83 FR 3038 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31-E Relating to Mid-Point Liquidity Orders and the Minimum Trade Size Modifier and Rule 7.36-E To Add a Definition of “Aggressing Order”
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 14 (January 22, 2018)
Federal Register Volume 83, Issue 14 (January 22, 2018)
| Page Range | 3038-3043 | |
| FR Document | 2018-00975 |
[Federal Register Volume 83, Number 14 (Monday, January 22, 2018)] [Notices] [Pages 3038-3043] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-00975] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82504; File No. SR-NYSEArca-2018-01] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31- E Relating to Mid-Point Liquidity Orders and the Minimum Trade Size Modifier and Rule 7.36-E To Add a Definition of ``Aggressing Order'' January 16, 2018. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on January 3, 2018, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7.31-E relating to Mid-Point Liquidity Orders and the Minimum Trade Size modifier and Rule 7.36-E to add a definition of ``Aggressing Order.'' 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. [[Page 3039]] A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose Mid-Point Liquidity (``MPL'') Orders and the Minimum Trade Size (``MTS'') modifier and Rule 7.36-E (Order Ranking and Display) to add a definition of ``Aggressing Order.'' [sic] For MPL Orders, the Exchange proposes to amend the price at which a marketable MPL Order would trade when there are resting orders priced better than the midpoint. The Exchange further proposes to amend functionality related to MPL-ALO Orders to describe how orders would trade if an MPL-ALO Order locks contra-side same-priced interest on the NYSE Arca Book. For MTS, the Exchange proposes to move all discussion relating to the MTS modifier to new sub-paragraph (i)(3) of Rule 7.31-E and in so doing, amend how resting orders with an MTS modifier would trade in specified circumstances. Background As provided for in current Rule 7.31-E(d)(3)(C), on arrival, an MPL Order to buy (sell) that is eligible to trade will trade with resting orders to sell (buy) with a working price at or below (above) the midpoint of the PBBO (i.e., priced better than the midpoint of the PBBO). The rule further provides that resting MPL Orders to buy (sell) will trade at the midpoint of the PBBO against all incoming orders to sell (buy) priced at or below (above) the midpoint of the PBBO (i.e., priced better than the midpoint of the PBBO). Current Rule 7.31-E(d)(3)(F) provides that an MPL Order may be designated with an ALO Modifier (an ``MPL-ALO Order'') and that on arrival, an MPL-ALO Order to buy (sell) will trade with resting orders to sell (buy) with a working price below (above) the midpoint of the PBBO, but will not trade with resting orders to sell (buy) priced at the midpoint of the PBBO. The rule further provides that a resting MPL- ALO Order to buy (sell) will trade with an arriving order to sell (buy) that is eligible to trade at the midpoint of the PBBO. The MTS modifier is currently available for Limit IOC Orders,\4\ MPL Orders,\5\ and Tracking Orders.\6\ As such, the MTS modifier is currently available only for orders that are not displayed and do not route. On arrival, both Limit IOC Orders and MPL Orders with an MTS modifier will trade against contra-side orders in the NYSE Arca Book that in the aggregate, meet the MTS.\7\ Once resting, MPL Orders and Tracking Orders with an MTS modifier function similarly: If a contra- side order does not meet the MTS, the incoming order will not trade with and may trade through the resting order with the MTS modifier. In addition, both MPL Orders and Tracking Orders with an MTS modifier will be cancelled if such orders are traded in part or reduced in size and the remaining quantity is less than the MTS. --------------------------------------------------------------------------- \4\ See Rule 7.31-E(b)(2)(A) (``A Limit IOC Order to buy (sell) may be designated with a minimum trade size (``MTS''), which will trade against sell (buy) orders in the NYSE Arca Book that in the aggregate, meets its MTS. On entry, a Limit IOC Order with an MTS must have a minimum of one round lot and will be rejected on arrival if the MTS is larger than the size of the Limit IOC Order. A Limit IOC Order with an MTS that cannot be immediately traded at its minimum size will be cancelled in its entirety.'') \5\ See Rule 7.31-E(d)(3)(D) (``An MPL Order may be designated with an MTS of a minimum of one round lot and will be rejected on arrival if the MTS is larger than the size of the MPL Order. On arrival, an MPL Order to buy (sell) with an MTS will trade with sell (buy) orders in the NYSE Arca Book that in the aggregate, meets its MTS. If the sell (buy) orders do not meet the MTS, the MPL Order to buy (sell) will not trade on arrival and will be ranked in the NYSE Arca Book. Once resting, an MPL Order to buy (sell) with an MTS will trade with an order to sell (buy) that meets the MTS and is priced at or below (above) the midpoint of the PBBO. If an order does not meet an MPL Order's MTS, the order will not trade with and may trade through such MPL Order. If an MPL Order with an MTS is traded in part or reduced in size and the remaining quantity of the order is less than the MTS, the MPL Order will be cancelled.'') \6\ See Rule 7.31-E(d)(4)(C) (``A Tracking Order may be designated with an MTS of one round lot or more. If an incoming order cannot meet the MTS, a Tracking Order with a later working time will trade ahead of the Tracking Order designated with an MTS with an earlier working time. If a Tracking Order with an MTS is traded in part or reduced in size and the remaining quantity is less than the MTS, the Tracking Order will be cancelled.'') \7\ Tracking Orders, including Tracking Orders with an MTS modifier, are passive orders that do not trade on arrival. See Rule 7.31-E(d)(4)(A). --------------------------------------------------------------------------- Proposed Definition of ``Aggressing Order'' The Exchange proposes to amend Rule 7.36-E to add a definition that would be used for purposes of Rule 7-E. Proposed Rule 7.36-E(a)(5) would define the term ``Aggressing Order'' to mean a buy (sell) order that is or becomes marketable against sell (buy) interest on the NYSE Arca Book.\8\ This term would therefore refer to orders that are marketable against other orders on the NYSE Arca Book, such as incoming orders and orders that have returned unexecuted after routing. --------------------------------------------------------------------------- \8\ The term ``marketable'' is defined in Rule 1.1(y) to mean for a Limit Order, an order than [sic] can be immediately executed or routed. --------------------------------------------------------------------------- This term would also be applicable to resting orders that become marketable due to one or more events. For the most part, resting orders will have already traded with contra-side orders against which they are marketable. However, there are circumstances when a resting order may become marketable, such as orders that become eligible to trade when a PBBO unlocks or uncrosses (e.g., MPL and Pegged Orders) or orders that have a trading restriction at specified prices (e.g., as discussed in greater detail below, MPL-ALO Orders or orders with an MTS Modifier). To maximize the potential for orders to trade, the Exchange continually evaluates whether resting orders may become marketable. Events that could trigger a resting order to become marketable include updates to the working price of such order, updates to the PBBO or NBBO, changes to other orders on the NYSE Arca Book, or processing of inbound messages (e.g., an update to Price Bands under the Regulation NMS Plan to Address Extraordinary Market Volatility). To address such circumstances, the Exchange proposes to include in proposed Rule 7.36- E(a)(5) that a resting order may become an Aggressing Order if its working price changes, if the PBBO or NBBO is updated, because of changes to other orders on the NYSE Arca Book, or when processing inbound messages. The order that becomes the Aggressing Order is the liquidity-taking order. Generally, if resting orders on both sides are determined to be an Aggressing Order, e.g., a locked PBBO becomes unlocked and as a result, MPL Orders are repriced, the later-arriving order will be the liquidity-taking order.\9\ However, if the evaluation results in only one side becoming an Aggressing Order, e.g., an order with an MTS Modifier becomes eligible to trade and the contra-side order(s) have no working price changes, the order with the MTS Modifier would become the liquidity-taking Aggressing Order. As described below, the Exchange proposes to use the term ``Aggressing Order'' in the rule text relating to the MTS Modifier and the MPL-ALO Order. Because an Aggressing Order becomes a liquidity taker, such term could be applicable to other circumstances. For example, an order with a Non-Display Remove Modifier that trades as a liquidity taker would also be considered an Aggressing Order. However, at this time, the Exchange does not propose to amend its rules to use the term ``Aggressing Order'' because the rule already specifies which order is the liquidity taker. --------------------------------------------------------------------------- \9\ See, e.g., Rule 7.31-E(d)(3)(B). --------------------------------------------------------------------------- [[Page 3040]] Proposed Amendments Relating to MPL and MPL-ALO Orders The Exchange proposes to amend the first sentence of current Rule 7.31-E(d)(3)(C) to make this text applicable to any marketable MPL Order, and not just an arriving MPL Order. To effect this change, the Exchange proposes to use the term ``Aggressing Order'' and replace the phrase ``[o]n arrival, an MPL Order to buy (sell) that is eligible to trade'' with the phrase, ``[a]n Aggressing MPL Order to buy (sell).'' The Exchange also proposes to amend the first sentence of current Rule 7.31-E(d)(3)(C) to describe at what price an Aggressing MPL Order would trade with contra-side resting orders that are priced better than the midpoint. The rule currently provides that an arriving MPL Order to buy (sell) would trade with resting orders to sell (buy) with a working price at or below (above) the midpoint of the PBBO. The Exchange proposes to specify that when an Aggressing MPL Order trades with resting orders priced better than the midpoint, it will trade at the working price of the resting orders, which is current functionality. For example, if the PBB is 10.10 and the midpoint is 10.13, and there are non-displayed sell orders of 100 shares with working prices of 10.11 and 10.12, an Aggressing MPL Order to buy with a limit of 10.13 for 200 shares would trade with such non-displayed sell orders at 10.11 and 10.12, respectively. The Exchange believes that this proposed amendment would promote transparency in Exchange rules regarding at what price an Aggressing MPL Order would trade. By using the term ``Aggressing Order,'' this rule would be applicable to a resting MPL Order that becomes marketable, such as after a PBBO unlocks or uncrosses. In the above example, if the MPL Order to buy is ineligible to trade because of a crossed PBBO, and while the PBBO is crossed, the Exchange receives the two non-displayed sell orders, when the PBBO uncrosses and the new midpoint is 10.13, the resting MPL Order would become an Aggressing Order and would trade with the non-displayed sell orders at 10.11 and 10.12, respectively. The Exchange also proposes to amend the second sentence of Rule 7.31-E(d)(3)(C) to replace the term ``incoming orders'' with the term ``Aggressing Orders.'' This proposed rule change would provide greater specificity that any contra-side order that is an Aggressing Order, as defined in proposed Rule 7.36-E(a)(5), would trade with a resting MPL Order at the midpoint of the PBBO. The Exchange also proposes to amend the rule governing MPL-ALO Orders to make similar changes. Currently, MPL-ALO Orders are described in Rule 7.31-E(d)(3)(F). Because of changes described below relating to MTS, as proposed, MPL-ALO Orders would be described in Rule 7.31- E(d)(3)(E). In amending proposed Rule 7.31-E(d)(3)(E), the Exchange proposes to break the current rule text into three sub-paragraphs. The first sentence of current Rule 7.31-E(d)(3)(F), which provides that an MPL Order may be designated with an ALO Modifier, would follow Rule 7.31- E(d)(3)(E). The current second sentence of Rule 7.31-E(d)(3)(F) would be set forth in proposed Rule 7.31-E(d)(3)(E)(i). The Exchange proposes to amend this rule in the same manner that it is proposing to amend the first sentence of Rule 7.31-E(d)(3)(C), described above. In addition, the Exchange proposes a non-substantive, clarifying amendment to add that an arriving MPL-ALO Order would trade with a contra-side same- priced order that has been designated with a Non-Display Remove Modifier, which is current functionality. Accordingly, proposed Rule 7.31-E(d)(3)(E)(i) would provide that an Aggressing MPL-ALO Order to buy (sell) will trade with resting orders to sell (buy) with a working price below (above) the midpoint of the PBBO at the working price of the resting orders, but will not trade with resting orders to sell (buy) priced at the midpoint of the PBBO unless such resting order is designated with a Non-Display Remove Modifier pursuant to paragraph (d)(3)(F) of this Rule (proposed new text italicized).\10\ --------------------------------------------------------------------------- \10\ A resting MPL-ALO Order that becomes an Aggressing Order would trade consistent with proposed Rule 7.31-E(d)(3)(E)(i) and therefore would trade with contra-side orders priced better than the midpoint, but would not trade at the midpoint unless such order had a Non-Display Remove Modifier. --------------------------------------------------------------------------- Because an Aggressing MPL-ALO Order does not trade with resting contra-side orders priced at the midpoint of the PBBO (unless the resting order has the Non-Display Remove Modifier), the Exchange proposes to specify the circumstances of when an MPL-ALO Order would be eligible to trade if it locks contra-side orders, which would differ depending on whether the contra-side order is displayed.\11\ The first sentence of Proposed Rule 7.31-E(d)(3)(E)(ii) would provide that if an MPL-ALO Order to buy (sell) cannot trade with a same-priced resting order to sell (buy), a subsequently arriving order to sell (buy) eligible to trade at the midpoint would trade ahead of a resting order to sell (buy) that is not displayed at that price. Accordingly, if an MPL-ALO Order locks a non-displayed order, such resting MPL-ALO Order can trade at that price with a subsequent order. --------------------------------------------------------------------------- \11\ A displayed odd-lot order that is not included in the calculation of the PBBO could be at the same price as an MPL Order. --------------------------------------------------------------------------- By contrast, the second sentence of proposed Rule 7.31- E(d)(3)(E)(ii) would provide that if such resting order to sell (buy) is displayed, the MPL-ALO Order to buy (sell) would not be eligible to trade at that price. Accordingly, if an MPL-ALO Order locks a displayed order, such resting MPL-ALO Order would not be eligible to trade at that price with any interest. The Exchange proposes to treat displayed orders locked by an MPL-ALO Order differently to avoid having non- displayed orders trade ahead of a same-priced, same-side displayed order. Proposed Amendments Relating to MTS The Exchange proposes to consolidate all references to MTS modifiers in Rule 7.31-E in proposed Rule 7.31-E(i)(3) as a new additional order instruction and modifier to be referred to as the ``Minimum Trade Size (`MTS') Modifier.'' As proposed, Rule 7.31-E(i)(3) would provide that a Limit IOC Order, MPL Order, or Tracking Order may be designated with an MTS Modifier, which is existing functionality. Because this proposed rule would specify which orders would be eligible for the MTS Modifier, the Exchange proposes to delete existing rule text specifying which orders are and are not eligible for an MTS Modifier.\12\ Proposed Rule 7.31-E(i)(3) is based in part on NYSE American Rule 7.31E(i)(3). --------------------------------------------------------------------------- \12\ The Exchange proposes to delete references to MTS in Rules 7.31-E(b)(2)(A), 7.31-E(b)(2)(B), 7.31-E(d)(3)(D), 7.31-E(d)(4)(C), 7.31-E(e)(3)(B), and 7.46-E(f)(1)(A). As noted above, because current Rule 7.31-E(d)(3)(D) would be deleted in its entirety, the remaining sub-paragraphs of Rule 7.31-E(d)(3) would be renumbered accordingly. In addition, current Rule 7.31-E(d)(4)(C) would be deleted in its entirety. --------------------------------------------------------------------------- Proposed Rule 7.31-E(i)(3)(A) would provide that an MTS must be a minimum of a round lot and that an order with an MTS Modifier would be rejected if the MTS is less than a round lot or if the MTS is larger than the size of the order. This proposed rule text is based on the next-to-last sentence of current Rule 7.31-E(b)(2)(A) and the first sentence of current Rule 7.31-E(d)(3)(D), and in part on the first sentence of current Rule 7.31-E(d)(4)(C), with non-substantive differences to use common terminology when applying [[Page 3041]] this requirement to all of the order types eligible for an MTS Modifier.\13\ Proposed Rule 7.31-E(i)(3)(A) is based on NYSE American Rule 7.31E(i)(3)(A) without any differences. --------------------------------------------------------------------------- \13\ Nasdaq also requires that its Minimum Quantity Order also have a size of at least a round lot. See Nasdaq Rule 4703(e). --------------------------------------------------------------------------- Proposed Rule 7.31-E(i)(3)(B) would provide that an order to buy (sell) with an MTS Modifier would trade with sell (buy) orders in the NYSE Arca Book that in the aggregate meet such order's MTS. This proposed rule text is based on the third sentence of Rule 7.31- E(b)(2)(A) and the second sentence of Rule 7.31-E(d)(3)(D) with non- substantive differences to use common terminology when applying this requirement to all of the order types eligible for an MTS Modifier. Because Tracking Orders do not trade on arrival, this rule text would be applicable only to MPL Orders and Limit IOC Orders with an MTS Modifier. Proposed Rule 7.31-E(i)(3)(B) is based on NYSE American Rule 7.31E(i)(3)(B)(i) without any differences. Proposed Rule 7.31-E(i)(3)(C) would provide that an order with an MTS Modifier that is designated Day and cannot be satisfied on arrival would not trade and would be ranked in the NYSE Arca Book. This proposed rule text is based on the third sentence of Rule 7.31- E(d)(3)(D) with non-substantive differences to reference orders designated Day, i.e., MPL Orders and MPL-ALO Orders. The first sentence of Rule 7.31-E(i)(3)(C) is based on NYSE American Rule 7.31E(i)(3)(C) without any differences. The Exchange further proposes to describe new functionality relating to when an order with an MTS Modifier that is designated Day would not be eligible to trade. In short, if a later-arriving contra- side order can meet the MTS of a resting order with an MTS Modifier, the two orders would trade unless the execution would be inconsistent with either intra-market price priority or would result in a non- displayed order trading ahead of a same-side, same-priced displayed order.\14\ Therefore, as proposed, the Exchange would not permit an order with an MTS Modifier that crosses other displayed or non- displayed orders on the NYSE Arca Book to trade at prices that are worse than the price of such contra-side orders. As further proposed, the Exchange would not permit a resting order with an MTS Modifier to trade at a price equal to a displayed contra-side order.\15\ --------------------------------------------------------------------------- \14\ Rule 7.36-E(c) provides that the Exchange ranks all non- marketable orders on the NYSE Arca Book according to price--time priority. \15\ At this time, the only resting orders with an MTS on the Exchange subject to this requirement would be MPL Orders. In such case, a contra-side order that is displayed and between the PBBO would be an odd-lot sized order; a round-lot sized displayed order would be reflected in the PBBO. --------------------------------------------------------------------------- To reflect these changes, the second sentence of Rule 7.31- E(i)(3)(C) would provide that when a buy (sell) order with an MTS Modifier that is designated Day is ranked in the NYSE Arca Book, it would not be eligible to trade: (i) At a price equal to or above (below) any sell (buy) orders that are displayed and that have a working price equal to or below (above) the working price of such order with an MTS Modifier, or (ii) at a price above (below) any sell (buy) orders that are not displayed and that have a working price below (above) the working price of such order with an MTS Modifier. For example,If the PBBO is 10.10 x 10.16, on the NYSE Arca Book there is a sell order (``Order A'') ranked Priority 3--Non-Display Orders for 50 shares at 10.12 and a sell order (``Order B'') ranked Priority 2-- Display Orders for 25 shares at 10.11, and the Exchange receives a buy MPL Order (``Order C'') with an MTS Modifier for 100 shares with a 10.16 limit, because the MTS cannot be met, Order C will not trade and will be ranked in the NYSE Arca Book at the midpoint of 10.13. At this point, the Exchange would have a non-displayed buy order crossing both non-displayed and displayed sell orders on the NYSE Arca Book. If the Exchange then receives a non-displayed sell order (``Order D'') for 100 shares at 10.11, even though Order D would be marketable against Order C, it would not trade because a trade at 10.13 would be above the price of resting sell orders.\16\ Order D would be added to the NYSE Arca Book at 10.11. --------------------------------------------------------------------------- \16\ Pursuant to Rule 7.31-E(d)(3)(C), an Aggressing Order will trade with a resting MPL Order at the midpoint of the PBBO. --------------------------------------------------------------------------- If next, the Exchange receives a buy order (``Order E'') to buy 25 shares at 10.11, it would trade with Order B. As discussed above, this execution would trigger the Exchange to evaluate whether Order C becomes marketable against contra-side orders.\17\ In this scenario, because Order B has now executed, Order C is no longer restricted from trading at 10.11. Because Order C's restriction has been lifted and Order D does not have a working price change, Order C would become an Aggressing Order and trade as the liquidity taker with Order D at 10.11. --------------------------------------------------------------------------- \17\ See discussion infra regarding the second sentence to proposed Rule 7.36-E(a)(5). --------------------------------------------------------------------------- Proposed Rule 7.31-E(i)(3)(D) would provide that an order with an MTS Modifier that is designated IOC and cannot be immediately satisfied would be cancelled in its entirety. This proposed rule text is based on the last sentence of Rule 7.31-E(b)(2)(A), with non-substantive differences to specify that this functionality would be applicable to any orders designated IOC that have an MTS Modifier, i.e., Limit IOC Orders and MPL-IOC Orders. Proposed Rule 7.31-E(i)(3)(D) is based on NYSE American Rule 7.31E(i)(3)(D) without any differences. Proposed Rule 7.31-E(i)(3)(E) would provide that a resting order to buy (sell) with an MTS Modifier would trade with individual sell (buy) orders that each meets the MTS.\18\ This proposed rule text is based on the fourth sentence of Rule 7.31-E(d)(3)(D) with a non-substantive difference to use the same terminology as proposed Rule 7.31-E(i)(3)(B) because a resting order with an MTS Modifier only trades if contra-side individual orders each meets such order's MTS. The Exchange proposes non-substantive differences to use common terminology when applying this requirement to all of the order types eligible for an MTS Modifier. Proposed Rule 7.31-E(i)(3)(E) is based on NYSE American Rule 7.31E(i)(3)(E) without any differences. --------------------------------------------------------------------------- \18\ A resting order with an MTS Modifier that becomes an Aggressing Order would trade consistent with proposed Rule 7.31- E(i)(3)(E) and therefore would trade with individual orders that each meet the MTS. --------------------------------------------------------------------------- Proposed Rules 7.31-E(i)(3)(E)(i)-(ii) would set forth additional requirements for how a resting order with an MTS Modifier would trade. Proposed Rule 7.31-E(i)(3)(E)(i) would provide that if an Aggressing Order to sell (buy) does not meet the MTS of the resting order to buy (sell) with an MTS Modifier, that Aggressing Order would not trade with and may trade through such order with an MTS Modifier. This proposed rule text is based on the fifth sentence of current Rule 7.31- E(d)(3)(D) and the second sentence of current Rule 7.31-E(d)(4)(C) with non-substantive differences to use common terminology when applying this requirement to all of the order types eligible for an MTS Modifier. Proposed Rule 7.31-E(i)(3)(E)(i) is based on NYSE American Rule 7.31E(i)(3)(E)(i) with a non-substantive difference to use the term ``Aggressing Order.'' Proposed Rule 7.31-E(i)(3)(E)(ii) would provide that if a resting non-displayed sell (buy) order did not meet the MTS of a same-priced resting order [[Page 3042]] to buy (sell) with an MTS Modifier, a subsequently arriving sell (buy) order that meets the MTS would trade ahead of such resting non- displayed sell (buy) order at that price. This proposed rule text is based in part on the second sentence of Rule 7.31-E(d)(4)(C) with non- substantive differences to use common terminology when applying this requirement to all of the order types eligible for an MTS Modifier. This proposed rule text is also based in part on NYSE American Rule 7.31E(i)(3)(E)(ii). However, the Exchange proposes a difference from current text and the NYSE American Rule to add that the subsequently arriving order could trade ahead of a resting non-displayed order at that price, e.g., at the internal locking price. This proposed behavior is consistent with the proposed amendment to MPL-ALO Orders, described above in proposed Rule 7.31-E(d)(3)(E)(ii). In addition, as discussed above, pursuant to proposed Rule 7.31-E(i)(3)(C)(i), if an order with an MTS Modifier is locked by a displayed order, the resting order with an MTS Modifier would not be eligible to trade at that price. In such case, the subsequently arriving order would not trade with the order with an MTS Modifier. Proposed Rule 7.31-E(i)(3)(F) would provide that a resting order with an MTS Modifier would be cancelled if it is traded in part or reduced in size and the remaining quantity is less than such order's MTS. This proposed rule text is based on the last sentence of Rule 7.31-E(d)(3)(D) and the last sentence of Rule 7.31-E(d)(4)(C) with non- substantive differences to use common terminology when applying this requirement to all of the order types eligible for an MTS Modifier. Proposed Rule 7.31-E(i)(3)(F) is based on NYSE American Rule 7.31E(i)(3)(F) without any differences Because of the technology changes associated with these proposed rule change, the Exchange will announce the implementation date of this proposed rule change by Trader Update. The Exchange anticipates that the implementation date will be in the first quarter of 2018. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\19\ in general, and furthers the objectives of Section 6(b)(5),\20\ 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. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b). \20\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed definition of ``Aggressing Order'' in Rule 7.36-E would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, protect investors and the public interest because it would provide for a definition in Exchange rules that describes orders that are or become marketable. The Exchange believes that the proposed definition would promote transparency in Exchange rules by providing detail regarding circumstances when a resting order may become marketable, and thus would be an Aggressing Order. The Exchange further believes that use of such definition would promote clarity in Exchange rules, particularly in the context of the amendments to MPL Orders and orders with an MTS Modifier. The Exchange believes that the proposed amendments to Rule 7.31- E(d)(3)(C) and (E) to use the term ``Aggressing Order'' and to describe the prices at which an Aggressing MPL Order would trade would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, protect investors and the public interest because it would promote clarity and transparency in Exchange rules regarding the behavior of marketable MPL and MPL-ALO Orders. In particular, the rule would provide greater specificity regarding how a resting MPL Order that becomes an Aggressing Order would trade. The Exchange believes that the proposed amendments to Rule 7.31- E(d)(3)(E) regarding when a resting MPL-ALO Order that locks contra- side, same-priced orders would be eligible to trade would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, protect investors and the public interest because it would describe circumstances when a subsequently arriving order could trade with the MPL-ALO Order. The proposed rule change would protect displayed orders by not allowing a subsequently arriving order to trade ahead of a same-priced, same-side displayed order. The Exchange believes that the proposed amendment to describe the existing MTS Modifier in proposed Rule 7.31-E(i)(3) would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, protect investors and the public interest because it would promote transparency in Exchange rules because MTS Modifiers for different order types operate in the same manner. The Exchange believes that by consolidating such references in a single location in Rule 7.31-E, the rule will be easier for members, the Commission, and the public to navigate. Finally, the Exchange believes that the proposal regarding when a resting order with an MTS Modifier would be eligible to trade would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, protect investors and the public interest, because the proposed rule change would ensure that there would not be an execution of a resting order with an MTS Modifier that either would be inconsistent with intra-market price priority or would result in a non-displayed order trading ahead of a same-side, same-priced displayed order. This proposed rule change would therefore promote just and equitable principles of trade by ensuring that displayed interest does not get traded through by a non-displayed order. 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 Exchange believes that the proposed rule change is not designed to address any competitive issues, but rather to add further clarity to Exchange rules by defining the term ``Aggressing Order,'' using that term in connection with MPL Orders, and consolidating references to MTS Modifiers in a single location in Exchange rules. In addition, the rule is designed to ensure that resting orders with trading restrictions, such as MPL-ALO Orders and resting orders with an MTS Modifier, would not trade through displayed orders or violate intra-market price priority. 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. [[Page 3043]] III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \21\ and Rule 19b- 4(f)(6) thereunder.\22\ --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(A). \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or 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-NYSEArca-2018-01 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-NYSEArca-2018-01. 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-NYSEArca-2018-01 and should be submitted on or before February 12, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-00975 Filed 1-19-18; 8:45 am] BILLING CODE 8011-01-P
![3038 Federal Register / Vol. 83, No. 14 / Monday, January 22, 2018 / Notices
subparagraph (f)(6) of Rule 19b–4 Electronic Comments SECURITIES AND EXCHANGE
thereunder.9 COMMISSION
• Use the Commission’s internet
A proposed rule change filed under
comment form (http://www.sec.gov/
Rule 19b–4(f)(6) normally does not [Release No. 34–82504; File No. SR–
rules/sro.shtml); or
become operative for 30 days after the NYSEArca–2018–01]
date of its filing. However, Rule 19b– • Send an email to rule-comments@
4(f)(6)(iii) 10 permits the Commission to sec.gov. Please include File Number SR– Self-Regulatory Organizations; NYSE
designate a shorter time if such action Phlx–2018–06 on the subject line. Arca, Inc.; Notice of Filing and
is consistent with the protection of Immediate Effectiveness of Proposed
Paper Comments
investors and the public interest. The Rule Change To Amend Rule 7.31–E
Exchange has requested that the • Send paper comments in triplicate Relating to Mid-Point Liquidity Orders
Commission waive the 30-day operative to Secretary, Securities and Exchange and the Minimum Trade Size Modifier
delay so that the proposed rule change Commission, 100 F Street NE, and Rule 7.36–E To Add a Definition of
will become operative on filing. The Washington, DC 20549–1090. ‘‘Aggressing Order’’
Exchange stated that the proposed rule
change promotes the protection of All submissions should refer to File January 16, 2018.
investors and the public interest by Number SR–Phlx–2018–06. This file Pursuant to Section 19(b)(1) 1 of the
improving the organization and number should be included on the Securities Exchange Act of 1934 (the
readability of the Exchange’s rules. subject line if email is used. To help the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
Waiver of the operative delay would Commission process and review your notice is hereby given that, on January
allow the Exchange, without delay, to comments more efficiently, please use 3, 2018, NYSE Arca, Inc. (the
continue to amend other sections of only one method. The Commission will ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
Rule 1080 for improved readability, post all comments on the Commission’s the Securities and Exchange
therefore, the Commission believes that internet website (http://www.sec.gov/ Commission (the ‘‘Commission’’) the
waiver of the 30-day operative delay is rules/sro.shtml). Copies of the proposed rule change as described in
consistent with the protection of submission, all subsequent Items I and II below, which Items have
investors and the public interest. amendments, all written statements
Accordingly, the Commission hereby been prepared by the self-regulatory
with respect to the proposed rule organization. The Commission is
waives the operative delay and change that are filed with the
designates the proposed rule change publishing this notice to solicit
Commission, and all written comments on the proposed rule change
operative upon filing.11
communications relating to the from interested persons.
At any time within 60 days of the proposed rule change between the
filing of such proposed rule change, the Commission and any person, other than I. Self-Regulatory Organization’s
Commission summarily may those that may be withheld from the Statement of the Terms of Substance of
temporarily suspend such rule change if public in accordance with the the Proposed Rule Change
it appears to the Commission that such provisions of 5 U.S.C. 552, will be
action is necessary or appropriate in the The Exchange proposes to amend
available for website viewing and Rule 7.31–E relating to Mid-Point
public interest, for the protection of
printing in the Commission’s Public Liquidity Orders and the Minimum
investors, or otherwise in furtherance of
Reference Room, 100 F Street NE, Trade Size modifier and Rule 7.36–E to
the purposes of the Act. If the
Commission takes such action, the Washington, DC 20549 on official add a definition of ‘‘Aggressing Order.’’
Commission shall institute proceedings business days between the hours of The proposed rule change is available
to determine whether the proposed rule 10:00 a.m. and 3:00 p.m. Copies of the on the Exchange’s website at
change should be approved or filing also will be available for www.nyse.com, at the principal office of
disapproved. inspection and copying at the principal the Exchange, and at the Commission’s
office of the Exchange. All comments Public Reference Room.
IV. Solicitation of Comments received will be posted without change.
Persons submitting comments are II. Self-Regulatory Organization’s
Interested persons are invited to
cautioned that we do not redact or edit Statement of the Purpose of, and
submit written data, views, and
personal identifying information from Statutory Basis for, the Proposed Rule
arguments concerning the foregoing,
including whether the proposed rule comment submissions. You should Change
change is consistent with the Act. submit only information that you wish In its filing with the Commission, the
Comments may be submitted by any of to make available publicly. All self-regulatory organization included
the following methods: submissions should refer to File statements concerning the purpose of,
Number SR–Phlx–2018–06, and should and basis for, the proposed rule change
9 17 CFR 240.19b-4(f)(6). In addition, Rule 19b– be submitted on or before February 12, and discussed any comments it received
4(f)(6) requires a self-regulatory organization to give 2018.
the Commission written notice of its intent to file on the proposed rule change. The text
the proposed rule change, along with a brief For the Commission, by the Division of of those statements may be examined at
description and text of the proposed rule change, Trading and Markets, pursuant to delegated the places specified in Item IV below.
at least five business days prior to the date of filing authority.12 The Exchange has prepared summaries,
ethrower on DSK3G9T082PROD with NOTICES
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange Eduardo A. Aleman, set forth in sections A, B, and C below,
has satisfied this requirement. Assistant Secretary. of the most significant parts of such
10 17 CFR 240.19b–4(f)(6)(iii).
[FR Doc. 2018–00976 Filed 1–19–18; 8:45 am] statements.
11 For purposes only of waiving the 30-day
operative delay, the Commission also has BILLING CODE 8011–01–P
1 15 U.S.C. 78s(b)(1).
considered the proposed rule’s impact on
2 15 U.S.C. 78a.
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f). 12 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4.
VerDate Sep<11>2014 19:00 Jan 19, 2018 Jkt 244001 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 E:\FR\FM\22JAN1.SGM 22JAN1](https://thefederalregister.org/doc/83_FR_3052/page/1.svg)
![Federal Register / Vol. 83, No. 14 / Monday, January 22, 2018 / Notices 3039
A. Self-Regulatory Organization’s Orders,5 and Tracking Orders.6 As such, which they are marketable. However,
Statement of the Purpose of, and the the MTS modifier is currently available there are circumstances when a resting
Statutory Basis for, the Proposed Rule only for orders that are not displayed order may become marketable, such as
Change and do not route. On arrival, both Limit orders that become eligible to trade
IOC Orders and MPL Orders with an when a PBBO unlocks or uncrosses (e.g.,
1. Purpose
MTS modifier will trade against contra- MPL and Pegged Orders) or orders that
Mid-Point Liquidity (‘‘MPL’’) Orders side orders in the NYSE Arca Book that have a trading restriction at specified
and the Minimum Trade Size (‘‘MTS’’) in the aggregate, meet the MTS.7 Once prices (e.g., as discussed in greater
modifier and Rule 7.36–E (Order resting, MPL Orders and Tracking
Ranking and Display) to add a definition detail below, MPL–ALO Orders or
Orders with an MTS modifier function
of ‘‘Aggressing Order.’’ [sic] For MPL orders with an MTS Modifier). To
similarly: If a contra-side order does not
Orders, the Exchange proposes to maximize the potential for orders to
meet the MTS, the incoming order will
amend the price at which a marketable not trade with and may trade through trade, the Exchange continually
MPL Order would trade when there are the resting order with the MTS modifier. evaluates whether resting orders may
resting orders priced better than the In addition, both MPL Orders and become marketable. Events that could
midpoint. The Exchange further Tracking Orders with an MTS modifier trigger a resting order to become
proposes to amend functionality related will be cancelled if such orders are marketable include updates to the
to MPL–ALO Orders to describe how traded in part or reduced in size and the working price of such order, updates to
orders would trade if an MPL–ALO remaining quantity is less than the MTS. the PBBO or NBBO, changes to other
Order locks contra-side same-priced orders on the NYSE Arca Book, or
interest on the NYSE Arca Book. For Proposed Definition of ‘‘Aggressing
processing of inbound messages (e.g., an
MTS, the Exchange proposes to move all Order’’
update to Price Bands under the
discussion relating to the MTS modifier The Exchange proposes to amend Regulation NMS Plan to Address
to new sub-paragraph (i)(3) of Rule Rule 7.36–E to add a definition that Extraordinary Market Volatility). To
7.31–E and in so doing, amend how would be used for purposes of Rule address such circumstances, the
resting orders with an MTS modifier 7–E. Proposed Rule 7.36–E(a)(5) would Exchange proposes to include in
would trade in specified circumstances. define the term ‘‘Aggressing Order’’ to proposed Rule 7.36–E(a)(5) that a resting
Background mean a buy (sell) order that is or order may become an Aggressing Order
becomes marketable against sell (buy)
As provided for in current Rule 7.31– if its working price changes, if the PBBO
interest on the NYSE Arca Book.8 This
E(d)(3)(C), on arrival, an MPL Order to or NBBO is updated, because of changes
term would therefore refer to orders that
buy (sell) that is eligible to trade will to other orders on the NYSE Arca Book,
are marketable against other orders on
trade with resting orders to sell (buy) the NYSE Arca Book, such as incoming or when processing inbound messages.
with a working price at or below (above) orders and orders that have returned The order that becomes the
the midpoint of the PBBO (i.e., priced unexecuted after routing. Aggressing Order is the liquidity-taking
better than the midpoint of the PBBO). This term would also be applicable to order. Generally, if resting orders on
The rule further provides that resting resting orders that become marketable both sides are determined to be an
MPL Orders to buy (sell) will trade at due to one or more events. For the most Aggressing Order, e.g., a locked PBBO
the midpoint of the PBBO against all part, resting orders will have already becomes unlocked and as a result, MPL
incoming orders to sell (buy) priced at traded with contra-side orders against Orders are repriced, the later-arriving
or below (above) the midpoint of the
PBBO (i.e., priced better than the order will be the liquidity-taking order.9
5 See Rule 7.31–E(d)(3)(D) (‘‘An MPL Order may
midpoint of the PBBO). be designated with an MTS of a minimum of one
However, if the evaluation results in
Current Rule 7.31–E(d)(3)(F) provides round lot and will be rejected on arrival if the MTS only one side becoming an Aggressing
that an MPL Order may be designated is larger than the size of the MPL Order. On arrival, Order, e.g., an order with an MTS
an MPL Order to buy (sell) with an MTS will trade Modifier becomes eligible to trade and
with an ALO Modifier (an ‘‘MPL–ALO with sell (buy) orders in the NYSE Arca Book that
Order’’) and that on arrival, an MPL– in the aggregate, meets its MTS. If the sell (buy) the contra-side order(s) have no working
ALO Order to buy (sell) will trade with orders do not meet the MTS, the MPL Order to buy price changes, the order with the MTS
resting orders to sell (buy) with a (sell) will not trade on arrival and will be ranked Modifier would become the liquidity-
in the NYSE Arca Book. Once resting, an MPL
working price below (above) the Order to buy (sell) with an MTS will trade with an
taking Aggressing Order. As described
midpoint of the PBBO, but will not order to sell (buy) that meets the MTS and is priced below, the Exchange proposes to use the
trade with resting orders to sell (buy) at or below (above) the midpoint of the PBBO. If term ‘‘Aggressing Order’’ in the rule text
priced at the midpoint of the PBBO. The an order does not meet an MPL Order’s MTS, the
order will not trade with and may trade through
relating to the MTS Modifier and the
rule further provides that a resting such MPL Order. If an MPL Order with an MTS is MPL–ALO Order. Because an
MPL–ALO Order to buy (sell) will trade traded in part or reduced in size and the remaining Aggressing Order becomes a liquidity
with an arriving order to sell (buy) that quantity of the order is less than the MTS, the MPL taker, such term could be applicable to
is eligible to trade at the midpoint of the Order will be cancelled.’’)
6 See Rule 7.31–E(d)(4)(C) (‘‘A Tracking Order other circumstances. For example, an
PBBO. order with a Non-Display Remove
may be designated with an MTS of one round lot
The MTS modifier is currently or more. If an incoming order cannot meet the MTS, Modifier that trades as a liquidity taker
available for Limit IOC Orders,4 MPL a Tracking Order with a later working time will would also be considered an Aggressing
trade ahead of the Tracking Order designated with
4 See Rule 7.31–E(b)(2)(A) (‘‘A Limit IOC Order to an MTS with an earlier working time. If a Tracking Order. However, at this time, the
Exchange does not propose to amend its
ethrower on DSK3G9T082PROD with NOTICES
buy (sell) may be designated with a minimum trade Order with an MTS is traded in part or reduced in
size (‘‘MTS’’), which will trade against sell (buy) size and the remaining quantity is less than the rules to use the term ‘‘Aggressing
orders in the NYSE Arca Book that in the aggregate, MTS, the Tracking Order will be cancelled.’’)
7 Tracking Orders, including Tracking Orders Order’’ because the rule already
meets its MTS. On entry, a Limit IOC Order with
an MTS must have a minimum of one round lot and with an MTS modifier, are passive orders that do specifies which order is the liquidity
will be rejected on arrival if the MTS is larger than not trade on arrival. See Rule 7.31–E(d)(4)(A). taker.
the size of the Limit IOC Order. A Limit IOC Order 8 The term ‘‘marketable’’ is defined in Rule 1.1(y)
with an MTS that cannot be immediately traded at to mean for a Limit Order, an order than [sic] can
its minimum size will be cancelled in its entirety.’’) be immediately executed or routed. 9 See, e.g., Rule 7.31–E(d)(3)(B).
VerDate Sep<11>2014 19:00 Jan 19, 2018 Jkt 244001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\22JAN1.SGM 22JAN1](https://thefederalregister.org/doc/83_FR_3052/page/2.svg)
![3040 Federal Register / Vol. 83, No. 14 / Monday, January 22, 2018 / Notices
Proposed Amendments Relating to MPL The Exchange also proposes to amend priced resting order to sell (buy), a
and MPL–ALO Orders the rule governing MPL–ALO Orders to subsequently arriving order to sell (buy)
The Exchange proposes to amend the make similar changes. Currently, MPL– eligible to trade at the midpoint would
first sentence of current Rule 7.31– ALO Orders are described in Rule 7.31– trade ahead of a resting order to sell
E(d)(3)(C) to make this text applicable to E(d)(3)(F). Because of changes described (buy) that is not displayed at that price.
any marketable MPL Order, and not just below relating to MTS, as proposed, Accordingly, if an MPL–ALO Order
an arriving MPL Order. To effect this MPL–ALO Orders would be described locks a non-displayed order, such
change, the Exchange proposes to use in Rule 7.31–E(d)(3)(E). resting MPL–ALO Order can trade at
the term ‘‘Aggressing Order’’ and In amending proposed Rule 7.31– that price with a subsequent order.
replace the phrase ‘‘[o]n arrival, an MPL E(d)(3)(E), the Exchange proposes to By contrast, the second sentence of
Order to buy (sell) that is eligible to break the current rule text into three proposed Rule 7.31–E(d)(3)(E)(ii) would
trade’’ with the phrase, ‘‘[a]n Aggressing sub-paragraphs. The first sentence of provide that if such resting order to sell
MPL Order to buy (sell).’’ current Rule 7.31–E(d)(3)(F), which (buy) is displayed, the MPL–ALO Order
The Exchange also proposes to amend provides that an MPL Order may be to buy (sell) would not be eligible to
the first sentence of current Rule 7.31– designated with an ALO Modifier, trade at that price. Accordingly, if an
E(d)(3)(C) to describe at what price an would follow Rule 7.31–E(d)(3)(E). The MPL–ALO Order locks a displayed
Aggressing MPL Order would trade with current second sentence of Rule 7.31– order, such resting MPL–ALO Order
contra-side resting orders that are priced E(d)(3)(F) would be set forth in would not be eligible to trade at that
better than the midpoint. The rule proposed Rule 7.31–E(d)(3)(E)(i). The price with any interest. The Exchange
currently provides that an arriving MPL Exchange proposes to amend this rule in proposes to treat displayed orders
Order to buy (sell) would trade with the same manner that it is proposing to locked by an MPL–ALO Order
resting orders to sell (buy) with a amend the first sentence of Rule 7.31– differently to avoid having non-
working price at or below (above) the E(d)(3)(C), described above. In addition, displayed orders trade ahead of a same-
midpoint of the PBBO. The Exchange the Exchange proposes a non- priced, same-side displayed order.
proposes to specify that when an substantive, clarifying amendment to
Proposed Amendments Relating to MTS
Aggressing MPL Order trades with add that an arriving MPL–ALO Order
resting orders priced better than the would trade with a contra-side same- The Exchange proposes to consolidate
midpoint, it will trade at the working priced order that has been designated all references to MTS modifiers in Rule
price of the resting orders, which is with a Non-Display Remove Modifier, 7.31–E in proposed Rule 7.31–E(i)(3) as
current functionality. For example, if which is current functionality. a new additional order instruction and
the PBB is 10.10 and the midpoint is Accordingly, proposed Rule 7.31– modifier to be referred to as the
10.13, and there are non-displayed sell E(d)(3)(E)(i) would provide that an ‘‘Minimum Trade Size (‘MTS’)
orders of 100 shares with working prices Aggressing MPL–ALO Order to buy (sell) Modifier.’’ As proposed, Rule 7.31–
of 10.11 and 10.12, an Aggressing MPL will trade with resting orders to sell E(i)(3) would provide that a Limit IOC
Order to buy with a limit of 10.13 for (buy) with a working price below Order, MPL Order, or Tracking Order
200 shares would trade with such non- (above) the midpoint of the PBBO at the may be designated with an MTS
displayed sell orders at 10.11 and 10.12, working price of the resting orders, but Modifier, which is existing
respectively. The Exchange believes that will not trade with resting orders to sell functionality. Because this proposed
this proposed amendment would (buy) priced at the midpoint of the rule would specify which orders would
promote transparency in Exchange rules PBBO unless such resting order is be eligible for the MTS Modifier, the
regarding at what price an Aggressing designated with a Non-Display Remove Exchange proposes to delete existing
MPL Order would trade. Modifier pursuant to paragraph (d)(3)(F) rule text specifying which orders are
By using the term ‘‘Aggressing of this Rule (proposed new text and are not eligible for an MTS
Order,’’ this rule would be applicable to italicized).10 Modifier.12 Proposed Rule 7.31–E(i)(3)
a resting MPL Order that becomes Because an Aggressing MPL–ALO is based in part on NYSE American Rule
marketable, such as after a PBBO Order does not trade with resting 7.31E(i)(3).
unlocks or uncrosses. In the above contra-side orders priced at the Proposed Rule 7.31–E(i)(3)(A) would
example, if the MPL Order to buy is midpoint of the PBBO (unless the provide that an MTS must be a
ineligible to trade because of a crossed resting order has the Non-Display minimum of a round lot and that an
PBBO, and while the PBBO is crossed, Remove Modifier), the Exchange order with an MTS Modifier would be
the Exchange receives the two non- proposes to specify the circumstances of rejected if the MTS is less than a round
displayed sell orders, when the PBBO when an MPL–ALO Order would be lot or if the MTS is larger than the size
uncrosses and the new midpoint is eligible to trade if it locks contra-side of the order. This proposed rule text is
10.13, the resting MPL Order would orders, which would differ depending based on the next-to-last sentence of
become an Aggressing Order and would on whether the contra-side order is current Rule 7.31–E(b)(2)(A) and the
trade with the non-displayed sell orders displayed.11 The first sentence of first sentence of current Rule 7.31–
at 10.11 and 10.12, respectively. Proposed Rule 7.31–E(d)(3)(E)(ii) would E(d)(3)(D), and in part on the first
The Exchange also proposes to amend provide that if an MPL–ALO Order to sentence of current Rule 7.31–E(d)(4)(C),
the second sentence of Rule 7.31– buy (sell) cannot trade with a same- with non-substantive differences to use
E(d)(3)(C) to replace the term ‘‘incoming common terminology when applying
10 A resting MPL–ALO Order that becomes an
orders’’ with the term ‘‘Aggressing
ethrower on DSK3G9T082PROD with NOTICES
Aggressing Order would trade consistent with 12 The Exchange proposes to delete references to
Orders.’’ This proposed rule change proposed Rule 7.31–E(d)(3)(E)(i) and therefore MTS in Rules 7.31–E(b)(2)(A), 7.31–E(b)(2)(B),
would provide greater specificity that would trade with contra-side orders priced better 7.31–E(d)(3)(D), 7.31–E(d)(4)(C), 7.31–E(e)(3)(B),
any contra-side order that is an than the midpoint, but would not trade at the and 7.46–E(f)(1)(A). As noted above, because
Aggressing Order, as defined in midpoint unless such order had a Non-Display current Rule 7.31–E(d)(3)(D) would be deleted in its
Remove Modifier. entirety, the remaining sub-paragraphs of Rule
proposed Rule 7.36–E(a)(5), would trade 11 A displayed odd-lot order that is not included 7.31–E(d)(3) would be renumbered accordingly. In
with a resting MPL Order at the in the calculation of the PBBO could be at the same addition, current Rule 7.31–E(d)(4)(C) would be
midpoint of the PBBO. price as an MPL Order. deleted in its entirety.
VerDate Sep<11>2014 19:00 Jan 19, 2018 Jkt 244001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\22JAN1.SGM 22JAN1](https://thefederalregister.org/doc/83_FR_3052/page/3.svg)
![Federal Register / Vol. 83, No. 14 / Monday, January 22, 2018 / Notices 3043
III. Date of Effectiveness of the All submissions should refer to File STATUS: This meeting will be closed to
Proposed Rule Change and Timing for Number SR–NYSEArca–2018–01. This the public.
Commission Action file number should be included on the MATTERS TO BE CONSIDERED:
Because the proposed rule change subject line if email is used. To help the Commissioners, Counsel to the
does not: (i) Significantly affect the Commission process and review your Commissioners, the Secretary to the
protection of investors or the public comments more efficiently, please use Commission, and recording secretaries
interest; (ii) impose any significant only one method. The Commission will will attend the closed meeting. Certain
burden on competition; and (iii) become post all comments on the Commission’s staff members who have an interest in
operative prior to 30 days from the date internet website (http://www.sec.gov/ the matters also may be present.
on which it was filed, or such shorter rules/sro.shtml). Copies of the The General Counsel of the
time as the Commission may designate, submission, all subsequent Commission, or his designee, has
the proposed rule change has become amendments, all written statements certified that, in his opinion, one or
effective pursuant to Section 19(b)(3)(A) with respect to the proposed rule more of the exemptions set forth in 5
of the Act 21 and Rule 19b–4(f)(6) change that are filed with the U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
thereunder.22 Commission, and all written and (10) and 17 CFR 200.402(a)(3),
At any time within 60 days of the communications relating to the (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and
filing of the proposed rule change, the proposed rule change between the (a)(10), permit consideration of the
Commission summarily may Commission and any person, other than scheduled matters at the closed meeting.
temporarily suspend such rule change if those that may be withheld from the Commissioner Piwowar, as duty
it appears to the Commission that such public in accordance with the officer, voted to consider the items
action is necessary or appropriate in the provisions of 5 U.S.C. 552, will be listed for the closed meeting in closed
public interest, for the protection of available for website viewing and session.
investors, or otherwise in furtherance of printing in the Commission’s Public The subject matters of the closed
the purposes of the Act. If the Reference Room, 100 F Street NE, meeting will be:
Commission takes such action, the Washington, DC 20549 on official
business days between the hours of Settlement of injunctive actions;
Commission shall institute proceedings Institution and settlement of
to determine whether the proposed rule 10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for administrative proceedings; and
change should be approved or
inspection and copying at the principal Other matters relating to enforcement
disapproved.
office of the Exchange. All comments proceedings.
IV. Solicitation of Comments received will be posted without change. At times, changes in Commission
Interested persons are invited to Persons submitting comments are priorities require alterations in the
submit written data, views, and cautioned that we do not redact or edit scheduling of meeting items.
arguments concerning the foregoing, personal identifying information from CONTACT PERSON FOR MORE INFORMATION:
including whether the proposed rule comment submissions. You should For further information and to ascertain
change is consistent with the Act. submit only information that you wish what, if any, matters have been added,
Comments may be submitted by any of to make available publicly. All deleted or postponed; please contact
the following methods: submissions should refer to File Brent J. Fields from the Office of the
Number SR–NYSEArca–2018–01 and Secretary at (202) 551–5400.
Electronic Comments
should be submitted on or before
• Use the Commission’s internet Dated: January 17, 2018.
February 12, 2018.
comment form (http://www.sec.gov/ Brent J. Fields,
For the Commission, by the Division of Secretary.
rules/sro.shtml); or Trading and Markets, pursuant to delegated
• Send an email to rule-comments@ authority.23 [FR Doc. 2018–01164 Filed 1–18–18; 4:15 pm]
sec.gov. Please include File Number SR– Eduardo A. Aleman, BILLING CODE 8011–01–P
NYSEArca–2018–01 on the subject line.
Assistant Secretary.
Paper Comments [FR Doc. 2018–00975 Filed 1–19–18; 8:45 am]
SECURITIES AND EXCHANGE
• Send paper comments in triplicate BILLING CODE 8011–01–P COMMISSION
to Secretary, Securities and Exchange
Commission, 100 F Street NE, [Release No. 34–82503; File Nos. SR–
Washington, DC 20549–1090. SECURITIES AND EXCHANGE
BatsBYX–2017–11; SR–BatsBZX–2017–38;
COMMISSION
SR–BatsEDGA–2017–13; SR–BatsEDGX–
21 15 U.S.C. 78s(b)(3)(A). 2017–22; SR–BOX–2017–16; SR–BX–2017–
22 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
Sunshine Act Meetings
023; SR–C2–2017–017; SR–CBOE–2017–
4(f)(6)(iii) requires a self-regulatory organization to 040; SR–CHX–2017–08; SR–FINRA–2017–
give the Commission written notice of its intent to TIME AND DATE: 2:00 p.m. on Wednesday,
011; SR–GEMX–2017–17; SR–IEX–2017–16;
file the proposed rule change, along with a brief January 24, 2018.
description and the text of the proposed rule
SR–ISE–2017–45; SR–MIAX–2017–18; SR–
PLACE: Closed Commission Hearing MRX–2017–04; SR–NASDAQ–2017–046;
change, at least five business days prior to the date
of filing of the proposed rule change, or such Room 10800. SR–NYSE–2017–22; SR–NYSEArca–2017–
shorter time as designated by the Commission. The 52; SR–NYSEMKT–2017–26; SR–PEARL–
Exchange has satisfied this requirement. 23 17 CFR 200.30–3(a)(12). 2017–20; SR–PHLX–2017–37]
ethrower on DSK3G9T082PROD with NOTICES
VerDate Sep<11>2014 19:00 Jan 19, 2018 Jkt 244001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 E:\FR\FM\22JAN1.SGM 22JAN1](https://thefederalregister.org/doc/83_FR_3052/page/6.svg)
Document Created: 2018-01-23 21:35:39
Document Modified: 2018-01-23 21:35:39
| 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 3038 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR