81 FR 96076 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Conform to Proposed Amendments to Securities Exchange Act Rule 15c6-1(a) To Shorten the Standard Settlement Cycle From Three Business Days After the Trade Date (“T+3”) to Two Business Days After the Trade Date (“T+2”)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 250 (December 29, 2016)

Page Range		96076-96080
FR Document		2016-31474
Federal Register, Volume 81 Issue 250 (Thursday, December 29, 2016)
[Federal Register Volume 81, Number 250 (Thursday, December 29, 2016)]
[Notices]
[Pages 96076-96080]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-31474]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79659; File No. SR-NYSE-2016-87]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Conform to Proposed 
Amendments to Securities Exchange Act Rule 15c6-1(a) To Shorten the 
Standard Settlement Cycle From Three Business Days After the Trade Date 
(``T+3'') to Two Business Days After the Trade Date (``T+2'')

December 22, 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 15, 2016, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes new Rules 14T, Dealings and SettlementsT 
(Rules 45--299C), 64T, 235T, 236T, 282.65T and 257T, and new Section 
703.02T (part 2) of the Listed Company Manual to conform to proposed 
amendments to Securities Exchange Act Rule 15c6-1(a) to shorten the 
standard settlement cycle from three business days after the trade date 
(``T+3'') to two business days after the trade date (``T+2''). 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.

[[Page 96077]]

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 adopt the following new rules to conform 
to proposed amendments to Securities Exchange Act Rule 15c6-1(a) \4\ to 
shorten the standard settlement cycle from T+3 to T+2:
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    \4\ See 17 CFR 240.15c6-1(a); see also notes 8-9, infra.
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     Rule 14T (Non-Regular Way Settlement Instructions);
     Dealings and SettlementsT (Rules 45-299C);
     Rule 64T (Bonds, Rights and 100-Share-Unit Stocks);
     Rule 235T (Ex-Dividend, Ex-Rights);
     Rule 236T (Ex-Warrants);
     Rule 257T (Deliveries After ``Ex'' Date);
     Rule 282.65T (Failure to Deliver and Liability Notice 
Procedures); and
     Section 703.02T (part 2) of the Listed Company Manual 
(Stock Split/Stock Rights/Stock Dividend Listing Process).
    The proposed new rules would have the same numbering as the current 
rules, but with the modifier ``T'' appended to the rule number. For 
example, Rule 14, governing non-regular way settlement instructions for 
orders, would remain unchanged and continue to apply to non-regular way 
settlements on the Exchange. Proposed Rule 14T would reflect that a 
regular way settlement would be two days and not the current three 
days. As discussed below, because the Exchange would not implement the 
proposed rules until after the final implementation of T+2, the 
Exchange proposes to retain the current versions of each rule on its 
books and not delete it until after the proposed rules are approved. 
The Exchange also proposes to file separate proposed rule changes to 
establish the operative date of the proposed rules and to delete the 
current version of each rule.
Background
    In 1993, the Securities and Exchange Commission (the ``SEC'' or 
``Commission'') adopted Rule 15c6-1(a) \5\ under the Act, which 
established three business days after trade date instead of five 
business days (``T+5''), as the standard trade settlement cycle for 
most securities transactions. The rule became effective in June 
1995.\6\ In November 1994, the Exchange amended its rules to be 
consistent with the T+3 settlement cycle for securities 
transactions.\7\
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    \5\ 17 CFR 240.15c6-1(a).
    \6\ See Securities Exchange Act Release Nos. 33023 (October 6, 
1993), 58 FR 52891 (order adopting Rule 15c6-1) and 34952 (November 
9, 1994), 59 FR 59137 (order changing the effective date from June 
1, 1995, to June 7, 1995).
    \7\ See Securities Exchange Act Release Nos. 35110 (December 16, 
1994), 59 FR 0 (December 23, 1994) (SR-NYSE-94-40) (Notice) and 
35506 (March 17, 1995), 60 FR 15618 (March 24, 1995) (SR-NYSE-94-40) 
(Approval Order).
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    On September 28, 2016, the SEC proposed amendments to Rule 15c6-
