82 FR 31118 - Self-Regulatory Organizations; NYSE MKT LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendments No. 1, 2, and 3, To Allow the Exchange To Trade, Pursuant to Unlisted Trading Privileges, any NMS Stock Listed on Another National Securities Exchange; Establish Rules for the Trading Pursuant to UTP of Exchange-Traded Products; and Adopt New Equity Trading Rules Relating To Trading Halts of Securities Traded Pursuant to UTP on the Pillar Platform
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 127 (July 5, 2017)
Federal Register Volume 82, Issue 127 (July 5, 2017)
| Page Range | 31118-31121 | |
| FR Document | 2017-14014 |
[Federal Register Volume 82, Number 127 (Wednesday, July 5, 2017)] [Notices] [Pages 31118-31121] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-14014] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81038; File No. SR-NYSEMKT-2016-103] Self-Regulatory Organizations; NYSE MKT LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendments No. 1, 2, and 3, To Allow the Exchange To Trade, Pursuant to Unlisted Trading Privileges, any NMS Stock Listed on Another National Securities Exchange; Establish Rules for the Trading Pursuant to UTP of Exchange- Traded Products; and Adopt New Equity Trading Rules Relating To Trading Halts of Securities Traded Pursuant to UTP on the Pillar Platform June 28, 2017. I. Introduction On November 17, 2016, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 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: (1) Allow the Exchange to trade, pursuant to unlisted trading privileges (``UTP''), any NMS stock \3\ listed on another national securities exchange; (2) establish rules for the trading pursuant to UTP of certain exchange-traded products (``ETPs''); and (3) adopt new equity trading rules relating to trading halts of securities traded pursuant to UTP on the Exchange's new trading platform, Pillar. The proposed rule change was published for comment in the Federal Register on December 1, 2016.\4\ On January 4, 2017, pursuant to Section 19(b)(2) of the Act,\5\ the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.\6\ On February 24, 2017, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act\7\ to determine whether to approve or disapprove the proposed rule change.\8\ [[Page 31119]] On March 28, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, and Amendment No. 1 was published for comment in the Federal Register on April 27, 2017.\9\ On April 27, 2017, the Exchange filed Amendment No. 2 to the proposed rule change.\10\ On May 23, 2017, the Commission designated a longer period for Commission action on the proposed rule change.\11\ On May 31, 2017, the Exchange filed Amendment No. 3 to the proposed rule change.\12\ The Commission has received no comments on the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ The term ``NMS stock'' is defined in Rule 600 of Regulation NMS. See 17 CFR 242.600(b)(47). \4\ See Securities Exchange Act Release No. 79400 (Nov. 25, 2016), 81 FR 86750 (Dec. 1, 2016). \5\ 15 U.S.C. 78s(b)(2). \6\ See Securities Exchange Act Release No. 79738, 82 FR 3068 (Jan. 10, 2017). \7\ 15 U.S.C. 78s(b)(2)(B). \8\ See Securities Exchange Act Release No. 80097 (Feb. 24, 2017), 82 FR 12251 (Mar. 1, 2017). Specifically, the Commission instituted proceedings to allow for additional analysis of the proposed rule change's consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ``designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,'' and ``to protect investors and the public interest.'' See id. at 12252. \9\ See Securities Exchange Act Release No. 80500 (Apr. 21, 2017), 82 FR 19416 (Apr. 27, 2017) (``Notice of Amendment No. 1''). \10\ In Amendment No. 2, the Exchange: (1) Corrected the cross- reference in footnote 66 of the filing to read ``See supra note 63''; (2) amended proposed Rule 5.2E(j)(6)(B)(V)(2)(a) to read ``may'' instead of ``will''; (3) amended proposed Rule 5.5E(m)(1)(c) to clarify that the regulatory function described therein would be exercised by ``the Exchange'' instead of ``Regulation''; (4) amended Supplementary Material .01 to proposed Rule 8.200E to erase the repetitive words ``are satisfied'' at the end of the introductory paragraph; and (5) amended proposed Rule 8.700E(h) to add at the beginning of the paragraph the sentence ``The Exchange will file separate proposals under Section 19(b) of the Securities Exchange Act of 1934 before listing and trading separate and distinct Managed Trust Securities.'' Amendment No. 2 is available at: https://www.sec.gov/comments/sr-nysemkt-2016-103/nysemkt2016103-1724667-150689.pdf. Because Amendment No. 2 to the proposed rule change does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, Amendment No. 2 is not subject to notice and comment. \11\ See Securities Exchange Act Release No. 80746, 82 FR 24763 (May 30, 2017) (designating July 29, 2017, as the date by which the Commission must either approve or disapprove the proposed rule change). \12\ In Amendment No. 3, the Exchange deleted footnote 10 of the filing, which stated that ``[t]he Exchange currently lists five ETPs on its current trading platform. These ETPs will continue to be listed and traded pursuant to the NYSE MKT Company Guide and the other rules of the Exchange that do not apply to the Pillar platform.'' The Exchange also deleted the sentence that followed footnote 10, which stated that ``[t]herefore, the Exchange is only proposing ETP rules in this rule filing that would apply to the Pillar platform and trading pursuant to UTP. Since the Exchange does not plan to trade ETPs on the Pillar platform that would be listed under these proposed rules, the Exchange is not proposing to change any of the current rules of the Exchange pertaining to the listing and trading of ETPs in the NYSE MKT Company Guide or in its other