81 FR 57632 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Pilot Period for the Exchange's Retail Liquidity Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 163 (August 23, 2016)

Page Range		57632-57634
FR Document		2016-20062
Federal Register, Volume 81 Issue 163 (Tuesday, August 23, 2016)
[Federal Register Volume 81, Number 163 (Tuesday, August 23, 2016)]
[Notices]
[Pages 57632-57634]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-20062]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78601; File No. SR-NYSEArca-2016-113]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Extending the Pilot 
Period for the Exchange's Retail Liquidity Program

August 17, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on August 8, 2016, NYSE Arca, Inc. (the

[[Page 57633]]

``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II, below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the pilot period for the Exchange's 
Retail Liquidity Program (the ``Retail Liquidity Program'' or the 
``Program''), which is currently scheduled to expire on August 31, 
2016, until December 31, 2016. 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 this filing is to extend the pilot period of the 
Retail Liquidity Program, currently scheduled to expire on August 31, 
2016, until December 31, 2016.
Background
    In December 2013, the Commission approved the Retail Liquidity 
Program on a pilot basis.\4\ The Program is designed to attract retail 
order flow to the Exchange, and allows such order flow to receive 
potential price improvement. The Program is currently limited to trades 
occurring at prices equal to or greater than $1.00 per share. Under the 
Program, Retail Liquidity Providers (``RLPs'') are able to provide 
potential price improvement in the form of a non-displayed order that 
is priced better than the Exchange's best protected bid or offer 
(``PBBO''), called a Retail Price Improvement Order (``RPI''). When 
there is an RPI in a particular security, the Exchange disseminates an 
indicator, known as the Retail Liquidity Identifier, indicating that 
such interest exists. Retail Member Organizations (``RMOs'') can submit 
a Retail Order to the Exchange, which would interact, to the extent 
possible, with available contra-side RPIs.
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    \4\ See Securities Exchange Act Release No. 71176 (December 23, 
2013), 78 FR 79524 (December 30, 2013) (SR-NYSEArca-2013-107) (``RLP 
Approval Order'').
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    The Retail Liquidity Program was approved by the Commission on a 
pilot basis. Pursuant to NYSE Arca Equities Rule 7.44(m), the pilot 
period for the Program was originally scheduled to end twelve months 
after the date of implementation. Because the Program was implemented 
on April 14, 2014, the first pilot period for the Program ended on 
April 14, 2015 and the Exchange extended the pilot period to August 31, 
2016.\5\ In 2015, the Exchange adopted NYSE Arca Equities Rule 7.44P, 
which will govern the Retail Liquidity Program when the Exchange 
implements its Pillar trading platform.\6\
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    \5\ The Exchange announced the implementation date by Trader 
Update, which is available here: https://www.nyse.com/publicdocs/nyse/notifications/trader-update/2014_04_07_Arca_RLP%20GO%20LIVE.pdf. See Securities Exchange Act 
Release No. 77425 (March 23, 2016), 81 FR 17523 (March 29, 2016) 
(SR-NYSEArca-2016-47).
    \6\ See Securities Exchange Act Release No. 76267 (Oct. 26, 
2015), 80 FR 66951 (Oct. 30, 2015) (SR-NYSEArca-2015-56) (``Pillar 
Approval Order'').
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Proposal To Extend the Operation of the Program
    The Exchange established the Retail Liquidity Program in an attempt 
to attract retail order flow to the Exchange by potentially providing 
price improvement to such order flow. The Exchange believes that the 
Program promotes competition for retail order flow by allowing Exchange 
members to submit RPIs to interact with Retail Orders. Such competition 
has the ability to promote efficiency by facilitating the price 
discovery process and generating additional investor interest in 
trading securities, thereby promoting capital formation. The Exchange 
believes that extending the pilot is appropriate because it will allow 
the Exchange and the Commission additional time to analyze data 
regarding the Program that the Exchange has committed to provide.\7\ As 
such, the Exchange believes that it is appropriate to extend the 
current operation of the Program.\8\ Through this filing, the Exchange 
seeks to amend NYSE Arca Equities Rule 7.44(m) and Rule 7.44P(m) and 
extend the current pilot period of the Program until December 31, 2016.
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    \7\ See RLP Approval Order, supra n. 4, 78 FR at 79529.
    \8\ Concurrently with this filing, the Exchange has submitted a 
request for an extension of the exemption under Regulation NMS Rule 
612 previously granted by the Commission that permits it to accept 
and rank the undisplayed RPIs. See Letter from Martha Redding, Asst. 
Corporate Secretary, NYSE Group, Inc. to Brent J. Fields, Secretary, 
Securities and Exchange Commission, dated August 8, 2016.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\9\ in general, and furthers the objectives of Section 6(b)(5),\10\ 
in particular, in that it is designed 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 Exchange 
believes that extending the pilot period for the Retail Liquidity 
Program is consistent with these principles because the Program is 
reasonably designed to attract retail order flow to the exchange 
environment, while helping to ensure that retail investors benefit from 
the better price that liquidity providers are willing to give their 
orders. Additionally, as previously stated, the competition promoted by 
the Program may facilitate the price discovery process and potentially 
generate additional investor interest in trading securities. The 
extension of the pilot period will allow the Commission and the 
Exchange to continue to monitor the Program for its potential effects 
on public price discovery, and on the broader market structure.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
simply extends an established pilot program for an additional six 
months, thus allowing the Retail Liquidity Program to enhance 
competition for retail order flow and contribute to the public price 
discovery process.

