80 FR 16716 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13 Relating to Pegging Interest
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 60 (March 30, 2015)
Federal Register Volume 80, Issue 60 (March 30, 2015)
| Page Range | 16716-16719 | |
| FR Document | 2015-07134 |
[Federal Register Volume 80, Number 60 (Monday, March 30, 2015)] [Notices] [Pages 16716-16719] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-07134] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74570; File No. SR-NYSE-2015-12] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13 Relating to Pegging Interest March 24, 2015. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that on March 17, 2015, New York Stock Exchange LLC (``NYSE'' 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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 13 (Orders and Modifiers) relating to pegging interest. 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 13 relating to pegging interest to provide that if the protected best bid or offer (``PBBO'') is not within the range of the pegging interest, the pegging interest would peg to the ``next best-priced available displayable interest,'' rather than the ``next best-priced available interest.'' This amendment would therefore exclude non-displayed interest from consideration as part of the ``next best-priced available interest'' under the rule. Background Under current Rule 13, pegging interest pegs to prices based on (i) a PBBO, which may be available on the Exchange or an away market, or (ii) [[Page 16717]] interest that establishes a price on the Exchange.\4\ In addition, pegging interest will peg only within a price range specified by the floor broker submitting the order. Thus, if the PBBO is not within the specified price range of the pegging interest, the pegging interest will instead peg to the next available best-priced interest that is within the specified price range.\5\ For example, if pegging interest to buy 100 shares has a specified price range up to $10.00, but the best protected bid (``PBB'') of 100 shares is $10.01, then such pegging interest could not peg to the $10.01 PBB because it is not within the specified price range of the pegging interest. The pegging interest would instead peg to the next available best-priced interest within the specified price range of up to $10.00.\6\ --------------------------------------------------------------------------- \4\ See paragraph (a)(3) to Rule 13 governing pegging interest. \5\ See paragraph (a)(4) to Rule 13 governing pegging interest. \6\ See paragraph (a)(4)(A) to Rule 13 governing pegging interest. Similarly, if pegging interest would peg to a price that would lock or cross the Exchange best offer or bid, the pegging interest would instead peg to the next available best-priced interest that would not lock or cross the Exchange best bid or offer. See paragraph (c)(1) to Rule 13 governing pegging interest. --------------------------------------------------------------------------- The ``next available best-priced interest'' concept in the current rule was originally expressed in a different fashion (when pegging was based on the Exchange's BBO, rather than the PBBO), but the basic functionality has always been the same. Specifically, when the pegging interest was introduced in 2006, if the Exchange BBO was higher (lower) than the price limit on the pegging interest to buy (sell), the pegging interest would peg to the highest (lowest) price at which there was other interest within the pegging price range.\7\ In 2008, the Exchange introduced Non-Displayed Reserve Orders, without changing the underlying functionality of pegging interest to exclude the prices of such orders from the evaluation of what constitutes the highest (lowest) price at which there is other interest available within the range of the pegging interest.\8\ In 2011, the Exchange amended the rule governing pegging interest to make a non-substantive change to the rule text to use the term ``next available best-priced non-pegging interest'' to describe the highest (lowest) priced interest in the Exchange Book or a protected bid or offer on an away market to which pegging interest to buy (sell) could peg.\9\ Accordingly, the next available best-priced interest for pegging interest to buy (sell) is the next highest (lowest)-priced buy (sell) interest within Exchange systems or an away market protected quote that is available for an execution at any given time. That interest could be same-side non- marketable displayable interest or same-side non-marketable non- displayable interest. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 54577 (Oct. 5, 2006), 71 FR 60208, 60210-11 (Oct. 12, 2006) (SR-NYSE-2006-36) (``Pegging Approval Order'') (order approving, among other things, introduction of pegging functionality for Floor brokers, including ``if the Exchange best bid is higher than the ceiling price of a pegging buy-side e-Quote or d-Quote, the e-Quote or d-Quote would remain at its quote price or the highest price at which there is other interest within its pegging price range, whichever is higher (consistent with the limit price of the order underlying the e-Quote or d-Quote). Similarly, if the Exchange best offer is lower than the floor price of a pegging sell-side e-Quote or d-Quote, the e-Quote or d-Quote would remain at its quote price or the lowest price at which there is other interest within its pegging price range, whichever is lower (consistent with the limit price of the order underlying the e-Quote or d-Quote).'' (emphasis added)). \8\ See Securities Exchange Act Release No. 58845 (Oct. 24, 2008), 73 FR 64379 (Oct. 29, 2008) (SR-NYSE-2008-46) (introducing Non-Display Reserve Orders). \9\ See Securities Exchange Act Release No. 66031 (Dec. 22, 2011), 76 FR 82024 (Dec. 29, 2011) (SR-NYSE-2011-62) (``Because the next available best-priced non-pegging interest may be on an away market, the Exchange further proposes to amend paragraph (vii) to Supplementary Material .26 to specify that the non-pegging interest against which pegging interest pegs may either be available on the Exchange or may be a protected bid or offer on an away market.'') (``2011 Pegging Filing''); see also Securities Exchange Act Release No. 68302 (Nov. 27, 2012), 77 FR 71658, 71662 (Dec. 3, 2012) (SR- NYSE-2012-65) (amending Exchange rule governing pegging to, among other things, consolidate rule text from separate parts of the then- existing rule in a streamlined format, including use of the term ``next available best-priced interest'') (``2012 Pegging Filing''). --------------------------------------------------------------------------- Taking the above example, assume that the next price points on the Exchange's book priced below the $10.01 PBB are a Non-Display Reserve Order to buy 100 for $9.99 and a Limit Order to buy 100 for $9.98. Because the Non-Display Reserve Order is the next available best-priced interest within the specified price range, the pegging interest would peg to the $9.99 price of the Non-Display Reserve Order. Proposed Rule Change The Exchange proposes to revise its rule to limit the type of interest to which pegging interest would peg if the PBBO is not within the specified price range of the pegging interest. As proposed, if the PBBO is not within the specified price range, the pegging interest would only peg to the next available best-priced displayable interest. The term ``displayable'' is defined in Rule 72(a)(i) as that portion of interest that could be published as, or as part of, the Exchange BBO and includes non-marketable odd-lot and round-lot orders. Using the above example, under the proposed change, the pegging interest to buy would instead peg to the Limit Order to buy for $9.98, and not the higher-priced Non-Display Reserve Order to buy for $9.99. The Exchange also proposes to make a conforming change to paragraph (c)(1) of Rule 13 to provide that if pegging interest would peg to a price that is locking or crossing the Exchange best bid or offer, the pegging interest would instead peg to the next available best-priced displayable interest that would not lock or cross the Exchange best bid or offer. Currently, under any circumstance when pegging interest cannot peg to the PBBO, whether because of a price restriction or if the PBBO does not meet a minimum size designation, pegging interest pegs instead to the next available best-priced interest. For example, pursuant to paragraph (c)(5) of Rule 13 governing pegging interest, the Exchange offers an optional feature whereby pegging interest may be designated with a minimum size of same-side volume to which such pegging interest would peg. If the PBBO does not meet the optional minimum size designation, the pegging interest pegs to the next available best- priced interest, without regard to size.\10\ Accordingly, the Exchange also proposes to make a related change to current paragraph (c)(5) (which is being renumbered as paragraph (b)(4)) to --------------------------------------------------------------------------- \10\ When the Exchange adopted this feature in 2006, the Exchange only considered the Exchange BBO for purposes of determining whether the size condition was met, and specifically excluded pegging interest that was pegging to the Exchange BBO. See Pegging Approval Order, supra, n. 7 at 60211. The Exchange now evaluates the minimum size requirement based on the PBBO instead of the Exchange BBO. See 2012 Pegging Filing, supra, n. 9 at 71663. ---------------------------------------------------------------------------specify that, if the PBBO does not meet a minimum size requirement specified by the pegging interest, the pegging interest pegs to the next available best-priced interest, without regard to size, and modify current functionality so that only displayable interest may be pegged [sic] in such circumstances.\11\ --------------------------------------------------------------------------- \11\ The Exchange also proposes to delete the clause ``which may not be the PBB or PBO'' in current paragraph (c)(5), which is rule text that related to when primary pegging interest had an optional offset feature, in which case the minimum quantity would not have been evaluated against the PBBO because primary pegging interest with an offset would not have pegged to the PBBO. The Exchange did not implement the offset functionality and previously filed a rule change to delete the rule text relating to the optional offset. See Securities Exchange Act Release No. 71897 (April 8, 2014), 79 FR 20953 (April 14, 2014) (SR-NYSE-2014-16) (amending rules governing pegging interest to conform to functionality that is available at the Exchange). --------------------------------------------------------------------------- [[Page 16718]] The Exchange also proposes non-substantive amendments to delete references to ``reserved'' paragraphs of the rule and renumber the rule accordingly. Because of the technology changes associated with this proposed rule change, the Exchange will announce by Trader Update when this change will be implemented, which will be within 30 days of the effective date of this filing. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of 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. Specifically, the proposed change is intended to respond to the concern raised by the Commission \14\ that the current rule permitting pegging to prices of non-displayable same- side non-marketable interest could potentially allow the user of the pegging interest to ascertain the presence of hidden liquidity at those price levels. Eliminating that functionality to respond to the Commission concern (along with conforming changes in the relevant rule) is, therefore, consistent with the Act. Similarly, the Exchange believes that specifying in its rules how the Exchange treats pegging interest that cannot peg to the PBBO, whether because of a price or size restriction, would remove impediments to and perfect the mechanism of a free and open market because it would provide transparency regarding the Exchange's pegging functionality. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). \14\ See Securities Exchange Act Release No. 74298 (Feb. 18, 2015), 80 FR 9770, 9772-73 (Feb. 24, 2015) (SR-NYSEMKT-2014-95) (Order instituting proceedings to determine whether to approve or disapprove a proposed rule change to NYSE MKT, LLC Rule 13-- Equities, which is based on NYSE Rule 13). --------------------------------------------------------------------------- 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 intended to address any competitive issues but rather to specify and amend the functionality associated with pegging interest to respond to concerns raised regarding current functionality. 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 The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6)(iii) thereunder.\17\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A)(iii). \16\ 17 CFR 240.19b-4(f)(6). \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's 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. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission may 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 asserts that such a waiver is consistent with the protection of investors and the public interest because it would permit the Exchange to implement the proposed change as soon as the technology supporting the change is available, because it would respond to the Commission concerns that the current rule could potentially allow the user of pegging interest to ascertain the presence of hidden liquidity, and because it would provide transparency regarding the pegging functionality. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.\20\ --------------------------------------------------------------------------- \18\ 17 CFR 240.19b-4(f)(6). \19\ 17 CFR 240.19b-4(f)(6)(iii). \20\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of such 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.\21\ --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(C). --------------------------------------------------------------------------- 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-NYSE-2015-12 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2015-12. 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 [[Page 16719]] 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 will also be available for inspection and copying at the NYSE's principal office and on its Internet Web site at www.nyse.com. 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-NYSE-2015-12 and should be submitted on or before April 20, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(59). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-07134 Filed 3-27-15; 8:45 am] BILLING CODE 8011-01-P
![16716 Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices
FINRA does not believe that the and Exchange Commission, 100 F Street (‘‘Act’’) 2 and Rule 19b–4 thereunder,3
proposed rule change would impact the NE., Washington, DC 20549–1090. notice is hereby given that on March 17,
competition among member firms, those All submissions should refer to File 2015, New York Stock Exchange LLC
who seek qualifications, or to the Number SR–FINRA–2015–006. This file (‘‘NYSE’’ or ‘‘Exchange’’) filed with the
provision of member services. Based on number should be included on the Securities and Exchange Commission
the economic impact assessment, the subject line if email is used. To help the (‘‘Commission’’) the proposed rule
proposed increases in qualification Commission process and review your change as described in Items I and II
examination fees are limited. Moreover, comments more efficiently, please use below, which Items have been prepared
they do not impose significantly only one method. The Commission will by the self-regulatory organization. The
different impacts on member firms with post all comments on the Commission’s Commission is publishing this notice to
different sizes or business models. Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule
Furthermore, FINRA does not believe rules/sro.shtml). Copies of the change from interested persons.