rules.'' The Exchange also deleted footnote 11, which was attached to the deleted sentence, and which provided a Web site address for the NYSE MKT Company Guide. Amendment No. 3 is available at https://www.sec.gov/comments/sr-nysemkt-2016-103/nysemkt2016103-1780346-152834.pdf. Because Amendment No. 3 to the proposed rule change does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, Amendment No. 3 is not subject to notice and comment. --------------------------------------------------------------------------- The Commission is granting approval of the proposed rule change, as modified by Amendments No. 1, 2, and 3. II. Description of the Proposal, As Modified by Amendments No. 1, 2, and 3 \13\ --------------------------------------------------------------------------- \13\ Additional information regarding the proposal can be found in the Notice of Amendment No. 1, supra note 9. --------------------------------------------------------------------------- NYSE MKT proposes to trade on its Pillar trading platform,\14\ pursuant to UTP, any NMS stock listed on another national securities exchange.\15\ NYSE MKT also proposes to establish listing and trading requirements for certain types of ETPs on Pillar.\16\ The Exchange's proposed rules for the qualification, listing, and trading of these ETPs are substantively identical to the rules of NYSE Arca and NYSE.\17\ Finally, the Exchange proposes to adopt new equity trading rules relating to trading halts of securities traded pursuant to UTP on Pillar. --------------------------------------------------------------------------- \14\ On January 29, 2015, the Exchange announced the implementation of Pillar, which, according to the Exchange, is an integrated trading technology platform designed to use a single specification for connecting to the equities and options markets operated by the Exchange and its affiliates, NYSE Arca, Inc. (``NYSE Arca'') and New York Stock Exchange LLC (``NYSE''). See Trader Update dated January 29, 2015, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/Pillar_Trader_Update_Jan_2015.pdf. See also Securities Exchange Act Release No. 79242 (Nov. 4, 2016), 81 FR 79081 (Nov. 10, 2016) (SR-NYSEMKT-2016-97) (``Pillar Framework Filing''). \15\ The Exchange represents that it will continue to trade the symbols for which it is the listing venue on its separate, existing trading platform (``Existing Platform'') and will not trade securities pursuant to UTP on the Existing Platform. \16\ Specifically, the Exchange proposes to establish listing and trading rules for the following: Equity Linked Notes; Investment Company Units; Index-Linked Exchangeable Notes; Equity Gold Shares; Equity Index-Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed-Income Index-Linked Securities, Futures-Linked Securities, and Multifactor-Index-Linked Securities; Trust Certificates; Currency and Index Warrants; Portfolio Depositary Receipts; Trust Issued Receipts; Commodity-Based Trust Shares; Currency Trust Shares; Commodity Index Trust Shares; Commodity Futures Trust Shares; Partnership Units; Paired Trust Shares; Trust Units; Managed Fund Shares; and Managed Trust Securities. \17\ See NYSE Arca Equities Rules 5 (Listings) and 8 (Trading of Certain Equities Derivatives); and NYSE Rules 5P (Securities Traded) and 8P (Trading of Certain Exchange Traded Products). --------------------------------------------------------------------------- Under the proposal, the Exchange represents that it will only trade securities pursuant to UTP on its Pillar trading platform, and will not trade securities pursuant to UTP on its Existing Platform. Furthermore, the Exchange does not intend to list ETPs on Pillar or on its Existing Platform. Therefore, the Exchange represents that the proposed rules apply only to Pillar, and the rules pertaining to the Existing Platform will remain unchanged. A. New Definitions The Exchange proposes to define the term ``Exchange Traded Product'' in Rule 1.1E(bbb) to mean a security that meets the definition of ``derivative securities product'' in Rule 19b-4(e) under the Act, and a ``UTP Exchange Traded Product'' to mean an ETP that trades on the Exchange pursuant to UTP.\18\ The Exchange also proposes to add Rule 1.1E(kk) to define ``UTP Regulatory Halt'' as a trade suspension, halt, or pause called by the primary listing market for a UTP security that requires all market centers to halt trading in that security. --------------------------------------------------------------------------- \18\ These proposed definitions are identical to the definitions of the same terms in NYSE Rule 1.1(bbb), and to the definition of ``Derivative Securities Product'' in NYSE Arca Equities Rule 1.1(bbb). --------------------------------------------------------------------------- B. Proposal To Trade Securities Pursuant to UTP The Exchange proposes new Rule 5.1E(a) to extend UTP to Pillar for securities listed on other national securities exchanges. Specifically, proposed Rule 5.1E(a)(1) would allow the Exchange to trade securities eligible for UTP under Section 12(f) of the Act.\19\ Proposed Rule 5.1E(a) provides that the securities the Exchange would trade pursuant to UTP would be traded on Pillar under the rules applicable to UTP trading. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78l(f). --------------------------------------------------------------------------- Proposed Rule 5.1E(a)(1) makes clear that the Exchange would not list any ETPs unless it files a proposed rule change under Section 19(b)(2) under the Act.\20\ Therefore, the Exchange represents that the provisions of proposed Rules 5E and 8E described below, which also permit the listing of ETPs, would not be effective until the Exchange files a proposed rule change to amend its rules to comply with Rules 10A-3 and 10C-1 under the Act and to incorporate qualitative listing criteria, and the proposed rule change is approved by the Commission.\21\ --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(2). \21\ In addition, the introductory note to each of proposed Rules 5E and 8E states that the provisions of the rules apply to the trading pursuant to UTP of ETPs on the Exchange and do not apply to the listing of ETPs on the Exchange. --------------------------------------------------------------------------- C. ETP Trading Pursuant UTP on the Exchange The Exchange proposes Rule 5.1E(a)(2) to govern the trading of ETPs pursuant to UTP and Rule 19b-4(e) under the Act. Specifically, proposed Rule 5.1E(a)(2)(A) provides that, within [[Page 31120]] five days after commencement of trading, the Exchange would file a Form 19b-4(e) with the Commission with respect to each ETP the Exchange trades pursuant to UTP. The Exchange proposes certain other rules to support the trading of ETPs pursuant to UTP. For example, proposed Rule 5.1E(a)(2)(B) provides that the Exchange will distribute an information circular prior to the commencement of trading in an ETP, which would generally include the same information as the information circular provided by the listing exchange, including (a) the special risks of trading the ETP, (b) the Exchange's rules that will apply to the ETP, including Rules 2090- Equities and 2111-Equities,\22\ and (c) information about the dissemination of the value of the underlying assets or indices, as applicable. --------------------------------------------------------------------------- \22\ See NYSE MKT Rule 2090-Equities (the Exchange's Know Your Customer Rule) and NYSE MKT Rule 2111-Equities (the Exchange's Suitability Rule). --------------------------------------------------------------------------- In addition, proposed Rule 5.1E(a)(2)(C) establishes certain requirements for member organizations that have customers that trade ETPs on a UTP basis, including requirements pertaining to prospectus delivery and the provision of written description of terms and characteristics of the ETPs. Also, proposed Rule 5.1E(a)(2)(E) imposes restrictions on member organizations that are registered as market makers on the Exchange for certain ETPs. Finally, proposed Rule 5.1E(a)(2)(F) specifies certain surveillance mechanisms for ETPs traded on the Exchange pursuant to UTP. Namely, Rule 5.1E(a)(2)(F) provides that the Exchange will enter into comprehensive surveillance sharing agreements with markets that trade components of the index or portfolio on which the ETP is based to the same extent as the listing exchange's rules require the listing exchange to enter into comprehensive surveillance sharing agreements with those markets.\23\ --------------------------------------------------------------------------- \23\ In addition, the Exchange represents that its surveillance procedures for ETPs traded on the Exchange pursuant to UTP would be similar to the procedures used for equity securities traded on the Exchange and would incorporate and rely upon existing Exchange surveillance systems. See Notice of Amendment No. 1, supra note 9, at 19418. --------------------------------------------------------------------------- The Exchange also proposes to add certain definitions contained in NYSE Arca Equities Rule 5.1E(b) that are relevant to the proposed rules, including non-substantive changes to certain references to account for the minor differences of the Exchange and NYSE Arca and their respective rules. D. Listing and Trading Requirements for ETPs The Exchange proposes to adopt rules that are substantively identical to those of NYSE Arca and NYSE for the qualification, listing, and delisting of ETPs. The Exchange proposes to add Rule 5.2E(j), which would be substantively identical to NYSE Arca Equities and NYSE Rule 5.2(j). This proposed rule pertains to the following ETPs: Equity Linked Notes (Rule 5.2E(j)(2)); Investment Company Units (Rule 5.2E(j)(3)); Index-Linked Exchangeable Notes (Rule 5.2E(j)(4)); Equity Gold Shares (Rule 5.2E(j)(5)); Equity Index Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities, and Multifactor Index-Linked Securities (Rule 5.2E(j)(6)); and Trust Certificates (Rule 5.2E(j)(7)). The Exchange also proposes to add Rules 5.5E(g)(2), which would provide additional continued listing standards for Investment Company Units; 5.5E(j)-1, which would provide additional continued listing standards for Equity Linked Notes; and 5.5E(m), which would provide delisting procedures for ETPs. Other than certain non- substantive and technical differences, the text of these proposed rules is identical to NYSE Arca and NYSE Rules 5.2(j)(2)-5.2(j)(7), 5.5(g)(2), 5.5(j)-1, and 5.5(m). Further, the Exchange proposes to add Rule 8E, which is substantively identical to Sections 1 and 2 of NYSE Arca Equities Rule 8 and of NYSE Rule 8P. This proposed rule pertains to the following ETPs: Currency and Index Warrants (Rules 8.1E-8.13E); Portfolio Depositary Receipts (Rule 8.100E); Trust Issued Receipts (Rule 8.200E); Commodity-Based Trust Shares (Rule 8.201E);Currency Trust Shares (Rule 8.202E); Commodity Index Trust Shares (Rule 8.203E); Commodity Futures Trust Shares (Rule 8.204E); Partnership Units (Rule 8.300E); Paired Trust Shares (Rule 8.400E); Trust Units (Rule 8.500E); Managed Fund Shares (Rule 8.600E); and Managed Trust Securities (Rule 8.700E). As mentioned above, the Exchange would not list any ETPs unless it files a proposed rule change under Section 19(b)(2) under the Act.\24\ Therefore, the provisions of Rules 5E and 8E, which permit the listing of ETPs, would not be effective until the Exchange files a proposed rule change to amend its rules to comply with Rules 10A-3 and 10C-1 under the Act and to incorporate qualitative listing criteria, and the proposed rule change is approved by the Commission. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- E. Proposed Rule 7.18E--Requirements for Halts on Pillar Platform In conjunction with the implementation of Pillar for trading of securities pursuant to UTP, the Exchange proposes new Rule 7.18E which governs trading halts in symbols trading on Pillar. This rule is substantively identical to the rules of NYSE Arca and NYSE. III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendments No. 1, 2, and 3, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\25\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\26\ which requires, among other things, that the rules of a national securities exchange be designed 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 facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \25\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \26\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange proposes to trade, pursuant to UTP, NMS stocks (including ETPs) on its Pillar platform. Section 12(f) of the Act \27\ provides that any national securities exchange may extend UTP to securities listed and registered on other national securities exchanges, subject to Commission rules. In particular, in order to extend UTP to securities, Rule 12f-5 under the Act requires a national securities exchange to have in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends unlisted trading privileges.\28\ The Commission notes that the Exchange's proposed Rule 5.1E allows NYSE MKT to extend UTP in Pillar to any security that is an NMS stock that [[Page 31121]] is listed on another national securities exchange. --------------------------------------------------------------------------- \27\ 15 U.S.C. 78l. \28\ See 17 CFR 240.12f-5. See also Securities Exchange Act Release No. 35737 (Apr. 21, 1995), 60 FR 20891 (Apr. 28, 1995) (File No. S7-4-95) (adopting Rule 12f-5 under the Act). --------------------------------------------------------------------------- The Commission has previously approved substantively identical rules for the listing and trading of ETPs on NYSE Arca and NYSE. The Exchange represents that it will not list, but only trade, ETPs on a UTP basis. The Exchange represents that to trade pursuant to UTP any ETP that is listed and traded on another national securities exchange, NYSE MKT would be required to file Form 19b-4(e) with the Commission. The Commission believes that the Exchange's proposal does not raise any novel issues, and the proposed rules of the Exchange are consistent with the rules of other national securities exchanges that trade securities, including ETPs.\29\ Additionally, the Exchange represents, and its proposed rules specify, that NYSE MKT will not list any ETPs unless it first obtains Commission approval of a proposed rule change under Section 19(b)(2) of the Act. Therefore, the provisions of proposed Rules 5E and 8E that permit the listing of ETPs would only be effective if the Commission approves a proposed rule change for the Exchange to amend its rules to comply with Rules 10A-3 and 10C-1 under the Act and to incorporate other applicable listing criteria. Finally, the Commission notes that NYSE MKT has represented that it will be responsible for accepting the obligations applicable to a UTP market, including specific requirements for registered market makers, books and records production, surveillance procedures, suitability and prospectus requirements, and requisite Exchange approvals.\30\ --------------------------------------------------------------------------- \29\ See, e.g., Rule 14.1 of Bats BYX Exchange, Inc. and Rule 14.1 of Bats EDGA Exchange, Inc. \30\ See proposed Rule 5.1E. --------------------------------------------------------------------------- The Commission believes that the UTP trading on NYSE MKT of NMS stocks, including ETPs, listed on other national securities exchanges is consistent with existing UTP trading of NMS stocks on other national securities exchanges and that is designed to increase competition among the different securities markets to the benefit of market participants. The Commission therefore finds that NYSE MKT's proposed rules governing trading on a UTP basis on its Pillar platform are consistent with the Act. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\31\ that the proposed rule change (SR-NYSEMKT-2016-103), as modified by Amendments No. 1, 2, and 3, be, and it hereby is, approved. --------------------------------------------------------------------------- \31\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\32\ --------------------------------------------------------------------------- \32\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-14014 Filed 7-3-17; 8:45 am] BILLING CODE 8011-01-P
![31118 Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices
While Rule 38a–1 requires each fund Finally, the staff estimates that each SECURITIES AND EXCHANGE
to maintain written policies and fund spends 6 hours annually, on COMMISSION
procedures, most funds are located average, maintaining the records
[Release No. 34–81038; File No. SR–
within a fund complex. The experience required by proposed Rule 38a–1. Thus, NYSEMKT–2016–103]
of the Commission’s examination and the aggregate annual burden hours
oversight staff suggests that each fund in associated with the recordkeeping Self-Regulatory Organizations; NYSE
a complex is able to draw extensively requirement is 24,798 hours. MKT LLC; Order Granting Approval of
from the fund complex’s ‘‘master’’ Proposed Rule Change, as Modified by
compliance program to assemble In total, the staff estimates that the
aggregate annual information collection Amendments No. 1, 2, and 3, To Allow
appropriate compliance policies and the Exchange To Trade, Pursuant to
procedures. Many fund complexes burden of Rule 38a–1 is 237,500 hours.
