81 FR 15141 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Equities Rule 7.33 To Conform the Exchange's Rules to Industry-Wide Standards for Recording the Capacity in Which an ETP Holder Executes a Transaction

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 54 (March 21, 2016)

[Federal Register Volume 81, Number 54 (Monday, March 21, 2016)]
[Notices]
[Pages 15141-15143]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-06239]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77374; File No. SR-NYSEARCA-2016-42]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rule 7.33 To Conform the Exchange's Rules to Industry-Wide 
Standards for Recording the Capacity in Which an ETP Holder Executes a 
Transaction

March 15, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 4, 2016, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II

[[Page 15142]]

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 amend NYSE Arca Equities Rule 7.33 to 
conform the Exchange's rules to industry-wide standards for recording 
the capacity in which an ETP Holders [sic] executes a transaction. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE Arca Equities Rule 7.33 (``Rule 7.33'') currently provides 
that ETP Holders may enter proprietary orders and agency orders for the 
account of a customer into the NYSE Arca Marketplace \4\ and that 
proprietary orders are subject to the same display and execution 
processes as agency orders. Rule 7.33 further provides that an ETP 
Holder entering a proprietary order shall mark the order with the 
appropriate designator to identify the order as proprietary.
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    \4\ The term ``NYSE Arca Marketplace'' is defined in NYSE Arca 
Equities Rule 1.1.
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    As proposed, Rule 7.33 would be amended to add a clause specifying 
that ETP Holders must input accurate information into the NYSE Arca 
Marketplace, including, but not limited to, identifying the capacity in 
which the ETP Holder entered each order, as follows: principal, agency, 
or riskless principal.\5\ The Exchange would delete the current clause 
relating to the entry of proprietary orders and agency orders for the 
account of a customer and the clause providing that ETP Holders 
entering proprietary orders mark the order with the appropriate 
designator to identify the order as proprietary as redundant. The 
Exchange proposes to retain the clause providing that proprietary 
orders would be subject to the same display and execution processes as 
agency orders.
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    \5\ In general, the term ``capacity'' refers to whether a 
broker-dealer acts as agent, i.e., directly on behalf of a customer, 
or whether the broker-dealer acts as principal, i.e., for its own 
account, in a transaction. A riskless principal transaction is one 
where a broker-dealer receives a customer order and then immediately 
executes an identical order in the marketplace, while taking on the 
role of principal, in order to fill the customer order pursuant to 
NYSE Arca Equities Rule 5320.
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    By requiring ETP Holders to identify the capacity in which they 
enter an order, the Exchange would be harmonizing its order entry 
requirements with those of other national securities exchanges.\6\ The 
proposed changes would not alter an ETP Holder's obligation to meet 
order audit trail system requirements, as set forth in the Rule 7400 
Series (Order Audit Trail System).
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    \6\ See, e.g., BATS Exchange, Inc. (``BATS'') Rule 11.21; BATS 
Y-Exchange, Inc. (``BATS-Y'') Rule 11.21; EDGA Exchange, Inc. 
(``EDGA'') Rule 11.5; EDGX Exchange, Inc. Rule 11.5; and NASDAQ 
Stock Market LLC (``NASDAQ'') Rule 4611(a)(6). The Exchange's 
affiliates New York Stock Exchange LLC (``NYSE'') and NYSE MKT LL 
[sic] (``NYSE MKT'') impose the same marking requirements on 
clearing member organizations. See NYSE Rule 132.30(9) & NYSE MKT 
Rule 132.30(9).
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2. Statutory Basis
    The Exchange believes that 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) of the Act,\8\ in particular, because it 
is designed to promote just and equitable principles of trade and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that the 
proposed rule change would remove impediments to and perfect the 
mechanism of a free and open market and national market system because 
it would provide greater harmonization between order entry on the 
Exchange and other marketplaces, resulting in greater uniformity and 
more efficient order entry to enable ETP Holders to use the same order-
marking conventions across all equities markets. As such, the proposed 
rule change would foster cooperation and coordination with persons 
engaged in facilitating transactions in securities and would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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 it is designed 
to provide greater harmonization between the Exchange and other markets 
in the marking of orders, resulting in more uniform and efficient order 
entry.

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, it 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). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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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

[[Page 15143]]

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-2016-42 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-2016-42. 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 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-2016-42 and should 
be submitted on or before April 11, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-06239 Filed 3-18-16; 8:45 am]
 BILLING CODE 8011-01-P