81 FR 45349 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 6.67(c) by Revising the Clearing Member Requirement for Entering an Order Into the Electronic Order Capture System
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 134 (July 13, 2016)
Federal Register Volume 81, Issue 134 (July 13, 2016)
| Page Range | 45349-45351 | |
| FR Document | 2016-16480 |
[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)] [Notices] [Pages 45349-45351] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16480] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78239; File No. SR-NYSEArca-2016-15] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 6.67(c) by Revising the Clearing Member Requirement for Entering an Order Into the Electronic Order Capture System July 7, 2016. I. Introduction On March 22, 2016, NYSE Arca, Inc. (the ``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 Rule 6.67(c) to change the timing for recording the name of the Clearing Member \3\ in the Electronic Order Capture system (``EOC''). On March 29, 2016,\4\ the Exchange filed [[Page 45350]] Amendment No. 1 to the proposed rule change. The Commission published the proposed rule change, as modified by Amendment No. 1, for comment in the Federal Register on April 11, 2016.\5\ The Commission received no comments on the proposed rule change. On May 25, 2016 the Commission extended the time period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change to July 10, 2016.\6\ The Commission did not receive any comments on the proposed rule change. This order institutes proceedings under section 19(b)(2)(B) of the Act \7\ to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1 thereto. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Rule 6.1(b)(3) defines ``Clearing Member'' as an Exchange OTP which has been admitted to membership in the Options Clearing Corporation pursuant to the provisions of the Rules of the Options Clearing Corporation. \4\ The Commission notes that the amendment date of March 30, 2016 in the SR-NYSEArca-2016-15 Notice is incorrect and the proper date is March 29, 2016. \5\ See Securities Exchange Act Release No. 34-77516 (April 5, 2016), 81 FR 21430 (``Notice''). Amendment No.1 was included in the Notice and provided the clarification that the CMTA Information and the name of the clearing OTP Holder would be entered into the EOC ``as the events occur and/or during trade reporting procedures which may occur after the representation and execution of the order.'' \6\ See Securities Exchange Act Release No. 34-77909 (May 25, 2016), 81 FR 35079 (June 1, 2016). \7\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- II. Description of the Proposal, as Modified by Amendment No. 1 The Exchange proposes to amend Rule 6.67(c) by revising the timing for an OTP holder to record the name of the Clearing Member in the EOC.\8\ In 2000, the Commission issued an order, which required the Exchange, in coordination with other exchanges, to ``design and implement a consolidated options audit trail system (`COATS'),'' that would ``enable the options exchanges to reconstruct markets promptly, effectively surveil them and enforce order handling, firm quote, trade reporting and other rules.'' \9\ The Commission Order requires the Exchange to incorporate into the audit trail all non-electronic orders ``such that the audit trail provides an accurate, time-sequenced record of electronic and other orders, quotations and transactions on such respondent exchange, beginning with the receipt of an order by such respondent exchange and further documenting the life of the order through the process of execution, partial execution, or cancellation of that order, which audit trail shall be readily retrievable in the common computer format.'' \10\ To comply with the Commission Order, the Exchange developed the EOC system for OTP holders.\11\ --------------------------------------------------------------------------- \8\ See Notice, supra note 5, 81 FR at 21431. \9\ See Section IV.B.e.(v) of the Commission's Order Instituting Public Administrative Proceedings Pursuant to sections 19(h)(1) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (``Commission Order''), Securities Exchange Act Release No. 43268 (September 11, 2000) and Administrative Proceeding File No. 3-10282. \10\ See id. \11\ See Notice, supra note 5, 81 FR at 21431. --------------------------------------------------------------------------- The EOC is the Exchange's floor-based electronic audit trail and order tracking system that provides an accurate time-sequenced record of all orders and transactions represented on the Exchange's trading floor.\12\ Rule 6.67(c) sets forth the EOC entry requirements and requires every OTP holder that receives an order for execution on the Exchange to ``immediately, prior to representation in the trading crowd, record the details of the order (including any modification of the terms of the order or cancellation of the order) into the EOC, unless such order has been entered into the Exchange's other electronic order processing facilities.'' \13\ The pre-trade EOC requirements under current Rule 6.67(c)(1) include ``the name of the clearing OTP Holder.'' \14\ Rule 6.67(c)(1) further states that ``[t]he remaining elements prescribed in Rule 6.68(a) and any additional information with respect to the order shall be recorded as the events occur and/or during trade reporting procedures which may occur after the representation and execution of the order.'' \15\ --------------------------------------------------------------------------- \12\ See id.; see also Rule 6.67(c). \13\ See Rule 6.67(c). \14\ See Rule 6.67(c)(1)(vii). \15\ See Rule 6.67(c)(1); see also Rule 6.68(a) (Record of Orders) (requiring that OTP Holders and OTP Firms maintain a record of each order that includes that the following data elements: (1) CMTA Information and the name of the clearing OTP Holder or Firm; (2) options symbol, expiration month, exercise price and type of options; (3) side of the market and order type; (4) quantity of options; (5) limit or stop price or special conditions; (6) opening or closing transaction; (7) time in force; (8) account origin code; and (9) whether the order was solicited or unsolicited). --------------------------------------------------------------------------- The Exchange proposes to amend Rule 6.67(c)(1) to allow an OTP Holder to record the name of the Clearing Member in the EOC ``as the events occur and/or during trade reporting procedures'' rather than prior to representation of the order in the trading crowd.\16\ The Exchange states that because the identity of the firm through which each trade will clear is not always initially provided when an order is presented, Floor Brokers waiting to receive this information and enter it into the EOC are delayed in representing and executing an order.\17\ The Exchange represents that the proposal would amend only the timing for the recording of the Clearing Member in the EOC while still maintaining the requirement to record the Clearing Member in the EOC for audit trail purposes.\18\ According to the Exchange, Floor Brokers would continue to be required to maintain proper order records, as part of each trade record, including the identity of the clearing OTP Holder, and would continue to be required to give up the responsible Clearing Member on each trade as part of each trade record.\19\ --------------------------------------------------------------------------- \16\ See Notice, supra note 5, 81 FR at 21431. \17\ See id. \18\ See id. \19\ See id. at 21431-32; see also Rule 6.68(a). --------------------------------------------------------------------------- III. Proceedings To Determine Whether To Approve or Disapprove SR- NYSEArca-2016-15 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to section 19(b)(2)(B) of the Act \20\ to determine whether the proposed rule change should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change, as discussed below. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described in greater detail below, the Commission seeks and encourages interested persons to provide additional comment on the proposed rule change. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also provides that proceedings to determine whether to disapprove a proposed rule change must be concluded within 180 days of the date of publication of notice of the filing of the proposed rule change. See id. The time for conclusion of the proceedings may be extended for up to 60 days if the Commission finds good cause for such extension and publishes its reasons for so finding. See id. --------------------------------------------------------------------------- Pursuant to section 19(b)(2)(B) of the Act, the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings because the proposal raises important issues that warrant further public comment and Commission consideration. Specifically, the Commission is instituting proceedings to allow for additional analysis of, and input from commenters with respect to, the proposed rule change's consistency with section 6(b)(5) of the Act,\21\ which requires that the rules of a national securities exchange be designed, among other things, 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 [[Page 45351]] open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Under the Exchange's current rules, a floor broker must record the name of the Clearing Member in the EOC prior to representing an order on the floor. As discussed above,\22\ the Exchange developed the EOC and created the pre-trade Clearing Member requirement in response to the Commission Order. The Exchange justifies the proposed elimination of the pre-trade clearing requirement by stating that ``Floor Brokers have told the Exchange that the identity of the firm through which each trade will clear is not always initially provided when an order is presented and that waiting to receive this information and enter it into EOC can delay the representation and execution of an order. In today's trading environment of rapidly moving markets and the need to execute an order and hedge a trade in real or near real time, even a slight delay can prove to be detrimental to the handling of an order.'' \23\ The Exchange further states that the ``proposed change to eliminate the Give Up Requirement prior to execution of each trade would not impair the Exchange's ability to comply with the [Commission] Order. Specifically, the EOC would still provide an accurate, time- sequenced record beginning with the receipt of an order and document the life of the order through the process of execution, partial execution, or cancellation. Entry of information pursuant to the Give Up Requirement would occur after the order had been represented and executed in the Trading Crowd. Thus, only the timing of the disclosure of such information would be affected by this proposal.'' \24\ --------------------------------------------------------------------------- \22\ See supra note 9. \23\ See Notice, supra note 5, 81 FR at 21431. \24\ See id. --------------------------------------------------------------------------- The Exchange, however, does not explain why the identity of the Clearing Member may not be provided when an order is presented to a Floor Broker, how frequently this occurs, or why it is burdensome to identify the Clearing Member in advance. As a result, the Exchange does not appear to offer a credible justification for proposing to incur the risk of delaying the recording of this important information into the EOC. The Commission accordingly believes the proposal, as modified by Amendment No. 1, raises questions as to whether it consistent with the requirements of section 6(b)(5) of the Act, including whether the proposal is 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. IV. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data and arguments with respect to the concerns identified above, as well as any other concerns they may have with the proposed rule change. In particular, the Commission invites the written views of interested persons concerning whether the proposal, as modified by Amendment No. 1, is consistent with sections 6(b)(5) \25\ or any other provision of the Act, or the rules and regulations thereunder. Although there does not appear to be any issue relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4 under the Act,\26\ any request for an opportunity to make an oral presentation.\27\ Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by August 3, 2016. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by August 17, 2016. In light of the concerns raised by the proposed rule change, as discussed above, the Commission invites additional comment on the proposed rule change as the Commission continues its analysis of the proposed rule change's consistency with sections 6(b)(5) and 6(b)(8),\28\ or any other provision of the Act, or the rules and regulations thereunder. The Commission asks that commenters address the sufficiency and merit of the Exchange's statements in support of the proposed rule change, in addition to any other comments they may wish to submit about the proposed rule change. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78f(b)(5). \26\ 17 CFR 240.19b-4. \27\ Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants to the Commission flexibility to determine what type of proceeding-- either oral or notice and opportunity for written comments--is appropriate for consideration of a particular proposal by a self- regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). \28\ 15 U.S.C. 78f(b)(5), (b)(8). --------------------------------------------------------------------------- Comments may be 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 No. SR-NYSEArca-2016-15 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 No. SR-NYSEArca-2016-15. 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 No. SR-NYSEArca-2016-15, and should be submitted by August 3, 2016. Rebuttal comments should be submitted by August 17, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\29\ --------------------------------------------------------------------------- \29\ 17 CFR 200.30-3(a)(57). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-16480 Filed 7-12-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices 45349
B. Self-Regulatory Organization’s that waiving the 30-day operative delay available for Web site viewing and
Statement on Burden on Competition is consistent with the protection of printing in the Commission’s Public
The Exchange does not believe that investors and the public interest. Reference Room, 100 F Street NE.,
the proposed rule change will impose Therefore, the Commission hereby Washington, DC 20549 on official
any burden on competition not waives the operative delay and business days between the hours of
necessary or appropriate in furtherance designates the proposed rule change 10:00 a.m. and 3:00 p.m. Copies of such
of the purposes of the Act. The operative upon filing.9 filing also will be available for
proposed rule change is not designed to At any time within 60 days of the inspection and copying at the principal
address any aspect of competition, filing of the proposed rule change, the office of the Exchange. All comments
whether between the Exchange and its Commission summarily may received will be posted without change;
competitors, or among market temporarily suspend such rule change if the Commission does not edit personal
participants. Instead, the proposed rule it appears to the Commission that such identifying information from
change is designed to allow the SPY action is necessary or appropriate in the submissions. You should submit only
Pilot Program to continue without public interest, for the protection of information that you wish to make
interruption. Additionally, the investors, or otherwise in furtherance of available publicly. All submissions
Exchange expects other SROs will the purposes of the Act. If the should refer to File Number SR–BOX–
propose similar extensions. Commission takes such action, the 2016–31, and should be submitted on or
Commission shall institute proceedings before August 3, 2016.
C. Self-Regulatory Organization’s to determine whether the proposed rule For the Commission, by the Division of
Statement on Comments on the should be approved or disapproved. Trading and Markets, pursuant to delegated
Proposed Rule Change Received From authority.10
Members, Participants, or Others IV. Solicitation of Comments
Brent J. Fields,
The Exchange has neither solicited Interested persons are invited to Secretary.
nor received comments on the proposed submit written data, views, and
[FR Doc. 2016–16488 Filed 7–12–16; 8:45 am]
rule change. arguments concerning the foregoing,
BILLING CODE 8011–01–P
including whether the proposed rule
III. Date of Effectiveness of the change is consistent with the Act.
Proposed Rule Change and Timing for Comments may be submitted by any of
Commission Action SECURITIES AND EXCHANGE
the following methods: COMMISSION
Because the foregoing proposed rule
Electronic Comments [Release No. 34–78239; File No. SR–
change does not: (i) Significantly affect
the protection of investors or the public • Use the Commission’s Internet NYSEArca–2016–15]
interest; (ii) impose any significant comment form (http://www.sec.gov/
rules/sro.shtml); or Self-Regulatory Organizations; NYSE
burden on competition; and (iii) become
• Send an email to rule-comments@ Arca, Inc.; Order Instituting
operative for 30 days from the date on
sec.gov. Please include File Number SR– Proceedings To Determine Whether To
which it was filed, or such shorter time
BOX–2016–31 on the subject line. Approve or Disapprove a Proposed
as the Commission may designate, it has
Rule Change, as Modified by
become effective pursuant to Section Paper Comments Amendment No. 1, To Amend Rule
19(b)(3)(A) of the Act and Rule 19b–
4(f)(6) thereunder.6 • Send paper comments in triplicate 6.67(c) by Revising the Clearing
A proposed rule change filed to Brent J. Fields, Secretary, Securities Member Requirement for Entering an
pursuant to Rule 19b–4(f)(6) under the and Exchange Commission, 100 F Street Order Into the Electronic Order
Act 7 normally does not become NE., Washington, DC 20549–1090. Capture System
operative for 30 days after the date of its All submissions should refer to File July 7, 2016.
filing. However, Rule 19b–4(f)(6)(iii) 8 Number SR–BOX–2016–31. This file
permits the Commission to designate a number should be included on the I. Introduction
shorter time if such action is consistent subject line if email is used. To help the On March 22, 2016, NYSE Arca, Inc.
with the protection of investors and the Commission process and review your (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
public interest. The Exchange has asked comments more efficiently, please use with the Securities and Exchange
the Commission to waive the 30-day only one method. The Commission will Commission (‘‘Commission’’), pursuant
operative delay so that the proposal may post all comments on the Commission’s to section 19(b)(1) of the Securities
become operative immediately upon Internet Web site (http://www.sec.gov/ Exchange Act of 1934 (‘‘Act’’) 1 and Rule
filing. The Exchange believes that rules/sro.shtml). Copies of the 19b–4 thereunder,2 a proposed rule
waiver of the operative delay is submission, all subsequent change to amend Rule 6.67(c) to change
consistent with the protection of amendments, all written statements the timing for recording the name of the
investors and the public interest with respect to the proposed rule Clearing Member 3 in the Electronic
because it will allow the SPY Pilot change that are filed with the Order Capture system (‘‘EOC’’). On
Program to continue without Commission, and all written March 29, 2016,4 the Exchange filed
interruption. The Commission believes communications relating to the
proposed rule change between the 10 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
6 17 CFR 240.19b–4(f)(6). As required under Rule Commission and any person, other than
jstallworth on DSK7TPTVN1PROD with NOTICES
19b–4(f)(6)(iii), the Exchange provided the those that may be withheld from the
2 17 CFR 240.19b–4.
Commission with written notice of its intent to file 3 Rule 6.1(b)(3) defines ‘‘Clearing Member’’ as an
the proposed rule change, along with a brief public in accordance with the Exchange OTP which has been admitted to
description and the text of the proposed rule provisions of 5 U.S.C. 552, will be membership in the Options Clearing Corporation
change, at least five business days prior to the date pursuant to the provisions of the Rules of the
of filing of the proposed rule change, or such 9 For purposes only of waiving the 30-day Options Clearing Corporation.
shorter time as designated by the Commission. operative delay, the Commission has considered the 4 The Commission notes that the amendment date
7 17 CFR 240.19b–4(f)(6).
proposed rule’s impact on efficiency, competition, of March 30, 2016 in the SR–NYSEArca–2016–15
8 17 CFR 240.19b–4(f)(6)(iii). and capital formation. See 15 U.S.C. 78c(f). Continued
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![45350 Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices
Amendment No. 1 to the proposed rule partial execution, or cancellation of that proposal would amend only the timing
change. The Commission published the order, which audit trail shall be readily for the recording of the Clearing
proposed rule change, as modified by retrievable in the common computer Member in the EOC while still
Amendment No. 1, for comment in the format.’’ 10 To comply with the maintaining the requirement to record
Federal Register on April 11, 2016.5 Commission Order, the Exchange the Clearing Member in the EOC for
The Commission received no comments developed the EOC system for OTP audit trail purposes.18 According to the
on the proposed rule change. On May holders.11 Exchange, Floor Brokers would
25, 2016 the Commission extended the The EOC is the Exchange’s floor-based continue to be required to maintain
time period within which to approve electronic audit trail and order tracking proper order records, as part of each
the proposed rule change, disapprove system that provides an accurate time- trade record, including the identity of
the proposed rule change, or institute sequenced record of all orders and the clearing OTP Holder, and would
proceedings to determine whether to transactions represented on the continue to be required to give up the
approve or disapprove the proposed Exchange’s trading floor.12 Rule 6.67(c) responsible Clearing Member on each
rule change to July 10, 2016.6 The sets forth the EOC entry requirements trade as part of each trade record.19
Commission did not receive any and requires every OTP holder that
receives an order for execution on the III. Proceedings To Determine Whether
comments on the proposed rule change.
Exchange to ‘‘immediately, prior to To Approve or Disapprove SR–
This order institutes proceedings under
representation in the trading crowd, NYSEArca–2016–15 and Grounds for
section 19(b)(2)(B) of the Act 7 to
record the details of the order (including Disapproval Under Consideration
determine whether to approve or
disapprove the proposed rule change, as any modification of the terms of the The Commission is instituting
modified by Amendment No. 1 thereto. order or cancellation of the order) into proceedings pursuant to section
the EOC, unless such order has been 19(b)(2)(B) of the Act 20 to determine
II. Description of the Proposal, as entered into the Exchange’s other whether the proposed rule change
Modified by Amendment No. 1 electronic order processing facilities.’’ 13 should be approved or disapproved.
The Exchange proposes to amend The pre-trade EOC requirements under Institution of such proceedings is
Rule 6.67(c) by revising the timing for current Rule 6.67(c)(1) include ‘‘the appropriate at this time in view of the
an OTP holder to record the name of the name of the clearing OTP Holder.’’ 14 legal and policy issues raised by the
Clearing Member in the EOC.8 In 2000, Rule 6.67(c)(1) further states that ‘‘[t]he proposed rule change, as discussed
the Commission issued an order, which remaining elements prescribed in Rule below. Institution of proceedings does
required the Exchange, in coordination 6.68(a) and any additional information not indicate that the Commission has
with other exchanges, to ‘‘design and with respect to the order shall be reached any conclusions with respect to
implement a consolidated options audit recorded as the events occur and/or any of the issues involved. Rather, as
trail system (‘COATS’),’’ that would during trade reporting procedures described in greater detail below, the
‘‘enable the options exchanges to which may occur after the Commission seeks and encourages
reconstruct markets promptly, representation and execution of the interested persons to provide additional
effectively surveil them and enforce order.’’ 15 comment on the proposed rule change.
order handling, firm quote, trade The Exchange proposes to amend Pursuant to section 19(b)(2)(B) of the
reporting and other rules.’’ 9 The Rule 6.67(c)(1) to allow an OTP Holder Act, the Commission is providing notice
Commission Order requires the to record the name of the Clearing of the grounds for disapproval under
Exchange to incorporate into the audit Member in the EOC ‘‘as the events occur consideration. The Commission is
trail all non-electronic orders ‘‘such that and/or during trade reporting instituting proceedings because the
the audit trail provides an accurate, procedures’’ rather than prior to proposal raises important issues that
time-sequenced record of electronic and representation of the order in the warrant further public comment and
other orders, quotations and trading crowd.16 The Exchange states Commission consideration. Specifically,
transactions on such respondent that because the identity of the firm the Commission is instituting
exchange, beginning with the receipt of through which each trade will clear is proceedings to allow for additional
an order by such respondent exchange not always initially provided when an analysis of, and input from commenters
and further documenting the life of the order is presented, Floor Brokers with respect to, the proposed rule
order through the process of execution, waiting to receive this information and change’s consistency with section
enter it into the EOC are delayed in 6(b)(5) of the Act,21 which requires that
Notice is incorrect and the proper date is March 29, representing and executing an order.17 the rules of a national securities
2016. The Exchange represents that the exchange be designed, among other
5 See Securities Exchange Act Release No. 34–
77516 (April 5, 2016), 81 FR 21430 (‘‘Notice’’).
things, to prevent fraudulent and
Amendment No.1 was included in the Notice and
10 See
id. manipulative acts and practices, to
11 See
Notice, supra note 5, 81 FR at 21431.
provided the clarification that the CMTA promote just and equitable principles of
12 See id.; see also Rule 6.67(c).
Information and the name of the clearing OTP trade, to remove impediments to and
Holder would be entered into the EOC ‘‘as the 13 See Rule 6.67(c).
events occur and/or during trade reporting 14 See Rule 6.67(c)(1)(vii).
perfect the mechanism of a free and
procedures which may occur after the 15 See Rule 6.67(c)(1); see also Rule 6.68(a)
representation and execution of the order.’’ 18 See id.
(Record of Orders) (requiring that OTP Holders and
6 See Securities Exchange Act Release No. 34– 19 See id. at 21431–32; see also Rule 6.68(a).
OTP Firms maintain a record of each order that
77909 (May 25, 2016), 81 FR 35079 (June 1, 2016). includes that the following data elements: (1) 20 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the
7 15 U.S.C. 78s(b)(2)(B). CMTA Information and the name of the clearing Act also provides that proceedings to determine
jstallworth on DSK7TPTVN1PROD with NOTICES
8 See Notice, supra note 5, 81 FR at 21431. OTP Holder or Firm; (2) options symbol, expiration whether to disapprove a proposed rule change must
9 See Section IV.B.e.(v) of the Commission’s month, exercise price and type of options; (3) side be concluded within 180 days of the date of
Order Instituting Public Administrative Proceedings of the market and order type; (4) quantity of publication of notice of the filing of the proposed
Pursuant to sections 19(h)(1) of the Securities options; (5) limit or stop price or special conditions; rule change. See id. The time for conclusion of the
Exchange Act of 1934, Making Findings and (6) opening or closing transaction; (7) time in force; proceedings may be extended for up to 60 days if
Imposing Remedial Sanctions (‘‘Commission (8) account origin code; and (9) whether the order the Commission finds good cause for such
Order’’), Securities Exchange Act Release No. 43268 was solicited or unsolicited). extension and publishes its reasons for so finding.
(September 11, 2000) and Administrative 16 See Notice, supra note 5, 81 FR at 21431. See id.
Proceeding File No. 3–10282. 17 See id. 21 15 U.S.C. 78f(b)(5).
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open market and a national market promote just and equitable principles of Electronic Comments
system and, in general, to protect trade, to remove impediments to and
investors and the public interest. perfect the mechanism of a free and • Use the Commission’s Internet
Under the Exchange’s current rules, a open market and a national market comment form (http://www.sec.gov/
floor broker must record the name of the system and, in general, to protect rules/sro.shtml); or
Clearing Member in the EOC prior to investors and the public interest. • Send an email to rule-comments@
representing an order on the floor. As sec.gov. Please include File No. SR–
discussed above,22 the Exchange IV. Procedure: Request for Written
Comments NYSEArca–2016–15 on the subject line.
developed the EOC and created the pre-
trade Clearing Member requirement in The Commission requests that Paper Comments
response to the Commission Order. The interested persons provide written
Exchange justifies the proposed • Send paper comments in triplicate
submissions of their views, data and to Secretary, Securities and Exchange
elimination of the pre-trade clearing arguments with respect to the concerns
requirement by stating that ‘‘Floor Commission, 100 F Street NE.,
identified above, as well as any other
Brokers have told the Exchange that the Washington, DC 20549–1090.
concerns they may have with the
identity of the firm through which each proposed rule change. In particular, the All submissions should refer to File No.
trade will clear is not always initially Commission invites the written views of SR–NYSEArca-2016–15. This file
provided when an order is presented interested persons concerning whether number should be included on the
and that waiting to receive this the proposal, as modified by subject line if email is used. To help the
information and enter it into EOC can Amendment No. 1, is consistent with
delay the representation and execution Commission process and review your
sections 6(b)(5) 25 or any other provision comments more efficiently, please use
of an order. In today’s trading of the Act, or the rules and regulations
environment of rapidly moving markets only one method. The Commission will
thereunder. Although there does not post all comments on the Commission’s
and the need to execute an order and appear to be any issue relevant to
hedge a trade in real or near real time, Internet Web site (http://www.sec.gov/
approval or disapproval which would rules/sro.shtml). Copies of the
even a slight delay can prove to be
be facilitated by an oral presentation of submission, all subsequent
detrimental to the handling of an
views, data, and arguments, the amendments, all written statements
order.’’ 23 The Exchange further states
Commission will consider, pursuant to
that the ‘‘proposed change to eliminate with respect to the proposed rule
Rule 19b–4 under the Act,26 any request
the Give Up Requirement prior to change that are filed with the
for an opportunity to make an oral
execution of each trade would not Commission, and all written
presentation.27 Interested persons are
impair the Exchange’s ability to comply communications relating to the
invited to submit written data, views,
with the [Commission] Order. proposed rule change between the
and arguments regarding whether the
Specifically, the EOC would still Commission and any person, other than
provide an accurate, time-sequenced proposal should be approved or
disapproved by August 3, 2016. Any those that may be withheld from the
record beginning with the receipt of an public in accordance with the
order and document the life of the order person who wishes to file a rebuttal to
any other person’s submission must file provisions of 5 U.S.C. 552, will be
through the process of execution, partial available for Web site viewing and
execution, or cancellation. Entry of that rebuttal by August 17, 2016. In light
of the concerns raised by the proposed printing in the Commission’s Public
information pursuant to the Give Up
rule change, as discussed above, the Reference Room, 100 F Street NE.,
Requirement would occur after the
order had been represented and Commission invites additional comment Washington, DC 20549 on official
executed in the Trading Crowd. Thus, on the proposed rule change as the business days between the hours of
only the timing of the disclosure of such Commission continues its analysis of 10:00 a.m. and 3:00 p.m. Copies of such
information would be affected by this the proposed rule change’s consistency filing also will be available for
proposal.’’ 24 with sections 6(b)(5) and 6(b)(8),28 or inspection and copying at the principal
The Exchange, however, does not any other provision of the Act, or the office of the Exchange. All comments
explain why the identity of the Clearing rules and regulations thereunder. The received will be posted without change;
Member may not be provided when an Commission asks that commenters the Commission does not edit personal
order is presented to a Floor Broker, address the sufficiency and merit of the identifying information from
how frequently this occurs, or why it is Exchange’s statements in support of the submissions. You should submit only
burdensome to identify the Clearing proposed rule change, in addition to any information that you wish to make
Member in advance. As a result, the other comments they may wish to available publicly. All submissions
Exchange does not appear to offer a submit about the proposed rule change. should refer to File No. SR–NYSEArca–
credible justification for proposing to Comments may be submitted by any 2016–15, and should be submitted by
incur the risk of delaying the recording of the following methods: August 3, 2016. Rebuttal comments
of this important information into the should be submitted by August 17,
EOC. The Commission accordingly 25 15
U.S.C. 78f(b)(5). 2016.
believes the proposal, as modified by 26 17
CFR 240.19b–4.
Amendment No. 1, raises questions as to 27 Section 19(b)(2) of the Act, as amended by the For the Commission, by the Division of
whether it consistent with the Securities Act Amendments of 1975, Public Law Trading and Markets, pursuant to delegated
94–29 (June 4, 1975), grants to the Commission authority.29
jstallworth on DSK7TPTVN1PROD with NOTICES
requirements of section 6(b)(5) of the flexibility to determine what type of proceeding—
Act, including whether the proposal is either oral or notice and opportunity for written Brent J. Fields,
designed to prevent fraudulent and comments—is appropriate for consideration of a Secretary.
particular proposal by a self-regulatory
manipulative acts and practices, to organization. See Securities Act Amendments of
[FR Doc. 2016–16480 Filed 7–12–16; 8:45 am]
1975, Senate Comm. on Banking, Housing & Urban BILLING CODE 8011–01–P
22 See supra note 9. Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
23 See Notice, supra note 5, 81 FR at 21431. (1975).
24 See id. 28 15 U.S.C. 78f(b)(5), (b)(8). 29 17 CFR 200.30–3(a)(57).
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Document Created: 2016-07-13 01:43:43
Document Modified: 2016-07-13 01:43:43
| 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 45349 |
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