82 FR 10418 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca Equities Rule 5.2(j)(6)(v) To Add the EURO STOXX 50 Volatility Futures to the Definition of Futures Reference Asset
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 27 (February 10, 2017)
Federal Register Volume 82, Issue 27 (February 10, 2017)
| Page Range | 10418-10422 | |
| FR Document | 2017-02735 |
[Federal Register Volume 82, Number 27 (Friday, February 10, 2017)] [Notices] [Pages 10418-10422] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02735] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79975; File No. SR-NYSEArca-2017-08] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca Equities Rule 5.2(j)(6)(v) To Add the EURO STOXX 50 Volatility Futures to the Definition of Futures Reference Asset February 6, 2017. 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 January 27, 2017, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory [[Page 10419]] organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Equities Rule 5.2(j)(6)(v) to add the EURO STOXX 50 Volatility (VSTOXX[supreg]) Futures (``VSTOXX Futures'') to the definition of Futures Reference Asset. 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 NYSE Arca Equities Rule 5.2(j)(6) provides for Exchange listing and trading, including listing pursuant to Rule 19b-4(e) under the Act,\4\ of ``Index-Linked Securities'',\5\ and, in particular, Futures-Linked Securities, which are Index-Linked Securities with a payment at maturity based on the performance of a Futures Reference Asset.\6\ The proposed rule change is based on recently approved amendments to Bats BZX Exchange, Inc. (``BZX'') Rule 14.11(d) to add VSTOXX Futures to the definition of Futures Reference Asset for purposes of listing Index- Linked Securities on BZX.\7\ --------------------------------------------------------------------------- \4\ Rule 19b-4(e) under the Act provides that the listing and trading of a new derivative securities product by a self-regulatory organization (``SRO'') shall not be deemed a proposed rule change, pursuant to section (c)(1) of Rule 19b-4, if the Commission has approved, pursuant to Section 19(b) of the Act, the SRO's trading rules, procedures, and listing standards for the product class and the SRO has a surveillance program for the product class. \5\ As defined in NYSE Arca Equities Rule 5.2(j)(6), the term ``Index-Linked Securities'' includes Equity Index-Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities and Multifactor Index-Linked Securities. \6\ As defined in NYSE Arca Equities Rule 5.2(j)(6)(v),``Futures Reference Asset'' includes ``an index of (a) futures on Treasury Securities, GSE Securities, supranational debt and debt of a foreign country or a subdivision thereof, or options or other derivatives on any of the foregoing; or (b) interest rate futures or options or derivatives on the foregoing in this subparagraph (b); or (c) CBOE Volatility Index (VIX) Futures.'' \7\ See Securities Exchange Act Release No. 79069 (October 7, 2016), 81 FR 70714 (October 13, 2016) (SR-BatsBZX-2016-26) (``BATS Filing''). Additional information regarding the VSTOXX and VSTOXX Futures is included in the BATS Filing. --------------------------------------------------------------------------- The Exchange proposes to amend NYSE Arca Equities Rule 5.2(j)(6)(v) in order to add VSTOXX Futures to the definition of Futures Reference Asset, which would allow the Exchange to list Futures-Linked Securities linked to VSTOXX Futures through generic listing standards pursuant to Rule 19b-4(e) under NYSE Arca Equities Rule 5.2(j)(6).\8\ Prior to listing Futures-Linked Securities linked to VSTOXX Futures pursuant to Rule 5.2(j)(6), an issuer would be required to represent to the Exchange that it will advise the Exchange of any failure of the Futures-Linked Securities to comply with the continued listing requirements. --------------------------------------------------------------------------- \8\ The Exchange also proposes to delete as duplicative the word ``or'' in two places in NYSE Arca Equities Rule 5.2(j)(6)(v). --------------------------------------------------------------------------- NYSE Arca Equities Rule 5.2(j)(6)(B)(V) (``Futures-Linked Securities Listing Standards'') requires that a Futures-Linked Security meet one of the following standards: (1) That the Futures Reference Asset to which the security is linked shall have been reviewed and approved for the trading of Futures-Linked Securities or options or other derivatives by the Commission under Section 19(b)(2) of the Act and rules thereunder and the conditions set forth in the Commission's approval order, including with respect to comprehensive surveillance sharing agreements (``CSSAs''), continue to be satisfied; or (2) the pricing information for components of a Futures Reference Asset must be derived from a market which is a member or affiliate of a member of the Intermarket Surveillance Group (``ISG'') or a market with which the Exchange has a CSSA.\9\ A Futures Reference Asset may include components representing not more than 10% of the dollar weight of such Futures Reference Asset for which the pricing information is derived from markets that do not meet requirement (2) above; provided, however, that no single component subject to this exception exceeds 7% of the dollar weight of the Futures Reference Asset. As proposed, adding VSTOXX Futures to the definition of Futures Reference Asset would satisfy the first criterion described above and the second criterion would be satisfied by virtue of Eurex Deutschland's (``Eurex'') membership in ISG, as further described below. --------------------------------------------------------------------------- \9\ ISG is comprised of an international group of exchanges, market centers, and market regulators that perform front-line market surveillance in their respective jurisdictions. See https://www.isgportal.org/home.html. --------------------------------------------------------------------------- Further, any Futures-Linked Securities linked to VSTOXX Futures would also be required to meet both the initial and continued listing standards in NYSE Arca Equities Rule 5.2(j)(6)(B)(V) or be subject to delisting or removal proceedings, which include: (i) That the value of the Futures Reference Asset be calculated and widely disseminated by one or more major market data vendors on at least a 15-second basis during the Exchange's Core Trading Session (normally, 9:30 a.m. to 4:00 p.m., Eastern Time); (ii) for Futures-Linked Securities that are periodically redeemable, the indicative value of the subject Futures- Linked Securities must be calculated and widely disseminated by the Exchange or one or more major market data vendors on at least a 15- second basis during the Exchange's Core Trading Session; (iii) the aggregate market value or the principal amount of the Futures-Linked Securities must be at least $400,000; (iv) the value of the Futures Reference Asset is no longer calculated or available and a new Futures Reference Asset is substituted, unless the new Futures Reference Asset meets the requirements of Rule 5.2(j)(6); or (v) if such other event occurs or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. Any Futures-Linked Securities linked to VSTOXX Futures would also be required to meet the listing standards applicable to all Index-Linked Securities under NYSE Arca Equities Rule 5.2(j)(6)(A). Finally, all Index-Linked Securities listed pursuant to NYSE Arca Equities Rule 5.2(j)(6) are included within the definition of ``security'' or ``securities'' as such terms are used in the Exchange rules and, as such, are subject to Exchange rules and procedures that currently govern the trading of securities on the Exchange. The Exchange believes that the proposed standards would continue to ensure transparency surrounding the listing process for Index-Linked Securities. The Exchange also believes that the existing standards for listing and trading Futures-Linked Securities are reasonably designed to promote a fair and orderly market for such [[Page 10420]] Futures-Linked Securities and the addition of VSTOXX Futures to Futures Reference Assets does not affect this. The proposed addition of VSTOXX Futures to those instruments included in Futures Reference Assets would also work in conjunction with the existing initial and continued listing criteria related to surveillance procedures and trading guidelines. The Exchange believes that its surveillance procedures are adequate to continue to properly monitor the trading of Futures-Linked Securities linked to VSTOXX Futures in all trading sessions and to deter and detect violations of Exchange rules. The issuer of a series of Index-Linked Securities is and will continue to be required to comply with Rule 10A-3 under the Act \10\ for the initial and continued listing of Index-Linked Securities, as provided in NYSE Arca Equities Rule 5.2(j)(6)(A)(f). The Exchange notes that the proposed change is not intended to amend any other component or requirement of NYSE Arca Equities Rule 5.2(j)(6). --------------------------------------------------------------------------- \10\ 17 CFR 240.10A-3. --------------------------------------------------------------------------- Additional information regarding the VSTOXX and VSTOXX Futures can be found on the STOXX Limited (``STOXX'') Web site and the Eurex Web site, respectively.\11\ The VSTOXX is based on EURO STOXX 50 Index (``Index'') real-time option prices that are listed on the Eurex and are designed to reflect the market expectations of near-term up to long-term volatility by measuring the square root of the implied variances across all options of a given time to expiration. The Index includes 50 stocks that are among the largest free-float market capitalization stocks from 12 Eurozone countries. VSTOXX Futures are cash settled and trade between the hours of 7:30 a.m. and 10:30 p.m. Central European Time (``CET'') (2:30 a.m. and 5:30 p.m. Eastern Time). The VSTOXX Futures contract value is 100 Euros per index point of the underlying and it is traded to two decimal places with a minimum price change of 0.05 points (equivalent to a value of 5 Euros). The daily settlement price is determined during the closing auction of the respective futures contract. The last trading day and final settlement day is 30 calendar days prior to the third Friday of the expiration month of the underlying options, which is usually the Wednesday prior to the second to last Friday of the respective maturity month. --------------------------------------------------------------------------- \11\ Eurex is a member of the ISG and, as such, the Exchange may obtain information regarding trading in the underlying VSTOXX Futures contracts. For a list of the current members and affiliate members of ISG, see www.isgportal.com. --------------------------------------------------------------------------- STOXX will compute the Index on a real-time basis throughout each trading day, from 8:50 a.m. until 5:30 CET (3:50 a.m. until 12:30 p.m. Eastern Time. VSTOXX levels will be calculated by STOXX and disseminated by major market data vendors on a real-time basis throughout each trading day. The Exchange believes that the proposed amendment to add VSTOXX Futures as an underlying Futures Reference Asset will provide investors with the ability to better diversify and hedge their portfolios using an exchange listed security without having to trade directly in the underlying futures contracts, and will facilitate the listing and trading of additional Futures-Linked Securities that will enhance competition among market participants, to the benefit of investors and the marketplace. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,\12\ in general, and furthers the objectives of Sections 6(b)(5) of the Act,\13\ in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The proposed amendment to add VSTOXX Futures as an underlying Futures Reference Asset will provide investors with the ability to better diversify and hedge their portfolios using an exchange-listed security without having to trade directly in the underlying futures contracts, and will facilitate the listing and trading of additional Futures-Linked Securities that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in Futures-Linked Securities and may obtain information regarding both the Futures-Linked Securities and VSTOXX Futures via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a CSSA. In addition, as noted above, investors will have ready access to information on an intraday basis regarding: (i) The value of the Futures Reference Asset, which will be calculated and widely disseminated by one or more major market data vendors on at least a 15-second basis during the Exchange's Core Trading Session; (ii) for Futures-Linked Securities that are periodically redeemable, the indicative value of the securities, which must be calculated and widely disseminated by the Exchange or one or more major market data vendors on at least a 15-second basis during the Exchange's Core Trading Session; and (iii) information regarding market price and trading of Futures-Linked Securities, which will be available on brokers' computer screens and other electronic services, and quotation and last sale information for the securities, which will be available on the facilities of the Consolidated Tape Association. Further, any Futures-Linked Securities linked to VSTOXX Futures would be required to meet both the initial and continued listing standards under NYSE Arca Equities Rule 5.2(j)(6)(B)(V) or be subject to delisting or removal proceedings, which include: (i) That the value of the Futures Reference Asset be calculated and widely disseminated by one or more major market data vendors on at least a 15-second basis during the Exchange's Core Trading Session; (ii) for Futures-Linked Securities that are periodically redeemable, the indicative value of the securities must be calculated and widely disseminated by the Exchange or one or more major market data vendors on at least a 15-second basis during the Exchange's Core Trading Session; (iii) the aggregate market value or the principal amount of the Futures-Linked Securities must be at least $400,000; (iv) the value of the Futures Reference Asset is no longer calculated or available and a new Futures Reference Asset is substituted, unless the new Futures Reference Asset meets the requirements of Rule 5.2(j)(6); or (v) if such other event occurs or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. Any Futures-Linked Securities linked to VSTOXX Futures would also be required to meet the listing standards applicable to all Index-Linked Securities in Rule 5.2(j)(6). All Index-Linked Securities listed pursuant to NYSE Arca Equities Rule 5.2(j)(6) are included within the definition of ``security'' or ``securities'' as such terms are used in the Exchange rules and, as such, are subject to Exchange rules and procedures that [[Page 10421]] currently govern the trading of securities on the Exchange. Trading in the securities may be halted under the conditions specified in NYSE Arca Equities Rule 5.2(j)(6)(E). B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,\14\ the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed rule change would facilitate the listing and trading of additional types of Futures-Linked Securities, which will enhance competition among market participants, to the benefit of investors and the marketplace and provide investors with the ability to better diversify and hedge their portfolios using an exchange listed security without having to trade directly in the underlying futures contracts. The Exchange believes that this would reduce the time frame for bringing Futures-Linked Securities linked to VSTOXX Futures to market, thereby reducing the burdens on issuers and other market participants and promoting competition. The proposed rule change would enhance competition among listing exchanges because the proposed rule is based on an approved listing standard on BZX. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- 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 \15\ and Rule 19b-4(f)(6) thereunder.\16\ 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. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A)(iii). \16\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. --------------------------------------------------------------------------- \17\ 17 CFR 240.19b-4(f)(6). \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange asserts that waiving the operative delay would be consistent with the protection of investors and the public interest because the Commission has already approved a substantially identical proposed rule change submitted by another national securities exchange. In addition, the Exchange asserts that a waiver would accommodate listing and trading, including trading pursuant to unlisted trading privileges, of an issue of Future-Linked Securities based on VSTOXX Futures without additional delay, and would thereby promote intermarket competition in listing and trading such securities, to the benefit of the investing public. The Commission believes that waiving the operative delay with respect to the proposed rule change is consistent with the protection of investors and the public interest because the proposal does not raise any regulatory issues that were not already addressed by the Commission when approving a substantially identical proposal by another national securities exchange.\19\ Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.\20\ --------------------------------------------------------------------------- \19\ See note 7, supra. \20\ For purposes only of waiving the operative delay of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of this proposed rule change, the Commission summarily may temporarily suspend the 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 will 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 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-NYSEArca-2017-08 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-NYSEArca-2017-08. 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- [[Page 10422]] NYSEArca-2017-08 and should be submitted on or before March 3, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-02735 Filed 2-9-17; 8:45 am] BILLING CODE 8011-01-P
![10418 Federal Register / Vol. 82, No. 27 / Friday, February 10, 2017 / Notices
responsibility with respect to certain specifically listed in the Certification, as which must be filed with the
applicable laws, rules, and regulations. may be amended by the Parties from Commission pursuant to Rule 17d–2
Included in the Plan is an exhibit that time to time. under the Act.14
lists every MIAX rule for which FINRA According to the Amended Plan,
MIAX and MIAX PEARL will review the IV. Conclusion
bears responsibility under the Plan for
overseeing and enforcing with respect to Certification, at least annually, or more This Order gives effect to the
MIAX members that are also members of frequently if required by changes in Amended Plan filed with the
FINRA and the associated persons either the rules of MIAX, MIAX PEARL, Commission in File No. 4–678. The
therewith (‘‘Certification’’). On January or FINRA, and, if necessary, submit to Parties shall notify all members affected
12, 2017, the parties submitted the FINRA an updated list of Common by the Amended Plan of their rights and
proposed Amended Plan. The primary Rules to add MIAX and MIAX PEARL obligations under the Amended Plan.
purpose of the amendment is to add rules not included on the then-current It is therefore ordered, pursuant to
MIAX PEARL as a Participant to the list of Common Rules that are Section 17(d) of the Act, that the
Plan. substantially similar to FINRA rules; Amended Plan in File No. 4–678,
delete MIAX and MIAX PEARL rules between FINRA, MIAX, and MIAX
III. Discussion included in the then-current list of PEARL, filed pursuant to Rule 17d–2
The Commission finds that the Common Rules that are no longer under the Act, is approved and declared
proposed Amended Plan is consistent substantially similar to FINRA rules; effective.
with the factors set forth in Section and confirm that the remaining rules on It is further ordered that MIAX and
17(d) of the Act 10 and Rule 17d–2(c) the list of Common Rules continue to be MIAX PEARL are relieved of those
thereunder 11 in that the proposed MIAX and MIAX PEARL rules that are responsibilities allocated to FINRA
Amended Plan is necessary or substantially similar to FINRA rules.12 under the Amended Plan in File No. 4–
appropriate in the public interest and FINRA will then confirm in writing 678.
for the protection of investors, fosters whether the rules listed in any updated For the Commission, by the Division of
cooperation and coordination among list are Common Rules as defined in the Trading and Markets, pursuant to delegated
SROs, and removes impediments to and Amended Plan. Under the Amended authority.15
fosters the development of the national Plan, MIAX and MIAX PEARL will also Eduardo A. Aleman,
market system. In particular, the provide FINRA with a current list of Assistant Secretary.
Commission believes that the proposed Common Members and shall update the
[FR Doc. 2017–02739 Filed 2–9–17; 8:45 am]
Amended Plan should reduce list no less frequently than once each
BILLING CODE 8011–01–P
unnecessary regulatory duplication by quarter.13 The Commission believes that
allocating to FINRA certain examination these provisions are designed to provide
and enforcement responsibilities for for continuing communication between
Common Members that would SECURITIES AND EXCHANGE
the Parties to ensure the continued
otherwise be performed by MIAX, MIAX COMMISSION
accuracy of the scope of the proposed
PEARL, and FINRA. Accordingly, the allocation of regulatory responsibility. [Release No. 34–79975; File No. SR–
proposed Amended Plan promotes The Commission is hereby declaring NYSEArca–2017–08]
efficiency by reducing costs to Common effective an Amended Plan that, among
Members. Furthermore, because MIAX, other things, allocates regulatory Self-Regulatory Organizations; NYSE
MIAX PEARL, and FINRA will responsibility to FINRA for the Arca, Inc.; Notice of Filing and
coordinate their regulatory functions in oversight and enforcement of all MIAX Immediate Effectiveness of Proposed
accordance with the Amended Plan, the and MIAX PEARL rules that are Rule Change To Amend NYSE Arca
Amended Plan should promote investor substantially similar to the rules of Equities Rule 5.2(j)(6)(v) To Add the
protection. FINRA for Common Members of MIAX EURO STOXX 50 Volatility Futures to
The Commission notes that, under the and FINRA, and MIAX PEARL and the Definition of Futures Reference
Amended Plan, MIAX, MIAX PEARL, FINRA. Therefore, modifications to the Asset
and FINRA have allocated regulatory Certification need not be filed with the February 6, 2017.
responsibility for those MIAX and Commission as an amendment to the
Pursuant to Section 19(b)(1) 1 of the
MIAX PEARL rules, set forth in the Amended Plan, provided that the
Securities Exchange Act of 1934 (the
Certification, that are substantially Parties are only adding to, deleting
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
similar to the applicable FINRA rules in from, or confirming changes to MIAX or
notice is hereby given that, on January
that examination for compliance with MIAX PEARL rules in the Certification
27, 2017, NYSE Arca, Inc. (the
such provisions and rules would not in conformance with the definition of
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
require FINRA to develop one or more Common Rules provided in the
the Securities and Exchange
new examination standards, modules, Amended Plan. However, should the
Commission (the ‘‘Commission’’) the
procedures, or criteria in order to Parties decide to add a MIAX or MIAX
proposed rule change as described in
analyze the application of the rule, or a PEARL rule to the Certification that is
Items I and II below, which Items have
Common Member’s activity, conduct, or not substantially similar to a FINRA
been prepared by the self-regulatory
output in relation to such rule. In rule; delete a MIAX or MIAX PEARL
addition, under the Amended Plan, rule from the Certification that is 14 The Commission also notes that the addition to
FINRA would assume regulatory substantially similar to a FINRA rule; or or deletion from the Certification of any federal
mstockstill on DSK3G9T082PROD with NOTICES
responsibility for certain provisions of leave on the Certification a MIAX or securities laws, rules, and regulations for which
the federal securities laws and the rules MIAX PEARL rule that is no longer FINRA would bear responsibility under the
Amended Plan for examining, and enforcing
and regulations thereunder that are set substantially similar to a FINRA rule, compliance by, Common Members, also would
forth in the Certification. The Common then such a change would constitute an constitute an amendment to the Amended Plan.
Rules covered by the Amended Plan are amendment to the Amended Plan, 15 17 CFR 200.30–3(a)(34).
1 15 U.S.C. 78s(b)(1).
10 15 U.S.C. 78q(d). 12 See paragraph 2 of the Amended Plan. 2 15 U.S.C. 78a.
11 17 CFR 240.17d–2(c). 13 See paragraph 3 of the Amended Plan. 3 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:35 Feb 09, 2017 Jkt 241001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\10FEN1.SGM 10FEN1](https://thefederalregister.org/doc/82_FR_10445/page/1.svg)
![10422 Federal Register / Vol. 82, No. 27 / Friday, February 10, 2017 / Notices
NYSEArca–2017–08 and should be of the most significant parts of such ByRDs shall be the same as Non-FLEX
submitted on or before March 3, 2017. statements. ByRDs, as set forth in Rule 5.86(a),
For the Commission, by the Division of except that positions in FLEX ByRDs
A. Self-Regulatory Organization’s
Trading and Markets, pursuant to delegated shall be aggregated with positions in
Statement of the Purpose of, and the
authority.22 Non-FLEX ByRDs on the same or similar
Statutory Basis for, the Proposed Rule
Robert W. Errett, underlying for the purpose of
Change
Deputy Secretary. calculating position limits.9 The
[FR Doc. 2017–02735 Filed 2–9–17; 8:45 am]
1. Purpose Exchange also proposes to include in
The purpose of this filing is to amend proposed Rule 5.35(b)(ii) that ‘‘[f]or
BILLING CODE 8011–01–P
certain rules related to FLEX Options, as purposes of the position limits
described below. established under this Rule, long
SECURITIES AND EXCHANGE FLEX Options are customized equity positions in ‘Finish Low’ and short
COMMISSION or index contracts that allow investors positions in ‘Finish High’ Binary Return
to tailor contract terms for exchange- Derivatives shall be considered to be on
[Release No. 34–79976; File No. SR– the same side of the market; and short
NYSEArca–2017–02]
listed equity and index options.4 The
Exchange is proposing to allow FLEX positions in ‘Finish Low’ and long
Options in ByRDs, make available positions in ‘Finish High’ Binary Return
Self-Regulatory Organizations; NYSE
additional settlement styles, modify Derivatives shall be considered to be on
Arca, Inc.; Notice of Filing and
how exercise prices and premiums are the same side of the market.’’ 10
Immediate Effectiveness of Proposed
expressed, change certain provisions Consistent with these changes, the
Rule Change To Amend Certain Rules
relating to floor-based trading, and Exchange also proposes to define Non-
Related to Flexible Exchange Options
modify other related provisions FLEX ByRDs as ‘‘a Non-FLEX Option
February 6, 2017. pertaining to FLEX Options. that is a Binary Return Derivatives
Pursuant to Section 19(b)(1) 1 of the contract,’’ in new paragraph (b)(22) to
Securities Exchange Act of 1934 FLEX Options for Binary Return Rule 5.30. The Exchange believes that
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Derivatives Contracts (‘‘ByRDs’’) FLEX ByRDs would enable market
notice is hereby given that on January The Exchange proposes to modify its participants to negotiate terms that
25, 2017, NYSE Arca, Inc. (‘‘NYSE rules to enable market participants to differ from standardized ByRDs, which
Arca’’ or the ‘‘Exchange’’) filed with the trade FLEX options contracts in ByRDs.5 would, in turn, provide greater
Securities and Exchange Commission Specifically, the Exchange proposes to opportunities for investors to manage
(‘‘Commission’’) the proposed rule add a new definition of ‘‘FLEX ByRDs,’’ risk through the use of FLEX Options.11
change as described in Items I and II which would be a ‘‘Binary Return The Exchange notes that the proposed
below, which Items have been prepared Derivatives contract on any ByRD- rules related to FLEX ByRDs are
by the Exchange. The Commission is eligible underlying security that is materially identical to rules recently
publishing this notice to solicit subject to the rules in this Section.’’ 6 approved on another options
comments on the proposed rule change The Exchange also proposes to revise exchange.12
from interested persons. Rule 5.30(b)(15) to include FLEX ByRDs Additional Settlement Styles for FLEX
in the definition of ‘‘Series of FLEX Options: Asian and Cliquet Style
I. Self-Regulatory Organization’s Options.’’ 7 Because FLEX ByRDs would
Statement of the Terms of Substance of have to be settled in cash, based on the The Exchange proposes to permit
the Proposed Rule Change Volume-Weighted Average Price (or parties to FLEX Index Options on
The Exchange proposes to amend VWAP) of the underlying security, 9 The Exchange also proposes to re-format Rule
certain rules related to Flexible market participants could not modify 5.35 to make clear the position limits that apply to
Exchange (‘‘FLEX’’) Options. The these terms.8 However, market each of FLEX Index Options and FLEX Equity
proposed rule change is available on the participants may trade FLEX ByRDs Options. In this regard, the Exchange proposes to
Exchange’s Web site at www.nyse.com, with non-standard strike prices and/or modify the title of the Rule 5.35 to remove reference
to ‘‘Index’’ and re-titled it as ‘‘Position Limits for
at the principal office of the Exchange, non-standard expiration dates. FLEX Options.’’ Further, the Exchange proposes
and at the Commission’s Public Regarding position limits, the Exchange reformatting changes to clarify that Rule 5.35(a),
Reference Room. proposes to add paragraph (b)(ii) to Rule with proposed sub-parts (i) and (ii), refers to FLEX
Index Options and proposed Rule 5.35(b), refers to
II. Self-Regulatory Organization’s 5.35 to provide that positions in FLEX FLEX Equity Options. Finally, the Exchange
Statement of the Purpose of, and 4 See Rule 5.30(b)(4) (defining ‘‘FLEX option’’).
proposes to re-locate current paragraph (d) to Rule
Statutory Basis for, the Proposed Rule 5.35 regarding the aggregation of position limits for
See generally Section 4, Flexible Exchange Options, FLEX Index Options to proposed paragraph (a)(iii),
Change Rules 5.30–5.44. which would add clarity and consistency to
5 ByRDs are European-style option contracts on Exchange rules. See proposed Rule 5.35(a) and (b).
In its filing with the Commission, the
individual stocks, exchange-traded funds (‘‘ETFs’’) 10 See ‘‘Statutory Basis’’ section herein (in the
self-regulatory organization included and Index-Linked Securities that have a fixed return third paragraph) for further discussion.
statements concerning the purpose of, in cash based on a set strike price; satisfy specified 11 The Exchange also proposes to modify Rule
and basis for, the proposed rule change listing criteria; and may only be exercised at 5.32(f)(3)(ii) to provide that FLEX ByRDs must be
and discussed any comments it received expiration pursuant to the Rules of the Options settled the same as non-FLEX ByRDs. See proposed
Clearing Corporation (the ‘‘OCC’’). See Rules Rule 5.32(f)(3)(ii) (discussed herein under
on the proposed rule change. The text 5.82(b), 5.90. For a description of ‘‘Exchange- ‘‘Additional Updates to Reflect Trading in FLEX
of those statements may be examined at Traded Fund Shares’’ and ‘‘Index-Linked Options’’); see also Rule 5.89 (Determination of the
mstockstill on DSK3G9T082PROD with NOTICES
the places specified in Item IV below. Securities,’’ see also Rule 5.3(g) and (j). Settlement Price of ByRDs).
6 See proposed Rule 5.30(b)(19).
The Exchange has prepared summaries, 12 See Securities Exchange Act Release Nos.
7 See proposed Rule 5.30(b)(15) (proposing to add
set forth in sections A, B, and C below, 79125 (October 19, 2016), 81 FR 73452 (October 25,
that a ‘‘Series of FLEX Options’’ would include, in 2016) (‘‘MKT Approval Order ’’) (order approving
the case of FLEX ByRDs, all such option contracts modifications to FLEX Options, including adding
22 17 CFR 200.30–3(a)(12). of the same class having the same expiration date, FLEX ByRDs); 78348 (July 15, 2016), 81 FR 47469
1 15 U.S.C. 78s(b)(1). strike price, and exercise settlement amount). (July 21, 2016) (‘‘MKT Notice’’) (SR–NYSEMKT–
2 15 U.S.C. 78a. 8 See ‘‘Statutory Basis’’ section herein (in the 2016–48). See also NYSE MKT Rules
3 17 CFR 240.19b–4. second paragraph) for further discussion. 900G(b)(16),(17), (22); 903G(c)(3)(i)–(ii); 906G(b)(ii).
VerDate Sep<11>2014 18:35 Feb 09, 2017 Jkt 241001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\10FEN1.SGM 10FEN1](https://thefederalregister.org/doc/82_FR_10445/page/5.svg)
Document Created: 2017-02-11 18:15:26
Document Modified: 2017-02-11 18:15:26
| 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 | 82 FR 10418 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR