81_FR_33387 81 FR 33286 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13-Equities and Related Rules Regarding Market Orders

81 FR 33286 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13-Equities and Related Rules Regarding Market Orders

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 101 (May 25, 2016)

Page Range33286-33291
FR Document2016-12240

Federal Register, Volume 81 Issue 101 (Wednesday, May 25, 2016)
[Federal Register Volume 81, Number 101 (Wednesday, May 25, 2016)]
[Notices]
[Pages 33286-33291]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-12240]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77859; File No. SR-NYSEMKT-2016-54]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 13--
Equities and Related Rules Regarding Market Orders

May 19, 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 May 16, 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 amend Rule 13--Equities (Orders and 
Modifiers) and related rules regarding Market Orders. 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 (Orders and 
Modifiers) (``Rule 13'') and related rules relating to Market Orders. 
The proposed changes are designed to simplify the Exchange's offering 
of order types by harmonizing the behavior of Market Orders with how 
similar orders operate on NYSE Arca Equities, Inc. (``NYSE Arca 
Equities''), the Exchange's affiliated equities marketplace, and by 
eliminating specified combinations of orders and modifiers.\4\
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    \4\ NYSE Arca Equities is a wholly-owned subsidiary of NYSE 
Arca, Inc., which is a national securities exchange.
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Overview
    Currently, Market Orders are defined in Rule 13(a)(1) as an order 
to buy or sell a stated amount of a security at the most advantageous 
price obtainable after the order is represented in the Trading Crowd or 
routed to Exchange systems. If a Market Order to sell has exhausted all 
eligible buy interest, any unfilled balance of the Market Order to sell 
will be cancelled. Market Orders may include an immediate-or-cancel 
(``IOC'') time-in-force modifier.\5\ In addition, a Market Order may 
include an instruction to either buy ``minus'' or sell ``plus.'' \6\
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    \5\ See Rule 13(b)(3).
    \6\ See Rule 13(f)(A) and (C).
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    The Exchange proposes to simplify how Market Orders would function 
on the Exchange by harmonizing the behavior of Market Orders with how 
they operate on the Pillar trading platform on NYSE Arca Equities and 
by eliminating the ability to combine a Market Order with an IOC, buy 
``minus,'' or sell ``plus'' instruction, which are not available on the 
NYSE Arca Equities trading platform. The Exchange believes that 
eliminating these order type combinations would streamline its rules 
and reduce complexity among its order type offerings.\7\
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    \7\ See, e.g., Mary Jo White, Chair, Securities and Exchange 
Commission, Speech at the Sandler O'Neill & Partners, L.P. Global 
Exchange and Brokerage Conference (June 5, 2014) (available at 
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
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Proposed Amendments to Market Orders
    To effect the proposed changes to how Market Orders would operate, 
the Exchange proposes to amend Rule 13(a)(1) to provide that a Market 
Order that is eligible for automatic execution would be an unpriced 
order to buy or sell a stated amount of a security that is to be traded 
at the best price obtainable without trading through the NBBO. This 
proposed rule text is based on the first sentence of NYSE Arca Equities 
Rule 7.31P(a)(1), which provides that a Market Order is an unpriced 
order to buy or sell a stated amount of a security that is to be traded 
at the best price obtainable without trading through the NBBO.
    The Exchange proposes one difference for the NYSE MKT version of 
the rule, which is to provide that the proposed definition is intended 
only for orders eligible for automatic execution. Rule 1000(a)--
Equities provides that an automatically executing order shall receive 
an immediate, automatic execution against orders reflected in the 
Exchange published quotation and orders in the Exchange book.\8\ 
However,

[[Page 33287]]

automatic executions are not available if trading in a security has 
been halted or if a block-sized transaction as defined in Rule 127.10--
Equities involves orders on the Exchange book that is being reported 
manually.\9\ Because the proposed new functionality relating to Market 
Orders would not be available for these limited circumstances, the 
Exchange proposes to keep the current definition of Market Orders as 
proposed subsection (D) of Rule 13(a)(1) and specify that this 
subsection of the rule is only for Market Orders that are not eligible 
for automatic execution.
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    \8\ Because Market Orders are eligible for automatic execution, 
the Exchange proposes a non-substantive amendment to change the 
title of Rule 1000--Equities from ``Automatic Execution of Limit 
Orders Against Orders Reflected In Exchange Published Quotation'' to 
``Automatic Executions.'' The proposed amendment aligns the title of 
Rule 1000--Equities with New York Stock Exchange LLC (``NYSE'') Rule 
1000.
    \9\ See Rule 1000(a)(i)-(ii)--Equities.
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    Proposed Rule 13(a)(1)(A) would define certain terms for purposes 
of Market Orders. Specifically, because the Exchange is proposing to 
adopt rule text based on NYSE Arca Equities Rule 7.31P(a)(1), which 
uses terms defined in the NYSE Arca Equities rules, the Exchange 
proposes to add the following defined terms to Rule 13:
     Proposed Rule 13(a)(1)(A)(i) would define the term ``Away 
Market, '' for purposes of Market Orders, to mean any exchange with 
which the Exchange maintains an electronic linkage and which provides 
instantaneous responses to orders routed from the Exchange. This 
proposed definition is based on NYSE Arca Equities Rule 1.1(ffP), which 
defines the term ``Away Market'' to mean any exchange, alternative 
trading system (``ATS'') or other broker-dealer (1) with which the NYSE 
Arca Marketplace maintains an electronic linkage and (2) which provides 
instantaneous responses to order routed from the NYSE Arca Marketplace. 
Because the Exchange does not route to any ATSs or other broker-dealers 
for execution, the Exchange would not include a reference to ATSs or 
broker-dealers in its definition of Away Market.
     Proposed Rule 13(a)(1)(A)(ii) would define the term 
``NBBO'' to mean the national best bid or offer and the terms ``NBB'' 
to mean the national best bid and ``NBO'' to mean the national best 
offer. These proposed definitions are identical to those definitions in 
NYSE Arca Equities Rule 1.1(dd).
     Proposed Rule 13(a)(1)(A)(iii) would define the term 
``working price'' to mean the price at which an order is eligible to 
trade at any given time. This proposed definition is based on NYSE Arca 
Equities Rule 7.36P(a)(3), which defines the term ``working price'' to 
mean the price at which an order is eligible to trade at any given 
time, which may be different from the limit price or display price of 
the order. The Exchange does not propose to include the last clause of 
the NYSE Arca Equities definition because the Exchange is proposing the 
definition of working price only for purposes of Market Orders, which 
do not include a limit price and which are not displayed.
     Proposed Rule 13(a)(1)(A)(iv) would define the term 
``MPV'' to mean the minimum price variation for quoting and entry of 
orders as specified in Supplementary Material .10 to Rule 62--Equities. 
The Exchange uses the same pricing increments as NYSE Arca 
Equities.\10\
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    \10\ See NYSE Arca Equities Rule 7.6 (defining minimum price 
variation as $0.01, with the exception of securities that are priced 
less than $1.00, for which the MPV for quoting and entry is 
$0.0001).
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    Proposed Rule 13(a)(1)(B) would specify how a Market Order would 
operate during continuous trading. The Exchange would specify how 
Market Orders would participate in auctions in proposed Rule 
13(a)(1)(C), described in greater detail below.
    As proposed in Rule 13(a)(1)(B)(i), a Market Order would be 
rejected on arrival or cancelled if resting if there is no contra-side 
NBBO or if the best protected quotations are or become crossed. This 
proposed rule text is based on the second sentence of NYSE Arca 
Equities Rule 7.31P(a)(1), which provides that a Market Order must be 
designated Day and will be rejected on arrival or cancelled if resting 
if there is no contra-side NBBO. Because of technology differences 
between how the Exchange operates and how NYSE Arca Equities operates 
on the Pillar trading platform, the Exchange proposes that if protected 
quotations are or become crossed, the Exchange would reject newly 
arriving Market Orders or cancel resting unexecuted Market Orders.
    Proposed Rule 13(a)(1)(B)(ii) would provide that:

    On arrival, a Market Order to buy (sell) is assigned a working 
price of the NBO (NBB) and will trade with all sell (buy) orders on 
the Exchange priced at or below (above) the NBO (NBB) before routing 
to the NBO (NBB) on an Away Market. The quantity of a Market Order 
to buy (sell) not traded or routed will remain undisplayed on the 
Exchange at a working price of the NBO (NBB) and be eligible to 
trade with incoming sell (buy) orders at that price. When the NBO 
(NBB) is updated, the Market Order to buy (sell) will be assigned a 
new working price of the updated NBO (NBB) and will trade with all 
sell (buy) orders on the Exchange priced at or below (above) the 
updated NBO (NBB) before routing to the updated NBO (NBB) on an Away 
Market. Such assessment will continue at each new contra-side NBBO 
until the order is filled or a Trading Collar is reached. If the 
NBBO becomes locked or crossed either on arrival or while the order 
is held undisplayed, the Market Order to buy (sell) will be assigned 
a working price of the NBB (NBO).

    This proposed rule text is based on NYSE Arca Equities Rule 
7.31P(a)(1)(A), which provides:

    On arrival, a Market Order to buy (sell) is assigned a working 
price of the NBO (NBB) and will trade with all sell (buy) orders on 
the NYSE Arca Book priced at or below (above) the NBO (NBB) before 
routing to the NBO (NBB) on an Away Market. The quantity of a Market 
Order to buy (sell) not traded or routed will remain undisplayed on 
the NYSE Arca Book at a working price of the NBO (NBB) and be 
eligible to trade with incoming sell (buy) orders at that price. 
When the updated NBO (NBB) is displayed, the Market Order to buy 
(sell) will be assigned a new working price of the updated NBO (NBB) 
and will trade with all sell (buy) orders on the NYSE Arca Book 
priced at or below (above) the updated NBO (NBB) before routing to 
the updated NBO (NBB) on an Away Market. Such assessment will 
continue at each new contra-side NBBO until the order is filled or a 
Trading Collar is reached. If the NBBO becomes locked or crossed 
while the order if held undisplayed, the Market Order to buy (sell) 
will be assigned a working price of the NBB (NBO).

    The Exchange proposes a non-substantive difference to use the term 
``Exchange'' instead of ``NYSE Arca Book'' in proposed Rule 
13(a)(1)(B)(ii). The Exchange also proposes a change from the NYSE Arca 
Equities Rule to specify that a Market Order would be priced to the 
same-side NBBO when the NBBO is crossed both on arrival and when 
resting. To this point, as described above, if the protected quotations 
are crossed, a resting Market Order would be cancelled, which differs 
from current NYSE Arca Equities behavior. However, if the NBBO is 
crossed, but the best protected quotations are not crossed, the 
Exchange would price the Market Order based on the same-side NBBO, 
which is how Market Orders operate on NYSE Arca Equities.\11\ Finally, 
the Exchange proposes a change from the NYSE Arca Equities rule to 
provide that a Market Order will be assigned a new working price when 
the NBBO is updated, and not when an updated NBBO is displayed. The 
proposed Exchange

[[Page 33288]]

functionality is identical to that of NYSE Arca Equities, but the 
Exchange believes its proposed rule language clarifies that it would 
incorporate updates to the NBBO based on executions at the Exchange 
that have not yet been displayed.
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    \11\ The NBBO may differ from the best protected quotations 
(``PBBO'') because the NBBO includes manual quotations, which are 
defined as any quotation other than an automated quotation. 17 CFR 
242.600(b)(37). By contrast, a protected quotation is an automated 
quotation that is the best bid or offer of a national securities 
exchange. 17 CFR 242.600(b)(57)(iii). In addition, when the Exchange 
routes interest to protected quotations, it adjusts the PBBO, but 
does not adjust the NBBO. See Securities Exchange Act Release No. 
74408 (March 2, 2015), 80 FR 12225 (March 6, 2015) (SR-NYSEMKT-2015-
11).
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    Proposed Rule 13(a)(1)(B)(iii) would provide that unexecuted Market 
Orders that are held undisplayed in Exchange systems would not be 
available to the DMM either as part of aggregated interest at a price 
point or in disaggregated form and would not participate in intra-day 
manual executions. The Exchange proposes this rule text to reflect the 
Exchange's unique trading model, which, unlike NYSE Arca Equities, 
includes a DMM assigned to each security that trades on the 
Exchange.\12\ Unless otherwise specified, DMMs have access to specified 
order information while on the Trading Floor.\13\ Because unexecuted 
Market Orders would be held undisplayed at the contra-side NBBO, the 
Exchange proposes to treat such unexecuted orders similarly to other 
undisplayed orders and would not make information about them available 
to the DMM during intra-day trading. Accordingly, proposed Rule 
13(a)(1)(B)(iii) is based on Rule 70(f)(ii)--Equities regarding the 
information available to a DMM regarding a Non-Display Reserve e-Quote 
that has been designated to be excluded from the DMM. In addition, 
because information about unexecuted Market Orders would not be 
available to DMMs when the Exchange is open for continuous trading, the 
Exchange further proposes to provide that such orders would not 
participate in intra-day manual executions, i.e., executions 
facilitated by the DMM while on the Trading Floor.\14\
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    \12\ See Rule 2(i)--Equities (defining the term ``Designated 
Market Maker'' or ``DMM'' to mean an individual member, officer, 
partner, employee or associated person of a DMM unit who is approved 
by the Exchange to act in the capacity of a DMM).
    \13\ See Rule 104(j)(ii)--Equities.
    \14\ By contrast, the Exchange proposes that the participation 
of Market Orders would not change for auctions on the Exchange, 
including that availability of Market Orders would be made known to 
the DMM. See proposed Rule 13(a)(1)(C)(ii). DMMs are responsible for 
facilitating openings and reopenings and the close of trading. To 
comply with this requirement, the Exchange makes available to DMMs 
and DMM unit algorithms aggregate order information. See Rule 
104(a)(2) and (3)--Equities.
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    Proposed Rule 13(a)(1)(C) would specify how Market Orders would 
participate in auctions. Because auctions on the Exchange are 
facilitated by DMMs, the Exchange proposes that Market Orders that have 
not been assigned a working price based on the contra-side NBBO or, 
during a halt, pause or trading suspension, have not yet traded, would 
continue to participate in an auction as Market Orders currently do and 
would continue to be included in the information made available to DMMs 
and the public no differently than today. Accordingly, as proposed in 
Rule 13(a)(1)(C)(i), a Market Order that was entered before the opening 
of trading, or was entered before or during a halt, pause or suspension 
in trading, would be made available to the DMM as provided for in Rule 
104(a)(2) and (3)--Equities and would be included in Order Imbalance 
Information \15\ and allocated in the applicable auction as a Market 
Order. This would include all opening and reopening auctions,\16\ and 
closing auctions that follow a halt, pause or suspension in 
trading.\17\ In addition, if a Market Order arrives during continuous 
trading, is held undisplayed and assigned a working price, and then 
that security enters a halt or pause, such Market Order will revert and 
be considered an unpriced Market Order for purposes of allocation in 
the reopening auction.
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    \15\ See Rules 15(c)--Equities and 123C(6)--Equities.
    \16\ See Rule 115A(a)(i)--Equities.
    \17\ See Rule 123C(7)--Equities.
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    By contrast, because a Market Order entered during continuous 
trading that remains unexecuted when the Exchange transitions to the 
closing transaction would have been assigned a working price, the 
Exchange proposes to handle such unexecuted Market Orders more 
similarly to a Limit Order in the closing transaction. Accordingly, as 
proposed in Rule 13(a)(1)(C)(ii), a Market Order that was entered 
during continuous trading and remains unexecuted for the close would be 
made available to the DMM as provided for in Rule 104(a)(3)--Equities 
and would be included in Order Imbalance Information and allocated in 
the closing transaction as a Limit Order with its limit price being the 
last working price assigned to the unexecuted Market Order.
    The Exchange proposes to address how short sale Market Orders would 
be allocated in an auction in proposed Rule 13(a)(1)(C)(iii). Similar 
to unexecuted Market Orders that would participate in the closing 
transaction as a Limit Order, during a Short Sale Period, as defined in 
Rule 440B(d), a short sale Market Order would also participate in any 
auction as a Limit Order, but with the limit price being the last 
Permitted Price before the applicable transaction. Accordingly, 
proposed Rule 13(a)(1)(C)(iii) would provide that during a Short Sale 
Period, as defined in Rule 440B(d)--Equities, a short sale Market Order 
re-priced to a Permitted Price, as defined in Rule 440B(e)--Equities, 
would be made available to the DMM as provided for in Rules 104(a)(2) 
and (3)--Equities and would be included in Order Imbalance Information 
and allocated in the applicable auction as a Limit Order. This proposed 
behavior would be applicable for any auction.\18\
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    \18\ This proposed behavior for short sale Market Orders on the 
Exchange is based on Commentary .01(a) to NYSE Arca Equities Rule 
7.35P, which provides that for purposes of pricing an auction and 
ranking orders for allocation in an auction, sell short Market 
Orders that are adjusted to a Permitted Price (as defined in Rule 
7.16P(f)) will be processed as Limit Orders ranked Priority 2--
Display Orders and will not be included in the Market Imbalance.
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    The Exchange also proposes to amend Rule 72--Equities (``Rule 72'') 
to specify how an unexecuted Market Order would be allocated. First, 
the Exchange proposes to amend Rule 72(c)(i), which currently provides 
that an automatically executing order will trade first with displayable 
bids (offers) and if there is insufficient displayable volume to fill 
the order, will trade next with non-displayable interest. The Exchange 
proposes to amend this rule to provide that an automatically executing 
order would trade first with any unexecuted Market Orders, which would 
be allocated in time priority, and then with displayable bids (offers).
    Second, the Exchange proposes to amend Rule 72(c)(iii), which 
currently describes how in any execution at the Exchange BBO, a 
participant who has established priority under Rule 72(a) will receive 
fifteen percent of the volume of such executed amount or a minimum of 
one round lot, whichever is greater, until such setting interest has 
received a complete execution of its eligible priority interest. The 
Exchange proposes to amend this rule text to add that such priority 
allocation would be after any unexecuted Market Orders have been 
satisfied.
    Both of these proposed amendments to Rule 72(c) are based on NYSE 
Arca Equities Rule 7.31P(a)(1), which provides that unexecuted Market 
Orders are ranked Priority 1--Market Orders. As defined in NYSE Arca 
Equities Rule 7.36P(e), at each price point, unexecuted Market Orders 
that are ranked Priority 1--Market Orders have priority over all other 
same-side orders with the same working price. The Exchange proposes to 
provide similar priority ranking of unexecuted Market Orders, which 
would harmonize how Market Orders behave on the two markets.

[[Page 33289]]

