81 FR 43297 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Add a New Discretionary Pegged Order
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 127 (July 1, 2016)
Federal Register Volume 81, Issue 127 (July 1, 2016)
| Page Range | 43297-43301 | |
| FR Document | 2016-15718 |
[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)] [Notices] [Pages 43297-43301] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-15718] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78181; File No. SR-NYSEArca-2016-44] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Add a New Discretionary Pegged Order June 28, 2016. I. Introduction On March 11, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 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 NYSE Arca Equities Rule 7.31P(h) to add a new Discretionary Pegged Order. The proposed rule change was published for comment in the Federal Register on March 30, 2016.\3\ The Commission received two comment letters on the proposed rule change \4\ and a response letter from the Exchange.\5\ On May 12, 2016, pursuant to Section 19(b)(2) of the Act,\6\ the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.\7\ On June 23, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.\8\ The Commission is publishing [[Page 43298]] this notice to solicit comments on Amendment No. 1 from interested persons, and is approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 77441 (March 24, 2016), 81 FR 17749 (``Notice''). \4\ See Letter from Sophia Lee, General Counsel, IEX Group, Inc. (``IEX''), to Brent J. Fields, Secretary, Commission, dated April 15, 2016 (``IEX Letter''); Letter from John C. Nagel, Esq., Managing Director and Sr. Deputy General Counsel, Citadel LLC (``Citadel''), to Brent J. Fields, Secretary, Commission, dated April 20, 2016 (``Citadel Letter''). \5\ See Letter from Elizabeth K. King, General Counsel and Corporate Secretary, New York Stock Exchange, to Brent J. Fields, Secretary, Commission, dated April 27, 2016 (``Response Letter''). \6\ 15 U.S.C. 78s(b)(2). \7\ See Securities Exchange Act Release No. 77820, 81 FR 31272 (May 18, 2016). The Commission designated June 28, 2016, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. \8\ In Amendment No. 1, the Exchange: (1) Added subsection (E) to proposed Rule 7.31P(h)(3), which would provide that if the PBBO (as defined below) is locked or crossed, both an arriving and resting Discretionary Pegged Order would wait for a PBBO that is not locked or crossed before the working price (as defined below) is adjusted and the order becomes eligible to trade; (2) provided additional responses to the comment letters; and (3) provided more information regarding the implementation date for the proposed rule change. Amendment No. 1 is available at: https://www.sec.gov/comments/sr-nysearca-2016-44/nysearca201644-4.pdf. --------------------------------------------------------------------------- II. Description of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Equites Rule 7.31P(h) to add a new Discretionary Pegged Order for its Pillar trading platform. According to the Exchange, the proposed Discretionary Pegged Order is based on the Discretionary Peg Order (``D-Peg Order'') proposed by IEX in its Form 1 application seeking registration as a national securities exchange.\9\ --------------------------------------------------------------------------- \9\ See Notice, supra note 3, at 17749. On June 17, 2016, the Commission granted IEX's application for registration as a national securities exchange. See Securities Exchange Act Release No. 78101 (June 17, 2016), 81 FR 41142 (June 23, 2016) (``IEX Order''). In its proposal, the Exchange identifies the substantive differences between the proposed Discretionary Pegged Order and IEX's D-Peg Order. First, the proposed Discretionary Pegged Order must have a limit price, whereas IEX's D-Peg Order is not required to have a limit price. See Notice, supra note 3, at 17749. Second, the proposed Discretionary Pegged Order must be Day time-in-force, whereas IEX's D-Peg order is also permitted to have certain other times-in-force. See id. Third, if the PBBO is locked or crossed, both an arriving and resting Discretionary Pegged Order would wait for a PBBO that is not locked or crossed before the working price is adjusted and the order becomes eligible to trade, whereas IEX's D- Peg Order can be priced and traded if the market is locked or crossed. See Amendment No. 1 at 3-4. In the proposal, the Exchange also states that, unlike IEX's D-Peg Order, the proposed Discretionary Pegged Order would be based on the PBBO rather than the NBBO. See Notice, supra note 3, at 17749. According to the Exchange, the PBBO is the reference price that it uses for its Pegged Orders under Rule 7.31P(h). The Commission notes that, in an amendment to IEX's exchange application, IEX clarified that its D- Peg Order is based on the Protected NBBO. See Investors' Exchange LLC--Form 1 Application and Exhibits, Addendum B-1 Comparison to Amendment No. 1, available at https://www.sec.gov/rules/other/2016/iex/iex-form-1-addendum-b-1-amendments-redline.pdf. --------------------------------------------------------------------------- Proposed Rule 7.31P(h)(3) would provide that a Discretionary Pegged Order would be a Pegged Order \10\ to buy (sell) that upon entry to the NYSE Arca Marketplace \11\ would be assigned a working price \12\ equal to the lower (higher) of the midpoint of the PBBO \13\ (``Midpoint Price'') or the limit price of the order. Any untraded shares of such order would be assigned a working price equal to the lower (higher) of the PBB (PBO) or the order's limit price and would automatically be adjusted in response to changes to the PBB (PBO) for buy (sell) orders up (down) to the order's limit price. In order to trade with contra- side orders on the NYSE Arca Book, a Discretionary Pegged Order to buy (sell) would exercise the least amount of price discretion necessary from its working price to its discretionary price (defined as the lower (higher) of the Midpoint Price or the Discretionary Pegged Order's limit price), except during periods of quote instability, as defined in proposed Rule 7.31P(h)(3)(D). --------------------------------------------------------------------------- \10\ The term ``Pegged Order'' is defined in Exchange Rule 7.31P(h) as a Limit Order that does not route with a working price that is pegged to a dynamic reference price. If the designated reference price is higher (lower) than the limit price of a Pegged Order to buy (sell), the working price will be the limit price of the order. \11\ The term ``NYSE Arca Marketplace'' is defined in Exchange Rule 1.1(e) as the electronic securities communications and trading facility designated by the Board of Directors through which orders of Users are consolidated for execution and/or display. \12\ The term ``working price'' is defined in Exchange Rule 7.36P(a)(3) as the price at which an order is eligible to trade at any given time, which may be different from the limit price or display price of the order. The term ``limit price'' is defined in Exchange Rule 7.36P(a)(2) as the highest (lowest) specified price at which a Limit Order to buy (sell) is eligible to trade. \13\ The term ``PBBO'' is defined in Exchange Rule 1.1(dd) as the highest Protected Bid and the lowest Protected Offer. --------------------------------------------------------------------------- Proposed Rule 7.31P(h)(3)(A) would provide that Discretionary Pegged Orders would not be displayed, must be designated Day, and would be eligible to be designated for the Core Trading Session only. Discretionary Pegged Orders that include a designation for the Early Trading Session or Late Trading Session would be rejected. Proposed Rule 7.31P(h)(3)(B) would provide that when exercising discretion, Discretionary Pegged Orders would maintain their time priority at their working price as Priority 3--Non-Display Orders and would be prioritized behind Priority 3--Non-Display Orders with a working price equal to the discretionary price of a Discretionary Pegged Order at the time of execution. If multiple Discretionary Pegged Orders are exercising price discretion during the same book processing action, they would maintain their relative time priority at the discretionary price. Proposed Rule 7.31P(h)(3)(C) would provide that a Discretionary Pegged Order would be eligible to exercise price discretion to its discretionary price, except during periods of quote instability. If the Corporation \14\ determines the PBB for a particular security to be an unstable quote, it would restrict buy Discretionary Pegged Orders in that security from exercising price discretion to trade against interest above the PBB. If the Corporation determines the PBO for a particular security to be an unstable quote, it would restrict sell Discretionary Pegged Orders in that security from exercising price discretion to trade against interest below the PBO. --------------------------------------------------------------------------- \14\ The term ``Corporation'' is defined in Exchange Rule 1.1(k) to mean NYSE Arca Equities, Inc., as described in NYSE Arca Equities, Inc.'s Certificate of Incorporation and Bylaws. --------------------------------------------------------------------------- Proposed Rule 7.31P(h)(3)(D) would set forth how the Exchange would determine the quote instability factor (i.e., the probability of an imminent change of the current PBB to a lower price or the current PBO to a higher price). When the quoting activity meets predefined criteria and the quote instability factor is greater than a defined threshold (``quote instability threshold''), the Corporation would treat the quote as not stable (``quote instability'' or ``crumbling quote''). When the Corporation determines either the PBB or the PBO is unstable, the determination would remain in effect at that price level for ten milliseconds. The Corporation would only treat one side of the PBBO as unstable in a particular security at any given time. The Corporation would determine that there is quote instability or a crumbling quote when the following occur: The PBB and PBO are the same as the PBB and PBO one millisecond ago; and the PBBO spread is less than or equal to the thirty-day median PBBO spread during the Core Trading Session; and there are more protected quotations on the far side; and the quote instability factor is greater than the defined quote instability threshold. The quote stability calculation used to determine the current quote instability factor would be defined by the following formula: 1/(1 + e [supcaret] -(C0 + C1 * N + C2 * F + C3 * N-1 + C4 * F-1)). The Exchange proposes to use the following quote stability