82 FR 12642 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 103B

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 42 (March 6, 2017)

Page Range		12642-12646
FR Document		2017-04206
Federal Register, Volume 82 Issue 42 (Monday, March 6, 2017)
[Federal Register Volume 82, Number 42 (Monday, March 6, 2017)]
[Notices]
[Pages 12642-12646]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-04206]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80122; File No. SR-NYSE-2017-06]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 103B

February 28, 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 February 22, 2017, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 103B, which governs the 
allocation of securities to Designated Market Makers. The proposed rule 
change is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 103B, which governs the 
allocation of securities to DMMs, to streamline the allocation process 
and facilitate the selection of DMM units by issuers. Specifically, as 
described in more detail below, the Exchange proposes to:
     Amend Rule 103B(III)(A), which provides for issuer 
selection of DMM units, to require issuers select all DMM units to 
interview, permit senior officials at issuers to designate a 
representative to attend DMM interviews, and eliminate the cap on the 
number of DMM representatives that can participate in issuer 
interviews;
     amend Rule 103B(III)(B), which provides for selection of 
DMM units by the Exchange, to remove the requirement that the Exchange 
Selection Panel (``ESP'') base its review only on information available 
to an issuer and reduce the size of the ESP to three Exchange employees 
designated by the Chief Executive Officer;
     renumber Rule 103B(III)(B)(2), which describes the DMM one 
year obligation, as new Rule 103B(III)(C) and make certain non-
substantive changes to the existing rule text;
     renumber Rule 103B(III)(B)(3), which describes foreign 
listing considerations, as new Rule 103B(III)(D);
     amend Rule 103B(VI)(D) (1) and (3), governing listed 
company mergers, to make certain non-substantive changes;
     amend Rule 103B(VI)(F), governing allocation of closed-end 
management investment companies, to specify that the group of eligible 
DMM units an issuer listing additional funds can select from also 
includes DMM units the issuer ``reviewed'' during the initial 
allocation;
     amend Rule 103B(VI)(G), governing the allocation freeze 
policy, to replace references to ``specialty stock'' with ``DMM 
interest''; and
     amend Rule 103B(VI)(H), setting forth the allocation 
sunset policy, to provide that allocation decisions remain effective 
for initial public offerings (``IPO'') that list on the Exchange within 
eighteen months of such decision rather than the current twelve months 
and to specify that, in situations where the proposed individual DMM is 
no longer with the selected DMM unit, the company may choose to stay 
with the selected DMM or be referred to allocation and may interview a 
replacement individual DMM prior to making that decision.
Current Rule 103B
    Rule 103B currently provides two options for the allocation of 
securities to DMMs: (1) The issuer selects the DMM unit; or (2) the 
issuer delegates selection of the DMM unit to the Exchange.
    If the issuer proceeds under the first option, the listing company 
selects a minimum of four DMM units to interview.\4\ A DMM unit's 
eligibility to participate in the allocation process is based on 
objective criteria and determined at the time the interview is 
scheduled. No more than three representatives of each DMM unit may 
currently participate in the interview, each of whom must be employees 
of the DMM unit.\5\
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    \4\ See Rule 103B(III)(A)(1).
    \5\ See Rule 103B(III)(A)(2)(b).
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    Within five business days after the issuer selects the DMM units to 
be interviewed, the issuer meets with representatives of each of the 
DMM units. At least one representative of the listing company must be a 
senior official of the rank of Corporate Secretary or above of that 
company. Additionally, no more than three representatives of each DMM 
unit may participate in the meeting, each of whom must be an employee 
of the DMM unit, and one of whom must be the individual DMM

[[Page 12643]]

