82 FR 3042 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of a Proposed Rule Change To Conform to Proposed Amendment to Rule 15c6-1(a) Under the Securities Exchange Act of 1934 To Shorten the Standard Settlement Cycle From Three Business Days After the Trade Date (“T+3”) to Two Business Days After the Trade Date (“T+2”)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 6 (January 10, 2017)

[Federal Register Volume 82, Number 6 (Tuesday, January 10, 2017)]
[Notices]
[Page 3042]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-00216]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79732; File No. SR-NYSEArca-2016-145]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of a Proposed Rule Change To Conform to Proposed Amendment to 
Rule 15c6-1(a) Under the Securities Exchange Act of 1934 To Shorten the 
Standard Settlement Cycle From Three Business Days After the Trade Date 
(``T+3'') to Two Business Days After the Trade Date (``T+2'')

January 4, 2017.

I. Introduction

    On November 4, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to conform its rules to an amendment proposed by 
the Commission to Rule 15c6-1(a) under the Securities Exchange Act of 
1934 (``Act'') to shorten the standard settlement cycle for most 
broker-dealer transactions from three business days after the trade 
date (``T+3'') to two business days after the trade date (``T+2'').\3\ 
The proposed rule change was published for comment in the Federal 
Register on November 23, 2016.\4\ The Commission received no comments 
on the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 78962 (Sept. 28, 
2016), 81 FR 69240 (Oct. 5, 2016) (File No. S7-22-16).
    \4\ See Securities Exchange Act Release No. 79337 (Nov. 17, 
2016), 81 FR 84635 (Nov. 23, 2016).
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II. Description of the Proposal

    The Exchange proposes to adopt new NYSE Arca Equities Rule 7.4T 
(Ex-Dividend or Ex-Right Dates), to conform to a proposed amendment to 
Rule 15c6-1(a) under the Act that would shorten the standard settlement 
cycle to T+2.

A. Current T+3 Settlement Cycle

    Currently, Exchange Rule 7.4 provides that transactions in stocks 
traded ``regular'' shall be ``ex-dividend'' or ``ex-rights,'' as the 
case may be, on the second business day preceding the record date fixed 
by the company or the date of the closing of transfer books, except 
when the Board of Directors rules otherwise.\5\ Further, current 
Exchange Rule 7.4 provides that, should the record date or closing of 
transfer books occur on a day other than a business day, the rule shall 
apply for the third preceding business day.
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    \5\ See Exchange Rule 7.4.
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B. Proposed T+2 Settlement Cycle

    Proposed new Exchange Rule 7.4T would provide that transactions in 
stocks traded ``regular'' shall be ``ex-divided'' or ``ex-rights,'' as 
the case may be, on the business day preceding the record date fixed by 
the company or the date of the closing of transfer books, except when 
the Board of Directors rules otherwise.\6\ Further, proposed Rule 7.4T 
would provide that, should the record date or closing of transfer books 
occur on a day other than a business day, the rule would apply for the 
second preceding business day.
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    \6\ See Proposed Exchange Rule 7.4T.
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C. Operative Date

    The Exchange proposes for the new rule to be adopted but not yet 
operative. The current T+3 rule would remain in effect until the 
Exchange files a separate proposed rule change, to delete the current 
T+3 rule and make operative the proposed T+2 rule. The Exchange would 
announce the operative date of the T+2 rule by issuing an Information 
Memo.

III. Discussion and Commission's Findings

    After careful review of the proposed rule change, the Commission 
finds that the proposal is consistent with the requirements of the Act 
and the rules and regulations thereunder that are applicable to a 
national securities exchange.\7\ Specifically, the Commission finds 
that the rule change is consistent with Section 6(b)(5) of the Act,\8\ 
which requires that the rules of a national securities exchange be 
designed, among other things, to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and to protect investors and the public interest.
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    \7\ In approving this rule change, the Commission has considered 
the rule's impact on efficiency, competition, and capital formation. 
See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the proposal would conform Exchange Rule 
7.4 to the amendment that the Commission has proposed to Rule 15c6-1(a) 
under the Act. The Commission also notes that the proposed amendment to 
Rule 15c6-1(a) under the Act has not yet been adopted by the 
Commission, and that the Exchange has, accordingly, not proposed to 
make its amended rule effective at present. Instead, the Exchange has 
proposed to establish the operative date of the Exchange's proposal by 
filing a separate proposed rule change. The Commission expects that any 
proposed rule change to establish the operative date of the Exchange's 
proposal would correspond with the compliance date of any amendment to 
Rule 15c6-1(a) that is adopted by the Commission.
    For the reasons noted above, the Commission finds that the proposal 
is consistent with the requirements of the Act and would foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and to protect investors and the public interest.

IV. Conclusion

    It is therefore ordered that, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NYSEArca-2016-145), be and 
hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-00216 Filed 1-9-17; 8:45 am]
 BILLING CODE 8011-01-P