coefficients: C0 = -2.39515; C1 = -0.76504; C2 = 0.07599; C3 = 0.38374; and C4 = 0.14466. The Exchange proposes to use the following quote stability variables: N = the number of protected quotations on the near side of the market; F = the number of protected quotations on the far side of the market; N-1 = the number of protected quotations on the near side of the market one millisecond ago; and F-1 = the number of protected quotations on the far side of the market one millisecond ago. The Exchange proposes to use a quote instability threshold of 0.32. Pursuant to proposed Rule 7.31P(h)(3)(D)(i)(D)(3), the Exchange reserves the right to modify the quote stability coefficients or quote instability [[Page 43299]] threshold at any time, subject to the filing of a proposed rule change with the Commission. Proposed Rule 7.31P(h)(3)(E) would provide that if the PBBO is locked or crossed, both an arriving and a resting Discretionary Pegged Order would wait for a PBBO that is not locked or crossed before the working price is adjusted and the order becomes eligible to trade. The Exchange anticipates that it will announce the implementation date of the proposed rule change by the fourth quarter of 2016.\15\ --------------------------------------------------------------------------- \15\ See Amendment No. 1 at 5. --------------------------------------------------------------------------- III. Summary of Comments and Response to Comments The Commission received two comment letters opposing the proposed rule change and a response letter and an amendment from the Exchange.\16\ --------------------------------------------------------------------------- \16\ See supra notes 4, 5, and 8. --------------------------------------------------------------------------- One commenter points out that, as noted by the Exchange, the proposed Discretionary Pegged Order is a copy of the D-Peg Order that the commenter created, which has been offered since November 2014 by the IEX Alternative Trading System.\17\ This commenter states its belief that the D-Peg Order is a useful order type that can protect investors, if implemented properly.\18\ However, this commenter questions the effectiveness of the proposed Discretionary Pegged Order, and states that it should not be approved unless the Exchange amends the proposal and provides additional justifications to show that the order type would work as purported.\19\ Specifically, this commenter states that the Exchange would not be in a position to deliver the benefits as claimed if it continues to offer co-location and microwave services to fast market participants because the Exchange would not be able to effectively update the order during a crumbling quote faster than the market participant trying to pick off the order.\20\ This commenter also questions whether the Exchange understands the use of the proposed order type and expresses concern that the implementation of order types that are not well thought-through can increase systemic risk and may have adverse impacts on investor protection.\21\ According to the commenter, the D-Peg formula was calculated based on the location of its systems in Weehawken, NJ, and its unique latency profile, and it makes little sense to apply the same formula to orders on the Exchange located in Mahwah, NJ.\22\ Finally, this commenter argues that the Exchange should adopt a different name for the proposed order type to avoid confusion and misrepresentation regarding the nature of the order type.\23\ --------------------------------------------------------------------------- \17\ See IEX Letter at 1. \18\ See id. \19\ See id., at 1-3. \20\ See id., at 2. \21\ See id., at 2-3. \22\ See id., at 2. \23\ See id., at 3. In its letter, the commenter also responds to the Exchange's comments on the D-Peg Order, which were set forth in the Notice. See id., at 2. As noted above, the Commission granted IEX's application for registration as a national securities exchange, which included the D-Peg Order. See supra note 9. This order does not address comments and responses related to IEX's D-Peg Order. --------------------------------------------------------------------------- Another commenter also opposes the proposed rule change. According to this commenter, Commission approval of exchanges' use of predictive order types such as the proposed Discretionary Pegged Order would result in rapidly increasing order type complexity, which would reduce market resilience and make markets more opaque for all investors.\24\ The commenter states its belief that the utility of these order types is marginal and does not outweigh the additional complexity that these order types would impose on the market.\25\ This commenter also expresses concerns regarding how the Commission could or would effectively review and police additional predictive order types as they emerge and evolve, and whether the Commission would propose guidance or limitations on how predictive order types may operate.\26\ Finally, this commenter states that predictive order types encroach on the traditional role of broker-dealers by using inherent competitive advantages that exchanges have over broker-dealers.