Self-Regulatory Organizations; NYSE MKT, LLC; Notice of Filing of Proposed Rule Change Amending Rule 13-Equities and Related Rules Governing Order Types and Modifiers, 20043-20047 [2015-08454]

Download as PDF Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices 20043 Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–74604; File No. SR– NYSEArca–2015–20] [Release No. 34–74682; File No. SR– NYSEMKT–2015–22] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Schedule of Fees and Charges for Exchange Services To Specify That Affiliated Exchange ETP Holders May Request That the Exchange Aggregate Its Eligible Activity With Activity of the ETP Holder’s Affiliates for Purposes of Charges or Credits Based on Volume Self-Regulatory Organizations; NYSE MKT, LLC; Notice of Filing of Proposed Rule Change Amending Rule 13— Equities and Related Rules Governing Order Types and Modifiers • 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– OC–2015–01 on the subject line. Paper Comments asabaliauskas on DSK5VPTVN1PROD with NOTICES • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–OC–2015–01. 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 such filing also will be available for inspection and copying at the principal offices 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–OC– 2015–01, and should be submitted on or before May 5, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Brent J. Fields, Secretary. [FR Doc. 2015–08451 Filed 4–13–15; 8:45 am] BILLING CODE 8011–01–P Correction In Notice document 2015–07619 beginning on page 18270 in the issue of Friday, April 3, 2015, make the following correction: On page 18270, in the third column, in the second paragraph from the bottom, the subject heading beginning ‘‘Self-Regulatory Organizations’’ should read as follows: ‘‘Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Schedule of Fees and Charges for Exchange Services to Specify that Affiliated Exchange ETP Holders May Request that the Exchange Aggregate Its Eligible Activity with Activity of the ETP Holder’s Affiliates for Purposes of Charges or Credits Based on Volume’’ [FR Doc. C1–2015–07619 Filed 4–13–15; 8:45 am] BILLING CODE 1505–01–D SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74628; File No. SR–Phlx– 2015–32] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 3301(h) April 1, 2015. Correction In notice document 2015–07851, appearing on pages 18662—18664 in the issue of Tuesday, April 7, 2015, make the following correction: On page 18664, in the second column, on the thirty-first line from the top, ‘‘May 7, 2015’’ is corrected to read ‘‘April 28, 2015.’’ [FR Doc. C1–2015–07851 Filed 4–13–15; 8:45 am] 9 17 BILLING CODE 1505–01–D CFR 200.30–3(a)(73). VerDate Sep<11>2014 20:26 Apr 13, 2015 Jkt 235001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 April 8, 2015. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on March 24, 2015, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 13—Equities and related rules governing order types and modifiers. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose On June 5, 2014, in a speech entitled ‘‘Enhancing Our Market Equity Structure,’’ Mary Jo White, Chair of the 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 E:\FR\FM\14APN1.SGM 14APN1 20044 Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES Securities and Exchange Commission (‘‘SEC’’ or the ‘‘Commission’’) requested the equity exchanges to conduct a comprehensive review of their order types and how they operate in practice, and as part of this review, consider appropriate rule changes to help clarify the nature of their order types. 4 Subsequent to the Chair’s speech, the SEC’s Division of Trading and Markets requested that the equity exchanges complete their reviews and submit any proposed rule changes.5 The Exchange notes that it continually assesses its rules governing order types and undertook on its own initiative a review of its rules related to order functionality to assure that its various order types, which have been adopted and amended over the years, accurately describe the functionality associated with those order types, and more specifically, how different order types may interact. As a result of that review, the Exchange submitted a proposed rule change to delete rules relating to functionality that was not available.6 In addition, over the years, when filing rule changes to adopt new functionality, the Exchange has used those filings as an opportunity to streamline related existing rule text for which functionality has not changed.7 The Exchange is filing this proposed rule change to continue with its efforts to review and clarify its rules governing order types, as appropriate. Specifically, the Exchange notes that Rule 13— Equities (‘‘Rule 13’’) is currently structured alphabetically, and does not include subsection numbering. The Exchange proposes to provide 4 See Mary Jo White, Chair, Securities and Exchange Commission, Speech at the Sandler, O’Neill & Partners, L.P. Global Exchange and Brokerage Conference (June 5, 2014) (available at www.sec.gov/News/Speech/Detail/Speech/ 1370542004312#.U5HI-fmwJiw). 5 See Letter from James Burns, Deputy Director, Division of Trading and Markets, Securities and Exchange Commission, to Jeffrey C. Sprecher, Chief Executive Officer, Intercontinental Exchange, Inc., dated June 20, 2014. 6 See Securities Exchange Act Release No. 71898 (April 8, 2014), 79 FR 20957 (April 14, 2014) (SR– NYSEMKT–2014–27) (‘‘2014 Pegging Filing’’) (amending rules governing pegging interest to conform to functionality that is available at the Exchange). 7 See, e.g., Securities Exchange Act Release Nos. 68305 (Nov. 28, 2012), 77 FR 71853 (Dec. 4, 2012) (SR–NYSEMKT–2012–67) (amending rules governing pegging interest to, among other things, make non-substantive changes, including moving the rule text from Rule 70.26—Equities to Rule 13, to make the rule text more focused and streamlined) (‘‘2012 Pegging Filing’’), and 71175 (Dec. 23, 2013), 78 FR 79534 (Dec. 30, 2013) (SR–NYSEMKT–2013– 25) (approval order for rule proposal that, among other things, amended Rule 70 governing Floor broker reserve e-quotes that streamlined the rule text without making substantive changes) (‘‘2013 Reserve e-Quote Filing’’). VerDate Sep<11>2014 17:42 Apr 13, 2015 Jkt 235001 additional clarity to Rule 13 by regrouping and re-numbering current rule text and making other non-substantive, clarifying changes. The proposed rule changes are not intended to reflect changes to functionality but rather to clarify Rule 13 to make it easier to navigate.8 In addition, the Exchange proposes to amend certain rules to remove references to functionality that is no longer operative. Proposed Rule 13 Restructure The Exchange proposes to re-structure Rule 13 to re-group existing order types and modifiers together along functional lines. Proposed new subsection (a) of Rule 13 would set forth the Exchange’s order types that are the foundation for all other order type instructions, i.e., the primary order types. The proposed primary order types would be: • Market Orders. Rule text governing Market Orders would be moved to new Rule 13(a)(1). The Exchange proposes a non-substantive change to replace the reference to ‘‘Display Book’’ with a reference to ‘‘Exchange systems.’’ 9 The Exchange notes that it proposes to capitalize the term ‘‘Market Order’’ throughout new Rule 13. • Limit Orders. Rule text governing Limit Orders would be moved to new Rule 13(a)(2). The Exchange proposes a non-substantive change to capitalize the term ‘‘Limit Order,’’ and to shorten the definition in a manner that streamlines the rule text without changing the meaning of the rule. The Exchange notes that it proposes to capitalize the term ‘‘Limit Order’’ throughout new Rule 13. The Exchange notes that it proposes to delete the definition of ‘‘Auto Ex Order’’ because all orders entered electronically at the Exchange are eligible for automatic execution in accordance with Rules 1000–1004— Equities and therefore the Exchange does not believe that it needs to separately define an Auto Ex Order. Rather than maintain a separate definition, the Exchange proposes to specify in proposed Rule 13(a) that all orders entered electronically at the Exchange are eligible for automatic 8 The Exchange notes that its affiliated exchanges, New York Stock Exchange LLC (‘‘NYSE’’) and NYSE Arca, Inc. are proposing similar restructuring of their respective order type rules to group order types and modifiers. See SR–NYSE–2015–15 and SR–NYSEArca–2015–08. 9 The Exchange proposes to replace the term ‘‘Display book’’ with the term ‘‘Exchange systems’’ when use of the term refers to the Exchange systems that receive and execute orders. The Exchange proposes to replace the term ‘‘Display Book’’ with the term ‘‘Exchange’s book’’ when use of the term refers to the interest that has been entered and ranked in Exchange systems. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 execution consistent with the terms of the order and Rules 1000–1004— Equities. The Exchange notes that Rule 13 currently provides for specified instructions for orders that may not execute on arrival, even if marketable, e.g., a Limit Order designated ALO, or may only be eligible to participate in an auction, accordingly, the terms of the order also control whether a marketable order would automatically execute upon arrival. The Exchange further proposes to specify that interest represented manually by Floor brokers, i.e., orally bid or offered at the point of sale on the Trading Floor, is not eligible for automatic execution. The Exchange notes that the order types currently specified in the definition for auto ex order are already separately defined in Rule 13 or Rule 70(a)(ii)—Equities (definition of G order). Proposed new subsection (b) of Rule 13 would set forth the existing Time in Force Modifiers that the Exchange makes available for orders entered at the Exchange. The Exchange proposes to: (i) Move rule text governing Day Orders to new Rule 13(b)(1), without any substantive changes to the rule text; (ii) move rule text governing Good til Cancelled Orders to new Rule 13(b)(2), without any substantive changes to the rule text; and (iii) move rule text governing Immediate or Cancel Orders to new Rule 13(b)(3) without any changes to rule text. The Exchange notes that these time-in-force conditions are not separate order types, but rather are modifiers to orders. Accordingly, the Exchange proposes to re-classify them as modifiers and remove the references to the term ‘‘Order.’’ In addition, as noted above, the Exchange proposes to capitalize the term ‘‘Limit Order’’ in Rule 13(b). Proposed new subsection (c) of Rule 13 would specify the Exchange’s existing Auction-Only Orders. In moving the rule text, the Exchange proposes the following non-substantive changes: (i) Capitalize the terms ‘‘Limit Order,’’ ‘‘CO Order,’’ and ‘‘Market Order’’; (ii) move the rule text for CO Orders to new Rule 13(c)(1); (iii) rename a ‘‘Limit ‘At the Close’ Order’’ as a ‘‘Limit-on-Close (LOC) Order’’ and move the rule text to new Rule 13(c)(2); (iv) rename a ‘‘Limit ‘On-the-Open’ Order’’ as a ‘‘Limit-on-Open (LOO) Order’’ and move the rule text to new Rule 13(c)(3); (v) rename a ‘‘Market ‘At-the-Close’ Order’’ as a ‘‘Market-on-Close (MOC) Order’’ and move the rule text to new Rule 13(c)(4); and (vi) rename a ‘‘Market ‘On-the-Open’ Order’’ as a ‘‘Market-onOpen (MOO) Order’’ and move the rule text to new Rule 13(c)(5). E:\FR\FM\14APN1.SGM 14APN1 Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES Proposed new subsection (d) of Rule 13 would specify the Exchange’s existing orders that include instructions not to display all or a portion of the order. The order types proposed to be included in this new subsection are: • Mid-point Passive Liquidity (‘‘MPL’’) Orders. Existing rule text governing MPL Orders would be moved to new Rule 13(d)(1) with nonsubstantive changes to capitalize the term Limit Order, update cross references, and refer to ‘‘Add Liquidity Only’’ as ALO, since ALO is now a separately defined term in new Rule 13(e)(1). The Exchange also proposes to clarify the rule text by deleting the term ‘‘including’’ from the phrase ‘‘[a]n MPL Order is not eligible for manual executions, including openings, reopenings, and closings,’’ because MPL Orders would not participate in an opening, re-opening, or closing that is effectuated electronically.10 The Exchange further proposes to make a substantive amendment to the rule text set forth in new Rule 13(d)(1)(C) to specify that Exchange systems would reject an MPL Order on entry if the Minimum Triggering Volume (‘‘MTV’’) is larger than the size of the order and would reject a request to partially cancel a resting MPL Order if it would result in the MTV being larger than the size of the order and make conforming changes to the existing rule text. The Exchange would continue to enforce an MTV restriction if the unexecuted portion of an MPL Order with an MTV is less than the MTV. The Exchange believes that this proposed rule change would prevent an entering firm from causing an MPL Order to have an MTV that is larger than the order, thereby bypassing contra-side interest that is larger than the size of the MPL Order.11 Finally, the Exchange proposes to make a nonsubstantive change to new Rule 13(d)(1)(E) to replace the term ‘‘discretionary trade’’ with ‘‘d-Quote,’’ because d-Quotes are the only type of Exchange interest that is eligible to include discretionary pricing instructions.12 • Reserve Orders. Existing rule text governing Reserve Orders would be moved to new Rule 13(d)(2) with non10 See Rule 123C.10—Equities (‘‘Closings may be effectuated manually or electronically’’) and Rule 123D(1)—Equities (‘‘Openings may be effectuated manually or electronically’’). 11 The Exchange notes that because of technology changes associated with rejecting MPL Orders that have an MTV larger than the size of the order, the Exchange will announce by Trader Update when this element of the proposed rule change will be implemented. 12 See Rule 70.25—Equities (Discretionary Instructions for Bids and Offers Represented via Floor Broker Agency Interest Files (e-QuotesSM)). VerDate Sep<11>2014 17:42 Apr 13, 2015 Jkt 235001 substantive changes to capitalize the term ‘‘Limit Order’’ and hyphenate the term ‘‘Non-Displayed.’’ The Exchange proposes further non-substantive changes to the rule text governing Minimum Display Reserve Orders, which would be in new Rule 13(d)(2)(C), to clarify that a Minimum Display Reserve Order would participate in both automatic and manual executions. This is existing functionality relating to Minimum Display Reserve Orders 13 and the proposed rule text aligns with Rule 70(f)(i)—Equities governing Floor broker Minimum Display Reserve e-Quotes.14 Similarly, the Exchange proposes nonsubstantive changes to the rule text governing Non-Displayed Reserve Orders, which would be in new Rule 13(d)(2)(D), to clarify that a NonDisplayed Reserve Order would not participate in manual executions. This is existing functionality relating to NonDisplayed Reserve Orders 15 and the proposed rule text aligns with Rule 70(f)(ii)—Equities governing NonDisplay Reserve eQuotes excluded from the DMM.16 Finally, in proposed new Rule 13(d)(2)(E), the Exchange proposes to clarify that the treatment of reserve interest, which is available for execution only after all displayable interest at that price point has been executed, is applicable to all Reserve Orders, and is not limited to Non-Displayed Reserve Orders.17 13 On October 1, 2008, the Commission approved the Exchange’s rule proposal to establish new membership, member firm conduct, and equity trading rules that were based on the existing NYSE rules to reflect that equities trading on the Exchange would be supported by the NYSE’s trading system. See Securities Exchange Act Release No. 58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8. 2008) (SR– Amex–2008–63) (approval order). Because the Exchange’s rules are based on the existing NYSE rules, the Exchange believes that pre-October 1, 2008 NYSE rule filings provide guidance concerning Exchange equity rules. See Securities Exchange Act Release No. 57688 (April 18, 2008), 73 FR 22194 at 22197 (April 24, 2008) (SR–NYSE– 2008–30) (order approving NYSE rule change that, among other things, adopted new Reserve Order for which the non-displayed portion of the order is eligible to participate in manual executions) (‘‘2008 Reserve Order Filing’’). 14 See 2013 Reserve e-Quote Filing, supra n. 7. 15 See Securities Exchange Act Release No. 58845 (Oct. 24, 2008), 73 FR 64379 at 64384 (Oct. 29, 2008) (SR–NYSE–2008–46) (order approving the NYSE’s New Market Model, including adopting a Non-Displayed Reserve Order that would not be eligible to participate in manual executions); see also Securities Exchange Act Release No. 59022 (Nov. 26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR– NYSEALTR–2008–10) (notice of filing and immediate effectiveness of rule change to conform Exchange equity rules with NYSE rules, including adopting NYSE New Market Model and related changes to adoption of a Non-Displayed Reserve Order). 16 See 2013 Reserve e-Quote Filing, supra n. 7. 17 See 2008 Reserve Order Filing supra n. 13 at 22196 (displayable portion of Reserve Order PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 20045 Proposed new subsection (e) of Rule 13 would specify the Exchange’s existing order types that, by definition, do not route. The order types proposed to be included in this new subsection are: • Add Liquidity Only (‘‘ALO’’) Modifiers. Existing rule text governing ALO modifiers would be moved to new Rule 13(e)(1) with non-substantive changes to capitalize the term ‘‘Limit Order’’ and update cross-references. Existing rule text that is being moved to new Rule 13(e)(1)(A) currently provides that Limit Orders designated ALO may participate in opens and closes, but that the ALO instructions would be ignored. Because Limit Orders designated ALO could also participate in re-openings, and the ALO instructions would similarly be ignored, the Exchange proposes to clarify new Rule 13(e)(1)(A) to provide that Limit Orders designated ALO could participate in openings, reopenings, and closings, but that the ALO instructions would be ignored. • Do Not Ship (‘‘DNS’’) Orders. Existing rule text governing DNS Orders would be moved to new Rule 13(e)(2) with non-substantive changes to capitalize the term ‘‘Limit Order’’ and replace the reference to ‘‘Display Book’’ with a reference to ‘‘Exchange systems.’’ • Intermarket Sweep Order. Existing rule text governing ISOs would be moved to new Rule 13(e)(3) with nonsubstantive changes to capitalize the term ‘‘Limit Order’’, update crossreferences, and replace the reference to ‘‘Display Book’’ with a reference to ‘‘Exchange’s book.’’ Proposed new subsection (f) of Rule 13 would specify the Exchange’s other existing order instructions and modifiers, including: • Do Not Reduce (‘‘DNR’’) Modifier. Existing rule text governing DNR Orders would be moved to new Rule 13(f)(1) with non-substantive changes to capitalize the terms ‘‘Limit Order’’ and ‘‘Stop Order.’’ In addition, the Exchange believes that because DNR instructions would be added to an order, DNR is more appropriately referred to as a modifier rather than as an order type. • Do Not Increase (‘‘DNI’’) Modifiers. Existing rule text governing DNI Orders would be moved to new Rule 13(f)(2) with non-substantive changes to capitalize the terms ‘‘Limit Order’’ and ‘‘Stop Order.’’ In addition, the Exchange believes that because DNI instructions would be added to an order, DNI is more appropriately referred to as a modifier rather than as an order type. executed together with other displayable interest at a price point before executing with reserve portion of the order). E:\FR\FM\14APN1.SGM 14APN1 asabaliauskas on DSK5VPTVN1PROD with NOTICES 20046 Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices • Pegging Interest. Existing rule text governing Pegging Interest and related subsections would be moved to new Rule 13(f)(3) with two clarifying changes to the existing rule text. First, because Pegging Interest is currently available for e-Quotes and d-Quotes only, the Exchange proposes to replace the term ‘‘can’’ with the term ‘‘must’’ in new Rule 13(f)(3)(a)(i) to provide that Pegging Interest ‘‘must be an e-Quote or d-Quote.’’ Second, the Exchange proposes to delete reference to the term ‘‘Primary Pegging Interest,’’ because the Exchange has only one form of pegging interest.18 • Retail Modifiers. Existing rule text governing Retail Modifiers and related subsections would be moved to new Rule 13(f)(4) with non-substantive changes to update cross-references. • Self-Trade Prevention (‘‘STP’’) Modifier. Existing rule text governing STP Modifiers and related subsections would be moved to new Rule 13(f)(5) with non-substantive changes to capitalize the terms ‘‘Limit Orders,’’ ‘‘Market Orders,’’ and ‘‘Stop Orders’’ and hyphenate the term ‘‘Self-Trade Prevention.’’ • Sell ‘‘Plus’’—Buy ‘‘Minus’’ Instructions. Existing rule text governing Sell ‘‘Plus’’—Buy ‘‘Minus’’ Orders would be moved to new Rule 13(f)(6) with non-substantive changes to break the rule into subsections, capitalize the terms ‘‘Market Order,’’ ‘‘Limit Order,’’ and ‘‘Stop Order,’’ and replace the references to Display Book with references to Exchange systems. In addition, the Exchange proposes to reclassify this as an order instruction rather than as a separate order. • Stop Orders. Existing rule text governing Stop Orders would be moved to new Rule 13(f)(7) with nonsubstantive changes to break the rule into subsections, capitalize the term ‘‘Market Order,’’ and replace references to ‘‘Exchange’s automated order routing system’’ with references to ‘‘Exchange systems.’’ The Exchange proposes to make conforming changes to Rule 501(d)(2)— Equities relating to the list of order types that are not accepted for trading in UTP Securities by: (i) Replacing the term ‘‘Market or Limit at the Close’’ with ‘‘MOC or LOC’’; (ii) replacing the term ‘‘At the Opening or At the Opening Only (‘‘OPG’’)’’ with ‘‘MOO or LOO’’; (iii) deleting the GTX Order reference, as an order instruction that the Exchange no longer accepts; and (iv) updating the subsection rule numbering accordingly. 18 See 2014 Pegging Filing, supra n. 6. VerDate Sep<11>2014 17:42 Apr 13, 2015 Jkt 235001 As part of the proposed restructure of Rule 13, the Exchange proposes to move existing rule text in Rule 13 governing the definition of ‘‘Routing Broker’’ to Rule 17(c), without any change to the rule text. The Exchange believes that Rule 17—Equities is a more logical location for the definition of Routing Broker because Rule 17(c)—Equities governs the operations of Routing Brokers. In addition, the Exchange proposes to delete existing rule text in Rule 13 governing Not Held Orders and add rule text relating to not held instructions to supplementary material .20 to Rule 13. Supplementary material .20 to Rule 13 reflects obligations that members have in handling customer orders. Because not held instructions are instructions from a customer to a member or member organization regarding the handling of an order, and do not relate to instructions accepted by Exchange systems for execution, the Exchange believes that references to not held instructions are better suited for this existing supplementary material. Accordingly, the Exchange proposes to amend supplementary material .20 to Rule 13 to add that generally, an instruction that an order is ‘‘not held’’ refers to an unpriced, discretionary order voluntarily categorized as such by the customer and with respect to which the customer has granted the member or member organization price and time discretion. The Exchange believes that this proposed amendment aligns the definition of ‘‘not held’’ with guidance from the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) and other markets regarding not held instructions.19 The Exchange notes that the existing Rule 13 text regarding how to mark a Not Held Order, e.g., ‘‘not held,’’ ‘‘disregard tape,’’ ‘‘take time,’’ etc., are outdated references regarding order marking between a customer and a member or member organization. All Exchange members and member organizations that receive customer orders are subject to Order Audit Trail System (‘‘OATS’’) obligations, consistent with Rule 7400—Equities Series and FINRA Rule 7400 Series, which require that order-handling instructions be documented in OATS. Among the order-handling instructions that can be captured in OATS is 19 See FINRA Regulatory Notice 11–29, Answer 3 (June 2011) (‘‘Generally, a ‘not held’ order is an unpriced, discretionary order voluntarily categorized as such by the customer and with respect to which the customer has granted the firm price and time discretion.’’). See also Definition of Market Not Held Order on Nasdaq.com Glossary of Stock Market Terms, available at https:// www.nasdaq.com/investing/glossary/m/market-notheld-order. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 whether an order is not held.20 The Exchange believes that these OATSrelated obligations now govern how a member or member organization records order-handling instructions from a customer and therefore the terms currently set forth in Rule 13 relating to Not Held Orders are no longer necessary. Finally, the Exchange proposes to amend Rule 70.25—Equities governing d-Quotes to clarify that certain functionality set forth in the Rule is no longer available. Specifically, Rule 70.25(c)(ii)—Equities currently provides that a Floor broker may designate a maximum size of contra-side volume with which it is willing to trade using discretionary pricing instructions. Because this functionality is not available, the Exchange proposes to delete references to the maximum discretionary size parameter from Rules 70.25(c)(ii)—Equities and (c)(v)— Equities. In addition, the Exchange proposes to amend Rule 70.25(c)(iv)— Equities to clarify that the circumstances of when the Exchange would consider interest displayed by other market centers at the price at which a d-Quote may trade are not limited to determining when a dQuote’s minimum or maximum size range is met. Accordingly, the Exchange proposes to delete the clause ‘‘when determining if the d-Quote’s minimum and/or maximum size range is met.’’ The Exchange believes that the proposed changes to Rule 70.25(c)— Equities will provide clarity and transparency regarding the existing functionality relating to d-Quotes at the Exchange. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ‘‘Act’’),21 in general, and furthers the objectives of Section 6(b)(5),22 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in 20 See FINRA OATS Frequently Asked Questions—Technical, at T21 (‘‘An order submitted by a customer who gives the broker discretion as to the price and time of execution is denoted as a ‘‘Not Held’’ order.’’), available at https:// www.finra.org/Industry/Compliance/ MarketTransparency/OATS/FAQ/P085542. 21 15 U.S.C. 78f(b). 22 15 U.S.C. 78f(b)(5). E:\FR\FM\14APN1.SGM 14APN1 asabaliauskas on DSK5VPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 71 / Tuesday, April 14, 2015 / Notices general, to protect investors and the public interest. Specifically, the Exchange believes that the proposed restructuring of Rule 13, to group existing order types to align by functionality, would remove impediments to and perfect 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. In addition, the Exchange believes that the proposed revisions to Rule 13 and related conforming changes to Rule 501(d)(2)— Equities promote clarity regarding existing functionality that has been approved in prior rule filings, but which may not have been codified in rule text.23 Moreover, the Exchange believes that moving rule text defining a Routing Broker to Rule 17—Equities represents a more logical location for such definition, thereby making it easier for market participants to navigate Exchange rules. Likewise, the Exchange believes the proposed changes to ‘‘Not Held Order,’’ to move it to supplementary material .20 to Rule 13 and revise the rule text to conform with guidance from FINRA and OATS requirements, would remove impediments to and perfect the mechanism of a free and open market and a national market system by applying a uniform definition of not held instructions across multiple markets, thereby reducing the potential for confusion regarding the meaning of not held instructions. The Exchange further believes that the proposed amendment regarding MPL Orders to reject both MPL Orders with an MTV larger than the size of the order and instructions to partially cancel an MPL Order that would result in an MTV larger than the size of the order would remove impediments to and perfect the mechanism of a free and open market and national market system in general because it could potentially reduce the ability of a member organization from using MPL Orders to bypass contra-side interest that may be larger than the size of the MPL Order. Finally, the Exchange believes that the proposed changes to Rule 70.25(c)— Equities would remove impediments to and perfect the mechanism of a free and open market and national market system in general because it assures that the Exchange’s rules align with the existing functionality available at the Exchange for d-Quotes. 23 See supra nn. 13–18. VerDate Sep<11>2014 17:42 Apr 13, 2015 Jkt 235001 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 change is not designed to address any competitive issue but rather would re-structure Rule 13 and remove rule text that relates to functionality that is no longer operative, thereby reducing confusion and making the Exchange’s rules easier to navigate. 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 Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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–2015–22 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEMKT–2015–22. 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 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 20047 only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEMKT–2015–22 and should be submitted on or before May 5, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Brent J. Fields, Secretary. [FR Doc. 2015–08454 Filed 4–13–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74676; File No. SR–ICC– 2015–008] Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change Related to Settlement Finality April 8, 2015. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 1, 2015, ICE Clear Credit LLC (‘‘ICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared primarily by ICC. The Commission is publishing this 24 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\14APN1.SGM 14APN1

Agencies

[Federal Register Volume 80, Number 71 (Tuesday, April 14, 2015)]
[Notices]
[Pages 20043-20047]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-08454]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74682; File No. SR-NYSEMKT-2015-22]


Self-Regulatory Organizations; NYSE MKT, LLC; Notice of Filing of 
Proposed Rule Change Amending Rule 13--Equities and Related Rules 
Governing Order Types and Modifiers

April 8, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on March 24, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the self-regulatory organization. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 13--Equities and related rules 
governing order types and modifiers. The text of the proposed rule 
change is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On June 5, 2014, in a speech entitled ``Enhancing Our Market Equity 
Structure,'' Mary Jo White, Chair of the

[[Page 20044]]

Securities and Exchange Commission (``SEC'' or the ``Commission'') 
requested the equity exchanges to conduct a comprehensive review of 
their order types and how they operate in practice, and as part of this 
review, consider appropriate rule changes to help clarify the nature of 
their order types. \4\ Subsequent to the Chair's speech, the SEC's 
Division of Trading and Markets requested that the equity exchanges 
complete their reviews and submit any proposed rule changes.\5\
---------------------------------------------------------------------------

    \4\ See Mary Jo White, Chair, Securities and Exchange 
Commission, Speech at the Sandler, O'Neill & Partners, L.P. Global 
Exchange and Brokerage Conference (June 5, 2014) (available at 
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
    \5\ See Letter from James Burns, Deputy Director, Division of 
Trading and Markets, Securities and Exchange Commission, to Jeffrey 
C. Sprecher, Chief Executive Officer, Intercontinental Exchange, 
Inc., dated June 20, 2014.
---------------------------------------------------------------------------

    The Exchange notes that it continually assesses its rules governing 
order types and undertook on its own initiative a review of its rules 
related to order functionality to assure that its various order types, 
which have been adopted and amended over the years, accurately describe 
the functionality associated with those order types, and more 
specifically, how different order types may interact. As a result of 
that review, the Exchange submitted a proposed rule change to delete 
rules relating to functionality that was not available.\6\ In addition, 
over the years, when filing rule changes to adopt new functionality, 
the Exchange has used those filings as an opportunity to streamline 
related existing rule text for which functionality has not changed.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 71898 (April 8, 
2014), 79 FR 20957 (April 14, 2014) (SR-NYSEMKT-2014-27) (``2014 
Pegging Filing'') (amending rules governing pegging interest to 
conform to functionality that is available at the Exchange).
    \7\ See, e.g., Securities Exchange Act Release Nos. 68305 (Nov. 
28, 2012), 77 FR 71853 (Dec. 4, 2012) (SR-NYSEMKT-2012-67) (amending 
rules governing pegging interest to, among other things, make non-
substantive changes, including moving the rule text from Rule 
70.26--Equities to Rule 13, to make the rule text more focused and 
streamlined) (``2012 Pegging Filing''), and 71175 (Dec. 23, 2013), 
78 FR 79534 (Dec. 30, 2013) (SR-NYSEMKT-2013-25) (approval order for 
rule proposal that, among other things, amended Rule 70 governing 
Floor broker reserve e-quotes that streamlined the rule text without 
making substantive changes) (``2013 Reserve e-Quote Filing'').
---------------------------------------------------------------------------

    The Exchange is filing this proposed rule change to continue with 
its efforts to review and clarify its rules governing order types, as 
appropriate. Specifically, the Exchange notes that Rule 13--Equities 
(``Rule 13'') is currently structured alphabetically, and does not 
include subsection numbering. The Exchange proposes to provide 
additional clarity to Rule 13 by re-grouping and re-numbering current 
rule text and making other non-substantive, clarifying changes. The 
proposed rule changes are not intended to reflect changes to 
functionality but rather to clarify Rule 13 to make it easier to 
navigate.\8\ In addition, the Exchange proposes to amend certain rules 
to remove references to functionality that is no longer operative.
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    \8\ The Exchange notes that its affiliated exchanges, New York 
Stock Exchange LLC (``NYSE'') and NYSE Arca, Inc. are proposing 
similar restructuring of their respective order type rules to group 
order types and modifiers. See SR-NYSE-2015-15 and SR-NYSEArca-2015-
08.
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Proposed Rule 13 Restructure
    The Exchange proposes to re-structure Rule 13 to re-group existing 
order types and modifiers together along functional lines.
    Proposed new subsection (a) of Rule 13 would set forth the 
Exchange's order types that are the foundation for all other order type 
instructions, i.e., the primary order types. The proposed primary order 
types would be:
     Market Orders. Rule text governing Market Orders would be 
moved to new Rule 13(a)(1). The Exchange proposes a non-substantive 
change to replace the reference to ``Display Book'' with a reference to 
``Exchange systems.'' \9\ The Exchange notes that it proposes to 
capitalize the term ``Market Order'' throughout new Rule 13.
---------------------------------------------------------------------------

    \9\ The Exchange proposes to replace the term ``Display book'' 
with the term ``Exchange systems'' when use of the term refers to 
the Exchange systems that receive and execute orders. The Exchange 
proposes to replace the term ``Display Book'' with the term 
``Exchange's book'' when use of the term refers to the interest that 
has been entered and ranked in Exchange systems.
---------------------------------------------------------------------------

     Limit Orders. Rule text governing Limit Orders would be 
moved to new Rule 13(a)(2). The Exchange proposes a non-substantive 
change to capitalize the term ``Limit Order,'' and to shorten the 
definition in a manner that streamlines the rule text without changing 
the meaning of the rule. The Exchange notes that it proposes to 
capitalize the term ``Limit Order'' throughout new Rule 13.
    The Exchange notes that it proposes to delete the definition of 
``Auto Ex Order'' because all orders entered electronically at the 
Exchange are eligible for automatic execution in accordance with Rules 
1000-1004--Equities and therefore the Exchange does not believe that it 
needs to separately define an Auto Ex Order. Rather than maintain a 
separate definition, the Exchange proposes to specify in proposed Rule 
13(a) that all orders entered electronically at the Exchange are 
eligible for automatic execution consistent with the terms of the order 
and Rules 1000-1004--Equities. The Exchange notes that Rule 13 
currently provides for specified instructions for orders that may not 
execute on arrival, even if marketable, e.g., a Limit Order designated 
ALO, or may only be eligible to participate in an auction, accordingly, 
the terms of the order also control whether a marketable order would 
automatically execute upon arrival. The Exchange further proposes to 
specify that interest represented manually by Floor brokers, i.e., 
orally bid or offered at the point of sale on the Trading Floor, is not 
eligible for automatic execution. The Exchange notes that the order 
types currently specified in the definition for auto ex order are 
already separately defined in Rule 13 or Rule 70(a)(ii)--Equities 
(definition of G order).
    Proposed new subsection (b) of Rule 13 would set forth the existing 
Time in Force Modifiers that the Exchange makes available for orders 
entered at the Exchange. The Exchange proposes to: (i) Move rule text 
governing Day Orders to new Rule 13(b)(1), without any substantive 
changes to the rule text; (ii) move rule text governing Good til 
Cancelled Orders to new Rule 13(b)(2), without any substantive changes 
to the rule text; and (iii) move rule text governing Immediate or 
Cancel Orders to new Rule 13(b)(3) without any changes to rule text. 
The Exchange notes that these time-in-force conditions are not separate 
order types, but rather are modifiers to orders. Accordingly, the 
Exchange proposes to re-classify them as modifiers and remove the 
references to the term ``Order.'' In addition, as noted above, the 
Exchange proposes to capitalize the term ``Limit Order'' in Rule 13(b).
    Proposed new subsection (c) of Rule 13 would specify the Exchange's 
existing Auction-Only Orders. In moving the rule text, the Exchange 
proposes the following non-substantive changes: (i) Capitalize the 
terms ``Limit Order,'' ``CO Order,'' and ``Market Order''; (ii) move 
the rule text for CO Orders to new Rule 13(c)(1); (iii) rename a 
``Limit `At the Close' Order'' as a ``Limit-on-Close (LOC) Order'' and 
move the rule text to new Rule 13(c)(2); (iv) rename a ``Limit `On-the-
Open' Order'' as a ``Limit-on-Open (LOO) Order'' and move the rule text 
to new Rule 13(c)(3); (v) rename a ``Market `At-the-Close' Order'' as a 
``Market-on-Close (MOC) Order'' and move the rule text to new Rule 
13(c)(4); and (vi) rename a ``Market `On-the-Open' Order'' as a 
``Market-on-Open (MOO) Order'' and move the rule text to new Rule 
13(c)(5).

[[Page 20045]]

    Proposed new subsection (d) of Rule 13 would specify the Exchange's 
existing orders that include instructions not to display all or a 
portion of the order. The order types proposed to be included in this 
new subsection are:
     Mid-point Passive Liquidity (``MPL'') Orders. Existing 
rule text governing MPL Orders would be moved to new Rule 13(d)(1) with 
non-substantive changes to capitalize the term Limit Order, update 
cross references, and refer to ``Add Liquidity Only'' as ALO, since ALO 
is now a separately defined term in new Rule 13(e)(1). The Exchange 
also proposes to clarify the rule text by deleting the term 
``including'' from the phrase ``[a]n MPL Order is not eligible for 
manual executions, including openings, re-openings, and closings,'' 
because MPL Orders would not participate in an opening, re-opening, or 
closing that is effectuated electronically.\10\ The Exchange further 
proposes to make a substantive amendment to the rule text set forth in 
new Rule 13(d)(1)(C) to specify that Exchange systems would reject an 
MPL Order on entry if the Minimum Triggering Volume (``MTV'') is larger 
than the size of the order and would reject a request to partially 
cancel a resting MPL Order if it would result in the MTV being larger 
than the size of the order and make conforming changes to the existing 
rule text. The Exchange would continue to enforce an MTV restriction if 
the unexecuted portion of an MPL Order with an MTV is less than the 
MTV. The Exchange believes that this proposed rule change would prevent 
an entering firm from causing an MPL Order to have an MTV that is 
larger than the order, thereby bypassing contra-side interest that is 
larger than the size of the MPL Order.\11\ Finally, the Exchange 
proposes to make a non-substantive change to new Rule 13(d)(1)(E) to 
replace the term ``discretionary trade'' with ``d-Quote,'' because d-
Quotes are the only type of Exchange interest that is eligible to 
include discretionary pricing instructions.\12\
---------------------------------------------------------------------------

    \10\ See Rule 123C.10--Equities (``Closings may be effectuated 
manually or electronically'') and Rule 123D(1)--Equities (``Openings 
may be effectuated manually or electronically'').
    \11\ The Exchange notes that because of technology changes 
associated with rejecting MPL Orders that have an MTV larger than 
the size of the order, the Exchange will announce by Trader Update 
when this element of the proposed rule change will be implemented.
    \12\ See Rule 70.25--Equities (Discretionary Instructions for 
Bids and Offers Represented via Floor Broker Agency Interest Files 
(e-Quotes\SM\)).
---------------------------------------------------------------------------

     Reserve Orders. Existing rule text governing Reserve 
Orders would be moved to new Rule 13(d)(2) with non-substantive changes 
to capitalize the term ``Limit Order'' and hyphenate the term ``Non-
Displayed.'' The Exchange proposes further non-substantive changes to 
the rule text governing Minimum Display Reserve Orders, which would be 
in new Rule 13(d)(2)(C), to clarify that a Minimum Display Reserve 
Order would participate in both automatic and manual executions. This 
is existing functionality relating to Minimum Display Reserve Orders 
\13\ and the proposed rule text aligns with Rule 70(f)(i)--Equities 
governing Floor broker Minimum Display Reserve e-Quotes.\14\ Similarly, 
the Exchange proposes non-substantive changes to the rule text 
governing Non-Displayed Reserve Orders, which would be in new Rule 
13(d)(2)(D), to clarify that a Non-Displayed Reserve Order would not 
participate in manual executions. This is existing functionality 
relating to Non-Displayed Reserve Orders \15\ and the proposed rule 
text aligns with Rule 70(f)(ii)--Equities governing Non-Display Reserve 
eQuotes excluded from the DMM.\16\ Finally, in proposed new Rule 
13(d)(2)(E), the Exchange proposes to clarify that the treatment of 
reserve interest, which is available for execution only after all 
displayable interest at that price point has been executed, is 
applicable to all Reserve Orders, and is not limited to Non-Displayed 
Reserve Orders.\17\
---------------------------------------------------------------------------

    \13\ On October 1, 2008, the Commission approved the Exchange's 
rule proposal to establish new membership, member firm conduct, and 
equity trading rules that were based on the existing NYSE rules to 
reflect that equities trading on the Exchange would be supported by 
the NYSE's trading system. See Securities Exchange Act Release No. 
58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8. 2008) (SR-Amex-2008-63) 
(approval order). Because the Exchange's rules are based on the 
existing NYSE rules, the Exchange believes that pre-October 1, 2008 
NYSE rule filings provide guidance concerning Exchange equity rules. 
See Securities Exchange Act Release No. 57688 (April 18, 2008), 73 
FR 22194 at 22197 (April 24, 2008) (SR-NYSE-2008-30) (order 
approving NYSE rule change that, among other things, adopted new 
Reserve Order for which the non-displayed portion of the order is 
eligible to participate in manual executions) (``2008 Reserve Order 
Filing'').
    \14\ See 2013 Reserve e-Quote Filing, supra n. 7.
    \15\ See Securities Exchange Act Release No. 58845 (Oct. 24, 
2008), 73 FR 64379 at 64384 (Oct. 29, 2008) (SR-NYSE-2008-46) (order 
approving the NYSE's New Market Model, including adopting a Non-
Displayed Reserve Order that would not be eligible to participate in 
manual executions); see also Securities Exchange Act Release No. 
59022 (Nov. 26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR-NYSEALTR-2008-
10) (notice of filing and immediate effectiveness of rule change to 
conform Exchange equity rules with NYSE rules, including adopting 
NYSE New Market Model and related changes to adoption of a Non-
Displayed Reserve Order).
    \16\ See 2013 Reserve e-Quote Filing, supra n. 7.
    \17\ See 2008 Reserve Order Filing supra n. 13 at 22196 
(displayable portion of Reserve Order executed together with other 
displayable interest at a price point before executing with reserve 
portion of the order).
---------------------------------------------------------------------------

    Proposed new subsection (e) of Rule 13 would specify the Exchange's 
existing order types that, by definition, do not route. The order types 
proposed to be included in this new subsection are:
     Add Liquidity Only (``ALO'') Modifiers. Existing rule text 
governing ALO modifiers would be moved to new Rule 13(e)(1) with non-
substantive changes to capitalize the term ``Limit Order'' and update 
cross-references. Existing rule text that is being moved to new Rule 
13(e)(1)(A) currently provides that Limit Orders designated ALO may 
participate in opens and closes, but that the ALO instructions would be 
ignored. Because Limit Orders designated ALO could also participate in 
re-openings, and the ALO instructions would similarly be ignored, the 
Exchange proposes to clarify new Rule 13(e)(1)(A) to provide that Limit 
Orders designated ALO could participate in openings, re-openings, and 
closings, but that the ALO instructions would be ignored.
     Do Not Ship (``DNS'') Orders. Existing rule text governing 
DNS Orders would be moved to new Rule 13(e)(2) with non-substantive 
changes to capitalize the term ``Limit Order'' and replace the 
reference to ``Display Book'' with a reference to ``Exchange systems.''
     Intermarket Sweep Order. Existing rule text governing ISOs 
would be moved to new Rule 13(e)(3) with non-substantive changes to 
capitalize the term ``Limit Order'', update cross-references, and 
replace the reference to ``Display Book'' with a reference to 
``Exchange's book.''
    Proposed new subsection (f) of Rule 13 would specify the Exchange's 
other existing order instructions and modifiers, including:
     Do Not Reduce (``DNR'') Modifier. Existing rule text 
governing DNR Orders would be moved to new Rule 13(f)(1) with non-
substantive changes to capitalize the terms ``Limit Order'' and ``Stop 
Order.'' In addition, the Exchange believes that because DNR 
instructions would be added to an order, DNR is more appropriately 
referred to as a modifier rather than as an order type.
     Do Not Increase (``DNI'') Modifiers. Existing rule text 
governing DNI Orders would be moved to new Rule 13(f)(2) with non-
substantive changes to capitalize the terms ``Limit Order'' and ``Stop 
Order.'' In addition, the Exchange believes that because DNI 
instructions would be added to an order, DNI is more appropriately 
referred to as a modifier rather than as an order type.

[[Page 20046]]

     Pegging Interest. Existing rule text governing Pegging 
Interest and related subsections would be moved to new Rule 13(f)(3) 
with two clarifying changes to the existing rule text. First, because 
Pegging Interest is currently available for e-Quotes and d-Quotes only, 
the Exchange proposes to replace the term ``can'' with the term 
``must'' in new Rule 13(f)(3)(a)(i) to provide that Pegging Interest 
``must be an e-Quote or d-Quote.'' Second, the Exchange proposes to 
delete reference to the term ``Primary Pegging Interest,'' because the 
Exchange has only one form of pegging interest.\18\
---------------------------------------------------------------------------

    \18\ See 2014 Pegging Filing, supra n. 6.
---------------------------------------------------------------------------

     Retail Modifiers. Existing rule text governing Retail 
Modifiers and related subsections would be moved to new Rule 13(f)(4) 
with non-substantive changes to update cross-references.
     Self-Trade Prevention (``STP'') Modifier. Existing rule 
text governing STP Modifiers and related subsections would be moved to 
new Rule 13(f)(5) with non-substantive changes to capitalize the terms 
``Limit Orders,'' ``Market Orders,'' and ``Stop Orders'' and hyphenate 
the term ``Self-Trade Prevention.''
     Sell ``Plus''--Buy ``Minus'' Instructions. Existing rule 
text governing Sell ``Plus''--Buy ``Minus'' Orders would be moved to 
new Rule 13(f)(6) with non-substantive changes to break the rule into 
subsections, capitalize the terms ``Market Order,'' ``Limit Order,'' 
and ``Stop Order,'' and replace the references to Display Book with 
references to Exchange systems. In addition, the Exchange proposes to 
re-classify this as an order instruction rather than as a separate 
order.
     Stop Orders. Existing rule text governing Stop Orders 
would be moved to new Rule 13(f)(7) with non-substantive changes to 
break the rule into subsections, capitalize the term ``Market Order,'' 
and replace references to ``Exchange's automated order routing system'' 
with references to ``Exchange systems.''
    The Exchange proposes to make conforming changes to Rule 
501(d)(2)--Equities relating to the list of order types that are not 
accepted for trading in UTP Securities by: (i) Replacing the term 
``Market or Limit at the Close'' with ``MOC or LOC''; (ii) replacing 
the term ``At the Opening or At the Opening Only (``OPG'')'' with ``MOO 
or LOO''; (iii) deleting the GTX Order reference, as an order 
instruction that the Exchange no longer accepts; and (iv) updating the 
subsection rule numbering accordingly.
    As part of the proposed restructure of Rule 13, the Exchange 
proposes to move existing rule text in Rule 13 governing the definition 
of ``Routing Broker'' to Rule 17(c), without any change to the rule 
text. The Exchange believes that Rule 17--Equities is a more logical 
location for the definition of Routing Broker because Rule 17(c)--
Equities governs the operations of Routing Brokers.
    In addition, the Exchange proposes to delete existing rule text in 
Rule 13 governing Not Held Orders and add rule text relating to not 
held instructions to supplementary material .20 to Rule 13. 
Supplementary material .20 to Rule 13 reflects obligations that members 
have in handling customer orders. Because not held instructions are 
instructions from a customer to a member or member organization 
regarding the handling of an order, and do not relate to instructions 
accepted by Exchange systems for execution, the Exchange believes that 
references to not held instructions are better suited for this existing 
supplementary material.
    Accordingly, the Exchange proposes to amend supplementary material 
.20 to Rule 13 to add that generally, an instruction that an order is 
``not held'' refers to an unpriced, discretionary order voluntarily 
categorized as such by the customer and with respect to which the 
customer has granted the member or member organization price and time 
discretion. The Exchange believes that this proposed amendment aligns 
the definition of ``not held'' with guidance from the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') and other markets 
regarding not held instructions.\19\ The Exchange notes that the 
existing Rule 13 text regarding how to mark a Not Held Order, e.g., 
``not held,'' ``disregard tape,'' ``take time,'' etc., are outdated 
references regarding order marking between a customer and a member or 
member organization. All Exchange members and member organizations that 
receive customer orders are subject to Order Audit Trail System 
(``OATS'') obligations, consistent with Rule 7400--Equities Series and 
FINRA Rule 7400 Series, which require that order-handling instructions 
be documented in OATS. Among the order-handling instructions that can 
be captured in OATS is whether an order is not held.\20\ The Exchange 
believes that these OATS-related obligations now govern how a member or 
member organization records order-handling instructions from a customer 
and therefore the terms currently set forth in Rule 13 relating to Not 
Held Orders are no longer necessary.
---------------------------------------------------------------------------

    \19\ See FINRA Regulatory Notice 11-29, Answer 3 (June 2011) 
(``Generally, a `not held' order is an unpriced, discretionary order 
voluntarily categorized as such by the customer and with respect to 
which the customer has granted the firm price and time 
discretion.''). See also Definition of Market Not Held Order on 
Nasdaq.com Glossary of Stock Market Terms, available at https://www.nasdaq.com/investing/glossary/m/market-not-held-order.
    \20\ See FINRA OATS Frequently Asked Questions--Technical, at 
T21 (``An order submitted by a customer who gives the broker 
discretion as to the price and time of execution is denoted as a 
``Not Held'' order.''), available at https://www.finra.org/Industry/Compliance/MarketTransparency/OATS/FAQ/P085542.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to amend Rule 70.25--Equities 
governing d-Quotes to clarify that certain functionality set forth in 
the Rule is no longer available. Specifically, Rule 70.25(c)(ii)--
Equities currently provides that a Floor broker may designate a maximum 
size of contra-side volume with which it is willing to trade using 
discretionary pricing instructions. Because this functionality is not 
available, the Exchange proposes to delete references to the maximum 
discretionary size parameter from Rules 70.25(c)(ii)--Equities and 
(c)(v)--Equities. In addition, the Exchange proposes to amend Rule 
70.25(c)(iv)--Equities to clarify that the circumstances of when the 
Exchange would consider interest displayed by other market centers at 
the price at which a d-Quote may trade are not limited to determining 
when a d-Quote's minimum or maximum size range is met. Accordingly, the 
Exchange proposes to delete the clause ``when determining if the d-
Quote's minimum and/or maximum size range is met.'' The Exchange 
believes that the proposed changes to Rule 70.25(c)--Equities will 
provide clarity and transparency regarding the existing functionality 
relating to d-Quotes at the Exchange.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\21\ in general, and 
furthers the objectives of Section 6(b)(5),\22\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system and, 
in

[[Page 20047]]

general, to protect investors and the public interest. Specifically, 
the Exchange believes that the proposed restructuring of Rule 13, to 
group existing order types to align by functionality, would remove 
impediments to and perfect 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. In addition, the Exchange 
believes that the proposed revisions to Rule 13 and related conforming 
changes to Rule 501(d)(2)--Equities promote clarity regarding existing 
functionality that has been approved in prior rule filings, but which 
may not have been codified in rule text.\23\ Moreover, the Exchange 
believes that moving rule text defining a Routing Broker to Rule 17--
Equities represents a more logical location for such definition, 
thereby making it easier for market participants to navigate Exchange 
rules. Likewise, the Exchange believes the proposed changes to ``Not 
Held Order,'' to move it to supplementary material .20 to Rule 13 and 
revise the rule text to conform with guidance from FINRA and OATS 
requirements, would remove impediments to and perfect the mechanism of 
a free and open market and a national market system by applying a 
uniform definition of not held instructions across multiple markets, 
thereby reducing the potential for confusion regarding the meaning of 
not held instructions.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ See supra nn. 13-18.
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    The Exchange further believes that the proposed amendment regarding 
MPL Orders to reject both MPL Orders with an MTV larger than the size 
of the order and instructions to partially cancel an MPL Order that 
would result in an MTV larger than the size of the order would remove 
impediments to and perfect the mechanism of a free and open market and 
national market system in general because it could potentially reduce 
the ability of a member organization from using MPL Orders to bypass 
contra-side interest that may be larger than the size of the MPL Order.
    Finally, the Exchange believes that the proposed changes to Rule 
70.25(c)--Equities would remove impediments to and perfect the 
mechanism of a free and open market and national market system in 
general because it assures that the Exchange's rules align with the 
existing functionality available at the Exchange for d-Quotes.

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 change is not 
designed to address any competitive issue but rather would re-structure 
Rule 13 and remove rule text that relates to functionality that is no 
longer operative, thereby reducing confusion and making the Exchange's 
rules easier to navigate.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-2015-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2015-22. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEMKT-2015-22 and should be submitted on or before May 
5, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-08454 Filed 4-13-15; 8:45 am]
 BILLING CODE 8011-01-P
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