80 FR 38486 - Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change Amending Rule 923NY to Modify the Appointment Process Utilized by the Exchange
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 128 (July 6, 2015)
Federal Register Volume 80, Issue 128 (July 6, 2015)
| Page Range | 38486-38488 | |
| FR Document | 2015-16412 |
[Federal Register Volume 80, Number 128 (Monday, July 6, 2015)] [Notices] [Pages 38486-38488] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-16412] [[Page 38486]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75322; File No. SR-NYSEMKT-2015-17] Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change Amending Rule 923NY to Modify the Appointment Process Utilized by the Exchange June 29, 2015. I. Introduction On March 20, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 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 modify the Market Maker appointment and withdrawal process used by the Exchange. The proposed rule change was published for comment in the Federal Register on April 8, 2015.\3\ On May 21, 2015, pursuant to Section 19(b)(2) of the Act,\4\ the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.\5\ The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 74636 (April 2, 2015), 80 FR 18884 (``Notice''). \4\ 15 U.S.C. 78s(b)(2). \5\ See Securities Exchange Act Release No. 75033, 80 FR 30519 (May 28, 2015). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change The Exchange proposes to amend Rule 923NY to modify the options Market Maker appointment and withdrawal process used by the Exchange. Under the proposal, once an Amex trading permit (``ATP'') holder has been approved as a Market Maker under Exchange Rule 9.21NY,\6\ the Market Maker would, subject to certain conditions, be permitted to register rather than apply for an appointment in one or more option classes, and would be permitted to select or withdraw option issues included in its appointment using an Exchange-approved electronic interface. The Exchange also proposes to include a Market Maker's available financial resources and operational capability as considerations in its periodic evaluation of Market Maker performance, which factors currently are considered when a Market Maker applies for an appointment. --------------------------------------------------------------------------- \6\ See Rule 921NY (``Registration of Market Makers''). See also Rule 920NY(a) (defining ``Market Maker''). The Exchange is not proposing any changes to Rule 921NY. --------------------------------------------------------------------------- A. Background Currently, a registered Market Maker may seek an appointment in one or more option classes pursuant to Rule 923NY. Specifically, Rule 923NY 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.'' \7\ 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,\8\ Rule 923NY(b) provides that ``[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.\9\ Further, current Rule 923NY(c) 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.'' \10\ 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.'' \11\ Current Rule 923NY also states that, in order to have a trading appointment on the Exchange, Market Makers must have the number of ATPs required under the Amex Options Fee Schedule.\12\ In addition, Floor Market Makers \13\ must also apply for appointment to a Trading Zone \14\ on the floor, subject to approval by the Exchange.\15\ --------------------------------------------------------------------------- \7\ See Notice, supra note 3, at 18885. \8\ See Rule 900.2 NY(76) (defining ``Specialist''). Any ATP Holder registered as a Market Maker with the Exchange is eligible to be qualified as a Specialist. See id. 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].'' See Rule 923NY(b). The Exchange is not proposing to change Rule 923NY(b) regarding Specialists and e-Specialists. \9\ See Notice, supra note 3, at 18885. \10\ See id. \11\ See Notice, supra note 3, at 18885. \12\ See Notice, supra note 3, at 18885. 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. \13\ See Rule 900.2NY(29) (defining ``Floor Market Maker''). \14\ 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(83). \15\ See Notice, supra note 3, at 18885. The current rule also provides that Specialists shall be appointed to the Trading Zone designated for their issues. See id. at 18885, n.13. --------------------------------------------------------------------------- Under current Rule 923NY, ``Market Makers may change the option issues in their appointment, subject to the approval of the Exchange,'' provided such requests are ``made in a form and manner prescribed by the Exchange.'' \16\ 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.'' \17\ If a Market Maker fails to provide the required notice, the Market Maker ``may be subject to formal disciplinary action pursuant to Section 9A of the Office Rules.'' \18\ 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.'' \19\ A Market Maker may seek review of any action taken by the Exchange.\20\ --------------------------------------------------------------------------- \16\ See Notice, supra note 3, at 18885. In considering the change request, the Exchange will consider the factors set forth in Rule 923NY(c). See id. \17\ See Notice, supra note 3, at 18885. \18\ See id. \19\ See id. \20\ See id. 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. A failure to comply with the 75% contract volume requirement may result in a fine pursuant to Rule 476A, however if aggravating circumstances are present, formal disciplinary action may be taken pursuant to Rule 9A.'' The Exchange is not proposing any changes to Rule 923NY(i). --------------------------------------------------------------------------- The Exchange periodically evaluates whether Market Makers have fulfilled performance standards, relating to, among other things, quality of markets, competition of Market Makers, observance of ethical standards and administrative factors.\21\ If the Exchange finds that a Market Maker has not met the performance standards, the [[Page 38487]] 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.\22\ --------------------------------------------------------------------------- \21\ See Rule 923NY(j). \22\ See Notice, supra note 3, at 18886, n.20 (describing current Rule 923NY(j)(2)) (``If a Market Maker's appointment in an option issue or issues has been terminated pursuant to Rule 923NY(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.''). --------------------------------------------------------------------------- B. Proposed Modifications The Exchange proposes to modify the current appointment and withdrawal process. Specifically, 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.\23\ The Exchange would continue to have authority to appoint one Specialist per option class and to designate e-Specialists in option classes to fulfill certain obligations required of Specialists.\24\ Similarly, an unlimited number of Market Makers could continue to be appointed to an options class, unless the Exchange restricts such appointments following Commission review and approval.\25\ 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\ --------------------------------------------------------------------------- \23\ See proposed Rule 923NY(a). As discussed above, a Market Maker 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. See proposed Rule 923NY(d). \24\ See proposed Rule 923NY(b). \25\ The Exchange is proposing a conforming 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. See proposed Rule 923NY(b). \26\ See Rule 923NY(g). --------------------------------------------------------------------------- In addition, the Exchange proposes to modify Rule 923NY(c) to provide 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.'' \27\ The modified rule would provide that a Market Maker's requested 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.\28\ Thus, a Market Maker could be appointed to an option issue on the same day it submits a request to the Exchange, depending on the availability of Exchange resources to process the request that day, but such request, if properly made and received, would be effective no later than the following business day. A Market Maker, however, would not be able to withdraw an option issue from its appointment on the same day that it submits the request; instead, the Exchange would only process such requests on an overnight basis for effectiveness on the following business day. Also, before any changes to a Market Maker's appointment would become effective, the Exchange would be required to confirm that the Market Maker's appointment would not exceed that permitted under paragraph (d) of the rule, pertaining to the number of ATPs a Market Maker would be required to have,\29\ and also confirm receipt of the Market Maker's request.\30\ According to the Exchange, the confirmation requirement, applicable to requests for additions, changes, and withdrawals, is designed to ensure that the request was properly made and also successfully transmitted to the Exchange.\31\ Market Makers would be able to select issues in their appointment or make changes thereto pursuant to proposed Rule 923NY(c) by submitting an email to the Exchange, which is currently ``the Exchange-approved electronic interface.'' \32\ --------------------------------------------------------------------------- \27\ See proposed Rule 923NY(c). \28\ Id. \29\ Id. The Exchange proposed certain clarifying and conforming changes to Rule 923NY(d) to make it consistent with other changes discussed herein. See Notice, supra note 3, at 18886-87. \30\ See proposed Rule 923NY(c). \31\ See Notice, supra note 3, at 18886. \32\ 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. See Notice, supra note 3, at 18886, n.27. --------------------------------------------------------------------------- Proposed Rule 923NY(h) would provide that a Market Maker may seek review of any action taken by the Exchange under Rule 923NY.\33\ --------------------------------------------------------------------------- \33\ See Rule 923NY(h). See also Notice, supra note 3, at 18887. --------------------------------------------------------------------------- Pursuant to current Rule 923NY(j), the Exchange conducts periodic evaluations of Market Makers to determine whether they have fulfilled performance standards. The Exchange proposes to modify Rule 923NY(j) to specify two additional factors it may consider in evaluating whether a Market Maker has fulfilled performance standards pursuant to Rule 923NY(j): (1) The financial resources available to the Market Maker and (2) the Market Maker's operational capability.\34\ These factors are currently among the factors the Exchange considers when determining whether to approve a Market Maker's appointment.