Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Amending NYSE Arca Equities Rule 7.37(c) To Provide That the Tracking Order Process Is Available Only for Orders That Are Eligible To Route to an Away Market, 44702-44703 [2012-18448]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 146 (Monday, July 30, 2012)]
[Notices]
[Pages 44702-44703]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18448]



[[Page 44702]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67490; File No. SR-NYSEArca-2012-75]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Amending NYSE Arca Equities Rule 7.37(c) To 
Provide That the Tracking Order Process Is Available Only for Orders 
That Are Eligible To Route to an Away Market

July 24, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on July 11, 2012, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rule 7.37(c) to 
provide that the Tracking Order Process is available only for orders 
that are eligible to route to an away market. The text of 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 proposes to amend NYSE Arca Equities Rule 7.37(c) to 
provide that the Tracking Order Process is available only for orders 
that are eligible to route to an away market.
    NYSE Arca Equities Rule 7.37 (``Rule 7.37'') sets forth the Order 
Execution process at the Exchange. Rule 7.37(c) specifies that during 
Core Trading Hours only, if an order has not been executed in its 
entirety pursuant to the Directed Order Process (Rule 7.37(a)), the 
Display Order Process (Rule 7.37(b)(1)), or the Working Order Process 
(Rule 7.37(b)(2)), such order may be matched and executed in the 
Tracking Order Process in price/time priority. The rule specifies that 
any portion of an order received from another market center or market 
participant shall be cancelled immediately, and an incoming order that 
is designated as an ISO will not interact in the tracking order 
process. Incoming orders that enter the Tracking Order Process execute 
against Tracking Orders, which are undisplayed, priced round lot orders 
that are eligible for execution in the Tracking Order Process against 
orders equal to or less than the aggregate size of the Tracking Order 
interest at that price.\3\
---------------------------------------------------------------------------

    \3\ See NYSE Arca Equities Rule 7.31(f).
---------------------------------------------------------------------------

    The Exchange proposes to amend Rule 7.37(c) to specify that only 
orders that are eligible to route to an away market would participate 
in the Tracking Order Process. Because the rule would specify that only 
interest that is eligible to route to an away market would participate, 
the Exchange proposes to delete the provision that states that incoming 
orders designated as an ISO will not interact in the Tracking Order 
Process. In addition, the Exchange proposes to delete the provision 
concerning the cancellation of any order received from another market 
center or market participant as moot in today's market structure. The 
Exchange previously included that rule language to address the 
operation of the markets under the Intermarket Trading System 
(``ITS''). ITS was decommissioned in connection with the implementation 
of Regulation NMS on July 9, 2007. Now that the markets operate 
pursuant to Regulation NMS, orders received from other market centers 
are marked as intermarket sweep orders, which by definition, are not 
routable orders. Accordingly, with the proposed amendment to clarify 
that the tracking order process is applicable only to routable orders, 
the existing rule text is now obviated.
    The Exchange notes that the proposed rule change is consistent with 
the manner by which the Exchange operates the Tracking Order Process 
and would not necessitate any changes to order processing.\4\
---------------------------------------------------------------------------

    \4\ The Exchange notes that when it adopted the Tracking Order 
Process, the Exchange explained in its rule filing that after the 
Tracking Order Process, an order would be routed to an away market: 
``[a]fter the order has been matched against any Tracking Orders, if 
the order has not been executed in its entirety and the remaining 
part of the order is an odd lot, the odd lot order would be executed 
in the Odd Lot Tracking Order Process, as described below. Otherwise 
the order would be routed pursuant to the final step of the 
execution algorithm.'' See Securities Exchange Act Release No. 43608 
(Nov. 21, 2000), 65 FR 78822 at 78828 (Dec. 15, 2000) (SR-PCX-00-25) 
(emphasis added).
---------------------------------------------------------------------------

2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Securities Exchange Act of 1934 (the ``Act''),\5\ which requires 
the rules of an exchange to promote just and equitable principles of 
trade, 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. The Exchange believes that the 
proposed rule change removes impediments to and perfects the mechanism 
of a free and open market by providing transparency regarding which 
orders are eligible to interact in the Tracking Order Process. In 
particular, the proposed rule change eliminates rule text that is 
obsolete in today's market structure and replaces it with updated rule 
text.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i)

[[Page 44703]]

as the Commission may designate up to 90 days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2012-75 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2012-75. 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 
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 the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; 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-NYSEArca-2012-75 and should 
be submitted on or before August 20, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18448 Filed 7-27-12; 8:45 am]
BILLING CODE 8011-01-P