that the proposed rule change will submission, all subsequent I. Self-Regulatory Organization’s
create any competitive advantage for amendments, all written statements Statement of the Terms of Substance of
any individuals as all candidates who with respect to the proposed rule the Proposed Rule Change
register for a particular qualification change that are filed with the
examination will be charged the same The Exchange proposes to amend
Commission, and all written Rule 13 (Orders and Modifiers) relating
amount. communications relating to the to pegging interest. The text of the
C. Self-Regulatory Organization’s proposed rule change between the proposed rule change is available on the
Statement on Comments on the Commission and any person, other than Exchange’s Web site at www.nyse.com,
Proposed Rule Change Received From those that may be withheld from the at the principal office of the Exchange,
Members, Participants or Others public in accordance with the and at the Commission’s Public
provisions of 5 U.S.C. 552, will be Reference Room.
Written comments were neither available for Web site viewing and
solicited nor received. printing in the Commission’s Public II. Self-Regulatory Organization’s
III. Date of Effectiveness of the Reference Room, 100 F Street NE., Statement of the Purpose of, and
Proposed Rule Change and Timing for Washington, DC 20549, on official Statutory Basis for, the Proposed Rule
Commission Action business days between the hours of Change
10:00 a.m. and 3:00 p.m. Copies of such In its filing with the Commission, the
The foregoing rule change has become
filing also will be available for self-regulatory organization included
effective pursuant to Section 19(b)(3)(A)
inspection and copying at the principal statements concerning the purpose of,
of the Act 13 and paragraph (f)(2) of Rule
office of FINRA. All comments received and basis for, the proposed rule change
19b–4 thereunder. 14 At any time within
will be posted without change; the and discussed any comments it received
60 days of the filing of the proposed rule
Commission does not edit personal on the proposed rule change. The text
change, the Commission summarily may
identifying information from of those statements may be examined at
temporarily suspend such rule change if
submissions. You should submit only the places specified in Item IV below.
it appears to the Commission that such
information that you wish to make The Exchange has prepared summaries,
action is necessary or appropriate in the
available publicly. All submissions set forth in sections A, B, and C below,
public interest, for the protection of
should refer to File Number SR–FINRA– of the most significant parts of such
investors, or otherwise in furtherance of
2015–006 and should be submitted on statements.
the purposes of the Act. If the
or before April 20, 2015.
Commission takes such action, the A. Self-Regulatory Organization’s
Commission shall institute proceedings For the Commission, by the Division of Statement of the Purpose of, and the
to determine whether the proposed rule Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
authority. 15
should be approved or disapproved. Change
Brent J. Fields,
IV. Solicitation of Comments Secretary. 1. Purpose
Interested persons are invited to [FR Doc. 2015–07133 Filed 3–27–15; 8:45 am] The Exchange proposes to amend
submit written data, views and BILLING CODE 8011–01–P Rule 13 relating to pegging interest to
arguments concerning the foregoing, provide that if the protected best bid or
including whether the proposed rule offer (‘‘PBBO’’) is not within the range
change is consistent with the Act. SECURITIES AND EXCHANGE of the pegging interest, the pegging
Comments may be submitted by any of COMMISSION interest would peg to the ‘‘next best-
the following methods: priced available displayable interest,’’
[Release No. 34–74570; File No. SR–NYSE– rather than the ‘‘next best-priced
Electronic Comments available interest.’’ This amendment
2015–12]
• Use the Commission’s Internet would therefore exclude non-displayed
comment form (http://www.sec.gov/ Self-Regulatory Organizations; New interest from consideration as part of the
rules/sro.shtml); or York Stock Exchange LLC; Notice of ‘‘next best-priced available interest’’
• Send an email to rule-comments@ Filing and Immediate Effectiveness of under the rule.
