80 FR 18909 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Amending Rule 6.35 To Refine the Appointment Process Utilized by the Exchange

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 67 (April 8, 2015)

Page Range		18909-18913
FR Document		2015-07963
Federal Register, Volume 80 Issue 67 (Wednesday, April 8, 2015)
[Federal Register Volume 80, Number 67 (Wednesday, April 8, 2015)]
[Notices]
[Pages 18909-18913]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07963]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74635; File No. SR-NYSEArca-2015-17]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Amending Rule 6.35 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 Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 6.35 (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.

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 6.35 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.
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    \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).
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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 6.35. 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\
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    \5\ See Rule 6.33 (Registration of Market Makers). See also Rule 
6.32(a) (Market Maker Defined) (A ``Market Maker is an individual 
who is registered with the Exchange for the purpose of making 
transactions as a dealer-specialist on the Floor of the Exchange or 
for the purpose of submitting quotes electronically and making 
transactions as a dealer-specialist through the NYSE Arca OX 
electronic trading system. Registered 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 Market Maker or a Lead 
Market Maker. Unless specified, or unless the context requires 
otherwise, the term Market Maker refers to both Market Makers and 
Lead Market Maker.'').
    \6\ See Rule 6.35(a).
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    In addition to having the authority to appoint one Lead Market 
Maker (``LMM'') \7\ per option class, ``[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 sets forth the number of Options Trading Permits (``OTPs'') 
required of a Market Maker in order to have a specified number of 
options issues included in the Market Maker's appointment (e.g., 1 OTP 
affords a Market Maker up to 100 option issues in their appointment, 
whereas 4 OTPs enables a Market Maker to include in their appointment 
all option issues traded on the Exchange).\10\
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    \7\ An LMM is ``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 6.82. Each 
LMM or nominee thereof must be registered with the Exchange as a 
Market Maker. Any OTP Holder or OTP Firm registered as a Market 
Maker with the Exchange is eligible to be qualified as an LMM.'' See 
Rule 6.82(a)(1).
    \8\ See Rule 6.35(b).
    \9\ See Rule 6.35(c).
    \10\ See Rule 6.35(d).
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    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.'' \11\ 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.'' \12\ If Market Makers fail to provide this notice, 
they ``may be subject to formal disciplinary

[[Page 18910]]

action pursuant to Rule 10.'' \13\ 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'' 
\14\ A Market Maker may seek review of any action taken by the 
Exchange.\15\
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    \11\ See Rule 6.35(e). In considering the change request, the 
Exchange will consider the factors set forth in Rule 6.35(c).
    \12\ See Rule 6.35(f).
    \13\ Id. Rule 10 sets forth the procedures for Exchange 
disciplinary proceedings and appeals, with Rule 10.5 specifically 
providing the due process for the formal hearing process and Rule 
10.7 requiring 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.
    \14\ See Rule 6.35(g).
    \15\ See Rule 6.35(h). Per Rule 6.35(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 a failure to comply with the 75% contract volume 
requirement may result in the imposition of a fine or initiation of 
formal disciplinary action, pursuant to Rule 10 (Disciplinary 
Proceedings and Appeals). The Exchange is not proposing any changes 
to Rule 6.35(i).
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    Finally, under the current Rule, the Exchange periodically conducts 
evaluations of Market Makers to determine whether they have fulfilled 
performance standards.\16\ 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.\17\
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    \16\ See Rule 6.25(j) [sic].
    \17\ See Rule 6.35(j)(1). See also Rule 6.35(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.'').
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Proposed Appointment Process
    The Exchange proposes to modify Rule 6.35 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 6.35(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.\18\ The Exchange would continue to have authority to appoint 
one LMM per option class. 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 
6.36(b) [sic] to reflect the proposed changes in Rule 6.35(a) to 
provide that ``[a]n unlimited number of Market Makers may register in 
each class,'' subject to any limits imposed by the Exchange.\19\
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    \18\ See proposed Rule 6.35(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 
the number of options permitted in a Market Maker's appointment is 
determined by the number of OTPs that the Market Maker has.
    \19\ See proposed Rule 6.35(b) (``The Exchange may appoint one 
LMM per option class. 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.'').
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    In addition, to simplify a Market Maker's ability to select and 
make changes to its appointment, the Exchange proposes to modify Rule 
6.35(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.'' \20\ 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.\21\ 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'' \22\ and 
confirm receipt of the Market Maker's request.\23\ 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 6.35(c), by submitting an email 
[sic] the Exchange which is ``the Exchange-approved electronic 
interface'' at this time.\24\
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    \20\ See proposed Rule 6.35(c).
    \21\ Id.
    \22\ Id. Proposed changes to Rule 6.35(d) are discussed below.
    \23\ The Exchange is also required to confirm receipt of 
requests to withdraw option issues from a Market Maker's 
appointment. See proposed Rule 6.35(c).
    \24\ 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.
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    Consistent with this proposed change, the Exchange proposes to 
delete paragraphs (e) and (f) of Rule 6.35, 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 6.35(c).\25\
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    \25\ The Exchange proposes to designate subparagraphs (e) and 
(f) as Reserved.
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    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.\26\ 
The Exchange also notes that the proposed changes to

[[Page 18911]]

Rule 6.35(a), (b) \27\ and (c) \28\ are consistent with the rules of 
other exchanges and therefore raise no new or novel issues.
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    \26\ See Rule 6.35(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 6.35(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.'').
    \27\ 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.'').
    \28\ 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.'').
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    As noted above, paragraph (d) of Rule 6.35 sets forth the number of 
OTPs a Market Maker must have in order to have a specified number of 
options issues included in the Market Maker's appointment. The Exchange 
recently amended the Arca Options Fee Schedule to include this 
information together with its OTP fees for Market Makers.\29\ 
Accordingly, the Exchange proposes to delete the detailed information 
on the number of option issues a Market Maker may include in its 
assignment in relation to the number of OTPs the Market Maker has and 
modify paragraph (d) of the Rule to read that ``[a] Market Maker must 
have the number of OTPs required under the Fee Schedule for its 
appointment as a Market Maker in option issues.'' \30\ The Exchange 
believes that removing this redundancy would improve the clarity of its 
rules.\31\
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    \29\ See Securities Exchange Act Release No. 34-74382 (February 
26, 2015), 80 FR 11713 (March 4, 2015) (SR-NYSEARCA-2015-10). See 
also NYSE Arca Options Fee Schedule (describing ``Number of Option 
Issues Permitted in Market Maker's Assignment'' based on the number 
of OTPs held and the associated costs), available here, https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf.
    \30\ See proposed Rule 6.35(d).
    \31\ See, e.g., 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. See also Securities Exchange Act 
Release No. 67505 (July 26, 2012), 77 FR 45292 [sic] (July 31, 2012) 
(SR-NYSEMKT-2012-24) (filing for immediate effectiveness to add 
information regarding ATP Fees previously found in NYSE Amex Rule 
923NY(d)(1)-(4) to Fee Schedule).
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    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 
Rule 10, 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.'' \32\ The 
Exchange's denial, termination, or suspension of a Market Maker's 
appointment would continue to be reviewable under Rule 10, as would 
other applicable actions taken by the Exchange under Rule 6.35.\33\
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    \32\ See Rule 6.35(h) (``A Market Maker may seek review of any 
action taken by the Exchange pursuant to this Rule in accordance 
with Rule 10, as applicable.'').
    \33\ Id.
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    Rule 6.35(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 6.35(j).\34\ The 
additional considerations the Exchange proposes to include in its 
periodic evaluations under Rule 6.35(j) are currently among the 
considerations of the Exchange in approving a Market Maker's 
appointment.\35\ 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.\36\
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    \34\ See proposed Rule 6.35(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.'').
    \35\ See Rule 6.35(c)(2) and (4).
    \36\ The Exchange is not proposing any changes to Rule 
6.35(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 Rule 10.5, should the Exchange find a Market 
Maker is failing to meet minimum performance standards. See Rule 
6.35(j)(1).
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    Finally, the Exchange proposes to modify Rule 6.35(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.'' \37\ 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 6.35(j)(2) is consistent with the proposed changes in 
paragraphs (a), (b), and (c) of Rule 6.35 to the process for Market 
Makers to register and change their appointments to options classes.
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    \37\ See proposed Rule 6.35(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.'').
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \38\ of 
the Securities Exchange Act of 1934 (the ``Act''), in general, and 
furthers the objectives of Section 6(b)(5),\39\ 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.
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    \38\ 15 U.S.C. 78f(b).
    \39\ 15 U.S.C. 78f(b)(5).
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    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

[[Page 18912]]

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 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.\40\ 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.\41\
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    \40\ See Rule 6.35(g). See also Rule 6.33 (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 6.37, 6.37A or 6.37B'', which outline the 
obligations of Market Makers).
    \41\ 15 U.S.C. 78f(d).
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    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.\42\
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    \42\ See Rule 6.37B.
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    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.\43\ 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.
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    \43\ See supra nn. 4, 27, 28.
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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.\44\ 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.
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    \44\ Id.
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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 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-NYSEArca-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.


[[Page 18913]]


All submissions should refer to File Number SR-NYSEArca-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-NYSEArca-2015-17, and should 
be submitted on or before April 29, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\45\
---------------------------------------------------------------------------

    \45\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-07963 Filed 4-7-15; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 18909

10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s In addition to having the authority to
filing also will be available for Statement of the Purpose of, and appoint one Lead Market Maker
inspection and copying at the principal Statutory Basis for, the Proposed Rule (‘‘LMM’’) 7 per option class, ‘‘[t]he
office of the Exchange. All comments Change Exchange may appoint an unlimited
received will be posted without change; In its filing with the Commission, the number of Market Makers in each class
the Commission does not edit personal self-regulatory organization included unless the number of Market Makers
identifying information from statements concerning the purpose of, appointed to a particular option class
submissions. You should submit only and basis for, the proposed rule change should be limited’’ based on the
information that you wish to make and discussed any comments it received Exchange’s judgment.8 Further, the Rule
available publicly. All submissions on the proposed rule change. The text provides that ‘‘Market Makers may
should refer to File Number SR– of those statements may be examined at select from among any option issues
NASDAQ–2015–028 and should be the places specified in Item IV below. traded on the Exchange for inclusion in
submitted on or before April 29, 2015. The Exchange has prepared summaries, their appointment, subject to the
For the Commission, by the Division of set forth in sections A, B, and C below, approval of the Exchange. In
Trading and Markets, pursuant to delegated of the most significant parts of such considering the approval of the
authority.12 statements. appointment of a Market Maker in each
Brent J. Fields, security,’’ the Exchange will consider
Secretary.
A. Self-Regulatory Organization’s the Market Maker’s preference; the
Statement of the Purpose of, and financial resources available to the
[FR Doc. 2015–07965 Filed 4–7–15; 8:45 am]
Statutory Basis for, the Proposed Rule Market Maker; the Market Maker’s
BILLING CODE 8011–01–P
Change experience, expertise and past
1. Purpose performance in making markets,
SECURITIES AND EXCHANGE including the Market Maker’s
The Exchange proposes to amend performance in other securities; the
COMMISSION
Rule 6.35 to refine the appointment Market Maker’s operational capability;
process utilized by the Exchange. The and the maintenance and enhancement
[Release No. 34–74635; File No. SR– Exchange believes this proposal, which
NYSEArca–2015–17] of competition among Market Makers in
is consistent with the rules of other
each security in which they are
option exchanges,4 would simplify and
Self-Regulatory Organizations; NYSE appointed.9 The Rule also sets forth the
enhance the efficiency of the
Arca, Inc.; Notice of Filing of Proposed number of Options Trading Permits
appointment process for both Market
Rule Change Amending Rule 6.35 To (‘‘OTPs’’) required of a Market Maker in
Makers and the Exchange and add
Refine the Appointment Process order to have a specified number of
clarity to Exchange rules.
Utilized by the Exchange options issues included in the Market
Current Appointment Process Maker’s appointment (e.g., 1 OTP
April 2, 2015.
To register as a Market Maker, an affords a Market Maker up to 100 option
Pursuant to Section 19(b)(1) 1 of the issues in their appointment, whereas 4
applicant must file an application with
Securities Exchange Act of 1934 (the OTPs enables a Market Maker to include
the Exchange on a form or forms
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 in their appointment all option issues
prescribed by the Exchange.5 Once
notice is hereby given that, on March traded on the Exchange).10
registered, a Market Maker may seek an
20, 2015, NYSE Arca, Inc. (the Under the current Rule, ‘‘Market
appointment in one or more option
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with Makers may change the option issues in
classes pursuant to Rule 6.35.
the Securities and Exchange their appointment, subject to the
Specifically, this Rule provides that
Commission (the ‘‘Commission’’) the approval of the Exchange’’ provided
‘‘[o]n a form or forms prescribed by the
proposed rule change as described in requests for changes are ‘‘made in a
Exchange, a Market Maker must apply
Items I, II, and III below, which Items form and manner prescribed by the
for an appointment in one or more
have been prepared by the self- Exchange.’’ 11 In addition, ‘‘Market
classes of option contracts.’’ 6
regulatory organization. The Makers may withdraw from trading an
Commission is publishing this notice to 4 See, e.g., BATS Exchange, Inc. (‘‘BATS’’) Rules option issue that is within their
solicit comments on the proposed rule 22.3(a),(b) (Market Maker Registration); NASDAQ appointment by providing the Exchange
change from interested persons. OMX PHLX (‘‘PHLX) Rule 3212(b) (Registration as with three business days’ written notice
a Market Maker); NASDAQ Options Market
I. Self-Regulatory Organization’s (‘‘NOM’’), Chapter VII (Market Participants),
of such withdrawal.’’ 12 If Market
Statement of the Terms of the Substance Section 3(a),(b) (Continuing Market Maker Makers fail to provide this notice, they
of the Proposed Rule Change Registration). ‘‘may be subject to formal disciplinary
5 See Rule 6.33 (Registration of Market Makers).

The Exchange proposes to amend See also Rule 6.32(a) (Market Maker Defined) (A 7 An LMM is ‘‘is an individual or entity that has
Rule 6.35 (Appointment of Market ‘‘Market Maker is an individual who is registered
been deemed qualified by the Exchange for the
with the Exchange for the purpose of making
Makers) to refine the appointment transactions as a dealer-specialist on the Floor of
purpose of making transactions on the Exchange in
process utilized by the Exchange. The accordance with the provisions of Rule 6.82. Each
the Exchange or for the purpose of submitting
LMM or nominee thereof must be registered with
text of the proposed rule change is quotes electronically and making transactions as a
the Exchange as a Market Maker. Any OTP Holder
dealer-specialist through the NYSE Arca OX
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available on the Exchange’s Web site at or OTP Firm registered as a Market Maker with the
electronic trading system. Registered Market Makers
www.nyse.com, at the principal office of are designated as specialists on the Exchange for all
Exchange is eligible to be qualified as an LMM.’’
the Exchange, and at the Commission’s See Rule 6.82(a)(1).
purposes under the Securities Exchange Act of 1934 8 See Rule 6.35(b).
Public Reference Room. and the Rules and Regulations thereunder. A
9 See Rule 6.35(c).
Market Maker on the Exchange will be either a
10 See Rule 6.35(d).
Market Maker or a Lead Market Maker. Unless
12 17 CFR 200.30–3(a)(12). 11 See Rule 6.35(e). In considering the change
specified, or unless the context requires otherwise,
1 15 U.S.C. 78s(b)(1). the term Market Maker refers to both Market Makers request, the Exchange will consider the factors set
2 15 U.S.C. 78a. and Lead Market Maker.’’). forth in Rule 6.35(c).
3 17 CFR 240.19b–4. 6 See Rule 6.35(a). 12 See Rule 6.35(f).

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18910 Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices

action pursuant to Rule 10.’’ 13 continue to have authority to appoint this Rule’’ 22 and confirm receipt of the
Moreover, the Exchange ‘‘may suspend one LMM per option class. Similarly, Market Maker’s request.23 Confirmation
or terminate any appointment of a there would continue to be an unlimited of receipt is designed to ensure that the
Market Maker in one or more option number of Market Makers appointed to request was successfully transmitted to
issues under this Rule whenever, in the an options class, unless the Exchange the Exchange (i.e., there was no system
Exchanges’ judgment, the interests of a restricted such appointments following failure or human error on either side of
fair and orderly market are best served Commission review and approval. The the electronic transaction that prevented
by such action’’ 14 A Market Maker may Exchange is proposing a change to the transmission and receipt of the Market
seek review of any action taken by the text in Rule 6.36(b) [sic] to reflect the Maker’s request). Presently, Market
Exchange.15 proposed changes in Rule 6.35(a) to Makers can select issues in their
Finally, under the current Rule, the provide that ‘‘[a]n unlimited number of appointment or make changes thereto,
Exchange periodically conducts Market Makers may register in each pursuant to proposed Rule 6.35(c), by
evaluations of Market Makers to class,’’ subject to any limits imposed by
submitting an email [sic] the Exchange
determine whether they have fulfilled the Exchange.19
performance standards.16 If the which is ‘‘the Exchange-approved
In addition, to simplify a Market
Exchange finds that a Market Maker has Maker’s ability to select and make electronic interface’’ at this time.24
not met the performance standards, the changes to its appointment, the Consistent with this proposed change,
Exchange may take action, including Exchange proposes to modify Rule the Exchange proposes to delete
suspending, terminating or restricting a 6.35(c) to replace the existing rule text paragraphs (e) and (f) of Rule 6.35,
Market Maker’s appointment or with text that provides that ‘‘[a] Market which describe how Market Makers can
registration, after providing the Market Maker may select or withdraw option change their appointment or withdraw
Maker an opportunity to be heard.17 issues included in their appointment by from issues in their appointment
submitting a request via an Exchange- because these provisions are rendered
Proposed Appointment Process
approved electronic interface with the superfluous by the proposed changes to
The Exchange proposes to modify Exchange on a day when the Exchange Rule 6.35(c).25
Rule 6.35 to refine the current is open for business.’’ 20 The modified
appointment process. Presently, Market The Exchange believes that the
rule would also provide that an
Makers must apply for an appointment proposed changes to how Market
appointment would become effective by
in an options class, which, as discussed Makers select and modify their appoints
no later than the following business day,
further below, is done by submitting an whereas a Market Maker’s request to would enable Market Makers to manage
email to the Exchange. The Exchange withdraw option issues from its their appointments with more flexibility
proposes to modify Rule 6.35(a) to appointment would not become and in a timelier manner which, in turn,
provide that, rather than apply for an effective until the following business would reduce the time and resources
appointment, ‘‘a Market Maker may day.21 Thus, as proposed, a Market expended by Market Makers and the
register for an appointment in one or Maker could be appointed to an options Exchange on the appointment process.
more classes of option contracts,’’ in a issue on the same day it submits a The Exchange believes this proposal
form and manner prescribed the request to the Exchange, depending on would provide Market Makers with
Exchange.18 The Exchange would availability of Exchange resources to more efficient access to the securities in
process the request that day, but such which they want to make markets and
13 Id. Rule 10 sets forth the procedures for
addition to its appointment would be disseminate competitive quotations,
Exchange disciplinary proceedings and appeals,
with Rule 10.5 specifically providing the due effective no later than the following which would provide additional
process for the formal hearing process and Rule business day. A Market Maker, however, liquidity and enhance competition in
10.7 requiring that any decision by the Exchange would not be able to withdraw an those securities. The Exchange would
must include a statement of findings and options issue from its appointment on retain the ability to suspend or
conclusions, with the reasons therefore upon all
material issues presented in the record. Further, the same day that it submits the request; terminate any appointment of a Market
where a penalty is imposed, the Exchange’s instead, the Exchange will only process Maker if necessary to maintain a fair
decision must include a statement specifying the such requests on an overnight basis for and orderly market.26 The Exchange
acts or practices in which the Respondent has been effectiveness on the following business
found to have engaged, or which the Respondent
also notes that the proposed changes to
has been found to have omitted. day. Before any additions to a Market
14 See Rule 6.35(g). Maker’s appointment would become 22 Id. Proposed changes to Rule 6.35(d) are
15 See Rule 6.35(h). Per Rule 6.35(i), Market effective, the Exchange would be discussed below.
Makers are also subject to a trading requirement, required to confirm ‘‘that the Market 23 The Exchange is also required to confirm

such that ‘‘[a]t least 75% of the trading activity of Maker’s appointment will not exceed receipt of requests to withdraw option issues from
a Market Maker (measured in terms of contract a Market Maker’s appointment. See proposed Rule
volume per quarter) must be in classes within the that permitted under paragraph (d) of 6.35(c).
Market Maker’s appointment’’ and a failure to 24 The Exchange will announce by Trader Update
comply with the 75% contract volume requirement of option contracts, subject to paragraph (d) of this the email address that Market Makers should utilize
may result in the imposition of a fine or initiation Rule.’’). As discussed, paragraph (d) of the Rule to make selections in, or changes to, their
of formal disciplinary action, pursuant to Rule 10 provides that the number of options permitted in appointment pursuant to this Rule.
(Disciplinary Proceedings and Appeals). The a Market Maker’s appointment is determined by the 25 The Exchange proposes to designate
Exchange is not proposing any changes to Rule number of OTPs that the Market Maker has. subparagraphs (e) and (f) as Reserved.
6.35(i). 19 See proposed Rule 6.35(b) (‘‘The Exchange may
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26 See Rule 6.35(g). The Exchange, however,
16 See Rule 6.25(j) [sic]. appoint one LMM per option class. An unlimited proposes to correct the possessive form of
17 See Rule 6.35(j)(1). See also Rule 6.35(j)(2) (‘‘If number of Market Makers may register in each class ‘‘Exchange’’ (from ‘‘Exchanges’ judgment’’ to
a Market Maker’s appointment in an option issue unless the number of Market Makers appointed to ‘‘Exchange’s judgment’’) in this paragraph to correct
or issues has been terminated pursuant to this a particular option class should be limited a typo in the existing rule text, which adds clarity
subsection (j), the Market Maker may not be re- whenever, in the Exchange’s judgment, quotation to Exchange rules. See proposed Rule 6.35(g) (‘‘The
appointed as a Market Maker in that option issue system capacity in an option class or classes is not Exchange may suspend or terminate any
or issues for a period not to exceed 6 months.’’). sufficient to support additional Market Makers in appointment of a Market Maker in one or more
18 See proposed Rule 6.35(a) (‘‘On a form or forms such class or classes.’’). option issues under this Rule whenever, in the
20 See proposed Rule 6.35(c).
prescribed by the Exchange, a Market Maker may Exchange’s judgment, the interests of a fair and
register for an appointment in one or more classes 21 Id. orderly market are best served by such action.’’).

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Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 18911

Rule 6.35(a), (b) 27 and (c) 28 are The Exchange also proposes to modify periodic evaluation of Market Maker
consistent with the rules of other the text in paragraph (h) of the Rule. As performance.36
exchanges and therefore raise no new or proposed, a Market Maker would Finally, the Exchange proposes to
novel issues. continue to be permitted to ‘‘seek modify Rule 6.35(j)(2) to reflect the
As noted above, paragraph (d) of Rule review of any action taken by the proposed changes to the Market Maker
6.35 sets forth the number of OTPs a Exchange, in accordance with Rule 10, appointment process. Specifically, the
Market Maker must have in order to as applicable.’’ However, to clarify the Exchange proposes to change the
have a specified number of options rule text, the Exchange proposes to reference to a Market Maker being ‘‘re-
issues included in the Market Maker’s delete the unnecessary clause appointed’’ by the Exchange if an option
appointment. The Exchange recently ‘‘including the denial of the issue or issues has been terminated
amended the Arca Options Fee pursuant to this subsection (j), and to
appointment for, or the termination or
Schedule to include this information instead provide that ‘‘the Exchange may
suspension of, a Market Maker’s
together with its OTP fees for Market restrict a Market Maker’s registration as
appointment in an option issue or
Makers.29 Accordingly, the Exchange a Market Maker in that option issue or
proposes to delete the detailed issues.’’ 32 The Exchange’s denial,
termination, or suspension of a Market issues for a period not to exceed 6
information on the number of option months.’’ 37 This proposal continues to
issues a Market Maker may include in Maker’s appointment would continue to
give the Exchange discretion to suspend
its assignment in relation to the number be reviewable under Rule 10, as would
that Market Maker’s appointment in the
of OTPs the Market Maker has and other applicable actions taken by the
affected option issue(s) for a full six
modify paragraph (d) of the Rule to read Exchange under Rule 6.35.33
months, or to allow that Market Maker
that ‘‘[a] Market Maker must have the Rule 6.35(j) states that the Exchange to resume that appointment earlier than
number of OTPs required under the Fee will conduct periodic evaluations of the prescribed six-month period, based
Schedule for its appointment as a Market Makers to determine whether on the Exchange’s evaluation of the facts
Market Maker in option issues.’’ 30 The they have fulfilled the requisite and circumstances. The Exchange
Exchange believes that removing this performance standards. The Exchange believes the proposed change is
redundancy would improve the clarity proposes to add ‘‘the financial resources necessary so that Rule 6.35(j)(2) is
of its rules.31 available to the Market Maker’’ and ‘‘the consistent with the proposed changes in
Market Maker’s operational capability’’ paragraphs (a), (b), and (c) of Rule 6.35
27 See e.g., BATS Rules 22.3(a) (‘‘An Options
as factors the Exchange will consider in to the process for Market Makers to
Member that has qualified as an Options Market
Maker may register to make markets in individual its evaluations conducted pursuant to register and change their appointments
series of options’’); NOM, Chapter VII, Section 3(a) Rule 6.35(j).34 The additional to options classes.
(‘‘An Options Participant that has qualified as an considerations the Exchange proposes to
Options Market Maker may register to make markets 2. Statutory Basis
in individual options.’’).
include in its periodic evaluations
28 See e.g., PHLX Rule 3212(b) (‘‘A PSX Market under Rule 6.35(j) are currently among The proposed rule change is
Maker may become registered in an issue by the considerations of the Exchange in consistent with Section 6(b) 38 of the
entering a registration request via an Exchange approving a Market Maker’s Securities Exchange Act of 1934 (the
approved electronic interface with PSX’s systems or
appointment.35 In connection with the ‘‘Act’’), in general, and furthers the
by contacting PSX Market Operations. Registration objectives of Section 6(b)(5),39 in
shall become effective on the day the registration Exchange’s proposed changes to the
request is entered’’); PHLX Rule 3220(a) (‘‘A market process for Market Makers’ particular, in that it is designed to
maker may voluntarily terminate its registration in appointments to options classes, the prevent fraudulent and manipulative
a security by withdrawing its two-sided quotation
Exchange proposes to eliminate these acts and practices, to promote just and
from PSX. A PSX Market Maker that voluntarily equitable principles of trade, to foster
terminates its registration in a security may not re- approval provisions. Because financial
register as a market maker for one (1) business resources and operational capability are cooperation and coordination with
day.’’). See also BATS Rules 22.3(b) (‘‘An Options important considerations in a Market persons engaged in facilitating
Market Maker may become registered in a series by transactions in securities, and to remove
entering a registration request via an Exchange Maker’s performance, the Exchange
impediments to and perfect the
approved electronic interface with the Exchange’s proposes to retain these factors for
systems by 9:00 a.m. Eastern time. Registration shall mechanism of a free and open market
consideration in the Exchange’s
become effective on the day the registration request and a national market system.
is entered’’); NOM, Chapter VII, Section 3(b) (‘‘An The Exchange believes that the
Options Market Maker may become registered in an (July 31, 2012) (SR–NYSEMKT–2012–24) (filing for
immediate effectiveness to add information
proposed rule change removes
option by entering a registration request via a
Nasdaq approved electronic interface with Nasdaq’s regarding ATP Fees previously found in NYSE impediments to a free and open market
systems. Registration shall become effective on the Amex Rule 923NY(d)(1)–(4) to Fee Schedule). because it would enable Market Makers
day the registration request is entered.’’). 32 See Rule 6.35(h) (‘‘A Market Maker may seek
to manage their appointments with
29 See Securities Exchange Act Release No. 34– review of any action taken by the Exchange more flexibility and in a timelier
74382 (February 26, 2015), 80 FR 11713 (March 4, pursuant to this Rule in accordance with Rule 10,
2015) (SR–NYSEARCA–2015–10). See also NYSE as applicable.’’). manner. The Exchange believes the
Arca Options Fee Schedule (describing ‘‘Number of 33 Id.
36 The Exchange is not proposing any changes to
Option Issues Permitted in Market Maker’s 34 See proposed Rule 6.35(j) (‘‘The Exchange will
Assignment’’ based on the number of OTPs held periodically conduct an evaluation of Market Rule 6.35(j)(1), which sets forth the actions that the
and the associated costs), available here, https:// Makers to determine whether they have fulfilled Exchange may take, after affording a Market Maker
www.nyse.com/publicdocs/nyse/markets/arca- performance standards relating to, among other written notice and an opportunity for hearing
options/NYSE_Arca_Options_Fee_Schedule.pdf. things, quality of markets, competition among pursuant to Rule 10.5, should the Exchange find a
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30 See proposed Rule 6.35(d). Market Makers, observance of ethical standards, Market Maker is failing to meet minimum
31 See, e.g., NYSE Amex Options Fee Schedule and administrative factors. The Exchange may performance standards. See Rule 6.35(j)(1).
37 See proposed Rule 6.35(j)(2) (‘‘If a Market
(Section III.A., Monthly ATP Fees) (describing consider any relevant information including, but
‘‘Number Of Issues Permitted In A Market Makers not limited to, the results of a Market Maker Maker’s appointment in an option issue or issues
Quoting Assignment’’ based on the number of evaluation, trading data, a Market Maker’s has been terminated pursuant to this subsection (j),
permits held and the associated costs), available regulatory history, the financial resources available the Market Maker may not register as a Market
here, https://www.nyse.com/publicdocs/nyse/ to the Market Maker, the Market Maker’s Maker in that option issue or issues for a period not
markets/amex-options/NYSE_Amex_Options_Fee_ operational capability, and such other factors and to exceed 6 months.’’).
data as may be pertinent in the circumstances.’’). 38 15 U.S.C. 78f(b).
Schedule.pdf. See also Securities Exchange Act
Release No. 67505 (July 26, 2012), 77 FR 45292 [sic] 35 See Rule 6.35(c)(2) and (4). 39 15 U.S.C. 78f(b)(5).

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18912 Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices

proposed change would reduce the under the rule, and continues to give the Market Makers would still be subject to
burden on both Market Makers and Exchange discretion to allow the Market the same obligations with respect to its
Exchange staff, which would result in a Maker to resume that appointment appointments; the proposed rule change
fair and reasonable use of resources to earlier than the prescribed six-month would make the appointment process
the benefit of all market participants. In period or to maintain the suspension for more efficient for Market Makers. The
particular, the proposal to allow Market the entire period. Finally, the Exchange Exchange believes that the proposed
Makers to select their appointments, is not proposing changes to the rule change would relieve any burden
and make changes thereto, via an disciplinary and appeals process for on, or otherwise promote, competition,
Exchange-approved electronic interface Market Makers that do not meet the as it would enable Market Makers to
is consistent with [sic] Act because it minimum performance standards. manage their appointments with more
would provide Market Makers with Accordingly, the Exchange believes this flexibility and in a timelier manner. The
more efficient access to the securities in proposal is consistent with Section 6(d) Exchange believes this would provide
which they want to make markets and of the Exchange Act.41 Market Makers with more efficient
thus more quickly begin disseminating The proposed rule change would not access to the securities in which they
competitive quotations in those result in unfair discrimination, as it want to make markets and thus more
securities, which would provide applies to all Market Makers. Further, quickly begin disseminating competitive
additional liquidity and enhance the proposed rule change would reduce quotations in those securities, which
competition in those securities. The the burden on Market Makers to manage would provide additional liquidity and
Exchange also believes that preventing their appointments and thus provide enhance competition in those securities.
Market Makers from being able to liquidity to the Exchange. Nevertheless,
withdraw an option issue from its Market Makers would still be required C. Self-Regulatory Organization’s
appointment on the same day that it to comply with certain obligations to Statement on Comments on the
submits the request (as such requests are maintain their status as a Market Maker, Proposed Rule Change Received From
processed on an overnight basis for including that they provide continuous, Members, Participants, or Others
effectiveness on the following business two-sided quotations in their appointed No written comments were solicited
day) would serve to promote just and securities.42 or received with respect to the proposed
equitable principles of trade and benefit Finally, as noted above, the proposed rule change.
investors and the public interest. modifications to the appointment
In addition, the Exchange believes III. Date of Effectiveness of the
process would align the rules of the
that the proposal to allow Market Proposed Rule Change and Timing for
Exchange with the rules of other options
Makers to make selections or changes to Commission Action
exchanges, where Market Makers
their appointment without first presently have the ability to select and Within 45 days of the date of
obtaining explicit Exchange approval is make changes to their appointment via publication of this notice in the Federal
likewise consistent with the Act. First, an Exchange-approved electronic Register or within such longer period (i)
because financial resources and interface.43 The Exchange believes this as the Commission may designate up to
operational capability are important consistency across exchanges would 90 days of such date if it finds such
considerations in a Market Maker’s remove impediments to and perfect the longer period to be appropriate and
performance, the Exchange proposes to mechanism of a free and open market by publishes its reasons for so finding or
retain these factors for consideration in ensuring that members, regulators and (ii) as to which the self-regulatory
the Exchange’s periodic evaluation of the public can more easily navigate the organization consents, the Commission
Market Maker performance. The Exchange’s rulebook and better will:
Exchange believes that adding these understand the appointment process. (A) By order approve or disapprove
factors to the Exchange’s consideration the proposed rule change, or
would remove impediments to and B. Self-Regulatory Organization’s (B) institute proceedings to determine
perfect the mechanism of a free and Statement on Burden on Competition whether the proposed rule change
open market and would benefit The Exchange does not believe that should be disapproved.
investors and the public interest. In the proposed rule change would impose
addition, as noted above, the Exchange IV. Solicitation of Comments
any burden on competition that is not
would continue to have authority to necessary or appropriate in furtherance Interested persons are invited to
suspend or terminate any Market Maker of the purposes of the Act because it submit written data, views, and
appointment in the interest of a fair and provides the same relief to a group of arguments concerning the foregoing,
orderly market, including if necessary to similarly situated market participants— including whether the proposed rule
prevent fraudulent and manipulative Market Makers. The proposed rule change is consistent with the Act.
acts and practices and protect investors, change would reduce the burden on Comments may be submitted by any of
or if a Market Maker does not satisfy its Market Makers to manage their the following methods:
obligations with respect to an appointments and thus provide Electronic Comments
appointment.40 The Exchange would liquidity to the Exchange.
also retain the ability to restrict a Market The Exchange does not believe the • Use the Commission’s Internet
Maker’s registration in option issues for proposed rule change would help comment form (http://www.sec.gov/
up to six months if a Market Maker’s Market Makers to the detriment of rules/sro.shtml); or
• Send an email to rule-comments@
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appointment in that option issue or market participants on other exchanges,
issues had been previously terminated particularly because the proposed sec.gov. Please include File Number SR–
functionality is similar to functionality NYSEArca–2015–17 on the subject line.
40 See Rule 6.35(g). See also Rule 6.33 (regarding
already available on other exchanges.44 Paper Comments
the Exchange’s ability to suspend or terminate a
Market Maker’s registration based on ‘‘a 41 15 U.S.C. 78f(d). • Send paper comments in triplicate
determination of any substantial or continued
failure by such Market Maker to engage in dealings
42 See Rule 6.37B. to Secretary, Securities and Exchange
in accordance with Rules 6.37, 6.37A or 6.37B’’, 43 See supra nn. 4, 27, 28. Commission, 100 F Street NE.,
which outline the obligations of Market Makers). 44 Id. Washington, DC 20549–1090.

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Document Created: 2018-02-21 10:07:00
Document Modified: 2018-02-21 10:07:00
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 18909