Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Equities Rule 7.31 To Specify How MPL Orders With ALO Order Instructions May Interact, 50189-50191 [2012-20316]
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Federal Register / Vol. 77, No. 161 / Monday, August 20, 2012 / Notices
make and keep records to document all
determinations to treat positions as error
positions; all determinations to assign
error positions to members or to
liquidate error positions; and the
liquidation of error positions through
the third-party broker-dealer.
III. Discussion and Commission’s
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of
Section 6(b) of the Act 19 and the rules
and regulations thereunder applicable to
a national securities exchange.20 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,21 which
requires, among other things, that the
rules of a national securities exchange
be designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
In addition, the Commission believes
the proposed rule change is consistent
with Section 11A(a)(1)(C) of the Act 22
in that it seeks to assure economically
efficient execution of securities
transactions.
The Commission recognizes that
technical or systems issues may occur,
and believes that Phlx Rule 3315, in
allowing Phlx or NES to cancel orders
affected by technical or systems issues,
should provide a reasonably efficient
means for Phlx to handle such orders,
and appears reasonably designed to
permit Phlx to maintain fair and orderly
markets.23
mstockstill on DSK4VPTVN1PROD with NOTICES
19 15
U.S.C. 78f(b).
20 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).
21 15 U.S.C. 78f(b)(5).
22 15 U.S.C. 78k–1(a)(1)(C).
23 The Commission notes that Phlx states that the
proposed amendments to Phlx Rule 3315 are
designed to maintain fair and orderly markets,
ensure full trade certainty for market participants,
and avoid disrupting the clearance and settlement
process. See Notice, 77 FR at 40687. The
Commission also notes that Phlx states that a
decision to cancel orders due to a technical or
systems issue is not equivalent to the Exchange
declaring self-help against a routing destination
pursuant to Rule 611 of Regulation NMS. See 17
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The Commission also believes that
allowing the Exchange to resolve error
positions through the use of an error
account maintained by NES pursuant to
the procedures set forth in the rule, and
as described above, is consistent with
the Act. The Commission notes that the
rule establishes criteria for determining
which positions are error positions,24
and that Phlx or NES, in connection
with a particular technical or systems
issue, will be required to either (i)
assign all resulting error positions to
members or (ii) have all resulting error
positions liquidated.25 Also, Phlx or
NES will assign error positions that
result from a particular technical or
systems issue to members only if all
such error positions can be assigned to
all of the members affected by that
technical or systems issue.26 If Phlx or
NES cannot assign all error positions to
all members, NES will liquidate all of
those error positions.27 In this regard,
the Commission believes that the new
rule appears reasonably designed to
further just and equitable principles of
trade and the protection of investors and
the public interest, and to help prevent
unfair discrimination, in that it should
help assure the handling of error
positions will be based on clear and
objective criteria, and that the resolution
of those positions will occur promptly
through a transparent process.
Additionally, the Commission notes
that it has previously expressed concern
about the potential for unfair
competition and conflicts of interest
between an exchange’s self-regulatory
obligations and its commercial interest
when the exchange is affiliated with one
of its members.28 The Commission is
also concerned about the potential for
misuse of confidential and proprietary
information. The Commission believes
that the requirement that NES provide
complete time and price discretion for
the liquidation of error positions to a
third-party broker-dealer, including that
NES not attempt to exercise any
influence or control over the timing or
methods of such trading, combined with
the requirement that Phlx establish and
enforce policies and procedures that are
reasonably designed to restrict the flow
of confidential and proprietary
information to the third-party brokerdealer liquidating such positions,
CFR 242.611(b). See also Notice, 77 FR at 40686
n.10.
24 See Phlx Rule 3315(d)(2).
25 See Phlx Rule 3315(d)(3).
26 See Phlx Rule 3315(d)(3)(A).
27 See Phlx Rule 3315(d)(3)(B).
28 See, e.g., Securities Exchange Act Release No.
65455 (September 30, 2011), 76 FR 62119 (October
6, 2011) (SR–NYSEArca–2011–61) at 62120 n.16
and accompanying text.
