82 FR 10931 - Self-Regulatory Organizations; New York Stock Exchange LLC; Order Granting Approval of a Proposed Rule Change To Conform to Proposed Amendment to Rule 15c6-1(a) Under the Securities Exchange Act of 1934 To Shorten the Standard Settlement Cycle for Most Broker-Dealer Transactions From Three Business Days After the Trade Date (“T+3”) to Two Business Days After the Trade Date (“T+2”)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 31 (February 16, 2017)

Page Range		10931-10933
FR Document		2017-03110

Federal Register, Volume 82 Issue 31 (Thursday, February 16, 2017)

[Federal Register Volume 82, Number 31 (Thursday, February 16, 2017)]
[Notices]
[Pages 10931-10933]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-03110]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80021; File No. SR-NYSE-2016-87]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Granting Approval of a Proposed Rule Change To Conform to Proposed
Amendment to Rule 15c6-1(a) Under the Securities Exchange Act of 1934
To Shorten the Standard Settlement Cycle for Most Broker-Dealer
Transactions From Three Business Days After the Trade Date (``T+3'') to
Two Business Days After the Trade Date (``T+2'')

February 10, 2017.

I. Introduction

On December 15, 2016, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to conform its rules to an amendment proposed by
the Commission to Rule 15c6-1(a) under the Act to shorten the standard
settlement cycle for most broker-dealer transactions from three
business days after the trade date (``T+3'') to two business days after
the trade date (``T+2'').\3\ The proposed rule change was published for
comment in the Federal Register on December 29, 2016.\4\ The Commission
received two comments on the proposal, each of which supports the
proposed rule change.\5\ This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 78962 (Sept. 28,
2016), 81 FR 69240 (Oct. 5, 2016) (File No. S7-22-16) (``T+2
Proposing Release'').
\4\ See Securities Exchange Act Release No. 79659 (Dec. 22,
2016), 81 FR 84635 (Dec. 29, 2016).
\5\ See Letters from Manisha Kimmel, Chief Regulatory Officer,
Wealth Management, Thomson Reuters, dated January 19, 2017; and
Thomas F. Price, Managing Director, Operations, Technology & BCP,
Securities Industry and Financial Markets Association (``SIFMA''),
dated January 19, 2017.

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[[Page 10932]]

II. Description of the Proposal

The Exchange proposes to adopt Rules 14T (Non-Regular Way
Settlement Instructions for Orders); Dealings and SettlementsT (Rules
45-299C); 64T (Bonds, Rights and 100-Share-Unit Stocks); 235T (Ex-
Dividend, Ex-Rights); 236T (Ex-Warrants); 257T (Deliveries After ``Ex''
Date); 282.65T (Failure to Deliver and Liability Notice Procedures);
and Section 703.02T (part 2) of the Listed Company Manual (Stock Split/
Stock Rights/Stock Dividend Listing Process) in order to conform the
Exchange's rulebook to the Commission's proposed amendment to Rule
15c6-1(a) under the Act, which would shorten the standard settlement
cycle from T+3 to T+2 for most broker-dealer transactions.
Exchange Rule 14 defines ``non-regular way'' settlement
instructions as instructions that allow for settlement other than
``regular way'' (i.e., other than settlement on the third business day
following trade date for securities other than U.S. Government
Securities). Proposed Exchange Rule 14T would amend this definition to
replace ``third business day'' with ``second business day.''
The Exchange proposes similar changes to Exchange rules related to
Dealing and Settlements. Exchange rules related to Dealing and
Settlements define ``regular way'' as ``due on the third business day
following the day of the contract.'' Proposed Exchange Rule Dealing and
SettlementsT would replace ``third business day'' with ``second
business day.''
Similarly, Exchange Rule 64(a) defines ``regular way'' as ``for
delivery on the third business day following the day of the contract.''
Proposed Exchange Rule 64T(a) would replace ``third business day'' with
``second business day.'' Exchange Rule 64(a)(ii) currently provides
that on the second and third business days preceding the final day for
subscription, bids and offers in rights to subscribe shall be made only
``next day.'' To conform with the move to a T+2 settlement cycle,
proposed Exchange Rule 64T(a)(ii) would delete the reference to the
third business day preceding the final day for subscription, because in
a T+2 settlement cycle, bids and offers in rights to subscribe on that
day would simply be subject to ``regular way'' settlement. Under
Current Rule 64(c), all ``seller's option'' trades, for delivery
between 2 and 60 business days, should be reported to the tape only in
calendar days. The Exchange proposes to amend Exchange Rule 64T(c) to
replace the reference to ``two'' with a reference to ``three.''
Exchange Rule 235 provides that transactions in stocks, except
those made for ``cash'' as prescribed in Exchange Rule 14, shall be ex-
dividend or ex-rights on the second business day preceding the record
date fixed by the corporation or the date of the closing of transfer
books. The Exchange proposes in Exchange Rule 235T to change ``second
business day preceding'' to ``business day preceding.'' The current
Exchange Rule 235 further provides that, if the record date or closing
of transfer books occurs upon a day other than a business day, Exchange
Rule 235 shall apply for the third preceding business day. The Exchange
proposes to change ``third preceding business day'' to ``second
preceding business day'' in proposed Exchange Rule 235T.
Exchange Rule 236 pertaining to ex-warrants similarly provides that
transactions in securities that have subscription warrants attached,
except those made for cash, shall be ex-warrants on the second business
day preceding the date of expiration of the warrants, except that when
the date of expiration occurs on a day other than a business day, the
transactions shall be ex-warrants on the third business day preceding
the date of expiration. The Exchange proposes to adopt proposed
Exchange Rule 236T and change the warrant period to the business day
preceding expiration of the warrants instead of the second business
day. Under proposed Exchange Rule 236T, when warrant expiration does
not occur on a business day, the ex-warrant period will begin on the
second business day preceding the expiration date instead of on the
third business day.
Exchange Rule 257 prescribes that the time frame for delivery of
dividends or rights for securities sold before the ``ex'' date but
delivered after the record date must occur within three days after the
record date. Proposed Exchange Rule 257T would shorten the time frame
to two days.
Subdivision (1)(A) of Supplementary Material .65 to current
Exchange Rule 282 provides that, when a liability notice is sent by
parties to a contract who are not both participants in a Qualified
Clearing Agency that has an automated service for notifying a failing
party of the liability that will be attendant to a failure to deliver,
that notice must be issued no later than one business day prior to the
latest time and the date of the offer or other event in order to obtain
the protection provided under Exchange Rule 282. The Exchange proposes
to amend the Supplementary Material so that Exchange Rule 282.65T(1)(A)
would provide that, to obtain the protection provided by Exchange Rule
282, the receiving member organization must send the liability notice
to the delivering member organization as soon as practicable but not
later than two hours prior to the cutoff time set forth in the
instructions on a specific offer or other event.
Finally, Section 703.02 (part 2) of the Listed Company Manual
prescribes that a distribution of less than 25% of a company's common
stock is traded ``ex'' on or after the second business day after the
record date. This procedure is based on the Exchange's current three-
day delivery rule in which contracts made on the Exchange for the
purchase and sale of securities are settled by delivery on the third
business day after the contract is made, unless other terms of
settlement are specified at the time the contract is made. The Exchange
proposes to adopt Section 703.02T (part 2) to provide that a
distribution of less than 25% of a company's common stock is traded
``ex'' on and after the business day prior to the record date.
The Exchange proposes to adopt the rules but delay making the rules
operative until the compliance date of any amendment to Rule 15c6-1(a)
under the Act that the Commission adopts. The Exchange proposes to add
preambles to each amended rule, and to the rule it would replace, to
provide that (1) the existing rule will remain operative until the
Exchange files separate proposed rule changes as necessary to establish
the operative date of the revised rule, to delete the current rule and
proposed preamble, and to remove the preamble text from the revised
rule; and (2) in addition to filing the necessary proposed rule
changes, the Exchange will announce via Information Memo the operative
date of the deletion of the current rule and implementation of the
proposed rule designated with a T.

