81 FR 10943 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 7.44P Retail Liquidity Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 41 (March 2, 2016)

[Federal Register Volume 81, Number 41 (Wednesday, March 2, 2016)]
[Notices]
[Pages 10943-10945]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-04506]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77236; File No. SR-NYSEArca-2016-30]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Rule 7.44P 
Retail Liquidity Program

February 25, 2016.
    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 February 11, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 7.44P (Retail Liquidity 
Program). 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 7.44P, which governs the 
Exchange's Retail Liquidity Program (``Program''), to update the 
expiration date of the pilot period for the Program and to clarify that 
Retail Orders may not be designated with a minimum trade size 
(``MTS'').
    The pilot period for the Program, which is currently governed by 
Rule 7.44, is scheduled to expire on March 31, 2016.\3\ When the 
Exchange filed for the extension of the Program in September 2015, Rule 
7.44P, which will govern the Program when the Exchange implements its 
Pillar trading platform, was not yet approved.\4\ The Exchange proposes 
a non-substantive, technical amendment to Rule 7.44P(m) to update the 
date when the pilot period for the Program expires from September 30, 
2015, which was the prior pilot expiration date, to March 31, 2016, 
which is the current pilot expiration date.
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    \3\ See NYSE Arca Equities Rule 7.44(m); see also Securities 
Exchange Act Release No. 75994 (Sept. 28, 2015), 80 FR 59834 (Oct. 
2, 2015) (SR-NYSEArca-2015-84) (Notice of Filing).
    \4\ See Securities Exchange Act Release No. 76267 (Oct. 26, 
2015), 80 FR 66951 (Oct. 30, 2015) (SR-NYSEArca-2015-56) (``Pillar 
Approval Order'').
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    The Exchange also proposes to amend Rule 7.44P(k) to clarify that 
Retail Orders may not be designated with an MTS. Both current Rule 
7.44(k) and Rule 7.44P(k), which will be operative once symbols begin 
migrating to the Pillar trading platform, provide for Retail Orders 
that may be designated with a time-in-force condition of immediate or 
cancel (``IOC'').\5\ The Exchange does not currently provide for an 
optional MTS for Limit Orders designated IOC. Accordingly, currently, 
under Rule 7.44, Retail Orders designated IOC are also not eligible for 
an MTS.
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    \5\ See NYSE Arca Equities Rules 7.44(k)(1), 7.44(k)(2)(A), 
7.44P(k)(1) and 7.44P(k)(2)(A).
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    In Pillar, the Exchange will be implementing a substantive 
difference under Rule 7.31P (Orders and Modifiers) to allow for an 
optional MTS for Limit Orders designated IOC.\6\ However, the Exchange 
does not propose a substantive difference to the Program in Pillar to 
allow Retail Orders that are designated IOC to be designated with an 
MTS. Accordingly, the Exchange proposes to clarify Rule 7.44P(k) to 
specify that Retail Orders may not be designated with an MTS. This 
proposed clarification does not represent a substantive change to the 
Program because Retail Orders are not currently permitted to be 
designated with an MTS. The Exchange proposes this rule change to 
provide greater specificity that the new MTS functionality available 
for Limit IOC Orders as described in Rule 7.31P(b)(2)(A) would not be 
available for Retail Orders in the Program, which is current 
functionality.
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    \6\ See Pillar Approval Order, supra note 4 at 66952. See also 
NYSE Arca Equities Rule 7.31P(b)(2)(A) (defining ``Limit IOC Order'' 
as being eligible for an optional MTS).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\7\ in general, and 
furthers the objectives of Section 6(b)(5),\8\ in particular, because 
it is designed to

[[Page 10944]]

prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to, and perfect the mechanism of, a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that the proposed amendment to 
Rule 7.44P(m) to update the expiration date of the pilot period of the 
Program would remove impediments to and perfect the mechanism of a free 
and open market and national market system by ensuring that Rule 
7.44P(m) reflects the current expiration date of the pilot period of 
the Program, thus reducing potential investor confusion regarding the 
actual expiration date for the Program. In addition, the Exchange 
believes that the proposed amendment to Rule 7.44P(k) to specify that 
Retail Orders may not be designated with an MTS would remove 
impediments to and perfect the mechanism of a free and open market and 
national market system by providing clarification in Exchange rules 
that one of the new functionalities available for Limit IOC Orders in 
Pillar would not be available for Retail Orders that are designated 
IOC. The Exchange believes that the proposed clarification would 
promote transparency in Exchange rules that current functionality of 
the Program is not changing and that the new MTS designation that will 
be available for Limit IOC Orders in Pillar will not be available for 
Retail Orders.

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 change is not 
designed to address any competitive issue but rather to make non-
substantive amendments to Rule 7.44P to update the expiration date of 
the pilot period for the Program and to clarify that Retail Orders are 
not eligible to be designated with an MTS, which is current 
functionality.

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 \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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 for 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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately on filing. In the filing, 
the Exchange states that it anticipated beginning the migration of 
symbols to Pillar on February 22, 2016 and, therefore, the Exchange 
points out that there would be symbols trading on the Exchange that 
will no longer governed by Rule 7.44 in less than 30 days from the date 
of filing of this proposed rule change. The Exchange argues that 
waiving the operative delay would allow these proposed clarifications 
to Rule 7.44P to have been operative before February 22, 2016, which 
the Exchange therefore asserts would reduce the potential for any 
confusion that may result from having an incorrect expiration date for 
the pilot period in the rule text or potential uncertainty of whether 
the new MTS functionality would be available for Retail Orders in the 
Program. The Commission believes that waiving the operative delay so 
that the proposed rule change would be operative as of the date of 
filing--February 11, 2016--would help mitigate any confusion as to 
which rule text for Rule 7.44P applied at the beginning of the 
migration of symbols to Pillar and throughout the migration. 
Accordingly, the Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest and hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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 to 
determine whether the proposed rule change should be approved or 
disapproved.

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-NYSEArca-2016-30 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2016-30. 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

[[Page 10945]]

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 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEArca-2016-30, and should be submitted on or before 
March 23, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12), (59).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-04506 Filed 3-1-16; 8:45 am]
 BILLING CODE 8011-01-P