81 FR 85659 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Rules 7.1 and 7.2, and NYSE Arca Equities Rules 7.1 and 7.2
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 228 (November 28, 2016)
Federal Register Volume 81, Issue 228 (November 28, 2016)
| Page Range | 85659-85663 | |
| FR Document | 2016-28460 |
[Federal Register Volume 81, Number 228 (Monday, November 28, 2016)] [Notices] [Pages 85659-85663] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-28460] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79363; File No. SR-NYSEArca-2016-148] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Rules 7.1 and 7.2, and NYSE Arca Equities Rules 7.1 and 7.2 November 21, 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 10, 2016, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Rule 7.1 (Trading Sessions) to permit the Chief Executive Officer of the Exchange or his or her designee to take certain actions in connection with the trading of securities on the Exchange; (b) NYSE Arca Equities Rule 7.1 (Hours of Business) to permit the President of NYSE Arca Equities or his or her designee to take certain actions in connection with the trading of securities on the NYSE Arca Equities marketplace; and (c) NYSE Arca Rule 7.2 (Holidays) and NYSE Arca Equities Rule 7.2 (Holidays) to remove a reference to presidential election days. 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 amend (a) NYSE Arca Rule 7.1 (Trading Sessions) to permit the Chief Executive Officer (``CEO'') of the Exchange or his or her designee to take certain actions in connection with the trading of securities on the Exchange; (b) NYSE Arca Equities Rule 7.1 (Hours of Business) to permit the President of NYSE Arca Equities or his or her designee to take certain actions in connection with the trading of securities on the NYSE Arca Equities marketplace; and (c) NYSE Arca Rule 7.2 (Holidays) and NYSE Arca Equities Rule 7.2 (Holidays) to remove a reference to presidential election days. The Exchange believes the proposed changes to NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 would make such rules more reflective of the organizational structure of the Exchange and NYSE Arca Equities. At the same time, the proposed rule changes would ensure that the Boards of Directors of NYSE Arca and of NYSE Arca Equities (each, a ``Board'') continue to have the authority to take action they deem necessary or appropriate in particular situations. NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 Proposed Changes to NYSE Arca Rule 7.1 The first paragraph of NYSE Arca Rule 7.1 provides that, unless otherwise ruled by the Board of the Exchange or its designee, the Exchange shall be open for the transaction of business daily except on Saturdays and Sundays, and that the hours at which trading sessions shall open and close shall be established by the Board or its designee. Commentary .01 to Rule 7.1 notes that, except under unusual conditions as may be determined by the Board or its designee, hours during which transactions in options on individual securities may be made on the Exchange shall correspond to the normal hours for business set forth in the rules of the primary exchange listing the securities underlying the options. The Exchange proposes to amend the first paragraph of NYSE Arca Rule 7.1 to provide that, except as may be [[Page 85660]] otherwise determined by the Board as to particular days, the Exchange shall be open for the transaction of business on every business day. The Exchange proposes to remove the current exclusion of Saturdays and Sundays because Saturdays and Sundays are not business days and therefore no exclusion is needed. Finally, the amended paragraph would provide that the hours at which trading sessions shall open and close may be specified by Exchange rule, as well as by the Board. The two paragraphs of the present rule would become paragraphs (a) and (b). These proposed rule changes are based in part on New York Stock Exchange LLC (``NYSE'') Rule 51(a) and NYSE MKT LLC (``NYSE MKT'') Rule 51(a)--Equities.\4\ --------------------------------------------------------------------------- \4\ NYSE LLC and NYSE MKT are affiliates of the Exchange. See Securities Exchange Act Release Nos. 45433 (February 12, 2002), 67 FR 7441 (February 19, 2002) (SR-NYSE-2001-55), and 58705 (October 1, 2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63). NYSE MKT LLC is submitting substantially the same proposed rule change for NYSE MKT Rule 901NY, applicable to the trading of options contracts on NYSE Amex Options LLC. See SR-NYSEMKT-2016-106. --------------------------------------------------------------------------- The Exchange proposes to add new paragraphs (c), (d), and (e) to NYSE Arca Rule 7.1. These proposed changes are based on NYSE Rule 51(b) and (c) and NYSE MKT Rule 51(b)-(d)--Equities. New paragraph (c) would provide that, except as may be otherwise determined by the NYSE Arca Board, the CEO of the Exchange or his or her designee may halt or suspend trading in some or all securities traded on the Exchange; extend the hours for the transaction of business on the Exchange; close some or all Exchange facilities; determine the duration of any such halt, suspension or closing undertaken; or determine to trade securities on the Exchange's disaster recovery facility.\5\ --------------------------------------------------------------------------- \5\ As part of its business continuity and disaster recovery plans, the Exchange maintains a disaster recovery facility, which is a secondary data center located in a geographically diverse location, as required by Regulation SCI. See 14 CFR 242.1001(a)(2)(v) (requiring policies and procedures for business continuity and disaster recovery plans that include maintaining backup and recovery capabilities sufficiently resilient and geographically diverse and that are reasonably designed to achieve next business day resumption of trading and two-hour resumption of critical SCI systems following a wide-scale disruption). --------------------------------------------------------------------------- New paragraph (d) would provide that the CEO or his or her designee shall take any of the actions described in new paragraph (c) only when he or she deems such action to be necessary or appropriate for the maintenance of a fair and orderly market, or the protection of investors or otherwise in the public interest, due to extraordinary circumstances such as:Actual or threatened physical danger, severe climatic conditions, civil unrest, terrorism, acts of war, or loss or interruption of facilities utilized by the Exchange, a request by a governmental agency or official, or a period of mourning or recognition for a person or event. New paragraph (e) would require that the CEO or his or her designee notify the NYSE Arca Board of actions taken pursuant to the rule, except for a period of mourning or recognition for a person or event, as soon thereafter as is feasible.\6\ --------------------------------------------------------------------------- \6\ For example, the Exchange may close on a national day of mourning for a former president of the United States. --------------------------------------------------------------------------- The Exchange proposes that the commentary to NYSE Arca Rule 7.1 be amended by deleting ``under unusual conditions'' and a reference to the Board's designee, and by adding a reference to the authority of the CEO or his or her designee under new subparagraph (c). Finally, the Exchange proposes to change the name of NYSE Arca Rule 7.1 from ``Trading Sessions'' to ``Hours of Business,'' which would make it consistent with NYSE Arca Equities Rule 7.1. Proposed Changes to NYSE Arca Equities Rule 7.1 The first paragraph of NYSE Arca Equities Rule 7.1 provides that, unless otherwise ruled by the NYSE Arca Equities Board, the Corporation shall be open for the transaction of business daily except on Saturdays and Sundays, and the hours at which trading sessions shall open and close shall be established by the NYSE Arca Equities Board. NYSE Arca Equities Rule 7.1 does not provide for a Board designee. The Exchange proposes to amend the first paragraph of NYSE Arca Equities Rule 7.1 to provide that, except as may be otherwise determined by the NYSE Arca Equities Board as to particular days, the Corporation shall be open for the transaction of business on every business day. The Exchange proposes to remove the current exclusion of Saturdays and Sundays because Saturdays and Sundays are not business days and therefore no exclusion is needed. Finally, the amended paragraph would provide that the hours at which trading sessions shall open and close may be specified by Exchange rule, as well as by the Board. The two paragraphs of the present rule would become paragraphs (a) and (b). These proposed rule changes are based in part on NYSE Rule 51(a) and NYSE MKT Rule 51(a)--Equities. The Exchange proposes to add a new subparagraph (c) to provide that, except as may be otherwise determined by the NYSE Arca Equities Board, the President of the Corporation or his or her designee may halt or suspend trading in some or all securities traded on the Corporation; extend the hours for the transaction of business on the Corporation; close some or all Corporation facilities; determine the duration of any such halt, suspension or closing; or determine to trade securities on the Exchange's disaster recovery facility. These proposed changes are based on NYSE Rule 51(b) and NYSE MKT Rule 51(b)--Equities. New subparagraphs (d) and (e) would subject the President or his or her designee to the same limitations and reporting requirements as in proposed NYSE Arca Rule 7.1(d) and (e), which are based on NYSE Rule 51(b) and (c) and NYSE MKT Rule 51(b)-(d)--Equities. Discussion Currently, NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 require Board action if extraordinary circumstances arise. However, the Boards may not be able to convene and act quickly, thereby delaying any potential response. Pursuant to their respective bylaws, at least half of the directors on the NYSE Arca and NYSE Arca Equities Boards are Public Directors.\7\ Therefore, as a practical matter, they are unlikely to be at or near the Exchange if extraordinary circumstances arise, making it harder to convene quickly. Further, if communication systems are severely compromised in an emergency, the Boards may not be able to convene at all.\8\ --------------------------------------------------------------------------- \7\ See NYSE Arca, Inc. Bylaws, Article III, Sec. 3.02(a) and NYSE Arca Equities, Inc. Bylaws, Art. III, Sec. 3.02(a). ``Public Directors'' are directors that are persons from the public who are not, or are not affiliated with, a broker-dealer in securities and, in the case of the Exchange Board, are not employed by, or involved in any material business relationship with, the Exchange or its affiliates. \8\ For both Boards, the presence of a majority of directors is necessary to constitute a quorum. See NYSE Arca, Inc. Bylaws, Article III, Sec. 3.07 and NYSE Arca Equities, Inc. Bylaws, Art. III, Sec. 3.09. --------------------------------------------------------------------------- Current NYSE Arca Rule 7.1 partially addresses this concern by allowing the NYSE Arca Board to name designees. However, use of a designee requires that the Board make the delegation before any unusual conditions arise. Further, NYSE Arca Rule 7.1 does not set any limits on when designees may act under the rule, unlike proposed paragraphs (c) and (d). Accordingly, the Exchange proposes to delete the references to a Board designee in the first paragraph of [[Page 85661]] NYSE Arca Rule 7.1 and commentary thereto. Such proposed deletions would make NYSE Arca Rule 7.1 consistent with NYSE Arca Equities Rule 7.1, NYSE Rule 51(a) and NYSE MKT Rule 51(a)--Equities, none of which contemplate the Board appointing a designee to set the hours for business. The Exchange believes designating by rule that the CEO of the Exchange, President of NYSE Arca Equities, or their designees may take certain actions in extraordinary circumstances would make NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 more reflective of the organizational structure of the Exchange and NYSE Arca Equities. As described above, the CEO, President, or their designees would be able to take such action only when they deem it to be necessary or appropriate for the maintenance of a fair and orderly market, or the protection of investors or otherwise in the public interest, due to extraordinary circumstances. The proposed amendments would ensure that the NYSE Arca and NYSE Arca Equities Boards continue to have the authority to take action they deem necessary or appropriate in particular situations. In addition, as proposed, the amended rules would ensure that the Boards would remain informed, by requiring the CEO or President to notify the relevant Board of actions taken pursuant to the authority granted under the rule, with the exception of a period of mourning or recognition for a person or event, as soon thereafter as is feasible. The proposed changes would have the additional benefit of bringing NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 into greater conformity with the rules of the NYSE and NYSE MKT.\9\ --------------------------------------------------------------------------- \9\ NYSE Rule 51(a) and NYSE MKT Rule 51(a)--Equities do not state that the CEO can name a designee. However, pursuant to NYSE Rule 1 and NYSE MKT Rule 1--Equities, the CEO of the relevant exchange may designate one or more qualified employees to act in his or her place in the event that the CEO is not available. See NYSE Rule 1 and NYSE MKT Rule 1--Equities. See also Securities Exchange Act Release No. 61810 (March 31, 2010), 75 FR 17816 (April 7, 2010) (SR-NYSE-2010-26). --------------------------------------------------------------------------- The Exchange notes that the trading rules of Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Bats EDGX Exchange, Inc., and Bats EDGA Exchange, Inc. also provide that the CEO of the relevant exchange may halt, suspend trading in any and all securities traded on the exchange, close some or all exchange facilities, and determine the duration of any such halt, suspension, or closing, when he deems such action necessary for the maintenance of fair and orderly markets, the protection of investors, or otherwise in the public interest. The lists of special circumstances set out in such trading rules are substantially similar to those in NYSE Rule 51 and NYSE MKT Rule 51-- Equities.\10\ --------------------------------------------------------------------------- \10\ See Bats BZX Exchange, Inc. Rule 11.1(c); Bats BYX Exchange, Inc. Rule 11.1(c); Bats EDGX Exchange, Inc. Rule 11.1(c); and Bats EDGA Exchange, Inc. Rule 11.1(c). --------------------------------------------------------------------------- NYSE Arca Rule 7.2 and NYSE Arca Equities Rule 7.2 The last sentence in the first paragraph of NYSE Arca Rule 7.2 provides that the Board will determine whether to open the Exchange on presidential election days. Similarly, the last sentence in the first paragraph of NYSE Arca Equities Rule 7.2 provides that the Board will determine whether to open NYSE Arca Equities on presidential election days. The Exchange proposes to delete both sentences. The existing sentences are worded as if the Exchange and NYSE Arca Equities will be closed on presidential election days unless the Board determines otherwise. The Exchange believes the wording is potentially confusing to investors, because the Exchange and NYSE Arca Equities are generally open on presidential election days. Accordingly, the Exchange proposes to delete the language. The proposed edits will not affect the Board's ability to close the Exchange or NYSE Arca Equities for a presidential election day, as it would continue to have authority to do so under Rule 7.1. 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with Section 6(b) of the Act,\11\ in general, and further the objectives of Section 6(b)(5) of the Act,\12\ in particular, because they are 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because they are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes that the proposed rule changes are consistent with Section 6(b)(1) of the Act,\13\ in that they enable the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f(b). \12\ 15 U.S.C. 78f(b)(5). \13\ 15 U.S.C. 78f(b)(1). --------------------------------------------------------------------------- The Exchange believes that the proposed changes to NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 would remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, protect investors and the public interest, and enable the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Act, because they would make NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 more reflective of the organizational structure of the Exchange and NYSE Arca Equities. In this manner, they would strengthen the ability of the Exchange and NYSE Arca Equities to respond appropriately and in a timely fashion to extraordinary circumstances, even if the relevant Board is unable to convene. However, unlike present NYSE Arca Rule 7.1, which puts no limits on when the Board's designees may act, the proposed amended rules would ensure that the CEO, President, or their designees, as applicable, would be able to take action only when he or she deems such action to be necessary or appropriate for the maintenance of a fair and orderly market, or the protection of investors or otherwise in the public interest, due to extraordinary circumstances. The Exchange believes that the proposed changes to NYSE Arca Rule 7.2 and NYSE Arca Equities Rule 7.2 would remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, protect investors and the public interest, and enable the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Act, because they would remove sentences that are worded as if the Exchange and NYSE Arca Equities will be closed on presidential election days unless the Board determines otherwise. The Exchange believes the wording is potentially confusing to investors, because the Exchange and NYSE Arca Equities are generally open on presidential election days. Accordingly, the Exchange proposes to delete the language. In addition, the Exchange believes that the proposed rule changes to [sic] would remove impediments to, and perfect the mechanisms of, a free and open market and a national market [[Page 85662]] system and, in general, protect investors and the public interest, and enable the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Act, because they would ensure that the NYSE Arca and NYSE Arca Equities Boards continue to have the authority to take action they deem necessary or appropriate in particular situations. In addition, as proposed, the proposed amended NYSE Arca Rule 7.1 and NYSE Arca Equities Rule 7.1 would ensure that the Boards would remain informed, by requiring the CEO or President to notify the relevant Board of actions taken pursuant to the authority granted under the rule, with the exception of a period of mourning or recognition for a person or event, as soon thereafter as is feasible. The proposed changes to NYSE Arca Rule 7.2 and NYSE Arca Equities Rule 7.2 will not affect the Board's ability to close the Exchange or NYSE Arca Equities for a presidential election day, as it would continue to have authority to do so under Rule 7.1. For these reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. The proposed rule change is not intended to address competitive issues but rather is concerned solely with the administration and functioning of the Exchange and its subsidiary NYSE Arca Equities. 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 \14\ and Rule 19b-4(f)(6) thereunder.\15\ --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A). \15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \16\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 states that waiver of the operative delay would immediately strengthen the ability of the Exchange and NYSE Arca Equities to respond appropriately and in a timely fashion to extraordinary circumstances. The Exchange further states that waiving the 30-day operative delay would not affect the authority of the NYSE Arca and NYSE Arca Equities Boards to take action they deem necessary or appropriate in particular situations. Moreover, the Exchange states that waiver of the 30-day operative delay would allow the Exchange to align its rules with those of its affiliated exchanges without delay. 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.\18\ --------------------------------------------------------------------------- \16\ 17 CFR 240.19b-4(f)(6). \17\ 17 CFR 240.19b-4(f)(6)(iii). \18\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSEArca-2016-148 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-2016-148. 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 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-2016-148, and should be submitted on or before December 19, 2016. [[Page 85663]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-28460 Filed 11-25-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 228 / Monday, November 28, 2016 / Notices 85659
the symbols of OTC Securities to SECURITIES AND EXCHANGE the places specified in Item IV below.
identify issuers that are delinquent in COMMISSION The Exchange has prepared summaries,
their required filings, on the day the set forth in sections A, B, and C below,
[Release No. 34–79363; File No. SR–
broker-dealer commences quoting in of the most significant parts of such
NYSEArca-2016–148]
such IDQS. statements.
3. Once a broker-dealer commences Self-Regulatory Organizations; NYSE A. Self-Regulatory Organization’s
publishing or submitting for publication Arca, Inc.; Notice of Filing and Statement of the Purpose of, and the
quotations in the IDQS for the OTC Immediate Effectiveness of Proposed Statutory Basis for, the Proposed Rule
Security in accordance with condition Rule Change Amending NYSE Arca Change
2, such IDQS permits broker-dealers to Rules 7.1 and 7.2, and NYSE Arca
Equities Rules 7.1 and 7.2 1. Purpose
continue publishing or submitting for
The Exchange proposes to amend (a)
publication quotations in such IDQS for November 21, 2016. NYSE Arca Rule 7.1 (Trading Sessions)
the OTC Security only if the OTC Pursuant to Section 19(b)(1) 1 of the to permit the Chief Executive Officer
Security continues to be piggyback Securities Exchange Act of 1934 (the (‘‘CEO’’) of the Exchange or his or her
eligible under rule 15c2–11(f)(3) in ‘‘Act’’),2 and Rule 19b–4 thereunder,3 designee to take certain actions in
another IDQS or has established and notice is hereby given that on November connection with the trading of securities
maintains piggyback eligibility under 10, 2016, NYSE Arca, Inc. (the on the Exchange; (b) NYSE Arca
rule 15c2–11(f)(3)(i) based on quotations ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with Equities Rule 7.1 (Hours of Business) to
(exclusive of any identified customer the Securities and Exchange permit the President of NYSE Arca
interests) in such IDQS. Commission (the ‘‘Commission’’) the Equities or his or her designee to take
proposed rule change as described in certain actions in connection with the
4. The IDQS establishes, maintains,
Items I and II below, which Items have trading of securities on the NYSE Arca
and enforces policies and procedures been prepared by the self-regulatory
reasonably designed to ensure Equities marketplace; and (c) NYSE
organization. The Commission is Arca Rule 7.2 (Holidays) and NYSE
compliance with this Order. publishing this notice to solicit Arca Equities Rule 7.2 (Holidays) to
5. The IDQS maintains books and comments on the proposed rule change remove a reference to presidential
records sufficient to demonstrate that from interested persons. election days.
such IDQS is complying with the terms I. Self-Regulatory Organization’s The Exchange believes the proposed
of this Order, and such IDQS promptly Statement of the Terms of Substance of changes to NYSE Arca Rule 7.1 and
provides such records to Commission the Proposed Rule Change NYSE Arca Equities Rule 7.1 would
staff upon request. make such rules more reflective of the
The Exchange proposes to amend
This Order is subject to modification organizational structure of the Exchange
NYSE Arca Rule 7.1 (Trading Sessions)
or revocation at any time the and NYSE Arca Equities. At the same
to permit the Chief Executive Officer of
Commission determines that such time, the proposed rule changes would
the Exchange or his or her designee to
action is necessary or appropriate in ensure that the Boards of Directors of
take certain actions in connection with
furtherance of the purposes of the NYSE Arca and of NYSE Arca Equities
the trading of securities on the
Exchange Act. In addition, persons (each, a ‘‘Board’’) continue to have the
Exchange; (b) NYSE Arca Equities Rule
authority to take action they deem
relying on this Order are directed to the 7.1 (Hours of Business) to permit the
necessary or appropriate in particular
anti-fraud and anti-manipulation President of NYSE Arca Equities or his
situations.
provisions of the federal securities laws, or her designee to take certain actions in
particularly section 10(b) of the connection with the trading of securities NYSE Arca Rule 7.1 and NYSE Arca
Exchange Act and rule 10b-5 on the NYSE Arca Equities marketplace; Equities Rule 7.1
thereunder. Responsibility for and (c) NYSE Arca Rule 7.2 (Holidays) Proposed Changes to NYSE Arca Rule
compliance with these and any other and NYSE Arca Equities Rule 7.2 7.1
applicable provisions of the federal (Holidays) to remove a reference to
presidential election days. The The first paragraph of NYSE Arca
securities laws must rest with the Rule 7.1 provides that, unless otherwise
persons relying on this Order. This proposed rule change is available on the
Exchange’s Web site at www.nyse.com, ruled by the Board of the Exchange or
Order should not be considered a view its designee, the Exchange shall be open
with respect to any other question that at the principal office of the Exchange,
and at the Commission’s Public for the transaction of business daily
the publication or submission for except on Saturdays and Sundays, and
Reference Room.
publication of quotations in reliance on that the hours at which trading sessions
this Order may raise, including, but not II. Self-Regulatory Organization’s shall open and close shall be established
limited to, the applicability of other Statement of the Purpose of, and by the Board or its designee.
federal or state laws to such activity. Statutory Basis for, the Proposed Rule Commentary .01 to Rule 7.1 notes that,
Change except under unusual conditions as may
For the Commission, by the Division of
Trading and Markets, pursuant to delegated In its filing with the Commission, the be determined by the Board or its
authority.8 self-regulatory organization included designee, hours during which
Robert W. Errett, statements concerning the purpose of, transactions in options on individual
securities may be made on the Exchange
mstockstill on DSK3G9T082PROD with NOTICES
and basis for, the proposed rule change
Deputy Secretary. shall correspond to the normal hours for
and discussed any comments it received
[FR Doc. 2016–28457 Filed 11–25–16; 8:45 am] business set forth in the rules of the
on the proposed rule change. The text
BILLING CODE 8011–01–P of those statements may be examined at primary exchange listing the securities
underlying the options.
1 15 U.S.C. 78s(b)(1). The Exchange proposes to amend the
2 15 U.S.C. 78a. first paragraph of NYSE Arca Rule 7.1
8 17 CFR 200.30–3(a)(6). 3 17 CFR 240.19b–4. to provide that, except as may be
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![Federal Register / Vol. 81, No. 228 / Monday, November 28, 2016 / Notices 85661
NYSE Arca Rule 7.1 and commentary special circumstances set out in such organized as to have the capacity to be
thereto. Such proposed deletions would trading rules are substantially similar to able to carry out the purposes of the Act
make NYSE Arca Rule 7.1 consistent those in NYSE Rule 51 and NYSE MKT and to comply, and to enforce
with NYSE Arca Equities Rule 7.1, Rule 51—Equities.10 compliance by its exchange members
NYSE Rule 51(a) and NYSE MKT Rule and persons associated with its
NYSE Arca Rule 7.2 and NYSE Arca
51(a)—Equities, none of which exchange members, with the provisions
Equities Rule 7.2
contemplate the Board appointing a of the Act, the rules and regulations
designee to set the hours for business. The last sentence in the first thereunder, and the rules of the
The Exchange believes designating by paragraph of NYSE Arca Rule 7.2 Exchange.
rule that the CEO of the Exchange, provides that the Board will determine The Exchange believes that the
President of NYSE Arca Equities, or whether to open the Exchange on proposed changes to NYSE Arca Rule
their designees may take certain actions presidential election days. Similarly, the 7.1 and NYSE Arca Equities Rule 7.1
in extraordinary circumstances would last sentence in the first paragraph of would remove impediments to, and
make NYSE Arca Rule 7.1 and NYSE NYSE Arca Equities Rule 7.2 provides perfect the mechanisms of, a free and
Arca Equities Rule 7.1 more reflective of that the Board will determine whether open market and a national market
the organizational structure of the to open NYSE Arca Equities on system and, in general, protect investors
Exchange and NYSE Arca Equities. As presidential election days. The and the public interest, and enable the
described above, the CEO, President, or Exchange proposes to delete both Exchange to be so organized as to have
their designees would be able to take sentences. the capacity to be able to carry out the
such action only when they deem it to The existing sentences are worded as purposes of the Act, because they would
be necessary or appropriate for the if the Exchange and NYSE Arca Equities make NYSE Arca Rule 7.1 and NYSE
maintenance of a fair and orderly will be closed on presidential election Arca Equities Rule 7.1 more reflective of
market, or the protection of investors or days unless the Board determines the organizational structure of the
otherwise in the public interest, due to otherwise. The Exchange believes the Exchange and NYSE Arca Equities. In
extraordinary circumstances. wording is potentially confusing to this manner, they would strengthen the
The proposed amendments would investors, because the Exchange and ability of the Exchange and NYSE Arca
ensure that the NYSE Arca and NYSE NYSE Arca Equities are generally open Equities to respond appropriately and in
Arca Equities Boards continue to have on presidential election days. a timely fashion to extraordinary
the authority to take action they deem Accordingly, the Exchange proposes to circumstances, even if the relevant
necessary or appropriate in particular delete the language. The proposed edits Board is unable to convene. However,
situations. In addition, as proposed, the will not affect the Board’s ability to unlike present NYSE Arca Rule 7.1,
amended rules would ensure that the close the Exchange or NYSE Arca which puts no limits on when the
Boards would remain informed, by Equities for a presidential election day, Board’s designees may act, the proposed
requiring the CEO or President to notify as it would continue to have authority amended rules would ensure that the
the relevant Board of actions taken to do so under Rule 7.1. CEO, President, or their designees, as
pursuant to the authority granted under 2. Statutory Basis applicable, would be able to take action
the rule, with the exception of a period only when he or she deems such action
of mourning or recognition for a person The Exchange believes that the to be necessary or appropriate for the
or event, as soon thereafter as is feasible. proposed rule changes are consistent maintenance of a fair and orderly
The proposed changes would have the with Section 6(b) of the Act,11 in market, or the protection of investors or
additional benefit of bringing NYSE general, and further the objectives of otherwise in the public interest, due to
Arca Rule 7.1 and NYSE Arca Equities Section 6(b)(5) of the Act,12 in extraordinary circumstances.
Rule 7.1 into greater conformity with particular, because they are designed to The Exchange believes that the
the rules of the NYSE and NYSE MKT.9 prevent fraudulent and manipulative proposed changes to NYSE Arca Rule
The Exchange notes that the trading acts and practices, to promote just and 7.2 and NYSE Arca Equities Rule 7.2
rules of Bats BZX Exchange, Inc., Bats equitable principles of trade, to foster would remove impediments to, and
BYX Exchange, Inc., Bats EDGX cooperation and coordination with perfect the mechanisms of, a free and
Exchange, Inc., and Bats EDGA persons engaged in regulating, clearing, open market and a national market
Exchange, Inc. also provide that the settling, processing information with system and, in general, protect investors
CEO of the relevant exchange may halt, respect to, and facilitating transactions and the public interest, and enable the
suspend trading in any and all securities in securities, to remove impediments to, Exchange to be so organized as to have
traded on the exchange, close some or and perfect the mechanisms of, a free the capacity to be able to carry out the
all exchange facilities, and determine and open market and a national market purposes of the Act, because they would
the duration of any such halt, system and, in general, to protect remove sentences that are worded as if
suspension, or closing, when he deems investors and the public interest and the Exchange and NYSE Arca Equities
such action necessary for the because they are not designed to permit will be closed on presidential election
maintenance of fair and orderly markets, unfair discrimination between days unless the Board determines
the protection of investors, or otherwise customers, issuers, brokers, or dealers. otherwise. The Exchange believes the
in the public interest. The lists of The Exchange also believes that the wording is potentially confusing to
proposed rule changes are consistent investors, because the Exchange and
9 NYSE Rule 51(a) and NYSE MKT Rule 51(a)— with Section 6(b)(1) of the Act,13 in that NYSE Arca Equities are generally open
Equities do not state that the CEO can name a they enable the Exchange to be so on presidential election days.
mstockstill on DSK3G9T082PROD with NOTICES
designee. However, pursuant to NYSE Rule 1 and
NYSE MKT Rule 1—Equities, the CEO of the Accordingly, the Exchange proposes to
10 See Bats BZX Exchange, Inc. Rule 11.1(c); Bats
relevant exchange may designate one or more delete the language.
qualified employees to act in his or her place in the BYX Exchange, Inc. Rule 11.1(c); Bats EDGX In addition, the Exchange believes
event that the CEO is not available. See NYSE Rule Exchange, Inc. Rule 11.1(c); and Bats EDGA
Exchange, Inc. Rule 11.1(c). that the proposed rule changes to [sic]
1 and NYSE MKT Rule 1—Equities. See also
Securities Exchange Act Release No. 61810 (March
11 15 U.S.C. 78f(b). would remove impediments to, and
31, 2010), 75 FR 17816 (April 7, 2010) (SR–NYSE– 12 15 U.S.C. 78f(b)(5). perfect the mechanisms of, a free and
2010–26). 13 15 U.S.C. 78f(b)(1). open market and a national market
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![Federal Register / Vol. 81, No. 228 / Monday, November 28, 2016 / Notices 85663
For the Commission, by the Division of acquisition with one or more their listing from the New York Stock
Trading and Markets, pursuant to delegated unidentified companies within a Exchange (‘‘NYSE’’) to the Global or
authority.19 specific period of time (an ‘‘Acquisition Global Select Markets (‘‘Eligible
Robert W. Errett, Company’’), Nasdaq will permit the Switches’’).7 The complimentary
Deputy Secretary. listing on the Nasdaq Global Market or services provided to some listed
[FR Doc. 2016–28460 Filed 11–25–16; 8:45 am] Capital Market if the company meets all companies under IM–5900–7 are not,
BILLING CODE 8011–01–P applicable initial listing requirements, however, available to companies listing
as well as the additional conditions on the Capital Market. The Exchange
described in Nasdaq Rule IM–5101–2 also noted that, as of the date of filing
SECURITIES AND EXCHANGE (Listing of Companies Whose Business its proposal with the Commission, all
COMMISSION Plan is to Complete One or More companies listing as an Acquisition
[Release No. 34–79366; File No. SR– Acquisitions).4 Pursuant to Rule IM– Company have listed on the Capital
NASDAQ–2016–106] 5101–2(b), among other requirements, Market.8
within 36 months of the effectiveness of Currently, pursuant to Rule IM–5900–
Self-Regulatory Organizations; The its IPO registration statement, or such 7, the services offered include a
Nasdaq Stock Market LLC; Order shorter period that the company whistleblower hotline (with a retail
Granting Approval of Proposed Rule specified in its registration statement, value of approximately $4,000
Change To Modify Rule IM–5900–7 To the company must complete one or annually), an investor relations Web site
Adjust the Entitlement to Services of more business combinations having an (with a retail value of approximately
Acquisition Companies aggregate fair market value of at least $16,000 annually), disclosure services
80% of the value of the deposit account for earnings or other press releases (with
November 21, 2016. (excluding any deferred underwriters a retail value ranging from $15,000 to
I. Introduction fees and taxes payable on the income $20,000 annually, depending on the
earned on the deposit account) at the company’s market capitalization and
On September 22, 2016, The Nasdaq
time of the agreement to enter into the whether it is an Eligible New Listing or
Stock Market LLC (‘‘Nasdaq’’ or
initial combination (a business an Eligible Switch), audio webcasting
‘‘Exchange’’) filed with the Securities
combination that satisfies the conditions (with a retail value of approximately
and Exchange Commission
of IM–5101–2(b) is referred to as a $6,500 annually), market analytic tools
(‘‘Commission’’), pursuant to Section
‘‘Business Combination’’).5 Rule IM– (with a retail value ranging from
19(b)(1) of the Securities Exchange Act
5101–2 also requires that following each approximately $29,000 to $51,000
of 1934 (‘‘Act’’) 1 and Rule 19b–4
Business Combination, the combined annually, depending on the number of
thereunder,2 a proposed rule change to
company must meet the requirements users granted access), and may include
modify the treatment of acquisition
for initial listing.6 market advisory tools such as stock
companies under Rule IM–5900–7 so As set forth in Rule IM–5900–7, the surveillance (with a retail value of
that acquisition companies will not be Exchange offers certain complimentary approximately $51,000 annually), global
entitled to complimentary services services to companies newly listing on targeting (with a retail value of
under IM–5900–7 until they complete the Nasdaq Global and Global Select approximately $40,000 annually),
an acquisition meeting the Exchange’s Markets in connection with an IPO, monthly ownership analytics and event
requirements, as described below. The upon emerging from bankruptcy, or in driven targeting (with a retail value of
proposed rule change was published in connection with a spin-off or carve-out approximately $46,000 annually), and
the Federal Register on October 7, from another company (‘‘Eligible New an annual perception study (with a
2016.3 The Commission received no Listings’’) and to companies that switch retail value of approximately $35,000
comments on the proposal. This order annually).9 The total retail value of the
grants approval of the proposed rule 4 Id. at 69882. Rule IM–5101–2(a) requires that at services provided ranges from
change. least 90% of the gross proceeds from the IPO and approximately $70,500 to $188,500
any concurrent sale by the company of equity
II. Description of the Proposal securities must be deposited in a trust account
annually, depending on a company’s
maintained by an independent trustee, an escrow market capitalization and whether it is
The Exchange proposed to amend
account maintained by an ‘‘insured depository an Eligible New Listing or an Eligible
Rule IM–5900–7 to adjust the timing of institution,’’ as that term is defined in Section Switch.10 In addition, one-time
when complimentary services are 3(c)(2) of the Federal Deposit Insurance Act, or in
a separate bank account established by a registered development fees of approximately
provided to listed acquisition
broker or dealer (collectively, a ‘‘deposit account’’). $3,500 to establish the services in the
companies under that rule. Under the For a full set of requirements to list an Acquisition first year are waived.11 The length of the
current rules, except as described Company, see Rule IM–5101–2. The Exchange complimentary period that a company
below, Nasdaq generally does not permits Acquisition Companies to list only on the
Capital and Global Markets but not the Global receives services under IM–5900–7 is
permit the initial or continued listing of either two or four years from the listing
Select Market. See Notice, supra note 3, at 69882
a company that has no specific business (citing Rule 5310(i), which provides that a company date, depending on a company’s market
plan or that has indicated that its subject to IM–5101–2 is not eligible to list on the capitalization and whether it is an
business plan is to engage in a merger Global Select Market).
5 Rule IM–5101–2 also provides, among other
or acquisition with an unidentified 7 In addition, all companies listed on Nasdaq
things, that if the company does not meet the
company or companies. However, in the requirements for initial listing following a business receive services from Nasdaq, including Nasdaq
case of a company whose business plan combination or does not comply with one of the Online and the Market Intelligence Desk. See
is to complete an initial public offering requirements set forth in the rule, Nasdaq will issue Notice, supra note 3, at 69882.
mstockstill on DSK3G9T082PROD with NOTICES
8 See Notice, supra note 3, at 69882.
(‘‘IPO’’) and engage in a merger or a Staff Delisting Determination to delist the
9 The Exchange noted that it does not propose to
company’s securities.
6 See Rule IM–5101–2. If the company does not make any changes in its filing to the values of the
19 17 CFR 200.30–3(a)(12). meet the requirements for initial listing following various services provided to eligible listed
1 15 U.S.C. 78s(b)(1). companies discussed above, which values are
a Business Combination or does not comply with
2 17 CFR 240.19b–4.
one of the requirements set forth in the IM–5101– specified in Rule IM–5900–7. See Notice, supra
3 See Securities Exchange Act Release No. 79025 2, Nasdaq will issue a Staff Delisting Determination note 3, at 69882.
10 See Rule IM–5900–7.
(October 3, 2016), 81 FR 69881 (October 7, 2016) under Nasdaq Rule 5810 to delist the company’s
(‘‘Notice’’). securities. Id. 11 Id.
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Document Created: 2018-02-14 08:35:31
Document Modified: 2018-02-14 08:35:31
| 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 85659 |
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