Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend NYSEMKT Rule 13-Equities and Related Rules Governing Order Types and Modifiers, 42593-42597 [2015-17535]

Download as PDF Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices srobinson on DSK5SPTVN1PROD with NOTICES floor to qualify for the fee cap constitutes equal treatment of members. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that its proposal to increase the maximum QCC Rebate does not impose a burden on competition. The Exchange’s proposal should encourage market participants to transact a greater number of QCC Orders in order to obtain QCC Rebates. All market participants are eligible to transact QCC Orders. The Exchange does not believe that the proposed rule change to the Monthly Strategy Cap will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes apply uniformly to all members that incur transaction charges, except Firms.27 Excluding Firm floor options transactions in Multiply Listed Options related to reversal and conversion, jelly roll and box spread strategies from the Monthly Strategy Cap does not create an undue burden on competition because these fees would continue to be capped as part of the Monthly Firm Fee Cap. The Exchange believes the proposal is consistent with robust competition and does not provide any unnecessary burden on competition. Further, certain floor members pay floor brokers to execute trades on the Exchange floor, thereby incurring costs related to this business model. The Exchange believes that offering fee caps to members executing floor transactions and not electronic executions does not create an unnecessary burden on competition because the fee caps defray brokerage costs associated with executing strategy transactions. Also, requiring that both the buy and sell sides of the order originate from the floor to qualify for the fee cap constitutes equal treatment of members. The Exchange operates in a highly competitive market, comprised of twelve options exchanges, in which market participants can easily and readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or rebates to be inadequate. Accordingly, the fees that are assessed and the rebates paid by the Exchange described in the above proposal are influenced by these robust market forces and therefore must remain competitive with fees charged and rebates paid by other venues and therefore must continue to be reasonable and equitably allocated to those members that opt to direct orders to the Exchange rather than competing venues. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act.28 At any time within 60 days of the filing of the 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 to determine whether the proposed rule should be approved or disapproved. Jkt 235001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–17496 Filed 7–16–15; 8:45 am] 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– Phlx–2015–57 on the subject line. Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend NYSEMKT Rule 13—Equities and Related Rules Governing Order Types and Modifiers 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–Phlx–2015–57. 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 are not assessed options transaction charges in section II of the Pricing Schedule. 20:59 Jul 16, 2015 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–Phlx– 2015–57, and should be submitted on or before August 7, 2015. 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: PO 00000 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75443; File No. SR– NYSEMKT–2015–22] July 13, 2015. I. Introduction On March 24, 2015, NYSE MKT LLC (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Exchange Rule 13— Equities, and related Exchange rules, 29 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 27 Customers VerDate Sep<11>2014 42593 28 15 U.S.C. 78s(b)(3)(A)(ii). Frm 00127 Fmt 4703 Sfmt 4703 E:\FR\FM\17JYN1.SGM 17JYN1 42594 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices governing order types and modifiers. The proposed rule change was published for comment in the Federal Register on April 14, 2015.3 On May 14, 2015, the Exchange filed Partial Amendment No. 1 to the proposed rule change.4 On May 27, 2015, pursuant to section 19(b)(2) of the Act,5 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.6 On July 10, 2015, the Exchange filed Amendment No. 2 to the proposed rule change.7 The Commission received no comment letters regarding the proposed rule change. The Commission is publishing this notice to solicit comments on Amendment No. 2 from interested persons and is approving the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. srobinson on DSK5SPTVN1PROD with NOTICES II. Description of the Proposal, as Modified by Amendment No. 2 On June 5, 2014, in a speech entitled ‘‘Enhancing Our Market Equity Structure,’’ Mary Jo White, Chair of the Commission, requested that the equity exchanges 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 and how they interact with each other.8 Subsequent to the 3 See Securities Exchange Act Release No. 74682 (April, 8, 2015), 80 FR 20043 (‘‘Notice’’). Prior to filing this proposal, the Exchange filed a similar proposal to amend Rule 13—Equities, and related Exchange rules, governing order types and modifiers. See Securities Exchange Act Release No. 73593 (November 14, 2014), 79 FR 69153 (November 20, 2014) (SR–NYSEMKT–2014–95). For that proposal, the Commission initially extended the time period for action, see Securities Exchange Act Release No. 73913 (December 22, 2014), 79 FR 78531 (December 30, 2014) (SR–NYSEMKT–2014– 95), and then instituted proceedings to determine whether to approve or disapprove the proposal, see Securities Exchange Act Release No. 74298 (February 18, 2015), 80 FR 9770 (February 24, 2015) (SR–NYSEMKT–2014–95). Prior to the conclusion of those proceedings, the Exchange withdrew the proposal. See Securities Exchange Act Release No. 74643 (April 3, 2015), 80 FR 19102 (April 9, 2015) (SR–NYSEMKT–2014–95). 4 The Exchange subsequently withdrew Partial Amendment No. 1 on May 20, 2015. 5 15 U.S.C. 78s(b)(2). 6 See Securities Exchange Act Release No. 75049, 80 FR 31091 (June 1, 2015). The Commission designated July 13, 2015, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 7 For a description of the proposals contained within Amendment No. 2, see infra Section V. 8 See Mary Jo White, Chair, Commission, Speech at the Sandler, O’Neill & Partners, L.P. Global Exchange and Brokerage Conference (June 5, 2014), available at https://www.sec.gov/News/Speech/ Detail/Speech/1370542004312. VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 Chair’s speech, the Commission’s Division of Trading and Markets requested that the Exchange complete its review and submit any proposed rule changes.9 The Exchange proposes to amend Rule 13—Equities by re-grouping and re-numbering existing order types and order modifiers. The Exchange also proposes to amend Rule 13—Equities to revise the definitions of certain order types and modifiers in both substantive and non-substantive ways and to add text stating that ‘‘[u]nless otherwise specified in [Rule 13—Equities], Rule 70 (for Floor brokers), or Rule 104 (for [Exchange Designated Market Makers (‘‘DMMs’’)], orders and modifiers are available for all member organizations.’’ The Exchange represents that these revisions are not intended to reflect changes to the functionality of any order type or modifier, but rather to clarify Rule 13—Equities to make it easier to navigate.10 In addition, the Exchange proposes to amend related Exchange rules to relocate rule text contained in current Rule 13—Equities; further explain the functionality of certain Floor broker and DMM interest; further explain the operation of non-displayed interest entered into the Exchange’s systems; add, update, or revise cross references; and make other nonsubstantive technical amendments. Under the proposal, Rule 13—Equities would be reorganized into six categories: (1) Primary Order Types; (2) Time in Force Modifiers; (3) AuctionOnly Orders; (4) Orders with Instructions Not to Display All or a Portion of the Order; (5) Orders with Instructions Not to Route; and (6) Additional Order Instructions and Modifiers. Currently, Rule 13—Equities lists order types and modifiers alphabetically and does not categorize order types and modifiers based on characteristic or function. however, would not be eligible for automatic execution. The Exchange is not changing the definition of ‘‘Market Order’’ and would replace the current term ‘‘Display Book’’ with the proposed term ‘‘Exchange systems.’’ 11 With respect to Limit Orders, current Rule 13—Equities defines a ‘‘marketable Limit Order’’ as ‘‘an order on the Exchange that can be immediately executed; that is, an order to buy priced at or above the Exchange best offer or an order to sell price at or below the Exchange best bid.’’ In the proposed rule change, the Exchange proposes to add a definition for a Limit Order as an order to buy or sell a stated amount of a security at a specified price or better. The definition of a ‘‘marketable Limit Order’’ would be revised non-substantively so that a marketable Limit Order would be defined as ‘‘a Limit Order to buy (sell) at or above (below) the Exchange best offer (bid) for the security.’’ A. Primary Order Types C. Auction-Only Orders Proposed section (a) of Rule 13— Equities would set forth two primary order types—Market Orders and Limit Orders—and specify which orders are eligible for automatic executions. The Exchange proposes to delete the current definition of ‘‘Auto Ex Order’’ and proposes that all orders entered electronically will be eligible for automatic execution. Interest represented manually by a floor broker, Proposed section (c) of Rule 13— Equities would set forth five AuctionOnly Orders: (1) Closing Offset (‘‘CO’’) Orders; (2) Limit-on-Close (‘‘LOC’’) Orders; (3) Limit-on-Open (‘‘LOO’’) Orders; (4) Market-on Close (‘‘MOC’’) Orders; and (5) Market-on-Open (‘‘MOO’’) Orders. The Exchange is 9 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. 10 See Notice, supra note 3, 80 FR at 20044. PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 B. Time in Force Modifiers Proposed section (b) of Rule 13— Equities would set forth three Time in Force modifiers for orders: (1) Day; (2) Good til Cancelled (‘‘GTC’’) or Open; and (3) Immediate or Cancel (‘‘IOC’’). For Day modifiers, the Exchange proposes to allow only Limit Orders to be designated as Day orders. Currently, any order could be designated as a Day order. For the GTC or Open modifier, the Exchange is proposing to allow only Limit Orders to be designated with the GTC or Open modifier. Currently, any order could be a GTC or Open order. With respect to IOC modifiers, the Exchange currently has three different modifiers: (1) Regulation NMScompliant IOC; (2) Exchange IOC; and (3) IOC–MTS (minimum trade size). The Exchange is proposing to make nonsubstantive changes to the definitions of all three IOC modifiers.12 11 The Exchange proposes to replace the term ‘‘Display Book’’ with ‘‘Exchange systems,’’ when the term refers to Exchange systems that receive and execute orders, and with ‘‘Exchange book’’ when the term refers to the interest that has been entered and ranked in Exchange systems, as applicable throughout the proposed rule text. 12 Throughout the proposed rule text, the Exchange proposes to capitalize terms, including, but not limited to, Limit Order and Market Order. E:\FR\FM\17JYN1.SGM 17JYN1 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices proposing to make non-substantive changes to these definitions. srobinson on DSK5SPTVN1PROD with NOTICES D. Non-Displayable Orders (All or a Portion of the Order) Proposed section (d) of Rule 13— Equities contains orders that are partially or fully undisplayed. There are two types of non-displayable orders: (1) Mid-Point Passive Liquidity Orders (‘‘MPL Orders’’) and (2) Reserve Orders. The Exchange proposes to make nonsubstantive changes to the definition of MPL Orders. With respect to Reserve Orders, the Exchange proposes to make nonsubstantive changes to the definition. The Exchange also proposes to add new rule text to state that a Minimum Display Reserve Order, which is a Limit Order that has a portion of the interest displayed when the order is or becomes the Exchange best bid or offer (‘‘Exchange BBO’’) and a portion not displayed (the reserve interest), would participate in both automatic and manual executions. The Exchange also proposes to add new rule text to state that a Non-Displayed Reserve Order, which is a Limit Order that is not displayed, would not participate in manual executions. The Exchange represents that these changes would reflect how those orders currently operate on the Exchange.13 Moreover, the Exchange proposes to change the circumstances in which the reserve interest of a Reserve Order would be available for execution. Currently, the Exchange’s rule text specifies that reserve interest of a Non-Displayed Reserve Order is available for execution only after all displayed interest at the price has been executed. The Exchange proposes to amend the rule text to specify that reserve interest of all Reserve Orders is available for execution only after all displayed interest at the price has been executed. E. Do Not Route Orders Proposed section (e) of Rule 13— Equities would set forth order modifiers and order types that would not be routed: (1) The Add Liquidity Only (‘‘ALO’’) modifier; (2) Do Not Ship (‘‘DNS’’) orders; and (3) Intermarket Sweep (‘‘ISO’’) orders. For the ALO modifier, the Exchange proposes to make non-substantive changes and to update cross references. The Exchange also proposes to add new rule text to specify that Limit Orders with the ALO modifier may participate in re-openings, but that the ALO designation would be ignored. This proposed change would expand the text of current Rule 13— Equities, which states that Limit Orders with the ALO modifier may participate in the Exchange’s open or close, but that the ALO designation would be ignored. The Exchange is also proposing to make non-substantive changes to the DNS order and ISO definitions. F. Other Modifiers Proposed section (f) of Rule 13— Equities would include the Exchange’s other order instructions and modifiers: (1) Do Not Reduce (‘‘DNR’’) modifier; (2) Do Not Increase (‘‘DNI’’) modifier; (3) Pegging interest; (4) Retail modifier; (5) Self-Trade Prevention (‘‘STP’’) modifier; (6) Sell ‘‘Plus’’—Buy ‘‘Minus’’ instruction; and (7) Stop order. The Exchange proposes to make nonsubstantive changes to the DNR and DNI modifiers. With respect to Pegging interest, the Exchange proposes to specify that Pegging interest must be a Floor broker agency interest file (‘‘e-Quote’’) or a discretionary e-Quote (‘‘d-Quote’’) and proposes to delete the reference to the term ‘‘Primary Pegging Interest’’ in proposed Rule 13(f)(3)(B) because the Exchange represents that it only has one form of Pegging interest.14 The Exchange proposes to make nonsubstantive changes to the Retail modifier, STP modifier, and the Sell ‘‘Plus’’—Buy ‘‘Minus’’ instruction definitions. With respect to the STP modifier, the Exchange proposes to add rule text specifying that the STP modifier is not available for DMM interest, and with respect to Stop orders, the Exchange proposes to make nonsubstantive changes and to replace the term ‘‘Exchange’s automated order routing system’’ with ‘‘Exchange systems.’’ G. Other Proposed Changes The Exchange proposes to move the definition of ‘‘Routing Broker’’ to Rule 17(c)—Equities because the Exchange states that Rule 17(c)—Equities governs the operations of Routing Brokers.15 The Exchange also proposes to amend the definition of Not Held orders and relocate that definition to Supplementary Material .20 to Rule 13—Equities because the Exchange states that Supplementary material .20 of Rule 13—Equities reflects the obligations that members have in handling customer orders and Not Held instructions are instructions from a customer to a member or member organization regarding the handling of an order.16 Rule 13—Equities currently 14 See Notice, supra note 3, 80 FR at 20046. id. 16 See id. 15 See 13 See Notice, supra note 3, 80 FR at 20045. VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 42595 defines a Not Held order as a market or limited price order marked ‘‘not held,’’ ‘‘disregard tape,’’ ‘‘take time,’’ ‘‘buy or sell on print,’’ or which bears any such qualifying notation. Under the proposed rule change, a Not Held order would refer 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 proposes several amendments to Rule 70—Equities, which governs the execution of Exchange Floor Broker interest. The Exchange proposes to amend Rule 70(a)(i)—Equities to (1) delete current rule text indicating that Floor Brokers can only enter e-Quotes at or outside the Exchange BBO because, in Amendment No. 2, the Exchange explains that Floor brokers may use e-Quotes to enter nondisplayed orders, such as Non-Display Reserve e-Quotes or MPL Orders, priced between the Exchange BBO, and (2) add rule text stating that e-Quotes would not include unelected Stop Orders, Market Orders, ISOs, GTC modifiers, DNR modifiers, or DNI modifiers. Furthermore, the Exchange proposes to add text to Rule 70.25(a)(ii)—Equities explaining that discretionary instructions may include instructions to participate in the Exchange’s opening or closing transaction only. The Exchange also proposes to amend Rule 70.25(c)— Equities 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 70.25(c)(v)— Equities. Additionally, the Exchange proposes to amend Rule 70.25(c)(iv)— Equities to clarify that the circumstances under which 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 also proposes to make non-substantive changes to Rules 70(a)(i)—Equities and 70(b)(i)—Equities by replacing the term ‘‘Display Book’’ with the term ‘‘Exchange systems,’’ and E:\FR\FM\17JYN1.SGM 17JYN1 srobinson on DSK5SPTVN1PROD with NOTICES 42596 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices in Rule 70(f)—Equities, the Exchange proposes to update cross references. The Exchange proposes several amendments to amend Rule 72— Equities, which governs the priority of bids and offers and allocation of executions on the Exchange. First, the Exchange proposes to amend Rule 72(c)(i)—Equities to (1) replace the term ‘‘reserve interest’’ with the term ‘‘nondisplayable interest’’ so that the rule sets forth that all non-displayable interest, which includes certain types of reserve interest and MPL Orders, trades on parity in accordance with the order allocation provisions of Rule 72— Equities and (2) change the phrase ‘‘the displayed bid (offer)’’ to ‘‘displayable bids (offers)’’ and change the phrase ‘‘displayed volume’’ to ‘‘displayable volume’’ to specify that an automatically executing order will trade first with displayable bids (offers) and, if there is insufficient displayable volume to fill the order, will trade next with non-displayable interest. The Exchange also proposes to amend Rule 72(c)(x)—Equities to add MPL Orders to the orders identified as being eligible to trade at price points between the Exchange BBO and delete a cross reference to Rule 13—Equities. The Exchange proposes two amendments to Rule 104—Equities, which governs the dealings and responsibilities of DMMs. First, the Exchange proposes to add text to Rule 104(b)(ii)—Equities explaining that the Exchange’s systems will prevent incoming DMM interest from trading with resting DMM interest. Specifically, proposed Rule 104(b)(ii)—Equities would now provide that if an incoming DMM interest would trade with resting DMM interest only, the incoming DMM interest would be cancelled, and if the incoming DMM interest would trade with interest other than DMM interest, the resting DMM interest would be cancelled. Furthermore, the Exchange proposes to add new Rule 104(b)(vi)— Equities to specify that DMMs may not enter the following orders and modifiers: (1) Market Orders; (2) GTC modifiers; (3) MOO orders; (4) CO orders; (5) MOC orders; (6) LOC orders; (7) DNR modifiers; (8) DNI modifiers; (9) Sell ‘‘Plus’’—Buy ‘‘Minus’’ instructions; and (10) Stop orders. The Exchange also proposes to amend Rule 501(d)(2)—Equities relating to the list of order types that are not accepted for trading in UTP Securities. The Exchange proposes to make nonsubstantive changes to update the name references to order types, and the Exchange proposes to delete the reference to Good ‘til Cross (GTX) orders because the Exchange represents that it VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 no longer accepts GTX Order Instructions.17 Finally, the Exchange proposes to amend Rule 1000—Equities, which governs automatic executions, by adding cross references to other Exchange rules applicable to automatic executions in Rule 1000(a)—Equities. III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 2, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.18 In particular, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act,19 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to 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 general, to protect investors and the public interest. The Exchange represents that it continually assesses its rules governing order types 20 and that this proposal is part of that continued effort to review and clarify its rules governing order types.21 In addition, the Commission notes that the Exchange asserts that the proposal is consistent with section 6(b)(5) of the Act because it would, among other things, clarify existing functionality of the Exchange’s order types and ensure that Exchange members, regulators, and the public can both more easily navigate the Exchange’s rulebook and better understand the order types available for trading on the Exchange.22 The Exchange’s proposal would restructure and reorganize Rule 13— Equities so that order types with similar functionality are grouped together by subsection. The Commission also notes that the proposal contains several revisions to the Exchange’s current rule text to clarify the descriptions of how certain orders, modifiers, and the ‘‘not Notice, supra note 3, 80 FR at 20046. approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 19 15 U.S.C. 78f(b)(5). 20 See Notice, supra note 3, 80 FR at 20044. 21 See id. 22 See Notice, supra note 3, 80 FR at 20047. PO 00000 17 See 18 In Frm 00130 Fmt 4703 Sfmt 4703 held’’ instruction function and to specify which member organizations can and cannot enter certain order types. The Commission believes that the proposed rule change should provide greater specificity, clarity, and transparency with respect to the order type and modifier functionalities available on the Exchange, as well as the Exchange’s methodology for handling certain order types, when compared to the existing rule text today. Accordingly, the Commission believes that the proposal is designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. IV. Solicitation of Comments on Amendment No. 2 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 2 to 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 E:\FR\FM\17JYN1.SGM 17JYN1 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices srobinson on DSK5SPTVN1PROD with NOTICES 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 this filing will also 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–2015–22 and should be submitted on or before August 7, 2015. V. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 2, prior to the 30th day after the date of publication of notice of Amendment No. 2 in the Federal Register. In Amendment No. 2, the Exchange proposes to add to Rule 13—Equities text that: (1) States that ‘‘[u]nless otherwise specified in [Rule 13— Equities], Rule 70 (for Floor brokers), or Rule 104 (for DMMs), orders and modifiers are available for all member organizations;’’ and (2) specifies that the STP modifier is not available for DMM interest. The Exchange also proposes to delete a proposed change to the definition of MPL Orders that would have required the Exchange’s systems to: (1) Reject an MPL Order on entry if it has a Minimum Triggering Volume larger than the size of the order and (2) to reject a request to partially cancel a resting MPL Order when the partial cancellation would result in a Minimum Triggering Volume that is larger than the size of the order. Furthermore, the Exchange proposes several nonsubstantive technical amendments to the filing so that the proposed text in Rules 13(a)(1)—Equities (definition of Market Order), 13(b)(2)—Equities (definition of the GTC modifier), 13(b)(3)—Equities (definition of the IOC modifier), 13(d)(1)(A)—Equities (definition of MPL Order), 501(a)— Equities (definition of the term ‘‘Closing Price’’), and the current Rule 13— Equities text marked for deletion under the present alphabetically listed format, accurately reflect the proposed rule changes to the current rule text and the proposed rule text that is not being changed from the current rule text. The Exchange also proposes to amend Rule 70—Equities to: (1) Delete current rule text in Rule 70(a)(i)—Equities indicating that Floor Brokers can only VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 enter e-Quotes at or outside the Exchange BBO; (2) add text to Rule 70(a)(i) stating that e-Quotes shall not include unelected Stop orders, Market Orders, ISOs, GTC modifiers, DNR modifiers, or DNI modifiers; (3) add text to Rule 70.25(a)(ii) explaining that discretionary instructions may include instructions to participate in the Exchange’s opening or closing transaction only; (4) make nonsubstantive changes to Rules 70(a)(i)— Equities and 70(b)(i)—Equities by replacing the term ‘‘Display Book’’ with the term ‘‘Exchange systems;’’ and (5) update cross references in Rule 70(f)— Equities. The Exchange proposes to amend Rule 72(c)(i) to: (1) Set forth that all non-displayable interest, which includes certain types of reserve interest and MPL Orders, trades on parity; and (2) to change the phrase ‘‘the displayed bid (offer)’’ to ‘‘displayable bids (offers)’’ and change the phrase ‘‘displayed volume’’ to ‘‘displayable volume.’’ The Exchange also proposes to amend Rule 72(c)(x) to add MPL Orders to the orders identified as being eligible to trade at price points between the Exchange BBO and delete a cross reference to Rule 13— Equities. The Exchange also proposes to add text to Rule 104(b)(ii)—Equities explaining that the Exchange’s systems will prevent incoming DMM interest from trading with resting DMM interest. Furthermore, the Exchange proposes to add new Rule 104(b)(vi)—Equities to specify that DMMs may not enter the following orders and modifiers: (1) Market Orders; (2) GTC modifiers; (3) MOO orders; (4) CO orders; (5) MOC orders; (6) LOC orders; (7) DNR modifiers; (8) DNI modifiers; (9) Sell ‘‘Plus’’—Buy ‘‘Minus’’ instructions; and (10) Stop orders. Finally, the Exchange proposes to amend Rule 1000(a)—Equities to provide cross references to other Exchange rules applicable to automatic executions. The Commission believes that the revisions proposed in Amendment No. 2 do not raise any novel regulatory issues. The Commission further believes that the proposed revisions to the rule text set forth in Amendment No. 2 do not represent any significant changes to the current functionality of the Exchange’s order types and modifiers. Rather, these proposed rule text changes primarily help clarify and better explain how the Exchange’s order types and modifiers currently operate and interact. For instance, the Commission believes that the Exchange’s proposal to add text at the beginning of Rule 13—Equities stating that, unless otherwise specified PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 42597 in other Exchange rules, orders and modifiers are available for all member organizations, coupled with the proposed addition of subparagraph (b)(vi) to Rule 104—Equities that specifically enumerates which orders and modifiers a DMM may not enter into the Exchange’s systems, should help member organizations better understand which orders and modifiers they can and cannot enter into the Exchange’s systems. Therefore, the Commission finds that Amendment No. 2 is consistent with the protection of investors and the public interest. Accordingly, the Commission finds good cause, pursuant to section 19(b)(2) of the Act,23 to approve the proposed rule change, as modified by Amendment No. 2, on an accelerated basis. VI. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,24 that the proposed rule change (SR–NYSEMKT– 2015–22), as modified by Amendment No. 2, be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–17535 Filed 7–16–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75432; File No. SR– NYSEMKT–2015–23] Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, Adopting a Principles-Based Approach To Prohibit the Misuse of Material Nonpublic Information by Specialists and eSpecialists by Deleting Rule 927.3NY and Section (f) of Rule 927.5NY July 13, 2015. I. Introduction On April 8, 2015, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’), pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 a 23 15 U.S.C. 78s(b)(2). U.S.C. 78s(b)(2). 25 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 24 15 E:\FR\FM\17JYN1.SGM 17JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)]
[Notices]
[Pages 42593-42597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17535]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75443; File No. SR-NYSEMKT-2015-22]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Amendment No. 2 and Order Granting Accelerated Approval of a Proposed 
Rule Change, as Modified by Amendment No. 2, To Amend NYSEMKT Rule 13--
Equities and Related Rules Governing Order Types and Modifiers

July 13, 2015.

I. Introduction

    On March 24, 2015, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
amend Exchange Rule 13--Equities, and related Exchange rules,

[[Page 42594]]

governing order types and modifiers. The proposed rule change was 
published for comment in the Federal Register on April 14, 2015.\3\ On 
May 14, 2015, the Exchange filed Partial Amendment No. 1 to the 
proposed rule change.\4\ On May 27, 2015, pursuant to section 19(b)(2) 
of the Act,\5\ the Commission designated a longer period within which 
to approve the proposed rule change, disapprove the proposed rule 
change, or institute proceedings to determine whether to disapprove the 
proposed rule change.\6\ On July 10, 2015, the Exchange filed Amendment 
No. 2 to the proposed rule change.\7\ The Commission received no 
comment letters regarding the proposed rule change. The Commission is 
publishing this notice to solicit comments on Amendment No. 2 from 
interested persons and is approving the proposed rule change, as 
modified by Amendment No. 2, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 74682 (April, 8, 
2015), 80 FR 20043 (``Notice''). Prior to filing this proposal, the 
Exchange filed a similar proposal to amend Rule 13--Equities, and 
related Exchange rules, governing order types and modifiers. See 
Securities Exchange Act Release No. 73593 (November 14, 2014), 79 FR 
69153 (November 20, 2014) (SR-NYSEMKT-2014-95). For that proposal, 
the Commission initially extended the time period for action, see 
Securities Exchange Act Release No. 73913 (December 22, 2014), 79 FR 
78531 (December 30, 2014) (SR-NYSEMKT-2014-95), and then instituted 
proceedings to determine whether to approve or disapprove the 
proposal, see Securities Exchange Act Release No. 74298 (February 
18, 2015), 80 FR 9770 (February 24, 2015) (SR-NYSEMKT-2014-95). 
Prior to the conclusion of those proceedings, the Exchange withdrew 
the proposal. See Securities Exchange Act Release No. 74643 (April 
3, 2015), 80 FR 19102 (April 9, 2015) (SR-NYSEMKT-2014-95).
    \4\ The Exchange subsequently withdrew Partial Amendment No. 1 
on May 20, 2015.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 75049, 80 FR 31091 
(June 1, 2015). The Commission designated July 13, 2015, as the date 
by which it should approve, disapprove, or institute proceedings to 
determine whether to disapprove the proposed rule change.
    \7\ For a description of the proposals contained within 
Amendment No. 2, see infra Section V.
---------------------------------------------------------------------------

II. Description of the Proposal, as Modified by Amendment No. 2

    On June 5, 2014, in a speech entitled ``Enhancing Our Market Equity 
Structure,'' Mary Jo White, Chair of the Commission, requested that the 
equity exchanges 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 and how they interact with each other.\8\ Subsequent to the 
Chair's speech, the Commission's Division of Trading and Markets 
requested that the Exchange complete its review and submit any proposed 
rule changes.\9\
---------------------------------------------------------------------------

    \8\ See Mary Jo White, Chair, Commission, Speech at the Sandler, 
O'Neill & Partners, L.P. Global Exchange and Brokerage Conference 
(June 5, 2014), available at https://www.sec.gov/News/Speech/Detail/Speech/1370542004312.
    \9\ 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 proposes to amend Rule 13--Equities by re-grouping and 
re-numbering existing order types and order modifiers. The Exchange 
also proposes to amend Rule 13--Equities to revise the definitions of 
certain order types and modifiers in both substantive and non-
substantive ways and to add text stating that ``[u]nless otherwise 
specified in [Rule 13--Equities], Rule 70 (for Floor brokers), or Rule 
104 (for [Exchange Designated Market Makers (``DMMs'')], orders and 
modifiers are available for all member organizations.'' The Exchange 
represents that these revisions are not intended to reflect changes to 
the functionality of any order type or modifier, but rather to clarify 
Rule 13--Equities to make it easier to navigate.\10\ In addition, the 
Exchange proposes to amend related Exchange rules to relocate rule text 
contained in current Rule 13--Equities; further explain the 
functionality of certain Floor broker and DMM interest; further explain 
the operation of non-displayed interest entered into the Exchange's 
systems; add, update, or revise cross references; and make other non-
substantive technical amendments.
---------------------------------------------------------------------------

    \10\ See Notice, supra note 3, 80 FR at 20044.
---------------------------------------------------------------------------

    Under the proposal, Rule 13--Equities would be reorganized into six 
categories: (1) Primary Order Types; (2) Time in Force Modifiers; (3) 
Auction-Only Orders; (4) Orders with Instructions Not to Display All or 
a Portion of the Order; (5) Orders with Instructions Not to Route; and 
(6) Additional Order Instructions and Modifiers. Currently, Rule 13--
Equities lists order types and modifiers alphabetically and does not 
categorize order types and modifiers based on characteristic or 
function.

A. Primary Order Types

    Proposed section (a) of Rule 13--Equities would set forth two 
primary order types--Market Orders and Limit Orders--and specify which 
orders are eligible for automatic executions. The Exchange proposes to 
delete the current definition of ``Auto Ex Order'' and proposes that 
all orders entered electronically will be eligible for automatic 
execution. Interest represented manually by a floor broker, however, 
would not be eligible for automatic execution.
    The Exchange is not changing the definition of ``Market Order'' and 
would replace the current term ``Display Book'' with the proposed term 
``Exchange systems.'' \11\ With respect to Limit Orders, current Rule 
13--Equities defines a ``marketable Limit Order'' as ``an order on the 
Exchange that can be immediately executed; that is, an order to buy 
priced at or above the Exchange best offer or an order to sell price at 
or below the Exchange best bid.'' In the proposed rule change, the 
Exchange proposes to add a definition for a Limit Order as an order to 
buy or sell a stated amount of a security at a specified price or 
better. The definition of a ``marketable Limit Order'' would be revised 
non-substantively so that a marketable Limit Order would be defined as 
``a Limit Order to buy (sell) at or above (below) the Exchange best 
offer (bid) for the security.''
---------------------------------------------------------------------------

    \11\ The Exchange proposes to replace the term ``Display Book'' 
with ``Exchange systems,'' when the term refers to Exchange systems 
that receive and execute orders, and with ``Exchange book'' when the 
term refers to the interest that has been entered and ranked in 
Exchange systems, as applicable throughout the proposed rule text.
---------------------------------------------------------------------------

B. Time in Force Modifiers

    Proposed section (b) of Rule 13--Equities would set forth three 
Time in Force modifiers for orders: (1) Day; (2) Good til Cancelled 
(``GTC'') or Open; and (3) Immediate or Cancel (``IOC''). For Day 
modifiers, the Exchange proposes to allow only Limit Orders to be 
designated as Day orders. Currently, any order could be designated as a 
Day order. For the GTC or Open modifier, the Exchange is proposing to 
allow only Limit Orders to be designated with the GTC or Open modifier. 
Currently, any order could be a GTC or Open order.
    With respect to IOC modifiers, the Exchange currently has three 
different modifiers: (1) Regulation NMS-compliant IOC; (2) Exchange 
IOC; and (3) IOC-MTS (minimum trade size). The Exchange is proposing to 
make non-substantive changes to the definitions of all three IOC 
modifiers.\12\
---------------------------------------------------------------------------

    \12\ Throughout the proposed rule text, the Exchange proposes to 
capitalize terms, including, but not limited to, Limit Order and 
Market Order.
---------------------------------------------------------------------------

C. Auction-Only Orders

    Proposed section (c) of Rule 13--Equities would set forth five 
Auction-Only Orders: (1) Closing Offset (``CO'') Orders; (2) Limit-on-
Close (``LOC'') Orders; (3) Limit-on-Open (``LOO'') Orders; (4) Market-
on Close (``MOC'') Orders; and (5) Market-on-Open (``MOO'') Orders. The 
Exchange is

[[Page 42595]]

proposing to make non-substantive changes to these definitions.

D. Non-Displayable Orders (All or a Portion of the Order)

    Proposed section (d) of Rule 13--Equities contains orders that are 
partially or fully undisplayed. There are two types of non-displayable 
orders: (1) Mid-Point Passive Liquidity Orders (``MPL Orders'') and (2) 
Reserve Orders. The Exchange proposes to make non-substantive changes 
to the definition of MPL Orders.
    With respect to Reserve Orders, the Exchange proposes to make non-
substantive changes to the definition. The Exchange also proposes to 
add new rule text to state that a Minimum Display Reserve Order, which 
is a Limit Order that has a portion of the interest displayed when the 
order is or becomes the Exchange best bid or offer (``Exchange BBO'') 
and a portion not displayed (the reserve interest), would participate 
in both automatic and manual executions. The Exchange also proposes to 
add new rule text to state that a Non-Displayed Reserve Order, which is 
a Limit Order that is not displayed, would not participate in manual 
executions. The Exchange represents that these changes would reflect 
how those orders currently operate on the Exchange.\13\ Moreover, the 
Exchange proposes to change the circumstances in which the reserve 
interest of a Reserve Order would be available for execution. 
Currently, the Exchange's rule text specifies that reserve interest of 
a Non-Displayed Reserve Order is available for execution only after all 
displayed interest at the price has been executed. The Exchange 
proposes to amend the rule text to specify that reserve interest of all 
Reserve Orders is available for execution only after all displayed 
interest at the price has been executed.
---------------------------------------------------------------------------

    \13\ See Notice, supra note 3, 80 FR at 20045.
---------------------------------------------------------------------------

E. Do Not Route Orders

    Proposed section (e) of Rule 13--Equities would set forth order 
modifiers and order types that would not be routed: (1) The Add 
Liquidity Only (``ALO'') modifier; (2) Do Not Ship (``DNS'') orders; 
and (3) Intermarket Sweep (``ISO'') orders. For the ALO modifier, the 
Exchange proposes to make non-substantive changes and to update cross 
references. The Exchange also proposes to add new rule text to specify 
that Limit Orders with the ALO modifier may participate in re-openings, 
but that the ALO designation would be ignored. This proposed change 
would expand the text of current Rule 13--Equities, which states that 
Limit Orders with the ALO modifier may participate in the Exchange's 
open or close, but that the ALO designation would be ignored. The 
Exchange is also proposing to make non-substantive changes to the DNS 
order and ISO definitions.

F. Other Modifiers

    Proposed section (f) of Rule 13--Equities would include the 
Exchange's other order instructions and modifiers: (1) Do Not Reduce 
(``DNR'') modifier; (2) Do Not Increase (``DNI'') modifier; (3) Pegging 
interest; (4) Retail modifier; (5) Self-Trade Prevention (``STP'') 
modifier; (6) Sell ``Plus''--Buy ``Minus'' instruction; and (7) Stop 
order. The Exchange proposes to make non-substantive changes to the DNR 
and DNI modifiers.
    With respect to Pegging interest, the Exchange proposes to specify 
that Pegging interest must be a Floor broker agency interest file (``e-
Quote'') or a discretionary e-Quote (``d-Quote'') and proposes to 
delete the reference to the term ``Primary Pegging Interest'' in 
proposed Rule 13(f)(3)(B) because the Exchange represents that it only 
has one form of Pegging interest.\14\
---------------------------------------------------------------------------

    \14\ See Notice, supra note 3, 80 FR at 20046.
---------------------------------------------------------------------------

    The Exchange proposes to make non-substantive changes to the Retail 
modifier, STP modifier, and the Sell ``Plus''--Buy ``Minus'' 
instruction definitions. With respect to the STP modifier, the Exchange 
proposes to add rule text specifying that the STP modifier is not 
available for DMM interest, and with respect to Stop orders, the 
Exchange proposes to make non-substantive changes and to replace the 
term ``Exchange's automated order routing system'' with ``Exchange 
systems.''

G. Other Proposed Changes

    The Exchange proposes to move the definition of ``Routing Broker'' 
to Rule 17(c)--Equities because the Exchange states that Rule 17(c)--
Equities governs the operations of Routing Brokers.\15\
---------------------------------------------------------------------------

    \15\ See id.
---------------------------------------------------------------------------

    The Exchange also proposes to amend the definition of Not Held 
orders and relocate that definition to Supplementary Material .20 to 
Rule 13--Equities because the Exchange states that Supplementary 
material .20 of Rule 13--Equities reflects the obligations that members 
have in handling customer orders and Not Held instructions are 
instructions from a customer to a member or member organization 
regarding the handling of an order.\16\ Rule 13--Equities currently 
defines a Not Held order as a market or limited price order marked 
``not held,'' ``disregard tape,'' ``take time,'' ``buy or sell on 
print,'' or which bears any such qualifying notation. Under the 
proposed rule change, a Not Held order would refer 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.
---------------------------------------------------------------------------

    \16\ See id.
---------------------------------------------------------------------------

    The Exchange proposes several amendments to Rule 70--Equities, 
which governs the execution of Exchange Floor Broker interest. The 
Exchange proposes to amend Rule 70(a)(i)--Equities to (1) delete 
current rule text indicating that Floor Brokers can only enter e-Quotes 
at or outside the Exchange BBO because, in Amendment No. 2, the 
Exchange explains that Floor brokers may use e-Quotes to enter non-
displayed orders, such as Non-Display Reserve e-Quotes or MPL Orders, 
priced between the Exchange BBO, and (2) add rule text stating that e-
Quotes would not include unelected Stop Orders, Market Orders, ISOs, 
GTC modifiers, DNR modifiers, or DNI modifiers. Furthermore, the 
Exchange proposes to add text to Rule 70.25(a)(ii)--Equities explaining 
that discretionary instructions may include instructions to participate 
in the Exchange's opening or closing transaction only. The Exchange 
also proposes to amend Rule 70.25(c)--Equities 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 70.25(c)(v)--Equities. Additionally, 
the Exchange proposes to amend Rule 70.25(c)(iv)--Equities to clarify 
that the circumstances under which 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 also proposes to make non-substantive 
changes to Rules 70(a)(i)--Equities and 70(b)(i)--Equities by replacing 
the term ``Display Book'' with the term ``Exchange systems,'' and

[[Page 42596]]

in Rule 70(f)--Equities, the Exchange proposes to update cross 
references.
    The Exchange proposes several amendments to amend Rule 72--
Equities, which governs the priority of bids and offers and allocation 
of executions on the Exchange. First, the Exchange proposes to amend 
Rule 72(c)(i)--Equities to (1) replace the term ``reserve interest'' 
with the term ``non-displayable interest'' so that the rule sets forth 
that all non-displayable interest, which includes certain types of 
reserve interest and MPL Orders, trades on parity in accordance with 
the order allocation provisions of Rule 72--Equities and (2) change the 
phrase ``the displayed bid (offer)'' to ``displayable bids (offers)'' 
and change the phrase ``displayed volume'' to ``displayable volume'' to 
specify that an automatically executing order will trade first with 
displayable bids (offers) and, if there is insufficient displayable 
volume to fill the order, will trade next with non-displayable 
interest. The Exchange also proposes to amend Rule 72(c)(x)--Equities 
to add MPL Orders to the orders identified as being eligible to trade 
at price points between the Exchange BBO and delete a cross reference 
to Rule 13--Equities.
    The Exchange proposes two amendments to Rule 104--Equities, which 
governs the dealings and responsibilities of DMMs. First, the Exchange 
proposes to add text to Rule 104(b)(ii)--Equities explaining that the 
Exchange's systems will prevent incoming DMM interest from trading with 
resting DMM interest. Specifically, proposed Rule 104(b)(ii)--Equities 
would now provide that if an incoming DMM interest would trade with 
resting DMM interest only, the incoming DMM interest would be 
cancelled, and if the incoming DMM interest would trade with interest 
other than DMM interest, the resting DMM interest would be cancelled. 
Furthermore, the Exchange proposes to add new Rule 104(b)(vi)--Equities 
to specify that DMMs may not enter the following orders and modifiers: 
(1) Market Orders; (2) GTC modifiers; (3) MOO orders; (4) CO orders; 
(5) MOC orders; (6) LOC orders; (7) DNR modifiers; (8) DNI modifiers; 
(9) Sell ``Plus''--Buy ``Minus'' instructions; and (10) Stop orders.
    The Exchange also proposes to amend Rule 501(d)(2)--Equities 
relating to the list of order types that are not accepted for trading 
in UTP Securities. The Exchange proposes to make non-substantive 
changes to update the name references to order types, and the Exchange 
proposes to delete the reference to Good `til Cross (GTX) orders 
because the Exchange represents that it no longer accepts GTX Order 
Instructions.\17\
---------------------------------------------------------------------------

    \17\ See Notice, supra note 3, 80 FR at 20046.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to amend Rule 1000--Equities, which 
governs automatic executions, by adding cross references to other 
Exchange rules applicable to automatic executions in Rule 1000(a)--
Equities.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 2, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\18\ In particular, the 
Commission finds that the proposed rule change is consistent with 
section 6(b)(5) of the Act,\19\ which requires, among other things, 
that the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to 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 general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \18\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange represents that it continually assesses its rules 
governing order types \20\ and that this proposal is part of that 
continued effort to review and clarify its rules governing order 
types.\21\ In addition, the Commission notes that the Exchange asserts 
that the proposal is consistent with section 6(b)(5) of the Act because 
it would, among other things, clarify existing functionality of the 
Exchange's order types and ensure that Exchange members, regulators, 
and the public can both more easily navigate the Exchange's rulebook 
and better understand the order types available for trading on the 
Exchange.\22\
---------------------------------------------------------------------------

    \20\ See Notice, supra note 3, 80 FR at 20044.
    \21\ See id.
    \22\ See Notice, supra note 3, 80 FR at 20047.
---------------------------------------------------------------------------

    The Exchange's proposal would restructure and reorganize Rule 13--
Equities so that order types with similar functionality are grouped 
together by subsection. The Commission also notes that the proposal 
contains several revisions to the Exchange's current rule text to 
clarify the descriptions of how certain orders, modifiers, and the 
``not held'' instruction function and to specify which member 
organizations can and cannot enter certain order types. The Commission 
believes that the proposed rule change should provide greater 
specificity, clarity, and transparency with respect to the order type 
and modifier functionalities available on the Exchange, as well as the 
Exchange's methodology for handling certain order types, when compared 
to the existing rule text today. Accordingly, the Commission believes 
that the proposal is designed to prevent fraudulent and manipulative 
acts and practices, promote just and equitable principles of trade, 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, protect investors 
and the public interest.

IV. Solicitation of Comments on Amendment No. 2

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 2 
to 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

[[Page 42597]]

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 this filing will also 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-2015-22 and should 
be submitted on or before August 7, 2015.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 2

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 2, prior to the 30th day after the 
date of publication of notice of Amendment No. 2 in the Federal 
Register. In Amendment No. 2, the Exchange proposes to add to Rule 13--
Equities text that: (1) States that ``[u]nless otherwise specified in 
[Rule 13--Equities], Rule 70 (for Floor brokers), or Rule 104 (for 
DMMs), orders and modifiers are available for all member 
organizations;'' and (2) specifies that the STP modifier is not 
available for DMM interest. The Exchange also proposes to delete a 
proposed change to the definition of MPL Orders that would have 
required the Exchange's systems to: (1) Reject an MPL Order on entry if 
it has a Minimum Triggering Volume larger than the size of the order 
and (2) to reject a request to partially cancel a resting MPL Order 
when the partial cancellation would result in a Minimum Triggering 
Volume that is larger than the size of the order. Furthermore, the 
Exchange proposes several non-substantive technical amendments to the 
filing so that the proposed text in Rules 13(a)(1)--Equities 
(definition of Market Order), 13(b)(2)--Equities (definition of the GTC 
modifier), 13(b)(3)--Equities (definition of the IOC modifier), 
13(d)(1)(A)--Equities (definition of MPL Order), 501(a)--Equities 
(definition of the term ``Closing Price''), and the current Rule 13--
Equities text marked for deletion under the present alphabetically 
listed format, accurately reflect the proposed rule changes to the 
current rule text and the proposed rule text that is not being changed 
from the current rule text.
    The Exchange also proposes to amend Rule 70--Equities to: (1) 
Delete current rule text in Rule 70(a)(i)--Equities indicating that 
Floor Brokers can only enter e-Quotes at or outside the Exchange BBO; 
(2) add text to Rule 70(a)(i) stating that e-Quotes shall not include 
unelected Stop orders, Market Orders, ISOs, GTC modifiers, DNR 
modifiers, or DNI modifiers; (3) add text to Rule 70.25(a)(ii) 
explaining that discretionary instructions may include instructions to 
participate in the Exchange's opening or closing transaction only; (4) 
make non-substantive changes to Rules 70(a)(i)--Equities and 70(b)(i)--
Equities by replacing the term ``Display Book'' with the term 
``Exchange systems;'' and (5) update cross references in Rule 70(f)--
Equities.
    The Exchange proposes to amend Rule 72(c)(i) to: (1) Set forth that 
all non-displayable interest, which includes certain types of reserve 
interest and MPL Orders, trades on parity; and (2) to change the phrase 
``the displayed bid (offer)'' to ``displayable bids (offers)'' and 
change the phrase ``displayed volume'' to ``displayable volume.'' The 
Exchange also proposes to amend Rule 72(c)(x) to add MPL Orders to the 
orders identified as being eligible to trade at price points between 
the Exchange BBO and delete a cross reference to Rule 13--Equities.
    The Exchange also proposes to add text to Rule 104(b)(ii)--Equities 
explaining that the Exchange's systems will prevent incoming DMM 
interest from trading with resting DMM interest. Furthermore, the 
Exchange proposes to add new Rule 104(b)(vi)--Equities to specify that 
DMMs may not enter the following orders and modifiers: (1) Market 
Orders; (2) GTC modifiers; (3) MOO orders; (4) CO orders; (5) MOC 
orders; (6) LOC orders; (7) DNR modifiers; (8) DNI modifiers; (9) Sell 
``Plus''--Buy ``Minus'' instructions; and (10) Stop orders.
    Finally, the Exchange proposes to amend Rule 1000(a)--Equities to 
provide cross references to other Exchange rules applicable to 
automatic executions.
    The Commission believes that the revisions proposed in Amendment 
No. 2 do not raise any novel regulatory issues. The Commission further 
believes that the proposed revisions to the rule text set forth in 
Amendment No. 2 do not represent any significant changes to the current 
functionality of the Exchange's order types and modifiers. Rather, 
these proposed rule text changes primarily help clarify and better 
explain how the Exchange's order types and modifiers currently operate 
and interact. For instance, the Commission believes that the Exchange's 
proposal to add text at the beginning of Rule 13--Equities stating 
that, unless otherwise specified in other Exchange rules, orders and 
modifiers are available for all member organizations, coupled with the 
proposed addition of subparagraph (b)(vi) to Rule 104--Equities that 
specifically enumerates which orders and modifiers a DMM may not enter 
into the Exchange's systems, should help member organizations better 
understand which orders and modifiers they can and cannot enter into 
the Exchange's systems. Therefore, the Commission finds that Amendment 
No. 2 is consistent with the protection of investors and the public 
interest.
    Accordingly, the Commission finds good cause, pursuant to section 
19(b)(2) of the Act,\23\ to approve the proposed rule change, as 
modified by Amendment No. 2, on an accelerated basis.
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    \23\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\24\ that the proposed rule change (SR-NYSEMKT-2015-22), as 
modified by Amendment No. 2, be, and it hereby is, approved on an 
accelerated basis.
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    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17535 Filed 7-16-15; 8:45 am]
 BILLING CODE 8011-01-P

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