Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change Amending Its Rules in Order To Clarify the Applicability and Functionality of Certain Order Types on the Exchange, 12540-12541 [2014-04799]

Download as PDF 12540 Federal Register / Vol. 79, No. 43 / Wednesday, March 5, 2014 / Notices appoint and remove members of the Administrative Committee and to oversee the Administrative Committee, confirm annually that all charter responsibilities have been carried out, and to evaluate the committee’s and PC members’ performance on a regular basis. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary . III. Discussion SECURITIES AND EXCHANGE COMMISSION Section 19(b)(2)(C) of the Act 9 directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization. Section 17A(b)(3)(F) of the Act 10 requires that the rules of a clearing agency that is registered with the Commission be designed to, among other things, protect investors and the public interest. The Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act 11 because the amendments to the Committee Charters should clarify the role and responsibilities of each of the Committees within OCC’s governance structure. Furthermore, consistent with Rule 17Ad–22(d)(8) 12 under the Act, the amendments to the Committee Charters should help ensure that OCC has governance arrangements that are clear and transparent, support the objectives of OCC’s owners and participants, and promote the effectiveness of OCC’s risk management procedures. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 13 and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,14 that the proposed rule change (File No. SR– OCC–2014–01) be and hereby is approved.15 mstockstill on DSK4VPTVN1PROD with NOTICES 9 15 U.S.C. 78s(b)(2)(C). U.S.C. 78q–1(b)(3)(F). 11 Id. 12 17 CFR 240.17Ad–22(d)(8). 13 15 U.S.C. 78q–1. 14 15 U.S.C. 78s(b)(2). 15 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 10 15 VerDate Mar<15>2010 17:13 Mar 04, 2014 Jkt 232001 [FR Doc. 2014–04796 Filed 3–4–14; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–71631; File No. SR– NYSEArca–2014–02] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change Amending Its Rules in Order To Clarify the Applicability and Functionality of Certain Order Types on the Exchange February 27, 2014. I. Introduction On January 8, 2014, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 amend its rules in order to clarify the applicability and functionality of certain option order types on the Exchange. The proposed rule change was published for comment in the Federal Register on January 21, 2014.3 The Commission received no comment letters regarding the proposed rule change. This order approves the proposed rule change. II. Description of the Proposal The Exchange has proposed to amend Rule 6.62 in order to clarify the applicability and functionality of certain option order types. The Exchange states that it is not proposing to change or alter any obligations, rights, policies or practices enumerated within its rules. Rather, according to the Exchange, this proposal is designed to reduce the potential for investor confusion as to the functionality and applicability of certain option order types presently available on the Exchange.4 The Exchange’s proposed revisions to Rule 6.62 would provide greater detail as to the existing functionality of certain order types, including: • Rule 6.62(a)—Market Order. The Exchange has proposed to amend Rule 6.62(a) to specify that: (1) Market Orders 16 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. 71293 (January 14, 2014), 79 FR 3429 (‘‘Notice’’). 4 See Notice, 79 FR at 3429. 1 15 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 entered before the opening of trading will be eligible for trading during the Opening Auction Process; (2) Market Orders entered during Core Trading Hours will be rejected if, at the time the order is received, there is no National Best Bid (‘‘NBB’’) and no National Best Offer (‘‘NBO’’) (collectively, ‘‘NBBO’’) disseminated by the Options Pricing Reporting Authority (‘‘OPRA’’) for the relevant option series; and (3) if at the time the Exchange receives a Market Order to buy (sell) there is an NBB (NBO) but no NBO (NBB) being disseminated, the Market Order will be processed pursuant to Rule 6.60(a).5 • Rule 6.62(d)(1)–(2)—Stop Orders and Stop Limit Orders. The Exchange has proposed to amend Rule 6.62(d)(1)– (2) to specify that it will reject Stop Orders and Stop Limit Orders to buy entered with a stop price below the bid at the time the order is entered and Stop Orders and Stop Limit Orders to sell entered with a stop price above the offer at the time the order is entered.6 • Rule 6.62(o)—NOW Order. The Exchange has proposed to clarify that a NOW Order that is not marketable against the NBBO when submitted to the Exchange will be rejected.7 • Rule 6.62(t)—Liquidity Adding Order. The Exchange has proposed to clarify that this order type may only be entered with a Day time-in-force modifier.8 The Exchange’s additional proposed revisions to Rule 6.62 would be threefold. First, the Exchange has proposed to specify in Rules 6.62(d)(5), 6.62(g) and 6.62(i) that Stock Contingency Orders, One-cancels-the-other Orders, and Single Stock Future/Option Orders, respectively, are only eligible for open outcry trading.9 Second, the Exchange has proposed to decommission the functionality supporting the Inside Limit Order defined in Rule 6.62(c) and the Tracking Order defined in Rule 6.62(d)(6) due to a lack of demand for these order types. The Exchange states that it does not intend to re-introduce these order types in the future, and thus proposes to delete the text of these 5 See proposed Rule 6.62(a); see also Notice, 79 FR at 3430. 6 See proposed Rules 6.62(d)(1)–(2); see also Notice, 79 FR at 3430. The Commission notes that proposed Rule 6.62(d)(1)–(2) accurately sets forth this additional specification, but the Exchange’s description of this rule change in the purpose section of its filing refers to stop prices above the bid or below the offer (instead of below the bid or above the offer) triggering rejection. 7 See proposed Rule 6.62(o); see also Notice, 79 FR at 3430. 8 See proposed Rule 6.62(t); see also Notice, 79 FR at 3430. 9 See proposed Rules 6.62(d)(5), 6.62(g) and 6.62(i); see also Notice, 79 FR at 3430. E:\FR\FM\05MRN1.SGM 05MRN1 Federal Register / Vol. 79, No. 43 / Wednesday, March 5, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES rules.10 Third, the Exchange has proposed to correct typographical errors in Rules 6.62(r) and 6.62(t), which define the Opening Only Order and Liquidity Adding Order, respectively. The Exchange has stated that it plans to issue a Trader Update announcing the changes proposed by this rule filing upon approval of the filing.11 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.12 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,13 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers or dealers. The Exchange believes that the proposed rule change is consistent with, and would further the objectives of, Section 6(b)(5) of the Act because it would add transparency and clarity to the Exchange’s rules by enhancing the descriptions of certain order type functionality, deleting obsolete or outdated rules, and correcting inaccurate language. The Exchange also believes that the proposal removes impediments to and perfects the mechanism of a free and open market by ensuring that members, regulators and the public can more easily navigate the Exchange’s rulebook and better understand the order types available for trading on the Exchange. Specifically, the Exchange believes that clarifying the definitions of Market Orders, Stop Orders, NOW Orders and Liquidity Adding Orders removes impediments to and perfects the mechanism of a free and open market by helping to ensure that investors better understand the functionality of these order types. Additionally, the Exchange believes that specifying that Stock Notice, 79 FR at 3430. at 3431. 12 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 13 15 U.S.C. 78f(b)(5). Contingency Orders, Single Stock Future/Option Orders and One-cancelsthe-other Orders are only for trading in open outcry will help to protect investors and the public interest by reducing the potential for confusion when routing orders to NYSE Arca. Lastly, the Exchange believes that deleting the definitions applicable to Inside Limit Orders and Tracking Orders provides clarity to Exchange rules by eliminating outdated and obsolete functionality. The Commission notes that the instant proposal does not add any new functionality but instead enhances and clarifies the descriptions of the option order type functionality currently available on the Exchange. The Exchange’s proposed revisions would provide greater detail as to the operation of certain option order types, including the circumstances in which certain order types are rejected, order types and modifiers that are compatible or incompatible with each other, and the eligibility of certain order types for only open outcry trading. Further, the Exchange proposes to update its rules by deleting obsolete order type provisions. The Commission believes that these proposed changes are reasonably designed to provide greater specificity, clarity and transparency with respect to the order type functionality available on the Exchange, and therefore should help to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,14 that the proposed rule change (SR–NYSEArca– 2014–02) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–04799 Filed 3–4–14; 8:45 am] BILLING CODE 8011–01–P 10 See 11 Id. VerDate Mar<15>2010 17:13 Mar 04, 2014 Jkt 232001 14 15 15 17 PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00080 Fmt 4703 Sfmt 4703 12541 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71629; File No. SR–FINRA– 2013–039] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc; Notice of Filing of Amendment No. 1 to Proposed Rule Change To Clarify the Classification and Reporting of Certain Securities to FINRA February 27, 2014. I. Introduction On September 16, 2013, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) 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 clarify the classification and reporting of certain securities to FINRA. The proposed rule change was published for comment in the Federal Register on September 30, 2013.3 The Commission received two comments on the proposal.4 On November 12, 2013, FINRA granted the Commission an extension of time to act on the proposal until December 29, 2013. On December 24, 2013, the Commission instituted proceedings to determine whether to disapprove the proposed rule change.5 On February 12, 2014, FINRA submitted Amendment No. 1 to respond to the comment letters and amend the proposed rule change, as described below in Item II, which Item has been prepared by FINRA. The Commission is publishing this notice to solicit comment from interested persons on the proposed rule change, as modified by Amendment No. 1. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change, as Modified by Amendment No. 1 In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 70482 (September 23, 2013), 78 FR 59995 (September 30, 2013) (‘‘Notice’’). 4 See Letters to the Commission from Sean Davy, Managing Director, Capital Markets, SIFMA, dated October 21, 2013 (‘‘SIFMA Letter’’); and Manisha Kimmel, Executive Director, Financial Information Forum, dated October 31, 2013 (‘‘FIF Letter’’). 5 See Securities Exchange Act Release No. 71180 (December 24, 2013), 78 FR 79716 (December 31, 2013). 2 17 E:\FR\FM\05MRN1.SGM 05MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 43 (Wednesday, March 5, 2014)]
[Notices]
[Pages 12540-12541]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-04799]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71631; File No. SR-NYSEArca-2014-02]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change Amending Its Rules in Order To Clarify 
the Applicability and Functionality of Certain Order Types on the 
Exchange

February 27, 2014.

I. Introduction

    On January 8, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
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 
amend its rules in order to clarify the applicability and functionality 
of certain option order types on the Exchange. The proposed rule change 
was published for comment in the Federal Register on January 21, 
2014.\3\ The Commission received no comment letters regarding the 
proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 71293 (January 14, 
2014), 79 FR 3429 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange has proposed to amend Rule 6.62 in order to clarify 
the applicability and functionality of certain option order types. The 
Exchange states that it is not proposing to change or alter any 
obligations, rights, policies or practices enumerated within its rules. 
Rather, according to the Exchange, this proposal is designed to reduce 
the potential for investor confusion as to the functionality and 
applicability of certain option order types presently available on the 
Exchange.\4\
---------------------------------------------------------------------------

    \4\ See Notice, 79 FR at 3429.
---------------------------------------------------------------------------

    The Exchange's proposed revisions to Rule 6.62 would provide 
greater detail as to the existing functionality of certain order types, 
including:
     Rule 6.62(a)--Market Order. The Exchange has proposed to 
amend Rule 6.62(a) to specify that: (1) Market Orders entered before 
the opening of trading will be eligible for trading during the Opening 
Auction Process; (2) Market Orders entered during Core Trading Hours 
will be rejected if, at the time the order is received, there is no 
National Best Bid (``NBB'') and no National Best Offer (``NBO'') 
(collectively, ``NBBO'') disseminated by the Options Pricing Reporting 
Authority (``OPRA'') for the relevant option series; and (3) if at the 
time the Exchange receives a Market Order to buy (sell) there is an NBB 
(NBO) but no NBO (NBB) being disseminated, the Market Order will be 
processed pursuant to Rule 6.60(a).\5\
---------------------------------------------------------------------------

    \5\ See proposed Rule 6.62(a); see also Notice, 79 FR at 3430.
---------------------------------------------------------------------------

     Rule 6.62(d)(1)-(2)--Stop Orders and Stop Limit Orders. 
The Exchange has proposed to amend Rule 6.62(d)(1)-(2) to specify that 
it will reject Stop Orders and Stop Limit Orders to buy entered with a 
stop price below the bid at the time the order is entered and Stop 
Orders and Stop Limit Orders to sell entered with a stop price above 
the offer at the time the order is entered.\6\
---------------------------------------------------------------------------

    \6\ See proposed Rules 6.62(d)(1)-(2); see also Notice, 79 FR at 
3430. The Commission notes that proposed Rule 6.62(d)(1)-(2) 
accurately sets forth this additional specification, but the 
Exchange's description of this rule change in the purpose section of 
its filing refers to stop prices above the bid or below the offer 
(instead of below the bid or above the offer) triggering rejection.
---------------------------------------------------------------------------

     Rule 6.62(o)--NOW Order. The Exchange has proposed to 
clarify that a NOW Order that is not marketable against the NBBO when 
submitted to the Exchange will be rejected.\7\
---------------------------------------------------------------------------

    \7\ See proposed Rule 6.62(o); see also Notice, 79 FR at 3430.
---------------------------------------------------------------------------

     Rule 6.62(t)--Liquidity Adding Order. The Exchange has 
proposed to clarify that this order type may only be entered with a Day 
time-in-force modifier.\8\
---------------------------------------------------------------------------

    \8\ See proposed Rule 6.62(t); see also Notice, 79 FR at 3430.
---------------------------------------------------------------------------

    The Exchange's additional proposed revisions to Rule 6.62 would be 
three-fold. First, the Exchange has proposed to specify in Rules 
6.62(d)(5), 6.62(g) and 6.62(i) that Stock Contingency Orders, One-
cancels-the-other Orders, and Single Stock Future/Option Orders, 
respectively, are only eligible for open outcry trading.\9\ Second, the 
Exchange has proposed to decommission the functionality supporting the 
Inside Limit Order defined in Rule 6.62(c) and the Tracking Order 
defined in Rule 6.62(d)(6) due to a lack of demand for these order 
types. The Exchange states that it does not intend to re-introduce 
these order types in the future, and thus proposes to delete the text 
of these

[[Page 12541]]

rules.\10\ Third, the Exchange has proposed to correct typographical 
errors in Rules 6.62(r) and 6.62(t), which define the Opening Only 
Order and Liquidity Adding Order, respectively.
---------------------------------------------------------------------------

    \9\ See proposed Rules 6.62(d)(5), 6.62(g) and 6.62(i); see also 
Notice, 79 FR at 3430.
    \10\ See Notice, 79 FR at 3430.
---------------------------------------------------------------------------

    The Exchange has stated that it plans to issue a Trader Update 
announcing the changes proposed by this rule filing upon approval of 
the filing.\11\
---------------------------------------------------------------------------

    \11\ Id. at 3431.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\12\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\13\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest; and are not designed to permit unfair discrimination 
between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \12\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is consistent 
with, and would further the objectives of, Section 6(b)(5) of the Act 
because it would add transparency and clarity to the Exchange's rules 
by enhancing the descriptions of certain order type functionality, 
deleting obsolete or outdated rules, and correcting inaccurate 
language. The Exchange also believes that the proposal removes 
impediments to and perfects the mechanism of a free and open market by 
ensuring that members, regulators and the public can more easily 
navigate the Exchange's rulebook and better understand the order types 
available for trading on the Exchange.
    Specifically, the Exchange believes that clarifying the definitions 
of Market Orders, Stop Orders, NOW Orders and Liquidity Adding Orders 
removes impediments to and perfects the mechanism of a free and open 
market by helping to ensure that investors better understand the 
functionality of these order types. Additionally, the Exchange believes 
that specifying that Stock Contingency Orders, Single Stock Future/
Option Orders and One-cancels-the-other Orders are only for trading in 
open outcry will help to protect investors and the public interest by 
reducing the potential for confusion when routing orders to NYSE Arca. 
Lastly, the Exchange believes that deleting the definitions applicable 
to Inside Limit Orders and Tracking Orders provides clarity to Exchange 
rules by eliminating outdated and obsolete functionality.
    The Commission notes that the instant proposal does not add any new 
functionality but instead enhances and clarifies the descriptions of 
the option order type functionality currently available on the 
Exchange. The Exchange's proposed revisions would provide greater 
detail as to the operation of certain option order types, including the 
circumstances in which certain order types are rejected, order types 
and modifiers that are compatible or incompatible with each other, and 
the eligibility of certain order types for only open outcry trading. 
Further, the Exchange proposes to update its rules by deleting obsolete 
order type provisions. The Commission believes that these proposed 
changes are reasonably designed to provide greater specificity, clarity 
and transparency with respect to the order type functionality available 
on the Exchange, and therefore should help to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, remove impediments to and perfect the mechanism of a free and 
open market and a national market system, and, in general, protect 
investors and the public interest.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-NYSEArca-2014-02) be, and it 
hereby is, approved.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-04799 Filed 3-4-14; 8:45 am]
BILLING CODE 8011-01-P

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