81_FR_6335 81 FR 6311 - Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change Amending the Seventh Amended and Restated Operating Agreement of the Exchange To Establish a Committee for Review as a Sub-Committee of the ROC and Make Conforming Changes to Rules and the NYSE MKT Company Guide

81 FR 6311 - Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change Amending the Seventh Amended and Restated Operating Agreement of the Exchange To Establish a Committee for Review as a Sub-Committee of the ROC and Make Conforming Changes to Rules and the NYSE MKT Company Guide

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 24 (February 5, 2016)

Page Range6311-6314
FR Document2016-02198

Federal Register, Volume 81 Issue 24 (Friday, February 5, 2016)
[Federal Register Volume 81, Number 24 (Friday, February 5, 2016)]
[Notices]
[Pages 6311-6314]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-02198]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77008; File No. SR-NYSEMKT-2015-106]


Self-Regulatory Organizations; NYSE MKT LLC; Order Approving 
Proposed Rule Change Amending the Seventh Amended and Restated 
Operating Agreement of the Exchange To Establish a Committee for Review 
as a Sub-Committee of the ROC and Make Conforming Changes to Rules and 
the NYSE MKT Company Guide

February 1, 2016.

I. Introduction

    On December 11, 2015, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 
(``Act''),\2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to 
amend the Seventh Amended and Restated Operating Agreement (``Operating 
Agreement'') of the Exchange and to amend various rules of the 
Exchange, as described below. The proposed rule change was published 
for comment in the Federal Register on December 18, 2015.\4\ The 
Commission received no comment letters on the proposed rule change. 
This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 76638 (December 14, 
2015), 80 FR 79117 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    As part of a regulatory restructuring, NYSE proposes to: (i) Amend 
the Operating Agreement to establish a Committee for Review (``CFR'') 
as a subcommittee of the Regulatory Oversight Committee (``ROC'') \5\ 
and make conforming changes to Exchange Rules 475, 476, 476A, 20--
Equities, 308--Equities and Sections 1201, 1204, 1205, 1206, 1211, and 
1212T of the Company Guide; (ii) delete references to ``NYSE 
Regulation, Inc.'' and ``NYSE Regulation'' \6\ in Section 4.05 of the

[[Page 6312]]

Operating Agreement as well as Exchange Rules 0, 1--Equities, 22--
Equities, 36--Equities, 48--Equities, 49--Equities, 54--Equities, 70--
Equities, 103--Equities, 103A--Equities, 103B--Equities, 422--Equities, 
497--Equities, and 902NY; (iii) replace references to the Chief 
Executive Officer of NYSE Regulation in Exchange Rules 48--Equities, 
49--Equities, and 86--Equities with references to the Chief Regulatory 
Officer of the Exchange; and (iv) make certain technical and non-
substantive changes.
---------------------------------------------------------------------------

    \5\ The Commission recently approved the Exchange's proposal to 
establish the ROC as a committee of the Exchange's Board of 
Directors (``Board'') to be composed solely of directors who satisfy 
the Exchange's independence requirements, as set forth in the 
Exchange's Independence Policy of the Board of Directors. See 
Securities Exchange Act Release No. 75148 (June 11, 2015), 80 FR 
34751 (June 17, 2015).
    \6\ NYSE Regulation, Inc. (``NYSE Regulation''), a not-for-
profit subsidiary of the Exchange's affiliate New York Stock 
Exchange LLC (``NYSE''), performs regulatory functions for the 
Exchange pursuant to an intercompany Regulatory Services Agreement 
(``RSA'') that gives the Exchange the contractual right to review 
NYSE Regulation's performance. See Notice, supra note 4, at 79117 
n.4.
---------------------------------------------------------------------------

    The Exchange proposes that these rule revisions would be operative 
simultaneously with the termination of the Regulatory Services 
Agreement between the Exchange and NYSE Regulation, but no later than 
June 30, 2016, on a date to be determined by the Board.\7\
---------------------------------------------------------------------------

    \7\ See id.
---------------------------------------------------------------------------

A. Establishing a Committee for Review and Conforming Exchange Rules

    The Exchange proposes to establish a Committee for Review (``CFR'') 
as a subcommittee of the ROC by adding a new subsection (h)(iii) to 
Section 2.03 of the Operating Agreement and to make conforming changes 
to Exchange Rules 475, 476, 476A, 20--Equities, 308--Equities and 
Sections 1201, 1204, 1205, 1206, 1211, and 1212T of the Company 
Guide.\8\ The proposed CFR would be the successor to the current CFR, 
which is a committee of NYSE Regulation's Board of Directors that 
reviews appeals of Exchange disciplinary actions, and the Committee on 
Securities, which is a Board committee that reviews determinations to 
limit or prohibit the continued listing of an issuer's securities on 
the Exchange.\9\
---------------------------------------------------------------------------

    \8\ See id. at 79118.
    \9\ See id.
---------------------------------------------------------------------------

    Section 2.03(h)(iii) of the Operating Agreement would provide that 
the Board shall annually appoint a CFR as a subcommittee of the ROC. 
The Exchange notes that proposed Section 2.03(h)(iii) of the Operating 
Agreement incorporates member organization association requirements of 
the current CFR.\10\ The proposed CFR would be comprised of both 
Exchange directors who satisfy the Exchange's independence requirements 
as well as non-directors.\11\ The Exchange notes that, because the 
majority of the Board would be independent directors, as a functional 
matter if the Exchange were to have a five-person Board, at least three 
of the five directors would qualify for CFR membership.\12\ Non-
directors serving on the proposed CFR would include representatives of 
member organizations that engage in a business involving substantial 
direct contact with securities customers (upstairs firms), DMMs or 
specialists, and floor brokers.\13\ The Exchange notes that the 
proposed CFR, like the current CFR, would be selected after appropriate 
consultation with those members.\14\ The Exchange notes further that, 
for any CFR vote, a majority of the members of the CFR casting votes 
would have to be directors of the Exchange.
---------------------------------------------------------------------------

    \10\ See id.
    \11\ See id. at 79118 n.8 and accompanying text (citing the 
Independence Policy of the Board of Directors).
    \12\ See id. at 79118 n.8.
    \13\ See id. at 79118. The Exchange notes that market makers on 
the Exchange's equity market are called DMMs and on NYSE Amex 
Options are called specialists. See id. at 79918 n.9.
    \14\ The Exchange does not propose to incorporate from the 
current CFR the category of a NYSE MKT member that is associated 
with a NYSE MKT member organization that spends a majority of their 
time on the trading floor and has a substantial part of their 
business the execution of transactions on the trading floor for 
their own account or the account of their member organization but is 
not registered as a specialist. See Notice, supra note 4, at 79118 
n.9. The Exchange represents that this category of NYSE MKT member 
no longer exists and, as a result, the Exchange does not propose to 
require the representation of such member on the proposed CFR. See 
id.
---------------------------------------------------------------------------

    The proposed CFR would be responsible for reviewing the 
disciplinary decisions on behalf of the Board and reviewing 
determinations to limit or prohibit the continued listing of an 
issuer's securities on the Exchange.\15\ Additionally, the Exchange 
proposes to incorporate the role of the Market Performance and 
Regulatory Advisory Committees into the proposed CFR.\16\ As a result, 
the proposed CFR would be charged with acting in an advisory capacity 
to the Board with respect to disciplinary matters, the listing and 
delisting of securities, regulatory programs, rulemaking and regulatory 
rules, including trading rules. The Exchange states that the proposed 
CFR would therefore serve in the same advisory capacity as the Market 
Performance and Regulatory Advisory Committees.\17\
---------------------------------------------------------------------------

    \15\ The Exchange notes that these powers are currently set 
forth in the charter of the NYSE Regulation CFR, which also states 
that the CFR can provide general advice to the NYSE Regulation's 
Board of Directors in connection with disciplinary, listing and 
other regulatory matters. The Exchange proposes to delineate the 
appellate and advisory powers of the proposed CFR in Section 
2.03(h)(iii) of the Operating Agreement. See id. at 79118 n.11.
    \16\ Id. at 79118-19. The Exchange notes that the same profile 
of members who historically have served on these advisory committees 
would be represented on the proposed CFR. Id.
    \17\ See id. at 79118.
---------------------------------------------------------------------------

    According to the Exchange, member participation on the proposed CFR 
would be sufficient to provide for the fair representation of members 
in the administration of the affairs of the Exchange, including 
rulemaking and the disciplinary process, consistent with Section 
6(b)(3) of the Act.\18\
---------------------------------------------------------------------------

    \18\ See id. at 79119 and 15 U.S.C. 78f(b)(3).
---------------------------------------------------------------------------

    The Exchange proposes to make conforming amendments to Exchange 
Rules 475, 476, 476A and 308--Equities and Sections 1201, 1204, 1205, 
1206, 1211, and 1212T of the Company Guide by generally replacing 
references to the current NYSE Regulation CFR with references to the 
``Committee for Review.''
    The Exchange further proposes to amend Rule 476(f) to provide that 
the CFR may, but would not be required to, appoint an appeals panel to 
conduct a review thereunder and make a recommendation to the CFR 
regarding the disposition of the appeal. The Exchange represents that 
appeals panels would have no other role in the appellate process.\19\ 
Any proposed appeals panel, as appointed by the CFR, would consist of 
at least three and no more than five individuals consistent with the 
composition of appeals panels constituted under the rules of the 
Exchange's affiliate, NYSE Arca, Inc.\20\ The Exchange represents that 
an appeals panel appointed by the CFR for equity matters would be 
composed of at least one director and one member or individual 
associated with an equities member organization. The Exchange further 
represents that an appeals panel appointed by the CFR for options 
matters would be composed of at least one director and one member or 
individual associated with an options member organization. The Exchange 
also proposes to describe the CFR as a subcommittee of the Exchange's 
ROC in Sections 1205 and 1212T(g) of the Company Guide.
---------------------------------------------------------------------------

    \19\ See id. at 79119.
    \20\ See id.
---------------------------------------------------------------------------

B. Modifying Exchange Rules To Delete References to NYSE Regulation

    The Exchange proposes in connection with the Exchange's termination 
of the intercompany RSA to amend Section 4.05 of the Operating 
Agreement as well as Exchange Rules 0 (Regulation of the Exchange and 
its Member Organizations), 1--Equities (Definitions of Terms), 22--
Equities (Disqualification Because of Personal Interest), 36 
(Supplementary Material .30)--Equities (Communications Between Exchange 
and Members' Offices), 46 (Supplementary Material

[[Page 6313]]

.10)--Equities (Floor Officials -Appointment), 48--Equities (Exemptive 
Relief--Extreme Market Volatility Condition), 49--Equities (Emergency 
Powers), 54--Equities (Dealings on Floor--Persons), 70 (Subparts (1) 
and (7) of Supplementary Material .40)--Equities (Execution of Floor 
Broker Interest), 103--Equities (Registration and Capital Requirements 
of DMMs and DMM Units), 103A--Equities (Member Education), 103B (Policy 
Note G and Supplementary Material .10)--Equities (Security Allocation 
and Reallocation), 422--Equities (Loans of and to Directors, etc.), 
497--Equities (Additional Requirements for Listed Securities Issued by 
Intercontinental Exchange, Inc. or its Affiliates), and 902NY 
(Admission and Conduct on the Options Trading Floor) by deleting 
references to ``NYSE Regulation, Inc.'' and ``NYSE Regulation'' and 
where appropriate to replace such references with the ``Exchange'' or 
the ``Exchange regulatory staff.'' \21\
---------------------------------------------------------------------------

    \21\ See id. at 79119-20.
---------------------------------------------------------------------------

C. Modifying Exchange Rules To Reference the Exchange's Chief 
Regulatory Officer

    The Exchange proposes to amend Exchange Rules 48--Equities 
(Exemptive Relief--Extreme Market Volatility Condition), 49--Equities 
(Emergency Powers), and 86--Equities (NYSE Bonds), to replace 
references to the Chief Executive Officer of NYSE Regulation with 
references to the Chief Regulatory Officer of the Exchange.

D. Certain Technical and Non-Substantive Changes

    The Exchange proposes to make certain technical and non-substantive 
changes to amend Exchange Rules 1--Equities (Definitions of Terms), 
48--Equities (Exemptive Relief-- Extreme Market Volatility Condition), 
and 103B--Equities (Security Allocation and Reallocation). The Exchange 
also proposes to make certain technical and non-substantive changes to 
amend the Exchange's Company Guide Sections 350 (Cancellation Notice), 
1204 (The Listing Qualifications Panel), 1205 (Review by the Exchange 
Committee on Securities), 1206 (Discretionary Review by Board of 
Directors), 1212T (Temporary Provisions Regarding Legacy Applications 
for Initial Listing), and the Listing Forms Appendix.
    Exchange Rule 1-Equities, which defines the term the ``Exchange,'' 
would be amended to replace single quotation marks with double 
quotation marks in the heading and in the first paragraph.
    Exchange Rule 48--Equities, which sets forth the procedures for 
invoking an extreme market volatility condition, would be amended to 
replace single quotation marks with double quotation marks around the 
term ``qualified Exchange officer.''
    Exchange Rule 103B--Equities, which governs the security allocation 
and reallocation process, would be amended to replace single quotation 
marks with double quotation marks around the term ``Allocation 
Prohibition'' and to remove the comma from ``New York Stock Exchange, 
LLC.''
    The Exchange proposes to update the sample letter set forth in 
Section 350 of the Exchange's Company Guide. Section 350 provides that 
a company no longer intending to issue all or some securities for 
listing should cancel the listing authority by notifying the Exchange 
by letter, and provides a sample letter for use by listed companies. 
The Exchange proposes to amend the sample letter in Section 350 by 
changing the addressee from ``Office of General Counsel'' to ``Legal 
Department,'' updating the address to ``11 Wall Street,'' and the 
salutation from ``Dear Sirs'' to ``Ladies and Gentlemen.'' Similarly, 
the Exchange proposes to make conforming changes in the Exchange's 
Company Guide Sections 1204, 1205, 1206 and 1212T to replace references 
to the ``Office of General Counsel'' with ``Legal Department.''
    The Exchange also proposes to amend Section 1212T(c) to replace the 
outdated reference to ``American Stock Exchange'' with ``Exchange.''
    Finally, the Exchange proposes to update the Listing Forms Appendix 
to update the address from ``30 Broad'' to ``11 Wall'' Street.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\22\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(1) of the Act, which requires an exchange 
to be so organized and have the capacity to carry out the purposes of 
the Act and to comply, and to enforce compliance by its members and 
persons associated with its members, with the Act, the rules and 
regulations thereunder, and the rules of the exchange.\23\ The 
Commission finds that the proposal also is consistent with the 
requirements of Section 6(b)(3) of the Act, which provides that the 
rules of an exchange must assure a fair representation of its members 
in the selection of its directors and administration of its affairs and 
provide that one or more directors shall be representative of issuers 
and investors and not be associated with a member of the exchange, 
broker, or dealer.\24\ In addition, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Act, which requires 
that the rules of the exchange be designed, among other things, to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest.\25\ 
Finally, the Commission finds that the proposal is consistent with 
Section 6(b)(7) of the Act, which requires that the rules of the 
exchange provide a fair procedure for the disciplining of its members 
and persons associated with members, the denial of membership to any 
person seeking membership therein, the barring of any person from 
becoming associated with a member thereof, and the prohibition or 
limitation by the exchange with respect to access to services offered 
by the exchange or a member thereof.\26\
---------------------------------------------------------------------------

    \22\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \23\ 15 U.S.C. 78f(b)(1).
    \24\ 15 U.S.C. 78f(b)(3).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ 15 U.S.C. 78f(b)(7).
---------------------------------------------------------------------------

    The Exchange represents that the proposed CFR would be a successor 
to the current CFR, which is a committee of the NYSE Regulation's Board 
of Directors that reviews appeals of Exchange disciplinary actions, and 
the Committee on Securities, which is a committee of the Exchange's 
Board that reviews determinations to limit or prohibit the continued 
listing of an issuer's securities on the Exchange.\27\ The Exchange 
also proposes to incorporate the responsibilities of the Market 
Performance Committee and the Regulatory Advisory Committee into the 
proposed CFR.\28\ According to the Exchange, the Market Performance 
Committee acts in an advisory capacity regarding trading rules and 
other matters within its charter, and the Regulatory Advisory Committee 
acts in an advisory capacity regarding disciplinary matters and 
regulatory

[[Page 6314]]

rules other than trading rules.\29\ Therefore, the Exchange proposes to 
expand the proposed CFR's responsibilities to include acting in an 
advisory capacity to the Board with respect to disciplinary matters, 
the listing and delisting of securities, regulatory programs, 
rulemaking and regulatory rules, including trading rules.\30\ The 
Commission notes that the proposed CFR incorporates the salient 
features of the current CFR, including the requirement that the CFR be 
comprised of both Exchange directors who satisfy the Exchange's 
independence requirements,\31\ as well as persons who are not 
directors, and that a majority of the members of the CFR voting on a 
matter subject to a vote of the CFR must be directors of the 
Exchange.\32\ As such, the Commission finds that the Exchange's 
proposed revisions to its appellate procedure for disciplinary matters 
and for determinations to limit or prohibit the continued listing of an 
issuer's securities on the Exchange ensures sufficient independence of 
the appellate function of the Exchange, and therefore helps to ensure 
that the exchange is organized and has the capacity to carry out the 
purposes of the Act, as required by Section 6(b)(1) of the Act.\33\
---------------------------------------------------------------------------

    \27\ See Notice, supra note 4, at 79118.
    \28\ See id. at 79118-19.
    \29\ See id. The Exchange notes that the same categories of NYSE 
MKT members that were represented on the Market Performance 
Committee and the Regulatory Advisory Committee would be represented 
on the proposed CFR. See id.
    \30\ See id.
    \31\ See note 11, supra.
    \32\ See Notice, supra note 4, at 79118.
    \33\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    The Commission also finds that the composition of the proposed CFR 
ensures the fair representation of members in the administration of the 
Exchange's affairs.\34\ Proposed Section 2.03(h)(iii) of the Exchange's 
Operating Agreement provides that, among the persons on the proposed 
CFR, who are not directors, at least one individual from each of the 
following categories must be on the CFR: (i) Individuals who are 
associated with a Member Organization that engages in a business 
involving substantial direct contact with securities customers, (ii) 
individuals who are associated with a Member Organization and 
registered as a DMM or specialist,\35\ and (iii) individuals who are 
associated with a Member Organization and have as a substantial part of 
their business the execution of transactions on the trading floor of 
the Exchange for other than their own account or the account of his or 
her Member Organization, but are not registered as a DMM or 
specialist.\36\ Because NYSE MKT members will serve on the proposed 
CFR, which will be charged with acting in an advisory capacity to the 
Board with respect to disciplinary matters, the listing and delisting 
of securities, regulatory programs, rulemaking and regulatory rules, 
including trading rules, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(3) of the Act.\37\
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78f(b)(3).
    \35\ The Exchange notes that market makers on the Exchange's 
equity market are called DMMs and on NYSE Amex Options are called 
specialists. See Notice, supra note 4, at 79118 n.9.
    \36\ See id.
    \37\ 15 U.S.C. 78f(b)(3).
---------------------------------------------------------------------------

    The Exchange also proposes to amend Exchange Rule 476(f) to permit 
the CFR to appoint an appeals panel, consisting of at least three and 
no more than five individuals, which would conduct a review of any 
disciplinary determination on behalf of the CFR, and make a 
recommendation to the CFR regarding the disposition of such appeal.\38\ 
According to the Exchange, an appeals panel appointed by the CFR for 
equity matters would be composed of at least one director and one 
member or individual associated with an equities member organization, 
and an appeals panel appointed for options matters would be composed of 
at least one director and one member or individual associated with an 
options member organization.\39\ The Commission finds that the 
Exchange's proposal with respect to the proposed composition and the 
role of an appeals panel is consistent with Sections 6(b)(3) and 
6(b)(7) of the Act.\40\
---------------------------------------------------------------------------

    \38\ See Notice, supra note 4, at 79119. According to the 
Exchange, any such appeals panel would have no other role in the 
appellate process. See id.
    \39\ See id.
    \40\ 15 U.S.C. 78f(b)(3) and 15 U.S.C. 78f(b)(7).
---------------------------------------------------------------------------

    Finally, the Commission finds that it is consistent with Section 
6(b)(5) of the Act for the Exchange to make various technical and 
conforming revisions to its Rules.\41\
---------------------------------------------------------------------------

    \41\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSEMKT-2015-106) is approved.
---------------------------------------------------------------------------

    \42\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02198 Filed 2-4-16; 8:45 am]
BILLING CODE 8011-01-P



                                                                                 Federal Register / Vol. 81, No. 24 / Friday, February 5, 2016 / Notices                                                      6311

                                                  execute Limit Orders priced within the                  arguments concerning the foregoing,                    SECURITIES AND EXCHANGE
                                                  LOP Limit Table or within the upper                     including whether the proposed rule                    COMMISSION
                                                  (lower) band of LULD, if the latter is                  change is consistent with the Act.
                                                                                                                                                                 [Release No. 34–77008; File No. SR–
                                                  more conservative.                                      Comments may be submitted by any of                    NYSEMKT–2015–106]
                                                     The Exchange believes that the                       the following methods:
                                                  proposal to not accept System Orders in                                                                        Self-Regulatory Organizations; NYSE
                                                                                                          Electronic Comments
                                                  a Straddle State will prevent Market                                                                           MKT LLC; Order Approving Proposed
                                                  Orders from being entered by market                       • Use the Commission’s Internet                      Rule Change Amending the Seventh
                                                  participants at erroneous prices which                  comment form (http://www.sec.gov/                      Amended and Restated Operating
                                                  the Exchange believes would stray                       rules/sro.shtml); or                                   Agreement of the Exchange To
                                                  widely from the LULD defined reference                    • Send an email to rule-comments@                    Establish a Committee for Review as a
                                                  price.                                                  sec.gov. Please include File Number SR–                Sub-Committee of the ROC and Make
                                                     The Exchange believes LOP and                        BX–2016–008 on the subject line.                       Conforming Changes to Rules and the
                                                  Market Order Protection will remove                                                                            NYSE MKT Company Guide
                                                  impediments to and perfect the                          Paper Comments
                                                  mechanisms of a free and open market                       • Send paper comments in triplicate                 February 1, 2016.
                                                  because these features will operate in                  to Secretary, Securities and Exchange                  I. Introduction
                                                  tandem with LULD.                                       Commission, 100 F Street NE.,
                                                                                                                                                                    On December 11, 2015, NYSE MKT
                                                  B. Self-Regulatory Organization’s                       Washington, DC 20549–1090.
                                                                                                                                                                 LLC (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
                                                  Statement on Burden on Competition                      All submissions should refer to File                   with the Securities and Exchange
                                                    The Exchange does not believe that                    Number SR–BX–2016–008. This file                       Commission (‘‘Commission’’), pursuant
                                                  the proposed rule change will impose                    number should be included on the                       to Section 19(b)(1) 1 of the Securities
                                                  any burden on competition not                           subject line if email is used. To help the             Exchange Act of 1934 (‘‘Act’’),2 and
                                                  necessary or appropriate in furtherance                 Commission process and review your                     Rule 19b–4 thereunder,3 a proposed rule
                                                  of the purposes of the Act. The                         comments more efficiently, please use                  change to amend the Seventh Amended
                                                  Exchange believes the LOP and Market                    only one method. The Commission will                   and Restated Operating Agreement
                                                  Order Protection features will provide                  post all comments on the Commission’s                  (‘‘Operating Agreement’’) of the
                                                  market participants with additional                     Internet Web site (http://www.sec.gov/                 Exchange and to amend various rules of
                                                  protection from anomalous executions,                   rules/sro.shtml). Copies of the                        the Exchange, as described below. The
                                                  in addition to LULD protections. Thus,                  submission, all subsequent                             proposed rule change was published for
                                                  the Exchange does not believe the                       amendments, all written statements                     comment in the Federal Register on
                                                  proposal creates any significant impact                 with respect to the proposed rule                      December 18, 2015.4 The Commission
                                                  on competition. The Exchange believes                   change that are filed with the                         received no comment letters on the
                                                  that offering these protections to the BX               Commission, and all written                            proposed rule change. This order
                                                  will not impose any undue burden on                     communications relating to the                         approves the proposed rule change.
                                                  intra-market competition, rather, it                    proposed rule change between the
                                                                                                          Commission and any person, other than                  II. Description of the Proposal
                                                  would permit equities and options
                                                  members to be protected in a similar                    those that may be withheld from the                       As part of a regulatory restructuring,
                                                  manner from erroneous executions.                       public in accordance with the                          NYSE proposes to: (i) Amend the
                                                                                                          provisions of 5 U.S.C. 552, will be                    Operating Agreement to establish a
                                                  C. Self-Regulatory Organization’s                       available for Web site viewing and                     Committee for Review (‘‘CFR’’) as a
                                                  Statement on Comments on the                            printing in the Commission’s Public                    subcommittee of the Regulatory
                                                  Proposed Rule Change Received From                      Reference Room, 100 F Street NE.,                      Oversight Committee (‘‘ROC’’) 5 and
                                                  Members, Participants, or Others                        Washington, DC 20549, on official                      make conforming changes to Exchange
                                                    No written comments were either                       business days between the hours of                     Rules 475, 476, 476A, 20—Equities,
                                                  solicited or received.                                  10:00 a.m. and 3:00 p.m. Copies of the                 308—Equities and Sections 1201, 1204,
                                                                                                          filing also will be available for                      1205, 1206, 1211, and 1212T of the
                                                  III. Date of Effectiveness of the
                                                                                                          inspection and copying at the principal                Company Guide; (ii) delete references to
                                                  Proposed Rule Change and Timing for
                                                                                                          office of the Exchange. All comments                   ‘‘NYSE Regulation, Inc.’’ and ‘‘NYSE
                                                  Commission Action
                                                                                                          received will be posted without change;                Regulation’’ 6 in Section 4.05 of the
                                                     Within 45 days of the date of                        the Commission does not edit personal
                                                  publication of this notice in the Federal               identifying information from                             1 15  U.S.C. 78s(b)(1).
                                                  Register or within such longer period                   submissions. You should submit only                      2 15  U.S.C. 78a.
                                                                                                                                                                    3 17 CFR 240.19b–4.
                                                  up to 90 days (i) as the Commission may                 information that you wish to make                         4 See Securities Exchange Act Release No. 76638
                                                  designate if it finds such longer period                available publicly. All submissions                    (December 14, 2015), 80 FR 79117 (‘‘Notice’’).
                                                  to be appropriate and publishes its                     should refer to File Number SR–BX–                        5 The Commission recently approved the
                                                  reasons for so finding or (ii) as to which              2016–008 and should be submitted on                    Exchange’s proposal to establish the ROC as a
                                                  the self-regulatory organization                        or before February 26, 2016.                           committee of the Exchange’s Board of Directors
                                                  consents, the Commission will:                                                                                 (‘‘Board’’) to be composed solely of directors who
                                                                                                            For the Commission, by the Division of               satisfy the Exchange’s independence requirements,
                                                     (A) By order approve or disapprove                   Trading and Markets, pursuant to delegated             as set forth in the Exchange’s Independence Policy
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  the proposed rule change, or                            authority.16                                           of the Board of Directors. See Securities Exchange
                                                     (B) institute proceedings to determine                                                                      Act Release No. 75148 (June 11, 2015), 80 FR 34751
                                                                                                          Robert W. Errett,
                                                  whether the proposed rule change                                                                               (June 17, 2015).
                                                                                                          Deputy Secretary.                                         6 NYSE Regulation, Inc. (‘‘NYSE Regulation’’), a
                                                  should be disapproved.
                                                                                                          [FR Doc. 2016–02196 Filed 2–4–16; 8:45 am]             not-for-profit subsidiary of the Exchange’s affiliate
                                                  IV. Solicitation of Comments                            BILLING CODE 8011–01–P
                                                                                                                                                                 New York Stock Exchange LLC (‘‘NYSE’’), performs
                                                                                                                                                                 regulatory functions for the Exchange pursuant to
                                                    Interested persons are invited to                                                                            an intercompany Regulatory Services Agreement
                                                  submit written data, views, and                           16 17   CFR 200.30–3(a)(12).                                                                     Continued




                                             VerDate Sep<11>2014   18:22 Feb 04, 2016   Jkt 238001   PO 00000   Frm 00087    Fmt 4703   Sfmt 4703   E:\FR\FM\05FEN1.SGM   05FEN1


                                                  6312                           Federal Register / Vol. 81, No. 24 / Friday, February 5, 2016 / Notices

                                                  Operating Agreement as well as                          functional matter if the Exchange were                     According to the Exchange, member
                                                  Exchange Rules 0, 1—Equities, 22—                       to have a five-person Board, at least                   participation on the proposed CFR
                                                  Equities, 36—Equities, 48—Equities,                     three of the five directors would qualify               would be sufficient to provide for the
                                                  49—Equities, 54—Equities, 70—                           for CFR membership.12 Non-directors                     fair representation of members in the
                                                  Equities, 103—Equities, 103A—Equities,                  serving on the proposed CFR would                       administration of the affairs of the
                                                  103B—Equities, 422—Equities, 497—                       include representatives of member                       Exchange, including rulemaking and the
                                                  Equities, and 902NY; (iii) replace                      organizations that engage in a business                 disciplinary process, consistent with
                                                  references to the Chief Executive Officer               involving substantial direct contact with               Section 6(b)(3) of the Act.18
                                                  of NYSE Regulation in Exchange Rules                    securities customers (upstairs firms),                    The Exchange proposes to make
                                                  48—Equities, 49—Equities, and 86—                       DMMs or specialists, and floor                          conforming amendments to Exchange
                                                  Equities with references to the Chief                   brokers.13 The Exchange notes that the                  Rules 475, 476, 476A and 308—Equities
                                                  Regulatory Officer of the Exchange; and                 proposed CFR, like the current CFR,                     and Sections 1201, 1204, 1205, 1206,
                                                  (iv) make certain technical and non-                    would be selected after appropriate                     1211, and 1212T of the Company Guide
                                                  substantive changes.                                    consultation with those members.14 The                  by generally replacing references to the
                                                     The Exchange proposes that these rule                Exchange notes further that, for any CFR                current NYSE Regulation CFR with
                                                  revisions would be operative                            vote, a majority of the members of the                  references to the ‘‘Committee for
                                                  simultaneously with the termination of                  CFR casting votes would have to be                      Review.’’
                                                  the Regulatory Services Agreement                       directors of the Exchange.                                The Exchange further proposes to
                                                  between the Exchange and NYSE                              The proposed CFR would be                            amend Rule 476(f) to provide that the
                                                  Regulation, but no later than June 30,                  responsible for reviewing the                           CFR may, but would not be required to,
                                                  2016, on a date to be determined by the                 disciplinary decisions on behalf of the                 appoint an appeals panel to conduct a
                                                  Board.7                                                 Board and reviewing determinations to                   review thereunder and make a
                                                                                                          limit or prohibit the continued listing of              recommendation to the CFR regarding
                                                  A. Establishing a Committee for Review                                                                          the disposition of the appeal. The
                                                  and Conforming Exchange Rules                           an issuer’s securities on the Exchange.15
                                                                                                          Additionally, the Exchange proposes to                  Exchange represents that appeals panels
                                                     The Exchange proposes to establish a                 incorporate the role of the Market                      would have no other role in the
                                                  Committee for Review (‘‘CFR’’) as a                     Performance and Regulatory Advisory                     appellate process.19 Any proposed
                                                  subcommittee of the ROC by adding a                     Committees into the proposed CFR.16 As                  appeals panel, as appointed by the CFR,
                                                  new subsection (h)(iii) to Section 2.03 of              a result, the proposed CFR would be                     would consist of at least three and no
                                                  the Operating Agreement and to make                     charged with acting in an advisory                      more than five individuals consistent
                                                  conforming changes to Exchange Rules                    capacity to the Board with respect to                   with the composition of appeals panels
                                                  475, 476, 476A, 20—Equities, 308—                       disciplinary matters, the listing and                   constituted under the rules of the
                                                  Equities and Sections 1201, 1204, 1205,                 delisting of securities, regulatory                     Exchange’s affiliate, NYSE Arca, Inc.20
                                                  1206, 1211, and 1212T of the Company                    programs, rulemaking and regulatory                     The Exchange represents that an appeals
                                                  Guide.8 The proposed CFR would be the                   rules, including trading rules. The                     panel appointed by the CFR for equity
                                                  successor to the current CFR, which is                  Exchange states that the proposed CFR                   matters would be composed of at least
                                                  a committee of NYSE Regulation’s                        would therefore serve in the same                       one director and one member or
                                                  Board of Directors that reviews appeals                 advisory capacity as the Market                         individual associated with an equities
                                                  of Exchange disciplinary actions, and                   Performance and Regulatory Advisory                     member organization. The Exchange
                                                  the Committee on Securities, which is a                 Committees.17                                           further represents that an appeals panel
                                                  Board committee that reviews                                                                                    appointed by the CFR for options
                                                  determinations to limit or prohibit the                   12 See
                                                                                                                                                                  matters would be composed of at least
                                                                                                                     id. at 79118 n.8.
                                                  continued listing of an issuer’s                          13 See   id. at 79118. The Exchange notes that        one director and one member or
                                                  securities on the Exchange.9                            market makers on the Exchange’s equity market are       individual associated with an options
                                                     Section 2.03(h)(iii) of the Operating                called DMMs and on NYSE Amex Options are                member organization. The Exchange
                                                  Agreement would provide that the                        called specialists. See id. at 79918 n.9.               also proposes to describe the CFR as a
                                                                                                             14 The Exchange does not propose to incorporate
                                                  Board shall annually appoint a CFR as                                                                           subcommittee of the Exchange’s ROC in
                                                                                                          from the current CFR the category of a NYSE MKT
                                                  a subcommittee of the ROC. The                          member that is associated with a NYSE MKT               Sections 1205 and 1212T(g) of the
                                                  Exchange notes that proposed Section                    member organization that spends a majority of their     Company Guide.
                                                  2.03(h)(iii) of the Operating Agreement                 time on the trading floor and has a substantial part
                                                  incorporates member organization                        of their business the execution of transactions on      B. Modifying Exchange Rules To Delete
                                                  association requirements of the current
                                                                                                          the trading floor for their own account or the          References to NYSE Regulation
                                                                                                          account of their member organization but is not
                                                  CFR.10 The proposed CFR would be                        registered as a specialist. See Notice, supra note 4,     The Exchange proposes in connection
                                                  comprised of both Exchange directors                    at 79118 n.9. The Exchange represents that this         with the Exchange’s termination of the
                                                  who satisfy the Exchange’s                              category of NYSE MKT member no longer exists            intercompany RSA to amend Section
                                                                                                          and, as a result, the Exchange does not propose to
                                                  independence requirements as well as                    require the representation of such member on the
                                                                                                                                                                  4.05 of the Operating Agreement as well
                                                  non-directors.11 The Exchange notes                     proposed CFR. See id.                                   as Exchange Rules 0 (Regulation of the
                                                  that, because the majority of the Board                    15 The Exchange notes that these powers are          Exchange and its Member
                                                  would be independent directors, as a                    currently set forth in the charter of the NYSE          Organizations), 1—Equities (Definitions
                                                                                                          Regulation CFR, which also states that the CFR can      of Terms), 22—Equities
                                                                                                          provide general advice to the NYSE Regulation’s
                                                  (‘‘RSA’’) that gives the Exchange the contractual       Board of Directors in connection with disciplinary,     (Disqualification Because of Personal
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  right to review NYSE Regulation’s performance. See      listing and other regulatory matters. The Exchange      Interest), 36 (Supplementary Material
                                                  Notice, supra note 4, at 79117 n.4.
                                                     7 See id.
                                                                                                          proposes to delineate the appellate and advisory        .30)—Equities (Communications
                                                                                                          powers of the proposed CFR in Section 2.03(h)(iii)      Between Exchange and Members’
                                                     8 See id. at 79118.
                                                                                                          of the Operating Agreement. See id. at 79118 n.11.
                                                     9 See id.                                               16 Id. at 79118–19. The Exchange notes that the
                                                                                                                                                                  Offices), 46 (Supplementary Material
                                                     10 See id.                                           same profile of members who historically have
                                                                                                                                                                   18 See id. at 79119 and 15 U.S.C. 78f(b)(3).
                                                     11 See id. at 79118 n.8 and accompanying text        served on these advisory committees would be
                                                  (citing the Independence Policy of the Board of         represented on the proposed CFR. Id.                     19 See id. at 79119.
                                                  Directors).                                                17 See id. at 79118.                                  20 See id.




                                             VerDate Sep<11>2014   18:22 Feb 04, 2016   Jkt 238001   PO 00000   Frm 00088   Fmt 4703   Sfmt 4703   E:\FR\FM\05FEN1.SGM      05FEN1


                                                                                   Federal Register / Vol. 81, No. 24 / Friday, February 5, 2016 / Notices                                                   6313

                                                  .10)—Equities (Floor Officials                               Exchange Rule 48—Equities, which                   that the proposal also is consistent with
                                                  –Appointment), 48—Equities                                sets forth the procedures for invoking an             the requirements of Section 6(b)(3) of
                                                  (Exemptive Relief—Extreme Market                          extreme market volatility condition,                  the Act, which provides that the rules
                                                  Volatility Condition), 49—Equities                        would be amended to replace single                    of an exchange must assure a fair
                                                  (Emergency Powers), 54—Equities                           quotation marks with double quotation                 representation of its members in the
                                                  (Dealings on Floor—Persons), 70                           marks around the term ‘‘qualified                     selection of its directors and
                                                  (Subparts (1) and (7) of Supplementary                    Exchange officer.’’                                   administration of its affairs and provide
                                                  Material .40)—Equities (Execution of                         Exchange Rule 103B—Equities, which                 that one or more directors shall be
                                                  Floor Broker Interest), 103—Equities                      governs the security allocation and                   representative of issuers and investors
                                                  (Registration and Capital Requirements                    reallocation process, would be amended                and not be associated with a member of
                                                  of DMMs and DMM Units), 103A—                             to replace single quotation marks with                the exchange, broker, or dealer.24 In
                                                  Equities (Member Education), 103B                         double quotation marks around the term                addition, the Commission finds that the
                                                  (Policy Note G and Supplementary                          ‘‘Allocation Prohibition’’ and to remove              proposal is consistent with Section
                                                  Material .10)—Equities (Security                          the comma from ‘‘New York Stock
                                                                                                                                                                  6(b)(5) of the Act, which requires that
                                                  Allocation and Reallocation), 422—                        Exchange, LLC.’’
                                                                                                               The Exchange proposes to update the                the rules of the exchange be designed,
                                                  Equities (Loans of and to Directors, etc.),                                                                     among other things, to prevent
                                                  497—Equities (Additional Requirements                     sample letter set forth in Section 350 of
                                                                                                            the Exchange’s Company Guide. Section                 fraudulent and manipulative acts and
                                                  for Listed Securities Issued by
                                                                                                            350 provides that a company no longer                 practices, to promote just and equitable
                                                  Intercontinental Exchange, Inc. or its
                                                                                                            intending to issue all or some securities             principles of trade, to remove
                                                  Affiliates), and 902NY (Admission and
                                                  Conduct on the Options Trading Floor)                     for listing should cancel the listing                 impediments to and perfect the
                                                  by deleting references to ‘‘NYSE                          authority by notifying the Exchange by                mechanism of a free and open market
                                                  Regulation, Inc.’’ and ‘‘NYSE                             letter, and provides a sample letter for              and a national market system, and, in
                                                  Regulation’’ and where appropriate to                     use by listed companies. The Exchange                 general, to protect investors and the
                                                  replace such references with the                          proposes to amend the sample letter in                public interest.25 Finally, the
                                                  ‘‘Exchange’’ or the ‘‘Exchange regulatory                 Section 350 by changing the addressee                 Commission finds that the proposal is
                                                  staff.’’ 21                                               from ‘‘Office of General Counsel’’ to                 consistent with Section 6(b)(7) of the
                                                                                                            ‘‘Legal Department,’’ updating the                    Act, which requires that the rules of the
                                                  C. Modifying Exchange Rules To                            address to ‘‘11 Wall Street,’’ and the                exchange provide a fair procedure for
                                                  Reference the Exchange’s Chief                            salutation from ‘‘Dear Sirs’’ to ‘‘Ladies             the disciplining of its members and
                                                  Regulatory Officer                                        and Gentlemen.’’ Similarly, the                       persons associated with members, the
                                                    The Exchange proposes to amend                          Exchange proposes to make conforming                  denial of membership to any person
                                                  Exchange Rules 48—Equities                                changes in the Exchange’s Company                     seeking membership therein, the barring
                                                  (Exemptive Relief—Extreme Market                          Guide Sections 1204, 1205, 1206 and                   of any person from becoming associated
                                                  Volatility Condition), 49—Equities                        1212T to replace references to the                    with a member thereof, and the
                                                  (Emergency Powers), and 86—Equities                       ‘‘Office of General Counsel’’ with ‘‘Legal            prohibition or limitation by the
                                                  (NYSE Bonds), to replace references to                    Department.’’                                         exchange with respect to access to
                                                  the Chief Executive Officer of NYSE                          The Exchange also proposes to amend                services offered by the exchange or a
                                                  Regulation with references to the Chief                   Section 1212T(c) to replace the outdated              member thereof.26
                                                  Regulatory Officer of the Exchange.                       reference to ‘‘American Stock
                                                                                                            Exchange’’ with ‘‘Exchange.’’                            The Exchange represents that the
                                                  D. Certain Technical and Non-                                Finally, the Exchange proposes to                  proposed CFR would be a successor to
                                                  Substantive Changes                                       update the Listing Forms Appendix to                  the current CFR, which is a committee
                                                    The Exchange proposes to make                           update the address from ‘‘30 Broad’’ to               of the NYSE Regulation’s Board of
                                                  certain technical and non-substantive                     ‘‘11 Wall’’ Street.                                   Directors that reviews appeals of
                                                  changes to amend Exchange Rules 1—                                                                              Exchange disciplinary actions, and the
                                                                                                            III. Discussion and Commission                        Committee on Securities, which is a
                                                  Equities (Definitions of Terms), 48—                      Findings
                                                  Equities (Exemptive Relief— Extreme                                                                             committee of the Exchange’s Board that
                                                  Market Volatility Condition), and                            After careful review, the Commission               reviews determinations to limit or
                                                  103B—Equities (Security Allocation and                    finds that the proposed rule change is                prohibit the continued listing of an
                                                  Reallocation). The Exchange also                          consistent with the Act and the rules                 issuer’s securities on the Exchange.27
                                                  proposes to make certain technical and                    and regulations thereunder applicable to              The Exchange also proposes to
                                                  non-substantive changes to amend the                      a national securities exchange.22 In                  incorporate the responsibilities of the
                                                  Exchange’s Company Guide Sections                         particular, the Commission finds that                 Market Performance Committee and the
                                                  350 (Cancellation Notice), 1204 (The                      the proposed rule change is consistent                Regulatory Advisory Committee into the
                                                  Listing Qualifications Panel), 1205                       with Section 6(b)(1) of the Act, which                proposed CFR.28 According to the
                                                  (Review by the Exchange Committee on                      requires an exchange to be so organized               Exchange, the Market Performance
                                                  Securities), 1206 (Discretionary Review                   and have the capacity to carry out the                Committee acts in an advisory capacity
                                                  by Board of Directors), 1212T                             purposes of the Act and to comply, and                regarding trading rules and other
                                                  (Temporary Provisions Regarding                           to enforce compliance by its members
                                                                                                                                                                  matters within its charter, and the
                                                  Legacy Applications for Initial Listing),                 and persons associated with its
                                                                                                                                                                  Regulatory Advisory Committee acts in
                                                                                                            members, with the Act, the rules and
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  and the Listing Forms Appendix.                                                                                 an advisory capacity regarding
                                                    Exchange Rule 1–Equities, which                         regulations thereunder, and the rules of
                                                                                                                                                                  disciplinary matters and regulatory
                                                  defines the term the ‘‘Exchange,’’ would                  the exchange.23 The Commission finds
                                                  be amended to replace single quotation                                                                            24 15 U.S.C. 78f(b)(3).
                                                                                                              22 In approving this proposed rule change, the
                                                  marks with double quotation marks in                      Commission notes that it has considered the
                                                                                                                                                                    25 15 U.S.C. 78f(b)(5).
                                                  the heading and in the first paragraph.                   proposed rule’s impact on efficiency, competition,      26 15 U.S.C. 78f(b)(7).

                                                                                                            and capital formation. See 15 U.S.C. 78c(f).            27 See Notice, supra note 4, at 79118.
                                                    21 See   id. at 79119–20.                                 23 15 U.S.C. 78f(b)(1).                               28 See id. at 79118–19.




                                             VerDate Sep<11>2014     18:22 Feb 04, 2016   Jkt 238001   PO 00000   Frm 00089   Fmt 4703   Sfmt 4703   E:\FR\FM\05FEN1.SGM    05FEN1