\35\ In connection with the other proposed changes to the Market Maker appointment process, the Exchange proposes that these factors instead be considered as part of the Exchange's periodic evaluation of a Market Maker. --------------------------------------------------------------------------- \34\ See proposed Rule 923NY(j). \35\ See Notice, supra note 3, at 18887. --------------------------------------------------------------------------- Further, 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 the Market Maker's registration as a Market Maker in that option issue or issues for a period not to exceed 6 months.'' \36\ The Exchange would retain the 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.\37\ --------------------------------------------------------------------------- \36\ 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 Exchange may restrict the Market Maker's registration as a Market Maker in that option issue or issues for a period not to exceed 6 months.''). See also Notice, supra note 3, at 18887. \37\ See Notice, supra note 3, at 18887. --------------------------------------------------------------------------- Finally, the Exchange proposes certain clarifying technical changes to Rule 923NY as well as certain conforming changes so that there is consistency throughout the rule text. III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act \38\ and the rules and regulations thereunder applicable to a national securities exchange.\39\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\40\ which requires, among other things, that the Exchange's rules 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 [[Page 38488]] and a national market system, and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \38\ 15 U.S.C. 78f. \39\ 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). \40\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission believes that the proposal to permit an ATP holder approved as a registered Market Maker pursuant to Exchange Rule 921NY to register for and withdraw from options appointments, subject to the proposed conditions and in accordance with the other provisions of Rule 923NY, is reasonably designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange states that the proposed changes regarding how Market Makers select and modify their appointments would provide Market Makers with more efficient access to the securities in which they want to make markets, enabling them to quickly begin disseminating competitive quotations in those securities which would provide additional liquidity and enhanced competition in those securities on the Exchange.\41\ The Exchange notes that the proposed rule change would enable Market Makers to manage their appointments with more flexibility and in a timelier manner, but that Market Makers still will 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\ 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, if properly made and received, are processed on an overnight basis for effectiveness the following business day) will serve to promote just and equitable principles of trade and benefit investors and the public interest.\43\ Further, before any changes to a Market Maker's appointment become effective, the Exchange will be required to confirm that the Market Maker's appointment will not exceed the number of ATPs a Market Maker is required to have and will also be required to confirm receipt of the Market Maker's request.\44\ --------------------------------------------------------------------------- \41\ See Notice, supra note 3, at 18887. In addition, the Exchange notes that other options exchanges permit market makers to select their appointments in a similar manner via exchange-approved electronic interfaces. See Notice, supra note 3, at 18886, n.31(citing, BATS Exchange, Inc. Rule 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''); and NASDAQ Options Market 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.''). \42\ See Notice, supra note 3, at 18888. \43\ See Notice, supra note 3, at 18887. \44\ See text accompany notes 29-30 supra. --------------------------------------------------------------------------- The Commission notes that the Exchange has proposed to add a Market Maker's available financial resources and operational capability as factors the Exchange may consider during its periodic evaluation of a Market Maker's performance, stating that these factors are important considerations in evaluating a Market Maker's performance, and that continued consideration of these factors would remove impediments to and perfect the mechanism of a free and open market and would benefit investors and the public interest.\45\ The Commission further notes that the Exchange will continue to have authority to suspend or terminate any appointment of a Market Maker in one or more option issues whenever, in the Exchange's judgment, the interests of a fair and orderly market are best served by such action.\46\ The Exchange will 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 has been terminated under the rule, and Rule 923NY will continue 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 minimum performance standards.\47\ --------------------------------------------------------------------------- \45\ See Notice, supra note 3, at 18887. \46\ See Rule 923NY(g). See also Notice, supra 3, at 18888, n.43 and 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). \47\ See Notice, supra note 3, at 18887. --------------------------------------------------------------------------- Based on the foregoing, the Commission finds the proposed rule change is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\48\ that the proposed rule change (SR-NYSEMKT-2015-17) be, and hereby is, approved. --------------------------------------------------------------------------- \48\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\49\ --------------------------------------------------------------------------- \49\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-16412 Filed 7-2-15; 8:45 am] BILLING CODE 8011-01-P
