80 FR 23838 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change To Eliminate Additional Order Type Combinations, Delete Related Rule Text, Restructure the Remaining Rule Text in NYSE Arca Equities Rule 7.31, and Make Other Clarifying Changes to Its Rules

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 82 (April 29, 2015)

Page Range		23838-23839
FR Document		2015-09918

Federal Register, Volume 80 Issue 82 (Wednesday, April 29, 2015)

[Federal Register Volume 80, Number 82 (Wednesday, April 29, 2015)]
[Notices]
[Pages 23838-23839]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-09918]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74796; File No. SR-NYSEArca-2015-08]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change To Eliminate Additional Order Type
Combinations, Delete Related Rule Text, Restructure the Remaining Rule
Text in NYSE Arca Equities Rule 7.31, and Make Other Clarifying Changes
to Its Rules

April 23, 2015.

I. Introduction

On February 19, 2015, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to reorganize, revise and clarify the order type
and order modifier definitions found in NYSE Arca Equities Rule
(``Rule'') 7.31; make certain conforming and clarifying changes to
Rules 7.35, 7.36, 7.37 and 7.38; and eliminate certain order type
functionality from the restructured rule. The proposed rule change was
published for comment in the Federal Register on March 9, 2015.\3\ The
Commission received no comment letters regarding the proposed rule
change. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 74415 (March 3,
2015), 80 FR 12537 (``Notice'').
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II. Description of the Proposal

On June 5, 2014, in a speech entitled ``Enhancing Our Market Equity
Structure,'' Mary Jo White, Chair of the Commission, requested that the
equity exchanges conduct a comprehensive review of their order types
and how they operate in practice, and as part of this review, consider
appropriate rule changes to help clarify the nature of their order
types.\4\ The Exchange has filed this proposed rule change to continue
its efforts to review and clarify its rules governing order types.\5\
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\4\ See Mary Jo White, Chair, Commission, Speech at the Sandler,
O'Neill & Partners, L.P. Global Exchange and Brokerage Conference
(June 5, 2014) (available at www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
\5\ See Notice, 80 FR at 12537.
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The Exchange proposes to reorganize and revise its existing order
type and modifier definitions in Rule 7.31. Specifically, proposed Rule
7.31(a) would contain the revised Exchange definitions for Market
Orders, Limit Orders, and Inside Limit Orders (collectively ``primary
order types'').\6\ The revised Market Order definition would specify
that it cannot be designated Immediate-or-Cancel (``IOC'') and that it
would be rejected in the absence of a contra-side bid or offer.\7\ The
revised Limit Order definition would specify that a ``marketable''
Limit Order is one to buy (sell) at or above (below) the contra-
contra-side Protected Best Bid or Offer for the security.\8\ The
revised Inside Limit Order definition would clarify how the order is
routed, the handling of any returning remainder of such order after
routing, and that such orders may not be designated IOC.\9\
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\6\ See Notice, 80 FR at 12538.
\7\ Id.
\8\ Id. The Exchange also proposes to capitalize the term
``Limit Orders'' where used in the rule. Id.
\9\ Id. The Exchange also proposes to state in proposed Rule
7.31(a)(3) that Inside Limit Orders may be designated with a NOW
Modifier. Id.
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Proposed Rule 7.31(b) would contain the definitions for the
Exchange's Time-in-Force (``TIF'') Modifiers: Day, Good Till Cancelled,
Good Till Date, IOC, and Fill-or-Kill.\10\ The definition for the NOW
Order designation would also be relocated and re-designated as a TIF
Modifier in proposed Rule 7.31(b)(5).\11\
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\10\ See Notice, 80 FR at 12539.
\11\ Id.
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Proposed Rule 7.31(c) would contain the Exchange's revised
definitions for Limit-on-Open Orders, Market-on-Open Orders, Limit-on-
Close Orders, and Market-on-Close Orders (collectively ``Auction-Only
Orders'').\12\ The revised definitions would clarify that the Exchange
would reject Auction-Only Orders in securities that are not eligible
for an auction, or if an auction is suspended pursuant to Rule
7.35(g).\13\
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\12\ Id.
\13\ Id.
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Proposed Rule 7.31(d) would contain the Exchange's revised and
reformatted definitions for Reserve Orders, Passive Liquidity Orders,
and Mid-Point Passive Liquidity (``MPL'') Orders (collectively
``Working Orders'').\14\ The revised Reserve Order definition would
clarify that such an order could not be designated IOC.\15\ Currently,
the All-or-None (``AON'') Order is offered as a Working Order, however
the Exchange proposes to eliminate the functionality.\16\
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\14\ Id.
\15\ See Notice, 80 FR at 12538.
\16\ See Notice, 80 FR at 12537-38. The Exchange also proposes
conforming changes to other rules to reflect the elimination of AON
Orders. See Notice, 80 FR at 12358; see also proposed Rules 7.36 and
7.37.
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Proposed Rule 7.31(e) would contain the Exchange's revised
definitions for Adding Liquidity Only (``ALO'') Orders, Intermarket
Sweep Orders, Post No Preference (``PNP'') Orders, PNP Blind Orders,
Cross Orders, and Tracking Orders (collectively ``non-routable
orders'').\17\ Proposed Rule 7.31(e)(4) would clarify that PNP Blind
Orders combined with the ALO modifier may not also be designated as a
Reserve Order.\18\
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\17\ See Notice, 80 FR at 12539-40.
\18\ See Notice, 80 FR at 12538.
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Proposed Rule 7.31(f) would contain the Exchange's revised
definitions for Primary Only Orders, Primary Until 9:45 Orders, and
Primary After 3:55 Orders (collectively ``specified routing
instructions'').\19\ The Primary Sweep Order is currently offered as a
specified routing instruction, however the Exchange proposes to
eliminate the functionality.\20\
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\19\ See Notice, 80 FR at 12540.
\20\ See Notice, 80 FR at 12538.
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Proposed Rule 7.31(g) would contain the Exchange's definitions for
other existing order types and modifiers, including the Pegged Order,
Proactive if Locked Modifier, Do Not Reduce Modifier, Do Not Increase
Modifier, and Self-Trade Prevention (``STP'') Modifier.\21\
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\21\ See Notice, 80 FR at 12540.
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Proposed Rule 7.31(h) would contain the Exchange's revised Q Order
definition clarifying that such orders do not route.\22\
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\22\ Id.
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The Exchange also proposes to amend and conform Rules 7.35, 7.36,
7.37 and 7.38 to proposed Rule 7.31 as it relates cross references,
term usage and capitalization.\23\ In addition to certain technical
changes, proposed Rule 7.35 would be updated to reflect that the
Exchange no longer conducts a closing auction for certain NYSE-listed
securities, does not run a Market Order Auction in Nasdaq-listed
securities, and only runs a Trading Halt Auction in securities that are
listed on the Exchange.\24\ In addition to certain technical changes,
proposed Rule 7.36 would be amended to clarify how, for

[[Page 23839]]

purposes of determining the best ranked displayed order(s) on the
Exchange for dissemination on the public data feeds, the Exchange
handles non-marketable odd-lot orders that are priced better than the
best-priced round lot interest at the Exchange.\25\ Specifically,
proposed Rule 7.36(c) would be amended to explain the current Exchange
functionality where non-marketable odd-lot sized orders that can be
aggregated to equal at least a round lot are displayed as the best
ranked displayed orders to sell (buy) at the least aggressive price at
which such odd-lot sized orders can be aggregated to equal at least a
round lot.\26\ Proposed Rule 7.37 would be amended to make conforming
and other non-substantive, technical changes.\27\ Proposed Rule
7.38(a)(1) would be amended to specify the order types that cannot be
entered as odd-lots, namely Reserve Orders, MPL-IOC Orders, Tracking
Orders, and Q Orders.\28\
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\23\ See Notice, 80 FR at 12540-41.
\24\ See Notice, 80 FR at 12540.
\25\ See Notice, 80 FR at 12540-41.
\26\ Id.
\27\ See Notice, 80 FR at 12540.
\28\ See Notice, 80 FR at 12541.
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III. Discussion and Commission Findings

After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\29\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\30\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest.
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\29\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\30\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the proposed rule change reflects the
Exchange's continued efforts to review and clarify its rules governing
order types.\31\ In addition, the Commission notes that the Exchange
believes that the proposal is consistent with Section 6(b)(5) of the
Act because it provides greater specificity, clarity and transparency
with regard to the Exchange's order handling processes and
functionalities, including how otherwise non-marketable odd-lot sized
orders are aggregated for purposes of determining the best bid or offer
for display on the public data feeds.\32\ According to the Exchange,
these amendments, both clarifying and technical, should remove
impediments to and perfect the mechanism of a free and open market, and
are consistent with the protection of investors and the public
interest.\33\ The Exchange believes that this proposal should help
reduce the potential for investor confusion and facilitate a better
understanding of the Exchange's order handling operations and
navigation of its rulebook.\34\
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\31\ See Notice, 80 FR at 12537.
\32\ See Notice, 80 FR at 12541.
\33\ Id.
\34\ Id.
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The Commission notes that the proposal reduces the number of order
types that will be accepted by the Exchange. The Commission also notes
that the proposal provides additional detail regarding certain order
type and modifier functionality that remain available on the Exchange.
The Commission further notes that the Exchange has restructured and
reorganized proposed Rule 7.31 such that order types with similar
functionality are grouped together by subsection. The Commission
believes that these proposed changes should provide greater
specificity, clarity and transparency with respect to the order type
and modifier functionality available on the Exchange, as well as the
Exchange's methodology for handling certain order types. Accordingly,
the Commission believes that the proposal should help to prevent
fraudulent and manipulative acts and practices, promote just and
equitable principles of trade, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, protect investors and the public interest.

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\35\ that the proposed rule change (SR-NYSEArca-2015-08) be, and it
hereby is, approved.
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\35\ 15 U.S.C. 78s(b)(2).
\36\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
Brent J. Fields,
Secretary.
[FR Doc. 2015-09918 Filed 4-28-15; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 82 / Wednesday, April 29, 2015 / Notices 23839

purposes of determining the best ranked Exchange’s order handling processes SECURITIES AND EXCHANGE
displayed order(s) on the Exchange for and functionalities, including how COMMISSION
dissemination on the public data feeds, otherwise non-marketable odd-lot sized
the Exchange handles non-marketable orders are aggregated for purposes of [Release No. 34–74795; File No. SR–
odd-lot orders that are priced better than determining the best bid or offer for NASDAQ–2015–038]
the best-priced round lot interest at the display on the public data feeds.32
Exchange.25 Specifically, proposed Rule According to the Exchange, these Self-Regulatory Organizations; The
7.36(c) would be amended to explain amendments, both clarifying and NASDAQ Stock Market LLC; Notice of
the current Exchange functionality technical, should remove impediments Filing and Immediate Effectiveness of
where non-marketable odd-lot sized to and perfect the mechanism of a free Proposed Rule Change To Postpone
orders that can be aggregated to equal at and open market, and are consistent Implementation of Changes to Rules
least a round lot are displayed as the with the protection of investors and the
best ranked displayed orders to sell 4751(h) and 4754(b) Relating to the
public interest.33 The Exchange believes
(buy) at the least aggressive price at Closing Process
that this proposal should help reduce
which such odd-lot sized orders can be the potential for investor confusion and April 23, 2015.
aggregated to equal at least a round facilitate a better understanding of the
lot.26 Proposed Rule 7.37 would be Exchange’s order handling operations Pursuant to Section 19(b)(1) of the
amended to make conforming and other and navigation of its rulebook.34 Securities Exchange Act of 1934
non-substantive, technical changes.27 (‘‘Act’’),1 and Rule 19b–4 thereunder,2
The Commission notes that the notice is hereby given that on April 13,
Proposed Rule 7.38(a)(1) would be
proposal reduces the number of order 2015, The NASDAQ Stock Market LLC
amended to specify the order types that
types that will be accepted by the
cannot be entered as odd-lots, namely (‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
Exchange. The Commission also notes
Reserve Orders, MPL–IOC Orders, the Securities and Exchange
that the proposal provides additional
Tracking Orders, and Q Orders.28 Commission (‘‘SEC’’ or ‘‘Commission’’)
detail regarding certain order type and
III. Discussion and Commission modifier functionality that remain the proposed rule change as described
Findings available on the Exchange. The in Items I and II below, which Items
Commission further notes that the have been prepared by the Exchange.
After careful review, the Commission
Exchange has restructured and The Commission is publishing this
finds that the proposed rule change is
reorganized proposed Rule 7.31 such notice to solicit comments on the
consistent with the requirements of the
Act and the rules and regulations that order types with similar proposed rule change from interested
thereunder applicable to a national functionality are grouped together by persons.
securities exchange.29 In particular, the subsection. The Commission believes I. Self-Regulatory Organization’s
Commission finds that the proposed that these proposed changes should Statement of the Terms of the Substance
rule change is consistent with Section provide greater specificity, clarity and
of the Proposed Rule Change
6(b)(5) of the Act,30 which requires, transparency with respect to the order
among other things, that the rules of a type and modifier functionality The Exchange proposes to postpone
national securities exchange be available on the Exchange, as well as the implementation of changes to Rules
designed to prevent fraudulent and Exchange’s methodology for handling 4751(h) and 4754(b) relating to the
manipulative acts and practices, to certain order types. Accordingly, the closing process.
promote just and equitable principles of Commission believes that the proposal
should help to prevent fraudulent and The text of the proposed rule change
trade, to foster cooperation and
manipulative acts and practices, is available on the Exchange’s Web site
coordination with persons engaged in
promote just and equitable principles of at http://nasdaq.cchwallstreet.com, at
facilitating transactions in securities, to
remove impediments to and perfect the trade, remove impediments to and the principal office of the Exchange, and
mechanism of a free and open market perfect the mechanism of a free and at the Commission’s Public Reference
and a national market system, and, in open market and a national market Room.
general, to protect investors and the system, and, in general, protect II. Self-Regulatory Organization’s
public interest. investors and the public interest.
Statement of the Purpose of, and
The Commission notes that the IV. Conclusion Statutory Basis for, the Proposed Rule
proposed rule change reflects the Change
Exchange’s continued efforts to review It is therefore ordered, pursuant to
and clarify its rules governing order Section 19(b)(2) of the Act,35 that the In its filing with the Commission, the
types.31 In addition, the Commission proposed rule change (SR–NYSEArca- Exchange included statements
notes that the Exchange believes that the 2015–08) be, and it hereby is, approved. concerning the purpose of and basis for
proposal is consistent with Section the proposed rule change and discussed
For the Commission, by the Division of
6(b)(5) of the Act because it provides any comments it received on the
Trading and Markets, pursuant to delegated
greater specificity, clarity and proposed rule change. The text of these
authority.36
transparency with regard to the statements may be examined at the
Brent J. Fields,
25 See Secretary. places specified in Item IV below. The
Notice, 80 FR at 12540–41.
Exchange has prepared summaries, set
mstockstill on DSK4VPTVN1PROD with NOTICES

26 Id.
[FR Doc. 2015–09918 Filed 4–28–15; 8:45 am]
27 See Notice, 80 FR at 12540. forth in sections A, B, and C below, of
BILLING CODE 8011–01–P
28 See Notice, 80 FR at 12541. the most significant aspects of such
29 In approving this proposed rule change, the
32 See
statements.
Commission has considered the proposed rule’s Notice, 80 FR at 12541.
33 Id.
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f). 34 Id.
30 15 U.S.C. 78f(b)(5). 35 15 1 15 U.S.C. 78s(b)(1).
U.S.C. 78s(b)(2).
31 See Notice, 80 FR at 12537. 36 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.

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Document Created: 2015-12-16 08:26:21
Document Modified: 2015-12-16 08:26:21

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 23838