81 FR 33563 - Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Add Additional Order Types to the NYSE BondsSM
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 102 (May 26, 2016)
Federal Register Volume 81, Issue 102 (May 26, 2016)
| Page Range | 33563-33565 | |
| FR Document | 2016-12388 |
[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)] [Notices] [Pages 33563-33565] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-12388] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77880; File No. SR-NYSE-2016-17] Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Add Additional Order Types to the NYSE Bonds\SM\ Platform, Codify Functionality of Order Types Currently Available on NYSE Bonds, and Provide Greater Detail as to How an Indicative Match Price Is Established With Respect to Bond Auctions May 20, 2016. I. Introduction On March 16, 2016, New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') 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 amend Rule 86 to add additional order types to the NYSE Bonds\SM\ platform, to codify functionality of order types currently available on NYSE Bonds, and to amend the definition of Indicative Match Price (``IMP'') in current Rule 86(b)(2)(G) to provide greater detail as to how an IMP is established with respect to Bond Auctions. On March 29, 2016, the Exchange filed Amendment No. 1 to the proposal.\3\ The proposed rule change was published for comment in the Federal Register on April 5, 2016.\4\ No comment letters were received in response to the Notice. This order approves the proposed rule change, as modified by Amendment No. 1. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ In Amendment No. 1, the Exchange proposed changes to amend the proposed rule text of Rule 86(j)(A)(ii) in Exhibit 5 and the purpose section of each of the Form 19b-4 and Exhibit 1 to clarify the effective time used to determine the priority of Timed Orders. The Exchange also amended the purpose section of each of the Form 19b-4 and Exhibit 1 to add that all-or-none and minimum quantity contingencies are displayed. \4\ See Securities Exchange Act Release No. 77477 (March 30, 2016), 81 FR 19671 (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change The Exchange proposes to amend Rule 86 to add NYSE Bonds Fill-or- Kill Order, NYSE Bonds All-or-None Order and NYSE Bonds Minimum Quantity Order as new order types to the NYSE Bonds platform,\5\ and to codify the operation of NYSE Bonds Good `Til Date Order and NYSE Bonds Timed Order that, according to the Exchange, are currently available on the NYSE Bonds platform.\6\ The Exchange also proposes to amend the definition of IMP to provide greater detail as to how an IMP is established with respect to Bond Auctions. --------------------------------------------------------------------------- \5\ NYSE Bonds is the Exchange's electronic system for receiving, processing, executing and reporting bids, offers, and executions in bonds. See Notice, supra note 4, at 19672. NYSE Bonds currently allows Users to submit limit orders and reserve orders. Current Rule 86(b)(2)(M) defines a User as any Member or Member Organization, Sponsored Participant, or Authorized Trader that is authorized to access NYSE Bonds. A NYSE Bonds Limit Order and a NYSE Bonds Reserve Order are defined in current Rules 86(b)(2)(B) and (C), respectively. The Exchange is also proposing non-substantive organizational changes to renumber sections of Rule 86. \6\ See Notice, supra note 4, at 19672. --------------------------------------------------------------------------- The Exchange proposes to adopt the NYSE Bonds Fill-or-Kill Order (``NYSE Bonds FOK Order''), a NYSE Bonds Limit Order that would be executed immediately in its entirety at the best price available against a single contra party and, if not executed immediately in its entirety, would be cancelled.\7\ A NYSE Bonds FOK Order would be eligible to participate in all trading sessions,\8\ but could be executed only during the trading session in which the order is sent; otherwise the order would be rejected. A NYSE Bonds FOK Order cannot participate in either the Opening Bond Auction or the Core Bond Auction.\9\ --------------------------------------------------------------------------- \7\ A NYSE Bonds FOK Order cannot be a NYSE Bonds Reserve Order. See proposed Rule 86(b)(2)(B)(ii). \8\ The Opening Bond Trading Session commences with the Opening Bond Auction at 4:00 a.m. ET and concludes at 8:00 a.m. ET. See Rule 86(i)(1)(A). The Core Bond Trading Session commences with the Core Bond Auction at 8:00 a.m. ET and concludes at 5:00 p.m. ET. See Rule 86(i)(2)(A). The Late Bond Trading Session commences at 5:00 p.m. ET and concludes at 8:00 p.m. ET. See Rule 86(i)(3)(A). \9\ The Notice provides additional details and examples related to the NYSE Bonds FOK Order. See Notice, supra note 4, at 19672. See also proposed Rule 86(b)(2)(B)(vii). --------------------------------------------------------------------------- The Exchange proposes to adopt the NYSE Bonds All-or-None Order (``NYSE Bonds AON Order''), a NYSE Bonds Limit Order (whose AON contingency would be displayed on the order book) that would be executed in its entirety against one or more contra party, or not at all.\10\ If a NYSE Bonds AON Order is not executed in full, NYSE Bonds would post the order to the order book at its limit price until it is executed in full, or is cancelled. Incoming contra-side orders that cannot meet the AON quantity may trade at or bypass the price of the NYSE Bonds AON Order. A NYSE Bonds AON Order would not participate in either the Opening Bond Auction or the Core Bond Auction and the order is eligible for execution only during the trading session for which it is designated. A NYSE Bonds AON Order must be designated as ``day,'' ``good `til cancelled,'' or ``good `til date.'' \11\ --------------------------------------------------------------------------- \10\ A NYSE Bonds AON Order cannot be a NYSE Bonds Reserve Order. See proposed Rule 86(b)(2)(B)(ii). \11\ The Notice provides additional details and examples related to the NYSE Bonds AON Order. See Notice, supra note 4, at 19672-73. See also proposed Rule 86(b)(2)(B)(viii). --------------------------------------------------------------------------- The Exchange also proposes to adopt the NYSE Bonds Minimum Quantity Order, a NYSE Bonds Limit Order (whose minimum quantity contingency would be displayed on the order book) that would trade against one or more contra side orders, provided the order's quantity requirement is met.\12\ In the event there is not enough contra-side liquidity available at the time a NYSE Bonds Minimum Quantity Order is submitted, NYSE Bonds would post the order on the order book at its limit price until it is executed in full, or is cancelled. Incoming contra-side orders that cannot meet the minimum quantity may trade at or bypass the price of a NYSE Bonds Minimum Quantity Order. A NYSE Bonds Minimum Quantity Order would be rejected if the minimum quantity entered on the order is greater than the total number of bonds of the order. A NYSE Bonds Minimum Quantity Order may be partially executed as long as each partial execution is for the minimum number of bonds or greater. If a balance remains after one or more partial executions and such balance is for less than the minimum quantity specified on the order, such balance would be treated as a regular limit order and placed on the order book in price-time priority. A NYSE Bonds Minimum Quantity Order would not participate in either the Opening Bond Auction or the Core Bond Auction and the order would be eligible for execution only in the trading session during which it was sent. A [[Page 33564]] NYSE Bonds Minimum Quantity Order must be designated as ``day,'' ``good 'til cancelled,'' or ``good 'til date.'' \13\ --------------------------------------------------------------------------- \12\ A NYSE Bonds Minimum Quantity Order cannot be a NYSE Bonds Reserve Order. See proposed Rule 86(b)(2)(B)(ii). \13\ The Notice provides additional details and examples related to the NYSE Bonds Minimum Quantity Order. See Notice, supra note 4, at 19673-74. See also proposed Rule 86(b)(2)(B)(ix). --------------------------------------------------------------------------- The Exchange proposes to codify the operation of the NYSE Bonds Good 'Til Date Order (``NYSE Bonds GTD Order''), a NYSE Bonds Limit Order or a NYSE Bonds Reserve Order, which if not executed or cancelled, would expire at the end of the Core Bond Trading Session on the date specified on the order. A NYSE Bonds GTD Order must include an Expire Date or be designated for the Core Bond Trading Session; otherwise, the order would be rejected. A NYSE Bonds GTD Order can participate in the Core Bond Auction and the Core Bond Trading Session only. A NYSE Bonds GTD Order would participate in the Core Bond Auction if it is entered before commencement of the Core Bond Auction, and if not executed in the Core Bond Auction, would remain live on NYSE Bonds and would be eligible for execution in the Core Bond Trading Session, unless the order is cancelled. A NYSE Bonds GTD Order entered after commencement of the Core Bond Auction would participate in the Core Bond Trading Session, unless the order is cancelled. A NYSE Bonds GTD Order can participate only in the Core Bond Trading Session, and such order designated for any other trading session would be rejected. A NYSE Bonds GTD Order that is not executed or cancelled in full at the end of the trading day would be placed on the order book for the following day in price-time priority for participation in the Core Bond Trading Session after the end of the Core Bond Auction.\14\ --------------------------------------------------------------------------- \14\ The Notice provides additional details and examples related to the NYSE Bonds GTD Order. See Notice, supra note 4, at 19674-75. See also proposed Rule 86(b)(2)(B)(v). --------------------------------------------------------------------------- The Exchange proposes to codify the operation of the NYSE Bonds Timed Order, a NYSE Bonds Limit Order or a NYSE Bonds Reserve Order that remains in effect for a period of time specified on the order (i.e., Effective Time and Expire Time) for the day on which the order is entered until the order is executed or cancelled. A NYSE Bonds Timed Order would be accepted, and may be cancelled, during all trading sessions, provided that the order is submitted during the trading session in which it is to become effective. A NYSE Bonds Timed Order would participate in the Core Bond Auction and Core Bond Trading Session if the order is entered before commencement of the Core Bond Auction, and if the order is not executed in the Core Bond Auction, or not cancelled, it would be eligible for execution in the Core Bond Trading Session. A NYSE Bonds Timed Order must include an Effective Time, an Expire Time, or a designated trading session; otherwise, the order would be rejected. A NYSE Bonds Timed Order submitted with an Effective Time alone becomes effective at the Effective Time and if not executed, the order would be cancelled at the end of the Late Bond Trading Session. A NYSE Bonds Timed Order submitted with an Expire Time alone becomes effective at the time it is sent to the Exchange and if not executed, the order would be cancelled at the Expire Time designated on the order. A NYSE Bonds Timed Order submitted with a designated trading session alone or with a designated trading session and either an Effective Time or an Expire Time would become effective at the time the designated trading session begins and if not executed, the order would be cancelled at the end of the designated trading session.\15\ NYSE Bonds would disregard the Effective Time or Expire Time submitted with a NYSE Bonds Timed Order that is designated for a specific trading session. Additionally, a NYSE Bonds Timed Order submitted with a time in force of Day during a trading session without an Effective Time, an Expire Time, or a designated trading session would be treated as a Day limit order and, if not executed, would be cancelled at the end of the Core Bond Trading Session.\16\ --------------------------------------------------------------------------- \15\ A NYSE Bonds Timed Order submitted during a designated trading session becomes effective at the time the order is received and, if not executed, would be cancelled at the end of such designated trading session. See Notice, supra note 4, at 19675 n.18. \16\ The Notice provides additional details and examples related to the NYSE Bonds Timed Order. See Notice, supra note 4, at 19675- 76. See also proposed Rule 86(b)(2)(B)(vi). --------------------------------------------------------------------------- Finally, the Exchange proposes to amend the definition of IMP in current Rule 86(b)(2)(G) to provide greater detail as to how an IMP is established with respect to Bond Auctions. Specifically, the Exchange proposes to define the IMP in a particular bond as a single price at which the maximum number of bonds is executable. If there are two or more prices at which the maximum number of bonds is executable, the IMP would be the price that is closest to the Reference Price provided that the IMP cannot be lower (higher) than any unmatched top of book order to buy (sell) that was eligible to participate in an auction at the IMP. For the Opening Bond Auction, the Reference Price is the closing price in a bond on the previous trading day or if the bond did not trade on the previous trading day, the closing price on the last day that the bond traded.\17\ For the Core Bond Auction and the Bond Halt Auction, the Reference Price is the last price of a bond on the trading day prior to the applicable auction, and if none, the previous trading day's closing price, and if none, the closing price on the last day that the bond traded. If orders to buy and orders to sell are not marketable (i.e., the price of a bond order to buy is not equal to or greater than the price of a bond order to sell), then the IMP would be determined by the side and volume at the top of book, with the price of the side with the greater volume establishing the IMP. Current Rules 86(l)(3)(A) and 86(n)(2)(E) provide that a Bond Auction or a Bond Halt Auction, respectively, would not occur in the event of a failure to establish an IMP. The Exchange proposes to amend these rules to provide that, for non-marketable buy and sell orders entered in NYSE Bonds where the size of the best bid and best offer are the same, an IMP would not be established and a Bond Auction or Bond Halt Auction would not occur.