82 FR 10828 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change Amending Rules 7.29E and 1.1E To Provide for a Delay Mechanism

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 30 (February 15, 2017)

Page Range		10828-10832
FR Document		2017-02994
Federal Register, Volume 82 Issue 30 (Wednesday, February 15, 2017)
[Federal Register Volume 82, Number 30 (Wednesday, February 15, 2017)]
[Notices]
[Pages 10828-10832]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02994]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79998; File No. SR-NYSEMKT-2017-05]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending Rules 7.29E and 1.1E To Provide for a 
Delay Mechanism

February 9, 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 MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rules 7.29E and 1.1E to provide for 
a Delay Mechanism. The proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

[[Page 10829]]

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rules 7.29E and 1.1E to provide for 
an intentional delay to specified order processing, which would be 
referred to as the ``Delay Mechanism.''
    To effect its transition to Pillar, the Exchange has adopted the 
rule numbering framework of the NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'') rules for Exchange cash equities trading on the Pillar 
trading platform.\4\ As described in the Framework Filing, the Exchange 
is denoting the rules applicable to cash equities trading on Pillar 
with the letter ``E'' to distinguish such rules from current Exchange 
rules with the same numbering.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 79242 (November 4, 
2016), 81 FR 79081 (November 10, 2016) (SR-NYSEMKT-2016-97) (Notice 
and Filing of Immediate Effectiveness of Proposed Rule Change) (the 
``Framework Filing''). In addition, the Exchange has filed a 
proposed rule change to support Exchange trading of securities 
listed on other national securities exchanges on an unlisted trading 
privileges basis, including Exchange Traded Products (``ETP'') 
listed on other exchanges. See Securities Exchange Act Release No. 
79400 (November 25, 2016), 81 FR 86750 (December 1, 2016) (SR-
NYSEMKT-2016-103) (Notice) (the ``ETP Listing Rules Filing'').
---------------------------------------------------------------------------

    The Exchange has also proposed trading rules for cash equity 
trading on Pillar, which are based on the trading rules of NYSE Arca 
Equities.\5\ With Pillar, the Exchange has proposed to transition its 
cash equities trading platform from a Floor-based market with a parity 
allocation model to a fully automated price-time priority allocation 
model that trades all NMS Stocks.
---------------------------------------------------------------------------

    \5\ See SR-NYSEMKT-2017-1 (the ``Trading Rules Filing''). The 
Exchange has also filed a proposed rule change to establish market 
maker obligations when trading on the Pillar trading platform. See 
SR-NYSEMKT-2017-04 (the ``Market Maker Filing''). After the 
Commission approves the ETP Listing Rules Filing, Market Maker 
Filing, and Trading Rules Filing, the Exchange will transition to 
Pillar on a date announced by Trader Update.
---------------------------------------------------------------------------

    The Exchange proposes a delay mechanism on Pillar that would add 
the equivalent of 350 microseconds of latency to inbound and outbound 
order messages, as described in greater detail below. The requirements 
for the proposed Delay Mechanism would be set forth in Rule 7.29E, and 
a definition of ``Delay Mechanism'' would be in Rule 1.1E. The 
Exchange's proposed Delay Mechanism is based in part on the operation 
of the intentional delay mechanism of Investors Exchange LLC (``IEX''). 
In addition, when the Exchange implements the Delay Mechanism, it would 
no longer offer Add Liquidity Only (``ALO'') Order or Day Intermarket 
Sweep Order (``ISO'') functionality and all Pegged Orders would not be 
displayed.\6\
---------------------------------------------------------------------------

    \6\ In the Trading Rules Filing, the Exchange proposes Rule 
7.31E (Orders and Modifiers), which is based on NYSE Arca Equities 
Rule 7.31. Therefore, as proposed, ALO Order, Day ISO Order, and 
Pegged Order functionality for the Exchange would be based on NYSE 
Arca Equities ALO, Day ISO, and Pegged Order functionality, 
including that Primary Pegged Orders would be required to have a 
minimum display quantity. Because the Exchange would transition to 
Pillar once the Commission approves the ETP Listing Rules Filing, 
Market Maker Filing, and Trading Rules Filing, which may be prior to 
approval of the Delay Mechanism, before implementing the Delay 
Mechanism, the Exchange will file a separate proposed rule change to 
eliminate ALO and Day ISO Orders and related functionality and to 
provide that Primary Pegged Orders would not be displayed.
---------------------------------------------------------------------------

Proposed Rule Changes
    As noted above, the proposed Delay Mechanism would function 
similarly to the intentional delay mechanism of IEX, which IEX refers 
to as the ``IEX POP.'' The IEX POP adds the equivalent of 350 
microseconds of latency between the network access point of the POP and 
IEX's matching engines at its primary data center.\7\ IEX uses a 
hardware solution to add its intentional delay via physical distance 
and coiled optical fiber. Similarly, using a software solution, the 
Exchange proposes that the Delay Mechanism would add 350 microseconds 
of latency to the processing of specified inbound and outbound 
communications.
---------------------------------------------------------------------------

    \7\ See IEX Rule 11.510 (Connectivity).
---------------------------------------------------------------------------

    As described in greater detail below, except when routing orders, 
the Exchange's proposed Delay Mechanism would provide for the addition 
of latency under the same circumstances as the IEX POP.
    The Exchange proposes to add paragraph (y) to Rule 1.1E, which is 
currently ``Reserved,'' to define ``Delay Mechanism.'' As proposed, the 
Delay Mechanism would mean a delay that is an equivalent of 350 
microseconds of latency that is added to specified order processing. 
This delay would be in addition to any natural latency inherent in 
accessing the Exchange and Away Markets.\8\
---------------------------------------------------------------------------

    \8\ The term ``Away Market'' is defined in Rule 1.1E(ff) to mean 
any exchange, alternate trading system (``ATS'') or other broker-
dealer (1) with which the Exchange maintains an electronic linkage 
and (2) that provides instantaneous responses to orders routed from 
the Exchange and that the Exchange will designate from time to time 
those ATS's or other broker-dealers that qualify as Away Markets.
---------------------------------------------------------------------------

    Proposed Rule 1.1E(y) would further provide that due to force 
majeure events and acts of third parties, the Exchange does not 
guarantee that the delay would always be 350 microseconds and that the 
Exchange would periodically monitor such latency, and would make 
adjustments to the latency as reasonably necessary to achieve 
consistency with the 350 microsecond target as soon as commercially 
practicable. The proposed rule would further provide that, if the 
Exchange determines to increase or decrease the delay period, it would 
submit a rule filing pursuant to Section 19 of the Act. This proposed 
rule text is based on Supplementary Material .20 [sic] (POP Latency) to 
IEX Rule 11.510 without any substantive differences.
    The Exchange proposes to add paragraph (b) to Rule 7.29E to 
describe the Delay Mechanism.\9\ Under proposed Rule 7.29E(b)(1), the 
Exchange would apply the Delay Mechanism to the following:
---------------------------------------------------------------------------

    \9\ In the Trading Rules Filing, the Exchange has proposed that 
Rule 7.29E would be titled ``Access'' and has proposed paragraph (a) 
to Rule 7.29E to specify the general access requirements to the 
Exchange.
---------------------------------------------------------------------------

     All inbound communications from an ETP Holder (proposed 
Rule 7.29E(b)(1)(A)). This proposed rule text is based on IEX Rule 
11.510(b)(1), which provides that ``Inbound POP Latency'' applies to 
all inbound communications (including, without limitation, order 
messages and cancel messages). The Exchange's proposal to apply the 
Delay Mechanism to all inbound communications from an ETP Holder would 
cover all incoming orders, as well as any requests to cancel or modify 
a resting order. The Exchange's proposal to apply the Delay Mechanism 
to all inbound communications from an ETP Holder would have the same 
effect as IEX's Inbound POP Latency because it would add 350 
microseconds of delay to all incoming messages to the Exchange.
     All outbound communications to an ETP Holder (proposed 
Rule 7.29E(b)(1)(B)). This proposed rule text is based on IEX Rule 
11.510(b)(2), which provides that ``Outbound POP Latency'' applies to 
all outbound communications (including, without limitation, execution 
report messages and quote update messages). The Exchange's proposal to 
apply the Delay Mechanism to all outbound communications to an ETP 
Holder would cover Exchange messages to an ETP Holder that an order has 
been accepted, rejected, cancelled, modified, or executed. The 
Exchange's proposal to apply the Delay Mechanism to all outbound 
communications to an ETP Holder would have the same effect as IEX's 
Outbound POP Latency because it would add 350 microseconds of delay to 
all outgoing messages to an ETP Holder from the Exchange. Together with 
the application of the proposed Delay Mechanism to all inbound

[[Page 10830]]

communications to the Exchange, there would be 700 microseconds of 
additional round-trip latency in a report received by an ETP Holder of 
an execution or partial execution on the Exchange.
     All outbound communications the Exchange routes to an Away 
Market (proposed Rule 7.29E(b)(1)(C)) and all inbound communications 
from an Away Market about a routed order (proposed Rule 
7.29E(b)(1)(D)). Under proposed Rule 7.37E, the Exchange determines 
whether to route an order after it has matched orders for execution 
against orders in the Exchange Book.\10\ If the Exchange determines to 
route an order, either because it would trade through a protected 
quotation or has an instruction to be routed to a primary listing 
market, the Exchange would apply the Delay Mechanism before routing 
such order. This proposed rule text would therefore provide that an 
order that the Exchange routes to an Away Market would have 700 
microseconds of added delay before it is routed: First a 350 
microsecond delay before the order is received by the Exchange's 
matching engines under proposed Rule 7.29E(b)(1)(A) and a second 350 
microsecond delay under proposed Rule 7.29E(b)(1)(C) when the order is 
routed. After the Exchange applies the Delay Mechanism to a routable 
order, the routed order would be subject to any natural latency 
inherent in accessing such Away Market.
---------------------------------------------------------------------------

    \10\ See proposed Rule 7.37E(b), Trading Rules Filing, supra 
note 5 (``Unless an order has an instruction not to route, after 
being matched for execution with any contra-side orders in the 
Exchange Book pursuant to paragraph (a) of this Rule, marketable 
orders will be routed to Away Market(s).'')
---------------------------------------------------------------------------

    Any inbound communications to the Exchange from the Away Market 
about such routed order, whether a rejection or execution report, would 
also be subject to the Delay Mechanism. In addition, any such report 
forwarded to the ETP Holder that entered the order would then be 
subject to an additional Delay Mechanism under proposed Rule 
7.29E(b)(1)(B). Accordingly, the Exchange would add a total of 1,400 
microseconds of round-trip delay to an order that the Exchange routes 
to an Away Market. The Exchange's proposed Delay Mechanism for orders 
that route would function differently from the IEX POP with respect to 
routable orders. Under IEX Rule 11.510, a routable order on IEX must 
traverse the IEX POP to access IEX's routing logic, and any orders that 
the IEX routing logic determines to send to the IEX matching engine 
must traverse an additional IEX POP. However, IEX does not include an 
IEX POP between its routing logic and routing to markets other than 
IEX.\11\ Accordingly, a routable order sent to IEX has 700 microseconds 
of delay before it reaches the IEX matching engine and an additional 
700 microseconds of delay before any reports from the IEX matching 
engine are sent to the order sender, for a round-trip delay of 1,400 
microseconds. However, a routable order sent to IEX's routing logic 
that is routed to an away market has only 350 microseconds of 
additional delay for inbound orders and only 350 microseconds of delay 
for outbound information to the order sender, for a round-trip delay of 
700 microseconds.
---------------------------------------------------------------------------

    \11\ See IEX Rule 11.510(c)(3)(A).
---------------------------------------------------------------------------

    The Exchange believes its proposed application of the Delay 
Mechanism to routable orders is consistent with how the Exchange 
already functions, which is that orders are matched for execution 
before routing (unless the order has an instruction to route to the 
primary listing market). As such, if there is an execution opportunity 
on the Exchange, an order would be subject to the same additional 
latency regardless of whether the order is routable or not. Only if the 
Exchange were to route an order would it add the latency of the Delay 
Mechanism a second time. The Exchange believes that this additional 
application of the proposed Delay Mechanism would ensure that the 
Exchange would not have a speed advantage over ETP Holders in routing 
the unexecuted quantity of an order to an Away Market. Specifically, an 
ETP Holder would be subject to the same latency in learning of an 
execution on the Exchange (350 microseconds after the execution) as the 
Exchange would apply to routing such order (350 microseconds before 
routing such order). Accordingly, an ETP Holder that would rather route 
directly to Away Markets would be able to operate on a level playing 
field with the Exchange's routing broker.
     All outbound communications (e.g., bids, offers, and 
trades) to the Exchange's proprietary data feeds (proposed Rule 
7.29E(b)(1)(E)). This proposed rule text is based on IEX Rule 
11.510(b)(1) [sic], which specifies IEX's Outbound POP Latency. The 
Exchange's proposal to apply the Delay Mechanism to all outbound 
messages to its proprietary data feeds would have the same effect as 
IEX's Outbound POP Latency because it would add 350 microseconds of 
delay before providing such information to the Exchange's proprietary 
data feed.
    Under proposed Rule 7.29E(b)(2), the Exchange would not apply the 
Delay Mechanism to the following:
     All inbound communications from data feeds (proposed Rule 
7.29E(b)(2)(A)). This proposed rule text is based on IEX Rule 
11.510(c)(2)(A), which provides that IEX communications with away 
market centers to receive proprietary market data do not traverse the 
IEX POP, and IEX Rule 11.510(c)(2)(B), which provides that IEX 
communications with the SIPs to receive data feeds do not traverse the 
IEX POP. By referencing data feeds, proposed Rule 7.29E(b)(2)(A) would 
be applicable to data feeds received directly from Away Markets and 
data feeds disseminated by a plan processor. Accordingly, the 
Exchange's proposal not to apply the Delay Mechanism in these 
circumstances would have the same effect as how IEX does not apply the 
IEX POP to its receipt of market data.
     Order processing and order execution on the Exchange's 
Book (proposed Rule 7.29E(b)(2)(B)). This proposed rule text is based 
on IEX Rule 11.510(c)(1), which provides that order book processing 
does not traverse the IEX POP. Accordingly, all actions taken within 
the Exchange's Book, including calculating the BBO, NBBO, or PBBO,\12\ 
assigning working prices and working times to orders,\13\ and ranking 
and executing orders, would not be subject to an additional delay. The 
Exchange's proposal not to apply the Delay Mechanism to order 
processing and order execution on the Exchange's Book would have the 
same effect as how IEX conducts order processing and order execution 
within its book. For example, the Exchange would not apply the Delay 
Mechanism to re-price Pegged Orders, which would not be displayed on 
the Exchange. As with IEX, the Exchange would update the working price 
of Pegged Orders based on an updated PBBO without any additional delay.
---------------------------------------------------------------------------

    \12\ The term ``BBO'' is defined in Rule 1.1E(h) as the best bid 
or offer that is a protected quotation on the Exchange. The terms 
``NBBO'' and ``PBBO'' are defined in Rule 1.1E(dd) as the national 
best bid or offer and the protected best bid and offer, 
respectively.
    \13\ In the Trading Rules Filing, supra note 5, the Exchange 
proposes to define the term ``working price'' in Rule 7.36E(a)(3) as 
the price at which an order is eligible to trade at any given time, 
which may be different from the limit price or display price of the 
order and define the term ``working time'' in Rule 7.36E(a)(4) as 
the effective time sequence assigned to an order for purposes of 
determining its priority ranking.
---------------------------------------------------------------------------

     All outbound communications (e.g., bids, offers, and 
trades) to the plan processors under Rules 601 and 602 of Regulation 
NMS (proposed Rule

[[Page 10831]]

7.29E(b)(2)(C)). This proposed rule text is based on IEX Rule 
11.510(c)(3)(B), which provides that IEX communications with the SIP to 
disseminate quotation and last sale information do not traverse the IEX 
POP. The Exchange's proposal not to apply the Delay Mechanism to 
outbound communications to the plan processors would therefore have the 
same effect as how IEX operates.
    The Exchange proposes an additional difference between its proposed 
Delay Mechanism and the IEX POP. As set forth in Supplementary Material 
.10 [sic] to IEX Rule 11.510, IEX would not apply the IEX POP when 
trading out of its back up system because it does not offer 
connectivity from the IEX POP to its back up systems. By contrast, the 
Exchange proposes that the Delay Mechanism would be functional 
regardless of whether the Exchange is operating out of its primary or 
secondary data center.
* * * * *
    Subject to rule approvals, the Exchange will announce the 
implementation of the Delay Mechanism by Trader Update, which may be 
after the Exchange transitions to Pillar.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\14\ in general, and 
furthers the objectives of Section 6(b)(5),\15\ 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 facilitating 
transactions in securities, 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. The Exchange 
believes that the proposed rules to add the proposed Delay Mechanism 
would remove impediments to and perfect the mechanism of a free and 
open market because it would apply a similar delay to order message 
processing as the Commission has recently approved for IEX, with 
differences only with respect to how the Delay Mechanism would function 
for orders that route to an Away Market.\16\ The Exchange further 
believes that the proposed Delay Mechanism is not unfairly 
discriminatory because it would be applied uniformly to all Exchange 
ETP Holders and may not be bypassed for a fee or otherwise.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ Securities Exchange Act Release No. 78101 (June 17, 2016), 
81 FR 41141, 41155 (June 23, 2016) (``IEX Approval Order'').
---------------------------------------------------------------------------

    The Exchange further believes that the proposed Delay Mechanism 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system and would protect investors 
and the public interest because it would provide a choice of exchanges 
for market participants that prefer to trade or list on an exchange 
that offers a delay mechanism.
    The Exchange also believes that the proposed Delay Mechanism, as it 
would apply to orders that are routed to Away Markets, would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and would protect investors and the public 
interest because it is designed in a manner that would enable ETP 
Holders that would prefer to route unexecuted quantities of orders to 
Away Markets, rather than having the Exchange route to Away Markets, to 
operate on a level playing field. As such, this aspect of the proposed 
Delay Mechanism is not unfairly discriminatory and would not impose a 
burden on competition because the Exchange's outbound router would not 
have unique access or preferences with respect to orders routed to Away 
Markets. As such, the Exchange's outbound router functionality would be 
on substantively comparable terms to a third party routing broker that 
is a member of the Exchange.
    In addition, the Exchange believes that the proposed Delay 
Mechanism is consistent with the Commission's recent interpretation of 
Rule 611 of Regulation NMS.\17\ The Commission has interpreted the term 
``immediate'' when determining whether a trading center maintains an 
``automated quotation'' for purposes of Rule 611 to include response 
time delays at trading centers that are de minimis, whether intentional 
or not. As such, a trading center may implement an intentional access 
delay that is de minimis, i.e., a delay so short so as not to frustrate 
the purposes of Rule 611 of Regulation NMS by impairing fair and 
efficient access to an exchange's quotations. In the context of IEX, 
the Commission has already found that an intentional delay of 350 
microseconds is de minimis.\18\ Accordingly, the Exchange believes that 
its proposed Delay Mechanism, which would provide for the same delay 
period as the IEX POP under the same circumstances, is similarly de 
minimis for purposes of the Rule 611 Interpretation.
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release No. 78102 (June 17, 
2016), 81 FR 40785 (June 23, 2016) (File No. S7-03-16) (``Rule 611 
Interpretation'').
    \18\ See IEX Approval Order, supra note 16.
---------------------------------------------------------------------------

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 
designed to provide a competitive trading model to IEX. For this 
reason, the Exchange has proposed a Delay Mechanism that would function 
similarly to the IEX POP, with the exception of how the Delay Mechanism 
would be applied to routable orders. The Exchange believes that its 
proposed application of the Delay Mechanism to routable orders would 
not impose a burden on competition because it is designed in a manner 
that would enable ETP Holders that would prefer to route unexecuted 
quantities of orders to Away Markets, rather than having the Exchange 
route to Away Markets, to operate on a level playing field. The 
Exchange's proposal is therefore designed to promote competition by 
offering a choice of exchanges to those ETP Holders and issuers that 
prefer to trade or list on an exchange that offers a delay mechanism. 
Accordingly, the proposed rule change is designed to introduce 
additional competition among exchanges so that broker dealers and 
issuers have more than one option if seeking a trading venue that 
offers an intentional delay mechanism.

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.

[[Page 10832]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please 
include File Number SR-NYSEMKT-2017-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2017-05. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2017-05 and should 
be submitted on or before March 8, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02994 Filed 2-14-17; 8:45 am]
 BILLING CODE 8011-01-P
10828 Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices

published Amendment No. 1 for rule change.11 Amendment No. 3, which For the Commission, by the Division of
comment in the Federal Register on supersedes and replaces the proposed Trading and Markets, pursuant to delegated
September 26, 2016.5 The Commission rule change, as modified by Amendment authority.18
received one comment in response to Nos. 1 and 2, in its entirety, was Eduardo A. Aleman,
the proposed rule change, as modified published for comment in the Federal Assistant Secretary.
by Amendment No. 1, to which the Register on December 29, 2016.12 On [FR Doc. 2017–02996 Filed 2–14–17; 8:45 am]
Exchange responded.6 On October 4, January 17, 2017, the Exchange BILLING CODE 8011–01–P
2016, the Commission extended the responded to the comment letters
time period within which to approve submitted after the OIP and prior to
the proposed rule change, disapprove January 17, 2017.13 On February 7, SECURITIES AND EXCHANGE
the proposed rule change, or institute 2017, the Exchange filed Amendment COMMISSION
proceedings to determine whether to No. 4 to the proposed rule change.14 [Release No. 34–79998; File No. SR–
approve or disapprove the proposed NYSEMKT–2017–05]
Section 19(b)(2) of the Act15 provides
rule change to November 15, 2016.7
that, after initiating proceedings, the Self-Regulatory Organizations; NYSE
On November 2, 2016, the Exchange Commission shall issue an order
filed Amendment No. 2 to the proposed MKT LLC; Notice of Filing of Proposed
approving or disapproving the proposed Rule Change Amending Rules 7.29E
rule change.8 On November 21, 2016, rule change not later than 180 days after
the Commission instituted proceedings and 1.1E To Provide for a Delay
the date of publication of notice of the Mechanism
to determine whether to approve or
filing of the proposed rule change. The
disapprove the proposed rule change, as February 9, 2017.
Commission may extend the period for
modified by Amendment Nos. 1 and 2.9 Pursuant to Section 19(b)(1) 1 of the
issuing an order approving or
Following the Order Instituting Securities Exchange Act of 1934 (the
disapproving the proposed rule change,
Proceedings, the Commission received ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
however, by not more than 60 days if
several additional comment letters.10 notice is hereby given that on January
On December 9, 2016, the Exchange the Commission determines that a
longer period is appropriate and 27, 2017, NYSE MKT LLC (the
filed Amendment No. 3 to the proposed ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
publishes the reasons for such
determination. The proposed rule the Securities and Exchange
including their composition, product release dates,
change was published for notice and Commission (the ‘‘Commission’’) the
and further detail on the reasonableness of their proposed rule change as described in
applicable fees; (iv) added an explanation for the comment in the Federal Register on
varying fee differences for the same Gb usage for Items I and II below, which Items have
August 17, 2016.16 February 13, 2017 is
third party data feeds, DTCC, and Virtual Control been prepared by the self-regulatory
180 days from that date, and April 14,
Circuit. organization. The Commission is
5 See Securities Exchange Act Release No. 34– 2017 is an additional 60 days from that
publishing this notice to solicit
78887 (September 20, 2016), 81 FR 66095. date. comments on the proposed rule change
6 See letter to Brent J. Fields, Secretary,
The Commission finds it appropriate from interested persons.
Commission, from John Ramsay, Chief Market
Policy Officer, Investors Exchange LLC (‘‘IEX Letter to designate a longer period within
which to issue an order approving or I. Self-Regulatory Organization’s
I’’), dated September 9, 2016.
Statement of the Terms of Substance of
On September 23, 2016, the NYSE submitted a disapproving the proposed rule change
response to the IEX letter (‘‘Response Letter I’’) the Proposed Rule Change
so that it has sufficient time to consider
which is available at https://www.sec.gov/ The Exchange proposes to amend
comments/sr-nyse-2016-45/nyse201645-3.pdf. the proposed rule change, as modified
7 See Securities Exchange Act Release No. 34– by Amendment Nos. 1–4, the issues Rules 7.29E and 1.1E to provide for a
78966 (September 28, 2016), 81 FR 68475. raised in the comment letters that have Delay Mechanism. The proposed rule
8 Amendment No. 2 is available on the
been submitted in connection therewith, change is available on the Exchange’s
Commission’s Web site at https://www.sec.gov/ and the Exchange’s response to the Web site at www.nyse.com, at the
comments/sr-nyse-2016-45/nyse201645-4.pdf. principal office of the Exchange, and at
9 See Securities Exchange Act Release 34–79316 comments.
the Commission’s Public Reference
(November 15, 2016), 81 FR 83303. Accordingly, the Commission, Room.
10 See letter to Brent J. Fields, Commission, from
pursuant to Section 19(b)(2) of the
Adam C. Cooper, Senior Managing Director and II. Self-Regulatory Organization’s
Chief Legal Officer, Citadel Securities, dated Act,17 designates April 14, 2017 as the
December 12, 2016 (‘‘Citadel Letter’’); letter to Brent date by which the Commission should Statement of the Purpose of, and
J. Fields, Commission, from Melissa MacGregor, either approve or disapprove the Statutory Basis for, the Proposed Rule
Managing Director and Associate General Counsel, proposed rule change, as modified by Change
SIFMA, dated December 12, 2016 (‘‘SIFMA Letter
I’’); letter to Brent J. Fields, Commission, from Joe Amendments Nos. 1–4. In its filing with the Commission, the
Wald, Chief Executive Officer, Clearpool Group, self-regulatory organization included
dated December 16, 2016 (‘‘Clearpool Letter’’); letter 11 Amendment No. 3, as filed by the Exchange, is statements concerning the purpose of,
to Brent J. Fields, Secretary, Commission, from John available at https://www.sec.gov/comments/sr-nyse-
Ramsay, Chief Market Policy Officer, Investors
and basis for, the proposed rule change
2016-45/nyse201645-5.pdf.
Exchange LLC (IEX), dated December 21, 2016 12 See Securities Exchange Act Release No. 34–
and discussed any comments it received
(‘‘IEX Letter II’’); letter to Brent J. Fields, 79674 (December 22, 2016), 81 FR 96053 (‘‘Notice on the proposed rule change. The text
Commission, from David L. Cavicke, Chief Legal of Current Proposal’’). of those statements may be examined at
Officer, Wolverine LLC (‘‘Wolverine Letter’’); letter 13 See NYSE Response Letter II (‘‘Response Letter the places specified in Item IV below.
to Bent J. Fields, Secretary, Commission, from
Stefano Durdic, Managing Director, R2G Services,
II’’), available at https://www.sec.gov/comments/sr- The Exchange has prepared summaries,
mstockstill on DSK3G9T082PROD with NOTICES

