81 FR 80703 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Temporarily Widen Price Collar Thresholds for the Core Open Auction and Trading Halt Auctions

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 221 (November 16, 2016)

[Federal Register Volume 81, Number 221 (Wednesday, November 16, 2016)]
[Notices]
[Pages 80703-80705]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-27470]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79275; File No. SR-NYSEArca-2016-146]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Temporarily 
Widen Price Collar Thresholds for the Core Open Auction and Trading 
Halt Auctions

November 9, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 9, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to temporarily widen price collar thresholds 
for the Core Open Auction and Trading Halt Auctions, which would be 
operative on November 9, 2016 only. The proposed rule change is 
available on the Exchange's Web site at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to temporarily widen price collar thresholds 
for the Core Open Auction and Trading Halt Auctions, which would be 
operative for November 9, 2016 only.
    On November 8, 2016, the United States held an election to decide, 
among other things, the next President of the United States. This 
election result has caused market volatility. This spike in market 
volatility has also impacted the pricing of Exchange Traded Products 
(``ETP''), the majority of which are listed on the Exchange.
    Because of the level of market volatility, the Exchange believes 
that widening the Auction Collars for the Core Open Auction and Trading 
Halt Auctions for November 9, 2016 only would assist the Exchange in 
conducting fair and orderly auctions.
    As set forth in Rule 7.35(a)(10), the price collar thresholds for 
the Core Open Auction and Trading Halt Auctions are currently set at 
10% for securities with an Auction Reference Price of $25.00 or less, 
5% for securities with an Auction Reference Price greater than $25.00 
but less than or equal to $50.00, and 3% for securities with an Auction 
Reference Price greater than $50.00.\4\
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    \4\ The Auction Reference Price for the Core Open Auction is the 
midpoint of the Auction NBBO or, if the Auction NBBO is locked, the 
locked price. If there is no Auction NBBO, the prior trading day's 
Official Closing Price. The Auction Reference Price for the Trading 
Halt Auction is the last consolidated round-lot price of that 
trading day, and if none, the prior trading day's Official Closing 
Price. See NYSE Arca Equities Rule 7.35(a)(8).
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    The Exchange proposes to apply Auction Collars of 10% for all 
Auction-Eligible Securities,\5\ regardless of the Auction Reference 
Price. The Exchange believes that for securities priced greater than 
$25.00, the proposed wider price collar threshold will allow for 
additional price movements that is expected because of the volatility 
in the market, while continuing to prevent auctions from occurring at 
prices significantly away from the applicable Auction Reference Price. 
The proposed 10% price collar threshold for the Core Open Auction is 
the same as currently

[[Page 80704]]

used by the Nasdaq Stock Market LLC (``Nasdaq'') for its opening 
crosses.\6\
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    \5\ For the Core Open Auction, Auction-Eligible Securities are 
all securities for which the Exchange is the primary listing market 
and UTP Securities designated by the Exchange. For the Trading Halt 
Auction, Auction-Eligible Securities are securities for which the 
Exchange is the primary listing market. See NYSE Arca Equities Rule 
7.35(a)(1)(A) and (B).
    \6\ See Nasdaq Rule 4752(d)(2)(E) and http://www.nasdaqtrader.com/content/productsservices/trading/crosses/openclose_faqs.pdf.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\8\ in particular, in that it is designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes that the impact of the results 
of the presidential election on November 8, 2016 has resulted in global 
market volatility and the U.S. ETP market is not immune. In response to 
this market volatility, the Exchange believes that it would promote the 
protection of investors and the public interest to temporarily widen 
the price collar thresholds for the Core Open Auction and Trading Halt 
Auctions on November 9, 2016 only because it would promote fair and 
orderly auctions. The Exchange further believes that widening the price 
collar thresholds would remove impediments to and perfect the mechanism 
of a national market system because it is designed to allow for greater 
price movement, while at the same time preventing auction trades from 
occurring at prices significantly away from the applicable Auction 
Reference Price. Accordingly, investors would be protected from 
executions significantly away from the last sale in a security or other 
applicable reference price, but natural price fluctuations resulting 
from the market volatility would be permitted. In addition, the 
Exchange believes that widening the Auction Collars could reduce the 
possibility of securities triggering multiple trading pauses under the 
Regulation NMS Plan to Address Market Volatility.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issues but rather is designed 
to ensure a fair and orderly market by temporarily widening the price 
collar thresholds for the Core Open Auction and Trading Halt Auctions 
on a trading day with market volatility due to the results of the 
presidential election, In addition, the proposed rule change is 
intended to be in effect for November 9, 2016 only to respond to unique 
events relating to U.S. presidential election and therefore will not 
create a burden on competition.

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

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

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

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). The Exchange has requested that the 
Commission waive the requirement that the Exchange provide the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and the text of the proposed 
rule change, at least five business days prior to the date on which 
the Exchange filed the proposed rule change pursuant to Rule 19b-
4(f)(6)(iii). The Commission hereby grants this request.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
stated that waiver of the operative delay would allow the Exchange to 
immediately implement the proposed rule change, thereby promoting the 
operation of a fair and orderly market on a day with market volatility 
due to the U.S. presidential election. The Commission believes the 
waiver of the operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the operative delay and designates the proposal operative upon 
filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2016-146 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2016-146. 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

[[Page 80705]]

available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEArca-2016-146, and should be submitted on or before 
December 7, 2016.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Brent J. Fields,
Secretary.
[FR Doc. 2016-27470 Filed 11-15-16; 8:45 am]
 BILLING CODE 8011-01-P