81 FR 17520 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13-Equities To Expand the Availability of Self-Trade Prevention Modifiers to Non-Algorithmically Entered Floor Broker Interest
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 60 (March 29, 2016)
Federal Register Volume 81, Issue 60 (March 29, 2016)
| Page Range | 17520-17521 | |
| FR Document | 2016-06996 |
[Federal Register Volume 81, Number 60 (Tuesday, March 29, 2016)] [Notices] [Pages 17520-17521] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-06996] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77433; File No. SR-NYSEMKT-2016-38] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13-- Equities To Expand the Availability of Self-Trade Prevention Modifiers to Non-Algorithmically Entered Floor Broker Interest March 23, 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 March 15, 2016, 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 13--Equities to expand the availability of self-trade prevention (``STP'') modifiers to non- algorithmically entered Floor broker interest. 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 13--Equities (``Rule 13'') to expand the availability of STP modifiers to non-algorithmically entered e-Quotes, pegging e-Quotes, and g-Quotes. STP modifiers arEe [sic] designed to prevent two orders from the same market participant identifier (``MPID'') assigned to a member organization from executing against each other. The STP modifier on the incoming order determines the interaction between two orders marked with STP modifiers and whether the incoming or the resting order would cancel. Both the buy and the sell order must include an STP modifier in order to prevent a trade from occurring and to effect a cancel instruction.\3\ Currently, under Rule 13(f)(3)(B), STP modifiers are available for Limit Orders and Market Orders entered by off-Floor participants, and for e-Quotes, pegging e-Quotes, and g-Quotes sent to the matching engine by an algorithm on behalf of a Floor broker. --------------------------------------------------------------------------- \3\ See Rule 13(f)(3)(A); Securities Exchange Act Release No. 69098 (Mar. 11, 2013), 78 FR 16544 (Mar. 15, 2013) (SR-NYSEMKT-2013- 21). --------------------------------------------------------------------------- The Exchange amended Rule 13 to add STP modifiers in 2013.\4\ At the time, the supporting technology was not compatible with Floor broker systems and the Exchange chose to deploy STP modifiers for other market participants while it performed the technical modifications required for the use of STP modifiers for Floor brokers.\5\ The Exchange later made STP modifiers available for algorithms used by Floor brokers to route interest to the Exchange's matching engine, but the technology supporting STP modifiers was still incompatible with all Floor broker systems.\6\ Now that the technology to extend STP modifiers to all Floor broker systems is available, the Exchange proposes to delete the clause ``sent to the matching engine by an algorithm on behalf of a Floor broker'' in Rule 13 to make STP modifiers available for eQuotes, pegging e-Quotes, and g-Quotes without limitation. No other changes are proposed to Rule 13. --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 69098, 78 FR at 16544. \5\ See id. \6\ See Securities Exchange Act Release No. 69501 (May 2, 2013), 78 FR 26821 (May 8, 2013) (SR-NYSEMKT-2013-36). --------------------------------------------------------------------------- Because of the technology changes associated with this rule proposal, the Exchange will announce the [[Page 17521]] implementation date in a Trader Update. 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 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. In particular, the Exchange believes that extending STP modifiers to non- algorithmically entered Floor broker interest would provide Floor brokers with an additional opportunity to prevent unintended executions by Floor broker customers with themselves or the potential for ``wash sales'' that may occur as a result of the velocity of trading in today's high-speed marketplace, thereby removing impediments to and perfecting the mechanism of a free and open market. The Exchange notes that STP modifiers would not alleviate, or otherwise exempt, broker- dealers from their best execution obligations. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b). \8\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 Exchange believes that the proposal would provide Floor brokers with an additional opportunity to prevent unintended self-trades from occurring. The Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues offering similar functionality. Many competing venues offer similar functionality to market participants. To this end, the Exchange is proposing a market enhancement to provide greater protections from inadvertent executions, and encourage market participants to trade on the Exchange. 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 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. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78s(b)(3)(A)(iii). \10\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(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. --------------------------------------------------------------------------- \11\ 17 CFR 240.19b-4(f)(6). \12\ 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) \13\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \13\ 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-NYSEMKT-2016-38 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-2016-38. 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-NYSEMKT-2016-38, and should be submitted on or before April 19, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ Brent J. Fields, Secretary. --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2016-06996 Filed 3-28-16; 8:45 am] BILLING CODE 8011-01-P
![17520 Federal Register / Vol. 81, No. 60 / Tuesday, March 29, 2016 / Notices
regarding the potential implications of SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
transferring assets. The Commission COMMISSION Statement of the Purpose of, and the
further believes that the proposed Statutory Basis for, the Proposed Rule
educational communication may [Release No. 34–77433; File No. SR– Change
encourage former customers to make NYSEMKT–2016–38] 1. Purpose
inquiries of their representatives, which
could increase communication between Self-Regulatory Organizations; NYSE The Exchange proposes to amend
customers and representatives about the MKT LLC; Notice of Filing and Rule 13—Equities (‘‘Rule 13’’) to expand
potential implications of transferring Immediate Effectiveness of Proposed the availability of STP modifiers to non-
assets. The Commission believes that Rule Change Amending Rule 13— algorithmically entered e-Quotes,
the increase in information and Equities To Expand the Availability of pegging e-Quotes, and g-Quotes.