1(a) to shorten the standard settlement cycle from T+3 to T+2 on the 
basis that the shorter settlement cycle would reduce the risks that 
arise from the value and number of unsettled securities transactions 
prior to completion of settlement, including credit, market and 
liquidity risk faced by U.S. market participants.\8\ The proposed rule 
amendment was published for comment in the Federal Register on October 
5, 2016.\9\ In light of this action by the SEC, the Exchange proposes 
new rules to reflect ``regular way'' settlement as occurring on 
T+2.\10\
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    \8\ See SEC Press Release 2016-200: ``SEC Proposes Rule 
Amendment to Expedite Process for Settling Securities Transactions'' 
(September 28, 2016).
    \9\ See Securities Exchange Act Release No. 78962 (September 28, 
2016), 81 FR 69240 (October 5, 2016) (File No. S7-22-16) (``SEC 
Proposing Release'').
    \10\ Earlier this year the MSRB also filed a rule change to 
reflect ``regular way'' settlement as occurring on T+2. See 
Securities Exchange Act Release Nos. 77744 (April 29, 2016), 81 FR 
26851 (May 4, 2016) (SR-MSRB-2016-04) (approving proposed amendments 
to MSRB Rules G-12 and G-15 to define regular-way settlement for 
municipal securities transactions as occurring on a two-day 
settlement cycle and technical conforming amendments).
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Proposed Rule Change
    The Exchange proposes the following new rules identified with the 
modifier ``T'' in order to reflect a T+2 settlement cycle. Except for 
changes reflecting the shortened settlement period, the proposed rules 
are the same as their current counterparts.
Rule 14
     Current Rule 14(a)(i) defines non-regular way settlement 
instructions as instructions that allow for settlement other than 
regular way, that is, ``settlement on the third business day following 
trade date for securities other than U.S. Government Securities''. The 
Exchange proposes a new Rule 14T that replaces ``third'' business day 
with ``second.''
     Current Dealings and Settlements (Rules 45-299C) defines 
regular way as ``due on the third business day following the day of the 
contract.'' The Exchange proposes a new version that changes ``third'' 
business day to ``second'';
     Current Rule 64(a) defines ``regular way'' as ``for 
delivery on the third business day following the day of the contract.'' 
The Exchange proposes a new Rule 64T(a) that changes ``third'' business 
day to ``second.'' Current Rule 64(a)(ii) provides that on the second 
and third business days preceding the final day for subscription, bids 
and offers in rights to subscribe shall be made only ``next day.'' To 
conform with the move to a T+2 settlement cycle, proposed Rule 
64T(a)(ii) would not contain a clause referring to the third business 
day preceding the final day for subscription because the third business 
day preceding the final day for subscription in a T+2 settlement cycle 
would simply be a regular way settlement. Finally, current Rule 64(c) 
requires ``seller's option'' trades, defined as trades for delivery 
between two and 60 business days, to be reported to the tape only in 
calendar day. Proposed Rule 64T(c) would define ``seller's option'' 
trades as trades for delivery between three and 60 business days to 
reflect the shortened settlement period. Further, the final sentence of 
current Rule 64 provides that the settlement date of a ``seller's 
option'' transaction printed as calendar days cannot coincide with the 
normal three business day ``regular way'' settlement. In proposed Rule 
64T, the Exchange would change the reference to ``regular way'' 
settlements to two business day.\11\
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    \11\ The Exchange also proposes to make a non-substantive change 
and remove the bold from the ``(a)'' in proposed Rule 64T(a).
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     Current Rule 235 provides that transactions in stocks, 
except those made for ``cash'' as prescribed in Rule 14, shall be ex-
dividend or ex-rights on the second business day preceding the record 
date fixed by the corporation or the date of the closing of transfer 
books. The Exchange proposes to adopt proposed Rule 235T that would 
delete the word ``second'' so the reference