sec.gov. Please include File Number SR– Proposed Rule Change Amending Rule
Background
mstockstill on DSK4VPTVN1PROD with NOTICES
FINRA–2015–006 on the subject line. 13 Relating to Pegging Interest
Under current Rule 13, pegging
Paper Comments March 24, 2015. interest pegs to prices based on (i) a
• Send paper comments in triplicate Pursuant to Section 19(b)(1) 1 of the PBBO, which may be available on the
to Brent J. Fields, Secretary, Securities Securities Exchange Act of 1934 Exchange or an away market, or (ii)
13 15 U.S.C. 78s(b)(3)(A). 15 17 CFR 200.30–3(a)(12). 2 15 U.S.C. 78a.
14 17 CFR 240.19b–4(f)(2). 1 15 U.S.C. 78s(b)(1). 3 17 CFR 240.19b–4.
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![Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices 16717
interest that establishes a price on the within the range of the pegging Using the above example, under the
Exchange.4 In addition, pegging interest interest.8 In 2011, the Exchange proposed change, the pegging interest to
will peg only within a price range amended the rule governing pegging buy would instead peg to the Limit
specified by the floor broker submitting interest to make a non-substantive Order to buy for $9.98, and not the
the order. Thus, if the PBBO is not change to the rule text to use the term higher-priced Non-Display Reserve
within the specified price range of the ‘‘next available best-priced non-pegging Order to buy for $9.99.
pegging interest, the pegging interest interest’’ to describe the highest (lowest) The Exchange also proposes to make
will instead peg to the next available priced interest in the Exchange Book or a conforming change to paragraph (c)(1)
best-priced interest that is within the a protected bid or offer on an away of Rule 13 to provide that if pegging
specified price range.5 For example, if market to which pegging interest to buy interest would peg to a price that is
pegging interest to buy 100 shares has (sell) could peg.9 Accordingly, the next locking or crossing the Exchange best
a specified price range up to $10.00, but available best-priced interest for pegging bid or offer, the pegging interest would
the best protected bid (‘‘PBB’’) of 100 interest to buy (sell) is the next highest instead peg to the next available best-
shares is $10.01, then such pegging (lowest)-priced buy (sell) interest within priced displayable interest that would
interest could not peg to the $10.01 PBB Exchange systems or an away market not lock or cross the Exchange best bid
because it is not within the specified protected quote that is available for an or offer.
price range of the pegging interest. The execution at any given time. That Currently, under any circumstance
pegging interest would instead peg to interest could be same-side non- when pegging interest cannot peg to the
the next available best-priced interest marketable displayable interest or same- PBBO, whether because of a price
within the specified price range of up to side non-marketable non-displayable restriction or if the PBBO does not meet
$10.00.6 interest. a minimum size designation, pegging
The ‘‘next available best-priced Taking the above example, assume interest pegs instead to the next
interest’’ concept in the current rule was that the next price points on the available best-priced interest. For
originally expressed in a different Exchange’s book priced below the example, pursuant to paragraph (c)(5) of
fashion (when pegging was based on the Rule 13 governing pegging interest, the
$10.01 PBB are a Non-Display Reserve
Exchange’s BBO, rather than the PBBO), Exchange offers an optional feature
Order to buy 100 for $9.99 and a Limit
but the basic functionality has always whereby pegging interest may be
Order to buy 100 for $9.98. Because the
been the same. Specifically, when the designated with a minimum size of
Non-Display Reserve Order is the next
pegging interest was introduced in 2006, same-side volume to which such
available best-priced interest within the
if the Exchange BBO was higher (lower) pegging interest would peg. If the PBBO
specified price range, the pegging
than the price limit on the pegging does not meet the optional minimum
interest would peg to the $9.99 price of
interest to buy (sell), the pegging size designation, the pegging interest
the Non-Display Reserve Order.
