81 FR 39722 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending NYSE Rule 6A To Exclude the Physical Area Within Fully Enclosed Telephone Booths Located in 18 Broad Street From the Definition of Trading Floor

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 117 (June 17, 2016)

[Federal Register Volume 81, Number 117 (Friday, June 17, 2016)]
[Notices]
[Pages 39722-39724]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-14320]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78057; File No. SR-NYSE-2016-31]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending NYSE Rule 6A To 
Exclude the Physical Area Within Fully Enclosed Telephone Booths 
Located in 18 Broad Street From the Definition of Trading Floor

June 13, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 31, 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, II, 
and III below, which Items have been prepared by the Exchange. 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\ 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 NYSE Rule 6A (``Trading Floor'') to 
exclude an area in 18 Broad Street that has fully enclosed telephone 
booths from the definition of Trading Floor. 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 purpose of the proposed rule change is to amend NYSE Rule 6A 
(``Trading Floor'') to exclude from the definition of ``Trading Floor'' 
the area within fully enclosed telephone booths located in 18 Broad 
Street.
    The Exchange currently defines ``Trading Floor'' \3\ in Rule 6A to 
mean the restricted-access physical areas designated by the Exchange 
for the trading of securities, commonly known as the ``Main Room,'' the 
``Blue Room'' and the ``Garage.'' \4\ Rule 6A also specifies that the 
Exchange's Trading Floor does not include areas designated by the 
Exchange where NYSE Amex-listed options are traded, commonly known as 
the ``Extended Blue Room,'' which, for the purposes of the Exchange's 
Rules, are referred to as the ``NYSE Amex Options Trading Floor.'' \5\ 
The Exchange proposes to add sub-paragraph numbering to Rule 6A, so 
that the first paragraph of the rule would be sub-paragraph (a) and the 
second paragraph would be sub-paragraph (b). As proposed, Rule 6A(a) 
would define the term ``Trading Floor,'' and proposed Rule 6A(b) would 
define which physical areas are excluded from the definition of 
``Trading Floor.''
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    \3\ Access to the Trading Floor is restricted at each entrance 
by turnstiles and only authorized visitors, members or member firm 
employees are permitted to enter.
    \4\ See NYSE Rule 6A; see also Securities Exchange Act Release 
No. 59479 (Mar. 2, 2009), 74 FR 10325 (Mar. 10, 2009) (SR-NYSE-2009-
23) (Notice of filing adopting NYSE Rule 6A and explaining that the 
proposed definition of ``Trading Floor'' will provide a more 
accurate description of the physical areas of the Floor where 
trading is actually conducted).
    \5\ Id. The term ``Trading Floor'' is distinct from the term 
``Floor.'' The term ``Floor'' means the trading Floor of the 
Exchange and the premises immediately adjacent thereto, such as the 
various entrances and lobbies of the 11 Wall Street, 18 New Street, 
8 Broad Street, 12 Broad Street and 18 Broad Street Buildings, and 
also means the telephone facilities available in these locations. 
See NYSE Rule 6.
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    The Exchange first proposes to amend Rule 6A to reflect the 
renaming of the physical area formerly known as the ``Garage.'' That 
area has been renamed the ``Buttonwood Room'' and the Exchange proposes 
to reflect this change in Rule 6A. Rule 6A also currently defines 
Trading Floor to include areas commonly known as the ``Blue Room'' and 
also refers to an area commonly referred to as the ``Extended Blue 
Room.'' \6\ The Exchange recently closed those areas and moved all 
member organizations, member organization employees and NYSE Amex 
Options trading activities that were previously housed in these areas 
to the Buttonwood Room. To reflect this change, the Exchange proposes 
to delete references to the Blue Room and Extended Blue Room from Rule 
6A and replace them with a reference to the Buttonwood Room.
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    \6\ The Blue Room and Extended Blue Room are references to 
trading spaces previously utilized by member firm employees and NYSE 
Amex Options at 20 Broad Street.
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    With respect to proposed Rule 6A(b), the current rule already 
excludes the NYSE Amex Options Trading Floor from the definition of 
``Trading Floor.'' To reflect the change to the names of the trading 
rooms and the relocation of the NYSE Amex Options Trading Floor to the 
Buttonwood Room, the Exchange proposes to amend Rule 6A(b) to refer to 
the Buttonwood Room when referring to the NYSE Amex Options Trading 
Floor. Accordingly, the proposed rule would exclude from the definition 
of Trading Floor the designated areas in the Buttonwood Room where NYSE 
Amex-listed options are traded which, for the purposes of the 
Exchange's Rules, would continue to be referred to as the ``NYSE Amex 
Options Trading Floor.'' \7\ This proposed change does not make any 
substantive changes and reflects only the location change for NYSE Amex 
Options. This proposal would have no impact on the physical location of 
NYSE Amex Options personnel as they would remain in their current 
location in the Buttonwood Room.
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    \7\ As when the NYSE Amex Options Trading Floor was located in 
the Extended Blue Room, in the Buttonwood Room, the Exchange has 
erected physical barriers between the NYSE Amex Options Trading 
Floor and any Exchange member organizations or Exchange personnel 
that are also located in the Buttonwood Room.
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    The Exchange next proposes to amend Rule 6A(b) to exclude an 
additional area from the definition of Trading Floor. As proposed, the 
Exchange proposes to exclude from the definition of Trading

[[Page 39723]]

Floor the area within fully enclosed telephone booths located in 18 
Broad Street at the Southeast wall of the Trading Floor. The telephone 
booths would be located in a vestibule area adjacent to 18 Broad Street 
elevator banks that provide access to the Trading Floor and that are 
separated from the equity trading areas of the Main Room by 
approximately forty (40) feet and a partial physical barrier. As such, 
while inside the telephone booths, there is not any visual or auditory 
access to activities conducted at the trading posts or by Floor 
Brokers.
    These telephone booths would be designed for use by DMMs, but could 
be used by anyone on the Trading Floor. Because the telephone booths 
would be excluded from the definition of Trading Floor, there would not 
be any restrictions on the use of personal cell phones by DMMs while in 
these telephone booths, nor would there be restrictions on which 
cellular phone a Floor broker may use while in the telephone booth. For 
example, currently, a DMM who is not on the Trading Floor, i.e., is 
located outside the restricted-access areas of the Floor, may use a 
personal cell phone to communicate with an issuer. As proposed, because 
the area within the telephone booth would similarly be excluded from 
the definition of Trading Floor, a DMM could use a personal cell phone 
while inside the telephone booth to communicate with an issuer. A DMM's 
use of a personal cell phone while within the telephone booth would be 
no different than if the DMM used his or her personal cell phone to 
communicate with an issuer from the DMM's office off the Exchange or 
while outside the restricted-access areas of the Floor, i.e., outside 
the Trading Floor.
    While in the telephone booth, the DMM would not have access to any 
time and place information that he or she may have at the trading post. 
The proposed location of these telephone booths would ensure the 
privacy of any conversations, for a number of reasons: the closest 
location of any Floor Broker operations, which also contain privacy 
barriers, is approximately forty (40) feet from the proposed location 
of the telephone booths; there are high arching walls with limited line 
and sight vision separating the telephone booths from any trading posts 
on the Trading Floor; and lastly, the telephone booths are fully 
enclosed so any conversation that would occur would take place behind 
closed doors. The Exchange believes that the combination of these 
visual and acoustical barriers would substantially eliminate the risk 
that any conversations occurring inside the telephone booth could be 
overheard. In addition, it substantially eliminates the risk that an 
individual having a telephone conversation while inside the telephone 
booth would be able to hear or see anything at a trading post where 
securities trade.
    To the extent that a DMM would use the telephone booths to 
communicate off the Trading Floor, current Exchange restrictions 
governing the protection of material non-public information would 
continue to apply. Rule 98 (``Operation of a DMM Unit'') currently 
provides that that when a Floor-based employee of a DMM unit moves to a 
location off of the Trading Floor of the Exchange or if any person that 
provides risk management oversight or supervision of the Floor-based 
operations of the DMM unit is aware of Floor-based non-public order 
information, he or she shall not (1) make such information available to 
customers, (2) make such information available to individuals or 
systems responsible for making trading decisions in DMM securities in 
away markets or related products, or (3) use any such information in 
connection with making trading decisions in DMM securities in away 
markets or related products.\8\ The proposed rule change is not 
intended to circumvent the restrictions prescribed in Rule 98 
applicable to DMMs. Accordingly, DMMs would continue to be subject to 
the restrictions against the misuse of material non-public information 
prescribed in Rule 98. To that end, any communication between a DMM and 
an issuer would be limited to information that is in the public domain 
and not deemed material, non-public information. Except for the 
requirement to protect against the misuse of material non-public 
information set forth in Rule 98, Exchange rules do not have any 
restrictions on DMMs communicating with issuers from locations off of 
the Trading Floor. To the contrary, an important element of the DMM 
role is its relationship with issuers.
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    \8\ See NYSE Rule 98(c)(3)(C). Rule 98, however, permits a DMM 
that needs to take on a larger risk profile in a security because of 
a proposed floor broker transaction to discuss the proposed 
transaction, which would be deemed material non-public information, 
with the DMM's risk manager located off of the Trading Floor without 
violating Exchange rules or federal securities laws.
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    Moreover, DMMs would continue to be subject to supplementary 
material .30 to Rule 36 (``DMM Unit Post Wires'') (``Rule 36.30''), 
which permits a DMM to maintain at their posts telephone lines and 
wired or wireless devices that are registered with the Exchange to 
communicate with personnel at the off-Floor offices of the DMM, the 
DMM's clearing firm, or with persons providing non-trading related 
services to the DMM. The Exchange is not proposing any changes to Rule 
36 and, therefore, the current restrictions in Rule 36 would remain 
applicable and would not be affected by the proposed amendment to the 
definition of Trading Floor in Rule 6A. The proposed amendment to Rule 
6A would allow the Exchange to delineate an area inside the telephone 
booth as being off the Trading Floor where a DMM may use a personal 
cell phone, which would not be subject to Rule 36.30.
    Because the proposed telephone booths would still fall within the 
broader definition of Floor under Exchange rules, the Exchange will 
retain jurisdiction in this area to regulate conduct that is 
inconsistent with Exchange Rules and the federal securities laws and 
rules thereunder.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with, and further the objectives of, Section 6(b)(5) of the Securities 
Exchange Act of 1934 \9\ (the ``Act''), in that they are designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, 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 
proposed rule change would exclude from the definition of Trading Floor 
fully-enclosed telephone booths that are located on the perimeter of 
the Trading Floor, approximately 40 feet away from any trading 
operations. The Exchange believes that excluding these telephone booths 
from the definition of Trading Floor is designed to prevent fraudulent 
and manipulative acts and practices and to promote just and equitable 
principles of trade because the visual and acoustic lines while within 
the fully-enclosed telephone booths to any trading activities are 
extremely limited. The Exchange believes that the combination of these 
visual and acoustical barriers would substantially eliminate the risk 
that any conversations occurring inside the telephone booth could be 
overheard. In addition, it substantially eliminates the risk that an 
individual having a telephone conversation while inside the telephone 
booth would be able to hear or see anything at a trading post where 
securities trade. Accordingly, because being inside the telephone 
booths would be akin to being off of the Trading Floor, the Exchange 
believes

[[Page 39724]]

that it would remove impediments to and perfect the mechanism of a free 
and open market and a national market system to treat the areas within 
the telephone booths similarly to areas located outside of the Trading 
Floor.
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    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange further believes that the proposed rule change would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because it will reduce the burdens 
on the ability of a DMM to communicate with an issuer. Currently, a DMM 
may use a personal cell phone to communicate with an issuer outside of 
the Trading Floor, but short of going to an office at a separate 
physical location, there are limited areas where a DMM may have a 
private conversation. The telephone booths would provide a physical 
space in which a DMM could have a private conversation with an issuer 
while at the same time remaining subject to existing Rule 98 
requirements to protect against the misuse of material, non-public 
information. The Exchange further believes that updating the references 
in the Exchange rules to reflect the correct use of the Exchange 
Trading Floor would eliminate any potential confusion among investors 
and other market participants on the Exchange as to areas of the 
Trading Floor where certain conduct is, or is not, permitted.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any issues relating to competition. Rather, the 
proposed rule change would ease burdens on the ability of a DMM to have 
a private conversation with an issuer by providing a physical location 
that would be excluded from the definition of Trading Floor that is 
private.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2016-31 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-2016-31. 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-NYSE-2016-31, and should be 
submitted on or before July 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14320 Filed 6-16-16; 8:45 am]
 BILLING CODE 8011-01-P