83 FR 28701 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Pillar Trading Platform Rule 7.31 Relating to Reserve Orders and Rule 7.36 Relating to Setter Priority
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 119 (June 20, 2018)
Federal Register Volume 83, Issue 119 (June 20, 2018)
| Page Range | 28701-28705 | |
| FR Document | 2018-13162 |
[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)] [Notices] [Pages 28701-28705] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-13162] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83432; File No. SR-NYSE-2018-26] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Pillar Trading Platform Rule 7.31 Relating to Reserve Orders and Rule 7.36 Relating to Setter Priority June 14, 2018. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on June 1, 2018, New York Stock Exchange LLC (``NYSE'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') a proposed rule change. On June 8, 2018, the Exchange filed Amendment No. 1 to the proposed rule change, as described in Items I, II, and III below, which Items have been prepared by the Exchange.\4\ 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. \4\ Amendment No. 1 replaces and supersedes the original filing in its entirety. In Amendment No. 1, the Exchange modified the definition of ``child order'' in proposed rule 7.31. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Pillar trading platform Rule 7.31 relating to Reserve Orders and Rule 7.36 relating to Setter Priority. This Amendment No. 1 supersedes the original filing in its entirety. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 7.31 relating to Reserve Orders and Rule 7.36 relating to Setter Priority. These proposed changes would be operative for trading on the Pillar trading platform only. Because the Exchange trades only UTP Securities \5\ on the Pillar trading platform at this time, these proposed changes would not be applicable to NYSE-listed securities. --------------------------------------------------------------------------- \5\ The term ``UTP Securities'' is defined in Rule 1.1 to mean a security that is listed on a national securities exchange other than the Exchange and that trades on the Exchange pursuant to unlisted trading privileges. --------------------------------------------------------------------------- Background Rule 7.31(d)(1) defines a Reserve Order as a Limit Order with a quantity of the size displayed and with a reserve quantity of the size (``reserve interest'') that is not displayed. The displayed quantity of a Reserve Order is ranked Priority 2--Display Orders and the reserve interest is ranked Priority 3--Non-Display Orders.\6\ Rule 7.31(d)(1)(A) provides that on entry, the display quantity of a Reserve Order must be entered in round lots and the displayed portion of a Reserve Order will be replenished following any execution. That rule further provides that the Exchange will display the full size of the Reserve Order when the unfilled quantity is less than the minimum display size for the order. Rule 7.31(d)(1)(B) provides that each time a Reserve Order is replenished from reserve interest, a new working time is assigned to the replenished quantity of the Reserve Order, while the reserve interest retains the working time of original order entry. Pursuant to Rule 7.31(d)(1)(C), a Reserve Order must be designated Day and may be combined with a Limit Non-Routable Order or a Primary Pegged Order. --------------------------------------------------------------------------- \6\ The terms ``Priority 2--Display Orders'' and ``Priority 3-- Non-Display Orders'' are defined in Rule 7.36(e). --------------------------------------------------------------------------- Rule 7.36(h) provides that Setter Priority will be assigned to an order ranked Priority 2--Display Orders with a display quantity of at least a round lot if such order (i) establishes a new BBO and (ii) either establishes a new NBBO or joins an Away Market NBBO and that only one order is eligible for Setter Priority at each price.\7\ Rule 7.36(h)(1) provides that an order will be evaluated for Setter Priority on arrival, which includes when any portion of an order that has routed returns unexecuted and when it becomes eligible to trade for the first time upon transitioning to a new trading session. --------------------------------------------------------------------------- \7\ The terms ``BBO,'' ``NBBO,'' ``PBBO,'' and ``Away Market'' are defined in Rule 1.1. --------------------------------------------------------------------------- Proposed Rule Change to Reserve Orders The Exchange proposes to amend Rule 7.31(d)(1) to change the manner by which the display portion of a Reserve Order would be replenished. As proposed, rather than replenishing the display quantity following any execution, the Exchange proposes to replenish the Reserve Order when the display quantity is decremented to below a round lot. This proposed functionality is consistent with how Reserve Orders are replenished on other equity exchanges.\8\ --------------------------------------------------------------------------- \8\ See, e.g., Cboe BZX Exchange, Inc. (``BZX'') Rule 11.9(c)(1); Nasdaq Stock Market LLC (``Nasdaq'') Rule 7503(h). --------------------------------------------------------------------------- As is currently the case, the replenish quantity would be the minimum display size of the order or the remaining quantity of reserve interest if it is less than the minimum display quantity. To reflect this functionality, the Exchange proposes that Rule 7.31(d)(1)(A) would be amended as follows (deleted text bracketed; new text underlined): (A) On entry, the display quantity of a Reserve Order must be entered in round lots. The displayed portion of a Reserve Order will be replenished when the display quantity is decremented to below a round lot. The replenish quantity will be the minimum display quantity of the order or the remaining quantity of the reserve interest if it is less than the minimum display quantity [following any execution. The Exchange will display the full size of the Reserve Order when the unfilled quantity is less than the minimum display size for the order]. Under current functionality, because the replenished quantity is assigned a new working time, it is feasible for a single Reserve Order to have multiple [[Page 28702]] replenished quantities with separate working times, each, a ``child'' order. The proposed change to limit when a Reserve Order would be replenished to when the display quantity is decremented to below a round lot only would reduce the number of child orders for a Reserve Order. The Exchange believes that minimizing the number of child orders for a Reserve Order would reduce the potential for market participants to detect that a child order displayed on the Exchange's proprietary market data feeds is associated with a Reserve Order. In most cases, the maximum number of child orders for a Reserve Order would be two. For example, assume a Reserve Order to buy has a display quantity of 100 shares and an additional 200 shares of reserve interest. A sell order of 50 shares would trade with the display quantity of such Reserve Order, which would decrement the display quantity to 50 shares. As proposed, the Exchange would then replenish the Reserve Order with 100 shares from the reserve interest, i.e., the minimum display size for the order. After this second replenishment, the Reserve Order would have two child orders, one for 50 shares, the other for 100 shares, each with different working times. Generally, when there are two child orders, the older child order of less than a round lot will be executed before the second child order. However, there are limited circumstances when a Reserve Order could have two child orders that equal less than a round lot, which, as proposed, would trigger a replenishment. For such circumstance, the Exchange proposes that when a Reserve Order is replenished from reserve interest and already has two child orders that equal less than a round lot, the child order with the later working time would be reassigned the new working time assigned to the next replenished quantity. For example, taking the same Reserve Order as above:If 100 shares of such order (``A'') are routed on arrival, it would have a display quantity of 100 shares (``B'') and 100 shares in reserve interest. While ``A'' is routed, a sell order of 50 shares would trade with ``B,'' decrementing ``B'' to 50 shares and the Reserve Order would be replenished from reserve interest, creating a second child order ``C'' of 100 shares. Next, the Exchange receives a request to reduce the size of the Reserve Order from 300 shares to 230 shares. Because ``A'' is still routed away and there is no reserve interest, and as described in more detail below, this 70 share reduction in size would be applied against the most recent child order of ``C,'' which would be reduced to 30 shares. Together with ``B,'' which would still be 50 shares, the two displayed child orders would equal less than a round lot, but with no quantity in reserve interest. Next, ``A'' is returned unexecuted, and as described below, becomes reserve interest and is evaluated for replenishment. Because the total display quantity (``B'' + ``C'') is less than a round lot, this Reserve Order would be replenished. But because the Reserve Order already has two child orders, the child order with the later working time, ``C,'' would be returned to the reserve interest, which would now have a quantity of 130 shares (``C'' + ``A''), and the Reserve Order would be replenished with 100 shares from the reserve interest with a new working time, which would be a new child order ``D.'' After this replenishment, this Reserve Order would have two child orders of ``B'' for 50 shares and ``D'' for 100 shares, and a reserve interest of 30 shares. To effect these changes, the Exchange proposes to amend current Rule 7.31(d)(1)(B) to specify that each display quantity of a Reserve Order with a different working time would be referred to as a child order. The Exchange further proposes new Rule 7.31(d)(1)(B)(i) that would provide that when a Reserve Order is replenished from reserve interest and already has two child orders that equal less than a round lot, the child order with the later working time would rejoin the reserve interest and be assigned the new working time assigned to the next replenished quantity. The Exchange also proposes new Rule 7.31(d)(1)(B)(ii) to provide that if a Reserve Order is not routable (i.e., is combined with either a Limit Non-Routable Order or a Primary Pegged Order), the replenish quantity would be assigned a display and working price consistent with the instructions for the order, which represents current functionality. For example, for a Limit Non-Routable Reserve Order, if the display price would lock or cross the contra-side PBBO, the replenished quantity would be assigned a display price one MPV worse than the PBBO and a working price equal to the contra-side PBBO, as provided for in Rule 7.31(e)(1)(A)(i). The Exchange believes that this proposed rule text would provide transparency and clarity to Exchange rules. For a Primary Pegged Reserve Order, the Exchange proposes that the replenished quantity would follow Rule 7.31(h)(2)(B), which provides that a Primary Pegged Order would be rejected if the PBBO is locked or crossed. Because a Primary Pegged Reserve Order would have resting reserve interest, the Exchange proposes to amend Rule 7.31(h)(2)(B) to provide that if the PBBO is locked or crossed when the display quantity of a Primary Pegged Reserve Order is replenished, the entire order would be cancelled. The Exchange believes that cancelling the entire order is consistent with the current rule that provides that the entire order would be rejected on arrival if the display quantity would lock or cross the PBBO. The Exchange further proposes to add new subsection (D) to Rule 7.31(d)(1) to describe when a Reserve Order would be routed. As proposed, a routable Reserve Order would be evaluated for routing both on arrival and each time the display quantity is replenished. Proposed Rule 7.31(d)(1)(D)(i) would provide that if routing is required, the Exchange would route from reserve interest before publishing the display quantity. In addition, if after routing, there is less than a round lot available to display, the Exchange would wait until the routed quantity returns (executed or unexecuted) before publishing the display quantity. In the example described above, the Exchange would have published the display quantity before the routed quantity returned because the display quantity was at least a round lot. If, however, 250 shares of a Reserve Order of 300 shares had been routed on arrival, because the unrouted quantity was less than a round lot (50 shares), the Exchange would wait for the routed quantity to return, either executed or unexecuted, before publishing the display quantity. The Exchange proposes this functionality to reduce the possibility for a Reserve Order to have more than one child order. If the Exchange did not wait, and instead displayed the 50 shares when the balance of the Reserve Order has routed, if the 250 shares returns unexecuted, such Reserve Order would be replenished and would have two child orders--one for the 50 shares that was displayed when the order was entered and a second for the 100 shares that replenished the Reserve Order from the quantity that returned unexecuted. By contrast, by waiting for a report on the routed quantity, if the routed quantity was not executed, the Exchange would display the minimum display quantity as a single child order. If the routed quantity was executed, the Exchange would display the 50 shares, but only because that would be the full remaining quantity of the Reserve Order. [[Page 28703]] Proposed Rule 7.31(d)(1)(D)(ii) would provide that any quantity of a Reserve Order that is returned unexecuted would join the working time of the reserve interest, which is current functionality. If there is no quantity of reserve interest to join, the returned quantity would be assigned a new working time as reserve interest. As further proposed, in either case, such reserve interest would replenish the display quantity as provided for in Rules 7.31(d)(1)(A) and (B). The Exchange believes that this proposed rule text would promote transparency and clarity in Exchange rules. The Exchange further believes it is appropriate for a returned quantity of a Reserve Order to join the reserve interest first because the order may not be eligible for a replenishment to the display quantity. Proposed Rule 7.31(d)(1)(E) would provide that a request to reduce in size a Reserve Order would cancel the reserve interest before canceling the display quantity and if there is more than one child order, the child order with the later working time would be cancelled first. This represents current functionality and the example set forth above demonstrates how this would function. The Exchange believes that canceling reserve interest before a child order would promote the display of liquidity on an exchange. The Exchange further believes that canceling a later-timed child order would respect the time priority of the first child order, and any priority such child order may have for allocations. Proposed Rule Change for Setter Priority The Exchange also proposes to expand the opportunity for an order to be eligible for Setter Priority pursuant to Rule 7.36(h)(1). As noted above, currently, an order is eligible for Setter Priority on arrival or when it becomes eligible to trade for the first time when transitioning to a new trading session. The Exchange first proposes to amend Rule 7.36(h)(1) to specify that an order would not be eligible for Setter Priority if there is an odd-lot sized order with Setter Priority at that price, which is current functionality. Because an odd-lot order cannot establish a BBO, if there is an odd-lot order at a price, an arriving order can get Setter Priority if it establishes the BBO and either joins or establishes the NBBO. However, as set forth in Rule 7.36(h)(2)(A), an order retains Setter Priority if it is decremented to below a round lot. In such case, an arriving order that establishes the BBO and either joins or establishes the NBBO would not be eligible for Setter Priority if there is an odd-lot sized order at that price with Setter Priority. The Exchange believes that the proposed rule text would promote