Justia Agencies And Commissions Securities And Exchange Commission Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 925NY To Eliminate the Requirement That Market Makers Comply With the Bid-Ask Differential Requirements Specified in Rule 925NY(b)(4)(A)-(E) When Electronically Bidding and Offering on the Exchange System During the Opening Auction Process, 74210-74212 [2013-29381]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 925NY To Eliminate the Requirement That Market Makers Comply With the Bid-Ask Differential Requirements Specified in Rule 925NY(b)(4)(A)-(E) When Electronically Bidding and Offering on the Exchange System During the Opening Auction Process, 74210-74212 [2013-29381]

Download as PDF 74210 Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 16 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 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 will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. 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–2013–129 and should be submitted on or before December 31, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. maindgalligan on DSK5TPTVN1PROD with NOTICES 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–2013–129 on the subject line. [FR Doc. 2013–29380 Filed 12–9–13; 8:45 am] 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–2013–129. 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 Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 925NY To Eliminate the Requirement That Market Makers Comply With the Bid-Ask Differential Requirements Specified in Rule 925NY(b)(4)(A)–(E) When Electronically Bidding and Offering on the Exchange System During the Opening Auction Process the Commission written notice of its intent to file 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 satisfied this requirement. 16 15 U.S.C. 78s(b)(2)(B). VerDate Mar<15>2010 18:48 Dec 09, 2013 Jkt 232001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70978; File No. SR– NYSEMKT–2013–96] December 4, 2013. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on November 17 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. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 20, 2013, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory 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 925NY to eliminate the requirement that Market Makers comply with the bid-ask differential requirements specified in Rule 925NY(b)(4)(A)–(E) when electronically bidding and offering on the Exchange system during the opening auction process (‘‘Auction’’). 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 925NY(b)(5) to eliminate the requirement that Market Makers, when electronically bidding and offering on the Exchange system (‘‘System’’) 4 during an Auction, must comply with the bid-ask differentials specified in Rule 925NY(b)(4)(A)–(E) and instead make the bid-ask differential specified 4 The term ‘‘Exchange System’’ refers to the Exchange’s electronic order delivery, execution and reporting system through which orders and quotes for listed options are consolidated for execution and/or display. See NYSE MKT Options Rule 900.2NY(48). E:\FR\FM\10DEN1.SGM 10DEN1 Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices maindgalligan on DSK5TPTVN1PROD with NOTICES in Rule 925NY(b)(5) applicable at all times, including during an Auction. Current Rule 925NY(b)(5) provides that options traded on the System during core trading hours may be quoted with a difference not to exceed $5 between the bid and offer regardless of the price of the bid (‘‘standard-width quote’’), except with respect to an Auction, in which case Rule 925NY(b)(4) governs bidding and offering quote differentials. Rule 925NY(b)(4)(A)–(E) set out Auction bidask differentials that vary depending on the price of the bid. Under Rule 925NY(b)(4)(A)–(E), the quote widths may not be more than: $0.25 if the bid is less than $2; $0.40 if the bid is at least $2 but does not exceed $5; $0.50 if the bid is more than $5 but does not exceed $10; $0.80 if the bid is more than $10 but does not exceed $20; and $1 if the bid is more than $20. The Exchange now proposes to replace the varying narrow-width bid-ask differentials that apply to Market Maker quotations during an Auction with the $5 quote differential that is in place at all other times. The Exchange notes that the narrowwidth bid-ask differentials applicable to Market Maker quotations during an Auction, which the current proposal would replace, were previously deleted from Rule 925NY in 2010,5 and reinstituted in 2011.6 The Exchange found that at times the absence of more narrow quotes during an Auction prevented series from opening promptly, and could unnecessarily delay the execution of orders. At that time, the Exchange believed that setting a narrower differential for Auction quotes would expedite the opening of all option series on the Exchange promptly after the opening of the underlying security. The Exchange now believes, however, that the rationales 7 under which it first 5 See Securities Exchange Act Release No. 62248 (June 9, 2010), 75 FR 34194 (June 16, 2010) (SR–NYSEAmex–2010–51). 