\27\ --------------------------------------------------------------------------- \24\ See Citadel Letter at 1. This commenter notes that the proposed Discretionary Pegged Order is virtually identical to IEX's D-Peg Order. See id. The commenter notes that it explained its concerns in more detail in its comment letter on IEX's exchange application. See Letter from John C. Nagel, Esq., Managing Director and Sr. Deputy General Counsel, Citadel LLC, to Brent J. Fields, Secretary, Commission, dated April 14, 2016. \25\ See Citadel Letter at 2. \26\ See id. \27\ See id. In the context of IEX's D-Peg Order and the proposed Discretionary Pegged Order, the Exchange also requests that the Commission articulate the boundaries of when an exchange may or may not offer services that are otherwise performed by broker- dealers and when it would be appropriate for an exchange to monitor the quality of the prices in a market to determine how to price an order, and raises the issue of whether these order types are consistent with the Commission's previous disapproval of Nasdaq's benchmark orders. See Response Letter at 2-4. See also Notice, supra note 3, at 17751. --------------------------------------------------------------------------- In response to comments, the Exchange indicates that the proposed Discretionary Pegged Order is a competitive response to IEX's D-Peg Order.\28\ The Exchange states that the proposed calculation to determine whether a quote is unstable is a straightforward determination that does not require inbound order flow to be intentionally delayed to be effective.\29\ According to the Exchange, while an intentionally-delayed market may prevent arriving interest from interacting with pegged orders immediately, it does not believe that processing market data updates and inbound orders out of phase (as with IEX) or simultaneously (as proposed by the Exchange) would materially alter the effectiveness of the proposed functionality.\30\ The Exchange also states its belief that the benefits of the proposed functionality would be the same regardless of the relative speed.\31\ Moreover, according to the Exchange, the proposed Discretionary Pegged Order would be an optional order type, and if market participants do not believe that the quote instability formula appropriately predicts market movement, they do not have to use the order type.\32\ The Exchange states that, over time and based on client feedback, it would consider changes to the specific formula used to assess the quality of the market or would consider offering additional types of Discretionary Pegged Orders to serve the trading needs of different market participants, subject to filing separate proposed rule changes with the Commission.\33\ Finally, the Exchange states that it does not anticipate that the proposed order type would have any disruptive effects on the overall market.\34\ --------------------------------------------------------------------------- \28\ See Response Letter at 3-4. \29\ See Amendment No. 1 at 4. \30\ See id. \31\ See id. \32\ See Response Letter at 4-5 and Amendment No. 1 at 4. The Exchange states its belief that the effectiveness of a particular order type in serving the trading needs of market participants should be market-driven. See Response Letter at 4. \33\ See Response Letter at 4. In its response letter, the Exchange also provides additional comments on IEX's exchange application. As noted above, the Commission granted IEX's exchange application, and this order does not address comments and responses related to IEX's D-Peg Order. See supra note 9. \34\ See Amendment No. 1 at 4. --------------------------------------------------------------------------- IV. Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\35\ In particular, the [[Page 43300]] Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\36\ 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 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. --------------------------------------------------------------------------- \35\ 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). \36\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- As noted above, the proposed Discretionary Pegged Order is based on IEX's D-Peg Order, although there are some differences between the two orders.\37\ First, unlike IEX's D-Peg Order, the proposed Discretionary Pegged Order must have a limit price.\38\ The Commission notes that this is not a novel aspect for this type of order because IEX's D-Peg Order is also permitted to have a limit price, although it is not required to have one.\39\ Second, unlike IEX's D-Peg Order, the proposed Discretionary Pegged Order must have a Day time-in-force.\40\ The Commission similarly notes that this is not a novel aspect for this type of order because IEX's D-Peg Order is also permitted to have the Day time-in-force, although it is permitted to have certain other times-in-force as well.\41\ Third, if the PBBO is locked or crossed, an arriving or resting Discretionary Pegged Order would wait for a PBBO that is not locked or crossed before the working price is adjusted and the order becomes eligible to trade,\42\ whereas IEX's D-Peg Order can be priced and traded if the market is locked or crossed.