[[Page 96078]]

would be to the ``business day'' preceding the record date. The current 
Rule further provides that if the record date or closing of transfer 
books occurs upon a day other than a business day, Rule 235 shall apply 
for the third preceding business day. The Exchange proposes to change 
``third preceding business day'' to ``second preceding business day'' 
in proposed Rule 235T;
     Current Rule 236 prescribes that ex-warrant trading will 
begin on the second business day preceding the date of expiration of 
the warrants, except that when expiration occurs on a non-business day, 
in which case it will begin on the third business day preceding date of 
expiration. The Exchange proposes to adopt proposed Rule 236T and 
change the warrant period to the business day preceding expiration of 
the warrants instead of the second business day. Under the proposed 
Rule, when warrant expiration occurs on other than a business day, the 
ex-warrant period will begin on the second business day preceding the 
expiration date instead of on the third business day;
     Current Rule 257 prescribes the time frame for delivery of 
dividends or rights for securities sold before the ``ex'' date but 
delivered after the record date. The current time frame is within three 
days after the record date. Consistent with the T+2 initiative, 
proposed Rule 257T would shorten the time frame to two days;
     Subdivision (1)(A) of Supplementary Material .65 to 
current Rule 282 sets forth the fail-to-deliver and liability notice 
procedures where a securities contract is for warrants, rights, 
convertible securities or other securities which have been called for 
redemption; are due to expire by their terms; are the subject of a 
tender or exchange offer; or are subject to other expiring events such 
as a record date for the underlying security and the last day on which 
the securities must be delivered or surrendered is the settlement date 
of the contract or later.
    Under current Rule 282.65(1)(A), the receiving member organization 
delivers a liability notice to the delivering member organization as an 
alternative to the close-out procedures set forth in the Rule. The 
liability notice sets a cutoff date for the delivery or surrender of 
the securities and provides notice to the delivering member 
organization of the liability attendant to its failure to deliver or 
surrender the securities in time. If the delivering member organization 
delivers or surrenders the securities in response to the liability 
notice, it has met its delivery obligation. If the delivering member 
organization fails to deliver or surrender the securities on the 
expiration date, it will be liable for any damages that may accrue 
thereby.
    Current Rule 282.65(1)(A) further provides that when the parties to 
a contract are both participants in a Qualified Clearing Agency that 
has an automated service for notifying a failing party of the liability 
that will be attendant to a failure to deliver, the transmission of the 
liability notice must be accomplished through such automated 
notification service. When the parties to a contract are not both 
participants in a Qualified Clearing Agency \12\ that has an automated 
service for notifying a failing party of the liability that will be 
attendant to a failure to deliver, such notice must be issued using 
written or comparable electronic media having immediate receipt 
capabilities no later than one business day prior to the latest time 
and the date of the offer or other event in order to obtain the 
protection provided by this Rule.\13\
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    \12\ Rule 180 governs failure to deliver and provides in part 
that ``[w]hen the parties to a contract are both participants in a 
registered clearing agency which has an automated service for 
notifying a failing party of the liability that will be attendant to 
a failure to deliver and that contract was to be settled through the 
facilities of said registered clearing agency, the transmission of 
the liability notification must be accomplished through use of said 
automated notification service.'' Rule 180 does not address the 
transmission of the liability notification for parties to a contract 
that are not both participants in a registered clearing agency, 
which is governed by Rule 282.65.
    \13\ The one-day time frame also appears in comparable 
provisions of other SROs. See, e.g., FINRA Rule 11810(j)(1)(A); NSCC 
Rules & Procedures, Procedure X (Execution of Buy-Ins) (Effective 
August 10, 2016); and Nasdaq Rule IM-11810 (Buying-in).
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    Given the proposed shortened settlement cycle, and in order to 
address concerns that the requirement for the delivering member 
organization to deliver a liability notice to the receiving member no 
later than one business day prior to the latest time and the date of 
the offer or other event in order to obtain the protection provided by 
the Rule may no longer be appropriate in a T+2 environment,\14\ the 
Exchange proposes to amend Rule 282.65(1)(A) in situations where both 
parties to a contract are not participants of a registered clearing 
agency with an automated notification service by extending the time 
frame for delivery of the liability notice. Rule 282.65(1)(A) would 
accordingly be amended to provide that in such cases, the receiving 
member organization must send the liability notice to the delivering 
member organization as soon as practicable but not later than two hours 
prior to the cutoff time set forth in the instructions on a specific 
offer or other event to obtain the protection provided by the Rule. The 
proposed change would be the only change to the text of current 
Supplementary Material .65.
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    \14\ See, e.g., Letter from Thomas F. Price, Managing Director, 
Operations, Technology & BCP, Securities Industry and Financial 
Markets Association, to Marcia E. Asquith, Corporate Secretary, 
FINRA, dated April 4, 2016 (``SIFMA'') (April 4, 2016), noting in 
connection with FINRA Rule 11810(j), the comparable provision to 
Rule 282.65(1)(A), that the ``industry has identified a number of 
situations where one-day notice may no longer be appropriate in a 
T+2 environment, including (1) where the delivery obligation is 
transferred to another party as a result of continuous net 
settlement, (2) settlements outside of National Securities Clearing 
Corporation (the ``NSCC'') and (3) settlements where the third party 
is not a[n NYSE] member.''
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     Current Section 703.02 (part 2) of the Listed Company 
Manual (Stock Split/Stock Rights/Stock Dividend Listing Process) 
provides that a distribution of less than 25% of a company's common 
stock is traded ``ex'' (without the distribution) on and after the 
second business day prior to the record date based on the Exchange's 
three-day delivery rule, pursuant to which contracts made on the 
Exchange for the purchase and sale of securities are settled by 
delivery on the third business day after the contract is made, unless 
other terms of settlement specify otherwise. Given the change to a two 
day delivery rule, the Exchange's proposed Section 703.02 would change 
the first sentence if the rule to reflect that a distribution of less 
than 25% of a company's common stock is traded ``ex'' on and after the 
business day prior to the record date. The second sentence in the 
proposed Rule would refer to the Exchange's two-day delivery rule 
pursuant to which contracts made on the Exchange for the purchase and 
sale of securities are settled by delivery on the second business day 
after the contract is made.
Operative Date Preambles
    As noted above, because the Exchange would not implement the 
proposed rules until after the final implementation of T+2, the 
Exchange proposes to retain the current versions of each rule on its 
books and not delete them until after the proposed rules are approved. 
The Exchange also proposes to file separate proposed rule changes as 
necessary to establish the operative date of the proposed rules and to 
delete the current version of each rule.
    To reduce the potential for confusion regarding which version of a 
given rule governs, the Exchange proposes to add a preamble to each 
current rule providing that: (1) the rule will remain operative until 
the Exchange files separate proposed rule changes as necessary to 
establish the operative date

[[Page 96079]]

of the revised rule, to delete the current rule and proposed preamble, 
and to remove the preamble text from the revised rule; and (2) in 
addition to filing the necessary proposed rule changes, the Exchange 
will announce via Information Memo the operative date of the deletion 
of the current rule and implementation of the proposed rule designated 
with a T.
    The Exchange also proposes to add a preamble to each proposed rule 
that would provide that: (1) The Exchange will file a separate rule 
change to establish the operative date of the proposed rule, delete the 
current version and the proposed preamble, and remove the preamble text 
from the revised rule; and (2) until such time, the current version of 
the rule will remain operative and that, in addition to filing the 
necessary proposed rule changes, the Exchange will announce via 
Information Memo the implementation of the proposed rule and the 
operative date of the deletion of the current rule.
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, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes that the proposed rule change 
supports the industry-led initiative to shorten the settlement cycle to 
two business days. Moreover, the proposed rule change is consistent 
with the SEC's proposed amendment to SEA Rule 15c6-1(a) to require 
standard settlement no later than T+2. The Exchange believes that the 
proposed rule change will provide the regulatory certainty to 
facilitate the industry-led move to a T+2 settlement cycle. Further, 
the Exchange believes that, by shortening the time period for 
settlement of most securities transactions, the proposed rule change 
would protect investors and the public interest by reducing the number 
of unsettled trades in the clearance and settlement system at any given 
time, thereby reducing the risk inherent in settling securities 
transactions to clearing corporations, their members and public 
investors. The Exchange also believes that adding a preamble to each 
current rule and to each proposed rule clarifying the operative dates 
of the respective versions 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, reducing 
potential confusion, and making the Exchange's rules easier to 
navigate.

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 is not 
designed to address any competitive issue but rather facilitate the 
industry's transition to a T+2 regular-way settlement cycle. The 
Exchange also believes that the proposed rule change will serve to 
promote clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection. Moreover, the 
proposed rule changes are consistent with the SEC's proposed amendment 
to SEA Rule 15c6-1(a) to require standard settlement no later than T+2. 
Accordingly, the Exchange believes that the proposed changes do not 
impose any burdens on the industry in addition to those necessary to 
implement amendments to SEA Rule 15c6-1(a) as described and enumerated 
in the SEC Proposing Release.\17\
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    \17\ See note 9, supra.
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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

    Within 45 days of the date of publication of this notice in the 
Federal Register or such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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- NYSE-2016-87 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-NYSE-2016-87. 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-NYSE-2016-87, and should be 
submitted on or before January 19, 2017.


[[Page 96080]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-31474 Filed 12-28-16; 8:45 am]
 BILLING CODE 8011-01-P
96076 Federal Register / Vol. 81, No. 250 / Thursday, December 29, 2016 / Notices