\18\ --------------------------------------------------------------------------- \17\ The Exchange proposes to delete the words ``the price that is closest to'' from the current rule to more precisely reflect the price that would be used to determine the Reference Price on the last day that a bond traded. See proposed Rule 86(b)(2)(D)(i)(a). \18\ The Notice provides additional details and examples related to the calculation of the IMP. See Notice, supra note 4, at 19676- 77. See also proposed Rule 86(b)(2)(D). --------------------------------------------------------------------------- In addition to adding order types to the NYSE Bonds platform and codifying functionality of order types currently available on NYSE Bonds, the Exchange also proposes to amend other parts of Rule 86 that are impacted by this proposed rule change. Rule 86(h) currently states that orders can only be designated for Bond Trading Sessions and cannot be designated for participation in Bond Auctions. The rule further states that participation in Bond Auctions is automatic if an order is designated for participation in a particular Bond trading Session and is entered prior to the commencement of the related Bond Auction. Given that not all of the new order types are eligible to participate in Bond Auctions, the Exchange proposes to amend the current rule to clarify that participation in Bond Auctions is not automatic if an order is designated for participation in a particular Bond Trading Session.\19\ --------------------------------------------------------------------------- \19\ See Notice, supra note 4, at 19677. --------------------------------------------------------------------------- Additionally, Rule 86(j) currently states that buy and sell orders in NYSE Bonds are displayed, matched and [[Page 33565]] executed according to price, with the highest bid price and the lowest offer price receiving highest priority and, within each price, according to the time of order entry. For Timed Orders, priority within each price is determined based on the effective time of the order, as provided in proposed Rule 86(b)(2)(B)(vi)(3)(a)-(c). Timed Orders submitted with an Effective Time become effective at the time designated on the order (i.e., at the Effective Time), whereas Timed Orders submitted with an Expire Time become effective at the time such order is submitted. Additionally, Timed Orders submitted with a designated trading session alone or with a designated trading session and either an Effective Time or an Expire Time become effective at the time the designated trading session begins, whereas Timed Orders submitted during a designated trading session become effective at the time such order is received. The Exchange proposes to reflect these differences with an amendment to Rule 86(j)(A)(ii).\20\ --------------------------------------------------------------------------- \20\ See id. --------------------------------------------------------------------------- Finally, the Exchange proposes to make non-substantive organizational changes to the rule text in order to make the rule easier to read and understand. Specifically, the Exchange is proposing to renumber each of paragraphs (C), (D), and (E) to (B)(ii), (B)(iii), and (B)(iv) and to renumber each of paragraphs (F) through (O) to (C) through (K). III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\21\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\22\ which requires, among other things, that the rules of a national securities exchange be 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; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \21\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \22\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission notes that the Exchange believes that the proposed rule change would protect investors and remove impediments to, and perfect the mechanisms of, a free and open market and a national market system by offering its Users additional order types and therefore affording them greater opportunities to execute their bond orders on the Exchange.\23\ The Exchange further states that its proposal to adopt new order types on NYSE Bonds, including All-or-None, Fill-or- Kill, and Minimum Quantity orders, is consistent with order types available on other ATSs and exchanges.\24\ The Commission notes that, according to the Exchange, the proposal to codify Good `Til Date Orders and Timed Orders does not add any new functionality but instead provides additional clarity and transparency regarding current functionality offered by the Exchange.\25\ Finally, the Commission notes that the Exchange's proposal relating to the calculation of the IMP is intended to provide additional detail, clarity, and transparency to the rule.\26\ --------------------------------------------------------------------------- \23\ See Notice, supra note 4, at 19677. \24\ See id. at 19672 & n.13, 19677. The Exchange states that, because fixed income securities are not subject to Regulation NMS, it proposes to display the All-or-None and Minimum Quantity and permit executions that bypass an All-or-None order or Minimum Quantity order if the terms of such orders cannot be met, unlike similar All-or-None and Minimum Quantity order types on equity exchanges. See id. at 19677. \25\ See Notice, supra note 4, at 19677. \26\ See id. at 19672, 77. --------------------------------------------------------------------------- The Commission believes that the proposed rules to adopt new order types on NYSE Bonds would provide Users with additional options for trading in fixed income securities on the Exchange. Based on the Exchange's representations, the Commission believes that the proposed rules regarding Good `Til Date and Timed Orders do not raise any novel regulatory considerations and should provide greater specificity, clarity, and transparency with respect to the functionality available on the Exchange. The Commission similarly believes that the proposal relating to the IMP calculation and the organizational changes to the rule text should provide additional clarity and transparency to the Exchange's rules. For these reasons, the Commission believes that the proposed rule change is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\27\ that the proposed rule change (SR-NYSE-2016-17), as modified by Amendment No. 1, be, and hereby is, approved. --------------------------------------------------------------------------- \27\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\28\ --------------------------------------------------------------------------- \28\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-12388 Filed 5-25-16; 8:45 am] BILLING CODE 8011-01-P
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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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executed according to price, with the permit unfair discrimination between proposed rule change (SR–NYSE–2016–
highest bid price and the lowest offer customers, issuers, brokers, or dealers. 17), as modified by Amendment No. 1,
price receiving highest priority and, The Commission notes that the be, and hereby is, approved.
within each price, according to the time Exchange believes that the proposed For the Commission, by the Division of
of order entry. For Timed Orders, rule change would protect investors and Trading and Markets, pursuant to delegated
priority within each price is determined remove impediments to, and perfect the authority.28
based on the effective time of the order, mechanisms of, a free and open market Robert W. Errett,
as provided in proposed Rule and a national market system by offering Deputy Secretary.
86(b)(2)(B)(vi)(3)(a)–(c). Timed Orders its Users additional order types and [FR Doc. 2016–12388 Filed 5–25–16; 8:45 am]
submitted with an Effective Time therefore affording them greater
BILLING CODE 8011–01–P
become effective at the time designated opportunities to execute their bond
on the order (i.e., at the Effective Time), orders on the Exchange.23 The Exchange
whereas Timed Orders submitted with further states that its proposal to adopt SECURITIES AND EXCHANGE
an Expire Time become effective at the new order types on NYSE Bonds, COMMISSION
time such order is submitted. including All-or-None, Fill-or-Kill, and
Minimum Quantity orders, is consistent [Release No. 34–77881; File No. SR–
Additionally, Timed Orders submitted ISEGemini–2016–03]
with a designated trading session alone with order types available on other
or with a designated trading session and ATSs and exchanges.24 The
Self-Regulatory Organizations; ISE
either an Effective Time or an Expire Commission notes that, according to the
Gemini, LLC; Order Approving
Time become effective at the time the Exchange, the proposal to codify Good
Proposed Rule Change Related to
‘Til Date Orders and Timed Orders does
designated trading session begins, Market Wide Risk Protection
not add any new functionality but
whereas Timed Orders submitted during
instead provides additional clarity and May 20, 2016.
a designated trading session become
transparency regarding current
effective at the time such order is I. Introduction
functionality offered by the Exchange.25
received. The Exchange proposes to Finally, the Commission notes that the On March 17, 2016, ISE Gemini, LLC
reflect these differences with an Exchange’s proposal relating to the (the ‘‘Exchange’’ or ‘‘ISE Gemini’’) filed
amendment to Rule 86(j)(A)(ii).20 calculation of the IMP is intended to with the Securities and Exchange
Finally, the Exchange proposes to provide additional detail, clarity, and Commission (‘‘Commission’’) pursuant
make non-substantive organizational transparency to the rule.26 to Section 19(b)(1) of the Securities
changes to the rule text in order to make The Commission believes that the Exchange Act of 1934 (‘‘Act’’) 1 and Rule
the rule easier to read and understand. proposed rules to adopt new order types 19b–4 thereunder,2 a proposed rule
Specifically, the Exchange is proposing on NYSE Bonds would provide Users change to introduce new activity-based
to renumber each of paragraphs (C), (D), with additional options for trading in risk protection functionality. The
and (E) to (B)(ii), (B)(iii), and (B)(iv) and fixed income securities on the proposed rule change was published for
to renumber each of paragraphs (F) Exchange. Based on the Exchange’s comment in the Federal Register on
through (O) to (C) through (K). representations, the Commission April 6, 2016.3 No comment letters were
believes that the proposed rules received in response to this proposal.
