80 FR 18884 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change Amending Rule 923NY To Refine the Appointment Process Utilized by the Exchange
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 67 (April 8, 2015)
Federal Register Volume 80, Issue 67 (April 8, 2015)
| Page Range | 18884-18889 | |
| FR Document | 2015-07964 |
[Federal Register Volume 80, Number 67 (Wednesday, April 8, 2015)] [Notices] [Pages 18884-18889] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-07964] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74636; File No. SR-NYSEMKT-2015-17] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change Amending Rule 923NY To Refine the Appointment Process Utilized by the Exchange April 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 March 20, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III 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 the Substance of the Proposed Rule Change The Exchange proposes to amend Rule 923NY (Appointment of Market Makers) to refine the appointment process utilized by the Exchange. 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. [[Page 18885]] 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 The Exchange proposes to amend Rule 923NY to refine the appointment process utilized by the Exchange. The Exchange believes this proposal, which is consistent with the rules of other option exchanges,\4\ would simplify and enhance the efficiency of the appointment process for both Market Makers and the Exchange and add clarity to Exchange rules. --------------------------------------------------------------------------- \4\ See, e.g., BATS Exchange, Inc. (``BATS'') Rules 22.3(a),(b) (Market Maker Registration); NASDAQ OMX PHLX (``PHLX) Rule 3212(b) (Registration as a Market Maker); NASDAQ Options Market (``NOM''), Chapter VII (Market Participants), Section 3(a),(b) (Continuing Market Maker Registration). --------------------------------------------------------------------------- Current Appointment Process To register as a Market Maker, an applicant must file an application with the Exchange on a form or forms prescribed by the Exchange.\5\ Once registered, a Market Maker may seek an appointment in one or more option classes pursuant to Rule 923NY. Specifically, this Rule provides that ``[o]n a form or forms prescribed by the Exchange, a Market Maker must apply for an appointment in one or more classes of option contracts.'' \6\ --------------------------------------------------------------------------- \5\ See Rule 921NY(Registration of Market Makers). See also Rule 920NY(a) (Market Maker Defined) (``A Market Maker is an ATP Holder that is registered with the Exchange for the purpose of submitting quotes electronically and making transactions as a dealer-specialist verbally on the Trading Floor or through the System from on the Trading Floor or remotely from off the Trading Floor, in accordance with the Rules of the Exchange. A Market Maker submitting quotes remotely is not eligible to participate in trades affected in open outcry except to the extent that such Market Maker's quotation represents the BBO. Market Makers are designated as specialists on the Exchange for all purposes under the Securities Exchange Act of 1934 and the Rules and Regulations thereunder. A Market Maker on the Exchange will be either a Remote Market Maker, a Floor Market Maker, a Specialist or an e-Specialist. Unless specified, or unless the context requires otherwise, the term Market Maker refers to Remote Market Makers, Floor Market Makers, Specialists and e- Specialists.''). \6\ See Rule 923NY(a). --------------------------------------------------------------------------- In addition to having the authority to appoint one Specialist per option class and to designate e-Specialists to fulfill certain obligations required of Specialists,\7\ ``[t]he Exchange may appoint an unlimited number of Market Makers in each class unless the number of Market Makers appointed to a particular option class should be limited'' based on the Exchange's judgment.\8\ Further, the Rule provides that ``Market Makers may select from among any option issues traded on the Exchange for inclusion in their appointment, subject to the approval of the Exchange. In considering the approval of the appointment of a Market Maker in each security,'' the Exchange will consider the Market Maker's preference; the financial resources available to the Market Maker; the Market Maker's experience, expertise and past performance in making markets, including the Market Maker's performance in other securities; the Market Maker's operational capability; and the maintenance and enhancement of competition among Market Makers in each security in which they are appointed.\9\ The Rule also states that, in order to have a trading appointment on the Exchange, Market Makers must have the number of Amex Trading Permits (``ATPs'') required under the Amex Options Fee Schedule.\10\ In addition, Floor Market Makers \11\ must also apply for appointment to a Trading Zone \12\ on the floor, subject to approval by the Exchange.\13\ --------------------------------------------------------------------------- \7\ A Specialist is ``an individual or entity that has been deemed qualified by the Exchange for the purpose of making transactions on the Exchange in accordance with the provisions of Rule 920NY [Market Makers], and who meets the qualification requirements of Rule 927NY(b) [Specialists]. Each Specialist must be registered with the Exchange as a Market Maker. Any ATP Holder registered as a Market Maker with the Exchange is eligible to be qualified as a Specialist. See Rule 900.2(76). Rule 923NY(b) also provides that ``[t]he Exchange may designate e-Specialists in an option class in accordance with Rule 927.4NY[e-Specialists].'' Id. The Exchange is not proposing to change Rule 923NY(b) regarding Specialists and e-Specialists. \8\ See Rule 923NY(b). \9\ See Rule 923NY(c). \10\ See Rule 923NY(d)(1). See also NYSE Amex Options Fee Schedule (Section III.A., Monthly ATP Fees) (describing ``Number Of Issues Permitted In A Market Makers Quoting Assignment'' based on the number of permits held and the associated costs), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf. \11\ A Floor Market Maker is ``a registered Market Maker who makes transactions as a dealer-specialist while on the Floor of the Exchange and provides quotations: (A) Manually, by public outcry, and (B) electronically through an auto-quoting device.'' See Rule 900.2NY(29). \12\ A Trading Zone refers to the areas on the Floor designated by the Exchange in which issues are assigned for the purposes of open outcry trading. See Rule 900.2NY(29). \13\ See Rule 923NY(d)(1) (also providing that Specialists shall be appointed to the Trading Zone designated for their issues). --------------------------------------------------------------------------- Under the current Rule, ``Market Makers may change the option issues in their appointment, subject to the approval of the Exchange'' provided requests for changes are ``made in a form and manner prescribed by the Exchange.'' \14\ In addition, ``Market Makers may withdraw from trading an option issue that is within their appointment by providing the Exchange with three business days' written notice of such withdrawal.'' \15\ If Market Makers fail to provide this notice, they ``may be subject to formal disciplinary action pursuant to Section 9A of the Office Rules.'' \16\ Moreover, the Exchange ``may suspend or terminate any appointment of a Market Maker in one or more option issues under this Rule whenever, in the Exchanges' judgment, the interests of a fair and orderly market are best served by such action'' \17\ A Market Maker may seek review of any action taken by the Exchange.\18\ --------------------------------------------------------------------------- \14\ See Rule 923NY(e). In considering the change request, the Exchange will consider the factors set forth in Rule 923NY(c). \15\ See Rule 923NY(f). \16\ Id. Section 9A of the Office Rules sets forth the procedures for Exchange disciplinary proceedings, including the due process for the formal hearing process and the requirement that any decision by the Exchange must include a statement of findings and conclusions, with the reasons therefore upon all material issues presented in the record. Further, where a penalty is imposed, the Exchange's decision must include a statement specifying the acts or practices in which the Respondent has been found to have engaged, or which the Respondent has been found to have omitted. \17\ See Rule 923NY(g). The Exchange, however, proposes to correct the possessive form of ``Exchange'' (from ``Exchanges' judgment'' to ``Exchange's judgment'') in this paragraph to correct a typo in the existing rule text, which adds clarity to Exchange rules. See proposed Rule 923NY(g) (``The Exchange may suspend or terminate any appointment of a Market Maker in one or more option issues under this Rule whenever, in the Exchange's judgment, the interests of a fair and orderly market are best served by such action.''). \18\ See Rule 923NY(h). Per Rule 923NY(i), Market Makers are also subject to a trading requirement, such that ``[a]t least 75% of the trading activity of a Market Maker (measured in terms of contract volume per quarter) must be in classes within the Market Maker's appointment and, in the case of Floor Market Makers, within their designated Trading Zone'' and a failure to comply with the 75% contract volume requirement may result in the imposition of a fine per Rule 476A or initiation of formal disciplinary action, pursuant to Section 9A (Disciplinary Rules). The Exchange is not proposing any changes to Rule 923NY(i). --------------------------------------------------------------------------- Finally, under the current Rule, the Exchange periodically conducts evaluations of Market Makers to determine whether they have fulfilled [[Page 18886]] performance standards.