81 FR 34401 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 6.43 Regarding Definition of Floor Broker

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 104 (May 31, 2016)

[Federal Register Volume 81, Number 104 (Tuesday, May 31, 2016)]
[Notices]
[Pages 34401-34403]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-12671]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77897; File No. SR-NYSEArca-2016-73]


 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Rule 6.43 
Regarding Definition of Floor Broker

May 24, 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 17, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 6.43 (Options Floor Broker 
Defined). The proposed rule change is available on the Exchange's Web 
site at www.nyse.com, at the principal office of the Exchange, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 6.43 to update the definition 
of Floor Broker.\4\ The proposed rule change would harmonize the Floor 
Broker definition with the recently updated rule of another competing 
options exchange--specifically NASDAQ OMX PHLX LLC (``PHLX'').\5\
---------------------------------------------------------------------------

    \4\ The Exchange notes that, other than changes to the format or 
terms used in the rule, the definition of Floor Broker has remained 
unchanged since 2001. See Securities Exchange Act Release No. 44790 
(September 13, 2001) 66 FR 48502 (September 20, 2001) (SR-PCX-2001-
26) (relating to accepting orders from Professional Customers).
    \5\ See Securities Exchange Act Release No. 76800 (December 30, 
2015), 81 FR 549, (January 6, 2016) (SR-Phlx-2015-114) (adopting 
updated definition of Floor Broker in PHLX Rule 1060 on immediately 
effective basis).
---------------------------------------------------------------------------

    Rule 6.43(a) defines a Floor Broker as ``an individual (either an 
OTP Holder or OTP Firm or a nominee of an OTP Holder or OTP Firm) who 
is registered with the Exchange for the purpose, while on the Exchange 
Floor, of accepting and executing option orders received from OTP 
Holders and OTP Firms [each an ``OTP''].'' The Rule further provides 
that ``[a] Floor Broker shall not accept an order from any other source 
unless he has registered his individual for an [OTP] approved to 
transact business with the public in accordance with Rule 9, in which 
event he may accept orders for public customers of the [OTP].''
    The Exchange notes that Floor Brokers, as registered Broker/
Dealers\6\, have long handled orders from Broker/Dealers who may not be 
OTPs. In addition, Floor Brokers may accept orders from non-Broker/
Dealers (i.e., public customers).\7\ Thus, the Exchange proposes to 
clarify Rule 6.43(a) by removing the language regarding the types of 
market participants from whom a Floor Broker may accept an order.\8\ 
The updated rule would provide that a

[[Page 34402]]

Floor Broker is an individual who is registered with the Exchange for 
the purpose, while on the Options Floor, of accepting and handling 
options orders.\9\ Further, as proposed, a Floor Broker may accept 
orders from OTPs, Broker Dealers that are non-OTPs, Professional 
Customers, pursuant to Rule 6.43(b), as well as from public customers 
provided the Floor Broker is properly qualified to do business with the 
public.\10\
---------------------------------------------------------------------------

    \6\ See Rule 6.43(a).
    \7\ To handle the orders of public customers, Floor Brokers must 
be properly qualified to do business with the public, per Rule 9 
(Conducting Business With The Public), generally, and Rule 9.18 
(Doing a Public Business in Options), specifically.
    \8\ See proposed Rule 6.43(a). This practice is consistent with 
the rules of other exchanges. See, e.g., supra n. 5 (PHLX Rule 1060) 
and CBOE Rule 6.70 (permitting CBOE Floor Brokers to accept orders 
from non-member broker-dealers).
    \9\ Consistent with the proposed changes to Rule 6.43(a), the 
Exchange proposes to delete the cross reference to this section from 
Rule 6.43(b)(1). See proposed Rule 6.43(b)(1).
    \10\ See supra n. 7.
---------------------------------------------------------------------------

    This proposed rule change would reflect current practice on the 
Exchange, specifically that a Floor Broker may accept orders from 
Broker Dealers that are not OTPs. The proposed modification would not 
alter a Floor Broker's responsibilities. Further, the proposal would 
have no impact on a Floor Broker's ability to accept orders from the 
public.\11\
---------------------------------------------------------------------------

    \11\ See id.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed change is consistent with 
Section 6(b) of the Act,\12\ in general, and furthers the objectives of 
Section 6(b)(5),\13\ in particular, in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitation transactions 
in securities, to remove impediments to, and perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposal is designed 
to remove language that could be interpreted as a limitation on orders 
that may be accepted by Floor Brokers to reflect current practice on 
the Exchange, which would promote just and equitable principles of 
trade, and remove impediments to, and perfect the mechanism of a free 
and open market. The proposed change would make clear to market 
participants that a Floor Broker may accept an order from a non-OTP 
that is a Broker Dealer, which adds clarity and transparency to 
Exchange rules to the benefit of all market participants. Thus, the 
Exchange believes that the proposal would help prevent confusion and 
help ensure that floor brokerage services are widely available to 
various types of market participants, which should, in turn, promote 
just and equitable principles of trade.

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

    The Exchange does not believe that this proposed rule change would 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. With respect to inter-market 
competition, the proposed rule change is a competitive change that is 
substantially similar to rules in place at another competing options 
exchange.\14\ With respect to intra-market competition, the proposal 
applies to all NYSE Arca Floor Brokers.
---------------------------------------------------------------------------

    \14\ See supra n. 5.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ 
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) thereunder.\17\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
---------------------------------------------------------------------------

    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) \18\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \18\ 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-NYSEArca-2016-73 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2016-73. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2016-73, and should 
be submitted on or before June 21, 2016.


[[Page 34403]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12671 Filed 5-27-16; 8:45 am]
 BILLING CODE 8011-01-P