82 FR 10940 - Self-Regulatory Organizations; NYSE MKT 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		10940-10942
FR Document		2017-03109
Federal Register, Volume 82 Issue 31 (Thursday, February 16, 2017)
[Federal Register Volume 82, Number 31 (Thursday, February 16, 2017)]
[Notices]
[Pages 10940-10942]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03109]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80020; File No. SR-NYSEMKT-2016-119]


Self-Regulatory Organizations; NYSE MKT 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, NYSE MKT LLC (``NYSE MKT'' 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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II. Description of the Proposal

    The Exchange proposes to adopt Equities Rules 14T--Equities (Non-
Regular Way Settlement Instructions for Orders); 64T--Equities (Bonds, 
Rights and 100-Share-Unit Stocks); 235T--Equities (Ex-Dividend, Ex-
Rights); 236T--Equities (Ex-Warrants); 257T--Equities (Deliveries After 
``Ex'' Date); 282.65T--Equities (Failure to Deliver and Liability 
Notice Procedures); and Sections 510T (Three Day Delivery Plan) and 
512T (Ex-Dividend Procedure) of the NYSE MKT Company Guide, 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--Equities 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--Equities would amend this 
definition to replace ``third business day'' with ``second business 
day.''
    Similarly, Exchange Rule 64(a)--Equities defines ``regular way'' as 
``for delivery on the third business day following the day of the 
contract.'' Proposed Exchange Rule 64T(a)--Equities would replace 
``third business day'' with ``second business day.'' \6\ Exchange Rule 
64(a)(ii)--Equities 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)--
Equities 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 Exchange Rule 64(c)--
Equities, 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)--Equities to 
replace the reference to ``two'' with a reference to ``three.''
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    \6\ The Exchange also proposes to make several non-substantive 
changes. As reflected in proposed Exchange Rule 64T(a)(i)--Equities, 
italics would be removed from the single quote before the words 
``issued'' and ``regular'' and a missing parenthesis added before 
the word ``See'' in the second sentence of the second paragraph. 
Italics would also be removed from the single quote before the word 
``seller's'' in five places in proposed Exchange Rule 64T(c)--
Equities as well as before the word ``regular'' in the last 
sentence. Finally, as reflected in proposed Exchange Rule 64T(a)(1), 
(a)(ii) and (b)--Equities, bold would be removed from ``(a)(i),'' 
``(ii)'' and ``(b).''
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    Exchange Rule 235--Equities provides that transactions in stocks, 
except those made for ``cash'' as prescribed in Exchange Rule 14--
Equities, 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--Equities to change ``second business day preceding'' to 
``business day preceding.'' The current Exchange Rule 235--Equities 
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--Equities.\7\
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    \7\ The Exchange also proposes to make non-substantive changes 
to correct punctuation in proposed Exchange Rule 235T--Equities by 
removing italics from the single quote before the word ``cash'' in 
two places.
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    Exchange Rule 236--Equities 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

[[Page 10941]]