III. Discussion and Commission regarding Good ‘Til Date and Timed This order approves the proposed rule
Findings Orders do not raise any novel regulatory change.
After careful review, the Commission considerations and should provide
II. Description of the Proposed Rule
finds that the proposed rule change is greater specificity, clarity, and
Change
consistent with the requirements of the transparency with respect to the
functionality available on the Exchange. The Exchange proposed to introduce
Act and the rules and regulations two activity-based risk protection
thereunder applicable to a national The Commission similarly believes that
the proposal relating to the IMP measures that will be mandatory for all
securities exchange.21 In particular, the members: (1) The ‘‘Order Entry Rate
calculation and the organizational
Commission finds that the proposed Protection,’’ which prevents members
changes to the rule text should provide
rule change is consistent with Section from entering orders at a rate that
additional clarity and transparency to
6(b)(5) of the Act,22 which requires, exceeds predefined thresholds,4 and (2)
the Exchange’s rules. For these reasons,
among other things, that the rules of a the ‘‘Order Execution Rate Protection,’’
the Commission believes that the
national securities exchange be which prevents members from
proposed rule change is consistent with
designed to prevent fraudulent and executing orders at a rate that exceeds
the Act.
manipulative acts and practices, to their predefined risk settings (together,
promote just and equitable principles of IV. Conclusion ‘‘Market Wide Risk Protection’’). The
trade, to foster cooperation and It is therefore ordered, pursuant to Exchange will announce the
coordination with persons engaged in Section 19(b)(2) of the Act,27 that the implementation date of the proposed
facilitating transactions in securities, to
remove impediments to and perfect the 23 See Notice, supra note 4, at 19677. 28 17 CFR 200.30–3(a)(12).
mechanism of a free and open market 24 See id. at 19672 & n.13, 19677. The Exchange 1 15 U.S.C. 78s(b)(1).
and a national market system, and, in states that, because fixed income securities are not 2 17 CFR 240.19b–4.
general, to protect investors and the subject to Regulation NMS, it proposes to display 3 See Securities Exchange Act Release No. 77488
sradovich on DSK3TPTVN1PROD with NOTICES
the All-or-None and Minimum Quantity and permit (Mar. 31, 2016), 81 FR 20021 (‘‘Notice’’).
public interest; and are not designed to executions that bypass an All-or-None order or 4 The Exchange stated that it will initiate the
Minimum Quantity order if the terms of such orders Order Entry Rate Protection pre-open, but in a
20 See id. cannot be met, unlike similar All-or-None and manner that allows members time to load their
21 Inapproving this proposed rule change, the Minimum Quantity order types on equity orders without inadvertently triggering the
Commission has considered the proposed rule’s exchanges. See id. at 19677. protection. The Exchange further noted that it will
25 See Notice, supra note 4, at 19677.
impact on efficiency, competition, and capital establish and communicate the precise initiation
formation. See 15 U.S.C. 78c(f). 26 See id. at 19672, 77.
time via circular and prior to implementation. See
22 15 U.S.C. 78f(b)(5). 27 15 U.S.C. 78s(b)(2). Notice, supra note 3, at 20022 n.4.
VerDate Sep<11>2014 18:47 May 25, 2016 Jkt 238001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\26MYN1.SGM 26MYN1](https://thefederalregister.org/doc/81_FR_33665/page/3.svg)
Document Created: 2016-05-26 01:13:22
Document Modified: 2016-05-26 01:13:22
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 33563 |
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