80 FR 42593 - Self-Regulatory Organizations; NYSE MKT 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 NYSEMKT Rule 13-Equities 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 | 42593-42597 | |
| FR Document | 2015-17535 |
[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)] [Notices] [Pages 42593-42597] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-17535] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75443; File No. SR-NYSEMKT-2015-22] Self-Regulatory Organizations; NYSE MKT 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 NYSEMKT Rule 13-- Equities and Related Rules Governing Order Types and Modifiers July 13, 2015. I. Introduction On March 24, 2015, NYSE MKT LLC (``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 amend Exchange Rule 13--Equities, and related Exchange rules, [[Page 42594]] 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\ 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. 74682 (April, 8, 2015), 80 FR 20043 (``Notice''). Prior to filing this proposal, the Exchange filed a similar proposal to amend Rule 13--Equities, and related Exchange rules, governing order types and modifiers. See Securities Exchange Act Release No. 73593 (November 14, 2014), 79 FR 69153 (November 20, 2014) (SR-NYSEMKT-2014-95). For that proposal, the Commission initially extended the time period for action, see Securities Exchange Act Release No. 73913 (December 22, 2014), 79 FR 78531 (December 30, 2014) (SR-NYSEMKT-2014-95), and then instituted proceedings to determine whether to approve or disapprove the 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, the Exchange withdrew the proposal. See Securities Exchange Act Release No. 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. 75049, 80 FR 31091 (June 1, 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--Equities by re-grouping and re-numbering existing order types and order modifiers. The Exchange also proposes to amend Rule 13--Equities to revise the definitions of certain order types and modifiers in both substantive and non- substantive ways and to add text stating that ``[u]nless otherwise specified in [Rule 13--Equities], Rule 70 (for Floor brokers), or Rule 104 (for [Exchange Designated Market Makers (``DMMs'')], orders and modifiers are available for all 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--Equities 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--Equities; 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 20044. --------------------------------------------------------------------------- Under the proposal, Rule 13--Equities 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-- Equities 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--Equities 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--Equities 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--Equities 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) Exchange 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--Equities 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 [[Page 42595]] 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--Equities 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 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 20045. --------------------------------------------------------------------------- E. Do Not Route Orders Proposed section (e) of Rule 13--Equities 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--Equities, 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--Equities 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 20046. --------------------------------------------------------------------------- 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)--Equities because the Exchange states that Rule 17(c)-- Equities 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--Equities because the Exchange states that Supplementary material .20 of Rule 13--Equities 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--Equities 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--Equities, which governs the execution of Exchange Floor Broker interest. The Exchange proposes to amend Rule 70(a)(i)--Equities 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)--Equities 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)--Equities to clarify that certain functionality set forth in the Rule is no longer available. Specifically, Rule 70.25(c)(ii)--Equities 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)--Equities and 70.25(c)(v)--Equities. Additionally, the Exchange proposes to amend Rule 70.25(c)(iv)--Equities 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)--Equities and 70(b)(i)--Equities by replacing the term ``Display Book'' with the term ``Exchange systems,'' and [[Page 42596]] in Rule 70(f)--Equities, the Exchange proposes to update cross references. The Exchange proposes several amendments to amend Rule 72-- Equities, 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)--Equities 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--Equities 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)--Equities 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--Equities. The Exchange proposes two amendments to Rule 104--Equities, which governs the dealings and responsibilities of DMMs. First, the Exchange proposes to add text to Rule 104(b)(ii)--Equities explaining that the Exchange's systems will prevent incoming DMM interest from trading with resting DMM interest. Specifically, proposed Rule 104(b)(ii)--Equities 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, the resting DMM interest would be cancelled. Furthermore, the Exchange proposes to add new Rule 104(b)(vi)--Equities 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. The Exchange also proposes to amend Rule 501(d)(2)--Equities relating to the list of order types that are not accepted for trading in UTP Securities. The Exchange proposes to make non-substantive changes to update the name references to order types, and the Exchange proposes to delete the reference to Good `til Cross (GTX) orders because the Exchange represents that it no longer accepts GTX Order Instructions.