81 FR 57986 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca Equities Rules 7.35P, 7.34P, 7.18P and 7.31P Regarding Order Processing Following an Auction or When Transitioning From One Trading Session to Another
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 164 (August 24, 2016)
Federal Register Volume 81, Issue 164 (August 24, 2016)
| Page Range | 57986-57992 | |
| FR Document | 2016-20209 |
[Federal Register Volume 81, Number 164 (Wednesday, August 24, 2016)] [Notices] [Pages 57986-57992] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-20209] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78615; File No. SR-NYSEArca-2016-117] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca Equities Rules 7.35P, 7.34P, 7.18P and 7.31P Regarding Order Processing Following an Auction or When Transitioning From One Trading Session to Another August 18, 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 15, 2016, NYSE Arca, Inc. (the ``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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Equities Rule 7.35P (Auctions), Rule 7.34P (Trading Sessions), Rule 7.18P (Halts), and 7.31P (Orders and Modifiers) regarding order processing following an auction or when transitioning from one trading sessions to another. 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. [[Page 57987]] A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend NYSE Arca Equities Rule 7.35P (Auctions) (``Rule 7.35P''), Rule 7.34P (Trading Sessions) (``Rule 7.34P''), Rule 7.18P (Halts) (``Rule 7.18P''), and 7.31P (Orders and Modifiers) (``Rule 7.31P'') regarding order processing following an auction or when transitioning from one trading session to another. These proposed changes would revise how the Exchange processes orders on the Pillar trading platform only. Overview Currently, under Rule 7.35P(g), during the Auction Processing Period,\4\ new orders, requests to cancel, and requests to cancel and replace an order that are received during the Auction Processing Period will be accepted but will not be processed until after the applicable auction concludes. In addition, a request to cancel and replace an order that was entered during the Auction Processing Period for an order that was also entered during the Auction Processing Period will be rejected. --------------------------------------------------------------------------- \4\ The ``Auction Processing Period'' means the period during which the applicable auction is being processed. See Rule 7.35P(a)(2). --------------------------------------------------------------------------- When the Exchange transitions to continuous trading, either after auction processing concludes or when transitioning from one trading session to another, the Exchange transitions to continuous trading pursuant to the steps specified in Rule 7.35P(h). Specifically, the Exchange will first expire orders that are no longer eligible to trade. Next, orders that are designated for a trading session and that were received during a prior trading session or during the Auction Processing Period, and that did not participate in the auction, will become eligible to trade. Then, before continuous trading will begin, the Exchange will process any order instructions received either during the Auction Imbalance Freeze or Auction Processing Period, which includes new orders and requests to cancel, will next adjust the display price and working price of orders based on the PBBO or NBBO, and if orders are marketable, will trade and/or route such orders based on price-time priority. After marketable orders have routed or traded, the Exchange will publish a quote for the next trading session. With respect to order entry for the Core Trading Session, Rule 7.34P(c)(1)(C) currently provides that Limit Orders designated IOC and Cross Orders entered before or during the Early Trading Session and designated for the Core Trading Session will be rejected if entered before the Core Open Auction concludes. As such, a Limit Order designated IOC that is entered after 9:30:00, but before the Core Open Auction concludes, would be rejected. Finally, Rule 7.18P(c)(2) provides that during a halt or pause in an Exchange-listed security, the Exchange retains resting orders in the NYSE Arca Book and assigns Limit Orders a working price and display price that is equal to the limit price of the order. The Exchange proposes to amend order and order instruction processing following an auction or when transitioning from one trading session to another to:Evaluate the status of orders that were live before the auction or in the earlier trading session and are eligible to trade after the auction/next trading session to assess whether to publish a new quote; After the Auction Processing Period ends, process orders that become eligible to trade in time sequence with specified cancel request; and Distinguish when requests to cancel, cancel and replace, and modify an order would be processed on arrival based on whether the impacted order was previously eligible to trade. The Exchange believes that these proposed changes would simplify the transition to continuous trading following an auction or the transition from one trading session to another. Specifically, rather than waiting for all marketable orders to be traded or routed in price/ time priority before publishing a quote, the Exchange would be evaluating orders at an earlier stage to determine whether to publish a quote. After publishing a quote, orders that become eligible to trade and related order instructions would be traded, routed, or quoted in time sequence. These proposed order processing changes would facilitate the Exchange in applying Price Bands, as defined in the Regulation NMS Plan to Address Extraordinary Market Volatility (``LULD Plan''),\5\ immediately following an auction in Exchange-listed securities, rather than waiting for the securities information processor (``SIP'') to publish such Price Bands based on the reference price provided by the Exchange for such securities. --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 77679 (April 21, 2016), 81 FR 24908 (April 27, 2016) (File No. 4-631) (Order approving 10th Amendment to the LULD Plan) and Rule 7.11P. --------------------------------------------------------------------------- To effect the rule change, the Exchange proposes to amend Rules 7.35P(g) and (h) to specify order and order instruction processing both during the Auction Processing Period and when transitioning to continuous trading. The Exchange also proposes to amend Rules 7.31P and 7.34P to specify that Limit Orders designated IOC and Cross Orders would be accepted during the Auction Processing Period. Finally, the Exchange proposes to amend Rule 7.18P to specify that orders that were on the NYSE Arca Book before a halt or pause would retain their last working and display price. Proposed Rule Change To effect the changes to how order instructions would be processed during the Auction Processing Period, the Exchange proposes to amend Rule 7.35P(g). As proposed, Rule 7.35P(g) would provide that new orders received during the Auction Processing Period would be accepted but would not be processed until after the Auction Processing Period. This proposed rule text is based on current Rule 7.35P(g), with a non- substantive change to specify that the processing would be ``after the Auction Processing Period'' rather than ``until after the applicable auction concludes.'' The proposed change is designed to use consistent terminology throughout proposed Rule 7.35P(g) and (h) without any change to its meaning. Proposed Rule 7.35P(g) would further provide that for purposes of paragraphs (g) and (h) of that rule, an ``order instruction'' refers to a request to cancel, cancel and replace, or modify an order. The current rule text does not currently specify how the Exchange would process requests to modify an order during the Auction Processing Period. However, because requests to modify an order would be handled in the same manner as requests to cancel or requests to cancel and replace and [sic] order, the Exchange proposes to include modifying an order in the definition of ``order instruction.'' As further proposed, during the Auction Processing Period, order instructions would be processed as described in proposed Rules 7.35P(g)(1)-(2), which would replace the remainder of the current text of Rule 7.35P(g). Proposed Rule 7.35P(g)(1) would provide that an order instruction received during the Auction Processing Period would not be processed until after the Auction Processing Period if it relates to an order that was received before the Auction Processing Period. This proposed text is based on current Rule 7.35P(g) with no substantive changes, but with revised text to use consistent terminology. The proposed [[Page 57988]] rule would further provide that any subsequent order instructions relating to such order would be rejected. This would be new functionality. The Exchange proposes to reject such subsequent order instructions because they may conflict with the previously-entered order instruction.