Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123C(9)(a)(1)(ii)-Equities To Delete the Requirement That the Order Acceptance Cut-Off Time Cannot Be Past 4:30 p.m., 73106-73109 [2012-29567]
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Federal Register / Vol. 77, No. 236 / Friday, December 7, 2012 / Notices
tkelley on DSK3SPTVN1PROD with
Commission believes that the proposal
is reasonably balanced to allow issuers
to express their analysis, while the
proposed rules help to ensure that there
will not be inaccurate, misleading or
confusing public information through
the Exchange’s authority to issue its
own public announcement in response
to such issuer’s announcement. The
Commission expects the Exchange to
actively monitor issuers’ analysis and
for the Exchange to promptly issue a
public announcement if the Exchange
detects misleading or inaccurate
information.19 Based on the above, the
Commission believes that, consistent
with Section 6(b)(5) of the Act, that the
proposal should prevent fraudulent and
manipulative acts and practices and
further investor protection.
The Commission also finds that the
proposed changes that would allow the
Exchange to make an issuer’s required
public announcement about a Nasdaq
Staff Determination should the issuer
fail to do so within the time allotted or
if the announcement does not contain
all the required information are
consistent with the requirements of the
Act. The Commission notes that, for the
same reasons noted above, it is
important that there is adequate
notification of a Nasdaq Staff
Determination to investors and the
public. Therefore, if the issuer fails to
make the required disclosure the
Exchange will have the authority to do
so. The Commission notes that the
proposal is similar to the rules of
another national securities exchange.20
As described above, the Exchange’s
proposal will also clarify some of the
rule language concerning a trading halt
that is imposed for an issuer’s failure to
make the public announcement, and
update these requirements to reflect the
other changes being adopted herein. The
Commission believes these changes are
appropriate and will ensure that a
trading halt can be imposed for failure
to adequately disclose information in
the public announcement, and clarify
that such trading halt would be lifted
after the Exchange makes the public
announcement assuming that is the only
basis for the trading halt. Based on the
above, the Commission believes that
these aspects of the proposal are
consistent with furthering investor
protection and the public interest.
Finally, the Commission believes that
the proposed new provision that gives
and does not address any issues or liabilities that
may arise under the Act.
19 The Commission expects Nasdaq to monitor
the new requirements and propose to make changes
if necessary.
20 See New York Stock Exchange Listed Company
Manual Section 802.02.
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the Exchange the authority to make a
public announcement involving an
issuer’s listing or trading on Nasdaq at
any level of a proceeding under its Rule
5800 Series in order to maintain the
quality of and public confidence in its
markets and to protect investors and the
public interest is consistent with the
Act. For example, the Exchange could
use this authority to counter any
inaccurate or misleading statements in
an issuer’s own public announcement
with respect to the issuer’s delisting.
The Commission also believes that this
authority could be useful in those
situations, as noted by Nasdaq in its
filing, where an issuer is trading in the
over-the-counter market pending its
delisting appeal and does not make its
own announcement when the appeal is
finally denied. In such a situation,
Nasdaq could use its authority to make
such an announcement. In both
situations noted above, allowing the
Exchange to make a public
announcement if there is a lack of
accurate public information concerning
a Nasdaq Staff Determination would be
important for investors and the public
interest consistent with Section 6(b)(5)
of the Act.21
IV. Conclusion
It is therefore ordered that, pursuant
to Section 19(b)(2) of the Act,22 that the
proposed rule change (SR–NASDAQ–
2012–118) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Kevin O’Neill,
Deputy Secretary.
[FR Doc. 2012–29605 Filed 12–6–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68337; File No. SR–ICC–
2012–18]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Withdrawal
of Proposed Rule Change To Add
Rules Related to the Clearing of iTraxx
Europe Index CDS and European
Corporate Single-Name CDS
December 3, 2012.
On September 28, 2012, ICE Clear
Credit LLC (‘‘ICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934,1 and
Rule 19b-4 thereunder,2 to add rules
related to the clearing of iTraxx Europe
Index credit default swaps and
European Corporate Single-Name credit
default swaps. Notice of the proposed
rule change was published in the
Federal Register on October 17, 2012.3
The Commission received no comments
on the proposed change. On November
30, 2012, ICC withdrew the proposed
rule change (SR–ICC–2012–18).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.4
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–29564 Filed 12–6–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68340; File No. SR–
NYSEMKT–2012–65]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending Rule
123C(9)(a)(1)(ii)—Equities To Delete
the Requirement That the Order
Acceptance Cut-Off Time Cannot Be
Past 4:30 p.m.
December 3, 2012.
21 The Commission does not believe giving the
Exchange the authority to make such public
announcements replaces any due process or rights
to appeal a delisting notification or public
reprimand letter under the Exchange’s adjudicatory
process, but rather is meant simply to provide a
way for the public to get accurate information about
an issuer that is subject to a Staff Determination.
The Commission expects the Exchange to monitor
its use of this authority consistent with this
purpose.
22 15 U.S.C. 78s(b)(2).
23 17 CFR 200.30–3(a)(12).
PO 00000
Frm 00099
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Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
20, 2012, NYSE MKT LLC (‘‘NYSE
MKT’’ or ‘‘Exchange’’) filed with the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 34–
68035 (October 11, 2012), 77 FR 63905 (October 17,
2012).
4 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
2 17
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Federal Register / Vol. 77, No. 236 / Friday, December 7, 2012 / Notices
Securities and Exchange Commission
(‘‘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
Rule 123C(9)(a)(1)(ii)—Equities to delete
the requirement that the order
acceptance cut-off time cannot be past
4:30 p.m. 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 123C(9)(a)(1)(ii)—Equities to delete
the requirement that the order
acceptance cut-off time cannot be past
4:30 p.m. (or 30 minutes after the
scheduled close in the case of an earlier
close).3
Background
tkelley on DSK3SPTVN1PROD with
Pursuant to Rule 123C(9)(a)(1)—
Equities, the Exchange may suspend
Rule 52—Equities (Hours of Operation)
to resolve an extreme order imbalance
that may result in a price dislocation at
the close as a result of an order entered
into Exchange systems, or represented
to a Designated Market Maker (‘‘DMM’’)
orally at or near the close. Rule
3 The Exchange notes that parallel changes are
proposed to be made to the rules of New York Stock
Exchange LLC (‘‘NYSE’’). See Securities Exchange
Act Release No. 68282 (Nov. 21, 2012), 77 FR 71023
(Nov. 28, 2012) (SR–NYSE–2012–63).
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123C(9)(a)(1)—Equities was intended to
be and has been invoked to attract
offsetting interest in rare circumstances
where there exists an extreme imbalance
at the close such that a DMM is unable
to close the security without
significantly dislocating the price.
Pursuant to Rule 123C(9)(a)(1)(ii)—
Equities, once it has been determined to
suspend Rule 52 and solicit offsetting
interest, the Exchange is responsible for
soliciting such offsetting interest from
both on-Floor and off-Floor participants.
Such solicitation requests include, at a
minimum, the security symbol, the
imbalance amount and side, the last sale
price, and an order acceptance cut-off
time. The Exchange designates the order
acceptance cut-off time, but the Rule
currently provides that in no event shall
the order acceptance cut-off time be
later than 4:30 p.m. (or 30 minutes after
the scheduled close in the case of an
earlier close).
Currently, the Exchange uses Trader
Updates to solicit interest from off-Floor
participants. The Exchange’s Trader
Updates are posted on the Exchange’s
Web site and are distributed both by
RSS feed and by email to anyone who
subscribes to receive such free updates.
Since January 3, 2011, when the Rule,
which was previously operated on a
pilot bases, became a permanent rule,
the Exchange and NYSE, which has an
identical rule, have invoked the relief
available pursuant to the Rule only
once, on September 21, 2012. In 2010,
Rule 123C(9)(a)(1)—Equities was
invoked only three times on both
markets.
Proposed Amendment
The Exchange proposes to amend
Rule 123C(9)(a)(1)(ii)—Equities to delete
the requirement that the order
acceptance cut-off time shall be no later
than 4:30 p.m., or in the case of an early
scheduled close, 30 minutes after the
closing time. The Exchange believes it is
appropriate to delete the bright-line cut
off time because it hinders the ability of
the Exchange to ensure a fair and
orderly close if adhering to the 4:30 p.m.
order acceptance cut-off time is not
possible under the particular
circumstances.
In particular, the Exchange notes that
for two of the four times that the rule
has been invoked since 2010 on both the
Exchange and the NYSE, the NYSE has
extended the order acceptance cut-off
time past 4:30 p.m. The reasons for the
extensions differed, but the Exchange
believes that given the rarity of the need
to invoke the provisions of Rule
123C(9)(a)(1)—Equities in the first
instance, together with what the NYSE
has experienced in those few events
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73107
with its parallel rule, it is appropriate to
delete the bright-line 4:30 p.m. cut-off
time.
For example, on February 12, 2010,
due to corporate actions in Berkshire
Hathaway (BRK) Class A and B
securities, an NYSE-listed security,
there was significant trading volume in
those securities, including at the close.
In the circumstances, it was determined
that the most efficient manner to effect
the close of trading in those securities
was to effect the closing transaction in
BRK–B before closing the BRK–A
shares. After closing the BRK–B security
at 4:19 p.m., the DMM assessed the
shares eligible to be executed for the
BRK–A close and determined that the
imbalance was significant enough to
invoke the procedures of NYSE Rule
123C(9)(a)(1). Due to the complexity of
the situation, the NYSE was not able to
issue its solicitation of offsetting interest
until 4:27 p.m. Because three minutes
was not sufficient time to receive
incoming offsetting interest and close
the security, the NYSE accepted order
flow past the 4:30 p.m. order acceptance
cut-off time. The NYSE filed with the
Commission a rule proposal that
permitted the temporary suspension of
NYSE Rule 123C(9)(a)(1)(ii) 4:30 p.m.
order acceptance cut-off time.4
More recently, on Friday, September
21, 2012, there was a buy imbalance in
Weatherford International LTD (WFT),
an NYSE-listed security, that could not
be satisfied by sell orders on the Book.
Accordingly, the NYSE invoked
procedures pursuant to NYSE Rule
123C(9) to solicit interest from both offFloor and on-Floor participants to offset
that imbalance. While the Exchange
initiated publication of solicitation for
such offsetting interest immediately
following 4:00 p.m., due to delays in the
Exchange’s web and email systems, the
Exchange’s two solicitations of interest,
which were sent at 4:22 p.m. and 4:28
p.m., did not leave Exchange systems
until 4:29 p.m. and 4:35 p.m.,
respectively, and were time-stamped
accordingly. Because of these delays,
the Exchange extended the order
acceptance cut-off time to 4:35 p.m.,
which is past the time prescribed in
NYSE Rule 123C(9)(a)(1)(ii). By
extending the order acceptance cut-off
time to 4:35 p.m., the Exchange was able
to attract sufficient sell-side interest to
offset the buy imbalance and the stock
was closed shortly thereafter on a
transaction of 7.822 million shares,
4 See Securities Exchange Act Release No. 61549
(Feb. 19, 2010), 75 FR 9009 (Feb. 26, 2010) (SR–
NYSE–2010–09).
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Federal Register / Vol. 77, No. 236 / Friday, December 7, 2012 / Notices
tkelley on DSK3SPTVN1PROD with
unchanged from the last sale price of
$13.54.5
Although the NYSE did not have rule
authority to extend the order acceptance
cut-off time in the WFT closing
situation to 4:35 p.m., the NYSE
believes that it acted appropriately
under the circumstances to ensure that
WFT could close in a fair and orderly
manner at a price that was not
significantly dislocated from the last
sale price. In particular, the issue that
the NYSE experienced with respect to
its web and email system was
unanticipated and the NYSE sought to
respond in a manner that protected
investors and the public interest by
ensuring a fair and orderly close.
The Exchange believes it is
appropriate to provide the Exchange
with authority to designate an order
acceptance cut-off time that is tailored
to the particular situation, rather than
have to adhere to the 4:30 p.m. time
frame. The Exchange’s ultimate goal is
to ensure a fair and orderly close in a
manner that is as close to the official
4:00 p.m. closing time as possible.
However, depending on the
circumstances, whether because of the
complexity of the closing process for a
particular security or because of a
system or technology issue, requiring a
bright-line order acceptance time may
not be appropriate.
Moreover, the Exchange believes that
adhering to such a bright-line cut-off
time could harm investors and the
public. For example, in both the BRK–
A and WFT closes, if the NYSE had
adhered to the 4:30 p.m. cut-off time,
the NYSE would not have been able to
complete its solicitation of offsetting
interest. Without such offsetting
interest, the Exchange had two
alternatives, either close the stock at a
price significantly dislocated from the
last sale price, or invoke an order
imbalance halt and not hold a closing
transaction. The Exchange does not
believe that either alternative is in the
best interest of investors or the public.
Rather, the Exchange believes that
ensuring that the closing price is not
significantly dislocated from the last
sale, even if that means a delayed
closing time, would benefit investors
and the public.6
5 On September 27, 2012, the NYSE published a
Trader Update that provided the public with notice
of this issue: https://traderupdates.nyse.com/2012/
09/weatherford_international_ltd.html.
6 The Exchange proposes to make clarifying
changes to paragraphs (a)(1), (a)(1)(v), (a)(2), and (b)
of Rule 123C(9)—Equities and Supplementary
Material .20 and .30 to Rule 123C—Equities to
either add the phrase ‘‘Equities’’ or delete the term
‘‘NYSE’’ in connection with references to other
equity rules in the rule text.
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2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 7 of the
Securities Exchange Act of 1934 (the
‘‘Act’’), in general, and furthers the
objectives of Section 6(b)(5),8 in
particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest, and it is not designed to
permit unfair discrimination among
customers, brokers, or dealers.
In particular, the Exchange believes
that providing the Exchange with the
authority to designate the order cut-off
time as appropriately tailored to the
particular situation removes
impediments to and perfects the
mechanism of a free and open market
because it enables the Exchange to
complete the process to solicit interest
to offset an imbalance at the close that
would otherwise result in a significant
price dislocation. Without the relief
requested herein, the Exchange may not
be able to complete the process to solicit
offsetting interest, which would result
in either the stock closing at a
dislocated price, or require the
Exchange to invoke an order imbalance
halt in the security. The Exchange
believes such solutions could harm
investors and the public because of
either an unnecessarily dislocated
closing price, or in the case of an
imbalance halt, orders intended for the
closing transaction would not be
executed. The Exchange further believes
that the proposed rule change would
protect investors and the public interest
because it would enable the Exchange to
complete the process to ensure that the
closing price that may be closer to the
last sale price, rather than a closing
price that is significantly dislocated
from the last sale price.
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.
7 15
8 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00101
Fmt 4703
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 9 and Rule
19b–4(f)(6) thereunder.10 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.
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–NYSEMKT–2012–65 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–NYSEMKT–2012–65. This
file number should be included on the
9 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
10 17
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Federal Register / Vol. 77, No. 236 / Friday, December 7, 2012 / Notices
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 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–2012–65 and should be
submitted on or before December 28,
2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–29567 Filed 12–6–12; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68339; File No. SR–
NYSEArca–2012–130]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Arca
Rule 6.62(cc) Making Available the
Post No Preference Light Only
Quotation to Options Classes Not
Participating in the Penny Pilot
tkelley on DSK3SPTVN1PROD with
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
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
1 15
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Arca Rule 6.62(cc) to make
available the Post No Preference Light
Only Quotation (‘‘PNPLO Quotation’’) to
options classes not participating in the
penny pilot (‘‘non-Penny Pilot Issues’’).
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
BILLING CODE 8011–01–P
December 3, 2012.
November 20, 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. Purpose
The Exchange proposes to amend
Rule 6.62(cc) to make available the Post
No Preference Light Only Quotation
(‘‘PNPLO Quotation’’) to non-Penny
Pilot Issues.
A PNPLO Quotation is an electronic
Market Maker quotation that, upon
initial entry into the NYSE Arca System,
is only eligible to execute against
displayed liquidity on the Consolidated
Book.3 A PNPLO Quotation is similar to
3 See Exchange Rule 6.62(cc). In this regard, a
PNPLO Quotation is similar to the Post No
Preference Light Order (‘‘PNP-Light Order’’) under
NYSE Arca Options Rule 6.62(v), which is a nonroutable order type that is only eligible to execute
against displayed liquidity. A PNPLO Quotation
that, upon entry, would execute exclusively against
non-displayed liquidity on the Consolidated Book
is immediately rejected by the NYSE Arca System.
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73109
the Post No Preference Light Order
(‘‘PNP-Light Order’’) under NYSE Arca
Options Rule 6.62(v), which is a nonroutable order type that is only eligible
to execute against displayed liquidity.
The PNPLO Quotation was recently
approved by the Commission in June of
2012 4 and provides a useful tool for
Market Markers to provide quotations in
the market. Upon entry of a PNPLO
Quotation, the NYSE Arca System
automatically removes the pre-existing
quotation(s) of a Market Maker, as it
does upon the entry of any other
quotation, regardless of the acceptance
or rejection of the PNPLO Quotation by
the NYSE Arca System.5 The PNPLO
Quotation also provides Market Makers
with greater control over the
circumstances in which their quotations
interact with contra-side trading interest
on the Exchange by preventing
interaction with non-displayed
liquidity. The increase in control
afforded by the PNPLO Quotation is
desirable from the perspective of Market
Makers because it is difficult for them
to account for non-displayed liquidity
in their quoting models.
Currently, the PNPLO Quotation is
only available for options classes
participating in the Penny Pilot
Program. Market Makers may only
submit PNPLO Quotation orders for
options classes in the Penny Pilot
Program. The Exchange now proposes to
allow the use of the PNPLO Quotation
by Market Makers for quoting in nonPenny classes as well.
In the initial Notice, the Exchange
stated that Market Makers on NYSE
Arca in penny pilot issues receive post
liquidity credits for electronic
Additionally, a PNPLO Quotation that, upon entry,
would execute against both displayed and nondisplayed liquidity on the Consolidated Book
immediately executes only against the displayed
liquidity, but not against the non-displayed
liquidity, and any remaining size of the PNPLO
Quotation will be immediately rejected by the
NYSE Arca System. Furthermore, a PNPLO
Quotation that, upon entry, would execute
exclusively against displayed liquidity on the
Consolidated Book immediately executes against
the displayed liquidity and any remaining size of
the PNPLO Quotation is placed on the Consolidated
Book and treated like a standard Market Maker
quotation. Lastly, a PNPLO Quotation that would
not execute against either displayed or nondisplayed liquidity is placed in the Consolidated
Book and treated as a standard Market Maker
quotation.
4 See Securities Exchange Act Release No. 67252
(June 25, 2012), 77 FR 38879 (June 29, 2012) (Order
approving PNPLO Quotation) (‘‘Order’’). See also
Securities Exchange Act Release No. 66937 (May 7,
2012), 77 FR 27820 (May 11, 2012) (‘‘Notice’’).
5 Accordingly, in the event that a PNPLO
Quotation is rejected by the NYSE Arca System, the
Market Maker is required to re-enter a quotation for
purposes of satisfying any applicable quoting
obligations under NYSE Arca Options Rule 6.37B.
See Notice, 77 FR at 27821.
E:\FR\FM\07DEN1.SGM
07DEN1
]]>Agencies
[Federal Register Volume 77, Number 236 (Friday, December 7, 2012)]
[Notices]
[Pages 73106-73109]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29567]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68340; File No. SR-NYSEMKT-2012-65]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Rule
123C(9)(a)(1)(ii)--Equities To Delete the Requirement That the Order
Acceptance Cut-Off Time Cannot Be Past 4:30 p.m.
December 3, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 20, 2012, NYSE MKT LLC (``NYSE MKT'' or ``Exchange'') filed
with the
[[Page 73107]]
Securities and Exchange Commission (``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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 123C(9)(a)(1)(ii)--Equities to
delete the requirement that the order acceptance cut-off time cannot be
past 4:30 p.m. 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 123C(9)(a)(1)(ii)--Equities to
delete the requirement that the order acceptance cut-off time cannot be
past 4:30 p.m. (or 30 minutes after the scheduled close in the case of
an earlier close).\3\
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\3\ The Exchange notes that parallel changes are proposed to be
made to the rules of New York Stock Exchange LLC (``NYSE''). See
Securities Exchange Act Release No. 68282 (Nov. 21, 2012), 77 FR
71023 (Nov. 28, 2012) (SR-NYSE-2012-63).
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Background
Pursuant to Rule 123C(9)(a)(1)--Equities, the Exchange may suspend
Rule 52--Equities (Hours of Operation) to resolve an extreme order
imbalance that may result in a price dislocation at the close as a
result of an order entered into Exchange systems, or represented to a
Designated Market Maker (``DMM'') orally at or near the close. Rule
123C(9)(a)(1)--Equities was intended to be and has been invoked to
attract offsetting interest in rare circumstances where there exists an
extreme imbalance at the close such that a DMM is unable to close the
security without significantly dislocating the price.
Pursuant to Rule 123C(9)(a)(1)(ii)--Equities, once it has been
determined to suspend Rule 52 and solicit offsetting interest, the
Exchange is responsible for soliciting such offsetting interest from
both on-Floor and off-Floor participants. Such solicitation requests
include, at a minimum, the security symbol, the imbalance amount and
side, the last sale price, and an order acceptance cut-off time. The
Exchange designates the order acceptance cut-off time, but the Rule
currently provides that in no event shall the order acceptance cut-off
time be later than 4:30 p.m. (or 30 minutes after the scheduled close
in the case of an earlier close).
Currently, the Exchange uses Trader Updates to solicit interest
from off-Floor participants. The Exchange's Trader Updates are posted
on the Exchange's Web site and are distributed both by RSS feed and by
email to anyone who subscribes to receive such free updates.
Since January 3, 2011, when the Rule, which was previously operated
on a pilot bases, became a permanent rule, the Exchange and NYSE, which
has an identical rule, have invoked the relief available pursuant to
the Rule only once, on September 21, 2012. In 2010, Rule
123C(9)(a)(1)--Equities was invoked only three times on both markets.
Proposed Amendment
The Exchange proposes to amend Rule 123C(9)(a)(1)(ii)--Equities to
delete the requirement that the order acceptance cut-off time shall be
no later than 4:30 p.m., or in the case of an early scheduled close, 30
minutes after the closing time. The Exchange believes it is appropriate
to delete the bright-line cut off time because it hinders the ability
of the Exchange to ensure a fair and orderly close if adhering to the
4:30 p.m. order acceptance cut-off time is not possible under the
particular circumstances.
In particular, the Exchange notes that for two of the four times
that the rule has been invoked since 2010 on both the Exchange and the
NYSE, the NYSE has extended the order acceptance cut-off time past 4:30
p.m. The reasons for the extensions differed, but the Exchange believes
that given the rarity of the need to invoke the provisions of Rule
123C(9)(a)(1)--Equities in the first instance, together with what the
NYSE has experienced in those few events with its parallel rule, it is
appropriate to delete the bright-line 4:30 p.m. cut-off time.
For example, on February 12, 2010, due to corporate actions in
Berkshire Hathaway (BRK) Class A and B securities, an NYSE-listed
security, there was significant trading volume in those securities,
including at the close. In the circumstances, it was determined that
the most efficient manner to effect the close of trading in those
securities was to effect the closing transaction in BRK-B before
closing the BRK-A shares. After closing the BRK-B security at 4:19
p.m., the DMM assessed the shares eligible to be executed for the BRK-A
close and determined that the imbalance was significant enough to
invoke the procedures of NYSE Rule 123C(9)(a)(1). Due to the complexity
of the situation, the NYSE was not able to issue its solicitation of
offsetting interest until 4:27 p.m. Because three minutes was not
sufficient time to receive incoming offsetting interest and close the
security, the NYSE accepted order flow past the 4:30 p.m. order
acceptance cut-off time. The NYSE filed with the Commission a rule
proposal that permitted the temporary suspension of NYSE Rule
123C(9)(a)(1)(ii) 4:30 p.m. order acceptance cut-off time.\4\
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\4\ See Securities Exchange Act Release No. 61549 (Feb. 19,
2010), 75 FR 9009 (Feb. 26, 2010) (SR-NYSE-2010-09).
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More recently, on Friday, September 21, 2012, there was a buy
imbalance in Weatherford International LTD (WFT), an NYSE-listed
security, that could not be satisfied by sell orders on the Book.
Accordingly, the NYSE invoked procedures pursuant to NYSE Rule 123C(9)
to solicit interest from both off-Floor and on-Floor participants to
offset that imbalance. While the Exchange initiated publication of
solicitation for such offsetting interest immediately following 4:00
p.m., due to delays in the Exchange's web and email systems, the
Exchange's two solicitations of interest, which were sent at 4:22 p.m.
and 4:28 p.m., did not leave Exchange systems until 4:29 p.m. and 4:35
p.m., respectively, and were time-stamped accordingly. Because of these
delays, the Exchange extended the order acceptance cut-off time to 4:35
p.m., which is past the time prescribed in NYSE Rule 123C(9)(a)(1)(ii).
By extending the order acceptance cut-off time to 4:35 p.m., the
Exchange was able to attract sufficient sell-side interest to offset
the buy imbalance and the stock was closed shortly thereafter on a
transaction of 7.822 million shares,
[[Page 73108]]
unchanged from the last sale price of $13.54.\5\
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\5\ On September 27, 2012, the NYSE published a Trader Update
that provided the public with notice of this issue: https://traderupdates.nyse.com/2012/09/weatherford_international_ltd.html.
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Although the NYSE did not have rule authority to extend the order
acceptance cut-off time in the WFT closing situation to 4:35 p.m., the
NYSE believes that it acted appropriately under the circumstances to
ensure that WFT could close in a fair and orderly manner at a price
that was not significantly dislocated from the last sale price. In
particular, the issue that the NYSE experienced with respect to its web
and email system was unanticipated and the NYSE sought to respond in a
manner that protected investors and the public interest by ensuring a
fair and orderly close.
The Exchange believes it is appropriate to provide the Exchange
with authority to designate an order acceptance cut-off time that is
tailored to the particular situation, rather than have to adhere to the
4:30 p.m. time frame. The Exchange's ultimate goal is to ensure a fair
and orderly close in a manner that is as close to the official 4:00
p.m. closing time as possible. However, depending on the circumstances,
whether because of the complexity of the closing process for a
particular security or because of a system or technology issue,
requiring a bright-line order acceptance time may not be appropriate.
Moreover, the Exchange believes that adhering to such a bright-line
cut-off time could harm investors and the public. For example, in both
the BRK-A and WFT closes, if the NYSE had adhered to the 4:30 p.m. cut-
off time, the NYSE would not have been able to complete its
solicitation of offsetting interest. Without such offsetting interest,
the Exchange had two alternatives, either close the stock at a price
significantly dislocated from the last sale price, or invoke an order
imbalance halt and not hold a closing transaction. The Exchange does
not believe that either alternative is in the best interest of
investors or the public. Rather, the Exchange believes that ensuring
that the closing price is not significantly dislocated from the last
sale, even if that means a delayed closing time, would benefit
investors and the public.\6\
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\6\ The Exchange proposes to make clarifying changes to
paragraphs (a)(1), (a)(1)(v), (a)(2), and (b) of Rule 123C(9)--
Equities and Supplementary Material .20 and .30 to Rule 123C--
Equities to either add the phrase ``Equities'' or delete the term
``NYSE'' in connection with references to other equity rules in the
rule text.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \7\ of the
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers
the objectives of Section 6(b)(5),\8\ in particular, in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest, and it is not designed to
permit unfair discrimination among customers, brokers, or dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that providing the Exchange
with the authority to designate the order cut-off time as appropriately
tailored to the particular situation removes impediments to and
perfects the mechanism of a free and open market because it enables the
Exchange to complete the process to solicit interest to offset an
imbalance at the close that would otherwise result in a significant
price dislocation. Without the relief requested herein, the Exchange
may not be able to complete the process to solicit offsetting interest,
which would result in either the stock closing at a dislocated price,
or require the Exchange to invoke an order imbalance halt in the
security. The Exchange believes such solutions could harm investors and
the public because of either an unnecessarily dislocated closing price,
or in the case of an imbalance halt, orders intended for the closing
transaction would not be executed. The Exchange further believes that
the proposed rule change would protect investors and the public
interest because it would enable the Exchange to complete the process
to ensure that the closing price that may be closer to the last sale
price, rather than a closing price that is significantly dislocated
from the last sale price.
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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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.
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
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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-NYSEMKT-2012-65 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-NYSEMKT-2012-65. This
file number should be included on the
[[Page 73109]]
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
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-2012-65 and should be submitted on or before
December 28, 2012.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29567 Filed 12-6-12; 8:45 am]
BILLING CODE 8011-01-P
