80 FR 67830 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123D-Equities 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 | 67830-67833 | |
| FR Document | 2015-27909 |
[Federal Register Volume 80, Number 212 (Tuesday, November 3, 2015)] [Notices] [Pages 67830-67833] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-27909] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76292; File No. SR-NYSEMKT-2015-81] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123D-- Equities 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 23, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 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--Equities 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 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--Equities (``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)--Equities. 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). As discussed below, the Exchange proposes to delete current Rule 123D(3) and (4). --------------------------------------------------------------------------- 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 [[Page 67831]] 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)--Equities & 104(f)(ii)--Equities. \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)--Equities provides that when arranging an opening or reopening price, except as provided for in Rule 115A(b)(2)--Equities 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)--Equities. 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)--Equities. 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)--Equities 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)--Equities: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--Equities, 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)--Equities, 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 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)-- Equities.\9\ --------------------------------------------------------------------------- \9\ Rule 72(c)--Equities describes the allocation of executions on the Exchange and Rule 72(c)(ii)--Equities 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)-- Equities 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)--Equities. --------------------------------------------------------------------------- \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)--Equities. 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)--Equities would be published.\12\ However, because the [[Page 67832]] 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)--Equities 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)--Equities 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)--Equities. \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(4), which sets forth a non-regulatory trading halt condition designated ``Structured Products.'' Rule 123D(4) was adopted to permit the halting of trading of exchange traded funds (``ETFs'') and structured products on the Exchange to facilitate the closing of the Exchange's former trading floor in connection with the acquisition of the Exchange by NYSE Euronext in 2008. Orders in ETFs and structured products subject to the trading halt condition are routed from the Exchange to its affiliate NYSE Arca, Inc. (``NYSE Arca'').\14\ The condition permits the Exchange to halt ETFs or structured products that remain listed on the Exchange.\15\ All Exchange-listed ETFs and structured products have transferred to NYSE Arca and are no longer traded on the Exchange, rendering Rule 123D(4) moot.\16\ --------------------------------------------------------------------------- \14\ See Securities Exchange Act Release No. 58824 (October 21, 2008), 73 FR 63754 (October 27, 2008) (SR-NYSEALTR-2008-02). See also Securities Exchange Act Release No. 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63). \15\ See id. \16\ The Exchange also proposes to amend current Rule 123D(2) to replace single quotation marks with double quotation marks around the term ``Equipment Changeover'' and to delete current Rule 123D(3), which is marked ``Reserved.'' --------------------------------------------------------------------------- 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,\17\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\18\ 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 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b). \18\ 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 Rule 123D(4) 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. [[Page 67833]] 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 \19\ and Rule 19b-4(f)(6) thereunder.\20\ 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. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78s(b)(3)(A)(iii). \20\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),\22\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. --------------------------------------------------------------------------- \21\ 17 CFR 240.19b-4(f)(6). \22\ 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) \23\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \23\ 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-NYSEMKT-2015-81 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-2015-81. 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 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 referto File Number SR-NYSEMKT-2015- 81, and should be submitted on or before November 24, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\ --------------------------------------------------------------------------- \24\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-27909 Filed 11-2-15; 8:45 am] BILLING CODE 8011-01-P
![67830 Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices
Reference Room, 100 F Street NE., I. Self-Regulatory Organization’s be referred to as ‘‘Openings.’’ 4 Proposed
Washington, DC 20549 on official Statement of the Terms of Substance of Rule 123D(a)(1) would include the
business days between the hours of the Proposed Rule Change current first paragraph of Rule 123D(1).
10:00 a.m. and 3:00 p.m. Copies of the The Exchange proposes to add a new
The Exchange proposes to amend paragraph (a)(2) to Rule 123D to provide
filing also will be available for Rule 123D—Equities to specify that
inspection and copying at the principal that, if a DMM cannot facilitate the open
Exchange systems may open one or of trading for one or more securities for
office of NSCC and on DTCC’s Web site more securities electronically if a
(http://dtcc.com/legal/sec-rule- which the DMM is registered, the
Designated Market Maker registered in a Exchange would open those securities
filings.aspx). All comments received security or securities cannot facilitate electronically on a quote or a trade as
will be posted without change; the the opening of trading as required by provided for in paragraphs (a)(3)—(a)(6)
Commission does not edit personal Exchange rules. The text of the of the proposed Rule. Proposed Rule
identifying information from proposed rule change is available on the 123D(a)(2) would further provide that
submissions. You should submit only Exchange’s Web site at www.nyse.com, manually-entered Floor interest would
information that you wish to make at the principal office of the Exchange, not participate in any open effected
available publicly. All submissions and at the Commission’s Public electronically by the Exchange and if
should refer to File Number SR–NSCC– Reference Room. previously entered, would be ignored.
