82 FR 3059 - Self-Regulatory Organizations; ISE Mercury, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Rules to Extend a Pilot Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 6 (January 10, 2017)
Federal Register Volume 82, Issue 6 (January 10, 2017)
| Page Range | 3059-3061 | |
| FR Document | 2017-00224 |
[Federal Register Volume 82, Number 6 (Tuesday, January 10, 2017)] [Notices] [Pages 3059-3061] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-00224] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79740; File No. SR-ISEMercury-2016-26] Self-Regulatory Organizations; ISE Mercury, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Rules to Extend a Pilot Program January 4, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on December 23, 2016, ISE Mercury, LLC (``ISE Mercury'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The [[Page 3060]] 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\ 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 amend its rules to extend a pilot program to quote and to trade certain options classes in penny increments. The text of the proposed rule change is available on the Exchange's Web site at www.ise.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 Exchange 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 these 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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Under the Penny Pilot Program, the minimum price variation for all participating options classes, except for the Nasdaq-100 Index Tracking Stock (``QQQQ''), the SPDR S&P 500 Exchange Traded Fund (``SPY'') and the iShares Russell 2000 Index Fund (``IWM''), is $0.01 for all quotations in options series that are quoted at less than $3 per contract and $0.05 for all quotations in options series that are quoted at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01 increments for all options series. The Penny Pilot Program is currently scheduled to expire on December 31, 2016.\3\ The Exchange proposes to extend the Penny Pilot Program through June 30, 2017, and to provide a revised date for adding replacement issues to the Penny Pilot Program. The Exchange proposes that any Penny Pilot Program issues that have been delisted may be replaced on the second trading day following January 1, 2017. The replacement issues will be selected based on trading activity for the most recent six month period excluding the month immediately preceding the replacement (i.e., beginning June 1, 2016, and ending November 30, 2016). This filing does not propose any substantive changes to the Penny Pilot Program: All classes currently participating will remain the same and all minimum increments will remain unchanged. The Exchange believes the benefits to public customers and other market participants who will be able to express their true prices to buy and sell options have been demonstrated to outweigh any increase in quote traffic. --------------------------------------------------------------------------- \3\ See Exchange Act Release No. 78202 (June 30, 2016), 81 FR 81 FR 44377 (July 7, 2016) (SR-ISE Mercury-2016-12). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of 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.\4\ Specifically, the proposed rule change is consistent with Section 6(b)(5) of the Act,\5\ because it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. In particular, the proposed rule change, which extends the Penny Pilot Program for an additional six months, will enable public customers and other market participants to express their true prices to buy and sell options to the benefit of all market participants. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,\6\ the Exchange does not believe that the proposed rule change will impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange believes that, by extending the expiration of the Penny Pilot Program, the proposed rule change will allow for further analysis of the Penny Pilot Program and a determination of how the Penny Pilot Program should be structured in the future. In doing so, the proposed rule change will also serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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 \7\ and Rule 19b-4(f)(6) thereunder.\8\ 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 and Rule 19b- 4(f)(6)(iii) thereunder. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78s(b)(3)(A)(iii). \8\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally does not become operative prior to 30 days after the date of the filing.\10\ However, pursuant to Rule 19b-4(f)(6)(iii),\11\ the Commission may 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 Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because doing so will allow the Pilot Program to continue without interruption in a manner that is consistent with the Commission's prior approval of the extension and expansion of the Pilot Program and will allow the Exchange and the Commission additional time to analyze the impact of the Pilot Program. Accordingly, the Commission designates the proposed [[Page 3061]] rule change as operative upon filing with the Commission.