\6\ To avoid such a scenario, the Exchange proposes that any subsequent order instructions would be rejected. --------------------------------------------------------------------------- \6\ For example, assume that during the Auction Processing Period, an ETP Holder sends a request to cancel and replace an order. While still in the Auction Processing Period, the ETP Holder then sends a request to cancel the original order. When those order instructions are processed in time sequence, the first instruction would result in a cancellation of the original order and a new order. The second instruction would be a cancellation of a non- existing order. --------------------------------------------------------------------------- Proposed Rule 7.35P(g)(2) would provide that an order instruction received during the Auction Processing Period would be processed on arrival if it relates to an order that was received during the Auction Processing Period. This proposed rule text represents a substantive change from current Rule 7.35P(g), which provides that the Exchange rejects a request to cancel and replace an order that was entered during the Auction Processing Period. The Exchange believes that if the Exchange receives an order during the Auction Processing Period, because such order would not be eligible to participate in an auction and because such order is not yet eligible to trade following the auction or in the next trading session, there should be no restrictions on cancelling, replacing, or modifying such non-live order. The Exchange also proposes to amend which orders may be entered during the Auction Processing Period. Currently, Rule 7.34P(c)(1)(C) provides that Limit Orders designated IOC and Cross Orders entered before or during the Early Trading Session and designated for the Core Trading Session will be rejected if entered before the Core Open Auction concludes. Because of the changes to order processing following the Auction Processing Period to process orders that are received during the Auction Processing Period in time sequence (as described in greater detail below), the Exchange proposes to accept Limit Orders designated IOC and Cross Orders during the Auction Processing Period. Because the Auction Processing Period occurs after 9:30 a.m. Eastern Time, an ETP Holder may be timing to send Limit Orders designated IOC as soon after 9:30 a.m. Eastern Time as feasible and would not know the precise time when the Exchange has transitioned to continuous trading. To avoid rejecting orders designated for the Core Trading Session that were entered during Core Trading Hours,\7\ the Exchange proposes to amend Rule 7.34P(c)(1)(C) to provide that Limit Orders designated IOC and Cross Orders entered before or during the Early Trading Session and designated for the Core Trading Session would be rejected if entered before the Auction Processing Period for the Core Open Auction. The Exchange similarly proposes to amend Rules 7.31P(b)(2) and (g), which currently provide that a Limit Order with an IOC Modifier or a Limit IOC Cross Order will be cancelled if it arrives during auction processing, to delete the phrase ``and it if arrives during auction processing, it will be cancelled.'' --------------------------------------------------------------------------- \7\ ``Core Trading Hours'' means the hours of 9:30 a.m. Eastern Time through 4:00 p.m. Eastern Time or such other hours as may be determined by the Corporation from time to time. See Rule 1.1(j). --------------------------------------------------------------------------- The Exchange further proposes to amend Rule 7.34P(c)(2) to add new subparagraph (C) that would provide that Limit Orders designated IOC and Cross Orders entered before and during the Core Trading Session and designated for the Late Trading Session would be rejected if entered before the Auction Processing Period for the Closing Auction. Currently, the rule is silent on the treatment of Limit Orders designated IOC and Cross Orders that are designated for the Late Trading Session only and entered during the Core Trading Session or earlier, but the treatment is the same as provided for in current Rule 7.34P(c)(1)(C). The Exchange proposes to codify the treatment of such orders entered during the Core Trading Session, and in so doing, make the same substantive change as proposed for Rule 7.34P(c)(1)(C). To effect the changes to how the Exchange would transition to continuous trading, the Exchange proposes to amend Rule 7.35P(h). The Exchange proposes a non-substantive clarifying change to the text of Rule 7.35P(h) to replace the phrase ``the Exchange will transition to continuous trading session for the applicable trading session'' with the phrase ``the Exchange will transition to continuous trading following an auction or when transitioning from one trading session to another'' to specify that Rule 7.35P(h) governs both trading session transition (which may involve an auction) and transition to continuous trading following a Trading Halt Auction. Rule 7.35P(h)(1), which is not changing, and proposed Rules 7.35P(h)(2)-(3), which will be new rule text, would specify how orders and order instructions would be processed as the Exchange transitions to continuous trading. The Exchange proposes to delete current Rule 7.35P(h)(2), (h)(3), and (h)(3)(A)-(D) (with the exception of the second sentence of current Rule 7.35P(h)(3)(B), which, as described below, will be included in proposed Rule 7.35P(h)(3)(C)). Proposed Rule 7.35P(h)(2) would specify how the Exchange would process order instructions during the transition to continuous trading: Proposed Rule 7.35P(h)(2)(A) would provide that an order instruction received during the Auction Imbalance Freeze,\8\ the transition to continuous trading, or the Auction Processing Period under paragraph (g)(1) of this Rule would be processed in time sequence with the processing of orders as specified in proposed Rule 7.35P(h)(3)(A) or (B) if it relates to an order that was received before the Auction Processing Period. As proposed, these order instructions would be processed in time sequence with the processing of orders as they become eligible to trade, as described below. Similar to proposed Rule 7.35P(g)(1), any subsequent order instructions relating to such order would be rejected. This proposed rule is based in part on current Rule 7.35P(h)(2)(A) [sic], which provides that any order instructions received during either the Auction Imbalance Freeze or Auction Processing Period that were not processed will be processed. The proposed changes are designed to provide more specificity that the specified order instructions would be processed in time sequence with all other order processing. --------------------------------------------------------------------------- \8\ The ``Auction Imbalance Freeze'' means the period that begins before the scheduled time for the Early Open Auction, Core Open Auction, or Closing Auction, as specified in Rules 7.35P(b), (c), and (d), and that ends once the Auction Processing Period begins. See Rule 7.35P(a)(3). --------------------------------------------------------------------------- Proposed Rule 7.35P(h)(2)(B) would provide that an order instruction received during the transition to continuous trading would be processed on arrival if it relates to an order that was entered during the Auction Processing Period or the transition to continuous trading. This proposed processing would therefore apply to orders that were not previously live and were entered after the Auction Processing Period began. Similar to proposed Rule 7.35P(g)(2), because these orders have not yet been processed, the Exchange believes it is appropriate to apply order instructions against such orders immediately. Proposed Rule 7.35P(h)(3) would specify how orders would be processed when transitioning to continuous [[Page 57989]] trading, as provided for in proposed Rules 7.35P(h)(3)(A)-(C): Proposed Rule 7.35P(h)(3)(A) would provide that a quote would be published based on unexecuted orders that were eligible to trade in the trading sessions both before and after the transition or auction, i.e., previously-live orders. This represents a substantive change from current Rule 7.35P(h)(3)(D), which provides that the Exchange will publish a quote only after all marketable orders have routed or traded. As proposed, the Exchange would publish a quote before evaluating the orders that were not previously eligible to trade. Proposed Rules 7.35P(h)(3)(A)(i) and (ii) would provide specificity regarding how such quote would be determined. Proposed Rule 7.35P(h)(3)(A)(i) would provide that before publishing a quote when transitioning from a prior trading session or following the Early Open Auction, Core Open Auction, or Closing Auction: (1) Previously-live orders that are marketable would be traded, routed, or cancelled in time sequence; (2) a new quote would be published only if different from the last-published quote; \9\ and (3) if the new published quote would be worse than the previously-published quote and would lock or cross the PBBO, the display price of Limit Orders would be adjusted consistent with Rule 7.31P(a)(2)(C). Because the Exchange does not currently update its quote solely because it transitions from one trading session to another, the Exchange would not be changing that behavior when evaluating whether to publish a quote. When assessing whether previously-live orders are marketable, the Exchange would re-price them first, as provided for in proposed Rule 7.35P(h)(3)(C). If such orders would become marketable against each other or a protected quote, they would be traded or routed, as applicable. In addition, because such orders would be subject to LULD Plan Price Bands, such orders may be cancelled if priced through a Price Band.\10\ With respect to proposed cross reference to Rule 7.31P(a)(2)(C), that rule describes how the Exchange would not publish a new BBO that would lock or cross a PBBO that initially had locked or crossed our previously-displayed quote. Because of updates to the PBBO during the Auction Processing Period, a similar set of facts and circumstances could arise, and rather than publishing a new quote that would lock or cross the PBBO, the Exchange would adjust the display price of Limit Orders as provided for in Rule 7.31P(a)(2)(C) until such time that the limit price of such orders no longer locks or crosses the PBBO.\11\ Proposed Rule 7.35P(h)(3)(A)(ii) would provide that before publishing a quote following a Trading Halt Auction: (1) Previously- live Limit Orders that are designated with a Proactive if Locked/ Crossed Modifier or that would be the result of reserve interest replenishing the fully-executed display quantity of a routable Reserve Order would route, if marketable against protected quotations on Away Markets; (2) previously-live orders marketable against other orders in the NYSE Arca Book that would not trade-through a protected quotation would trade; and (3) the display price of all other orders that are marketable against a protected quotation on an Away Market would be adjusted consistent with Rule 7.31P(a)(2)(C). The Exchange proposes this difference in processing following a Trading Halt Auction to avoid locking or crossing a protected quotation, the Exchange proposes to re- price the display price of such orders as provided for in Rule 7.31P(a)(2)(C). In addition, unlike a trading session transition change, because the Exchange would not have a published quote during a halt or pause, if there is sufficient interest, the Exchange would publish a quote at this stage following a Trading Halt Auction. --------------------------------------------------------------------------- \9\ For example, assume that at 9:29 a.m. Eastern Time, NYSE Arca publishes a quote in XYZ of 100 shares 10.04 x 10.05 100 shares. Assume that after the Auction Processing Period, based on the orders that were previously eligible to trade, the quote would be 100 shares 10.04 x 10.05 100 shares. Because the quote has not changed, the Exchange would not republish that quote. By contrast, if the new quote is 100 shares 10.03 x 10.05 100 shares, the Exchange would publish a new quote. \10\ See Rule 7.11P(a)(5) (specifying when the Exchange would cancel buy (sell) orders priced above (below) the Upper (Lower) Price Band). \11\ For example, assume that before the Core Open Auction, the Exchange publishes a quote of 10.04 x 10.05, which is the NBBO. During the Auction Processing Period, an Away Market publishes a new protected offer of 10.02, which crosses the Exchange's best bid. That bid can stand its ground. However, if after the Auction Processing Period, the new Exchange best bid would be 10.03, because this is worse than the Exchange's last published best bid and would cross the new PBO of 10.02, the Exchange would adjust the display price of the Limit Order representing the best bid to 10.01 and the working price would be priced at 10.02. --------------------------------------------------------------------------- Proposed Rule 7.35P(h)(3)(B) would provide that next, unexecuted orders that were not eligible to trade in the prior trading session (or were received during a halt or pause) or that were received during the Auction Processing Period, would be assigned a new working time at the end of the Auction Processing Period in time sequence relative to one another based on original entry time. This would be new processing of such orders. Currently, as provided for in Rule 7.36P(f)(1), an order is assigned a working time based on its original order entry time. That would remain true for such orders for purposes of participation in the applicable auction.\12\ However, as proposed, after the Auction Processing Period, the Exchange would assign a new working time to such orders, i.e., orders that were not previously live. This proposed change is similar to how Bats BZX Exchange, Inc. (``Bats'') and the Nasdaq Stock Market LLC (``Nasdaq'') process orders following an auction that were not previously live.\13\ By assigning a new working time, in continuous trading, such orders would no longer have time priority over orders that were entered later, but were eligible to trade in the prior trading session.\14\ --------------------------------------------------------------------------- \12\ See Rule 7.35P(a)(6) (describing Auction Ranking, which is based on the price-time priority of such orders as specified in Rules 7.36P(c)-(g)). \13\ See Bats Rules 11.23(b)(3)(A) and (B) and (c)(3)(A) (previously-live orders, i.e., ``Limit order shares on the Continuous Book that are not executed in'' an auction, will remain on the Bats' book and thus will be represented in the quote and orders that were not previously live, i.e., ``RHO Orders'' will be added to the Bats' book at the conclusion of the Opening Auction); Nasdaq Rules 4752(c) and 4753(c)(1) (If no opening or trading halt cross, orders are added to the book, i.e., the previously published quote, in time priority). \14\ For example, assume a Limit Order to buy for 10.00 designated for the Core Trading Session only (Order A) is entered at 8:00 a.m. Eastern Time. Assume next that a Limit Order to buy for 10.00 designated for both the Early and Core Trading Sessions (Order B) is entered at 9:00 a.m. Eastern Time, and is eligible to trade on arrival. Assume that Order B is not executed in the Early Trading Session. In the Core Trading Auction, Order A will have time priority over Order B. However, after the Auction Processing Period for the Core Open Auction ends, Order A will be assigned a new working time. In continuous trading Order B, which was eligible to trade earlier than Order A, would have time priority over Order A. --------------------------------------------------------------------------- Proposed Rule 7.35P(h)(3)(C) would provide that when processing orders, the display price and working price of an order would be adjusted based on the PBBO or NBBO, as provided for in Rule 7.31P. This rule text is based on the first sentence of current Rule 7.31P(h)(3)(B). The second sentence of proposed Rule 7.35P(h)(3)(C) would retain the second sentence of current Rule 7.35P(h)(3)(B), which states that ``when transitioning to continuous trading, the display price and working price of Day ISOs will be adjusted in the same manner as Arca Only Orders until the Day ISO is either traded in full or displayed at its limit price.'' The Exchange also proposes to amend Rule 7.18P regarding order handling during a halt or pause. During a UTP Regulatory Halt, the Exchange cancels any unexecuted portions of Market Orders. The Exchange proposes to add that the Exchange would also cancel [[Page 57990]] orders not eligible to trade in the current trading session on the NYSE Arca Book. For example, assume there is a UTP Regulatory Halt at 8:00 a.m. Eastern Time. If the Exchange receives notice of such halt, it would cancel any orders in the impacted security resting on the NYSE Arca Book that are designated for the Core Trading Session only or designated for the Core and Late Trading Sessions, i.e., are not eligible to trade in the Early Trading Session, which is for purposes of this example, the current trading session. Because the Exchange does not conduct a Trading Halt Auction for UTP Securities, the Exchange proposes to cancel such non-live orders in order to reduce the potential for such orders to lock or cross a protected quotation if trading resumes in that security in the next trading session. The Exchange also proposes to amend how orders are maintained on the NYSE Arca Book during a halt or pause. As proposed, rather than assign Limit Orders a working price and display price that is equal to the limit price of the Order, the Exchange proposes to amend Rule 7.18P(c)(2) to provide that during a halt or pause in Exchange-listed securities, it would maintain resting orders on the NYSE Arca Book at their last working price and display price. This proposed change would not alter how such orders would participate in a Trading Halt Auction, which would continue to be based on their limit price, and not their last working price.\15\ Nor would it alter how they would be priced when transitioning to continuous trading, because as proposed in Rule 7.35P(h)(3)(C), the working price and display price of such orders would be adjusted based on any changes to the PBBO or NBBO, as provided for in Rule 7.31P. This proposed rule change would therefore not alter any priority for such orders, but would streamline order processing for the Exchange by eliminating an extra processing step. For consistency, the Exchange proposes to add the same clause to Rule 7.18P(b)(2).\16\ Finally, the Exchange proposes to amend Rule 7.18P(c)(5) to provide more specificity of when the rules governing order acceptance during a halt or pause ends. Currently, the rule provides that the Exchange accepts all other incoming order instructions until the security has reopened. Because acceptance of orders and order instructions during the Auction Processing Period is governed by Rule 7.35P(g), the Exchange proposes to revise Rule 7.18P(c)(5) to provide that the Exchange would accept all other incoming order instructions until the Auction Processing Period for the Trading Halt Auction, at which point, Rule 7.35P(g) would govern the entry of incoming orders and order instructions. --------------------------------------------------------------------------- \15\ See Rule 7.35P(a)(6)(A) (Limit Orders, LOO Orders, and LOC orders will be ranked based on their limit price and not the price at which they would participate in the auction). \16\ The Exchange also proposes a non-substantive, technical amendment to fix a typographical error in Rule 7.18P(c) to use the term ``Marketplace'' instead of ``Markeplace.'' --------------------------------------------------------------------------- * * * * * Because of the technology changes associated with this proposed rule change, the Exchange will announce by Trader Update the implementation date. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\17\ in general, and furthers the objectives of Section 6(b)(5),\18\ in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b). \18\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes the proposed changes would 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, because they are designed to simplify order and order instruction processing both during the Auction Processing Period and when transitioning to continuous trading. Specifically, the Exchange believes that publishing a quote based on orders that were previously live before the new trading session or auction would result in the Exchange publishing an updated quote sooner than under current rules. In addition, the proposed change to process orders that become live after an auction or in a new trading session in time sequence rather than in price/time priority would similarly simplify order processing by processing such orders in the order they were received. The Exchange also believes that assigning a new working time to orders that were not live prior to the transition to continuous trading would preserve the time priority of those orders that were eligible to trade in an earlier trading session or before the auction. This proposed rule change is also based on how Bats and Nasdaq assign time priority to orders that were not live prior to an auction and that are added to the book after an auction.\19\ --------------------------------------------------------------------------- \19\ See supra note 13. --------------------------------------------------------------------------- The Exchange also believes that the proposed changes to when the Exchange would process order instructions, both during the Auction Processing Period and when transitioning to continuous trading, are designed to provide consistent treatment of when order instructions would be processed, which would be based on when an order was entered. The Exchange believes that waiting to process order instructions that relate to an order that was entered before the Auction Processing Period (including order instructions entered during the Auction Imbalance Freeze that were not yet processed) would remove impediments to and perfect a free and open market and a national market system because it would ensure that a customer's order instructions would be processed in time sequence with the underlying order. Likewise, the Exchange believes that the proposed change to reject subsequent order instructions when order instructions are not processed on arrival, as provided for in proposed Rules 7.35P(g)(1) and 7.35P(2)(A) [sic], would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would reduce the potential for conflicting order instructions being entered for the same order. By contrast, the Exchange believes that if a new order is entered during a transition phase, such as the Auction Processing Period or the transition to continuous trading, ETP Holders do not have an expectation that such orders would be processed yet, and therefore processing order instructions relating to such new orders on arrival would remove impediments to and perfect the mechanism of a free and open market and a national market system by ensuring that the most recent instruction for such not-yet-live order is available when the order will be processed in time sequence with other orders. The Exchange also believes that the proposed change to accept Limit Orders designated IOC and Cross Orders during the Auction Processing Period would remove impediments to and perfect the mechanism of a free and open market and a national market system. Specifically, the Exchange believes that ETP Holders that enter such orders after 9:30 a.m. Eastern Time or after 4:00 p.m. Eastern Time have an expectation that [[Page 57991]] such orders would be eligible to trade consistent with the IOC instruction. Because an ETP Holder would not be able to pinpoint the precise timing of the Auction Processing Period for a security and because the Exchange would be processing orders in time sequence following the Auction Processing Period, the Exchange believes that the applicable IOC instruction would in essence be processed on arrival. The Exchange believes that the proposed changes to Rule 7.18P would remove impediments to and perfect the mechanism of a free and open market and a national market system because they are designed to streamline order processing during a halt or pause. The Exchange further believes that the proposed change during a UTP Regulatory Halt to cancel orders that are not eligible to trade in the current trading session would remove impediments and perfect the mechanism of a free and open market and a national market system because the changes are designed to reduce the potential for such orders to lock or cross a protected quotation if trading resumes in that security in the next trading session. The Exchange further believes that the proposed changes would remove impediments to and perfect the mechanism of a free and open market and in general, to protect investors and the public interest because the proposed changes would facilitate the Exchange in applying Price Bands under the LULD Plan to Exchange-listed securities immediately following the transition to the Core Trading Session or following a Trading Halt Auction during Core Trading Hours without waiting for such Price Bands to be published by the SIP based on the reference price provided by the Exchange. 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 Exchange believes that the proposed rule change is not designed to address any competitive issues, but rather, to streamline and simplify order and order instruction processing both during and immediately after the Auction Processing Period. 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 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 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) thereunder.\21\ --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A). \21\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \22\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \23\ permits the Commission to 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 proposal may become operative immediately upon filing. According to the Exchange, the proposed rule change would help the Exchange in providing more information about orders on the Arca Book at an earlier stage, would simplify certain order processing, and would facilitate the Exchange in applying LULD Price Bands immediately following an auction in Exchange-listed securities, rather than waiting for the SIP to publish such Price Bands based on a reference price provided by the Exchange. The Exchange further stated that it expects to be able to implement the technology changes supporting this proposed rule change in less than 30 days from filing. The Commission believes the waiver of the operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal operative upon filing.\24\ --------------------------------------------------------------------------- \22\ 17 CFR 240.19b-4(f)(6). \23\ 17 CFR 240.19b-4(f)(6)(iii). \24\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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-2016-117 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-2016-117. 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., [[Page 57992]] Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2016-117, and should be submitted on or before September 14, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-20209 Filed 8-23-16; 8:45 am] BILLING CODE 8011-01-P
![57986 Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices
dealers’’) to preserve for prescribed the staff estimates that the average SECURITIES AND EXCHANGE
periods of time certain records required broker-dealer spends approximately COMMISSION
to be made by Rule 17a–3. In addition, $5,000 each year to store documents
[Release No. 34–78615; File No. SR–
Rule 17a–4 requires the preservation of required to be retained under Rule 17a– NYSEArca–2016–117]
records required to be made by other 4. Costs include the cost of physical
Commission rules and other kinds of space, computer hardware and software, Self-Regulatory Organizations; NYSE
records which firms make or receive in etc., which vary widely depending on Arca, Inc.; Notice of Filing and
the ordinary course of business. These the size of the broker-dealer and the Immediate Effectiveness of Proposed
include, but are not limited to, bank type of storage media employed. The Rule Change To Amend NYSE Arca
statements, cancelled checks, bills Equities Rules 7.35P, 7.34P, 7.18P and
Commission estimates that the annual
receivable and payable, originals of 7.31P Regarding Order Processing
reporting and recordkeeping cost
communications, and descriptions of Following an Auction or When
various transactions. Rule 17a–4 also burden is $20,520,000. This cost is
calculated by the number of active, Transitioning From One Trading
permits broker-dealers to employ, under Session to Another
certain conditions, electronic storage registered broker-dealers multiplied by
media to maintain records required to the reporting and recordkeeping cost for August 18, 2016.
