Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Exchange Rules Governing Letters of Guarantee and Letters of Authorization, 24800-24802 [2014-09917]
Download as PDF
<![CDATA[
24800
Federal Register / Vol. 79, No. 84 / Thursday, May 1, 2014 / Notices
For the Commission, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2014–09919 Filed 4–30–14; 8:45 am]
1. Purpose
As further described below, each ATP
Holder acting as either a Market Maker
or Floor Broker on NYSE Amex Options
currently is required to submit to the
Exchange a Letter of Guarantee or Letter
of Authorization for its trading activities
from a Clearing Member.4 Typically, by
a Letter of Guarantee, the Clearing
Member accepts financial responsibility
for all Exchange transactions made by a
Market Maker 5 and, by a Letter of
Authorization, a Clearing Member is
responsible for the clearance of
Exchange transactions of the Floor
Broker on the Exchange.6
• The purpose of the proposal is to
amend various Exchange rules
governing Letters of Guarantee and
Authorization to: Provide that any
written notice of revocation of a Letter
of Guarantee or Letter of Authorization
will become effective upon processing
by the Exchange.
• give the Exchange the ability to
prevent access and connectivity if a
Market Maker or Floor Broker is subject
to written notice of revocation.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72017; File No. SR–
NYSEMKT–2014–33]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending Exchange
Rules Governing Letters of Guarantee
and Letters of Authorization
April 25, 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 April 11,
2014, 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 and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend
Exchange rules governing Letters of
Guarantee and Letters of Authorization.
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.
tkelley on DSK3SPTVN1PROD with NOTICES
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.
10 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
VerDate Mar<15>2010
17:30 Apr 30, 2014
Jkt 232001
Changes to Rule 924NY(c)—Letters of
Guarantee
Rule 924NY(c) states that a Letter of
Guarantee filed with the Exchange shall
remain in effect until a final written
notice of revocation has been received
by the Exchange. The current rule sets
forth a time period for the effectiveness
of a notice of revocation to take place.
However the Exchange does not believe
that a specified timeframe is necessary.
Because the Exchange can process such
revocations at any time after receipt, the
Exchange proposes to amend Rule
924NY(c) to provide that notices of
revocation shall become effective as
soon as the Exchange is able to process
the revocation. The Exchange notes that
the proposed rule change is consistent
with the rules governing the processing
of the revocation of a Letter of
Guarantee on the Chicago Board
Options Exchange (‘‘CBOE’’).7
Once a notice of revocation has been
processed, a Market Maker no longer
has in effect a Letter of Guarantee, as
required by Rule 924NY(a). If a Market
4 A Clearing Member is an Exchange ATP Holder
which has been admitted to membership in the
Options Clearing Corporation pursuant to the
provisions of the Rules of the Options Clearing
Corporation.
5 See Rule 924NY(b).
6 See Rule 932NY(b).
7 See CBOE Rule 8.5(c).
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
Maker no longer has a valid Letter of
Guarantee, that Market Maker presents
risk to the marketplace and the
Exchange believes it is appropriate to
terminate access and connectivity to the
Exchange in these situations.
Accordingly, the Exchange proposes to
further amend Rule 924NY(c) by stating
that upon the effectiveness of a notice
of revocation, the Exchange will be
permitted to prevent access and
connectivity to the Exchange by that
Market Maker. Preventing access and
connectivity by a Market Maker who
does not have a valid Letter of
Guarantee is consistent with similar
procedures of the CBOE.8
Changes to Rule 932NY—Letters of
Authorization
Rule 932NY(c) states that a Letter of
Authorization filed with the Exchange
shall remain in effect until a written
notice of revocation has been filed with
the Exchange. The current rule sets forth
a time period for the effectiveness of a
revocation to take place. However the
Exchange does not believe that a
specified timeframe is necessary.
Because the Exchange can process such
revocations at any time after receipt, the
Exchange proposes to amend Rule
932NY(c) to provide that a notice of
revocation shall become effective as
soon as the Exchange is able to process
the revocation. The Exchange notes that
the proposed rules change is consistent
with the rules governing the processing
of the revocation of a Letter of
Authorization on the CBOE.9
Once a notice of revocation has been
processed, a Floor Broker no longer has
in effect a Letter of Authorization, as
required by Rule 932NY(a). If a Floor
Broker no longer has a valid Letter of
Authorization, that Floor Broker
presents risk to the marketplace and the
Exchange believes it is appropriate to
terminate access and connectivity to the
Exchange in these situations.
Accordingly, the Exchange proposes to
further amend Rule 932NY(c) by stating
that upon the effectiveness of a notice
of revocation, the Exchange will be
permitted to prevent access and
connectivity to the Exchange by that
Floor Broker. Preventing access and
connectivity to a Floor Broker who does
not have on file an effective Letter of
Authorization is consistent with similar
procedures of the CBOE.10
The Exchange also proposes to adopt
an additional provision to Rule
932NY(c) stating that final revocation
shall in no way relieve a Clearing
8 See
CBOE Rule 3.28(b).
CBOE Rule 6.72(c).
10 Supra note 8.
9 See
E:\FR\FM\01MYN1.SGM
01MYN1
Federal Register / Vol. 79, No. 84 / Thursday, May 1, 2014 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
Member of responsibility for clearing
Floor Broker transactions that were
executed prior to the effectiveness of
such final revocation. The Exchange
believes that this provision, which
currently applies only to Market Makers
who have been subject to notices of
revocation, is equally appropriate in
instances when a Floor Broker is subject
to a notice of revocation. The Exchange
notes that the proposed rule change is
consistent with the rules governing the
processing of the revocation of a Letter
of Authorization on the CBOE.11
The Exchange notes that nothing in
existing or proposed rules would
prohibit a Market Maker or Floor Broker
from seeking to gain access and
connectivity to the Exchange once that
individual is able to again acquire the
required Letter of Guarantee or Letter of
Authorization.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Act,12 in general, and furthers the
objectives of Section 6(b)(5),13 in
particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system.
Preventing access and connectivity to
the Exchange by a Market Maker or
Floor Broker subject to a notice of
revocation will promote just and
equitable principles of trade and serves
to protect investors and the public
because it prevents trading by a Market
Makers or Floor Broker without
financial guarantees for its trading. A
Market Maker or Floor Broker who no
longer has a valid Letter of Guarantee or
Letter of Authorization presents risk to
the marketplace and the Exchange
believes it is appropriate to prevent
access and connectivity to the Exchange
in these situations. In addition, making
a notice of revocation effective upon
processing by the Exchange, instead of
being encumbered by a specified time
frame, will permit the Exchange to act
swiftly to take measures aimed at
market integrity and investor protection.
The Exchange believes the proposed
rule change is also consistent with the
requirements that the rules of an
exchange provide a fair procedure for
the denial or limitation by an exchange
note 9.
U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
of any person with respect to access to
services offered by the Exchange
because the Exchange would not
prohibit or limit a Floor Broker or
Market Maker from seeking to gain
access and connectivity to the Exchange
once that individual is able to again
acquire the required Letter of Guarantee
or Letter of Authorization.
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
proposed rule changes will apply
equally to all Floor Brokers and Market
Makers and is designed to protect all
ATP Holders and public investors
effecting transactions on the Exchange.
In addition, the proposed changes will
not impose any unnecessary burden on
the operation of the Exchange because
the changes will allow the Exchange to
adopt more efficient procedures for the
processing notices of revocation.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 14 and Rule
19b–4(f)(6) thereunder.15 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing, noting that a waiver of the
operative delay will allow the Exchange
to promptly adopt and implement new
procedures aimed at market integrity
11 Supra
12 15
VerDate Mar<15>2010
17:30 Apr 30, 2014
14 15
15 15
Jkt 232001
PO 00000
U.S.C.78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
Frm 00135
Fmt 4703
Sfmt 4703
24801
and investor protection. For this reason,
the Commission believes that waiving
the 30-day operative delay is consistent
with the protection of investors and the
public interest. As such, the
Commission waives the operative delay
and designates the proposed rule change
to be operative upon filing.16
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) 17 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEMKT–2014–33 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEMKT–2014–33. 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
16 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
17 15 U.S.C. 78s(b)(2)(B).
E:\FR\FM\01MYN1.SGM
01MYN1
24802
Federal Register / Vol. 79, No. 84 / Thursday, May 1, 2014 / Notices
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 at 100 F Street NE.,
Washington, DC 20549–1090 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEMKT–2014–33, and should be
submitted on or before May 22, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–09917 Filed 4–30–14; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72033; File No. SR–FINRA–
2014–003]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving a
Proposed Rule Change To Amend
FINRA’s Corporate Financing Rules To
Simplify and Refine the Scope of the
Rules
tkelley on DSK3SPTVN1PROD with NOTICES
April 28, 2014.
On January 9, 2014, 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 proposing to
amend FINRA Rules 5110 (Corporate
Financing Rule—Underwriting Terms
and Arrangements) and 5121 (Public
Offerings of Securities with Conflicts of
Interest) in several respects in order to
simplify and refine the scope of the
rules. The proposed rule change was
published for comment in the Federal
Register on January 29, 2014.3 The
Commission received two comment
18 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. 71372
(January 23, 2014), 79 FR 4793 (SR–FINRA–2014–
003) (‘‘Notice’’).
1 15
VerDate Mar<15>2010
17:30 Apr 30, 2014
Jkt 232001
letters on the proposal.4 On April 16,
2014, FINRA responded to the comment
letters.5 On March 4, 2014, the
Commission extended the time period
for Commission action to April 28,
2014.6 This order approves the
proposed rule change.
independent financial adviser as ‘‘a
member that provides advisory or
consulting services to the issuer and is
neither engaged in, nor affiliated with
any entity that is engaged in, the
solicitation or distribution of the
offering.’’
I. Description of the Proposed Rule
Change 7
Rule 5110 generally regulates
underwriting compensation and
prohibits unfair arrangements in
connection with the public offering of
securities. Among other provisions,
Rule 5110 requires members to file with
FINRA information about the securities
offerings in which they participate and
to disclose affiliations and other
relationships that may indicate the
existence of conflicts of interest. FINRA
is proposing amendments to Rule 5110
to: (1) Narrow the scope of the
definition of ‘‘participation or
participating in a public offering;’’ (2)
modify the lock-up restrictions to
exclude certain securities acquired or
converted to prevent dilution; and (3)
clarify that the information
requirements apply only to
relationships with a ‘‘participating’’
member. FINRA states that this change
preserves the protections of the rule and
will enable issuers to seek advice from
a member that is not involved in the
distribution or sale of the issuer’s
securities.
Participation in a Public Offering
Rule 5110(a)(5) defines ‘‘participating
in a public offering’’ to include
participation in ‘‘any advisory or
consulting capacity to the issuer related
to the offering.’’ FINRA proposes to
amend Rule 5110(a)(5) to provide that
an ‘‘independent financial adviser’’ that
provides advisory or consulting services
to the issuer would not meet the
definition of ‘‘participation in a public
offering’’ as defined in Rule 5110(a)(5)
and would therefore not be subject to
the compensation limitations of Rule
5110. The proposal defines an
Lock-Up Restrictions
Rule 5110(d)(1) generally includes as
underwriting compensation all items of
value, which may include unregistered
securities, that are acquired (or arranged
to be acquired) within the 180 day
period prior to the filing of the
registration statement (‘‘180-day review
period’’). Rule 5110(d)(5) (Exceptions
from Underwriting Compensation)
provides five exceptions that permit
participating members to acquire
securities of the issuer during the 180day review period without the securities
being deemed to be underwriting
compensation, including excluding
from underwriting compensation the
receipt of additional securities to
prevent dilution of the investor’s
investment (e.g., securities acquired as a
result of a stock-split or a pro-rata rights
or similar offering) where such
additional securities are received during
the 180-day review period or
subsequent to the filing of the public
offering, but where the original
securities were acquired before the 180day review period or otherwise were not
deemed by FINRA to be underwriting
compensation, as described in Rule
5110(d)(5)(D).
While these acquisitions and
conversions to prevent dilution are
excepted from underwriting
compensation, they currently continue
to be subject to the lock-up restrictions
of Rule 5110(g)(1). FINRA proposes to
eliminate the lock-up restrictions for
these securities in order to treat shares
received in an acquisition or conversion
to prevent dilution during the 180-day
review period in a manner consistent
with the treatment provided for the
securities on which their acquisition or
conversion was based.
4 See Letter from Suzanne Rothwell (‘‘Rothwell’’),
Managing Member, Rothwell Consulting LLC, to
Elizabeth M. Murphy, Secretary, Commission, dated
February 10, 2014 (‘‘Rothwell Letter’’); Letter from
Sean Davy, Managing Director, Corporate Credits
Market Division, Securities Industries and Financial
Markets Association (‘‘SIFMA’’), to Elizabeth M.
Murphy, Secretary, Commission, dated February 18,
2014 (‘‘SIFMA Letter’’).
5 See Letter from Kathryn M. Moore, Associate
General Counsel, FINRA, to Kevin O’Neill, Deputy
Secretary, Commission, dated April 16, 2014
(‘‘FINRA Letter’’).
6 See Securities Exchange Act Release No. 71642
(March 4, 2014), 79 FR 13364 (SR–FINRA–2014–
003).
7 A more detailed description of the proposal is
contained in the Notice. See supra note 3.
Information Requirements
Subject to certain exceptions, Rule
5110(b)(6)(A)(iii) requires filers to
disclose to FINRA information about the
affiliation or association with any
member of the officers, directors, and
certain owners of the issuer. The
compensation limitations and other
provisions of Rule 5110 and Rule 5121
apply only to members that participate
in a public offering. Correspondingly,
FINRA is proposing to amend Rule
5110(b)(6)(A)(iii) to narrow the scope of
this provision to require disclosure
about the affiliation or association of the
PO 00000
Frm 00136
Fmt 4703
Sfmt 4703
E:\FR\FM\01MYN1.SGM
01MYN1
]]>Agencies
[Federal Register Volume 79, Number 84 (Thursday, May 1, 2014)]
[Notices]
[Pages 24800-24802]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09917]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72017; File No. SR-NYSEMKT-2014-33]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Exchange Rules
Governing Letters of Guarantee and Letters of Authorization
April 25, 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 April 11, 2014, 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 and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend Exchange rules governing Letters of
Guarantee and Letters of Authorization. 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
As further described below, each ATP Holder acting as either a
Market Maker or Floor Broker on NYSE Amex Options currently is required
to submit to the Exchange a Letter of Guarantee or Letter of
Authorization for its trading activities from a Clearing Member.\4\
Typically, by a Letter of Guarantee, the Clearing Member accepts
financial responsibility for all Exchange transactions made by a Market
Maker \5\ and, by a Letter of Authorization, a Clearing Member is
responsible for the clearance of Exchange transactions of the Floor
Broker on the Exchange.\6\
---------------------------------------------------------------------------
\4\ A Clearing Member is an Exchange ATP Holder which has been
admitted to membership in the Options Clearing Corporation pursuant
to the provisions of the Rules of the Options Clearing Corporation.
\5\ See Rule 924NY(b).
\6\ See Rule 932NY(b).
---------------------------------------------------------------------------
The purpose of the proposal is to amend various Exchange
rules governing Letters of Guarantee and Authorization to: Provide that
any written notice of revocation of a Letter of Guarantee or Letter of
Authorization will become effective upon processing by the Exchange.
give the Exchange the ability to prevent access and
connectivity if a Market Maker or Floor Broker is subject to written
notice of revocation.
Changes to Rule 924NY(c)--Letters of Guarantee
Rule 924NY(c) states that a Letter of Guarantee filed with the
Exchange shall remain in effect until a final written notice of
revocation has been received by the Exchange. The current rule sets
forth a time period for the effectiveness of a notice of revocation to
take place. However the Exchange does not believe that a specified
timeframe is necessary. Because the Exchange can process such
revocations at any time after receipt, the Exchange proposes to amend
Rule 924NY(c) to provide that notices of revocation shall become
effective as soon as the Exchange is able to process the revocation.
The Exchange notes that the proposed rule change is consistent with the
rules governing the processing of the revocation of a Letter of
Guarantee on the Chicago Board Options Exchange (``CBOE'').\7\
---------------------------------------------------------------------------
\7\ See CBOE Rule 8.5(c).
---------------------------------------------------------------------------
Once a notice of revocation has been processed, a Market Maker no
longer has in effect a Letter of Guarantee, as required by Rule
924NY(a). If a Market Maker no longer has a valid Letter of Guarantee,
that Market Maker presents risk to the marketplace and the Exchange
believes it is appropriate to terminate access and connectivity to the
Exchange in these situations. Accordingly, the Exchange proposes to
further amend Rule 924NY(c) by stating that upon the effectiveness of a
notice of revocation, the Exchange will be permitted to prevent access
and connectivity to the Exchange by that Market Maker. Preventing
access and connectivity by a Market Maker who does not have a valid
Letter of Guarantee is consistent with similar procedures of the
CBOE.\8\
---------------------------------------------------------------------------
\8\ See CBOE Rule 3.28(b).
---------------------------------------------------------------------------
Changes to Rule 932NY--Letters of Authorization
Rule 932NY(c) states that a Letter of Authorization filed with the
Exchange shall remain in effect until a written notice of revocation
has been filed with the Exchange. The current rule sets forth a time
period for the effectiveness of a revocation to take place. However the
Exchange does not believe that a specified timeframe is necessary.
Because the Exchange can process such revocations at any time after
receipt, the Exchange proposes to amend Rule 932NY(c) to provide that a
notice of revocation shall become effective as soon as the Exchange is
able to process the revocation. The Exchange notes that the proposed
rules change is consistent with the rules governing the processing of
the revocation of a Letter of Authorization on the CBOE.\9\
---------------------------------------------------------------------------
\9\ See CBOE Rule 6.72(c).
---------------------------------------------------------------------------
Once a notice of revocation has been processed, a Floor Broker no
longer has in effect a Letter of Authorization, as required by Rule
932NY(a). If a Floor Broker no longer has a valid Letter of
Authorization, that Floor Broker presents risk to the marketplace and
the Exchange believes it is appropriate to terminate access and
connectivity to the Exchange in these situations. Accordingly, the
Exchange proposes to further amend Rule 932NY(c) by stating that upon
the effectiveness of a notice of revocation, the Exchange will be
permitted to prevent access and connectivity to the Exchange by that
Floor Broker. Preventing access and connectivity to a Floor Broker who
does not have on file an effective Letter of Authorization is
consistent with similar procedures of the CBOE.\10\
---------------------------------------------------------------------------
\10\ Supra note 8.
---------------------------------------------------------------------------
The Exchange also proposes to adopt an additional provision to Rule
932NY(c) stating that final revocation shall in no way relieve a
Clearing
[[Page 24801]]
Member of responsibility for clearing Floor Broker transactions that
were executed prior to the effectiveness of such final revocation. The
Exchange believes that this provision, which currently applies only to
Market Makers who have been subject to notices of revocation, is
equally appropriate in instances when a Floor Broker is subject to a
notice of revocation. The Exchange notes that the proposed rule change
is consistent with the rules governing the processing of the revocation
of a Letter of Authorization on the CBOE.\11\
---------------------------------------------------------------------------
\11\ Supra note 9.
---------------------------------------------------------------------------
The Exchange notes that nothing in existing or proposed rules would
prohibit a Market Maker or Floor Broker from seeking to gain access and
connectivity to the Exchange once that individual is able to again
acquire the required Letter of Guarantee or Letter of Authorization.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\12\ in general, and furthers the objectives of Section
6(b)(5),\13\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Preventing access and connectivity to the Exchange by a Market
Maker or Floor Broker subject to a notice of revocation will promote
just and equitable principles of trade and serves to protect investors
and the public because it prevents trading by a Market Makers or Floor
Broker without financial guarantees for its trading. A Market Maker or
Floor Broker who no longer has a valid Letter of Guarantee or Letter of
Authorization presents risk to the marketplace and the Exchange
believes it is appropriate to prevent access and connectivity to the
Exchange in these situations. In addition, making a notice of
revocation effective upon processing by the Exchange, instead of being
encumbered by a specified time frame, will permit the Exchange to act
swiftly to take measures aimed at market integrity and investor
protection.
The Exchange believes the proposed rule change is also consistent
with the requirements that the rules of an exchange provide a fair
procedure for the denial or limitation by an exchange of any person
with respect to access to services offered by the Exchange because the
Exchange would not prohibit or limit a Floor Broker or Market Maker
from seeking to gain access and connectivity to the Exchange once that
individual is able to again acquire the required Letter of Guarantee or
Letter of Authorization.
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 proposed rule changes
will apply equally to all Floor Brokers and Market Makers and is
designed to protect all ATP Holders and public investors effecting
transactions on the Exchange. In addition, the proposed changes will
not impose any unnecessary burden on the operation of the Exchange
because the changes will allow the Exchange to adopt more efficient
procedures for the processing notices of revocation.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------
\14\ 15 U.S.C.78s(b)(3)(A)(iii).
\15\ 15 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing, noting that a waiver of the operative delay will allow the
Exchange to promptly adopt and implement new procedures aimed at market
integrity and investor protection. For this reason, the Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. As such, the
Commission waives the operative delay and designates the proposed rule
change to be operative upon filing.\16\
---------------------------------------------------------------------------
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEMKT-2014-33 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2014-33. 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
[[Page 24802]]
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 at 100 F Street NE.,
Washington, DC 20549-1090 on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NYSEMKT-2014-33, and should be submitted on or before May 22, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09917 Filed 4-30-14; 8:45 am]
BILLING CODE P
