81 FR 35410 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 130

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 106 (June 2, 2016)

[Federal Register Volume 81, Number 106 (Thursday, June 2, 2016)]
[Notices]
[Pages 35410-35411]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-12877]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77930; File No. SR-NYSE-2016-38]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 130

May 26, 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, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') 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 130 to specify that, unless 
otherwise required by rule, all transactions effected on the Exchange 
would be processed anonymously. 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 130 to specify that, except as 
otherwise required by the Exchange's rules,\4\ all transactions 
effected on the Exchange and all reports associated with such 
transaction would be processed anonymously and would not reveal contra-
party identities.
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    \4\ For example, face-to-face transactions on the Trading Floor, 
including Crowd trades executed verbally between two Floor brokers 
and between a Floor broker and a Designated Market Maker (``DMM''), 
would continue to require submission of certain contra side 
information, as required by Rules 123, 132, and 134. Exchange 
systems and the executing brokers would continue not to have access 
to any information about the ultimate customer (i.e., the name of 
the member or member organization's customer) in an order or 
transaction.
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    Rule 130 currently provides that ``[n]otwithstanding any other rule 
to the contrary, each transaction effected on the Exchange shall be 
compared or otherwise closed out by the close of business on the 
Exchange on the business day following the day of the contract.'' The 
Exchange proposes to replace ``notwithstanding any other rule to the 
contrary'' with ``unless otherwise specified by rule'' and add a clause 
to Rule 130 providing that all transactions effected on the Exchange 
would be processed anonymously and that transaction reports will 
indicate the details of the transaction, but will not reveal contra 
party identities.
    Additionally, the Exchange proposes to add new subsection (b) to 
Rule 130 that provides that the Exchange would reveal contra-party 
identities in the following circumstances: (1) For regulatory purposes 
or to comply with an order of a court or arbitrator; (2) when a 
Qualified Clearing Agency ceases to act for a member organization or 
the member organization's clearing firm, and determines not to 
guarantee the settlement of the member organization's trades; or (3) if 
both parties to the transaction consent.\5\ The proposed changes are 
intended to clarify and reflect the Exchange's current practice as it 
relates to electronic transactions and align with the rules of other 
national securities exchange that preserve anonymity through the 
settlement process.\6\
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    \5\ The Exchange proposes non-substantive, technical amendments 
to re-number the remaining paragraphs of Rule 130 accordingly.
    \6\ See NYSE Arca Equities, Inc. (``NYSE Arca Equities'') Rule 
7.41, BATS BZX Exchange, Inc. (``BATS'') Rule 11.15, and NASDAQ 
Stock Market LLC (``Nasdaq'') Rule 4760.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers 
the objectives of Section 6(b)(5),\7\ 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. The Exchange believes that 
the proposed rule change removes impediments to and perfects the 
mechanism of a free and open market by furthering the important goal of 
post-trade anonymity. Similarly, the proposal promotes just and 
equitable principles of trade and removes impediments to and perfects 
the mechanism of a free and open market by providing transparency to 
the Exchange's existing process to process trades anonymously, which is 
consistent with that of other national securities exchanges.\8\ The 
Exchange believes that post-trade anonymity benefits investors because 
preserving anonymity through settlement limits the potential market

[[Page 35411]]

impact that disclosing contra-party identities could have, which might 
include the ability to detect trading patterns and make assumptions 
about the potential direction of the market based on the identified 
contra party's presumed client-base. The Exchange further believes it 
is appropriate to carve out Floor-based face-to-face trades from the 
anonymity requirement because such trades are, by definition, not 
anonymous.
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    \7\ 15 U.S.C. 78f(b)(5).
    \8\ See note 6, supra.
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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 rather intended to align 
the Exchange's practice with the rules of other national stock 
exchanges.

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 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.
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    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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2016-38 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-NYSE-2016-38. 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-NYSE-2016-38 
and should be submitted on or before June 23, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-12877 Filed 6-1-16; 8:45 am]
 BILLING CODE 8011-01-P