be maintained under Rules 17a–3 and each respondent (4,104 active, Pursuant to Section 19(b)(1) 1 of the
17a–4. registered broker-dealers × $5,000). Securities Exchange Act of 1934 (the
There are approximately 4,104 active, Written comments are invited on: (a) ‘‘Act’’),2 and Rule 19b–4 thereunder,3
registered broker-dealers. The staff Whether the proposed collection of notice is hereby given that on August
estimates that the average amount of information is necessary for the proper 15, 2016, NYSE Arca, Inc. (the
time necessary to preserve the books performance of the functions of the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
and records as required by Rule 17a–4 Commission, including whether the the Securities and Exchange
is 254 hours per broker-dealer per year. Commission (the ‘‘Commission’’) the
information shall have practical utility;
In addition, the Commission is moving proposed rule change as described in
(b) the accuracy of the Commission’s
into this information collection the Items I and II below, which Items have
annual burden hours for paragraph estimate of the burden of the proposed
been prepared by the self-regulatory
(b)(11) of Rule 17a–4, which requires collection of information; (c) ways to
organization. The Commission is
any broker-dealer that sponsors an enhance the quality, utility, and clarity
publishing this notice to solicit
internal broker-dealer system to of the information collected; and (d)
comments on the proposed rule change
maintain certain records relating to such ways to minimize the burden of the from interested persons.
system for at least three years. The collection of information on
Commission estimates that paragraph respondents, including through the use I. Self-Regulatory Organization’s
(b)(11) of Rule 17a–4 imposes an annual of automated collection techniques or Statement of the Terms of Substance of
burden of 3 hours per year to maintain other forms of information technology. the Proposed Rule Change
the requisite records. The Commission Consideration will be given to The Exchange proposes to amend
estimates that there are approximately comments and suggestions submitted in NYSE Arca Equities Rule 7.35P
150 internal broker-dealer systems, writing within 60 days of this (Auctions), Rule 7.34P (Trading
resulting in an annual recordkeeping publication. Sessions), Rule 7.18P (Halts), and 7.31P
burden of 450 hours. Therefore, the (Orders and Modifiers) regarding order
An agency may not conduct or
Commission estimates that compliance processing following an auction or
with Rule 17a–4 requires 1,042,866 sponsor, and a person is not required to
when transitioning from one trading
hours each year ((4,104 broker-dealers × respond to, a collection of information
sessions to another. The proposed rule
254 hours) + (150 broker-dealers × 3 under the PRA unless it displays a
change is available on the Exchange’s
hours). These burdens are currently valid OMB control number. Web site at www.nyse.com, at the
recordkeeping burdens. Please direct your written comments principal office of the Exchange, and at
The staff believes that compliance to: Pamela Dyson, Director/Chief the Commission’s Public Reference
personnel would be charged with Information Officer, Securities and Room.
ensuring compliance with Commission Exchange Commission, c/o Remi Pavlik-
regulation, including Rule 17a–4. The II. Self-Regulatory Organization’s
Simon, 100 F Street NE., Washington, Statement of the Purpose of, and
staff estimates that the hourly salary of DC 20549, or send an email to:
a Compliance Clerk is $65 per hour.1 Statutory Basis for, the Proposed Rule
PRA_Mailbox@sec.gov. Change
Based upon these numbers, the total
internal cost of compliance for 4,104 Dated: August 19, 2016. In its filing with the Commission, the
respondents is the dollar cost of Brent J. Fields, self-regulatory organization included
approximately $67.8 million (1,042,416 Secretary. statements concerning the purpose of,
yearly hours × $65). The total burden [FR Doc. 2016–20258 Filed 8–23–16; 8:45 am] and basis for, the proposed rule change
hour decrease of 242,062 is due to a and discussed any comments it received
BILLING CODE 8011–01–P
decrease in the number of respondents on the proposed rule change. The text
from 5,057 to 4,104. of those statements may be examined at
Based on conversations with members the places specified in Item IV below.
of the securities industry and the
mstockstill on DSK3G9T082PROD with NOTICES
The Exchange has prepared summaries,
Commission’s experience in the area, set forth in sections A, B, and C below,
of the most significant parts of such
1 This figure is based on SIFMA’s Office Salaries
statements.
in the Securities Industry 2016, modified by
Commission staff to account for an 1,800-hour
1 15 U.S.C. 78s(b)(1).
work-year multiplied by 2.93 to account for
2 15 U.S.C. 78a.
bonuses, firm size, employee benefits, and
overhead. 3 17 CFR 240.19b–4.
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![Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices 57987
A. Self-Regulatory Organization’s Limit Orders designated IOC and Cross 7.35P(g) and (h) to specify order and
Statement of the Purpose of, and the Orders entered before or during the order instruction processing both during
Statutory Basis for, the Proposed Rule Early Trading Session and designated the Auction Processing Period and
Change for the Core Trading Session will be when transitioning to continuous
rejected if entered before the Core Open trading. The Exchange also proposes to
1. Purpose amend Rules 7.31P and 7.34P to specify
Auction concludes. As such, a Limit
The Exchange proposes to amend Order designated IOC that is entered that Limit Orders designated IOC and
NYSE Arca Equities Rule 7.35P after 9:30:00, but before the Core Open Cross Orders would be accepted during
(Auctions) (‘‘Rule 7.35P’’), Rule 7.34P Auction concludes, would be rejected. the Auction Processing Period. Finally,
(Trading Sessions) (‘‘Rule 7.34P’’), Rule Finally, Rule 7.18P(c)(2) provides that the Exchange proposes to amend Rule
7.18P (Halts) (‘‘Rule 7.18P’’), and 7.31P during a halt or pause in an Exchange- 7.18P to specify that orders that were on
(Orders and Modifiers) (‘‘Rule 7.31P’’) listed security, the Exchange retains the NYSE Arca Book before a halt or
regarding order processing following an resting orders in the NYSE Arca Book pause would retain their last working
auction or when transitioning from one and assigns Limit Orders a working and display price.
trading session to another. These price and display price that is equal to Proposed Rule Change
proposed changes would revise how the the limit price of the order. The
Exchange processes orders on the Pillar Exchange proposes to amend order and To effect the changes to how order
trading platform only. order instruction processing following instructions would be processed during
an auction or when transitioning from the Auction Processing Period, the
Overview Exchange proposes to amend Rule
one trading session to another to:
Currently, under Rule 7.35P(g), during • Evaluate the status of orders that 7.35P(g). As proposed, Rule 7.35P(g)
the Auction Processing Period,4 new were live before the auction or in the would provide that new orders received
orders, requests to cancel, and requests earlier trading session and are eligible to during the Auction Processing Period
to cancel and replace an order that are trade after the auction/next trading would be accepted but would not be
received during the Auction Processing session to assess whether to publish a processed until after the Auction
Period will be accepted but will not be new quote; Processing Period. This proposed rule
processed until after the applicable • After the Auction Processing Period text is based on current Rule 7.35P(g),
auction concludes. In addition, a ends, process orders that become with a non-substantive change to
request to cancel and replace an order eligible to trade in time sequence with specify that the processing would be
that was entered during the Auction specified cancel request; and ‘‘after the Auction Processing Period’’
Processing Period for an order that was • Distinguish when requests to rather than ‘‘until after the applicable
also entered during the Auction cancel, cancel and replace, and modify auction concludes.’’ The proposed
Processing Period will be rejected. an order would be processed on arrival change is designed to use consistent
When the Exchange transitions to based on whether the impacted order terminology throughout proposed Rule
continuous trading, either after auction was previously eligible to trade. 7.35P(g) and (h) without any change to
processing concludes or when The Exchange believes that these its meaning.
transitioning from one trading session to Proposed Rule 7.35P(g) would further
proposed changes would simplify the
another, the Exchange transitions to provide that for purposes of paragraphs
transition to continuous trading
continuous trading pursuant to the steps (g) and (h) of that rule, an ‘‘order
following an auction or the transition
specified in Rule 7.35P(h). Specifically, instruction’’ refers to a request to cancel,
from one trading session to another.
the Exchange will first expire orders cancel and replace, or modify an order.
Specifically, rather than waiting for all
that are no longer eligible to trade. Next, The current rule text does not currently
marketable orders to be traded or routed
orders that are designated for a trading specify how the Exchange would
in price/time priority before publishing
session and that were received during a process requests to modify an order
a quote, the Exchange would be
prior trading session or during the during the Auction Processing Period.
evaluating orders at an earlier stage to However, because requests to modify an
Auction Processing Period, and that did determine whether to publish a quote.
not participate in the auction, will order would be handled in the same
After publishing a quote, orders that manner as requests to cancel or requests
become eligible to trade. Then, before become eligible to trade and related
continuous trading will begin, the to cancel and replace and [sic] order, the
order instructions would be traded, Exchange proposes to include
Exchange will process any order routed, or quoted in time sequence.
instructions received either during the modifying an order in the definition of
These proposed order processing ‘‘order instruction.’’ As further
Auction Imbalance Freeze or Auction changes would facilitate the Exchange
Processing Period, which includes new proposed, during the Auction
in applying Price Bands, as defined in Processing Period, order instructions
orders and requests to cancel, will next the Regulation NMS Plan to Address
adjust the display price and working would be processed as described in
Extraordinary Market Volatility (‘‘LULD proposed Rules 7.35P(g)(1)–(2), which
price of orders based on the PBBO or Plan’’),5 immediately following an
NBBO, and if orders are marketable, will would replace the remainder of the
auction in Exchange-listed securities, current text of Rule 7.35P(g).
trade and/or route such orders based on rather than waiting for the securities • Proposed Rule 7.35P(g)(1) would
price-time priority. After marketable information processor (‘‘SIP’’) to publish provide that an order instruction
orders have routed or traded, the such Price Bands based on the reference received during the Auction Processing
Exchange will publish a quote for the price provided by the Exchange for such Period would not be processed until
mstockstill on DSK3G9T082PROD with NOTICES
next trading session. securities.
With respect to order entry for the after the Auction Processing Period if it
To effect the rule change, the relates to an order that was received
Core Trading Session, Rule Exchange proposes to amend Rules
7.34P(c)(1)(C) currently provides that before the Auction Processing Period.
5 See Securities Exchange Act Release No. 77679
This proposed text is based on current
4 The ‘‘Auction Processing Period’’ means the (April 21, 2016), 81 FR 24908 (April 27, 2016) (File
Rule 7.35P(g) with no substantive
period during which the applicable auction is being No. 4–631) (Order approving 10th Amendment to changes, but with revised text to use
processed. See Rule 7.35P(a)(2). the LULD Plan) and Rule 7.11P. consistent terminology. The proposed
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![57988 Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices
rule would further provide that any that were entered during Core Trading transitions to continuous trading. The
subsequent order instructions relating to Hours,7 the Exchange proposes to Exchange proposes to delete current
such order would be rejected. This amend Rule 7.34P(c)(1)(C) to provide Rule 7.35P(h)(2), (h)(3), and (h)(3)(A)–
would be new functionality. The that Limit Orders designated IOC and (D) (with the exception of the second
Exchange proposes to reject such Cross Orders entered before or during sentence of current Rule 7.35P(h)(3)(B),
subsequent order instructions because the Early Trading Session and which, as described below, will be
they may conflict with the previously- designated for the Core Trading Session included in proposed Rule
entered order instruction.6 To avoid would be rejected if entered before the 7.35P(h)(3)(C)).
such a scenario, the Exchange proposes Auction Processing Period for the Core Proposed Rule 7.35P(h)(2) would
that any subsequent order instructions Open Auction. The Exchange similarly specify how the Exchange would
would be rejected. proposes to amend Rules 7.31P(b)(2) process order instructions during the
• Proposed Rule 7.35P(g)(2) would and (g), which currently provide that a transition to continuous trading:
provide that an order instruction Limit Order with an IOC Modifier or a • Proposed Rule 7.35P(h)(2)(A) would
received during the Auction Processing Limit IOC Cross Order will be cancelled provide that an order instruction
Period would be processed on arrival if if it arrives during auction processing, to received during the Auction Imbalance
it relates to an order that was received delete the phrase ‘‘and it if arrives Freeze,8 the transition to continuous
during the Auction Processing Period. during auction processing, it will be trading, or the Auction Processing
This proposed rule text represents a cancelled.’’ Period under paragraph (g)(1) of this
substantive change from current Rule The Exchange further proposes to Rule would be processed in time
7.35P(g), which provides that the amend Rule 7.34P(c)(2) to add new sequence with the processing of orders
Exchange rejects a request to cancel and subparagraph (C) that would provide as specified in proposed Rule
replace an order that was entered during that Limit Orders designated IOC and 7.35P(h)(3)(A) or (B) if it relates to an
the Auction Processing Period. The Cross Orders entered before and during order that was received before the
Exchange believes that if the Exchange the Core Trading Session and Auction Processing Period. As
receives an order during the Auction designated for the Late Trading Session proposed, these order instructions
Processing Period, because such order would be rejected if entered before the would be processed in time sequence
would not be eligible to participate in Auction Processing Period for the with the processing of orders as they
an auction and because such order is Closing Auction. Currently, the rule is become eligible to trade, as described
not yet eligible to trade following the silent on the treatment of Limit Orders below. Similar to proposed Rule
auction or in the next trading session, designated IOC and Cross Orders that 7.35P(g)(1), any subsequent order
there should be no restrictions on are designated for the Late Trading instructions relating to such order
cancelling, replacing, or modifying such Session only and entered during the would be rejected. This proposed rule is
non-live order. Core Trading Session or earlier, but the based in part on current Rule
The Exchange also proposes to amend treatment is the same as provided for in 7.35P(h)(2)(A) [sic], which provides that
which orders may be entered during the current Rule 7.34P(c)(1)(C). The any order instructions received during
Auction Processing Period. Currently, Exchange proposes to codify the either the Auction Imbalance Freeze or
Rule 7.34P(c)(1)(C) provides that Limit treatment of such orders entered during Auction Processing Period that were not
Orders designated IOC and Cross Orders the Core Trading Session, and in so processed will be processed. The
entered before or during the Early doing, make the same substantive proposed changes are designed to
Trading Session and designated for the change as proposed for Rule provide more specificity that the
Core Trading Session will be rejected if specified order instructions would be
7.34P(c)(1)(C).
entered before the Core Open Auction To effect the changes to how the processed in time sequence with all
concludes. Because of the changes to Exchange would transition to other order processing.
order processing following the Auction • Proposed Rule 7.35P(h)(2)(B) would
continuous trading, the Exchange
Processing Period to process orders that provide that an order instruction
proposes to amend Rule 7.35P(h). The
are received during the Auction received during the transition to
Exchange proposes a non-substantive
Processing Period in time sequence (as continuous trading would be processed
clarifying change to the text of Rule
described in greater detail below), the on arrival if it relates to an order that
7.35P(h) to replace the phrase ‘‘the
Exchange proposes to accept Limit was entered during the Auction
Exchange will transition to continuous
Orders designated IOC and Cross Orders Processing Period or the transition to
trading session for the applicable
during the Auction Processing Period. continuous trading. This proposed
trading session’’ with the phrase ‘‘the
Because the Auction Processing Period processing would therefore apply to
Exchange will transition to continuous
occurs after 9:30 a.m. Eastern Time, an orders that were not previously live and
trading following an auction or when
ETP Holder may be timing to send Limit were entered after the Auction
transitioning from one trading session to
Orders designated IOC as soon after 9:30 Processing Period began. Similar to
another’’ to specify that Rule 7.35P(h)
a.m. Eastern Time as feasible and would proposed Rule 7.35P(g)(2), because
governs both trading session transition
not know the precise time when the these orders have not yet been
Exchange has transitioned to continuous (which may involve an auction) and
processed, the Exchange believes it is
trading. To avoid rejecting orders transition to continuous trading
appropriate to apply order instructions
designated for the Core Trading Session following a Trading Halt Auction. Rule
against such orders immediately.
7.35P(h)(1), which is not changing, and Proposed Rule 7.35P(h)(3) would
proposed Rules 7.35P(h)(2)–(3), which specify how orders would be processed
mstockstill on DSK3G9T082PROD with NOTICES
6 For example, assume that during the Auction
Processing Period, an ETP Holder sends a request will be new rule text, would specify when transitioning to continuous
to cancel and replace an order. While still in the how orders and order instructions
Auction Processing Period, the ETP Holder then would be processed as the Exchange 8 The ‘‘Auction Imbalance Freeze’’ means the
sends a request to cancel the original order. When
those order instructions are processed in time period that begins before the scheduled time for the
7 ‘‘Core Trading Hours’’ means the hours of 9:30 Early Open Auction, Core Open Auction, or Closing
sequence, the first instruction would result in a
cancellation of the original order and a new order. a.m. Eastern Time through 4:00 p.m. Eastern Time Auction, as specified in Rules 7.35P(b), (c), and (d),
The second instruction would be a cancellation of or such other hours as may be determined by the and that ends once the Auction Processing Period
a non-existing order. Corporation from time to time. See Rule 1.1(j). begins. See Rule 7.35P(a)(3).
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![57990 Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices
orders not eligible to trade in the current acceptance of orders and order proposed rule change is also based on
trading session on the NYSE Arca Book. instructions during the Auction how Bats and Nasdaq assign time
For example, assume there is a UTP Processing Period is governed by Rule priority to orders that were not live
Regulatory Halt at 8:00 a.m. Eastern 7.35P(g), the Exchange proposes to prior to an auction and that are added
Time. If the Exchange receives notice of revise Rule 7.18P(c)(5) to provide that to the book after an auction.19
such halt, it would cancel any orders in the Exchange would accept all other The Exchange also believes that the
the impacted security resting on the incoming order instructions until the proposed changes to when the Exchange
NYSE Arca Book that are designated for Auction Processing Period for the would process order instructions, both
the Core Trading Session only or Trading Halt Auction, at which point, during the Auction Processing Period
designated for the Core and Late Rule 7.35P(g) would govern the entry of and when transitioning to continuous
Trading Sessions, i.e., are not eligible to incoming orders and order instructions. trading, are designed to provide
trade in the Early Trading Session, * * * * * consistent treatment of when order
which is for purposes of this example, Because of the technology changes instructions would be processed, which
the current trading session. Because the associated with this proposed rule would be based on when an order was
Exchange does not conduct a Trading change, the Exchange will announce by entered. The Exchange believes that
Halt Auction for UTP Securities, the Trader Update the implementation date. waiting to process order instructions
Exchange proposes to cancel such non- that relate to an order that was entered
live orders in order to reduce the 2. Statutory Basis before the Auction Processing Period
potential for such orders to lock or cross The proposed rule change is (including order instructions entered
a protected quotation if trading resumes consistent with Section 6(b) of the during the Auction Imbalance Freeze
in that security in the next trading Securities Exchange Act of 1934 (the that were not yet processed) would
session. ‘‘Act’’),17 in general, and furthers the remove impediments to and perfect a
The Exchange also proposes to amend objectives of Section 6(b)(5),18 in free and open market and a national
how orders are maintained on the NYSE particular, because it is designed to market system because it would ensure
Arca Book during a halt or pause. As prevent fraudulent and manipulative that a customer’s order instructions
proposed, rather than assign Limit acts and practices, to promote just and would be processed in time sequence
Orders a working price and display equitable principles of trade, to foster with the underlying order. Likewise, the
price that is equal to the limit price of cooperation and coordination with Exchange believes that the proposed
the Order, the Exchange proposes to persons engaged in facilitating change to reject subsequent order
amend Rule 7.18P(c)(2) to provide that transactions in securities, to remove instructions when order instructions are
during a halt or pause in Exchange- impediments to, and perfect the not processed on arrival, as provided for
listed securities, it would maintain mechanism of, a free and open market in proposed Rules 7.35P(g)(1) and
resting orders on the NYSE Arca Book and a national market system and, in 7.35P(2)(A) [sic], would remove
at their last working price and display general, to protect investors and the impediments to and perfect the
price. This proposed change would not public interest. mechanism of a free and open market
alter how such orders would participate The Exchange believes the proposed and a national market system because it
in a Trading Halt Auction, which would changes would remove impediments to would reduce the potential for
continue to be based on their limit and perfect the mechanism of a free and conflicting order instructions being
price, and not their last working price.15 open market and a national market entered for the same order. By contrast,
Nor would it alter how they would be system, and in general, to protect the Exchange believes that if a new
priced when transitioning to continuous investors and the public interest, order is entered during a transition
trading, because as proposed in Rule because they are designed to simplify phase, such as the Auction Processing
7.35P(h)(3)(C), the working price and order and order instruction processing Period or the transition to continuous
display price of such orders would be both during the Auction Processing trading, ETP Holders do not have an
adjusted based on any changes to the Period and when transitioning to expectation that such orders would be
PBBO or NBBO, as provided for in Rule continuous trading. Specifically, the processed yet, and therefore processing
7.31P. This proposed rule change would Exchange believes that publishing a order instructions relating to such new
therefore not alter any priority for such quote based on orders that were orders on arrival would remove
orders, but would streamline order previously live before the new trading impediments to and perfect the
processing for the Exchange by session or auction would result in the mechanism of a free and open market
eliminating an extra processing step. For Exchange publishing an updated quote and a national market system by
consistency, the Exchange proposes to sooner than under current rules. In ensuring that the most recent
add the same clause to Rule addition, the proposed change to instruction for such not-yet-live order is
7.18P(b)(2).16 Finally, the Exchange process orders that become live after an available when the order will be
proposes to amend Rule 7.18P(c)(5) to auction or in a new trading session in processed in time sequence with other
provide more specificity of when the time sequence rather than in price/time orders.
rules governing order acceptance during priority would similarly simplify order The Exchange also believes that the
a halt or pause ends. Currently, the rule processing by processing such orders in proposed change to accept Limit Orders
provides that the Exchange accepts all the order they were received. The designated IOC and Cross Orders during
other incoming order instructions until Exchange also believes that assigning a the Auction Processing Period would
the security has reopened. Because new working time to orders that were remove impediments to and perfect the
mechanism of a free and open market
mstockstill on DSK3G9T082PROD with NOTICES
not live prior to the transition to
15 See Rule 7.35P(a)(6)(A) (Limit Orders, LOO continuous trading would preserve the and a national market system.
Orders, and LOC orders will be ranked based on time priority of those orders that were Specifically, the Exchange believes that
their limit price and not the price at which they eligible to trade in an earlier trading ETP Holders that enter such orders after
would participate in the auction).