![38486 Federal Register / Vol. 80, No. 128 / Monday, July 6, 2015 / Notices
SECURITIES AND EXCHANGE Market Maker’s available financial Makers 13 must also apply for
COMMISSION resources and operational capability as appointment to a Trading Zone 14 on the
considerations in its periodic evaluation floor, subject to approval by the
[Release No. 34–75322; File No. SR– of Market Maker performance, which Exchange.15
NYSEMKT–2015–17] factors currently are considered when a Under current Rule 923NY, ‘‘Market
Market Maker applies for an Makers may change the option issues in
Self-Regulatory Organizations; NYSE
appointment. their appointment, subject to the
MKT LLC; Order Approving Proposed
approval of the Exchange,’’ provided
Rule Change Amending Rule 923NY to A. Background such requests are ‘‘made in a form and
Modify the Appointment Process Currently, a registered Market Maker manner prescribed by the Exchange.’’ 16
Utilized by the Exchange may seek an appointment in one or In addition, ‘‘Market Makers may
June 29, 2015. more option classes pursuant to Rule withdraw from trading an option issue
923NY. Specifically, Rule 923NY that is within their appointment by
I. Introduction provides that ‘‘[o]n a form or forms providing the Exchange with three
On March 20, 2015, NYSE MKT LLC prescribed by the Exchange, a Market business days’ written notice of such
(the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed Maker must apply for an appointment in withdrawal.’’ 17 If a Market Maker fails
with the Securities and Exchange one or more classes of option to provide the required notice, the
Commission (‘‘Commission’’), pursuant contracts.’’ 7 In addition to having the Market Maker ‘‘may be subject to formal
to Section 19(b)(1) of the Securities authority to appoint one Specialist per disciplinary action pursuant to Section
Exchange Act of 1934 (‘‘Act’’) 1 and Rule option class and to designate e- 9A of the Office Rules.’’ 18 Moreover, the
19b–4 thereunder,2 a proposed rule Specialists to fulfill certain obligations Exchange ‘‘may suspend or terminate
change to modify the Market Maker required of Specialists,8 Rule 923NY(b) any appointment of a Market Maker in
appointment and withdrawal process provides that ‘‘[t]he Exchange may one or more option issues under this
used by the Exchange. The proposed appoint an unlimited number of Market Rule whenever, in the Exchanges’
rule change was published for comment Makers in each class unless the number judgment, the interests of a fair and
in the Federal Register on April 8, of Market Makers appointed to a orderly market are best served by such
2015.3 On May 21, 2015, pursuant to particular option class should be action.’’ 19 A Market Maker may seek
Section 19(b)(2) of the Act,4 the limited’’ based on the Exchange’s review of any action taken by the
Commission designated a longer period judgment.9 Further, current Rule Exchange.20
within which to approve the proposed 923NY(c) provides that ‘‘Market Makers The Exchange periodically evaluates
rule change, disapprove the proposed may select from among any option whether Market Makers have fulfilled
rule change, or institute proceedings to issues traded on the Exchange for performance standards, relating to,
determine whether to approve or inclusion in their appointment, subject among other things, quality of markets,
disapprove the proposed rule change.5 to the approval of the Exchange.’’ 10 In competition of Market Makers,
The Commission received no comment considering the approval of the observance of ethical standards and
letters on the proposed rule change. appointment of a Market Maker in each administrative factors.21 If the Exchange
This order approves the proposed rule security, ‘‘the Exchange will consider finds that a Market Maker has not met
change. the Market Maker’s preference; the the performance standards, the
financial resources available to the
II. Description of the Proposed Rule Market Maker; the Market Maker’s Permitted In A Market Makers Quoting
Change Assignment’’ based on the number of permits held
experience, expertise and past and the associated costs), available here, https://
The Exchange proposes to amend performance in making markets, www.nyse.com/publicdocs/nyse/markets/amex-
Rule 923NY to modify the options including the Market Maker’s options/NYSE_Amex_Options_Fee_Schedule.pdf.
13 See Rule 900.2NY(29) (defining ‘‘Floor Market
Market Maker appointment and performance in other securities; the
Maker’’).
withdrawal process used by the Market Maker’s operational capability; 14 A Trading Zone refers to the areas on the Floor
Exchange. Under the proposal, once an and the maintenance and enhancement designated by the Exchange in which issues are
Amex trading permit (‘‘ATP’’) holder of competition among Market Makers in assigned for the purposes of open outcry trading.
has been approved as a Market Maker each security in which they are See Rule 900.2NY(83).
15 See Notice, supra note 3, at 18885. The current
under Exchange Rule 9.21NY,6 the appointed.’’ 11 Current Rule 923NY also rule also provides that Specialists shall be
Market Maker would, subject to certain states that, in order to have a trading appointed to the Trading Zone designated for their
conditions, be permitted to register appointment on the Exchange, Market issues. See id. at 18885, n.13.
rather than apply for an appointment in Makers must have the number of ATPs 16 See Notice, supra note 3, at 18885. In
one or more option classes, and would required under the Amex Options Fee considering the change request, the Exchange will
consider the factors set forth in Rule 923NY(c). See
be permitted to select or withdraw Schedule.12 In addition, Floor Market id.
option issues included in its 17 See Notice, supra note 3, at 18885.
appointment using an Exchange- 7 See
Notice, supra note 3, at 18885. 18 See id.
8 See
Rule 900.2 NY(76) (defining ‘‘Specialist’’).
approved electronic interface. The 19 See id.
Any ATP Holder registered as a Market Maker with
Exchange also proposes to include a the Exchange is eligible to be qualified as a
20 See id. Per Rule 923NY(i), Market Makers are
also subject to a trading requirement, such that ‘‘[a]t
Specialist. See id. Rule 923NY(b) also provides that least 75% of the trading activity of a Market Maker
1 15 U.S.C. 78s(b)(1). ‘‘[t]he Exchange may designate e-Specialists in an (measured in terms of contract volume per quarter)
2 17 CFR 240.19b–4. option class in accordance with Rule 927.4NY[e- must be in classes within the Market Maker’s
3 See Securities Exchange Act Release No. 74636 Specialists].’’ See Rule 923NY(b). The Exchange is appointment and, in the case of Floor Market
Lhorne on DSK7TPTVN1PROD with NOTICES
(April 2, 2015), 80 FR 18884 (‘‘Notice’’). not proposing to change Rule 923NY(b) regarding Makers, within their designated Trading Zone. A
4 15 U.S.C. 78s(b)(2). Specialists and e-Specialists. failure to comply with the 75% contract volume
5 See Securities Exchange Act Release No. 75033, 9 See Notice, supra note 3, at 18885.
requirement may result in a fine pursuant to Rule
10 See id.
80 FR 30519 (May 28, 2015). 476A, however if aggravating circumstances are
6 See Rule 921NY (‘‘Registration of Market 11 See Notice, supra note 3, at 18885. present, formal disciplinary action may be taken
Makers’’). See also Rule 920NY(a) (defining 12 See Notice, supra note 3, at 18885. See also pursuant to Rule 9A.’’ The Exchange is not
‘‘Market Maker’’). The Exchange is not proposing NYSE Amex Options Fee Schedule (Section III.A., proposing any changes to Rule 923NY(i).
any changes to Rule 921NY. Monthly ATP Fees) (describing ‘‘Number Of Issues 21 See Rule 923NY(j).
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![Federal Register / Vol. 80, No. 128 / Monday, July 6, 2015 / Notices 38487
Exchange may take action, including same day it submits a request to the Market Maker’s appointment.35 In
suspending, terminating or restricting a Exchange, depending on the availability connection with the other proposed
Market Maker’s appointment or of Exchange resources to process the changes to the Market Maker
registration, after providing the Market request that day, but such request, if appointment process, the Exchange
Maker an opportunity to be heard.22 properly made and received, would be proposes that these factors instead be
effective no later than the following considered as part of the Exchange’s
B. Proposed Modifications
business day. A Market Maker, however, periodic evaluation of a Market Maker.
The Exchange proposes to modify the would not be able to withdraw an Further, the Exchange proposes to
current appointment and withdrawal option issue from its appointment on modify Rule 923NY(j)(2) to reflect the
process. Specifically, the Exchange the same day that it submits the request; proposed changes to the Market Maker
proposes to modify Rule 923NY(a) to instead, the Exchange would only appointment process. Specifically, the
provide that, rather than apply for an process such requests on an overnight Exchange proposes to change the
appointment, ‘‘a Market Maker may basis for effectiveness on the following reference to a Market Maker being ‘‘re-
register for an appointment in one or business day. Also, before any changes appointed’’ by the Exchange if an option
more classes of option contracts,’’ in a to a Market Maker’s appointment would issue or issues has been terminated
form and manner prescribed the become effective, the Exchange would pursuant to this subsection (j), and to
Exchange.23 The Exchange would be required to confirm that the Market instead provide that ‘‘the Exchange may
continue to have authority to appoint Maker’s appointment would not exceed restrict the Market Maker’s registration
one Specialist per option class and to that permitted under paragraph (d) of as a Market Maker in that option issue
designate e-Specialists in option classes the rule, pertaining to the number of or issues for a period not to exceed 6
to fulfill certain obligations required of ATPs a Market Maker would be required months.’’ 36 The Exchange would retain
Specialists.24 Similarly, an unlimited to have,29 and also confirm receipt of the discretion to suspend that Market
number of Market Makers could the Market Maker’s request.30 According Maker’s appointment in the affected
continue to be appointed to an options to the Exchange, the confirmation option issue(s) for a full six months, or
class, unless the Exchange restricts such requirement, applicable to requests for to allow that Market Maker to resume
appointments following Commission additions, changes, and withdrawals, is that appointment earlier than the
review and approval.25 The Exchange designed to ensure that the request was prescribed six-month period, based on
would retain the ability to suspend or properly made and also successfully the Exchange’s evaluation of the facts
terminate any appointment of a Market transmitted to the Exchange.31 Market and circumstances.37
Maker if necessary to maintain a fair Makers would be able to select issues in Finally, the Exchange proposes
and orderly market.26 their appointment or make changes certain clarifying technical changes to
In addition, the Exchange proposes to thereto pursuant to proposed Rule Rule 923NY as well as certain
modify Rule 923NY(c) to provide that 923NY(c) by submitting an email to the conforming changes so that there is
‘‘[a] Market Maker may select or Exchange, which is currently ‘‘the consistency throughout the rule text.
withdraw option issues included in Exchange-approved electronic
their appointment by submitting a interface.’’ 32 III. Discussion and Commission
request via an Exchange-approved Proposed Rule 923NY(h) would Findings
electronic interface with the Exchange provide that a Market Maker may seek After careful review, the Commission
on a day when the Exchange is open for review of any action taken by the finds that the proposed rule change is
business.’’ 27 The modified rule would Exchange under Rule 923NY.33 consistent with the requirements of the
provide that a Market Maker’s requested Pursuant to current Rule 923NY(j), the Act 38 and the rules and regulations
appointment would become effective by Exchange conducts periodic evaluations thereunder applicable to a national
no later than the following business day, of Market Makers to determine whether securities exchange.39 In particular, the
whereas a Market Maker’s request to they have fulfilled performance Commission finds that the proposed
withdraw option issues from its standards. The Exchange proposes to rule change is consistent with Section
appointment would not become modify Rule 923NY(j) to specify two 6(b)(5) of the Act,40 which requires,
effective until the following business additional factors it may consider in among other things, that the Exchange’s
day.28 Thus, a Market Maker could be evaluating whether a Market Maker has rules be designed to prevent fraudulent
appointed to an option issue on the fulfilled performance standards and manipulative acts and practices, to
pursuant to Rule 923NY(j): (1) The promote just and equitable principles of
22 See Notice, supra note 3, at 18886, n.20
financial resources available to the trade, to foster cooperation and
(describing current Rule 923NY(j)(2)) (‘‘If a Market Market Maker and (2) the Market
Maker’s appointment in an option issue or issues coordination with persons engaged in
has been terminated pursuant to Rule 923NY(j)), the Maker’s operational capability.34 These facilitating transactions in securities, to
Market Maker may not be re-appointed as a Market factors are currently among the factors remove impediments to and perfect the
Maker in that option issue or issues for a period not the Exchange considers when
to exceed 6 months.’’).
mechanism of a free and open market
23 See proposed Rule 923NY(a). As discussed
determining whether to approve a
35 See Notice, supra note 3, at 18887.
above, a Market Maker must have the designated
29 Id.
The Exchange proposed certain clarifying 36 See
number of ATPs set forth in the Amex Options Fee proposed Rule 923NY(j)(2) (‘‘If a Market
Schedule in order to have a trading appointment on and conforming changes to Rule 923NY(d) to make Maker’s appointment in an option issue or issues
the Exchange. See proposed Rule 923NY(d). it consistent with other changes discussed herein. has been terminated pursuant to this subsection (j),
24 See proposed Rule 923NY(b). See Notice, supra note 3, at 18886–87. the Exchange may restrict the Market Maker’s
25 The Exchange is proposing a conforming 30 See proposed Rule 923NY(c). registration as a Market Maker in that option issue
change to the text in Rule 923NY(b) to reflect the 31 See Notice, supra note 3, at 18886. or issues for a period not to exceed 6 months.’’). See
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proposed changes in Rule 923NY(a), to provide that 32 The Exchange will announce by Trader Update also Notice, supra note 3, at 18887.
37 See Notice, supra note 3, at 18887.
‘‘[a]n unlimited number of Market Makers may the email address that Market Makers should utilize
register in each class,’’ subject to any limits to make selections in, or changes to, their 38 15 U.S.C. 78f.
imposed by the Exchange. See proposed Rule appointment pursuant to this Rule. See Notice, 39 In approving this proposed rule change, the
923NY(b). supra note 3, at 18886, n.27. Commission has considered the proposed rule’s
26 See Rule 923NY(g). 33 See Rule 923NY(h). See also Notice, supra note impact on efficiency, competition, and capital
27 See proposed Rule 923NY(c). 3, at 18887. formation. See 15 U.S.C. 78c(f).
28 Id. 34 See proposed Rule 923NY(j). 40 15 U.S.C. 78f(b)(5).
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![38488 Federal Register / Vol. 80, No. 128 / Monday, July 6, 2015 / Notices
and a national market system, and, in equitable principles of trade and benefit proposed rule change (SR–NYSEMKT–
general, to protect investors and the investors and the public interest.43 2015–17) be, and hereby is, approved.
public interest. Further, before any changes to a Market For the Commission, by the Division of
The Commission believes that the Maker’s appointment become effective, Trading and Markets, pursuant to delegated
proposal to permit an ATP holder the Exchange will be required to authority.49
approved as a registered Market Maker confirm that the Market Maker’s Robert W. Errett,
pursuant to Exchange Rule 921NY to appointment will not exceed the Deputy Secretary.
register for and withdraw from options number of ATPs a Market Maker is [FR Doc. 2015–16412 Filed 7–2–15; 8:45 am]
appointments, subject to the proposed required to have and will also be
BILLING CODE 8011–01–P
conditions and in accordance with the required to confirm receipt of the
other provisions of Rule 923NY, is Market Maker’s request.44
reasonably designed to prevent The Commission notes that the SECURITIES AND EXCHANGE
fraudulent and manipulative acts and Exchange has proposed to add a Market COMMISSION
practices, to promote just and equitable Maker’s available financial resources
principles of trade, to foster cooperation and operational capability as factors the [Release No. 34–75320; File No. SR–ICEEU–
and coordination with persons engaged Exchange may consider during its 2015–009]
in facilitating transactions in securities, periodic evaluation of a Market Maker’s Self-Regulatory Organizations; ICE
to remove impediments to and perfect performance, stating that these factors Clear Europe Limited; Notice of
the mechanism of a free and open are important considerations in Designation of Longer Period for
market and a national market system, evaluating a Market Maker’s Commission Action on Proposed Rule
and, in general, to protect investors and performance, and that continued Change Relating to Finance
the public interest. The Exchange states consideration of these factors would Procedures To Add Clearstream
that the proposed changes regarding remove impediments to and perfect the Banking as a Triparty Collateral
how Market Makers select and modify mechanism of a free and open market Service Provider
their appointments would provide and would benefit investors and the
Market Makers with more efficient public interest.45 The Commission June 29, 2015.
