Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123C-Equities To Define the Term “Official Closing Price”, 77680-77683 [2015-31442]

Download as PDF 77680 Federal Register / Vol. 80, No. 240 / Tuesday, December 15, 2015 / Notices action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Exchange to accurately reflect the new ownership structure and ticker symbol for Alphabet Class A shares and to continue to list and trade mini options on Alphabet’s Class A shares, formerly Google Class A shares. For these reasons, the Commission designates the proposed rule change to be operative upon filing.10 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. 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: asabaliauskas on DSK5VPTVN1PROD with NOTICES 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– BATS–2015–111 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–BATS–2015–111. 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/ 10 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 17:08 Dec 14, 2015 Jkt 238001 rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal 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–BATS– 2015–111, and should be submitted on or before January 5, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–31437 Filed 12–14–15; 8:45 am] BILLING CODE 8011–01–P publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 123C—Equities to define the term ‘‘Official Closing Price.’’ The proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76601; File No. SR– NYSEMKT–2015–98] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 123C— Equities To Define the Term ‘‘Official Closing Price’’ December 9, 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 November 25, 2015, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 The Exchange proposes to amend Rule 123C—Equities (‘‘Rule 123C’’) to define the term ‘‘Official Closing Price’’ and specify how the Exchange would determine the Official Closing Price for all securities listed on the Exchange. Currently, if the Exchange does not conduct a closing transaction in a security, it does not specify any closing price information about that security.4 The Exchange proposes to amend Rule 123C to define the term ‘‘Official Closing Price’’ and specify how such price would be determined. The Exchange’s proposed rule is similar to rules of other listing exchanges, which similarly define an Official Closing Price.5 4 For example, if there is insufficient interest, e.g., the highest price order to buy is priced lower than the lowest price order to sell and there are no market orders for the closing transaction, the Exchange will not hold a closing auction. Similarly, if a security is subject to a regulatory halt as of 4:00 p.m. Eastern Time, the Exchange will not conduct a closing auction in that security. 5 See, e.g., NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’) Rule 1.1(ggP) (defining the term ‘‘Official Closing Price’’); NASDAQ Stock Market LLC (‘‘Nasdaq’’) Rules 4754(b)(4) and (b)(6)(A)(ii) (defining the term ‘‘Official Closing Price’’); and E:\FR\FM\15DEN1.SGM 15DEN1 asabaliauskas on DSK5VPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 240 / Tuesday, December 15, 2015 / Notices As proposed, Rule 123C(1)(e) would provide that the Official Closing Price of a security listed on the Exchange would be determined as set forth in proposed Rules 123C(1)(e)(i) and (ii). Proposed Rule 123C(1)(e)(i) would provide that the Official Closing Price would be the price established in a closing transaction under paragraphs (7) and (8) of Rule 123C of one round lot or more. As further proposed, if there is no closing transaction in a security or if a closing transaction is less than one round lot, the Official Closing Price would be the most recent last-sale eligible trade in such security on the Exchange on that trading day. For example, there would not be a closing transaction in a security if there is insufficient trading interest for a closing transaction of a round lot or more or because the security has been halted as of 4:00 p.m. Eastern Time. If there were no closing transaction and no last-sale eligible trades on the Exchange on that trading day, the Exchange proposes that the Official Closing Price would be the prior day’s Official Closing Price. As such, the Exchange would carry over the prior day’s Official Closing Price for a security until such time that there is either a closing transaction on the Exchange or a last-sale eligible trade on the Exchange in such security. For example, if on Monday, a security trades on the NYSE at 3:00 p.m. for $10.00, but there is no closing transaction, the Official Closing Price for that security on Monday would be $10.00. If on Tuesday there are no trades in that security on the Exchange and no closing transaction, Tuesday’s Official Closing Price would be the Official Closing Price for the prior day, which was $10.00. Similarly, if on Wednesday, there are still no trades on the Exchange in that security, Wednesday’s Official Closing Price would be Tuesday’s Official Closing Price, which was $10.00. The Official Closing Price for the security would continue to be $10.00 until there is either a closing transaction or a last-sale eligible trade on the Exchange on a trading day in the security. As further proposed, Rule 123C(1)(e)(ii) would provide that if the Exchange were unable to conduct a closing transaction due to a systems or technical issue, the Official Closing Price would be the last consolidated last-sale eligible trade during regular trading hours on that trading day.6 This BATS Exchange, Inc. (‘‘BATS’’) Rule 11.23(c)(2)(B) (determining the BATS Official Closing Price). 6 The Exchange is in the process of working with Nasdaq and NYSE Arca to establish back-up procedures if one or more of these markets is unable VerDate Sep<11>2014 17:08 Dec 14, 2015 Jkt 238001 proposed rule is similar to New York Stock Exchange LLC (‘‘NYSE’’) Rule 440B(c)(3), which provides that the NYSE will use the consolidated last sale price for determining whether to trigger a Short Sale Price Test under that rule if there is no closing transaction due to a systems or technical issue. Similar to the NYSE, the Exchange proposes to use the consolidated last sale price rather than the Exchange last sale price when there is a systems or technical issue preventing the Exchange from conducting an auction because trading may be continuing on other markets while the Exchange’s systems are impaired, and therefore the Exchange’s last sale price may not be reflective of the most recent price of a security. Proposed Rule 123C(1)(e)(ii) would further provide that if there were no consolidated last-sale eligible trades in a security on a trading day when the Exchange is unable to conduct a closing transaction in a security or securities due to a systems or technical issue, the Official Closing Price of such security would be the prior day’s Official Closing Price. The Exchange notes that this proposal differs from NYSE Rule 440B(c)(3), which provides that if trading is interrupted on the Exchange because of a systems or technical issue and not restored on that trading day, the Exchange would use the most recent consolidated last sale price for that security on the most recent day on which the security traded for purposes of determining whether the short sale price test restrictions of Rule 201 of Regulation SHO are triggered. The Exchange believes that using the last Official Closing Price from the prior trading day instead of the most recent consolidated last-sale price would incorporate the Exchange’s proposed new methodology for determining the Official Closing Price, as described above. For example, assuming the same facts as the scenario described above, when $10.00 is the Official Closing Price on Tuesday and Wednesday, if on Thursday, the Exchange experiences a systems issue and is not able to conduct a closing transaction in that security and there is no consolidated last sale for that to conduct an auction. See NYSE press release dated July 22, 2015, available here: https:// ir.theice.com/press-and-publications/pressreleases/all-categories/2015/07-22-2015.aspx. In connection with this initiative, the Exchange notes that it will file a separate proposed rule change to amend the definition of ‘‘Official Closing Price’’ to address how the markets would serve as alternate back-up venues. Until such time, the Exchange proposes to use the last consolidated last-sale eligible price as the Official Closing Price if the Exchange is unable to conduct an auction because of systems or technical issues. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 77681 trading day, the Official Closing Price would again be $10.00. The Exchange also proposes to change Rule 123C(8) to use the term ‘‘closing transaction,’’ instead of ‘‘closing print.’’ This change would conform the terminology in Rule 123C(8) to Rule 123C(7) and proposed Rule 123C(1)(e). Finally, the Exchange proposes to make conforming amendments to Rule 440B—Equities (‘‘Rule 440B’’), which governs Short Sales. Rule 440B(b) currently sets forth the procedures for a Short Sale Price Test and provides that Exchange systems will not execute or display a short sale order with respect to a covered security at a price that is less than or equal to the current national best bid if the price of that security decreases by 10% of more, as determined by the listing market for the security, from the security’s closing price on the listing market as of the end of regular trading hours on the prior day (‘‘Trigger Price’’). If the Exchange does not have a closing transaction in a security, it currently uses the last sale price on the Exchange as the Trigger Price. Rule 440B(c)(2) further provides that if a covered security did not trade on the Exchange on the prior trading day (due to a trading halt, trading suspension, or otherwise) the Exchange’s determination of the Trigger Price shall be based on the last sale price on the Exchange for that security on the most recent day on which the security traded. The Exchange proposes to use the new definition of ‘‘Official Closing Price’’ in Rule 440B. As proposed, Rule 440B(b) would provide that Exchange systems would not execute or display a short sale order with respect to a covered security at a price that is less than or equal to the current national best bid if the price of that security decreases by 10% or more, as determined by the listing market for that security, from the security’s Official Closing Price, as defined in Rule 123C— Equities as of the end of regular trading hours on the prior day (‘‘Trigger Price’’). (emphasis added) As discussed above, the proposed new definition of Official Closing Price would incorporate what price the Exchange would use in circumstances when there is no closing auction. Consistent with current Rule 440B(c)(2), proposed Rule 123C(1)(e)(i) would provide that if there is no auction in a security, the last-sale eligible trade on the Exchange would be the Official Closing Price. In addition, similar to NYSE Rule 440B(c)(3), proposed Rule 123C(1)(e)(ii) would provide that if the Exchange is unable to conduct a closing auction because of a systems or E:\FR\FM\15DEN1.SGM 15DEN1 77682 Federal Register / Vol. 80, No. 240 / Tuesday, December 15, 2015 / Notices technical issue, the last consolidated last-sale eligible trade on that trading day would be the Official Closing Price. Accordingly, the Exchange proposes a substantive difference to provide that if there is no consolidated last-sale price, the Exchange would use the prior day’s Official Closing Price. Because the proposed definition of Official Closing Price would address the circumstances specified in Rule 440B(c)(2), the Exchange proposes to delete Rule 440B(c)(2) as redundant of the proposed use of ‘‘Official Closing Price’’ in Rule 440B(b). asabaliauskas on DSK5VPTVN1PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Section 6(b)(5) of the Act,8 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. The Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would provide transparency in how the Exchange would determine the Official Closing Price in all Exchange-listed securities, regardless of whether there was a closing transaction. The Exchange believes that using the Exchange’s last sale price as the Official Closing Price if there is no closing transaction would remove impediments to and perfect the mechanism of a free and open market because if there is insufficient trading interest for an auction, the last sale price on the Exchange in such security would likely reflect the most recent price for that security. The Exchange further believes that using the consolidated last sale price as the Official Closing Price if the Exchange is experiencing a system or technical issue that impairs the ability to conduct a closing transaction would remove impediments to and perfect the mechanism of a free and open market because if the Exchange’s systems are not functioning, but other markets are trading, the consolidated last sale price on a trading day would likely reflect the most recent price for that security. U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). The Exchange believes that amending Rule 440B to similarly use the term Official Closing Price would remove impediments to and perfect the mechanism of a free and open market and a national market system because it would promote transparency and consistency across Exchange rules. In particular, Rule 440B references the closing price on the listing market at the end of the regular trading hours for purposes of determining the Trigger Price under that rule. By using the term ‘‘Official Closing Price’’ in Rule 440B(b), the Exchange would be using a defined term and would obviate the need to separately describe the events currently set forth in Rule 440B(c)(2). B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any competitive issues, but rather to provide greater transparency in Exchange rules regarding how the Exchange would determine the Official Closing Price for all securities listed on the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the self-regulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change or such shorter time as designated by the Commission,9 the proposed rule change has become effective pursuant to 7 15 VerDate Sep<11>2014 17:08 Dec 14, 2015 Section 19(b)(3)(A) of the Act 10 and Rule 19b–4(f)(6) thereunder.11 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 12 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEMKT–2015–98 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–2015–98. 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 10 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 12 15 U.S.C. 78s(b)(2)(B). 11 17 9 The Jkt 238001 PO 00000 Exchange has fulfilled this requirement. Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\15DEN1.SGM 15DEN1 Federal Register / Vol. 80, No. 240 / Tuesday, December 15, 2015 / Notices business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEMKT–2015–98 and should be submitted on or before January 5, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–31442 Filed 12–14–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76603; File No. SR–EDGX– 2015–58] Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of EDGX Exchange, Inc. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend its fees and rebates applicable to Members 5 of the Exchange pursuant to EDGX Rule 15.1(a) and (c) (‘‘Fee Schedule’’) to increase the fee for orders yielding fee code K, which routes to NASDAQ OMX PSX (‘‘PSX’’) using ROUC or ROUE routing strategy. The text of the proposed rule change is available at the Exchange’s Web site at www.batstrading.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 Exchange 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 these 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. asabaliauskas on DSK5VPTVN1PROD with NOTICES December 9, 2015. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 1, 2015, EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The Exchange proposes to increase the fee for orders yielding fee code K, which routes to PSX using ROUC or ROUE routing strategy. In securities priced at or above $1.00, the Exchange currently assesses a fee of $0.0028 per share for Members’ orders that yield fee code K. The Exchange proposes to amend its Fee Schedule to increase this fee to $0.0029 per share. The proposed change would enable the Exchange to pass through the rate that BATS Trading, Inc. (‘‘BATS Trading’’), the Exchange’s affiliated routing brokerdealer, is charged for routing orders to PSX when it does not qualify for a volume tiered reduced fee. The proposed change is in response to PSX’s December 2015 fee change where PSX increased the fee to remove liquidity via routable order types it charges its 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer, or any person associated with a registered broker or dealer, that has been admitted to membership in the Exchange. A Member will have the status of a ‘‘member’’ of the Exchange as that term is defined in Section 3(a)(3) of the Act.’’ See Exchange Rule 1.5(n). 13 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 17:08 Dec 14, 2015 Jkt 238001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 77683 customers, from a fee of $0.0027 per share to a fee of $0.0028 per share for Tapes A and B securities and from a fee of $0.0028 per share to $0.0029 per share for Tape C securities.6 When BATS Trading routes to PSX, it will now be charged a standard rate of $0.0028 per share for Tapes A and B securities and $0.0029 per share for Tape C securities.7 BATS Trading will pass through this rate to the Exchange and the Exchange, in turn, will pass through of a rate of $0.0029 per share for Tape A, B, and C securities to its Members.8 The proposed increase to the fee under fee code K would enable the Exchange to equitably allocate its costs among all Members utilizing fee code K. The Exchange proposes to implement this amendment to its Fee Schedule immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,9 in general, and furthers the objectives of Section 6(b)(4),10 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. The Exchange believes that its proposal to increase the fee for Members’ orders that yield fee code K represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities because the Exchange does not levy additional fees or offer additional rebates for orders that it routes to PSX through BATS Trading. As of December 1, 2015, PSX increased the fee to remove liquidity from a fee of $0.0027 per share to a fee of $0.0028 per share for Tapes A and B securities and from a fee of $0.0028 per share to $0.0029 per share for Tape C securities.11 Therefore, the Exchange believes that its proposal to pass through a fee of $0.0029 per share for orders that yield fee code K is equitable and reasonable because it accounts for the pricing changes on PSX. In addition, the proposal allows the Exchange to now charge its Members a pass-through rate for orders that are routed to PSX. 6 See Equity Trader Alert 2015–189, available at https://www.nasdaqtrader.com/ TraderNews.aspx?id=ETA-2015-189. 7 The Exchange notes that to the extent BATS Trading does or does not achieve any volume tiered reduced fee on PSX, its rate for fee code K will not change. 8 The Exchange notes that, due to billing system limitations that do not allow for separate rates by tape, it will pass through the higher fee of $0.0029 per share for all Tapes A, B & C securities. 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(4). 11 See supra note 4. E:\FR\FM\15DEN1.SGM 15DEN1

Agencies

[Federal Register Volume 80, Number 240 (Tuesday, December 15, 2015)]
[Notices]
[Pages 77680-77683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31442]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76601; File No. SR-NYSEMKT-2015-98]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 123C--
Equities To Define the Term ``Official Closing Price''

 December 9, 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 November 25, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 123C--Equities to define the 
term ``Official Closing Price.'' The proposed rule change is available 
on the Exchange's Web site at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 123C--Equities (``Rule 123C'') 
to define the term ``Official Closing Price'' and specify how the 
Exchange would determine the Official Closing Price for all securities 
listed on the Exchange.
    Currently, if the Exchange does not conduct a closing transaction 
in a security, it does not specify any closing price information about 
that security.\4\ The Exchange proposes to amend Rule 123C to define 
the term ``Official Closing Price'' and specify how such price would be 
determined. The Exchange's proposed rule is similar to rules of other 
listing exchanges, which similarly define an Official Closing Price.\5\
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    \4\ For example, if there is insufficient interest, e.g., the 
highest price order to buy is priced lower than the lowest price 
order to sell and there are no market orders for the closing 
transaction, the Exchange will not hold a closing auction. 
Similarly, if a security is subject to a regulatory halt as of 4:00 
p.m. Eastern Time, the Exchange will not conduct a closing auction 
in that security.
    \5\ See, e.g., NYSE Arca Equities, Inc. (``NYSE Arca Equities'') 
Rule 1.1(ggP) (defining the term ``Official Closing Price''); NASDAQ 
Stock Market LLC (``Nasdaq'') Rules 4754(b)(4) and (b)(6)(A)(ii) 
(defining the term ``Official Closing Price''); and BATS Exchange, 
Inc. (``BATS'') Rule 11.23(c)(2)(B) (determining the BATS Official 
Closing Price).

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[[Page 77681]]

    As proposed, Rule 123C(1)(e) would provide that the Official 
Closing Price of a security listed on the Exchange would be determined 
as set forth in proposed Rules 123C(1)(e)(i) and (ii). Proposed Rule 
123C(1)(e)(i) would provide that the Official Closing Price would be 
the price established in a closing transaction under paragraphs (7) and 
(8) of Rule 123C of one round lot or more. As further proposed, if 
there is no closing transaction in a security or if a closing 
transaction is less than one round lot, the Official Closing Price 
would be the most recent last-sale eligible trade in such security on 
the Exchange on that trading day. For example, there would not be a 
closing transaction in a security if there is insufficient trading 
interest for a closing transaction of a round lot or more or because 
the security has been halted as of 4:00 p.m. Eastern Time. If there 
were no closing transaction and no last-sale eligible trades on the 
Exchange on that trading day, the Exchange proposes that the Official 
Closing Price would be the prior day's Official Closing Price. As such, 
the Exchange would carry over the prior day's Official Closing Price 
for a security until such time that there is either a closing 
transaction on the Exchange or a last-sale eligible trade on the 
Exchange in such security.
    For example, if on Monday, a security trades on the NYSE at 3:00 
p.m. for $10.00, but there is no closing transaction, the Official 
Closing Price for that security on Monday would be $10.00. If on 
Tuesday there are no trades in that security on the Exchange and no 
closing transaction, Tuesday's Official Closing Price would be the 
Official Closing Price for the prior day, which was $10.00. Similarly, 
if on Wednesday, there are still no trades on the Exchange in that 
security, Wednesday's Official Closing Price would be Tuesday's 
Official Closing Price, which was $10.00. The Official Closing Price 
for the security would continue to be $10.00 until there is either a 
closing transaction or a last-sale eligible trade on the Exchange on a 
trading day in the security.
    As further proposed, Rule 123C(1)(e)(ii) would provide that if the 
Exchange were unable to conduct a closing transaction due to a systems 
or technical issue, the Official Closing Price would be the last 
consolidated last-sale eligible trade during regular trading hours on 
that trading day.\6\ This proposed rule is similar to New York Stock 
Exchange LLC (``NYSE'') Rule 440B(c)(3), which provides that the NYSE 
will use the consolidated last sale price for determining whether to 
trigger a Short Sale Price Test under that rule if there is no closing 
transaction due to a systems or technical issue. Similar to the NYSE, 
the Exchange proposes to use the consolidated last sale price rather 
than the Exchange last sale price when there is a systems or technical 
issue preventing the Exchange from conducting an auction because 
trading may be continuing on other markets while the Exchange's systems 
are impaired, and therefore the Exchange's last sale price may not be 
reflective of the most recent price of a security.
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    \6\ The Exchange is in the process of working with Nasdaq and 
NYSE Arca to establish back-up procedures if one or more of these 
markets is unable to conduct an auction. See NYSE press release 
dated July 22, 2015, available here: https://ir.theice.com/press-and-publications/press-releases/all-categories/2015/07-22-2015.aspx. In 
connection with this initiative, the Exchange notes that it will 
file a separate proposed rule change to amend the definition of 
``Official Closing Price'' to address how the markets would serve as 
alternate back-up venues. Until such time, the Exchange proposes to 
use the last consolidated last-sale eligible price as the Official 
Closing Price if the Exchange is unable to conduct an auction 
because of systems or technical issues.
---------------------------------------------------------------------------

    Proposed Rule 123C(1)(e)(ii) would further provide that if there 
were no consolidated last-sale eligible trades in a security on a 
trading day when the Exchange is unable to conduct a closing 
transaction in a security or securities due to a systems or technical 
issue, the Official Closing Price of such security would be the prior 
day's Official Closing Price. The Exchange notes that this proposal 
differs from NYSE Rule 440B(c)(3), which provides that if trading is 
interrupted on the Exchange because of a systems or technical issue and 
not restored on that trading day, the Exchange would use the most 
recent consolidated last sale price for that security on the most 
recent day on which the security traded for purposes of determining 
whether the short sale price test restrictions of Rule 201 of 
Regulation SHO are triggered. The Exchange believes that using the last 
Official Closing Price from the prior trading day instead of the most 
recent consolidated last-sale price would incorporate the Exchange's 
proposed new methodology for determining the Official Closing Price, as 
described above.
    For example, assuming the same facts as the scenario described 
above, when $10.00 is the Official Closing Price on Tuesday and 
Wednesday, if on Thursday, the Exchange experiences a systems issue and 
is not able to conduct a closing transaction in that security and there 
is no consolidated last sale for that trading day, the Official Closing 
Price would again be $10.00.
    The Exchange also proposes to change Rule 123C(8) to use the term 
``closing transaction,'' instead of ``closing print.'' This change 
would conform the terminology in Rule 123C(8) to Rule 123C(7) and 
proposed Rule 123C(1)(e).
    Finally, the Exchange proposes to make conforming amendments to 
Rule 440B--Equities (``Rule 440B''), which governs Short Sales. Rule 
440B(b) currently sets forth the procedures for a Short Sale Price Test 
and provides that Exchange systems will not execute or display a short 
sale order with respect to a covered security at a price that is less 
than or equal to the current national best bid if the price of that 
security decreases by 10% of more, as determined by the listing market 
for the security, from the security's closing price on the listing 
market as of the end of regular trading hours on the prior day 
(``Trigger Price''). If the Exchange does not have a closing 
transaction in a security, it currently uses the last sale price on the 
Exchange as the Trigger Price. Rule 440B(c)(2) further provides that if 
a covered security did not trade on the Exchange on the prior trading 
day (due to a trading halt, trading suspension, or otherwise) the 
Exchange's determination of the Trigger Price shall be based on the 
last sale price on the Exchange for that security on the most recent 
day on which the security traded.
    The Exchange proposes to use the new definition of ``Official 
Closing Price'' in Rule 440B. As proposed, Rule 440B(b) would provide 
that Exchange systems would not execute or display a short sale order 
with respect to a covered security at a price that is less than or 
equal to the current national best bid if the price of that security 
decreases by 10% or more, as determined by the listing market for that 
security, from the security's Official Closing Price, as defined in 
Rule 123C--Equities as of the end of regular trading hours on the prior 
day (``Trigger Price''). (emphasis added)
    As discussed above, the proposed new definition of Official Closing 
Price would incorporate what price the Exchange would use in 
circumstances when there is no closing auction. Consistent with current 
Rule 440B(c)(2), proposed Rule 123C(1)(e)(i) would provide that if 
there is no auction in a security, the last-sale eligible trade on the 
Exchange would be the Official Closing Price. In addition, similar to 
NYSE Rule 440B(c)(3), proposed Rule 123C(1)(e)(ii) would provide that 
if the Exchange is unable to conduct a closing auction because of a 
systems or

[[Page 77682]]

technical issue, the last consolidated last-sale eligible trade on that 
trading day would be the Official Closing Price. Accordingly, the 
Exchange proposes a substantive difference to provide that if there is 
no consolidated last-sale price, the Exchange would use the prior day's 
Official Closing Price. Because the proposed definition of Official 
Closing Price would address the circumstances specified in Rule 
440B(c)(2), the Exchange proposes to delete Rule 440B(c)(2) as 
redundant of the proposed use of ``Official Closing Price'' in Rule 
440B(b).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would provide transparency in how 
the Exchange would determine the Official Closing Price in all 
Exchange-listed securities, regardless of whether there was a closing 
transaction. The Exchange believes that using the Exchange's last sale 
price as the Official Closing Price if there is no closing transaction 
would remove impediments to and perfect the mechanism of a free and 
open market because if there is insufficient trading interest for an 
auction, the last sale price on the Exchange in such security would 
likely reflect the most recent price for that security. The Exchange 
further believes that using the consolidated last sale price as the 
Official Closing Price if the Exchange is experiencing a system or 
technical issue that impairs the ability to conduct a closing 
transaction would remove impediments to and perfect the mechanism of a 
free and open market because if the Exchange's systems are not 
functioning, but other markets are trading, the consolidated last sale 
price on a trading day would likely reflect the most recent price for 
that security.
    The Exchange believes that amending Rule 440B to similarly use the 
term Official Closing Price would remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because it would promote transparency and consistency across Exchange 
rules. In particular, Rule 440B references the closing price on the 
listing market at the end of the regular trading hours for purposes of 
determining the Trigger Price under that rule. By using the term 
``Official Closing Price'' in Rule 440B(b), the Exchange would be using 
a defined term and would obviate the need to separately describe the 
events currently set forth in Rule 440B(c)(2).

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issues, but rather to provide 
greater transparency in Exchange rules regarding how the Exchange would 
determine the Official Closing Price for all securities listed on the 
Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate if consistent with the protection of 
investors and the public interest, provided that the self-regulatory 
organization has given the Commission written notice of its intent to 
file the proposed rule change at least five business days prior to the 
date of filing of the proposed rule change or such shorter time as 
designated by the Commission,\9\ the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \9\ The Exchange has fulfilled this requirement.
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2015-98 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-2015-98. 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

[[Page 77683]]

business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing will also be available for inspection and copying at the 
NYSE's principal office and on its Internet Web site at www.nyse.com. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSEMKT-2015-
98 and should be submitted on or before January 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31442 Filed 12-14-15; 8:45 am]
 BILLING CODE 8011-01-P
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