6 See Securities Exchange Act Release No. 63746 (January 20, 2011), 75 FR 4961 (Jan. 27, 2011) (SR–NYSEAmex–2011–05). 7 The obligation for Market Makers to provide opening quotes at the widths described in Rule 925NY(b)(4)(A)–(E) had been adapted from the era when the Exchange conducted open outcry rotations, had only open outcry quotes available to respond to an order, and did not disseminate Firm Quotes. Further, an open outcry opening rotation only required a response from a single Market Maker. The opening market represented the firm quote for all Market Makers in a trading crowd, and any such Market Maker could be held to fill orders at the quoted market. The original intent of maintaining the obligation for Market Makers to submit narrow, traditional bid-ask quotations was to encourage a narrower aggregated Exchange market during the opening auction. This was especially necessary as NYSE MKT was often the VerDate Mar<15>2010 18:48 Dec 09, 2013 Jkt 232001 eliminated the narrow-width quoting obligations for Auctions in 2010 are once again evident to such an extent that the narrow-width quoting obligations are no longer necessary for Auctions, and thus the Exchange proposes to eliminate them again. The Exchange no longer has the concerns it had in 2011 regarding potential delays, both in the opening of series and in the execution of orders. In particular, the Exchange’s 2012 amendment to Rule 952NY allows for series to open on the wider, standard-width quote when an Auction is not to take place,8 which is currently the case in a majority of series openings on the Exchange. Additionally, it is no longer necessary to require Market Makers to submit narrow, traditional bid-ask quotations to encourage a narrower Exchange market during the auction process, as was the original intent of the limitations on bidask differentials. Since the time of the original introduction of the System, the Exchange has instituted increased functionality to define price parameters during the auction process. The system will not conduct an Auction in a series until one of two conditions is met: (i) A Market Maker submits a narrow-width quote, or (ii) a narrow-width NBBO is received from OPRA. This is a systemic solution which renders the rules-based narrow bid-ask differential moot. Further, in light of the lowering of the Lead Market Maker quoting obligation to 90% in 2008,9 there is no requirement for a Market Maker to submit a quotation for an Auction, and thus the Auction quote-width requirement imposes limits on a nonexistent obligation. Finally, the opening auction parameters described in Rule 952NY, under which an Auction will not be conducted unless the composite NYSE MKT bid-ask is within an acceptable range (identical to the bid-ask parameters pursuant to Rule 925NY(b)(4)(A)–(E)) would remain in effect under the Exchange’s current proposal. The Exchange thus believes that the current proposal is appropriate and first market to open a series, there was not necessarily an accurate National Best Bid/Offer (‘‘NBBO’’) available, and the Exchange did not have a systemically enforced narrow-width bid-ask differential applicable to the auction process. Since the time of the original introduction of the System, however, NYSE MKT has instituted increased functionality to define price parameters during the auction process. 8 See Securities Exchange Act Release No. 68383 (Dec. 7, 2012), 77 FR 74258 (Dec. 13, 2012) (SR– NYSEMKT–2012–72). 9 See Securities Exchange Act Release No. 59472 (Feb. 27, 2009) 74 FR 9843 (Mar. 6, 2009) (SR– NYSEAltr–2008–14). PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 74211 further notes that the proposal would more closely align the Exchange’s rules with the rules of other options exchanges that do not require narrowwidth quotes during an opening auction. Neither BATS Exchange, Inc. (‘‘BATS’’) nor NASDAQ Stock Market LLC (‘‘NOM’’) imposes narrow-width quote requirements during an opening auction.10 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Section 6(b)(5) of the Act,12 in particular, because 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, and to remove impediments to, and perfect the mechanism of a free and open market and a national market system. The proposed rule change is designed to remove impediments to, and perfect the mechanism of a free and open market and a national market system by setting price parameters for the opening Auction rather than relying on a restriction that does not have obligatory performance. The wider quote differential requirement for openings when an Auction is conducted