81 FR 21415 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 955NY(c) by Revising the Clearing Member Requirements for Entering an Order Into the Electronic Order Capture System (“EOC”)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 69 (April 11, 2016)

Page Range		21415-21417
FR Document		2016-08179
Federal Register, Volume 81 Issue 69 (Monday, April 11, 2016)
[Federal Register Volume 81, Number 69 (Monday, April 11, 2016)]
[Notices]
[Pages 21415-21417]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-08179]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77518; File No. SR-NYSEMKT-2016-13]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 
955NY(c) by Revising the Clearing Member Requirements for Entering an 
Order Into the Electronic Order Capture System (``EOC'')

April 5, 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 22, 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. On March 30, 2016, the Exchange filed Amendment No. 1 to 
the proposed rule change. The Commission is publishing this notice to 
solicit comments on the proposed rule change, as modified by Amendment 
No. 1, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 955NY(c) by revising the 
requirements for entering an order into the Electronic Order Capture 
System (``EOC''). 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
    The Exchange proposes to amend Exchange Rule 955NY(c) by revising 
the requirements for entering an order into the EOC. Specifically, the 
Exchange proposes to eliminate the pre-trade EOC requirement that ATP 
Holders give up the name of the Clearing Member \4\ responsible for 
clearing each trade before representing a trade in open outcry. \5\
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    \4\ Rule 900.2NY defines ``Clearing Member'' as an Exchange ATP 
Holder which has been admitted to membership in the Options Clearing 
Corporation pursuant to the provisions of the Rules of the Options 
Clearing Corporation.
    \5\ In Amendment No. 1, the Exchange clarified that it is 
proposing to amend the timing in which Clearing Member information 
will be entered into the EOC. More specifically, the Exchange noted 
that Rule 955NY(c)(1) requires the other items included in Rule 
956NY(a), including the ``CMTA Information and the name of the 
clearing OTP Holder or Firm,'' to be included in the EOC ``as the 
events occur and/or during trade reporting procedures which may 
occur after the representation and execution of the order.''
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    The EOC is the Exchange's floor-based electronic audit trail and 
order tracking system that provides an accurate time-sequenced record 
of all orders and transactions entered and executed on the floor of the 
Exchange.\6\ This process, commonly referred to as the 
``systemization'' of an order, is composed of the contractual terms of 
an order that are required to be disclosed in order to effect a trade. 
The EOC was developed to comply with an order of the Commission, which 
required that the Exchange, in coordination with other exchanges, 
``design and implement a consolidated options audit trail system 
(`COATS'),'' that would ``enable the options exchanges to reconstruct 
markets promptly, effectively surveil them and enforce order handling, 
firm quote, trade reporting and other rules.'' \7\ In particular, the 
Exchange was required incorporate into the audit trail all non-
electronic orders ``such that the audit trail provides an accurate, 
time-sequenced record of electronic and other orders, quotations and 
transactions on such respondent exchange, beginning with the receipt of 
an order by such respondent exchange and further documenting the life 
of the order through the process of execution, partial execution, or 
cancellation of that order, which audit trail shall be readily 
retrievable in the common computer format.'' \8\
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    \6\ This system includes the electronic communications interface 
between booth terminals and the Floor Broker work stations.
    \7\ See Section IV.B.e.(v) of the Commission's Order Instituting 
Public Administrative Proceedings Pursuant to Sections 19(h)(1) of 
the Securities Exchange Act of 1934, Making Findings and Imposing 
Remedial Sanctions (the ``Order''). See Securities Exchange Act 
Release No. 43268 (September 11, 2000) and Administrative Proceeding 
File No. 3-10282.
    \8\ See id.
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    Current Rule 955NY(c) sets forth the EOC entry requirements and 
mandates that every ATP Holder that receives an order for execution on 
the Exchange ``must immediately, prior to representation in the trading 
crowd, record the details of the order (including any modification of 
the terms of the order or cancellation of the order) into the EOC, 
unless such order has been entered into the Exchange's other electronic 
order processing facilities (e.g., orders sent electronically through 
the Exchange's Member Firm Interface).'' \9\ Among other pre-trade EOC 
requirements under current Rule 955NY(c)(1), every ATP Holder must 
provide ``the name of the clearing ATP Holder'' (the ``Give Up 
Requirement'') \10\ Rule 955NY(c)(1) also provides that ``[t]he 
remaining elements prescribed in Rule 956NY and any additional 
information with respect to the order shall be recorded as the events 
occur and/or during trade reporting procedures which may occur after 
the representation and execution of the order.'' \11\
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    \9\ See Rule 955NY(c).
    \10\ See Rule 955NY(c)(1)(vii). Rule 955NY(c)(1) also requires 
the following data points to be entered upon receipt of an order: 
(i) The option symbol; (ii) the expiration date of the option; (iii) 
the exercise price; (iv) buy or sell with applicable limit or stop 
price or special instructions; (v) call or put; (vi) the quantity of 
contracts; as well as such other information as may be required by 
the Exchange from time to time. Rule 955NY(c)(1) also provides that 
the Exchange may also require additional information if needed and 
provides that the remaining data elements prescribed in Rule 956NY 
[see infra n. 10] are to be recorded as the events occur and/or 
during trade reporting procedures. The Exchange proposes to add the 
words ``in the EOC'' to Rule 955NY(c)(1) to make clear where the 
additional information would be recorded. See proposed Rule 
955NY(c)(1).
    \11\ See Rule 955NY (c)(1). The Exchange notes that one such 
element prescribed in Rule 956NY(a) to be recorded by each ATP 
Holder is ``CMTA Information and the name of the clearing ATP 
Holder,'' and therefore, per Rule 955NY(c)(1), this information 
would still be disclosed ``as the events occur and/or during trade 
reporting procedures which may occur after the representation and 
execution of the order.'' Id. See also Rule 956NY(a) (Record of 
Orders) (requiring that ATP Holders maintain a record of each order 
that includes that the following data elements: (1) CMTA Information 
and the name of the clearing ATP Holder; (2) options symbol, 
expiration month, exercise price and type of options; (3) side of 
the market and order type; (4) quantity of options; (5) limit or 
stop price or special conditions; (6) opening or closing 
transaction; (7) time in force; (8) account origin code; and (9) 
whether the order was solicited or unsolicited.) See also Rule 957NY 
(Reporting Duties), infra n. 12.

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[[Page 21416]]

    Pursuant to the proposed rule change, ATP Holders would no longer 
be subject to the pre-trade Give Up Requirement. Floor Brokers have 
told the Exchange that the identity of the firm through which each 
trade will clear is not always initially provided when an order is 
presented and that waiting to receive this information and enter it 
into EOC can delay the representation and execution of an order. In 
today's trading environment of rapidly moving markets and the need to 
execute an order and hedge a trade in real or near real time, even a 
slight delay can prove to be detrimental to the handling of an order. 
The proposed change to eliminate the Give Up Requirement prior to 
execution of each trade would not impair the Exchange's ability to 
comply with the Order. Specifically, the EOC would still provide an 
accurate, time-sequenced record beginning with the receipt of an order 
and document the life of the order through the process of execution, 
partial execution, or cancellation. Entry of information pursuant to 
the Give Up Requirement would occur after the order had been 
represented and executed in the Trading Crowd.\12\ Thus, only the 
timing of the disclosure of such information would be affected by this 
proposal.
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    \12\ See id.; see also Commentary .01 to Rule 957NY (providing 
that for each transaction executed on the Options Floor, the 
responsible ATP Holder will immediately report, among other 
information, both its assigned broker initial code and the name of 
the contra clearing member).
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    The Exchange notes that, similar to a filing it submitted in 
2013,\13\ the proposed rule change relates only to the system entry 
requirements for floor-based orders and would not change rules 
governing the record of orders (Rule 956NY). Floor Brokers would 
continue to be required to maintain proper order records, as part of 
each trade record, including the identity of the clearing ATP 
Holder.\14\ In that regard, Floor Brokers would continue to be required 
to give up the responsible Clearing Member on each trade as part of 
each trade record.\15\
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    \13\ See Securities and Exchange Act Release 69081 (March 8, 
2013), 78 FR 16332, 16333 (March 14, 2013) (SR-NYSEMKT-2013-16) 
(noting that ``[b]ecause the CMTA information, the opening/closing 
designation, the account origin code, the time if force and whether 
an order was solicited or unsolicited are not contractual terms of a 
trade itself nor are they required data elements pursuant to the 
Exchange's order format requirements, the Exchange does not believe 
this information needs to be entered into the EOC prior to an order 
being represented in the Trading Crowd, but may be entered 
contemporaneously upon the receipt of such information, even if that 
occurs after the order had been represented and executed in the 
Trading Crowd'').
    \14\ The Exchange notes that another exchange has made 
modifications to its rules related to the Order. See Securities 
Exchange Act Release No. 63071 (October 8, 2010), 75 FR 63876, 
63877-78 (October 18, 2010) (SR-Phlx-2010-139) (immediately 
effective filing to amend language related to the timing of the 
entry of clearing information, noting in relevant part that ``[t]he 
clearing information, which is the contra-side clearing information, 
is not required to be entered pursuant to COATS. Rather, this 
information facilitates the identification of the trade for 
clearing.''). The Exchange notes that the Philadelphia Stock 
Exchange proposed these changes to its rules without solicitation of 
the exchanges that were subject to the Order, including the 
Exchange. Accordingly, the Exchange believes that exchanges' changes 
to their rules put in place to comply with the Order are 
appropriately effected pursuant to the provisions of Section 
19(b)(1) of the Act and Rule 19b-4 thereunder. See 15 U.S.C. 
78s(b)(1); 17 CFR 240.19b-4.
    \15\ See supra nn. 11, 12. In addition, the Exchange notes that 
this proposal would not change rules governing trade reporting 
requirements (Rule 957NY) (i.e., that ``[t]ransactions not reported 
to [the Options Pricing Reporting Authority] within 90 seconds after 
the execution will be designated as (`late,'' per Rule 957(a)). The 
Exchange also notes that last year it revised and detailed the 
process in which an ATP Holder ``gives up'' or selects a Clearing 
Member responsible for the clearance of an Exchange transaction (the 
``Give Up Process''). See Securities and Exchange Act Release 75642 
(August 7, 2015), 80 FR 48594 (August 13, 2015) (SR-NYSEMKT-2015-55) 
(revising the Exchange's Give Up Process through modifications to 
Rules 960, 961 and 954NY).
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2. Statutory Basis
    The Exchange believes that the proposed change is consistent with 
Section 6(b) of the Act,\16\ in general, and furthers the objectives of 
Section 6(b)(5),\17\ in particular, in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitation transactions 
in securities, to remove impediments to, and perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest. Additionally, the Exchange believes the proposed rule 
change is consistent with the Section 6(b)(5) \18\ requirement that the 
rules of an exchange not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Id.
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    Specifically, the proposed change to order entry requirements for 
the EOC (i.e., eliminating the pre-trade Give Up) is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities by ensuring that the terms of an order continue to be 
properly systematized prior to the order being represented in the 
Trading Crowd. The proposed change to eliminate the Give Up Requirement 
prior to execution of each trade would not impair the Exchange's 
ability to comply with the Order. Specifically, the EOC would still 
provide an accurate, time-sequenced record of electronic and other 
orders, quotations and transactions, beginning with the receipt of the 
order and documenting the life of the order through the process of 
execution, partial execution, or cancellation.\19\
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    \19\ See supra n. 7.
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    The proposal is also designed to prevent fraudulent and 
manipulative acts and practices, by ensuring that the Exchange is 
continues to meet its obligation to create and maintain a time-
sequenced record of orders, quotations and transactions on the 
Exchange. This proposal does not alter--or, as stated above, impair, 
the Exchange's obligation to incorporate into its audit trail all non-
electronic orders to provide an accurate, time-sequenced record of 
electronic and other orders, quotations and transactions that documents 
the life of the order from receipt through the execution, partial 
execution, or cancellation.\20\ Moreover, the proposed change merely 
removes the Give Up Requirement from pre-trade systemization, it does 
not alter that give ups must be disclosed as part of the Give Up 
Process and as part of trade reporting on the Exchange.\21\ 
Accordingly, nothing in this proposal would alter the Exchange's 
obligations pursuant to, or ability to comply with, the Order. The 
Exchange notes that it has previously modified the non-contractual data 
elements required pursuant to Rule 955NY(c) (i.e., not mandated by the 
Order).\22\
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    \20\ Id.
    \21\ See supra nn. 11, 12, 15.
    \22\ See supra n. 13.
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    Finally, the Exchange believes that the proposed change would 
reduce the burden on Floor Brokers to enter order information prior to 
representation which would, in turn, promote just and equitable 
principles of trade and remove impediments to and perfect the mechanism 
of a free and open market by reducing the delay in representation and 
execution of an order on the Exchange.

[[Page 21417]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that this proposed rule change would 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change would 
reduce the burden on Floor Brokers that have reported that the identity 
of the firm through which each trade will clear is not always initially 
provided when an order is presented and that waiting to receive this 
information and enter it into EOC can delay the representation and 
execution of an order. By reducing Floor Brokers' burden on order entry 
compliance, the Exchange believes the proposal will improve the 
competitiveness of Exchange Floor Brokers, by enabling more timely 
executions of open outcry trades and promoting competition for order 
flow among market participants and the options exchanges.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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 No. SR-NYSEMKT-2016-13 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 No. SR-NYSEMKT-2016-13. 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 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 No. SR-NYSEMKT-2016-13, and should be 
submitted on or before May 2, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Robert W. Errett,
Deputy Secretary.
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    \23\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-08179 Filed 4-8-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices 21415

For the Commission, by the Division of and discussed any comments it received particular, the Exchange was required
Trading and Markets, pursuant to delegated on the proposed rule change. The text incorporate into the audit trail all non-
authority.63 of those statements may be examined at electronic orders ‘‘such that the audit
Robert W. Errett, the places specified in Item IV below. trail provides an accurate, time-
Deputy Secretary. The Exchange has prepared summaries, sequenced record of electronic and
[FR Doc. 2016–08186 Filed 4–8–16; 8:45 am] set forth in sections A, B, and C below, other orders, quotations and
BILLING CODE 8011–01–P of the most significant parts of such transactions on such respondent
statements. exchange, beginning with the receipt of
an order by such respondent exchange
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s and further documenting the life of the
COMMISSION Statement of the Purpose of, and order through the process of execution,
Statutory Basis for, the Proposed Rule partial execution, or cancellation of that
[Release No. 34–77518; File No. SR– Change
NYSEMKT–2016–13] order, which audit trail shall be readily
1. Purpose retrievable in the common computer
Self-Regulatory Organizations; NYSE format.’’ 8
The Exchange proposes to amend Current Rule 955NY(c) sets forth the
MKT LLC; Notice of Filing of Proposed
Exchange Rule 955NY(c) by revising the EOC entry requirements and mandates
Rule Change, as Modified by
requirements for entering an order into that every ATP Holder that receives an
Amendment No. 1, To Amend Rule
the EOC. Specifically, the Exchange order for execution on the Exchange
955NY(c) by Revising the Clearing
proposes to eliminate the pre-trade EOC ‘‘must immediately, prior to
Member Requirements for Entering an
requirement that ATP Holders give up representation in the trading crowd,
Order Into the Electronic Order
the name of the Clearing Member 4 record the details of the order (including
Capture System (‘‘EOC’’)
responsible for clearing each trade any modification of the terms of the
April 5, 2016. before representing a trade in open order or cancellation of the order) into
Pursuant to Section 19(b)(1) 1 of the outcry. 5 the EOC, unless such order has been
Securities Exchange Act of 1934 (the The EOC is the Exchange’s floor-based entered into the Exchange’s other
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 electronic audit trail and order tracking electronic order processing facilities
notice is hereby given that, on March system that provides an accurate time- (e.g., orders sent electronically through
22, 2016, NYSE MKT LLC (the sequenced record of all orders and the Exchange’s Member Firm
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with transactions entered and executed on Interface).’’ 9 Among other pre-trade
the Securities and Exchange the floor of the Exchange.6 This process, EOC requirements under current Rule
Commission (the ‘‘Commission’’) the commonly referred to as the 955NY(c)(1), every ATP Holder must
proposed rule change as described in ‘‘systemization’’ of an order, is provide ‘‘the name of the clearing ATP
Items I and II below, which Items have composed of the contractual terms of an Holder’’ (the ‘‘Give Up Requirement’’) 10
been prepared by the self-regulatory order that are required to be disclosed Rule 955NY(c)(1) also provides that
organization. On March 30, 2016, the in order to effect a trade. The EOC was ‘‘[t]he remaining elements prescribed in
Exchange filed Amendment No. 1 to the developed to comply with an order of Rule 956NY and any additional
proposed rule change. The Commission the Commission, which required that information with respect to the order
is publishing this notice to solicit the Exchange, in coordination with shall be recorded as the events occur
comments on the proposed rule change, other exchanges, ‘‘design and and/or during trade reporting
as modified by Amendment No. 1, from implement a consolidated options audit procedures which may occur after the
interested persons. trail system (‘COATS’),’’ that would representation and execution of the
‘‘enable the options exchanges to order.’’ 11
I. Self-Regulatory Organization’s
reconstruct markets promptly,
Statement of the Terms of the Substance (September 11, 2000) and Administrative
effectively surveil them and enforce
of the Proposed Rule Change Proceeding File No. 3–10282.
order handling, firm quote, trade 8 See id.
The Exchange proposes to amend reporting and other rules.’’ 7 In 9 See Rule 955NY(c).
Rule 955NY(c) by revising the 10 See Rule 955NY(c)(1)(vii). Rule 955NY(c)(1)
requirements for entering an order into 4 Rule 900.2NY defines ‘‘Clearing Member’’ as an
also requires the following data points to be entered
the Electronic Order Capture System Exchange ATP Holder which has been admitted to upon receipt of an order: (i) The option symbol; (ii)
membership in the Options Clearing Corporation the expiration date of the option; (iii) the exercise
(‘‘EOC’’). The proposed rule change is pursuant to the provisions of the Rules of the price; (iv) buy or sell with applicable limit or stop
available on the Exchange’s Web site at Options Clearing Corporation. price or special instructions; (v) call or put; (vi) the
www.nyse.com, at the principal office of 5 In Amendment No. 1, the Exchange clarified
quantity of contracts; as well as such other
the Exchange, and at the Commission’s that it is proposing to amend the timing in which information as may be required by the Exchange
Public Reference Room. Clearing Member information will be entered into from time to time. Rule 955NY(c)(1) also provides
the EOC. More specifically, the Exchange noted that that the Exchange may also require additional
II. Self-Regulatory Organization’s Rule 955NY(c)(1) requires the other items included information if needed and provides that the
in Rule 956NY(a), including the ‘‘CMTA remaining data elements prescribed in Rule 956NY
Statement of the Purpose of, and Information and the name of the clearing OTP [see infra n. 10] are to be recorded as the events
Statutory Basis for, the Proposed Rule Holder or Firm,’’ to be included in the EOC ‘‘as the occur and/or during trade reporting procedures.
Change events occur and/or during trade reporting The Exchange proposes to add the words ‘‘in the
procedures which may occur after the EOC’’ to Rule 955NY(c)(1) to make clear where the
In its filing with the Commission, the representation and execution of the order.’’ additional information would be recorded. See
mstockstill on DSK4VPTVN1PROD with NOTICES

self-regulatory organization included 6 This system includes the electronic proposed Rule 955NY(c)(1).
statements concerning the purpose of, communications interface between booth terminals 11 See Rule 955NY (c)(1). The Exchange notes that

and basis for, the proposed rule change and the Floor Broker work stations. one such element prescribed in Rule 956NY(a) to
7 See Section IV.B.e.(v) of the Commission’s be recorded by each ATP Holder is ‘‘CMTA
63 17
Order Instituting Public Administrative Proceedings Information and the name of the clearing ATP
CFR 200.30–3(a)(12). Pursuant to Sections 19(h)(1) of the Securities Holder,’’ and therefore, per Rule 955NY(c)(1), this
1 15 U.S.C.78s(b)(1). Exchange Act of 1934, Making Findings and information would still be disclosed ‘‘as the events
2 15 U.S.C. 78a.
Imposing Remedial Sanctions (the ‘‘Order’’). See occur and/or during trade reporting procedures
3 17 CFR 240.19b–4. Securities Exchange Act Release No. 43268 Continued

VerDate Sep<11>2014 18:37 Apr 08, 2016 Jkt 238001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\11APN1.SGM 11APN1
21416 Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices

Pursuant to the proposed rule change, (Rule 956NY). Floor Brokers would is designed to promote just and
ATP Holders would no longer be subject continue to be required to maintain equitable principles of trade, to foster
to the pre-trade Give Up Requirement. proper order records, as part of each cooperation and coordination with
Floor Brokers have told the Exchange trade record, including the identity of persons engaged in facilitating
that the identity of the firm through the clearing ATP Holder.14 In that transactions in securities by ensuring
which each trade will clear is not regard, Floor Brokers would continue to that the terms of an order continue to be
always initially provided when an order be required to give up the responsible properly systematized prior to the order
is presented and that waiting to receive Clearing Member on each trade as part being represented in the Trading Crowd.
this information and enter it into EOC of each trade record.15 The proposed change to eliminate the
can delay the representation and Give Up Requirement prior to execution
2. Statutory Basis
execution of an order. In today’s trading of each trade would not impair the
environment of rapidly moving markets The Exchange believes that the
proposed change is consistent with Exchange’s ability to comply with the
and the need to execute an order and
Section 6(b) of the Act,16 in general, and Order. Specifically, the EOC would still
hedge a trade in real or near real time,
furthers the objectives of Section provide an accurate, time-sequenced
even a slight delay can prove to be
detrimental to the handling of an order. 6(b)(5),17 in particular, in that it is record of electronic and other orders,
The proposed change to eliminate the designed to promote just and equitable quotations and transactions, beginning
Give Up Requirement prior to execution principles of trade, to foster cooperation with the receipt of the order and
of each trade would not impair the and coordination with persons engaged documenting the life of the order
Exchange’s ability to comply with the in regulating, clearing, settling, through the process of execution, partial
Order. Specifically, the EOC would still processing information with respect to, execution, or cancellation.19
provide an accurate, time-sequenced and facilitation transactions in The proposal is also designed to
record beginning with the receipt of an securities, to remove impediments to, prevent fraudulent and manipulative
order and document the life of the order and perfect the mechanism of a free and acts and practices, by ensuring that the
through the process of execution, partial open market and, in general, to protect Exchange is continues to meet its
execution, or cancellation. Entry of investors and the public interest. obligation to create and maintain a time-
information pursuant to the Give Up Additionally, the Exchange believes the sequenced record of orders, quotations
Requirement would occur after the proposed rule change is consistent with and transactions on the Exchange. This
order had been represented and the Section 6(b)(5) 18 requirement that proposal does not alter—or, as stated
executed in the Trading Crowd.12 Thus, the rules of an exchange not be designed above, impair, the Exchange’s obligation
only the timing of the disclosure of such to permit unfair discrimination between to incorporate into its audit trail all non-
information would be affected by this customers, issuers, brokers, or dealers.
Specifically, the proposed change to electronic orders to provide an accurate,
proposal.
The Exchange notes that, similar to a order entry requirements for the EOC time-sequenced record of electronic and
filing it submitted in 2013,13 the (i.e., eliminating the pre-trade Give Up) other orders, quotations and
proposed rule change relates only to the transactions that documents the life of
system entry requirements for floor- 14 The Exchange notes that another exchange has the order from receipt through the
based orders and would not change made modifications to its rules related to the Order. execution, partial execution, or
See Securities Exchange Act Release No. 63071 cancellation.20 Moreover, the proposed
rules governing the record of orders (October 8, 2010), 75 FR 63876, 63877–78 (October
18, 2010) (SR–Phlx–2010–139) (immediately
change merely removes the Give Up
which may occur after the representation and effective filing to amend language related to the Requirement from pre-trade
execution of the order.’’ Id. See also Rule 956NY(a) timing of the entry of clearing information, noting systemization, it does not alter that give
(Record of Orders) (requiring that ATP Holders in relevant part that ‘‘[t]he clearing information,
maintain a record of each order that includes that ups must be disclosed as part of the
which is the contra-side clearing information, is not
the following data elements: (1) CMTA Information required to be entered pursuant to COATS. Rather, Give Up Process and as part of trade
and the name of the clearing ATP Holder; (2) this information facilitates the identification of the reporting on the Exchange.21
options symbol, expiration month, exercise price trade for clearing.’’). The Exchange notes that the
and type of options; (3) side of the market and order Accordingly, nothing in this proposal
Philadelphia Stock Exchange proposed these
type; (4) quantity of options; (5) limit or stop price changes to its rules without solicitation of the
would alter the Exchange’s obligations
or special conditions; (6) opening or closing exchanges that were subject to the Order, including pursuant to, or ability to comply with,
transaction; (7) time in force; (8) account origin
code; and (9) whether the order was solicited or
the Exchange. Accordingly, the Exchange believes the Order. The Exchange notes that it
that exchanges’ changes to their rules put in place has previously modified the non-
unsolicited.) See also Rule 957NY (Reporting to comply with the Order are appropriately effected
Duties), infra n. 12.
pursuant to the provisions of Section 19(b)(1) of the contractual data elements required
12 See id.; see also Commentary .01 to Rule
Act and Rule 19b–4 thereunder. See 15 U.S.C. pursuant to Rule 955NY(c) (i.e., not
957NY (providing that for each transaction 78s(b)(1); 17 CFR 240.19b–4.
executed on the Options Floor, the responsible ATP mandated by the Order).22
15 See supra nn. 11, 12. In addition, the Exchange
Holder will immediately report, among other Finally, the Exchange believes that
notes that this proposal would not change rules
information, both its assigned broker initial code
and the name of the contra clearing member).
governing trade reporting requirements (Rule the proposed change would reduce the
13 See Securities and Exchange Act Release 69081
957NY) (i.e., that ‘‘[t]ransactions not reported to [the burden on Floor Brokers to enter order
Options Pricing Reporting Authority] within 90
(March 8, 2013), 78 FR 16332, 16333 (March 14,
seconds after the execution will be designated as information prior to representation
2013) (SR–NYSEMKT–2013–16) (noting that which would, in turn, promote just and
(‘late,’’ per Rule 957(a)). The Exchange also notes
‘‘[b]ecause the CMTA information, the opening/
that last year it revised and detailed the process in equitable principles of trade and remove
closing designation, the account origin code, the
which an ATP Holder ‘‘gives up’’ or selects a
time if force and whether an order was solicited or
Clearing Member responsible for the clearance of an
impediments to and perfect the
mstockstill on DSK4VPTVN1PROD with NOTICES

unsolicited are not contractual terms of a trade itself mechanism of a free and open market by
Exchange transaction (the ‘‘Give Up Process’’). See
nor are they required data elements pursuant to the
Exchange’s order format requirements, the
Securities and Exchange Act Release 75642 (August reducing the delay in representation and
7, 2015), 80 FR 48594 (August 13, 2015) (SR– execution of an order on the Exchange.
Exchange does not believe this information needs
NYSEMKT–2015–55) (revising the Exchange’s Give
to be entered into the EOC prior to an order being
represented in the Trading Crowd, but may be Up Process through modifications to Rules 960, 961
and 954NY). 19 See supra n. 7.
entered contemporaneously upon the receipt of
16 15 U.S.C. 78f(b). 20 Id.
such information, even if that occurs after the order
17 15 U.S.C. 78f(b)(5). 21 See supra nn. 11, 12, 15.
had been represented and executed in the Trading
Crowd’’). 18 Id. 22 See supra n. 13.

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Federal Register / Vol. 81, No. 69 / Monday, April 11, 2016 / Notices 21417

B. Self-Regulatory Organization’s Paper Comments SECURITIES AND EXCHANGE
Statement on Burden on Competition COMMISSION
• Send paper comments in triplicate
The Exchange does not believe that to Secretary, Securities and Exchange [Release No. 34–77524; File No. SR-
this proposed rule change would Commission, 100 F Street NE., BatsBZX–2016–04]
impose any burden on competition not Washington, DC 20549–1090.
necessary or appropriate in furtherance Self-Regulatory Organizations; Bats
of the purposes of the Act. The All submissions should refer to File No. BZX Exchange, Inc.; Notice of Filing
proposed rule change would reduce the SR–NYSEMKT–2016–13. This file and Immediate Effectiveness of a
burden on Floor Brokers that have number should be included on the Proposed Rule Change Related to Fees
reported that the identity of the firm subject line if email is used. To help the for Its Equity Options Platform
through which each trade will clear is Commission process and review your April 5, 2016.
not always initially provided when an comments more efficiently, please use Pursuant to Section 19(b)(1) of the
order is presented and that waiting to only one method. The Commission will Securities Exchange Act of 1934 (the
receive this information and enter it into post all comments on the Commission’s ‘‘Act’’),1 and Rule 19b-4 thereunder,2
EOC can delay the representation and Internet Web site (http://www.sec.gov/ notice is hereby given that on March 31,
execution of an order. By reducing Floor rules/sro.shtml). Copies of the 2016, Bats BZX Exchange, Inc. (the
Brokers’ burden on order entry submission, all subsequent ‘‘Exchange’’ or ‘‘BZX’’) filed with the
compliance, the Exchange believes the amendments, all written statements Securities and Exchange Commission
proposal will improve the with respect to the proposed rule (‘‘Commission’’) the proposed rule
competitiveness of Exchange Floor change that are filed with the change as described in Items I, II and III
Brokers, by enabling more timely Commission, and all written below, which Items have been prepared
executions of open outcry trades and communications relating to the by the Exchange. The Exchange has
promoting competition for order flow proposed rule change between the designated the proposed rule change as
among market participants and the Commission and any person, other than one establishing or changing a member
options exchanges. due, fee, or other charge imposed by the
those that may be withheld from the
C. Self-Regulatory Organization’s public in accordance with the Exchange under Section 19(b)(3)(A)(ii)
Statement on Comments on the provisions of 5 U.S.C. 552, will be of the Act 3 and Rule 19b-4(f)(2)
Proposed Rule Change Received From thereunder,4 which renders the
available for Web site viewing and
Members, Participants, or Others proposed rule change effective upon
printing in the Commission’s Public
filing with the Commission. The
No written comments were solicited Reference Room, 100 F Street NE., Commission is publishing this notice to
or received with respect to the proposed Washington, DC 20549 on official solicit comments on the proposed rule
rule change. business days between the hours of change from interested persons.
10:00 a.m. and 3:00 p.m. Copies of such
III. Date of Effectiveness of the filing also will be available for I. Self-Regulatory Organization’s
Proposed Rule Change and Timing for inspection and copying at the principal Statement of the Terms of Substance of
Commission Action office of the Exchange. All comments the Proposed Rule Change
Within 45 days of the date of received will be posted without change; The Exchange filed a proposal to
publication of this notice in the Federal the Commission does not edit personal amend the fee schedule applicable to
Register or within such longer period (i) identifying information from Members 5 and non-members of the
as the Commission may designate up to submissions. You should submit only Exchange pursuant to BZX Rules 15.1(a)
90 days of such date if it finds such information that you wish to make and (c).
longer period to be appropriate and available publicly. All submissions The text of the proposed rule change
publishes its reasons for so finding or should refer to File No. SR–NYSEMKT– is available at the Exchange’s Web site
(ii) as to which the Exchange consents, 2016–13, and should be submitted on or at www.batstrading.com, at the
the Commission shall: (a) By order before May 2, 2016. principal office of the Exchange, and at
approve or disapprove such proposed the Commission’s Public Reference
For the Commission, by the Division of Room.
rule change, or (b) institute proceedings Trading and Markets, pursuant to delegated
to determine whether the proposed rule authority.23 II. Self-Regulatory Organization’s
change should be disapproved. Statement of the Purpose of, and
Robert W. Errett,
IV. Solicitation of Comments Statutory Basis for, the Proposed Rule
Deputy Secretary. Change
Interested persons are invited to [FR Doc. 2016–08179 Filed 4–8–16; 8:45 am]
In its filing with the Commission, the
submit written data, views, and BILLING CODE 8011–01–P
Exchange included statements
arguments concerning the foregoing, concerning the purpose of and basis for
including whether the proposed rule the proposed rule change and discussed
change is consistent with the Act. any comments it received on the
Comments may be submitted by any of proposed rule change. The text of these
the following methods: statements may be examined at the
mstockstill on DSK4VPTVN1PROD with NOTICES

Electronic Comments
1 15 U.S.C. 78s(b)(1).
• Use the Commission’s Internet 2 17 CFR 240.19b–4.
comment form (http://www.sec.gov/ 3 15 U.S.C. 78s(b)(3)(A)(ii).

rules/sro.shtml); or 4 17 CFR 240.19b–4(f)(2).
5 The term ‘‘Member’’ is defined as ‘‘any
• Send an email to rule-comments@ registered broker or dealer that has been admitted
sec.gov. Please include File No. SR– to membership in the Exchange.’’ See Exchange
NYSEMKT–2016–13 on the subject line. 23 17 CFR 200.30–3(a)(12). Rule 1.5(n).

VerDate Sep<11>2014 18:37 Apr 08, 2016 Jkt 238001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\11APN1.SGM 11APN1
Document Created: 2016-04-09 00:11:00
Document Modified: 2016-04-09 00:11:00
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 21415