\12\ --------------------------------------------------------------------------- \9\ 17 CFR 240.19b-4(f)(6). \10\ 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 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. The Exchange has satisfied this pre-filing requirement. \11\ 17 CFR 240.19b-4(f)(6)(iii). \12\ For purposes only of waiving the operative delay for this proposal, the Commission has 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 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) \13\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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 StatementsUse the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File No. SR-ISEMercury-2016-26 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-ISEMercury-2016-26. 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. Copies of such filing also will be available for inspection and copying at the principal office of ISE Mercury. 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-ISEMercury-2016-26 and should be submitted by January 31, 2017. --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-00224 Filed 1-9-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 6 / Tuesday, January 10, 2017 / Notices 3059
automatically executed. Under the Securities Exchange, LLC (‘‘ISE’’) and with the implementation of the
proposal, ISE Mercury would determine ISE Gemini, LLC (‘‘ISE Gemini’’) reduction in the auction duration to no
an exposure period for each of the four members that responded to an auction less than 100 milliseconds.15
mechanisms that is no less than 100 in the period beginning July 1, 2015 and Based on ISE Mercury’s statements,
milliseconds and no more than 1 ending January 15, 2016.11 Each of the the Commission believes that market
second.7 twenty-one members surveyed indicated participants should continue to have
that they can currently receive, process, opportunities to compete for exposed
III. Discussion and Commission’s
and communicate a response back to the bids and offers within an exposure
Findings
exchange within 100 milliseconds.12 To period of no less than 100 milliseconds
After careful review, the Commission implement the reduced exposure and no more than 1 second.16
finds that the proposed rule change is periods and help ensure that ISE Accordingly, the Commission believes
consistent with the requirements of the Mercury’s and its members’ systems are that it is consistent with the Act for the
Act and the rules and regulations working properly given the faster Exchange to modify the response times
thereunder applicable to a national response times, ISE Mercury will reduce in the Block Mechanism, Facilitation
securities exchange.8 In particular, the the auction time over a period of weeks, Mechanism, Solicited Order
Commission finds that the proposed ending at 100 milliseconds. Upon Mechanism, and PIM from 500
rule change is consistent with Section effectiveness of the proposal, and at milliseconds to a time period designated
6(b)(5) of the Act,9 which requires, least six weeks prior to implementation by the Exchange of no less than 100
among other things, that the rules of a of the proposed rule change, ISE milliseconds and no more than 1
national securities exchange be Mercury will issue a circular to its second.
designed to promote just and equitable members, informing them of the
principles of trade, to foster cooperation implementation date of the reduction of IV. Conclusion
and coordination with persons engaged the auction from 500 milliseconds to the It is therefore ordered, pursuant to
in regulating transactions in securities, auction time designated by ISE Mercury Section 19(b)(2) of the Act,17 that the
to remove impediments to and perfect (100 milliseconds) to allow members the proposed rule change (SR–ISEMercury–
the mechanism of a free and open opportunity to perform systems 2016–21) be, and hereby is, approved.
market and a national market system changes. ISE Mercury also represented For the Commission, by the Division of
and, in general, to protect investors and that it will issue a circular at least four Trading and Markets, pursuant to delegated
the public interest, and not be designed weeks prior to any future changes, as authority.18
to permit unfair discrimination between permitted by its rules, to the auction Eduardo A. Aleman,
customers, issuers, brokers, or dealers. time.13 In addition, ISE Mercury Assistant Secretary.
The Commission also finds that the reviewed all executions occurring in the [FR Doc. 2017–00215 Filed 1–9–17; 8:45 am]
proposed rule change is consistent with mechanisms by ISE Mercury members
BILLING CODE 8011–01–P
Section 6(b)(8) of the Act,10 which from March 28, 2016 to April 25, 2016.
requires that the rules of an exchange This review of executions in the
not impose any burden on competition mechanisms indicated that SECURITIES AND EXCHANGE
that is not necessary or appropriate in approximately 98% of responses that COMMISSION
furtherance of the purposes of the Act. resulted in price improving executions
The Commission believes that, given at the conclusion of an auction were [Release No. 34–79740; File No. SR–
the electronic environment of ISE submitted within 500 milliseconds. ISEMercury–2016–26]
Mercury, reducing each of the exposure Approximately 94% of responses that
periods from 500 milliseconds to no less Self-Regulatory Organizations; ISE
resulted in price improving executions
than 100 milliseconds could facilitate Mercury, LLC; Notice of Filing and
at the conclusion of an auction were
the prompt execution of orders, while submitted within 100 milliseconds, and Immediate Effectiveness of Proposed
continuing to provide market 83% were submitted within 50 Rule Change To Amend its Rules to
participants with an opportunity to milliseconds of the initial order.14 Extend a Pilot Program
compete for exposed bids and offers. To Furthermore, with regard to the impact January 4, 2017.
substantiate that its members could of the proposal on system capacity, ISE Pursuant to Section 19(b)(1) of the
receive, process, and communicate a Mercury has analyzed its capacity and Securities Exchange Act of 1934
response back to ISE Mercury within represented that it has the necessary (‘‘Act’’),1 and Rule 19b–4 thereunder,2
100 milliseconds, ISE Mercury stated systems capacity to handle the potential notice is hereby given that on December
that it surveyed all International additional traffic associated with the 23, 2016, ISE Mercury, LLC (‘‘ISE
additional transactions that may occur Mercury’’ or ‘‘Exchange’’) filed with the
7 While the proposed rule change would allow
Securities and Exchange Commission
ISE Mercury to increase the exposure period up to 11 ISE Mercury launched on February 16, 2016,
1 second, ISE Mercury stated that it currently (‘‘SEC’’ or ‘‘Commission’’) the proposed
after the survey had been completed. ISE and ISE
intends to decrease the time period allowed for Gemini are affiliates of ISE Mercury that also offer rule change as described in Items I and
responses to 100 milliseconds. See Notice, supra a Block Order Mechanism, Facilitation Mechanism, II, below, which Items have been
note 3, at 85297. ISE Mercury further noted that its Solicited Order Mechanism, and PIM. See Notice, prepared by the Exchange. The
proposal is consistent with exposure periods supra note 3, at 85297 n.12.
permitted in similar mechanisms on other options 12 ISE Mercury believes the survey results apply
15 See id.
exchanges. See id. at 85296. See also Securities equally to ISE Mercury as all current ISE Mercury
16 The Commission notes that the ability to
Exchange Act Release Nos. 76301 (October 29, members are also members of ISE or ISE Gemini,
pmangrum on DSK3GDR082PROD with NOTICES
2015), 80 FR 68347 (November 4, 2015) (SR–BX– which are affiliates of ISE Mercury, and the same designate such an exposure time period is
2015–032) and 77557 (April 7, 2016), 81 FR 21935 functionality for auction responses offered on ISE consistent with the rules of other options
(April 13, 2016) (SR–Phlx–2016–40). Mercury is also offered on these affiliated exchanges. See supra note 7. See also NASDAQ
8 In approving this proposed rule change, the exchanges. See Notice, supra note 3, at 85297. ISE Phlx Rule 1080(n)(ii)(A)(4) and NASDAQ BX
Commission has considered the proposed rule’s Mercury further represents that its trading system Options Rules Chapter VI, Section 9(ii)(A)(3).
17 15 U.S.C. 78s(b)(2).
impact on efficiency, competition, and capital has comparable latency to both ISE and ISE Gemini.
formation. See 15 U.S.C. 78c(f). See id. 18 17 CFR 200.30–3(a)(12).
9 15 U.S.C. 78f(b)(5). 13 See id. at 85298. 1 15 U.S.C. 78s(b)(1).
10 15 U.S.C. 78f(b)(8). 14 See id. at 85297. 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 82, No. 6 / Tuesday, January 10, 2017 / Notices 3061
rule change as operative upon filing printing in the Commission’s Public Fees and Charges for Exchange Services
with the Commission.12 Reference Room. Copies of such filing related to co-location services to provide
At any time within 60 days of the also will be available for inspection and a more detailed description of the access
filing of such proposed rule change, the copying at the principal office of ISE to trading and execution services and
Commission summarily may Mercury. All comments received will be connectivity to data provided to Users
temporarily suspend such rule change if posted without change; the Commission with local area networks available in the
it appears to the Commission that such does not edit personal identifying data center; and (b) modify certain fees
action is necessary or appropriate in the information from submissions. You for access to the local area networks in
public interest, for the protection of should submit only information that the Exchange’s data center. The
investors, or otherwise in furtherance of you wish to make available publicly. All proposed rule change is available on the
the purposes of the Act. If the submissions should refer to File Exchange’s Web site at www.nyse.com,
Commission takes such action, the Number SR–ISEMercury–2016–26 and at the principal office of the Exchange,
Commission shall institute proceedings should be submitted by January and at the Commission’s Public
under Section 19(b)(2)(B) 13 of the Act to 31,2017. Reference Room.
determine whether the proposed rule For the Commission, by the Division of
change should be approved or II. Self-Regulatory Organization’s
Trading and Markets, pursuant to delegated
disapproved. authority.14
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
IV. Solicitation of Comments Eduardo A. Aleman,
Change
Assistant Secretary.
Interested persons are invited to In its filing with the Commission, the
[FR Doc. 2017–00224 Filed 1–9–17; 8:45 am]
submit written data, views, and self-regulatory organization included
arguments concerning the foregoing, BILLING CODE 8011–01–P
statements concerning the purpose of,
including whether the proposed rule and basis for, the proposed rule change
change is consistent with the Act. and discussed any comments it received
SECURITIES AND EXCHANGE
Comments may be submitted by any of on the proposed rule change. The text
COMMISSION
the following methods: of those statements may be examined at
[Release No. 34–79729; File No. SR– the places specified in Item IV below.