interest would peg to the highest pegs to the next available best-priced
(lowest) price at which there was other Proposed Rule Change interest, without regard to size.10
interest within the pegging price range.7 Accordingly, the Exchange also
In 2008, the Exchange introduced Non- The Exchange proposes to revise its
rule to limit the type of interest to proposes to make a related change to
Displayed Reserve Orders, without current paragraph (c)(5) (which is being
changing the underlying functionality of which pegging interest would peg if the
PBBO is not within the specified price renumbered as paragraph (b)(4)) to
pegging interest to exclude the prices of • specify that, if the PBBO does not
such orders from the evaluation of what range of the pegging interest. As
proposed, if the PBBO is not within the meet a minimum size requirement
constitutes the highest (lowest) price at
specified price range, the pegging specified by the pegging interest, the
which there is other interest available
interest would only peg to the next pegging interest pegs to the next
4 See paragraph (a)(3) to Rule 13 governing available best-priced displayable available best-priced interest, without
pegging interest. interest. The term ‘‘displayable’’ is regard to size, and
5 See paragraph (a)(4) to Rule 13 governing
defined in Rule 72(a)(i) as that portion • modify current functionality so that
pegging interest. of interest that could be published as, or only displayable interest may be pegged
6 See paragraph (a)(4)(A) to Rule 13 governing
as part of, the Exchange BBO and [sic] in such circumstances.11
pegging interest. Similarly, if pegging interest
would peg to a price that would lock or cross the includes non-marketable odd-lot and
10 When the Exchange adopted this feature in
Exchange best offer or bid, the pegging interest round-lot orders.
would instead peg to the next available best-priced 2006, the Exchange only considered the Exchange
interest that would not lock or cross the Exchange BBO for purposes of determining whether the size
8 See Securities Exchange Act Release No. 58845 condition was met, and specifically excluded
best bid or offer. See paragraph (c)(1) to Rule 13
governing pegging interest. (Oct. 24, 2008), 73 FR 64379 (Oct. 29, 2008) (SR– pegging interest that was pegging to the Exchange
7 See Securities Exchange Act Release No. 54577 NYSE–2008–46) (introducing Non-Display Reserve BBO. See Pegging Approval Order, supra, n. 7 at
(Oct. 5, 2006), 71 FR 60208, 60210–11 (Oct. 12, Orders). 60211. The Exchange now evaluates the minimum
2006) (SR–NYSE–2006–36) (‘‘Pegging Approval
9 See Securities Exchange Act Release No. 66031 size requirement based on the PBBO instead of the
Order’’) (order approving, among other things, (Dec. 22, 2011), 76 FR 82024 (Dec. 29, 2011) (SR– Exchange BBO. See 2012 Pegging Filing, supra, n.
introduction of pegging functionality for Floor NYSE–2011–62) (‘‘Because the next available best- 9 at 71663.
brokers, including ‘‘if the Exchange best bid is priced non-pegging interest may be on an away 11 The Exchange also proposes to delete the
higher than the ceiling price of a pegging buy-side market, the Exchange further proposes to amend clause ‘‘which may not be the PBB or PBO’’ in
e-Quote or d-Quote, the e-Quote or d-Quote would paragraph (vii) to Supplementary Material .26 to current paragraph (c)(5), which is rule text that
remain at its quote price or the highest price at specify that the non-pegging interest against which related to when primary pegging interest had an
which there is other interest within its pegging price pegging interest pegs may either be available on the optional offset feature, in which case the minimum
Exchange or may be a protected bid or offer on an quantity would not have been evaluated against the
mstockstill on DSK4VPTVN1PROD with NOTICES
range, whichever is higher (consistent with the
limit price of the order underlying the e-Quote or away market.’’) (‘‘2011 Pegging Filing’’); see also PBBO because primary pegging interest with an
d-Quote). Similarly, if the Exchange best offer is Securities Exchange Act Release No. 68302 (Nov. offset would not have pegged to the PBBO. The
lower than the floor price of a pegging sell-side e- 27, 2012), 77 FR 71658, 71662 (Dec. 3, 2012) (SR– Exchange did not implement the offset functionality
Quote or d-Quote, the e-Quote or d-Quote would NYSE–2012–65) (amending Exchange rule and previously filed a rule change to delete the rule
remain at its quote price or the lowest price at governing pegging to, among other things, text relating to the optional offset. See Securities
which there is other interest within its pegging price consolidate rule text from separate parts of the then- Exchange Act Release No. 71897 (April 8, 2014), 79
range, whichever is lower (consistent with the limit existing rule in a streamlined format, including use FR 20953 (April 14, 2014) (SR–NYSE–2014–16)
price of the order underlying the e-Quote or d- of the term ‘‘next available best-priced interest’’) (amending rules governing pegging interest to
Quote).’’ (emphasis added)). (‘‘2012 Pegging Filing’’). Continued
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![Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices 16719
public in accordance with the applies to all registered investment is necessary for the Commission’s
provisions of 5 U.S.C. 552, will be advisers. In relying on the rule, inspection program to ascertain
available for Web site viewing and investment advisers must provide compliance with the Advisers Act.
printing in the Commission’s Public certain disclosures to their clients. An agency may not conduct or
Reference Room, 100 F Street NE., Advisory clients can use the disclosures sponsor, and a person is not required to
Washington, DC 20549, on official to monitor agency cross transactions respond to a collection of information
business days between the hours of that affect their advisory account. The unless it displays a currently valid
10:00 a.m. and 3:00 p.m. Copies of the Commission also uses the information control number.
filing will also be available for required by Rule 206(3)–2 in connection The public may view the background
inspection and copying at the NYSE’s with its investment adviser inspection documentation for this information
principal office and on its Internet Web program to ensure that advisers are in collection at the following Web site,
site at www.nyse.com. All comments compliance with the rule. Without the www.reginfo.gov. Comments should be
received will be posted without change; information collected under the rule, directed to: (i) Desk Officer for the
the Commission does not edit personal advisory clients would not have Securities and Exchange Commission,
identifying information from information necessary for monitoring Office of Information and Regulatory
submissions. You should submit only their adviser’s handling of their Affairs, Office of Management and
information that you wish to make accounts and the Commission would be Budget, Room 10102, New Executive
available publicly. All submissions less efficient and effective in its Office Building, Washington, DC 20503,
should refer to File Number SR–NYSE– inspection program. or by sending an email to: Shagufta_
2015–12 and should be submitted on or The information requirements of the Ahmed@omb.eop.gov; and (ii) Pamela
before April 20, 2015. rule consist of the following: (1) Prior to Dyson, Director/Chief Information
obtaining the client’s consent, Officer, Securities and Exchange
For the Commission, by the Division of
appropriate disclosure must be made to Commission, c/o Remi Pavlik-Simon,
Trading and Markets, pursuant to delegated
authority.22 the client as to the practice of, and the 100 F Street NE., Washington, DC 20549
Brent J. Fields,
conflicts of interest involved in, agency or send an email to: PRA_Mailbox@
cross transactions; (2) at or before the sec.gov. Comments must be submitted to
Secretary.
completion of any such transaction, the OMB within 30 days of this notice.
