80 FR 67822 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123D To Specify That Exchange Systems May Open One or More Securities Electronically if a Designated Market Maker Registered in a Security or Securities Cannot Facilitate the Opening of Trading as Required by Exchange Rules
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 212 (November 3, 2015)
Federal Register Volume 80, Issue 212 (November 3, 2015)
| Page Range | 67822-67826 | |
| FR Document | 2015-27911 |
[Federal Register Volume 80, Number 212 (Tuesday, November 3, 2015)] [Notices] [Pages 67822-67826] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-27911] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76290; File No. SR-NYSE-2015-49] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123D To Specify That Exchange Systems May Open One or More Securities Electronically if a Designated Market Maker Registered in a Security or Securities Cannot Facilitate the Opening of Trading as Required by Exchange Rules October 28, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on October 16, 2015, New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 123D to specify that Exchange systems may open one or more securities electronically if a Designated Market Maker registered in a security or securities cannot facilitate the opening of trading as required by Exchange rules. The text of the proposed rule change is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included [[Page 67823]] statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 123D to specify that Exchange systems may open one or more securities electronically if a Designated Market Maker (``DMM'') registered in a security or securities cannot facilitate the open of trading as required by Exchange rules.\3\ --------------------------------------------------------------------------- \3\ The proposed amendment contemplates that a DMM's inability to open securities either manually or electronically would be related to business continuity disruptions such as the physical closing of the Exchange Trading Floor or equipment and connectivity breakdowns that prevent the DMM from opening a security either manually or electronically. When a DMM is unable to open securities manually or electronically, the DMM's affirmative obligations under Rule 104 would not apply. --------------------------------------------------------------------------- Currently, Rule 123D provides that openings may be effected manually or electronically. However, the current rule contemplates that openings would be facilitated by a DMM, as provided for in Rule 104(a)(2). The Exchange proposes to re-number Rule 123D to provide that current Rule 123D(1) would be re-numbered as Rule 123D(a), and the heading would be amended to be referred to as ``Openings.'' \4\ Proposed Rule 123D(a)(1) would include the current first paragraph of Rule 123D(1). --------------------------------------------------------------------------- \4\ The Exchange would also delete the terms ``Delayed'' and ``Halts in trading'' from the current Rule 123D(1) heading. The Exchange further proposes to add a new sub-paragraph (b) to Rule 123D, before the current second paragraph of Rule 123D(1), which would be named ``Delayed Openings/Halts in Trading.'' The Exchange proposes further non-substantive amendments to re-number current Rule 123D(2) as 123D(c) and Rule 123D(4) as Rule 123D(d). As discussed below, the Exchange proposes to delete current Rule 123D(3) and related Supplementary Material .24. --------------------------------------------------------------------------- The Exchange proposes to add a new paragraph (a)(2) to Rule 123D to provide that, if a DMM cannot facilitate the open of trading for one or more securities for which the DMM is registered, the Exchange would open those securities electronically on a quote or a trade as provided for in paragraphs (a)(3)-(a)(6) of the proposed Rule. Proposed Rule 123D(a)(2) would further provide that manually-entered Floor interest would not participate in any open effected electronically by the Exchange and if previously entered, would be ignored. Finally, proposed Rule 123D(a)(2) would provide that, unless otherwise specified, references to an open or opening in proposed Rules 123D(a)(3)-(a)(6) would also mean a reopening following a trading halt or pause. Proposed Rule 123D(a)(3) would specify when the Exchange would open a security on a trade and would provide that the Exchange would open a security on a trade if there is buy and sell interest that can trade a round lot or more at a price that is no greater than or no less than a specified range (``Opening Price Range'') away from the last sale price on the Exchange (``Reference Price''). Proposed Rule 123D(a)(3) would further provide that the Exchange would determine the Opening Price Range parameters upon advance notice to market participants. Unlike DMMs, who have the obligation to trade for their own account to supply liquidity as needed to facilitate openings,\5\ the Exchange would not supply any liquidity when effecting an electronic open. Without the addition of liquidity to offset an imbalance, pricing the opening based on a significant imbalance could result in an opening price that may not be reasonably related to the last sale price on the Exchange. To avoid opening a security at a price too far away from the last sale, the Exchange proposes to establish numerical guidelines to provide parameters regarding the price a security may open when the Exchange opens such security on a trade. The Exchange proposes to establish the Opening Price Range parameters from time to time upon advance notice to market participants, which is similar to how other markets function.\6\ --------------------------------------------------------------------------- \5\ See Rule 104(a)(2) & 104(f)(ii). \6\ See, e.g., Nasdaq Stock Market LLC (``Nasdaq'') Rule 4752(b)[sic](2)(E) (Nasdaq management sets and modifies benchmarks and thresholds for the Nasdaq Opening Cross from time to time upon prior notice to market participants); NYSE Arca Equities, Inc. (``NYSE Arca Equities'') Rule 1.1(s)(A) (NYSE Arca Equities sets and modifiers price collar thresholds for the Market Order Auction from time to time upon prior notice to ETP Holders). --------------------------------------------------------------------------- Proposed Rule 123D(a)(3)(A)-(C) would specify how orders would participate if the Exchange opens a security on a trade. Proposed Rule 123D(a)(3)(A) would provide that if all interest guaranteed to participate in an opening trade under Rule 115A(b) \7\ could trade at a price consistent with the Opening Price Range, the opening trade would be at the price at which all such interest could trade. Proposed Rule 123D(a)(3)(B) would provide that if there are only Market Orders on both sides of the market, the opening price would be the Reference Price. --------------------------------------------------------------------------- \7\ Rule 115A(b) provides that when arranging an opening or reopening price, except as provided for in Rule 115A(b)(2) which concerns opening a security on a quote, market interest would be guaranteed to participate in the opening or reopening transaction and have precedence over limit interest that is priced equal to the opening or reopening price of a security and DMM interest. For purposes of the opening or reopening transaction, market interest includes (1) market and Market on Open (``MOO'') orders, (2) tick- sensitive market and MOO orders to buy (sell) that are priced higher (lower) than the opening or reopening price, (3) limit interest to buy (sell) that is priced higher (lower) than the opening or reopening price, and (iv) Floor broker interest entered manually by the DMM. See Rule 115A(b)(1)(A). For purposes of the opening or reopening transaction, limit interest would include (2) limited- priced interest, including-Quotes, Limit on Open (``LOO'') orders, and G orders; and (ii) tick-sensitive market and MOO orders that are priced equal to the opening or reopening price of a security. See Rule 115A(b)(1)(C). In addition, G orders that are priced equal to the opening or reopening price of a security would yield to all other limit interest priced equal to the opening or reopening price of a security except DMM interest. --------------------------------------------------------------------------- Because the Exchange would open a security within specified guidelines, not all interest that is intended for the open may participate in such an open. Proposed Rule 123D(a)(3)(C) would therefore provide that if interest that is otherwise guaranteed to participate in an opening trade under Rule 115A(b) would cause an opening price to be outside the Opening Price Range, such interest would not be guaranteed to participate in the opening trade. In that case, the Exchange proposes that the opening trade would be at the price at which the maximum volume of shares is tradable that is closest to the Reference Price and that orders would be allocated in the following priority, which is based on the priority of orders set forth in Rule 115A(b):Proposed Rule 123D(a)(3)(C)(i) would provide that Market and Market-on-Open (``MOO'') orders would trade first in time priority, provided that, during a Short Sale Period, sell short market orders and MOO orders would be adjusted to a Permitted Price \8\ and would be considered limit orders for purposes of determining allocation priority. --------------------------------------------------------------------------- \8\ As set forth in Rule 440B, a short sale price test is activated if the price of a listed security declines by 10% or more from the previous day's last sale on the listing market and continues through the end of the following trading day (the ``Short Sale Period''). Pursuant to Rule 440B(e), Exchange systems will re- price short sale orders that are limited to the current national best bid (``NBB'') or lower and short sale market orders by one minimum price increment above the NBB (the ``Permitted Price''). The Permitted Price for securities for which the NBB is $1 or more is $.01 above the NBB; the Permitted Price for securities for which the NBB is below $1 is $.0001 above the NBB. --------------------------------------------------------------------------- Proposed Rule 123D(a)(3)(C)(ii) would provide that Stop Orders that [[Page 67824]] would be elected based on the opening price would trade second in time priority. As further proposed, during a Short Sale Period, sell short Stop Orders that are priced to a Permitted Price that would be lower than the opening price would trade after all other Stop Orders and before all other interest priced equal to or lower than the opening price. Proposed Rule 123D(a)(3)(C)(iii) would provide that Limit Orders (including Reserve Orders) to buy (sell) and e-Quotes (including Reserve e-Quotes) to buy (sell) priced higher (lower) than the opening price would trade third on parity by agent under Rule 72(c).\9\ --------------------------------------------------------------------------- \9\ Rule 72(c) describes the allocation of executions on the Exchange and Rule 72(c)(ii) provides that for purposes of share allocation in an execution, each single Floor broker, the DMM and orders collectively represented in Exchange systems shall constitute individual participants. Rule 72(c)(iv) provides that executed volume shall be allocated to each participant on parity. --------------------------------------------------------------------------- Proposed Rule 123D(a)(3)(C)(iv) would provide that G- quotes \10\ to buy (sell) priced higher (lower) than the opening price will trade fourth on parity by agent under Rule 72(c). --------------------------------------------------------------------------- \10\ Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), generally prohibits a member of a national securities exchange from effecting transactions on that exchange for its own account, the account of an associated person, or any account over which it or an associated person exercises discretion. Subsection (G) of Section 11(a)(1) provides an exemption allowing an exchange member to have its own floor broker execute a proprietary transaction (``G order''). A G- Quote is an electronic method for Floor brokers to represent G orders. G orders on NYSE yield priority, parity and precedence based on size to all other non-G orders. --------------------------------------------------------------------------- Finally, proposed Rule 123D(a)(3)(C)(v) would provide that all other limit interest that is priced equal to the opening price will trade last and be allocated consistent with Rule 115A(b)(1). Proposed Rule 123D(a)(4) would describe when the Exchange would open a security electronically on a quote. First, proposed Rule 123D(a)(4)(A) would provide that if interest of less than a round lot pairs off at a price within the Opening Price Range, the Exchange would open on a quote. In this circumstance, after opening on a quote, interest of less than a round lot would trade at the price closest to the Reference Price (or at the Reference Price if the only interest is market orders), but would not be reported as an opening trade. Proposed Rule 123D(a)(4)(B) would provide that the Exchange would open a security electronically on a quote if interest of any size pairs off at a price below (above) the lower (upper) boundary of the Opening Price Range, in which case, such paired-off interest would not trade. Proposed Rule 123D(a)(4)(C) would provide that the Exchange would open a security electronically on a quote if there is no interest that can be quoted on either or both sides of the market. The proposed Rule would further specify that if an opening quote has a zero bid and/or a zero offer, it would not constitute an ``Opening Price'' as defined in Section I(I) of the Regulation NMS Plan to Address Extraordinary Market Volatility (the ``Plan'').\11\ Accordingly, if the Exchange were to open on a quote with a zero bid and/or a zero offer, it would not calculate a midpoint of the quote for purposes of calculating Price Bands as provided for in Section V(B)(1) of the Plan. --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 67091, 77 FR 33498 (June 6, 2012) (File No. 4-631). --------------------------------------------------------------------------- Proposed Rule 123D(a)(5) would specify which information would be provided in advance of an opening or reopening. In order to provide transparency regarding the opening process, the Exchange proposes that during an opening effected by the Exchange, Order Imbalance Information pursuant to Rule 15(c) would be published.\12\ However, because the Exchange would not open a security at a price outside of specified ranges, the Exchange would not issue pre-opening indications in a security pursuant to either Rule 15(a) or 123D.\13\ The Exchange further proposes that it would publish pre-opening indications pursuant to Rule 123D(b) for a re-opening following a regulatory halt. --------------------------------------------------------------------------- \12\ Order Imbalance Information reflects real-time order imbalances that accumulate prior to the opening transaction on the Exchange and the price at which interest eligible to participate in the opening transaction may be executed in full. Order Imbalance Information disseminated pursuant to Rule 15(c) includes all interest eligible for execution in the opening transaction of the security in Exchange systems, i.e., electronic interest, including Floor broker electronic interest, entered into Exchange systems prior to the opening. Order Imbalance Information is disseminated on the Exchange's proprietary data feeds. See Rule 15(c)(1). \13\ See Proposed Rule 123D(a)(2) (F) [sic]. Rule 123D(1) requires the dissemination of one or more indications in connection with any delayed opening where a security has not opened or been quoted by 10 a.m. In addition, Rule 123D(1) provides that dissemination of one or more indication is mandatory for an opening which will result in a ``significant'' price change from the previous close. For securities priced under $10, such indications are mandatory if the price change is one dollar of more; for securities between $10 and $99.99, indications are required for price movements of the lesser of 10% or three dollars; and for securities over $100, indications are required for price movements of five dollars or more. --------------------------------------------------------------------------- Proposed Rule 123D(a)(6) would describe under which circumstances the Exchange would cancel orders after opening on a trade or quote. A proposed in new Rule 123D(a)(6)(A), all unexecuted Market Orders, MOO Orders, and LOO Orders would be cancelled. This would be new behavior following an Exchange-facilitated open because under a DMM-facilitated open, all Market and MOO Orders are guaranteed to participate and therefore there would not be any unexecuted Market Orders or MOO Orders following an opening. Proposed Rule 123D(a)(6)(B) would provide that after an opening on a trade, buy (sell) Limit Orders priced higher (lower) than the opening price would be cancelled. Lastly, proposed Rule 123D(a)(6)(C) would provide that if interest would have paired off at a price below (above) the lower (upper) boundary of the Opening Price Range, after opening on a quote, sell (buy) Limit Orders would be cancelled. The Exchange proposes to cancel only the side of the orders that would cause an opening price to be outside of the Opening Price Range parameters; the other side would not be cancelled and would be included in the opening quote. The Exchange also proposes to delete current Rule 123D(3) and related Supplementary Material .24. Rule 123D(3) sets forth a non- regulatory trading halt condition titled ``Investment Company Units or Index-Linked Securities Trading Condition'' adopted to facilitate the listing and trading of all index-linked securities and ETFs from the Exchange to its affiliate NYSE Arca, Inc. (``NYSE Arca'') by December 31, 2007.\14\ The condition permits the Exchange to halt ETFs or index- linked securities after January 1, 2008 that remain listed on the NYSE.\15\ All NYSE-listed index-linked securities and ETFs have transferred to NYSE Arca and are no longer traded on the Exchange, rendering Rule 123D(3) and Supplementary Material .24 moot. --------------------------------------------------------------------------- \14\ See Securities Exchange Act Release No. 57035 (December 21, 2007), 72 FR 74386 (December 31, 2007) (SR-NYSE-2007-117). \15\ See id. --------------------------------------------------------------------------- Because of the technology changes associated with the proposed rule change, the Exchange proposes to announce the implementation date via Trader Update. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\16\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\17\ in particular, because it 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 [[Page 67825]] open market and a national market system, and protect investors and the public interest. The Exchange believes that permitting the Exchange to electronically open trading would remove impediments to and perfect the mechanism of a free and open market and a national market system by ensuring an orderly open if the registered DMM cannot manually or electronically facilitate the open of trading as required under Rule 104(a). Similarly, the proposal promotes just and equitable principles of trade and removes impediments to and perfects the mechanism of a free and open market by providing customers and the investing public with the certainty of an open in circumstances where business continuity disruptions or other emergencies would prevent the assigned DMMs from opening a security. For the same reasons, the proposal is also designed to protect investors as well as the public interest. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b). \17\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed amendment to Rule 123D(a)(3) to provide that openings effected by the Exchange would be within a proposed numerical guideline would remove impediments to and perfect the mechanism of a free and open market because, similar to how Nasdaq and NYSE Arca Equities function, it would enable the Exchange to set parameters for an opening to assure that the potential prices that a security may open would not be significantly away from the Reference Price. Similarly, the Exchange believes that excluding interest eligible for the open that would cause an execution to occur outside the Opening Price Range parameters, even if such interest would otherwise be required to be included in an open effected by a DMM, would remove impediments to and perfect the mechanism of a fair and orderly market because it would assure that the Exchange could effect the open within the proposed specified price ranges. The proposed rule therefore promotes just and equitable principles of trade because it provides transparency to entering firms of whether interest would be eligible to participate in a closing transaction effected by the Exchange. Finally, deleting an obsolete halt condition in 123D(3) and related Supplementary Material .24 removes impediments to and perfects the mechanism of a free and open market by removing confusion that may result from having obsolete references in the Exchange's rulebook. The Exchange further believes that the proposal removes impediments to and perfects the mechanism of a free and open market by ensuring that persons subject to the Exchange's jurisdiction, regulators, and the investing public, can more easily navigate and understand the Exchange's rulebook. The Exchange believes that eliminating obsolete references would not be inconsistent with the public interest and the protection of investors because investors will not be harmed and in fact would benefit from increased transparency, thereby reducing potential confusion. Removing such obsolete references will also further the goal of transparency and add clarity to the Exchange's rules. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not intended to address competitive issues but rather enable the Exchange to open trading where circumstances would prevent a DMM from facilitating an open. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ Because the proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6)(iii) thereunder. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A)(iii). \19\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),\21\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. --------------------------------------------------------------------------- \20\ 17 CFR 240.19b-4(f)(6). \21\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSE-2015-49 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-2015-49. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such [[Page 67826]] filing also will be available for inspection and copying at the principal offices 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-2015-49, and should be submitted on or before November 24, 2015. --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ Robert W. Errett, Deputy Secretary. [FR Doc. 2015-27911 Filed 11-2-15; 8:45 am] BILLING CODE 8011-01-P
![67822 Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices
staff engage in 1.5 hours per new client SECURITIES AND EXCHANGE ‘‘remove references to odd lot orders in
and 1 hour per continuing client to COMMISSION proposed Rule 7.16P(f)(5)’’
prepare, conduct and/or review Robert W. Errett,
interviews regarding the client’s [Release No. 34–76198A; File No. SR– Deputy Secretary.
financial situation and investment NYSEARCA–2015–58]
[FR Doc. 2015–27877 Filed 11–2–15; 8:45 am]
objectives as required by the rule.
Self-Regulatory Organizations; NYSE BILLING CODE 8011–01–P
Furthermore, the staff estimates that
each year the investment advisory Arca, Inc.; Notice of Filing of
program sponsors’ staff spends 1 hour Amendment No. 1 and Order Granting
Accelerated Approval to a Proposed SECURITIES AND EXCHANGE
per client to prepare and mail quarterly COMMISSION
client account statements, including Rule Change, as Modified by
notices to update information. Based on Amendment No. 1, Adopting New [Release No. 34–76290; File No. SR–NYSE–
the estimates above, the Commission Equity Trading Rules Relating to 2015–49]
Trading Halts, Short Sales, Limit Up-
estimates that the total annual burden of Self-Regulatory Organizations; New
Limit Down, and Odd Lots and Mixed
the rule’s paperwork requirements is York Stock Exchange LLC; Notice of
Lots to Reflect the Implementation of
35,534,594 hours. Pillar, the Exchange’s New Trading Filing and Immediate Effectiveness of
The estimate of average burden hours Technology Platform; Correction Proposed Rule Change Amending Rule
is made solely for the purposes of the 123D To Specify That Exchange
Paperwork Reduction Act. The estimate October 28, 2015. Systems May Open One or More
is not derived from a comprehensive or AGENCY: Securities and Exchange Securities Electronically if a
even a representative survey or study of Commission. Designated Market Maker Registered in
the costs of Commission rules and ACTION: Notice; correction. a Security or Securities Cannot
forms. An agency may not conduct or Facilitate the Opening of Trading as
sponsor, and a person is not required to SUMMARY: The Securities and Exchange Required by Exchange Rules
respond to a collection of information Commission published a document in
October 28, 2015.