\43\ The Commission notes that the proposed treatment of Discretionary Pegged Orders when the market is locked or crossed is consistent with Exchange Rule 7.31P(h)(1)(B), which governs the treatment of other non-displayed pegged orders on the Exchange (i.e., Market Pegged Orders) when the market is locked or crossed. --------------------------------------------------------------------------- \37\ See supra note 9. \38\ See Notice, supra note 3, at 17749. \39\ See IEX Rule 11.190(b)(10)(E). \40\ See Notice, supra note 3, at 17749. \41\ See IEX Rule 11.190(b)(10)(B). \42\ See Amendment No. 1 at 3-4. \43\ See IEX Rule 11.190(h)(3). --------------------------------------------------------------------------- The Commission notes that, according to the Exchange, the proposed Discretionary Pegged Order would assist ETP Holders in obtaining best execution for their customers by limiting executions at the Midpoint Price when the PBBO is not stable, and by reducing the potential to execute at a stale price.\44\ Moreover, the Commission notes that, in response to the comments, the Exchange acknowledges that an intentionally-delayed market may prevent arriving interest from interacting with pegged orders immediately, but states its belief that the proposed Discretionary Pegged Order would be effective, notwithstanding the differences in speed between the Exchange and IEX.\45\ --------------------------------------------------------------------------- \44\ See Notice, supra note 3, at 17751. \45\ See supra notes 29-34 and accompanying text (discussing in more detail the Exchange's response to comments). --------------------------------------------------------------------------- With respect to questions regarding whether the proposed Discretionary Pegged Order would perform a function that is typically performed by broker-dealers, and whether approval of the proposed Discretionary Pegged Order would be inconsistent with the Commission's prior disapproval of Nasdaq's ``benchmark orders,'' the Commission notes that, as with IEX's rules governing the D-Peg Order, proposed Rule 7.31P(h)(3) would delineate the specific conditions under which a Discretionary Pegged Order would or would not be eligible to execute up (down) to the Midpoint Price by setting forth the formula that the Exchange would use to determine quote stability. Also, as with IEX's D- Peg Order, the Exchange would encode in its rule the totality of the discretionary feature of the proposed Discretionary Pegged Order. As the Exchange notes in the proposal, the manner by which it would monitor the quality of the quotes would be objective and transparent, as set forth in the proposed rule.\46\ As with IEX's D-Peg Order, the Commission does not believe that the hardcoded conditionality of the proposed order type would provide the Exchange with actual discretion or the ability to exercise individualized judgment when executing an order. The Commission also notes that the Exchange would be required to submit a proposed rule change pursuant to Section 19(b) of the Act prior to implementing any changes to the proposed order. Moreover, as with IEX's D-Peg Order, the Commission believes that the proposed Discretionary Pegged Order is distinguishable from Nasdaq's benchmark orders and does not implicate the same issues.\47\ --------------------------------------------------------------------------- \46\ See Notice, supra note 3, at 17751. \47\ See IEX Order, supra note 9, at 41153 (discussing in more detail the differences between IEX's D-Peg Order and Nasdaq's benchmark orders). --------------------------------------------------------------------------- With respect to a commenter's concern that approval of the proposed Discretionary Pegged Order would lead to the proliferation of complex predictive order types, the Commission notes that new exchange proposed order types are subject to the rule filing process of Section 19(b) of the Act and Rule 19b-4 under the Act, and the standards in Section 6(b) of the Act, among other provisions.\48\ --------------------------------------------------------------------------- \48\ See also Form 19b-4, General Instructions. --------------------------------------------------------------------------- With respect to a commenter's request that the Exchange use a different name for the proposed order in order to avoid confusion and misrepresentation regarding the nature of the order,\49\ the Commission notes that the functionality of the proposed Discretionary Pegged Order is specifically delineated in proposed Rule 7.31P(h)(3). Moreover, the Commission notes that, currently, order types on different exchanges with nearly identical names may function differently.\50\ As a result, the Commission does not believe the Exchange's use of the name ``Discretionary Pegged Order'' raises regulatory concerns. --------------------------------------------------------------------------- \49\ In its comment letter, this commenter references its ``Patent-Pending `DYNAMIC PEG ORDERS IN AN ELECTRONIC TRADING SYSTEM' in the U.S. patent application number 14/799,975, priority to August 22, 2014.'' However, this commenter states that its comment letter ``speaks to deficiencies in NYSE's application in light of current market structure and is not intended to address, comment on or waive our property rights in the D-peg invention or related subject matter.'' See IEX Letter at note 2. In issuing this order, the Commission expresses no view with respect to these matters. \50\ See, e.g., Exchange Rule 7.31P(h)(2) (describing the Exchange's ``Primary Pegged Order'') and IEX Rules 11.190(a)(3) and (b)(8) (describing IEX's ``primary peg order''). --------------------------------------------------------------------------- Finally, the Commission notes that existing exchanges offer both discretion and pegging functionalities, including the combination of both of those functionalities in a single order type.