    To further harmonize the behavior of Market Orders on the Exchange 
with the behavior of Market Orders on NYSE Arca Equities, the Exchange 
proposes to amend Rule 80C(a)(5)(A)--Equities regarding how Market 
Orders would be handled if they cannot be fully executed at or within 
the Limit Up-Limit Down Price Bands.\19\ Currently, the Exchange would 
display the unexecuted portion of a buy (sell) market order at the 
Upper (Lower) Price Band if it cannot be fully executed at or within 
the Price Bands. The Exchange proposes to amend this Rule to provide 
that the Exchange would cancel the unexecuted portion of the buy (sell) 
market order if it cannot be fully executed at or within the Price 
Bands and would notify the member organization of the reason for such 
cancellation. This proposed rule text is based on NYSE Arca Equities 
Rule 7.11P(a)(5)(A), which provides that any untraded quantity of 
Market Orders that cannot be traded at prices at or within the Price 
Bands will be cancelled and the ETP Holder will be notified of the 
reason for such cancellation. In addition, because the Exchange does 
not offer Market Pegging Interest, the Exchange proposes a non-
substantive change to delete the text in Rule 80C(a)(5)(E)--Equities 
relating to Market Pegging Interest and replace it with the text 
``Reserved.'' \20\
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    \19\ See Rule 80C--Equities.
    \20\ The Exchange also proposes a non-substantive amendment to 
Rule 80C(e)(5)(A)--Equities to capitalize the term ``Market Order.''
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    In addition, the Exchange proposes to harmonize the behavior of 
sell short Market Orders during a Short Sale Period with how such 
orders are handled on NYSE Arca Equities. Currently, Rule 440B(e)--
Equities provides that short sale market orders will be re-priced by 
Exchange systems one minimum price increment above the current national 
best bid (``Permitted Price.'') Because the Exchange proposes that 
unexecuted Market Orders would not be displayed, the Exchange proposes 
to amend Rule 440B(e)--Equities to provide that any unexecuted or any 
unexecuted portion of a short sale Market Order re-priced to a 
Permitted Price would rest on the Exchange's Book and be non-displayed 
and that they would be re-priced upward to a Permitted Price to 
correspond with a rise in the national best bid.\21\ This proposed rule 
change is based on NYSE Arca Equities Rule 7.16P(f)(5)(C), which 
provides that Market Orders will have a working price adjusted to a 
Permitted Price and will continuously adjust to a Permitted Price as 
the NBB moves both up and down.
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    \21\ The Exchange also proposes a non-substantive amendment to 
Rule 440B(e)--Equities to capitalize the term ``Market Order.''
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    The Exchange also proposes to amend how Trading Collars would 
operate for Market Orders. Because of technology differences between 
the Exchange and NYSE Arca Equities, the Exchange proposes to keep the 
current behavior for Trading Collars, which use the NBBO as a reference 
price, rather than adopt the NYSE Arca Equities manner of determining 
Trading Collars, which use the consolidated last sale price as the 
reference price. Currently, Rule 1000(c)--Equities provides that 
Trading Collars are applicable to incoming market orders. Because as 
proposed, Market Orders would be re-evaluated for an execution or 
routing opportunity with each update to the NBBO, the Exchange proposes 
to apply the Trading Collar evaluation with each evaluation to trade or 
route an unexecuted Market Order. Accordingly, the Exchange proposes to 
amend Rule 1000(c)--Equities to provide that an unexecuted Market Order 
would be subject to a Trading Collar upon each evaluation to trade or 
route such order.\22\
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    \22\ The Exchange also proposes a non-substantive amendment to 
Rule 1000(c)--Equities to capitalize the terms ``Market Order'' and 
``Limit Order.''
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    Finally, the Exchange proposes to amend Supplementary Material .10 
to Rule 13 to specify how unexecuted Market Orders would be included in 
the definitions of ``best-priced sell interest'' and ``best-priced buy 
interest.'' These terms are used to describe how a Limit Order 
designated with an Add Liquidity Only (``ALO'') Modifier will be re-
priced when such Limit Order, at the time of entry, is marketable 
against Exchange interest or would lock or cross a protected 
quotation.\23\ Specifically, a Limit Order designated ALO that, at the 
time of entry, is marketable against Exchange interest will be re-
priced and displayed one MPV below the best-priced sell interest (for 
bids) or above the best-priced buy interest (for offers). Supplementary 
Material .10 to Rule 13 provides that the term best-priced sell (buy) 
interest refers to the lowest-priced sell (highest-priced buy) interest 
against which incoming buy (sell) interest would be required to execute 
with and/or route to, including Exchange displayed offers, Non-Display 
Reserve Orders, Non-Display Reserve e-Quotes, odd-lot sized sell (buy) 
interest, and protected offers (bids) on away markets, but does not 
include non-displayed sell (buy) interest that is priced based on the 
PBBO. The Exchange proposes to amend Supplementary Material .10 to Rule 
13 to add unexecuted Market Orders to the list of interest that would 
be included in the term ``best-priced sell interest'' and ``best-priced 
buy interest.'' Accordingly, if there is an unexecuted Market Order 
being held undisplayed at a price, an incoming opposite-side Limit 
Order designated ALO would be re-priced and displayed one MPV away from 
the working price of such unexecuted Market Order.
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    \23\ See Rule 13(e)(1)(B).
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Proposed Deletions
    The Exchange proposes to reduce complexity by reducing order type 
combinations that are infrequently used. As proposed, the Exchange 
proposes to eliminate the functionality to combine a Market Order with 
an IOC, buy ``minus,'' or sell ``plus'' instruction.
    First, to eliminate IOC instructions for Market Orders, the 
Exchange proposes to amend Rules 13(b)(2)(A) regarding Regulation NMS-
compliant IOC Orders and 13(b)(2)(B) regarding Exchange IOC Orders to 
delete the references to Market Orders in the rule text. The Exchange 
further proposes to clarify Rule 13(b)(1) regarding the Day Modifier to 
specify that Market Orders can be designated Day, which is current 
functionality. The Exchange also proposes non-substantive, technical 
changes to capitalize the term ``Order'' in Rule 13(b)(2)(A).
    Second, to eliminate tick sensitive instructions for Market Orders, 
the Exchange proposes to amend Rule 13(f)(4) to delete references to 
Market Orders and to make other non-substantive changes. Rule 
13(f)(4)(A) currently provides:

    A Market Order to sell ``plus'' is a Market Order to sell a 
stated amount of a stock provided that the price to be obtained is 
not lower than the last sale if the last sale was a ``plus'' or 
``zero plus'' tick, and is not lower than the last sale plus the 
minimum fractional change in the stock if the last sale was a 
``minus'' or ``zero minus'' tick. A Limit Order to sell ``plus'' 
would have the additional restriction of stating the lowest price at 
which it could be executed.
    The Exchange proposes to delete references to Market Orders in the 
first sentence. In addition, the Exchange proposes to delete the last 
sentence and instead incorporate the concept of that sentence into the 
prior sentence. The proposed new rule text would provide:

    An order with an instruction to sell ``plus'' will not trade at 
a price [sic] lower than the last sale if the last sale was a 
``plus'' or ``zero plus'' tick, and is not [sic] lower than the last 
sale plus the minimum fractional change in the stock if the last 
sale was a ``minus'' or ``zero minus'' tick, subject to the limit 
price of an order, if applicable.

    The Exchange proposes a similar change to Rule 13(f)(4)(C), which 
currently provides:


[[Page 33290]]


    A Market Order to buy ``minus'' is a Market Order to buy a 
stated amount of a stock provided that the price to be obtained is 
not higher than the last sale if the last sale was a ``minus'' or 
``zero minus'' tick, and is not higher than the last sale minus the 
minimum fractional change in the stock if the last sale was a 
``plus'' or ``zero plus'' tick. A Limit Order to buy ``minus'' would 
have the additional restriction of stating the highest price at 
which it could be executed.

    The proposed new rule text, which would be set forth in Rule 
13(f)(4)(B), would provide:

    An order with an instruction to buy ``minus'' will not trade at 
a price [sic] higher than the last sale if the last sale was a 
``minus'' or ``zero minus'' tick, and is not [sic] higher than the 
last sale minus the minimum fractional change in the stock if the 
last sale was a ``plus'' or ``zero plus'' tick, subject to the limit 
price of an order, if applicable.

    The Exchange further proposes to streamline the rule by deleting 
current Rule 13(f)(4)(B) and combining it with current Rule 
13(f)(4)(D), which would be re-numbered as Rule 13(f)(4)(C).\24\ 
Proposed Rule 13(f)(4)(C) would also specify which orders may be 
combined with sell ``plus'' and buy ``minus'' instructions. 
Accordingly, as proposed, Rule 13(f)(4)(C) would provide:
---------------------------------------------------------------------------

    \24\ Consistent with the proposed re-numbering of Rule 13(f)(4), 
current Rule 13(f)(4)(E) would be re-numbered as Rule 13(f)(4)(D), 
with no changes to the rule text. The Exchange proposes a non-
substantive amendment to delete the second sentence of current Rule 
13(f)(4)(E), which is a duplicate of the first sentence.

    Sell ``plus'' and buy ``minus'' instructions are available for 
Limit Orders, LOO Orders, LOC Orders, and MOC Orders. Orders with a 
buy ``minus'' or sell ``plus'' instruction that are systemically 
delivered to Exchange systems will be eligible to be automatically 
executed in accordance with, and to the extent provided by, Rules 
---------------------------------------------------------------------------
1000-1004, consistent with the order's instructions.

    As noted above, sell ``plus'' and buy ``minus'' instructions, also 
referred to as ``tick-sensitive instructions,'' are currently available 
for Market Orders, but are also available for MOO and LOO Orders \25\ 
and MOC and LOC Orders.\26\ The Exchange proposes to clarify proposed 
Rule 13(f)(4)(C) to specify which orders could include tick-sensitive 
instructions. As proposed, Limit Orders, LOO Orders, LOC Orders and MOC 
Orders would continue to be eligible to be combined with a tick-
sensitive instruction. As noted above, Market Orders would not be 
eligible to include tick-sensitive instructions, and the Exchange 
proposes to also exclude MOO Orders from including tick-sensitive 
instructions. To reflect these changes, the Exchange also proposes to 
amend Rule 13(c)(5) and Rule 115A(a)(1)(A) and (B)--Equities to delete 
references to tick-sensitive market and MOO orders. The Exchange also 
proposes a non-substantive amendment to Rule 115A(a)(1)(A)--Equities to 
capitalize the term ``Market Order.''
---------------------------------------------------------------------------

    \25\ See Rule 115A(1)(A) and (B)--Equities.
    \26\ See Rule 123C(7)--Equities.
---------------------------------------------------------------------------

* * * * *
    Because of the technology changes associated with this proposed 
rule change, the Exchange will announce by Trader Update the 
implementation date.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\27\ in general, and 
furthers the objectives of Section 6(b)(5),\28\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would simplify how Market Orders 
would function on the Exchange by harmonizing the behavior of Market 
Orders with how they operate on the Pillar trading platform on NYSE 
Arca Equities. The Exchange further believes that the proposed changes 
would protect investors and the public interest because they are 
designed to prevent a Market Order from sweeping through multiple price 
points on the Exchange book, which may result in a Market Order 
executing at prices away from the prevailing quote. As proposed, a 
Market Order would be held undisplayed at the last contra-side NBBO 
price and wait for a pricing update before being eligible to trade or 
route again, thus reducing the potential for a Market Order to sweep 
through multiple price points on the Exchange's book. Instead, by 
waiting for updates to the NBBO before becoming eligible to trade 
again, a Market Order would have additional opportunity to route to 
Away Markets before sweeping through multiple price points on the 
Exchange's book.
    The Exchange further believes that eliminating IOC and tick-
sensitive instructions for Market Orders would remove impediments to 
and perfect a national market system by simplifying functionality and 
complexity of its order types. Specifically, these are order type 
combinations that are infrequently used. For example, year-to-date, 
both the Exchange and NYSE combined have not received any MOO Orders 
with tick-sensitive instructions, have not received any Market Orders 
with sell plus instructions, and have received only 17 Market Orders 
with buy minus instructions. Similarly, year-to-date, the Exchange and 
NYSE have received only 20 Market Orders with IOC instructions. 
Accordingly, the Exchange believes that eliminating these order types 
would be consistent with the public interest and the protection of 
investors because investors will not be harmed and in fact would 
benefit from the removal of complex functionality.
    The Exchange further believes that deleting corresponding 
references in Exchange rules to deleted order types also would remove 
impediments to and perfect the mechanism of a free and open market by 
ensuring that members, regulators and the public can more easily 
navigate the Exchange's rulebook and better understand the orders types 
available for trading on the Exchange. Removing obsolete cross 
references also furthers the goal of transparency and adds clarity to 
the Exchange's rules.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change is not 
designed to address any competitive issue but would rather harmonize 
the treatment of Market Orders between the Exchange and NYSE Arca 
Equities and remove complex functionality and obsolete cross-
references, thereby reducing confusion and making the Exchange's rules 
easier to understand and navigate.

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

[[Page 33291]]

19(b)(3)(A) of the Act \29\ and Rule 19b-4(f)(6) thereunder.\30\ 
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.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78s(b)(3)(A).
    \30\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \31\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\32\ 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 Exchange believes 
that waiving the operative delay would promote the protection of 
investors and the public interest because the proposed rule change 
would reduce the potential for a Market Order to trade at prices away 
from the prevailing quote and at potentially worse prices for the 
investor. Likewise, the Exchange believes that eliminating IOC and 
tick-sensitive instructions for Market Orders, without delay, would be 
consistent with the protection of investors and the public interest 
because these instructions are rarely used and their elimination would 
simplify the Exchange's offering of order types. The Commission 
believes that the proposed rule change is consistent with the 
protection of investors and the public interest, because the proposal 
would diminish the likelihood of Market Orders trading at prices that 
would be disadvantageous to investors, and because it would simplify 
the Exchange's order types by eliminating rarely used complex order 
functionality. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\33\
---------------------------------------------------------------------------

    \31\ 17 CFR 240.19b-4(f)(6).
    \32\ 17 CFR 240.19b-4(f)(6)(iii).
    \33\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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) \34\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \34\ 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 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-2016-54 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2016-54. 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-2016-54 and should 
be submitted on or before June 15, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12240 Filed 5-24-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                  33286                          Federal Register / Vol. 81, No. 101 / Wednesday, May 25, 2016 / Notices

                                                  number should be included on the                        Securities and Exchange Commission                    systems. If a Market Order to sell has
                                                  subject line if email is used. To help the              (the ‘‘Commission’’) the proposed rule                exhausted all eligible buy interest, any
                                                  Commission process and review your                      change as described in Items I and II,                unfilled balance of the Market Order to
                                                  comments more efficiently, please use                   below, which Items have been prepared                 sell will be cancelled. Market Orders
                                                  only one method. The Commission will                    by the self-regulatory organization. The              may include an immediate-or-cancel
                                                  post all comments on the Commission’s                   Commission is publishing this notice to               (‘‘IOC’’) time-in-force modifier.5 In
                                                  Internet Web site (http://www.sec.gov/                  solicit comments on the proposed rule                 addition, a Market Order may include
                                                  rules/sro.shtml). Copies of the                         change from interested persons.                       an instruction to either buy ‘‘minus’’ or
                                                  submission, all subsequent                                                                                    sell ‘‘plus.’’ 6
                                                                                                          I. Self-Regulatory Organization’s                        The Exchange proposes to simplify
                                                  amendments, all written statements
                                                                                                          Statement of the Terms of Substance of                how Market Orders would function on
                                                  with respect to the proposed rule
                                                  change that are filed with the                          the Proposed Rule Change                              the Exchange by harmonizing the
                                                  Commission, and all written                                The Exchange proposes to amend                     behavior of Market Orders with how
                                                  communications relating to the                          Rule 13—Equities (Orders and                          they operate on the Pillar trading
                                                  proposed rule change between the                        Modifiers) and related rules regarding                platform on NYSE Arca Equities and by
                                                  Commission and any person, other than                   Market Orders. The proposed rule                      eliminating the ability to combine a
                                                  those that may be withheld from the                     change is available on the Exchange’s                 Market Order with an IOC, buy
                                                  public in accordance with the                           Web site at www.nyse.com, at the                      ‘‘minus,’’ or sell ‘‘plus’’ instruction,
                                                  provisions of 5 U.S.C. 552, will be                     principal office of the Exchange, and at              which are not available on the NYSE
                                                  available for Web site viewing and                      the Commission’s Public Reference                     Arca Equities trading platform. The
                                                  printing in the Commission’s Public                     Room.                                                 Exchange believes that eliminating these
                                                  Reference Room, 100 F Street NE.,                                                                             order type combinations would
                                                                                                          II. Self-Regulatory Organization’s
                                                  Washington, DC 20549 on official                                                                              streamline its rules and reduce
                                                                                                          Statement of the Purpose of, and
                                                  business days between the hours of                                                                            complexity among its order type
                                                                                                          Statutory Basis for, the Proposed Rule
                                                  10:00 a.m. and 3:00 p.m. Copies of the                                                                        offerings.7
                                                                                                          Change
                                                  filing also will be available for
                                                  inspection and copying at the principal                    In its filing with the Commission, the             Proposed Amendments to Market
                                                  office of the MSRB. All comments                        self-regulatory organization included                 Orders
                                                  received will be posted without change;                 statements concerning the purpose of,                    To effect the proposed changes to how
                                                  the Commission does not edit personal                   and basis for, the proposed rule change               Market Orders would operate, the
                                                  identifying information from                            and discussed any comments it received                Exchange proposes to amend Rule
                                                  submissions. You should submit only                     on the proposed rule change. The text                 13(a)(1) to provide that a Market Order
                                                  information that you wish to make                       of those statements may be examined at                that is eligible for automatic execution
                                                  available publicly. All submissions                     the places specified in Item IV below.                would be an unpriced order to buy or
                                                  should refer to File Number SR–MSRB–                    The Exchange has prepared summaries,                  sell a stated amount of a security that is
                                                  2016–06 and should be submitted on or                   set forth in sections A, B, and C below,              to be traded at the best price obtainable
                                                  before June 15, 2016.                                   of the most significant parts of such                 without trading through the NBBO. This
                                                    For the Commission, pursuant to delegated             statements.                                           proposed rule text is based on the first
                                                  authority.10                                            A. Self-Regulatory Organization’s                     sentence of NYSE Arca Equities Rule
                                                  Robert W. Errett,                                       Statement of the Purpose of, and the                  7.31P(a)(1), which provides that a
                                                  Deputy Secretary.                                       Statutory Basis for, the Proposed Rule                Market Order is an unpriced order to
                                                  [FR Doc. 2016–12238 Filed 5–24–16; 8:45 am]             Change                                                buy or sell a stated amount of a security
                                                                                                                                                                that is to be traded at the best price
                                                  BILLING CODE 8011–01–P
                                                                                                          1. Purpose                                            obtainable without trading through the
                                                                                                             The Exchange proposes to amend                     NBBO.
                                                  SECURITIES AND EXCHANGE                                 Rule 13—Equities (Orders and                             The Exchange proposes one difference
                                                  COMMISSION                                              Modifiers) (‘‘Rule 13’’) and related rules            for the NYSE MKT version of the rule,
                                                                                                          relating to Market Orders. The proposed               which is to provide that the proposed
                                                  [Release No. 34–77859; File No. SR–                                                                           definition is intended only for orders
                                                  NYSEMKT–2016–54]
                                                                                                          changes are designed to simplify the
                                                                                                          Exchange’s offering of order types by                 eligible for automatic execution. Rule
                                                  Self-Regulatory Organizations; NYSE                     harmonizing the behavior of Market                    1000(a)—Equities provides that an
                                                  MKT LLC; Notice of Filing and                           Orders with how similar orders operate                automatically executing order shall
                                                  Immediate Effectiveness of Proposed                     on NYSE Arca Equities, Inc. (‘‘NYSE                   receive an immediate, automatic
                                                  Rule Change Amending Rule 13—                           Arca Equities’’), the Exchange’s                      execution against orders reflected in the
                                                  Equities and Related Rules Regarding                    affiliated equities marketplace, and by               Exchange published quotation and
                                                  Market Orders                                           eliminating specified combinations of                 orders in the Exchange book.8 However,
                                                                                                          orders and modifiers.4
                                                                                                                                                                  5 See Rule 13(b)(3).
                                                  May 19, 2016.
                                                     Pursuant to Section 19(b)(1) 1 of the                Overview                                                6 See Rule 13(f)(A) and (C).
                                                                                                                                                                  7 See, e.g., Mary Jo White, Chair, Securities and
                                                  Securities Exchange Act of 1934 (the                       Currently, Market Orders are defined               Exchange Commission, Speech at the Sandler
                                                  ‘‘Act’’) 2 and Rule 19b–4 thereunder,3                  in Rule 13(a)(1) as an order to buy or                O’Neill & Partners, L.P. Global Exchange and
mstockstill on DSK3G9T082PROD with NOTICES




                                                  notice is hereby given that on May 16,                  sell a stated amount of a security at the             Brokerage Conference (June 5, 2014) (available at
                                                  2016, NYSE MKT LLC (the ‘‘Exchange’’                    most advantageous price obtainable                    www.sec.gov/News/Speech/Detail/Speech/
                                                  or ‘‘NYSE MKT’’) filed with the                                                                               1370542004312#.U5HI-fmwJiw).
                                                                                                          after the order is represented in the                   8 Because Market Orders are eligible for automatic
                                                                                                          Trading Crowd or routed to Exchange                   execution, the Exchange proposes a non-substantive
                                                    10 17 CFR 200.30–3(a)(12).                                                                                  amendment to change the title of Rule 1000—
                                                    1 15 U.S.C. 78s(b)(1).                                  4 NYSE Arca Equities is a wholly-owned              Equities from ‘‘Automatic Execution of Limit
                                                    2 15 U.S.C. 78a.
                                                                                                          subsidiary of NYSE Arca, Inc., which is a national    Orders Against Orders Reflected In Exchange
                                                    3 17 CFR 240.19b–4.                                   securities exchange.                                  Published Quotation’’ to ‘‘Automatic Executions.’’



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                                                                              Federal Register / Vol. 81, No. 101 / Wednesday, May 25, 2016 / Notices                                                      33287

                                                  automatic executions are not available if               price or display price of the order. The              reached. If the NBBO becomes locked or
                                                  trading in a security has been halted or                Exchange does not propose to include                  crossed either on arrival or while the order
                                                  if a block-sized transaction as defined in              the last clause of the NYSE Arca                      is held undisplayed, the Market Order to buy
                                                                                                                                                                (sell) will be assigned a working price of the
                                                  Rule 127.10—Equities involves orders                    Equities definition because the                       NBB (NBO).
                                                  on the Exchange book that is being                      Exchange is proposing the definition of
                                                  reported manually.9 Because the                         working price only for purposes of                     This proposed rule text is based on
                                                  proposed new functionality relating to                  Market Orders, which do not include a                 NYSE Arca Equities Rule 7.31P(a)(1)(A),
                                                  Market Orders would not be available                    limit price and which are not displayed.              which provides:
                                                  for these limited circumstances, the                      • Proposed Rule 13(a)(1)(A)(iv) would                 On arrival, a Market Order to buy (sell) is
                                                  Exchange proposes to keep the current                   define the term ‘‘MPV’’ to mean the                   assigned a working price of the NBO (NBB)
                                                  definition of Market Orders as proposed                 minimum price variation for quoting                   and will trade with all sell (buy) orders on
                                                  subsection (D) of Rule 13(a)(1) and                     and entry of orders as specified in                   the NYSE Arca Book priced at or below
                                                                                                          Supplementary Material .10 to Rule                    (above) the NBO (NBB) before routing to the
                                                  specify that this subsection of the rule                                                                      NBO (NBB) on an Away Market. The quantity
                                                  is only for Market Orders that are not                  62—Equities. The Exchange uses the                    of a Market Order to buy (sell) not traded or
                                                  eligible for automatic execution.                       same pricing increments as NYSE Arca                  routed will remain undisplayed on the NYSE
                                                     Proposed Rule 13(a)(1)(A) would                      Equities.10                                           Arca Book at a working price of the NBO
                                                  define certain terms for purposes of                      Proposed Rule 13(a)(1)(B) would                     (NBB) and be eligible to trade with incoming
                                                  Market Orders. Specifically, because the                specify how a Market Order would                      sell (buy) orders at that price. When the
                                                  Exchange is proposing to adopt rule text                operate during continuous trading. The                updated NBO (NBB) is displayed, the Market
                                                  based on NYSE Arca Equities Rule                        Exchange would specify how Market                     Order to buy (sell) will be assigned a new
                                                  7.31P(a)(1), which uses terms defined in                Orders would participate in auctions in               working price of the updated NBO (NBB) and
                                                                                                                                                                will trade with all sell (buy) orders on the
                                                  the NYSE Arca Equities rules, the                       proposed Rule 13(a)(1)(C), described in
                                                                                                                                                                NYSE Arca Book priced at or below (above)
                                                  Exchange proposes to add the following                  greater detail below.                                 the updated NBO (NBB) before routing to the
                                                  defined terms to Rule 13:                                 As proposed in Rule 13(a)(1)(B)(i), a               updated NBO (NBB) on an Away Market.
                                                     • Proposed Rule 13(a)(1)(A)(i) would                 Market Order would be rejected on                     Such assessment will continue at each new
                                                  define the term ‘‘Away Market, ’’ for                   arrival or cancelled if resting if there is           contra-side NBBO until the order is filled or
                                                  purposes of Market Orders, to mean any                  no contra-side NBBO or if the best                    a Trading Collar is reached. If the NBBO
                                                  exchange with which the Exchange                        protected quotations are or become                    becomes locked or crossed while the order if
                                                  maintains an electronic linkage and                     crossed. This proposed rule text is based             held undisplayed, the Market Order to buy
                                                                                                          on the second sentence of NYSE Arca                   (sell) will be assigned a working price of the
                                                  which provides instantaneous responses
                                                                                                                                                                NBB (NBO).
                                                  to orders routed from the Exchange.                     Equities Rule 7.31P(a)(1), which
                                                  This proposed definition is based on                    provides that a Market Order must be                     The Exchange proposes a non-
                                                  NYSE Arca Equities Rule 1.1(ffP), which                 designated Day and will be rejected on                substantive difference to use the term
                                                  defines the term ‘‘Away Market’’ to                     arrival or cancelled if resting if there is           ‘‘Exchange’’ instead of ‘‘NYSE Arca
                                                  mean any exchange, alternative trading                  no contra-side NBBO. Because of                       Book’’ in proposed Rule 13(a)(1)(B)(ii).
                                                  system (‘‘ATS’’) or other broker-dealer                 technology differences between how the                The Exchange also proposes a change
                                                  (1) with which the NYSE Arca                            Exchange operates and how NYSE Arca                   from the NYSE Arca Equities Rule to
                                                  Marketplace maintains an electronic                     Equities operates on the Pillar trading               specify that a Market Order would be
                                                  linkage and (2) which provides                          platform, the Exchange proposes that if               priced to the same-side NBBO when the
                                                  instantaneous responses to order routed                 protected quotations are or become                    NBBO is crossed both on arrival and
                                                  from the NYSE Arca Marketplace.                         crossed, the Exchange would reject                    when resting. To this point, as described
                                                  Because the Exchange does not route to                  newly arriving Market Orders or cancel                above, if the protected quotations are
                                                  any ATSs or other broker-dealers for                    resting unexecuted Market Orders.                     crossed, a resting Market Order would
                                                  execution, the Exchange would not                         Proposed Rule 13(a)(1)(B)(ii) would                 be cancelled, which differs from current
                                                  include a reference to ATSs or broker-                  provide that:                                         NYSE Arca Equities behavior. However,
                                                  dealers in its definition of Away Market.                  On arrival, a Market Order to buy (sell) is        if the NBBO is crossed, but the best
                                                     • Proposed Rule 13(a)(1)(A)(ii) would                assigned a working price of the NBO (NBB)             protected quotations are not crossed, the
                                                  define the term ‘‘NBBO’’ to mean the                    and will trade with all sell (buy) orders on          Exchange would price the Market Order
                                                  national best bid or offer and the terms                the Exchange priced at or below (above) the           based on the same-side NBBO, which is
                                                  ‘‘NBB’’ to mean the national best bid                   NBO (NBB) before routing to the NBO (NBB)             how Market Orders operate on NYSE
                                                  and ‘‘NBO’’ to mean the national best                   on an Away Market. The quantity of a Market           Arca Equities.11 Finally, the Exchange
                                                                                                          Order to buy (sell) not traded or routed will         proposes a change from the NYSE Arca
                                                  offer. These proposed definitions are                   remain undisplayed on the Exchange at a
                                                  identical to those definitions in NYSE                                                                        Equities rule to provide that a Market
                                                                                                          working price of the NBO (NBB) and be
                                                  Arca Equities Rule 1.1(dd).                             eligible to trade with incoming sell (buy)            Order will be assigned a new working
                                                     • Proposed Rule 13(a)(1)(A)(iii)                     orders at that price. When the NBO (NBB) is           price when the NBBO is updated, and
                                                  would define the term ‘‘working price’’                 updated, the Market Order to buy (sell) will          not when an updated NBBO is
                                                  to mean the price at which an order is                  be assigned a new working price of the                displayed. The proposed Exchange
                                                  eligible to trade at any given time. This               updated NBO (NBB) and will trade with all
                                                  proposed definition is based on NYSE                    sell (buy) orders on the Exchange priced at             11 The NBBO may differ from the best protected

                                                  Arca Equities Rule 7.36P(a)(3), which                   or below (above) the updated NBO (NBB)                quotations (‘‘PBBO’’) because the NBBO includes
                                                                                                          before routing to the updated NBO (NBB) on            manual quotations, which are defined as any
                                                  defines the term ‘‘working price’’ to                                                                         quotation other than an automated quotation. 17
mstockstill on DSK3G9T082PROD with NOTICES




                                                                                                          an Away Market. Such assessment will
                                                  mean the price at which an order is                     continue at each new contra-side NBBO until           CFR 242.600(b)(37). By contrast, a protected
                                                  eligible to trade at any given time,                                                                          quotation is an automated quotation that is the best
                                                                                                          the order is filled or a Trading Collar is            bid or offer of a national securities exchange. 17
                                                  which may be different from the limit                                                                         CFR 242.600(b)(57)(iii). In addition, when the
                                                                                                            10 See NYSE Arca Equities Rule 7.6 (defining        Exchange routes interest to protected quotations, it
                                                  The proposed amendment aligns the title of Rule         minimum price variation as $0.01, with the            adjusts the PBBO, but does not adjust the NBBO.
                                                  1000—Equities with New York Stock Exchange LLC          exception of securities that are priced less than     See Securities Exchange Act Release No. 74408
                                                  (‘‘NYSE’’) Rule 1000.                                   $1.00, for which the MPV for quoting and entry is     (March 2, 2015), 80 FR 12225 (March 6, 2015) (SR–
                                                     9 See Rule 1000(a)(i)–(ii)—Equities.                 $0.0001).                                             NYSEMKT–2015–11).



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                                                  33288                       Federal Register / Vol. 81, No. 101 / Wednesday, May 25, 2016 / Notices

                                                  functionality is identical to that of                   pause or trading suspension, have not                 in Rule 440B(d)—Equities, a short sale
                                                  NYSE Arca Equities, but the Exchange                    yet traded, would continue to                         Market Order re-priced to a Permitted
                                                  believes its proposed rule language                     participate in an auction as Market                   Price, as defined in Rule 440B(e)—
                                                  clarifies that it would incorporate                     Orders currently do and would continue                Equities, would be made available to the
                                                  updates to the NBBO based on                            to be included in the information made                DMM as provided for in Rules 104(a)(2)
                                                  executions at the Exchange that have                    available to DMMs and the public no                   and (3)—Equities and would be
                                                  not yet been displayed.                                 differently than today. Accordingly, as               included in Order Imbalance
                                                    Proposed Rule 13(a)(1)(B)(iii) would                  proposed in Rule 13(a)(1)(C)(i), a Market             Information and allocated in the
                                                  provide that unexecuted Market Orders                   Order that was entered before the                     applicable auction as a Limit Order.
                                                  that are held undisplayed in Exchange                   opening of trading, or was entered                    This proposed behavior would be
                                                  systems would not be available to the                   before or during a halt, pause or                     applicable for any auction.18
                                                  DMM either as part of aggregated                        suspension in trading, would be made                     The Exchange also proposes to amend
                                                  interest at a price point or in                         available to the DMM as provided for in               Rule 72—Equities (‘‘Rule 72’’) to specify
                                                  disaggregated form and would not                        Rule 104(a)(2) and (3)—Equities and                   how an unexecuted Market Order would
                                                  participate in intra-day manual                         would be included in Order Imbalance                  be allocated. First, the Exchange
                                                  executions. The Exchange proposes this                  Information 15 and allocated in the                   proposes to amend Rule 72(c)(i), which
                                                  rule text to reflect the Exchange’s                     applicable auction as a Market Order.                 currently provides that an automatically
                                                  unique trading model, which, unlike                     This would include all opening and                    executing order will trade first with
                                                  NYSE Arca Equities, includes a DMM                      reopening auctions,16 and closing                     displayable bids (offers) and if there is
                                                  assigned to each security that trades on                auctions that follow a halt, pause or                 insufficient displayable volume to fill
                                                  the Exchange.12 Unless otherwise                        suspension in trading.17 In addition, if              the order, will trade next with non-
                                                  specified, DMMs have access to                          a Market Order arrives during                         displayable interest. The Exchange
                                                  specified order information while on the                continuous trading, is held undisplayed               proposes to amend this rule to provide
                                                  Trading Floor.13 Because unexecuted                     and assigned a working price, and then                that an automatically executing order
                                                  Market Orders would be held                             that security enters a halt or pause, such
                                                  undisplayed at the contra-side NBBO,                                                                          would trade first with any unexecuted
                                                                                                          Market Order will revert and be                       Market Orders, which would be
                                                  the Exchange proposes to treat such                     considered an unpriced Market Order
                                                  unexecuted orders similarly to other                                                                          allocated in time priority, and then with
                                                                                                          for purposes of allocation in the                     displayable bids (offers).
                                                  undisplayed orders and would not make                   reopening auction.
                                                  information about them available to the                    By contrast, because a Market Order                   Second, the Exchange proposes to
                                                  DMM during intra-day trading.                           entered during continuous trading that                amend Rule 72(c)(iii), which currently
                                                  Accordingly, proposed Rule                              remains unexecuted when the Exchange                  describes how in any execution at the
                                                  13(a)(1)(B)(iii) is based on Rule                       transitions to the closing transaction                Exchange BBO, a participant who has
                                                  70(f)(ii)—Equities regarding the                        would have been assigned a working                    established priority under Rule 72(a)
                                                  information available to a DMM                          price, the Exchange proposes to handle                will receive fifteen percent of the
                                                  regarding a Non-Display Reserve                         such unexecuted Market Orders more                    volume of such executed amount or a
                                                  e-Quote that has been designated to be                  similarly to a Limit Order in the closing             minimum of one round lot, whichever
                                                  excluded from the DMM. In addition,                     transaction. Accordingly, as proposed in              is greater, until such setting interest has
                                                  because information about unexecuted                    Rule 13(a)(1)(C)(ii), a Market Order that             received a complete execution of its
                                                  Market Orders would not be available to                 was entered during continuous trading                 eligible priority interest. The Exchange
                                                  DMMs when the Exchange is open for                      and remains unexecuted for the close                  proposes to amend this rule text to add
                                                  continuous trading, the Exchange                        would be made available to the DMM as                 that such priority allocation would be
                                                  further proposes to provide that such                   provided for in Rule 104(a)(3)—Equities               after any unexecuted Market Orders
                                                  orders would not participate in intra-                  and would be included in Order                        have been satisfied.
                                                  day manual executions, i.e., executions                 Imbalance Information and allocated in                   Both of these proposed amendments
                                                  facilitated by the DMM while on the                     the closing transaction as a Limit Order              to Rule 72(c) are based on NYSE Arca
                                                  Trading Floor.14                                        with its limit price being the last                   Equities Rule 7.31P(a)(1), which
                                                    Proposed Rule 13(a)(1)(C) would                       working price assigned to the                         provides that unexecuted Market Orders
                                                  specify how Market Orders would                         unexecuted Market Order.                              are ranked Priority 1—Market Orders.
                                                  participate in auctions. Because                           The Exchange proposes to address                   As defined in NYSE Arca Equities Rule
                                                  auctions on the Exchange are facilitated                how short sale Market Orders would be                 7.36P(e), at each price point,
                                                  by DMMs, the Exchange proposes that                     allocated in an auction in proposed Rule              unexecuted Market Orders that are
                                                  Market Orders that have not been                        13(a)(1)(C)(iii). Similar to unexecuted               ranked Priority 1—Market Orders have
                                                  assigned a working price based on the                   Market Orders that would participate in               priority over all other same-side orders
                                                  contra-side NBBO or, during a halt,                     the closing transaction as a Limit Order,             with the same working price. The
                                                     12 See Rule 2(i)—Equities (defining the term
                                                                                                          during a Short Sale Period, as defined                Exchange proposes to provide similar
                                                  ‘‘Designated Market Maker’’ or ‘‘DMM’’ to mean an
                                                                                                          in Rule 440B(d), a short sale Market                  priority ranking of unexecuted Market
                                                  individual member, officer, partner, employee or        Order would also participate in any                   Orders, which would harmonize how
                                                  associated person of a DMM unit who is approved         auction as a Limit Order, but with the                Market Orders behave on the two
                                                  by the Exchange to act in the capacity of a DMM).       limit price being the last Permitted Price            markets.
                                                     13 See Rule 104(j)(ii)—Equities.
                                                                                                          before the applicable transaction.
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                                                     14 By contrast, the Exchange proposes that the

                                                  participation of Market Orders would not change         Accordingly, proposed Rule                              18 This proposed behavior for short sale Market

                                                  for auctions on the Exchange, including that            13(a)(1)(C)(iii) would provide that                   Orders on the Exchange is based on Commentary
                                                  availability of Market Orders would be made known       during a Short Sale Period, as defined                .01(a) to NYSE Arca Equities Rule 7.35P, which
                                                  to the DMM. See proposed Rule 13(a)(1)(C)(ii).                                                                provides that for purposes of pricing an auction and
                                                  DMMs are responsible for facilitating openings and                                                            ranking orders for allocation in an auction, sell
                                                                                                            15 See Rules 15(c)—Equities and 123C(6)—
                                                  reopenings and the close of trading. To comply with                                                           short Market Orders that are adjusted to a Permitted
                                                  this requirement, the Exchange makes available to       Equities.                                             Price (as defined in Rule 7.16P(f)) will be processed
                                                                                                            16 See Rule 115A(a)(i)—Equities.
                                                  DMMs and DMM unit algorithms aggregate order                                                                  as Limit Orders ranked Priority 2—Display Orders
                                                  information. See Rule 104(a)(2) and (3)—Equities.         17 See Rule 123C(7)—Equities.                       and will not be included in the Market Imbalance.



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                                                                              Federal Register / Vol. 81, No. 101 / Wednesday, May 25, 2016 / Notices                                                     33289

                                                     To further harmonize the behavior of                 Permitted Price as the NBB moves both                 list of interest that would be included in
                                                  Market Orders on the Exchange with the                  up and down.                                          the term ‘‘best-priced sell interest’’ and
                                                  behavior of Market Orders on NYSE                          The Exchange also proposes to amend                ‘‘best-priced buy interest.’’ Accordingly,
                                                  Arca Equities, the Exchange proposes to                 how Trading Collars would operate for                 if there is an unexecuted Market Order
                                                  amend Rule 80C(a)(5)(A)—Equities                        Market Orders. Because of technology                  being held undisplayed at a price, an
                                                  regarding how Market Orders would be                    differences between the Exchange and                  incoming opposite-side Limit Order
                                                  handled if they cannot be fully executed                NYSE Arca Equities, the Exchange                      designated ALO would be re-priced and
                                                  at or within the Limit Up-Limit Down                    proposes to keep the current behavior                 displayed one MPV away from the
                                                  Price Bands.19 Currently, the Exchange                  for Trading Collars, which use the                    working price of such unexecuted
                                                  would display the unexecuted portion                    NBBO as a reference price, rather than                Market Order.
                                                  of a buy (sell) market order at the Upper               adopt the NYSE Arca Equities manner
                                                                                                          of determining Trading Collars, which                 Proposed Deletions
                                                  (Lower) Price Band if it cannot be fully
                                                  executed at or within the Price Bands.                  use the consolidated last sale price as                  The Exchange proposes to reduce
                                                  The Exchange proposes to amend this                     the reference price. Currently, Rule                  complexity by reducing order type
                                                  Rule to provide that the Exchange                       1000(c)—Equities provides that Trading                combinations that are infrequently used.
                                                  would cancel the unexecuted portion of                  Collars are applicable to incoming                    As proposed, the Exchange proposes to
                                                  the buy (sell) market order if it cannot                market orders. Because as proposed,                   eliminate the functionality to combine a
                                                  be fully executed at or within the Price                Market Orders would be re-evaluated for               Market Order with an IOC, buy
                                                  Bands and would notify the member                       an execution or routing opportunity                   ‘‘minus,’’ or sell ‘‘plus’’ instruction.
                                                  organization of the reason for such                     with each update to the NBBO, the                        First, to eliminate IOC instructions for
                                                  cancellation. This proposed rule text is                Exchange proposes to apply the Trading                Market Orders, the Exchange proposes
                                                  based on NYSE Arca Equities Rule                        Collar evaluation with each evaluation                to amend Rules 13(b)(2)(A) regarding
                                                  7.11P(a)(5)(A), which provides that any                 to trade or route an unexecuted Market                Regulation NMS-compliant IOC Orders
                                                  untraded quantity of Market Orders that                 Order. Accordingly, the Exchange                      and 13(b)(2)(B) regarding Exchange IOC
                                                  cannot be traded at prices at or within                 proposes to amend Rule 1000(c)—                       Orders to delete the references to Market
                                                  the Price Bands will be cancelled and                   Equities to provide that an unexecuted                Orders in the rule text. The Exchange
                                                  the ETP Holder will be notified of the                  Market Order would be subject to a                    further proposes to clarify Rule 13(b)(1)
                                                  reason for such cancellation. In                        Trading Collar upon each evaluation to                regarding the Day Modifier to specify
                                                  addition, because the Exchange does not                 trade or route such order.22                          that Market Orders can be designated
                                                  offer Market Pegging Interest, the                         Finally, the Exchange proposes to                  Day, which is current functionality. The
                                                  Exchange proposes a non-substantive                     amend Supplementary Material .10 to                   Exchange also proposes non-
                                                  change to delete the text in Rule                       Rule 13 to specify how unexecuted                     substantive, technical changes to
                                                  80C(a)(5)(E)—Equities relating to Market                Market Orders would be included in the                capitalize the term ‘‘Order’’ in Rule
                                                  Pegging Interest and replace it with the                definitions of ‘‘best-priced sell interest’’          13(b)(2)(A).
                                                  text ‘‘Reserved.’’ 20                                   and ‘‘best-priced buy interest.’’ These                  Second, to eliminate tick sensitive
                                                     In addition, the Exchange proposes to                terms are used to describe how a Limit                instructions for Market Orders, the
                                                  harmonize the behavior of sell short                    Order designated with an Add Liquidity                Exchange proposes to amend Rule
                                                  Market Orders during a Short Sale                       Only (‘‘ALO’’) Modifier will be re-priced             13(f)(4) to delete references to Market
                                                  Period with how such orders are                         when such Limit Order, at the time of                 Orders and to make other non-
                                                  handled on NYSE Arca Equities.                          entry, is marketable against Exchange                 substantive changes. Rule 13(f)(4)(A)
                                                  Currently, Rule 440B(e)—Equities                        interest or would lock or cross a                     currently provides:
                                                  provides that short sale market orders                  protected quotation.23 Specifically, a                   A Market Order to sell ‘‘plus’’ is a Market
                                                  will be re-priced by Exchange systems                   Limit Order designated ALO that, at the               Order to sell a stated amount of a stock
                                                  one minimum price increment above                       time of entry, is marketable against                  provided that the price to be obtained is not
                                                  the current national best bid (‘‘Permitted              Exchange interest will be re-priced and               lower than the last sale if the last sale was
                                                  Price.’’) Because the Exchange proposes                                                                       a ‘‘plus’’ or ‘‘zero plus’’ tick, and is not lower
                                                                                                          displayed one MPV below the best-                     than the last sale plus the minimum
                                                  that unexecuted Market Orders would                     priced sell interest (for bids) or above              fractional change in the stock if the last sale
                                                  not be displayed, the Exchange proposes                 the best-priced buy interest (for offers).            was a ‘‘minus’’ or ‘‘zero minus’’ tick. A Limit
                                                  to amend Rule 440B(e)—Equities to                       Supplementary Material .10 to Rule 13                 Order to sell ‘‘plus’’ would have the
                                                  provide that any unexecuted or any                      provides that the term best-priced sell               additional restriction of stating the lowest
                                                  unexecuted portion of a short sale                      (buy) interest refers to the lowest-priced            price at which it could be executed.
                                                  Market Order re-priced to a Permitted                   sell (highest-priced buy) interest against              The Exchange proposes to delete
                                                  Price would rest on the Exchange’s Book                 which incoming buy (sell) interest                    references to Market Orders in the first
                                                  and be non-displayed and that they                      would be required to execute with and/                sentence. In addition, the Exchange
                                                  would be re-priced upward to a                          or route to, including Exchange                       proposes to delete the last sentence and
                                                  Permitted Price to correspond with a                    displayed offers, Non-Display Reserve                 instead incorporate the concept of that
                                                  rise in the national best bid.21 This                   Orders, Non-Display Reserve e-Quotes,                 sentence into the prior sentence. The
                                                  proposed rule change is based on NYSE                   odd-lot sized sell (buy) interest, and                proposed new rule text would provide:
                                                  Arca Equities Rule 7.16P(f)(5)(C), which                protected offers (bids) on away markets,                 An order with an instruction to sell ‘‘plus’’
                                                  provides that Market Orders will have a                 but does not include non-displayed sell               will not trade at a price [sic] lower than the
                                                  working price adjusted to a Permitted                   (buy) interest that is priced based on the            last sale if the last sale was a ‘‘plus’’ or ‘‘zero
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                                                  Price and will continuously adjust to a                 PBBO. The Exchange proposes to amend                  plus’’ tick, and is not [sic] lower than the last
                                                                                                                                                                sale plus the minimum fractional change in
                                                    19 See
                                                                                                          Supplementary Material .10 to Rule 13                 the stock if the last sale was a ‘‘minus’’ or
                                                           Rule 80C—Equities.
                                                    20 The Exchange also proposes a non-substantive
                                                                                                          to add unexecuted Market Orders to the                ‘‘zero minus’’ tick, subject to the limit price
                                                  amendment to Rule 80C(e)(5)(A)—Equities to                                                                    of an order, if applicable.
                                                  capitalize the term ‘‘Market Order.’’                     22 The Exchange also proposes a non-substantive

                                                    21 The Exchange also proposes a non-substantive       amendment to Rule 1000(c)—Equities to capitalize        The Exchange proposes a similar
                                                  amendment to Rule 440B(e)—Equities to capitalize        the terms ‘‘Market Order’’ and ‘‘Limit Order.’’       change to Rule 13(f)(4)(C), which
                                                  the term ‘‘Market Order.’’                                23 See Rule 13(e)(1)(B).                            currently provides:


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                                                  33290                        Federal Register / Vol. 81, No. 101 / Wednesday, May 25, 2016 / Notices

                                                     A Market Order to buy ‘‘minus’’ is a Market          changes, the Exchange also proposes to                    The Exchange further believes that
                                                  Order to buy a stated amount of a stock                 amend Rule 13(c)(5) and Rule                           eliminating IOC and tick-sensitive
                                                  provided that the price to be obtained is not           115A(a)(1)(A) and (B)—Equities to                      instructions for Market Orders would
                                                  higher than the last sale if the last sale was                                                                 remove impediments to and perfect a
                                                                                                          delete references to tick-sensitive
                                                  a ‘‘minus’’ or ‘‘zero minus’’ tick, and is not
                                                  higher than the last sale minus the minimum             market and MOO orders. The Exchange                    national market system by simplifying
                                                  fractional change in the stock if the last sale         also proposes a non-substantive                        functionality and complexity of its order
                                                  was a ‘‘plus’’ or ‘‘zero plus’’ tick. A Limit           amendment to Rule 115A(a)(1)(A)—                       types. Specifically, these are order type
                                                  Order to buy ‘‘minus’’ would have the                   Equities to capitalize the term ‘‘Market               combinations that are infrequently used.
                                                  additional restriction of stating the highest           Order.’’                                               For example, year-to-date, both the
                                                  price at which it could be executed.                                                                           Exchange and NYSE combined have not
                                                                                                          *     *     *    *      *
                                                   The proposed new rule text, which                        Because of the technology changes                    received any MOO Orders with tick-
                                                  would be set forth in Rule 13(f)(4)(B),                 associated with this proposed rule                     sensitive instructions, have not received
                                                  would provide:                                          change, the Exchange will announce by                  any Market Orders with sell plus
                                                                                                          Trader Update the implementation date.                 instructions, and have received only 17
                                                     An order with an instruction to buy
                                                  ‘‘minus’’ will not trade at a price [sic] higher
                                                                                                                                                                 Market Orders with buy minus
                                                                                                          2. Statutory Basis                                     instructions. Similarly, year-to-date, the
                                                  than the last sale if the last sale was a
                                                  ‘‘minus’’ or ‘‘zero minus’’ tick, and is not               The proposed rule change is                         Exchange and NYSE have received only
                                                  [sic] higher than the last sale minus the               consistent with Section 6(b) of the                    20 Market Orders with IOC instructions.
                                                  minimum fractional change in the stock if the           Securities Exchange Act of 1934 (the                   Accordingly, the Exchange believes that
                                                  last sale was a ‘‘plus’’ or ‘‘zero plus’’ tick,                                                                eliminating these order types would be
                                                                                                          ‘‘Act’’),27 in general, and furthers the
                                                  subject to the limit price of an order, if                                                                     consistent with the public interest and
                                                  applicable.                                             objectives of Section 6(b)(5),28 in
                                                                                                          particular, because it is designed to                  the protection of investors because
                                                     The Exchange further proposes to                     prevent fraudulent and manipulative                    investors will not be harmed and in fact
                                                  streamline the rule by deleting current                 acts and practices, to promote just and                would benefit from the removal of
                                                  Rule 13(f)(4)(B) and combining it with                  equitable principles of trade, to foster               complex functionality.
                                                  current Rule 13(f)(4)(D), which would                   cooperation and coordination with                         The Exchange further believes that
                                                  be re-numbered as Rule 13(f)(4)(C).24                   persons engaged in facilitating                        deleting corresponding references in
                                                  Proposed Rule 13(f)(4)(C) would also                    transactions in securities, to remove                  Exchange rules to deleted order types
                                                  specify which orders may be combined                    impediments to, and perfect the                        also would remove impediments to and
                                                  with sell ‘‘plus’’ and buy ‘‘minus’’                    mechanism of, a free and open market                   perfect the mechanism of a free and
                                                  instructions. Accordingly, as proposed,                 and a national market system and, in                   open market by ensuring that members,
                                                  Rule 13(f)(4)(C) would provide:                         general, to protect investors and the                  regulators and the public can more
                                                    Sell ‘‘plus’’ and buy ‘‘minus’’ instructions          public interest.                                       easily navigate the Exchange’s rulebook
                                                  are available for Limit Orders, LOO Orders,                The Exchange believes the proposed                  and better understand the orders types
                                                  LOC Orders, and MOC Orders. Orders with                 rule change would remove impediments                   available for trading on the Exchange.
                                                  a buy ‘‘minus’’ or sell ‘‘plus’’ instruction that       to and perfect the mechanism of a free                 Removing obsolete cross references also
                                                  are systemically delivered to Exchange
                                                                                                          and open market and a national market                  furthers the goal of transparency and
                                                  systems will be eligible to be automatically                                                                   adds clarity to the Exchange’s rules.
                                                  executed in accordance with, and to the                 system because it would simplify how
                                                  extent provided by, Rules 1000–1004,                    Market Orders would function on the                    B. Self-Regulatory Organization’s
                                                  consistent with the order’s instructions.               Exchange by harmonizing the behavior                   Statement on Burden on Competition
                                                                                                          of Market Orders with how they operate                   The Exchange does not believe that
                                                     As noted above, sell ‘‘plus’’ and buy
                                                                                                          on the Pillar trading platform on NYSE                 the proposed rule change will impose
                                                  ‘‘minus’’ instructions, also referred to as
                                                                                                          Arca Equities. The Exchange further                    any burden on competition that is not
                                                  ‘‘tick-sensitive instructions,’’ are
                                                                                                          believes that the proposed changes                     necessary or appropriate in furtherance
                                                  currently available for Market Orders,
                                                                                                          would protect investors and the public                 of the purposes of the Act. The
                                                  but are also available for MOO and LOO
                                                                                                          interest because they are designed to                  proposed change is not designed to
                                                  Orders 25 and MOC and LOC Orders.26
                                                                                                          prevent a Market Order from sweeping                   address any competitive issue but
                                                  The Exchange proposes to clarify
                                                                                                          through multiple price points on the                   would rather harmonize the treatment of
                                                  proposed Rule 13(f)(4)(C) to specify
                                                                                                          Exchange book, which may result in a                   Market Orders between the Exchange
                                                  which orders could include tick-
                                                                                                          Market Order executing at prices away                  and NYSE Arca Equities and remove
                                                  sensitive instructions. As proposed,
                                                                                                          from the prevailing quote. As proposed,                complex functionality and obsolete
                                                  Limit Orders, LOO Orders, LOC Orders
                                                                                                          a Market Order would be held                           cross-references, thereby reducing
                                                  and MOC Orders would continue to be
                                                                                                          undisplayed at the last contra-side                    confusion and making the Exchange’s
                                                  eligible to be combined with a tick-
                                                                                                          NBBO price and wait for a pricing                      rules easier to understand and navigate.
                                                  sensitive instruction. As noted above,
                                                                                                          update before being eligible to trade or
                                                  Market Orders would not be eligible to                                                                         C. Self-Regulatory Organization’s
                                                                                                          route again, thus reducing the potential
                                                  include tick-sensitive instructions, and                                                                       Statement on Comments on the
                                                                                                          for a Market Order to sweep through
                                                  the Exchange proposes to also exclude                                                                          Proposed Rule Change Received From
                                                                                                          multiple price points on the Exchange’s
                                                  MOO Orders from including tick-                                                                                Members, Participants, or Others
                                                                                                          book. Instead, by waiting for updates to
                                                  sensitive instructions. To reflect these
                                                                                                          the NBBO before becoming eligible to                     No written comments were solicited
                                                                                                          trade again, a Market Order would have
mstockstill on DSK3G9T082PROD with NOTICES




                                                    24 Consistent with the proposed re-numbering of                                                              or received with respect to the proposed
                                                  Rule 13(f)(4), current Rule 13(f)(4)(E) would be re-    additional opportunity to route to Away                rule change.
                                                  numbered as Rule 13(f)(4)(D), with no changes to        Markets before sweeping through
                                                  the rule text. The Exchange proposes a non-             multiple price points on the Exchange’s                III. Date of Effectiveness of the
                                                  substantive amendment to delete the second
                                                                                                          book.                                                  Proposed Rule Change and Timing for
                                                  sentence of current Rule 13(f)(4)(E), which is a                                                               Commission Action
                                                  duplicate of the first sentence.
                                                    25 See Rule 115A(1)(A) and (B)—Equities.               27 15   U.S.C. 78f(b).                                   The Exchange has filed the proposed
                                                    26 See Rule 123C(7)—Equities.                          28 15   U.S.C. 78f(b)(5).                             rule change pursuant to Section


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                                                                                Federal Register / Vol. 81, No. 101 / Wednesday, May 25, 2016 / Notices                                                     33291

                                                  19(b)(3)(A) of the Act 29 and Rule 19b–                   designates the proposal operative upon                  Reference Room, 100 F Street NE.,
                                                  4(f)(6) thereunder.30 Because the                         filing.33                                               Washington, DC 20549 on official
                                                  proposed rule change does not: (i)                           At any time within 60 days of the                    business days between the hours of
                                                  Significantly affect the protection of                    filing of such proposed rule change, the                10:00 a.m. and 3:00 p.m. Copies of the
                                                  investors or the public interest; (ii)                    Commission summarily may                                filing also will be available for
                                                  impose any significant burden on                          temporarily suspend such rule change if                 inspection and copying at the principal
                                                  competition; and (iii) become operative                   it appears to the Commission that such                  office of the Exchange. All comments
                                                  prior to 30 days from the date on which                   action is necessary or appropriate in the               received will be posted without change;
                                                  it was filed, or such shorter time as the                 public interest, for the protection of                  the Commission does not edit personal
                                                  Commission may designate, if                              investors, or otherwise in furtherance of               identifying information from
                                                  consistent with the protection of                         the purposes of the Act. If the                         submissions. You should submit only
                                                  investors and the public interest, the                    Commission takes such action, the                       information that you wish to make
                                                  proposed rule change has become                           Commission shall institute proceedings                  available publicly. All submissions
                                                                                                            under Section 19(b)(2)(B) 34 of the Act to              should refer to File Number SR–
                                                  effective pursuant to Section 19(b)(3)(A)
                                                                                                            determine whether the proposed rule                     NYSEMKT–2016–54 and should be
                                                  of the Act and Rule 19b–4(f)(6)(iii)
                                                                                                            change should be approved or                            submitted on or before June 15, 2016.
                                                  thereunder.
                                                                                                            disapproved.                                              For the Commission, by the Division of
                                                     A proposed rule change filed under                                                                             Trading and Markets, pursuant to delegated
                                                  Rule 19b–4(f)(6) 31 normally does not                     IV. Solicitation of Comments
                                                                                                                                                                    authority.35
                                                  become operative prior to 30 days after                     Interested persons are invited to                     Robert W. Errett,
                                                  the date of the filing. However, pursuant                 submit written data, views, and
                                                                                                                                                                    Deputy Secretary.
                                                  to Rule 19b4(f)(6)(iii),32 the Commission                 arguments concerning the foregoing,
                                                                                                                                                                    [FR Doc. 2016–12240 Filed 5–24–16; 8:45 am]
                                                  may designate a shorter time if such                      including whether the proposed rule
                                                                                                            change is consistent with the Act.                      BILLING CODE 8011–01–P
                                                  action is consistent with the protection
                                                  of investors and the public interest. The                 Comments may be submitted by any of
                                                  Exchange has asked the Commission to                      the following methods:
                                                                                                                                                                    SECURITIES AND EXCHANGE
                                                  waive the 30-day operative delay so that                  Electronic Comments                                     COMMISSION
                                                  the proposal may become operative
                                                  immediately upon filing. The Exchange                       • Use the Commission’s Internet                       [Release No. 34–77861; File No. SR–
                                                  believes that waiving the operative                       comment form (http://www.sec.gov/                       NYSEArca–2016–67]
                                                  delay would promote the protection of                     rules/sro.shtml); or
                                                                                                              • Send an email to rule-comments@                     Self-Regulatory Organizations; NYSE
                                                  investors and the public interest                                                                                 Arca, Inc.; Notice of Filing of Proposed
                                                                                                            sec.gov. Please include File Number SR–
                                                  because the proposed rule change                                                                                  Rule Change Relating to the Listing
                                                                                                            NYSEMKT–2016–54 on the subject line.
                                                  would reduce the potential for a Market                                                                           and Trading of Shares of the Natixis
                                                  Order to trade at prices away from the                    Paper Comments                                          Seeyond International Minimum
                                                  prevailing quote and at potentially                          • Send paper comments in triplicate                  Volatility ETF Under NYSE Arca
                                                  worse prices for the investor. Likewise,                  to Brent J. Fields, Secretary, Securities               Equities Rule 8.600
                                                  the Exchange believes that eliminating                    and Exchange Commission, 100 F Street
                                                  IOC and tick-sensitive instructions for                   NE., Washington, DC 20549–1090.                         May 19, 2016.
                                                  Market Orders, without delay, would be                    All submissions should refer to File                       Pursuant to Section 19(b)(1) 1 of the
                                                  consistent with the protection of                         Number SR–NYSEMKT–2016–54. This                         Securities Exchange Act of 1934
                                                  investors and the public interest                         file number should be included on the                   (‘‘Act’’) 2 and Rule 19b–4 thereunder,3
                                                  because these instructions are rarely                     subject line if email is used. To help the              notice is hereby given that on May 5,
                                                  used and their elimination would                          Commission process and review your                      2016, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
                                                  simplify the Exchange’s offering of order                 comments more efficiently, please use                   ‘‘Exchange’’) filed with the Securities
                                                  types. The Commission believes that the                   only one method. The Commission will                    and Exchange Commission
                                                  proposed rule change is consistent with                   post all comments on the Commission’s                   (‘‘Commission’’) the proposed rule
                                                  the protection of investors and the                       Internet Web site (http://www.sec.gov/                  change as described in Items I, II, and
                                                  public interest, because the proposal                     rules/sro.shtml). Copies of the                         III below, which Items have been
                                                  would diminish the likelihood of                          submission, all subsequent                              prepared by the Exchange. The
                                                  Market Orders trading at prices that                      amendments, all written statements                      Commission is publishing this notice to
                                                  would be disadvantageous to investors,                    with respect to the proposed rule                       solicit comments on the proposed rule
                                                  and because it would simplify the                         change that are filed with the                          change from interested persons.
                                                  Exchange’s order types by eliminating                     Commission, and all written                             I. Self-Regulatory Organization’s
                                                  rarely used complex order functionality.                  communications relating to the                          Statement of the Terms of Substance of
                                                  Accordingly, the Commission hereby                        proposed rule change between the                        the Proposed Rule Change
                                                  waives the 30-day operative delay and                     Commission and any person, other than                      The Exchange proposes to list and
                                                                                                            those that may be withheld from the                     trade shares of the Natixis Seeyond
                                                    29 15  U.S.C. 78s(b)(3)(A).                             public in accordance with the                           International Minimum Volatility ETF
                                                    30 17  CFR 240.19b–4(f)(6). In addition, Rule 19b-      provisions of 5 U.S.C. 552, will be                     under NYSE Arca Equities Rule 8.600
                                                  4(f)(6)(iii) requires the Exchange to give the
                                                                                                            available for Web site viewing and
mstockstill on DSK3G9T082PROD with NOTICES




                                                  Commission written notice of the Exchange’s intent                                                                (‘‘Managed Fund Shares). The proposed
                                                  to file the proposed rule change, along with a brief      printing in the Commission’s Public                     rule change is available on the
                                                  description and text of the proposed rule change,
                                                  at least five business days prior to the date of filing      33 For purposes only of accelerating the operative
                                                                                                                                                                    Exchange’s Web site at www.nyse.com,
                                                  of the proposed rule change, or such shorter time         date of this proposal, the Commission has
                                                                                                                                                                      35 17 CFR 200.30–3(a)(12).
                                                  as designated by the Commission. The Exchange             considered the proposed rule’s impact on
                                                  has satisfied this requirement.                           efficiency, competition, and capital formation. 15        1 15 U.S.C. 78s(b)(1).
                                                     31 17 CFR 240.19b–4(f)(6).                             U.S.C. 78c(f).                                            2 15 U.S.C. 78a.
                                                     32 17 CFR 240.19b–4(f)(6)(iii).                           34 15 U.S.C. 78s(b)(2)(B).                             3 17 CFR 240.19b–4.




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Document Created: 2018-02-07 15:03:46
Document Modified: 2018-02-07 15:03:46
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 33286 

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