unless it displays a currently valid the Federal Register on October 26,
2015, concerning a Notice of Filing of Pursuant to Section 19(b)(1) of the
control number. Securities Exchange Act of 1934
Amendment No. 1 and Order Granting
Written comments are invited on: (a) Accelerated Approval to a Proposed (‘‘Act’’),1 and Rule 19b–4 thereunder,2
whether the collections of information Rule Change, as Modified by notice is hereby given that on October
are necessary for the proper Amendment No. 1, Adopting New 16, 2015, New York Stock Exchange
performance of the functions of the Equity Trading Rules Relating to LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
Commission, including whether the Trading Halts, Short Sales, Limit Up- with the Securities and Exchange
information has practical utility; (b) the Limit Down, and Odd Lots and Mixed Commission (‘‘SEC’’ or ‘‘Commission’’)
accuracy of the Commission’s estimate Lots to Reflect the Implementation of the proposed rule change as described
of the burdens of the collections of Pillar, the Exchange’s New Trading in Items I, II, and III below, which Items
information; (c) ways to enhance the Technology Platform. The document have been prepared by the Exchange.
contained typographical errors. The Commission is publishing this
quality, utility, and clarity of the
notice to solicit comments on the
information collected; and (d) ways to FOR FURTHER INFORMATION CONTACT: proposed rule change from interested
minimize the burdens of the collections Sonia Trocchio, Division of Trading and persons.
of information on respondents, Markets, Securities and Exchange
including through the use of automated Commission, 100 F Street NE., I. Self-Regulatory Organization’s
collection techniques or other forms of Washington, DC 20549, (202) 551–5648. Statement of the Terms of Substance of
information technology. Consideration the Proposed Rule Change
Correction
will be given to comments and The Exchange proposes to amend
suggestions submitted in writing within In the Federal Register of October 26, Rule 123D to specify that Exchange
60 days of this publication. 2015 in FR Doc. 2015–27069, on page systems may open one or more
65274, subsection (iii) of footnote 5, securities electronically if a Designated
Please direct your written comments
change the text, ‘‘amend proposed Rule Market Maker registered in a security or
to Pamela Dyson, Director/Chief
7.16P(f)(5)(C) to clarify that the securities cannot facilitate the opening
Information Officer, Securities and Exchange would treat all odd lot orders
Exchange Commission, C/O Remi of trading as required by Exchange
ranked Priority 2—Display Orders in the rules. The text of the proposed rule
Pavlik-Simon, 100 F Street NE., same manner as Market Orders and change is available on the Exchange’s
Washington, DC 20549; or send an email other non-displayed orders,’’ to the text, Web site at www.nyse.com, at the
to: PRA_Mailbox@sec.gov. ‘‘remove references to odd lot orders in principal office of the Exchange, and at
Dated: October 28, 2015. proposed Rule 7.16P(f)(5)’’. On page the Commission’s Public Reference
Robert W. Errett, 65276, in the 4th sentence of paragraph Room.
3, remove the following language: ‘‘of
Deputy Secretary. II. Self-Regulatory Organization’s
odd-lot orders that are ranked Priority
[FR Doc. 2015–27916 Filed 11–2–15; 8:45 am] Statement of the Purpose of, and
mstockstill on DSK4VPTVN1PROD with NOTICES
2,’’. On page 65277, in the 1st sentence
BILLING CODE 8011–01–P of the first full paragraph, change the Statutory Basis for, the Proposed Rule
text, ‘‘amends proposed Rule Change
7.16P(f)(5)(C) to clarify that the In its filing with the Commission, the
Exchange would treat all odd lot orders self-regulatory organization included
ranked Priority 2—Display Orders in the
same manner as Market Orders and 1 15 U.S.C. 78s(b)(1).
other non-displayed orders,’’ to the text, 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:04 Nov 02, 2015 Jkt 238001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\03NON1.SGM 03NON1](https://thefederalregister.org/doc/80_FR_68034/page/1.svg)
(E) (Nasdaq management sets except DMM interest.
securities manually or electronically, the DMM’s and modifies benchmarks and thresholds for the 8 As set forth in Rule 440B, a short sale price test
affirmative obligations under Rule 104 would not Nasdaq Opening Cross from time to time upon prior is activated if the price of a listed security declines
apply. notice to market participants); NYSE Arca Equities, by 10% or more from the previous day’s last sale
4 The Exchange would also delete the terms Inc. (‘‘NYSE Arca Equities’’) Rule 1.1(s)(A) (NYSE on the listing market and continues through the end
‘‘Delayed’’ and ‘‘Halts in trading’’ from the current Arca Equities sets and modifiers price collar of the following trading day (the ‘‘Short Sale
thresholds for the Market Order Auction from time
mstockstill on DSK4VPTVN1PROD with NOTICES
Rule 123D(1) heading. The Exchange further Period’’). Pursuant to Rule 440B(e), Exchange
proposes to add a new sub-paragraph (b) to Rule to time upon prior notice to ETP Holders). systems will re-price short sale orders that are
123D, before the current second paragraph of Rule 7 Rule 115A(b) provides that when arranging an
limited to the current national best bid (‘‘NBB’’) or
123D(1), which would be named ‘‘Delayed opening or reopening price, except as provided for lower and short sale market orders by one
Openings/Halts in Trading.’’ The Exchange in Rule 115A(b)(2) which concerns opening a minimum price increment above the NBB (the
proposes further non-substantive amendments to re- security on a quote, market interest would be ‘‘Permitted Price’’). The Permitted Price for
number current Rule 123D(2) as 123D(c) and Rule guaranteed to participate in the opening or securities for which the NBB is $1 or more is $.01
123D(4) as Rule 123D(d). As discussed below, the reopening transaction and have precedence over above the NBB; the Permitted Price for securities for
Exchange proposes to delete current Rule 123D(3) limit interest that is priced equal to the opening or which the NBB is below $1 is $.0001 above the
and related Supplementary Material .24. reopening price of a security and DMM interest. For NBB.
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![67824 Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices
would be elected based on the opening Proposed Rule 123D(a)(4)(C) would Orders, and LOO Orders would be
price would trade second in time provide that the Exchange would open cancelled. This would be new behavior
priority. As further proposed, during a a security electronically on a quote if following an Exchange-facilitated open
Short Sale Period, sell short Stop Orders there is no interest that can be quoted because under a DMM-facilitated open,
that are priced to a Permitted Price that on either or both sides of the market. all Market and MOO Orders are
would be lower than the opening price The proposed Rule would further guaranteed to participate and therefore
would trade after all other Stop Orders specify that if an opening quote has a there would not be any unexecuted
and before all other interest priced equal zero bid and/or a zero offer, it would not Market Orders or MOO Orders following
to or lower than the opening price. constitute an ‘‘Opening Price’’ as an opening. Proposed Rule
• Proposed Rule 123D(a)(3)(C)(iii) defined in Section I(I) of the Regulation 123D(a)(6)(B) would provide that after
would provide that Limit Orders NMS Plan to Address Extraordinary an opening on a trade, buy (sell) Limit
(including Reserve Orders) to buy (sell) Market Volatility (the ‘‘Plan’’).11 Orders priced higher (lower) than the
and e-Quotes (including Reserve e- Accordingly, if the Exchange were to opening price would be cancelled.
Quotes) to buy (sell) priced higher open on a quote with a zero bid and/or Lastly, proposed Rule 123D(a)(6)(C)
(lower) than the opening price would a zero offer, it would not calculate a would provide that if interest would
trade third on parity by agent under midpoint of the quote for purposes of have paired off at a price below (above)
Rule 72(c).9 calculating Price Bands as provided for the lower (upper) boundary of the
• Proposed Rule 123D(a)(3)(C)(iv) in Section V(B)(1) of the Plan. Opening Price Range, after opening on
would provide that G-quotes 10 to buy Proposed Rule 123D(a)(5) would a quote, sell (buy) Limit Orders would
(sell) priced higher (lower) than the specify which information would be be cancelled. The Exchange proposes to
opening price will trade fourth on parity provided in advance of an opening or cancel only the side of the orders that
by agent under Rule 72(c). reopening. In order to provide would cause an opening price to be
• Finally, proposed Rule transparency regarding the opening outside of the Opening Price Range
123D(a)(3)(C)(v) would provide that all process, the Exchange proposes that parameters; the other side would not be
other limit interest that is priced equal during an opening effected by the cancelled and would be included in the
to the opening price will trade last and Exchange, Order Imbalance Information opening quote.
be allocated consistent with Rule pursuant to Rule 15(c) would be The Exchange also proposes to delete
115A(b)(1). published.12 However, because the current Rule 123D(3) and related
Proposed Rule 123D(a)(4) would Exchange would not open a security at Supplementary Material .24. Rule
describe when the Exchange would a price outside of specified ranges, the 123D(3) sets forth a non-regulatory
open a security electronically on a Exchange would not issue pre-opening trading halt condition titled
quote. First, proposed Rule indications in a security pursuant to ‘‘Investment Company Units or Index-
123D(a)(4)(A) would provide that if either Rule 15(a) or 123D.13 The Linked Securities Trading Condition’’
interest of less than a round lot pairs off Exchange further proposes that it would adopted to facilitate the listing and
at a price within the Opening Price publish pre-opening indications trading of all index-linked securities
Range, the Exchange would open on a pursuant to Rule 123D(b) for a re- and ETFs from the Exchange to its
quote. In this circumstance, after opening following a regulatory halt. affiliate NYSE Arca, Inc. (‘‘NYSE Arca’’)
opening on a quote, interest of less than Proposed Rule 123D(a)(6) would by December 31, 2007.14 The condition
a round lot would trade at the price describe under which circumstances the permits the Exchange to halt ETFs or
closest to the Reference Price (or at the Exchange would cancel orders after index-linked securities after January 1,
Reference Price if the only interest is opening on a trade or quote. A proposed 2008 that remain listed on the NYSE.15
market orders), but would not be in new Rule 123D(a)(6)(A), all All NYSE-listed index-linked securities
reported as an opening trade. unexecuted Market Orders, MOO and ETFs have transferred to NYSE Arca
Proposed Rule 123D(a)(4)(B) would and are no longer traded on the
provide that the Exchange would open 11 See Securities Exchange Act Release No. 67091,
Exchange, rendering Rule 123D(3) and
a security electronically on a quote if 77 FR 33498 (June 6, 2012) (File No. 4–631). Supplementary Material .24 moot.
interest of any size pairs off at a price 12 Order Imbalance Information reflects real-time
Because of the technology changes
order imbalances that accumulate prior to the
below (above) the lower (upper) opening transaction on the Exchange and the price associated with the proposed rule
boundary of the Opening Price Range, in at which interest eligible to participate in the change, the Exchange proposes to
which case, such paired-off interest opening transaction may be executed in full. Order announce the implementation date via
would not trade. Imbalance Information disseminated pursuant to
Rule 15(c) includes all interest eligible for
Trader Update.
execution in the opening transaction of the security 2. Statutory Basis
9 Rule 72(c) describes the allocation of executions
in Exchange systems, i.e., electronic interest,
on the Exchange and Rule 72(c)(ii) provides that for including Floor broker electronic interest, entered The Exchange believes that the
purposes of share allocation in an execution, each into Exchange systems prior to the opening. Order
single Floor broker, the DMM and orders proposed rule change is consistent with
Imbalance Information is disseminated on the
collectively represented in Exchange systems shall Exchange’s proprietary data feeds. See Rule Section 6(b) of the Act,16 in general, and
constitute individual participants. Rule 72(c)(iv) 15(c)(1). furthers the objectives of Section 6(b)(5)
provides that executed volume shall be allocated to 13 See Proposed Rule 123D(a)(2) (F) [sic]. Rule of the Act,17 in particular, because it is
each participant on parity. 123D(1) requires the dissemination of one or more
10 Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1),
designed to prevent fraudulent and
indications in connection with any delayed opening
generally prohibits a member of a national where a security has not opened or been quoted by
manipulative acts and practices,
securities exchange from effecting transactions on 10 a.m. In addition, Rule 123D(1) provides that promote just and equitable principles of
that exchange for its own account, the account of trade, remove impediments to and
mstockstill on DSK4VPTVN1PROD with NOTICES
dissemination of one or more indication is
an associated person, or any account over which it mandatory for an opening which will result in a perfect the mechanism of a free and
or an associated person exercises discretion. ‘‘significant’’ price change from the previous close.
Subsection (G) of Section 11(a)(1) provides an For securities priced under $10, such indications
14 See Securities Exchange Act Release No. 57035
exemption allowing an exchange member to have are mandatory if the price change is one dollar of
its own floor broker execute a proprietary more; for securities between $10 and $99.99, (December 21, 2007), 72 FR 74386 (December 31,
transaction (‘‘G order’’). A G-Quote is an electronic indications are required for price movements of the 2007) (SR–NYSE–2007–117).
15 See id.
method for Floor brokers to represent G orders. G lesser of 10% or three dollars; and for securities
16 15 U.S.C. 78f(b).
orders on NYSE yield priority, parity and over $100, indications are required for price
precedence based on size to all other non-G orders. movements of five dollars or more. 17 15 U.S.C. 78f(b)(5).
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![67826 Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices
filing also will be available for Participation or Association With a The Commission uses the information
inspection and copying at the principal Member of Any Person Subject to a provided in the submissions filed
offices of the Exchange. All comments Statutory Disqualification, and pursuant to Rule 19h–1 to review
received will be posted without change; Applications to the Commission for decisions of SROs to permit the entry
the Commission does not edit personal Relief Therefrom into or continuance in the securities
identifying information from Notice is hereby given that, pursuant business of persons who have
submissions. You should submit only to the Paperwork Reduction Act of 1995 committed serious misconduct. The
information that you wish to make (44 U.S.C. 3501 et seq.), the Securities filings submitted pursuant to the Rule
available publicly. All submissions also permit inclusion of an application
and Exchange Commission
should refer to File Number SR–NYSE– to the Commission for consent to
(‘‘Commission’’) is soliciting comments
2015–49, and should be submitted on or associate with a member of an SRO
on the proposed request for
before November 24, 2015. notwithstanding a Commission order
reinstatement, with change, of a
For the Commission, by the Division of barring such association.
previously approved collection for
Trading and Markets, pursuant to delegated The Commission reviews filings made
which approval has expired—Rule 19h–
authority.23 pursuant to the Rule to ascertain
1, Notice by a Self-Regulatory
Robert W. Errett, whether it is in the public interest to
Organization of Proposed Admission to
Deputy Secretary. permit the employment in the securities
or Continuance in Membership or
[FR Doc. 2015–27911 Filed 11–2–15; 8:45 am]
business of persons subject to a
Participation or Association With a
statutory disqualification. The filings
BILLING CODE 8011–01–P Member of Any Person Subject to a
contain information that is essential to
Statutory Disqualification, and the staff’s review and ultimate
Applications to the Commission for determination on whether an
SECURITIES AND EXCHANGE Relief Therefrom (17 CFR 240.19h–1).
COMMISSION association or employment is in the
The Commission plans to submit this public interest and consistent with
request for reinstatement to the Office of investor protection. Without these
Submission for OMB Review;
Management and Budget (‘‘OMB’’) for filings, persons subject to a statutory
Comment Request
approval. disqualification could reenter or
Upon Written Request Copies Available Rule 19h–1 (‘‘Rule’’) under the continue employment in the securities
From: U.S. Securities and Exchange Securities Exchange Act of 1934 (the business without the Commission’s
Commission, Office of FOIA Services, ‘‘Exchange Act’’) prescribes the form critical review of their character, ability
100 F Street NE., Washington, DC and content of notices and applications to act as a fiduciary, and their
20549–2736. by self-regulatory organizations employer’s plan of supervision. The
Reinstatement: Rule 19h–1; (‘‘SROs’’) regarding proposed failure to collect and review this
SEC File No. 270–247; OMB Control No. admissions to, or continuances in, information could result in significant
3235–0259. membership, participation or harm to the investing public.
Notice by a Self-Regulatory association with a member of any The Commission estimates the annual
Organization of Proposed Admission to person subject to a statutory burden of responding to this collection
or Continuance in Membership or disqualification. of information is as follows.
BURDEN HOURS
19h–1(a)(4)—Notification of
19h–1(a)—Notice of 19h–1(d)—Application to the
proposed admission or con-
admission or continuance 19h–1(b)—Preliminary Commission for relief from
tinuance pursuant to an ex-
notwithstanding a statutory notifications certain statutory
ception from the
disqualification disqualifications
notice requirements
Estimated number of respondents = .......... 20 ........................................ 20 ........................................ 20 ........................................ 20.
Estimated number of annual responses 11 ........................................ 9 .......................................... 28 ........................................ 5.
per respondent =.
Estimated annual reporting burden per re- 80 ........................................ 80 ........................................ 13 ........................................ 80.
sponse =.
Estimated total annual reporting bur- 17,600 (20 respondents × 14,400 (20 respondents × 9 7,280 (20 respondents × 28 8,000 (20 respondents × 5
den =. 11 annual responses per annual responses per re- annual responses per re- annual responses per re-
respondent × 80 hours spondent × 80 hours per spondent × 13 hours per spondent × 80 hours per
per respondent). respondent). respondent). respondent).
Written comments are invited on: (a) collection of information on subject to the PRA that does not display
Whether this collection of information respondents, including through the use a valid OMB control number.
is necessary for the proper performance of automated collection techniques or Persons submitting comments on the
of the functions of the agency, including other forms of information technology. collection of information requirements
whether the information will have The Commission may not conduct or should direct them to Pamela Dyson,
mstockstill on DSK4VPTVN1PROD with NOTICES
practical utility; (b) the accuracy of the sponsor a collection of information Director/Chief Information Officer,
agency’s estimate of the burden imposed unless it displays a currently valid Securities and Exchange Commission,
by the collection of information; (c) control number. No person shall be c/o Remi Pavlik-Simon, 100 F Street
ways to enhance the quality, utility, and NE., Washington, DC 20549, or send an
subject to any penalty for failing to
clarity of the information collected; and email to: PRA_Mailbox@sec.gov.
comply with a collection of information
(d) ways to minimize the burden of the Comments should reference SEC File
23 17 CFR 200.30–3(a)(12).
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Document Created: 2018-03-01 11:32:40
Document Modified: 2018-03-01 11:32:40
| 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 67822 |
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