who is proposed to trade the company's security, unless that DMM is 
unavailable to appear, in which case a telephone interview is 
permitted.
    Following the interview, a DMM unit may not have any contact with 
an issuer. If an issuer has a follow-up question regarding any DMM 
unit(s) it interviewed, it must be conveyed to the Exchange. The 
Exchange then contacts the unit(s) to which the question pertains and 
provides any available information received from the unit(s) to the 
listing company. Within two business days of the issuer's interviews 
with the DMM units, the issuer selects its DMM unit in writing. The 
Exchange then confirms the allocation of the security to that DMM unit, 
at which time the security is deemed to have been so allocated.
    If the issuer proceeds under the second option and delegates 
selection of the DMM unit to the Exchange, the Exchange convenes an ESP 
to select the DMM unit based on a review of all information available 
to the issuer. The current ESP must consists of (1) at least one member 
of the Exchange's Senior Management, as designated by the CEO or his or 
her designee, (2) any combination of two Exchange Senior Management or 
Exchange Floor Operations Staff, to be designated by the Executive 
Vice-President of Exchange Floor Operations or his/her designee; and 
(3) three non-DMM Floor Governors for a total of six members.\6\
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    \6\ See Rule 103B(III)(B)(1).
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Proposed Rule Change
    The Exchange proposes the following changes to Rule 103B to 
streamline the allocation process and facilitate the selection of DMM 
units by issuers, as follows.
Rule 103B(III)(A)--Issuer Selection of DMM Unit by Interview
    Rule 103B(III)(A) is currently titled ``DMM Unit Selected by the 
Issuer'' and describes the first allocation option, which is selection 
of a DMM unit by the issuer following interviews.
    The Exchange proposes to delete the current title and replace it 
with ``Issuer Selection of DMM Unit by Interview'' to more specifically 
delineate the first option.
    The Exchange proposes amending subsection (1) of Rule 103B(III)(A), 
which provides that the issuer shall select a minimum of four DMM units 
to interview, to require that issuers select all DMM units to 
interview. To effectuate this change, the Exchange would delete ``a 
minimum of four'' and add ``all'' after ``select'' and before ``DMM 
units to interview.'' Requiring issuers to select all DMM units to 
interview would provide all eligible DMM units with an opportunity to 
participate in the allocation process, which will lead to an increase 
in competition without being overly burdensome on the issuer. The 
Exchange believes that the increase in competition would provide DMM 
units with a greater incentive to perform optimally. The proposed 
change would also provide the issuer with more choice in the selection 
of its assigned DMM unit.
    The Exchange also proposes a non-substantive change to Rule 
103B(III)(A) to replace ``shall'' with ``must'' before ``select.''
    Further, the Exchange proposes amending the first sentence of Rule 
103B(III)(A)(2)(b), which provides that issuers meet with DMM units 
within five business days after the issuer select the DMM units, to add 
the word ``eligible'' before ``DMM units.''
    The Exchange also proposes amending the second sentence of Rule 
103B(III)(A)(2)(b), which provides that at least one representative of 
the listing company must be a senior official of the rank of Corporate 
Secretary or higher. The Exchange proposes to provide senior officials 
at the issuer with the option to designate an individual to participate 
in the meeting on their behalf by adding the clause ``or a designee of 
such senior official'' at the end of the second sentence of the Rule. 
The Exchange believes that the proposed change would enable issuers to 
more efficiently manage the interview process and prevent scheduling 
conflicts among its most senior executives from unduly delaying the 
interviews.
    Current Rule 103B(A)(2)(b) further provides that no more than three 
representatives of each DMM unit may participate in the meeting, each 
of whom must be employees of the DMM unit. The Exchange proposes to 
eliminate the cap on the number of DMM representatives that can 
participate in issuer interviews by deleting the phrase ``No more than 
three'' before ``representatives of each DMM unit'' and capitalize the 
``r''. The Exchange believes that the current cap on number of 
representatives from the DMM unit limits the ability of a DMM unit to 
assess who may be best suited to attend an interview with an issuer. 
The Exchange further believes that providing DMM units with greater 
flexibility in determining how many people to bring to an interview 
would enable the DMMs to make that determination as necessary.
    The Exchange also proposes to make participation by representatives 
of the DMM units mandatory by deleting ``may'' before ``participate in 
the meeting'' and replacing it with ``must.''
    In addition, the Exchange proposes to specify that employees of a 
member organization operating a DMM unit are permitted to attend 
allocation interviews by adding ``member organization operating a'' 
before ``DMM unit.'' Under Exchange Rules, a ``DMM unit'' can be 
operated as either a stand-alone member organization or as a trading 
unit within a member organization.\7\ The proposed change would enable 
senior management of a broker-dealer operating a DMM unit to be 
eligible to participate in allocation interviews.
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    \7\ See Rules 2(j) and 98(b)(1).
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    Finally, the Exchange proposes to delete the heading of Rule 
103B(III)(A)(3), which is currently ``Issuer's Selection of DMM Unit,'' 
and subpart (a). The text of current Rule 103B(III)(A)(3)(a) would 
become the text of new Rule 103(III)(A)(3) and would be amended to 
replace references to ``shall'' with ``will'' in two places and ``shall 
then'' with ``will'' in another.
Rule 103B(III)(B)--Exchange Selection of DMM Unit by Delegation
    Rule 103B(III)(B) is currently titled ``DMM Unit Selected by the 
Exchange'' and sets forth the second allocation option, which is 
selection of a DMM unit by the Exchange by delegation from the issuer.
    The Exchange proposes to delete the current title and replace it 
with ``Exchange Selection of DMM Unit by Delegation'' to more 
accurately delineate the second option. As discussed below, the 
Exchange proposes various changes to Rule 103B(III)(B) to further 
delineate selection of a DMM unit based on delegated authority from the 
issuer and distinguish it from direct issuer selections under Rule 
103B(III)(A).
    The Exchange proposes to amend subsection (B)(1) to remove the 
clause providing that ESP selection of a DMM unit be ``based on a 
review of all information available to the issuer.'' The proposed 
change would enable the ESP to consider confidential statistical or 
market quality data for each eligible DMM unit that is only available 
to the Exchange. The Exchange believes that enabling the ESP, which as 
discussed below would be composed of Exchange staff only, to consider 
such information in its selection of a DMM unit on behalf of an issuer 
would facilitate more informed and objective decisions and

[[Page 12644]]

would expedite the allocation, and ultimately the trading, of 
securities on the Exchange.
    Relatedly, the Exchange proposes to reduce the size of the ESP to 
three Exchange employees designated by the Chief Executive Officer in 
order to streamline the ESP selection process and the operations of the 
ESP itself. The Exchange believes that limiting the ESP to Exchange 
employees would be appropriate given that the ESP would have access to 
highly confidential statistical or market quality data about DMM firms 
that would be inappropriate to share with non-Exchange employees.
    Further, the second paragraph of current Rule 103B(III)(B)(1) would 
become Rule 103B(III)(B)(2). The Exchange proposes to specify in this 
provision that the ESP would select the DMM unit and remove the clause 
providing that the ESP select the DMM unit ``pursuant to the provisions 
of 103B(III)(A) above'' as unnecessary.
    The second paragraph of current Rule 103B(III)(B)(1) would become 
Rule 103B(III)(B)(3). The Exchange proposes to remove the clause 
providing that tie votes are decided by the CEO of the Exchange or his 
or her designee as unnecessary given that the proposed three-person ESP 
could not deadlock. The Exchange also proposes non-substantive changes 
to the remainder of this paragraph to clarify that selection of the ESP 
selects the DMM unit and to replace ``shall'' with ``will'' in three 
places.
    Current Rule 103B(III)(B)(2), governing the DMM one-year 
obligation, would become Rule 103B(III)(C). The first sentence would be 
deleted as unnecessary in order to streamline the Rule. The text of the 
Rule would also be amended to replace ``shall be'' with ``with'' before 
``required.''
    Finally, current Rule 103B(III)(B)(3), governing foreign listing 
considerations, would become Rule 103B(III)(D).
Rule 103B(VI)--Policy Notes
    The Exchange proposes the following changes to Rule 103B(VI).
    First, the last sentence of subsections (1) and (3) of Rule 
103B(VI)(D) (Listed Company Mergers) would be amended to delete an 
extra period in each.
    Second, Rule 103B(VI)(F) (Allocation of Group of Closed-End 
Management Investment Companies) would be amended to specify that an 
issuer listing additional funds within nine months from the initial 
listing may select a different DMM unit from the group of eligible DMM 
units that the issuer interviewed or reviewed in the allocation 
process. The current Rule only references DMM units that the issuer has 
``interviewed.'' Including ``or reviewed'' in the proposed Rule would 
explicitly cover allocations made by delegation to the Exchange under 
option two where an issuer reviewed but may not have formally 
interviewed a DMM unit.
    Second, Rule 103B(VI)(G) (Allocation Freeze Policy) would be 
amended to remove outdated references to Exchange Rules 475 or 476, 
which have been replaced by the Rule 8000 and 9000 Series references in 
the Rule. Further, the Exchange proposes to replace the two outdated 
references to ``specialty stock'' with ``DMM security.'' \8\
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    \8\ As defined in Rule 98(b)(2), the term ``DMM securities'' 
means any securities allocated to the DMM unit pursuant to Rule 103B 
or other applicable rules.
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    Finally, the Exchange proposes to amend Rule 103B(VI)(H) 
(Allocation Sunset Policy) to extend the period an allocation decision 
remains binding on an IPO listing from twelve to eighteen months of 
such decision. The proposed change would provide listing issuers with 
greater flexibility when an IPO is postponed before being referred for 
allocation through the allocation process pursuant to NYSE Rule 
103B(III).
    The Exchange also proposes to amend the Rule to cover the 
contingency where the individual DMM selected by an issuer to trade its 
securities is no longer with the selected DMM unit during the period 
that allocation decisions remain effective. The Exchange proposes to 
permit a company in that circumstance to choose whether to stay with 
the selected DMM unit or be referred to allocation. Further, the 
Exchange proposes to provide the company with the choice of 
interviewing a replacement DMM from that DMM unit prior to deciding 
whether to stay with the selected DMM unit or be referred to 
allocation. Finally, the Exchange proposes to replace one reference to 
``shall'' in the last sentence of the Rule with ``will.''
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest, as 
follows.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendments to Rule 
103B(III)(A)(1) to provide that issuers interview all DMMs would 
promote just and equitable principles of trade because no eligible DMM 
unit would be excluded from the issuer interview. Additionally, the 
Exchange believes that the proposal is designed to remove impediments 
to, and perfect the mechanism of a free and open market and a national 
market system, because it would lead to increased competition without 
being overly burdensome on issuers and would provide issuers with 
greater choice in the selection of a DMM unit. The Exchange believes 
that the increase in competition would also provide DMM units with a 
greater incentive to perform optimally.
    The Exchange believes that the proposed amendments to Rule 
103B(III)(A)(2)(b) to permit senior officials at issuers to designate a 
representative to attend DMM interviews would remove impediments to, 
and perfect the mechanism of a free and open market, by allowing 
issuers to more efficiently manage the interview process and prevent 
scheduling conflicts from unduly delaying interviews and the assignment 
of securities to DMM units, which ultimately facilitates the fair and 
orderly trading in the subject security.
    The Exchange believes that the additional proposed amendments to 
Rule 103B(III)(A)(2)(b) to eliminate the cap on the number of DMM 
representatives that can participate in issuer interviews, making 
participation by representatives of the DMM units in such interviews 
mandatory, and permitting employees of a member organization operating 
a DMM to attend allocation interviews, is designed to remove 
impediments to, and perfect the mechanism of a free and open market, 
because it would give issuers greater exposure to management and other 
staff at the proposed DMM units and provide them with more information 
about the firms during the interview, thus enhancing the value of the 
interviews for issuers and facilitating their choice of DMM.
    The Exchange believes that the proposed amendments to Rule 
103B(III)(B)(1) to remove the requirement that the ESP base its review 
on information available to the issuer would remove impediments to, and 
perfect the mechanism of a free and open market, by enabling the ESP 
consider confidential statistical or market quality data for each 
eligible DMM unit that is only available to the

[[Page 12645]]

Exchange, thereby facilitating more informed and objective decisions by 
the ESPs on behalf of issuers. Similarly, the Exchange believes that 
the proposed amendments to Rule 103B(III)(B)(1) reducing the size of 
the ESP to three Exchange employees designated by the Chief Executive 
Officer would streamline and facilitate the process of assigning 
securities to DMM units by allowing for more flexibility in composing 
the ESP, which ultimately facilitates and expedites the allocation and 
ultimately the trading of securities on the Exchange.
    The Exchange believes that the amendments to Rule 103B(VI)(H) 
extending the sunset period from twelve to eighteen months will foster 
cooperation and coordination with person engaged in facilitating 
securities transactions and will remove impediments to a free and open 
market because it recognizes that all IPOs may not be brought to market 
in a twelve month period and avoids repeating administrative steps in 
the listing process, thereby promoting efficient use of the Exchange's 
resources. The proposed rule change also remove impediments to, and 
perfect the mechanism of a free and open market, by providing issuers 
with a greater opportunity for input in the allocation process.
    Finally, the Exchange's proposal to make various technical, non-
substantive changes to the text of Rules 103B(III) and (VI)--renaming 
headings and section renumbering, replacing ``shall'' with ``will,'' 
deleting extraneous punctuation, deleting redundant and unnecessary 
clauses, adding clarifying text and updated references, and replacing 
outdated references--adds clarity and transparency to the Exchange's 
Rules and reduces potential investor confusion, which would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system.

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 Exchange believes that 
the proposed changes would increase competition among DMM units by 
allowing more DMM units to participate in the interview process and 
provide DMM units with a greater incentive to perform optimally 
potentially and enhance the quality of the services DMMs provide to 
issuers. Further, the Exchange believes that the proposed changes would 
not be burdensome to issuers. Further, even assuming an increase in the 
burden on issuers during the allocation process resulting from the 
proposed changes, the Exchange believes that any such increased burden 
will be small relative to the benefits that additional competition 
between DMM units may provide. Issuers could, moreover, permit the 
Exchange to select the DMM unit pursuant to the process found in NYSE 
Rule 103B(III)(B).

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act\13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2017-06 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2017-06. 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

[[Page 12646]]

available publicly. All submissions should refer to File Number SR-
NYSE-2017-06 and should be submitted on or before March 27, 2017.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04206 Filed 3-3-17; 8:45 am]
 BILLING CODE 8011-01-P
12642 Federal Register / Vol. 82, No. 42 / Monday, March 6, 2017 / Notices

taxonomy for use by such foreign organization. The Commission is • renumber Rule 103B(III)(B)(3),
private issuers in preparing their publishing this notice to solicit which describes foreign listing
Interactive Data Files.6 comments on the proposed rule change considerations, as new Rule
On March 1, 2017, the IFRS from interested persons. 103B(III)(D);
Taxonomy was specified on the • amend Rule 103B(VI)(D) (1) and (3),
I. Self-Regulatory Organization’s
Commission’s Web site, as provided by governing listed company mergers, to
Statement of the Terms of Substance of
the EDGAR Filer Manual.7 Accordingly, make certain non-substantive changes;
the Proposed Rule Change • amend Rule 103B(VI)(F), governing
foreign private issuers that prepare their
financial statements in accordance with The Exchange proposes to amend allocation of closed-end management
IFRS as issued by the IASB and are Rule 103B, which governs the allocation investment companies, to specify that
subject to Rule 405 may immediately of securities to Designated Market the group of eligible DMM units an
begin submitting their financial Makers. The proposed rule change is issuer listing additional funds can select
statements in interactive data format. available on the Exchange’s Web site at from also includes DMM units the
Although existing Rule 405 would www.nyse.com, at the principal office of issuer ‘‘reviewed’’ during the initial
require foreign private issuers that the Exchange, and at the Commission’s allocation;
prepare their financial statements in Public Reference Room. • amend Rule 103B(VI)(G), governing
accordance with IFRS as issued by the II. Self-Regulatory Organization’s the allocation freeze policy, to replace
IASB to submit financial data in XBRL Statement of the Purpose of, and references to ‘‘specialty stock’’ with
upon publication of the taxonomy, the Statutory Basis for, the Proposed Rule ‘‘DMM interest’’; and
Commission is providing notice that • amend Rule 103B(VI)(H), setting
Change
such issuers may first submit financial forth the allocation sunset policy, to
In its filing with the Commission, the provide that allocation decisions remain
data in XBRL with their first annual
self-regulatory organization included effective for initial public offerings
report on Form 20–F or 40–F for a fiscal
statements concerning the purpose of, (‘‘IPO’’) that list on the Exchange within
period ending on or after December 15,
and basis for, the proposed rule change eighteen months of such decision rather
2017.
and discussed any comments it received than the current twelve months and to
By the Commission. on the proposed rule change. The text specify that, in situations where the
Dated: March 1, 2017. of those statements may be examined at proposed individual DMM is no longer
Brent J. Fields, the places specified in Item IV below. with the selected DMM unit, the
Secretary. The Exchange has prepared summaries, company may choose to stay with the
[FR Doc. 2017–04241 Filed 3–3–17; 8:45 am] set forth in sections A, B, and C below, selected DMM or be referred to
BILLING CODE 8011–01–P
of the most significant parts of such allocation and may interview a
statements. replacement individual DMM prior to
A. Self-Regulatory Organization’s making that decision.
SECURITIES AND EXCHANGE Statement of the Purpose of, and the
COMMISSION Current Rule 103B
Statutory Basis for, the Proposed Rule
[Release No. 34–80122; File No. SR–NYSE– Change Rule 103B currently provides two
2017–06] options for the allocation of securities to
1. Purpose DMMs: (1) The issuer selects the DMM
Self-Regulatory Organizations; New The Exchange proposes to amend unit; or (2) the issuer delegates selection
York Stock Exchange LLC; Notice of Rule 103B, which governs the allocation of the DMM unit to the Exchange.
Filing and Immediate Effectiveness of of securities to DMMs, to streamline the If the issuer proceeds under the first
Proposed Rule Change To Amend Rule allocation process and facilitate the option, the listing company selects a
103B selection of DMM units by issuers. minimum of four DMM units to
Specifically, as described in more detail interview.4 A DMM unit’s eligibility to
February 28, 2017. below, the Exchange proposes to: participate in the allocation process is
Pursuant to Section 19(b)(1) 1 of the • Amend Rule 103B(III)(A), which based on objective criteria and
Securities Exchange Act of 1934 (the provides for issuer selection of DMM determined at the time the interview is
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 units, to require issuers select all DMM scheduled. No more than three
notice is hereby given that on February units to interview, permit senior representatives of each DMM unit may
22, 2017, New York Stock Exchange officials at issuers to designate a currently participate in the interview,
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed representative to attend DMM each of whom must be employees of the
with the Securities and Exchange interviews, and eliminate the cap on the DMM unit.5
Commission (the ‘‘Commission’’) the number of DMM representatives that Within five business days after the
proposed rule change as described in can participate in issuer interviews; issuer selects the DMM units to be
Items I and II below, which Items have • amend Rule 103B(III)(B), which interviewed, the issuer meets with
been prepared by the self-regulatory provides for selection of DMM units by representatives of each of the DMM
the Exchange, to remove the units. At least one representative of the
6 See SEC No-Action Letter from the Division of
requirement that the Exchange Selection listing company must be a senior official
Corporation Finance and the Office of the Chief Panel (‘‘ESP’’) base its review only on
Accountant to the Center for Audit Quality (Apr. 8,
of the rank of Corporate Secretary or
information available to an issuer and
asabaliauskas on DSK3SPTVN1PROD with NOTICES

