S.C. 77e)
Therefore, the Commission hereby Reference Room, 100 F Street NE., requires the filing of a registration
waives the operative delay and Washington, DC 20549, on official statement prior to the offer of securities
designates the proposal operative upon business days between the hours of to the public and that the registration
filing.18 10:00 a.m. and 3:00 p.m. Copies of the statement be effective before any
At any time within 60 days of the filing also will be available for securities are sold, and Section 8 of the
filing of the proposed rule change, the inspection and copying at the principal Investment Company Act (15 U.S.C.
Commission summarily may office of the Exchange. All comments 80a–8) provides for the registration of
temporarily suspend such rule change if received will be posted without change; investment companies. Pursuant to
it appears to the Commission that such the Commission does not edit personal Form N–4, separate accounts organized
action is necessary or appropriate in the identifying information from as unit investment trusts that offer
public interest, for the protection of submissions. You should submit only variable annuity contracts provide
investors, or otherwise in furtherance of information that you wish to make investors with a prospectus and a
the purposes of the Act. If the available publicly. All submissions statement of additional information
Commission takes such action, the should refer to File Number SR– covering essential information about a
Commission shall institute proceedings NYSEARCA–2015–11 and should be separate account. Section 5(b) of the
to determine whether the proposed rule submitted on or before March 27, 2015. Securities Act requires that investors be
should be approved or disapproved. For the Commission, by the Division of provided with a prospectus containing
IV. Solicitation of Comments Trading and Markets, pursuant to delegated the information required in a
authority.19 registration statement prior to or at the
Interested persons are invited to Brent J. Fields, time of sale or delivery of securities.
submit written data, views and The purpose of Form N–4 is to meet
Secretary.
arguments concerning the foregoing, the filing and disclosure requirements of
[FR Doc. 2015–05163 Filed 3–5–15; 8:45 am]
including whether the proposed rule the Securities Act and the Investment
change is consistent with the Act. BILLING CODE 8011–01–P
Company Act and to enable filers to
Comments may be submitted by any of provide investors with information
the following methods: necessary to evaluate an investment in
SECURITIES AND EXCHANGE
Electronic Comments COMMISSION a security. The information required to
be filed with the Commission permits
• Use the Commission’s Internet verification of compliance with
Proposed Collection; Comment
comment form (http://www.sec.gov/ securities law requirements and assures
Request
rules/sro.shtml); or the public availability and
• Send an email to rule-comments@ Upon Written Request, Copies Available dissemination of the information.
sec.gov. Please include File Number SR– From: Securities and Exchange The estimated annual number of
NYSEARCA–2015–11 on the subject Commission, Office of FOIA Services, filings on Form N–4 is 210 initial
line. 100 F Street NE., Washington, DC registration statements and 1,443 post-
Paper Comments 20549–2736. effective amendments. The estimated
Extension: average number of portfolios per filing
• Send paper comments in triplicate
Form N–4; SEC File No. 270–282, OMB is one, both for initial registration
to Secretary, Securities and Exchange Control No. 3235–0318. statements and post-effective
Commission, 100 F Street NE.,
Notice is hereby given that, pursuant amendments on Form N–4.
Washington, DC 20549–1090.
to the Paperwork Reduction Act of 1995 Accordingly, the estimated number of
All submissions should refer to File portfolios referenced in initial Form N–
(44 U.S.C. 3501 et seq.), the Securities
Number SR–NYSEARCA–2015–11. This 4 filings annually is 210 and the
and Exchange Commission (the
file number should be included on the estimated number of portfolios
‘‘Commission’’) is soliciting comments
subject line if email is used. To help the referenced in post-effective amendment
on the collection of information
Commission process and review your filings on Form N–4 annually is 1,443.
summarized below. The Commission
comments more efficiently, please use The estimate of the annual hour burden
plans to submit this existing collection
only one method. The Commission will for Form N–4 is approximately 278.5
of information to the Office of
post all comments on the Commission’s hours per initial registration statement
Management and Budget for extension
Internet Web site (http://www.sec.gov/ and 197.25 hours per post-effective
and approval.
rules/sro.shtml). Copies of the The collection of information is amendment, for a total of 343,116.75
submission, all subsequent entitled: ‘‘Form N–4 (17 CFR 239.17b) hours ((210 initial registration
amendments, all written statements under the Securities Act of 1933 and (17 statements x 278.5 hours) + (1,443 post-
with respect to the proposed rule CFR 274.11c) under the Investment effective amendments × 197.25 hours)).
change that are filed with the Company Act of 1940, registration The current estimated annual cost
Commission, and all written statement of separate accounts burden for preparing an initial Form N–
communications relating to the organized as unit investment trust.’’ 4 filing is $23,013 per portfolio and the
proposed rule change between the Form N–4 is the form used by insurance current estimated annual cost burden
Commission and any person, other than
mstockstill on DSK4VPTVN1PROD with NOTICES

company separate accounts organized as for preparing a post-effective
those that may be withheld from the unit investment trusts that offer variable amendment filing on Form N–4 is
public in accordance with the annuity contracts to register as $21,813 per portfolio. The Commission
investment companies under the estimates that, on an annual basis, 210
18 For purposes only of waiving the 30-day
Investment Company Act of 1940 (15 portfolios will be referenced in initial
operative delay, the Commission has also
considered the proposed rule’s impact on U.S.C. 80a–1 et seq.) and/or to register Form N–4 filings and 1,443 portfolios
efficiency, competition, and capital formation. See will be referenced in post-effective
15 U.S.C. 78c(f). 19 17 CFR 200.30–3(a)(12). amendment filings on Form N–4. Thus,

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Document Created: 2018-02-21 09:33:25
Document Modified: 2018-02-21 09:33:25

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 12221