communication about the potential Self-Trade Prevention Modifiers to STP modifiers arEe [sic] designed to
implications of transferring assets will Non-Algorithmically Entered Floor prevent two orders from the same
benefit customers when deciding Broker Interest market participant identifier (‘‘MPID’’)
whether to transfer assets. assigned to a member organization from
March 23, 2016. executing against each other. The STP
The Commission does not believe that modifier on the incoming order
the proposed rule change will result in Pursuant to Section 19(b)(1) of the
determines the interaction between two
a burden on competition that is not Securities Exchange Act of 1934
orders marked with STP modifiers and
necessary or appropriate in furtherance (‘‘Act’’),1 and Rule 19b–4 thereunder,2
whether the incoming or the resting
of the purposes of the Exchange Act. notice is hereby given that on March 15, order would cancel. Both the buy and
The Commission believes FINRA has 2016, NYSE MKT LLC (the ‘‘Exchange’’ the sell order must include an STP
carefully crafted the proposed rule or ‘‘NYSE MKT’’) filed with the modifier in order to prevent a trade from
change to achieve its intended and Securities and Exchange Commission occurring and to effect a cancel
necessary regulatory purpose while (‘‘SEC’’ or ‘‘Commission’’) the proposed instruction.3 Currently, under Rule
minimizing the burden on firms. rule change as described in Items I, II, 13(f)(3)(B), STP modifiers are available
Although the proposed rule change will and III below, which Items have been for Limit Orders and Market Orders
impose new requirements upon FINRA prepared by the Exchange. The entered by off-Floor participants, and
members, it will apply equally to all Commission is publishing this notice to for e-Quotes, pegging e-Quotes, and g-
FINRA members when hiring or solicit comments on the proposed rule Quotes sent to the matching engine by
otherwise associating with a registered change from interested persons. an algorithm on behalf of a Floor broker.
representative. I. Self-Regulatory Organization’s The Exchange amended Rule 13 to
add STP modifiers in 2013.4 At the time,
The Commission has considered the Statement of the Terms of Substance of
the supporting technology was not
commenters’ views on the proposed rule the Proposed Rule Change
compatible with Floor broker systems
change and believes that FINRA and the Exchange chose to deploy STP
responded appropriately to the concerns The Exchange proposes to amend
Rule 13—Equities to expand the modifiers for other market participants
raised. while it performed the technical
availability of self-trade prevention
For the reasons stated above, the (‘‘STP’’) modifiers to non- modifications required for the use of
Commission finds that the rule change algorithmically entered Floor broker STP modifiers for Floor brokers.5 The
is consistent with the Act and the rules interest. The proposed rule change is Exchange later made STP modifiers
and regulations thereunder. available for algorithms used by Floor
available on the Exchange’s Web site at
brokers to route interest to the
V. Conclusion www.nyse.com, at the principal office of
Exchange’s matching engine, but the
the Exchange, and at the Commission’s technology supporting STP modifiers
IT IS THEREFORE ORDERED, Public Reference Room. was still incompatible with all Floor
pursuant to Exchange Act section
II. Self-Regulatory Organization’s broker systems.6 Now that the
19(b)(2) 79 that the proposed rule change
Statement of the Purpose of, and technology to extend STP modifiers to
(SR–FINRA–2015–057) be, and hereby
Statutory Basis for, the Proposed Rule all Floor broker systems is available, the
is, approved. Exchange proposes to delete the clause
Change
For the Commission, by the Division of ‘‘sent to the matching engine by an
Trading and Markets, pursuant to delegated In its filing with the Commission, the algorithm on behalf of a Floor broker’’
authority.80 self-regulatory organization included in Rule 13 to make STP modifiers
Brent J. Fields, statements concerning the purpose of, available for eQuotes, pegging e-Quotes,
Secretary. and basis for, the proposed rule change and g-Quotes without limitation. No
[FR Doc. 2016–06995 Filed 3–28–16; 8:45 am] and discussed any comments it received other changes are proposed to Rule 13.
BILLING CODE 8011–01–P
on the proposed rule change. The text Because of the technology changes
of those statements may be examined at associated with this rule proposal, the
the places specified in Item IV below. Exchange will announce the
The Exchange has prepared summaries,
mstockstill on DSK4VPTVN1PROD with NOTICES
3 See Rule 13(f)(3)(A); Securities Exchange Act
set forth in sections A, B, and C below,
Release No. 69098 (Mar. 11, 2013), 78 FR 16544
of the most significant parts of such (Mar. 15, 2013) (SR–NYSEMKT–2013–21).
statements. 4 See Securities Exchange Act Release No. 69098,
78 FR at 16544.
5 See id.
6 See Securities Exchange Act Release No. 69501
79 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). (May 2, 2013), 78 FR 26821 (May 8, 2013) (SR–
80 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. NYSEMKT–2013–36).
VerDate Sep<11>2014 19:43 Mar 28, 2016 Jkt 238001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\29MRN1.SGM 29MRN1](https://thefederalregister.org/doc/81_FR_17580/page/1.svg)
![Federal Register / Vol. 81, No. 60 / Tuesday, March 29, 2016 / Notices 17521
implementation date in a Trader III. Date of Effectiveness of the Paper Comments
Update. Proposed Rule Change and Timing for
Commission Action • Send paper comments in triplicate
2. Statutory Basis to Secretary, Securities and Exchange
The Exchange has filed the proposed Commission, 100 F Street, NE.,
The Exchange believes that the
rule change pursuant to Section Washington, DC 20549–1090.
proposed rule change is consistent with
19(b)(3)(A)(iii) of the Act 9 and Rule
Section 6(b) of the Act,7 in general, and All submissions should refer to File
furthers the objectives of Section 6(b)(5) 19b–4(f)(6) thereunder.10 Because the
proposed rule change does not: (i) Number SR–NYSEMKT–2016–38. This
of the Act,8 in particular, because it is file number should be included on the
Significantly affect the protection of
designed to prevent fraudulent and subject line if email is used. To help the
investors or the public interest; (ii)
manipulative acts and practices,
impose any significant burden on Commission process and review your
promote just and equitable principles of
competition; and (iii) become operative comments more efficiently, please use
trade, remove impediments to and
prior to 30 days from the date on which only one method. The Commission will
perfect the mechanism of a free and
it was filed, or such shorter time as the post all comments on the Commission’s
open market and a national market
Commission may designate, if Internet Web site (http://www.sec.gov/
system, and protect investors and the
consistent with the protection of rules/sro.shtml). Copies of the