\17\ --------------------------------------------------------------------------- \17\ See Notice, supra note 3, 80 FR at 20046. --------------------------------------------------------------------------- Finally, the Exchange proposes to amend Rule 1000--Equities, which governs automatic executions, by adding cross references to other Exchange rules applicable to automatic executions in Rule 1000(a)-- Equities. 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.\18\ In particular, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act,\19\ 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. --------------------------------------------------------------------------- \18\ 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). \19\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange represents that it continually assesses its rules governing order types \20\ and that this proposal is part of that continued effort to review and clarify its rules governing order types.\21\ 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.\22\ --------------------------------------------------------------------------- \20\ See Notice, supra note 3, 80 FR at 20044. \21\ See id. \22\ See Notice, supra note 3, 80 FR at 20047. --------------------------------------------------------------------------- The Exchange's proposal would restructure and reorganize Rule 13-- Equities 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-NYSEMKT-2015-22 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-NYSEMKT-2015-22. 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 [[Page 42597]] 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-NYSEMKT-2015-22 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-- Equities text that: (1) States that ``[u]nless otherwise specified in [Rule 13--Equities], Rule 70 (for Floor brokers), or Rule 104 (for DMMs), orders and modifiers are available for all 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)--Equities (definition of Market Order), 13(b)(2)--Equities (definition of the GTC modifier), 13(b)(3)--Equities (definition of the IOC modifier), 13(d)(1)(A)--Equities (definition of MPL Order), 501(a)--Equities (definition of the term ``Closing Price''), and the current Rule 13-- Equities 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. The Exchange also proposes to amend Rule 70--Equities to: (1) Delete current rule text in Rule 70(a)(i)--Equities 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)--Equities and 70(b)(i)-- Equities by replacing the term ``Display Book'' with the term ``Exchange systems;'' and (5) update cross references in Rule 70(f)-- Equities. 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--Equities. The Exchange also proposes to add text to Rule 104(b)(ii)--Equities 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)--Equities 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)--Equities 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--Equities stating that, unless otherwise specified in other Exchange rules, orders and modifiers are available for all member organizations, coupled with the proposed addition of subparagraph (b)(vi) to Rule 104--Equities 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,\23\ to approve the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VI. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,\24\ that the proposed rule change (SR-NYSEMKT-2015-22), as modified by Amendment No. 2, be, and it hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-17535 Filed 7-16-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42593
floor to qualify for the fee cap robust market forces and therefore must submission, all subsequent
constitutes equal treatment of members. remain competitive with fees charged amendments, all written statements
and rebates paid by other venues and with respect to the proposed rule
B. Self-Regulatory Organization’s
therefore must continue to be reasonable change that are filed with the
Statement on Burden on Competition
and equitably allocated to those Commission, and all written
The Exchange does not believe that members that opt to direct orders to the communications relating to the
the proposed rule change will impose Exchange rather than competing venues. proposed rule change between the
any burden on competition not Commission and any person, other than
necessary or appropriate in furtherance C. Self-Regulatory Organization’s those that may be withheld from the
of the purposes of the Act. The Statement on Comments on the public in accordance with the
Exchange believes that its proposal to Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be
increase the maximum QCC Rebate does Members, Participants, or Others available for Web site viewing and
not impose a burden on competition. Written comments were neither printing in the Commission’s Public
The Exchange’s proposal should solicited nor received. Reference Room, 100 F Street NE.,
encourage market participants to Washington, DC 20549, on official
transact a greater number of QCC Orders III. Date of Effectiveness of the
business days between the hours of
in order to obtain QCC Rebates. All Proposed Rule Change and Timing for
10:00 a.m. and 3:00 p.m. Copies of such
market participants are eligible to Commission Action
filing also will be available for
transact QCC Orders. The foregoing rule change has become inspection and copying at the principal
The Exchange does not believe that effective pursuant to section offices of the Exchange. All comments
the proposed rule change to the 19(b)(3)(A)(ii) of the Act.28 At any time received will be posted without change;
Monthly Strategy Cap will impose any within 60 days of the filing of the the Commission does not edit personal
burden on competition not necessary or proposed rule change, the Commission identifying information from
appropriate in furtherance of the summarily may temporarily suspend submissions. You should submit only
purposes of the Act because the such rule change if it appears to the information that you wish to make
proposed changes apply uniformly to all Commission that such action is available publicly. All submissions
members that incur transaction charges, necessary or appropriate in the public should refer to File Number SR–Phlx–
except Firms.27 Excluding Firm floor interest, for the protection of investors, 2015–57, and should be submitted on or
options transactions in Multiply Listed or otherwise in furtherance of the before August 7, 2015.
Options related to reversal and purposes of the Act. If the Commission For the Commission, by the Division of
conversion, jelly roll and box spread takes such action, the Commission shall Trading and Markets, pursuant to delegated
strategies from the Monthly Strategy institute proceedings to determine authority.29
Cap does not create an undue burden on whether the proposed rule should be Robert W. Errett,
competition because these fees would approved or disapproved. Deputy Secretary.
continue to be capped as part of the
Monthly Firm Fee Cap. The Exchange IV. Solicitation of Comments [FR Doc. 2015–17496 Filed 7–16–15; 8:45 am]
BILLING CODE 8011–01–P
believes the proposal is consistent with Interested persons are invited to
robust competition and does not submit written data, views, and
provide any unnecessary burden on arguments concerning the foregoing,
SECURITIES AND EXCHANGE
competition. Further, certain floor including whether the proposed rule
COMMISSION
members pay floor brokers to execute change is consistent with the Act.
trades on the Exchange floor, thereby Comments may be submitted by any of [Release No. 34–75443; File No. SR–
incurring costs related to this business the following methods: NYSEMKT–2015–22]
model. The Exchange believes that
Electronic Comments Self-Regulatory Organizations; NYSE
offering fee caps to members executing
floor transactions and not electronic • Use the Commission’s Internet MKT LLC; Notice of Filing of
comment form (http://www.sec.gov/ Amendment No. 2 and Order Granting
executions does not create an
rules/sro.shtml); or Accelerated Approval of a Proposed
unnecessary burden on competition
because the fee caps defray brokerage • Send an email to rule-comments@ Rule Change, as Modified by
sec.gov. Please include File Number SR– Amendment No. 2, To Amend
costs associated with executing strategy
Phlx–2015–57 on the subject line. NYSEMKT Rule 13—Equities and
transactions. Also, requiring that both
Related Rules Governing Order Types
the buy and sell sides of the order Paper Comments and Modifiers
originate from the floor to qualify for the
fee cap constitutes equal treatment of • Send paper comments in triplicate
July 13, 2015.
members. to Secretary, Securities and Exchange
The Exchange operates in a highly Commission, 100 F Street NE., I. Introduction
competitive market, comprised of Washington, DC 20549–1090. On March 24, 2015, NYSE MKT LLC
twelve options exchanges, in which All submissions should refer to File (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
market participants can easily and Number SR–Phlx–2015–57. This file with the Securities and Exchange
readily direct order flow to competing number should be included on the Commission (‘‘Commission’’), pursuant
venues if they deem fee levels at a subject line if email is used. To help the to section 19(b)(1) of the Securities
Commission process and review your
srobinson on DSK5SPTVN1PROD with NOTICES
particular venue to be excessive or Exchange Act of 1934 (‘‘Act’’) 1 and Rule
rebates to be inadequate. Accordingly, comments more efficiently, please use 19b–4 thereunder,2 a proposed rule
the fees that are assessed and the rebates only one method. The Commission will change to amend Exchange Rule 13—
paid by the Exchange described in the post all comments on the Commission’s Equities, and related Exchange rules,
above proposal are influenced by these Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the 29 17 CFR 200.30–3(a)(12).
27 Customers 1 15 U.S.C. 78s(b)(1).
are not assessed options transaction
charges in section II of the Pricing Schedule. 28 15 U.S.C. 78s(b)(3)(A)(ii). 2 17 CFR 240.19b–4.
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![42594 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices
governing order types and modifiers. Chair’s speech, the Commission’s however, would not be eligible for
The proposed rule change was Division of Trading and Markets automatic execution.
published for comment in the Federal requested that the Exchange complete The Exchange is not changing the
Register on April 14, 2015.3 On May 14, its review and submit any proposed rule definition of ‘‘Market Order’’ and would
2015, the Exchange filed Partial changes.9 replace the current term ‘‘Display Book’’
Amendment No. 1 to the proposed rule The Exchange proposes to amend with the proposed term ‘‘Exchange
change.4 On May 27, 2015, pursuant to Rule 13—Equities by re-grouping and systems.’’ 11 With respect to Limit
section 19(b)(2) of the Act,5 the re-numbering existing order types and Orders, current Rule 13—Equities
Commission designated a longer period order modifiers. The Exchange also defines a ‘‘marketable Limit Order’’ as
within which to approve the proposed proposes to amend Rule 13—Equities to ‘‘an order on the Exchange that can be
rule change, disapprove the proposed revise the definitions of certain order immediately executed; that is, an order
rule change, or institute proceedings to types and modifiers in both substantive to buy priced at or above the Exchange
determine whether to disapprove the and non-substantive ways and to add best offer or an order to sell price at or
proposed rule change.6 On July 10, text stating that ‘‘[u]nless otherwise below the Exchange best bid.’’ In the
2015, the Exchange filed Amendment specified in [Rule 13—Equities], Rule 70 proposed rule change, the Exchange
No. 2 to the proposed rule change.7 The (for Floor brokers), or Rule 104 (for proposes to add a definition for a Limit
Commission received no comment [Exchange Designated Market Makers Order as an order to buy or sell a stated
letters regarding the proposed rule (‘‘DMMs’’)], orders and modifiers are amount of a security at a specified price
change. The Commission is publishing available for all member organizations.’’ or better. The definition of a
this notice to solicit comments on The Exchange represents that these ‘‘marketable Limit Order’’ would be
Amendment No. 2 from interested revisions are not intended to reflect revised non-substantively so that a
persons and is approving the proposed changes to the functionality of any order marketable Limit Order would be
rule change, as modified by Amendment type or modifier, but rather to clarify defined as ‘‘a Limit Order to buy (sell)
No. 2, on an accelerated basis. Rule 13—Equities to make it easier to at or above (below) the Exchange best
II. Description of the Proposal, as navigate.10 In addition, the Exchange offer (bid) for the security.’’
Modified by Amendment No. 2 proposes to amend related Exchange
B. Time in Force Modifiers
rules to relocate rule text contained in
On June 5, 2014, in a speech entitled Proposed section (b) of Rule 13—
current Rule 13—Equities; further
‘‘Enhancing Our Market Equity Equities would set forth three Time in
explain the functionality of certain
Structure,’’ Mary Jo White, Chair of the Force modifiers for orders: (1) Day; (2)
Floor broker and DMM interest; further
Commission, requested that the equity Good til Cancelled (‘‘GTC’’) or Open;
explain the operation of non-displayed
exchanges conduct a comprehensive and (3) Immediate or Cancel (‘‘IOC’’).
interest entered into the Exchange’s
review of their order types and how For Day modifiers, the Exchange
systems; add, update, or revise cross
they operate in practice and, as part of proposes to allow only Limit Orders to
references; and make other non-
this review, consider appropriate rule be designated as Day orders. Currently,
changes to help clarify the nature of substantive technical amendments.
Under the proposal, Rule 13—Equities any order could be designated as a Day
their order types and how they interact order. For the GTC or Open modifier,
with each other.8 Subsequent to the would be reorganized into six
categories: (1) Primary Order Types; (2) the Exchange is proposing to allow only
3 See Securities Exchange Act Release No. 74682 Time in Force Modifiers; (3) Auction- Limit Orders to be designated with the
(April, 8, 2015), 80 FR 20043 (‘‘Notice’’). Prior to Only Orders; (4) Orders with GTC or Open modifier. Currently, any
filing this proposal, the Exchange filed a similar Instructions Not to Display All or a order could be a GTC or Open order.
proposal to amend Rule 13—Equities, and related Portion of the Order; (5) Orders with With respect to IOC modifiers, the
Exchange rules, governing order types and
modifiers. See Securities Exchange Act Release No. Instructions Not to Route; and (6) Exchange currently has three different
73593 (November 14, 2014), 79 FR 69153 Additional Order Instructions and modifiers: (1) Regulation NMS-
(November 20, 2014) (SR–NYSEMKT–2014–95). For Modifiers. Currently, Rule 13—Equities compliant IOC; (2) Exchange IOC; and
that proposal, the Commission initially extended (3) IOC–MTS (minimum trade size). The
the time period for action, see Securities Exchange
lists order types and modifiers
Act Release No. 73913 (December 22, 2014), 79 FR alphabetically and does not categorize Exchange is proposing to make non-
78531 (December 30, 2014) (SR–NYSEMKT–2014– order types and modifiers based on substantive changes to the definitions of
95), and then instituted proceedings to determine characteristic or function. all three IOC modifiers.12
whether to approve or disapprove the proposal, see
Securities Exchange Act Release No. 74298 A. Primary Order Types C. Auction-Only Orders
(February 18, 2015), 80 FR 9770 (February 24, 2015)
(SR–NYSEMKT–2014–95). Prior to the conclusion Proposed section (a) of Rule 13— Proposed section (c) of Rule 13—
of those proceedings, the Exchange withdrew the Equities would set forth two primary Equities would set forth five Auction-
proposal. See Securities Exchange Act Release No. Only Orders: (1) Closing Offset (‘‘CO’’)
74643 (April 3, 2015), 80 FR 19102 (April 9, 2015) order types—Market Orders and Limit
(SR–NYSEMKT–2014–95). Orders—and specify which orders are Orders; (2) Limit-on-Close (‘‘LOC’’)
4 The Exchange subsequently withdrew Partial
eligible for automatic executions. The Orders; (3) Limit-on-Open (‘‘LOO’’)
Amendment No. 1 on May 20, 2015. Exchange proposes to delete the current Orders; (4) Market-on Close (‘‘MOC’’)
5 15 U.S.C. 78s(b)(2).
definition of ‘‘Auto Ex Order’’ and Orders; and (5) Market-on-Open
6 See Securities Exchange Act Release No. 75049,
proposes that all orders entered (‘‘MOO’’) Orders. The Exchange is
80 FR 31091 (June 1, 2015). The Commission
designated July 13, 2015, as the date by which it electronically will be eligible for
should approve, disapprove, or institute automatic execution. Interest 11 The Exchange proposes to replace the term
srobinson on DSK5SPTVN1PROD with NOTICES
proceedings to determine whether to disapprove the represented manually by a floor broker, ‘‘Display Book’’ with ‘‘Exchange systems,’’ when
proposed rule change. the term refers to Exchange systems that receive and
7 For a description of the proposals contained execute orders, and with ‘‘Exchange book’’ when
9 See Letter from James Burns, Deputy Director, the term refers to the interest that has been entered
within Amendment No. 2, see infra Section V.
