81 FR 14917 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Deadline for Implementing Rule 967.1NY(a)(2) and (3)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 53 (March 18, 2016)

[Federal Register Volume 81, Number 53 (Friday, March 18, 2016)]
[Notices]
[Pages 14917-14919]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-06096]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77356; File No. SR-NYSEMKT-2016-36]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Extend the Deadline 
for Implementing Rule 967.1NY(a)(2) and (3)

March 14, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on March 4, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 extend the deadline for implementing Rule 
967.1NY(a)(2) and (3) until July 31, 2016. 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 is proposing to extend the deadline for implementing 
Rule 967.1NY(a)(2) and (3) until July 31, 2016. The current 
implementation deadline is March 4, 2016.
    In March 2015, the Commission approved Rule 967.1NY, which provides 
a price protection risk mechanism for Market Maker quotes.\4\ Rule 
967.1NY provides two layers of price protection to incoming Market 
Maker quotes, rejecting those Market Maker quotes that exceed certain 
parameters, as a risk mitigation tool.\5\ The Exchange has implemented 
the first layer of price protection (the NBBO Reasonability Check) and 
has until one year from the date of the Approval Order to implement the 
second layer of protection (the Underlying Stock Price/Strike Price 
Check) pursuant to Commentary .01 to Rule 967.1NY, which is March 4, 
2016 (the ``March 4th Deadline'').\6\
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    \4\ See Securities Exchange Act Release No. 74440 (March 4, 
2015), 80 FR 12687 (March 10, 2015) (SR-NYSEMKT-2014-116) (Approval 
Order); see also Securities Exchange Act Release No. 74017 (January 
8, 2015), 80 FR 1979 (January 14, 2015) (SR-NYSEMKT-2014-116) 
(Notice).
    \5\ The first layer of price protection assesses incoming sell 
quotes against the NBB and incoming buy quotes against the NBO (the 
``NBBO Price Reasonability Check''). Specifically, per Rule 
967.1NY(a)(1), provided that an NBBO is available, a Market Maker 
quote would be rejected if it is priced a specified dollar amount or 
percentage through the contra-side NBBO. The second layer of price 
protection assesses the price of call or put bids against a 
specified benchmark (the ``Underlying Stock Price/Strike Price 
Check''), per Rule 967.1NY(a)(2) and (3). This second layer of 
protection applies to bids in call options or put options when (1) 
there is no NBBO available, for example, during pre-opening or prior 
to conducting a re-opening after a trading halt, or (2) if the NBBO 
is so wide as to not reflect an appropriate price for the respective 
options series.
    \6\ See Securities Exchange Act Release No. 75151 (June 11, 
2015), 80 FR 34770 (June 17, 2015) (SR-NYSEMKT-2015-42).
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    Because the Exchange has not yet implemented the Underlying Stock 
Price/Strike Price Check, the Exchange proposes to modify Commentary 
.01 to Rule 967.1NY to extend the March 4th Deadline to implement Rule 
967.1NY(a)(2) and (3) until July 31, 2016. The Exchange has finalized 
the technology related to this aspect of the Rule and will be filing 
with the Commission a separate proposed rule change to modify the Rule 
as it relates to the Underlying Stock Price/Strike Price Check. The 
Exchange believes the proposed extension would provide the Exchange 
with sufficient time to review the proposed modifications with the 
Commission prior to implementing the rule, as modified.
    Finally, the Exchange believes that because the Underlying Stock 
Price/Strike Price Check is an approved rule of the Exchange, providing 
the Exchange with additional time to implement the Rule would ensure 
that

[[Page 14918]]

Market Makers and investors are afforded the opportunity to benefit 
from this price protection feature once it is implemented.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(5),\8\ 
in particular, in that it is designed to promote just and equitable 
principles of trade, 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 the proposal promotes just and 
equitable principles of trade and removes impediments to, and perfects 
the mechanism of, a free and open market and a national market system 
because an extension of the March 4th Deadline would enable the 
Exchange to implement the finalized technology related to the 
Underlying Stock Price/Strike Price Check. Moreover, the proposed 
extension would assist with the maintenance of a fair and orderly 
market and protect investors and the public interest because it would 
afford the Exchange additional time to file, and review, with the 
Commission a proposed modification of the Rule as it relates to the 
Underlying Stock Price/Strike Price Check prior to implementing the 
rule, as modified.
    Finally, the Exchange believes that because the Underlying Stock 
Price/Strike Price Check is an approved rule of the Exchange, providing 
the Exchange with additional time to implement the Rule would ensure 
that Market Makers and investors are afforded the opportunity to 
benefit from this price protection feature once it is implemented--even 
if in modified form.

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 designed to address any competitive issues, but rather, to extend 
the deadline for implementing the Underlying Stock Price/Strike Price 
Check pending finalization of the technology associated with that 
feature.

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

    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 \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 
Commission has waived this requirement in this case.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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 proposal 
may become operative immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will allow the 
Exchange to immediately extend the implementation deadline for the 
Underlying Stock Price/Strike Price Check without delay and provide the 
Exchange additional time to implement the technology associated with 
such price protection. Accordingly, the Commission hereby waives the 
30-day operative delay requirement and designates the proposed rule 
change as operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 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-NYSEMKT-2016-36 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-NYSEMKT-2016-36. 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 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

[[Page 14919]]

identifying information from submissions.
    You should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSEMKT-2016-
36, and should be submitted on or before April 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-06096 Filed 3-17-16; 8:45 am]
 BILLING CODE 8011-01-P