transactions shall be ex-warrants on the third business day preceding 
the date of expiration. The Exchange proposes to adopt proposed 
Exchange Rule 236T--Equities 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--Equities, 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.\8\
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    \8\ The Exchange also proposes to make non-substantive changes 
to correct punctuation in proposed Rule 236T--Equities by removing 
italics from the single quote before the word ``cash'' in two 
places.
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    Exchange Rule 257--Equities 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--Equities would 
shorten the time frame to two days.\9\
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    \9\ The Exchange also proposes to make non-substantive changes 
to correct punctuation in proposed Rule 257T--Equities by removing 
italics from the single quote before the word ``Ex'' in the heading 
and the word ``cash'' in the rule text.
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    Subdivision (1)(A) of Supplementary Material .65 to current 
Exchange Rule 282--Equities 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--
Equities. The Exchange proposes to amend the Supplementary Material so 
that Exchange Rule 282.65T(1)(A)--Equities would provide that, to 
obtain the protection provided by Exchange Rule 282- Equities, 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.
    Section 510 of the Exchange's Company Guide provides that all 
transactions effected on the Exchange (unless otherwise specified) will 
be settled in three business days. Additionally, Section 510 states 
that a ``regular way'' transaction is due for settlement by delivery of 
the securities against payment on the third business day after the 
transaction date. Section 510 also provides an example stating that a 
``regular way'' transaction made on a Friday is due for settlement on 
Wednesday of the following week and that a transaction on Monday is due 
for settlement on Thursday of the same week. The Exchange proposes in 
Section 510T to replace both references to ``three business days'' with 
a reference to ``two business days.'' Proposed Section 510T would also 
amend the example provided in Section 510 by changing ``Wednesday'' to 
``Tuesday'' and ``Thursday'' to ``Wednesday.''
    Section 512 of the Exchange's Company Guide provides that 
transactions in stocks (except those made for ``cash'') are ex-dividend 
on the second business day preceding the record date, unless the record 
date selected is not a business day, in which case the stock will be 
quoted ex-dividend on the third preceding business day. Proposed 
Section 512T would shorten these time frames to the business day 
preceding the record date and the second business day preceding the 
record date, respectively.
    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.\10\ Specifically, the 
Commission finds that the rule change is consistent with Section 
6(b)(5) of the Act,\11\ which requires that the rules of a national 
securities exchange be designed, among 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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    \10\ 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).
    \11\ 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.\12\ Both comment letters express support for 
Commission approval of the proposed rule change.
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    \12\ 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 \13\ 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,\14\ and as a result a reduction in systemic risk for 
U.S. market participants.\15\ 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

[[Page 10942]]

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.\16\ The ISC 
has identified September 5, 2017, as the target date for the transition 
to a T+2 settlement cycle to occur.\17\
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    \13\ See supra note 3.
    \14\ 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.
    \15\ See T+2 Proposing Release, supra note 3, 81 FR at 69241.
    \16\ 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.
    \17\ See Press Release, ISC, U.S. 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,\18\ that the proposed rule change (SR-NYSEMKT-2016-119), be and 
hereby is, approved.
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    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03109 Filed 2-15-17; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 31 / Thursday, February 16, 2017 / Notices 10941