nyse-2016-45/nyse201645-1502013-130586.pdf. The set forth in sections A, B, and C below,
LLC, dated January 21, 2017 (‘‘R2G Letter’’); letter
R2G and SIFMA II Letters, supra note 10, were
to Brent J. Fields, Commission, from Melissa
submitted after the Response Letter II. of the most significant parts of such
MacGregor, Managing Director and Associate 14 Amendment No. 4, as filed by the Exchange, is statements.
General Counsel, SIFMA, dated February 6, 2017
(‘‘SIFMA Letter II’’). All comments received by the available at https://www.sec.gov/comments/sr-nyse-
Commission on the proposed rule change are 2016-45/nyse201645-1570711-131690.pdf. 18 17 CFR 200.30–3(a)(57).
15 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1).
available on the Commission’s Web site at: https://
16 See supra note 3. 2 15 U.S.C. 78a.
www.sec.gov/comments/sr-nyse-2016-45/
nyse201645.shtml. 17 15 U.S.C. 78s(b)(2). 3 17 CFR 240.19b–4.

VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\15FEN1.SGM 15FEN1
Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices 10829

A. Self-Regulatory Organization’s Only (‘‘ALO’’) Order or Day Intermarket the Exchange would periodically
Statement of the Purpose of, and the Sweep Order (‘‘ISO’’) functionality and monitor such latency, and would make
Statutory Basis for, the Proposed Rule all Pegged Orders would not be adjustments to the latency as reasonably
Change displayed.6 necessary to achieve consistency with
the 350 microsecond target as soon as
1. Purpose Proposed Rule Changes
commercially practicable. The proposed
The Exchange proposes to amend As noted above, the proposed Delay rule would further provide that, if the
Rules 7.29E and 1.1E to provide for an Mechanism would function similarly to Exchange determines to increase or
intentional delay to specified order the intentional delay mechanism of IEX, decrease the delay period, it would
processing, which would be referred to which IEX refers to as the ‘‘IEX POP.’’ submit a rule filing pursuant to Section
as the ‘‘Delay Mechanism.’’ The IEX POP adds the equivalent of 350 19 of the Act. This proposed rule text
To effect its transition to Pillar, the microseconds of latency between the is based on Supplementary Material .20
Exchange has adopted the rule network access point of the POP and [sic] (POP Latency) to IEX Rule 11.510
numbering framework of the NYSE Arca IEX’s matching engines at its primary without any substantive differences.
Equities, Inc. (‘‘NYSE Arca Equities’’) data center.7 IEX uses a hardware The Exchange proposes to add
rules for Exchange cash equities trading solution to add its intentional delay via paragraph (b) to Rule 7.29E to describe
on the Pillar trading platform.4 As physical distance and coiled optical the Delay Mechanism.9 Under proposed
described in the Framework Filing, the fiber. Similarly, using a software Rule 7.29E(b)(1), the Exchange would
Exchange is denoting the rules solution, the Exchange proposes that the apply the Delay Mechanism to the
applicable to cash equities trading on Delay Mechanism would add 350 following:
Pillar with the letter ‘‘E’’ to distinguish microseconds of latency to the • All inbound communications from
such rules from current Exchange rules processing of specified inbound and an ETP Holder (proposed Rule
with the same numbering. outbound communications. 7.29E(b)(1)(A)). This proposed rule text
The Exchange has also proposed As described in greater detail below, is based on IEX Rule 11.510(b)(1), which
trading rules for cash equity trading on except when routing orders, the provides that ‘‘Inbound POP Latency’’
Pillar, which are based on the trading Exchange’s proposed Delay Mechanism applies to all inbound communications
rules of NYSE Arca Equities.5 With would provide for the addition of (including, without limitation, order
Pillar, the Exchange has proposed to latency under the same circumstances messages and cancel messages). The
transition its cash equities trading as the IEX POP. Exchange’s proposal to apply the Delay
platform from a Floor-based market with The Exchange proposes to add Mechanism to all inbound
a parity allocation model to a fully paragraph (y) to Rule 1.1E, which is communications from an ETP Holder
automated price-time priority allocation currently ‘‘Reserved,’’ to define ‘‘Delay would cover all incoming orders, as
model that trades all NMS Stocks. Mechanism.’’ As proposed, the Delay well as any requests to cancel or modify
The Exchange proposes a delay Mechanism would mean a delay that is a resting order. The Exchange’s proposal
mechanism on Pillar that would add the an equivalent of 350 microseconds of to apply the Delay Mechanism to all
equivalent of 350 microseconds of latency that is added to specified order inbound communications from an ETP
latency to inbound and outbound order processing. This delay would be in Holder would have the same effect as
messages, as described in greater detail addition to any natural latency inherent IEX’s Inbound POP Latency because it
below. The requirements for the in accessing the Exchange and Away would add 350 microseconds of delay to
proposed Delay Mechanism would be Markets.8 all incoming messages to the Exchange.
set forth in Rule 7.29E, and a definition Proposed Rule 1.1E(y) would further • All outbound communications to
of ‘‘Delay Mechanism’’ would be in Rule provide that due to force majeure events an ETP Holder (proposed Rule
1.1E. The Exchange’s proposed Delay and acts of third parties, the Exchange 7.29E(b)(1)(B)). This proposed rule text
Mechanism is based in part on the does not guarantee that the delay would is based on IEX Rule 11.510(b)(2), which
operation of the intentional delay always be 350 microseconds and that provides that ‘‘Outbound POP Latency’’
mechanism of Investors Exchange LLC applies to all outbound communications
(‘‘IEX’’). In addition, when the Exchange 6 In the Trading Rules Filing, the Exchange (including, without limitation,
implements the Delay Mechanism, it proposes Rule 7.31E (Orders and Modifiers), which execution report messages and quote
is based on NYSE Arca Equities Rule 7.31. update messages). The Exchange’s
would no longer offer Add Liquidity Therefore, as proposed, ALO Order, Day ISO Order,
and Pegged Order functionality for the Exchange proposal to apply the Delay Mechanism
4 See Securities Exchange Act Release No. 79242 would be based on NYSE Arca Equities ALO, Day to all outbound communications to an
(November 4, 2016), 81 FR 79081 (November 10, ISO, and Pegged Order functionality, including that ETP Holder would cover Exchange
2016) (SR–NYSEMKT–2016–97) (Notice and Filing Primary Pegged Orders would be required to have messages to an ETP Holder that an order
of Immediate Effectiveness of Proposed Rule a minimum display quantity. Because the Exchange
Change) (the ‘‘Framework Filing’’). In addition, the would transition to Pillar once the Commission has been accepted, rejected, cancelled,
Exchange has filed a proposed rule change to approves the ETP Listing Rules Filing, Market modified, or executed. The Exchange’s
support Exchange trading of securities listed on Maker Filing, and Trading Rules Filing, which may proposal to apply the Delay Mechanism
other national securities exchanges on an unlisted be prior to approval of the Delay Mechanism, before to all outbound communications to an
trading privileges basis, including Exchange Traded implementing the Delay Mechanism, the Exchange
will file a separate proposed rule change to
ETP Holder would have the same effect
Products (‘‘ETP’’) listed on other exchanges. See
Securities Exchange Act Release No. 79400 eliminate ALO and Day ISO Orders and related as IEX’s Outbound POP Latency because
(November 25, 2016), 81 FR 86750 (December 1, functionality and to provide that Primary Pegged it would add 350 microseconds of delay
2016) (SR–NYSEMKT–2016–103) (Notice) (the Orders would not be displayed. to all outgoing messages to an ETP
‘‘ETP Listing Rules Filing’’). 7 See IEX Rule 11.510 (Connectivity).
Holder from the Exchange. Together
mstockstill on DSK3G9T082PROD with NOTICES

5 See SR–NYSEMKT–2017–1 (the ‘‘Trading Rules 8 The term ‘‘Away Market’’ is defined in Rule

Filing’’). The Exchange has also filed a proposed 1.1E(ff) to mean any exchange, alternate trading
with the application of the proposed
rule change to establish market maker obligations system (‘‘ATS’’) or other broker-dealer (1) with Delay Mechanism to all inbound
when trading on the Pillar trading platform. See which the Exchange maintains an electronic linkage
SR–NYSEMKT–2017–04 (the ‘‘Market Maker and (2) that provides instantaneous responses to 9 In the Trading Rules Filing, the Exchange has
Filing’’). After the Commission approves the ETP orders routed from the Exchange and that the proposed that Rule 7.29E would be titled ‘‘Access’’
Listing Rules Filing, Market Maker Filing, and Exchange will designate from time to time those and has proposed paragraph (a) to Rule 7.29E to
Trading Rules Filing, the Exchange will transition ATS’s or other broker-dealers that qualify as Away specify the general access requirements to the
to Pillar on a date announced by Trader Update. Markets. Exchange.

VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\15FEN1.SGM 15FEN1
Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices 10831

7.29E(b)(2)(C)). This proposed rule text Mechanism is not unfairly would provide for the same delay
is based on IEX Rule 11.510(c)(3)(B), discriminatory because it would be period as the IEX POP under the same
which provides that IEX applied uniformly to all Exchange ETP circumstances, is similarly de minimis
communications with the SIP to Holders and may not be bypassed for a for purposes of the Rule 611
disseminate quotation and last sale fee or otherwise. Interpretation.
information do not traverse the IEX The Exchange further believes that the
proposed Delay Mechanism would B. Self-Regulatory Organization’s
POP. The Exchange’s proposal not to
remove impediments to and perfect the Statement on Burden on Competition
apply the Delay Mechanism to
outbound communications to the plan mechanism of a free and open market The Exchange does not believe that
processors would therefore have the and a national market system and would the proposed rule change will impose
same effect as how IEX operates. protect investors and the public interest any burden on competition that is not
The Exchange proposes an additional because it would provide a choice of necessary or appropriate in furtherance
difference between its proposed Delay exchanges for market participants that of the purposes of the Act. The
Mechanism and the IEX POP. As set prefer to trade or list on an exchange proposed change is designed to provide
forth in Supplementary Material .10 that offers a delay mechanism. a competitive trading model to IEX. For
[sic] to IEX Rule 11.510, IEX would not The Exchange also believes that the this reason, the Exchange has proposed
apply the IEX POP when trading out of proposed Delay Mechanism, as it would a Delay Mechanism that would function
its back up system because it does not apply to orders that are routed to Away similarly to the IEX POP, with the
offer connectivity from the IEX POP to Markets, would remove impediments to exception of how the Delay Mechanism
its back up systems. By contrast, the and perfect the mechanism of a free and would be applied to routable orders.
Exchange proposes that the Delay open market and a national market The Exchange believes that its proposed
Mechanism would be functional system and would protect investors and application of the Delay Mechanism to
regardless of whether the Exchange is the public interest because it is designed routable orders would not impose a
operating out of its primary or in a manner that would enable ETP burden on competition because it is
secondary data center. Holders that would prefer to route designed in a manner that would enable
* * * * * unexecuted quantities of orders to Away ETP Holders that would prefer to route
Subject to rule approvals, the Markets, rather than having the unexecuted quantities of orders to Away
Exchange will announce the Exchange route to Away Markets, to Markets, rather than having the
implementation of the Delay operate on a level playing field. As Exchange route to Away Markets, to
Mechanism by Trader Update, which such, this aspect of the proposed Delay operate on a level playing field. The
may be after the Exchange transitions to Mechanism is not unfairly Exchange’s proposal is therefore
Pillar. discriminatory and would not impose a designed to promote competition by
burden on competition because the offering a choice of exchanges to those
2. Statutory Basis Exchange’s outbound router would not ETP Holders and issuers that prefer to
The proposed rule change is have unique access or preferences with trade or list on an exchange that offers
consistent with Section 6(b) of the respect to orders routed to Away a delay mechanism. Accordingly, the
Securities Exchange Act of 1934 (the Markets. As such, the Exchange’s proposed rule change is designed to
‘‘Act’’),14 in general, and furthers the outbound router functionality would be introduce additional competition among
objectives of Section 6(b)(5),15 in on substantively comparable terms to a exchanges so that broker dealers and
particular, because it is designed to third party routing broker that is a issuers have more than one option if
prevent fraudulent and manipulative member of the Exchange. seeking a trading venue that offers an
acts and practices, to promote just and In addition, the Exchange believes intentional delay mechanism.
equitable principles of trade, to foster that the proposed Delay Mechanism is
cooperation and coordination with consistent with the Commission’s recent C. Self-Regulatory Organization’s
persons engaged in facilitating interpretation of Rule 611 of Regulation Statement on Comments on the
transactions in securities, to remove NMS.17 The Commission has Proposed Rule Change Received From
impediments to, and perfect the interpreted the term ‘‘immediate’’ when Members, Participants, or Others
mechanism of, a free and open market determining whether a trading center No written comments were solicited
and a national market system and, in maintains an ‘‘automated quotation’’ for or received with respect to the proposed
general, to protect investors and the purposes of Rule 611 to include rule change.
public interest. The Exchange believes response time delays at trading centers
that the proposed rules to add the that are de minimis, whether intentional III. Date of Effectiveness of the
proposed Delay Mechanism would or not. As such, a trading center may Proposed Rule Change and Timing for
remove impediments to and perfect the implement an intentional access delay Commission Action
mechanism of a free and open market that is de minimis, i.e., a delay so short Within 45 days of the date of
because it would apply a similar delay so as not to frustrate the purposes of publication of this notice in the Federal
to order message processing as the Rule 611 of Regulation NMS by Register or such longer period up to 90
Commission has recently approved for impairing fair and efficient access to an days (i) as the Commission may
IEX, with differences only with respect exchange’s quotations. In the context of designate if it finds such longer period
to how the Delay Mechanism would IEX, the Commission has already found to be appropriate and publishes its
function for orders that route to an that an intentional delay of 350 reasons for so finding or (ii) as to which
mstockstill on DSK3G9T082PROD with NOTICES

Away Market.16 The Exchange further microseconds is de minimis.18 the self-regulatory organization
believes that the proposed Delay Accordingly, the Exchange believes that consents, the Commission will:
its proposed Delay Mechanism, which (A) By order approve or disapprove
14 15 U.S.C. 78f(b).
15 15
the proposed rule change, or
U.S.C. 78f(b)(5). 17 See Securities Exchange Act Release No. 78102
16 Securities Exchange Act Release No. 78101 (June 17, 2016), 81 FR 40785 (June 23, 2016) (File (B) institute proceedings to determine
(June 17, 2016), 81 FR 41141, 41155 (June 23, 2016) No. S7–03–16) (‘‘Rule 611 Interpretation’’). whether the proposed rule change
(‘‘IEX Approval Order’’). 18 See IEX Approval Order, supra note 16. should be disapproved.

VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\15FEN1.SGM 15FEN1
10832 Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices

IV. Solicitation of Comments For the Commission, by the Division of enterprise, joint arrangement, or profit-
Trading and Markets, pursuant to delegated sharing plan.
Interested persons are invited to authority.19 Rule 17d–1 also contains a number of
submit written data, views, and Eduardo A. Aleman, exceptions to the requirement that a
arguments concerning the foregoing, Assistant Secretary. fund must obtain Commission approval
including whether the proposed rule [FR Doc. 2017–02994 Filed 2–14–17; 8:45 am] prior to entering into joint transactions
change is consistent with the Act. BILLING CODE 8011–01–P or arrangements with affiliates. For
Comments may be submitted by any of example, funds do not have to obtain
the following methods: Commission approval for certain
SECURITIES AND EXCHANGE employee compensation plans, certain
Electronic Comments COMMISSION tax-deferred employee benefit plans,
• Use the Commission’s Internet certain transactions involving small
Submission for OMB Review; business investment companies, the
comment form (http://www.sec.gov/ Comment Request receipt of securities or cash by certain
rules/sro.shtml); or affiliates pursuant to a plan of
• Send an email to rule-comments@ Upon Written Request, Copies Available reorganization, certain arrangements
sec.gov. Please include File Number SR– From: Securities and Exchange regarding liability insurance policies
NYSEMKT–2017–05 on the subject line. Commission, Office of Investor and transactions with ‘‘portfolio
Education and Advocacy, affiliates’’ (companies that are affiliated
Paper Comments Washington, DC 20549–0213. with the fund solely as a result of the
• Send paper comments in triplicate Extension: fund (or an affiliated fund) controlling
to Brent J. Fields, Secretary, Securities Rule 17d–1; SEC File No. 270–505, OMB them or owning more than five percent
Control No. 3235–0562. of their voting securities) so long as
and Exchange Commission, 100 F Street
Notice is hereby given that, pursuant certain other affiliated persons of the
NE., Washington, DC 20549–1090.
to the Paperwork Reduction Act of 1995 fund (e.g., the fund’s adviser, persons
All submissions should refer to File (44 U.S.C. 3501 et seq.), the Securities controlling the fund, and persons under
Number SR–NYSEMKT–2017–05. This and Exchange Commission common control with the fund) are not
file number should be included on the (‘‘Commission’’) has submitted to the parties to the transaction and do not
subject line if email is used. To help the Office of Management and Budget have a ‘‘financial interest’’ in a party to
Commission process and review your (‘‘OMB’’) a request for extension of the the transaction. The rule excludes from
comments more efficiently, please use the definition of ‘‘financial interest’’ any
previously approved collection of
only one method. The Commission will interest that the fund’s board of
information discussed below.
post all comments on the Commission’s directors (including a majority of the
Section 17(d) (15 U.S.C. 80a–17(d)) of directors who are not interested persons
Internet Web site (http://www.sec.gov/ the Investment Company Act of 1940 of the fund) finds to be not material, as
rules/sro.shtml). Copies of the (15 U.S.C. 80a et seq.) (the ‘‘Act’’) long as the board records the basis for
submission, all subsequent prohibits first- and second-tier affiliates its finding in their meeting minutes.
amendments, all written statements of a fund, the fund’s principal Thus, the rule contains two filing and
with respect to the proposed rule underwriters, and affiliated persons of recordkeeping requirements that
change that are filed with the the fund’s principal underwriters, acting constitute collections of information.
Commission, and all written as principal, to effect any transaction in First, rule 17d–1 requires funds that
communications relating to the which the fund or a company controlled wish to engage in a joint transaction or
proposed rule change between the by the fund is a joint or a joint and arrangement with affiliates to meet the
Commission and any person, other than several participant in contravention of procedural requirements for obtaining
those that may be withheld from the the Commission’s rules. Rule 17d–1 (17 exemptive relief from the rule’s
public in accordance with the CFR 270.17d–1) prohibits an affiliated prohibition on joint transactions or
provisions of 5 U.S.C. 552, will be person of or principal underwriter for arrangements involving first- or second-
available for Web site viewing and any fund (a ‘‘first-tier affiliate’’), or any tier affiliates. Second, rule 17d–1
printing in the Commission’s Public affiliated person of such person or permits a portfolio affiliate to enter into
Reference Room, 100 F Street NE., underwriter (a ‘‘second-tier affiliate’’), a joint transaction or arrangement with
acting as principal, from participating in the fund if a prohibited participant has
Washington, DC 20549, on official
or effecting any transaction in a financial interest that the fund’s board
business days between the hours of
connection with a joint enterprise or determines is not material and records
10:00 a.m. and 3:00 p.m. Copies of the
other joint arrangement in which the the basis for this finding in their
filing also will be available for fund is a participant, unless prior to meeting minutes. These requirements of
inspection and copying at the principal entering into the enterprise or rule 17d–1 are designed to prevent fund
office of the Exchange. All comments arrangement ‘‘an application regarding insiders from managing funds for their
received will be posted without change; [the transaction] has been filed with the own benefit, rather than for the benefit
the Commission does not edit personal Commission and has been granted by an of the funds’ shareholders.
identifying information from order.’’ In reviewing the proposed Based on an analysis of past filings,
submissions. You should submit only affiliated transaction, the rule provides Commission staff estimates that 18
information that you wish to make that the Commission will consider funds file applications under section
mstockstill on DSK3G9T082PROD with NOTICES

available publicly. All submissions whether the proposal is (i) consistent 17(d) and rule 17d–1 per year. The staff
should refer to File Number SR– with the provisions, policies, and understands that funds that file an
NYSEMKT–2017–05 and should be purposes of the Act, and (ii) on a basis application generally obtain assistance
submitted on or before March 8, 2017. different from or less advantageous than from outside counsel to prepare the
that of other participants in determining application. The cost burden of using
whether to grant an exemptive outside counsel is discussed below. The
19 17 CFR 200.30–3(a)(12). application for a proposed joint Commission staff estimates that each

VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\15FEN1.SGM 15FEN1
Document Created: 2017-02-15 00:54:51
Document Modified: 2017-02-15 00:54:51
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 10828