Unlisted Trading Privileges, any NMS
already have written policies and The estimate of burden hours is made
Stock Listed on Another National
procedures documenting their solely for the purposes of the Paperwork Securities Exchange; Establish Rules
compliance programs. Further, a fund Reduction Act. The estimate is not for the Trading Pursuant to UTP of
needing to develop or revise policies derived from a comprehensive or even Exchange-Traded Products; and Adopt
and procedures on one or more topics a representative survey or study of the New Equity Trading Rules Relating To
in order to achieve a comprehensive costs of Commission rules. Complying Trading Halts of Securities Traded
compliance program can draw on a with this collection of information Pursuant to UTP on the Pillar Platform
number of outlines and model programs requirement is mandatory. Responses
available from a variety of industry will not be kept confidential. An agency June 28, 2017.
representatives, commentators, and may not conduct or sponsor, and a I. Introduction
organizations. person is not required to respond to, a On November 17, 2016, NYSE MKT
There are approximately 4,333 funds collection of information unless it LLC (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
subject to Rule 38a–1. Among these displays a currently valid control with the Securities and Exchange
funds, 97 were newly registered in the number. Commission (‘‘Commission’’), pursuant
past year. These 97 funds, therefore, Written comments are invited on: (a) to Section 19(b)(1) of the Securities
were required to adopt and document Exchange Act of 1934 (‘‘Act’’) 1 and Rule
Whether the proposed collection of
the policies and procedures that make 19b–4 thereunder,2 a proposed rule
information is necessary for the proper
up their compliance programs. change to: (1) Allow the Exchange to
performance of the functions of the
Commission staff estimates that the trade, pursuant to unlisted trading
average annual hour burden for a fund agency, including whether the
information will have practical utility; privileges (‘‘UTP’’), any NMS stock 3
to adopt and document these policies listed on another national securities
and procedures is 105 hours. Thus, we (b) the accuracy of the agency’s estimate
of the burden of the collection of exchange; (2) establish rules for the
estimate that the aggregate annual trading pursuant to UTP of certain
burden hours associated with the information; (c) ways to enhance the
exchange-traded products (‘‘ETPs’’); and
adoption and documentation quality, utility, and clarity of the
(3) adopt new equity trading rules
requirement is 10,185 hours. information collected; and (d) ways to
relating to trading halts of securities
All funds are required to conduct an minimize the burden of the collection of traded pursuant to UTP on the
annual review of the adequacy of their information on respondents, including Exchange’s new trading platform, Pillar.
existing policies and procedures and the through the use of automated collection The proposed rule change was
policies and procedures of each techniques or other forms of information published for comment in the Federal
investment adviser, principal technology. Consideration will be given Register on December 1, 2016.4 On
underwriter, administrator, and transfer to comments and suggestions submitted January 4, 2017, pursuant to Section
agent of the fund, and the effectiveness in writing within 60 days of this 19(b)(2) of the Act,5 the Commission
of their implementation. In addition, publication. designated a longer period within which
each fund chief compliance officer is Please direct your written comments to approve the proposed rule change,
required to prepare an annual report to Pamela Dyson, Chief Information disapprove the proposed rule change, or
that addresses the operation of the institute proceedings to determine
Officer, Securities and Exchange
policies and procedures of the fund and whether to disapprove the proposed
Commission, c/o Remi Pavlik-Simon,
the policies and procedures of each rule change.6 On February 24, 2017, the
100 F Street NE., Washington, DC
investment adviser, principal Commission instituted proceedings
underwriter, administrator, and transfer 20549, or send an email to: PRA_
Mailbox@sec.gov. under Section 19(b)(2)(B) of the Act7 to
agent of the fund, any material changes determine whether to approve or
made to those policies and procedures Dated: June 28, 2017. disapprove the proposed rule change.8
since the date of the last report, any Robert W. Errett,
material changes to the policies and Deputy Secretary.
1 15 U.S.C. 78s(b)(1).
procedures recommended as a result of [FR Doc. 2017–14064 Filed 7–3–17; 8:45 am]
2 17 CFR 240.19b–4.
the annual review, and certain 3 The term ‘‘NMS stock’’ is defined in Rule 600
compliance matters that occurred since BILLING CODE 8011–01–P of Regulation NMS. See 17 CFR 242.600(b)(47).
4 See Securities Exchange Act Release No. 79400
the date of the last report. The staff (Nov. 25, 2016), 81 FR 86750 (Dec. 1, 2016).
estimates that each fund spends 49
sradovich on DSK3GMQ082PROD with NOTICES
5 15 U.S.C. 78s(b)(2).
hours per year, on average, conducting 6 See Securities Exchange Act Release No. 79738,
the annual review and preparing the 82 FR 3068 (Jan. 10, 2017).
annual report to the board of directors. 7 15 U.S.C. 78s(b)(2)(B).
8 See Securities Exchange Act Release No. 80097
Thus, we estimate that the annual
(Feb. 24, 2017), 82 FR 12251 (Mar. 1, 2017).
aggregate burden hours associated with Specifically, the Commission instituted proceedings
the annual review and annual report to allow for additional analysis of the proposed rule
requirement is 202,517 hours. change’s consistency with Section 6(b)(5) of the
VerDate Sep<11>2014 17:57 Jul 03, 2017 Jkt 241001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\05JYN1.SGM 05JYN1](https://thefederalregister.org/doc/82_FR_31245/page/1.svg)
![Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices 31119
On March 28, 2017, the Exchange filed Commission has received no comments the proposed rules apply only to Pillar,
Amendment No. 1 to the proposed rule on the proposed rule change. and the rules pertaining to the Existing
change, and Amendment No. 1 was The Commission is granting approval Platform will remain unchanged.
published for comment in the Federal of the proposed rule change, as
modified by Amendments No. 1, 2, and A. New Definitions
Register on April 27, 2017.9 On April
27, 2017, the Exchange filed 3. The Exchange proposes to define the
Amendment No. 2 to the proposed rule term ‘‘Exchange Traded Product’’ in
II. Description of the Proposal, As Rule 1.1E(bbb) to mean a security that
change.10 On May 23, 2017, the Modified by Amendments No. 1, 2, and
Commission designated a longer period meets the definition of ‘‘derivative
3 13 securities product’’ in Rule 19b–4(e)
for Commission action on the proposed
rule change.11 On May 31, 2017, the NYSE MKT proposes to trade on its under the Act, and a ‘‘UTP Exchange
Exchange filed Amendment No. 3 to the Pillar trading platform,14 pursuant to Traded Product’’ to mean an ETP that
proposed rule change.12 The UTP, any NMS stock listed on another trades on the Exchange pursuant to
national securities exchange.15 NYSE UTP.18 The Exchange also proposes to
Act, which requires, among other things, that the
MKT also proposes to establish listing add Rule 1.1E(kk) to define ‘‘UTP
rules of a national securities exchange be ‘‘designed and trading requirements for certain Regulatory Halt’’ as a trade suspension,
to prevent fraudulent and manipulative acts and types of ETPs on Pillar.16 The halt, or pause called by the primary
practices, to promote just and equitable principles Exchange’s proposed rules for the listing market for a UTP security that
of trade,’’ and ‘‘to protect investors and the public
interest.’’ See id. at 12252.
qualification, listing, and trading of requires all market centers to halt
9 See Securities Exchange Act Release No. 80500 these ETPs are substantively identical to trading in that security.
(Apr. 21, 2017), 82 FR 19416 (Apr. 27, 2017) the rules of NYSE Arca and NYSE.17
(‘‘Notice of Amendment No. 1’’). Finally, the Exchange proposes to adopt B. Proposal To Trade Securities
10 In Amendment No. 2, the Exchange: (1)
new equity trading rules relating to Pursuant to UTP
Corrected the cross-reference in footnote 66 of the trading halts of securities traded The Exchange proposes new Rule
filing to read ‘‘See supra note 63’’; (2) amended
proposed Rule 5.2E(j)(6)(B)(V)(2)(a) to read ‘‘may’’ pursuant to UTP on Pillar. 5.1E(a) to extend UTP to Pillar for
instead of ‘‘will’’; (3) amended proposed Rule Under the proposal, the Exchange securities listed on other national
5.5E(m)(1)(c) to clarify that the regulatory function represents that it will only trade securities exchanges. Specifically,
described therein would be exercised by ‘‘the securities pursuant to UTP on its Pillar proposed Rule 5.1E(a)(1) would allow
Exchange’’ instead of ‘‘Regulation’’; (4) amended
Supplementary Material .01 to proposed Rule
trading platform, and will not trade the Exchange to trade securities eligible
8.200E to erase the repetitive words ‘‘are satisfied’’ securities pursuant to UTP on its for UTP under Section 12(f) of the Act.19
at the end of the introductory paragraph; and (5) Existing Platform. Furthermore, the Proposed Rule 5.1E(a) provides that the
amended proposed Rule 8.700E(h) to add at the Exchange does not intend to list ETPs securities the Exchange would trade
beginning of the paragraph the sentence ‘‘The
Exchange will file separate proposals under Section
on Pillar or on its Existing Platform. pursuant to UTP would be traded on
19(b) of the Securities Exchange Act of 1934 before Therefore, the Exchange represents that Pillar under the rules applicable to UTP
listing and trading separate and distinct Managed trading.
Trust Securities.’’ Amendment No. 2 is available at: 13 Additional information regarding the proposal
Proposed Rule 5.1E(a)(1) makes clear
https://www.sec.gov/comments/sr-nysemkt-2016- can be found in the Notice of Amendment No. 1,
103/nysemkt2016103-1724667-150689.pdf. Because
that the Exchange would not list any
supra note 9.
Amendment No. 2 to the proposed rule change does 14 On January 29, 2015, the Exchange announced
ETPs unless it files a proposed rule
not materially alter the substance of the proposed the implementation of Pillar, which, according to change under Section 19(b)(2) under the
rule change or raise unique or novel regulatory the Exchange, is an integrated trading technology Act.20 Therefore, the Exchange
issues, Amendment No. 2 is not subject to notice platform designed to use a single specification for
and comment.
represents that the provisions of
connecting to the equities and options markets
11 See Securities Exchange Act Release No. 80746, operated by the Exchange and its affiliates, NYSE
proposed Rules 5E and 8E described
82 FR 24763 (May 30, 2017) (designating July 29, Arca, Inc. (‘‘NYSE Arca’’) and New York Stock below, which also permit the listing of
2017, as the date by which the Commission must Exchange LLC (‘‘NYSE’’). See Trader Update dated ETPs, would not be effective until the
either approve or disapprove the proposed rule January 29, 2015, available at https:// Exchange files a proposed rule change
change). www.nyse.com/publicdocs/nyse/markets/nyse/
12 In Amendment No. 3, the Exchange deleted Pillar_Trader_Update_Jan_2015.pdf. See also to amend its rules to comply with Rules
footnote 10 of the filing, which stated that ‘‘[t]he Securities Exchange Act Release No. 79242 (Nov. 4, 10A–3 and 10C–1 under the Act and to
Exchange currently lists five ETPs on its current 2016), 81 FR 79081 (Nov. 10, 2016) (SR– incorporate qualitative listing criteria,
trading platform. These ETPs will continue to be NYSEMKT–2016–97) (‘‘Pillar Framework Filing’’). and the proposed rule change is
15 The Exchange represents that it will continue
listed and traded pursuant to the NYSE MKT
Company Guide and the other rules of the Exchange to trade the symbols for which it is the listing venue
approved by the Commission.21
that do not apply to the Pillar platform.’’ The on its separate, existing trading platform (‘‘Existing C. ETP Trading Pursuant UTP on the
Exchange also deleted the sentence that followed Platform’’) and will not trade securities pursuant to
footnote 10, which stated that ‘‘[t]herefore, the UTP on the Existing Platform. Exchange
Exchange is only proposing ETP rules in this rule 16 Specifically, the Exchange proposes to
The Exchange proposes Rule
filing that would apply to the Pillar platform and establish listing and trading rules for the following:
trading pursuant to UTP. Since the Exchange does Equity Linked Notes; Investment Company Units;
5.1E(a)(2) to govern the trading of ETPs
not plan to trade ETPs on the Pillar platform that Index-Linked Exchangeable Notes; Equity Gold pursuant to UTP and Rule 19b–4(e)
would be listed under these proposed rules, the Shares; Equity Index-Linked Securities, under the Act. Specifically, proposed
Exchange is not proposing to change any of the Commodity-Linked Securities, Currency-Linked Rule 5.1E(a)(2)(A) provides that, within
current rules of the Exchange pertaining to the Securities, Fixed-Income Index-Linked Securities,
listing and trading of ETPs in the NYSE MKT Futures-Linked Securities, and Multifactor-Index-
18 These proposed definitions are identical to the
Company Guide or in its other rules.’’ The Linked Securities; Trust Certificates; Currency and
Exchange also deleted footnote 11, which was Index Warrants; Portfolio Depositary Receipts; Trust definitions of the same terms in NYSE Rule
attached to the deleted sentence, and which Issued Receipts; Commodity-Based Trust Shares; 1.1(bbb), and to the definition of ‘‘Derivative
sradovich on DSK3GMQ082PROD with NOTICES
provided a Web site address for the NYSE MKT Currency Trust Shares; Commodity Index Trust Securities Product’’ in NYSE Arca Equities Rule
Company Guide. Amendment No. 3 is available at Shares; Commodity Futures Trust Shares; 1.1(bbb).
19 15 U.S.C. 78l(f).
https://www.sec.gov/comments/sr-nysemkt-2016- Partnership Units; Paired Trust Shares; Trust Units;
Managed Fund Shares; and Managed Trust 20 15 U.S.C. 78s(b)(2).
103/nysemkt2016103-1780346-152834.pdf. Because
Amendment No. 3 to the proposed rule change does Securities. 21 In addition, the introductory note to each of
not materially alter the substance of the proposed 17 See NYSE Arca Equities Rules 5 (Listings) and proposed Rules 5E and 8E states that the provisions
rule change or raise unique or novel regulatory 8 (Trading of Certain Equities Derivatives); and of the rules apply to the trading pursuant to UTP
issues, Amendment No. 3 is not subject to notice NYSE Rules 5P (Securities Traded) and 8P (Trading of ETPs on the Exchange and do not apply to the
and comment. of Certain Exchange Traded Products). listing of ETPs on the Exchange.
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![Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices 31121
is listed on another national securities No. 1, 2, and 3, be, and it hereby is, Commission, including whether the
exchange. approved. information shall have practical utility;
The Commission has previously For the Commission, by the Division of (b) the accuracy of the Commission’s
approved substantively identical rules Trading and Markets, pursuant to delegated estimates of the burden of the proposed
for the listing and trading of ETPs on authority.32 collection of information; (c) ways to
NYSE Arca and NYSE. The Exchange Robert W. Errett, enhance the quality, utility, and clarity
represents that it will not list, but only Deputy Secretary. of the information to be collected; and
trade, ETPs on a UTP basis. The [FR Doc. 2017–14014 Filed 7–3–17; 8:45 am] (d) ways to minimize the burden of the
Exchange represents that to trade collection of information on
BILLING CODE 8011–01–P
pursuant to UTP any ETP that is listed respondents, including through the use
and traded on another national of automated collection techniques or
securities exchange, NYSE MKT would SECURITIES AND EXCHANGE other forms of information technology.
be required to file Form 19b–4(e) with COMMISSION Consideration will be given to
the Commission. comments and suggestions submitted in
The Commission believes that the [SEC File No. 270–427, OMB Control No. writing within 60 days of this
Exchange’s proposal does not raise any 3235–0476]
publication.
novel issues, and the proposed rules of An agency may not conduct or
Proposed Collection; Comment
the Exchange are consistent with the sponsor, and a person is not required to
Request
rules of other national securities respond to, a collection of information
exchanges that trade securities, Upon Written Request, Copies Available unless it displays a currently valid OMB
including ETPs.29 Additionally, the From: Securities and Exchange control number.
Exchange represents, and its proposed Commission, Office of FOIA Services, Please direct your written comments
rules specify, that NYSE MKT will not 100 F Street NE., Washington, DC to: Pamela Dyson, Director/Chief
list any ETPs unless it first obtains 20549–2736 Information Officer, Securities and
Commission approval of a proposed rule Extension: Rule 10b–17 Exchange Commission, c/o Remi Pavlik-
change under Section 19(b)(2) of the Simon, 100 F Street NE., Washington,
Act. Therefore, the provisions of Notice is hereby given that pursuant
DC 20549, or send an email to: PRA_
proposed Rules 5E and 8E that permit to the Paperwork Reduction Act of 1995
Mailbox@sec.gov.
the listing of ETPs would only be (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission Dated: June 28, 2017.
effective if the Commission approves a
proposed rule change for the Exchange (‘‘Commission’’) is soliciting comments Robert W. Errett,
to amend its rules to comply with Rules on the existing collection of information Deputy Secretary.
10A–3 and 10C–1 under the Act and to provided for in Rule 10b–17 (17 CFR [FR Doc. 2017–14065 Filed 7–3–17; 8:45 am]
incorporate other applicable listing 240.10b–17), under the Securities BILLING CODE 8011–01–P
criteria. Finally, the Commission notes Exchange Act of 1934 (15 U.S.C. 78a et
that NYSE MKT has represented that it seq.). The Commission plans to submit
will be responsible for accepting the this existing collection of information to SECURITIES AND EXCHANGE
obligations applicable to a UTP market, the Office of Management and Budget COMMISSION
including specific requirements for (‘‘OMB’’) for extension and approval.
Rule 10b–17 requires any issuer of a
registered market makers, books and [Release No. 34–81037; File No. SR–ICC–
class of securities publicly traded by the 2017–010]
records production, surveillance
use of any means or instrumentality of
procedures, suitability and prospectus
interstate commerce or of the mails or Self-Regulatory Organizations; ICE
requirements, and requisite Exchange
of any facility of any national securities Clear Credit LLC; Notice of Proposed
approvals.30
The Commission believes that the exchange to give notice of the following Rule Change, Security-Based Swap
UTP trading on NYSE MKT of NMS specific distributions relating to such Submission, or Advance Notice
stocks, including ETPs, listed on other class of securities: (1) A dividend or Relating to the ICC Clearing Rules and
national securities exchanges is other distribution in cash or in kind the ICC Treasury Operations Policies
consistent with existing UTP trading of other than interest payments on debt and Procedures
NMS stocks on other national securities securities; (2) a stock split or reverse
stock split; or (3) a rights or other June 28, 2017.
exchanges and that is designed to Pursuant to Section 19(b)(1) of the
increase competition among the subscription offering.
There are approximately 12,127 Securities Exchange Act of 1934 1 and
different securities markets to the Rule 19b–4 thereunder,2 notice is
respondents per year. These
benefit of market participants. The hereby given that on June 16, 2017, ICE
respondents make approximately 27,144
Commission therefore finds that NYSE Clear Credit LLC (‘‘ICC’’) filed with the
responses per year. Each response takes
MKT’s proposed rules governing trading Securities and Exchange Commission
approximately 10 minutes to complete.
on a UTP basis on its Pillar platform are the proposed rule change, security-
Thus, the total compliance burden per
consistent with the Act. based swap submission, or advance
year is 4,524 burden hours. The total
VI. Conclusion internal labor cost of compliance for the notice, as described in Items I, II, and III
It is therefore ordered, pursuant to respondents, associated with producing below, which Items have been prepared
primarily by ICC. The Commission is
sradovich on DSK3GMQ082PROD with NOTICES
Section 19(b)(2) of the Act,31 that the and filing the reports, is approximately
$317,991.96. publishing this notice to solicit
proposed rule change (SR–NYSEMKT–
Written comments are invited on: (a) comments on the proposed rule change,
2016–103), as modified by Amendments
Whether the proposed collection of security-based swap submission, or
29 See, e.g., Rule 14.1 of Bats BYX Exchange, Inc. information is necessary for the proper advance notice from interested persons.
and Rule 14.1 of Bats EDGA Exchange, Inc. performance of the functions of the
30 See proposed Rule 5.1E. 1 15 U.S.C. 78s(b)(1).
31 15 U.S.C. 78s(b)(2). 32 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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Document Created: 2017-07-04 02:01:00
Document Modified: 2017-07-04 02:01:00
| 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 31118 |
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