81 FR 33561 - Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving Proposed Rule Change Related to Market Wide Risk Protection
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 102 (May 26, 2016)
Federal Register Volume 81, Issue 102 (May 26, 2016)
| Page Range | 33561-33563 | |
| FR Document | 2016-12384 |
[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)] [Notices] [Pages 33561-33563] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-12384] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77875; File No. SR-ISE-2016-08] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Approving Proposed Rule Change Related to Market Wide Risk Protection May 20, 2016. I. Introduction On March 17, 2016, the International Securities Exchange, LLC (the ``Exchange'' or ``ISE'') filed with the Securities and Exchange Commission (``Commission'') pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to introduce new activity-based risk protection functionality. The proposed rule change was published for comment in the Federal Register on April 6, 2016.\3\ No comment letters were received in response to this proposal. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 77489 (Mar. 31, 2016), 81 FR 20004 (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change The Exchange proposed to introduce two activity-based risk protection measures that will be mandatory for all members: (1) The ``Order Entry Rate Protection,'' which prevents members from entering orders at a rate that exceeds predefined thresholds,\4\ and (2) the ``Order Execution Rate Protection,'' which prevents members from executing orders at a rate that exceeds their predefined risk settings (together, ``Market Wide Risk Protection''). The Exchange will announce the implementation date of the proposed rule in a circular to be distributed to members prior to implementation.\5\ --------------------------------------------------------------------------- \4\ The Exchange stated that it will initiate the Order Entry Rate Protection pre-open, but in a manner that allows members time to load their orders without inadvertently triggering the protection. The Exchange further noted that it will establish and communicate the precise initiation time via circular and prior to implementation. See Notice, supra note 3, at 20004 n.4. \5\ See Notice, supra note 3, at 20004. --------------------------------------------------------------------------- Pursuant to proposed Rule 714(d), ``Market Wide Risk Protection,'' the Exchange's trading system (the ``System'') will maintain one or more counting programs on behalf of each member that will track the number of orders entered and the number of contracts traded on ISE or, if chosen by the member, across both ISE and its affiliate, ISE Gemini, LLC (``ISE Gemini'').\6\ Members may also use multiple counting programs to separate risk protections for different groups established within the member.\7\ The counting programs will maintain separate counts, over rolling time periods specified by the member, for each count of: (1) The total number of orders entered in the regular order book; (2) the total number of orders entered in the complex order book with only options legs; (3) the total number of orders entered in the complex order book with both stock and options legs; (4) the total number of contracts traded in regular orders; and (5) the total number of contracts traded in complex orders with only options legs.\8\ --------------------------------------------------------------------------- \6\ Members may set different risk parameters for their trading activity on each exchange, or they may set risk parameters that apply to their trading across both ISE and ISE Gemini. See proposed Rule 714(d). \7\ The Exchange stated that it will explain how members can go about setting up risk protections for different groups (e.g., business units) in a circular issued to members. See Notice, supra note 3, at 20004-05 n.7. \8\ See proposed Rule 714(d). The Exchange clarified that a member's allowable order rate for the Order Entry Rate Protection will be comprised of parameters (1) to (3), while the allowable contract execution rate for the Order Execution Rate Protection will be comprised of parameters (4) and (5). The Exchange further explained that contracts executed on the agency and contra-side of a two-sided crossing order will be counted separately for the Order Execution Rate Protection. See Notice, supra note 3, at 20005. --------------------------------------------------------------------------- According to the Exchange, members will have the discretion to establish the applicable time period for each of the counts maintained under the Market Wide Risk Protection, provided that the selected period is within minimum and maximum time parameters that will be established by the Exchange and announced via circular.\9\ By contrast, the Exchange's proposal does not establish minimum or maximum values for any of the order entry or execution parameters described in (1) through (5) above. Nevertheless, the Exchange will establish default values \10\ for the time period, order entry, and contracts traded parameters in a circular to be distributed to members. The Exchange represented that such default values will apply only to members that do not submit their own parameters for the Market Wide Risk Protection measures.\11\ --------------------------------------------------------------------------- \9\ Id. The Exchange stated that it anticipated setting these minimum and maximum time parameters at one second and a full trading day, respectively. See Notice, supra note 3, at 20005 n.9. \10\ See proposed Rule 714(d); see also Notice, supra note 3, at 20005. \11\ Id. --------------------------------------------------------------------------- The Exchange further proposed to use separate counts for regular orders, complex options orders,\12\ and complex orders with a stock component,\13\ as it believed that members may want to have different risk settings for these instruments. If the Market Wide Risk Protection is triggered based on any count, however, proposed Rule 714(d) states that the triggered action (discussed below) will be taken across the entire market--with respect to all products traded in both simple and complex instruments and across ISE (or, [[Page 33562]] if set by the member, across ISE and ISE Gemini).\14\ --------------------------------------------------------------------------- \12\ The Exchange explained that the contract execution count for complex orders with only options legs will be the sum of the number of contracts executed with respect to each leg. Id. \13\ Complex orders that contain a stock component will not be included as part of the complex order execution count. The Exchange stated its belief that the separate components of stock-option orders (i.e., options components executed in contracts and stock components executed in shares) could not be combined in a way that would provide a meaningful measure of risk exposure. See Notice, supra note 3, at 20005 n.10. \14\ Proposed Rule 714(d)(1); see also Notice, supra note 3, at 20005. --------------------------------------------------------------------------- Under proposed Rule 714(d), the System will trigger the Market Wide Risk Protection when it determines that the member has either (1) entered a number of orders exceeding its designated allowable order rate for the specified time period, or (2) executed a number of contracts exceeding its designated allowable contract execution rate for the specified time period.\15\ If the member's thresholds have been exceeded in either simple or complex instruments, the Market Wide Risk Protection will be triggered and the System will automatically reject all subsequent incoming orders entered by the member on ISE or, if set by the member, across both ISE and ISE Gemini.\16\ In addition, if the member has opted in to this functionality, the System will automatically cancel all of the member's existing orders.\17\ The Market Wide Risk Protection will remain engaged until the member manually (e.g., via email) notifies the Exchange to enable the acceptance of new orders.\18\ --------------------------------------------------------------------------- \15\ Id.; see also proposed Rule 714(d)(1). Specifically, after a member enters or executes an order, the System will look back over the specified time period to determine whether the member has exceeded the relevant thresholds. See Notice, supra note 3, at 20005. In the Notice, the Exchange provided examples illustrating how the Market Wide Risk Protection functionality would work both for order entry and order execution protections. See Notice, supra note 3, at 20005-06. \16\ According to the Exchange, members that set different risk parameters for ISE and ISE Gemini will only have their orders rejected on the exchange whose threshold was exceeded. See Notice, supra note 3, at 20005 n.11. \17\ Proposed Rule 714(d)(2). \18\ Proposed Rule 714(d)(3). Members who have not opted to cancel all existing orders under proposed Rule 714(d)(2), however, will still be able to interact with their existing orders entered before the Market Wide Risk Protection was triggered. For instance, such members may send cancel order messages and/or receive trade executions for those orders. Id.; see also Notice, supra note 3, at 20005. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act \19\ and rules and regulations thereunder applicable to a national securities exchange.\20\ In particular, the Commission finds that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanisms of a free and open market and a national market system, and, in general, to protect investors and the public interest.\21\ --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b). \20\ In approving these proposed rule changes, the Commission has considered the proposed rules' impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \21\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission believes that the Exchange's proposed activity-based order protections will provide an additional tool to members to assist them in managing their risk exposure.\22\ Specifically, the Commission believes that the Market Wide Risk Protection functionality may help members to mitigate the potential risks associated with entering and/or executing a level of orders that exceeds their risk management thresholds that may result from, for example, technology issues with electronic trading systems. Further, the Commission notes that other exchanges have established risk protection mechanisms for members and market makers that are similar in many respects to ISE's proposal.\23\ --------------------------------------------------------------------------- \22\ The Exchange currently provides members with limit order price protections that reject orders priced too far outside of the Exchange's best bid or offer. See ISE Rule 714(b)(2). \23\ See, e.g., Miami International Securities Exchange, LLC Rule 519A (``Risk Protection Monitor''); BATS BZX Exchange, Inc. Rule 21.16 (``Risk Monitor Mechanism''). --------------------------------------------------------------------------- Proposed Rule 714(d) imposes a mandatory obligation on ISE members to utilize the Market Wide Risk Protection functionality. The Commission notes that, although the Exchange will establish minimum and maximum permissible parameters for the time period values, members will have discretion to set the threshold values for the order entry and order execution parameters.\24\ If members do not independently set such parameters, they will be subject to the default parameters established by ISE.\25\ While the Commission believes that the Exchange's proposed rule provides members flexibility to tailor the Market Wide Risk Protection to their respective risk management needs, the Commission reminds members to be mindful of their obligations to, among other things, seek best execution of orders they handle on an agency basis and consider their best execution obligations when establishing parameters for the Market Wide Risk Protection or utilizing the default parameters set by ISE.\26\ For example, an abnormally low order entry parameter, set over an abnormally long specified time period should be carefully scrutinized, particularly if a member's order flow to ISE contains agency orders. To the extent that a member chooses sensitive parameters, a member should consider the effect of its chosen settings on its ability to receive a timely execution on marketable agency orders that it sends to ISE in various market conditions. The Commission cautions brokers considering their best execution obligations to be aware that the agency orders they represent may be rejected as a result of the Market Wide Risk Protection functionality. --------------------------------------------------------------------------- \24\ The Exchange has represented that it anticipates that the minimum and maximum values for the applicable time period will be initially set at one second and a full trading day, respectively, which the Commission believes gives members wide latitude in establishing the applicable time periods. See Notice, supra note 3, at 20005 n.9. \25\ Proposed Rule 714(d). \26\ See Securities Exchange Act Release No. 37619A (Sept. 6, 1996), 61 FR 48290, at 48323 (Sept. 12, 1996) (Order Execution Obligations adopting release); see also Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37537-8 (June 29, 2005) (Regulation NMS adopting release). --------------------------------------------------------------------------- As discussed above, ISE determined not to establish minimum and maximum permissible settings for the order entry and order execution parameters in its rule and indicated its intent to set a minimum and maximum for the time period parameters that provide broad discretion to members (i.e., one second and a full trading day, respectively).\27\ In light of these broad limits, the Commission expects ISE to periodically assess whether the Market Wide Risk Protection measures are operating in a manner that is consistent with the promotion of fair and orderly markets, including whether the default values and minimum and maximum permissible parameters for the applicable time period established by ISE continue to be appropriate and operate in a manner consistent with the Act and the rules thereunder. --------------------------------------------------------------------------- \27\ See Notice, supra note 3, at 20005 n.9; see also supra note 24. --------------------------------------------------------------------------- Finally, the Commission believes that it is consistent with the Act for ISE to offer its Market Wide Risk Protection across both ISE and its affiliate, ISE Gemini, as such functionality could assist members in managing and reducing inadvertent exposure to excessive risk across both of these markets if the member desires to avail itself of that feature. Further, the Commission notes that it previously approved ISE's proposal to offer cross-market risk protections for market maker quotes, and approval of the cross-market application of the Market Wide Risk Protection functionality is consistent with that prior approval.\28\ --------------------------------------------------------------------------- \28\ See ISE Rule 804(g); see also Securities Exchange Act Release No. 73147 (Sept. 19, 2014), 79 FR 57639 (Sept. 25, 2014) (SR-ISE-2014-09) (approval order). --------------------------------------------------------------------------- [[Page 33563]] IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\29\ that the proposed rule change (SR-ISE-2016-08) be, and hereby is, approved. --------------------------------------------------------------------------- \29\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\30\ --------------------------------------------------------------------------- \30\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-12384 Filed 5-25-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Notices 33561
in connection with the revised date is introduce new activity-based risk (4) the total number of contracts traded
reprinted below. protection functionality. The proposed in regular orders; and (5) the total
rule change was published for comment number of contracts traded in complex
Stanley F. Mires,
in the Federal Register on April 6, orders with only options legs.8
Attorney, Federal Compliance.
2016.3 No comment letters were According to the Exchange, members
Decision of the Governors of the United received in response to this proposal. will have the discretion to establish the
States Postal Service Concerning This order approves the proposed rule applicable time period for each of the
Revised Implementation Date of Mail change. counts maintained under the Market
Classification Schedule Changes for II. Description of the Proposed Rule Wide Risk Protection, provided that the
Priority Mail International Flat Rate Change selected period is within minimum and
Envelopes and Priority Mail maximum time parameters that will be
International Small Flat Rate Boxes The Exchange proposed to introduce
two activity-based risk protection established by the Exchange and
(Governors’ Decision No. 16–2) announced via circular.9 By contrast,
measures that will be mandatory for all
May 12, 2016. members: (1) The ‘‘Order Entry Rate the Exchange’s proposal does not
Protection,’’ which prevents members establish minimum or maximum values
Statement of Explanation and for any of the order entry or execution
Justification from entering orders at a rate that
exceeds predefined thresholds,4 and (2) parameters described in (1) through (5)
Pursuant to section 404(b) and above. Nevertheless, the Exchange will
the ‘‘Order Execution Rate Protection,’’
Chapter 36 of title 39, United States establish default values 10 for the time
which prevents members from
Code, Governors’ Decision No. 16–1 period, order entry, and contracts traded
executing orders at a rate that exceeds
established classification changes to parameters in a circular to be
their predefined risk settings (together,
Priority Mail International Flat Rate distributed to members. The Exchange
Envelopes (PMI FREs) and PMI Small ‘‘Market Wide Risk Protection’’). The
Exchange will announce the represented that such default values
Flat Rate Boxes (PMI SFRBs) to be will apply only to members that do not
effective June 3, 2016. implementation date of the proposed
rule in a circular to be distributed to submit their own parameters for the
Due to operational considerations, I Market Wide Risk Protection
hereby revise the implementation date members prior to implementation.5
Pursuant to proposed Rule 714(d), measures.11
of the classification changes set forth in
Governors’ Decision No. 16–1 as ‘‘Market Wide Risk Protection,’’ the The Exchange further proposed to use
indicated in our order below. Exchange’s trading system (the separate counts for regular orders,
‘‘System’’) will maintain one or more complex options orders,12 and complex
Order counting programs on behalf of each orders with a stock component,13 as it
The changes in classification to PMI member that will track the number of believed that members may want to
FREs and PMI SFRBs established in orders entered and the number of have different risk settings for these
Governors’ Decision No. 16–1 shall be contracts traded on ISE or, if chosen by instruments. If the Market Wide Risk
effective on August 28, 2016. the member, across both ISE and its Protection is triggered based on any
By The Governors: affiliate, ISE Gemini, LLC (‘‘ISE count, however, proposed Rule 714(d)
James H. Bilbray Gemini’’).6 Members may also use states that the triggered action
Chairman, Temporary Emergency Committee multiple counting programs to separate (discussed below) will be taken across
of the Board of Governors risk protections for different groups the entire market—with respect to all
[FR Doc. 2016–12400 Filed 5–25–16; 8:45 am] established within the member.7 The products traded in both simple and
BILLING CODE 7710–12–P counting programs will maintain complex instruments and across ISE (or,
separate counts, over rolling time
periods specified by the member, for 8 See proposed Rule 714(d). The Exchange
each count of: (1) The total number of clarified that a member’s allowable order rate for
SECURITIES AND EXCHANGE the Order Entry Rate Protection will be comprised
COMMISSION orders entered in the regular order book; of parameters (1) to (3), while the allowable contract
(2) the total number of orders entered in execution rate for the Order Execution Rate
[Release No. 34–77875; File No. SR–ISE– the complex order book with only Protection will be comprised of parameters (4) and
2016–08] options legs; (3) the total number of (5). The Exchange further explained that contracts
executed on the agency and contra-side of a two-
Self-Regulatory Organizations; orders entered in the complex order sided crossing order will be counted separately for
International Securities Exchange, book with both stock and options legs; the Order Execution Rate Protection. See Notice,
supra note 3, at 20005.
LLC; Order Approving Proposed Rule 3 See Securities Exchange Act Release No. 77489 9 Id. The Exchange stated that it anticipated
Change Related to Market Wide Risk (Mar. 31, 2016), 81 FR 20004 (‘‘Notice’’). setting these minimum and maximum time
Protection 4 The Exchange stated that it will initiate the parameters at one second and a full trading day,
Order Entry Rate Protection pre-open, but in a respectively. See Notice, supra note 3, at 20005 n.9.
May 20, 2016. manner that allows members time to load their 10 See proposed Rule 714(d); see also Notice,
orders without inadvertently triggering the supra note 3, at 20005.
I. Introduction protection. The Exchange further noted that it will 11 Id.
On March 17, 2016, the International establish and communicate the precise initiation 12 The Exchange explained that the contract
Securities Exchange, LLC (the time via circular and prior to implementation. See execution count for complex orders with only
Notice, supra note 3, at 20004 n.4. options legs will be the sum of the number of
‘‘Exchange’’ or ‘‘ISE’’) filed with the 5 See Notice, supra note 3, at 20004.
contracts executed with respect to each leg. Id.