8 See Mary Jo White, Chair, Commission, Speech Division of Trading and Markets, Securities and and ranked in Exchange systems, as applicable
at the Sandler, O’Neill & Partners, L.P. Global Exchange Commission, to Jeffrey C. Sprecher, Chief throughout the proposed rule text.
Exchange and Brokerage Conference (June 5, 2014), Executive Officer, Intercontinental Exchange, Inc., 12 Throughout the proposed rule text, the
available at http://www.sec.gov/News/Speech/ dated June 20, 2014. Exchange proposes to capitalize terms, including,
Detail/Speech/1370542004312. 10 See Notice, supra note 3, 80 FR at 20044. but not limited to, Limit Order and Market Order.
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![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42597
printing in the Commission’s Public enter e-Quotes at or outside the in other Exchange rules, orders and
Reference Room, 100 F Street NE., Exchange BBO; (2) add text to Rule modifiers are available for all member
Washington, DC 20549, on official 70(a)(i) stating that e-Quotes shall not organizations, coupled with the
business days between the hours of include unelected Stop orders, Market proposed addition of subparagraph
10:00 a.m. and 3:00 p.m. Copies of this Orders, ISOs, GTC modifiers, DNR (b)(vi) to Rule 104—Equities that
filing will also be available for modifiers, or DNI modifiers; (3) add text specifically enumerates which orders
inspection and copying at the principal to Rule 70.25(a)(ii) explaining that and modifiers a DMM may not enter
office of the Exchange. All comments discretionary instructions may include into the Exchange’s systems, should
received will be posted without change; instructions to participate in the help member organizations better
the Commission does not edit personal Exchange’s opening or closing understand which orders and modifiers
identifying information from transaction only; (4) make non- they can and cannot enter into the
submissions. You should submit only substantive changes to Rules 70(a)(i)— Exchange’s systems. Therefore, the
information that you wish to make Equities and 70(b)(i)—Equities by Commission finds that Amendment No.
available publicly. All submissions replacing the term ‘‘Display Book’’ with 2 is consistent with the protection of
should refer to File Number SR– the term ‘‘Exchange systems;’’ and (5) investors and the public interest.
NYSEMKT–2015–22 and should be update cross references in Rule 70(f)— Accordingly, the Commission finds
submitted on or before August 7, 2015. Equities. good cause, pursuant to section 19(b)(2)
The Exchange proposes to amend of the Act,23 to approve the proposed
V. Accelerated Approval of Proposed Rule 72(c)(i) to: (1) Set forth that all
Rule Change, as Modified by rule change, as modified by Amendment
non-displayable interest, which No. 2, on an accelerated basis.
Amendment No. 2 includes certain types of reserve interest
The Commission finds good cause to and MPL Orders, trades on parity; and VI. Conclusion
approve the proposed rule change, as (2) to change the phrase ‘‘the displayed It is therefore ordered, pursuant to
modified by Amendment No. 2, prior to bid (offer)’’ to ‘‘displayable bids (offers)’’ section 19(b)(2) of the Act,24 that the
the 30th day after the date of and change the phrase ‘‘displayed proposed rule change (SR–NYSEMKT–
publication of notice of Amendment No. volume’’ to ‘‘displayable volume.’’ The 2015–22), as modified by Amendment
2 in the Federal Register. In Exchange also proposes to amend Rule No. 2, be, and it hereby is, approved on
Amendment No. 2, the Exchange 72(c)(x) to add MPL Orders to the orders an accelerated basis.
proposes to add to Rule 13—Equities identified as being eligible to trade at
For the Commission, by the Division of
text that: (1) States that ‘‘[u]nless price points between the Exchange BBO Trading and Markets, pursuant to delegated
otherwise specified in [Rule 13— and delete a cross reference to Rule 13— authority.25
Equities], Rule 70 (for Floor brokers), or Equities. Robert W. Errett,
Rule 104 (for DMMs), orders and The Exchange also proposes to add
modifiers are available for all member Deputy Secretary.
text to Rule 104(b)(ii)—Equities
organizations;’’ and (2) specifies that the explaining that the Exchange’s systems [FR Doc. 2015–17535 Filed 7–16–15; 8:45 am]
STP modifier is not available for DMM will prevent incoming DMM interest BILLING CODE 8011–01–P
interest. The Exchange also proposes to from trading with resting DMM interest.
delete a proposed change to the Furthermore, the Exchange proposes to
definition of MPL Orders that would add new Rule 104(b)(vi)—Equities to SECURITIES AND EXCHANGE
have required the Exchange’s systems specify that DMMs may not enter the COMMISSION
to: (1) Reject an MPL Order on entry if following orders and modifiers: (1) [Release No. 34–75432; File No. SR–
it has a Minimum Triggering Volume Market Orders; (2) GTC modifiers; (3) NYSEMKT–2015–23]
larger than the size of the order and (2) MOO orders; (4) CO orders; (5) MOC
to reject a request to partially cancel a orders; (6) LOC orders; (7) DNR Self-Regulatory Organizations; NYSE
resting MPL Order when the partial modifiers; (8) DNI modifiers; (9) Sell MKT LLC; Order Approving Proposed
cancellation would result in a Minimum ‘‘Plus’’—Buy ‘‘Minus’’ instructions; and Rule Change, as Modified by
Triggering Volume that is larger than the (10) Stop orders. Amendment No. 1, Adopting a
size of the order. Furthermore, the Finally, the Exchange proposes to Principles-Based Approach To Prohibit
Exchange proposes several non- amend Rule 1000(a)—Equities to the Misuse of Material Nonpublic
substantive technical amendments to provide cross references to other Information by Specialists and e-
the filing so that the proposed text in Exchange rules applicable to automatic Specialists by Deleting Rule 927.3NY
Rules 13(a)(1)—Equities (definition of executions. and Section (f) of Rule 927.5NY
Market Order), 13(b)(2)—Equities The Commission believes that the
revisions proposed in Amendment No. July 13, 2015.
(definition of the GTC modifier),
13(b)(3)—Equities (definition of the IOC 2 do not raise any novel regulatory I. Introduction
modifier), 13(d)(1)(A)—Equities issues. The Commission further believes
that the proposed revisions to the rule On April 8, 2015, NYSE MKT LLC
(definition of MPL Order), 501(a)—
text set forth in Amendment No. 2 do (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
Equities (definition of the term ‘‘Closing
not represent any significant changes to with the Securities and Exchange
Price’’), and the current Rule 13—
the current functionality of the Commission (the ‘‘Commission’’),
Equities text marked for deletion under
Exchange’s order types and modifiers. pursuant to Section 19(b)(1) 1 of the
the present alphabetically listed format,
Rather, these proposed rule text changes Securities Exchange Act of 1934
accurately reflect the proposed rule
srobinson on DSK5SPTVN1PROD with NOTICES
primarily help clarify and better explain (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 a
changes to the current rule text and the
proposed rule text that is not being how the Exchange’s order types and 23 15 U.S.C. 78s(b)(2).
changed from the current rule text. modifiers currently operate and interact. 24 15 U.S.C. 78s(b)(2).
The Exchange also proposes to amend For instance, the Commission believes 25 17 CFR 200.30–3(a)(12).
Rule 70—Equities to: (1) Delete current that the Exchange’s proposal to add text 1 15 U.S.C. 78s(b)(1).
rule text in Rule 70(a)(i)—Equities at the beginning of Rule 13—Equities 2 15 U.S.C. 78a.
indicating that Floor Brokers can only stating that, unless otherwise specified 3 17 CFR 240.19b–4.
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Document Created: 2018-02-23 09:21:20
Document Modified: 2018-02-23 09:21:20
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| Collection | Federal Register | |
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