transactions shall be ex-warrants on the 510 also provides an example stating requires that the rules of a national
third business day preceding the date of that a ‘‘regular way’’ transaction made securities exchange be designed, among
expiration. The Exchange proposes to on a Friday is due for settlement on other things, to prevent fraudulent and
adopt proposed Exchange Rule 236T— Wednesday of the following week and manipulative acts and practices, to
Equities and change the warrant period that a transaction on Monday is due for promote just and equitable principles of
to the business day preceding expiration settlement on Thursday of the same trade, to foster cooperation and
of the warrants instead of the second week. The Exchange proposes in coordination with persons engaged in
business day. Under proposed Exchange Section 510T to replace both references regulating, clearing, settling, processing
Rule 236T—Equities, when warrant to ‘‘three business days’’ with a information with respect to, and
expiration does not occur on a business reference to ‘‘two business days.’’ facilitating transactions in securities, to
day, the ex-warrant period will begin on Proposed Section 510T would also remove impediments to and perfect the
the second business day preceding the amend the example provided in Section mechanism of a free and open market
expiration date instead of on the third 510 by changing ‘‘Wednesday’’ to and a national market system, and to
business day.8 ‘‘Tuesday’’ and ‘‘Thursday’’ to protect investors and the public interest.
Exchange Rule 257—Equities ‘‘Wednesday.’’ As noted above, the Commission
prescribes that the time frame for Section 512 of the Exchange’s received two comment letters on the
delivery of dividends or rights for Company Guide provides that proposed rule change.12 Both comment
securities sold before the ‘‘ex’’ date but transactions in stocks (except those letters express support for Commission
delivered after the record date must made for ‘‘cash’’) are ex-dividend on the approval of the proposed rule change.
occur within three days after the record second business day preceding the The Commission notes that the
date. Proposed Exchange Rule 257T— record date, unless the record date proposal would amend the Exchange’s
Equities would shorten the time frame selected is not a business day, in which rules to conform to the amendment that
to two days.9 case the stock will be quoted ex- the Commission has proposed to Rule
Subdivision (1)(A) of Supplementary dividend on the third preceding 15c6–1(a) under the Act 13 and support
Material .65 to current Exchange Rule business day. Proposed Section 512T a move to a T+2 standard settlement
282—Equities provides that when a would shorten these time frames to the cycle. In the T+2 Proposing Release the
liability notice is sent by parties to a business day preceding the record date Commission stated its preliminary belief
contract who are not both participants and the second business day preceding that shortening the standard settlement
in a Qualified Clearing Agency that has the record date, respectively. cycle from T+3 to T+2 will result in a
an automated service for notifying a The Exchange proposes to adopt the reduction of credit, market, and
failing party of the liability that will be rules but delay making the rules liquidity risk,14 and as a result a
operative until the compliance date of reduction in systemic risk for U.S.
attendant to a failure to deliver, that
any amendment to Rule 15c6–1(a) under market participants.15 The Commission
notice must be issued no later than one
the Act that the Commission adopts. also notes that it has not yet adopted the
business day prior to the latest time and
The Exchange proposes to add proposed amendment to Rule 15c6–1(a)
the date of the offer or other event in
preambles to each amended rule, and to under the Act and that the Exchange
order to obtain the protection provided
the rule it would replace, to provide that has, accordingly, not proposed to make
under Exchange Rule 282—Equities.
(1) the existing rule will remain its amended rules operative at present.
The Exchange proposes to amend the
operative until the Exchange files Instead, the Exchange has proposed to
Supplementary Material so that
separate proposed rule changes as announce the operative date of the
Exchange Rule 282.65T(1)(A)—Equities
necessary to establish the operative date Exchange’s proposal via Information
would provide that, to obtain the of the revised rule, to delete the current Memo and by filing a separate proposed
protection provided by Exchange Rule rule and proposed preamble, and to rule change. The Commission expects
282– Equities, the receiving member remove the preamble text from the that the operative date of the proposed
organization must send the liability revised rule; and (2) in addition to filing rule change would correspond with the
notice to the delivering member the necessary proposed rule changes, compliance date of any amendment to
organization as soon as practicable but the Exchange will announce via Rule 15c6–1(a) that is adopted by the
not later than two hours prior to the Information Memo the operative date of Commission. The Commission notes
cutoff time set forth in the instructions the deletion of the current rule and that, in October 2014, Depository Trust
on a specific offer or other event. implementation of the proposed rule and Clearing Corporation, in
Section 510 of the Exchange’s designated with a T. collaboration with the Investment
Company Guide provides that all Company Institute, SIFMA, and other
transactions effected on the Exchange III. Discussion and Commission’s
market participants, formed an Industry
(unless otherwise specified) will be Findings
settled in three business days. After careful review of the proposed 12 See supra note 5.
Additionally, Section 510 states that a rule change and the comments, the 13 See supra note 3.
‘‘regular way’’ transaction is due for Commission finds that the proposal is 14 Credit risk refers to the risk that the credit

settlement by delivery of the securities consistent with the requirements of the quality of one party to a transaction will deteriorate
against payment on the third business to the extent that it is unable to fulfill its obligations
Act and the rules and regulations to its counterparty on settlement date. Market risk
day after the transaction date. Section thereunder that are applicable to a refers to the risk that the value of securities bought
national securities exchange.10 and sold will change between trade execution and
asabaliauskas on DSK3SPTVN1PROD with NOTICES

8 The Exchange also proposes to make non- settlement such that the completion of the trade
Specifically, the Commission finds that
substantive changes to correct punctuation in would result in a financial loss. Liquidity risk
proposed Rule 236T—Equities by removing italics
the rule change is consistent with describes the risk that an entity will be unable to
from the single quote before the word ‘‘cash’’ in two Section 6(b)(5) of the Act,11 which meet financial obligations on time due to an
places. inability to deliver funds or securities in the form
9 The Exchange also proposes to make non- 10 In approving this proposed rule change, the required though it may possess sufficient financial
substantive changes to correct punctuation in Commission has considered the rule’s impact on resources in other forms. See T+2 Proposing
proposed Rule 257T—Equities by removing italics efficiency, competition, and capital formation. See Release, supra note 3, 81 FR at 69241 n. 3.
from the single quote before the word ‘‘Ex’’ in the 15 U.S.C. 78c(f). 15 See T+2 Proposing Release, supra note 3, 81 FR

heading and the word ‘‘cash’’ in the rule text. 11 15 U.S.C. 78f(b)(5). at 69241.

VerDate Sep<11>2014 19:05 Feb 15, 2017 Jkt 241001 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 E:\FR\FM\16FEN1.SGM 16FEN1
10942 Federal Register / Vol. 82, No. 31 / Thursday, February 16, 2017 / Notices

Steering Group (‘‘ISC’’) and an industry Items I, II, and III below, which Items Background
working group to facilitate the transition have been prepared by the self- Rule 98 governs the operation of a
to a T+2 settlement cycle for U.S. trades regulatory organization. The DMM unit and paragraph (c)(3) of that
in equities, corporate and municipal Commission is publishing this notice to rule specifies restrictions on trading for
bonds, and unit investment trusts.16 The solicit comments on the proposed rule member organizations operating a DMM
ISC has identified September 5, 2017, as change from interested persons. unit. More specifically, Rule 98(c)(3)(B)
the target date for the transition to a T+2
I. Self-Regulatory Organization’s provides that, while on the Trading
settlement cycle to occur.17
Statement of the Terms of Substance of Floor 5 of the Exchange, employees of
For the reasons noted above, the
Commission finds that the proposal is the Proposed Rule Change the DMM unit:
consistent with the requirements of the (i) Except as provided for in Rule
The Exchange proposes to amend 36.30,6 may trade only DMM securities
Act and would foster cooperation and Rule 98 to provide that, while on the
coordination with persons engaged in only on or through the systems and
Trading Floor, Designated Market facilities of the Exchange as permitted
regulating, clearing, settling, processing Makers (‘‘DMM’’) must trade DMM
information with respect to, and by Exchange rules.
securities at their assigned stock trading (ii) except as provided for in Rules
facilitating transactions in securities, to post location and may not trade any
remove impediments to and perfect the 36.30, may not communicate with
security that is a related product of their individuals or systems responsible for
mechanism of a free and open market DMM securities. The proposed rule
and a national market system, and to making trading decisions for related
change is available on the Exchange’s products or for away-market trading in
protect investors and the public interest. Web site at www.nyse.com, at the their assigned DMM securities.
IV. Conclusion principal office of the Exchange, and at (iii) shall not have access to customer
It is therefore ordered, pursuant to the Commission’s Public Reference information or the DMM unit’s position
Section 19(b)(2) of the Act,18 that the Room. in related products.
proposed rule change (SR–NYSEMKT– II. Self-Regulatory Organization’s Accordingly, under current Rule 98,
2016–119), be and hereby is, approved. Statement of the Purpose of, and while on the Trading Floor, DMMs may
For the Commission, by the Division of Statutory Basis for, the Proposed Rule only trade DMM securities and, thus,
Trading and Markets, pursuant to delegated Change may not trade any other securities,
authority.19 including securities that are related
Eduardo A. Aleman, In its filing with the Commission, the products to their DMM securities.
Assistant Secretary. self-regulatory organization included
Proposed Rule Change
statements concerning the purpose of,
[FR Doc. 2017–03109 Filed 2–15–17; 8:45 am]
and basis for, the proposed rule change The Exchange proposes to amend
BILLING CODE 8011–01–P
and discussed any comments it received Rule 98 to remove restrictions to DMM
on the proposed rule change. The text operations on the Trading Floor that are
of those statements may be examined at unrelated to the unique role of DMMs at
SECURITIES AND EXCHANGE
the places specified in Item IV below. the Exchange. Specifically, as described
COMMISSION
The Exchange has prepared summaries, in Rule 104, DMMs have specified
[Release No. 34–80019; File No. SR–NYSE– set forth in sections A, B, and C below, obligations with respect to their DMM
2017–03] of the most significant parts of such securities and have access to specified
statements. non-public order information regarding
Self-Regulatory Organizations; New their DMM securities.7 However, DMMs
York Stock Exchange LLC; Notice of A. Self-Regulatory Organization’s do not have a unique role or access to
Filing of Proposed Rule Change Statement of the Purpose of, and the any non-public order information with
Amending Rule 98 Statutory Basis for, the Proposed Rule respect to securities that are not
Change assigned to them under Rule 103B. The
February 10, 2017.
Pursuant to Section 19(b)(1) 1 of the 1. Purpose
5 As defined in Rule 6A, the term ‘‘Trading Floor’’
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 The Exchange proposes to amend means the restricted-access physical areas
Rule 98 to provide that, while on the designated by the Exchange for the trading of
notice is hereby given that, on January securities, commonly known as the ‘‘Main Room’’
26, 2017, New York Stock Exchange Trading Floor, DMMs must trade DMM and the ‘‘Buttonwood Room’’ and does not include
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed securities at their assigned stock trading (i) the areas in the ‘‘Buttonwood Room’’ designated
with the Securities and Exchange post location and may not trade any by the Exchange where NYSE Amex-listed options
security that is a related product of their are traded, which, for the purposes of the
Commission (the ‘‘Commission’’) the Exchange’s Rules, shall be referred to as the ‘‘NYSE
proposed rule change as described in DMM securities.4 Amex Options Trading Floor’’ or (ii) the physical
area within fully enclosed telephone booths located
16 See Press Release, DTCC, Industry Steering 4 As defined in Rule 2(i), the term ‘‘DMM’’ means in 18 Broad Street at the Southeast wall of the
an individual member, officer, partner, employee or Trading Floor.
Committee and Working Group Formed to Drive 6 Rule 36.30 permits a DMM unit that is registered
Implementation of T+2 in the U.S. (Oct. 2014), associated person of a Designated Market Maker
http://www.dtcc.com/news/2014/october/16/ Unit who is approved by the Exchange to act in the in an Investment Company Unit (as defined in
ust2.aspx. capacity of a DMM. The term ‘‘DMM securities’’ is Section 703.16 of the Listed Company Manual) or
a Trust Issued Receipt (as that term is defined in
asabaliauskas on DSK3SPTVN1PROD with NOTICES

17 See Press Release, ISC, U.S. T+2 ISC defined in Rule 98(a)(2) to mean any securities
allocated to the DMM unit pursuant to Rule 103B Rule 1200) to use a telephone connection or order
Recommends Move to Shorter Settlement Cycle On
or other applicable rules. The term ‘‘related entry terminal at the DMM unit’s post to enter
September 5, 2017 (Mar. 7, 2016), http://
products’’ is defined in Rule 98(a)(7) to mean any proprietary orders in the Unit or receipt in another
www.ust2.com/pdfs/T2-ISC-recommends-shorter-
derivative instrument that is related to a DMM market center, in a Component Security of such a
settlement-030716.pdf.
18 15 U.S.C. 78s(b)(2). security, including options, warrants, hybrid Unit or receipt, or an options or futures contract
securities, single-stock futures, security-based swap related to such Unit or receipt, and may use the
19 17 CFR 200.30–3(a)(12).
agreement, a forward contract, or any other post telephone to obtain market information with
1 15 U.S.C. 78s(b)(1).
instrument that is exercisable into or whose price respect to such Units, receipts, options, futures or
2 15 U.S.C. 78a. Component Securities.
is based upon or derived from a security traded at
3 17 CFR 240.19b–4. the Exchange. 7 See, e.g., Rule 104(a) and (j).

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Document Created: 2018-02-01 15:02:22
Document Modified: 2018-02-01 15:02:22
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 10940