\51\ As with IEX's D-Peg Order, the proposed discretion functionality would be turned ``on'' or ``off'' depending on the Exchange's quote stability determination. Because the Exchange has encoded in its rule the totality of the discretionary feature of the proposed Discretionary Pegged Order, the Commission believes the proposed order type is a close variant of the discretion and pegging functionality that currently exist on other exchanges. --------------------------------------------------------------------------- \51\ See, e.g., Nasdaq Rule 4703(g). --------------------------------------------------------------------------- Based on the foregoing and the Exchange's representations, the Commission believes that the proposed rule change, as modified by Amendment No. 1, is consistent with the Act. V. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to the proposed rule change is consistent with the Act. Comments may be [[Page 43301]] submitted by any of the following methods: Electronic CommentsUse 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-2016-44 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-NYSEArca-2016-44. 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-NYSEArca-2016-44 and should be submitted on or before July 22, 2016. VI. Accelerated Approval of the Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the 30th day after the date of publication of notice of Amendment No. 1 in the Federal Register. In Amendment No. 1, the Exchange added subsection (E) to proposed Rule 7.31P(h)(3), which would provide that if the PBBO is locked or crossed, both an arriving and resting Discretionary Pegged Order would wait for a PBBO that is not locked or crossed before the working price is adjusted and the order becomes eligible to trade. As noted above, this aspect of the proposed Discretionary Pegged Order is consistent with Exchange Rule 7.31P(h)(1)(B), which governs the treatment of other non-displayed pegged orders on the Exchange (i.e., Market Pegged Orders) when the market is locked or crossed. In Amendment No. 1, the Exchange also provided additional responses to the comment letters and provided more information regarding the implementation date for the proposed rule change. These two changes do not alter the substance of the proposed rule change. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,\52\ to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \52\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VII. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\53\ that the proposed rule change (SR-NYSEArca-2016-44), as modified by Amendment No. 1, be, and it hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \53\ Id. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\54\ --------------------------------------------------------------------------- \54\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-15718 Filed 6-30-16; 8:45 am] BILLING CODE 8011-01-P
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rules/sro.shtml). Copies of the Discretionary Pegged Order. The
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Act 18 and paragraph (f)(6) of Rule 19b–
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public in accordance with the the proposed rule change, disapprove
intent to file the proposed rule change, the proposed rule change, or institute
along with a brief description and text provisions of 5 U.S.C. 552, will be
available for Web site viewing and proceedings to determine whether to
of the proposed rule change at least five disapprove the proposed rule change.7
business days prior to the date of filing printing in the Commission’s Public
On June 23, 2016, the Exchange filed
of the proposed rule change, or such Reference Room, 100 F Street NE.,
Amendment No. 1 to the proposed rule
shorter time as designated by the Washington, DC 20549, on official
change.8 The Commission is publishing
Commission. business days between the hours of
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of such 1 15 U.S.C. 78s(b)(1).
filing of the proposed rule change, the filing will also be available for 2 17 CFR 240.19b–4.
Commission summarily may inspection and copying at the principal 3 See Securities Exchange Act Release No. 77441
office of the Exchange. All comments (March 24, 2016), 81 FR 17749 (‘‘Notice’’).
temporarily suspend such rule change if 4 See Letter from Sophia Lee, General Counsel,
it appears to the Commission that such received will be posted without change; IEX Group, Inc. (‘‘IEX’’), to Brent J. Fields,
action is: (1) Necessary or appropriate in the Commission does not edit personal Secretary, Commission, dated April 15, 2016 (‘‘IEX
the public interest; (2) for the protection identifying information from Letter’’); Letter from John C. Nagel, Esq., Managing
submissions. You should submit only Director and Sr. Deputy General Counsel, Citadel
of investors; or (3) otherwise in LLC (‘‘Citadel’’), to Brent J. Fields, Secretary,
furtherance of the purposes of the Act. information that you wish to make Commission, dated April 20, 2016 (‘‘Citadel
If the Commission takes such action, the available publicly. All submissions Letter’’).
Commission shall institute proceedings should refer to File Number SR– 5 See Letter from Elizabeth K. King, General
BatsBZX–2016–27 and should be Counsel and Corporate Secretary, New York Stock
to determine whether the proposed rule Exchange, to Brent J. Fields, Secretary, Commission,
should be approved or disapproved. submitted on or before July 22, 2016. dated April 27, 2016 (‘‘Response Letter’’).
6 15 U.S.C. 78s(b)(2).
IV. Solicitation of Comments For the Commission, by the Division of
7 See Securities Exchange Act Release No. 77820,
Trading and Markets, pursuant to delegated
81 FR 31272 (May 18, 2016). The Commission
Interested persons are invited to authority.20 designated June 28, 2016, as the date by which it
submit written data, views, and Robert W. Errett, should approve, disapprove, or institute
asabaliauskas on DSK3SPTVN1PROD with NOTICES
arguments concerning the foregoing, proceedings to determine whether to disapprove the
Deputy Secretary. proposed rule change.
including whether the proposed rule [FR Doc. 2016–15582 Filed 6–30–16; 8:45 am] 8 In Amendment No. 1, the Exchange: (1) Added
change is consistent with the Act. subsection (E) to proposed Rule 7.31P(h)(3), which
BILLING CODE 8011–01–P
Comments may be submitted by any of would provide that if the PBBO (as defined below)
the following methods: is locked or crossed, both an arriving and resting
Discretionary Pegged Order would wait for a PBBO
that is not locked or crossed before the working
18 15 U.S.C. 78s(b)(3)(A). price (as defined below) is adjusted and the order
19 17 CFR 240.19b–4. 20 17 CFR 200.30–3(a)(12). Continued
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![Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Notices 43301
submitted by any of the following arriving and resting Discretionary 17d–1 under the Act to permit certain
methods: Pegged Order would wait for a PBBO joint arrangements and transactions.
that is not locked or crossed before the
Electronic Comments Summary of the Application:
working price is adjusted and the order
• Use the Commission’s Internet becomes eligible to trade. As noted Applicants request an order that would
comment form (http://www.sec.gov/ above, this aspect of the proposed permit certain registered open-end
rules/sro.shtml); or Discretionary Pegged Order is consistent management investment companies to
• Send an email to rule-comments@ with Exchange Rule 7.31P(h)(1)(B), participate in a joint lending and
sec.gov. Please include File Number SR– which governs the treatment of other borrowing facility.
NYSEArca–2016–44 on the subject line. non-displayed pegged orders on the Applicants: MainStay Funds Trust,
Paper Comments Exchange (i.e., Market Pegged Orders) The MainStay Funds and MainStay VP
when the market is locked or crossed. In Funds Trust (each a ‘‘Trust’’ and
• Send paper comments in triplicate collectively the ‘‘Trusts’’) and New York
Amendment No. 1, the Exchange also
to Brent J. Fields, Secretary, Securities Life Investment Management LLC
provided additional responses to the
and Exchange Commission, 100 F Street (‘‘New York Life Investments’’).
NE., Washington, DC 20549–1090. comment letters and provided more
information regarding the Filing Dates: The application was
All submissions should refer to File implementation date for the proposed filed on July 30, 2015, and amended on
Number SR–NYSEArca–2016–44. This rule change. These two changes do not September 28, 2015, January 19, 2016,
file number should be included on the May 12, 2016, and June 20, 2016.
alter the substance of the proposed rule
subject line if email is used. To help the Hearing or Notification of Hearing: An
change. Accordingly, the Commission
Commission process and review your order granting the requested relief will
finds good cause, pursuant to Section
comments more efficiently, please use be issued unless the Commission orders
19(b)(2) of the Act,52 to approve the
only one method. The Commission will a hearing. Interested persons may
proposed rule change, as modified by
post all comments on the Commission’s request a hearing by writing to the
Amendment No. 1, on an accelerated
Internet Web site (http://www.sec.gov/ Commission’s Secretary and serving
basis.
rules/sro.shtml). Copies of the applicants with a copy of the request,
submission, all subsequent VII. Conclusion personally or by mail. Hearing requests
amendments, all written statements should be received by the Commission
It is therefore ordered, pursuant to
with respect to the proposed rule by 5:30 p.m. on July 22, 2016 and
Section 19(b)(2) of the Act,53 that the
change that are filed with the should be accompanied by proof of
proposed rule change (SR–NYSEArca–
Commission, and all written service on the applicants, in the form of
2016–44), as modified by Amendment
communications relating to the an affidavit, or, for lawyers, a certificate
No. 1, be, and it hereby is, approved on
proposed rule change between the of service. Pursuant to rule 0–5 under
an accelerated basis.
Commission and any person, other than the Act, hearing requests should state
those that may be withheld from the For the Commission, by the Division of
Trading and Markets, pursuant to delegated
the nature of the writer’s interest, any
public in accordance with the facts bearing upon the desirability of a
provisions of 5 U.S.C. 552, will be authority.54
Robert W. Errett,
hearing on the matter, the reason for the
available for Web site viewing and request, and the issues contested.
printing in the Commission’s Public Deputy Secretary.
Persons who wish to be notified of a
Reference Room, 100 F Street NE., [FR Doc. 2016–15718 Filed 6–30–16; 8:45 am]
hearing may request notification by
Washington, DC 20549, on official BILLING CODE 8011–01–P writing to the Commission’s Secretary.
business days between the hours of
ADDRESSES: Secretary, U.S. Securities
10:00 a.m. and 3:00 p.m. Copies of the
SECURITIES AND EXCHANGE and Exchange Commission, 100 F Street
filing also will be available for
COMMISSION NE., Washington, DC 20549–1090;
inspection and copying at the principal
Applicants: New York Life Investment
office of the Exchange. All comments [Investment Company Act Release No. IC– Management LLC, 51 Madison Avenue,
received will be posted without change; 32163; File No. 812–14523] New York, NY 10010.
the Commission does not edit personal
identifying information from FOR FURTHER INFORMATION CONTACT:
MainStay Funds Trust, et al.; Notice of
submissions. You should submit only Application Robert Shapiro, Senior Counsel, at (202)
information that you wish to make 551–7758 or Mary Kay Frech, Branch
available publicly. All submissions June 27, 2016. Chief, at (202) 551–6821 (Division of
should refer to File Number SR– AGENCY: Securities and Exchange Investment Management, Chief
NYSEArca–2016–44 and should be Commission (‘‘Commission’’). Counsel’s Office).
submitted on or before July 22, 2016. ACTION: Notice of an application for an SUPPLEMENTARY INFORMATION: The
order pursuant to: (a) Section 6(c) of the following is a summary of the
VI. Accelerated Approval of the application. The complete application
Proposed Rule Change, as Modified by Investment Company Act of 1940
(‘‘Act’’) granting an exemption from may be obtained via the Commission’s
Amendment No. 1 Web site by searching for the file
sections 18(f) and 21(b) of the Act; (b)
The Commission finds good cause to section 12(d)(1)(J) of the Act granting an number, or an applicant using the
approve the proposed rule change, as
asabaliauskas on DSK3SPTVN1PROD with NOTICES
exemption from section 12(d)(1) of the Company name box, at http://
modified by Amendment No. 1, prior to Act; (c) sections 6(c) and 17(b) of the www.sec.gov/search/search.htm or by
the 30th day after the date of Act granting an exemption from sections calling (202) 551–8090.
publication of notice of Amendment No. 17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
1 in the Federal Register. In Applicants’ Representations
and (d) section 17(d) of the Act and rule
Amendment No. 1, the Exchange added 1. Each Trust is organized as a
subsection (E) to proposed Rule 52 15 U.S.C. 78s(b)(2). Massachusetts business trust or a
7.31P(h)(3), which would provide that if 53 Id. Delaware statutory trust and is
the PBBO is locked or crossed, both an 54 17 CFR 200.30–3(a)(12). registered under the Act as an open-end
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Document Created: 2016-07-14 11:37:28
Document Modified: 2016-07-14 11:37:28
| 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 43297 |
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