transparency and clarity in Exchange rules. The Exchange proposes in new Rule 7.36(h)(1)(C) that Setter Priority would be evaluated for a resting order that is assigned a new display price. A resting order could be assigned a new display price for a number of reasons, including because of a change to the PBBO or NBBO (as described in Rule 7.31), pursuant to Rule 7.11(a)(5), or if a Short Sale Period is triggered for a security under Rule 7.16(f). In any repricing scenario, the repriced order would be evaluated for Setter Priority, meaning it would have to meet the requirements of Rule 7.36(h) that it has a display quantity of at least a round lot and (i) establishes a new BBO and (ii) either establishes a new NBBO or joins an Away Market NBBO. The Exchange believes that if a repriced resting order meets these conditions, it has aggressively displayed liquidity on the Exchange and should be eligible for the additional Setter Priority allocation. The Exchange proposes to specify what would happen if multiple orders reprice at the same time. As proposed in the second sentence to new Rule 7.36(h)(1)(C), if multiple orders reprice at the same time, none of the orders would be eligible for Setter Priority unless one order is equal to or greater than a round lot and the sum of all other orders at that price is less than a round lot. The other orders at that price could have been resting orders, e.g., odd-lot sized displayed orders, or other repriced orders, or both. The Exchange believes that this proposed change is consistent with how the Exchange evaluates Setter Priority on arrival, which is available for an incoming order of at least a round-lot size that establishes the BBO and either joins or establishes the NBBO, notwithstanding other orders at that price that equal less than a round lot and do not already have Setter Priority. The Exchange also proposes in new Rule 7.36(h)(1)(D) that a Reserve Order would be evaluated for Setter Priority when the display quantity is replenished. The Exchange proposes this change in conjunction with the proposed changes to Reserve Order replenishment, described above. Because a Reserve Order would be replenished only if the display quantity is decremented to below a round lot, the Exchange believes that a replenishment event should be eligible for Setter Priority if it both establishes a BBO and either joins or establishes the NBBO. If the second child order meets those conditions, such child order would be eligible for Setter Priority even if there is still the first child order of an odd-lot size for such Reserve Order on the Exchange Book. However, consistent with the proposed change to Rule 7.36(h)(1), if the first child order of the Reserve Order had Setter Priority, the second child order of the Reserve Order would not be eligible for Setter Priority because there is already an order on the Exchange Book at that price with Setter Priority. The second sentence of proposed Rule 7.36(h)(1)(D) would further provide that during a Short Sale Period under Rule 7.16(f), if a short sale Reserve Order has an odd-lot quantity with Setter Priority and the Permitted Price at which such order would be replenished would be a different price, the replenish quantity would not be eligible for Setter Priority. As set forth in Rule 7.16(f)(5)(B), reserve interest that replenishes the displayed quantity of a Reserve Order will be replenished at a Permitted Price. Even though the second child order would be at a different price and would otherwise meet the conditions for Setter Priority, the Exchange believes that a Reserve Order should not be eligible for Setter Priority at more than one price. For example, during a Short Sale Period, If the NBB is 10.00, a short sale Reserve Order priced at 10.01 would be displayed at 10.01. If that short sale Reserve Order established the BO and either joined or established the NBO, it would be assigned Setter Priority. If the NBB subsequently changes to 10.01, pursuant to Rule 7.16(f)(6), the display quantity of the Reserve Order would remain displayed at 10.01, but the reserve interest would be repriced to the Permitted Price of 10.02. If next, the display quantity at 10.01 is reduced to below a round lot, such child order would retain Setter Priority. In addition, the Reserve Order would be replenished at 10.02, which is the Permitted Price. However, as proposed, even if the child order at 10.02 would establish a new BO and either joined or established a new NBO, because it is part of the same Reserve Order, it would not be eligible to Setter Priority at the Permitted Price. Finally, the Exchange proposes to amend Rule 7.36(h)(3)(C), which provides that an order loses its Setter Priority if such order is less than a round lot and is assigned a new working time pursuant to Rule 7.38(d)(2). To reflect the proposed change to Reserve Orders described above that a child order could be assigned a new working time, the Exchange proposes that if child order of a Reserve Order with Setter Priority is assigned a new [[Page 28704]] working time, it would lose that priority. However, when it joins the reserve interest and replenishes the Reserve Order, pursuant to proposed Rule 7.36(h)(1)(D), the new child order would be evaluated for Setter Priority. For example: If the Away Market PBB is 10.05 and the Exchange receives a Reserve Order to buy priced at 10.00 with 100 shares minimum display quantity and an additional 1000 shares in reserve interest, the child order ``A'' of 100 shares would be displayed at 10.00, but would not be eligible for Setter Priority. If the Away Market PBB adjusts to 9.99 and the Exchange receives a sell order with a limit price of 10.00 for 70 shares, ``A'' would be decremented to 30 shares and the Reserve Order would be replenished with a new child order ``B'' for 100 shares. Because ``B'' would establish a new BB on the Exchange and a new NBB, it would be assigned Setter Priority. If next, the Exchange receives an order to sell 90 shares at 10.00, because ``B'' has Setter Priority, it would trade with the new order to sell and would decremented to 10 shares, but still retain Setter Priority. Because ``A'' and ``B'' equal less than a round lot, the Reserve Order will be replenished. But because ``B'' would lose its working time and join the reserve interest pursuant to proposed Rule 7.31(d)(1)(B), ``B'' would also lose its Setter Priority pursuant to proposed Rule 7.36(h)(3)(C). A new child order ``C'' would replenish the order for 100 shares. In this case, because ``C'' would again establish the BB on the Exchange and the NBB, ``C'' would be assigned Setter Priority for 100 shares. Finally, the Exchange proposes to amend Rule 7.36(h)(4) to delete sub-paragraph (B) of that Rule, which provides that Setter Priority is not available when the reserve quantity replenishes the display quantity of a Reserve Order. The Exchange proposes to re-number the rule text so that Rule 7.36(h)(4) provides that Setter Priority is not available for any portion of an order that is ranked Priority 3--Non- Display Orders, which is currently set forth in sub-paragraph (A). * * * * * Because of the technology changes associated with this proposed rule change, the Exchange will announce by Trader Update when these changes will be implemented. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\9\ in general, and furthers the objectives of Section 6(b)(5),\10\ in particular, because it is 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. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f(b). \10\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change to replenish a Reserve Order only if the display quantity is decremented to below a round lot would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would reduce the number of child orders associated with a single Reserve Order. By reducing the number of child orders, the Exchange believes it would reduce the potential for market participants to detect that a child order is associated with a Reserve Order. This proposed functionality is also consistent with how Reserve Orders function on BZX and Nasdaq. For similar reasons, the Exchange believes that if a Reserve Order has two child orders that equal less than a round lot, it would remove impediments to and perfect the mechanism of a free and open market and a national market system to assign a new working time to the later child order so that when such Reserve Order is replenished, it would have a maximum of only two child orders. The Exchange believes that this proposed change would streamline the operation of Reserve Orders and meet the objective to reduce the potential for market participants to be able to identify that a child order is associated with a Reserve Order. The Exchange further believes that the proposed rule change to evaluate a Reserve Order for routing both on arrival and when replenishing would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would reduce the potential for the display quantity of a Reserve Order to lock or cross the PBBO of an away market. The Exchange further believes that routing from reserve interest would promote the display of liquidity on the Exchange, because if there is at least a round lot remaining of a Reserve Order that is not routed, the Exchange would display that quantity. The Exchange also believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system to wait to display a Reserve Order if there is less than a round lot remaining after routing because it would reduce the potential for such Reserve Order to have more than one child order. Finally, the Exchange believes that joining any quantity of a Reserve Order that is returned unexecuted with reserve interest first would be consistent with the proposed replenishment logic that a Reserve Order would be replenished only if the display quantity is decremented to below a round lot. The Exchange believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system to apply a request to reduce in size a Reserve Order to the reserve interest first, and then next to the child order with the later working time, because such functionality would promote the display of liquidity on the Exchange and honor the priority of the first child order with the earlier working time. The Exchange believes that including this existing functionality in Rule 7.31 would promote transparency and clarity in Exchange rules. The Exchange believes that the proposed change to Primary Pegged Reserve Orders would remove impediments to and perfect the mechanism of a free and open market and a national market system because similar to how a Primary Pegged Order would function on arrival, if the replenish quantity of a Primary Pegged Reserve Order would lock or cross the PBBO, the entire Reserve Order would be cancelled. The Exchange believes that by cancelling the entire order, the Exchange would reduce the potential for such order to be displayed at a price that would lock or cross the PBBO. The Exchange believes that the proposed changes to Rule 7.36 relating to Setter Priority would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would provide for additional circumstances when an order would be eligible to be evaluated for Setter Priority. The Exchange believes that a resting order that is repriced or a Reserve Order that is replenished should be entitled to Setter Priority if it meets the existing conditions for Setter Priority, including that it is at least a round lot in size, establishes the BBO, and either establishes or joins the NBBO. In these circumstances, a repriced order or replenished Reserve Order would be promoting the aggressive display of liquidity on the [[Page 28705]] Exchange, which would benefit all market participants. The Exchange believes that the proposed changes to Setter Priority are designed to operate consistently with the existing functionality, which is why multiple orders that reprice would not be eligible for Setter Priority, unless one order is equal to a round lot or more and the sum of all other orders at that price equal less than a round lot. Similarly, the Exchange believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system for a Reserve Order to be eligible for Setter Priority at only one price, and therefore, during a Short Sale Period, if a Reserve Order is replenished at a Permitted Price, it would not be eligible for Setter Priority at a second price level. Finally, the Exchange believes that the proposed amendment to Rule 7.37(h)(3)(C) to add that an order would lose Setter Priority if it is less than a round lot and assigned a new working time pursuant to proposed Rule 7.31(d)(1)(B)(i) is consistent with current behavior that an odd-lot sized order would lose Setter Priority if it is assigned a new working time. The Exchange believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system for a Reserve Order to lose Setter Priority in such circumstances because when it is assigned a new working time, it would be eligible to be reevaluated for Setter Priority. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any competitive issues. Rather, the proposed rule change to Reserve Orders is designed to reduce the potential for market participants to identify that a child order is related to a Reserve Order. The changes to Setter Priority are designed to promote the aggressive display of liquidity on the Exchange to provide additional circumstances when an order would be eligible for Setter Priority, consistent with current rules. 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 Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSE-2018-26 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-NYSE-2018-26. 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 website (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 website 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2018-26 and should be submitted on or before July 11, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\11\ --------------------------------------------------------------------------- \11\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-13162 Filed 6-19-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 28701
should be submitted on or before July II. Self-Regulatory Organization’s 7.31(d)(1)(C), a Reserve Order must be
11, 2018. Statement of the Purpose of, and designated Day and may be combined
For the Commission, by the Division of
Statutory Basis for, the Proposed Rule with a Limit Non-Routable Order or a
Trading and Markets, pursuant to delegated Change Primary Pegged Order.
Rule 7.36(h) provides that Setter
authority.14 In its filing with the Commission, the
Priority will be assigned to an order
Eduardo A. Aleman, self-regulatory organization included
ranked Priority 2—Display Orders with
Assistant Secretary. statements concerning the purpose of,
a display quantity of at least a round lot
and basis for, the proposed rule change
[FR Doc. 2018–13170 Filed 6–19–18; 8:45 am] if such order (i) establishes a new BBO
and discussed any comments it received
BILLING CODE 8011–01–P and (ii) either establishes a new NBBO
on the proposed rule change. The text
or joins an Away Market NBBO and that
of those statements may be examined at
only one order is eligible for Setter
the places specified in Item IV below.
SECURITIES AND EXCHANGE Priority at each price.7 Rule 7.36(h)(1)
The Exchange has prepared summaries, provides that an order will be evaluated
COMMISSION set forth in sections A, B, and C below, for Setter Priority on arrival, which
of the most significant parts of such includes when any portion of an order
[Release No. 34–83432; File No. SR–NYSE– statements.
2018–26]
that has routed returns unexecuted and
A. Self-Regulatory Organization’s when it becomes eligible to trade for the
Self-Regulatory Organizations; New Statement of the Purpose of, and the first time upon transitioning to a new
York Stock Exchange LLC; Notice of Statutory Basis for, the Proposed Rule trading session.
Filing of Proposed Rule Change, as Change Proposed Rule Change to Reserve
Modified by Amendment No. 1, To 1. Purpose Orders
Amend Pillar Trading Platform Rule The Exchange proposes to amend
The Exchange proposes to amend
7.31 Relating to Reserve Orders and Rule 7.31 relating to Reserve Orders and Rule 7.31(d)(1) to change the manner by
Rule 7.36 Relating to Setter Priority Rule 7.36 relating to Setter Priority. which the display portion of a Reserve
These proposed changes would be Order would be replenished. As
June 14, 2018.
operative for trading on the Pillar proposed, rather than replenishing the
Pursuant to Section 19(b)(1) 1 of the trading platform only. Because the display quantity following any
Securities Exchange Act of 1934 Exchange trades only UTP Securities 5 execution, the Exchange proposes to
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3 on the Pillar trading platform at this replenish the Reserve Order when the
notice is hereby given that, on June 1, time, these proposed changes would not display quantity is decremented to
2018, New York Stock Exchange LLC be applicable to NYSE-listed securities. below a round lot. This proposed
(‘‘NYSE’’ or ‘‘Exchange’’) filed with the functionality is consistent with how
Background Reserve Orders are replenished on other
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule Rule 7.31(d)(1) defines a Reserve equity exchanges.8
change. On June 8, 2018, the Exchange Order as a Limit Order with a quantity As is currently the case, the replenish
of the size displayed and with a reserve quantity would be the minimum display
filed Amendment No. 1 to the proposed
quantity of the size (‘‘reserve interest’’) size of the order or the remaining
rule change, as described in Items I, II,
that is not displayed. The displayed quantity of reserve interest if it is less
and III below, which Items have been than the minimum display quantity. To
prepared by the Exchange.4 The quantity of a Reserve Order is ranked
Priority 2—Display Orders and the reflect this functionality, the Exchange
Commission is publishing this notice to proposes that Rule 7.31(d)(1)(A) would
solicit comments on the proposed rule reserve interest is ranked Priority 3—
Non-Display Orders.6 Rule 7.31(d)(1)(A) be amended as follows (deleted text
change from interested persons. bracketed; new text underlined):
provides that on entry, the display
I. Self-Regulatory Organization’s quantity of a Reserve Order must be (A) On entry, the display quantity of
entered in round lots and the displayed a Reserve Order must be entered in
Statement of the Terms of Substance of
portion of a Reserve Order will be round lots. The displayed portion of a
the Proposed Rule Change
replenished following any execution. Reserve Order will be replenished when
The Exchange proposes to amend That rule further provides that the the display quantity is decremented to
Pillar trading platform Rule 7.31 relating Exchange will display the full size of below a round lot. The replenish
to Reserve Orders and Rule 7.36 relating the Reserve Order when the unfilled quantity will be the minimum display
to Setter Priority. This Amendment No. quantity is less than the minimum quantity of the order or the remaining
quantity of the reserve interest if it is
1 supersedes the original filing in its display size for the order. Rule
less than the minimum display quantity
entirety. The proposed rule change is 7.31(d)(1)(B) provides that each time a
[following any execution. The Exchange
available on the Exchange’s website at Reserve Order is replenished from
will display the full size of the Reserve
www.nyse.com, at the principal office of reserve interest, a new working time is
Order when the unfilled quantity is less
the Exchange, and at the Commission’s assigned to the replenished quantity of
than the minimum display size for the
Public Reference Room. the Reserve Order, while the reserve
order].
interest retains the working time of Under current functionality, because
original order entry. Pursuant to Rule the replenished quantity is assigned a
sradovich on DSK3GMQ082PROD with NOTICES
14 17 CFR 200.30–3(a)(12).
5 The term ‘‘UTP Securities’’ is defined in Rule
new working time, it is feasible for a
1 15 U.S.C. 78s(b)(1).
1.1 to mean a security that is listed on a national single Reserve Order to have multiple
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
securities exchange other than the Exchange and
that trades on the Exchange pursuant to unlisted 7 The terms ‘‘BBO,’’ ‘‘NBBO,’’ ‘‘PBBO,’’ and
4 Amendment No. 1 replaces and supersedes the
trading privileges. ‘‘Away Market’’ are defined in Rule 1.1.
original filing in its entirety. In Amendment No. 1, 6 The terms ‘‘Priority 2—Display Orders’’ and 8 See, e.g., Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule
the Exchange modified the definition of ‘‘child ‘‘Priority 3—Non-Display Orders’’ are defined in 11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’)
order’’ in proposed rule 7.31. Rule 7.36(e). Rule 7503(h).
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![Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 28705
Exchange, which would benefit all III. Date of Effectiveness of the inspection and copying at the principal
market participants. Proposed Rule Change and Timing for office of the Exchange. All comments
The Exchange believes that the Commission Action received will be posted without change.
proposed changes to Setter Priority are Persons submitting comments are
Within 45 days of the date of
designed to operate consistently with cautioned that we do not redact or edit
publication of this notice in the Federal
the existing functionality, which is why personal identifying information from
Register or up to 90 days (i) as the
multiple orders that reprice would not comment submissions. You should
Commission may designate if it finds
be eligible for Setter Priority, unless one submit only information that you wish
such longer period to be appropriate
order is equal to a round lot or more and to make available publicly. All
and publishes its reasons for so finding
the sum of all other orders at that price submissions should refer to File
or (ii) as to which the self-regulatory
equal less than a round lot. Similarly, Number SR–NYSE–2018–26 and should
the Exchange believes that it would organization consents, the Commission
will: be submitted on or before July 11, 2018.
remove impediments to and perfect the
mechanism of a free and open market (A) By order approve or disapprove For the Commission, by the Division of
and a national market system for a the proposed rule change, or Trading and Markets, pursuant to delegated
(B) institute proceedings to determine authority.11
Reserve Order to be eligible for Setter
Priority at only one price, and therefore, whether the proposed rule change Eduardo A. Aleman,
during a Short Sale Period, if a Reserve should be disapproved. Assistant Secretary.
Order is replenished at a Permitted IV. Solicitation of Comments [FR Doc. 2018–13162 Filed 6–19–18; 8:45 am]
Price, it would not be eligible for Setter BILLING CODE 8011–01–P
Interested persons are invited to
Priority at a second price level.
Finally, the Exchange believes that submit written data, views, and
the proposed amendment to Rule arguments concerning the foregoing, SECURITIES AND EXCHANGE
7.37(h)(3)(C) to add that an order would including whether the proposed rule COMMISSION
lose Setter Priority if it is less than a change is consistent with the Act.
round lot and assigned a new working Comments may be submitted by any of
the following methods: [Release No. 34–83446; File No. SR–ISE–
time pursuant to proposed Rule 2018–52]
7.31(d)(1)(B)(i) is consistent with Electronic Comments
current behavior that an odd-lot sized Self-Regulatory Organizations; Nasdaq
• Use the Commission’s internet
order would lose Setter Priority if it is ISE, LLC; Notice of Filing and
comment form (http://www.sec.gov/
assigned a new working time. The Immediate Effectiveness of Proposed
rules/sro.shtml); or
Exchange believes that it would remove Rule Change To Increase Certain
• Send an email to rule-comments@
impediments to and perfect the Route-Out Fees Set Forth in Section
sec.gov. Please include File Number SR–
mechanism of a free and open market IV.F of the Schedule of Fees
NYSE–2018–26 on the subject line.
and a national market system for a
Reserve Order to lose Setter Priority in Paper Comments June 14, 2018.
such circumstances because when it is • Send paper comments in triplicate Pursuant to Section 19(b)(1) of the
assigned a new working time, it would to Secretary, Securities and Exchange Securities Exchange Act of 1934
be eligible to be reevaluated for Setter Commission, 100 F Street NE, (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Priority. Washington, DC 20549–1090. notice is hereby given that on June 1,
B. Self-Regulatory Organization’s 2018, Nasdaq ISE, LLC (‘‘ISE’’ or
All submissions should refer to File
Statement on Burden on Competition ‘‘Exchange’’) filed with the Securities
Number SR–NYSE–2018–26. This file
and Exchange Commission
The Exchange does not believe that number should be included on the
(‘‘Commission’’) the proposed rule
the proposed rule change will impose subject line if email is used. To help the
change as described in Items I and II
any burden on competition that is not Commission process and review your
below, which Items have been prepared
necessary or appropriate in furtherance comments more efficiently, please use
by the Exchange. The Commission is
of the purposes of the Act. The only one method. The Commission will
publishing this notice to solicit
proposed rule change is not designed to post all comments on the Commission’s
comments on the proposed rule change
address any competitive issues. Rather, internet website (http://www.sec.gov/
from interested persons.
the proposed rule change to Reserve rules/sro.shtml). Copies of the
Orders is designed to reduce the submission, all subsequent I. Self-Regulatory Organization’s
potential for market participants to amendments, all written statements Statement of the Terms of Substance of
identify that a child order is related to with respect to the proposed rule the Proposed Rule Change
a Reserve Order. The changes to Setter change that are filed with the
Priority are designed to promote the Commission, and all written The Exchange proposes to increase
aggressive display of liquidity on the communications relating to the certain route-out fees set forth in
Exchange to provide additional proposed rule change between the Section IV.F of the Schedule of Fees, as
circumstances when an order would be Commission and any person, other than described further below.
eligible for Setter Priority, consistent those that may be withheld from the The text of the proposed rule change
with current rules. public in accordance with the is available on the Exchange’s website at
provisions of 5 U.S.C. 552, will be
sradovich on DSK3GMQ082PROD with NOTICES
http://ise.cchwallstreet.com/, at the
C. Self-Regulatory Organization’s available for website viewing and principal office of the Exchange, and at
Statement on Comments on the printing in the Commission’s Public the Commission’s Public Reference
Proposed Rule Change Received From Reference Room, 100 F Street NE, Room.
Members, Participants, or Others Washington, DC 20549, on official
No written comments were solicited business days between the hours of 11 17 CFR 200.30–3(a)(12).
or received with respect to the proposed 10:00 a.m. and 3:00 p.m. Copies of the 1 15 U.S.C. 78s(b)(1).
rule change. filing also will be available for 2 17 CFR 240.19b–4.
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Document Created: 2018-06-20 00:19:37
Document Modified: 2018-06-20 00:19:37
| 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 | 83 FR 28701 |
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