III. Discussion and Commission's Findings

After careful review of the proposed rule change and the comments,
the Commission finds that the proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange.\6\ Specifically, the
Commission finds that the rule change is consistent with Section
6(b)(5) of the Act,\7\ which requires that the rules of a national
securities exchange be designed, among

[[Page 10933]]

other things, 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 mechanism of a free and open market and a national market
system, and to protect investors and the public interest.
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\6\ In approving this proposed rule change, the Commission has
considered the rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
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As noted above, the Commission received two comment letters on the
proposed rule change.\8\ Both comment letters express support for
Commission approval of the proposed rule change.
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\8\ See supra note 5.
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The Commission notes that the proposal would amend the Exchange's
rules to conform to the amendment that the Commission has proposed to
Rule 15c6-1(a) under the Act \9\ and support a move to a T+2 standard
settlement cycle. In the T+2 Proposing Release the Commission stated
its preliminary belief that shortening the standard settlement cycle
from T+3 to T+2 will result in a reduction of credit, market, and
liquidity risk,\10\ and as a result a reduction in systemic risk for
U.S. market participants.\11\ The Commission also notes that it has not
yet adopted the proposed amendment to Rule 15c6-1(a) under the Act and
that the Exchange has, accordingly, not proposed to make its amended
rules operative at present. Instead, the Exchange has proposed to
announce the operative date of the Exchange's proposal via Information
Memo and by filing a separate proposed rule change. The Commission
expects that the operative date of the proposed rule change would
correspond with the compliance date of any amendment to Rule 15c6-1(a)
that is adopted by the Commission. The Commission notes that, in
October 2014, Depository Trust and Clearing Corporation, in
collaboration with the Investment Company Institute, SIFMA, and other
market participants, formed an Industry Steering Group (``ISC'') and an
industry working group to facilitate the transition to a T+2 settlement
cycle for U.S. trades in equities, corporate and municipal bonds, and
unit investment trusts.\12\ The ISC has identified September 5, 2017,
as the target date for the transition to a T+2 settlement cycle to
occur.\13\
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\9\ See supra note 3.
\10\ Credit risk refers to the risk that the credit quality of
one party to a transaction will deteriorate to the extent that it is
unable to fulfill its obligations to its counterparty on settlement
date. Market risk refers to the risk that the value of securities
bought and sold will change between trade execution and settlement
such that the completion of the trade would result in a financial
loss. Liquidity risk describes the risk that an entity will be
unable to meet financial obligations on time due to an inability to
deliver funds or securities in the form required though it may
possess sufficient financial resources in other forms. See T+2
Proposing Release, supra note 3, 81 FR at 69241 n. 3.
\11\ See T+2 Proposing Release, supra note 3, 81 FR at 69241.
\12\ See Press Release, DTCC, Industry Steering Committee and
Working Group Formed to Drive Implementation of T+2 in the U.S.
(Oct. 2014), http://www.dtcc.com/news/2014/october/16/ust2.aspx.
\13\ See Press Release, ISC, US T+2 ISC Recommends Move to
Shorter Settlement Cycle On September 5, 2017 (Mar. 7, 2016), http://www.ust2.com/pdfs/T2-ISC-recommends-shorter-settlement-030716.pdf.
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For the reasons noted above, the Commission finds that the proposal
is consistent with the requirements of the Act and would 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 mechanism of a free and open market and a national market
system, and to protect investors and the public interest.

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-NYSE-2016-87), be and hereby
is, approved.
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\14\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03110 Filed 2-15-17; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 31 / Thursday, February 16, 2017 / Notices 10931

Gemini’s functionality prevents simplify functionality available on the Nos. 1 and 2, be, and hereby is,
Immediate-or-Cancel (‘‘IOC’’) orders Exchange and reduce the complexity of approved.
entered by a market maker from trading its order types.68 The Exchange further For the Commission, by the Division of
with the market maker’s own quote.62 represents that the utilization of Trading and Markets, pursuant to delegated
The Exchange proposes to replace this minimum quantity orders by its authority.75
self-trade protection with anti- members has been very limited and is Eduardo A. Aleman,
internalization functionality currently currently being utilized to transact less Assistant Secretary.
offered on Phlx.63 The Exchange than 1% of the Exchange’s volume.69
[FR Doc. 2017–03101 Filed 2–15–17; 8:45 am]
proposes to provide that quotes and Accordingly, the Commission believes it
BILLING CODE 8011–01–P
orders entered by market makers using is appropriate for the Exchange to
the same member identifier will not be remove references to the minimum
executed against quotes and orders quantity order type.
SECURITIES AND EXCHANGE
entered on the opposite side of the
I. Delay of Implementation of Directed COMMISSION
market by the same market maker using
Orders and Qualified Contingent Cross
the same member identifier. In such a
Orders [Release No. 34–80021; File No. SR–NYSE–
case, the system will cancel the resting
quote or order back to the entering party Currently, ISE Gemini rules provide 2016–87]
prior to execution. The proposed anti- for the use of Directed Orders 70 and
Qualified Contingent Cross Orders.71 Self-Regulatory Organizations; New
internalization functionality will not
The Exchange proposes to amend ISE York Stock Exchange LLC; Order
apply in any auction. The Exchange
states that this proposed functionality Gemini Rules 721 (Crossing Orders) and Granting Approval of a Proposed Rule
does not modify the duty of best 811 (Directed Orders) to note that these Change To Conform to Proposed
execution owed to public customer functionalities will not be available as of Amendment to Rule 15c6–1(a) Under
orders.64 a certain date in the first quarter of 2017 the Securities Exchange Act of 1934 To
The Exchange represents that the to be announced in a notice. The Shorten the Standard Settlement Cycle
proposal is designed to assist market Exchange represents that it will for Most Broker-Dealer Transactions
makers in reducing trading costs from recommence the Directed Orders and From Three Business Days After the
unwanted executions potentially Qualified Contingent Cross Trade Date (‘‘T+3’’) to Two Business
resulting from the interaction of functionalities on ISE Gemini within Days After the Trade Date (‘‘T+2’’)
executable interest from the same firm one year from the date of the filing of February 10, 2017.
performing the same market making the proposed rule change. Otherwise,
function.65 The Commission believes the Exchange will file a rule proposal I. Introduction
that the proposed rule is reasonably with the Commission to remove these
designed to prevent the unwanted rules. On December 15, 2016, New York
execution of quotes and orders entered The Exchange represents that it Stock Exchange LLC (‘‘NYSE’’ or
by market makers using the same proposes to delay the implementation of ‘‘Exchange’’) filed with the Securities
member identifier. the Directed Order and Qualified and Exchange Commission
Contingent Cross Order functionalities (‘‘Commission’’), pursuant to Section
H. Minimum Execution Quantity Orders on ISE Gemini to provide the Exchange 19(b)(1) of the Securities Exchange Act
The Exchange proposes to amend ISE additional time to rebuild the required of 1934 (‘‘Act’’) 1 and Rule 19b–4
Gemini Rule 715 (Types of Orders) to technology on the new platform.72 The thereunder,2 a proposed rule change to
remove minimum quantity orders in Exchange further represents that conform its rules to an amendment
subpart (q).66 The Exchange states that members have been given adequate proposed by the Commission to Rule
the utilization of minimum quantity notice of the implementation dates and 15c6–1(a) under the Act to shorten the
orders by its members has been very that the Exchange will provide further standard settlement cycle for most
limited, and therefore proposes to notifications to members to ensure broker-dealer transactions from three
remove this order type.67 Furthermore, clarity about the delay of business days after the trade date
the Exchange proposes to remove two implementation of these (‘‘T+3’’) to two business days after the
references to minimum quantity orders functionalities.73 The Commission trade date (‘‘T+2’’).3 The proposed rule
in Supplementary Material .02 to ISE believes that the proposed rule change change was published for comment in
Gemini Rule 713 and in Supplementary helps ensure clarity about the delay of the Federal Register on December 29,
Material .04 to ISE Gemini Rule 717. implementation of this functionality. 2016.4 The Commission received two
The Exchange states that the removing For these reasons, the Commission comments on the proposal, each of
the minimum quantity order type would believes that the proposed rule change, which supports the proposed rule
as modified by Amendment Nos. 1 and change.5 This order approves the
62 See id. 2, is consistent with the Act. proposed rule change.
63 See Phlx Rule 1080(p)(2).
64 See Notice, supra note 3, at 96120. IV. Conclusion
75 17 CFR 200.30–3(a)(12).
65 See Notice, supra note 3, at 96123.
It is therefore ordered, pursuant to 1 15 U.S.C. 78s(b)(1).
66 A Minimum Quantity Order is an order type
Section 19(b)(2) of the Act,74 that the 2 17 CFR 240.19b–4.
that is available for partial execution only for a
proposed rule change (SR–ISEGemini- 3 See Securities Exchange Act Release No. 78962
asabaliauskas on DSK3SPTVN1PROD with NOTICES

