Self-Regulatory Organizations; New York Stock Exchange 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 NYSE Rule 13 and Related Rules Governing Order Types and Modifiers, 42575-42579 [2015-17536]

Download as PDF Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices srobinson on DSK5SPTVN1PROD with NOTICES Applicants’ Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. The Substitutions will not be effected unless the Applicants determine that: (a) The Contracts allow the substitution of shares of registered open-end investment companies in the manner contemplated by the application; (b) the Substitutions can be consummated as described in the application under applicable insurance laws; and (c) any regulatory requirements in each jurisdiction where the Contracts are qualified for sale have been complied with to the extent necessary to complete the Substitutions. 2. The Applicants or their affiliates will pay all expenses and transaction costs of the Substitutions, including legal and accounting expenses, any applicable brokerage expenses and other fees and expenses. No fees or charges will be assessed to the affected Contract owners to effect the Substitutions. 3. The Substitutions will be effected at the relative net asset values of the respective shares in conformity with Section 22(c) of the 1940 Act and Rule 22c–1 thereunder without the imposition of any transfer or similar charges by Applicants. The Substitutions will be effected without change in the amount or value of any Contracts held by affected Contract owners. 4. The Substitutions will in no way alter the tax treatment of affected Contract owners in connection with their Contracts, and no tax liability will arise for Contract owners as a result of the Substitutions. 5. The rights or obligations of the Applicants under the Contracts of affected Contract owners will not be altered in any way. The Substitutions will not adversely affect any riders under the Contracts. 6. Affected Contract owners will be permitted to make at least one transfer of Contract value from the subaccount investing in the Existing Portfolio (before the Substitution Date) or the Replacement Portfolio (after the Substitution Date) to any other available investment option under the Contract without charge for a period beginning at least 30 days before the Substitution Date through at least 30 days following the Substitution Date. Except as described in any market timing/shortterm trading provisions of the relevant prospectus, Horace Mann will not exercise any right it may have under the Contracts to impose restrictions on transfers between the subaccounts under the Contracts, including VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 limitations on the future number of transfers, for a period beginning at least 30 days before the Substitution Date through at least 30 days following the Substitution Date. 7. All affected Contract owners will be notified, at least 30 days before the Substitution Date about: (a) The intended substitution of Existing Portfolios with the Replacement Portfolios; (b) the intended Substitution Date; and (c) information with respect to transfers as set forth in Condition 6 above. In addition, the Applicants will also deliver to all affected Contract owners, at least 30 days before the Substitution Date, a prospectus for each applicable Replacement Portfolio. 8. Applicants will deliver to each affected Contract owner within five (5) business days of the Substitution Date a written confirmation which will include: (a) A confirmation that the Substitutions were carried out as previously notified; (b) a restatement of the information set forth in the PreSubstitution Notice; and (c) before and after account values. 9. For two years following the Substitution Date, Horace Mann will reimburse those who were Contract owners on the Substitution Date and who, as a result of a Substitution, had Contract value allocated to a subaccount investing in a Replacement Portfolio such that the Replacement Portfolio’s net annual operating expenses (taking into account any fee waivers and expense reimbursements) for such period will not exceed, on an annualized basis, the net annual operating expenses (taking into account any fee waivers and expense reimbursements) of the corresponding Existing Portfolio as of the Existing Portfolio’s most recent fiscal year preceding the Substitution Date. Any adjustments will be made at least on a quarterly basis. In addition, for a period of at least two years following the Substitution Date, the Applicants will not increase the Contract fees and charges—including asset based charges such as mortality and expense risk charges deducted from the subaccounts—that would otherwise be assessed under the terms of Contracts that are in force on the Substitution Date. For the Commission, by the Division of Investment Management, under delegated authority. Robert W. Errett, Deputy Secretary. [FR Doc. 2015–17575 Filed 7–16–15; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75444; File No. SR–NYSE– 2015–15] Self-Regulatory Organizations; New York Stock Exchange 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 NYSE Rule 13 and Related Rules Governing Order Types and Modifiers July 13, 2015. I. Introduction On March 24, 2015, New York Stock Exchange LLC (‘‘Exchange’’ or ‘‘NYSE’’) 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, and related Exchange rules, 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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 74678 (April 8, 2015), 80 FR 20053 (‘‘Notice’’). Prior to filing this proposal, the Exchange filed a similar proposal to amend Rule 13, and related Exchange rules, governing order types and modifiers. See Securities Exchange Act Release No. 73703 (November 28, 2014), 79 FR 72039 (December 4, 2014) (SR–NYSE–2014–59). For that proposal, the Commission extended the time period for action, see Securities Exchange Act Release No. 74051 (January 14, 2015), 80 FR 2983 (January 21, 2015) (SR–NYSE–2014–59), and for an almost identical filing of NYSE MKT LLC (‘‘NYSE MKT’’), the Commission instituted proceedings to determine whether to approve or disapprove NYSE MKT’s 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 for NYSE MKT’s proposal, both NYSE and NYSE MKT withdrew their respective proposals. See Securities Exchange Act Release Nos. 74642 (April 3, 2015), 80 FR 19096 (April 9, 2015) (SR–NYSE–2014–59) and 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. 75048, 80 FR 31419 (June 2, 2015). The Commission designated July 13, 2015, as the date by which it should approve, disapprove, or institute 2 17 Continued BILLING CODE 8011–01–P PO 00000 Frm 00109 Fmt 4703 42575 Sfmt 4703 E:\FR\FM\17JYN1.SGM 17JYN1 42576 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 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 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 by re-grouping and renumbering existing order types and order modifiers. The Exchange also proposes to amend Rule 13 to revise the definitions of certain order types and modifiers in both substantive and nonsubstantive ways and to add text stating that, unless otherwise specified in either Rules 13, 70 (applicable to Exchange Floor brokers), or 104 (applicable to Exchange Designated Market Makers (‘‘DMMs’’)), orders and modifiers listed in Rule 13 are available for all Exchange 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 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; further explain the functionality of certain Floor broker and DMM interest; further 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. 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 20054. VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 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 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 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 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 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.’’ B. Time in Force Modifiers Proposed section (b) of Rule 13 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 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. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 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) NYSE 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 C. Auction-Only Orders Proposed section (c) of Rule 13 would set forth five Auction-Only Orders: (1) Closing Offset (‘‘CO’’) Orders; (2) Limiton-Close (‘‘LOC’’) Orders; (3) Limit-onOpen (‘‘LOO’’) Orders; (4) Market-on Close (‘‘MOC’’) Orders; and (5) Marketon-Open (‘‘MOO’’) Orders. The Exchange is proposing to make nonsubstantive changes to these definitions. D. Non-Displayable Orders (All or a Portion of the Order) Proposed section (d) of Rule 13 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 12 Throughout the proposed rule text, the Exchange proposes to capitalize terms, including, but not limited to, Limit Order and Market Order. 13 See Notice, supra note 3, 80 FR at 20055. E:\FR\FM\17JYN1.SGM 17JYN1 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 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. srobinson on DSK5SPTVN1PROD with NOTICES E. Do Not Route Orders Proposed section (e) of Rule 13 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, 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 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) SelfTrade 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 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) because the Exchange states that Rule 17(c) 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 because the Exchange states that Supplementary material .20 of Rule 13 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 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. The Exchange proposes several amendments to Rule 70, which governs the execution of Exchange Floor Broker interest. The Exchange proposes to amend Rule 70(a)(i) 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) 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) to clarify that certain functionality set forth in the Rule is no longer available. Specifically, Rule 70.25(c)(ii) currently provides that a Floor broker may designate a maximum size of contra-side 15 See 14 See Notice, supra note 3, 80 FR at 20055. VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 16 See PO 00000 id. id. Frm 00111 Fmt 4703 Sfmt 4703 42577 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) and (c)(v). Additionally, the Exchange proposes to amend Rule 70.25(c)(iv) 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) and 70(b)(i) by replacing the term ‘‘Display Book’’ with the term ‘‘Exchange systems,’’ and in Rule 70(f), the Exchange proposes to update cross references. The Exchange proposes several amendments to amend Rule 72, 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) 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 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) 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. The Exchange proposes two amendments to Rule 104, which governs the dealings and responsibilities of DMMs. First, the Exchange proposes to add text to Rule 104(b)(ii) explaining that the Exchange’s systems will prevent incoming DMM interest from trading with resting DMM interest. Specifically, proposed Rule 104(b)(ii) 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, E:\FR\FM\17JYN1.SGM 17JYN1 42578 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices the resting DMM interest would be cancelled. Furthermore, the Exchange proposes to add new Rule 104(b)(vi) 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, which governs automatic executions, by adding cross references to other Exchange rules applicable to automatic executions in Rule 1000(a). III. Discussion and Commission Findings srobinson on DSK5SPTVN1PROD with NOTICES 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.17 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,18 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 19 and that this proposal is part of that continued effort to review and clarify its rules governing order types.20 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.21 17 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). 18 15 U.S.C. 78f(b)(5). 19 See Notice, supra note 3, 80 FR at 20053. 20 See Notice, supra note 3, 80 FR at 20053–54. 21 See Notice, supra note 3, 80 FR at 20056. VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 The Exchange’s proposal would restructure and reorganize Rule 13 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– NYSE–2015–15 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–NYSE–2015–15. 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 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 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 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–NYSE– 2015–15 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 text that: (1) States that, unless otherwise specified in either Rules 13, 70, or 104, orders and modifiers listed in Rule 13 are available for all Exchange 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) (definition of Market Order) and 13(d)(1)(A) (definition of MPL Order), and the current Rule 13 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. E:\FR\FM\17JYN1.SGM 17JYN1 srobinson on DSK5SPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices The Exchange also proposes to amend Rule 70 to: (1) Delete current rule text in Rule 70(a)(i) 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 nonsubstantive changes to Rules 70(a)(i) and 70(b)(i) by replacing the term ‘‘Display Book’’ with the term ‘‘Exchange systems;’’ and (5) update cross references in Rule 70(f). 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. The Exchange also proposes to add text to Rule 104(b)(ii) 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) 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) 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 stating that, unless otherwise specified in Rules 13, VerDate Sep<11>2014 20:59 Jul 16, 2015 Jkt 235001 70, or 104, orders and modifiers are available for all member organizations, coupled with the proposed addition of subparagraph (b)(vi) to Rule 104 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,22 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,23 that the proposed rule change (NYSE–2015–15), 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.24 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–17536 Filed 7–16–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–75441; File No. SR– NYSEMKT–2015–47] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Allowing the Listing of Options Overlying Portfolio Depositary Receipts and Index Fund Shares That Are Listed Pursuant to Generic Listing Standards on Equities Exchanges for Series of ETFs Based on International or Global Indexes Under Which a Comprehensive Surveillance Sharing Agreement Is Not Required July 13, 2015. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on July 2, 2015, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission PO 00000 22 15 U.S.C. 78s(b)(2). U.S.C. 78s(b)(2). 24 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. 23 15 Frm 00113 Fmt 4703 Sfmt 4703 42579 (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to allow the listing of options overlying portfolio depositary receipts and index fund shares (collectively, ‘‘ETFs’’) that are listed pursuant to generic listing standards on equities exchanges for series of ETFs based on international or global indexes under which a comprehensive surveillance sharing agreement is not required. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend Commentary .06 to Rule 915 (Criteria for Underlying Securities) to list options overlying ETFs that are listed pursuant to generic listing standards on equities exchanges for series of ETFs based on international or global indexes under which a comprehensive surveillance sharing agreement (‘‘CSSA’’ or ‘‘comprehensive surveillance agreement’’) is not required.4 This proposal will enable the Exchange to list and trade options on ETFs without a CSSA provided that the ETF is listed on an equities exchange pursuant to the 4 See, e.g., NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(a)(B); NYSE MKT Rule 1000, Commentary .03(a)(B); NASDAQ Rule 5705(a)(3)(A)(ii); and BATS Rule 14.11(b)(3)(A)(ii). E:\FR\FM\17JYN1.SGM 17JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)]
[Notices]
[Pages 42575-42579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17536]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75444; File No. SR-NYSE-2015-15]


Self-Regulatory Organizations; New York Stock Exchange 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 NYSE Rule 13 and Related Rules Governing Order Types and 
Modifiers

July 13, 2015.

I. Introduction

    On March 24, 2015, New York Stock Exchange LLC (``Exchange'' or 
``NYSE'') 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, and related Exchange 
rules, 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\

[[Page 42576]]

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. 74678 (April 8, 
2015), 80 FR 20053 (``Notice''). Prior to filing this proposal, the 
Exchange filed a similar proposal to amend Rule 13, and related 
Exchange rules, governing order types and modifiers. See Securities 
Exchange Act Release No. 73703 (November 28, 2014), 79 FR 72039 
(December 4, 2014) (SR-NYSE-2014-59). For that proposal, the 
Commission extended the time period for action, see Securities 
Exchange Act Release No. 74051 (January 14, 2015), 80 FR 2983 
(January 21, 2015) (SR-NYSE-2014-59), and for an almost identical 
filing of NYSE MKT LLC (``NYSE MKT''), the Commission instituted 
proceedings to determine whether to approve or disapprove NYSE MKT's 
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 for NYSE MKT's 
proposal, both NYSE and NYSE MKT withdrew their respective 
proposals. See Securities Exchange Act Release Nos. 74642 (April 3, 
2015), 80 FR 19096 (April 9, 2015) (SR-NYSE-2014-59) and 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. 75048, 80 FR 31419 
(June 2, 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.
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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 by re-grouping and re-
numbering existing order types and order modifiers. The Exchange also 
proposes to amend Rule 13 to revise the definitions of certain order 
types and modifiers in both substantive and non-substantive ways and to 
add text stating that, unless otherwise specified in either Rules 13, 
70 (applicable to Exchange Floor brokers), or 104 (applicable to 
Exchange Designated Market Makers (``DMMs'')), orders and modifiers 
listed in Rule 13 are available for all Exchange 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 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; 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 20054.
---------------------------------------------------------------------------

    Under the proposal, Rule 13 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 
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 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 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 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) NYSE 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 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 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 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

[[Page 42577]]

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 20055.
---------------------------------------------------------------------------

E. Do Not Route Orders

    Proposed section (e) of Rule 13 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, 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 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 20055.
---------------------------------------------------------------------------

    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) because the Exchange states that Rule 17(c) 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 because the Exchange states that Supplementary material .20 of 
Rule 13 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 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, which governs 
the execution of Exchange Floor Broker interest. The Exchange proposes 
to amend Rule 70(a)(i) 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) 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) to 
clarify that certain functionality set forth in the Rule is no longer 
available. Specifically, Rule 70.25(c)(ii) 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) and (c)(v). Additionally, the Exchange proposes to 
amend Rule 70.25(c)(iv) 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) and 70(b)(i) by replacing the term ``Display Book'' with 
the term ``Exchange systems,'' and in Rule 70(f), the Exchange proposes 
to update cross references.
    The Exchange proposes several amendments to amend Rule 72, 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) 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 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) 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.
    The Exchange proposes two amendments to Rule 104, which governs the 
dealings and responsibilities of DMMs. First, the Exchange proposes to 
add text to Rule 104(b)(ii) explaining that the Exchange's systems will 
prevent incoming DMM interest from trading with resting DMM interest. 
Specifically, proposed Rule 104(b)(ii) 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,

[[Page 42578]]

the resting DMM interest would be cancelled. Furthermore, the Exchange 
proposes to add new Rule 104(b)(vi) 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, which governs 
automatic executions, by adding cross references to other Exchange 
rules applicable to automatic executions in Rule 1000(a).

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.\17\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\18\ 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.
---------------------------------------------------------------------------

    \17\ 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).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange represents that it continually assesses its rules 
governing order types \19\ and that this proposal is part of that 
continued effort to review and clarify its rules governing order 
types.\20\ 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.\21\
---------------------------------------------------------------------------

    \19\ See Notice, supra note 3, 80 FR at 20053.
    \20\ See Notice, supra note 3, 80 FR at 20053-54.
    \21\ See Notice, supra note 3, 80 FR at 20056.
---------------------------------------------------------------------------

    The Exchange's proposal would restructure and reorganize Rule 13 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-NYSE-2015-15 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-NYSE-2015-15. 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 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-NYSE-2015-15 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 
text that: (1) States that, unless otherwise specified in either Rules 
13, 70, or 104, orders and modifiers listed in Rule 13 are available 
for all Exchange 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) 
(definition of Market Order) and 13(d)(1)(A) (definition of MPL Order), 
and the current Rule 13 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.

[[Page 42579]]

    The Exchange also proposes to amend Rule 70 to: (1) Delete current 
rule text in Rule 70(a)(i) 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) and 70(b)(i) by replacing the term ``Display Book'' with the 
term ``Exchange systems;'' and (5) update cross references in Rule 
70(f).
    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.
    The Exchange also proposes to add text to Rule 104(b)(ii) 
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) 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) 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 stating that, unless 
otherwise specified in Rules 13, 70, or 104, orders and modifiers are 
available for all member organizations, coupled with the proposed 
addition of subparagraph (b)(vi) to Rule 104 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,\22\ to approve the proposed rule change, as 
modified by Amendment No. 2, on an accelerated basis.
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    \22\ 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,\23\ that the proposed rule change (NYSE-2015-15), as modified by 
Amendment No. 2, be, and it hereby is, approved on an accelerated 
basis.
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    \23\ 15 U.S.C. 78s(b)(2).

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17536 Filed 7-16-15; 8:45 am]
 BILLING CODE 8011-01-P

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