2015–008 and should be submitted on II. Self-Regulatory Organization’s Finally, proposed Rule 123D(a)(2)
or before November 24, 2015. Statement of the Purpose of, and would provide that, unless otherwise
For the Commission, by the Division of Statutory Basis for, the Proposed Rule specified, references to an open or
Trading and Markets, pursuant to delegated Change opening in proposed Rules 123D (a)(3)—
authority.22 (a)(6) would also mean a reopening
In its filing with the Commission, the following a trading halt or pause.
Robert W. Errett, self-regulatory organization included Proposed Rule 123D(a)(3) would
Deputy Secretary. statements concerning the purpose of, specify when the Exchange would open
[FR Doc. 2015–27912 Filed 11–2–15; 8:45 am] and basis for, the proposed rule change a security on a trade and would provide
BILLING CODE 8011–01–P and discussed any comments it received that the Exchange would open a security
on the proposed rule change. The text on a trade if there is buy and sell
of those statements may be examined at interest that can trade a round lot or
SECURITIES AND EXCHANGE the places specified in Item IV below. more at a price that is no greater than
COMMISSION The Exchange has prepared summaries, or no less than a specified range
set forth in sections A, B, and C below, (‘‘Opening Price Range’’) away from the
[Release No. 34–76292; File No. SR– of the most significant parts of such last sale price on the Exchange
NYSEMKT–2015–81] statements. (‘‘Reference Price’’). Proposed Rule
A. Self-Regulatory Organization’s 123D(a)(3) would further provide that
Self-Regulatory Organizations; NYSE Statement of the Purpose of, and the the Exchange would determine the
MKT LLC; Notice of Filing and Statutory Basis for, the Proposed Rule Opening Price Range parameters upon
Immediate Effectiveness of Proposed Change advance notice to market participants.
Rule Change Amending Rule 123D— Unlike DMMs, who have the
Equities To Specify That Exchange 1. Purpose obligation to trade for their own account
Systems May Open One or More to supply liquidity as needed to
The Exchange proposes to amend
Securities Electronically if a facilitate openings,5 the Exchange
Rule 123D—Equities (‘‘Rule 123D’’) to
would not supply any liquidity when
Designated Market Maker Registered in specify that Exchange systems may open
effecting an electronic open. Without
a Security or Securities Cannot one or more securities electronically if
the addition of liquidity to offset an
Facilitate the Opening of Trading as a Designated Market Maker (‘‘DMM’’)
imbalance, pricing the opening based on
Required by Exchange Rules registered in a security or securities
a significant imbalance could result in
cannot facilitate the open of trading as
October 28, 2015. an opening price that may not be
required by Exchange rules.3
reasonably related to the last sale price
Pursuant to Section 19(b)(1) of the Currently, Rule 123D provides that on the Exchange. To avoid opening a
Securities Exchange Act of 1934 openings may be effected manually or security at a price too far away from the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 electronically. However, the current rule last sale, the Exchange proposes to
notice is hereby given that on October contemplates that openings would be establish numerical guidelines to
23, 2015, NYSE MKT LLC (the facilitated by a DMM, as provided for in provide parameters regarding the price
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with Rule 104(a)(2)—Equities. The Exchange a security may open when the Exchange
the Securities and Exchange proposes to re-number Rule 123D to opens such security on a trade. The
Commission (‘‘SEC’’ or ‘‘Commission’’) provide that current Rule 123D(1) Exchange proposes to establish the
the proposed rule change as described would be re-numbered as Rule 123D(a),
and the heading would be amended to
in Items I, II, and III below, which Items 4 The Exchange would also delete the terms
have been prepared by the Exchange. ‘‘Delayed’’ and ‘‘Halts in trading’’ from the current
3 The proposed amendment contemplates that a Rule 123D(1) heading. The Exchange further
The Commission is publishing this DMM’s inability to open securities either manually proposes to add a new sub-paragraph (b) to Rule
mstockstill on DSK4VPTVN1PROD with NOTICES
notice to solicit comments on the or electronically would be related to business 123D, before the current second paragraph of Rule
proposed rule change from interested continuity disruptions such as the physical closing 123D(1), which would be named ‘‘Delayed
of the Exchange Trading Floor or equipment and Openings/Halts in Trading.’’ The Exchange
persons. connectivity breakdowns that prevent the DMM proposes further non-substantive amendments to re-
from opening a security either manually or number current Rule 123D(2) as 123D(c). As
electronically. When a DMM is unable to open discussed below, the Exchange proposes to delete
22 17 CFR 200.30–3(a)(12).
securities manually or electronically, the DMM’s current Rule 123D(3) and (4).
1 15 U.S.C. 78s(b)(1). affirmative obligations under Rule 104 would not 5 See Rule 104(a)(2)—Equities & 104(f)(ii)—
2 17 CFR 240.19b–4. apply. Equities.
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(E) (Nasdaq management sets 8 As set forth in Rule 440B—Equities, a short sale Market Volatility (the ‘‘Plan’’).11
and modifies benchmarks and thresholds for the price test is activated if the price of a listed security Accordingly, if the Exchange were to
Nasdaq Opening Cross from time to time upon prior declines by 10% or more from the previous day’s open on a quote with a zero bid and/or
notice to market participants); NYSE Arca Equities, last sale on the listing market and continues
through the end of the following trading day (the
a zero offer, it would not calculate a
Inc. (‘‘NYSE Arca Equities’’) Rule 1.1(s)(A) (NYSE
Arca Equities sets and modifiers price collar ‘‘Short Sale Period’’). Pursuant to Rule 440B(e)— midpoint of the quote for purposes of
thresholds for the Market Order Auction from time Equities, Exchange systems will re-price short sale calculating Price Bands as provided for
to time upon prior notice to ETP Holders). orders that are limited to the current national best in Section V(B)(1) of the Plan.
7 Rule 115A(b)—Equities provides that when bid (‘‘NBB’’) or lower and short sale market orders
by one minimum price increment above the NBB
Proposed Rule 123D(a)(5) would
arranging an opening or reopening price, except as
provided for in Rule 115A(b)(2)—Equities which (the ‘‘Permitted Price’’). The Permitted Price for specify which information would be
concerns opening a security on a quote, market securities for which the NBB is $1 or more is $.01 provided in advance of an opening or
interest would be guaranteed to participate in the above the NBB; the Permitted Price for securities for reopening. In order to provide
opening or reopening transaction and have which the NBB is below $1 is $.0001 above the
NBB.
transparency regarding the opening
precedence over limit interest that is priced equal
to the opening or reopening price of a security and 9 Rule 72(c)—Equities describes the allocation of process, the Exchange proposes that
DMM interest. For purposes of the opening or executions on the Exchange and Rule 72(c)(ii)— during an opening effected by the
reopening transaction, market interest includes (1) Equities provides that for purposes of share Exchange, Order Imbalance Information
market and Market on Open (‘‘MOO’’) orders, (2) allocation in an execution, each single Floor broker, pursuant to Rule 15(c)—Equities would
tick-sensitive market and MOO orders to buy (sell) the DMM and orders collectively represented in
that are priced higher (lower) than the opening or Exchange systems shall constitute individual be published.12 However, because the
reopening price, (3) limit interest to buy (sell) that participants. Rule 72(c)(iv)—Equities provides that
is priced higher (lower) than the opening or executed volume shall be allocated to each 11 See Securities Exchange Act Release No. 67091,
reopening price, and (iv) Floor broker interest participant on parity. 77 FR 33498 (June 6, 2012) (File No. 4–631).