Electronic Statements NYSEArca–2016–172]
The Exchange has prepared summaries,
• Use the Commission’s Internet
Self-Regulatory Organizations; NYSE set forth in sections A, B, and C below,
comment form http://www.sec.gov/
Arca, Inc.; Notice of Filing and of the most significant parts of such
rules/sro.shtml); or
• Send an email to rule-comments@ Immediate Effectiveness of Proposed statements.
sec.gov. Please include File No. SR– Rule Change Amending the NYSE Arca A. Self-Regulatory Organization’s
ISEMercury–2016–26 on the subject Options Fee Schedule and the NYSE Statement of the Purpose of, and
line. Arca Equities Schedule of Fees and Statutory Basis for, the Proposed Rule
Charges Related to Co-Location Change
Paper Comments Services To Increase LCN and IP
• Send paper comments in triplicate Network Fees and Add a Description of 1. Purpose
to Secretary, Securities and Exchange Access to Trading and Execution The Exchange proposes to amend the
Commission, 100 F Street NE., Services and Connectivity to Included Fee Schedules related to co-location 4
Washington, DC 20549–1090. Data Products services offered by the Exchange to (a)
All submissions should refer to File provide a more detailed description of
January 4, 2017.
Number SR–ISEMercury–2016–26. This the access to trading and execution
file number should be included on the Pursuant to Section 19(b)(1) 1 of the services and connectivity to data
subject line if email is used. To help the Securities Exchange Act of 1934 (the provided to Users 5 with connections to
Commission process and review your ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 the Liquidity Center Network (‘‘LCN’’)
comments more efficiently, please use notice is hereby given that, on December and internet protocol (‘‘IP’’) network,
only one method. The Commission will 22, 2016, NYSE Arca, Inc. (the
post all comments on the Commission’s ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 4 The Exchange initially filed rule changes
Internet Web site (http://www.sec.gov/ the Securities and Exchange relating to its co-location services with the
rules/sro.shtml). Copies of the Commission (the ‘‘Commission’’) the Securities and Exchange Commission
proposed rule change as described in (‘‘Commission’’) in 2010. See Securities Exchange
submission, all subsequent Act Release No. 63275 (November 8, 2010), 75 FR
amendments, all written statements Items I, II, and III below, which Items 70048 (November 16, 2010) (SR–NYSEArca–2010–
with respect to the proposed rule have been prepared by the self- 100) (the ‘‘Original Co-location Filing’’). The
change that are filed with the regulatory organization. The Exchange operates a data center in Mahwah, New
Commission is publishing this notice to Jersey (the ‘‘data center’’) from which it provides
Commission, and all written co-location services to Users.
communications relating to the solicit comments on the proposed rule 5 For purposes of the Exchange’s co-location
proposed rule change between the change from interested persons. services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
Commission and any person, other than I. Self-Regulatory Organization’s from the Exchange. See Securities Exchange Act
those that may be withheld from the Statement of the Terms of the Substance Release No. 76010 (September 29, 2015), 80 FR
public in accordance with the of the Proposed Rule Change 60197 (October 5, 2015) (SR–NYSEArca–2015–82).
pmangrum on DSK3GDR082PROD with NOTICES
provisions of 5 U.S.C. 552, will be As specified in the Fee Schedules, a User that
The Exchange proposes to amend the incurs co-location fees for a particular co-location
available for Web site viewing and NYSE Arca Options Fee Schedule and service pursuant thereto would not be subject to co-
the NYSE Arca Equities Schedule of location fees for the same co-location service
12 For purposes only of waiving the operative
charged by the Exchange’s affiliates New York
delay for this proposal, the Commission has Stock Exchange LLC (‘‘NYSE LLC’’) and NYSE MKT
14 17 CFR 200.30–3(a)(12).
considered the proposed rule’s impact on LLC (‘‘NYSE MKT and, together with NYSE LLC,
1 15 U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See the ‘‘Affiliate SROs’’). See Securities Exchange Act
15 U.S.C. 78c(f). 2 15 U.S.C. 78a.
Release No. 70173 (August 13, 2013), 78 FR 50459
13 15 U.S.C. 78s(b)(2)(B). 3 17 CFR 240.19b–4. (August 19, 2013) (SR–NYSEArca–2013–80).
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Document Created: 2018-02-01 14:54:06
Document Modified: 2018-02-01 14:54:06
| 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 3059 |
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