sradovich on DSK3TPTVN1PROD with NOTICES
Securities and Exchange Commission 6 Members may set different risk parameters for 13 Complex orders that contain a stock component
(‘‘Commission’’) pursuant to Section their trading activity on each exchange, or they may will not be included as part of the complex order
19(b)(1) of the Securities Exchange Act set risk parameters that apply to their trading across execution count. The Exchange stated its belief that
of 1934 (‘‘Act’’) 1 and Rule 19b–4 both ISE and ISE Gemini. See proposed Rule 714(d). the separate components of stock-option orders (i.e.,
7 The Exchange stated that it will explain how options components executed in contracts and
thereunder,2 a proposed rule change to members can go about setting up risk protections stock components executed in shares) could not be
for different groups (e.g., business units) in a combined in a way that would provide a
1 15 U.S.C. 78s(b)(1). circular issued to members. See Notice, supra note meaningful measure of risk exposure. See Notice,
2 17 CFR 240.19b–4. 3, at 20004–05 n.7. supra note 3, at 20005 n.10.
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![Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Notices 33563
IV. Conclusion comment letters were received in would be displayed on the order book)
It is therefore ordered, pursuant to response to the Notice. This order that would be executed in its entirety
Section 19(b)(2) of the Act,29 that the approves the proposed rule change, as against one or more contra party, or not
proposed rule change (SR–ISE–2016–08) modified by Amendment No. 1. at all.10 If a NYSE Bonds AON Order is
be, and hereby is, approved. not executed in full, NYSE Bonds would
II. Description of the Proposed Rule
post the order to the order book at its
For the Commission, by the Division of Change limit price until it is executed in full, or
Trading and Markets, pursuant to delegated The Exchange proposes to amend
authority.30 is cancelled. Incoming contra-side
Rule 86 to add NYSE Bonds Fill-or-Kill orders that cannot meet the AON
Robert W. Errett,
Order, NYSE Bonds All-or-None Order quantity may trade at or bypass the
Deputy Secretary. and NYSE Bonds Minimum Quantity price of the NYSE Bonds AON Order. A
[FR Doc. 2016–12384 Filed 5–25–16; 8:45 am] Order as new order types to the NYSE NYSE Bonds AON Order would not
BILLING CODE 8011–01–P Bonds platform,5 and to codify the participate in either the Opening Bond
operation of NYSE Bonds Good ‘Til Date Auction or the Core Bond Auction and
Order and NYSE Bonds Timed Order the order is eligible for execution only
SECURITIES AND EXCHANGE that, according to the Exchange, are during the trading session for which it
COMMISSION currently available on the NYSE Bonds is designated. A NYSE Bonds AON
[Release No. 34–77880; File No. SR–NYSE– platform.6 The Exchange also proposes Order must be designated as ‘‘day,’’
2016–17] to amend the definition of IMP to ‘‘good ‘til cancelled,’’ or ‘‘good ‘til
provide greater detail as to how an IMP date.’’ 11
Self-Regulatory Organizations; New is established with respect to Bond The Exchange also proposes to adopt
York Stock Exchange LLC; Order Auctions. the NYSE Bonds Minimum Quantity
Approving Proposed Rule Change, as The Exchange proposes to adopt the Order, a NYSE Bonds Limit Order
Modified by Amendment No. 1 Thereto, NYSE Bonds Fill-or-Kill Order (‘‘NYSE (whose minimum quantity contingency
To Add Additional Order Types to the Bonds FOK Order’’), a NYSE Bonds would be displayed on the order book)
NYSE BondsSM Platform, Codify Limit Order that would be executed that would trade against one or more
Functionality of Order Types Currently immediately in its entirety at the best contra side orders, provided the order’s
Available on NYSE Bonds, and Provide price available against a single contra quantity requirement is met.12 In the
Greater Detail as to How an Indicative party and, if not executed immediately event there is not enough contra-side
Match Price Is Established With in its entirety, would be cancelled.7 A liquidity available at the time a NYSE
Respect to Bond Auctions NYSE Bonds FOK Order would be Bonds Minimum Quantity Order is
May 20, 2016. eligible to participate in all trading submitted, NYSE Bonds would post the
sessions,8 but could be executed only order on the order book at its limit price
I. Introduction during the trading session in which the until it is executed in full, or is
On March 16, 2016, New York Stock order is sent; otherwise the order would cancelled. Incoming contra-side orders
Exchange LLC (‘‘NYSE’’ or the be rejected. A NYSE Bonds FOK Order that cannot meet the minimum quantity
‘‘Exchange’’) filed with the Securities cannot participate in either the Opening may trade at or bypass the price of a
and Exchange Commission Bond Auction or the Core Bond NYSE Bonds Minimum Quantity Order.
(‘‘Commission’’) pursuant to Section Auction.9 A NYSE Bonds Minimum Quantity
19(b)(1) of the Securities Exchange Act The Exchange proposes to adopt the Order would be rejected if the minimum
of 1934 (‘‘Act’’) 1 and Rule 19b–4 NYSE Bonds All-or-None Order (‘‘NYSE quantity entered on the order is greater
thereunder,2 a proposed rule change to Bonds AON Order’’), a NYSE Bonds than the total number of bonds of the
amend Rule 86 to add additional order Limit Order (whose AON contingency order. A NYSE Bonds Minimum
types to the NYSE BondsSM platform, to Quantity Order may be partially
5 NYSE Bonds is the Exchange’s electronic system
codify functionality of order types executed as long as each partial
currently available on NYSE Bonds, and for receiving, processing, executing and reporting
bids, offers, and executions in bonds. See Notice, execution is for the minimum number of
to amend the definition of Indicative supra note 4, at 19672. NYSE Bonds currently bonds or greater. If a balance remains
Match Price (‘‘IMP’’) in current Rule allows Users to submit limit orders and reserve after one or more partial executions and
86(b)(2)(G) to provide greater detail as to orders. Current Rule 86(b)(2)(M) defines a User as such balance is for less than the
how an IMP is established with respect any Member or Member Organization, Sponsored
Participant, or Authorized Trader that is authorized minimum quantity specified on the
to Bond Auctions. On March 29, 2016, to access NYSE Bonds. A NYSE Bonds Limit Order order, such balance would be treated as
the Exchange filed Amendment No. 1 to and a NYSE Bonds Reserve Order are defined in a regular limit order and placed on the
the proposal.3 The proposed rule change current Rules 86(b)(2)(B) and (C), respectively. The order book in price-time priority. A
was published for comment in the Exchange is also proposing non-substantive
organizational changes to renumber sections of Rule NYSE Bonds Minimum Quantity Order
Federal Register on April 5, 2016.4 No 86. would not participate in either the
6 See Notice, supra note 4, at 19672. Opening Bond Auction or the Core
29 15 U.S.C. 78s(b)(2). 7 A NYSE Bonds FOK Order cannot be a NYSE
Bond Auction and the order would be
30 17 CFR 200.30–3(a)(12). Bonds Reserve Order. See proposed Rule eligible for execution only in the trading
1 15 U.S.C. 78s(b)(1). 86(b)(2)(B)(ii).
2 17 CFR 240.19b–4. 8 The Opening Bond Trading Session commences
session during which it was sent. A
3 In Amendment No. 1, the Exchange proposed with the Opening Bond Auction at 4:00 a.m. ET and
10 A NYSE Bonds AON Order cannot be a NYSE
changes to amend the proposed rule text of Rule concludes at 8:00 a.m. ET. See Rule 86(i)(1)(A). The
sradovich on DSK3TPTVN1PROD with NOTICES
86(j)(A)(ii) in Exhibit 5 and the purpose section of Core Bond Trading Session commences with the Bonds Reserve Order. See proposed Rule
each of the Form 19b–4 and Exhibit 1 to clarify the Core Bond Auction at 8:00 a.m. ET and concludes 86(b)(2)(B)(ii).
effective time used to determine the priority of at 5:00 p.m. ET. See Rule 86(i)(2)(A). The Late Bond 11 The Notice provides additional details and
Timed Orders. The Exchange also amended the Trading Session commences at 5:00 p.m. ET and examples related to the NYSE Bonds AON Order.
purpose section of each of the Form 19b–4 and concludes at 8:00 p.m. ET. See Rule 86(i)(3)(A). See Notice, supra note 4, at 19672–73. See also
Exhibit 1 to add that all-or-none and minimum 9 The Notice provides additional details and proposed Rule 86(b)(2)(B)(viii).
quantity contingencies are displayed. examples related to the NYSE Bonds FOK Order. 12 A NYSE Bonds Minimum Quantity Order
4 See Securities Exchange Act Release No. 77477 See Notice, supra note 4, at 19672. See also cannot be a NYSE Bonds Reserve Order. See
(March 30, 2016), 81 FR 19671 (‘‘Notice’’). proposed Rule 86(b)(2)(B)(vii). proposed Rule 86(b)(2)(B)(ii).
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Document Created: 2016-05-26 01:13:17
Document Modified: 2016-05-26 01:13:17
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 81 FR 33561 |
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