entered manually by the DMM. See Rule 10 Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), 12 Order Imbalance Information reflects real-time
115A(b)(1)(A)—Equities. For purposes of the generally prohibits a member of a national order imbalances that accumulate prior to the
opening or reopening transaction, limit interest securities exchange from effecting transactions on opening transaction on the Exchange and the price
would include (2) limited-priced interest, that exchange for its own account, the account of at which interest eligible to participate in the
mstockstill on DSK4VPTVN1PROD with NOTICES
including—Quotes, Limit on Open (‘‘LOO’’) orders, an associated person, or any account over which it opening transaction may be executed in full. Order
and G orders; and (ii) tick-sensitive market and or an associated person exercises discretion. Imbalance Information disseminated pursuant to
MOO orders that are priced equal to the opening Subsection (G) of Section 11(a)(1) provides an Rule 15(c)—Equities includes all interest eligible for
or reopening price of a security. See Rule exemption allowing an exchange member to have execution in the opening transaction of the security
115A(b)(1)(C)—Equities. In addition, G orders that its own floor broker execute a proprietary in Exchange systems, i.e., electronic interest,
are priced equal to the opening or reopening price transaction (‘‘G order’’). A G-Quote is an electronic including Floor broker electronic interest, entered
of a security would yield to all other limit interest method for Floor brokers to represent G orders. G into Exchange systems prior to the opening. Order
priced equal to the opening or reopening price of orders on NYSE yield priority, parity and Imbalance Information is disseminated on the
a security except DMM interest. precedence based on size to all other non-G orders. Continued
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![67832 Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices
Exchange would not open a security at routed from the Exchange to its affiliate impediments to and perfect the
a price outside of specified ranges, the NYSE Arca, Inc. (‘‘NYSE Arca’’).14 The mechanism of a free and open market
Exchange would not issue pre-opening condition permits the Exchange to halt because, similar to how Nasdaq and
indications in a security pursuant to ETFs or structured products that remain NYSE Arca Equities function, it would
either Rule 15(a)—Equities or 123D.13 listed on the Exchange.15 All Exchange- enable the Exchange to set parameters
The Exchange further proposes that it listed ETFs and structured products for an opening to assure that the
would publish pre-opening indications have transferred to NYSE Arca and are potential prices that a security may
pursuant to Rule 123D(b) for a re- no longer traded on the Exchange, open would not be significantly away
opening following a regulatory halt. rendering Rule 123D(4) moot.16 from the Reference Price. Similarly, the
Proposed Rule 123D(a)(6) would Because of the technology changes
Exchange believes that excluding
describe under which circumstances the associated with the proposed rule
Exchange would cancel orders after change, the Exchange proposes to interest eligible for the open that would
opening on a trade or quote. A proposed announce the implementation date via cause an execution to occur outside the
in new Rule 123D(a)(6)(A), all Trader Update. Opening Price Range parameters, even if
unexecuted Market Orders, MOO such interest would otherwise be
2. Statutory Basis required to be included in an open
Orders, and LOO Orders would be
cancelled. This would be new behavior The Exchange believes that the effected by a DMM, would remove
following an Exchange-facilitated open proposed rule change is consistent with impediments to and perfect the
because under a DMM-facilitated open, Section 6(b) of the Act,17 in general, and mechanism of a fair and orderly market
all Market and MOO Orders are furthers the objectives of Section 6(b)(5) because it would assure that the
guaranteed to participate and therefore of the Act,18 in particular, because it is Exchange could effect the open within
there would not be any unexecuted designed to prevent fraudulent and the proposed specified price ranges. The
Market Orders or MOO Orders following manipulative acts and practices, proposed rule therefore promotes just
an opening. Proposed Rule promote just and equitable principles of and equitable principles of trade
123D(a)(6)(B) would provide that after trade, remove impediments to and because it provides transparency to
an opening on a trade, buy (sell) Limit perfect the mechanism of a free and entering firms of whether interest would
Orders priced higher (lower) than the open market and a national market
be eligible to participate in a closing
opening price would be cancelled. system, and protect investors and the
transaction effected by the Exchange.
Lastly, proposed Rule 123D(a)(6)(C) public interest. The Exchange believes
would provide that if interest would that permitting the Exchange to Finally, deleting an obsolete halt
have paired off at a price below (above) electronically open trading would condition in Rule 123D(4) removes
the lower (upper) boundary of the remove impediments to and perfect the impediments to and perfects the
Opening Price Range, after opening on mechanism of a free and open market mechanism of a free and open market by
a quote, sell (buy) Limit Orders would and a national market system by removing confusion that may result
be cancelled. The Exchange proposes to ensuring an orderly open if the from having obsolete references in the
cancel only the side of the orders that registered DMM cannot manually or Exchange’s rulebook. The Exchange
would cause an opening price to be electronically facilitate the open of further believes that the proposal
outside of the Opening Price Range trading as required under Rule 104(a). removes impediments to and perfects
parameters; the other side would not be Similarly, the proposal promotes just the mechanism of a free and open
cancelled and would be included in the and equitable principles of trade and market by ensuring that persons subject
opening quote. removes impediments to and perfects to the Exchange’s jurisdiction,
The Exchange also proposes to delete the mechanism of a free and open regulators, and the investing public, can
current Rule 123D(4), which sets forth a market by providing customers and the more easily navigate and understand the
non-regulatory trading halt condition investing public with the certainty of an Exchange’s rulebook. The Exchange
designated ‘‘Structured Products.’’ Rule open in circumstances where business
123D(4) was adopted to permit the believes that eliminating obsolete
continuity disruptions or other
halting of trading of exchange traded references would not be inconsistent
emergencies would prevent the assigned
funds (‘‘ETFs’’) and structured products with the public interest and the
DMMs from opening a security. For the
on the Exchange to facilitate the closing same reasons, the proposal is also protection of investors because investors
of the Exchange’s former trading floor in designed to protect investors as well as will not be harmed and in fact would
connection with the acquisition of the the public interest. benefit from increased transparency,
Exchange by NYSE Euronext in 2008. The Exchange believes that the thereby reducing potential confusion.
Orders in ETFs and structured products proposed amendment to Rule 123D(a)(3) Removing such obsolete references will
subject to the trading halt condition are to provide that openings effected by the also further the goal of transparency and
Exchange would be within a proposed add clarity to the Exchange’s rules.
Exchange’s proprietary data feeds. See Rule numerical guideline would remove
15(c)(1)—Equities. B. Self-Regulatory Organization’s
13 See Proposed Rule 123D(a)(2) (F) [sic]. Rule
14 See Securities Exchange Act Release No. 58824
Statement on Burden on Competition
123D(1) requires the dissemination of one or more
(October 21, 2008), 73 FR 63754 (October 27, 2008)
indications in connection with any delayed opening
(SR–NYSEALTR–2008–02). See also Securities The Exchange does not believe that
where a security has not opened or been quoted by the proposed rule change will impose
Exchange Act Release No. 58705 (October 1, 2008),
10 a.m. In addition, Rule 123D(1) provides that
73 FR 58995 (October 8, 2008) (SR–Amex–2008– any burden on competition that is not
dissemination of one or more indication is
mstockstill on DSK4VPTVN1PROD with NOTICES
63).
mandatory for an opening which will result in a 15 See id.
necessary or appropriate in furtherance
‘‘significant’’ price change from the previous close. of the purposes of the Act. The
16 The Exchange also proposes to amend current
For securities priced under $10, such indications
are mandatory if the price change is one dollar of Rule 123D(2) to replace single quotation marks with proposed rule change is not intended to
more; for securities between $10 and $99.99, double quotation marks around the term address competitive issues but rather
indications are required for price movements of the ‘‘Equipment Changeover’’ and to delete current
Rule 123D(3), which is marked ‘‘Reserved.’’
enable the Exchange to open trading
lesser of 10% or three dollars; and for securities
over $100, indications are required for price 17 15 U.S.C. 78f(b). where circumstances would prevent a
movements of five dollars or more. 18 15 U.S.C. 78f(b)(5). DMM from facilitating an open.
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![Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices 67833
C. Self-Regulatory Organization’s Electronic Comments SECURITIES AND EXCHANGE
Statement on Comments on the COMMISSION
Proposed Rule Change Received from • Use the Commission’s Internet
comment form (http://www.sec.gov/ [File No. 500–1]
Members, Participants, or Others
rules/sro.shtml); or
No written comments were solicited Order of Suspension of Trading; In the
• Send an email to rule-comments@ Matter of American Power Corp. and
or received with respect to the proposed
sec.gov. Please include File Number SR– Locan, Inc.
rule change.
NYSEMKT–2015–81 on the subject line.
III. Date of Effectiveness of the October 30, 2015.
Proposed Rule Change and Timing for Paper Comments It appears to the Securities and
Commission Action Exchange Commission that there is a
• Send paper comments in triplicate lack of current and accurate information
The Exchange has filed the proposed to Brent J. Fields, Secretary, Securities concerning the securities of American
rule change pursuant to Section and Exchange Commission, 100 F Power Corp. (CIK No. 1436174), a
19(b)(3)(A)(iii) of the Act 19 and Rule Street, NE., Washington, DC 20549– revoked Nevada corporation with its
19b–4(f)(6) thereunder.20 Because the 1090. principal place of business listed as
proposed rule change does not: (i) All submissions should refer to File Denver, Colorado, with stock quoted on
significantly affect the protection of Number SR–NYSEMKT–2015–81. This OTC Link (previously, ‘‘Pink Sheets’’)
investors or the public interest; (ii) file number should be included on the operated by OTC Markets Group, Inc.
impose any significant burden on (‘‘OTC Link’’) under the ticker symbol
subject line if email is used. To help the
competition; and (iii) become operative AMPW, because it has not filed any
Commission process and review your
prior to 30 days from the date on which periodic reports since the period ended
it was filed, or such shorter time as the comments more efficiently, please use December 31, 2012. On October 22,
Commission may designate, if only one method. The Commission will 2014, the Division of Corporation
consistent with the protection of post all comments on the Commission’s Finance sent American Power a
investors and the public interest, the Internet Web site (http://www.sec.gov/ delinquency letter requesting
proposed rule change has become rules/sro.shtml). Copies of the compliance with their periodic filing
effective pursuant to Section 19(b)(3)(A) submission, all subsequent obligations, but the letter was returned
of the Act and Rule 19b–4(f)(6)(iii) amendments, all written statements because of American Power’s failure to
thereunder. with respect to the proposed rule maintain a valid address on file with the
A proposed rule change filed under change that are filed with the Commission, as required by
Rule 19b–4(f)(6) 21 normally does not Commission, and all written Commission rules (Rule 301 of
become operative prior to 30 days after communications relating to the Regulation S–T, 17 CFR 232.301 and
the date of the filing. However, pursuant proposed rule change between the Section 5.4 of EDGAR Filer Manual).
to Rule 19b4(f)(6)(iii),22 the Commission Commission and any person, other than It appears to the Securities and
may designate a shorter time if such those that may be withheld from the Exchange Commission that there is a
action is consistent with the protection public in accordance with the lack of current and accurate information
of investors and the public interest. provisions of 5 U.S.C. 552, will be concerning the securities of Locan, Inc.
available for Web site viewing and (CIK No. 1431837), a delinquent
At any time within 60 days of the Delaware corporation with its principal
filing of such proposed rule change, the printing in the Commission’s Public
Reference Room, 100 F Street NE., place of business listed as Bartlesville,
Commission summarily may Oklahoma, with stock quoted on OTC
temporarily suspend such rule change if Washington, DC 20549 on official
Link under the ticker symbol LOCN,
it appears to the Commission that such business days between the hours of
because it has not filed any periodic
action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of such
reports since the period ended
public interest, for the protection of filing also will be available for
December 31, 2012. On October 27,
investors, or otherwise in furtherance of inspection and copying at the principal 2014, Locan received a delinquency
the purposes of the Act. If the offices of the Exchange. All comments letter sent by the Division of
Commission takes such action, the received will be posted without change; Corporation Finance requesting
Commission shall institute proceedings the Commission does not edit personal compliance with their periodic filing
under Section 19(b)(2)(B) 23 of the Act to identifying information from obligations.
determine whether the proposed rule submissions. You should submit only The Commission is of the opinion that
change should be approved or information that you wish to make the public interest and the protection of
disapproved. available publicly. All submissions investors require a suspension of trading
IV.Solicitation of Comments should referto File Number SR– in the securities of the above-listed
NYSEMKT–2015–81, and should be companies.
Interested persons are invited to submitted on or before November 24, Therefore, it is ordered, pursuant to
submit written data, views, and 2015. Section 12(k) of the Securities Exchange
arguments concerning the foregoing, Act of 1934, that trading in the
including whether the proposed rule For the Commission, by the Division of
securities of the above-listed companies
change is consistent with the Act. Trading and Markets, pursuant to delegated
is suspended for the period from 9:30
mstockstill on DSK4VPTVN1PROD with NOTICES
authority.24
Comments may be submitted by any of a.m. EDT on October 30, 2015, through
the following methods: Robert W. Errett, 11:59 p.m. EST on November 12, 2015.
Deputy Secretary.
By the Commission.
19 15 U.S.C. 78s(b)(3)(A)(iii). [FR Doc. 2015–27909 Filed 11–2–15; 8:45 am]
20 17 CFR 240.19b–4(f)(6).
Jill M. Peterson,
BILLING CODE 8011–01–P
21 17 CFR 240.19b–4(f)(6). Assistant Secretary.
22 17 CFR 240.19b–4(f)(6)(iii). [FR Doc. 2015–28065 Filed 10–30–15; 4:15 pm]
23 15 U.S.C. 78s(b)(2)(B). 24 17 CFR 200.30–3(a)(12). BILLING CODE 8011–01–P
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Document Created: 2018-03-01 11:32:11
Document Modified: 2018-03-01 11:32:11
| 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 67830 |
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