specified number of contracts or greater. A member
may specify whether any subsequent executions of 2016–17), as modified by Amendment (Sept. 28, 2016), 81 FR 69240 (Oct. 5, 2016) (File
the order must also be for the specified number of No. S7–22–16) (‘‘T+2 Proposing Release’’).
4 See Securities Exchange Act Release No. 79659
contracts or greater, or if the balance may be 68 See Notice, supra note 3, at 96123.
executed as a regular order. If all executions are to 69 See
(Dec. 22, 2016), 81 FR 84635 (Dec. 29, 2016).
Notice, supra note 3, at 96120 n.35.
be for a specified number of contracts or greater and 70 See ISE Gemini Rule 811.
5 See Letters from Manisha Kimmel, Chief

the balance of the order after one or more partial Regulatory Officer, Wealth Management, Thomson
71 See ISE Gemini Rule 715(j).
execution(s) is less than the minimum, such Reuters, dated January 19, 2017; and Thomas F.
72 See Notice, supra note 3, at 96123.
balance is treated as all-or-none. See ISE Gemini Price, Managing Director, Operations, Technology &
Rule 715(q). 73 See id.
BCP, Securities Industry and Financial Markets
67 See Notice, supra note 3, at 96120. 74 15 U.S.C. 78s(b)(2). Association (‘‘SIFMA’’), dated January 19, 2017.

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Federal Register / Vol. 82, No. 31 / Thursday, February 16, 2017 / Notices 10933

other things, to prevent fraudulent and to a T+2 settlement cycle for U.S. trades prepared by the Exchange. The
manipulative acts and practices, to in equities, corporate and municipal Commission is publishing this notice to
promote just and equitable principles of bonds, and unit investment trusts.12 The solicit comments on the proposed rule
trade, to foster cooperation and ISC has identified September 5, 2017, as change from interested persons.
coordination with persons engaged in the target date for the transition to a T+2
I. Self-Regulatory Organization’s
regulating, clearing, settling, processing settlement cycle to occur.13
For the reasons noted above, the Statement of the Terms of Substance of
information with respect to, and
Commission finds that the proposal is the Proposed Rule Change
facilitating transactions in securities, to
remove impediments to and perfect the consistent with the requirements of the The Exchange proposes to amend the
mechanism of a free and open market Act and would foster cooperation and Exchange’s Pricing Schedule at Section
and a national market system, and to coordination with persons engaged in I, entitled ‘‘Rebates and Fees for Adding
protect investors and the public interest. regulating, clearing, settling, processing and Removing Liquidity in SPY,’’ and
As noted above, the Commission information with respect to, and Section II, entitled ‘‘Multiply Listed
received two comment letters on the facilitating transactions in securities, to Options Fees’’ 3 to amend various
proposed rule change.8 Both comment remove impediments to and perfect the transaction fees and rebates.
letters express support for Commission mechanism of a free and open market The text of the proposed rule change
approval of the proposed rule change. and a national market system, and to is available on the Exchange’s Web site
The Commission notes that the protect investors and the public interest. at http://nasdaqphlx.cchwallstreet
proposal would amend the Exchange’s .com/, at the principal office of the
rules to conform to the amendment that IV. Conclusion Exchange, and at the Commission’s
the Commission has proposed to Rule It is therefore ordered, pursuant to Public Reference Room.
15c6–1(a) under the Act 9 and support a Section 19(b)(2) of the Act,14 that the
proposed rule change (SR–NYSE–2016– II. Self-Regulatory Organization’s
move to a T+2 standard settlement
87), be and hereby is, approved. Statement of the Purpose of, and
cycle. In the T+2 Proposing Release the
Statutory Basis for, the Proposed Rule
Commission stated its preliminary belief For the Commission, by the Division of Change
that shortening the standard settlement Trading and Markets, pursuant to delegated
cycle from T+3 to T+2 will result in a authority.15 In its filing with the Commission, the
reduction of credit, market, and Eduardo A. Aleman, Exchange included statements
liquidity risk,10 and as a result a Assistant Secretary. concerning the purpose of and basis for
reduction in systemic risk for U.S. [FR Doc. 2017–03110 Filed 2–15–17; 8:45 am]
the proposed rule change and discussed
market participants.11 The Commission any comments it received on the
BILLING CODE 8011–01–P
also notes that it has not yet adopted the proposed rule change. The text of these
proposed amendment to Rule 15c6–1(a) statements may be examined at the
under the Act and that the Exchange SECURITIES AND EXCHANGE places specified in Item IV below. The
has, accordingly, not proposed to make COMMISSION Exchange has prepared summaries, set
its amended rules operative at present. forth in sections A, B, and C below, of
Instead, the Exchange has proposed to [Release No. 34–80008; File No. SR–Phlx– the most significant aspects of such
2017–09] statements.
announce the operative date of the
Exchange’s proposal via Information Self-Regulatory Organizations; A. Self-Regulatory Organization’s
Memo and by filing a separate proposed NASDAQ PHLX LLC; Notice of Filing Statement of the Purpose of, and
rule change. The Commission expects and Immediate Effectiveness of Statutory Basis for, the Proposed Rule
that the operative date of the proposed Proposed Rule Change To Amend Change
rule change would correspond with the Sections I and II of the Pricing
compliance date of any amendment to Schedule 1. Purpose
Rule 15c6–1(a) that is adopted by the The purpose of the proposed rule
Commission. The Commission notes February 10, 2017. change is to amend the Exchange’s
that, in October 2014, Depository Trust Pursuant to Section 19(b)(1) of the Pricing Schedule at Section I, entitled
and Clearing Corporation, in Securities Exchange Act of 1934 ‘‘Rebates and Fees for Adding and
collaboration with the Investment (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Removing Liquidity in SPY,’’ to (i)
Company Institute, SIFMA, and other notice is hereby given that, on February amend the Simple Order Rebate for
market participants, formed an Industry 1, 2017, NASDAQ PHLX LLC (‘‘Phlx’’ or Adding Liquidity which is paid to
Steering Group (‘‘ISC’’) and an industry ‘‘Exchange’’) filed with the Securities Specialists 4 and Market Makers; 5
working group to facilitate the transition and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule 3 Multiply Listed Options includes options
8 See supra note 5. change as described in Items I, II, and overlying equities, ETFs, ETNs and indexes which
9 See supra note 3. are Multiply Listed.
III below, which Items have been
10 Credit risk refers to the risk that the credit 4 The term ‘‘Specialist’’ applies to transactions for

quality of one party to a transaction will deteriorate 12 See Press Release, DTCC, Industry Steering the account of a Specialist (as defined in Exchange
to the extent that it is unable to fulfill its obligations Rule 1020(a)).
Committee and Working Group Formed to Drive
to its counterparty on settlement date. Market risk 5 The term ‘‘Market Maker’’ describes fees and
Implementation of T+2 in the U.S. (Oct. 2014),
refers to the risk that the value of securities bought rebates applicable to Registered Options Traders
http://www.dtcc.com/news/2014/october/16/
and sold will change between trade execution and
asabaliauskas on DSK3SPTVN1PROD with NOTICES

ust2.aspx. (‘‘ROT’’), Streaming Quote Traders (‘‘SQT’’) and
settlement such that the completion of the trade 13 See Press Release, ISC, US T+2 ISC Remote Streaming Quote Traders (‘‘RSQT’’). A ROT
would result in a financial loss. Liquidity risk is defined in Exchange Rule 1014(b) as a regular
describes the risk that an entity will be unable to Recommends Move to Shorter Settlement Cycle On
member of the Exchange located on the trading
meet financial obligations on time due to an September 5, 2017 (Mar. 7, 2016), http://
floor who has received permission from the
inability to deliver funds or securities in the form www.ust2.com/pdfs/T2-ISC-recommends-shorter-
Exchange to trade in options for his own account.
required though it may possess sufficient financial settlement-030716.pdf.
14 15 U.S.C. 78s(b)(2).
A ROT includes SQTs and RSQTs as well as on and
resources in other forms. See T+2 Proposing off-floor ROTS. An SQT is defined in Exchange
15 17 CFR 200.30–3(a)(12).
Release, supra note 3, 81 FR at 69241 n. 3. Rule 1014(b)(ii)(A) as an ROT who has received
11 See T+2 Proposing Release, supra note 3, 81 FR 1 15 U.S.C. 78s(b)(1).
permission from the Exchange to generate and
at 69241. 2 17 CFR 240.19b–4. Continued

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Document Created: 2018-02-01 15:02:24
Document Modified: 2018-02-01 15:02:24

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 10931