80 FR 42575 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend NYSE Rule 13 and Related Rules Governing Order Types and Modifiers
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 137 (July 17, 2015)
Federal Register Volume 80, Issue 137 (July 17, 2015)
| Page Range | 42575-42579 | |
| FR Document | 2015-17536 |
[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)] [Notices] [Pages 42575-42579] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-17536] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75444; File No. SR-NYSE-2015-15] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend NYSE Rule 13 and Related Rules Governing Order Types and Modifiers July 13, 2015. I. Introduction On March 24, 2015, New York Stock Exchange LLC (``Exchange'' or ``NYSE'') 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 amend Exchange Rule 13, and related Exchange rules, governing order types and modifiers. The proposed rule change was published for comment in the Federal Register on April 14, 2015.\3\ On May 14, 2015, the Exchange filed Partial Amendment No. 1 to the proposed rule change \4\ On May 27, 2015, pursuant to Section 19(b)(2) of the Act,\5\ 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 disapprove the proposed rule change.\6\ [[Page 42576]] On July 10, 2015, the Exchange filed Amendment No. 2 to the proposed rule change.\7\ The Commission received no comment letters regarding the proposed rule change. The Commission is publishing this notice to solicit comments on Amendment No. 2 from interested persons and is approving the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 74678 (April 8, 2015), 80 FR 20053 (``Notice''). Prior to filing this proposal, the Exchange filed a similar proposal to amend Rule 13, and related Exchange rules, governing order types and modifiers. See Securities Exchange Act Release No. 73703 (November 28, 2014), 79 FR 72039 (December 4, 2014) (SR-NYSE-2014-59). For that proposal, the Commission extended the time period for action, see Securities Exchange Act Release No. 74051 (January 14, 2015), 80 FR 2983 (January 21, 2015) (SR-NYSE-2014-59), and for an almost identical filing of NYSE MKT LLC (``NYSE MKT''), the Commission instituted proceedings to determine whether to approve or disapprove NYSE MKT's proposal, see Securities Exchange Act Release No. 74298 (February 18, 2015), 80 FR 9770 (February 24, 2015) (SR-NYSEMKT-2014-95). Prior to the conclusion of those proceedings for NYSE MKT's proposal, both NYSE and NYSE MKT withdrew their respective proposals. See Securities Exchange Act Release Nos. 74642 (April 3, 2015), 80 FR 19096 (April 9, 2015) (SR-NYSE-2014-59) and 74643 (April 3, 2015), 80 FR 19102 (April 9, 2015) (SR-NYSEMKT-2014-95). \4\ The Exchange subsequently withdrew Partial Amendment No. 1 on May 20, 2015. \5\ 15 U.S.C. 78s(b)(2). \6\ See Securities Exchange Act Release No. 75048, 80 FR 31419 (June 2, 2015). The Commission designated July 13, 2015, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. \7\ For a description of the proposals contained within Amendment No. 2, see infra Section V. --------------------------------------------------------------------------- II. Description of the Proposal, As Modified by Amendment No. 2 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 and how they interact with each other.\8\ Subsequent to the Chair's speech, the Commission's Division of Trading and Markets requested that the Exchange complete its review and submit any proposed rule changes.\9\ --------------------------------------------------------------------------- \8\ 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 http://www.sec.gov/News/Speech/Detail/Speech/1370542004312. \9\ See Letter from James Burns, Deputy Director, Division of Trading and Markets, Securities and Exchange Commission, to Jeffrey C. Sprecher, Chief Executive Officer, Intercontinental Exchange, Inc., dated June 20, 2014. --------------------------------------------------------------------------- The Exchange proposes to amend Rule 13 by re-grouping and re- numbering existing order types and order modifiers. The Exchange also proposes to amend Rule 13 to revise the definitions of certain order types and modifiers in both substantive and non-substantive ways and to add text stating that, unless otherwise specified in either Rules 13, 70 (applicable to Exchange Floor brokers), or 104 (applicable to Exchange Designated Market Makers (``DMMs'')), orders and modifiers listed in Rule 13 are available for all Exchange member organizations. The Exchange represents that these revisions are not intended to reflect changes to the functionality of any order type or modifier, but rather to clarify Rule 13 to make it easier to navigate.\10\ In addition, the Exchange proposes to amend related Exchange rules to relocate rule text contained in current Rule 13; further explain the functionality of certain Floor broker and DMM interest; further explain the operation of non-displayed interest entered into the Exchange's systems; add, update, or revise cross references; and make other non- substantive technical amendments. --------------------------------------------------------------------------- \10\ See Notice, supra note 3, 80 FR at 20054. --------------------------------------------------------------------------- Under the proposal, Rule 13 would be reorganized into six categories: (1) Primary Order Types; (2) Time in Force Modifiers; (3) Auction-Only Orders; (4) Orders with Instructions Not to Display All or a Portion of the Order; (5) Orders with Instructions Not to Route; and (6) Additional Order Instructions and Modifiers. Currently, Rule 13 lists order types and modifiers alphabetically and does not categorize order types and modifiers based on characteristic or function. A. Primary Order Types Proposed section (a) of Rule 13 would set forth two primary order types--Market Orders and Limit Orders--and specify which orders are eligible for automatic executions. The Exchange proposes to delete the current definition of ``Auto Ex Order'' and proposes that all orders entered electronically will be eligible for automatic execution. Interest represented manually by a floor broker, however, would not be eligible for automatic execution. The Exchange is not changing the definition of ``Market Order'' and would replace the current term ``Display Book'' with the proposed term ``Exchange systems.'' \11\ With respect to Limit Orders, current Rule 13 defines a ``marketable Limit Order'' as ``an order on the Exchange that can be immediately executed; that is, an order to buy priced at or above the Exchange best offer or an order to sell price at or below the Exchange best bid.'' In the proposed rule change, the Exchange proposes to add a definition for a Limit Order as an order to buy or sell a stated amount of a security at a specified price or better. The definition of a ``marketable Limit Order'' would be revised non- substantively so that a marketable Limit Order would be defined as ``a Limit Order to buy (sell) at or above (below) the Exchange best offer (bid) for the security.'' --------------------------------------------------------------------------- \11\ The Exchange proposes to replace the term ``Display Book'' with ``Exchange systems,'' when the term refers to Exchange systems that receive and execute orders, and with ``Exchange book'' when the term refers to the interest that has been entered and ranked in Exchange systems, as applicable throughout the proposed rule text. --------------------------------------------------------------------------- B. Time in Force Modifiers Proposed section (b) of Rule 13 would set forth three Time in Force modifiers for orders: (1) Day; (2) Good til Cancelled (``GTC'') or Open; and (3) Immediate or Cancel (``IOC''). For Day modifiers, the Exchange proposes to allow only Limit Orders to be designated as Day orders. Currently, any order could be designated as a Day order. For the GTC or Open modifier, the Exchange is proposing to allow only Limit Orders to be designated with the GTC or Open modifier. Currently, any order could be a GTC or Open order. With respect to IOC modifiers, the Exchange currently has three different modifiers: (1) Regulation NMS-compliant IOC; (2) NYSE IOC; and (3) IOC-MTS (minimum trade size). The Exchange is proposing to make non-substantive changes to the definitions of all three IOC modifiers.\12\ --------------------------------------------------------------------------- \12\ Throughout the proposed rule text, the Exchange proposes to capitalize terms, including, but not limited to, Limit Order and Market Order. --------------------------------------------------------------------------- C. Auction-Only Orders Proposed section (c) of Rule 13 would set forth five Auction-Only Orders: (1) Closing Offset (``CO'') Orders; (2) Limit-on-Close (``LOC'') Orders; (3) Limit-on-Open (``LOO'') Orders; (4) Market-on Close (``MOC'') Orders; and (5) Market-on-Open (``MOO'') Orders. The Exchange is proposing to make non-substantive changes to these definitions. D. Non-Displayable Orders (All or a Portion of the Order) Proposed section (d) of Rule 13 contains orders that are partially or fully undisplayed. There are two types of non-displayable orders: (1) Mid-Point Passive Liquidity Orders (``MPL Orders'') and (2) Reserve Orders. The Exchange proposes to make non-substantive changes to the definition of MPL Orders. With respect to Reserve Orders, the Exchange proposes to make non- substantive changes to the definition. The Exchange also proposes to add new rule text to state that a Minimum Display Reserve Order, which is a Limit Order that has a portion of the interest displayed when the order is or becomes the Exchange best bid or offer (``Exchange BBO'') and a portion not displayed (the reserve interest), would participate in both automatic and manual executions. The Exchange also proposes to add new rule text to state that a Non-Displayed Reserve Order, which is a Limit Order that is not displayed, would not participate in manual executions. The Exchange represents that these changes would reflect how those orders currently operate on the Exchange.\13\ Moreover, the Exchange proposes to change the circumstances in which the reserve interest of a Reserve Order would be [[Page 42577]] available for execution. Currently, the Exchange's rule text specifies that reserve interest of a Non-Displayed Reserve Order is available for execution only after all displayed interest at the price has been executed. The Exchange proposes to amend the rule text to specify that reserve interest of all Reserve Orders is available for execution only after all displayed interest at the price has been executed. --------------------------------------------------------------------------- \13\ See Notice, supra note 3, 80 FR at 20055. --------------------------------------------------------------------------- E. Do Not Route Orders Proposed section (e) of Rule 13 would set forth order modifiers and order types that would not be routed: (1) The Add Liquidity Only (``ALO'') modifier; (2) Do Not Ship (``DNS'') orders; and (3) Intermarket Sweep (``ISO'') orders. For the ALO modifier, the Exchange proposes to make non-substantive changes and to update cross references. The Exchange also proposes to add new rule text to specify that Limit Orders with the ALO modifier may participate in re-openings, but that the ALO designation would be ignored. This proposed change would expand the text of current Rule 13, which states that Limit Orders with the ALO modifier may participate in the Exchange's open or close, but that the ALO designation would be ignored. The Exchange is also proposing to make non-substantive changes to the DNS order and ISO definitions. F. Other Modifiers Proposed section (f) of Rule 13 would include the Exchange's other order instructions and modifiers: (1) Do Not Reduce (``DNR'') modifier; (2) Do Not Increase (``DNI'') modifier; (3) Pegging interest; (4) Retail modifier; (5) Self-Trade Prevention (``STP'') modifier; (6) Sell ``Plus''--Buy ``Minus'' instruction; and (7) Stop order. The Exchange proposes to make non-substantive changes to the DNR and DNI modifiers. With respect to Pegging interest, the Exchange proposes to specify that Pegging interest must be a Floor broker agency interest file (``e- Quote'') or a discretionary e-Quote (``d-Quote'') and proposes to delete the reference to the term ``Primary Pegging Interest'' in proposed Rule 13(f)(3)(B) because the Exchange represents that it only has one form of Pegging interest.\14\ --------------------------------------------------------------------------- \14\ See Notice, supra note 3, 80 FR at 20055. --------------------------------------------------------------------------- The Exchange proposes to make non-substantive changes to the Retail modifier, STP modifier, and the Sell ``Plus''--Buy ``Minus'' instruction definitions. With respect to the STP modifier, the Exchange proposes to add rule text specifying that the STP modifier is not available for DMM interest, and with respect to Stop orders, the Exchange proposes to make non-substantive changes and to replace the term ``Exchange's automated order routing system'' with ``Exchange systems.'' G. Other Proposed Changes The Exchange proposes to move the definition of ``Routing Broker'' to Rule 17(c) because the Exchange states that Rule 17(c) governs the operations of Routing Brokers.\15\ --------------------------------------------------------------------------- \15\ See id. --------------------------------------------------------------------------- The Exchange also proposes to amend the definition of Not Held orders and relocate that definition to Supplementary Material .20 to Rule 13 because the Exchange states that Supplementary material .20 of Rule 13 reflects the obligations that members have in handling customer orders and Not Held instructions are instructions from a customer to a member or member organization regarding the handling of an order.\16\ Rule 13 currently defines a Not Held order as a market or limited price order marked ``not held,'' ``disregard tape,'' ``take time,'' ``buy or sell on print,'' or which bears any such qualifying notation. Under the proposed rule change, a Not Held order would refer to an unpriced, discretionary order voluntarily categorized as such by the customer and with respect to which the customer has granted the member or member organization price and time discretion. --------------------------------------------------------------------------- \16\ See id. --------------------------------------------------------------------------- The Exchange proposes several amendments to Rule 70, which governs the execution of Exchange Floor Broker interest. The Exchange proposes to amend Rule 70(a)(i) to (1) delete current rule text indicating that Floor Brokers can only enter e-Quotes at or outside the Exchange BBO because, in Amendment No. 2, the Exchange explains that Floor brokers may use e-Quotes to enter non-displayed orders, such as Non-Display Reserve e-Quotes or MPL Orders, priced between the Exchange BBO, and (2) add rule text stating that e-Quotes would not include unelected Stop Orders, Market Orders, ISOs, GTC modifiers, DNR modifiers, or DNI modifiers. Furthermore, the Exchange proposes to add text to Rule 70.25(a)(ii) explaining that discretionary instructions may include instructions to participate in the Exchange's opening or closing transaction only. The Exchange also proposes to amend Rule 70.25(c) to clarify that certain functionality set forth in the Rule is no longer available. Specifically, Rule 70.25(c)(ii) currently provides that a Floor broker may designate a maximum size of contra-side volume with which it is willing to trade using discretionary pricing instructions. Because this functionality is not available, the Exchange proposes to delete references to the maximum discretionary size parameter from Rules 70.25(c)(ii) and (c)(v). Additionally, the Exchange proposes to amend Rule 70.25(c)(iv) to clarify that the circumstances under which the Exchange would consider interest displayed by other market centers at the price at which a d-Quote may trade are not limited to determining when a d-Quote's minimum or maximum size range is met. Accordingly, the Exchange proposes to delete the clause ``when determining if the d-Quote's minimum and/or maximum size range is met.'' The Exchange also proposes to make non-substantive changes to Rules 70(a)(i) and 70(b)(i) by replacing the term ``Display Book'' with the term ``Exchange systems,'' and in Rule 70(f), the Exchange proposes to update cross references. The Exchange proposes several amendments to amend Rule 72, which governs the priority of bids and offers and allocation of executions on the Exchange. First, the Exchange proposes to amend Rule 72(c)(i) to (1) replace the term ``reserve interest'' with the term ``non- displayable interest'' so that the rule sets forth that all non- displayable interest, which includes certain types of reserve interest and MPL Orders, trades on parity in accordance with the order allocation provisions of Rule 72 and (2) change the phrase ``the displayed bid (offer)'' to ``displayable bids (offers)'' and change the phrase ``displayed volume'' to ``displayable volume'' to specify that an automatically executing order will trade first with displayable bids (offers) and, if there is insufficient displayable volume to fill the order, will trade next with non-displayable interest. The Exchange also proposes to amend Rule 72(c)(x) to add MPL Orders to the orders identified as being eligible to trade at price points between the Exchange BBO and delete a cross reference to Rule 13. The Exchange proposes two amendments to Rule 104, which governs the dealings and responsibilities of DMMs. First, the Exchange proposes to add text to Rule 104(b)(ii) explaining that the Exchange's systems will prevent incoming DMM interest from trading with resting DMM interest. Specifically, proposed Rule 104(b)(ii) would now provide that if an incoming DMM interest would trade with resting DMM interest only, the incoming DMM interest would be cancelled, and if the incoming DMM interest would trade with interest other than DMM interest, [[Page 42578]] the resting DMM interest would be cancelled. Furthermore, the Exchange proposes to add new Rule 104(b)(vi) to specify that DMMs may not enter the following orders and modifiers: (1) Market Orders; (2) GTC modifiers; (3) MOO orders; (4) CO orders; (5) MOC orders; (6) LOC orders; (7) DNR modifiers; (8) DNI modifiers; (9) Sell ``Plus''--Buy ``Minus'' instructions; and (10) Stop orders. Finally, the Exchange proposes to amend Rule 1000, which governs automatic executions, by adding cross references to other Exchange rules applicable to automatic executions in Rule 1000(a). III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\17\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\18\ 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. --------------------------------------------------------------------------- \17\ 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). \18\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange represents that it continually assesses its rules governing order types \19\ and that this proposal is part of that continued effort to review and clarify its rules governing order types.\20\ In addition, the Commission notes that the Exchange asserts that the proposal is consistent with Section 6(b)(5) of the Act because it would, among other things, clarify existing functionality of the Exchange's order types and ensure that Exchange members, regulators, and the public can both more easily navigate the Exchange's rulebook and better understand the order types available for trading on the Exchange.\21\ --------------------------------------------------------------------------- \19\ See Notice, supra note 3, 80 FR at 20053. \20\ See Notice, supra note 3, 80 FR at 20053-54. \21\ See Notice, supra note 3, 80 FR at 20056. --------------------------------------------------------------------------- The Exchange's proposal would restructure and reorganize Rule 13 so that order types with similar functionality are grouped together by subsection. The Commission also notes that the proposal contains several revisions to the Exchange's current rule text to clarify the descriptions of how certain orders, modifiers, and the ``not held'' instruction function and to specify which member organizations can and cannot enter certain order types. The Commission believes that the proposed rule change should provide greater specificity, clarity, and transparency with respect to the order type and modifier functionalities available on the Exchange, as well as the Exchange's methodology for handling certain order types, when compared to the existing rule text today. Accordingly, the Commission believes that the proposal is designed 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. Solicitation of Comments on Amendment No. 2 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 2 to the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSE-2015-15 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2015-15. 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 this filing will also 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-NYSE-2015-15 and should be submitted on or before August 7, 2015. V. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 2, prior to the 30th day after the date of publication of notice of Amendment No. 2 in the Federal Register. In Amendment No. 2, the Exchange proposes to add to Rule 13 text that: (1) States that, unless otherwise specified in either Rules 13, 70, or 104, orders and modifiers listed in Rule 13 are available for all Exchange member organizations; and (2) specifies that the STP modifier is not available for DMM interest. The Exchange also proposes to delete a proposed change to the definition of MPL Orders that would have required the Exchange's systems to: (1) Reject an MPL Order on entry if it has a Minimum Triggering Volume larger than the size of the order and (2) to reject a request to partially cancel a resting MPL Order when the partial cancellation would result in a Minimum Triggering Volume that is larger than the size of the order. Furthermore, the Exchange proposes several non-substantive technical amendments to the filing so that the proposed text in Rules 13(a)(1) (definition of Market Order) and 13(d)(1)(A) (definition of MPL Order), and the current Rule 13 text marked for deletion under the present alphabetically listed format, accurately reflect the proposed rule changes to the current rule text and the proposed rule text that is not being changed from the current rule text. [[Page 42579]] The Exchange also proposes to amend Rule 70 to: (1) Delete current rule text in Rule 70(a)(i) indicating that Floor Brokers can only enter e-Quotes at or outside the Exchange BBO; (2) add text to Rule 70(a)(i) stating that e-Quotes shall not include unelected Stop orders, Market Orders, ISOs, GTC modifiers, DNR modifiers, or DNI modifiers; (3) add text to Rule 70.25(a)(ii) explaining that discretionary instructions may include instructions to participate in the Exchange's opening or closing transaction only; (4) make non-substantive changes to Rules 70(a)(i) and 70(b)(i) by replacing the term ``Display Book'' with the term ``Exchange systems;'' and (5) update cross references in Rule 70(f). The Exchange proposes to amend Rule 72(c)(i) to: (1) Set forth that all non-displayable interest, which includes certain types of reserve interest and MPL Orders, trades on parity; and (2) to change the phrase ``the displayed bid (offer)'' to ``displayable bids (offers)'' and change the phrase ``displayed volume'' to ``displayable volume.'' The Exchange also proposes to amend Rule 72(c)(x) to add MPL Orders to the orders identified as being eligible to trade at price points between the Exchange BBO and delete a cross reference to Rule 13. The Exchange also proposes to add text to Rule 104(b)(ii) explaining that the Exchange's systems will prevent incoming DMM interest from trading with resting DMM interest. Furthermore, the Exchange proposes to add new Rule 104(b)(vi) to specify that DMMs may not enter the following orders and modifiers: (1) Market Orders; (2) GTC modifiers; (3) MOO orders; (4) CO orders; (5) MOC orders; (6) LOC orders; (7) DNR modifiers; (8) DNI modifiers; (9) Sell ``Plus''--Buy ``Minus'' instructions; and (10) Stop orders. Finally, the Exchange proposes to amend Rule 1000(a) to provide cross references to other Exchange rules applicable to automatic executions. The Commission believes that the revisions proposed in Amendment No. 2 do not raise any novel regulatory issues. The Commission further believes that the proposed revisions to the rule text set forth in Amendment No. 2 do not represent any significant changes to the current functionality of the Exchange's order types and modifiers. Rather, these proposed rule text changes primarily help clarify and better explain how the Exchange's order types and modifiers currently operate and interact. For instance, the Commission believes that the Exchange's proposal to add text at the beginning of Rule 13 stating that, unless otherwise specified in Rules 13, 70, or 104, orders and modifiers are available for all member organizations, coupled with the proposed addition of subparagraph (b)(vi) to Rule 104 that specifically enumerates which orders and modifiers a DMM may not enter into the Exchange's systems, should help member organizations better understand which orders and modifiers they can and cannot enter into the Exchange's systems. Therefore, the Commission finds that Amendment No. 2 is consistent with the protection of investors and the public interest. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,\22\ to approve the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\23\ that the proposed rule change (NYSE-2015-15), as modified by Amendment No. 2, be, and it hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\ --------------------------------------------------------------------------- \24\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-17536 Filed 7-16-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42575
Applicants’ Conditions limitations on the future number of SECURITIES AND EXCHANGE
Applicants agree that any order transfers, for a period beginning at least COMMISSION
granting the requested relief will be 30 days before the Substitution Date
[Release No. 34–75444; File No. SR–NYSE–
subject to the following conditions: through at least 30 days following the 2015–15]
1. The Substitutions will not be Substitution Date.
effected unless the Applicants 7. All affected Contract owners will be Self-Regulatory Organizations; New
determine that: (a) The Contracts allow notified, at least 30 days before the York Stock Exchange LLC; Notice of
the substitution of shares of registered Substitution Date about: (a) The Filing of Amendment No. 2 and Order
open-end investment companies in the intended substitution of Existing Granting Accelerated Approval of a
manner contemplated by the Portfolios with the Replacement Proposed Rule Change, as Modified by
application; (b) the Substitutions can be Portfolios; (b) the intended Substitution Amendment No. 2, To Amend NYSE
consummated as described in the Date; and (c) information with respect to Rule 13 and Related Rules Governing
application under applicable insurance transfers as set forth in Condition 6 Order Types and Modifiers
laws; and (c) any regulatory above. In addition, the Applicants will July 13, 2015.
requirements in each jurisdiction where also deliver to all affected Contract
the Contracts are qualified for sale have owners, at least 30 days before the I. Introduction
been complied with to the extent Substitution Date, a prospectus for each On March 24, 2015, New York Stock
necessary to complete the Substitutions. applicable Replacement Portfolio. Exchange LLC (‘‘Exchange’’ or ‘‘NYSE’’)
2. The Applicants or their affiliates filed with the Securities and Exchange
8. Applicants will deliver to each
will pay all expenses and transaction Commission (‘‘Commission’’), pursuant
affected Contract owner within five (5)
costs of the Substitutions, including to Section 19(b)(1) of the Securities
business days of the Substitution Date a
legal and accounting expenses, any Exchange Act of 1934 (‘‘Act’’) 1 and Rule
written confirmation which will
applicable brokerage expenses and other 19b–4 thereunder,2 a proposed rule
include: (a) A confirmation that the
fees and expenses. No fees or charges change to amend Exchange Rule 13, and
Substitutions were carried out as
will be assessed to the affected Contract related Exchange rules, governing order
previously notified; (b) a restatement of
owners to effect the Substitutions. types and modifiers. The proposed rule
3. The Substitutions will be effected the information set forth in the Pre-
Substitution Notice; and (c) before and change was published for comment in
at the relative net asset values of the the Federal Register on April 14, 2015.3
respective shares in conformity with after account values.
On May 14, 2015, the Exchange filed
Section 22(c) of the 1940 Act and Rule 9. For two years following the Partial Amendment No. 1 to the
22c–1 thereunder without the Substitution Date, Horace Mann will proposed rule change 4 On May 27,
imposition of any transfer or similar reimburse those who were Contract 2015, pursuant to Section 19(b)(2) of the
charges by Applicants. The owners on the Substitution Date and Act,5 the Commission designated a
Substitutions will be effected without who, as a result of a Substitution, had longer period within which to approve
change in the amount or value of any Contract value allocated to a subaccount the proposed rule change, disapprove
Contracts held by affected Contract investing in a Replacement Portfolio the proposed rule change, or institute
owners. such that the Replacement Portfolio’s proceedings to determine whether to
4. The Substitutions will in no way net annual operating expenses (taking disapprove the proposed rule change.6
alter the tax treatment of affected into account any fee waivers and
Contract owners in connection with expense reimbursements) for such 1 15 U.S.C. 78s(b)(1).
their Contracts, and no tax liability will period will not exceed, on an 2 17 CFR 240.19b–4.
arise for Contract owners as a result of annualized basis, the net annual 3 See Securities Exchange Act Release No. 74678
the Substitutions. operating expenses (taking into account (April 8, 2015), 80 FR 20053 (‘‘Notice’’). Prior to
5. The rights or obligations of the any fee waivers and expense filing this proposal, the Exchange filed a similar
proposal to amend Rule 13, and related Exchange
Applicants under the Contracts of reimbursements) of the corresponding rules, governing order types and modifiers. See
affected Contract owners will not be Existing Portfolio as of the Existing Securities Exchange Act Release No. 73703
altered in any way. The Substitutions Portfolio’s most recent fiscal year (November 28, 2014), 79 FR 72039 (December 4,
will not adversely affect any riders preceding the Substitution Date. Any 2014) (SR–NYSE–2014–59). For that proposal, the
Commission extended the time period for action,
under the Contracts. adjustments will be made at least on a see Securities Exchange Act Release No. 74051
6. Affected Contract owners will be quarterly basis. In addition, for a period (January 14, 2015), 80 FR 2983 (January 21, 2015)
permitted to make at least one transfer of at least two years following the (SR–NYSE–2014–59), and for an almost identical
of Contract value from the subaccount Substitution Date, the Applicants will filing of NYSE MKT LLC (‘‘NYSE MKT’’), the
Commission instituted proceedings to determine
investing in the Existing Portfolio not increase the Contract fees and whether to approve or disapprove NYSE MKT’s
(before the Substitution Date) or the charges—including asset based charges proposal, see Securities Exchange Act Release No.
Replacement Portfolio (after the such as mortality and expense risk 74298 (February 18, 2015), 80 FR 9770 (February
Substitution Date) to any other available charges deducted from the 24, 2015) (SR–NYSEMKT–2014–95). Prior to the
conclusion of those proceedings for NYSE MKT’s
investment option under the Contract subaccounts—that would otherwise be proposal, both NYSE and NYSE MKT withdrew
without charge for a period beginning at assessed under the terms of Contracts their respective proposals. See Securities Exchange
least 30 days before the Substitution that are in force on the Substitution Act Release Nos. 74642 (April 3, 2015), 80 FR 19096
Date through at least 30 days following Date. (April 9, 2015) (SR–NYSE–2014–59) and 74643
(April 3, 2015), 80 FR 19102 (April 9, 2015) (SR–
the Substitution Date. Except as
srobinson on DSK5SPTVN1PROD with NOTICES
For the Commission, by the Division of NYSEMKT–2014–95).
described in any market timing/short- Investment Management, under delegated 4 The Exchange subsequently withdrew Partial
term trading provisions of the relevant authority. Amendment No. 1 on May 20, 2015.
prospectus, Horace Mann will not 5 15 U.S.C. 78s(b)(2).
Robert W. Errett, 6 See Securities Exchange Act Release No. 75048,
exercise any right it may have under the
Deputy Secretary. 80 FR 31419 (June 2, 2015). The Commission
Contracts to impose restrictions on designated July 13, 2015, as the date by which it
transfers between the subaccounts [FR Doc. 2015–17575 Filed 7–16–15; 8:45 am]
should approve, disapprove, or institute
under the Contracts, including BILLING CODE 8011–01–P Continued
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![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42579
The Exchange also proposes to amend 70, or 104, orders and modifiers are (the ‘‘Commission’’) the proposed rule
Rule 70 to: (1) Delete current rule text available for all member organizations, change as described in Items I and II
in Rule 70(a)(i) indicating that Floor coupled with the proposed addition of below, which Items have been prepared
Brokers can only enter e-Quotes at or subparagraph (b)(vi) to Rule 104 that by the self-regulatory organization. The
outside the Exchange BBO; (2) add text specifically enumerates which orders Commission is publishing this notice to
to Rule 70(a)(i) stating that e-Quotes and modifiers a DMM may not enter solicit comments on the proposed rule
shall not include unelected Stop orders, into the Exchange’s systems, should change from interested persons.
Market Orders, ISOs, GTC modifiers, help member organizations better
I. Self-Regulatory Organization’s
DNR modifiers, or DNI modifiers; (3) understand which orders and modifiers
Statement of the Terms of the Substance
add text to Rule 70.25(a)(ii) explaining they can and cannot enter into the
of the Proposed Rule Change
that discretionary instructions may Exchange’s systems. Therefore, the
include instructions to participate in the Commission finds that Amendment No. The Exchange proposes to allow the
Exchange’s opening or closing 2 is consistent with the protection of listing of options overlying portfolio
transaction only; (4) make non- investors and the public interest. depositary receipts and index fund
substantive changes to Rules 70(a)(i) Accordingly, the Commission finds shares (collectively, ‘‘ETFs’’) that are
and 70(b)(i) by replacing the term good cause, pursuant to Section 19(b)(2) listed pursuant to generic listing
‘‘Display Book’’ with the term of the Act,22 to approve the proposed standards on equities exchanges for
‘‘Exchange systems;’’ and (5) update rule change, as modified by Amendment series of ETFs based on international or
cross references in Rule 70(f). No. 2, on an accelerated basis. global indexes under which a
The Exchange proposes to amend comprehensive surveillance sharing
Rule 72(c)(i) to: (1) Set forth that all VI. Conclusion agreement is not required. The text of
non-displayable interest, which It is therefore ordered, pursuant to the proposed rule change is available on
includes certain types of reserve interest Section 19(b)(2) of the Act,23 that the the Exchange’s Web site at
and MPL Orders, trades on parity; and proposed rule change (NYSE–2015–15), www.nyse.com, at the principal office of
(2) to change the phrase ‘‘the displayed as modified by Amendment No. 2, be, the Exchange, and at the Commission’s
bid (offer)’’ to ‘‘displayable bids (offers)’’ and it hereby is, approved on an Public Reference Room.
and change the phrase ‘‘displayed accelerated basis.
volume’’ to ‘‘displayable volume.’’ The II. Self-Regulatory Organization’s
For the Commission, by the Division of Statement of the Purpose of, and
Exchange also proposes to amend Rule Trading and Markets, pursuant to delegated
72(c)(x) to add MPL Orders to the orders Statutory Basis for, the Proposed Rule
authority.24
identified as being eligible to trade at Change
Robert W. Errett,
price points between the Exchange BBO Deputy Secretary.
In its filing with the Commission, the
and delete a cross reference to Rule 13. self-regulatory organization included
[FR Doc. 2015–17536 Filed 7–16–15; 8:45 am]
The Exchange also proposes to add statements concerning the purpose of,
BILLING CODE 8011–01–P
text to Rule 104(b)(ii) explaining that and basis for, the proposed rule change
the Exchange’s systems will prevent and discussed any comments it received
incoming DMM interest from trading on the proposed rule change. The text
SECURITIES AND EXCHANGE
with resting DMM interest. of those statements may be examined at
COMMISSION
Furthermore, the Exchange proposes to the places specified in Item IV below.
add new Rule 104(b)(vi) to specify that [Release No. 34–75441; File No. SR– The Exchange has prepared summaries,
DMMs may not enter the following NYSEMKT–2015–47] set forth in sections A, B, and C below,
orders and modifiers: (1) Market Orders; of the most significant parts of such
(2) GTC modifiers; (3) MOO orders; (4) Self-Regulatory Organizations; NYSE statements.
CO orders; (5) MOC orders; (6) LOC MKT LLC; Notice of Filing and
orders; (7) DNR modifiers; (8) DNI Immediate Effectiveness of Proposed A. Self-Regulatory Organization’s
modifiers; (9) Sell ‘‘Plus’’—Buy Rule Change Allowing the Listing of Statement of the Purpose of, and
‘‘Minus’’ instructions; and (10) Stop Options Overlying Portfolio Depositary Statutory Basis for, the Proposed Rule
orders. Receipts and Index Fund Shares That Change
Finally, the Exchange proposes to Are Listed Pursuant to Generic Listing 1. Purpose
amend Rule 1000(a) to provide cross Standards on Equities Exchanges for
references to other Exchange rules Series of ETFs Based on International The Exchange is proposing to amend
applicable to automatic executions. or Global Indexes Under Which a Commentary .06 to Rule 915 (Criteria for
The Commission believes that the Comprehensive Surveillance Sharing Underlying Securities) to list options
revisions proposed in Amendment No. Agreement Is Not Required overlying ETFs that are listed pursuant
2 do not raise any novel regulatory to generic listing standards on equities
July 13, 2015. exchanges for series of ETFs based on
issues. The Commission further believes
that the proposed revisions to the rule Pursuant to Section 19(b)(1) 1 of the international or global indexes under
text set forth in Amendment No. 2 do Securities Exchange Act of 1934 (the which a comprehensive surveillance
not represent any significant changes to ‘‘Act’’),2 and Rule 19b–4 thereunder,3 sharing agreement (‘‘CSSA’’ or
the current functionality of the notice is hereby given that on July 2, ‘‘comprehensive surveillance
Exchange’s order types and modifiers. 2015, NYSE MKT LLC (the ‘‘Exchange’’ agreement’’) is not required.4 This
Rather, these proposed rule text changes or ‘‘NYSE MKT’’) filed with the proposal will enable the Exchange to list
srobinson on DSK5SPTVN1PROD with NOTICES
primarily help clarify and better explain Securities and Exchange Commission and trade options on ETFs without a
how the Exchange’s order types and CSSA provided that the ETF is listed on
22 15 U.S.C. 78s(b)(2).
modifiers currently operate and interact. an equities exchange pursuant to the
23 15 U.S.C. 78s(b)(2).
For instance, the Commission believes 24 17 CFR 200.30–3(a)(12).
4 See, e.g., NYSE Arca Equities Rule 5.2(j)(3),
that the Exchange’s proposal to add text 1 15 U.S.C. 78s(b)(1).
Commentary .01(a)(B); NYSE MKT Rule 1000,
at the beginning of Rule 13 stating that, 2 15 U.S.C. 78a.
Commentary .03(a)(B); NASDAQ Rule
unless otherwise specified in Rules 13, 3 17 CFR 240.19b–4. 5705(a)(3)(A)(ii); and BATS Rule 14.11(b)(3)(A)(ii).
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Document Created: 2018-02-23 09:21:38
Document Modified: 2018-02-23 09:21:38
| 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 42575 |
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