81 FR 95699 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To (1) Change How Orders Would Be Processed When the Protected Best Bid (“PBB”) Is Higher Than the Protected Best Offer (“PBO”) (The “PBBO”) in Certain Circumstances, and (2) Adopt a Limit Order Price Protection Mechanism
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 249 (December 28, 2016)
Federal Register Volume 81, Issue 249 (December 28, 2016)
| Page Range | 95699-95703 | |
| FR Document | 2016-31302 |
[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)] [Notices] [Pages 95699-95703] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-31302] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79640; File No. SR-NYSEMKT-2016-117] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To (1) Change How Orders Would Be Processed When the Protected Best Bid (``PBB'') Is Higher Than the Protected Best Offer (``PBO'') (The ``PBBO'') in Certain Circumstances, and (2) Adopt a Limit Order Price Protection Mechanism December 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 December 12, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III 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 (1) change how orders would be processed when the protected best bid (``PBB'') is higher than the protected best offer (``PBO'') (the ``PBBO'') in certain circumstances, and (2) adopt a limit order price protection mechanism. 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 (1) change how orders would be processed when the PBB is higher than the PBO in certain circumstances, and (2) adopt a limit order price protection mechanism. Processing of Orders When the PBBO Is Crossed (Rules 13--Equities, 70-- Equities, 76--Equities and 1000--Equities) Currently, when the PBB is priced higher than the PBO in a security (i.e., the PBBO is crossed), buy and sell orders trade on the Exchange without regard to price and without routing, consistent with the exception to the Order Protection Rule enumerated in Rule 611(b)(4) of Regulation NMS (``Rule 611(b)(4)'').\4\ In certain circumstances as described herein, the Exchange proposes to no longer avail itself of this exception to the Order Protection Rule.\5\ In those circumstances, rather than trading through a protected quotation when the PBBO is crossed, routable orders may instead be routed to protected quotations. In order to implement this change, the Exchange proposes to amend the following rules: --------------------------------------------------------------------------- \4\ 17 CFR 242.611(b)(4). See also Rule 15A--Equities (Order Protection Rule). \5\ For example, assume if the Exchange has a displayed bid of $10.00 and another market crosses that bid with a protected offer of $9.99. Currently, if the Exchange receives a marketable order to buy, it will trade on the Exchange at prices higher than $9.99. Once the Exchange no longer avails itself of the exception in Rule 611(b)(4), unless otherwise specified in Exchange rules as described in this proposed rule change, arriving routable interest to buy that is marketable on the Exchange would instead first route to that protected offer. --------------------------------------------------------------------------- Rule 13--Equities Market Order Rule 13(a)(1)--Equities provides that a Market Order that is eligible for automatic executions is an unpriced order to buy or sell a stated amount of a security that is to be traded at the best price obtainable without trading through the NBBO. Rule 13(a)(1)(B)(i)-- Equities provides that when the Exchange is open for continuous trading, a Market Order will be rejected on arrival, or cancelled if resting, if there is no contra-side NBBO or if the best protected quotations are or become crossed. The Exchange proposes to no longer reject or cancel Market Orders when the PBBO is crossed. To effectuate this change, the Exchange proposes to delete the phrase ``or if the best protected quotations are or become crossed'' in Rule 13(a)(1)(B)(i)--Equities. As a result of this proposed change, if a Market Order arrives when the PBBO is crossed, the Exchange would process the Market Order in the same way as when the NBBO is crossed under the current rule.\6\ --------------------------------------------------------------------------- \6\ See Rule 13(a)(1)(B)(ii)--Equities. --------------------------------------------------------------------------- Routing to Protected Quotations The Exchange proposes to amend the Rule 13--Equities to specify circumstances when the Exchange would make order handling decisions based on a protected quotation. The Exchange proposes to make these changes because, in the circumstances described below, the Exchange would no longer avail itself of the exception to the Order Protection Rule specified in Rule 611(b)(4), and therefore the Exchange would include protected [[Page 95700]] quotations for order handling purposes even when the PBBO is crossed. First, the Exchange proposes to amend the definition of Exchange IOC Order to reflect that, when the PBBO is crossed, the Exchange would route such orders to other markets if an execution on the Exchange would trade through a protected quotation in compliance with Regulation NMS. Rule 13(b)(2)(B)--Equities defines an Exchange IOC Order as a Limit Order designated Immediate or Cancel (``IOC'') that will be automatically executed against the displayed quotation up to its full size and sweep the Exchange book, as provided in Rule 1000 to the extent possible, with portions of the order routed to other markets if necessary in compliance with Regulation NMS and the portion not so executed will be immediately and automatically cancelled. As such, currently an Exchange IOC Order is only routed to a protected quotation unless the exception in Rule 611(b)(4) applies. Because the Exchange proposes to route an Exchange IOC Order to other markets if an execution on the Exchange would trade through a protected quotation, i.e., in circumstances when the PBBO is crossed, the Exchange would revise the rule text to read ``with portions of the order routed to other markets if an execution would trade through a protected quotation, in compliance with Regulation NMS. The portion of the order not so executed will be immediately and automatically cancelled.'' Second, the Exchange proposes to amend the definition of ``best- priced sell interest'' and ``best-priced buy interest,'' which are terms used for purposes of determining where to display and rank a Limit Order designated with an Add Liquidity Only (``ALO'') Modifier. Supplementary Material .10 of Rule 13--Equities provides that, for purposes of the Rule, the term ``best-priced sell interest'' refers to the lowest priced sell interest against which incoming buy interest would be required to execute with and/or route to, including Exchange displayed offers, Non-Display Reserve Orders, Non- Display Reserve e- Quotes, odd-lot sized sell interest, unexecuted Market Orders, and protected offers on away markets and that the term ``best-priced buy interest'' refers to the highest priced buy interest against which incoming sell interest would be required to execute with and/or route to, including Exchange displayed bids, Non-Display Reserve Orders, Non- Display Reserve e-Quotes, odd-lot sized buy interest, unexecuted Market Orders, and protected bids on away markets, but does not include non- displayed buy interest that is priced based on the PBBO.\7\ --------------------------------------------------------------------------- \7\ The Exchange also proposes a non-substantive change to add a colon after Supplementary Material in the heading. --------------------------------------------------------------------------- Because the Exchange currently avails itself of the exception in Rule 611(b)(4) when the PBBO is crossed, the Exchange does not include protected bids or offers in the determination of ``best-priced sell interest'' or ``best-priced buy interest.'' With the proposed change, in the circumstances when the Exchange no longer avails itself of this exception, the Exchange would consider all protected quotations, including when the PBBO is crossed. To reflect this change, the Exchange proposes the following amendments to Supplementary Material .10 to Rule 13--Equities.\8\ --------------------------------------------------------------------------- \8\ Since the terms defined in Supplementary Material .10 are only used for Limit Orders designated ALO, the Exchange proposes to replace ``this Rule'' after ``For purposes of'' with ``displaying and ranking a Limit Order with an Add Liquidity Only (ALO) modifier''. ---------------------------------------------------------------------------In the first clause defining ``best-priced sell interest,'' the Exchange proposes to delete ``with and/or route to'' after ``execute,'' add the word ``and'' before ``unexecuted Market Orders'' and add the phrase ``the lowest-priced'' before ``protected offers on away markets.'' The proposed change would clarify that best- priced sell interest can mean either the lowest-priced sell interest against which incoming buy interest would execute with on the Exchange or the lowest-priced protected offer, which can be a protected offer on an away market. In the second clause defining ``best-priced buy interest,'' the Exchange would delete ``with and/or route'' after ``execute,'' add the word ``and'' before ``unexecuted Market Orders,'' and add ``the highest-priced'' before ``protected bids on away markets.'' The proposed change would clarify that best-priced buy interest can mean either the lowest-priced buy interest against which incoming sell interest would execute with on the Exchange or the lowest-priced protected bid, which can be a protected bid on an away market. Pegging Interest Rule 13(f)(1)--Equities defines pegging interest and provides that pegging interest pegs to prices based on (i) a PBBO, which may be available on the Exchange or an away market, or (ii) interest that establishes a price on the Exchange. If the PBBO is not within the specified price range of the pegging interest, the pegging interest will instead peg to the next available best-priced displayable interest that is within the specified price range, which may be on the Exchange or the protected bid or offer of another market.