access to the securities in which they further notes that the Exchange will On May 5, 2015, ICE Clear Europe
want to make markets, enabling them to continue to have authority to suspend or Limited (‘‘ICEEU’’) filed with the
quickly begin disseminating competitive terminate any appointment of a Market Securities and Exchange Commission
quotations in those securities which Maker in one or more option issues (‘‘Commission’’), pursuant to Section
would provide additional liquidity and whenever, in the Exchange’s judgment, 19(b)(1) of the Securities Exchange Act
enhanced competition in those the interests of a fair and orderly market of 1934 (‘‘Act’’) 1 and Rule 19b–4
securities on the Exchange.41 The are best served by such action.46 The thereunder,2 a proposed rule change to
Exchange notes that the proposed rule Exchange will also retain the ability to modify the Finance Procedures to allow
change would enable Market Makers to restrict a Market Maker’s registration in Clearstream Banking to serve as a
manage their appointments with more option issues for up to six months if a triparty collateral service provider for
flexibility and in a timelier manner, but Market Maker’s appointment in that initial or original margin provided in
that Market Makers still will be required option issue or issues has been respect of all product categories,
to comply with certain obligations to terminated under the rule, and Rule including CDS Contracts. The proposed
maintain their status as a Market Maker, 923NY will continue to give the rule change was published for comment
including that they provide continuous, Exchange discretion to allow the Market in the Federal Register on May 15,
two-sided quotations in their appointed Maker to resume that appointment 2015.3 To date, the Commission has not
securities.42 The Exchange also believes earlier than the prescribed six-month received comments on the proposal.
that preventing Market Makers from period or to maintain the suspension for Section 19(b)(2) of the Act 4 provides
being able to withdraw an option issue the entire period. Finally, the Exchange that within 45 days of the publication of
from its appointment on the same day is not proposing changes to the notice of the filing of a proposed rule
that it submits the request (as such disciplinary and appeals process for change, or within such longer period up
requests, if properly made and received, Market Makers that do not meet to 90 days as the Commission may
are processed on an overnight basis for minimum performance standards.47 designate if it finds such longer period
effectiveness the following business Based on the foregoing, the to be appropriate and publishes its
day) will serve to promote just and Commission finds the proposed rule reasons for so finding or as to which the
change is consistent with the Act. self-regulatory organization consents,
41 See Notice, supra note 3, at 18887. In addition,
the Commission shall either approve the
the Exchange notes that other options exchanges IV. Conclusion
permit market makers to select their appointments
proposed rule change, disapprove the
in a similar manner via exchange-approved It is therefore ordered, pursuant to proposed rule change, or institute
electronic interfaces. See Notice, supra note 3, at Section 19(b)(2) of the Act,48 that the proceedings to determine whether the
18886, n.31(citing, BATS Exchange, Inc. Rule proposed rule change should be
22.3(b) (‘‘An Options Market Maker may become
registered in a series by entering a registration
43 See
Notice, supra note 3, at 18887. disapproved. The 45th day from the
request via an Exchange approved electronic
44 See
text accompany notes 29–30 supra. publication of notice of filing of this
45 See Notice, supra note 3, at 18887.
interface with the Exchange’s systems by 9:00 a.m. proposed rule change is June 29, 2015.
46 See Rule 923NY(g). See also Notice, supra 3,
Eastern time. Registration shall become effective on The Commission is extending this 45-
the day the registration request is entered’’); and at 18888, n.43 and Rule 921NY (regarding the
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NASDAQ Options Market Chapter VII, Section 3(b) Exchange’s ability to suspend or terminate a Market
49 17 CFR 200.30–3(a)(12).
(‘‘An Options Market Maker may become registered Maker’s registration based on ‘‘a determination of
1 15 U.S.C. 78s(b)(1).
in an option by entering a registration request via any substantial or continued failure by such Market
a Nasdaq approved electronic interface with Maker to engage in dealings in accordance with 2 17 CFR 240.19b–4.
Nasdaq’s systems. Registration shall become Rules 925NY or 923NY,’’ which outline the 3 Securities Exchange Act Release No. 34–74922
effective on the day the registration request is obligations of Market Makers). (May 11, 2015), 80 FR 28035 (May 15, 2015) (File
entered.’’). 47 See Notice, supra note 3, at 18887. No. SR–ICEEU–2015–009).
42 See Notice, supra note 3, at 18888. 48 15 U.S.C. 78s(b)(2). 4 15 U.S.C. 78s(b)(2).
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Document Created: 2015-12-15 13:17:42
Document Modified: 2015-12-15 13:17:42
| 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 38486 |
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