83 FR 63919 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rules 6.62-O and 6.37A-O To Add New Order Types and Quotation Designations
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 238 (December 12, 2018)
Federal Register Volume 83, Issue 238 (December 12, 2018)
| Page Range | 63919-63922 | |
| FR Document | 2018-26833 |
[Federal Register Volume 83, Number 238 (Wednesday, December 12, 2018)] [Notices] [Pages 63919-63922] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-26833] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84737; File No. SR-NYSEArca-2018-74] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rules 6.62-O and 6.37A-O To Add New Order Types and Quotation Designations December 6, 2018. I. Introduction On October 5, 2018, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (``Commission'') pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend NYSE Arca Rules 6.62-O (Certain Types of Orders Defined) and 6.37A-O (Market Maker Quotations) to add new order types and quotation designations. The proposed rule change was published for comment in the Federal Register on October 24, 2018.\3\ On December 4, 2018, the Exchange filed Amendment No. 1 to the proposed rule change.\4\ The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 1. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 84451 (October 18, 2018), 83 FR 53692 (``Notice''). \4\ In Amendment No. 1, the Exchange made technical corrections to cross references in the proposed rule text. Because Amendment No. 1 does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, it is not subject to notice and comment. The amendment is available at: https://www.sec.gov/comments/sr-nysearca-2018-74/srnysearca201874.htm. --------------------------------------------------------------------------- II. Description of the Proposal, as Modified by Amendment No. 1 A. Order Types Currently, Rule 6.62-O sets forth the order types available on the Exchange, including Liquidity Adding Orders (each an ``ALO'') and PNP (Post No Preference) Orders, both of which provide market participants control over how their orders interact with contra-side liquidity. Specifically, an ALO is a [[Page 63920]] Limit Order that is rejected if it is marketable against the NBBO on arrival.\5\ A PNP Order is a Limit Order that is eligible to interact solely with interest on the Exchange, will not route, and will cancel if it locks or crosses the NBBO.\6\ The Exchange proposes to amend Rule 6.62-O to add two order types that build on the existing ALO and PNP Order functionality to allow for repricing (rather than cancellation or rejection of orders) under certain circumstances. --------------------------------------------------------------------------- \5\ See Rule 6.62-O(t) (providing that ``a Liquidity Adding Order is a Limit Order which is to be accepted only if it is not executable at the time of receipt. Orders with the liquidity adding instruction will not be routed if marketable against the NBBO, but will be rejected. Liquidity adding orders may only be entered as a Day Order''). The Exchange proposes to modify paragraph (t) of this Rule to define Liquidity Adding Orders as ``ALOs'' and make conforming changes to the Rule. See proposed Rule 6.62-O(t). The Exchange also proposes to modify the Rule to reflect that ``[a]n ALO or RALO, as defined in paragraph (t)(1) of this Rule, will be rejected if entered outside of Core Trading Hours or during a trading halt or, if resting, will be cancelled in the event of a trading halt.'' See id. \6\ See Rule 6.62-O(p) (providing that a PNP Order ``is a Limit Order to buy or sell that is to be executed in whole or in part on the Exchange, and the portion not so executed is to be ranked in the Consolidated Book, without routing any portion of the order to another market center; provided, however, the Exchange shall cancel a PNP Order that would lock or cross the NBBO''). The Exchange proposes to capitalize the ``Market Center'' as used in paragraph (p) of the Rule, which is a defined term in Rule 6.1A-O(6). See proposed Rule 6.62-O(p). --------------------------------------------------------------------------- 1. Repricing ALO (``RALO'') The Exchange proposes to provide market participants the ability to send in ALOs designated as RALO.\7\ As proposed, a RALO will be repriced (rather than be rejected) if it would either trade as the liquidity taker or display at a price that locks or crosses any interest on the Exchange or the NBBO.\8\ Specifically, an incoming RALO to buy (sell) that would trade with any displayed or undisplayed sell (buy) interest on the Consolidated Book will be displayed at a price one minimum price variation (``MPV'') below (above) such sell (buy) interest.\9\ An incoming RALO to buy (sell) that is not marketable against interest in the Consolidated Book but that would lock or cross the NBO (NBB) will be displayed at a price that is one MPV below (above) the NBO (NBB).\10\ If the sell (buy) interest in the Consolidated Book or NBO (NBB) moves up (down), the display price of the RALO to buy (sell) and the undisplayed price at which it is eligible to trade will be continuously adjusted, up (down) to the RALO's limit price.\11\ --------------------------------------------------------------------------- \7\ See proposed Rule 6.62-O(t)(1). The Exchange also proposes that a RALO that is designated as a Reserve Order will be rejected. See id. \8\ See id. \9\ See proposed Rule 6.62-O(t)(1)(A). \10\ See id. \11\ See id. --------------------------------------------------------------------------- A resting RALO to buy (sell) that is displayed one MPV below (above) interest on the Consolidated Book would be eligible to trade at its display price.\12\ A resting RALO to buy (sell) that is displayed at a price one MPV below (above) the NBO (NBB) would be eligible to trade at the NBO (NBB); provided, however, that if the NBO (NBB) updates to lock or cross the RALO's display price, such RALO will trade at its display price in time priority behind other eligible interest already displayed at that price.\13\ Each time there is an update to the price of the RALO, the Exchange will rank the RALO by time priority behind other eligible interest already at that price.\14\ If multiple RALOs simultaneously reprice to the same price at which they are eligible to trade, the RALOs will be prioritized based on the time of original order entry.\15\ Furthermore, an incoming RALO will be cancelled if its limit price to buy (sell) is more than a configurable number of MPVs above (below) the initial display price (on arrival), after first trading with eligible interest, if any.\16\ The Exchange will determine the configurable number of MPVs, which will be announced by Trader Update.\17\ --------------------------------------------------------------------------- \12\ See proposed Rule 6.62-O(t)(1)(A)(i). \13\ See proposed Rule 6.62-O(t)(1)(A)(ii). \14\ See proposed Rule 6.62-O(t)(1)(A)(iii). \15\ See id. \16\ See proposed Rule 6.62-O(t)(1)(B). \17\ See id. --------------------------------------------------------------------------- 2. Repricing PNP Order (``RPNP'') The Exchange proposes to provide market participants the ability to send in PNP Orders designated as RPNP.\18\ As proposed, a RPNP is a PNP Order that will be repriced instead of cancelled after trading with interest in the Consolidated Book, if it would lock or cross the NBBO.\19\ Specifically, a RPNP to buy (sell) that would lock or cross the NBO (NBB) will be displayed at a price one MPV below (above) the NBO (NBB).\20\ If the NBO (NBB) moves up (down), the display price of the RPNP to buy (sell) and the undisplayed price at which it is eligible to trade will be continuously adjusted, up (down) to the limit price of the RPNP.