                                                  6314                           Federal Register / Vol. 81, No. 24 / Friday, February 5, 2016 / Notices

                                                  rules other than trading rules.29                       account or the account of his or her                   SECURITIES AND EXCHANGE
                                                  Therefore, the Exchange proposes to                     Member Organization, but are not                       COMMISSION
                                                  expand the proposed CFR’s                               registered as a DMM or specialist.36
                                                  responsibilities to include acting in an                Because NYSE MKT members will serve                    [Release No. 34–77007; File No. SR–Phlx–
                                                  advisory capacity to the Board with                     on the proposed CFR, which will be                     2016–12]
                                                  respect to disciplinary matters, the                    charged with acting in an advisory
                                                  listing and delisting of securities,                    capacity to the Board with respect to                  Self-Regulatory Organizations;
                                                  regulatory programs, rulemaking and                     disciplinary matters, the listing and                  NASDAQ OMX PHLX LLC; Notice of
                                                  regulatory rules, including trading                     delisting of securities, regulatory                    Filing of Proposed Rule Change To
                                                  rules.30 The Commission notes that the                  programs, rulemaking and regulatory                    Adopt a Limit Order Protection and a
                                                  proposed CFR incorporates the salient                   rules, including trading rules, the                    Market Order Protection
                                                  features of the current CFR, including                  Commission finds that the proposed
                                                  the requirement that the CFR be                         rule change is consistent with Section                 February 1, 2016.
                                                  comprised of both Exchange directors                    6(b)(3) of the Act.37
                                                  who satisfy the Exchange’s                                                                                        Pursuant to Section 19(b)(1) of the
                                                  independence requirements,31 as well                       The Exchange also proposes to amend                 Securities Exchange Act of 1934 (the
                                                  as persons who are not directors, and                   Exchange Rule 476(f) to permit the CFR                 ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                  that a majority of the members of the                   to appoint an appeals panel, consisting                notice is hereby given that on January
                                                  CFR voting on a matter subject to a vote                of at least three and no more than five                21, 2016, NASDAQ OMX PHLX LLC
                                                  of the CFR must be directors of the                     individuals, which would conduct a                     (‘‘Phlx’’ or the ‘‘Exchange’’) filed with
                                                  Exchange.32 As such, the Commission                     review of any disciplinary                             the Securities and Exchange
                                                  finds that the Exchange’s proposed                      determination on behalf of the CFR, and                Commission (the ‘‘Commission’’) the
                                                  revisions to its appellate procedure for                make a recommendation to the CFR                       proposed rule change as described in
                                                  disciplinary matters and for                            regarding the disposition of such                      Items I and II below, which Items have
                                                  determinations to limit or prohibit the                 appeal.38 According to the Exchange, an                been prepared by the Exchange. The
                                                  continued listing of an issuer’s                        appeals panel appointed by the CFR for                 Commission is publishing this notice to
                                                  securities on the Exchange ensures                      equity matters would be composed of at
                                                                                                                                                                 solicit comments on the proposed rule
                                                  sufficient independence of the appellate                least one director and one member or
                                                                                                                                                                 change from interested persons.
                                                  function of the Exchange, and therefore                 individual associated with an equities
                                                  helps to ensure that the exchange is                    member organization, and an appeals                    I. Self-Regulatory Organization’s
                                                  organized and has the capacity to carry                 panel appointed for options matters                    Statement of the Terms of Substance of
                                                  out the purposes of the Act, as required                would be composed of at least one                      the Proposed Rule Change
                                                  by Section 6(b)(1) of the Act.33                        director and one member or individual
                                                     The Commission also finds that the                   associated with an options member                         The Exchange proposes to amend
                                                  composition of the proposed CFR                         organization.39 The Commission finds                   NASDAQ OMX PSX Rule 3307, entitled
                                                  ensures the fair representation of                      that the Exchange’s proposal with                      ‘‘Processing of Orders’’ to adopt a Limit
                                                  members in the administration of the                    respect to the proposed composition                    Order Protection or ‘‘LOP’’ and a Market
                                                  Exchange’s affairs.34 Proposed Section                  and the role of an appeals panel is                    Order Protection for members accessing
                                                  2.03(h)(iii) of the Exchange’s Operating                consistent with Sections 6(b)(3) and                   PSX.
                                                  Agreement provides that, among the                      6(b)(7) of the Act.40                                     The text of the proposed rule change
                                                  persons on the proposed CFR, who are                       Finally, the Commission finds that it               is available on the Exchange’s Web site
                                                  not directors, at least one individual                  is consistent with Section 6(b)(5) of the              at http://
                                                  from each of the following categories                   Act for the Exchange to make various                   nasdaqomxphlx.cchwallstreet.com, at
                                                  must be on the CFR: (i) Individuals who                 technical and conforming revisions to
                                                  are associated with a Member                                                                                   the principal office of the Exchange, and
                                                                                                          its Rules.41                                           at the Commission’s Public Reference
                                                  Organization that engages in a business
                                                  involving substantial direct contact with               IV. Conclusion                                         Room.
                                                  securities customers, (ii) individuals                                                                         II. Self-Regulatory Organization’s
                                                  who are associated with a Member                          It is therefore ordered, pursuant to
                                                                                                          Section 19(b)(2) of the Act, that the                  Statement of the Purpose of, and
                                                  Organization and registered as a DMM                                                                           Statutory Basis for, the Proposed Rule
                                                  or specialist,35 and (iii) individuals who              proposed rule change (SR–NYSEMKT–
                                                                                                          2015–106) is approved.                                 Change
                                                  are associated with a Member
                                                  Organization and have as a substantial                    For the Commission, by the Division of                 In its filing with the Commission, the
                                                  part of their business the execution of                 Trading and Markets, pursuant to delegated             Exchange included statements
                                                  transactions on the trading floor of the                authority.42                                           concerning the purpose of and basis for
                                                  Exchange for other than their own                       Robert W. Errett,                                      the proposed rule change and discussed
                                                    29 See id. The Exchange notes that the same
                                                                                                          Deputy Secretary.                                      any comments it received on the
                                                  categories of NYSE MKT members that were                [FR Doc. 2016–02198 Filed 2–4–16; 8:45 am]             proposed rule change. The text of these
                                                  represented on the Market Performance Committee         BILLING CODE 8011–01–P                                 statements may be examined at the
                                                  and the Regulatory Advisory Committee would be                                                                 places specified in Item IV below. The
                                                  represented on the proposed CFR. See id.
                                                                                                                                                                 Exchange has prepared summaries, set
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                    30 See id.                                              36 See id.
                                                    31 See note 11, supra.                                  37 15 U.S.C. 78f(b)(3).                              forth in sections A, B, and C below, of
                                                    32 See Notice, supra note 4, at 79118.                  38 See Notice, supra note 4, at 79119. According     the most significant aspects of such
                                                    33 15 U.S.C. 78f(b)(1).                               to the Exchange, any such appeals panel would          statements.
                                                    34 15 U.S.C. 78f(b)(3).                               have no other role in the appellate process. See id.
                                                                                                            39 See id.
                                                    35 The Exchange notes that market makers on the
                                                                                                            40 15 U.S.C. 78f(b)(3) and 15 U.S.C. 78f(b)(7).
                                                  Exchange’s equity market are called DMMs and on
                                                                                                            41 15 U.S.C. 78f(b)(5).                               1 15   U.S.C. 78s(b)(1).
                                                  NYSE Amex Options are called specialists. See
                                                  Notice, supra note 4, at 79118 n.9.                       42 17 CFR 200.30–3(a)(12).                            2 17   CFR 240.19b–4.



                                             VerDate Sep<11>2014   18:22 Feb 04, 2016   Jkt 238001   PO 00000   Frm 00090   Fmt 4703   Sfmt 4703   E:\FR\FM\05FEN1.SGM    05FEN1



Document Created: 2016-02-05 00:17:07
Document Modified: 2016-02-05 00:17:07
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 6311 

2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR