Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Certain of Its Rules Related to Binary Return Derivatives Contracts, 6566-6568 [2016-02330]
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77014; File No. SR–
NYSEMKT–2016–16]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending Certain of Its
Rules Related to Binary Return
Derivatives Contracts
February 2, 2016.
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
27, 2016, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend
certain of its rules related to Binary
Return Derivatives contracts. The
proposed rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
certain of its rules related to Binary
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Return Derivatives contracts (‘‘ByRDs’’),
which the Exchange introduced in
2007.4
First, the Exchange proposes to add
Rule 953ByRDs to make clear that the
Exchange would halt or suspend trading
for a ByRDs contract to the same extent
that it halts or suspends trading under
Rule 953NY in an option contract on the
same underlying security.5 The current
ByRDs rules are silent regarding the
treatment of ByRDs during trading halts
and suspensions of options contracts.
The Exchange therefore believes that the
proposed change would add clarity and
transparency to Exchange rules and
would ensure consistent treatment of
ByRDs contracts in the event of a halt
or suspension of trading in options
contracts on the same underlying
security.
Next, the Exchange proposes to
modify Rule 903ByRDs(b) (Series of
ByRDs Open for Trading), which
currently provides that ‘‘[n]ew
expiration week series will be added for
trading on Thursday each week, unless
Friday is an Exchange holiday in which
case new expiration series would be
added for trading on Wednesday.’’ 6 The
Exchange proposes to revise this rule to
include instances when an Exchange
holiday falls on a Thursday.
Specifically, as revised, new series
would be added for trading ‘‘on
Thursday each week, unless Thursday
or Friday is an Exchange holiday in
which case new expiration series would
be added for trading on Wednesday.’’ 7
The Exchange notes that this proposed
change would allow the Exchange to
add new series during Thanksgiving
4 See Securities Exchange Act Release No. 56251
(August 14, 2007), 72 FR 46523 (August 20, 2007)
(SR–Amex–2004–27) (Order approving listing of
Fixed Return Options (‘‘FROs’’)); see also Securities
Exchange Act Release No. 71957 (April 16, 2014),
79 FR 22563 (April 22, 2014) (SR–NYSEMKT–
2014–06) (Order approving name change from FROs
to Binary Return Derivatives (ByRDs) and re-launch
of these products, with certain modification, and
amending Obvious Errors rules to include ByRDs).
ByRDs are European-style option contracts on
individual stocks, exchange-traded funds (‘‘ETFs’’)
and Index-Linked Securities that have a fixed return
in cash based on a set strike price; satisfy specified
listing criteria; and may only be exercised at
expiration pursuant to the Rules of the Options
Clearing Corporation (the ‘‘OCC’’).
5 See proposed Rule 953ByRDs (Trading Halts
and Suspensions of Binary Return Derivatives).
6 See Rule 903ByRDs(b).
7 See proposed Rule 903ByRDs (b) (‘‘Consecutive
Week Expiration Series: The Exchange will list
Binary Return Derivatives having five (5)
consecutive weekly expiration series available at
one time. Each expiration series will expire at the
end of the week, normally a Friday, with
consecutive week expirations covering the next five
(5) calendar weeks. New expiration week series will
be added for trading on Thursday each week, unless
Thursday or Friday is an Exchange holiday in
which case new expiration series would be added
for trading on Wednesday’’).
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week or anytime Christmas or New
Year’s falls on a Thursday, which
increased flexibility would benefit
market participants.
The Exchange also proposes to amend
Rule 975NY (Nullification and
Adjustment of Options Transactions
including Obvious Errors) regarding the
treatment of ByRDs in the event of a
catastrophic error. Current Rule
975NY(d)(3)(A) provides that ‘‘[u]pon
proper notification as described in
section (d)(2) of this Rule, any
transaction in ByRDs, qualifying as a
Catastrophic Error will automatically be
adjusted by the Exchange to $1.02 per
contract unless both parties mutually
agree to nullify the transaction or both
parties mutually agree to a different
adjustment price. However, the
Exchange proposes to modify this rule
to clarify that any transactions in ByRDs
qualifying as a Catastrophic Error ‘‘that
is higher or lower than the Theoretical
Price by $.50 or more shall be deemed
a Catastrophic Error, subject to the
adjustment procedures of paragraph
(d)(3) unless such adjustment would
result in a price higher than $1.02, in
which case the adjustment price shall be
$1.02.’’ 8 Thus, as proposed, the
transaction would only be adjusted to
$1.02 if the adjustment would result in
a price greater than $1.02. As ByRDs
will either pay $0 or $100 at expiration,
a single ByRDs contract should not have
a value greater than $1.00, therefore the
Exchange believes that any adjustment
under the provisions of the Catastrophic
Error rule should be capped at a price
no higher than $1.02. Capping the
adjustment price at $1.02 for
Catastrophic Errors involving ByRDs
options is consistent with the
adjustment process for obvious errors
involving ByRDs option, which are also
capped at $1.02.9 Similarly, to ensure
consistency in Exchange rules, the
Exchange propose to strike from the
definition of Catastrophic Error rules,
the clause that states ‘‘except for Binary
Return Derivatives where any
transaction occurring at a price greater
than $1.02 shall qualify as a
Catastrophic Error.’’ 10 The change to
paragraph (d)(1) of the Rule would
allow transactions in ByRDs to be
subject to standard Catastrophic Error
rules (i.e., transactions that are higher or
lower than the Theoretical Price by $.50
or more shall be deemed a Catastrophic
Error). The Exchange notes that, to date,
no ByRDs transactions have been
deemed Catastrophic Errors and the
Exchange did not adjust any ByRDs
8 See
proposed Rule 975NY(d)(3)(A).
Rule 975NY(c)(6).
10 See proposed Rule 975NY(d)(1).
9 See
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
transaction per current Rule
975NY(d)(3)(A). The proposed change
would ensure that ByRDs trades that are
deemed Catastrophic Errors are
appropriately adjusted.11
Finally, the Exchange proposes to
delete extraneous text from Rule
462(d)(10)(A), regarding margin
accounts, such that the revised text
would provide that ‘‘[e]xcept as
provided below, no ByRDs option
carried long in a customer’s account
shall be considered of any value for the
purpose of computing the margin
required in the account of such
customer.’’ 12 The Exchange believes the
proposed change would correct an
existing typographical error in Exchange
rules.
Implementation
The Exchange proposes to announce
the implementation of the proposed rule
change via Trader Update.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) 13 of the Securities Exchange Act of
1934 (the ‘‘Act’’), in general, and
furthers the objectives of Section
6(b)(5),14 in particular, in that it is
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system.
Specifically, the proposed change to
Rule 903ByRDs(b) to cover instances
when an Exchange holiday falls on a
Thursday would allow the Exchange to
add new series during Thanksgiving
week or anytime Christmas or New
Year’s falls on a Thursday, which
increased flexibility would remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system to the
benefit of market participants.
In addition, the Exchange believes
that the proposed rule to make clear that
ByRDs would be treated the same as
other options contracts, in the event of
a trading halt or suspension, would
remove impediments to, and perfect the
mechanisms of, a free and open market
11 The Exchange notes that ByRDs contracts were
outside of the scope of the industry wide effort to
harmonize Obvious and Catastrophic Error rules,
and the proposed change therefore does not impact
the harmonization effort. See Securities Exchange
Act Release No. 74920 (May 8, 2015), 80 FR 27816,
27822 (May 14, 2015) (SR–NYSEMKT–2015–39).
12 See proposed Rule 462(d)(10)(A) (striking the
extraneous words ‘‘is or a customer’’).
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
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17:51 Feb 05, 2016
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because it would add clarity and
transparency to Exchange rules.
Moreover, this proposed change would
ensure consistent treatment of ByRDs
contracts in the event of a halt or
suspension of trading in options
contracts on the same underlying
security.
The proposed change to Rule
975NY(d)(3)(A), regarding the treatment
ByRDs transactions deemed
Catastrophic Errors is designed to
promote just and equitable principles of
trade, and to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, as the proposed change would
ensure that ByRDs trades that are
deemed Catastrophic Errors are
appropriately adjusted.
Finally, the proposed change to
remove incorrect and extraneous rule
text from Rule 462(d)(10)(A) adds clarity
and transparency to Exchange rules and
reduces potential investor confusion,
which would remove impediments to
and perfect the mechanism of a free and
open market and a national market
system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed change is not designed to
address any competitive issue but rather
to add clarity and transparency to
Exchange rules, thereby reducing
confusion and making the Exchange’s
rules easier to understand and navigate.
The Exchange believes that the
proposed rule change will serve to
promote regulatory clarity and
consistency, thereby reducing burdens
on the marketplace and facilitating
investor protection.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
PO 00000
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6567
become effective pursuant to Section
19(b)(3)(A) of the Act 15 and Rule 19b–
4(f)(6) thereunder.16
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEMKT–2016–16 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEMKT–2016–16. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://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
15 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with 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.
16 17
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
provisions of 5 U.S.C. 552, will be
available for Web site 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 such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEMKT–2016–16, and should be
submitted on or before February 29,
2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–02330 Filed 2–5–16; 8:45 am]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No: SSA–2016–0002]
Agency Information Collection
Activities: Proposed Request and
Comment Request
The Social Security Administration
(SSA) publishes a list of information
collection packages requiring clearance
by the Office of Management and
Budget (OMB) in compliance with
Public Law 104–13, the Paperwork
Reduction Act of 1995, effective October
1, 1995. This notice includes revisions
of OMB-approved information
collections.
SSA is soliciting comments on the
accuracy of the agency’s burden
estimate; the need for the information;
its practical utility; ways to enhance its
quality, utility, and clarity; and ways to
minimize burden on respondents,
including the use of automated
collection techniques or other forms of
information technology. Mail, email, or
fax your comments and
recommendations on the information
collection(s) to the OMB Desk Officer
and SSA Reports Clearance Officer at
the following addresses or fax numbers.
(OMB) Office of Management and
Budget, Attn: Desk Officer for SSA, Fax:
202–395–6974, Email address: OIRA_
Submission@omb.eop.gov.
(SSA) Social Security Administration,
OLCA, Attn: Reports Clearance Director,
3100 West High Rise, 6401 Security
Blvd., Baltimore, MD 21235, Fax: 410–
966–2830, Email address:
OR.Reports.Clearance@ssa.gov.
Or you may submit your comments
online through www.regulations.gov,
referencing Docket ID Number [SSA–
2016–0002].
I. The information collections below
are pending at SSA. SSA will submit
Number of
responses
Modality of completion
them to OMB within 60 days from the
date of this notice. To be sure we
consider your comments, we must
receive them no later than April 8, 2016.
Individuals can obtain copies of the
collection instruments by writing to the
above email address.
1. Statement for Determining
Continuing Eligibility, Supplemental
Security Income Payment(s)—20 CFR
416.204—0960–0416. SSA conducts
disability redeterminatons to determine
if Supplemental Security Income (SSI)
recipients (1) met and continue to meet
all statutory and regulatory
requirements for SSI eligibility and (2)
are receiving the correct SSI payment
amount. SSA makes these
redeterminations through periodic use
of Form SSA–8203BK. SSA conducts
this legally mandated information
collection in field offices via personal
contact (face-to-face or telephone
interview) using the automated
Modernized SSI Claim System
(MSSICS). The respondents are SSI
recipients or their representative payees.
Type of Request: Revision of an OMBapproved information collection.
Frequency of
response
Average
burden per
response
(minutes)
Estimated total
annual burden
(hours)
801,789
666,431
135,357
1
1
1
20
19
20
267,263
211,036
45,119
Totals ........................................................................................................
asabaliauskas on DSK5VPTVN1PROD with NOTICES
MSSICS ...........................................................................................................
MSSICS/Signature Proxy ................................................................................
Paper ...............................................................................................................
1,603,577
........................
........................
523,418
2. Information About Joint Checking/
Savings Account—20 CFR 416.1201 and
416.1208—0960–0461. SSA considers a
person’s resources when evaluating
eligibility for SSI. Generally, we
consider funds in checking and savings
accounts as resources owned by the
individuals whose names appear on the
account. However, individuals applying
for SSI may rebut this assumption of
ownership in a joint account by
17 17
submitting certain evidence to establish
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uses Form SSA–2574 to collect
information from SSI applicants and
recipients who object to the assumption
that they own all or part of the funds in
a joint checking or savings account
bearing their names. SSA collects
information about the account from both
the SSI applicant or recipient and the
other account holder(s). After receiving
the completed form, SSA determines if
we should consider the account to be a
resource for the SSI applicant and
recipient. The respondents are
applicants and recipients of SSI, and
individuals who list themselves as joint
owners of financial accounts with SSI
applicants or recipients.
Type of Request: Revision of an OMBapproved information collection.
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Notices]
[Pages 6566-6568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02330]
[[Page 6566]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77014; File No. SR-NYSEMKT-2016-16]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Certain of Its
Rules Related to Binary Return Derivatives Contracts
February 2, 2016.
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 27, 2016, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') 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 the
Substance of the Proposed Rule Change
The Exchange proposes to amend certain of its rules related to
Binary Return Derivatives contracts. The proposed rule change is
available on the Exchange's Web site at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend certain of its rules related to
Binary Return Derivatives contracts (``ByRDs''), which the Exchange
introduced in 2007.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 56251 (August 14,
2007), 72 FR 46523 (August 20, 2007) (SR-Amex-2004-27) (Order
approving listing of Fixed Return Options (``FROs'')); see also
Securities Exchange Act Release No. 71957 (April 16, 2014), 79 FR
22563 (April 22, 2014) (SR-NYSEMKT-2014-06) (Order approving name
change from FROs to Binary Return Derivatives (ByRDs) and re-launch
of these products, with certain modification, and amending Obvious
Errors rules to include ByRDs). ByRDs are European-style option
contracts on individual stocks, exchange-traded funds (``ETFs'') and
Index-Linked Securities that have a fixed return in cash based on a
set strike price; satisfy specified listing criteria; and may only
be exercised at expiration pursuant to the Rules of the Options
Clearing Corporation (the ``OCC'').
---------------------------------------------------------------------------
First, the Exchange proposes to add Rule 953ByRDs to make clear
that the Exchange would halt or suspend trading for a ByRDs contract to
the same extent that it halts or suspends trading under Rule 953NY in
an option contract on the same underlying security.\5\ The current
ByRDs rules are silent regarding the treatment of ByRDs during trading
halts and suspensions of options contracts. The Exchange therefore
believes that the proposed change would add clarity and transparency to
Exchange rules and would ensure consistent treatment of ByRDs contracts
in the event of a halt or suspension of trading in options contracts on
the same underlying security.
---------------------------------------------------------------------------
\5\ See proposed Rule 953ByRDs (Trading Halts and Suspensions of
Binary Return Derivatives).
---------------------------------------------------------------------------
Next, the Exchange proposes to modify Rule 903ByRDs(b) (Series of
ByRDs Open for Trading), which currently provides that ``[n]ew
expiration week series will be added for trading on Thursday each week,
unless Friday is an Exchange holiday in which case new expiration
series would be added for trading on Wednesday.'' \6\ The Exchange
proposes to revise this rule to include instances when an Exchange
holiday falls on a Thursday. Specifically, as revised, new series would
be added for trading ``on Thursday each week, unless Thursday or Friday
is an Exchange holiday in which case new expiration series would be
added for trading on Wednesday.'' \7\ The Exchange notes that this
proposed change would allow the Exchange to add new series during
Thanksgiving week or anytime Christmas or New Year's falls on a
Thursday, which increased flexibility would benefit market
participants.
---------------------------------------------------------------------------
\6\ See Rule 903ByRDs(b).
\7\ See proposed Rule 903ByRDs (b) (``Consecutive Week
Expiration Series: The Exchange will list Binary Return Derivatives
having five (5) consecutive weekly expiration series available at
one time. Each expiration series will expire at the end of the week,
normally a Friday, with consecutive week expirations covering the
next five (5) calendar weeks. New expiration week series will be
added for trading on Thursday each week, unless Thursday or Friday
is an Exchange holiday in which case new expiration series would be
added for trading on Wednesday'').
---------------------------------------------------------------------------
The Exchange also proposes to amend Rule 975NY (Nullification and
Adjustment of Options Transactions including Obvious Errors) regarding
the treatment of ByRDs in the event of a catastrophic error. Current
Rule 975NY(d)(3)(A) provides that ``[u]pon proper notification as
described in section (d)(2) of this Rule, any transaction in ByRDs,
qualifying as a Catastrophic Error will automatically be adjusted by
the Exchange to $1.02 per contract unless both parties mutually agree
to nullify the transaction or both parties mutually agree to a
different adjustment price. However, the Exchange proposes to modify
this rule to clarify that any transactions in ByRDs qualifying as a
Catastrophic Error ``that is higher or lower than the Theoretical Price
by $.50 or more shall be deemed a Catastrophic Error, subject to the
adjustment procedures of paragraph (d)(3) unless such adjustment would
result in a price higher than $1.02, in which case the adjustment price
shall be $1.02.'' \8\ Thus, as proposed, the transaction would only be
adjusted to $1.02 if the adjustment would result in a price greater
than $1.02. As ByRDs will either pay $0 or $100 at expiration, a single
ByRDs contract should not have a value greater than $1.00, therefore
the Exchange believes that any adjustment under the provisions of the
Catastrophic Error rule should be capped at a price no higher than
$1.02. Capping the adjustment price at $1.02 for Catastrophic Errors
involving ByRDs options is consistent with the adjustment process for
obvious errors involving ByRDs option, which are also capped at
$1.02.\9\ Similarly, to ensure consistency in Exchange rules, the
Exchange propose to strike from the definition of Catastrophic Error
rules, the clause that states ``except for Binary Return Derivatives
where any transaction occurring at a price greater than $1.02 shall
qualify as a Catastrophic Error.'' \10\ The change to paragraph (d)(1)
of the Rule would allow transactions in ByRDs to be subject to standard
Catastrophic Error rules (i.e., transactions that are higher or lower
than the Theoretical Price by $.50 or more shall be deemed a
Catastrophic Error). The Exchange notes that, to date, no ByRDs
transactions have been deemed Catastrophic Errors and the Exchange did
not adjust any ByRDs
[[Page 6567]]
transaction per current Rule 975NY(d)(3)(A). The proposed change would
ensure that ByRDs trades that are deemed Catastrophic Errors are
appropriately adjusted.\11\
---------------------------------------------------------------------------
\8\ See proposed Rule 975NY(d)(3)(A).
\9\ See Rule 975NY(c)(6).
\10\ See proposed Rule 975NY(d)(1).
\11\ The Exchange notes that ByRDs contracts were outside of the
scope of the industry wide effort to harmonize Obvious and
Catastrophic Error rules, and the proposed change therefore does not
impact the harmonization effort. See Securities Exchange Act Release
No. 74920 (May 8, 2015), 80 FR 27816, 27822 (May 14, 2015) (SR-
NYSEMKT-2015-39).
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Finally, the Exchange proposes to delete extraneous text from Rule
462(d)(10)(A), regarding margin accounts, such that the revised text
would provide that ``[e]xcept as provided below, no ByRDs option
carried long in a customer's account shall be considered of any value
for the purpose of computing the margin required in the account of such
customer.'' \12\ The Exchange believes the proposed change would
correct an existing typographical error in Exchange rules.
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\12\ See proposed Rule 462(d)(10)(A) (striking the extraneous
words ``is or a customer'').
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Implementation
The Exchange proposes to announce the implementation of the
proposed rule change via Trader Update.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \13\ of the Securities Exchange Act of 1934 (the ``Act''),
in general, and furthers the objectives of Section 6(b)(5),\14\ in
particular, in that it is designed to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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Specifically, the proposed change to Rule 903ByRDs(b) to cover
instances when an Exchange holiday falls on a Thursday would allow the
Exchange to add new series during Thanksgiving week or anytime
Christmas or New Year's falls on a Thursday, which increased
flexibility would remove impediments to, and perfect the mechanism of,
a free and open market and a national market system to the benefit of
market participants.
In addition, the Exchange believes that the proposed rule to make
clear that ByRDs would be treated the same as other options contracts,
in the event of a trading halt or suspension, would remove impediments
to, and perfect the mechanisms of, a free and open market because it
would add clarity and transparency to Exchange rules. Moreover, this
proposed change would ensure consistent treatment of ByRDs contracts in
the event of a halt or suspension of trading in options contracts on
the same underlying security.
The proposed change to Rule 975NY(d)(3)(A), regarding the treatment
ByRDs transactions deemed Catastrophic Errors is designed to promote
just and equitable principles of trade, and to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, as the proposed change would ensure that ByRDs trades
that are deemed Catastrophic Errors are appropriately adjusted.
Finally, the proposed change to remove incorrect and extraneous
rule text from Rule 462(d)(10)(A) adds clarity and transparency to
Exchange rules and reduces potential investor confusion, which would
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed change is not
designed to address any competitive issue but rather to add clarity and
transparency to Exchange rules, thereby reducing confusion and making
the Exchange's rules easier to understand and navigate. The Exchange
believes that the proposed rule change will serve to promote regulatory
clarity and consistency, thereby reducing burdens on the marketplace
and facilitating investor protection.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with 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.
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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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEMKT-2016-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2016-16. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://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
[[Page 6568]]
provisions of 5 U.S.C. 552, will be available for Web site 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEMKT-2016-16, and should
be submitted on or before February 29, 2016.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02330 Filed 2-5-16; 8:45 am]
BILLING CODE 8011-01-P