\19\ If the Exchange finds that a Market Maker has not met the performance standards, the Exchange may take action, including suspending, terminating or restricting a Market Maker's appointment or registration, after providing the Market Maker an opportunity to be heard.\20\ --------------------------------------------------------------------------- \19\ See Rule 923NY(j). \20\ See Rule 923NY(j)(1). See also Rule 923NY(j)(2) (``If a Market Maker's appointment in an option issue or issues has been terminated pursuant to this subsection (j), the Market Maker may not be re-appointed as a Market Maker in that option issue or issues for a period not to exceed 6 months.''). --------------------------------------------------------------------------- Proposed Appointment Process The Exchange proposes to modify Rule 923NY to refine the current appointment process. Presently, Market Makers must apply for an appointment in an options class, which, as discussed further below, is done by submitting an email to the Exchange. The Exchange proposes to modify Rule 923NY(a) to provide that, rather than apply for an appointment, ``a Market Maker may register for an appointment in one or more classes of option contracts,'' in a form and manner prescribed the Exchange.\21\ The Exchange would continue to have authority to appoint one Specialist per option class and to designate e-Specialists in options classes to fulfill certain obligations required of Specialists. Similarly, there would continue to be an unlimited number of Market Makers appointed to an options class, unless the Exchange restricted such appointments following Commission review and approval. The Exchange is proposing a change to the text in Rule 923NY(b) to reflect the proposed changes in Rule 923NY(a) to provide that ``[a]n unlimited number of Market Makers may register in each class,'' subject to any limits imposed by the Exchange.\22\ --------------------------------------------------------------------------- \21\ See proposed Rule 923NY(a) (``On a form or forms prescribed by the Exchange, a Market Maker may register for an appointment in one or more classes of option contracts, subject to paragraph (d) of this Rule.''). As discussed, paragraph (d) of the Rule provides that Market Makers must have the designated number of ATPs set forth in the Amex Options Fee Schedule in order to have a trading appointment on the Exchange. \22\ See proposed Rule 923NY(b) (``The Exchange may appoint one Specialist per option class. The Exchange may designate e- Specialists in an option class in accordance with Rule 927.4NY. An unlimited number of Market Makers may register in each class unless the number of Market Makers appointed to a particular option class should be limited whenever, in the Exchange's judgment, quotation system capacity in an option class or classes is not sufficient to support additional Market Makers in such class or classes.''). --------------------------------------------------------------------------- In addition, to simplify a Market Maker's ability to select and make changes to its appointment, the Exchange proposes to modify Rule 923NY(c) to replace the existing rule text with text that provides that ``[a] Market Maker may select or withdraw option issues included in their appointment by submitting a request via an Exchange-approved electronic interface with the Exchange on a day when the Exchange is open for business.'' \23\ The modified rule would also provide that an appointment would become effective by no later than the following business day, whereas a Market Maker's request to withdraw option issues from its appointment would not become effective until the following business day. \24\ Thus, as proposed, a Market Maker could be appointed to an options issue on the same day it submits a request to the Exchange, depending on availability of Exchange resources to process the request that day, but such addition to its appointment would be effective no later than the following business day. A Market Maker, however, would not be able to withdraw an options issue from its appointment on the same day that it submits the request; instead, the Exchange will only process such requests on an overnight basis for effectiveness on the following business day. Before any additions to a Market Maker's appointment would become effective, the Exchange would be required to confirm ``that the Market Maker's appointment will not exceed that permitted under paragraph (d) of this Rule'' \25\ and confirm receipt of the Market Maker's request.\26\ Confirmation of receipt is designed to ensure that the request was successfully transmitted to the Exchange (i.e., there was no system failure or human error on either side of the electronic transaction that prevented transmission and receipt of the Market Maker's request). Presently, Market Makers can select issues in their appointment or make changes thereto, pursuant to proposed Rule 923NY(c), by submitting an email [sic] the Exchange which is ``the Exchange-approved electronic interface'' at this time.\27\ --------------------------------------------------------------------------- \23\ See proposed Rule 923NY(c). \24\ Id. \25\ Id. Proposed changes to Rule 923NY(d) are discussed below. \26\ The Exchange is also required to confirm receipt of requests to withdraw option issues from a Market Maker's appointment. See proposed Rule 923NY(c). \27\ The Exchange will announce by Trader Update the email address that Market Makers should utilize to make selections in, or changes to, their appointment pursuant to this Rule. --------------------------------------------------------------------------- Consistent with this proposed change, the Exchange proposes to delete paragraphs (e) and (f) of Rule 923NY, which describe how Market Makers can change their appointment or withdraw from issues in their appointment because these provisions are rendered superfluous by the proposed changes to Rule 923NY(c).\28\ --------------------------------------------------------------------------- \28\ The Exchange proposes to designate subparagraphs (e) and (f) as Reserved. --------------------------------------------------------------------------- The Exchange believes that the proposed changes to how Market Makers select and modify their appoints would enable Market Makers to manage their appointments with more flexibility and in a timelier manner which, in turn, would reduce the time and resources expended by Market Makers and the Exchange on the appointment process. The Exchange believes this proposal would provide Market Makers with more efficient access to the securities in which they want to make markets and disseminate competitive quotations, which would provide additional liquidity and enhance competition in those securities. The Exchange would retain the ability to suspend or terminate any appointment of a Market Maker if necessary to maintain a fair and orderly market.\29\ The Exchange also notes that the proposed changes to Rule 923NY(a), (b) \30\ and (c) \31\ are consistent with the rules of other exchanges and therefore raise no new or novel issues. --------------------------------------------------------------------------- \29\ See Rule 923NY(g). The Exchange, however, proposes to correct the possessive form of ``Exchange'' (from ``Exchanges' judgment'' to ``Exchange's judgment'') in this paragraph to correct a typo in the existing rule text, which adds clarity to Exchange rules. See proposed Rule 923NY(g) (``The Exchange may suspend or terminate any appointment of a Market Maker in one or more option issues under this Rule whenever, in the Exchange's judgment, the interests of a fair and orderly market are best served by such action.''). \30\ See e.g., BATS Rules 22.3(a) (``An Options Member that has qualified as an Options Market Maker may register to make markets in individual series of options''); NOM, Chapter VII, Section 3(a) (``An Options Participant that has qualified as an Options Market Maker may register to make markets in individual options.''). \31\ See e.g., PHLX Rule 3212(b) (``A PSX Market Maker may become registered in an issue by entering a registration request via an Exchange approved electronic interface with PSX's systems or by contacting PSX Market Operations. Registration shall become effective on the day the registration request is entered''); PHLX Rule 3220(a) (``A market maker may voluntarily terminate its registration in a security by withdrawing its two-sided quotation from PSX. A PSX Market Maker that voluntarily terminates its registration in a security may not re-register as a market maker for one (1) business day.''). See also BATS Rules 22.3(b) (``An Options Market Maker may become registered in a series by entering a registration request via an Exchange approved electronic interface with the Exchange's systems by 9:00 a.m. Eastern time. Registration shall become effective on the day the registration request is entered''); NOM, Chapter VII, Section 3(b) (``An Options Market Maker may become registered in an option by entering a registration request via a Nasdaq approved electronic interface with Nasdaq's systems. Registration shall become effective on the day the registration request is entered.''). --------------------------------------------------------------------------- The Exchange also proposes to amend Rule 923NY(d)(1) to state that ``Market Makers must have the number of ATPs required under the Fee Schedule for its [[Page 18887]] appointment as a Market Maker in option issues,'' which the Exchange believes adds clarity to the Rule.\32\ In addition, the Exchange proposes to modify Rule 923NY(d)(2) to provide that ``Floor Market Makers shall be appointed to a Trading Zone on the Floor,'' \33\ to conform this provision to other changes proposed herein, which are designed to streamline the Exchange's appointment process.\34\ --------------------------------------------------------------------------- \32\ See proposed Rule 923NY(d)(1). \33\ The Exchange also proposes to capitalize ``Floor'' in the first sentence of Rule 923NY(d)(1) to add clarity and consistency to Exchange rules. \34\ This proposed change also conforms to the latter portion of Rule 923NY(d)(2) which provides that ``Specialists shall be appointed to the Trading Zone designated for their issues.'' --------------------------------------------------------------------------- The Exchange also proposes to modify the text in paragraph (h) of the Rule. As proposed, a Market Maker would continue to be permitted to ``seek review of any action taken by the Exchange, in accordance with Section 9A of the Office Rules, as applicable.'' However, to clarify the rule text, the Exchange proposes to delete the unnecessary clause ``including the denial of the appointment for, or the termination or suspension of, a Market Maker's appointment in an option issue or issues.'' \35\ The Exchange's denial, termination, or suspension of a Market Maker's appointment would continue to be reviewable under Section 9A of the Office Rules, as would other applicable actions taken by the Exchange under Rule 923NY.\36\ --------------------------------------------------------------------------- \35\ See Rule 923NY(h) (``A Market Maker may seek review of any action taken by the Exchange pursuant to this Rule in accordance with Section 9A of the Office Rules, as applicable.''). \36\ Id. --------------------------------------------------------------------------- Rule 923NY(j) states that the Exchange will conduct periodic evaluations of Market Makers to determine whether they have fulfilled the requisite performance standards. The Exchange proposes to add ``the financial resources available to the Market Maker'' and ``the Market Maker's operational capability'' as factors the Exchange will consider in its evaluations conducted pursuant to Rule 923NY(j).\37\ The additional considerations the Exchange proposes to include in its periodic evaluations under Rule 923NY (j) are currently among the considerations of the Exchange in approving a Market Maker's appointment.\38\ In connection with the Exchange's proposed changes to the process for Market Makers' appointments to options classes, the Exchange proposes to eliminate these approval provisions. Because financial resources and operational capability are important considerations in a Market Maker's performance, the Exchange proposes to retain these factors for consideration in the Exchange's periodic evaluation of Market Maker performance.\39\ --------------------------------------------------------------------------- \37\ See proposed Rule 923NY(j) (``The Exchange will periodically conduct an evaluation of Market Makers to determine whether they have fulfilled performance standards relating to, among other things, quality of markets, competition among Market Makers, observance of ethical standards, and administrative factors. The Exchange may consider any relevant information including, but not limited to, the results of a Market Maker evaluation, trading data, a Market Maker's regulatory history, the financial resources available to the Market Maker, the Market Maker's operational capability, and such other factors and data as may be pertinent in the circumstances.''). \38\ See Rule 923NY(c)(2) and (4). \39\ The Exchange is not proposing any changes to Rule 923NY(j)(1), which sets forth the actions that the Exchange may take, after affording a Market Maker written notice and an opportunity for hearing pursuant to Section 9A should the Exchange find a Market Maker is failing to meet minimum performance standards. See Rule 923NY(j)(1). The Exchange however proposes to delete the word ``primary'' from Rule 923NY(j)(1)(A) so that the clause refers simply to the ``Market Maker's appointment,'' which change would add clarity and consistency to Exchange rules. See proposed Rule 923NY(j)(1)(A). --------------------------------------------------------------------------- Finally, the Exchange proposes to modify Rule 923NY(j)(2) to reflect the proposed changes to the Market Maker appointment process. Specifically, the Exchange proposes to change the reference to a Market Maker being ``re-appointed'' by the Exchange if an option issue or issues has been terminated pursuant to this subsection (j), and to instead provide that ``the Exchange may restrict a Market Maker's registration as a Market Maker in that option issue or issues for a period not to exceed 6 months.'' \40\ This proposal continues to give the Exchange discretion to suspend that Market Maker's appointment in the affected option issue(s) for a full six months, or to allow that Market Maker to resume that appointment earlier than the prescribed six-month period, based on the Exchange's evaluation of the facts and circumstances. The Exchange believes the proposed change is necessary so that Rule 923NY(j)(2) is consistent with the proposed changes in paragraphs (a), (b), and (c) of Rule 923NY to the process for Market Makers to register and change their appointments to options classes. --------------------------------------------------------------------------- \40\ See proposed Rule 923NY(j)(2) (``If a Market Maker's appointment in an option issue or issues has been terminated pursuant to this subsection (j), the Market Maker may not register as a Market Maker in that option issue or issues for a period not to exceed 6 months.''). --------------------------------------------------------------------------- 2. Statutory Basis The proposed rule change is consistent with Section 6(b) \41\ of the Securities Exchange Act of 1934 (the ``Act''), in general, and furthers the objectives of Section 6(b)(5),\42\ in particular, in that 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, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \41\ 15 U.S.C. 78f(b). \42\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change removes impediments to a free and open market because it would enable Market Makers to manage their appointments with more flexibility and in a timelier manner. The Exchange believes the proposed change would reduce the burden on both Market Makers and Exchange staff, which would result in a fair and reasonable use of resources to the benefit of all market participants. In particular, the proposal to allow Market Makers to select their appointments, and make changes thereto, via an Exchange- approved electronic interface is consistent with [sic] Act because it would provide Market Makers with more efficient access to the securities in which they want to make markets and thus more quickly begin disseminating competitive quotations in those securities, which would provide additional liquidity and enhance competition in those securities. The Exchange also believes that preventing Market Makers from being able to withdraw an option issue from its appointment on the same day that it submits the request (as such requests are processed on an overnight basis for effectiveness on the following business day) would serve to promote just and equitable principles of trade and benefit investors and the public interest. In addition, the Exchange believes that the proposal to allow Market Makers to make selections or changes to their appointment without first obtaining explicit Exchange approval is likewise consistent with the Act. First, because financial resources and operational capability are important considerations in a Market Maker's performance, the Exchange proposes to retain these factors for consideration in the Exchange's periodic evaluation of Market Maker performance. The Exchange believes that adding these factors to the Exchange's consideration would remove impediments to and perfect the mechanism of a free and open market and would benefit investors and the public interest. In addition, as noted above, the Exchange would continue to have authority to [[Page 18888]] suspend or terminate any Market Maker appointment in the interest of a fair and orderly market, including if necessary to prevent fraudulent and manipulative acts and practices and protect investors, or if a Market Maker does not satisfy its obligations with respect to an appointment.\43\ The Exchange would also retain the ability to restrict a Market Maker's registration in option issues for up to six months if a Market Maker's appointment in that option issue or issues had been previously terminated under the rule, and continues to give the Exchange discretion to allow the Market Maker to resume that appointment earlier than the prescribed six-month period or to maintain the suspension for the entire period. Finally, the Exchange is not proposing changes to the disciplinary and appeals process for Market Makers that do not meet the minimum performance standards. Accordingly, the Exchange believes this proposal is consistent with Section 6(d) of the Exchange Act.\44\ --------------------------------------------------------------------------- \43\ See Rule 923NY(g). See also Rule 921NY (regarding the Exchange's ability to suspend or terminate a Market Maker's registration based on ``a determination of any substantial or continued failure by such Market Maker to engage in dealings in accordance with Rules 925NY or 923NY'', which outline the obligations of Market Makers). \44\ 15 U.S.C. 78f(d). --------------------------------------------------------------------------- The proposed rule change would not result in unfair discrimination, as it applies to all Market Makers. Further, the proposed rule change would reduce the burden on Market Makers to manage their appointments and thus provide liquidity to the Exchange. Nevertheless, Market Makers would still be required to comply with certain obligations to maintain their status as a Market Maker, including that they provide continuous, two-sided quotations in their appointed securities.\45\ --------------------------------------------------------------------------- \45\ See Rule 925.1NY. --------------------------------------------------------------------------- Finally, as noted above, the proposed modifications to the appointment process would align the rules of the Exchange with the rules of other options exchanges, where Market Makers presently have the ability to select and make changes to their appointment via an Exchange-approved electronic interface.\46\ The Exchange believes this consistency across exchanges would remove impediments to and perfect the mechanism of a free and open market by ensuring that members, regulators and the public can more easily navigate the Exchange's rulebook and better understand the appointment process. --------------------------------------------------------------------------- \46\ See supra nn. 4, 30, 31. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because it provides the same relief to a group of similarly situated market participants--Market Makers. The proposed rule change would reduce the burden on Market Makers to manage their appointments and thus provide liquidity to the Exchange. The Exchange does not believe the proposed rule change would help Market Makers to the detriment of market participants on other exchanges, particularly because the proposed functionality is similar to functionality already available on other exchanges.\47\ Market Makers would still be subject to the same obligations with respect to its appointments; the proposed rule change would make the appointment process more efficient for Market Makers. The Exchange believes that the proposed rule change would relieve any burden on, or otherwise promote, competition, as it would enable Market Makers to manage their appointments with more flexibility and in a timelier manner. The Exchange believes this would provide Market Makers with more efficient access to the securities in which they want to make markets and thus more quickly begin disseminating competitive quotations in those securities, which would provide additional liquidity and enhance competition in those securities. --------------------------------------------------------------------------- \47\ Id. --------------------------------------------------------------------------- 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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 CommentsUse 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-NYSEMKT-2015-17 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-NYSEMKT-2015-17. 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 such 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-NYSEMKT-2015-17, and should be submitted on or before April 29, 2015. [[Page 18889]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\48\ --------------------------------------------------------------------------- \48\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-07964 Filed 4-7-15; 8:45 am] BILLING CODE 8011-01-P
![18884 Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices
eligible to invest in securities (as companies that are part of the same Applicants’ Condition
defined in section 2(a)(36) of the Act) in group of investment companies,
reliance on rule 12d1–2 under the Act government securities, and short-term Applicants agree that any order
(the ‘‘Funds’’), to also invest, to the paper; (iii) the aggregate sales loads and granting the requested relief will be
extent consistent with its investment distribution-related fees of the acquiring subject to the following condition:
objectives, policies, strategies and company and the acquired company are Applicants will comply with all
limitations, in financial instruments that not excessive under rules adopted provisions of rule 12d1–2 under the Act,
may not be securities within the pursuant to section 22(b) or section except for paragraph (a)(2) to the extent
meaning of section 2(a)(36) of the Act 22(c) of the Act by a securities that it restricts any Fund from investing
(‘‘Other Investments’’).1 Applicants also association registered under section 15A in Other Investments as described in the
request that the order exempt any entity, of the Exchange Act or by the application.
including any entity controlled by or Commission; and (iv) the acquired
under common control with an Adviser, company has a policy that prohibits it For the Commission, by the Division of
that now or in the future acts as from acquiring securities of registered Investment Management, under delegated
principal underwriter, or broker or open-end investment companies or authority.
dealer (if registered under the Securities registered unit investment trusts in Brent J. Fields,
Exchange Act of 1934, as amended (the reliance on section 12(d)(1)(F) or (G) of Secretary.
‘‘Exchange Act’’)), with respect to the the Act. [FR Doc. 2015–07970 Filed 4–7–15; 8:45 am]
transactions described herein. 3. Rule 12d1–2 under the Act permits BILLING CODE 8011–01–P
3. Consistent with its fiduciary a registered open-end investment
obligations under the Act, each Fund’s company or a registered unit investment
board of trustees will review the trust that relies on section 12(d)(1)(G) of SECURITIES AND EXCHANGE
advisory fees charged by the Fund’s the Act to acquire, in addition to
Adviser to ensure that the fees are based COMMISSION
securities issued by another registered
on services provided that are in addition investment company in the same group
to, rather than duplicative of, services [Release No. 34–74636; File No. SR–
of investment companies, government NYSEMKT–2015–17]
provided pursuant to the advisory securities, and short-term paper: (i)
agreement of any investment company Securities issued by an investment
in which the Fund may invest. Self-Regulatory Organizations; NYSE
company that is not in the same group MKT LLC; Notice of Filing of Proposed
Applicants’ Legal Analysis of investment companies, when the Rule Change Amending Rule 923NY To
1. Section 12(d)(1)(A) of the Act acquisition is in reliance on section Refine the Appointment Process
provides that no registered investment 12(d)(1)(A) or 12(d)(1)(F) of the Act; (ii) Utilized by the Exchange
company (‘‘acquiring company’’) may securities (other than securities issued
acquire securities of another investment by an investment company); and (iii) April 2, 2015.
company (‘‘acquired company’’) if such securities issued by a money market
Pursuant to Section 19(b)(1) 1 of the
securities represent more than 3% of the fund, when the investment is in reliance
on rule 12d1–1 under the Act. For the Securities Exchange Act of 1934 (the
acquired company’s outstanding voting ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
stock or more than 5% of the acquiring purposes of rule 12d1–2, ‘‘securities’’
means any security as defined in section notice is hereby given that, on March
company’s total assets, or if such 20, 2015, NYSE MKT LLC (the
securities, together with the securities of 2(a)(36) of the Act.
4. Section 6(c) of the Act provides that ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
other investment companies, represent
the Commission may exempt any the Securities and Exchange
more than 10% of the acquiring
company’s total assets. Section person, security, or transaction from any Commission (the ‘‘Commission’’) the
12(d)(1)(B) of the Act provides that no provision of the Act, or from any rule proposed rule change as described in
registered open-end investment under the Act, if such exemption is Items I, II, and III below, which Items
company may sell its securities to necessary or appropriate in the public have been prepared by the self-
another investment company if the sale interest and consistent with the regulatory organization. The
will cause the acquiring company to protection of investors and the purposes Commission is publishing this notice to
own more than 3% of the acquired fairly intended by the policies and solicit comments on the proposed rule
company’s voting stock, or cause more provisions of the Act. Applicants submit change from interested persons.
than 10% of the acquired company’s that their request for relief meets this
standard. I. Self-Regulatory Organization’s
voting stock to be owned by investment
companies and companies controlled by 5. Applicants request an order under Statement of the Terms of the Substance
them. section 6(c) of the Act for an exemption of the Proposed Rule Change
2. Section 12(d)(1)(G) of the Act from rule 12d1–2(a) to allow the Funds The Exchange proposes to amend
provides, in part, that section 12(d)(1) to invest in Other Investments while Rule 923NY (Appointment of Market
will not apply to securities of an investing in Underlying Funds. Makers) to refine the appointment
acquired company purchased by an Applicants state that the Funds will
acquiring company if: (i) The acquired process utilized by the Exchange. The
comply with rule 12d1–2 under the Act,
company and acquiring company are text of the proposed rule change is
but for the fact that the Funds may
asabaliauskas on DSK5VPTVN1PROD with NOTICES
part of the same group of investment invest a portion of their assets in Other available on the Exchange’s Web site at
companies; (ii) the acquiring company Investments. Applicants assert that www.nyse.com, at the principal office of
holds only securities of acquired permitting the Funds to invest in Other the Exchange, and at the Commission’s
Investments as described in the Public Reference Room.
1 All entities that currently intend to rely on the
application would not raise any of the
requested order are named as applicants. Any other
entity that relies on the order in the future will
concerns that the requirements of 1 15 U.S.C. 78s(b)(1).
comply with the terms and condition of the section 12(d)(1) were designed to 2 15 U.S.C. 78a.
application. address. 3 17 CFR 240.19b–4.
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II. Self-Regulatory Organization’s for an appointment in one or more the floor, subject to approval by the
Statement of the Purpose of, and classes of option contracts.’’ 6 Exchange.13
Statutory Basis for, the Proposed Rule In addition to having the authority to Under the current Rule, ‘‘Market
Change appoint one Specialist per option class Makers may change the option issues in
In its filing with the Commission, the and to designate e-Specialists to fulfill their appointment, subject to the
self-regulatory organization included certain obligations required of approval of the Exchange’’ provided
statements concerning the purpose of, Specialists,7 ‘‘[t]he Exchange may requests for changes are ‘‘made in a
and basis for, the proposed rule change appoint an unlimited number of Market form and manner prescribed by the
and discussed any comments it received Makers in each class unless the number Exchange.’’ 14 In addition, ‘‘Market
on the proposed rule change. The text Makers may withdraw from trading an
of Market Makers appointed to a
of those statements may be examined at option issue that is within their
particular option class should be
the places specified in Item IV below. appointment by providing the Exchange
limited’’ based on the Exchange’s
The Exchange has prepared summaries, with three business days’ written notice
judgment.8 Further, the Rule provides
set forth in sections A, B, and C below, of such withdrawal.’’ 15 If Market
that ‘‘Market Makers may select from
of the most significant parts of such Makers fail to provide this notice, they
among any option issues traded on the
statements. ‘‘may be subject to formal disciplinary
Exchange for inclusion in their
action pursuant to Section 9A of the
A. Self-Regulatory Organization’s appointment, subject to the approval of
Office Rules.’’ 16 Moreover, the
Statement of the Purpose of, and the Exchange. In considering the
Exchange ‘‘may suspend or terminate
Statutory Basis for, the Proposed Rule approval of the appointment of a Market any appointment of a Market Maker in
Change Maker in each security,’’ the Exchange one or more option issues under this
will consider the Market Maker’s Rule whenever, in the Exchanges’
1. Purpose preference; the financial resources judgment, the interests of a fair and
The Exchange proposes to amend available to the Market Maker; the orderly market are best served by such
Rule 923NY to refine the appointment Market Maker’s experience, expertise action’’ 17 A Market Maker may seek
process utilized by the Exchange. The and past performance in making review of any action taken by the
Exchange believes this proposal, which markets, including the Market Maker’s Exchange.18
is consistent with the rules of other performance in other securities; the Finally, under the current Rule, the
option exchanges,4 would simplify and Market Maker’s operational capability; Exchange periodically conducts
enhance the efficiency of the and the maintenance and enhancement evaluations of Market Makers to
appointment process for both Market of competition among Market Makers in determine whether they have fulfilled
Makers and the Exchange and add each security in which they are
clarity to Exchange rules. appointed.9 The Rule also states that, in assigned for the purposes of open outcry trading.
order to have a trading appointment on See Rule 900.2NY(29).
Current Appointment Process
the Exchange, Market Makers must have 13 See Rule 923NY(d)(1) (also providing that
To register as a Market Maker, an the number of Amex Trading Permits Specialists shall be appointed to the Trading Zone
designated for their issues).
applicant must file an application with (‘‘ATPs’’) required under the Amex 14 See Rule 923NY(e). In considering the change
the Exchange on a form or forms Options Fee Schedule.10 In addition, request, the Exchange will consider the factors set
prescribed by the Exchange.5 Once Floor Market Makers 11 must also apply forth in Rule 923NY(c).
registered, a Market Maker may seek an for appointment to a Trading Zone 12 on 15 See Rule 923NY(f).
appointment in one or more option 16 Id. Section 9A of the Office Rules sets forth the
classes pursuant to Rule 923NY. 6 See procedures for Exchange disciplinary proceedings,
Rule 923NY(a).
including the due process for the formal hearing
Specifically, this Rule provides that 7A Specialist is ‘‘an individual or entity that has process and the requirement that any decision by
‘‘[o]n a form or forms prescribed by the been deemed qualified by the Exchange for the the Exchange must include a statement of findings
purpose of making transactions on the Exchange in
Exchange, a Market Maker must apply accordance with the provisions of Rule 920NY
and conclusions, with the reasons therefore upon
all material issues presented in the record. Further,
[Market Makers], and who meets the qualification where a penalty is imposed, the Exchange’s
4 See, e.g., BATS Exchange, Inc. (‘‘BATS’’) Rules
requirements of Rule 927NY(b) [Specialists]. Each decision must include a statement specifying the
22.3(a),(b) (Market Maker Registration); NASDAQ Specialist must be registered with the Exchange as acts or practices in which the Respondent has been
OMX PHLX (‘‘PHLX) Rule 3212(b) (Registration as a Market Maker. Any ATP Holder registered as a
a Market Maker); NASDAQ Options Market found to have engaged, or which the Respondent
Market Maker with the Exchange is eligible to be has been found to have omitted.
(‘‘NOM’’), Chapter VII (Market Participants), qualified as a Specialist. See Rule 900.2(76). Rule 17 See Rule 923NY(g). The Exchange, however,
Section 3(a),(b) (Continuing Market Maker 923NY(b) also provides that ‘‘[t]he Exchange may
Registration). proposes to correct the possessive form of
designate e-Specialists in an option class in
5 See Rule 921NY(Registration of Market Makers). ‘‘Exchange’’ (from ‘‘Exchanges’ judgment’’ to
accordance with Rule 927.4NY[e-Specialists].’’ Id.