C. Self-Regulatory Organization’s under Section 19(b)(2)(B) 24 of the Act to be submitted on or before January 19,
Statement on Comments on the determine whether the proposed rule 2017.
Proposed Rule Change Received From change should be approved or For the Commission, by the Division of
Members, Participants, or Others disapproved. Trading and Markets, pursuant to delegated
Written comments were neither authority.25
IV. Solicitation of Comments
solicited nor received. Robert W. Errett,
Interested persons are invited to Deputy Secretary.
III. Date of Effectiveness of the submit written data, views and
[FR Doc. 2016–31492 Filed 12–28–16; 8:45 am]
Proposed Rule Change and Timing for arguments concerning the foregoing,
BILLING CODE 8011–01–P
Commission Action including whether the proposed rule
The Exchange has designated this rule change is consistent with the Act.
filing as non-controversial under Comments may be submitted by any of SECURITIES AND EXCHANGE
Section 19(b)(3)(A) 19 of the Act and the following methods: COMMISSION
Rule 19b–4(f)(6) 20 thereunder. Because Electronic Comments
the proposed rule change does not: (i) [Release No. 34–79659; File No. SR–NYSE–
Significantly affect the protection of • Use the Commission’s Internet 2016–87]
investors or the public interest; (ii) comment form (http://www.sec.gov/
rules/sro.shtml); or Self-Regulatory Organizations; New
impose any significant burden on
competition; and (iii) become operative • Send an email to rule-comments@ York Stock Exchange LLC; Notice of
sec.gov. Please include File Number SR– Filing of Proposed Rule Change To
for 30 days from the date on which it
IEX–2016–22 on the subject line. Conform to Proposed Amendments to
was filed, or such shorter time as the
Securities Exchange Act Rule 15c6–
Commission may designate, it has Paper Comments 1(a) To Shorten the Standard
become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b– • Send paper comments in triplicate Settlement Cycle From Three Business
to Brent J. Fields, Secretary, Securities Days After the Trade Date (‘‘T+3’’) to
4(f)(6) thereunder.
and Exchange Commission, 100 F Street Two Business Days After the Trade
A proposed rule change filed under
NE., Washington, DC 20549–1090. Date (‘‘T+2’’)
Rule 19b–4(f)(6) 21 normally does not
become operative prior to 30 days after All submissions should refer to File December 22, 2016.
the date of the filing. However, pursuant Number SR–IEX–2016–22. This file Pursuant to Section 19(b)(1) 1 of the
to Rule 19b–4(f)(6)(iii),22 the number should be included in the Securities Exchange Act of 1934 (the
Commission may designate a shorter subject line if email is used. To help the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
time if such action is consistent with the Commission process and review your notice is hereby given that, on December
protection of investors and the public comments more efficiently, please use 15, 2016, New York Stock Exchange
interest. The Exchange has asked the only one method. The Commission will LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
Commission to waive the 30-day post all comments on the Commission’s with the Securities and Exchange
operative delay as the proposed Internet Web site (http://www.sec.gov/ Commission (the ‘‘Commission’’) the
implementation of the two-year rules/sro.shtml). Copies of the proposed rule change as described in
retention of jurisdiction is consistent submission, all subsequent Items I and II below, which Items have
with the rules of other SROs and will amendments, all written statements been prepared by the self-regulatory
enable the Exchange to immediately with respect to the proposed rule organization. The Commission is
retain jurisdiction over a register change that are filed with the publishing this notice to solicit
representative who may have been Commission, and all written comments on the proposed rule change
engaged in unlawful activity. Based on communications relating to the from interested persons.
the foregoing, the Commission believes proposed rule change between the
that it is consistent with the protection Commission and any person, other than I. Self-Regulatory Organization’s
of investors and the public interest to those that may be withheld from the Statement of the Terms of Substance of
waive the 30-day operative date so that public in accordance with the the Proposed Rule Change
the proposal may take effect upon provisions of 5 U.S.C. 552, will be The Exchange proposes new Rules
filing.23 available for Web site viewing and 14T, Dealings and SettlementsT (Rules
At any time within 60 days of the printing in the Commission’s Public 45—299C), 64T, 235T, 236T, 282.65T
filing of the proposed rule change, the Reference Section, 100 F Street NE., and 257T, and new Section 703.02T
Commission summarily may Washington, DC 20549, on official (part 2) of the Listed Company Manual
temporarily suspend such rule change if business days between the hours of to conform to proposed amendments to
it appears to the Commission that such 10:00 a.m. and 3:00 p.m. Copies of the Securities Exchange Act Rule 15c6–1(a)
action is necessary or appropriate in the filing will also be available for to shorten the standard settlement cycle
public interest, for the protection of inspection and copying at the IEX’s from three business days after the trade
investors, or otherwise in furtherance of principal office and on its Internet Web date (‘‘T+3’’) to two business days after
the purposes of the Act. If the site at www.iextrading.com. All the trade date (‘‘T+2’’). The proposed
Commission takes such action, the comments received will be posted rule change is available on the
without change; the Commission does
asabaliauskas on DSK3SPTVN1PROD with NOTICES

Commission shall institute proceedings Exchange’s Web site at www.nyse.com,
not edit personal identifying at the principal office of the Exchange,
19 15 U.S.C. 78s(b)(3)(A). information from submissions. You and at the Commission’s Public
20 17 CFR 240.19b–4(f)(6). should submit only information that Reference Room.
21 17 CFR 240.19b–4(f)(6).
you wish to make available publicly. All
22 17 CFR 240.19b–4(f)(6)(iii).
submissions should refer to File 25 17 CFR 200.30–3(a)(12).
23 For purposes only of waiving the 30-day
Number SR–IEX–2016–22 and should 1 15 U.S.C.78s(b)(1).
operative delay, the Commission has considered the
2 15 U.S.C. 78a.
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f). 24 15 U.S.C. 78s(b)(2)(B). 3 17 CFR 240.19b–4.

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Federal Register / Vol. 81, No. 250 / Thursday, December 29, 2016 / Notices 96079

of the revised rule, to delete the current settling securities transactions to (B) institute proceedings to determine
rule and proposed preamble, and to clearing corporations, their members whether the proposed rule change
remove the preamble text from the and public investors. The Exchange also should be disapproved.
revised rule; and (2) in addition to filing believes that adding a preamble to each
the necessary proposed rule changes, current rule and to each proposed rule IV. Solicitation of Comments
the Exchange will announce via clarifying the operative dates of the Interested persons are invited to
Information Memo the operative date of respective versions would remove submit written data, views, and
the deletion of the current rule and impediments to and perfect the arguments concerning the foregoing,
implementation of the proposed rule mechanism of a free and open market
including whether the proposed rule
designated with a T. and a national market system by adding
The Exchange also proposes to add a change is consistent with the Act.
clarity and transparency to the
preamble to each proposed rule that Comments may be submitted by any of
Exchange’s rules, reducing potential
would provide that: (1) The Exchange the following methods:
confusion, and making the Exchange’s
will file a separate rule change to rules easier to navigate. Electronic Comments
establish the operative date of the
proposed rule, delete the current B. Self-Regulatory Organization’s • Use the Commission’s Internet
version and the proposed preamble, and Statement on Burden on Competition comment form (http://www.sec.gov/
remove the preamble text from the The Exchange does not believe that rules/sro.shtml); or
revised rule; and (2) until such time, the the proposed rule change will impose • Send an email to rule-comments@
current version of the rule will remain any burden on competition that is not sec.gov. Please include File Number SR-
operative and that, in addition to filing necessary or appropriate in furtherance
the necessary proposed rule changes, NYSE–2016–87 on the subject line.
of the purposes of the Act. The
the Exchange will announce via proposed change is not designed to Paper Comments
Information Memo the implementation address any competitive issue but rather
of the proposed rule and the operative facilitate the industry’s transition to a • Send paper comments in triplicate
date of the deletion of the current rule. T+2 regular-way settlement cycle. The to Brent J. Fields, Secretary, Securities
Exchange also believes that the and Exchange Commission, 100 F Street
2. Statutory Basis
proposed rule change will serve to NE., Washington, DC 20549–1090.
The Exchange believes that the
promote clarity and consistency, All submissions should refer to File
proposed rule change is consistent with
thereby reducing burdens on the Number SR–NYSE–2016–87. This file
Section 6(b) of the Act,15 in general, and
marketplace and facilitating investor number should be included on the
furthers the objectives of Section 6(b)(5)
of the Act,16 in particular, because it is protection. Moreover, the proposed rule subject line if email is used. To help the
designed to prevent fraudulent and changes are consistent with the SEC’s Commission process and review your
manipulative acts and practices, proposed amendment to SEA Rule comments more efficiently, please use
promote just and equitable principles of 15c6–1(a) to require standard settlement only one method. The Commission will
trade, to foster cooperation and no later than T+2. Accordingly, the post all comments on the Commission’s
coordination with persons engaged in Exchange believes that the proposed Internet Web site (http://www.sec.gov/
regulating, clearing, settling, processing changes do not impose any burdens on rules/sro.shtml). Copies of the
information with respect to, and remove the industry in addition to those submission, all subsequent
impediments to and perfect the necessary to implement amendments to
amendments, all written statements
mechanism of a free and open market SEA Rule 15c6–1(a) as described and
with respect to the proposed rule
and a national market system, and, in enumerated in the SEC Proposing
change that are filed with the
general, to protect investors and the Release.17
Commission, and all written
public interest. C. Self-Regulatory Organization’s communications relating to the
In particular, the Exchange believes Statement on Comments on the proposed rule change between the
that the proposed rule change supports Proposed Rule Change Received From Commission and any person, other than
the industry-led initiative to shorten the Members, Participants, or Others those that may be withheld from the
settlement cycle to two business days. public in accordance with the
Moreover, the proposed rule change is No written comments were solicited
or received with respect to the proposed provisions of 5 U.S.C. 552, will be
consistent with the SEC’s proposed available for Web site viewing and
amendment to SEA Rule 15c6–1(a) to rule change.
printing in the Commission’s Public
require standard settlement no later III. Date of Effectiveness of the Reference Room, 100 F Street NE.,
than T+2. The Exchange believes that Proposed Rule Change and Timing for Washington, DC 20549, on official
the proposed rule change will provide Commission Action business days between the hours of
the regulatory certainty to facilitate the 10:00 a.m. and 3:00 p.m. Copies of the
industry-led move to a T+2 settlement Within 45 days of the date of
publication of this notice in the Federal filing also will be available for
cycle. Further, the Exchange believes inspection and copying at the principal
that, by shortening the time period for Register or such longer period up to 90
days (i) as the Commission may office of the Exchange. All comments
settlement of most securities
designate if it finds such longer period received will be posted without change;
asabaliauskas on DSK3SPTVN1PROD with NOTICES

transactions, the proposed rule change
to be appropriate and publishes its the Commission does not edit personal
would protect investors and the public
reasons for so finding or (ii) as to which identifying information from
interest by reducing the number of
the self-regulatory organization submissions. You should submit only
unsettled trades in the clearance and
settlement system at any given time, consents, the Commission will: information that you wish to make
thereby reducing the risk inherent in (A) by order approve or disapprove available publicly. All submissions
the proposed rule change, or should refer to File Number SR–NYSE–
15 15 U.S.C. 78f(b). 2016–87, and should be submitted on or
16 15 U.S.C. 78f(b)(5). 17 See note 9, supra. before January 19, 2017.

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96080 Federal Register / Vol. 81, No. 250 / Thursday, December 29, 2016 / Notices

For the Commission, by the Division of proposed rule change to November 24, (‘‘Price List’’) and the NYSE Amex
Trading and Markets, pursuant to delegated 2016.5 Options Fee Schedule (‘‘Fee Schedule’’)
authority.18 On November 2, 2016, the Exchange related to these co-location services.
Eduardo A. Aleman, filed Amendment No. 1 to the proposed This Amendment No. 2 10 supersedes
Assistant Secretary. rule change.6 On November 29, 2016, the original filing and Amendment 1 in
[FR Doc. 2016–31474 Filed 12–28–16; 8:45 am] the Commission instituted proceedings their entirety.11
BILLING CODE 8011–01–P to determine whether to approve or The proposed change is available on
disapprove the proposed rule change, as the Exchange’s Web site at
modified by Amendment No. 1.7 In www.nyse.com, at the principal office of
SECURITIES AND EXCHANGE response to the Order Instituting the Exchange, and at the Commission’s
COMMISSION Proceedings, the Commission received Public Reference Room.
[Release No. 34–79672; File No. SR–
additional comments letters regarding
the proposed rule change.8 II. Self-Regulatory Organization’s
NYSEMKT–2016–63]
On December 9, 2016, the Exchange Statement of the Purpose of, and
Self-Regulatory Organizations; NYSE filed Amendment No. 2 to the proposed Statutory Basis for, the Proposed Rule
MKT LLC; Notice of Filing of rule change as described in Items I and Change
Amendment Nos. 2 and 3 to Proposed II below, which Items have been
In its filing with the Commission, the
Rule Change Amending the Co- prepared by Exchange. On December 13,
self-regulatory organization included
Location Services Offered by the 2016 the Exchange filed Amendment
statements concerning the purpose of,
Exchange To Add Certain Access and No. 3 to the proposed rule change.9 The
and basis for, the proposed rule change
Connectivity Fees Commission is publishing this notice to
and discussed any comments it received
solicit comments on Amendment Nos. 2
December 22, 2016. and 3 to the proposed rule change from on the proposed rule change. The text
On August 16, 2016, NYSE MKT LLC interested persons. of those statements may be examined at
(the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed the places specified in Item IV below.
with the Securities and Exchange I. Self-Regulatory Organization’s The Exchange has prepared summaries,
Commission (‘‘Commission’’), pursuant Statement of the Terms of Substance of set forth in sections A, B, and C below,
to Section 19(b)(1) of the Securities the Proposed Amendments of the most significant parts of such
Exchange Act of 1934 (‘‘Act’’) 1 and Rule The Exchange proposes to amend the statements.
19b-4 thereunder,2 a proposed rule co-location services offered by the
change to amend the co-location Exchange to establish fees relating to 10 See supra note 9, noting that Amendment No.

services offered by the Exchange to: (1) Users’ access to third party trading and 2 was modified in part by Amendment No. 3.
Accordingly, the Commission notes that
Provide additional information execution services; connectivity to third Amendment Nos. 2 and 3 together supersede the
regarding the access to various trading party data feeds and testing and original filing, as modified by Amendment No. 1,
and execution services; connectivity to certification feeds; access to clearing; in its entirety.
market data feeds and testing and and other services. In addition, this 11 The Securities and Exchange Commission

proposed rule change reflects changes to (‘‘Commission’’) has issued an order instituting
certification feeds; connectivity to Third proceedings to determine whether to approve or
Party Systems; and connectivity to the NYSE MKT Equities Price List disapprove the proposed rule change, as modified
DTCC provided to Users using data by amendments 1 and 2. See Securities Exchange
center local area networks; and (2) 5 See Securities Exchange Act Release No. 34– Act Release No. 79378 (November 22, 2016), 81 FR
78968 (September 28, 2016), 81 FR 68493. 86050 (November 29, 2016) (SR–NYSEMKT–2016–
establish fees relating to a User’s access 6 Amendment No. 1 is available on the 63) (the ‘‘November 22 Order’’). In its filing, as
to various trading and execution Commission’s Web site at https://www.sec.gov/ amended by amendment 1, the Exchange proposed
services; connectivity to market data comments/sr-nysemkt-2016-63/nysemkt201663- adding to the Fee Schedules (a) a more detailed
feeds and testing and certification feeds; 1.pdf. description of the connectivity to certain market
7 See Securities Exchange Act Release 34–79378 data products (the ‘‘Included Data Products’’) that
connectivity to DTCC; and other Users receive with connections to the local area
(November 22, 2016), 81 FR 86050.
services. The proposed rule change was 8 See letter to Brent J. Fields, Commission, from networks available in the data center; and (b)
published for comment in the Federal Melissa MacGregor, Managing Director and connectivity fees for connecting to other market
Register on August 26, 2016.3 The Associate General Counsel, SIFMA, dated December data products of the Exchange and its affiliates,
New York Stock Exchange LLC and NYSE Arca, Inc.
Commission received no comments in 12, 2016; letter to Brent J. Fields, Commission, from
(the ‘‘Premium NYSE Data Products’’). In the
response to the proposed rule change.4 Joe Wald, Chief Executive Officer, Clearpool Group,
dated December 16, 2016; letter to Brent J. Fields, November 22 Order, the Commission cites language
On October 4, 2016, the Commission Secretary, Commission, from John Ramsay, Chief from the proposed rule change:
extended the time period within which Market Policy Officer, Investors Exchange LLC the Exchange also stated that the expectation of
to approve the proposed rule change, (IEX), dated December 21, 2016. All comments co-location was that normally Users would expect
received by the Commission on the proposed rule reduced latencies in . . . receiving market data from
disapprove the proposed rule change, or change are available on the Commission’s Web site the Exchange by being colocated. Therefore, as the
institute proceedings to determine at: https://www.sec.gov/comments/sr-nysemkt- Exchange states in Amendment No. 2, both
whether to approve or disapprove the 2016-63/nysemkt201663.shtml. Included Data Products and Premium NYSE Data
The Commission notes that it received an Products are ‘directly related to the purpose of co-
18 17 additional letter on the NYSE Companion Filing. location.’
CFR 200.30–3(a)(12).
1 15 See letter to Brent J. Fields, Commission, from Id., at 86053. It goes on to say that, if Included
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Adam C. Cooper, Senior Managing Director and Data Products and Premium NYSE Data Products
Chief Legal Officer, Citadel Securities, dated are ‘‘integral to co-located Users for trading on the
3 See Securities Exchange Act Release No. 34–
asabaliauskas on DSK3SPTVN1PROD with NOTICES

December 12, 2016. All comments received by the Exchange,’’ it was questionable whether obtaining
78629 (August 22, 2016), 81 FR 58992. Commission on the NYSE Companion Filing are the information from another source is a viable
4 The Commission notes that it did receive one
available on the Commission’s Web site at: https:// alternative. Id. The Exchange disagrees with the
comment letter on a related filing, NYSE–2016–45 www.sec.gov/comments/sr-nyse-2016-45/ Commission’s description of Included Data
(the ‘‘NYSE Companion Filing’’), which is equally nyse201645.shtml. Products and Premium NYSE Data Products as
relevant to this filing. See letter to Brent J. Fields, 9 The Commission notes that the Exhibit 5 filed ‘‘integral’’ to Users for trading on the Exchange.
Secretary, Commission, from John Ramsay, Chief with Amendment No. 2 contained erroneous rule Being related to the purpose of co-location is not
Market Policy Officer, Investors Exchange LLC text and therefore was corrected in Amendment No. the same as being integral for trading. A User is not
(IEX), dated September 9, 2016. 3. Amendment Nos. 2 and 3 are available at https:// required to receive either Included Data Products or
On September 23, 2016, the NYSE submitted a www.sec.gov/comments/sr-nysemkt-2016-63/ Premium NYSE Data Products in order to trade on
response to the IEX letter. nysemkt201663-3.pdf. the Exchange.

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Document Created: 2016-12-29 01:59:11
Document Modified: 2016-12-29 01:59:11
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 96076