16 The Exchange also proposes a non-substantive,
session or before the auction. This 9:30 a.m. Eastern Time or after 4:00 p.m.
technical amendment to fix a typographical error in Eastern Time have an expectation that
17 15 U.S.C. 78f(b).
Rule 7.18P(c) to use the term ‘‘Marketplace’’ instead
of ‘‘Markeplace.’’ 18 15 U.S.C. 78f(b)(5). 19 See supra note 13.
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![57992 Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices
Washington, DC 20549 on official Primary Counties (Physical Damage and EIDL Loan Application Deadline Date:
business days between the hours of Economic Injury Loans): East Baton 03/27/2017.
10:00 a.m. and 3:00 p.m. Copies of such Rouge, Livingston, Saint Helena, ADDRESSES: Submit completed loan
filing also will be available for Tangipahoa. applications to: U.S. Small Business
inspection and copying at the principal Contiguous Counties (Economic Injury Administration, Processing and
office of the Exchange. All comments Loans Only): Disbursement Center, 14925 Kingsport
received will be posted without change; Louisiana: Ascension, East Feliciana, Road, Fort Worth, TX 76155.
the Commission does not edit personal Iberville, Jefferson, Saint Charles, FOR FURTHER INFORMATION CONTACT:
identifying information from Saint Tammany, St John the Baptist, Alan Escobar, Office of Disaster
submissions. You should submit only Washington, West Baton Rouge. Assistance, U.S. Small Business
information that you wish to make Mississippi: Amite, Pike. Administration, 409 3rd Street SW.,
available publicly. All submissions The Interest Rates are: Suite 6050, Washington, DC 20416.
should refer to File Number SR–
SUPPLEMENTARY INFORMATION: The notice
NYSEArca–2016–117, and should be Percent
of the President’s major disaster
submitted on or before September 14,
For Physical Damage: declaration for the State of West
2016.
Homeowners With Credit Avail- Virginia, dated 06/25/2016 is hereby
For the Commission, by the Division of able Elsewhere ...................... 3.125 amended to extend the deadline for
Trading and Markets, pursuant to delegated Homeowners Without Credit filing applications for physical damages
authority.25 Available Elsewhere .............. 1.563 as a result of this disaster to 09/07/2016.
Robert W. Errett, Businesses With Credit Avail- All other information in the original
Deputy Secretary. able Elsewhere ...................... 6.250 declaration remains unchanged.
[FR Doc. 2016–20209 Filed 8–23–16; 8:45 am] Businesses Without Credit
Available Elsewhere .............. 4.000 (Catalog of Federal Domestic Assistance
BILLING CODE 8011–01–P
Non-Profit Organizations With Numbers 59002 and 59008)
Credit Available Elsewhere ... 2.625 James E. Rivera,
Non-Profit Organizations With-
SMALL BUSINESS ADMINISTRATION out Credit Available Else- Associate Administrator for Disaster
where ..................................... 2.625 Assistance.
[Disaster Declaration #14811 and #14812] For Economic Injury: [FR Doc. 2016–20193 Filed 8–23–16; 8:45 am]
Businesses & Small Agricultural BILLING CODE 8025–01–P
LOUISIANA Disaster #LA–00065 Cooperatives Without Credit
AGENCY: U.S. Small Business Available Elsewhere .............. 4.000
Administration. Non-Profit Organizations With- SMALL BUSINESS ADMINISTRATION
out Credit Available Else-
ACTION: Notice. where ..................................... 2.625 [Disaster Declaration #14813 and #14814]
SUMMARY: This is a Notice of the Louisiana Disaster Number LA–00066
Presidential declaration of a major The number assigned to this disaster
disaster for the State of Louisiana for physical damage is 14811B and for AGENCY: U.S. Small Business
(FEMA–4277–DR), dated 08/14/2016. economic injury is 148120. Administration.
Incident: Severe Storms and Flooding. (Catalog of Federal Domestic Assistance ACTION: Amendment 1.
Incident Period: 08/11/2016 and Numbers 59002 and 59008)
continuing. SUMMARY: This is an amendment of the
James E. Rivera,
Effective Date: 08/14/2016. Presidential declaration of a major
Associate Administrator for Disaster disaster for Public Assistance Only for
Physical Loan Application Deadline
Assistance.
Date: 10/13/2016. the State of Louisiana (FEMA–4277–
Economic Injury (EIDL) Loan [FR Doc. 2016–20192 Filed 8–23–16; 8:45 am] DR), dated 08/16/2016.
Application Deadline Date: 05/15/2017. BILLING CODE 8025–01–P Incident: Severe Storms and Flooding.
ADDRESSES: Submit completed loan Incident Period: 08/11/2016 and
applications to: U.S. Small Business continuing.
SMALL BUSINESS ADMINISTRATION Effective Date: 08/16/2016.
Administration, Processing and
Disbursement Center, 14925 Kingsport [Disaster Declaration #14749 and #14750] Physical Loan Application Deadline
Road, Fort Worth, TX 76155. Date: 10/17/2016.
West Virginia Disaster Number WV– Economic Injury (EIDL) Loan
FOR FURTHER INFORMATION CONTACT: A.
00043 Application Deadline Date: 05/16/2017.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration, ADDRESSES: Submit completed loan
AGENCY: U.S. Small Business
409 3rd Street SW., Suite 6050, Administration. applications to: U.S. Small Business
Washington, DC 20416. Administration, Processing and
ACTION: Amendment 5.
SUPPLEMENTARY INFORMATION: Notice is
Disbursement Center, 14925 Kingsport
hereby given that as a result of the SUMMARY: This is an amendment of the Road, Fort Worth, TX 76155.
President’s major disaster declaration on Presidential declaration of a major FOR FURTHER INFORMATION CONTACT:
08/14/2016, applications for disaster disaster for the State of West Virginia Alan Escobar, Office of Disaster
(FEMA–4273–DR), dated 06/25/2016. Assistance, U.S. Small Business
mstockstill on DSK3G9T082PROD with NOTICES
loans may be filed at the address listed
above or other locally announced Incident: Severe Storms, Flooding, Administration, 409 3rd Street SW.,
locations. Landslides, and Mudslides. Suite 6050, Washington, DC 20416.
The following areas have been Incident Period: 06/22/2016 through SUPPLEMENTARY INFORMATION: The notice
determined to be adversely affected by 06/29/2016. of the President’s major disaster
the disaster: Effective Date: 07/06/2016. declaration for Private Non-Profit
Physical Loan Application Deadline organizations in the State of Louisiana,
25 17 CFR 200.30–3(a)(12). Date: 09/07/2016. dated 08/16/2016, is hereby amended to
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Document Created: 2016-08-24 03:02:38
Document Modified: 2016-08-24 03:02:38
| 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 57986 |
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