82 FR 19300 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 994NY, Broadcast Order Liquidity Delivery Mechanism
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 79 (April 26, 2017)
Federal Register Volume 82, Issue 79 (April 26, 2017)
| Page Range | 19300-19304 | |
| FR Document | 2017-08388 |
[Federal Register Volume 82, Number 79 (Wednesday, April 26, 2017)] [Notices] [Pages 19300-19304] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-08388] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80494; File No. SR-NYSEMKT-2017-21] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 994NY, Broadcast Order Liquidity Delivery Mechanism April 20, 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 April 11, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt Rule 994NY, Broadcast Order Liquidity Delivery (``BOLD'') Mechanism. The proposed rule change is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the filing is to adopt a rule that governs the operation of the Exchange's new BOLD Mechanism. As proposed, BOLD Mechanism is a feature within the Exchange's trading system that would provide automated order handling for eligible orders in designated classes. Regarding BOLD Mechanism eligibility, the Exchange will designate eligible order size, eligible order type, eligible capacity code (e.g., Customer \4\ orders, non-Market Maker non-Customer orders, and Market Maker \5\ orders), and classes in which the BOLD Mechanism will be available. Orders must be specifically marked to be eligible for the BOLD Mechanism. After trading with eligible interest on the Exchange, the BOLD Mechanism will automatically process an eligible incoming order that is marketable against quotations disseminated by other exchanges that are participants in the Options Order Protection and Locked/Crossed Market Plan (the ``Linkage Plan''). --------------------------------------------------------------------------- \4\ The term ``Customer'' means an individual or organization that is not a Broker/Dealer; when not capitalized, ``customer'' refers to any individual or organization whose order is being represented, including a Broker/Dealer. See Rule 900.2NY(18). \5\ Market Makers are included in the definition of ATP Holders. See Rule 900.2NY(5) (defining ATP Holder as ``a natural person, sole proprietorship, partnership, corporation, limited liability company or other organization, in good standing, that has been issued an ATP,'' and requires that ``[a]n ATP Holder must be a registered broker or dealer pursuant to Section 15 of the Securities Exchange Act of 1934.'' See also Rule 900.2NY(38) (providing that a Market Maker is ``an ATP Holder that acts as a Market Maker pursuant to Rule 920NY''). --------------------------------------------------------------------------- With respect to order handling, orders that are received by the BOLD Mechanism pursuant to paragraph (a) of [[Page 19301]] the proposed rule will be electronically exposed at the National Best Bid or Offer (``NBBO'') upon receipt. The exposure will be for a period of time determined by the Exchange on a class-by-class basis, which period of time will not exceed one second. All ATP Holders will be permitted to trade against interest exposed during the exposure period. Regarding the allocation of exposed orders, any interest priced at the prevailing NBBO or better will be executed pursuant to Rule 964NY (Display, Priority and Order Allocation).\6\ If during the exposure period the Exchange receives an order (or quote) on the opposite side of the market from the exposed order that could trade against the exposed order at the prevailing NBBO price or better, then the exposed order will trade with such order at the prevailing NBBO price or better. The exposure period will not terminate if the exposed order has not been completely executed following such trade. Interest that is not immediately executable based on the prevailing NBBO may become executable during the exposure period based on changes to the NBBO. In the event of a change to the NBBO during the exposure period, the Exchange will evaluate the disseminated best bid/offer, and to the extent possible, execute any remaining portion of the exposed order at the best price(s) of resting interest on the Exchange. Following the exposure period, the Exchange will route the remaining portion of the exposed order to other exchanges, unless otherwise instructed by the ATP Holder. Any portion of a routed order that returns unfilled will trade against the Exchange's best bid/offer unless another exchange is quoting at a better price in which case new orders will be generated and routed to trade against such better prices. All executions on the Exchange pursuant to this paragraph will comply with Rule 991NY (Order Protection). --------------------------------------------------------------------------- \6\ NYSE Amex provides customer priority and size pro-rata allocation. Pursuant to Rule 964NY, customers at a given price are executed first in priority. Non-customers are executed on a pro-rata basis pursuant to the size pro rata algorithm set forth in Rule 964NY(b)(3). --------------------------------------------------------------------------- Regarding the early termination of the exposure period, the exposure period will terminate if the entire exposed order trades at the NBBO or better. In addition, the exposure period will terminate prior to its expiration and the exposed order will be processed in accordance with paragraph (c) of the proposed rule if, during the exposure period, the NBBO updates such that the exposed order is no longer marketable against the prevailing NBBO. The purpose of the proposed rule change is to provide all ATP holders with the opportunity to improve their prices and ``step up'' to meet the NBBO in order to interact with orders sent to the Exchange. This would allow the market participant sending an order to NYSE Amex to increase its chances of receiving an execution at NYSE Amex (the market participant's chosen venue) instead of having the order routed to another exchange. This ``step up'' process allows market participants to take into account factors beyond just disseminated prices, such as execution costs, system reliability, and quality of service, when determining the exchange to which to route an order. A market participant that prefers NYSE Amex due to some combination of these other factors will know that, even if NYSE Amex is not displaying a price that is the NBBO, the market participant may still receive an execution at NYSE Amex because another ATP Holder may ``step up'' to match the NBBO. Further, the BOLD Mechanism and the ``step up'' process enable ATP Holders to add liquidity that is available to interact with orders sent to the Exchange. Indeed, when an ATP Holder on NYSE Amex ``steps up'' to match the NBBO that is displayed on another exchange, more contracts may be executed at this NBBO price on NYSE Amex than are available at that same price on another exchange. The Exchange's proposed BOLD Mechanism and the ``step up'' process are not novel concepts. As proposed, the BOLD Mechanism is similar to the Step Up Mechanism (``SUM'') offered on Bats EDGX Exchange, Inc. (``EDGX''), which provides the same manner of ``step up'' process.\7\ Similar to SUM, the proposed BOLD Mechanism would be entirely electronic. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 78339 (July 15, 2016), 81 FR 47461 (July 21, 2016) (SR-BatsEDGX-2016-29) (``SUM Approval''). The SUM Approval was based on the Commission's prior approval of the Chicago Board Options Exchange, Inc.'s (``CBOE'') Hybrid Agency Liaison (``HAL''). See Securities Exchange Act Release No. 60551 (August 20, 2009), 74 FR 43196 (August 26, 2009) (SR-CBOE- 2009-040) (``Approval of CBOE's HAL''). --------------------------------------------------------------------------- Another similarity between the proposed BOLD Mechanism and SUM is the determination by the Exchange to permit all ATP Holders to trade against interest exposed during the exposure period.\8\ The proposed BOLD Mechanism, however, is different from CBOE's HAL in that on CBOE, only Market Makers with an appointment in the relevant option class and Trading Permit Holders acting as agent for orders resting at the top of CBOE's book in the relevant option series opposite the order submitted to HAL may submit responses to the exposure message during the exposure period (unless CBOE determines, on a class-by-class basis, to allow all Trading Permit Holders to submit responses to the exposure message). Therefore, on CBOE, an order will not be exposed if the CBOE quotation contains resting orders and does not contain sufficient CBOE Market Maker quotation interest to satisfy the entire order. The Exchange does not propose this limitation because the proposed BOLD Mechanism is not dependent only on Market Maker interest in any way, but rather, seeks to expose the order for execution to all participants on NYSE Amex. In this respect, the proposed BOLD Mechanism is similar to EDGX's SUM, which also is not dependent just on Market Maker interest and exposes orders to all participants on that exchange. Also, Interpretation and Policy .01 to CBOE Rule 6.14A (the CBOE rule regarding HAL), which prohibits the redistribution of exposure messages to market participants not eligible to respond to such messages (except in classes in which CBOE allows all Trading Permit Holders to respond to such messages) also would not apply to the proposed BOLD Mechanism, as all ATP Holders would be permitted to trade against the interest exposed during the exposure period. --------------------------------------------------------------------------- \8\ The Exchange is adopting the term ``interest'' rather than ``response'' (as known on EDGX) to distinguish that the BOLD Mechanism is not an auction functionality that requires ATP Holders to ``respond'' to an auction message. Rather, ATP Holders would be permitted to trade against the ``interest'' that is exposed during the exposure period in accordance with the execution priority set forth in Rule 964NY(b)(3). --------------------------------------------------------------------------- With regards to early termination of the exposure period, while the Exchange proposes different criteria for early termination of an exposure period than those reasons set forth in the corresponding CBOE rule regarding HAL, the proposed rule is, in most cases, similar to the SUM rule. Similar to SUM, an exposure period will terminate early if an order is executed in full. CBOE also terminates an exposure period in slightly different circumstances than the Exchange has proposed, including when a same side order is received by CBOE, if CBOE Market Maker interest decrements to an amount equal to the size of the exposed order and if the underlying security enters a limit up limit down state. Similar to EDGX, the Exchange does not believe early termination is necessary for the BOLD Mechanism under any of these reasons, and has proposed to [[Page 19302]] terminate the exposure period early in a scenario not covered by HAL but that is available by SUM. Specifically, the Exchange would terminate an exposure period early when the exposed order is no longer marketable against the NBBO. The Exchange notes that SUM also terminates the exposure period early if a resting order on EDGX is locked or crossed by another options exchange. The Exchange does not believe early termination is necessary for the BOLD Mechanism because the BOLD Mechanism is not an auction. Accordingly, the Exchange believes that permitting the exposure period to continue would allow other orders to arrive and trade with any order exposed via the BOLD Mechanism (including any from the locking Exchange). Although the early termination section of the proposed rule represents the greatest departure from the HAL rule, the proposed BOLD Mechanism rule is nearly identical to the SUM rule, and the Exchange does not believe that any of the differences raise new policy issues generally with respect to a step up process. With respect to the early termination scenarios not adopted by the Exchange, the Exchange believes that the fact that an ATP Holder will have the ability to cancel its order after the BOLD Mechanism process is initiated coupled with the fact that the Exchange will only execute an order that has been exposed via the BOLD Mechanism process to the extent the order is marketable against the NBBO mitigate any potential concern regarding such differences.\9\ Further, regarding the termination scenarios specified by the Exchange, the Exchange believes that these are reasonable reasons to terminate the BOLD Mechanism process. Specifically, if an order is no longer marketable, then it cannot be executed through the BOLD Mechanism process so no longer benefits from being exposed. Generally speaking, the Exchange's proposed rule is similar to the SUM rule in terms of its structure and wording. The Exchange's proposed rule differs slightly from the SUM rule in that the proposed BOLD Mechanism is not an auction and therefore, when an ATP Holder ``steps up'' to trade against an exposed order, the proposed rule does not refer to that as a ``response'' by the ATP Holder. The proposed rule also differs from the SUM rule in that orders received pursuant to paragraph (a) of the proposed rule would only be processed by the BOLD Mechanism once because, having exposed the order and attracted insufficient (or no) liquidity, the order (or balance thereof) would not be exposed again. The Exchange does not believe the terminology used or different wording represents any substantive difference between the proposed BOLD Mechanism and the functionality offered through SUM and HAL. Any such differences are intended to highlight the exact operation of the proposed BOLD Mechanism process. --------------------------------------------------------------------------- \9\ As a general matter, ATP Holders can cancel their orders on the Exchange unless expressly prohibited. For example, Rule 971.1NY(c) provides, in part, that ``[o]nce commenced, the CUBE Order (as well as the Contra Order) may not be cancelled or modified.'' No such restriction exists for orders processed by the BOLD Mechanism. --------------------------------------------------------------------------- Despite the differences highlighted above, the proposed BOLD Mechanism would otherwise operate in similar manner to SUM and HAL, the latter of which was previously approved by the Commission and formed the basis for the former to be made immediately effective upon its filing with the Commission. The Commission has always been clear that honoring better prices on other markets can be accomplished by matching those better prices.\10\ The proposed BOLD Mechanism would allow participants on NYSE Amex to do just that. If an ATP Holder wants to ensure that an order does not go through the proposed BOLD Mechanism, then that participant can submit an order that would not be exposed to the BOLD Mechanism.\11\ --------------------------------------------------------------------------- \10\ For example, in adopting the Order Protection Rule (Rule 611) under Regulation NMS in 2005, the Commission stated: ``The Order Protection Rule generally requires that trading centers match the best quoted prices, cancel orders without an execution, or route orders to the trading centers quoting the best prices.'' See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37495 (June 29, 2005), at 37525 (S7-10-04). \11\ An ATP Holder will be able to opt-in to the BOLD Mechanism by including a specific field in their orders submitted to the Exchange. Details regarding the ability to opt-in will be set forth in the Exchange's order entry specifications, which are made publicly available to all ATP Holders. The ability to opt-in to the BOLD Mechanism is different from the SUM process. SUM has adopted an `opt-out' approach where members of EDGX are able to opt-out by including a specific field in orders submitted to that exchange. --------------------------------------------------------------------------- In addition to Rule 994NY proposed above, the Exchange proposes to adopt Commentary .01 to proposed Rule 994NY, which states that all determinations by the Exchange pursuant to proposed Rule 994NY (i.e., eligible order size, order type, increment, participant ID, BOLD Mechanism timer and classes) will be announced in a Trader Update and maintained in specifications made publicly available via the Exchange's Web site. As noted above, the Exchange also proposes to adopt Commentary .02 to proposed Rule 994NY to make clear that orders that are received paragraph (a) of the proposed rule would only be processed by the BOLD Mechanism once. The Exchange also proposes to amend certain other Exchange rules that would be impacted by the proposed BOLD Mechanism. First, the Exchange proposes to adopt paragraph (F) under Rule 971.1NY(c)(4) to reflect that the Exchange's Customer Best Execution Auction (``CUBE Auction'') will conclude early if the BOLD Mechanism, i.e., orders that are eligible for exposure under proposed Rule 994NY, receives an unrelated order in the same series during the CUBE Auction's Response Time Interval. When the CUBE Auction concludes, the CUBE Order would execute pursuant to current Rule 971.1NY(c)(5). The Exchange believes that early conclusion of a CUBE Auction in this circumstance would allow the Exchange to appropriately handle unrelated orders exposed via the BOLD Mechanism, while at the same time allowing the CUBE Order to execute against the Contra Order and any RFR Responses that may have been entered up to that point. Next, the Exchange proposes to adopt Commentary .04 to Rule 971.1NY, which states that a CUBE Order will be rejected if the CUBE Order is in the same series as an order exposed pursuant to the proposed BOLD Mechanism. Finally, the Exchange proposes to adopt Commentary .04 to Rule 985NY, which states that a Qualified Contingent Cross (``QCC'') Order will be rejected if the QCC Order is in the same series as an order exposed pursuant to the proposed BOLD Mechanism. The Exchange believes the rejection of a CUBE Order and/or a QCC Order in these circumstances would allow the full exposure period for the order submitted pursuant to the BOLD Mechanism, which should maximize the opportunity for the exposed order to be executed on the Exchange. 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirements of the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.\12\ In particular, the proposal is consistent with Section 6(b)(5) of the Act \13\ because it is designed to adopt the BOLD Mechanism, which is designed to offer market participants greater flexibility with respect to orders entered [[Page 19303]] into the NYSE Amex book, thereby promoting just and equitable principles of trade, fostering cooperation and coordination with persons engaged in facilitating transactions in securities, removing impediments to, and perfecting the mechanisms of, a free and open market and a national market system. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange's proposal to adopt the BOLD Mechanism would provide ATP Holders on NYSE Amex with the opportunity to improve their prices to match the NBBO in order to interact with orders sent to the Exchange. This will allow the market participant sending an order to NYSE Amex to increase its chances of receiving an execution on NYSE Amex (the market participant's chosen venue) instead of having the order be routed to another exchange. This ``step up'' process allows market participants to take into account factors beyond just disseminated prices, such as execution costs, system reliability, and quality of service, when determining the exchange to which to route an order. A market participant that prefers NYSE Amex due to some combination of these other factors will know that, even if NYSE Amex is not displaying a price that is the NBBO, the market participant may still receive an execution at NYSE Amex because another ATP Holder may ``step up'' to match the NBBO. Therefore, the fact that the BOLD Mechanism allows a market participant who elects to send an order to NYSE Amex to have a greater likelihood of achieving execution at their chosen venue removes an impediment to and perfects the mechanism for a free and open national market system. Further, the BOLD Mechanism and the ``step up'' process enables ATP Holders to add liquidity that is available to interact with orders sent to the Exchange. Indeed, when an ATP Holder ``steps up'' to match the NBBO that is displayed on another exchange, more contracts maybe executed at this NBBO price on NYSE Amex than are available at that same price on the other exchange. This increased liquidity benefits all market participants on NYSE Amex, thereby perfecting the mechanism for a free and open national market system and protecting investors and the public interest. The Exchange's proposed BOLD Mechanism is similar to EDGX's SUM, which provides the same manner of ``step up'' process. To the extent there are differences between the proposed BOLD Mechanism and SUM, as described elsewhere in the proposal, the Exchange does not believe such differences raise any new or significant policy concerns. Further, despite the differences, the proposed BOLD Mechanism would otherwise operate in a similar manner to the SUM process. As such, the Exchange merely desires to adopt functionality that is similar to one that already exists on EDGX, and on CBOE.\14\ Permitting the Exchange to operate on an even playing field relative to other exchanges that have similar functionality removes impediments to and perfects the mechanism for a free and open market and a national market system. --------------------------------------------------------------------------- \14\ See supra, note 7. --------------------------------------------------------------------------- The Commission has always been clear that honoring better prices on other markets can be accomplished by matching those other prices.\15\ The proposed BOLD Mechanism would allow participants on NYSE Amex to do just that. --------------------------------------------------------------------------- \15\ See supra, note 10. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change to adopt the BOLD Mechanism will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange's proposed BOLD Mechanism is open to all market participants. The ``step up'' feature of the proposed BOLD Mechanism allows for execution at the NBBO for price improvement. When such price improvement is achieved via this ``stepping up'' to meet (or beat) the best quoted price at another exchange, market participants are able to receive the best quoted price while still achieving execution on NYSE Amex, the exchange to which they elected to send their orders. As noted above, the proposed BOLD Mechanism is similar to processes offered on other options exchanges that compete with NYSE Amex, and therefore the proposal is pro-competitive. 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 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 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\ --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(3)(A). \17\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the 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. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \18\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange stated that waiver of the operative delay will allow the Exchange to provide functionality on NYSE Amex that is similar to functionality provided by other options exchanges, including but not limited to EDGX.\20\ In addition, the Exchange stated that waiver of the operative delay will allow it to more effectively compete with other options exchanges. For these reasons, the Commission believes the waiver of the operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal operative upon filing.\21\ --------------------------------------------------------------------------- \18\ 17 CFR 240.19b-4(f)(6). \19\ 17 CFR 240.19b-4(f)(6)(iii). \20\ See supra, note 7. \21\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the 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 to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, [[Page 19304]] including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSEMKT-2017-21 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-NYSEMKT-2017-21. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEMKT-2017-21, and should be submitted on or before May 17, 2017. --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-08388 Filed 4-25-17; 8:45 am] BILLING CODE 8011-01-P
![19300 Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices
7. Applicants request an exemption to exempt any person, security, or and at the Commission’s Public
permit Funds of Funds to acquire Fund transaction, or any class or classes of Reference Room.
shares beyond the limits of section persons, securities, or transactions, from
II. Self-Regulatory Organization’s
12(d)(1)(A) of the Act; and the Funds, any provision of section 12(d)(1) if the
Statement of the Purpose of, and
and any principal underwriter for the exemption is consistent with the public
Statutory Basis for, the Proposed Rule
Funds, and/or any broker or dealer interest and the protection of investors.
registered under the Exchange Act, to Section 17(b) of the Act authorizes the Change
sell shares to Funds of Funds beyond Commission to grant an order In its filing with the Commission, the
the limits of section 12(d)(1)(B) of the permitting a transaction otherwise self-regulatory organization included
Act. The application’s terms and prohibited by section 17(a) if it finds statements concerning the purpose of,
conditions are designed to, among other that (a) the terms of the proposed and basis for, the proposed rule change
things, help prevent any potential (i) transaction are fair and reasonable and and discussed any comments it received
undue influence over a Fund through do not involve overreaching on the part on the proposed rule change. The text
control or voting power, or in of any person concerned; (b) the of those statements may be examined at
connection with certain services, proposed transaction is consistent with the places specified in Item IV below.
transactions, and underwritings, (ii) the policies of each registered The Exchange has prepared summaries,
excessive layering of fees, and (iii) investment company involved; and (c) set forth in sections A, B, and C below,
overly complex fund structures, which the proposed transaction is consistent of the most significant parts of such
are the concerns underlying the limits with the general purposes of the Act. statements.
in sections 12(d)(1)(A) and (B) of the For the Commission, by the Division of A. Self-Regulatory Organization’s
Act. Investment Management, under delegated
8. Applicants request an exemption Statement of the Purpose of, and the
authority.
from sections 17(a)(1) and 17(a)(2) of the Statutory Basis for, the Proposed Rule
Eduardo A. Aleman,
Act to permit persons that are Affiliated Change
Assistant Secretary.
Persons, or Second Tier Affiliates, of the [FR Doc. 2017–08444 Filed 4–25–17; 8:45 am] 1. Purpose
Funds, solely by virtue of certain
BILLING CODE 8011–01–P The purpose of the filing is to adopt
ownership interests, to effectuate
a rule that governs the operation of the
purchases and redemptions in-kind. The
Exchange’s new BOLD Mechanism. As
deposit procedures for in-kind SECURITIES AND EXCHANGE
purchases of Creation Units and the proposed, BOLD Mechanism is a feature
COMMISSION within the Exchange’s trading system
redemption procedures for in-kind
redemptions of Creation Units will be [Release No. 34–80494; File No. SR– that would provide automated order
the same for all purchases and NYSEMKT–2017–21] handling for eligible orders in
redemptions and Deposit Instruments designated classes. Regarding BOLD
Self-Regulatory Organizations; NYSE Mechanism eligibility, the Exchange
and Redemption Instruments will be
MKT LLC; Notice of Filing and will designate eligible order size,
valued in the same manner as those
Immediate Effectiveness of a Proposed eligible order type, eligible capacity
investment positions currently held by
Rule Change To Adopt Rule 994NY, code (e.g., Customer 4 orders, non-
the Funds. Applicants also seek relief
Broadcast Order Liquidity Delivery Market Maker non-Customer orders, and
from the prohibitions on affiliated
Mechanism Market Maker 5 orders), and classes in
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its April 20, 2017.
which the BOLD Mechanism will be
shares from a Fund of Funds, and to available. Orders must be specifically
Pursuant to Section 19(b)(1) 1 of the
engage in the accompanying in-kind marked to be eligible for the BOLD
Securities Exchange Act of 1934 (the
transactions with the Fund of Funds.3 Mechanism. After trading with eligible
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
The purchase of Creation Units by a interest on the Exchange, the BOLD
notice is hereby given that on April 11,
Fund of Funds directly from a Fund will Mechanism will automatically process
2017, NYSE MKT LLC (the ‘‘Exchange’’
be accomplished in accordance with the an eligible incoming order that is
or ‘‘NYSE MKT’’) filed with the
policies of the Fund of Funds and will marketable against quotations
Securities and Exchange Commission
be based on the NAVs of the Funds. disseminated by other exchanges that
(the ‘‘Commission’’) the proposed rule
9. Section 6(c) of the Act permits the are participants in the Options Order
change as described in Items I and II
Commission to exempt any persons or Protection and Locked/Crossed Market
below, which Items have been prepared
transactions from any provision of the Plan (the ‘‘Linkage Plan’’).
by the self-regulatory organization. The
Act if such exemption is necessary or With respect to order handling, orders
Commission is publishing this notice to
appropriate in the public interest and that are received by the BOLD
solicit comments on the proposed rule
consistent with the protection of Mechanism pursuant to paragraph (a) of
change from interested persons.
investors and the purposes fairly
intended by the policy and provisions of I. Self-Regulatory Organization’s 4 The term ‘‘Customer’’ means an individual or
Statement of the Terms of Substance of organization that is not a Broker/Dealer; when not
the Act. Section 12(d)(1)(J) of the Act capitalized, ‘‘customer’’ refers to any individual or
provides that the Commission may the Proposed Rule Change organization whose order is being represented,
The Exchange proposes to adopt Rule including a Broker/Dealer. See Rule 900.2NY(18).
3 The requested relief would apply to direct sales 5 Market Makers are included in the definition of
994NY, Broadcast Order Liquidity
of shares in Creation Units by a Fund to a Fund of ATP Holders. See Rule 900.2NY(5) (defining ATP
mstockstill on DSK30JT082PROD with NOTICES
Funds and redemptions of those shares. Applicants,
Delivery (‘‘BOLD’’) Mechanism. The Holder as ‘‘a natural person, sole proprietorship,
moreover, are not seeking relief from section 17(a) proposed rule change is available on the partnership, corporation, limited liability company
for, and the requested relief will not apply to, Exchange’s Web site at www.nyse.com, or other organization, in good standing, that has
transactions where a Fund could be deemed an at the principal office of the Exchange, been issued an ATP,’’ and requires that ‘‘[a]n ATP
Affiliated Person, or a Second-Tier Affiliate, of a Holder must be a registered broker or dealer
Fund of Funds because an Adviser or an entity pursuant to Section 15 of the Securities Exchange
1 15 U.S.C. 78s(b)(1).
controlling, controlled by or under common control Act of 1934.’’ See also Rule 900.2NY(38) (providing
2 15 U.S.C. 78a.
with an Adviser provides investment advisory that a Market Maker is ‘‘an ATP Holder that acts
services to that Fund of Funds. 3 17 CFR 240.19b–4. as a Market Maker pursuant to Rule 920NY’’).
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![19302 Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices
terminate the exposure period early in received pursuant to paragraph (a) of the (a) of the proposed rule would only be
a scenario not covered by HAL but that proposed rule would only be processed processed by the BOLD Mechanism
is available by SUM. Specifically, the by the BOLD Mechanism once because, once.
Exchange would terminate an exposure having exposed the order and attracted The Exchange also proposes to amend
period early when the exposed order is insufficient (or no) liquidity, the order certain other Exchange rules that would
no longer marketable against the NBBO. (or balance thereof) would not be be impacted by the proposed BOLD
The Exchange notes that SUM also exposed again. The Exchange does not Mechanism. First, the Exchange
terminates the exposure period early if believe the terminology used or proposes to adopt paragraph (F) under
a resting order on EDGX is locked or different wording represents any Rule 971.1NY(c)(4) to reflect that the
crossed by another options exchange. substantive difference between the Exchange’s Customer Best Execution
The Exchange does not believe early proposed BOLD Mechanism and the Auction (‘‘CUBE Auction’’) will
termination is necessary for the BOLD functionality offered through SUM and conclude early if the BOLD Mechanism,
Mechanism because the BOLD HAL. Any such differences are intended i.e., orders that are eligible for exposure
Mechanism is not an auction. to highlight the exact operation of the under proposed Rule 994NY, receives
Accordingly, the Exchange believes that proposed BOLD Mechanism process. an unrelated order in the same series
permitting the exposure period to Despite the differences highlighted during the CUBE Auction’s Response
continue would allow other orders to above, the proposed BOLD Mechanism Time Interval. When the CUBE Auction
arrive and trade with any order exposed would otherwise operate in similar concludes, the CUBE Order would
via the BOLD Mechanism (including manner to SUM and HAL, the latter of execute pursuant to current Rule
any from the locking Exchange). which was previously approved by the 971.1NY(c)(5). The Exchange believes
Although the early termination section Commission and formed the basis for that early conclusion of a CUBE Auction
of the proposed rule represents the the former to be made immediately in this circumstance would allow the
greatest departure from the HAL rule, effective upon its filing with the Exchange to appropriately handle
the proposed BOLD Mechanism rule is Commission. The Commission has unrelated orders exposed via the BOLD
nearly identical to the SUM rule, and always been clear that honoring better Mechanism, while at the same time
the Exchange does not believe that any prices on other markets can be allowing the CUBE Order to execute
of the differences raise new policy accomplished by matching those better against the Contra Order and any RFR
issues generally with respect to a step prices.10 The proposed BOLD Responses that may have been entered
up process. Mechanism would allow participants on up to that point.
With respect to the early termination NYSE Amex to do just that. If an ATP Next, the Exchange proposes to adopt
scenarios not adopted by the Exchange, Holder wants to ensure that an order Commentary .04 to Rule 971.1NY,
the Exchange believes that the fact that which states that a CUBE Order will be
does not go through the proposed BOLD
an ATP Holder will have the ability to rejected if the CUBE Order is in the
Mechanism, then that participant can
cancel its order after the BOLD same series as an order exposed
submit an order that would not be
Mechanism process is initiated coupled pursuant to the proposed BOLD
exposed to the BOLD Mechanism.11
with the fact that the Exchange will only Mechanism. Finally, the Exchange
In addition to Rule 994NY proposed
execute an order that has been exposed proposes to adopt Commentary .04 to
above, the Exchange proposes to adopt
via the BOLD Mechanism process to the Rule 985NY, which states that a
Commentary .01 to proposed Rule
extent the order is marketable against Qualified Contingent Cross (‘‘QCC’’)
994NY, which states that all
the NBBO mitigate any potential Order will be rejected if the QCC Order
determinations by the Exchange
concern regarding such differences.9 is in the same series as an order exposed
pursuant to proposed Rule 994NY (i.e.,
Further, regarding the termination pursuant to the proposed BOLD
eligible order size, order type,
scenarios specified by the Exchange, the Mechanism. The Exchange believes the
increment, participant ID, BOLD
Exchange believes that these are rejection of a CUBE Order and/or a QCC
Mechanism timer and classes) will be
reasonable reasons to terminate the Order in these circumstances would
announced in a Trader Update and
BOLD Mechanism process. Specifically, allow the full exposure period for the
maintained in specifications made
if an order is no longer marketable, then order submitted pursuant to the BOLD
publicly available via the Exchange’s
it cannot be executed through the BOLD Mechanism, which should maximize
Web site. As noted above, the Exchange
Mechanism process so no longer the opportunity for the exposed order to
also proposes to adopt Commentary .02
benefits from being exposed. Generally be executed on the Exchange.
to proposed Rule 994NY to make clear
speaking, the Exchange’s proposed rule
that orders that are received paragraph 2. Statutory Basis
is similar to the SUM rule in terms of
its structure and wording. The 10 For example, in adopting the Order Protection
The Exchange believes that its
Exchange’s proposed rule differs Rule (Rule 611) under Regulation NMS in 2005, the proposal is consistent with the
slightly from the SUM rule in that the Commission stated: ‘‘The Order Protection Rule requirements of the Securities Exchange
proposed BOLD Mechanism is not an generally requires that trading centers match the Act of 1934 (the ‘‘Act’’) and the rules
best quoted prices, cancel orders without an and regulations thereunder that are
auction and therefore, when an ATP execution, or route orders to the trading centers
Holder ‘‘steps up’’ to trade against an quoting the best prices.’’ See Securities Exchange applicable to a national securities
exposed order, the proposed rule does Act Release No. 51808 (June 9, 2005), 70 FR 37495 exchange, and, in particular, with the
not refer to that as a ‘‘response’’ by the (June 29, 2005), at 37525 (S7–10–04). requirements of Section 6(b) of the
11 An ATP Holder will be able to opt-in to the
ATP Holder. The proposed rule also Act.12 In particular, the proposal is
BOLD Mechanism by including a specific field in
consistent with Section 6(b)(5) of the
mstockstill on DSK30JT082PROD with NOTICES
differs from the SUM rule in that orders their orders submitted to the Exchange. Details
regarding the ability to opt-in will be set forth in Act 13 because it is designed to adopt the
9 As a general matter, ATP Holders can cancel the Exchange’s order entry specifications, which are BOLD Mechanism, which is designed to
their orders on the Exchange unless expressly made publicly available to all ATP Holders. The offer market participants greater
prohibited. For example, Rule 971.1NY(c) provides, ability to opt-in to the BOLD Mechanism is different
in part, that ‘‘[o]nce commenced, the CUBE Order from the SUM process. SUM has adopted an ‘opt-
flexibility with respect to orders entered
(as well as the Contra Order) may not be cancelled out’ approach where members of EDGX are able to
12 15 U.S.C. 78f(b).
or modified.’’ No such restriction exists for orders opt-out by including a specific field in orders
processed by the BOLD Mechanism. submitted to that exchange. 13 15 U.S.C. 78f(b)(5).
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![19304 Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices
including whether the proposed rule received will be posted without change; and SSA Reports Clearance Officer at
change is consistent with the Act. the Commission does not edit personal the following addresses or fax numbers.
Comments may be submitted by any of identifying information from (OMB), Office of Management and
the following methods: submissions. You should submit only Budget, Attn: Desk Officer for SSA,
information that you wish to make Fax: 202–395–6974, Email address:
Electronic Comments
available publicly. All submissions OIRA_Submission@omb.eop.gov.
• Use the Commission’s Internet should refer to File Number SR–
comment form (http://www.sec.gov/ (SSA), Social Security Administration,
NYSEMKT–2017–21, and should be
rules/sro.shtml); or OLCA, Attn: Reports Clearance
submitted on or before May 17, 2017.
• Send an email to rule-comments@ Director, 3100 West High Rise, 6401
sec.gov. Please include File Number SR– For the Commission, by the Division of Security Blvd., Baltimore, MD 21235,
Trading and Markets, pursuant to delegated Fax: 410–966–2830, Email address:
NYSEMKT–2017–21 on the subject line. authority.22
OR.Reports.Clearance@ssa.gov
Paper Comments Eduardo A. Aleman,
Or you may submit your comments
• Send paper comments in triplicate Assistant Secretary.
online through www.regulations.gov,
to Secretary, Securities and Exchange [FR Doc. 2017–08388 Filed 4–25–17; 8:45 am]
referencing Docket ID Number [SSA–
Commission, 100 F Street NE., BILLING CODE 8011–01–P
2017–0020].
Washington, DC 20549–1090.
I. The information collections below
All submissions should refer to File are pending at SSA. SSA will submit
Number SR–NYSEMKT–2017–21. This SOCIAL SECURITY ADMINISTRATION them to OMB within 60 days from the
file number should be included on the
[Docket No: SSA–2017–0020] date of this notice. To be sure we
subject line if email is used. To help the
consider your comments, we must
Commission process and review your Agency Information Collection receive them no later than June 26,
comments more efficiently, please use Activities: Proposed Request and 2017. Individuals can obtain copies of
only one method. The Commission will Comment Request the collection instruments by writing to
post all comments on the Commission’s
The Social Security Administration the above email address.
Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the (SSA) publishes a list of information 1. Application for Benefits under a
submission, all subsequent collection packages requiring clearance U.S. International Social Security
amendments, all written statements by the Office of Management and Agreement—20 CFR 404.1925—0960–
with respect to the proposed rule Budget (OMB) in compliance with 0448. Section 233(a) of the Social
change that are filed with the Public Law 104–13, the Paperwork Security Act (Act) authorizes the
Commission, and all written Reduction Act of 1995, effective October President to broker international Social
communications relating to the 1, 1995. This notice includes revisions Security agreements (Totalization
proposed rule change between the and on extension of OMB-approved Agreements) between the United States
Commission and any person, other than information collections. and foreign countries. SSA collects
those that may be withheld from the SSA is soliciting comments on the information using Form SSA–2490–BK
public in accordance with the accuracy of the agency’s burden to determine entitlement to Social
provisions of 5 U.S.C. 552, will be estimate; the need for the information; Security benefits from the United States,
available for Web site viewing and its practical utility; ways to enhance its or from a country that enters into a
printing in the Commission’s Public quality, utility, and clarity; and ways to Totalization Agreement with the United
Reference Room, 100 F Street NE., minimize burden on respondents, States. The respondents are individuals
Washington, DC 20549, on official including the use of automated applying for Old Age Survivors and
business days between the hours of collection techniques or other forms of Disability Insurance (OASDI) benefits
10:00 a.m. and 3:00 p.m. Copies of the information technology. Mail, email, or from the United States or from a
filing also will be available for fax your comments and Totalization Agreement country.
inspection and copying at the principal recommendations on the information Type of Request: Revision of an OMB-
office of the Exchange. All comments collection(s) to the OMB Desk Officer approved information collection.
Average Estimated
Number of Frequency burden per total annual
Modality of completion respondents of response response burden
(minutes) (hours)
SSA–2490–BK (MCS) ..................................................................................... 15,030 1 30 7,515
SSA–2490–BK (paper) .................................................................................... 2,120 1 30 1,060
Totals ........................................................................................................ 17,150 ........................ ........................ 8,575
2. Medicare Part D Subsidies deductible, and co-payment costs for eligibility determinations, and to
Regulations—20 CFR 418.3625(c), certain low-income individuals. The provide a process for appealing SSA’s
418.3645, 418.3665(a), and 418.3670— MMA also mandated the provision of determinations. Regulation sections
mstockstill on DSK30JT082PROD with NOTICES
0960–0702. The Medicare Prescription subsidies for those individuals who 418.3625(c), 418.3645, 418.3665(a), and
Drug Improvement and Modernization qualify for the program and who meet 418.3670 contain public reporting
Act (MMA) of 2003 established the eligibility criteria for help with requirements pertaining to
Medicare Part D program for voluntary premium, deductible, or co-payment administrative review hearings.
prescription drug coverage of premium, costs. This law requires SSA to make Respondents are applicants for the
22 17 CFR 200.30–3(a)(12).
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Document Created: 2017-04-26 03:15:41
Document Modified: 2017-04-26 03:15:41
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 19300 |
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