Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Options Rule 6.40 To Expand the Scope of the Existing Risk Limitation Mechanism To Address Multiple, Successive Triggers of the Risk Limitation Mechanism, 2219-2224 [2014-00334]
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Federal Register / Vol. 79, No. 8 / Monday, January 13, 2014 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
2. Pipe delimited with field names as
first record
E. Data set or orders entered into
reopening auctions during halts or
Trading Pauses.
1. Arrivals, Changes, Cancels, # shares,
limit/market, side, Limit State side
2. Pipe delimited with field name as
first record
F. Data set of order events received
during Limit States.
G. Summary data on order flow of
arrivals and cancellations for each 15second period for discrete time periods
and sample stocks to be determined by
the SEC in subsequent data requests.
Must indicate side(s) of Limit State.
1. Market/marketable sell orders arrivals
and executions
a. Count
b. Shares
c. Shares executed
2. Market/marketable buy orders arrivals
and executions
a. Count
b. Shares
c. Shares executed
3. Count arriving, volume arriving and
shares executing in limit sell orders
above NBBO mid-point
4. Count arriving, volume arriving and
shares executing in limit sell orders
at or below NBBO mid-point (nonmarketable)
5. Count arriving, volume arriving and
shares executing in limit buy orders
at or above NBBO mid-point (nonmarketable)
6. Count arriving, volume arriving and
shares executing in limit buy orders
below NBBO mid-point
7. Count and volume arriving of limit
sell orders priced at or above NBBO
mid-point plus $0.05
8. Count and volume arriving of limit
buy orders priced at or below NBBO
mid-point minus $0.05
9. Count and volume of (3–8) for cancels
10. Include: ticker, date, time at start,
time of Limit State, all data item
fields in 1, last sale prior to 15second period (null if no trades
today), range during 15-second
period, last trade during 15-second
period
III. At Least Two Months Prior to the
End of the Pilot Period, All Participants
Shall Provide to the SEC Assessments
Relating to the Impact of the Plan and
Calibration of the Percentage
Parameters as Follows
A. Assess the statistical and economic
impact on liquidity of approaching Price
Bands.
B. Assess the statistical and economic
impact of the Price Bands on erroneous
trades.
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C. Assess the statistical and economic
impact of the appropriateness of the
Percentage Parameters used for the Price
Bands.
D. Assess whether the Limit State is
the appropriate length to allow for
liquidity replenishment when a Limit
State is reached because of a temporary
liquidity gap.
E. Evaluate concerns from the options
markets regarding the statistical and
economic impact of Limit States on
liquidity and market quality in the
options markets. (Participants that
operate options exchange should also
prepare such assessment reports.)
F. Assess whether the process for
entering a Limit State should be
adjusted and whether Straddle States
are problematic.
G. Assess whether the process for
exiting a Limit State should be adjusted.
H. Assess whether the Trading Pauses
are too long or short and whether the
reopening procedures should be
adjusted.
[FR Doc. 2014–00346 Filed 1–10–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71253; File No. SR–
NYSEArca–2013–148]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Arca
Options Rule 6.40 To Expand the
Scope of the Existing Risk Limitation
Mechanism To Address Multiple,
Successive Triggers of the Risk
Limitation Mechanism
January 7, 2014.
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 December
26, 2013, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory 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).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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2219
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Arca Options Rule 6.40 to expand
the scope of the existing Risk Limitation
Mechanism to address multiple,
successive triggers of the Risk
Limitation Mechanism. 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 Options Rule 6.40 to expand
the scope of the existing Risk Limitation
Mechanism to address multiple,
successive triggers of the Risk
Limitation Mechanism.
Overview
The Exchange has in place a risklimitation system that is designed to
help Market Makers and non-Market
Maker OTP Firms and OTP Holders
(collectively, referred to herein as
‘‘dealers’’) better manage risk during
periods of increased and significant
trading activity. The three existing Risk
Limitation Mechanisms (described
below) are designed to mitigate the
potential risks of multiple executions
against a dealer’s trading interest that, in
today’s highly automated and electronic
trading environment, can occur
simultaneously across multiple series
and multiple option classes. In
operation, under current Rule 6.40,
when a dealer has triggered a Risk
Limitation Mechanism in a given option
class (by breaching preset thresholds),
the Exchange will cancel all resting
quotes and/or certain orders and will
reject all subsequent quotes and/or
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certain orders in the affected option
class (underlying symbol) until the
dealer submits a message to the
Exchange requesting to re-enable the
entry of quotes or certain orders. This
temporary suspension from the market
in the affected option classes
(specifically as relates to quoting or
certain orders) is meant to operate as a
safety valve that forces dealers to reevaluate their positions before
requesting to re-enter the market. As
discussed below, the Exchange believes
that the majority of dealers that avail
themselves of the Risk Limitation
Mechanism utilize automated, systemgenerated messages to request that the
Exchange re-enable the entry of their
quotes or certain orders after triggering
the Risk Limitation Mechanism.
Provided the dealer does not experience
multiple triggers of the Risk Limitation
Mechanism in rapid succession, the
Exchange believes the automated reenable message is sufficient.
The goal of the current proposal is to
address circumstances where a dealer
experiences multiple, successive
triggers of the Risk Limitation
Mechanism, which the Exchange
believes would be indicative of the
dealer experiencing a bona fide problem
(i.e., a potential system error). Thus,
when a dealer experiences multiple,
successive triggers of the Risk
Limitation Mechanism, the Exchange
proposes a two-pronged remedial
response. First, the Exchange would
cancel all of the dealer’s quotes or
Applicable Orders (defined below)—as
opposed to cancelling only those quotes
or certain orders in the option class
(underlying symbol) in which the dealer
triggered the Risk Limitation
Mechanisms. Second, the Exchange
would require that the dealer make nonautomated contact with the Exchange to
re-enable the submission of the dealer’s
quotes or Applicable Orders.4
The Exchange believes that the
proposed enhancement to current Rule
6.40 would help maintain a fair and
orderly market because it would
suspend all of the dealers’ quoting or
trading in certain orders following
multiple, successive triggers of the Risk
Limitation Mechanism and would
require non-automated contact with the
Exchange before this suspension is
lifted. The proposed modifications
would therefore encourage increased
attention by dealers to their risk
tolerance and related controls. The
Exchange is also proposing these
4 The Exchange will include as part of a Trader
Update appropriate contact information to be used
by dealers when requesting to re-enable the entry
of quotes and orders.
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modifications in response to requests
from its clients and believes the changes
will assist these clients in better
managing their risks.
Existing Risk Limitation Mechanism
The Exchange first adopted a risklimitation system, as embodied in Rule
6.40, to manage risk during periods of
increased and significant trading
activity.5 The prior version of the Rule
provided only a Transaction-Based Risk
Limitation Mechanism that applied
solely to Market Maker quotes.
In 2012, in response to an
increasingly automated and electronic
trading environment, the Exchange
adopted the risk protections afforded
under current Rule 6.40 (Risk Limitation
Mechanism).6 Current Rule 6.40
expanded upon the earlier version by
extending the transaction-based
limitation mechanism to orders from
Market Makers as well as to orders from
non-Market Maker OTP Firms and OTP
Holders (together, ‘‘non-Market
Makers’’) 7 and providing for two
additional risk limitation mechanisms—
a volume-based mechanism and a
percentage-based mechanism
(collectively, the ‘‘Risk Limitation
Mechanisms’’). In addition to applying
to all Market Maker quotes, the existing
Risk Limitation Mechanisms apply to
dealers’ orders submitted via ArcaDirect
and those designated as one of three
‘‘post no preference’’ order types—
specifically, PNP, PNP-Blind and PNPLight, or as Liquidity Adding Orders
(‘‘ALO’’), which account for upwards of
ninety-five percent of order flow to the
Exchange (collectively, the ‘‘Applicable
Orders’’).8 Each Risk Limitation
Mechanism is designed to measure a
dealer’s risk exposure within a time
5 See Securities Exchange Act Release No. 54238
(July 28, 2006), 71 FR 44758 (August 7, 2006) (SR–
NYSEArca–2006–13).
6 See Securities Exchange Act Release No. 34–
67714 (August 22, 2012), 77 FR 167 (August 28,
2012) (SR–NYSEArca–2012–87). The Risk
Limitation Mechanisms as set forth in current Rule
6.40 (and the proposal described herein) are only
applicable to electronic trading on the Exchange.
7 The Exchange specified within Rule 6.40(a) that
non-Market Maker OTP Firms and OTP Holders
would be referred to as ‘‘non-Market Makers’’ for
purposes of Rule 6.40.
8 See paragraphs (p), (u), (v) and (t) of NYSE Arca
Options Rule 6.62 (Certain Types of Orders
Defined), respectively. The Exchange notes that the
rule is currently silent as to the source and order
types that are subject to the Risk Limitation
Mechanisms. The Exchange therefore proposes to
modify Commentary .07 to Rule 6.40 to identify the
source and the order types to which the existing
(and modified) Risk Limitation Mechanisms apply
and would announce via Trader Update any
changes to these source(s) or order types. Similarly,
for the sake of clarity, the Exchange proposes to
replace ‘‘order’’ with ‘‘Applicable Order’’ in
existing paragraphs (b), (c), (d) and (e) to Rule 6.40,
and elsewhere in the rule as necessary.
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period specified by the Exchange, based
on either the number of trades executed
by the dealer (the ‘‘Transaction-Based
Risk Limitation Mechanism’’); the
number of contacts entered by the
dealer (the ‘‘Volume-Based TransactionBased Risk Limitation Mechanism’’); or
the percentage of a dealer’s quoted size
that gets traded (the ‘‘Percentage-Based
Risk Limitation Mechanism’’).
Per current Rule 6.40(a), the Exchange
utilizes Trade Counters, based on
trading permit identification (or
‘‘TPID’’), to determine when a Risk
Limitation Mechanism has been
triggered. The dealer selects from within
a range specified by the Exchange
individual risk parameters that, if
breached, will trigger the selected Risk
Limitation Mechanism.9
Per Commentary .08 to the Rule,
while the existing Risk Limitation
Mechanisms apply to quotes and
Applicable Orders from Market Makers
and non-Market Makers, use of this risklimitation feature is mandated only for
Market Makers’ quotes.10 Thus, Market
Makers are required to activate one of
the three Risk Limitation Mechanisms at
all times for their quotes for each class
in their appointment. However, the
existing Risk Limitation Mechanisms
are entirely voluntary for Applicable
Orders submitted by Market Makers and
non-Market Makers. With respect to the
Applicable Orders, Market Makers and
non-Market Makers have the option of
availing themselves of one of the three
Risk Limitation Mechanisms for some or
all of the option classes in which they
trade/provide quotes.11 A Market Maker
9 Per current Commentary .03 to Rule 6.40, the
Exchange will not (i) specify a minimum setting of
less than one or a maximum setting of more than
100 for the Transaction-Based Risk Limitation
Mechanism; (ii) specify a minimum setting of less
than 20 or a maximum setting of more than 5,000
for the Volume-Based Risk Limitation Mechanism;
or (iii) specify a minimum setting of less than 100
or a maximum setting of more than 2,000 for the
Percentage-Based Risk Limitation Mechanism. The
Exchange proposes to amend Commentary .03 to
Rule 6.40 to reflect that any changes to these
settings would be announced to dealers via Trader
Update, rather than Regulatory Bulletin.
10 When first implemented, Rule 6.40 was entitled
‘‘Market Maker Risk Limitation Mechanism— OX’’,
and applied solely to—and was mandated for—
Market Maker quotes. However, when the rule was
revised in 2012, and the risk-limitation
functionality was expanded to cover Applicable
Orders as well as quotes, the changes to the title of
the rule and the accompanying rule text did not
make entirely clear that the Risk Limitation
Mechanism is required for all Market Maker quotes.
Thus, as proposed, new Commentary .04 will state
that use of the Risk Limitation Mechanism is
mandated only for Market Maker quotes and is
otherwise optional.
11 With respect to Applicable Orders submitted by
dealers, the Exchange has included in current Rule
6.40 the concept of a ‘‘specified class’’ to indicate
the option class for which a Risk Limitation
Mechanism is activated; if a dealer does not identify
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may activate one Risk Limitation
Mechanism for its quotes and a different
Risk Limitation Mechanism for its
Applicable Orders, even if both are
activated for the same class.
Per current Rule 6.40(e), and
Commentary .01 to the Rule, once a
dealer’s specified risk exposure is
exceeded within the time period
specified by the Exchange (as tracked by
the Trade Counter), the Risk Limitation
Mechanism is triggered and the NYSE
Arca System (‘‘System’’) automatically
cancels electronic Applicable Orders or
quotes by generating a ‘‘bulk cancel’’
message.12 Per Commentary .01, the
bulk cancel message is processed in
time priority with any other quote, order
or other message received by the
System.13 Thus, any quotes or orders
that match with a Market Maker’s quote
or with a dealers’ [sic] Applicable
Orders that were received by the System
prior to the receipt of the bulk cancel
message would be automatically
executed. Similarly, quotes or orders
received by the System after receipt of
the bulk cancel message would not be
executed against the cancelled quotes or
Applicable Orders. In this regard, Rule
6.40—in its current form and as
proposed—would not relieve dealers of
their ‘‘firm quote’’ obligations under
Rule 602 of Regulation NMS 14 or NYSE
Arca Options Rule 6.86. Furthermore,
the proposed rule change would not
relieve Market Makers of their quoting
obligations under the Exchange’s
Rules.15
A dealer that has been suspended
from quoting or submitting Applicable
Orders in the affected class, pursuant to
current Rule 6.40(e), may only re-enter
the market by submitting a message to
the Exchange requesting re-entry and,
until such message is submitted, any
subsequent quotes or Applicable Orders
will be rejected by the Exchange.16 The
intended purpose of this forced
suspension from quoting and from
certain trading in the affected class is to
afford the dealer an opportunity to
evaluate its positions before opting to
re-enter the market. In practice, the
Exchange has received responses to bulk
cancel messages from dealers requesting
to re-enter the market within as few as
any ‘‘specified class,’’ none of the Risk Limitation
Mechanisms will be activated.
12 See NYSE Arca Options Rule 6.40(b)(1)–(3);
(c)(1)–(3); and (d)(1)–(3).
13 As previously noted, for the sake of clarity, the
Exchange proposes to revise the rule text to utilize
‘‘Applicable Order’’ rather than ‘‘order’’ where
necessary.
14 17 CFR 242.602.
15 See, e.g., NYSE Arca Options Rule 6.37B.
16 See NYSE Arca Options Rule 6.40(e), and
Commentary .01.
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two milliseconds. This rapid response
time leads the Exchange to conclude
that the messages being submitted in
response to the bulk cancel messages are
automated, system-generated messages.
The effect of this apparent automation is
that dealers that are effectively kicked
out of the market (for their quotes or
Applicable Orders) in the affected class
for triggering the Risk Limitation
Mechanism can re-enter the market
within milliseconds. The Exchange
believes that an automated response is
sufficient, provided the dealer does not
experience multiple triggers of the Risk
Limitation Mechanism in rapid
succession.
Under current Rule 6.40 there is no
mechanism for addressing multiple,
successive triggers of the Risk
Limitation Mechanisms within a time
period specified by the Exchange, which
could be particularly problematic for
dealers if the markets turns in an
unexpected direction.
Proposed Changes to Risk Limitation
Mechanism
The Exchange proposes to modify
Rule 6.40 to address circumstances
where a dealer experiences multiple,
successive triggers of the Risk
Limitation Mechanism. The Exchange
proposes a two-pronged remedial
response. First, the Exchange would
cancel all of the dealer’s quotes or
Applicable Orders (defined below)—as
opposed to cancelling only those quotes
or certain orders in the option class
(underlying symbol) in which the dealer
triggered the Risk Limitation
Mechanism. Second, the Exchange
would require that the dealer make nonautomated contact with the Exchange to
re-enable the submission of the dealer’s
quotes or certain orders.
Proposed Rule 6.40(a)(2) would
provide for a ‘‘trigger counter’’ that
(similar to the Trade Counter, which
serves as the basis for determining
whether a Risk Limitation Mechanism
has been triggered) would track the
number of times that a dealer has
triggered any of the Risk Limitation
Mechanisms pursuant to current Rule
6.40(b), (c), or (d).17
Proposed Rule 6.40(f) outlines the
actions that the System would take if
the trigger counter indicates that any of
the Risk Limitation Mechanisms have
17 This proposed addition would require that
current Rule 6.40(a) be renamed from ‘‘Trade
Counter’’ to ‘‘Counters,’’ and renumbered such that
‘‘Trade Counter’’ would be numbered as proposed
Rule 6.40(a)(1). The Exchange also proposes to
amend paragraph (a) to refer to ‘‘Applicable
Orders,’’ as referenced in Commentary .07 to the
Rule (instead of ‘‘orders’’) to make clear which
orders are subject to the Risk Limitation
Mechanisms.
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2221
been triggered in excess of the number
of times specified by the dealer (within
a parameter set by the Exchange, as
noted below) within the time period
specified by the Exchange. In short,
once a dealer has exceeded the number
of triggers of the Risk Limitation
Mechanisms, pursuant to paragraph (f)
of Rule 6.40, all Applicable Orders or
quotes by a Market Maker or all
Applicable Orders by a non-Maker
Maker would be cancelled.
Specifically, per proposed Rule
6.40(f)(1), if the Risk Limitation
Mechanism is triggered pursuant to
paragraph (b)(1), (c)(1) or (d)(1) to this
Rule, the System would automatically
cancel all of the non-Market Maker’s
Applicable Orders, regardless of which
specified class caused the underlying
trigger of the Risk Limitation
Mechanism. Per proposed Rule
6.40(f)(2), if the Risk Limitation
Mechanism is triggered pursuant to
paragraph (b)(2), (c)(2) or (d)(2) to this
Rule, the System would automatically
cancel all of the Market Maker’s
Applicable Orders, regardless of which
specified class caused the underlying
trigger of the Risk Limitation
Mechanism. And, per proposed Rule
6.40(f)(3), if the Risk Limitation
Mechanism is triggered pursuant to
paragraph (b)(3), (c)(3) or (d)(3) to this
Rule, the System would automatically
cancel all of the Market Maker’s quotes,
regardless of which appointed class
caused the underlying trigger of the Risk
Limitation Mechanism.
The difference between the existing
Risk Limitation Mechanism versus the
proposed enhancement is the
cancellation of all of a dealer’s
Applicable Orders or quotes upon
breach of proposed paragraph (f) to Rule
6.40. Thus, if a dealer triggers a Risk
Limitation Mechanism, pursuant to
paragraph (e) of current Rule 6.40, only
the dealer’s quotes or Applicable Orders
in the option class that triggered the
Risk Limitation Mechanism would be
cancelled by the Exchange; whereas if a
dealer breaches proposed paragraph (f)
of Rule 6.40, by engaging in multiple
triggers of the Risk Limitation
Mechanism in a time period specified
by the Exchange, all of that dealer’s
Applicable Orders or quotes in any
option class(es) submitted that day
would be cancelled—not just the
Applicable Orders or quotes in the
option class(es) that led to the most
recent trigger of the Risk Limitation
Mechanism.18 The Exchange believes
18 The cancellation will only apply to those
quotes or Applicable Orders submitted by the
dealer that trading day. With respect to the
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that this modification—to temporarily
suspend quoting or Applicable Orders
in all classes actively traded by the
dealer—would strengthen the efficacy of
the existing Risk Limitation
Mechanisms by providing dealers with
increased sensitivity in setting risk
tolerance and controls.
Pursuant to proposed Commentary .01
to Rule 6.40, upon breaching proposed
paragraph (f) of Rule 6.40, the System
would automatically cancel electronic
Applicable Orders or quotes by
generating a ‘‘bulk cancel’’ message—
just as the system currently does in the
event of a breach of the Risk Limitation
Mechanism (i.e., current paragraph (e)
of Rule 6.40).19 In addition to the bulk
cancel message, the System would
generate an alert message providing
notice that the dealer has exceeded the
number of triggers of the Risk Limitation
Mechanisms, pursuant to paragraph (f)
of Rule 6.40.
The Exchange also proposes to amend
current Commentary .02 to Rule 6.40 to
reflect that the Exchange would (and
does) accept automated messages from
dealers requesting the re-enabling of
quotes or Applicable Orders, following
a breach of paragraph (e). The Exchange
believes that this proposed change
would add transparency to the
functioning of the Exchange and the
types of messages it would accept when
a Risk Limitation Mechanism is
triggered pursuant to paragraph (e) of
the Rule.
The Exchange proposes to further
amend current Commentary .02 to Rule
6.40 to require that, upon a dealer’s
breach of proposed paragraph (f) to
current Rule 6.40, the dealer would
have to make non-automated contact
with the Exchange to enable the entry of
all new Applicable Orders or quotes,
which had been cancelled pursuant to
proposed paragraph (f).20 The Exchange
cancellation of all Applicable Orders, pursuant to
proposed paragraph (f) to Rule 6.40, this would
include a cancellation of Applicable Orders in
option classes for which the dealer may not have
opted to utilize a Risk Limitation Mechanism. Thus,
even though dealers are not required to subject all
option classes traded to this risk-limitation feature,
a breach of proposed paragraph 6.40(f) would affect
all Applicable Orders in all option classes traded
that day.
19 Relatedly, the Exchange also proposes to
amend Commentary .08 to Rule 6.40 regarding the
cancellation of Applicable Orders to make it
pertinent to paragraph (f), in addition to its current
application to paragraph (e) to Rule 6.40.
20 Specifically, proposed Commentary .03 to Rule
6.40 provides that ‘‘[i]f any of the Risk Limitation
Mechanisms are triggered pursuant to paragraphs
(f)(1) or (f)(2) of Rule 6.40, any Applicable Orders
sent by the non-Market Maker or Market Maker,
respectively, in any class, shall be rejected until the
non-Market Maker or Market Maker makes nonautomated contact with the Exchange to enable the
entry of new Applicable Orders. If any of the Risk
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believes that requiring this additional,
non-automated contact will strengthen
the efficacy of the existing Risk
Limitation Mechanisms by providing
dealers with increased sensitivity in
setting risk tolerance and controls.
Pursuant to proposed Commentary .03
to Rule 6.40, the Exchange would
specify via Trader Update the applicable
range within which dealers could select
the number of times the Risk Limitation
Mechanism could be triggered before
breaching proposed paragraph (f) to
Rule 6.40, but this setting would not be
less than a minimum of one and a
maximum of 100. The Exchange
believes that setting the parameters
within this broad range would provide
dealers with ample flexibility in setting
their tolerance for risk. Those dealers
with a lower risk tolerance or those that
may be prone to multiple, successive
triggers of the Risk Limitation
Mechanisms in shorter periods of time,
may opt to select a number of triggers
on the lower end of the range, thereby
optimizing the protection afforded by
this proposed rule change, while those
dealers with a higher risk tolerance or
that are less likely to experience
multiple, successive triggers of the Risk
Limitation Mechanism, may select the
maximum allowable triggers to decrease
the protections afforded by the proposed
rule change. Moreover, while the
Exchange retains discretion with respect
to the levels at which it could adjust
these settings, the Exchange would not
be permitted to adjust the settings below
the minimum or maximum proposed,
which, the Exchange believes would
reasonably ensure that the settings are at
all times within a reasonable range.
Consistent with current Commentary
.03 to Rule 6.40, the applicable time
period within which dealers would
select the number of triggers before
breaching proposed paragraph (f) to
Rule 6.40 would not be less 100
milliseconds, unless otherwise
announced by the Exchange. The
Exchange believes that specifying the
applicable minimum, maximum and/or
default settings via Trader Update,
including any changes thereto in the
future designed to ensure that the
mechanisms work as intended, would
be consistent with the manner in which
the Exchange has communicated any
changes to the existing Risk Limitation
Mechanism settings and is consistent
with the manner in which the
Commission currently permits option
exchanges to communicate settings or
Limitation Mechanisms are triggered pursuant to
Rule 6.40(f)(3), any quotes sent by the Market
Maker, in any class, shall be rejected until the
Market Maker makes non-automated contact with
the Exchange to enable the entry of new quotes.’’
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parameters for various exchange
mechanisms to their members other
than through the rule filing process, i.e.,
via notices, bulletins or circulars.21
The Exchange also proposes at this
time to make a procedural change for
making announcements regarding
functionality associated with the Risk
Limitation Mechanism. Presently the
Exchange issues Regulatory Bulletins
when making such announcements.
Going forward, the Exchange proposes
to issue a Trader Update in lieu of a
Regulatory Bulletin. Regulatory
Bulletins generally contain information
regarding legal and regulatory matters
while Trader Updates deal with issues
such as trading, systems changes and
real-time market announcements. The
Exchange believes that it is more
appropriate to make announcements
regarding the Risk Limitation
Mechanism via Trader Update. Trader
Updates, like Regulatory Bulletins, are
electronically distributed to all OTP
Holders and OTP Firms and are posted
on the Exchange’s Web site.
Accordingly, the Exchange proposes
amended current Commentaries .03 and
.07 to Rule 6.40 by replacing references
to ‘‘Regulatory Bulletin’’ with ‘‘Trader
Update.’’ Should the Exchange make a
change to the Risk Limitation
Mechanism settings, for example to
accommodate changes in market
conditions or the technology needs and
considerations of dealers, the Exchange
would issue a Trader Update at least
one trading day in advance of the
settings becoming effective, which
would give dealers notice and
21 See, e.g., Securities Exchange Act Release No.
34–70038 (July 25, 2013), 78 FR 147 (July 31, 2013)
(SR–NYSEArca–2013–72) (NYSE Arca Rule 6.60,
which applies a trade collar mechanism to prevent
the immediate execution of certain incoming orders
outside of a specified parameter (referred to as a
‘‘Trading Collar’’) and provides that changes to the
Trading Collar may be announced by Trader
Update. See also BOX Options Exchange LLC
(‘‘BOX’’) Rule 8140, which provides that, related to
BOX’s Quote Removal Mechanism Upon Technical
Disconnect, BOX Market Makers will be notified of
the value that ‘‘n’’ seconds represents via
Regulatory Circular. See also Securities Exchange
Act Release No. 58140 (July 10, 2008), 73 FR 41384
(July 18, 2008) (SR–BSE–2008–40), in which the
Commission noted that ‘‘n’’ seconds would be
configurable by BOX and any subsequent reconfigurations will be announced to Market Makers
via Regulatory Circular. See also Interpretation and
Policy .05 to Chicago Board Options Exchange
(‘‘CBOE’’) Rule 6.74A, which provides that any
determinations made by CBOE regarding CBOE’s
Automated Improvement Mechanism, such as
eligible classes, order size parameters and the
minimum price increment for certain responses,
shall be communicated in a Regulatory Circular.
See also CBOE Rule 6.13(b)(i)(C)(2)(a), which
provides that CBOE may establish certain maximum
order size eligibility requirements with respect to
automatic executions and announce such
determinations via Regulatory Circular.
E:\FR\FM\13JAN1.SGM
13JAN1
Federal Register / Vol. 79, No. 8 / Monday, January 13, 2014 / Notices
opportunity to make any necessary
adjustments to their risk settings.
Pursuant to proposed Commentary .04
to Rule 6.40, those dealers that utilize
any of the Risk Limitation Mechanisms
would be automatically subject to
proposed paragraph (f) to Rule 6.40.
Thus, while the Risk Limitation
Mechanism is optional for each dealer’s
Applicable Orders, once a dealer avails
itself of the Risk Limitation Mechanism
for some of the option classes in which
it trades, all of the option classes in
which that dealer trades would be
subject to the proposed rule change.22
Pursuant to proposed Commentary .06
to Rule 6.40, absent a breach pursuant
to Rule 6.40(f), the trigger counter
(which would serve as the basis for
determining a breach of proposed
paragraph (f)) would be automatically
reset and would commence a new count
for dealers (1) when a time period
specified by the Exchange elapses; or (2)
following any intraday update to
configurable thresholds, as provided in
Commentary .03 to this Rule 6.40. Per
proposed Commentary .06 to Rule 6.40,
in the event of a breach pursuant to
proposed Rule 6.40(f), the trigger
counter would be reset and would
commence a new count when the
affected dealer makes non-automated
contact with the Exchange to enable the
entry of new Applicable Orders or
quotes, as provided in proposed
Commentary .02 to Rule 6.40.
The Exchange believes that the
proposed change to current Rule 6.40
will enhance the existing Risk
Limitation Mechanisms and enable the
Exchange to aid in mitigating the
potential risks of multiple executions
against a dealer’s trading interest that, in
today’s highly automated and electronic
trading environment, can occur
simultaneously across multiple series
and multiple option classes.
Implementation
The Exchange will announce the
implementation date of the proposed
rule change by Trader Update to be
published no later than 60 days
following the effective date of this filing.
The implementation date will be no
later than 60 days following the
issuance of the Trader Update.
tkelley on DSK3SPTVN1PROD with 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’’), in general, and furthers the
22 Market Makers are required to utilize the Risk
Limitation Mechanism for all of their quotes and
therefore all quotes would be subject to the
proposed change.
VerDate Mar<15>2010
16:40 Jan 10, 2014
Jkt 232001
objectives of Section 6(b)(5) 23 which
requires the rules of an exchange to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange believes that the
proposed rule change removes
impediments to and perfects the
mechanism of a free and open market by
providing dealers with greater control
and flexibility over setting their risk
tolerance and more protection over risk
exposure, if the market moves in an
unexpected direction.
Specifically, the Exchange believes
that cancelling all quotes or Applicable
Orders and requiring dealers to make
non-automated contact with the
Exchange following multiple, successive
triggers of the Risk Limitation
Mechanism allows dealers to be
sensitive to the rapid trading that occurs
in today’s highly automated and
electronic trading environment. This
increased sensitivity will enable dealers
to avoid transacting against their
interests and will help to ensure that
executions will not occur at erroneous
prices, thereby removing impediments
to and promoting a fair and orderly
market.
Moreover, the Exchange believes that
the proposal is consistent with the
protection of investors and the public
interests because it will permit dealers
to better manage the potential risks of
multiple executions against a dealer’s
proprietary interest that, in today’s
highly automated and electronic trading
environment, can occur simultaneously
across multiple series and multiple
option classes. Consistent with the
ability to better manage risk, the
Exchange anticipates that the proposed
enhancement to the existing Risk
Limitation Mechanism could likewise
enhance the Exchange’s overall market
quality as a result of narrowed quote
widths and increased liquidity for series
traded on the Exchange, which would
benefit investors and the public interest.
As with the intent of the existing Risk
Limitation Mechanism, the Exchange
believes that the proposed modifications
to Rule 6.40 would further assist dealers
in providing aggressive quotes and
increased liquidity, thus improving
overall market quality on the Exchange
for the benefit of all investors and the
public.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange is proposing a market
enhancement that would provide
dealers with greater control and
flexibility over setting their risk
tolerance and more protection over risk
exposure, if the market moves in an
unexpected direction. The Exchange
believes the proposal would provide
market participants with additional
protection from erroneous executions.
The proposal is structured to offer the
same enhancement to all dealers,
regardless of size, and would not
impose a competitive burden on any
participant. The Exchange does not
believe that the proposed enhancement
to the existing risk limitation
mechanism would impose a burden on
competing options exchanges. Rather,
the availability of this mechanism may
foster more competition. Specifically,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues. When an exchange
offers enhanced functionality that
distinguishes it from the competition
and participants find it useful, it has
been the Exchange’s experience that
competing exchanges will move to
adopt similar functionality. Thus, the
Exchange believes that this type of
competition amongst exchanges is
beneficial to the market place as a whole
as it can result in enhanced processes,
functionality, and technologies.
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 24 and Rule
19b–4(f)(6) thereunder.25 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
24 15
23 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00077
Fmt 4703
25 17
Sfmt 4703
2223
E:\FR\FM\13JAN1.SGM
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
13JAN1
2224
Federal Register / Vol. 79, No. 8 / Monday, January 13, 2014 / Notices
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) 26 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:
tkelley on DSK3SPTVN1PROD 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–2013–148 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–2013–148. 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
26 15
U.S.C. 78s(b)(2)(B).
VerDate Mar<15>2010
16:40 Jan 10, 2014
Jkt 232001
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2013–148 and should be
submitted on or before February 3, 2014.
of the existing Risk Limitation
Mechanism to address multiple,
successive triggers of the Risk
Limitation Mechanism. 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
BILLING CODE 8011–01–P
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.
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–71252; File No. SR–
NYSEMKT–2013–106]
1. Purpose
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–00334 Filed 1–10–14; 8:45 am]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Rule
928NY To Expand the Scope of the
Existing Risk Limitation Mechanism To
Address Multiple, Successive Triggers
of the Risk Limitation Mechanism
January 7, 2014.
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 December
26, 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
NYSE Rule 928NY to expand the scope
27 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
The Exchange proposes to amend
NYSE Rule 928NY to expand the scope
of the existing Risk Limitation
Mechanism to address multiple,
successive triggers of the Risk
Limitation Mechanism.
Overview
The Exchange has in place a risklimitation system that is designed to
help Market Makers and non-Market
Maker ATP Holders (collectively,
referred to herein as ‘‘dealers’’) better
manage risk during periods of increased
and significant trading activity. The
three existing Risk Limitation
Mechanisms (described below) are
designed to mitigate the potential risks
of multiple executions against a dealer’s
trading interest that, in today’s highly
automated and electronic trading
environment, can occur simultaneously
across multiple series and multiple
option classes. In operation, under
current Rule 928NY, when a dealer has
triggered a Risk Limitation Mechanism
in a given option class (by breaching
preset thresholds), the Exchange will
cancel all resting quotes and/or certain
orders and will reject all subsequent
quotes and/or certain orders in the
affected option class (underlying
symbol) until the dealer submits a
message to the Exchange requesting to
re-enable the entry of quotes or certain
orders. This temporary suspension from
E:\FR\FM\13JAN1.SGM
13JAN1
]]>Agencies
[Federal Register Volume 79, Number 8 (Monday, January 13, 2014)]
[Notices]
[Pages 2219-2224]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00334]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71253; File No. SR-NYSEArca-2013-148]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca
Options Rule 6.40 To Expand the Scope of the Existing Risk Limitation
Mechanism To Address Multiple, Successive Triggers of the Risk
Limitation Mechanism
January 7, 2014.
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 December 26, 2013, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 Options Rule 6.40 to
expand the scope of the existing Risk Limitation Mechanism to address
multiple, successive triggers of the Risk Limitation Mechanism. 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 Options Rule 6.40 to
expand the scope of the existing Risk Limitation Mechanism to address
multiple, successive triggers of the Risk Limitation Mechanism.
Overview
The Exchange has in place a risk-limitation system that is designed
to help Market Makers and non-Market Maker OTP Firms and OTP Holders
(collectively, referred to herein as ``dealers'') better manage risk
during periods of increased and significant trading activity. The three
existing Risk Limitation Mechanisms (described below) are designed to
mitigate the potential risks of multiple executions against a dealer's
trading interest that, in today's highly automated and electronic
trading environment, can occur simultaneously across multiple series
and multiple option classes. In operation, under current Rule 6.40,
when a dealer has triggered a Risk Limitation Mechanism in a given
option class (by breaching preset thresholds), the Exchange will cancel
all resting quotes and/or certain orders and will reject all subsequent
quotes and/or
[[Page 2220]]
certain orders in the affected option class (underlying symbol) until
the dealer submits a message to the Exchange requesting to re-enable
the entry of quotes or certain orders. This temporary suspension from
the market in the affected option classes (specifically as relates to
quoting or certain orders) is meant to operate as a safety valve that
forces dealers to re-evaluate their positions before requesting to re-
enter the market. As discussed below, the Exchange believes that the
majority of dealers that avail themselves of the Risk Limitation
Mechanism utilize automated, system-generated messages to request that
the Exchange re-enable the entry of their quotes or certain orders
after triggering the Risk Limitation Mechanism. Provided the dealer
does not experience multiple triggers of the Risk Limitation Mechanism
in rapid succession, the Exchange believes the automated re-enable
message is sufficient.
The goal of the current proposal is to address circumstances where
a dealer experiences multiple, successive triggers of the Risk
Limitation Mechanism, which the Exchange believes would be indicative
of the dealer experiencing a bona fide problem (i.e., a potential
system error). Thus, when a dealer experiences multiple, successive
triggers of the Risk Limitation Mechanism, the Exchange proposes a two-
pronged remedial response. First, the Exchange would cancel all of the
dealer's quotes or Applicable Orders (defined below)--as opposed to
cancelling only those quotes or certain orders in the option class
(underlying symbol) in which the dealer triggered the Risk Limitation
Mechanisms. Second, the Exchange would require that the dealer make
non-automated contact with the Exchange to re-enable the submission of
the dealer's quotes or Applicable Orders.\4\
---------------------------------------------------------------------------
\4\ The Exchange will include as part of a Trader Update
appropriate contact information to be used by dealers when
requesting to re-enable the entry of quotes and orders.
---------------------------------------------------------------------------
The Exchange believes that the proposed enhancement to current Rule
6.40 would help maintain a fair and orderly market because it would
suspend all of the dealers' quoting or trading in certain orders
following multiple, successive triggers of the Risk Limitation
Mechanism and would require non-automated contact with the Exchange
before this suspension is lifted. The proposed modifications would
therefore encourage increased attention by dealers to their risk
tolerance and related controls. The Exchange is also proposing these
modifications in response to requests from its clients and believes the
changes will assist these clients in better managing their risks.
Existing Risk Limitation Mechanism
The Exchange first adopted a risk-limitation system, as embodied in
Rule 6.40, to manage risk during periods of increased and significant
trading activity.\5\ The prior version of the Rule provided only a
Transaction-Based Risk Limitation Mechanism that applied solely to
Market Maker quotes.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 54238 (July 28,
2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13).
---------------------------------------------------------------------------
In 2012, in response to an increasingly automated and electronic
trading environment, the Exchange adopted the risk protections afforded
under current Rule 6.40 (Risk Limitation Mechanism).\6\ Current Rule
6.40 expanded upon the earlier version by extending the transaction-
based limitation mechanism to orders from Market Makers as well as to
orders from non-Market Maker OTP Firms and OTP Holders (together,
``non-Market Makers'') \7\ and providing for two additional risk
limitation mechanisms--a volume-based mechanism and a percentage-based
mechanism (collectively, the ``Risk Limitation Mechanisms''). In
addition to applying to all Market Maker quotes, the existing Risk
Limitation Mechanisms apply to dealers' orders submitted via ArcaDirect
and those designated as one of three ``post no preference'' order
types--specifically, PNP, PNP-Blind and PNP-Light, or as Liquidity
Adding Orders (``ALO''), which account for upwards of ninety-five
percent of order flow to the Exchange (collectively, the ``Applicable
Orders'').\8\ Each Risk Limitation Mechanism is designed to measure a
dealer's risk exposure within a time period specified by the Exchange,
based on either the number of trades executed by the dealer (the
``Transaction-Based Risk Limitation Mechanism''); the number of
contacts entered by the dealer (the ``Volume-Based Transaction-Based
Risk Limitation Mechanism''); or the percentage of a dealer's quoted
size that gets traded (the ``Percentage-Based Risk Limitation
Mechanism'').
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 34-67714 (August 22,
2012), 77 FR 167 (August 28, 2012) (SR-NYSEArca-2012-87). The Risk
Limitation Mechanisms as set forth in current Rule 6.40 (and the
proposal described herein) are only applicable to electronic trading
on the Exchange.
\7\ The Exchange specified within Rule 6.40(a) that non-Market
Maker OTP Firms and OTP Holders would be referred to as ``non-Market
Makers'' for purposes of Rule 6.40.
\8\ See paragraphs (p), (u), (v) and (t) of NYSE Arca Options
Rule 6.62 (Certain Types of Orders Defined), respectively. The
Exchange notes that the rule is currently silent as to the source
and order types that are subject to the Risk Limitation Mechanisms.
The Exchange therefore proposes to modify Commentary .07 to Rule
6.40 to identify the source and the order types to which the
existing (and modified) Risk Limitation Mechanisms apply and would
announce via Trader Update any changes to these source(s) or order
types. Similarly, for the sake of clarity, the Exchange proposes to
replace ``order'' with ``Applicable Order'' in existing paragraphs
(b), (c), (d) and (e) to Rule 6.40, and elsewhere in the rule as
necessary.
---------------------------------------------------------------------------
Per current Rule 6.40(a), the Exchange utilizes Trade Counters,
based on trading permit identification (or ``TPID''), to determine when
a Risk Limitation Mechanism has been triggered. The dealer selects from
within a range specified by the Exchange individual risk parameters
that, if breached, will trigger the selected Risk Limitation
Mechanism.\9\
---------------------------------------------------------------------------
\9\ Per current Commentary .03 to Rule 6.40, the Exchange will
not (i) specify a minimum setting of less than one or a maximum
setting of more than 100 for the Transaction-Based Risk Limitation
Mechanism; (ii) specify a minimum setting of less than 20 or a
maximum setting of more than 5,000 for the Volume-Based Risk
Limitation Mechanism; or (iii) specify a minimum setting of less
than 100 or a maximum setting of more than 2,000 for the Percentage-
Based Risk Limitation Mechanism. The Exchange proposes to amend
Commentary .03 to Rule 6.40 to reflect that any changes to these
settings would be announced to dealers via Trader Update, rather
than Regulatory Bulletin.
---------------------------------------------------------------------------
Per Commentary .08 to the Rule, while the existing Risk Limitation
Mechanisms apply to quotes and Applicable Orders from Market Makers and
non-Market Makers, use of this risk-limitation feature is mandated only
for Market Makers' quotes.\10\ Thus, Market Makers are required to
activate one of the three Risk Limitation Mechanisms at all times for
their quotes for each class in their appointment. However, the existing
Risk Limitation Mechanisms are entirely voluntary for Applicable Orders
submitted by Market Makers and non-Market Makers. With respect to the
Applicable Orders, Market Makers and non-Market Makers have the option
of availing themselves of one of the three Risk Limitation Mechanisms
for some or all of the option classes in which they trade/provide
quotes.\11\ A Market Maker
[[Page 2221]]
may activate one Risk Limitation Mechanism for its quotes and a
different Risk Limitation Mechanism for its Applicable Orders, even if
both are activated for the same class.
---------------------------------------------------------------------------
\10\ When first implemented, Rule 6.40 was entitled ``Market
Maker Risk Limitation Mechanism-- OX'', and applied solely to--and
was mandated for--Market Maker quotes. However, when the rule was
revised in 2012, and the risk-limitation functionality was expanded
to cover Applicable Orders as well as quotes, the changes to the
title of the rule and the accompanying rule text did not make
entirely clear that the Risk Limitation Mechanism is required for
all Market Maker quotes. Thus, as proposed, new Commentary .04 will
state that use of the Risk Limitation Mechanism is mandated only for
Market Maker quotes and is otherwise optional.
\11\ With respect to Applicable Orders submitted by dealers, the
Exchange has included in current Rule 6.40 the concept of a
``specified class'' to indicate the option class for which a Risk
Limitation Mechanism is activated; if a dealer does not identify any
``specified class,'' none of the Risk Limitation Mechanisms will be
activated.
---------------------------------------------------------------------------
Per current Rule 6.40(e), and Commentary .01 to the Rule, once a
dealer's specified risk exposure is exceeded within the time period
specified by the Exchange (as tracked by the Trade Counter), the Risk
Limitation Mechanism is triggered and the NYSE Arca System (``System'')
automatically cancels electronic Applicable Orders or quotes by
generating a ``bulk cancel'' message.\12\ Per Commentary .01, the bulk
cancel message is processed in time priority with any other quote,
order or other message received by the System.\13\ Thus, any quotes or
orders that match with a Market Maker's quote or with a dealers' [sic]
Applicable Orders that were received by the System prior to the receipt
of the bulk cancel message would be automatically executed. Similarly,
quotes or orders received by the System after receipt of the bulk
cancel message would not be executed against the cancelled quotes or
Applicable Orders. In this regard, Rule 6.40--in its current form and
as proposed--would not relieve dealers of their ``firm quote''
obligations under Rule 602 of Regulation NMS \14\ or NYSE Arca Options
Rule 6.86. Furthermore, the proposed rule change would not relieve
Market Makers of their quoting obligations under the Exchange's
Rules.\15\
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\12\ See NYSE Arca Options Rule 6.40(b)(1)-(3); (c)(1)-(3); and
(d)(1)-(3).
\13\ As previously noted, for the sake of clarity, the Exchange
proposes to revise the rule text to utilize ``Applicable Order''
rather than ``order'' where necessary.
\14\ 17 CFR 242.602.
\15\ See, e.g., NYSE Arca Options Rule 6.37B.
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A dealer that has been suspended from quoting or submitting
Applicable Orders in the affected class, pursuant to current Rule
6.40(e), may only re-enter the market by submitting a message to the
Exchange requesting re-entry and, until such message is submitted, any
subsequent quotes or Applicable Orders will be rejected by the
Exchange.\16\ The intended purpose of this forced suspension from
quoting and from certain trading in the affected class is to afford the
dealer an opportunity to evaluate its positions before opting to re-
enter the market. In practice, the Exchange has received responses to
bulk cancel messages from dealers requesting to re-enter the market
within as few as two milliseconds. This rapid response time leads the
Exchange to conclude that the messages being submitted in response to
the bulk cancel messages are automated, system-generated messages. The
effect of this apparent automation is that dealers that are effectively
kicked out of the market (for their quotes or Applicable Orders) in the
affected class for triggering the Risk Limitation Mechanism can re-
enter the market within milliseconds. The Exchange believes that an
automated response is sufficient, provided the dealer does not
experience multiple triggers of the Risk Limitation Mechanism in rapid
succession.
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\16\ See NYSE Arca Options Rule 6.40(e), and Commentary .01.
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Under current Rule 6.40 there is no mechanism for addressing
multiple, successive triggers of the Risk Limitation Mechanisms within
a time period specified by the Exchange, which could be particularly
problematic for dealers if the markets turns in an unexpected
direction.
Proposed Changes to Risk Limitation Mechanism
The Exchange proposes to modify Rule 6.40 to address circumstances
where a dealer experiences multiple, successive triggers of the Risk
Limitation Mechanism. The Exchange proposes a two-pronged remedial
response. First, the Exchange would cancel all of the dealer's quotes
or Applicable Orders (defined below)--as opposed to cancelling only
those quotes or certain orders in the option class (underlying symbol)
in which the dealer triggered the Risk Limitation Mechanism. Second,
the Exchange would require that the dealer make non-automated contact
with the Exchange to re-enable the submission of the dealer's quotes or
certain orders.
Proposed Rule 6.40(a)(2) would provide for a ``trigger counter''
that (similar to the Trade Counter, which serves as the basis for
determining whether a Risk Limitation Mechanism has been triggered)
would track the number of times that a dealer has triggered any of the
Risk Limitation Mechanisms pursuant to current Rule 6.40(b), (c), or
(d).\17\
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\17\ This proposed addition would require that current Rule
6.40(a) be renamed from ``Trade Counter'' to ``Counters,'' and
renumbered such that ``Trade Counter'' would be numbered as proposed
Rule 6.40(a)(1). The Exchange also proposes to amend paragraph (a)
to refer to ``Applicable Orders,'' as referenced in Commentary .07
to the Rule (instead of ``orders'') to make clear which orders are
subject to the Risk Limitation Mechanisms.
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Proposed Rule 6.40(f) outlines the actions that the System would
take if the trigger counter indicates that any of the Risk Limitation
Mechanisms have been triggered in excess of the number of times
specified by the dealer (within a parameter set by the Exchange, as
noted below) within the time period specified by the Exchange. In
short, once a dealer has exceeded the number of triggers of the Risk
Limitation Mechanisms, pursuant to paragraph (f) of Rule 6.40, all
Applicable Orders or quotes by a Market Maker or all Applicable Orders
by a non-Maker Maker would be cancelled.
Specifically, per proposed Rule 6.40(f)(1), if the Risk Limitation
Mechanism is triggered pursuant to paragraph (b)(1), (c)(1) or (d)(1)
to this Rule, the System would automatically cancel all of the non-
Market Maker's Applicable Orders, regardless of which specified class
caused the underlying trigger of the Risk Limitation Mechanism. Per
proposed Rule 6.40(f)(2), if the Risk Limitation Mechanism is triggered
pursuant to paragraph (b)(2), (c)(2) or (d)(2) to this Rule, the System
would automatically cancel all of the Market Maker's Applicable Orders,
regardless of which specified class caused the underlying trigger of
the Risk Limitation Mechanism. And, per proposed Rule 6.40(f)(3), if
the Risk Limitation Mechanism is triggered pursuant to paragraph
(b)(3), (c)(3) or (d)(3) to this Rule, the System would automatically
cancel all of the Market Maker's quotes, regardless of which appointed
class caused the underlying trigger of the Risk Limitation Mechanism.
The difference between the existing Risk Limitation Mechanism
versus the proposed enhancement is the cancellation of all of a
dealer's Applicable Orders or quotes upon breach of proposed paragraph
(f) to Rule 6.40. Thus, if a dealer triggers a Risk Limitation
Mechanism, pursuant to paragraph (e) of current Rule 6.40, only the
dealer's quotes or Applicable Orders in the option class that triggered
the Risk Limitation Mechanism would be cancelled by the Exchange;
whereas if a dealer breaches proposed paragraph (f) of Rule 6.40, by
engaging in multiple triggers of the Risk Limitation Mechanism in a
time period specified by the Exchange, all of that dealer's Applicable
Orders or quotes in any option class(es) submitted that day would be
cancelled--not just the Applicable Orders or quotes in the option
class(es) that led to the most recent trigger of the Risk Limitation
Mechanism.\18\ The Exchange believes
[[Page 2222]]
that this modification--to temporarily suspend quoting or Applicable
Orders in all classes actively traded by the dealer--would strengthen
the efficacy of the existing Risk Limitation Mechanisms by providing
dealers with increased sensitivity in setting risk tolerance and
controls.
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\18\ The cancellation will only apply to those quotes or
Applicable Orders submitted by the dealer that trading day. With
respect to the cancellation of all Applicable Orders, pursuant to
proposed paragraph (f) to Rule 6.40, this would include a
cancellation of Applicable Orders in option classes for which the
dealer may not have opted to utilize a Risk Limitation Mechanism.
Thus, even though dealers are not required to subject all option
classes traded to this risk-limitation feature, a breach of proposed
paragraph 6.40(f) would affect all Applicable Orders in all option
classes traded that day.
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Pursuant to proposed Commentary .01 to Rule 6.40, upon breaching
proposed paragraph (f) of Rule 6.40, the System would automatically
cancel electronic Applicable Orders or quotes by generating a ``bulk
cancel'' message--just as the system currently does in the event of a
breach of the Risk Limitation Mechanism (i.e., current paragraph (e) of
Rule 6.40).\19\ In addition to the bulk cancel message, the System
would generate an alert message providing notice that the dealer has
exceeded the number of triggers of the Risk Limitation Mechanisms,
pursuant to paragraph (f) of Rule 6.40.
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\19\ Relatedly, the Exchange also proposes to amend Commentary
.08 to Rule 6.40 regarding the cancellation of Applicable Orders to
make it pertinent to paragraph (f), in addition to its current
application to paragraph (e) to Rule 6.40.
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The Exchange also proposes to amend current Commentary .02 to Rule
6.40 to reflect that the Exchange would (and does) accept automated
messages from dealers requesting the re-enabling of quotes or
Applicable Orders, following a breach of paragraph (e). The Exchange
believes that this proposed change would add transparency to the
functioning of the Exchange and the types of messages it would accept
when a Risk Limitation Mechanism is triggered pursuant to paragraph (e)
of the Rule.
The Exchange proposes to further amend current Commentary .02 to
Rule 6.40 to require that, upon a dealer's breach of proposed paragraph
(f) to current Rule 6.40, the dealer would have to make non-automated
contact with the Exchange to enable the entry of all new Applicable
Orders or quotes, which had been cancelled pursuant to proposed
paragraph (f).\20\ The Exchange believes that requiring this
additional, non-automated contact will strengthen the efficacy of the
existing Risk Limitation Mechanisms by providing dealers with increased
sensitivity in setting risk tolerance and controls.
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\20\ Specifically, proposed Commentary .03 to Rule 6.40 provides
that ``[i]f any of the Risk Limitation Mechanisms are triggered
pursuant to paragraphs (f)(1) or (f)(2) of Rule 6.40, any Applicable
Orders sent by the non-Market Maker or Market Maker, respectively,
in any class, shall be rejected until the non-Market Maker or Market
Maker makes non-automated contact with the Exchange to enable the
entry of new Applicable Orders. If any of the Risk Limitation
Mechanisms are triggered pursuant to Rule 6.40(f)(3), any quotes
sent by the Market Maker, in any class, shall be rejected until the
Market Maker makes non-automated contact with the Exchange to enable
the entry of new quotes.''
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Pursuant to proposed Commentary .03 to Rule 6.40, the Exchange
would specify via Trader Update the applicable range within which
dealers could select the number of times the Risk Limitation Mechanism
could be triggered before breaching proposed paragraph (f) to Rule
6.40, but this setting would not be less than a minimum of one and a
maximum of 100. The Exchange believes that setting the parameters
within this broad range would provide dealers with ample flexibility in
setting their tolerance for risk. Those dealers with a lower risk
tolerance or those that may be prone to multiple, successive triggers
of the Risk Limitation Mechanisms in shorter periods of time, may opt
to select a number of triggers on the lower end of the range, thereby
optimizing the protection afforded by this proposed rule change, while
those dealers with a higher risk tolerance or that are less likely to
experience multiple, successive triggers of the Risk Limitation
Mechanism, may select the maximum allowable triggers to decrease the
protections afforded by the proposed rule change. Moreover, while the
Exchange retains discretion with respect to the levels at which it
could adjust these settings, the Exchange would not be permitted to
adjust the settings below the minimum or maximum proposed, which, the
Exchange believes would reasonably ensure that the settings are at all
times within a reasonable range.
Consistent with current Commentary .03 to Rule 6.40, the applicable
time period within which dealers would select the number of triggers
before breaching proposed paragraph (f) to Rule 6.40 would not be less
100 milliseconds, unless otherwise announced by the Exchange. The
Exchange believes that specifying the applicable minimum, maximum and/
or default settings via Trader Update, including any changes thereto in
the future designed to ensure that the mechanisms work as intended,
would be consistent with the manner in which the Exchange has
communicated any changes to the existing Risk Limitation Mechanism
settings and is consistent with the manner in which the Commission
currently permits option exchanges to communicate settings or
parameters for various exchange mechanisms to their members other than
through the rule filing process, i.e., via notices, bulletins or
circulars.\21\
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\21\ See, e.g., Securities Exchange Act Release No. 34-70038
(July 25, 2013), 78 FR 147 (July 31, 2013) (SR-NYSEArca-2013-72)
(NYSE Arca Rule 6.60, which applies a trade collar mechanism to
prevent the immediate execution of certain incoming orders outside
of a specified parameter (referred to as a ``Trading Collar'') and
provides that changes to the Trading Collar may be announced by
Trader Update. See also BOX Options Exchange LLC (``BOX'') Rule
8140, which provides that, related to BOX's Quote Removal Mechanism
Upon Technical Disconnect, BOX Market Makers will be notified of the
value that ``n'' seconds represents via Regulatory Circular. See
also Securities Exchange Act Release No. 58140 (July 10, 2008), 73
FR 41384 (July 18, 2008) (SR-BSE-2008-40), in which the Commission
noted that ``n'' seconds would be configurable by BOX and any
subsequent re-configurations will be announced to Market Makers via
Regulatory Circular. See also Interpretation and Policy .05 to
Chicago Board Options Exchange (``CBOE'') Rule 6.74A, which provides
that any determinations made by CBOE regarding CBOE's Automated
Improvement Mechanism, such as eligible classes, order size
parameters and the minimum price increment for certain responses,
shall be communicated in a Regulatory Circular. See also CBOE Rule
6.13(b)(i)(C)(2)(a), which provides that CBOE may establish certain
maximum order size eligibility requirements with respect to
automatic executions and announce such determinations via Regulatory
Circular.
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The Exchange also proposes at this time to make a procedural change
for making announcements regarding functionality associated with the
Risk Limitation Mechanism. Presently the Exchange issues Regulatory
Bulletins when making such announcements. Going forward, the Exchange
proposes to issue a Trader Update in lieu of a Regulatory Bulletin.
Regulatory Bulletins generally contain information regarding legal and
regulatory matters while Trader Updates deal with issues such as
trading, systems changes and real-time market announcements. The
Exchange believes that it is more appropriate to make announcements
regarding the Risk Limitation Mechanism via Trader Update. Trader
Updates, like Regulatory Bulletins, are electronically distributed to
all OTP Holders and OTP Firms and are posted on the Exchange's Web
site. Accordingly, the Exchange proposes amended current Commentaries
.03 and .07 to Rule 6.40 by replacing references to ``Regulatory
Bulletin'' with ``Trader Update.'' Should the Exchange make a change to
the Risk Limitation Mechanism settings, for example to accommodate
changes in market conditions or the technology needs and considerations
of dealers, the Exchange would issue a Trader Update at least one
trading day in advance of the settings becoming effective, which would
give dealers notice and
[[Page 2223]]
opportunity to make any necessary adjustments to their risk settings.
Pursuant to proposed Commentary .04 to Rule 6.40, those dealers
that utilize any of the Risk Limitation Mechanisms would be
automatically subject to proposed paragraph (f) to Rule 6.40. Thus,
while the Risk Limitation Mechanism is optional for each dealer's
Applicable Orders, once a dealer avails itself of the Risk Limitation
Mechanism for some of the option classes in which it trades, all of the
option classes in which that dealer trades would be subject to the
proposed rule change.\22\
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\22\ Market Makers are required to utilize the Risk Limitation
Mechanism for all of their quotes and therefore all quotes would be
subject to the proposed change.
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Pursuant to proposed Commentary .06 to Rule 6.40, absent a breach
pursuant to Rule 6.40(f), the trigger counter (which would serve as the
basis for determining a breach of proposed paragraph (f)) would be
automatically reset and would commence a new count for dealers (1) when
a time period specified by the Exchange elapses; or (2) following any
intraday update to configurable thresholds, as provided in Commentary
.03 to this Rule 6.40. Per proposed Commentary .06 to Rule 6.40, in the
event of a breach pursuant to proposed Rule 6.40(f), the trigger
counter would be reset and would commence a new count when the affected
dealer makes non-automated contact with the Exchange to enable the
entry of new Applicable Orders or quotes, as provided in proposed
Commentary .02 to Rule 6.40.
The Exchange believes that the proposed change to current Rule 6.40
will enhance the existing Risk Limitation Mechanisms and enable the
Exchange to aid in mitigating the potential risks of multiple
executions against a dealer's trading interest that, in today's highly
automated and electronic trading environment, can occur simultaneously
across multiple series and multiple option classes.
Implementation
The Exchange will announce the implementation date of the proposed
rule change by Trader Update to be published no later than 60 days
following the effective date of this filing. The implementation date
will be no later than 60 days following the issuance of the Trader
Update.
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''), in general, and
furthers the objectives of Section 6(b)(5) \23\ which requires the
rules of an exchange to prevent fraudulent and manipulative acts and
practices, 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.
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\23\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change removes
impediments to and perfects the mechanism of a free and open market by
providing dealers with greater control and flexibility over setting
their risk tolerance and more protection over risk exposure, if the
market moves in an unexpected direction.
Specifically, the Exchange believes that cancelling all quotes or
Applicable Orders and requiring dealers to make non-automated contact
with the Exchange following multiple, successive triggers of the Risk
Limitation Mechanism allows dealers to be sensitive to the rapid
trading that occurs in today's highly automated and electronic trading
environment. This increased sensitivity will enable dealers to avoid
transacting against their interests and will help to ensure that
executions will not occur at erroneous prices, thereby removing
impediments to and promoting a fair and orderly market.
Moreover, the Exchange believes that the proposal is consistent
with the protection of investors and the public interests because it
will permit dealers to better manage the potential risks of multiple
executions against a dealer's proprietary interest that, in today's
highly automated and electronic trading environment, can occur
simultaneously across multiple series and multiple option classes.
Consistent with the ability to better manage risk, the Exchange
anticipates that the proposed enhancement to the existing Risk
Limitation Mechanism could likewise enhance the Exchange's overall
market quality as a result of narrowed quote widths and increased
liquidity for series traded on the Exchange, which would benefit
investors and the public interest. As with the intent of the existing
Risk Limitation Mechanism, the Exchange believes that the proposed
modifications to Rule 6.40 would further assist dealers in providing
aggressive quotes and increased liquidity, thus improving overall
market quality on the Exchange for the benefit of all investors and the
public.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange is proposing a
market enhancement that would provide dealers with greater control and
flexibility over setting their risk tolerance and more protection over
risk exposure, if the market moves in an unexpected direction. The
Exchange believes the proposal would provide market participants with
additional protection from erroneous executions. The proposal is
structured to offer the same enhancement to all dealers, regardless of
size, and would not impose a competitive burden on any participant. The
Exchange does not believe that the proposed enhancement to the existing
risk limitation mechanism would impose a burden on competing options
exchanges. Rather, the availability of this mechanism may foster more
competition. Specifically, the Exchange notes that it operates in a
highly competitive market in which market participants can readily
favor competing venues. When an exchange offers enhanced functionality
that distinguishes it from the competition and participants find it
useful, it has been the Exchange's experience that competing exchanges
will move to adopt similar functionality. Thus, the Exchange believes
that this type of competition amongst exchanges is beneficial to the
market place as a whole as it can result in enhanced processes,
functionality, and technologies.
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 \24\ and Rule 19b-4(f)(6) thereunder.\25\
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
[[Page 2224]]
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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\24\ 15 U.S.C. 78s(b)(3)(A)(iii).
\25\ 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \26\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\26\ 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-NYSEArca-2013-148 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-2013-148. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2013-148 and should
be submitted on or before February 3, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00334 Filed 1-10-14; 8:45 am]
BILLING CODE 8011-01-P