public interest. In particular, the
investors and the public interest, the submission, all subsequent
Exchange believes that extending STP
proposed rule change has become amendments, all written statements
modifiers to non-algorithmically entered
effective pursuant to Section 19(b)(3)(A) with respect to the proposed rule
Floor broker interest would provide
of the Act and Rule 19b–4(f)(6)(iii) change that are filed with the
Floor brokers with an additional
thereunder. Commission, and all written
opportunity to prevent unintended
executions by Floor broker customers A proposed rule change filed under communications relating to the
with themselves or the potential for Rule 19b–4(f)(6) 11 normally does not proposed rule change between the
‘‘wash sales’’ that may occur as a result become operative prior to 30 days after Commission and any person, other than
of the velocity of trading in today’s the date of the filing. However, pursuant those that may be withheld from the
high-speed marketplace, thereby to Rule 19b4(f)(6)(iii),12 the Commission public in accordance with the
removing impediments to and may designate a shorter time if such provisions of 5 U.S.C. 552, will be
perfecting the mechanism of a free and action is consistent with the protection available for Web site viewing and
open market. The Exchange notes that of investors and the public interest. printing in the Commission’s Public
STP modifiers would not alleviate, or At any time within 60 days of the Reference Room, 100 F Street NE.,
otherwise exempt, broker-dealers from filing of such proposed rule change, the Washington, DC 20549 on official
their best execution obligations. Commission summarily may business days between the hours of
temporarily suspend such rule change if 10:00 a.m. and 3:00 p.m. Copies of the
B. Self-Regulatory Organization’s
it appears to the Commission that such filing also will be available for
Statement on Burden on Competition
action is necessary or appropriate in the inspection and copying at the principal
The Exchange does not believe that public interest, for the protection of
office of the Exchange. All comments
the proposed rule change will impose investors, or otherwise in furtherance of
received will be posted without change;
any burden on competition that is not the purposes of the Act. If the
Commission takes such action, the the Commission does not edit personal
necessary or appropriate in furtherance
Commission shall institute proceedings identifying information from
of the purposes of the Act. The
Exchange believes that the proposal under Section 19(b)(2)(B) 13 of the Act to submissions. You should submit only
would provide Floor brokers with an determine whether the proposed rule information that you wish to make
additional opportunity to prevent change should be approved or available publicly. All submissions
unintended self-trades from occurring. disapproved. should refer to File Number SR–
The Exchange notes that it operates in NYSEMKT–2016–38, and should be
IV. Solicitation of Comments submitted on or before April 19, 2016.
a highly competitive market in which
market participants can readily direct Interested persons are invited to For the Commission, by the Division of
order flow to competing venues offering submit written data, views, and Trading and Markets, pursuant to delegated
similar functionality. Many competing arguments concerning the foregoing, authority.14
venues offer similar functionality to including whether the proposed rule Brent J. Fields,
market participants. To this end, the change is consistent with the Act. Secretary.
Exchange is proposing a market Comments may be submitted by any of
[FR Doc. 2016–06996 Filed 3–28–16; 8:45 am]
enhancement to provide greater the following methods:
protections from inadvertent executions, BILLING CODE 8011–01–P
Electronic Comments
and encourage market participants to
trade on the Exchange. • Use the Commission’s Internet
C. Self-Regulatory Organization’s comment form (http://www.sec.gov/
Statement on Comments on the rules/sro.shtml); or
Proposed Rule Change Received From • Send an email to rule-comments@
mstockstill on DSK4VPTVN1PROD with NOTICES
Members, Participants, or Others sec.gov. Please include File Number SR–
NYSEMKT–2016–38 on the subject line.
No written comments were solicited
or received with respect to the proposed 9 15 U.S.C. 78s(b)(3)(A)(iii).
rule change. 10 17 CFR 240.19b–4(f)(6).
11 17 CFR 240.19b–4(f)(6).
7 15 U.S.C. 78f(b). 12 17 CFR 240.19b–4(f)(6)(iii).
8 15 U.S.C. 78f(b)(5). 13 15 U.S.C. 78s(b)(2)(B). 14 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014 19:43 Mar 28, 2016 Jkt 238001 PO 00000 Frm 00097 Fmt 4703 Sfmt 9990 E:\FR\FM\29MRN1.SGM 29MRN1](https://thefederalregister.org/doc/81_FR_17580/page/2.svg)
Document Created: 2016-03-30 08:29:37
Document Modified: 2016-03-30 08:29:37
| 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 | 81 FR 17520 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR