81 FR 96532 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change to Amend the Supplementary Material to ISE Rule 1901
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 251 (December 30, 2016)
Federal Register Volume 81, Issue 251 (December 30, 2016)
| Page Range | 96532-96534 | |
| FR Document | 2016-31678 |
[Federal Register Volume 81, Number 251 (Friday, December 30, 2016)] [Notices] [Pages 96532-96534] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-31678] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79686; File No. SR-ISE-2016-31] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change to Amend the Supplementary Material to ISE Rule 1901 December 23, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on December 22, 2016, the International Securities Exchange, LLC (``ISE'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. 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\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Supplementary Material to ISE Rule 1901, titled ``Order Protection'' in connection with a system migration to Nasdaq INET technology. The text of the proposed rule change is available on the Exchange's Web site at www.ise.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 Exchange 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 these 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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this rule change is to amend the Supplementary Material to ISE Rule 1901, titled ``Order Protection'' to reflect the ISE, ISE Gemini, LLC and ISE Mercury, LLC technology migration to a Nasdaq, Inc. (``Nasdaq'') supported architecture. INET is the proprietary core technology utilized across Nasdaq's global markets and utilized on The NASDAQ Options Market LLC (``NOM''), NASDAQ PHLX LLC (``Phlx'') and NASDAQ BX, Inc. (``BX'') (collectively, ``Nasdaq Exchanges''). The migration of ISE to the Nasdaq INET architecture would result in higher performance, scalability, and more robust architecture. With this system migration, the Exchange intends to adopt certain trading functionality currently utilized at Nasdaq Exchanges. The functionality being adopted is described in this filing. Generally With the re-platform, the Exchange will now be built on the Nasdaq INET architecture, which allows certain trading system functionality to be performed in parallel. The Exchange believes that this architecture change will improve the member experience by reducing overall latency compared to the current ISE, ISE Gemini, LLC and ISE Mercury, LLC system because of the manner in which the system is segregated into component parts to handle processing. [[Page 96533]] Trading Halts Pursuant to Supplementary Material .02 to Rule 1901, when the automatic execution of an incoming order would result in an impermissible trade-through, such order is exposed at the current national best bid or offer to all members for a time period established by the Exchange not to exceed one (1) second.\3\ The Exchange proposes to amend Supplementary Material .02 to Rule 1901 to provide that if a trading halt is initiated during this exposure period, the exposure period will be terminated without execution. Today, when a trading halt is triggered during the auction process described above, ISE terminates the exposure period and executes eligible interest. The proposed treatment of trading halts is based on Phlx Rule 1047(c), which provides that in the event the exchange halts trading, all trading in the affected option shall be halted. This is interpreted to restrict executions after a halt unless there is a specific rule specifying that such trades should take place. Halting the exposure period without execution is a change from current ISE behavior. However, the Exchange believes participants prefer certainty in regard to how their interest will be handled in the event of a trading halt and prefer consistency of behavior across market centers. --------------------------------------------------------------------------- \3\ During the exposure period, Exchange Members may enter responses up to the size of the order being exposed in the regular trading increment applicable to the option. --------------------------------------------------------------------------- Implementation The Exchange intends to begin implementation of the proposed rule change in tandem with a technology migration to Nasdaq INET architecture. The migration will be on a symbol by symbol basis, and the Exchange will issue a notice to provide Members with notification of the symbols that will migrate and the relevant dates. With respect to the amendment to Supplementary Material .02 to Rule 1901, the rule change impact not only ISE, but also ISE Gemini, LLC and ISE Mercury, LLC because Chapter 19 is incorporated by reference into those rulebooks. The Exchange proposes that the implementation of this rule change into each rulebook occur as specified herein. ISE rule changes will be implemented in Q2 2017 on a symbol by symbol basis, as noted above. ISE Gemini, LLC rule changes will be implemented in Q1 2017 on a symbol by symbol basis. ISE Mercury, LLC rule changes will be implemented in Q3 2017 on a symbol by symbol basis. The Exchange will add the following rule text to make clear the implementation date in each rulebook: ``The amended rule text will be implemented on a symbol by symbol basis for ISE Gemini, LLC in Q1 2017, for ISE in Q2 2017 and for ISE Mercury, LLC in Q3 2017, the specific dates will be announced in a separate notice.'' 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\4\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\5\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest for the reasons stated below. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Trading Halts The Exchange's proposal to amend Supplementary Material .02 to Rule 1901 to add a new provision to memorialize the impact of a trading halt on the exposure period is consistent with the Act because halting the exposure period without execution provides certainty to market participants with respect to how their interest will be handled in the event of a trading halt. This method will also provide consistency of behavior across market centers. Memorializing this behavior will increase transparency of the operation of the Exchange for the benefit of Members and investors. 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 not necessary or appropriate in furtherance of the purposes of the Act. As explained above, the Exchange is re-platforming it's trading system onto the Nasdaq INET architecture, and is making certain other changes to its trading functionality in connection with this migration. Amending the Supplementary Material .02 to Rule 1901 will not impact the intense competition that exists in the options market. In fact, the Exchange believes that this proposal will provide clarity as to the manner in which a trading halt impacts exposure periods, thereby providing certainty to all market participants. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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 within 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 such 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-ISE-2016-31 on the subject line. Paper Comments: Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2016-31. 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 [[Page 96534]] 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-ISE-2016-31 and should be submitted on or before January 20, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\6\ --------------------------------------------------------------------------- \6\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-31678 Filed 12-29-16; 8:45 am] BILLING CODE 8011-01-P
![96532 Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
C. Self-Regulatory Organization’s Commission and any person, other than connection with a system migration to
Statement on Comments on the those that may be withheld from the Nasdaq INET technology.
Proposed Rule Change Received From public in accordance with the The text of the proposed rule change
Members, Participants, or Others provisions of 5 U.S.C. 552, will be is available on the Exchange’s Web site
Written comments were neither available for Web site viewing and at www.ise.com, at the principal office
solicited nor received. printing in the Commission’s Public of the Exchange, and at the
Reference Room, 100 F Street NE., Commission’s Public Reference Room.
III. Date of Effectiveness of the Washington, DC 20549 on official
Proposed Rule Change and Timing for business days between the hours of II. Self-Regulatory Organization’s
Commission Action 10:00 a.m. and 3:00 p.m. Copies of such Statement of the Purpose of, and
The foregoing rule change has become filing also will be available for Statutory Basis for, the Proposed Rule
effective pursuant to Section 19(b)(3)(A) inspection and copying at the principal Change
of the Act 8 and paragraph (f)(2) of Rule office of FINRA. All comments received
In its filing with the Commission, the
19b–4 thereunder.9 At any time within will be posted without change; the
Exchange included statements
60 days of the filing of the proposed rule Commission does not edit personal
identifying information from concerning the purpose of and basis for
change, the Commission summarily may the proposed rule change and discussed
temporarily suspend such rule change if submissions. You should submit only
information that you wish to make any comments it received on the
it appears to the Commission that such proposed rule change. The text of these
action is necessary or appropriate in the available publicly. All submissions
should refer to File Number SR–FINRA– statements may be examined at the
public interest, for the protection of places specified in Item IV below. The
investors, or otherwise in furtherance of 2016–048, and should be submitted on
or before January 20, 2017. Exchange has prepared summaries, set
the purposes of the Act. If the forth in sections A, B, and C below, of
Commission takes such action, the For the Commission, by the Division of the most significant aspects of such
Commission shall institute proceedings Trading and Markets, pursuant to delegated
authority.10
statements.
to determine whether the proposed rule
should be approved or disapproved. Robert W. Errett, A. Self-Regulatory Organization’s
Deputy Secretary. Statement of the Purpose of, and
IV. Solicitation of Comments
[FR Doc. 2016–31682 Filed 12–29–16; 8:45 am] Statutory Basis for, the Proposed Rule
Interested persons are invited to Change
BILLING CODE 8011–01–P
submit written data, views, and
arguments concerning the foregoing, 1. Purpose
including whether the proposed rule SECURITIES AND EXCHANGE The purpose of this rule change is to
change is consistent with the Act. COMMISSION amend the Supplementary Material to
Comments may be submitted by any of ISE Rule 1901, titled ‘‘Order Protection’’
the following methods: [Release No. 34–79686; File No. SR–ISE–
2016–31] to reflect the ISE, ISE Gemini, LLC and
Electronic Comments ISE Mercury, LLC technology migration
Self-Regulatory Organizations; to a Nasdaq, Inc. (‘‘Nasdaq’’) supported
• Use the Commission’s Internet
International Securities Exchange, architecture. INET is the proprietary
comment form (http://www.sec.gov/
LLC; Notice of Filing of Proposed Rule core technology utilized across Nasdaq’s
rules/sro.shtml); or
• Send an email to rule-comments@ Change to Amend the Supplementary global markets and utilized on The
sec.gov. Please include File Number SR– Material to ISE Rule 1901 NASDAQ Options Market LLC
FINRA–2016–048 on the subject line. (‘‘NOM’’), NASDAQ PHLX LLC (‘‘Phlx’’)
December 23, 2016.
and NASDAQ BX, Inc. (‘‘BX’’)
Paper Comments Pursuant to Section 19(b)(1) of the (collectively, ‘‘Nasdaq Exchanges’’). The
Securities Exchange Act of 1934
• Send paper comments in triplicate (‘‘Act’’),1 and Rule 19b–4 thereunder,2
migration of ISE to the Nasdaq INET
to Secretary, Securities and Exchange architecture would result in higher
notice is hereby given that on December performance, scalability, and more
Commission, 100 F Street NE., 22, 2016, the International Securities
Washington, DC 20549–1090. robust architecture. With this system
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) migration, the Exchange intends to
All submissions should refer to File filed with the Securities and Exchange
Number SR–FINRA–2016–048. This file adopt certain trading functionality
Commission (‘‘SEC’’ or ‘‘Commission’’) currently utilized at Nasdaq Exchanges.
number should be included on the the proposed rule change as described
subject line if email is used. To help the The functionality being adopted is
in Items I and II below, which Items described in this filing.
Commission process and review your have been prepared by the Exchange.
comments more efficiently, please use The Commission is publishing this Generally
only one method. The Commission will notice to solicit comments on the
post all comments on the Commission’s With the re-platform, the Exchange
proposed rule change from interested
Internet Web site (http://www.sec.gov/ will now be built on the Nasdaq INET
persons.
rules/sro.shtml). Copies of the architecture, which allows certain
submission, all subsequent I. Self-Regulatory Organization’s trading system functionality to be
amendments, all written statements Statement of the Terms of Substance of performed in parallel. The Exchange
the Proposed Rule Change believes that this architecture change
srobinson on DSK5SPTVN1PROD with NOTICES
with respect to the proposed rule
change that are filed with the The Exchange proposes to amend the will improve the member experience by
Commission, and all written Supplementary Material to ISE Rule reducing overall latency compared to
communications relating to the 1901, titled ‘‘Order Protection’’ in the current ISE, ISE Gemini, LLC and
proposed rule change between the ISE Mercury, LLC system because of the
10 17 CFR 200.30–3(a)(12). manner in which the system is
8 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). segregated into component parts to
9 17 CFR 240.19b–4(f)(2). 2 17 CFR 240.19b–4. handle processing.
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![96534 Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
provisions of 5 U.S.C. 552, will be available on the Exchange’s Web site at ETP Holders enter orders and order
available for Web site viewing and www.nyse.com, at the principal office of instructions by using communication
printing in the Commission’s Public the Exchange, and at the Commission’s protocols that map to the order types
Reference Room, 100 F Street NE., Public Reference Room. and modifiers described in Exchange
Washington, DC 20549, on official rules. Currently, all ETP Holders
II. Self-Regulatory Organization’s
business days between the hours of communicate with the NYSE Arca
10:00 a.m. and 3:00 p.m. Copies of the Statement of the Purpose of, and
Marketplace using Pillar phase I
filing also will be available for Statutory Basis for, the Proposed Rule
protocols. The Exchange is introducing
inspection and copying at the principal Change
new technology to support how ETP
office of the Exchange. All comments In its filing with the Commission, the Holders communicate with the NYSE
received will be posted without change; self-regulatory organization included Arca Marketplace (‘‘Pillar phase II
the Commission does not edit personal statements concerning the purpose of, protocols’’). Because Pillar phase II
identifying information from and basis for, the proposed rule change protocols will support new order
submissions. You should submit only and discussed any comments it received functionality, the Exchange proposes to
information that you wish to make on the proposed rule change. The text revise its rules to reflect these changes.
available publicly. All submissions of those statements may be examined at During this implementation, there
should refer to File Number SR–ISE– the places specified in Item IV below. will be a period when both the Pillar
2016–31 and should be submitted on or The Exchange has prepared summaries, phase I and Pillar phase II protocols will
before January 20, 2017. set forth in sections A, B, and C below, be available to ETP Holders.
For the Commission, by the Division of of the most significant parts of such Accordingly, the Exchange proposes to
Trading and Markets, pursuant to delegated statements. amend its rules to describe how an ETP
authority.6 Holder’s orders would behave
A. Self-Regulatory Organization’s
Robert W. Errett, depending on the protocol an ETP
Statement of the Purpose of, and
Deputy Secretary. Holder chooses to use.
Statutory Basis for, the Proposed Rule
[FR Doc. 2016–31678 Filed 12–29–16; 8:45 am] Change Proposed Amendments to Rule 7.11
BILLING CODE 8011–01–P
1. Purpose Currently, under Rule 7.11 any Limit
Order that is priced or would trade
The Exchange proposes to amend
SECURITIES AND EXCHANGE outside of a Price Band under the Plan 6
NYSE Arca Equities Rules 7.11 (Limit
COMMISSION is cancelled, unless an ETP Holder
Up-Limit Down Plan and Trading
enters instructions for adjustment of the
[Release No. 34–79688; File No. SR– Pauses in Individual Securities Due to
Limit Order’s working price.
NYSEArca–2016–170] Extraordinary Market Volatility) (‘‘Rule
Specifically, Rule 7.11(a)(5) specifies
7.11’’), 7.31 (Orders and Modifiers)
Self-Regulatory Organizations; NYSE that a buy (sell) order that is priced or
(‘‘Rule 7.31’’), and 7.34 (Trading
Arca, Inc.; Notice of Filing and could be traded above (below) the
Sessions) (‘‘Rule 7.34’’) to specify order
Immediate Effectiveness of Proposed Upper (Lower) Price Band will be
behavior for orders entered via the Pillar
Rule Change Amending NYSE Arca cancelled, except as specified in Rule
phase II protocols.
Equities Rules 7.11, 7.31, and 7.34 7.11(a)(6). Rule 7.11(a)(6) further
Background provides that ETP Holders may enter an
December 23, 2016.
On January 29, 2015, the Exchange instruction for the working price of a
Pursuant to Section 19(b)(1) 1 of the announced the implementation of Pillar, Limit Order to buy (sell) with a limit
Securities Exchange Act of 1934 (the which is an integrated trading price above (below) the Upper (Lower)
‘‘Act’’),2 and Rule 19b–4 thereunder,3 technology platform designed to use a price Band to be adjusted to a price that
notice is hereby given that on December single specification for connecting to the is equal to the Upper (Lower) Price
20, 2016, NYSE Arca, Inc. (the equities and options markets operated Band rather than cancel the order.
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with by the Exchange and its affiliates, NYSE Paragraphs (A)–(D) to Rule 7.11(a)(6)
the Securities and Exchange MKT, Inc. (‘‘NYSE MKT’’) and New provide more specifics regarding how
Commission (the ‘‘Commission’’) the York Stock Exchange LLC (‘‘NYSE’’).4 such repricing instructions operate.
proposed rule change as described in
NYSE Arca Equities, which operates the
Items I and II below, which Items have Modifiers and the Retail Liquidity Program);
equities trading platform for the Securities Exchange Act Release Nos. 75467 (July
been prepared by the self-regulatory
Exchange, was the first trading system 16, 2015), 80 FR 43515 (July 22, 2015) (Notice) and
organization. The Commission is
to migrate to Pillar. In connection with 76198 (October 20, 2015), 80 FR 65274 (October 26,
publishing this notice to solicit 2015) (SR–NYSEArca–2015–58) (Approval Order of
this implementation, the Exchange filed
comments on the proposed rule change NYSE Arca Pillar III Filing, adopting rules for
four rule proposals relating to Pillar.5 Trading Halts, Short Sales, Limit Up-Limit Down,
from interested persons.
and Odd Lots and Mixed Lots); and Securities
I. Self-Regulatory Organization’s 4 See Trader Update dated January 29, 2015, Exchange Act Release Nos. 76085 (October 6, 2015),
Statement of the Terms of the Substance available here: https://www.nyse.com/publicdocs/ 80 FR 61513 (October 13, 2015) (Notice) and 76869
nyse/markets/nyse/ (January 11, 2016), 81 FR 2276 (January 15, 2016)
of the Proposed Rule Change Pillar_Trader_Update_Jan_2015.pdf. (Approval Order of NYSE Arca Pillar IV Filing,
The Exchange proposes to amend 5 See Securities Exchange Act Release Nos. 74951 adopting rules for Auctions).
(May 13, 2015), 80 FR 28721 (May 19, 2015) 6 Under Rule 7.11(a)(1), the ‘‘Plan’’ is defined as
NYSE Arca Equities Rules 7.11, 7.31, (Notice) and 75494 (July 20, 2015), 80 FR 44170 the Plan to Address Extraordinary Market Volatility
srobinson on DSK5SPTVN1PROD with NOTICES
and 7.34 to specify order behavior for (July 24, 2015) (SR–NYSEArca–2015–38) (Approval Submitted to the Securities and Exchange
orders entered via the Pillar phase II Order of NYSE Arca Pillar I Filing, adopting rules Commission Pursuant to Rule 608 of Regulation
protocols. The proposed rule change is for Trading Sessions, Order Ranking and Display, NMS under the Securities Exchange Act of 1934,
and Order Execution); Securities Exchange Act Exhibit A to Securities Exchange Act Release No.
6 17
Release Nos. 75497 (July 21, 2015), 80 FR 45022 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012),
CFR 200.30–3(a)(12). (July 28, 2015) (Notice) and 76267 (October 26, as it may be amended from time to time. Under
1 15 U.S.C. 78s(b)(1). 2015), 80 FR 66951 (October 30, 2015) (SR– Rule 7.11(a)(2), capitalized terms not otherwise
2 15 U.S.C. 78a.
NYSEArca–2015–56) (Approval Order of NYSE defined in Rule 7.11 have the meaning set forth in
3 17 CFR 240.19b–4. Arca Pillar II Filing, adopting rules for Orders and the Plan.
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Document Created: 2016-12-30 05:16:13
Document Modified: 2016-12-30 05:16:13
| 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 96532 |
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