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50189
should help mitigate the Commission’s
concerns. In particular, the Commission
believes that these requirements should
help assure that none of Phlx, NES, or
the third-party broker-dealer is able to
misuse confidential or proprietary
information obtained in connection
with the liquidation of error positions
for its own benefit. The Commission
also notes that Phlx and NES would be
required to make and keep records to
document all determinations to treat
positions as error positions; all
determinations to assign error positions
to members or liquidate error positions;
and the liquidation of error positions
through the third-party broker-dealer.29
Finally, the Commission notes that
the proposed procedures for canceling
orders and the handling of error
positions are consistent with procedures
the Commission has approved for other
exchanges.30
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,31 that the
proposed rule change (SR-Phlx–2012–
81) be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–20317 Filed 8–17–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67652; File No. SR–
NYSEArca–2012–83]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Arca
Equities Rule 7.31 To Specify How MPL
Orders With ALO Order Instructions
May Interact
August 14, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
29 See
Phlx Rule 3315(d)(4).
e.g., Securities Exchange Act Release Nos.
67281 (June 27, 2012), 77 FR 39543 (July 3, 2012)
(SR–NASDAQ–2012–057); 66963 (May 10, 2012),
77 FR 28919 (May 16, 2012) (SR–NYSEArca–2012–
22); 67010 (May 17, 2012), 77 FR 30564 (May 23,
2012) (SR–EDGX–2012–08); and 67011 (May 17,
2012), 77 FR 30562 (May 23, 2012) (SR–EDGA–
2012–09).
31 15 U.S.C. 78s(b)(2).
32 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
30 See,
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50190
Federal Register / Vol. 77, No. 161 / Monday, August 20, 2012 / Notices
notice is hereby given that, on August
6, 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 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 Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Arca Equities Rule 7.31 to specify
how MPL Orders with ALO Order
instructions may interact. 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
mstockstill on DSK4VPTVN1PROD with NOTICES
1. Purpose
The Exchange proposes to amend
NYSE Arca Equities Rule 7.31 to specify
how MPL Orders with ALO Order
instructions may interact.
Background
An MPL Order is a type of Working
Order that has conditional or
undisplayed price and/or size. As set
forth in NYSE Arca Equities Rule
7.31(h)(5), an MPL Order is a Passive
Liquidity Order that is priced at the
midpoint of the PBBO and does not
trade through a Protected Quotation. An
MPL Order has a minimum order entry
size of one share and Users may specify
a minimum executable size for an MPL
Order, which must be no less than one
share. If an MPL Order has a specified
minimum executable size, it will
execute against an incoming order that
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16:25 Aug 17, 2012
Jkt 226001
meets the minimum executable size and
is priced at or better than the midpoint
of the PBBO. If the leaves quantity
becomes less than the minimum size,
the minimum executable size restriction
will no longer be enforced on
executions.
If the market is locked or crossed, the
MPL Order will wait for the market to
unlock or uncross before becoming
eligible to trade again. MPL Orders are
ranked in time priority for the purposes
of execution as long as the midpoint is
within the limit range of the order. MPL
Orders always execute at the midpoint
and do not receive price improvement.
MPL Orders are valid for any session,
but do not participate in auctions. Users
that choose not to trade with MPL
Orders may mark incoming limit orders
with a ‘‘No Midpoint Execution’’
designator and such limit orders will
ignore MPL Orders. MPL Orders do not
route out of the Exchange to other
market centers.
An ALO Order is a limit order that
Exchange systems will accept and place
in the NYSE Arca book only when the
order adds liquidity. As set forth in
NYSE Arca Equities Rule 7.31(nn), ALO
Orders will not route to an away market,
shall be day only, and may not be
designated as GTC. In addition, the rule
specifies when Exchange systems will
reject incoming ALO orders at the time
of entry, including when the ALO Order
is marketable or if the ALO Order will
lock or cross the market. The rule also
specifies that an ALO Order will be
rejected if it would interact with
undisplayed orders on NYSE Arca.
However, the rule further specifies that
the system will not reject an incoming
ALO Order if it would interact with an
MPL Order. Rather, the incoming ALO
order will ignore the MPL Order and
proceed to post to the NYSE Arca book.
Currently, Users may designate an
MPL Order to also be an ALO Order
(‘‘MPL–ALO Order’’). If an MPL Order
(or MPL–ALO Order) is resting on the
NYSE Arca book and an incoming
contra-side MPL–ALO Order is
marketable against the resting MPL
Order, pursuant to current rules, the
incoming MPL–ALO Order will ignore
the resting MPL Order and be placed in
the NYSE Arca Book. As a result, there
may be a buy and sell MPL Order
resting on the NYSE Arca Book at the
same price that cannot interact.
Proposed Rule Change
The Exchange proposes to amend
both NYSE Arca Equities Rules
7.31(h)(5) and (nn) to specify how MPL
Orders with ALO Order instructions
may interact. First, the Exchange
proposes to amend Rule 7.31(h)(5) to
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
specify that User may designate an MPL
Order as an ALO Order and to name
such orders as an ‘‘MPL–ALO Order’’.
The Exchange also proposes to amend
Rule 7.31(nn) to provide that a User may
specify that a resting MPL Order or
MPL–ALO Order may execute against
an arriving marketable MPL–ALO
Order. By providing Users with the
choice for an MPL Order to interact with
an incoming MPL–ALO Order, the
Exchange believes that it will reduce the
potential for two orders that are
marketable against one another to be
placed in the NYSE Arca book.
The Exchange recognizes that if a
User designates an MPL or MPL–ALO
Order to execute against an incoming
marketable MPL–ALO Order, the
incoming order would technically not
be a liquidity providing order, since it
would be executing against a resting
order, and proposes to amend Rule
7.31(nn) accordingly. However, for
purposes of determining which order is
a ‘‘liquidity taker’’ and which order is
a ‘‘liquidity provider’’, the Exchange
will designate the User who chooses for
a marketable MPL–ALO Order to
execute to be the liquidity taker.
Accordingly, if the resting interest
chooses to interact, but the arriving
MPL–ALO Order does not, the two
orders will execute, but the arriving
MPL–ALO Order will be considered the
liquidity provider. If both the resting
interest and the arriving MPL–ALO
Order are designated to interact, the
Exchange will consider the arriving
interest as the liquidity taker interest.
The Exchange further proposes to
make technical, non-substantive
changes to Rule 7.31(nn). The Exchange
proposes to use consistent terminology
for orders that are placed in the NYSE
Arca book and replace the term ‘‘post
to’’ with ‘‘placed in.’’ The Exchange
notes that orders ‘‘placed in’’ the NYSE
Arca book are not necessary [sic]
displayed orders. The Exchange also
proposes to amend Rule 7.31(nn)(1) to
clarify that ALO Orders that are
marketable will be rejected, except as
provided for in Rule 7.31(nn)(3), which,
as noted above, concerns the proposed
new rule text enabling User-directed
MPL or MPL–ALO Orders to interact
with incoming marketable MPL–ALO
Orders.
The Exchange will announce the
implementation date of the proposed
rule change in a Trader Update to be
published no later than 90 days
following Commission approval. The
implementation date will be no later
than 90 days following publication of
the Trader Update announcing
Commission approval.
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Federal Register / Vol. 77, No. 161 / Monday, August 20, 2012 / Notices
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’’),4 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
reducing the potential for two orders
that are marketable against one another
from resting on the NYSE Arca book and
not executing. The proposed rule
change will also provide transparency
in the Exchange rules of how MPL
Orders with ALO Order instructions
would interact.
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.
mstockstill on DSK4VPTVN1PROD with NOTICES
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 5 and Rule
19b–4(f)(6) thereunder.6 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.7
4 15
U.S.C. 78f(b).
U.S.C. 78s(b)(3)(A)(iii).
6 17 CFR 240.19b–4(f)(6).
7 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b-4(f)(6)(iii) requires a self-regulatory
organization to provide the Commission with
written notice of its intent to file the proposed rule
change, along with a brief description and text of
5 15
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16:25 Aug 17, 2012
Jkt 226001
At any time within 60 days of the
filing of such 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.
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–NYSEArca–2012–83 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–2012–83. 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
a.m. and 3 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
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has fulfilled this
requirement.
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
50191
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
publicly available. All submissions
should refer to File Number SR–
NYSEArca–2012–83 and should be
submitted on or before September 10,
2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012–20316 Filed 8–17–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67655; File No. SR–
NASDAQ–2012–059]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove
Proposed Rule Change To Establish
‘‘Benchmark Orders’’ Under NASDAQ
Rule 4751(f)
August 14, 2012.
I. Introduction
On May 1, 2012, The NASDAQ Stock
Market LLC (‘‘NASDAQ’’ or
‘‘Exchange’’) 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
establish various ‘‘Benchmark Orders’’
under NASDAQ Rule 4751(f). The
proposed rule change was published for
comment in the Federal Register on
May 17, 2012.3 The Commission
received no comments on the proposal.
On June 26, 2012, the Commission
extended to August 15, 2012, the time
period in which to approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.4
This order institutes proceedings under
Section 19(b)(2)(B) of the Act to
determine whether to approve or
disapprove the proposed rule change.
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 66972
(May 11, 2012), 77 FR 29435 (May 17, 2012)
(‘‘Notice’’).
4 See Securities Exchange Act Release No. 67258
(June 26, 2012), 77 FR 39314 (July 2, 2012).
1 15
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]]>Agencies
[Federal Register Volume 77, Number 161 (Monday, August 20, 2012)]
[Notices]
[Pages 50189-50191]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20316]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67652; File No. SR-NYSEArca-2012-83]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca
Equities Rule 7.31 To Specify How MPL Orders With ALO Order
Instructions May Interact
August 14, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\
[[Page 50190]]
notice is hereby given that, on August 6, 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 and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend NYSE Arca Equities Rule 7.31 to
specify how MPL Orders with ALO Order instructions may interact. 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 7.31 to
specify how MPL Orders with ALO Order instructions may interact.
Background
An MPL Order is a type of Working Order that has conditional or
undisplayed price and/or size. As set forth in NYSE Arca Equities Rule
7.31(h)(5), an MPL Order is a Passive Liquidity Order that is priced at
the midpoint of the PBBO and does not trade through a Protected
Quotation. An MPL Order has a minimum order entry size of one share and
Users may specify a minimum executable size for an MPL Order, which
must be no less than one share. If an MPL Order has a specified minimum
executable size, it will execute against an incoming order that meets
the minimum executable size and is priced at or better than the
midpoint of the PBBO. If the leaves quantity becomes less than the
minimum size, the minimum executable size restriction will no longer be
enforced on executions.
If the market is locked or crossed, the MPL Order will wait for the
market to unlock or uncross before becoming eligible to trade again.
MPL Orders are ranked in time priority for the purposes of execution as
long as the midpoint is within the limit range of the order. MPL Orders
always execute at the midpoint and do not receive price improvement.
MPL Orders are valid for any session, but do not participate in
auctions. Users that choose not to trade with MPL Orders may mark
incoming limit orders with a ``No Midpoint Execution'' designator and
such limit orders will ignore MPL Orders. MPL Orders do not route out
of the Exchange to other market centers.
An ALO Order is a limit order that Exchange systems will accept and
place in the NYSE Arca book only when the order adds liquidity. As set
forth in NYSE Arca Equities Rule 7.31(nn), ALO Orders will not route to
an away market, shall be day only, and may not be designated as GTC. In
addition, the rule specifies when Exchange systems will reject incoming
ALO orders at the time of entry, including when the ALO Order is
marketable or if the ALO Order will lock or cross the market. The rule
also specifies that an ALO Order will be rejected if it would interact
with undisplayed orders on NYSE Arca. However, the rule further
specifies that the system will not reject an incoming ALO Order if it
would interact with an MPL Order. Rather, the incoming ALO order will
ignore the MPL Order and proceed to post to the NYSE Arca book.
Currently, Users may designate an MPL Order to also be an ALO Order
(``MPL-ALO Order''). If an MPL Order (or MPL-ALO Order) is resting on
the NYSE Arca book and an incoming contra-side MPL-ALO Order is
marketable against the resting MPL Order, pursuant to current rules,
the incoming MPL-ALO Order will ignore the resting MPL Order and be
placed in the NYSE Arca Book. As a result, there may be a buy and sell
MPL Order resting on the NYSE Arca Book at the same price that cannot
interact.
Proposed Rule Change
The Exchange proposes to amend both NYSE Arca Equities Rules
7.31(h)(5) and (nn) to specify how MPL Orders with ALO Order
instructions may interact. First, the Exchange proposes to amend Rule
7.31(h)(5) to specify that User may designate an MPL Order as an ALO
Order and to name such orders as an ``MPL-ALO Order''.
The Exchange also proposes to amend Rule 7.31(nn) to provide that a
User may specify that a resting MPL Order or MPL-ALO Order may execute
against an arriving marketable MPL-ALO Order. By providing Users with
the choice for an MPL Order to interact with an incoming MPL-ALO Order,
the Exchange believes that it will reduce the potential for two orders
that are marketable against one another to be placed in the NYSE Arca
book.
The Exchange recognizes that if a User designates an MPL or MPL-ALO
Order to execute against an incoming marketable MPL-ALO Order, the
incoming order would technically not be a liquidity providing order,
since it would be executing against a resting order, and proposes to
amend Rule 7.31(nn) accordingly. However, for purposes of determining
which order is a ``liquidity taker'' and which order is a ``liquidity
provider'', the Exchange will designate the User who chooses for a
marketable MPL-ALO Order to execute to be the liquidity taker.
Accordingly, if the resting interest chooses to interact, but the
arriving MPL-ALO Order does not, the two orders will execute, but the
arriving MPL-ALO Order will be considered the liquidity provider. If
both the resting interest and the arriving MPL-ALO Order are designated
to interact, the Exchange will consider the arriving interest as the
liquidity taker interest.
The Exchange further proposes to make technical, non-substantive
changes to Rule 7.31(nn). The Exchange proposes to use consistent
terminology for orders that are placed in the NYSE Arca book and
replace the term ``post to'' with ``placed in.'' The Exchange notes
that orders ``placed in'' the NYSE Arca book are not necessary [sic]
displayed orders. The Exchange also proposes to amend Rule 7.31(nn)(1)
to clarify that ALO Orders that are marketable will be rejected, except
as provided for in Rule 7.31(nn)(3), which, as noted above, concerns
the proposed new rule text enabling User-directed MPL or MPL-ALO Orders
to interact with incoming marketable MPL-ALO Orders.
The Exchange will announce the implementation date of the proposed
rule change in a Trader Update to be published no later than 90 days
following Commission approval. The implementation date will be no later
than 90 days following publication of the Trader Update announcing
Commission approval.
[[Page 50191]]
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''),\4\ 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 reducing the potential for two orders that
are marketable against one another from resting on the NYSE Arca book
and not executing. The proposed rule change will also provide
transparency in the Exchange rules of how MPL Orders with ALO Order
instructions would interact.
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\4\ 15 U.S.C. 78f(b).
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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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \5\ and Rule 19b-4(f)(6) thereunder.\6\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\7\
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\5\ 15 U.S.C. 78s(b)(3)(A)(iii).
\6\ 17 CFR 240.19b-4(f)(6).
\7\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires a self-regulatory organization to provide the
Commission with written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of filing
of the proposed rule change, or such shorter time as designated by
the Commission. The Exchange has fulfilled this requirement.
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At any time within 60 days of the filing of such 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.
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-2012-83 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-2012-83. 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
a.m. and 3 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 publicly available. All
submissions should refer to File Number SR-NYSEArca-2012-83 and should
be submitted on or before September 10, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-20316 Filed 8-17-12; 8:45 am]
BILLING CODE 8011-01-P