2011), available at http://www.sec.gov/divisions/ above of that company. Additionally, no
corpfin/cf-noaction/2011/caq040811.htm. With the reduce the size of the ESP to three more than three representatives of each
issuance of this notice and the posting of the IFRS Exchange employees designated by the DMM unit may participate in the
taxonomy on the Commission’s Web site, the letter Chief Executive Officer;
is now moot.
meeting, each of whom must be an
7 See Section 6.3.9 of Volume II of the EDGAR
• renumber Rule 103B(III)(B)(2), employee of the DMM unit, and one of
Filer Manual. which describes the DMM one year whom must be the individual DMM
1 15 U.S.C. 78s(b)(1). obligation, as new Rule 103B(III)(C) and
2 15 U.S.C. 78a. make certain non-substantive changes to 4 See Rule 103B(III)(A)(1).
3 17 CFR 240.19b–4. the existing rule text; 5 See Rule 103B(III)(A)(2)(b).

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Federal Register / Vol. 82, No. 42 / Monday, March 6, 2017 / Notices 12643

who is proposed to trade the company’s ‘‘DMM units to interview.’’ Requiring The Exchange also proposes to make
security, unless that DMM is issuers to select all DMM units to participation by representatives of the
unavailable to appear, in which case a interview would provide all eligible DMM units mandatory by deleting
telephone interview is permitted. DMM units with an opportunity to ‘‘may’’ before ‘‘participate in the
Following the interview, a DMM unit participate in the allocation process, meeting’’ and replacing it with ‘‘must.’’
may not have any contact with an which will lead to an increase in In addition, the Exchange proposes to
issuer. If an issuer has a follow-up competition without being overly specify that employees of a member
question regarding any DMM unit(s) it burdensome on the issuer. The organization operating a DMM unit are
interviewed, it must be conveyed to the Exchange believes that the increase in permitted to attend allocation
Exchange. The Exchange then contacts competition would provide DMM units interviews by adding ‘‘member
the unit(s) to which the question with a greater incentive to perform organization operating a’’ before ‘‘DMM
pertains and provides any available optimally. The proposed change would unit.’’ Under Exchange Rules, a ‘‘DMM
information received from the unit(s) to also provide the issuer with more choice unit’’ can be operated as either a stand-
the listing company. Within two in the selection of its assigned DMM alone member organization or as a
business days of the issuer’s interviews unit. trading unit within a member
with the DMM units, the issuer selects The Exchange also proposes a non- organization.7 The proposed change
its DMM unit in writing. The Exchange substantive change to Rule 103B(III)(A) would enable senior management of a
then confirms the allocation of the to replace ‘‘shall’’ with ‘‘must’’ before broker-dealer operating a DMM unit to
security to that DMM unit, at which ‘‘select.’’ be eligible to participate in allocation
time the security is deemed to have Further, the Exchange proposes interviews.
been so allocated. amending the first sentence of Rule Finally, the Exchange proposes to
If the issuer proceeds under the 103B(III)(A)(2)(b), which provides that delete the heading of Rule
second option and delegates selection of issuers meet with DMM units within 103B(III)(A)(3), which is currently
the DMM unit to the Exchange, the five business days after the issuer select ‘‘Issuer’s Selection of DMM Unit,’’ and
Exchange convenes an ESP to select the the DMM units, to add the word subpart (a). The text of current Rule
DMM unit based on a review of all ‘‘eligible’’ before ‘‘DMM units.’’ 103B(III)(A)(3)(a) would become the text
information available to the issuer. The The Exchange also proposes of new Rule 103(III)(A)(3) and would be
current ESP must consists of (1) at least amending the second sentence of Rule amended to replace references to
one member of the Exchange’s Senior 103B(III)(A)(2)(b), which provides that ‘‘shall’’ with ‘‘will’’ in two places and
Management, as designated by the CEO at least one representative of the listing ‘‘shall then’’ with ‘‘will’’ in another.
or his or her designee, (2) any company must be a senior official of the
rank of Corporate Secretary or higher. Rule 103B(III)(B)—Exchange Selection
combination of two Exchange Senior of DMM Unit by Delegation
Management or Exchange Floor The Exchange proposes to provide
Operations Staff, to be designated by the senior officials at the issuer with the Rule 103B(III)(B) is currently titled
Executive Vice-President of Exchange option to designate an individual to ‘‘DMM Unit Selected by the Exchange’’
Floor Operations or his/her designee; participate in the meeting on their and sets forth the second allocation
and (3) three non-DMM Floor Governors behalf by adding the clause ‘‘or a option, which is selection of a DMM
for a total of six members.6 designee of such senior official’’ at the unit by the Exchange by delegation from
end of the second sentence of the Rule. the issuer.
Proposed Rule Change The Exchange believes that the The Exchange proposes to delete the
The Exchange proposes the following proposed change would enable issuers current title and replace it with
changes to Rule 103B to streamline the to more efficiently manage the interview ‘‘Exchange Selection of DMM Unit by
allocation process and facilitate the process and prevent scheduling Delegation’’ to more accurately
selection of DMM units by issuers, as conflicts among its most senior delineate the second option. As
follows. executives from unduly delaying the discussed below, the Exchange proposes
interviews. various changes to Rule 103B(III)(B) to
Rule 103B(III)(A)—Issuer Selection of Current Rule 103B(A)(2)(b) further further delineate selection of a DMM
DMM Unit by Interview provides that no more than three unit based on delegated authority from
Rule 103B(III)(A) is currently titled representatives of each DMM unit may the issuer and distinguish it from direct
‘‘DMM Unit Selected by the Issuer’’ and participate in the meeting, each of issuer selections under Rule
describes the first allocation option, whom must be employees of the DMM 103B(III)(A).
which is selection of a DMM unit by the unit. The Exchange proposes to The Exchange proposes to amend
issuer following interviews. eliminate the cap on the number of subsection (B)(1) to remove the clause
The Exchange proposes to delete the DMM representatives that can providing that ESP selection of a DMM
current title and replace it with ‘‘Issuer participate in issuer interviews by unit be ‘‘based on a review of all
Selection of DMM Unit by Interview’’ to deleting the phrase ‘‘No more than information available to the issuer.’’ The
more specifically delineate the first three’’ before ‘‘representatives of each proposed change would enable the ESP
option. DMM unit’’ and capitalize the ‘‘r’’. The to consider confidential statistical or
The Exchange proposes amending Exchange believes that the current cap market quality data for each eligible
subsection (1) of Rule 103B(III)(A), on number of representatives from the DMM unit that is only available to the
which provides that the issuer shall DMM unit limits the ability of a DMM Exchange. The Exchange believes that
asabaliauskas on DSK3SPTVN1PROD with NOTICES

select a minimum of four DMM units to unit to assess who may be best suited enabling the ESP, which as discussed
interview, to require that issuers select to attend an interview with an issuer. below would be composed of Exchange
all DMM units to interview. To The Exchange further believes that staff only, to consider such information
effectuate this change, the Exchange providing DMM units with greater in its selection of a DMM unit on behalf
would delete ‘‘a minimum of four’’ and flexibility in determining how many of an issuer would facilitate more
add ‘‘all’’ after ‘‘select’’ and before people to bring to an interview would informed and objective decisions and
enable the DMMs to make that
6 See Rule 103B(III)(B)(1). determination as necessary. 7 See Rules 2(j) and 98(b)(1).

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Federal Register / Vol. 82, No. 42 / Monday, March 6, 2017 / Notices 12645

Exchange, thereby facilitating more burdensome to issuers. Further, even public interest, for the protection of
informed and objective decisions by the assuming an increase in the burden on investors, or otherwise in furtherance of
ESPs on behalf of issuers. Similarly, the issuers during the allocation process the purposes of the Act. If the
Exchange believes that the proposed resulting from the proposed changes, Commission takes such action, the
amendments to Rule 103B(III)(B)(1) the Exchange believes that any such Commission shall institute proceedings
reducing the size of the ESP to three increased burden will be small relative under Section 19(b)(2)(B) 17 of the Act to
Exchange employees designated by the to the benefits that additional determine whether the proposed rule
Chief Executive Officer would competition between DMM units may change should be approved or
streamline and facilitate the process of provide. Issuers could, moreover, permit disapproved.
assigning securities to DMM units by the Exchange to select the DMM unit
IV. Solicitation of Comments
allowing for more flexibility in pursuant to the process found in NYSE
composing the ESP, which ultimately Rule 103B(III)(B). Interested persons are invited to
facilitates and expedites the allocation submit written data, views, and
C. Self-Regulatory Organization’s arguments concerning the foregoing,
and ultimately the trading of securities
Statement on Comments on the including whether the proposed rule
on the Exchange.
The Exchange believes that the Proposed Rule Change Received From change is consistent with the Act.
amendments to Rule 103B(VI)(H) Members, Participants, or Others Comments may be submitted by any of
extending the sunset period from twelve No written comments were solicited the following methods:
to eighteen months will foster or received with respect to the proposed Electronic Comments
cooperation and coordination with rule change.
person engaged in facilitating securities • Use the Commission’s Internet
III. Date of Effectiveness of the comment form (http://www.sec.gov/
transactions and will remove
Proposed Rule Change and Timing for rules/sro.shtml); or
impediments to a free and open market
because it recognizes that all IPOs may
Commission Action • Send an email to rule-comments@
not be brought to market in a twelve The Exchange has filed the proposed sec.gov. Please include File Number SR–
month period and avoids repeating rule change pursuant to Section NYSE–2017–06 on the subject line.
administrative steps in the listing 19(b)(3)(A)(iii) of the Act 11 and Rule Paper Comments
process, thereby promoting efficient use 19b–4(f)(6) thereunder.12 Because the
of the Exchange’s resources. The proposed rule change does not: (i) • Send paper comments in triplicate
proposed rule change also remove Significantly affect the protection of to Secretary, Securities and Exchange
impediments to, and perfect the investors or the public interest; (ii) Commission, 100 F Street NE.,
mechanism of a free and open market, impose any significant burden on Washington, DC 20549–1090.
by providing issuers with a greater competition; and (iii) become operative All submissions should refer to File
opportunity for input in the allocation prior to 30 days from the date on which Number SR–NYSE–2017–06. This file
process. it was filed, or such shorter time as the number should be included on the
Finally, the Exchange’s proposal to Commission may designate, if subject line if email is used. To help the
make various technical, non-substantive consistent with the protection of Commission process and review your
changes to the text of Rules 103B(III) investors and the public interest, the comments more efficiently, please use
and (VI)—renaming headings and proposed rule change has become only one method. The Commission will
section renumbering, replacing ‘‘shall’’ effective pursuant to Section 19(b)(3)(A) post all comments on the Commission’s
with ‘‘will,’’ deleting extraneous of the Act13 and Rule 19b–4(f)(6)(iii) Internet Web site (http://www.sec.gov/
punctuation, deleting redundant and thereunder.14 rules/sro.shtml). Copies of the
unnecessary clauses, adding clarifying A proposed rule change filed under submission, all subsequent
text and updated references, and Rule 19b–4(f)(6) 15 normally does not amendments, all written statements
replacing outdated references—adds become operative prior to 30 days after with respect to the proposed rule
clarity and transparency to the the date of the filing. However, pursuant change that are filed with the
Exchange’s Rules and reduces potential to Rule 19b4(f)(6)(iii),16 the Commission Commission, and all written
investor confusion, which would may designate a shorter time if such communications relating to the
remove impediments to and perfect the action is consistent with the protection proposed rule change between the
mechanism of a free and open market of investors and the public interest. Commission and any person, other than
and a national market system. At any time within 60 days of the those that may be withheld from the
filing of such proposed rule change, the public in accordance with the
B. Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be
Commission summarily may
Statement on Burden on Competition available for Web site viewing and
temporarily suspend such rule change if
The Exchange does not believe that it appears to the Commission that such printing in the Commission’s Public
the proposed rule change will impose action is necessary or appropriate in the Reference Room, 100 F Street, NE.,
any burden on competition that is not Washington, DC 20549 on official
necessary or appropriate in furtherance 11 15 U.S.C. 78s(b)(3)(A)(iii). business days between the hours of
of the purposes of the Act. The 12 17 CFR 240.19b–4(f)(6). 10:00 a.m. and 3:00 p.m. Copies of the
Exchange believes that the proposed 13 15 U.S.C. 78s(b)(3)(A).
filing also will be available for
14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
changes would increase competition inspection and copying at the principal
asabaliauskas on DSK3SPTVN1PROD with NOTICES

4(f)(6)(iii) requires the Exchange to give the
among DMM units by allowing more Commission written notice of the Exchange’s intent office of the Exchange. All comments
DMM units to participate in the to file the proposed rule change, along with a brief received will be posted without change;
interview process and provide DMM description and text of the proposed rule change, the Commission does not edit personal
units with a greater incentive to perform at least five business days prior to the date of filing identifying information from
of the proposed rule change, or such shorter time
optimally potentially and enhance the as designated by the Commission. The Exchange submissions. You should submit only
quality of the services DMMs provide to has satisfied this requirement. information that you wish to make
issuers. Further, the Exchange believes 15 17 CFR 240.19b–4(f)(6).

that the proposed changes would not be 16 17 CFR 240.19b–4(f)(6)(iii). 17 15 U.S.C. 78s(b)(2)(B).

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Document Created: 2017-03-04 00:06:24
Document Modified: 2017-03-04 00:06:24
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 12642