will implement a less burdensome quoting obligation in a way that benefits market participants and enables them to safely execute their orders on the Exchange because the proposal maintains the price protection parameters established under Rule 952NY. This will reduce the likelihood of disadvantageous pricing for orders executed during an Auction, which also contributes to the protection of investors and the public interest generally. The Exchange believes that by maintaining these price protection parameters within the Auction process, rather than just as a requirement for submitted quotes, Customers and other market participants will continue to be afforded a level of price protection on executions that occur during an Auction. The proposed rule is also designed to promote just and equitable principles of trade because it would permit Market Makers to provide opening quotes more consistent with those provided by market makers on other options exchanges.13 10 See BATS Rule 22.5; NOM Rules Chapter VII, Sections 5–6. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). 13 See note 10, supra. E:\FR\FM\10DEN1.SGM 10DEN1 74212 Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices 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 not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the Exchange believes that the proposal will result in the Exchange operating in a more efficient way. The adoption of a less burdensome quoting obligation on NYSE MKT Market Makers during the auction process will allow them to compete more effectively with their counterparts on other options exchanges that are similarly not subject to a narrow-width bid-ask differential applicable during auctions. In addition, the proposed rule change is procompetitive on both an inter-market and intra-market basis in that it is not only designed to help the Exchange compete more effectively with other options exchanges with similar rules, but could also lead to increased participation by a greater number of Market Makers on the Exchange during the auction process because of the more flexible quoting obligations it would impose. 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. maindgalligan on DSK5TPTVN1PROD with NOTICES 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 14 and Rule 19b–4(f)(6) thereunder.15 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. 14 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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 satisfied this requirement. 15 17 VerDate Mar<15>2010 18:48 Dec 09, 2013 Jkt 232001 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 16 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEMKT–2013–96 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–2013–96. 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 will also be available for 16 15 PO 00000 U.S.C. 78s(b)(2)(B). Frm 00112 Fmt 4703 Sfmt 4703 inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. 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–2013–96 and should be submitted on or before December 31, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–29381 Filed 12–9–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70986; File No. SR–BATS– 2013–051] Self-Regulatory Organizations; BATS Exchange, Inc.; Order Granting Approval of Proposed Rule Change To List and Trade Shares of the iShares Liquidity Income Fund December 4, 2013. I. Introduction On September 19, 2013, BATS Exchange, Inc. (‘‘Exchange’’ or ‘‘BATS’’) 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 list and trade shares (‘‘Shares’’) of the iShares Liquidity Income Fund (‘‘Fund’’). The proposed rule change was published for comment in the Federal Register on October 22, 2013.3 The Commission received no comments on the proposal. This order grants approval of the proposed rule change. II. Description of the Proposed Rule Change The Exchange proposes to list and trade the Shares of the Fund pursuant to BATS Rule 14.11(i), which governs the listing and trading of Managed Fund Shares on the Exchange. The Shares will be offered by iShares U.S. ETF Trust (‘‘Trust’’), which was established as a Delaware statutory trust on June 21, 17 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. 70608 (October 3, 2013), 78 FR 62791 (‘‘Notice’’). 1 15 E:\FR\FM\10DEN1.SGM 10DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 237 (Tuesday, December 10, 2013)]
[Notices]
[Pages 74210-74212]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29381]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70978; File No. SR-NYSEMKT-2013-96]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Rule 925NY To
Eliminate the Requirement That Market Makers Comply With the Bid-Ask
Differential Requirements Specified in Rule 925NY(b)(4)(A)-(E) When
Electronically Bidding and Offering on the Exchange System During the
Opening Auction Process

December 4, 2013.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on November 20, 2013, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, 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\ 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 Rule 925NY to eliminate the
requirement that Market Makers comply with the bid-ask differential
requirements specified in Rule 925NY(b)(4)(A)-(E) when electronically
bidding and offering on the Exchange system during the opening auction
process (``Auction''). 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 925NY(b)(5) to eliminate the
requirement that Market Makers, when electronically bidding and
offering on the Exchange system (``System'') \4\ during an Auction,
must comply with the bid-ask differentials specified in Rule
925NY(b)(4)(A)-(E) and instead make the bid-ask differential specified

[[Page 74211]]

in Rule 925NY(b)(5) applicable at all times, including during an
Auction.
---------------------------------------------------------------------------

\4\ The term ``Exchange System'' refers to the Exchange's
electronic order delivery, execution and reporting system through
which orders and quotes for listed options are consolidated for
execution and/or display. See NYSE MKT Options Rule 900.2NY(48).
---------------------------------------------------------------------------

Current Rule 925NY(b)(5) provides that options traded on the System
during core trading hours may be quoted with a difference not to exceed
$5 between the bid and offer regardless of the price of the bid
(``standard-width quote''), except with respect to an Auction, in which
case Rule 925NY(b)(4) governs bidding and offering quote differentials.
Rule 925NY(b)(4)(A)-(E) set out Auction bid-ask differentials that vary
depending on the price of the bid. Under Rule 925NY(b)(4)(A)-(E), the
quote widths may not be more than: $0.25 if the bid is less than $2;
$0.40 if the bid is at least $2 but does not exceed $5; $0.50 if the
bid is more than $5 but does not exceed $10; $0.80 if the bid is more
than $10 but does not exceed $20; and $1 if the bid is more than $20.
The Exchange now proposes to replace the varying narrow-width bid-ask
differentials that apply to Market Maker quotations during an Auction
with the $5 quote differential that is in place at all other times.
The Exchange notes that the narrow-width bid-ask differentials
applicable to Market Maker quotations during an Auction, which the
current proposal would replace, were previously deleted from Rule 925NY
in 2010,\5\ and reinstituted in 2011.\6\ The Exchange found that at
times the absence of more narrow quotes during an Auction prevented
series from opening promptly, and could unnecessarily delay the
execution of orders. At that time, the Exchange believed that setting a
narrower differential for Auction quotes would expedite the opening of
all option series on the Exchange promptly after the opening of the
underlying security.
---------------------------------------------------------------------------

\5\ See Securities Exchange Act Release No. 62248 (June 9,
2010), 75 FR 34194 (June 16, 2010) (SR-NYSEAmex-2010-51).
\6\ See Securities Exchange Act Release No. 63746 (January 20,
2011), 75 FR 4961 (Jan. 27, 2011) (SR-NYSEAmex-2011-05).
---------------------------------------------------------------------------

The Exchange now believes, however, that the rationales \7\ under
which it first eliminated the narrow-width quoting obligations for
Auctions in 2010 are once again evident to such an extent that the
narrow-width quoting obligations are no longer necessary for Auctions,
and thus the Exchange proposes to eliminate them again. The Exchange no
longer has the concerns it had in 2011 regarding potential delays, both
in the opening of series and in the execution of orders. In particular,
the Exchange's 2012 amendment to Rule 952NY allows for series to open
on the wider, standard-width quote when an Auction is not to take
place,\8\ which is currently the case in a majority of series openings
on the Exchange.
---------------------------------------------------------------------------

\7\ The obligation for Market Makers to provide opening quotes
at the widths described in Rule 925NY(b)(4)(A)-(E) had been adapted
from the era when the Exchange conducted open outcry rotations, had
only open outcry quotes available to respond to an order, and did
not disseminate Firm Quotes. Further, an open outcry opening
rotation only required a response from a single Market Maker. The
opening market represented the firm quote for all Market Makers in a
trading crowd, and any such Market Maker could be held to fill
orders at the quoted market. The original intent of maintaining the
obligation for Market Makers to submit narrow, traditional bid-ask
quotations was to encourage a narrower aggregated Exchange market
during the opening auction. This was especially necessary as NYSE
MKT was often the first market to open a series, there was not
necessarily an accurate National Best Bid/Offer (``NBBO'')
available, and the Exchange did not have a systemically enforced
narrow-width bid-ask differential applicable to the auction process.
Since the time of the original introduction of the System, however,
NYSE MKT has instituted increased functionality to define price
parameters during the auction process.
\8\ See Securities Exchange Act Release No. 68383 (Dec. 7,
2012), 77 FR 74258 (Dec. 13, 2012) (SR-NYSEMKT-2012-72).
---------------------------------------------------------------------------

Additionally, it is no longer necessary to require Market Makers to
submit narrow, traditional bid-ask quotations to encourage a narrower
Exchange market during the auction process, as was the original intent
of the limitations on bid-ask differentials. Since the time of the
original introduction of the System, the Exchange has instituted
increased functionality to define price parameters during the auction
process. The system will not conduct an Auction in a series until one
of two conditions is met: (i) A Market Maker submits a narrow-width
quote, or (ii) a narrow-width NBBO is received from OPRA. This is a
systemic solution which renders the rules-based narrow bid-ask
differential moot. Further, in light of the lowering of the Lead Market
Maker quoting obligation to 90% in 2008,\9\ there is no requirement for
a Market Maker to submit a quotation for an Auction, and thus the
Auction quote-width requirement imposes limits on a non-existent
obligation.
---------------------------------------------------------------------------

\9\ See Securities Exchange Act Release No. 59472 (Feb. 27,
2009) 74 FR 9843 (Mar. 6, 2009) (SR-NYSEAltr-2008-14).
---------------------------------------------------------------------------

Finally, the opening auction parameters described in Rule 952NY,
under which an Auction will not be conducted unless the composite NYSE
MKT bid-ask is within an acceptable range (identical to the bid-ask
parameters pursuant to Rule 925NY(b)(4)(A)-(E)) would remain in effect
under the Exchange's current proposal.
The Exchange thus believes that the current proposal is appropriate
and further notes that the proposal would more closely align the
Exchange's rules with the rules of other options exchanges that do not
require narrow-width quotes during an opening auction. Neither BATS
Exchange, Inc. (``BATS'') nor NASDAQ Stock Market LLC (``NOM'') imposes
narrow-width quote requirements during an opening auction.\10\
---------------------------------------------------------------------------

\10\ See BATS Rule 22.5; NOM Rules Chapter VII, Sections 5-6.
---------------------------------------------------------------------------

2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\12\ in particular, because 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, and to remove impediments to, and perfect the mechanism of
a free and open market and a national market system.
---------------------------------------------------------------------------

\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The proposed rule change is designed to remove impediments to, and
perfect the mechanism of a free and open market and a national market
system by setting price parameters for the opening Auction rather than
relying on a restriction that does not have obligatory performance. The
wider quote differential requirement for openings when an Auction is
conducted will implement a less burdensome quoting obligation in a way
that benefits market participants and enables them to safely execute
their orders on the Exchange because the proposal maintains the price
protection parameters established under Rule 952NY. This will reduce
the likelihood of disadvantageous pricing for orders executed during an
Auction, which also contributes to the protection of investors and the
public interest generally. The Exchange believes that by maintaining
these price protection parameters within the Auction process, rather
than just as a requirement for submitted quotes, Customers and other
market participants will continue to be afforded a level of price
protection on executions that occur during an Auction. The proposed
rule is also designed to promote just and equitable principles of trade
because it would permit Market Makers to provide opening quotes more
consistent with those provided by market makers on other options
exchanges.\13\
---------------------------------------------------------------------------

\13\ See note 10, supra.

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[[Page 74212]]

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 not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes that the proposal will result in the Exchange operating in a
more efficient way. The adoption of a less burdensome quoting
obligation on NYSE MKT Market Makers during the auction process will
allow them to compete more effectively with their counterparts on other
options exchanges that are similarly not subject to a narrow-width bid-
ask differential applicable during auctions. In addition, the proposed
rule change is pro-competitive on both an inter-market and intra-market
basis in that it is not only designed to help the Exchange compete more
effectively with other options exchanges with similar rules, but could
also lead to increased participation by a greater number of Market
Makers on the Exchange during the auction process because of the more
flexible quoting obligations it would impose.

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 \14\ and Rule 19b-4(f)(6) thereunder.\15\
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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\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 satisfied 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 15 U.S.C. 78s(b)(2)(B).
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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-2013-96 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-2013-96. 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 will also be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. 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-2013-96 and should be submitted on or before
December 31, 2013.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29381 Filed 12-9-13; 8:45 am]
BILLING CODE 8011-01-P

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