[[Page 57634]]

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative before the expiration of the current 
pilot period. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest, because waiver would allow the pilot period to continue 
uninterrupted after its current expiration date of August 31, 2016, 
thereby avoiding any potential investor confusion that could result 
from temporary interruption in the pilot program. For this reason, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
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-NYSEArca-2016-113 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-2016-113. 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-2016-113 and should 
be submitted on or before September 12, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-20062 Filed 8-22-16; 8:45 am]
 BILLING CODE 8011-01-P
57634 Federal Register / Vol. 81, No. 163 / Tuesday, August 23, 2016 / Notices

C. Self-Regulatory Organization’s operative delay and designates the Washington, DC 20549 on official
Statement on Comments on the proposal operative upon filing.17 business days between the hours of
Proposed Rule Change Received From At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the
Members, Participants, or Others filing of the proposed rule change, the filing also will be available for
Commission summarily may inspection and copying at the principal
No written comments were solicited temporarily suspend such rule change if office of the Exchange. All comments
or received with respect to the proposed it appears to the Commission that such received will be posted without change;
rule change. action is necessary or appropriate in the the Commission does not edit personal
III. Date of Effectiveness of the public interest, for the protection of identifying information from
Proposed Rule Change and Timing for investors, or otherwise in furtherance of submissions. You should submit only
Commission Action the purposes of the Act. If the information that you wish to make
Commission takes such action, the available publicly. All submissions
The Exchange has filed the proposed Commission shall institute proceedings should refer to File Number SR–
rule change pursuant to Section to determine whether the proposed rule NYSEArca–2016–113 and should be
19(b)(3)(A) of the Act 11 and Rule 19b– change should be approved or submitted on or before September 12,
4(f)(6) thereunder.12 Because the disapproved. 2016.
proposed rule change does not: (i) For the Commission, by the Division of
Significantly affect the protection of IV. Solicitation of Comments
Trading and Markets, pursuant to delegated
investors or the public interest; (ii) Interested persons are invited to authority.18
impose any significant burden on submit written data, views, and Brent J. Fields,
competition; and (iii) become operative arguments concerning the foregoing, Secretary.
prior to 30 days from the date on which including whether the proposed rule
[FR Doc. 2016–20062 Filed 8–22–16; 8:45 am]
it was filed, or such shorter time as the change is consistent with the Act.
BILLING CODE 8011–01–P
Commission may designate, if Comments may be submitted by any of
consistent with the protection of the following methods:
investors and the public interest, the SECURITIES AND EXCHANGE
Electronic Comments
proposed rule change has become COMMISSION
effective pursuant to Section 19(b)(3)(A) • Use the Commission’s Internet
of the Act 13 and Rule 19b–4(f)(6) comment form (http://www.sec.gov/ Sunshine Act Meeting
thereunder.14 rules/sro.shtml); or
A proposed rule change filed under • Send an email to rule-comments@ Notice is hereby given, pursuant to
Rule 19b–4(f)(6) 15 normally does not sec.gov. Please include File Number SR– the provisions of the Government in the
become operative prior to 30 days after NYSEArca–2016–113 on the subject Sunshine Act, Public Law 94–409, that
the date of the filing. However, pursuant line. the Securities and Exchange
to Rule 19b4(f)(6)(iii),16 the Commission Paper Comments Commission will hold a closed meeting
may designate a shorter time if such on Thursday, August 25, 2016 at 2 p.m.
• Send paper comments in triplicate Commissioners, Counsel to the
action is consistent with the protection
to Brent J. Fields, Secretary, Securities Commissioners, the Secretary to the
of investors and the public interest. The
and Exchange Commission, 100 F Street Commission, and recording secretaries
Exchange has asked the Commission to
NE., Washington, DC 20549–1090. will attend the closed meeting. Certain
waive the 30-day operative delay so that
the proposed rule change may become All submissions should refer to File staff members who have an interest in
operative before the expiration of the Number SR–NYSEArca–2016–113. This the matters also may be present.
file number should be included on the The General Counsel of the
current pilot period. The Commission
subject line if email is used. To help the Commission, or her designee, has
believes that waiving the 30-day
Commission process and review your certified that, in her opinion, one or
operative delay is consistent with the
comments more efficiently, please use more of the exemptions set forth in 5
protection of investors and the public
only one method. The Commission will U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
interest, because waiver would allow
post all comments on the Commission’s and 17 CFR 200.402(a)(3), (a)(5), (a)(7),
the pilot period to continue
Internet Web site (http://www.sec.gov/ (a)(9)(ii) and (a)(10), permit
uninterrupted after its current
rules/sro.shtml). Copies of the consideration of the scheduled matter at
expiration date of August 31, 2016,
submission, all subsequent the closed meeting.
thereby avoiding any potential investor Commissioner Piwowar, as duty
confusion that could result from amendments, all written statements
with respect to the proposed rule officer, voted to consider the items
temporary interruption in the pilot listed for the closed meeting in closed
program. For this reason, the change that are filed with the
Commission, and all written session.
Commission hereby waives the 30-day The subject matter of the closed
communications relating to the
proposed rule change between the meeting will be:
11 15 U.S.C. 78s(b)(3)(A).
Commission and any person, other than Institution and settlement of
12 17 CFR 240.19b–4(f)(6).
13 15 U.S.C. 78s(b)(3)(A). those that may be withheld from the injunctive actions;
Institution and settlement of
14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– public in accordance with the
administrative proceedings;
4(f)(6)(iii) requires the Exchange to give the provisions of 5 U.S.C. 552, will be
sradovich on DSK3GMQ082PROD with NOTICES

Commission written notice of the Exchange’s intent Resolution of litigation claims; and
available for Web site viewing and Other matters relating to enforcement
to file the proposed rule change, along with a brief
description and text of the proposed rule change, printing in the Commission’s Public proceedings.
at least five business days prior to the date of filing Reference Room, 100 F Street NE., At times, changes in Commission
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange 17 For purposes only of waiving the 30-day
priorities require alterations in the
has satisfied this requirement. operative delay, the Commission has considered the scheduling of meeting items.
15 17 CFR 240.19b–4(f)(6).
proposed rule’s impact on efficiency, competition,
16 17 CFR 240.19b–4(f)(6)(iii). and capital formation. See 15 U.S.C. 78c(f). 18 17 CFR 200.30–3(a)(12).

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Document Created: 2018-02-09 11:40:26
Document Modified: 2018-02-09 11:40:26
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 57632