See also Rule 920NY(a) (Market Maker Defined) (‘‘A ‘‘Exchange’s judgment’’) in this paragraph to correct
The Exchange is not proposing to change Rule
Market Maker is an ATP Holder that is registered a typo in the existing rule text, which adds clarity
923NY(b) regarding Specialists and e-Specialists.
with the Exchange for the purpose of submitting 8 See Rule 923NY(b).
to Exchange rules. See proposed Rule 923NY(g)
quotes electronically and making transactions as a (‘‘The Exchange may suspend or terminate any
9 See Rule 923NY(c).
dealer-specialist verbally on the Trading Floor or appointment of a Market Maker in one or more
10 See Rule 923NY(d)(1). See also NYSE Amex
through the System from on the Trading Floor or option issues under this Rule whenever, in the
remotely from off the Trading Floor, in accordance Options Fee Schedule (Section III.A., Monthly ATP Exchange’s judgment, the interests of a fair and
with the Rules of the Exchange. A Market Maker Fees) (describing ‘‘Number Of Issues Permitted In orderly market are best served by such action.’’).
submitting quotes remotely is not eligible to A Market Makers Quoting Assignment’’ based on 18 See Rule 923NY(h). Per Rule 923NY(i), Market
participate in trades affected in open outcry except the number of permits held and the associated Makers are also subject to a trading requirement,
costs), available here, https://www.nyse.com/
asabaliauskas on DSK5VPTVN1PROD with NOTICES
to the extent that such Market Maker’s quotation such that ‘‘[a]t least 75% of the trading activity of
represents the BBO. Market Makers are designated publicdocs/nyse/markets/amex-options/NYSE_ a Market Maker (measured in terms of contract
as specialists on the Exchange for all purposes Amex_Options_Fee_Schedule.pdf. volume per quarter) must be in classes within the
11 A Floor Market Maker is ‘‘a registered Market
under the Securities Exchange Act of 1934 and the Market Maker’s appointment and, in the case of
Rules and Regulations thereunder. A Market Maker Maker who makes transactions as a dealer-specialist Floor Market Makers, within their designated
on the Exchange will be either a Remote Market while on the Floor of the Exchange and provides Trading Zone’’ and a failure to comply with the
Maker, a Floor Market Maker, a Specialist or an e- quotations: (A) Manually, by public outcry, and (B) 75% contract volume requirement may result in the
Specialist. Unless specified, or unless the context electronically through an auto-quoting device.’’ See imposition of a fine per Rule 476A or initiation of
requires otherwise, the term Market Maker refers to Rule 900.2NY(29). formal disciplinary action, pursuant to Section 9A
Remote Market Makers, Floor Market Makers, 12 A Trading Zone refers to the areas on the Floor (Disciplinary Rules). The Exchange is not proposing
Specialists and e-Specialists.’’). designated by the Exchange in which issues are any changes to Rule 923NY(i).
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![18886 Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices
performance standards.19 If the text with text that provides that ‘‘[a] superfluous by the proposed changes to
Exchange finds that a Market Maker has Market Maker may select or withdraw Rule 923NY(c).28
not met the performance standards, the option issues included in their The Exchange believes that the
Exchange may take action, including appointment by submitting a request via proposed changes to how Market
suspending, terminating or restricting a an Exchange-approved electronic Makers select and modify their appoints
Market Maker’s appointment or interface with the Exchange on a day would enable Market Makers to manage
registration, after providing the Market when the Exchange is open for their appointments with more flexibility
Maker an opportunity to be heard.20 business.’’ 23 The modified rule would and in a timelier manner which, in turn,
also provide that an appointment would would reduce the time and resources
Proposed Appointment Process expended by Market Makers and the
become effective by no later than the
The Exchange proposes to modify following business day, whereas a Exchange on the appointment process.
Rule 923NY to refine the current Market Maker’s request to withdraw The Exchange believes this proposal
appointment process. Presently, Market option issues from its appointment would provide Market Makers with
Makers must apply for an appointment would not become effective until the more efficient access to the securities in
in an options class, which, as discussed following business day. 24 Thus, as which they want to make markets and
further below, is done by submitting an proposed, a Market Maker could be disseminate competitive quotations,
email to the Exchange. The Exchange appointed to an options issue on the which would provide additional
proposes to modify Rule 923NY(a) to same day it submits a request to the liquidity and enhance competition in
provide that, rather than apply for an Exchange, depending on availability of those securities. The Exchange would
appointment, ‘‘a Market Maker may Exchange resources to process the retain the ability to suspend or
register for an appointment in one or request that day, but such addition to its terminate any appointment of a Market
more classes of option contracts,’’ in a appointment would be effective no later Maker if necessary to maintain a fair
form and manner prescribed the than the following business day. A and orderly market.29 The Exchange
Exchange.21 The Exchange would Market Maker, however, would not be also notes that the proposed changes to
continue to have authority to appoint able to withdraw an options issue from Rule 923NY(a), (b) 30 and (c) 31 are
one Specialist per option class and to its appointment on the same day that it consistent with the rules of other
designate e-Specialists in options submits the request; instead, the exchanges and therefore raise no new or
classes to fulfill certain obligations Exchange will only process such novel issues.
required of Specialists. Similarly, there requests on an overnight basis for The Exchange also proposes to amend
would continue to be an unlimited effectiveness on the following business Rule 923NY(d)(1) to state that ‘‘Market
number of Market Makers appointed to day. Before any additions to a Market Makers must have the number of ATPs
an options class, unless the Exchange Maker’s appointment would become required under the Fee Schedule for its
restricted such appointments following effective, the Exchange would be
Commission review and approval. The required to confirm ‘‘that the Market 28 The Exchange proposes to designate
Exchange is proposing a change to the subparagraphs (e) and (f) as Reserved.
Maker’s appointment will not exceed 29 See Rule 923NY(g). The Exchange, however,
text in Rule 923NY(b) to reflect the that permitted under paragraph (d) of proposes to correct the possessive form of
proposed changes in Rule 923NY(a) to this Rule’’ 25 and confirm receipt of the ‘‘Exchange’’ (from ‘‘Exchanges’ judgment’’ to
provide that ‘‘[a]n unlimited number of Market Maker’s request.26 Confirmation ‘‘Exchange’s judgment’’) in this paragraph to correct
Market Makers may register in each of receipt is designed to ensure that the a typo in the existing rule text, which adds clarity
class,’’ subject to any limits imposed by to Exchange rules. See proposed Rule 923NY(g)
request was successfully transmitted to (‘‘The Exchange may suspend or terminate any
the Exchange.22 the Exchange (i.e., there was no system appointment of a Market Maker in one or more
In addition, to simplify a Market failure or human error on either side of option issues under this Rule whenever, in the
Maker’s ability to select and make the electronic transaction that prevented Exchange’s judgment, the interests of a fair and
changes to its appointment, the transmission and receipt of the Market orderly market are best served by such action.’’).
30 See e.g., BATS Rules 22.3(a) (‘‘An Options
Exchange proposes to modify Rule Maker’s request). Presently, Market Member that has qualified as an Options Market
923NY(c) to replace the existing rule Makers can select issues in their Maker may register to make markets in individual
appointment or make changes thereto, series of options’’); NOM, Chapter VII, Section 3(a)
19 See Rule 923NY(j). (‘‘An Options Participant that has qualified as an
pursuant to proposed Rule 923NY(c), by
20 See Rule 923NY(j)(1). See also Rule 923NY(j)(2) Options Market Maker may register to make markets
(‘‘If a Market Maker’s appointment in an option
submitting an email [sic] the Exchange in individual options.’’).
issue or issues has been terminated pursuant to this which is ‘‘the Exchange-approved 31 See e.g., PHLX Rule 3212(b) (‘‘A PSX Market
subsection (j), the Market Maker may not be re- electronic interface’’ at this time.27 Maker may become registered in an issue by
appointed as a Market Maker in that option issue Consistent with this proposed change, entering a registration request via an Exchange
or issues for a period not to exceed 6 months.’’). the Exchange proposes to delete approved electronic interface with PSX’s systems or
21 See proposed Rule 923NY(a) (‘‘On a form or by contacting PSX Market Operations. Registration
forms prescribed by the Exchange, a Market Maker
paragraphs (e) and (f) of Rule 923NY, shall become effective on the day the registration
may register for an appointment in one or more which describe how Market Makers can request is entered’’); PHLX Rule 3220(a) (‘‘A market
classes of option contracts, subject to paragraph (d) change their appointment or withdraw maker may voluntarily terminate its registration in
of this Rule.’’). As discussed, paragraph (d) of the from issues in their appointment a security by withdrawing its two-sided quotation
Rule provides that Market Makers must have the from PSX. A PSX Market Maker that voluntarily
designated number of ATPs set forth in the Amex
because these provisions are rendered terminates its registration in a security may not re-
Options Fee Schedule in order to have a trading register as a market maker for one (1) business
23 See proposed Rule 923NY(c).
appointment on the Exchange. day.’’). See also BATS Rules 22.3(b) (‘‘An Options
24 Id.
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22 See proposed Rule 923NY(b) (‘‘The Exchange Market Maker may become registered in a series by
may appoint one Specialist per option class. The 25 Id. Proposed changes to Rule 923NY(d) are entering a registration request via an Exchange
Exchange may designate e-Specialists in an option discussed below. approved electronic interface with the Exchange’s
class in accordance with Rule 927.4NY. An 26 The Exchange is also required to confirm systems by 9:00 a.m. Eastern time. Registration shall
unlimited number of Market Makers may register in receipt of requests to withdraw option issues from become effective on the day the registration request
each class unless the number of Market Makers a Market Maker’s appointment. See proposed Rule is entered’’); NOM, Chapter VII, Section 3(b) (‘‘An
appointed to a particular option class should be 923NY(c). Options Market Maker may become registered in an
limited whenever, in the Exchange’s judgment, 27 The Exchange will announce by Trader Update option by entering a registration request via a
quotation system capacity in an option class or the email address that Market Makers should utilize Nasdaq approved electronic interface with Nasdaq’s
classes is not sufficient to support additional to make selections in, or changes to, their systems. Registration shall become effective on the
Market Makers in such class or classes.’’). appointment pursuant to this Rule. day the registration request is entered.’’).
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![Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 18887
appointment as a Market Maker in under Rule 923NY (j) are currently objectives of Section 6(b)(5),42 in
option issues,’’ which the Exchange among the considerations of the particular, in that it is designed to
believes adds clarity to the Rule.32 In Exchange in approving a Market prevent fraudulent and manipulative
addition, the Exchange proposes to Maker’s appointment.38 In connection acts and practices, to promote just and
modify Rule 923NY(d)(2) to provide that with the Exchange’s proposed changes equitable principles of trade, to foster
‘‘Floor Market Makers shall be to the process for Market Makers’ cooperation and coordination with
appointed to a Trading Zone on the appointments to options classes, the persons engaged in facilitating
Floor,’’ 33 to conform this provision to Exchange proposes to eliminate these transactions in securities, and to remove
other changes proposed herein, which approval provisions. Because financial impediments to and perfect the
are designed to streamline the resources and operational capability are mechanism of a free and open market
Exchange’s appointment process.34 important considerations in a Market and a national market system.
The Exchange also proposes to modify Maker’s performance, the Exchange The Exchange believes that the
the text in paragraph (h) of the Rule. As proposes to retain these factors for proposed rule change removes
proposed, a Market Maker would consideration in the Exchange’s impediments to a free and open market
continue to be permitted to ‘‘seek periodic evaluation of Market Maker because it would enable Market Makers
review of any action taken by the performance.39 to manage their appointments with
Exchange, in accordance with Section Finally, the Exchange proposes to more flexibility and in a timelier
9A of the Office Rules, as applicable.’’ modify Rule 923NY(j)(2) to reflect the manner. The Exchange believes the
However, to clarify the rule text, the proposed changes to the Market Maker proposed change would reduce the
Exchange proposes to delete the appointment process. Specifically, the burden on both Market Makers and
unnecessary clause ‘‘including the Exchange proposes to change the Exchange staff, which would result in a
denial of the appointment for, or the reference to a Market Maker being ‘‘re- fair and reasonable use of resources to
termination or suspension of, a Market appointed’’ by the Exchange if an option the benefit of all market participants. In
Maker’s appointment in an option issue issue or issues has been terminated particular, the proposal to allow Market
or issues.’’ 35 The Exchange’s denial, pursuant to this subsection (j), and to Makers to select their appointments,
termination, or suspension of a Market instead provide that ‘‘the Exchange may and make changes thereto, via an
Maker’s appointment would continue to restrict a Market Maker’s registration as Exchange-approved electronic interface
be reviewable under Section 9A of the a Market Maker in that option issue or is consistent with [sic] Act because it
Office Rules, as would other applicable issues for a period not to exceed 6 would provide Market Makers with
actions taken by the Exchange under months.’’ 40 This proposal continues to more efficient access to the securities in
Rule 923NY.36 give the Exchange discretion to suspend which they want to make markets and
Rule 923NY(j) states that the that Market Maker’s appointment in the thus more quickly begin disseminating
Exchange will conduct periodic affected option issue(s) for a full six competitive quotations in those
evaluations of Market Makers to months, or to allow that Market Maker securities, which would provide
determine whether they have fulfilled to resume that appointment earlier than additional liquidity and enhance
the requisite performance standards. the prescribed six-month period, based competition in those securities. The
The Exchange proposes to add ‘‘the on the Exchange’s evaluation of the facts Exchange also believes that preventing
financial resources available to the and circumstances. The Exchange Market Makers from being able to
Market Maker’’ and ‘‘the Market Maker’s believes the proposed change is withdraw an option issue from its
necessary so that Rule 923NY(j)(2) is appointment on the same day that it
operational capability’’ as factors the
consistent with the proposed changes in submits the request (as such requests are
Exchange will consider in its
paragraphs (a), (b), and (c) of Rule processed on an overnight basis for
evaluations conducted pursuant to Rule
923NY to the process for Market Makers effectiveness on the following business
923NY(j).37 The additional
to register and change their day) would serve to promote just and
considerations the Exchange proposes to
appointments to options classes. equitable principles of trade and benefit
include in its periodic evaluations
investors and the public interest.
2. Statutory Basis In addition, the Exchange believes
32 See proposed Rule 923NY(d)(1).
33 The Exchange also proposes to capitalize
The proposed rule change is that the proposal to allow Market
‘‘Floor’’ in the first sentence of Rule 923NY(d)(1) to consistent with Section 6(b) 41 of the Makers to make selections or changes to
add clarity and consistency to Exchange rules. Securities Exchange Act of 1934 (the their appointment without first
34 This proposed change also conforms to the ‘‘Act’’), in general, and furthers the obtaining explicit Exchange approval is
latter portion of Rule 923NY(d)(2) which provides likewise consistent with the Act. First,
that ‘‘Specialists shall be appointed to the Trading
Zone designated for their issues.’’
38 See Rule 923NY(c)(2) and (4). because financial resources and
39 The Exchange is not proposing any changes to
35 See Rule 923NY(h) (‘‘A Market Maker may seek operational capability are important
Rule 923NY(j)(1), which sets forth the actions that
review of any action taken by the Exchange the Exchange may take, after affording a Market considerations in a Market Maker’s
pursuant to this Rule in accordance with Section Maker written notice and an opportunity for performance, the Exchange proposes to
9A of the Office Rules, as applicable.’’). hearing pursuant to Section 9A should the retain these factors for consideration in
36 Id.
Exchange find a Market Maker is failing to meet the Exchange’s periodic evaluation of
37 See proposed Rule 923NY(j) (‘‘The Exchange minimum performance standards. See Rule
will periodically conduct an evaluation of Market 923NY(j)(1). The Exchange however proposes to Market Maker performance. The
Makers to determine whether they have fulfilled delete the word ‘‘primary’’ from Rule Exchange believes that adding these
923NY(j)(1)(A) so that the clause refers simply to factors to the Exchange’s consideration
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performance standards relating to, among other
things, quality of markets, competition among the ‘‘Market Maker’s appointment,’’ which change
would add clarity and consistency to Exchange
would remove impediments to and
Market Makers, observance of ethical standards,
and administrative factors. The Exchange may rules. See proposed Rule 923NY(j)(1)(A). perfect the mechanism of a free and
consider any relevant information including, but 40 See proposed Rule 923NY(j)(2) (‘‘If a Market open market and would benefit
not limited to, the results of a Market Maker Maker’s appointment in an option issue or issues investors and the public interest. In
evaluation, trading data, a Market Maker’s has been terminated pursuant to this subsection (j), addition, as noted above, the Exchange
regulatory history, the financial resources available the Market Maker may not register as a Market
to the Market Maker, the Market Maker’s Maker in that option issue or issues for a period not would continue to have authority to
operational capability, and such other factors and to exceed 6 months.’’).
data as may be pertinent in the circumstances.’’). 41 15 U.S.C. 78f(b). 42 15 U.S.C. 78f(b)(5).
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![Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 18889
For the Commission, by the Division of II. Clearing Agency’s Statement of the • $5.00 per transfer for lower volume
Trading and Markets, pursuant to delegated Purpose of, and Statutory Basis for, the Eligible AIP Products.
authority.48 Proposed Rule Change NSCC will implement the new
Brent J. Fields, In its filing with the Commission, transfer fees beginning March 26, 2015,
Secretary. NSCC included statements concerning or such later date as NSCC may
[FR Doc. 2015–07964 Filed 4–7–15; 8:45 am] the purpose of and basis for the announce through Important Notice.
BILLING CODE 8011–01–P proposed rule change and discussed any (2) Statutory Basis
comments it received on the proposed
rule change. The text of these statements NSCC believes that the proposed rule
SECURITIES AND EXCHANGE may be examined at the places specified change is consistent with the
COMMISSION in Item IV below. NSCC has prepared requirements of the Act, and the rules
summaries, set forth in sections A, B, and regulations thereunder applicable to
and C below, of the most significant NSCC. In particular, the proposed rule
[Release No. 34–74639; File No. SR–NSCC–
aspects of such statements. change is consistent with Section
2015–001]
17A(b)(3)(D) 7 of the Act because it
A. Self-Regulatory Organization’s
Self-Regulatory Organizations; establishes NSCC’s fees for the
Statement of the Purpose of, and
National Securities Clearing processing of transfer instructions
Statutory Basis for, the Proposed Rule
Corporation; Notice of Filing and submitted by AIP Members, which
Change
Immediate Effectiveness of Proposed helps to provide for the equitable
(1) Statement of Purpose allocation of reasonable dues, fees and
Rule Change to Amend Addendum A
(Fee Structure) With Respect to the AIP was initially approved by the other charges among members in
Commission on May 12, 2008 5 as a new connection with use of the Service.
Alternative Investment Product
Services processing platform for alternative B. Self-Regulatory Organization’s
investment products such as hedge Statement on Burden on Competition
April 2, 2015. funds, funds of hedge funds,
commodities pools, managed futures, NSCC does not believe that the
Pursuant to Section 19(b)(1) of the proposed rule change will have any
Securities Exchange Act of 1934 and real estate investment trusts
(collectively, ‘‘Eligible AIP Products’’). impact or impose any burden on
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 competition.
notice is hereby given that on March 23, AIP links global market participants,
including broker/dealers, fund C. Self-Regulatory Organization’s
2015, National Securities Clearing
managers, fund administrators and Statement on Comments on the
Corporation (‘‘NSCC’’) filed with the
custodians (collectively, ‘‘AIP Proposed Rule Change Received From
Securities and Exchange Commission
Members’’), to provide one standard Members, Participants, or Others
(‘‘Commission’’) the proposed rule
end-to-end process for Eligible AIP
change as described in Items I, II and III Written comments relating to the
Products.
below, which Items have been prepared As set forth in NSCC’s Rules, ‘‘AIP proposed rule change have not yet been
by NSCC. NSCC filed the proposed rule Data transmitted through the AIP solicited or received. NSCC will notify
change pursuant to Section 19(b)(3)(A) 3 Service may include data relating to the Commission of any written
of the Act and Rule 19b–4(f)(2) 4 subscriptions and purchases; comments received by NSCC.
thereunder. The proposed rule change redemptions, withdrawals and tender
was effective upon filing with the III. Date of Effectiveness of the
offers; exchange transactions; transfers; Proposed Rule Change and Timing for
Commission. The Commission is . . . and such other data as may be
publishing this notice to solicit Commission Action
established by [NSCC] from time to
comments on the proposed rule change time.’’ 6 The foregoing rule change has become
from interested persons. NSCC recently enhanced the AIP effective pursuant to Section 19(b)(3)(A)
I. Clearing Agency’s Statement of the platform to better process transfer of the Act 8 and paragraph (f) of Rule
Terms of Substance of the Proposed instructions submitted by AIP Members. 19b–4 9 thereunder. At any time within
Rule Change In connection with these enhancements, 60 days of the filing of the proposed rule
NSCC proposes to amend Addendum A change, the Commission summarily may
The proposed rule change consists of to establish the fees applicable to the temporarily suspend such rule change if
an amendment to Addendum A (Fee processing of transfers, such as for it appears to the Commission that such
Structure) of NSCC’s Rules & Procedures example, internal transfers. Internal action is necessary or appropriate in the
(‘‘Rules’’) to establish certain fees transfers occur within an AIP Member public interest, for the protection of
applicable to the Alternative Investment that is a broker/dealer when such AIP investors, or otherwise in furtherance of
Product services (‘‘AIP’’ or the Member re-registers a customer account the purposes of the Act.
‘‘Service’’), as more fully described in the name of a different customer due
IV. Solicitation of Comments
below. The text of the proposed rule to, for example, the death of the
change is available on NSCC’s Web site previously registered customer. NSCC Interested persons are invited to
at http://www.dtcc.com/legal/sec-rule- proposes to establish the following fees submit written data, views, and
for AIP transfers:
asabaliauskas on DSK5VPTVN1PROD with NOTICES
filings.aspx, at the principal office of arguments concerning the foregoing,
NSCC, and at the Commission’s Public • $1.50 per transfer for higher volume including whether the proposed rule
Reference Room. Eligible AIP Products. change is consistent with the Act.
Comments may be submitted by any of
5 Securities Exchange Act Release No. 57813 (May
48 17 CFR 200.30–3(a)(12). the following methods:
12, 2008), 73 FR 28539 (May 16, 2008) (SR–NSCC–
1 15 U.S.C. 78s(b)(1). 2007–12).
2 17 CFR 240.19b–4. 6 See, [sic] NSCC Rule 53 (Alternative Investment 7 15 U.S.C. 78q–1(b)(3)(D).
3 15 U.S.C. 78s(b)(3)(A). 8 15 U.S.C. 78s(b)(3)(A).
Product Services and Members), Section 6
4 17 CFR 240.19b–4(f)(2). (Transmission of AIP Data) [emphasis added]. 9 17 CFR 240.19b–4(f).
VerDate Sep<11>2014 17:55 Apr 07, 2015 Jkt 235001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 E:\FR\FM\08APN1.SGM 08APN1](https://thefederalregister.org/doc/80_FR_18951/page/6.svg)
Document Created: 2018-02-21 10:06:58
Document Modified: 2018-02-21 10:06:58
| 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 18884 |
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