[FR Doc. 2015–07134 Filed 3–27–15; 8:45 am]
client must be furnished with a written
BILLING CODE 8011–01–P Dated: March 24, 2015.
confirmation containing specified
information and offering to furnish Brent J. Fields,
upon request certain additional Secretary.
SECURITIES AND EXCHANGE information; and (3) at least annually, [FR Doc. 2015–07127 Filed 3–27–15; 8:45 am]
COMMISSION the client must be furnished with a BILLING CODE 8011–01–P
[SEC File No. 270–216, OMB Control No. written statement or summary as to the
3235–0243] total number of transactions during the
period covered by the consent and the SECURITIES AND EXCHANGE
Submission for OMB Review; total amount of commissions received COMMISSION
Comment Request by the adviser or its affiliated broker-
dealer attributable to such transactions. Submission for OMB Review;
Upon Written Request, Copies Available Comment Request
From: Securities and Exchange The Commission estimates that
Commission, Office of FOIA Services, approximately 464 respondents use the Upon Written Request, Copies Available
100 F Street NE., Washington, DC rule annually, necessitating about 32 From: Securities and Exchange
20549–2736. responses per respondent each year, for Commission, Office of FOIA Services,
a total of 14,848 responses. Each 100 F Street NE., Washington, DC
Extension: response requires an estimated 0.5
Rule 206(3)–2. 20549–2736.
hours, for a total of 7,424 hours. The
Notice is hereby given that, pursuant estimated average burden hours are Extension:
to the Paperwork Reduction Act of 1995 Rule 6c–7; SEC File No. 270–269, OMB
made solely for the purposes of the
Control No. 3235–0276.
(44 U.S.C. 3501 et seq.) the Securities Paperwork Reduction Act and are not
and Exchange Commission (the derived from a comprehensive or Notice is hereby given that, pursuant
‘‘Commission’’) has submitted to the representative survey or study of the to the Paperwork Reduction Act of 1995
Office of Management and Budget a cost of Commission rules and forms. (44 U.S.C. 3501 et seq.), the Securities
request for extension of the previously This collection of information is and Exchange Commission (the
approved collection of information found at (17 CFR 275.206(3)–2) and is ‘‘Commission’’) has submitted to the
discussed below. necessary in order for the investment Office of Management and Budget a
Rule 206(3)–2, (17 CFR 275.206(3)–2) adviser to obtain the benefits of Rule request for extension of the previously
which is entitled ‘‘Agency Cross 206(3)–2. The collection of information approved collection of information
Transactions for Advisory Clients,’’ requirements under the rule is discussed below.
permits investment advisers to comply mandatory. Information subject to the Rule 6c–7 (17 CFR 270.6c–7) under
with section 206(3) of the Investment disclosure requirements of Rule the Investment Company Act of 1940
Advisers Act of 1940 (the ‘‘Act’’) (15 206(3)–2 does not require submission to (15 U.S.C. 80a–1 et seq.) (‘‘1940 Act’’)
mstockstill on DSK4VPTVN1PROD with NOTICES
U.S.C. 80b–6(3)) by obtaining a client’s the Commission; and, accordingly, the provides exemption from certain
blanket consent to enter into agency disclosure pursuant to the rule is not provisions of Sections 22(e) and 27 of
cross transactions (i.e., a transaction in kept confidential. the 1940 Act for registered separate
which an adviser acts as a broker to both Commission-registered investment accounts offering variable annuity
the advisory client and the opposite advisers are required to maintain and contracts to certain employees of Texas
party to the transaction). Rule 206(3)–2 preserve certain information required institutions of higher education
under Rule 206(3)–2 for five (5) years. participating in the Texas Optional
22 17 CFR 200.30–3(a)(59). The long-term retention of these records Retirement Program. There are
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Document Created: 2015-12-18 11:33:11
Document Modified: 2015-12-18 11:33:11
| 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 16716 |
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