81 FR 78231 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Direxion Daily Municipal Bond Taxable Bear 1X Fund Under NYSE Arca Equities Rule 5.2(j)(3)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 215 (November 7, 2016)
Federal Register Volume 81, Issue 215 (November 7, 2016)
| Page Range | 78231-78233 | |
| FR Document | 2016-26790 |
[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)] [Notices] [Pages 78231-78233] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-26790] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79211; File No. SR-NYSEArca-2016-100] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Direxion Daily Municipal Bond Taxable Bear 1X Fund Under NYSE Arca Equities Rule 5.2(j)(3) November 1, 2016. I. Introduction On July 13, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to list and trade shares (``Shares'') of the Direxion Daily Municipal Bond Taxable Bear 1X Fund (``Fund''), a series of the Direxion Shares ETF Trust (``Trust''). The proposed rule change was published for comment in the Federal Register on August 3, 2016.\3\ On September 14, 2016, pursuant to Section 19(b)(2) of the Act,\4\ the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.\5\ On September 15, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.\6\ The Commission received no comments on the proposed rule change. This order institutes proceedings under Section 19(b)(2)(B) of the Act \7\ to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 78433 (July 28, 2016), 81 FR 51241. \4\ 15 U.S.C. 78s(b)(2). \5\ See Securities Exchange Act Release No. 78840, 81 FR 64552 (September 20, 2016). The Commission designated November 1, 2016, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. \6\ In Amendment No. 1, which replaced the original filing in its entirety, the Exchange: (1) Revised the description of the Fund's principal investments and (2) made other technical amendments. Amendment No. 1 is available at https://www.sec.gov/comments/sr-nysearca-2016-100/nysearca2016100-1.pdf. \7\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- II. The Exchange's Description of the Proposal The Exchange proposes to list and trade the Shares under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, which governs the listing and trading of Investment Company Units based on fixed income securities indexes. The Fund is a series of the Trust.\8\ Rafferty Asset Management, LLC would be the investment adviser to the Fund. Foreside Fund Services, LLC will be the distributor of the Fund's Shares. The Bank of New York Mellon would serve as the accounting agent, custodian, and transfer agent for the Fund. U.S. Bancorp Fund Services, LLC will serve as the Fund's administrator.\9\ --------------------------------------------------------------------------- \8\ The Trust is registered under the Investment Company Act of 1940 (``1940 Act''). According to the Exchange, on February 29, 2016, the Trust filed a registration statement on Form N-1A under the Securities Act of 1933 and the 1940 Act (File Nos.: 811-22201 and 333-150525). \9\ Additional information regarding the Trust, the Fund, and the Shares, including investment strategies, risks, creation and redemption procedures, fees, portfolio holdings, disclosure policies, calculation of the NAV, distributions, and taxes, among other things, can be found in Amendment No. 1 and the Registration Statement, as applicable. See Amendment No. 1, supra note 6 and Registration Statement, supra note 8. --------------------------------------------------------------------------- The Standard & Poor's National AMT-Free Municipal Bond Index (``Index'') would be the Fund's benchmark.\10\ The Index is a broad, comprehensive, market value-weighted index designed to measure the performance of the tax-exempt, investment-grade U.S. municipal bond market. The Fund would seek daily inverse investment results of the Index but would not seek to achieve its stated investment objective over a period of time greater than one day. Further, the Fund might gain inverse exposure to only a representative sample of the securities in the Index that have aggregate characteristics similar to those of the Index. The Fund would gain this inverse exposure by investing in a combination of Financial Instruments (defined below) that provide inverse exposure to the underlying securities of the Index. The Fund would not seek income that is exempt from federal, state, or local income taxes. --------------------------------------------------------------------------- \10\ The S&P Dow Jones Indices is the ``Index Provider'' with respect to the Index. The Index Provider is not a broker-dealer or affiliated with a broker-dealer and has implemented procedures designed to prevent the use and dissemination of material, non- public information regarding the Index. --------------------------------------------------------------------------- A. The Fund's Principal Investments The Fund would seek to track 100% of the inverse of the daily performance of the Index. Under normal circumstances, the Fund would create net short positions by investing at least 80% of the Fund's assets (plus any borrowings for investment purposes) in the following financial instruments (``Financial Instruments''): Options on exchange- traded funds (``ETFs'') and indices, traded on U.S. exchanges (based on gross notional value); swaps that provide short exposure to the securities included in the Index and various ETFs (based on gross notional value); and short positions in ETFs, as described below in this section, that, in combination, provide inverse exposure to the Index. The Fund might invest in options that provide short exposure to the Index or various ETFs, including iShares National Muni Bond ETF, SPDR Nuveen Barclays Municipal Bond ETF, iShares Short-term National Muni Bond ETF, SPDR Nuveen Barclays Short-Term Municipal Bond ETF, Market Vectors High-Yield Municipal Index ETF, SPDR Nuveen S&P High Yield Municipal Bond ETF, Market Vectors AMT-Free Intermediate Municipal Index ETF, PowerShares National AMT-Free Municipal Bond Portfolio, Vanguard Tax-Exempt Bond ETF, and the PIMCO Intermediate Municipal Bond Active Exchange-Traded Fund. The Fund might invest in swaps that provide short exposure to the securities included in the Index and various ETFs, including iShares National Muni Bond ETF, SPDR Nuveen Barclays Municipal Bond ETF, iShares Short-Term National Muni Bond ETF, SPDR Nuveen Barclays Short- Term Municipal Bond ETF, Market Vectors High-Yield Municipal Index ETF, SPDR Nuveen S&P High Yield Municipal Bond ETF, Market Vectors AMT-Free Intermediate Municipal Index ETF, PowerShares [[Page 78232]] National AMT-Free Municipal Bond Portfolio, Vanguard Tax-Exempt Bond ETF, and the PIMCO Intermediate Municipal Bond Active Exchange-Traded Fund. The Fund might take direct short positions in ETFs, such as the iShares National Muni Bond ETF, SPDR Nuveen Barclays Municipal Bond ETF, iShares Short-term National Muni Bond ETF, SPDR Nuveen Barclays Short-Term Municipal Bond ETF, Market Vectors High-Yield Municipal Index ETF, SPDR Nuveen S&P High Yield Municipal Bond ETF, Market Vectors AMT-Free Intermediate Municipal Index ETF, PowerShares National AMT-Free Municipal Bond Portfolio, Vanguard Tax-Exempt Bond ETF, and the PIMCO Intermediate Municipal Bond Active Exchange-Traded Fund.\11\ The Fund would not take long positions in ETFs or invest in options that overlie inverse, leveraged, or inverse leveraged ETFs. --------------------------------------------------------------------------- \11\ For purposes of this filing, ETFs are Investment Company Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); Portfolio Depositary Receipts (as described in NYSE Arca Equities Rule 8.100); and Managed Fund Shares (as described in NYSE Arca Equities Rule 8.600) and also are securities listed on another national securities exchange pursuant to substantially equivalent listing rules. The Fund will not take short positions in inverse, leveraged, or inverse leveraged ETFs. --------------------------------------------------------------------------- B. The Fund's Non-Principal Investments According to the Exchange, under normal circumstances, at least 80% of the Fund's assets will be invested in Financial Instruments to establish net short positions, as described above, and the Fund's remaining assets might be invested in cash and the following cash equivalents (in addition to cash or cash equivalents used to collateralize the Fund's investments in Financial Instruments): Money market funds, depository accounts with institutions with high quality credit ratings, U.S. government securities that have terms-to-maturity of less than 397 days, and repurchase agreements that have terms-to- maturity of less than 397 days. III. Proceedings To Determine Whether To Approve or Disapprove SR- NYSEArca-2016-100 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act \12\ to determine whether the proposed rule change, as modified by Amendment No. 1, should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as stated below, the Commission seeks and encourages interested persons to provide comments on the proposed rule change. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- Pursuant to Section 19(b)(2)(B) of the Act,\13\ the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of the proposed rule change's consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ``designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade'' and ``to protect investors and the public interest.'' \14\ The Exchange has submitted the proposed rule change because the Shares do not meet all of the ``generic'' listing requirements of Commentary .02(a) to NYSE Arca Equities Rule 5.2(j)(3). Namely, Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3) provides that, for an index or portfolio that underlies a series of Investment Company Units, components that in the aggregate account for at least 75% of the weight of such index or portfolio each shall have a minimum original principal amount outstanding of $100 million or more. Although the Index that underlies the Shares does not satisfy this requirement, the Exchange states that the Index is nonetheless sufficiently broad-based to deter potential manipulation because: (1) It is composed of approximately 3,063 issues and 474 unique issuers; (2) a substantial portion (95.87%) of the Index weight is composed of maturities that are part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more; and (3) the total ($248 billion) and the average ($81 million) dollar amount outstanding of Index issues are ``substantial.'' \15\ --------------------------------------------------------------------------- \13\ Id. \14\ 15 U.S.C. 78f(b)(5). \15\ Namely, according to the Exchange, as of May 23, 2016, the total dollar amount outstanding of issues in the Index was approximately $248 billion and the average dollar amount outstanding of issues in the Index was approximately $81 million. Further, as of May 23, 2016, the most heavily weighted component represents 0.43% of the weight of the Index and the five most heavily weighted components represent 1.88% of the weight of the Index. --------------------------------------------------------------------------- The Commission seeks comment on whether the Index characteristics the Exchange has identified, as noted above, provide sufficient basis for the Commission to determine that the Index, and thereby the Shares that overlie it, is not susceptible to manipulation. In this regard, the Commission notes that it recently approved a proposal to list and trade shares of an actively managed municipal bond ETF,\16\ where the listing exchange made a number of other representations regarding the type of municipal bonds that the fund would hold. For example, the exchange, in that instance, stated that the fund's investments in municipal securities would provide exposure to at least 15 different states, with no more than 30% of the value of the fund's net assets comprising municipal securities that provide exposure to any single state. Further, the exchange also noted that the fund would include securities from a minimum of 13 non-affiliated issuers.\17\ Although in this filing, the Fund would seek an inverse investment result of an index rather than actively manage a portfolio of municipal securities, the concerns regarding the susceptibility of the Index underlying the Shares to manipulation is similar to the concerns regarding the susceptibility of a portfolio to manipulation. Accordingly, the Commission seeks comment on whether the Exchange has demonstrated that its proposal is consistent with Section 6(b)(5) of the Act, and specifically whether the price of the Shares is susceptible to manipulation. --------------------------------------------------------------------------- \16\ See Securities Exchange Act Release No. 78913 (Sep. 23, 2016), 81 FR 69109 (Oct. 5, 2016) (SR-NASDAQ-2016-002). \17\ For purposes of this restriction, the exchange provided that ``non-affiliated issuers'' are issuers that are not ``affiliated persons'' within the meaning of Section 2(a)(3) of the 1940 Act. Additionally, each state and each separate political subdivision, agency, authority, or instrumentality of such state, each multi-state agency or authority, and each guarantor, if any, would be treated as separate issuers of municipal securities. --------------------------------------------------------------------------- IV. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any [[Page 78233]] request for an opportunity to make an oral presentation.\18\ --------------------------------------------------------------------------- \18\ Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding--either oral or notice and opportunity for written comments--is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). --------------------------------------------------------------------------- Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by November 28, 2016. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by December 12, 2016. The Commission asks that commenters address the sufficiency of the Exchange's statements in support of the proposal, which are set forth in Amendment No. 1 to the proposed rule change, in addition to any other comments they may wish to submit about the proposed rule change. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSEArca-2016-100 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Numbers SR-NYSEArca-2016-100. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of these filings 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-2016-100 and should be submitted on or before November 28, 2016. Rebuttal comments should be submitted by December 12, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(57). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-26790 Filed 11-4-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices 78231
The public may view the background rule change, or institute proceedings to municipal bond market. The Fund
documentation for this information determine whether to disapprove the would seek daily inverse investment
collection at the following Web site, proposed rule change.5 On September results of the Index but would not seek
www.reginfo.gov. Comments should be 15, 2016, the Exchange filed to achieve its stated investment
directed to: (i) Desk Officer for the Amendment No. 1 to the proposed rule objective over a period of time greater
Securities and Exchange Commission, change.6 The Commission received no than one day. Further, the Fund might
Office of Information and Regulatory comments on the proposed rule change. gain inverse exposure to only a
Affairs, Office of Management and This order institutes proceedings under representative sample of the securities
Budget, Room 10102, New Executive Section 19(b)(2)(B) of the Act 7 to in the Index that have aggregate
Office Building, Washington, DC 20503, determine whether to approve or characteristics similar to those of the
or by sending an email to: Shagufta_ disapprove the proposed rule change, as Index. The Fund would gain this
Ahmed@omb.eop.gov; and (ii) Pamela modified by Amendment No. 1. inverse exposure by investing in a
Dyson, Director/Chief Information combination of Financial Instruments
Officer, Securities and Exchange II. The Exchange’s Description of the (defined below) that provide inverse
Commission, c/o Remi Pavlik-Simon, Proposal exposure to the underlying securities of
100 F Street NE., Washington, DC 20549 The Exchange proposes to list and the Index. The Fund would not seek
or send an email to: PRA_Mailbox@ trade the Shares under NYSE Arca income that is exempt from federal,
sec.gov. Comments must be submitted to Equities Rule 5.2(j)(3), Commentary .02, state, or local income taxes.
OMB within 30 days of this notice. which governs the listing and trading of
A. The Fund’s Principal Investments
Dated: November 1, 2016. Investment Company Units based on
fixed income securities indexes. The The Fund would seek to track 100%
Brent J. Fields,
Fund is a series of the Trust.8 Rafferty of the inverse of the daily performance
Secretary. of the Index. Under normal
Asset Management, LLC would be the
[FR Doc. 2016–26785 Filed 11–4–16; 8:45 am] circumstances, the Fund would create
investment adviser to the Fund.
BILLING CODE 8011–01–P
Foreside Fund Services, LLC will be the net short positions by investing at least
distributor of the Fund’s Shares. The 80% of the Fund’s assets (plus any
Bank of New York Mellon would serve borrowings for investment purposes) in
SECURITIES AND EXCHANGE the following financial instruments
as the accounting agent, custodian, and
COMMISSION (‘‘Financial Instruments’’): Options on
transfer agent for the Fund. U.S.
[Release No. 34–79211; File No. SR– Bancorp Fund Services, LLC will serve exchange-traded funds (‘‘ETFs’’) and
NYSEArca–2016–100] as the Fund’s administrator.9 indices, traded on U.S. exchanges
The Standard & Poor’s National AMT- (based on gross notional value); swaps
Self-Regulatory Organizations; NYSE Free Municipal Bond Index (‘‘Index’’) that provide short exposure to the
Arca, Inc.; Order Instituting would be the Fund’s benchmark.10 The securities included in the Index and
Proceedings To Determine Whether To Index is a broad, comprehensive, market various ETFs (based on gross notional
Approve or Disapprove a Proposed value-weighted index designed to value); and short positions in ETFs, as
Rule Change, as Modified by measure the performance of the tax- described below in this section, that, in
Amendment No. 1, To List and Trade exempt, investment-grade U.S. combination, provide inverse exposure
Shares of the Direxion Daily Municipal to the Index.
Bond Taxable Bear 1X Fund Under 5 See Securities Exchange Act Release No. 78840, The Fund might invest in options that
NYSE Arca Equities Rule 5.2(j)(3) 81 FR 64552 (September 20, 2016). The provide short exposure to the Index or
Commission designated November 1, 2016, as the various ETFs, including iShares
November 1, 2016. date by which the Commission shall either approve National Muni Bond ETF, SPDR Nuveen
or disapprove, or institute proceedings to determine
I. Introduction whether to disapprove, the proposed rule change.
Barclays Municipal Bond ETF, iShares
On July 13, 2016, NYSE Arca, Inc. 6 In Amendment No. 1, which replaced the Short-term National Muni Bond ETF,
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed original filing in its entirety, the Exchange: (1) SPDR Nuveen Barclays Short-Term
Revised the description of the Fund’s principal Municipal Bond ETF, Market Vectors
with the Securities and Exchange investments and (2) made other technical High-Yield Municipal Index ETF, SPDR
Commission (‘‘Commission’’), pursuant amendments. Amendment No. 1 is available at
https://www.sec.gov/comments/sr-nysearca-2016- Nuveen S&P High Yield Municipal
to Section 19(b)(1) of the Securities
100/nysearca2016100-1.pdf. Bond ETF, Market Vectors AMT-Free
Exchange Act of 1934 (‘‘Exchange 7 15 U.S.C. 78s(b)(2)(B). Intermediate Municipal Index ETF,
Act’’) 1 and Rule 19b–4 thereunder,2 a 8 The Trust is registered under the Investment
PowerShares National AMT-Free
proposed rule change to list and trade Company Act of 1940 (‘‘1940 Act’’). According to Municipal Bond Portfolio, Vanguard
shares (‘‘Shares’’) of the Direxion Daily the Exchange, on February 29, 2016, the Trust filed
a registration statement on Form N–1A under the Tax-Exempt Bond ETF, and the PIMCO
Municipal Bond Taxable Bear 1X Fund
Securities Act of 1933 and the 1940 Act (File Nos.: Intermediate Municipal Bond Active
(‘‘Fund’’), a series of the Direxion Shares 811–22201 and 333–150525). Exchange-Traded Fund.
ETF Trust (‘‘Trust’’). The proposed rule 9 Additional information regarding the Trust, the
The Fund might invest in swaps that
change was published for comment in Fund, and the Shares, including investment provide short exposure to the securities
the Federal Register on August 3, 2016.3 strategies, risks, creation and redemption
included in the Index and various ETFs,
On September 14, 2016, pursuant to procedures, fees, portfolio holdings, disclosure
policies, calculation of the NAV, distributions, and including iShares National Muni Bond
Section 19(b)(2) of the Act,4 the taxes, among other things, can be found in ETF, SPDR Nuveen Barclays Municipal
Commission designated a longer period Amendment No. 1 and the Registration Statement, Bond ETF, iShares Short-Term National
sradovich on DSK3GMQ082PROD with NOTICES
within which to approve the proposed as applicable. See Amendment No. 1, supra note 6
Muni Bond ETF, SPDR Nuveen Barclays
rule change, disapprove the proposed and Registration Statement, supra note 8.
10 The S&P Dow Jones Indices is the ‘‘Index Short-Term Municipal Bond ETF,
1 15
Provider’’ with respect to the Index. The Index Market Vectors High-Yield Municipal
U.S.C. 78s(b)(1). Provider is not a broker-dealer or affiliated with a
2 17 CFR 240.19b–4.
Index ETF, SPDR Nuveen S&P High
broker-dealer and has implemented procedures
3 See Securities Exchange Act Release No. 78433
designed to prevent the use and dissemination of
Yield Municipal Bond ETF, Market
(July 28, 2016), 81 FR 51241. material, non-public information regarding the Vectors AMT-Free Intermediate
4 15 U.S.C. 78s(b)(2). Index. Municipal Index ETF, PowerShares
VerDate Sep<11>2014 16:02 Nov 04, 2016 Jkt 241001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\07NON1.SGM 07NON1](https://thefederalregister.org/doc/81_FR_78446/page/1.svg)
![Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices 78233
request for an opportunity to make an business days between the hours of the Exchange, and at the Commission’s
oral presentation.18 10:00 a.m. and 3:00 p.m. Copies of these Public Reference Room.
Interested persons are invited to filings also will be available for
submit written data, views, and II. Self-Regulatory Organization’s
inspection and copying at the principal
arguments regarding whether the Statement of the Purpose of, and
office of the Exchange. All comments
proposal should be approved or Statutory Basis for, the Proposed Rule
received will be posted without change; Change
disapproved by November 28, 2016. the Commission does not edit personal
Any person who wishes to file a rebuttal identifying information from In its filing with the Commission, the
to any other person’s submission must submissions. You should submit only self-regulatory organization included
file that rebuttal by December 12, 2016. information that you wish to make statements concerning the purpose of,
The Commission asks that commenters available publicly. All submissions and basis for, the proposed rule change
address the sufficiency of the should refer to File Number SR– and discussed any comments it received
Exchange’s statements in support of the NYSEArca–2016–100 and should be on the proposed rule change. The text
proposal, which are set forth in submitted on or before November 28, of those statements may be examined at
Amendment No. 1 to the proposed rule 2016. Rebuttal comments should be the places specified in Item IV below.
change, in addition to any other submitted by December 12, 2016. The Exchange has prepared summaries,
comments they may wish to submit set forth in sections A, B, and C below,
For the Commission, by the Division of of the most significant parts of such
about the proposed rule change. Trading and Markets, pursuant to delegated
Comments may be submitted by any statements.
authority.19
of the following methods:
Brent J. Fields, A. Self-Regulatory Organization’s
Electronic Comments Secretary. Statement of the Purpose of, and the
• Use the Commission’s Internet [FR Doc. 2016–26790 Filed 11–4–16; 8:45 am] Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ BILLING CODE 8011–01–P
Change
rules/sro.shtml); or 1. Purpose
• Send an email to rule-comments@
SECURITIES AND EXCHANGE The Exchange is proposing to amend
sec.gov. Please include File Number SR–
Commentary .05 to Rule 6.91 to enhance
NYSEArca–2016–100 on the subject COMMISSION
the Exchange’s price protection filters
line.
[Release No. 34–79214; File No. SR– applicable to electronically entered
Paper Comments NYSEArca–2016–139] Complex Orders,4 including by
• Send paper comments in triplicate clarifying how the functionality
to Secretary, Securities and Exchange Self-Regulatory Organizations; NYSE operates and expanding its application,
Commission, 100 F Street NE., Arca, Inc.; Notice of Filing and as described below.
Washington, DC 20549–1090. Immediate Effectiveness of Proposed
Clarifying the Description of the Filter
All submissions should refer to File Rule Change Amending Commentary
.05 to Rule 6.91 Commentary .05 to Rule 6.91
Numbers SR–NYSEArca–2016–100. currently sets forth the Price Protection
This file number should be included on November 1, 2016. Filter (the ‘‘Filter’’) applicable to each
the subject line if email is used. To help Pursuant to Section 19(b)(1) 1 of the incoming ‘‘Electronic Complex Order’’
the Commission process and review Securities Exchange Act of 1934 (the (or ‘‘ECO’’).5 The Filter automatically
your comments more efficiently, please ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 rejects incoming ECOs with a price that
use only one method. The Commission notice is hereby given that on October deviates from the current market by the
will post all comments on the 25, 2016, NYSE Arca, Inc. (the Specified Amount,6 which varies
Commission’s Internet Web site (http:// ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with depending on the smallest MPV of any
www.sec.gov/rules/sro.shtml). Copies of the Securities and Exchange leg in the ECO.7
the submission, all subsequent Commission (the ‘‘Commission’’) the
amendments, all written statements proposed rule change as described in 4 Rule 6.62(e) defines a Complex Order as any
with respect to the proposed rule Items I and II below, which Items have order involving the simultaneous purchase and/or
change that are filed with the been prepared by the Exchange. The sale of two or more different option series in the
Commission, and all written same underlying security, for the same account, in
Commission is publishing this notice to a ratio that is equal to or greater than one-to-three
communications relating to the solicit comments on the proposed rule (.333) and less than or equal to three-to-one (3.00)
proposed rule change between the change from interested persons. and for the purpose of executing particular
Commission and any person, other than investment strategy.
those that may be withheld from the I. Self-Regulatory Organization’s 5 Per Rule 6.91, an ECO is a Complex Order that
Statement of the Terms of Substance of has been entered into the NYSE Arca System
public in accordance with the (‘‘System’’) and routed to the Complex Matching
provisions of 5 U.S.C. 552, will be the Proposed Rule Change Engine (‘‘CME’’) for possible execution. The CME is
available for Web site viewing and The Exchange proposes to amend the mechanism in which ECOs are executed against
printing in the Commission’s Public each other or against individual quotes and orders
Commentary .05 to Rule 6.91(Electronic in the Consolidated Book. ECOs that are not
Reference Room, 100 F Street NE., Complex Order Trading) to enhance the immediately executed by the CME are ranked in the
Washington, DC 20549, on official price protection filters applicable to Consolidated Book. See Rule 6.91(a).
6 The Specified Amount is defined as: (i) .10 for
electronically entered Complex Orders.
18 Section 19(b)(2) of the Act, as amended by the orders where the smallest Minimum Price Variation
sradovich on DSK3GMQ082PROD with NOTICES
Securities Act Amendments of 1975, Pub. L. 94–29
The proposed rule change is available (‘‘MPV’’) of any leg of the Electronic Complex Order
(June 4, 1975), grants the Commission flexibility to on the Exchange’s Web site at is .01; (ii) .15 for orders where the smallest MPV
determine what type of proceeding—either oral or www.nyse.com, at the principal office of of any leg of the Electronic Complex Order is .05;
notice and opportunity for written comments—is and .30 for orders where the smallest MPV of any
appropriate for consideration of a particular leg of the Electronic Complex Order is .10. See
19 17 CFR 200.30–3(a)(57).
proposal by a self-regulatory organization. See Commentary .05 to Rule 6.91.
1 15 U.S.C. 78s(b)(1).
Securities Act Amendments of 1975, Senate Comm. 7 See Commentary .05 to Rule 6.91(a). The
2 15 U.S.C. 78a.
on Banking, Housing & Urban Affairs, S. Rep. No. Exchange notes that each ECO is entered into the
75, 94th Cong., 1st Sess. 30 (1975). 3 17 CFR 240.19b–4. Continued
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Document Created: 2018-02-14 08:21:58
Document Modified: 2018-02-14 08:21:58
| 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 78231 |
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