\9\ Rule 13(f)(1)(B)(i)--Equities further provides that pegging interest to buy (sell) will not peg to a price that is locking or crossing the Exchange best offer (bid), but instead will peg to the next available best- priced displayable interest that would not lock or cross the Exchange best offer (bid). --------------------------------------------------------------------------- \9\ See Rule 13(f)(1)(A)(iv)(a) & (f)(1)(A)(iii)--Equities. --------------------------------------------------------------------------- To avoid routing pegging interest when the PBBO is locked or crossed, the Exchange proposes to specify that the Exchange would not peg to a locking or crossing PBBO and would instead peg to the next- available best-priced displayable interest that would not lock or cross either the Exchange's BBO or the PBBO. To effect this change, the Exchange proposes to amend Rule 13(f)(1)(B)(i)--Equities to provide that pegging interest to buy (sell) will not peg to the PBB (PBO) if the PBBO is locked or crossed or to a price that is locking or crossing the Exchange best offer (bid), but instead would peg to the next available best-priced displayable interest that would not lock or cross the Exchange best offer (bid) or the PBO (PBB). Rule 70--Equities Rule 70--Equities governs the execution of Floor broker interest, including g-Quotes. G-Quotes are an electronic method for Floor brokers to represent orders that yield priority, parity and precedence based on size to displayed and non-displayed orders on the Exchange's book, in compliance with Section 11(a)(1)(G) of the Act (the ``G Rule'').\10\ --------------------------------------------------------------------------- \10\ Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), generally prohibits a member of a national securities exchange from effecting transactions on that exchange for its own account, the account of an associated person, or any account over which it or an associated person exercises discretion. Subsection (G) of Section 11(a)(1) provides an exemption from this prohibition, allowing an exchange member to have its own floor broker execute a proprietary order, also known as a ``G order,'' provided such order yields priority, parity, and precedence. Under the G Rule, G orders are not required to yield to other orders that are for the account of a member, e.g., Designated Market Maker (``DMM'') interest or other g-Quotes. --------------------------------------------------------------------------- Because the proposed change to how the Exchange would operate when the PBBO is crossed would result in routable orders being routed to a crossed PBBO, the Exchange proposes to revise the behavior of g-Quotes to limit the circumstances when such orders would route. While the G Rule only requires G orders to yield to orders on the Exchange, the Exchange does not believe that a G order should trade on [[Page 95701]] another market before resting displayed interest on the Exchange trades and to which, absent routing of the G order, would be yielded priority by the G order under the G Rule. Accordingly, the Exchange proposes to restrict a g-Quote from routing to a protected quotation ahead of displayed orders on the Exchange at the same price. To effect this change, the Exchange proposes to add a new subsection (iii) to Rule 70(a)--Equities that would provide that a g-Quote to buy (sell) that would be required to route on arrival would be cancelled when there is resting displayable interest that is not a g-Quote or DMM interest to buy (sell) at the same or higher (lower) price as the g-Quote. Further, the Exchange proposes to amend subsection (a)(ii) of Supplementary Material .25 to Rule 70--Equities to specify that discretionary instructions for Floor broker d-Quotes\11\ are unavailable when the PBBO is crossed. To effectuate this change, the Exchange proposes to delete the phrase ``at all times'' following ``Discretionary instructions are active'' and add the phrase ``unless the PBBO is crossed'' following ``during the trading day.'' \12\ --------------------------------------------------------------------------- \11\ D-Quotes enable Floor brokers to enter discretionary instructions as to the price at which the d-Quote may trade and the number of shares to which the discretionary price instructions apply. \12\ The Exchange also proposes to add ``reopening'' after ``at the opening'' and before ``and closing transactions'' in Rule 70.25(a)(ii)--Equities. --------------------------------------------------------------------------- Rule 76--Equities Rule 76--Equities governs the execution of manual ``cross'' or ``crossing'' orders by Floor brokers on the Exchange trading Floor. Supplementary Material .10 of Rule 76--Equities permits Floor Brokers to enter a cross transaction into their hand held device (``HHD'') and describes the operation by the Exchange of a quote minder function that monitors protected bids and offers to determine when the limit price assigned to the proposed crossed transaction is such that the orders may be executed consistent with Regulation NMS Rule 611. The Exchange proposes to amend Supplementary Material .10 of Rule 76--Equities to specify that quote minder would be unavailable to Floor brokers when the PBBO is crossed by adding the sentence ``Quote minder will not monitor protected bids and offers when the PBBO is crossed'' to the end of the Rule. The proposed change to Rule 76.10--Equities is consistent with the proposed change, described above, that the Exchange would route orders even if the PBBO is crossed. Because Rule 76-- Equities governs crossing orders at a single price on the Exchange, the Exchange believes this proposed change makes clear that the Exchange would not permit a crossing order to be executed when the PBBO is crossed. Rule 1000--Equities Rule 1000--Equities provides for automatic executions by Exchange systems. The Exchange proposes to add new Supplementary Material .10 to specify how DMM interest would be processed when the PBBO is crossed and there is same side resting displayable interest that is locking or crossing the contra-side PBBO. Similar to the proposed amendment described above relating to g-Quotes, the Exchange does not believe that DMM interest should have an opportunity to trade on another market ahead of displayed orders on the Exchange. To effect this change, the proposed amendment would provide that DMM interest that would be required to route on arrival would be cancelled when there is same side resting displayable buy (sell) interest (that is not a g-Quote or DMM interest to buy (sell)) that is locking or crossing the PBO (PBB). Similarly, the Exchange proposes to specify that certain DMM interest that would increase the displayed quantity of the similarly-entered resting DMM interest would be rejected when the resting DMM interest is locked or crossed by a protected away quote.\13\ --------------------------------------------------------------------------- \13\ See Rule 104(b)--Equities &1000--Equities. --------------------------------------------------------------------------- Limit Order Price Protection (Rules 13--Equities and 1000--Equities) The Exchange proposes to amend Rule 13--Equities to introduce limit order price protection, which would result in Limit Orders with prices too far away from the prevailing quote to be rejected on arrival. The proposed rule is based on NYSE Arca Equities, Inc, (``NYSE Arca Equities'') Rule 7.31(a)(2)(B). As proposed, the Exchange would reject limit orders that are priced a specified percentage away from the contra side national best bid (``NBB'') or national best offer (``NBO''), as defined in Rule 600(b)(42) of Regulation NMS. As the Exchange receives limit orders, Exchange systems will check the price of the limit order against the contra-side NBB or NBO at the time of the order entry to determine whether the limit order is within the specified percentage. As proposed, the specified percentage would be equal to the corresponding ``numerical guideline'' percentages set forth in paragraph (c)(1) of Rule 1000--Equities (Automatic Executions) that are used to calculate Trading Collars.\14\ --------------------------------------------------------------------------- \14\ The NYSE Arca Equities limit order price protection mechanism uses the ``numerical guideline'' percentage set forth in Rule 7.10(c)(1) (Clearly Erroneous Executions) for its Core Trading Session. See NYSE Arca Equities Rule 7.31(a)(2)(B). The Exchange's proposal would use the same numerical guidelines, but rather than cross referencing another rule, the Exchange proposes to enumerate the specified percentages in proposed Rule 13(a)(2)(A). --------------------------------------------------------------------------- Proposed Rule 13(a)(2)(A)--Equities would provide that a Limit Order to buy (sell) would be rejected if it is priced at or above (below) a specified percentage away from the NBO (NBB). Proposed Rule 13(a)(2)(A)(i)--Equities would further provide if the NBB or the NBO is greater than $0.00 up to and including $25.00, the specified percentage would be 10%; if the NBB or NBO is greater than $25.00 up to and including $50.00, the specified percentage would be 5%; and if the NBB or NBO is greater than $50.00, the specified percentage would be 3%. For example, if the NBB is $26.00, a sell order priced at or below $24.70, which is 5% below the NBB, would be rejected. Likewise, if the NBO is $55.00, a buy order priced at or above $56.65, which is 3% above the NBO, would be rejected. Proposed Rule 13(a)(2)(A)(i)--Equities would further provide that if the NBBO is crossed, the Exchange would use the Exchange Best Offer (``BO'') instead of the NBO for buy orders and the Exchange Best Bid (``BB'') instead of the NBB for sell orders. The proposed Rule would further provide that if the NBBO is crossed and there is no BO (BB), Limit Order Price Protection will not be applied to an incoming Limit Order to buy (sell). Further, proposed Rule 13(a)(2)(A)(i)--Equities would provide, like current NYSE Arca Rule 7.31(a)(2)(B), that Limit Order Price Protection will not be applied to an incoming Limit Order to buy (sell) if there is no NBO (NBB). Further, if the specified percentage for both buy and sell orders are not in the minimum price variation (``MPV'') for the security, as defined in Supplemental Material .10 to Rule 62--Equities, they would be rounded down to the nearest price at the applicable MPV. This proposed rule text is based on current Rule 1000(c)(1)--Equities, governing Trading Collars. Proposed Rule 13(a)(2)(A)(ii)--Equities would provide that Limit Order Price Protection would be applicable only when automatic executions are in effect. This rule would further provide that Limit Order Price Protection would not be applicable (a) before a security opens for trading or during a halt or pause; (b) during a trading suspension; (c) to incoming Auction-Only Orders; [[Page 95702]] and (d) to high-priced securities, as defined in Rule 1000(a)(iii)-- Equities. Finally, in connection with the introduction of the proposed Limit Order Price Protection mechanism, the Exchange proposes to amend Rule 1000(c)--Equities and (c)(ii)--Equities to delete references to marketable limit orders. Accordingly, Trading Collars specified in Rule 1000(c)--Equities would be applicable to Market Orders only, and pricing protections in proposed Rule 13(a)(2)(A)--Equities would be applicable to Limit Orders. The Exchange believes that the Limit Order Protection mechanism would prevent the entry of supermarketable limit orders, i.e., limit orders that in essence act like market orders because they are priced so far away from the prevailing market price, that could cause significant price dislocation in the market. The Exchange also believes that the mechanism would further serve to mitigate the potential for clearly erroneous executions to occur. The Exchange believes that the proposed treatment of limit orders serves as an additional safeguard that could help limit potential harm from extreme price volatility by preventing executions that could occur at a price significantly away from the contra side national best bid or national best offer. * * * * * Because of the technology changes associated with this rule proposal, the Exchange will announce the implementation date in a Trader Update. The Exchange currently anticipates implementing the proposed changes no later than March 31, 2017. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\15\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\16\ in particular, because it is designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest. Specifically, while the Exchange is entitled to avail itself of the exception to Rule 611(b)(4) to the Order Protection Rule, the Exchange believes that trading or routing based on the PBBO, even when it is crossed, may result in additional order execution opportunities to trade at prevailing prices in the market. Accordingly, as a general matter, taking into consideration all protected quotations for purposes of the price at which to trade or route an order on the Exchange, even when the PBBO is crossed, would remove impediments to and perfect the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b). \16\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed changes to modify current order behavior that is based on Rule 611(b)(4) would remove impediments to and perfect the mechanism of a free and open market and a national market system because they are designed to reflect changes to how such orders would be processed when the PBBO is crossed in a manner consistent with the original intent of such orders. The Exchange believes the proposed amendment to Rule 13-- Equities governing Market Orders would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would promote transparency that a Market Order would be accepted when the PBBO is crossed, and thus may route when the PBBO is crossed. The Exchange believes the proposed amendments to Rule 13-- Equities definition of an Exchange IOC Order clarifying that the Exchange would route to a protected quotation when the PBBO is crossed would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would provide specificity regarding the reason why an order may be routed, thereby promoting transparency in Exchange rules. The Exchange further believes that specifying that Supplementary Material .10 relates to the displaying and ranking of Limit Orders designated ALO would remove impediments to and perfect the mechanism of a free and open market and a national market system by adding clarity and transparency to the Exchange's rules. The proposed amendments to Rules 70--Equities and 1000-- Equities to cancel g-Quotes that would otherwise be required to route to away markets ahead of resting displayable interest and reject DMM interest that would increase the displayed quantity of similarly- entered resting DMM interest when that resting interest is locked or crossed by a protected away quote would remove impediments to and perfect the mechanism of a free and open market and a national market system and protect investors and the public because it would provide priority to previously-displayed orders not only for execution opportunities on the Exchange, but also on other markets. The proposed amendment to Rule 76--Equities relating to crossing orders would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would provide transparency that crossing orders, which are designed to trade on the Exchange as a single-priced transaction, would not be eligible to trade if the PBBO is crossed. The Exchange believes that the proposed Limit Order Protection mechanism would remove impediments to and perfect the mechanism of a free and open market and a national market system by rejecting orders that are priced too far away from the prevailing market. The Exchange believes that the proposed rule would ensure that limit orders would not cause the price of a security to move beyond prices that could otherwise be determined to be a clearly erroneous execution, thereby protecting investors from receiving executions away from the prevailing prices at any given time. Finally, the Exchange's proposal to make non-substantive changes to the text of Supplementary Material .10 of Rule 13--Equities and to Rule 70.25(a)--Equities adds clarity and transparency to Exchange rules and reduces potential investor confusion, which would remove impediments to and perfect the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change would not impose any burden on competition because it would align how the Exchange operates when the PBBO is crossed with how other equity exchanges function when the PBBO is crossed. Moreover, the proposed rule changes would specify how orders would be processed when the PBBO is crossed, thereby promoting transparency and efficiency to the benefit of all market participants, and the adoption of a limit order protection mechanism that is based on the rules of another exchange. The Exchange believes that the proposed rule change will serve to promote regulatory clarity and consistency, thereby reducing burdens on competition in the marketplace and facilitating investor protection. [[Page 95703]] 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 The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\ 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6)(iii) thereunder. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A)(iii). \18\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),\20\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. --------------------------------------------------------------------------- \19\ 17 CFR 240.19b-4(f)(6). \20\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- At any time within 60 days of the filing of such 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 under Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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-NYSEMKT-2016-117 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEMKT-2016-117. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the 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-NYSEMKT-2016-117 and should be submitted on or before January 18, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016-31302 Filed 12-27-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 249 / Wednesday, December 28, 2016 / Notices 95699
only one method. The Commission will ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with (‘‘Rule 611(b)(4)’’).4 In certain
post all comments on the Commission’s the Securities and Exchange circumstances as described herein, the
Internet Web site (http://www.sec.gov/ Commission (the ‘‘Commission’’) the Exchange proposes to no longer avail
rules/sro.shtml). Copies of the proposed rule change as described in itself of this exception to the Order
submission, all subsequent Items I, II, and III below, which Items Protection Rule.5 In those
amendments, all written statements have been prepared by the self- circumstances, rather than trading
with respect to the proposed rule regulatory organization. The through a protected quotation when the
change that are filed with the Commission is publishing this notice to PBBO is crossed, routable orders may
Commission, and all written solicit comments on the proposed rule instead be routed to protected
communications relating to the change from interested persons. quotations. In order to implement this
proposed rule change between the change, the Exchange proposes to
Commission and any person, other than I. Self-Regulatory Organization’s amend the following rules:
those that may be withheld from the Statement of the Terms of Substance of
the Proposed Rule Change Rule 13—Equities
public in accordance with the
provisions of 5 U.S.C. 552, will be The Exchange proposes to (1) change Market Order
available for Web site viewing and how orders would be processed when Rule 13(a)(1)—Equities provides that
printing in the Commission’s Public the protected best bid (‘‘PBB’’) is higher a Market Order that is eligible for
Reference Room, 100 F Street NE., than the protected best offer (‘‘PBO’’) automatic executions is an unpriced
Washington, DC 20549, on official (the ‘‘PBBO’’) in certain circumstances, order to buy or sell a stated amount of
business days between the hours of and (2) adopt a limit order price a security that is to be traded at the best
10:00 a.m. and 3:00 p.m. Copies of such protection mechanism. The proposed price obtainable without trading
filing also will be available for rule change is available on the through the NBBO. Rule 13(a)(1)(B)(i)—
inspection and copying at the principal Exchange’s Web site at www.nyse.com, Equities provides that when the
office of the Exchange. All comments at the principal office of the Exchange, Exchange is open for continuous
received will be posted without change; and at the Commission’s Public trading, a Market Order will be rejected
the Commission does not edit personal Reference Room. on arrival, or cancelled if resting, if
identifying information from there is no contra-side NBBO or if the
submissions. You should submit only II. Self-Regulatory Organization’s best protected quotations are or become
information that you wish to make Statement of the Purpose of, and crossed.
available publicly. All submissions Statutory Basis for, the Proposed Rule The Exchange proposes to no longer
should refer to File Number SR– Change reject or cancel Market Orders when the
BatsBZX–2016–87 and should be PBBO is crossed. To effectuate this
submitted on or before January 18, 2017. In its filing with the Commission, the
self-regulatory organization included change, the Exchange proposes to delete
For the Commission, by the Division of statements concerning the purpose of, the phrase ‘‘or if the best protected
Trading and Markets, pursuant to delegated
and basis for, the proposed rule change quotations are or become crossed’’ in
authority.42 Rule 13(a)(1)(B)(i)—Equities. As a result
and discussed any comments it received
Eduardo A. Aleman, of this proposed change, if a Market
on the proposed rule change. The text
Assistant Secretary. of those statements may be examined at Order arrives when the PBBO is crossed,
[FR Doc. 2016–31298 Filed 12–27–16; 8:45 am] the places specified in Item IV below. the Exchange would process the Market
BILLING CODE 8011–01–P The Exchange has prepared summaries, Order in the same way as when the
set forth in sections A, B, and C below, NBBO is crossed under the current
of the most significant parts of such rule.6
SECURITIES AND EXCHANGE statements. Routing to Protected Quotations
COMMISSION
A. Self-Regulatory Organization’s The Exchange proposes to amend the
[Release No. 34–79640; File No. SR– Rule 13—Equities to specify
NYSEMKT–2016–117]
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule circumstances when the Exchange
Self-Regulatory Organizations; NYSE Change would make order handling decisions
MKT LLC; Notice of Filing and based on a protected quotation. The
1. Purpose Exchange proposes to make these
Immediate Effectiveness of Proposed
Rule Change To (1) Change How The Exchange proposes to (1) change changes because, in the circumstances
Orders Would Be Processed When the how orders would be processed when described below, the Exchange would
Protected Best Bid (‘‘PBB’’) Is Higher the PBB is higher than the PBO in no longer avail itself of the exception to
Than the Protected Best Offer (‘‘PBO’’) certain circumstances, and (2) adopt a the Order Protection Rule specified in
(The ‘‘PBBO’’) in Certain limit order price protection mechanism. Rule 611(b)(4), and therefore the
Circumstances, and (2) Adopt a Limit Exchange would include protected
Processing of Orders When the PBBO Is
Order Price Protection Mechanism Crossed (Rules 13—Equities, 70— 4 17 CFR 242.611(b)(4). See also Rule 15A—
December 21, 2016. Equities, 76—Equities and 1000— Equities (Order Protection Rule).
Pursuant to Section 19(b)(1) 1 of the Equities) 5 For example, assume if the Exchange has a
displayed bid of $10.00 and another market crosses
Securities Exchange Act of 1934 (the Currently, when the PBB is priced that bid with a protected offer of $9.99. Currently,
sradovich on DSK3GMQ082PROD with NOTICES
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 higher than the PBO in a security (i.e., if the Exchange receives a marketable order to buy,
notice is hereby given that on December the PBBO is crossed), buy and sell
it will trade on the Exchange at prices higher than
12, 2016, NYSE MKT LLC (the $9.99. Once the Exchange no longer avails itself of
orders trade on the Exchange without the exception in Rule 611(b)(4), unless otherwise
42 17
regard to price and without routing, specified in Exchange rules as described in this
CFR 200.30–3(a)(12). proposed rule change, arriving routable interest to
1 15 U.S.C.78s(b)(1).
consistent with the exception to the
buy that is marketable on the Exchange would
2 15 U.S.C. 78a. Order Protection Rule enumerated in instead first route to that protected offer.
3 17 CFR 240.19b–4. Rule 611(b)(4) of Regulation NMS 6 See Rule 13(a)(1)(B)(ii)—Equities.
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![Federal Register / Vol. 81, No. 249 / Wednesday, December 28, 2016 / Notices 95703
C. Self-Regulatory Organization’s Electronic Comments SECURITIES AND EXCHANGE
Statement on Comments on the COMMISSION
Proposed Rule Change Received From • Use the Commission’s Internet
Members, Participants, or Others comment form (http://www.sec.gov/
[Release No. 34–79641; File No. SR–
rules/sro.shtml); or NASDAQ–2016–179]
No written comments were solicited
• Send an email to rule-comments@
or received with respect to the proposed Self-Regulatory Organizations; The
sec.gov. Please include File Number SR–
rule change. NASDAQ Stock Market LLC; Notice of
NYSEMKT–2016–117 on the subject
III. Date of Effectiveness of the line. Filing and Immediate Effectiveness of
Proposed Rule Change and Timing for Proposed Rule Change To Delay the
Commission Action Paper Comments Implementation of the Limit Order
Protection
The Exchange has filed the proposed • Send paper comments in triplicate
rule change pursuant to Section to Brent J. Fields, Secretary, Securities December 21, 2016.
19(b)(3)(A)(iii) of the Act 17 and Rule and Exchange Commission, 100 F Street Pursuant to Section 19(b)(1) of the
19b–4(f)(6) thereunder.18 Because the NE., Washington, DC 20549–1090. Securities Exchange Act of 1934
proposed rule change does not: (i) All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Significantly affect the protection of Number SR–NYSEMKT–2016–117. This notice is hereby given that on December
investors or the public interest; (ii) file number should be included on the 20, 2016, The NASDAQ Stock Market
impose any significant burden on LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
subject line if email is used. To help the
competition; and (iii) become operative with the Securities and Exchange
Commission process and review your
prior to 30 days from the date on which Commission (‘‘SEC’’ or ‘‘Commission’’)
it was filed, or such shorter time as the comments more efficiently, please use the proposed rule change as described
Commission may designate, if only one method. The Commission will in Items I, II, and III, below, which Items
consistent with the protection of post all comments on the Commission’s have been prepared by the Exchange.
investors and the public interest, the Internet Web site (http://www.sec.gov/ The Commission is publishing this
proposed rule change has become rules/sro.shtml). Copies of the notice to solicit comments on the
effective pursuant to Section 19(b)(3)(A) submission, all subsequent proposed rule change from interested
of the Act and Rule 19b–4(f)(6)(iii) amendments, all written statements persons.
thereunder. with respect to the proposed rule
change that are filed with the I. Self-Regulatory Organization’s
A proposed rule change filed under Statement of the Terms of Substance of
Rule 19b–4(f)(6) 19 normally does not Commission, and all written
the Proposed Rule Change
become operative prior to 30 days after communications relating to the
the date of the filing. However, pursuant proposed rule change between the The Exchange proposes to delay the
to Rule 19b4(f)(6)(iii),20 the Commission Commission and any person, other than implementation of the Limit Order
may designate a shorter time if such those that may be withheld from the Protection or ‘‘LOP’’ for members
action is consistent with the protection public in accordance with the accessing the Nasdaq Market Center.
of investors and the public interest. provisions of 5 U.S.C. 552, will be II. Self-Regulatory Organization’s
At any time within 60 days of the available for Web site viewing and Statement of the Purpose of, and
filing of such proposed rule change, the printing in the Commission’s Public Statutory Basis for, the Proposed Rule
Commission summarily may Reference Room, 100 F Street, NE., Change
temporarily suspend such rule change if Washington, DC 20549 on official
In its filing with the Commission, the
it appears to the Commission that such business days between the hours of
Exchange included statements
action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of the
concerning the purpose of and basis for
public interest, for the protection of filing also will be available for
the proposed rule change and discussed
investors, or otherwise in furtherance of inspection and copying at the principal any comments it received on the
the purposes of the Act. If the office of the Exchange. All comments proposed rule change. The text of these
Commission takes such action, the received will be posted without change; statements may be examined at the
Commission shall institute proceedings the Commission does not edit personal places specified in Item IV below. The
under Section 19(b)(2)(B) 21 of the Act to identifying information from Exchange has prepared summaries, set
determine whether the proposed rule submissions. You should submit only forth in sections A, B, and C below, of
change should be approved or information that you wish to make the most significant aspects of such
disapproved. available publicly. All submissions statements.
IV. Solicitation of Comments should refer to File Number SR–
NYSEMKT–2016–117 and should be A. Self-Regulatory Organization’s
Interested persons are invited to Statement of the Purpose of, and
submitted on or before January 18, 2017.
submit written data, views, and Statutory Basis for, the Proposed Rule
For the Commission, by the Division of Change
arguments concerning the foregoing,
Trading and Markets, pursuant to delegated
including whether the proposed rule 1. Purpose
authority.22
change is consistent with the Act.
The purpose of the proposal is to
sradovich on DSK3GMQ082PROD with NOTICES
Comments may be submitted by any of Eduardo A. Aleman,
the following methods: Assistant Secretary. delay the implementation of the
[FR Doc. 2016–31302 Filed 12–27–16; 8:45 am] Exchange’s mechanism to protect
17 15 U.S.C. 78s(b)(3)(A)(iii).
against erroneous Limit Orders, which
BILLING CODE 8011–01–P
18 17 CFR 240.19b–4(f)(6). are entered into the Nasdaq Market
19 17 CFR 240.19b–4(f)(6).
20 17 CFR 240.19b–4(f)(6)(iii). 1 15 U.S.C. 78s(b)(1).
21 15 U.S.C. 78s(b)(2)(B). 22 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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Document Created: 2016-12-28 02:16:25
Document Modified: 2016-12-28 02:16:25
| 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 95699 |
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