\21\ --------------------------------------------------------------------------- \18\ See proposed Rule 6.62-O(p)(1). The Exchange proposes that a RPNP received during pre-open or a trading halt will be treated as a PNP Order (i.e., as a Limit Order and will not reprice) for purposes of participating in opening auctions or re-opening auctions. See proposed Rule 6.62-O(p). A RPNP may only be entered as a Day Order and a RPNP that is designated as a Reserve Order will be rejected. See proposed Rule 6.62-O(p)(1). \19\ See id. \20\ See proposed Rule 6.62-O (p)(1)(A). \21\ See id. --------------------------------------------------------------------------- A RPNP to buy (sell) that is displayed at a price one MPV below (above) the NBO (NBB) will trade at the NBO (NBB); provided, however, that if the NBO (NBB) updates to lock or cross the RPNP's display price, such RPNP will trade at its display price in time priority behind other eligible interest already displayed at that price.\22\ Each time there is an update to the price of the RPNP, the Exchange will rank the RPNP by time priority behind other eligible interest already at that price.\23\ If multiple RPNPs simultaneously reprice to the same price at which they are eligible to trade, the RPNPs will be prioritized based on the time of original order entry.\24\ Similar to the proposed RALO, an incoming RPNP will be cancelled if its limit price to buy (sell) is more than a configurable number of MPVs above (below) the initial display price (on arrival), after first trading with eligible interest, if any. The Exchange will determine the configurable number of MPVs, which will be announced by Trader Update. --------------------------------------------------------------------------- \22\ See proposed Rule 6.62-O(p)(1)(A)(i). \23\ See proposed Rule 6.62-O(p)(1)(A)(ii). \24\ See id. --------------------------------------------------------------------------- B. Quotation Designations Currently, Rule 6.37A-O(a) defines Market Maker quotes, including quotations designated as Market Maker--Light Only (``MMLO''), and specifies how such quotes are processed when a series is open for trading. The Exchange proposes to amend Rule 6.37A-O(a) to add two new quote designations to provide Market Makers with the same functionality for their quotations as are proposed for orders designated as RALO and RPNP entered on the Exchange.\25\ --------------------------------------------------------------------------- \25\ See Notice, supra note 3, at 53695. The Exchange represents that the proposed quotation designations would function similar to the proposed RALO and RPNP. See id. --------------------------------------------------------------------------- 1. Market Maker--Add Liquidity Only Quotation (``MMALO'') The Exchange proposes to provide Market Makers the ability to designate quotations as MMALO.\26\ An incoming or resting MMALO will never trade as the liquidity taker or display at a price that locks or crosses any interest on the Exchange or the NBBO.\27\ Instead of [[Page 63921]] trading, an MMALO will be repriced based on contra-side interest pursuant to proposed Rule 6.37A-O(a)(4)(A).\28\ Specifically, an incoming MMALO to buy (sell) that would trade with any sell (buy) interest on the Consolidated Book will be displayed at a price one MPV below (above) such sell (buy) interest.\29\ An incoming MMALO to buy (sell) that is not marketable against interest in the Consolidated Book but that would lock or cross the NBO (NBB) will be displayed at a price that is one MPV below (above) the NBO (NBB).\30\ If the sell (buy) interest in the Consolidated Book or NBO (NBB) moves up (down), the display price of the MMALO to buy (sell) and the undisplayed price at which it is eligible to trade will be continuously adjusted, up (down) to the MMALO's limit price.\31\ --------------------------------------------------------------------------- \26\ See proposed Rule 6.37A-O(a)(3)(B) and (a)(4)(A)(i). The Exchange proposes to delete a reference to MMLO in paragraph (a)(4) and proposes to separately describe the treatment of the various quote types when a series is open for trading. See proposed Rule 6.37A-O(a)(4). \27\ Because incoming quotations, other than an MMALO, would immediately ``trade with contra-side interest in the Consolidated Book at prices that do not trade through interest on another Market Center,'' the Exchange proposes to modify the rule to carve out incoming MMALOs. See proposed Rule 6.37A-O(a)(4)(A). The Exchange also proposes to replace references to ``another Market Center'' with ``the NBBO'' to add clarity and consistency to the Rule. See id. See also proposed Rule 6.37A-O(a)(4)(C)(i),(D)(i)-(ii). \28\ See proposed Rule 6.37A-O(a)(3)(B). \29\ See proposed Rule 6.37A-O(a)(4)(A)(i). \30\ See id. \31\ See id. --------------------------------------------------------------------------- Similar to the proposed RALO, a resting MMALO to buy (sell) that is displayed one MPV below (above) interest on the Consolidated Book will trade at its display price.\32\ A resting MMALO to buy (sell) that is displayed at a price one MPV below (above) the NBO (NBB) will trade at the NBO (NBB); provided, however, that if the NBO (NBB) updates to lock or cross the MMALO's display price, such MMALO will trade at its display price in time priority behind other eligible interest already displayed at that price.\33\ Each time there is an update to the MMALO's price, the Exchange will rank the MMALO by time priority behind other eligible interest already at that price.\34\ If multiple MMALOs simultaneously reprice to the same price at which they are eligible to trade, the MMALOs will be prioritized based on the time of original order entry.\35\ --------------------------------------------------------------------------- \32\ See proposed Rule 6.37A-O(a)(4)(A)(i)(a). \33\ See proposed Rule 6.37A-O(a)(4)(A)(i)(b). \34\ See proposed Rule 6.37A-O(a)(4)(A)(i)(c). \35\ See id. --------------------------------------------------------------------------- To incorporate MMALO (and MMRP discussed below) into existing rule text, the Exchange proposes to amend Rule 6.37A-O by re-organizing and re-numbering related rule text regarding the treatment of untraded incoming quotations. Specifically, the Exchange proposes to provide that ``[a]ny untraded quantity of an incoming quotation will be added to the Consolidated Book, except in the circumstances specified below, which result in the remaining balance being cancelled,'' \36\ including when the incoming quotation ``is not designated as MMALO or MMRP'' and locks or crosses the NBBO and when it is designated as MMLO and locks or crosses undisplayed interest.\37\ Similarly, the Exchange proposes to modify Rule 6.37A-O(a)(4) to provide that an incoming quotation that locks or crosses the NBBO would be rejected, so long as ``it is not designated as MMALO or MMRP'' and cannot trade with interest in the Consolidated Book at prices that do not trade through the NBBO.\38\ --------------------------------------------------------------------------- \36\ See proposed Rule 6.37A-O(a)(4)(C). \37\ See proposed Rule 6.37A-O(a)(4)(C)(i) and (ii). \38\ See proposed Rule 6.37A-O(a)(4)(D)(i). --------------------------------------------------------------------------- An incoming quotation will be rejected, and the Exchange will cancel the Market Maker's current quotation on the same side of the market, if it is designated as MMALO, and has a limit price to buy (sell) that is more than a configurable number of MPVs above (below) the initial display price of the MMALO.\39\ The Exchange will determine the configurable number of MPVs, which will be announced by Trader Update. --------------------------------------------------------------------------- \39\ See proposed Rule 6.37A-O(a)(4)(D)(iii). The Exchange notes that incoming MMALOs that fail the MPV check are rejected while similarly-priced RALOs would be accepted and then cancelled. See Notice, supra note 3, at 53696, n.24. The Exchange also proposes to re-locate rule text that is currently at the end of this provision to the beginning, such that the Rules states that ``[a]n incoming quotation will be rejected, and the Exchange will cancel the Market Maker's current quotation on the same side of the market, if:''. See proposed Rule 6.37A-O(a)(4)(D). --------------------------------------------------------------------------- 2. Market Maker--Repricing Quotation (``MMRP'') The Exchange proposes to provide Market Makers the ability to designate quotations as MMRP.\40\ An incoming or resting quotation designated as MMRP will never display at a price that locks or crosses the NBBO.\41\ Instead, after trading with interest in the Consolidated Book, an incoming MMRP to buy (sell) that locks or crosses the NBO (NBB) will be displayed at a price that is one MPV below (above) the NBO (NBB).\42\ If the NBO (NBB) moves up (down), the display price of the MMRP to buy (sell) and the undisplayed price at which it is eligible to trade would be continuously adjusted, up (down) to the MMRP's limit price.\43\ --------------------------------------------------------------------------- \40\ See proposed Rule 6.37A-O(a)(3)(C) and (a)(4)(B). \41\ See proposed Rule 6.37A-O(a)(3)(C). \42\ See proposed Rule 6.37A-O(a)(4)(B). \43\ See id. --------------------------------------------------------------------------- Similar to the proposed RPNP, an MMRP to buy (sell) that is displayed at a price one MPV below (above) the NBO (NBB) will trade at the NBO (NBB); provided, however, that if the NBO (NBB) updates to lock or cross the MMRP's display price, such MMRP will trade at its display price in time priority behind other eligible interest already displayed at that price.\44\ Each time there is an update to the price of the MMRP, the Exchange will rank the MMRP by time priority behind other eligible interest already at that price.\45\ If multiple MMRPs simultaneously reprice to the same price at which they are eligible to trade, the MMRPs will be prioritized based on the time of original order entry.\46\ --------------------------------------------------------------------------- \44\ See proposed Rule 6.37A-O(a)(4)(B)(i). \45\ See proposed Rule 6.37A-O(a)(4)(B)(ii). \46\ See id. --------------------------------------------------------------------------- An incoming MMRP that has a limit price more than a configurable number of MPVs above (below) the initial display price (on arrival) will first trade with marketable interest in the Consolidated Book up (down) to the NBO (NBB) and any remaining balance will be cancelled.\47\ Similarly, the Exchange will reject an incoming MMRP that does not trade (i.e., because there is no marketable interest in the Consolidated Book) and has a limit price to buy (sell) that is more than a configurable number of MPVs above (below) the initial display price (on arrival) of the MMRP.\48\ The Exchange will determine the configurable number of MPVs, which will be announced by Trader Update.\49\ --------------------------------------------------------------------------- \47\ See proposed Rule 6.37A-O(a)(4)(C)(iii). \48\ See proposed Rule 6.37A-O(a)(4)(D). The Exchange notes that incoming MMRPs that fail the MPV check are rejected while similarly- priced RPNPs would be accepted and then cancelled. See Notice, supra note 3, at 53696, n.32. \49\ Because the MMRP is cancelled, the Exchange would also cancel the opposite-side quote for that Market Maker. See proposed Rule 6.37A-O(a)(4)(C) (providing, ``[w]hen such quantity of an incoming quotation is cancelled, the Exchange will also cancel the Market Maker's current quotation on the opposite side of the market''). --------------------------------------------------------------------------- When a series is not open for trading (i.e., during pre-open or a trading halt), a Market Maker may submit an MMRP, which will be eligible to participate in the opening auction and re-opening auction, as applicable, at the limit price of the MMRP.\50\ All resting quotations will be cancelled in the event of a trading halt.\51\ --------------------------------------------------------------------------- \50\ See proposed Rule 6.37A-O(a)(5). \51\ See id. --------------------------------------------------------------------------- To reflect the proposed quotation designations in Rule 6.37A-O, the Exchange proposes to re-organize paragraph (a) of the Rule by re- locating rule text stating that ``a quotation will [[Page 63922]] not route'' from existing paragraph (a)(3)(D) to paragraph (a)(2); adding new paragraph (a)(3) to provide that ``[a] Market Maker may designate a quote as follows''; and re-numbering the remainder of the paragraph to account for such changes.\52\ In addition, the Exchange proposes to renumber the description of an MMLO as paragraph (a)(3)(A), and amend the rule text to provide that on arrival, a quotation designated MMLO will trade with displayed interest in the Consolidated Book only.\53\ Once resting, the MMLO designation no longer applies and such quotation is eligible to trade with displayed and undisplayed interest.\54\ --------------------------------------------------------------------------- \52\ See proposed Rule 6.37A-O(a)(2)-(3). \53\ See proposed Rule 6.37A-O(a)(3)(A). \54\ See id. --------------------------------------------------------------------------- Implementation The Exchange states that it will announce by Trader Update the implementation date of the proposed rule change within 90 days of the effective date of this proposed rule change.\55\ --------------------------------------------------------------------------- \55\ See Notice, supra note 3, at 53697. --------------------------------------------------------------------------- III. Discussion and Commission's Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act,\56\ and the rules and regulations thereunder applicable to a national securities exchange.\57\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\58\ which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating 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, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \56\ 15 U.S.C. 78(f). \57\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \58\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission believes that by providing market participants with two new order types that build on the existing ALO and PNP Order functionality to allow for repricing instead of cancellation or rejection of orders under certain circumstances, the proposed rule change could give market participants greater flexibility and control over the circumstances under which their orders interact with contra side-interest on the Exchange. By increasing the opportunities for execution at multiple price points and encouraging the provision of greater displayed liquidity to the market, the proposal is reasonably designed to facilitate the mechanism of price discovery. The Commission also believes that ranking a repriced RALO or repriced RPNP behind other interest already eligible to trade at a price, as well as ranking such orders that simultaneously reprice to the same price by time of original order entry, is reasonably designed to preserve the principles of priority and therefore promote just and equitable principles of trade. Finally, the Commission notes other options exchanges offer similar order types as proposed by the Exchange.\59\ --------------------------------------------------------------------------- \59\ See Notice, supra note 3, at 53697, n.39 (citing Nasdaq Options Market Chapter VI Trading Systems, Sec. 1(e)(11) and Nasdaq PHLX LLC Rule 1080(m)(iv)(A)). --------------------------------------------------------------------------- The Commission notes that the proposal to add the two new quotation designations is designed to provide Market Makers with the same functionality for their quotations as are proposed for orders entered on the Exchange. The proposed quotation designations are similar to how the proposed RALO and RPNP will function and may enable Market Makers to exert greater control over how their quotes would interact with contra-side liquidity, while affording additional opportunities to provide liquidity to the market. The Commission notes that, absent the proposed repricing functionality associated with the MMALO and MMRP, a Market Maker quote that locks or crosses interest on the Exchange or an away market will reject or cancel. In the case of MMALOs, the proposal is reasonably designed to promote the display of liquidity because such quotations would be displayed at the next-best aggressive price instead of being cancelled. The Commission believes that the proposal will also ensure that an MMALO will always add liquidity as maker, rather than remove liquidity as taker, while ensuring that MMALOs priced too far through the contra-side interest on the Exchange or the NBBO will be rejected. As such, the proposed MMALO could assist Market Makers in maintaining a fair and orderly market and encourage Market Makers to provide displayed liquidity to the market, thus contributing to price discovery. In the case of MMRPs, the proposal may afford Market Makers more certainty when providing liquidity, while ensuring that MMRPs priced too far through the contra-side NBBO will cancel or reject after trading with any eligible interest on the Exchange. The Commission believes that ranking the repriced MMALO or repriced MMRP by time priority behind other interest already available to trade at a price preserves principles of priority and therefore would promote just and equitable principles of trade. Further, the Commission believes that the proposed quotation designations are reasonably designed to provide Market Makers with a greater level of determinism, in terms of managing their exposure, and thus could encourage more aggressive liquidity provision, resulting in more trading opportunities and tighter spreads. This may help improve the mechanism of price discovery. Moreover, the Commission notes that other options exchanges have adopted quote types designed to strengthen market making.\60\ --------------------------------------------------------------------------- \60\ See Notice, supra note 3, at 53698, n.45 (citing Miami International Securities Exchange, LLC Rule 515(d) and BOX Options Exchange LLC IM-8050-3). --------------------------------------------------------------------------- For the reasons discussed above, the Commission believes that the proposed rule change, as modified by Amendment No. 1, is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\61\ that the proposed rule change (SR-NYSEArca-2018-74), as modified by Amendment No. 1, be, and it hereby is, approved. --------------------------------------------------------------------------- \61\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\62\ --------------------------------------------------------------------------- \62\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-26833 Filed 12-11-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices 63919
exempt any person, security, or Federal Register on July 3, 2018.3 On For the Commission, by the Division of
transaction, or any class or classes of August 14, 2018, pursuant to Section Trading and Markets, pursuant to delegated
persons, securities, or transactions, from 19(b)(2) of the Act,4 the Commission authority.10
any provision of section 12(d)(1) if the designated a longer period within which Eduardo A. Aleman,
exemption is consistent with the public to approve the proposed rule change, Assistant Secretary.
interest and the protection of investors. disapprove the proposed rule change, or [FR Doc. 2018–26829 Filed 12–11–18; 8:45 am]
Section 17(b) of the Act authorizes the institute proceedings to determine BILLING CODE 8011–01–P
Commission to grant an order whether to disapprove the proposed
permitting a transaction otherwise rule change.5
prohibited by section 17(a) if it finds On September 24, 2018, the SECURITIES AND EXCHANGE
that (a) the terms of the proposed Commission instituted proceedings COMMISSION
transaction are fair and reasonable and under Section 19(b)(2)(B) of the Act 6 to [Release No. 34–84737; File No. SR–
do not involve overreaching on the part determine whether to approve or NYSEArca–2018–74]
of any person concerned; (b) the disapprove the proposed rule change.7
proposed transaction is consistent with The Commission has received no Self-Regulatory Organizations; NYSE
the policies of each registered comment letters on the proposed rule Arca, Inc.; Order Approving a
investment company involved; and (c) change. Proposed Rule Change, as Modified by
the proposed transaction is consistent Section 19(b)(2) of the Act 8 provides Amendment No. 1, To Amend Rules
with the general purposes of the Act. that after initiating disapproval 6.62–O and 6.37A–O To Add New Order
Section 6(c) of the Act permits the Types and Quotation Designations
proceedings, the Commission shall issue
Commission to exempt any persons or
an order approving or disapproving the December 6, 2018.
transactions from any provision of the
proposed rule change not later than 180
Act if such exemption is necessary or I. Introduction
days after the date of publication of
appropriate in the public interest and
notice of filing of the proposed rule On October 5, 2018, NYSE Arca, Inc.
consistent with the protection of
change. The Commission may extend (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
investors and the purposes fairly
the period for issuing an order with the Securities and Exchange
intended by the policy and provisions of
approving or disapproving the proposed Commission (‘‘Commission’’) pursuant
the Act.
rule change, however, by not more than to Section 19(b)(1) of the Securities
For the Commission, by the Division of 60 days if the Commission determines Exchange Act of 1934 (‘‘Act’’) 1 and Rule
Investment Management, pursuant to that a longer period is appropriate and 19b–4 thereunder,2 a proposed rule
delegated authority. change to amend NYSE Arca Rules
publishes reasons for such
Eduardo A. Aleman, 6.62–O (Certain Types of Orders
determination. The proposed rule
Assistant Secretary. change was published for notice and Defined) and 6.37A–O (Market Maker
[FR Doc. 2018–26795 Filed 12–11–18; 8:45 am] comment in the Federal Register on July Quotations) to add new order types and
BILLING CODE 8011–01–P 3, 2018. December 30, 2018, is 180 days quotation designations. The proposed
from that date, and February 28, 2019, rule change was published for comment
is 240 days from that date. in the Federal Register on October 24,
SECURITIES AND EXCHANGE 2018.3 On December 4, 2018, the
The Commission finds it appropriate
COMMISSION Exchange filed Amendment No. 1 to the
to designate a longer period within
[Release No. 34–84732; File No. SR– which to issue an order approving or proposed rule change.4 The Commission
NYSEArca–2018–40] disapproving the proposed rule change received no comment letters on the
so that it has sufficient time to consider proposed rule change. This order
Self–Regulatory Organizations; NYSE this proposed rule change. Accordingly, approves the proposed rule change, as
Arca, Inc.; Notice of Designation of a the Commission, pursuant to Section modified by Amendment No. 1.
Longer Period for Commission Action 19(b)(2) of the Act,9 designates February
on Proceedings To Determine Whether II. Description of the Proposal, as
28, 2019, as the date by which the Modified by Amendment No. 1
To Approve or Disapprove a Proposed Commission shall either approve or
Rule Change Regarding Investments of disapprove the proposed rule change A. Order Types
the REX BKCM ETF (File No.SR–NYSEArca–2018–40). Currently, Rule 6.62–O sets forth the
December 6, 2018. order types available on the Exchange,
On June 26, 2018, NYSE Arca, Inc. 3 See Securities Exchange Act Release No. 83546 including Liquidity Adding Orders
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed (June 28, 2018), 83 FR 31214 (July 3, 2018). (each an ‘‘ALO’’) and PNP (Post No
4 15 U.S.C. 78s(b)(2).
with the Securities and Exchange Preference) Orders, both of which
5 See Securities Exchange Act Release No. 83844
Commission (‘‘Commission’’), pursuant provide market participants control over
(Aug. 14, 2018), 83 FR 42178 (Aug. 20, 2018).
to Section 19(b)(1) of the Securities 6 15 U.S.C. 78s(b)(2)(B).
how their orders interact with contra-
Exchange Act of 1934 (‘‘Act’’) 1 and Rule 7 See Securities Exchange Act Release No. 84275 side liquidity. Specifically, an ALO is a
19b–4 thereunder,2 a proposed rule (Sept. 24, 2018), 83 FR 49142 (Sept. 28, 2018).
change seeking to modify certain Specifically, the Commission instituted proceedings 1 15 U.S.C. 78s(b)(1).
to allow for additional analysis of the proposed rule 2 17 CFR 240.19b–4.
investments of the REX BKCM ETF, a change’s consistency with Section 6(b)(5) of the 3 See Securities Exchange Act Release No. 84451
series of the Exchange Listed Funds Act, which requires among other things, that the (October 18, 2018), 83 FR 53692 (‘‘Notice’’).
Trust, the shares of which are currently
amozie on DSK3GDR082PROD with NOTICES1
rules of a national securities exchange be ‘‘designed 4 In Amendment No. 1, the Exchange made
listed and traded on the Exchange under to prevent fraudulent and manipulative acts and technical corrections to cross references in the
NYSE Arca Rule 8.600–E, Managed practices, to promote just and equitable principles proposed rule text. Because Amendment No. 1 does
of trade,’’ and ‘‘to protect investors and the public not materially alter the substance of the proposed
Fund Shares. The proposed rule change interest.’’ See id. at 49143 (citing 15 U.S.C. rule change or raise unique or novel regulatory
was published for comment in the 78f(b)(5)). issues, it is not subject to notice and comment. The
8 15 U.S.C. 78s(b)(2).
amendment is available at: https://www.sec.gov/
1 15 U.S.C. 78s(b)(1). 9 Id.
comments/sr-nysearca-2018-74/srnyse
2 17 CFR 240.19b–4. 10 17 CFR 200.30–3(a)(57). arca201874.htm.
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![63920 Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices
Limit Order that is rejected if it is which it is eligible to trade will be continuously adjusted, up (down) to the
marketable against the NBBO on continuously adjusted, up (down) to the limit price of the RPNP.21
arrival.5 A PNP Order is a Limit Order RALO’s limit price.11 A RPNP to buy (sell) that is displayed
that is eligible to interact solely with A resting RALO to buy (sell) that is at a price one MPV below (above) the
interest on the Exchange, will not route, displayed one MPV below (above) NBO (NBB) will trade at the NBO (NBB);
and will cancel if it locks or crosses the interest on the Consolidated Book provided, however, that if the NBO
NBBO.6 The Exchange proposes to would be eligible to trade at its display (NBB) updates to lock or cross the
amend Rule 6.62–O to add two order price.12 A resting RALO to buy (sell) RPNP’s display price, such RPNP will
types that build on the existing ALO that is displayed at a price one MPV trade at its display price in time priority
and PNP Order functionality to allow below (above) the NBO (NBB) would be behind other eligible interest already
for repricing (rather than cancellation or eligible to trade at the NBO (NBB); displayed at that price.22 Each time
rejection of orders) under certain provided, however, that if the NBO there is an update to the price of the
circumstances. (NBB) updates to lock or cross the RPNP, the Exchange will rank the RPNP
1. Repricing ALO (‘‘RALO’’) RALO’s display price, such RALO will by time priority behind other eligible
trade at its display price in time priority interest already at that price.23 If
The Exchange proposes to provide multiple RPNPs simultaneously reprice
market participants the ability to send behind other eligible interest already
displayed at that price.13 Each time to the same price at which they are
in ALOs designated as RALO.7 As eligible to trade, the RPNPs will be
proposed, a RALO will be repriced there is an update to the price of the
RALO, the Exchange will rank the prioritized based on the time of original
(rather than be rejected) if it would order entry.24 Similar to the proposed
either trade as the liquidity taker or RALO by time priority behind other
eligible interest already at that price.14 RALO, an incoming RPNP will be
display at a price that locks or crosses cancelled if its limit price to buy (sell)
any interest on the Exchange or the If multiple RALOs simultaneously
reprice to the same price at which they is more than a configurable number of
NBBO.8 Specifically, an incoming MPVs above (below) the initial display
RALO to buy (sell) that would trade are eligible to trade, the RALOs will be
prioritized based on the time of original price (on arrival), after first trading with
with any displayed or undisplayed sell eligible interest, if any. The Exchange
(buy) interest on the Consolidated Book order entry.15 Furthermore, an incoming
RALO will be cancelled if its limit price will determine the configurable number
will be displayed at a price one of MPVs, which will be announced by
minimum price variation (‘‘MPV’’) to buy (sell) is more than a configurable
number of MPVs above (below) the Trader Update.
below (above) such sell (buy) interest.9
An incoming RALO to buy (sell) that is initial display price (on arrival), after B. Quotation Designations
not marketable against interest in the first trading with eligible interest, if
Currently, Rule 6.37A–O(a) defines
Consolidated Book but that would lock any.16 The Exchange will determine the
Market Maker quotes, including
or cross the NBO (NBB) will be configurable number of MPVs, which
quotations designated as Market
displayed at a price that is one MPV will be announced by Trader Update.17
Maker—Light Only (‘‘MMLO’’), and
below (above) the NBO (NBB).10 If the 2. Repricing PNP Order (‘‘RPNP’’) specifies how such quotes are processed
sell (buy) interest in the Consolidated when a series is open for trading. The
Book or NBO (NBB) moves up (down), The Exchange proposes to provide Exchange proposes to amend Rule
the display price of the RALO to buy market participants the ability to send 6.37A–O(a) to add two new quote
(sell) and the undisplayed price at in PNP Orders designated as RPNP.18 As designations to provide Market Makers
proposed, a RPNP is a PNP Order that with the same functionality for their
5 See Rule 6.62–O(t) (providing that ‘‘a Liquidity
will be repriced instead of cancelled quotations as are proposed for orders
Adding Order is a Limit Order which is to be
accepted only if it is not executable at the time of
after trading with interest in the designated as RALO and RPNP entered
receipt. Orders with the liquidity adding instruction Consolidated Book, if it would lock or on the Exchange.25
will not be routed if marketable against the NBBO, cross the NBBO.19 Specifically, a RPNP
but will be rejected. Liquidity adding orders may to buy (sell) that would lock or cross the 1. Market Maker—Add Liquidity Only
only be entered as a Day Order’’). The Exchange Quotation (‘‘MMALO’’)
proposes to modify paragraph (t) of this Rule to NBO (NBB) will be displayed at a price
define Liquidity Adding Orders as ‘‘ALOs’’ and one MPV below (above) the NBO The Exchange proposes to provide
make conforming changes to the Rule. See proposed (NBB).20 If the NBO (NBB) moves up Market Makers the ability to designate
Rule 6.62–O(t). The Exchange also proposes to (down), the display price of the RPNP
modify the Rule to reflect that ‘‘[a]n ALO or RALO,
quotations as MMALO.26 An incoming
as defined in paragraph (t)(1) of this Rule, will be to buy (sell) and the undisplayed price or resting MMALO will never trade as
rejected if entered outside of Core Trading Hours or at which it is eligible to trade will be the liquidity taker or display at a price
during a trading halt or, if resting, will be cancelled that locks or crosses any interest on the
in the event of a trading halt.’’ See id.
6 See Rule 6.62–O(p) (providing that a PNP Order
11 See id. Exchange or the NBBO.27 Instead of
12 See proposed Rule 6.62–O(t)(1)(A)(i).
‘‘is a Limit Order to buy or sell that is to be 13 See proposed Rule 6.62–O(t)(1)(A)(ii). 21 See id.
executed in whole or in part on the Exchange, and
14 See proposed Rule 6.62–O(t)(1)(A)(iii). 22 See
the portion not so executed is to be ranked in the proposed Rule 6.62–O(p)(1)(A)(i).
15 See id.
Consolidated Book, without routing any portion of 23 See proposed Rule 6.62–O(p)(1)(A)(ii).
the order to another market center; provided, 16 See proposed Rule 6.62–O(t)(1)(B). 24 See id.
however, the Exchange shall cancel a PNP Order 17 See id. 25 See Notice, supra note 3, at 53695. The
that would lock or cross the NBBO’’). The Exchange 18 See proposed Rule 6.62–O(p)(1). The Exchange Exchange represents that the proposed quotation
proposes to capitalize the ‘‘Market Center’’ as used proposes that a RPNP received during pre-open or designations would function similar to the
in paragraph (p) of the Rule, which is a defined
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a trading halt will be treated as a PNP Order (i.e., proposed RALO and RPNP. See id.
term in Rule 6.1A–O(6). See proposed Rule 6.62– as a Limit Order and will not reprice) for purposes 26 See proposed Rule 6.37A–O(a)(3)(B) and
O(p). of participating in opening auctions or re-opening (a)(4)(A)(i). The Exchange proposes to delete a
7 See proposed Rule 6.62–O(t)(1). The Exchange
auctions. See proposed Rule 6.62–O(p). A RPNP reference to MMLO in paragraph (a)(4) and
also proposes that a RALO that is designated as a may only be entered as a Day Order and a RPNP proposes to separately describe the treatment of the
Reserve Order will be rejected. See id. that is designated as a Reserve Order will be various quote types when a series is open for
8 See id. rejected. See proposed Rule 6.62–O(p)(1). trading. See proposed Rule 6.37A–O(a)(4).
9 See proposed Rule 6.62–O(t)(1)(A). 19 See id. 27 Because incoming quotations, other than an
10 See id. 20 See proposed Rule 6.62–O (p)(1)(A). MMALO, would immediately ‘‘trade with contra-
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![Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices 63921
trading, an MMALO will be repriced quotation will be added to the Similar to the proposed RPNP, an
based on contra-side interest pursuant Consolidated Book, except in the MMRP to buy (sell) that is displayed at
to proposed Rule 6.37A–O(a)(4)(A).28 circumstances specified below, which a price one MPV below (above) the NBO
Specifically, an incoming MMALO to result in the remaining balance being (NBB) will trade at the NBO (NBB);
buy (sell) that would trade with any sell cancelled,’’ 36 including when the provided, however, that if the NBO
(buy) interest on the Consolidated Book incoming quotation ‘‘is not designated (NBB) updates to lock or cross the
will be displayed at a price one MPV as MMALO or MMRP’’ and locks or MMRP’s display price, such MMRP will
below (above) such sell (buy) interest.29 crosses the NBBO and when it is trade at its display price in time priority
An incoming MMALO to buy (sell) that designated as MMLO and locks or behind other eligible interest already
is not marketable against interest in the crosses undisplayed interest.37 displayed at that price.44 Each time
Consolidated Book but that would lock Similarly, the Exchange proposes to there is an update to the price of the
or cross the NBO (NBB) will be modify Rule 6.37A–O(a)(4) to provide MMRP, the Exchange will rank the
displayed at a price that is one MPV that an incoming quotation that locks or MMRP by time priority behind other
below (above) the NBO (NBB).30 If the crosses the NBBO would be rejected, so eligible interest already at that price.45
sell (buy) interest in the Consolidated long as ‘‘it is not designated as MMALO If multiple MMRPs simultaneously
Book or NBO (NBB) moves up (down), or MMRP’’ and cannot trade with reprice to the same price at which they
the display price of the MMALO to buy interest in the Consolidated Book at are eligible to trade, the MMRPs will be
(sell) and the undisplayed price at prices that do not trade through the prioritized based on the time of original
which it is eligible to trade will be NBBO.38 order entry.46
continuously adjusted, up (down) to the An incoming quotation will be An incoming MMRP that has a limit
MMALO’s limit price.31 rejected, and the Exchange will cancel price more than a configurable number
Similar to the proposed RALO, a the Market Maker’s current quotation on of MPVs above (below) the initial
resting MMALO to buy (sell) that is the same side of the market, if it is display price (on arrival) will first trade
displayed one MPV below (above) designated as MMALO, and has a limit with marketable interest in the
interest on the Consolidated Book will price to buy (sell) that is more than a Consolidated Book up (down) to the
trade at its display price.32 A resting configurable number of MPVs above NBO (NBB) and any remaining balance
MMALO to buy (sell) that is displayed (below) the initial display price of the will be cancelled.47 Similarly, the
at a price one MPV below (above) the MMALO.39 The Exchange will Exchange will reject an incoming
NBO (NBB) will trade at the NBO (NBB); determine the configurable number of MMRP that does not trade (i.e., because
provided, however, that if the NBO MPVs, which will be announced by there is no marketable interest in the
(NBB) updates to lock or cross the Trader Update. Consolidated Book) and has a limit
MMALO’s display price, such MMALO 2. Market Maker—Repricing Quotation price to buy (sell) that is more than a
will trade at its display price in time (‘‘MMRP’’) configurable number of MPVs above
priority behind other eligible interest (below) the initial display price (on
already displayed at that price.33 Each The Exchange proposes to provide
Market Makers the ability to designate arrival) of the MMRP.48 The Exchange
time there is an update to the MMALO’s will determine the configurable number
price, the Exchange will rank the quotations as MMRP.40 An incoming or
resting quotation designated as MMRP of MPVs, which will be announced by
MMALO by time priority behind other Trader Update.49
eligible interest already at that price.34 will never display at a price that locks
or crosses the NBBO.41 Instead, after When a series is not open for trading
If multiple MMALOs simultaneously (i.e., during pre-open or a trading halt),
reprice to the same price at which they trading with interest in the Consolidated
Book, an incoming MMRP to buy (sell) a Market Maker may submit an MMRP,
are eligible to trade, the MMALOs will which will be eligible to participate in
be prioritized based on the time of that locks or crosses the NBO (NBB) will
be displayed at a price that is one MPV the opening auction and re-opening
original order entry.35 auction, as applicable, at the limit price
To incorporate MMALO (and MMRP below (above) the NBO (NBB).42 If the
NBO (NBB) moves up (down), the of the MMRP.50 All resting quotations
discussed below) into existing rule text, will be cancelled in the event of a
the Exchange proposes to amend Rule display price of the MMRP to buy (sell)
and the undisplayed price at which it is trading halt.51
6.37A–O by re-organizing and re- To reflect the proposed quotation
numbering related rule text regarding eligible to trade would be continuously
adjusted, up (down) to the MMRP’s designations in Rule 6.37A–O, the
the treatment of untraded incoming Exchange proposes to re-organize
quotations. Specifically, the Exchange limit price.43
paragraph (a) of the Rule by re-locating
proposes to provide that ‘‘[a]ny rule text stating that ‘‘a quotation will
36 See proposed Rule 6.37A–O(a)(4)(C).
untraded quantity of an incoming 37 See proposed Rule 6.37A–O(a)(4)(C)(i) and (ii).
38 See proposed Rule 6.37A–O(a)(4)(D)(i). 44 See proposed Rule 6.37A–O(a)(4)(B)(i).
side interest in the Consolidated Book at prices that 39 See proposed Rule 6.37A–O(a)(4)(D)(iii). The 45 See proposed Rule 6.37A–O(a)(4)(B)(ii).
do not trade through interest on another Market 46 See id.
Exchange notes that incoming MMALOs that fail
Center,’’ the Exchange proposes to modify the rule
the MPV check are rejected while similarly-priced 47 See proposed Rule 6.37A–O(a)(4)(C)(iii).
to carve out incoming MMALOs. See proposed Rule
RALOs would be accepted and then cancelled. See 48 See proposed Rule 6.37A–O(a)(4)(D). The
6.37A–O(a)(4)(A). The Exchange also proposes to
Notice, supra note 3, at 53696, n.24. The Exchange Exchange notes that incoming MMRPs that fail the
replace references to ‘‘another Market Center’’ with
also proposes to re-locate rule text that is currently MPV check are rejected while similarly-priced
‘‘the NBBO’’ to add clarity and consistency to the
at the end of this provision to the beginning, such RPNPs would be accepted and then cancelled. See
Rule. See id. See also proposed Rule 6.37A–
that the Rules states that ‘‘[a]n incoming quotation Notice, supra note 3, at 53696, n.32.
O(a)(4)(C)(i),(D)(i)–(ii).
will be rejected, and the Exchange will cancel the
amozie on DSK3GDR082PROD with NOTICES1
49 Because the MMRP is cancelled, the Exchange
28 See proposed Rule 6.37A–O(a)(3)(B).
Market Maker’s current quotation on the same side would also cancel the opposite-side quote for that
29 See proposed Rule 6.37A–O(a)(4)(A)(i).
of the market, if:’’. See proposed Rule 6.37A– Market Maker. See proposed Rule 6.37A–O(a)(4)(C)
30 See id.
O(a)(4)(D). (providing, ‘‘[w]hen such quantity of an incoming
31 See id. 40 See proposed Rule 6.37A–O(a)(3)(C) and
quotation is cancelled, the Exchange will also
32 See proposed Rule 6.37A–O(a)(4)(A)(i)(a). (a)(4)(B). cancel the Market Maker’s current quotation on the
33 See proposed Rule 6.37A–O(a)(4)(A)(i)(b). 41 See proposed Rule 6.37A–O(a)(3)(C). opposite side of the market’’).
34 See proposed Rule 6.37A–O(a)(4)(A)(i)(c). 42 See proposed Rule 6.37A–O(a)(4)(B). 50 See proposed Rule 6.37A–O(a)(5).
35 See id. 43 See id. 51 See id.
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![63922 Federal Register / Vol. 83, No. 238 / Wednesday, December 12, 2018 / Notices
not route’’ from existing paragraph participants greater flexibility and more certainty when providing
(a)(3)(D) to paragraph (a)(2); adding new control over the circumstances under liquidity, while ensuring that MMRPs
paragraph (a)(3) to provide that ‘‘[a] which their orders interact with contra priced too far through the contra-side
Market Maker may designate a quote as side-interest on the Exchange. By NBBO will cancel or reject after trading
follows’’; and re-numbering the increasing the opportunities for with any eligible interest on the
remainder of the paragraph to account execution at multiple price points and Exchange. The Commission believes
for such changes.52 In addition, the encouraging the provision of greater that ranking the repriced MMALO or
Exchange proposes to renumber the displayed liquidity to the market, the repriced MMRP by time priority behind
description of an MMLO as paragraph proposal is reasonably designed to other interest already available to trade
(a)(3)(A), and amend the rule text to facilitate the mechanism of price at a price preserves principles of
provide that on arrival, a quotation discovery. The Commission also priority and therefore would promote
designated MMLO will trade with believes that ranking a repriced RALO just and equitable principles of trade.
displayed interest in the Consolidated or repriced RPNP behind other interest Further, the Commission believes that
Book only.53 Once resting, the MMLO already eligible to trade at a price, as the proposed quotation designations are
designation no longer applies and such well as ranking such orders that reasonably designed to provide Market
quotation is eligible to trade with simultaneously reprice to the same price Makers with a greater level of
displayed and undisplayed interest.54 by time of original order entry, is determinism, in terms of managing their
reasonably designed to preserve the exposure, and thus could encourage
Implementation
principles of priority and therefore more aggressive liquidity provision,
The Exchange states that it will promote just and equitable principles of resulting in more trading opportunities
announce by Trader Update the trade. Finally, the Commission notes and tighter spreads. This may help
implementation date of the proposed other options exchanges offer similar improve the mechanism of price
rule change within 90 days of the order types as proposed by the discovery. Moreover, the Commission
effective date of this proposed rule Exchange.59 notes that other options exchanges have
change.55 The Commission notes that the adopted quote types designed to
III. Discussion and Commission’s proposal to add the two new quotation strengthen market making.60
Findings designations is designed to provide For the reasons discussed above, the
Market Makers with the same Commission believes that the proposed
After careful review, the Commission functionality for their quotations as are rule change, as modified by Amendment
finds that the proposed rule change, as proposed for orders entered on the No. 1, is consistent with the Act.
modified by Amendment No. 1, is Exchange. The proposed quotation
consistent with the requirements of the designations are similar to how the IV. Conclusion
Act,56 and the rules and regulations proposed RALO and RPNP will function It is therefore ordered, pursuant to
thereunder applicable to a national and may enable Market Makers to exert Section 19(b)(2) of the Act,61 that the
securities exchange.57 In particular, the greater control over how their quotes proposed rule change (SR–NYSEArca–
Commission finds that the proposed would interact with contra-side 2018–74), as modified by Amendment
rule change is consistent with Section liquidity, while affording additional No. 1, be, and it hereby is, approved.
6(b)(5) of the Act,58 which requires, opportunities to provide liquidity to the
among other things, that the rules of a For the Commission, by the Division of
market. The Commission notes that, Trading and Markets, pursuant to delegated
national securities exchange be absent the proposed repricing authority.62
designed to promote just and equitable functionality associated with the
principles of trade, to foster cooperation Eduardo A. Aleman,
MMALO and MMRP, a Market Maker Assistant Secretary.
and coordination with persons engaged quote that locks or crosses interest on
in regulating transactions in securities, [FR Doc. 2018–26833 Filed 12–11–18; 8:45 am]
the Exchange or an away market will
to remove impediments to and perfect reject or cancel. In the case of MMALOs, BILLING CODE 8011–01–P
the mechanism of a free and open the proposal is reasonably designed to
market and a national market system promote the display of liquidity because
and, in general, to protect investors and SECURITIES AND EXCHANGE
such quotations would be displayed at COMMISSION
the public interest, and not be designed the next-best aggressive price instead of
to permit unfair discrimination between being cancelled. The Commission
customers, issuers, brokers, or dealers. believes that the proposal will also [Release No. 34–84741; File No. SR–ISE–
The Commission believes that by ensure that an MMALO will always add 2018–97]
providing market participants with two liquidity as maker, rather than remove
new order types that build on the Self-Regulatory Organizations; Nasdaq
liquidity as taker, while ensuring that ISE, LLC; Notice of Filing and
existing ALO and PNP Order MMALOs priced too far through the
functionality to allow for repricing Immediate Effectiveness of Proposed
contra-side interest on the Exchange or Rule Change To Amend
instead of cancellation or rejection of the NBBO will be rejected. As such, the
orders under certain circumstances, the Supplementary Material .02 to Rule 715
proposed MMALO could assist Market Regarding Cancel and Replace Orders
proposed rule change could give market Makers in maintaining a fair and orderly
52 See
market and encourage Market Makers to December 6, 2018.
proposed Rule 6.37A–O(a)(2)–(3).
53 See proposed Rule 6.37A–O(a)(3)(A).
provide displayed liquidity to the Pursuant to Section 19(b)(1) of the
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54 See id. market, thus contributing to price Securities Exchange Act of 1934
55 See Notice, supra note 3, at 53697. discovery. In the case of MMRPs, the
56 15 U.S.C. 78(f). proposal may afford Market Makers 60 See Notice, supra note 3, at 53698, n.45 (citing
57 In approving this proposed rule change, the Miami International Securities Exchange, LLC Rule
Commission has considered the proposed rule’s 59 See Notice, supra note 3, at 53697, n.39 (citing 515(d) and BOX Options Exchange LLC
impact on efficiency, competition, and capital Nasdaq Options Market Chapter VI Trading IM–8050–3).
formation. See 15 U.S.C. 78c(f). Systems, Sec. 1(e)(11) and Nasdaq PHLX LLC Rule 61 15 U.S.C. 78s(b)(2).
58 15 U.S.C. 78f(b)(5). 1080(m)(iv)(A)). 62 17 CFR 200.30–3(a)(12).
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Document Created: 2018-12-12 01:40:19
Document Modified: 2018-12-12 01:40:19
| 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 63919 |
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