Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change To Provide for Price Collar Thresholds for Trading Halt Auctions, 5809-5810 [2016-01930]

Download as PDF Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices 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 and that the rules are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Based on the Exchange’s representations, the Commission believes that eliminating the Rule 410B reporting requirement will not reduce the amount of publicly available information about securities transactions and that it is not likely to hamper the ability of the Exchange to conduct regulatory oversight of its members. The Commission notes that Rule 410B does not currently provide for real-time, publicly disseminated reporting of transactions, but instead requires non-public, electronic reporting of trade data to the Exchange on a nextday basis for regulatory purposes only. The Commission further notes that the Exchange represents that its members would remain subject to federal and Exchange books-and-records requirements 23 and that Exchange members would still be required to provide such trade data to the Exchange upon the Exchange’s request. For these reasons, the Commission believes that the proposal should help 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. Conclusion mstockstill on DSK4VPTVN1PROD with NOTICES It is therefore ordered, pursuant to Section 19(b)(2) of the Act,24 that the proposed rule change (SR–NYSE–2015– 48) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–01924 Filed 2–2–16; 8:45 am] BILLING CODE 8011–01–P 23 See 17 CFR 240.17a–3, 17 CFR 240.17a–4 & Rule 440—Equities. 24 15 U.S.C. 78s(b)(2). 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:14 Feb 02, 2016 Jkt 238001 5809 Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736. Office Building, Washington, DC 20503, or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Comments must be submitted to OMB within 30 days of this notice. Extension: Form N–8F, OMB Control No. 3235–0157, SEC File No. 270–136. Dated: January 29, 2016. Robert W. Errett, Deputy Secretary. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (the ‘‘Commission’’) has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below. Form N–8F (17 CFR 274.218) is the form prescribed for use by registered investment companies in certain circumstances to request orders of the Commission declaring that the registration of that investment company cease to be in effect. The form requests information about: (i) The investment company’s identity, (ii) the investment company’s distributions, (iii) the investment company’s assets and liabilities, (iv) the events leading to the request to deregister, and (v) the conclusion of the investment company’s business. The information is needed by the Commission to determine whether an order of deregistration is appropriate. The Form takes approximately 5.2 hours on average to complete. It is estimated that approximately 150 investment companies file Form N–8F annually, so the total annual burden for the form is estimated to be approximately 780 hours. The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act and is not derived from a comprehensive or even a representative survey or study. The collection of information on Form N–8F is not mandatory. The information provided on Form N–8F is not kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently-valid OMB control number. The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive [FR Doc. 2016–01960 Filed 2–2–16; 8:45 am] SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76994; File No. SR– NYSEArca–2015–121] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change To Provide for Price Collar Thresholds for Trading Halt Auctions January 28, 2016. I. Introduction On December 7, 2015, NYSE Arca, Inc. (‘‘Exchange’’) 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 1.1(s) to provide for price collar thresholds for Trading Halt Auctions. The proposed rule change was published for comment in the Federal Register on December 24, 2015.3 The Commission received three comment letters on the proposed rule change.4 This order approves the proposed rule change. II. Description of the Proposed Rule Change The Exchange currently conducts Trading Halt Auctions under Exchange Rule 7.35(f).5 To respond to market 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 76690 (December 18, 2015), 80 FR 80430 (‘‘Notice’’). 4 See letters from David LaValle, US Head of SPDR ETF Capital Markets, State Street Global Advisors, dated January 14, 2016 (‘‘SSGA Letter’’); Joanne Medero, US Head of Government Relations & Public Policy, Samara Cohen, US Head of iShares Capital Markets, Hubert De Jesus, Co-Head of Market Structure and Electronic Trading, BlackRock, Inc., dated January 14, 2016 (‘‘BlackRock Letter’’); and Eric Swanson, General Counsel & Secretary, BATS Global Markets, Inc., dated January 22, 2016 (‘‘BATS Letter’’). 5 See Exchange Rule 7.35(f); see also Notice, supra note 3, at 80431. 2 17 E:\FR\FM\03FEN1.SGM 03FEN1 5810 Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES events on August 24, 2015, the Exchange proposes to adopt specified price collar thresholds for Trading Halt Auctions.6 According to the Exchange, on August 24, 2015, it applied price collar thresholds to Trading Halt Auctions that were 5% for securities with a consolidated last sale price of $25.00 or less, 2% for securities with a consolidated last sale price greater than $25.00 but less than or equal to $50.00, and 1% for securities with a consolidated last sale price greater than $50.00.7 The Exchange states its belief that these thresholds were too narrow, but that it is appropriate to have protections in place for Trading Halt Auctions to ensure that a re-opening trade will not deviate significantly from prior prices, even taking into consideration natural price movements for a security.8 Proposed new Rule 1.1(s)(B) would provide that, when the Trading Halt Auction Price is established by Rule 7.35(f)(4)(A), the Limit Orders eligible for determining the Indicative Match Price would be limited by specified price collar thresholds away from the last consolidated sale price before the Trading Halt Auction.9 As proposed, the specified percentage for the price collar thresholds for Trading Halt Auctions would be 10% for securities with a consolidated last sale price of $25.00 or less, 5% for securities with a consolidated last sale price greater than $25.00 but less than or equal to $50.00, and 3% for securities with a consolidated last sale price greater than $50.00.10 These proposed price collar thresholds would be in effect until six months after the operative date of the proposed rule change.11 In the proposal, the Exchange represents that it will be conducting an analysis to identify what changes, if any, would be appropriate to balance the need to allow for natural price movement in a Trading Halt Auction, while at the same time avoiding 6 See Notice, supra note 3, at 80431. Currently, the Exchange’s rules do not provide for price collar thresholds for Trading Halt Auctions. See Exchange Rules 1.1(s) and 7.35(f); see also Notice, supra note 3, at 80430–31. 7 See Notice, supra note 3, at 80431. 8 See id. 9 See proposed Rule 1.1(s)(B). 10 See id. The Exchange states that these proposed percentages are based on the ‘‘numerical guideline’’ percentages set forth in the Exchange’s Clearly Erroneous Executions rule for the Core Trading Session. See Notice, supra note 3, at 80431 and Exchange Rule 7.10(c)(1). The Exchange further states that its proposal is similar in certain respects to how BATS Exchange, Inc. prices its Halt Auctions for ETPs. See Notice, supra note 3, at 80431–32. 11 See proposed Rule 1.1(s)(B). VerDate Sep<11>2014 19:14 Feb 02, 2016 Jkt 238001 significant price deviations that would not be in line with the fair value of securities listed on the Exchange, which are all Exchange Traded Products.12 The Exchange states that, following this analysis, it will propose to make the price collar thresholds in this proposal permanent or propose other or additional changes to its re-opening auction process.13 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.14 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,15 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. As noted above, the Commission received three comment letters on the proposed rule change.16 One commenter supports the proposed rule change and states its belief that price collars are an important investor protection, which will help avoid potentially clearly erroneous trades and strengthen market participants’ confidence.17 This commenter also states its belief that the proposed rule change will help rebuild investor confidence in the efficient functioning of the marketplace in the wake of the volatility experienced in August 2015.18 Another commenter also supports the proposed rule change and states its belief that the proposed change will mitigate the recurrence of some of the pricing disruption witnessed on August 24, 2015.19 One commenter is 12 See Notice, supra note 3, at 80431. id. For a more detailed description of the proposed rule change, see Notice, supra note 3. 14 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). 15 15 U.S.C. 78f(b)(5). 16 See supra note 4. 17 See SSGA Letter. 18 See id. 19 See BATS Letter, at 1. At the same time, this commenter notes that there are additional related measures that the Commission and all of the exchanges should implement to prevent the 13 See PO 00000 Frm 00108 Fmt 4703 Sfmt 9990 broadly supportive of the proposed rule change and its proactive response toward improving market resiliency, and states that this proposed rule change is a step in the right direction.20 The Commission believes that the proposed rule change, which would widen the Exchange’s price collar thresholds for Trading Halt Auctions, is appropriate as an interim measure to protect investors and the public interest.21 As noted above, the Exchange will conduct an analysis to determine whether to make the proposed price collar thresholds permanent or to propose other or additional changes to its re-opening process.22 In addition, the Commission believes that the proposed rule change will provide transparency with respect to the Exchange’s Trading Halt Auction process and enhance investors’ understanding of the operation of price collars during Trading Halt Auctions. For these reasons, the Commission believes that the proposed rule change is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,23 that the proposed rule change (SR–NYSEArca– 2015–121) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–01930 Filed 2–2–16; 8:45 am] BILLING CODE 8011–01–P recurrence of the disruptions of August 24, 2015. See id., at 1–2. 20 See BlackRock Letter. This commenter also states that the events of August 24, 2015 have demonstrated that there is a need to enhance and revise the trading mechanisms that aim to protect the market from extraordinary volatility. See id. This commenter urges the Commission to accelerate the adoption of holistic measures to improve the resiliency of the U.S. equity market. See id. 21 As noted above, the proposed price collar thresholds would sunset six months after the operative date of this proposed rule change. See proposed Rule 1.1(s)(B). 22 See Notice, supra note 3, at 80431. 23 15 U.S.C. 78s(b)(2) 24 17 CFR 200.30–3(a)(12). E:\FR\FM\03FEN1.SGM 03FEN1

Agencies

[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5809-5810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01930]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76994; File No. SR-NYSEArca-2015-121]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change To Provide for Price Collar Thresholds for Trading 
Halt Auctions

January 28, 2016.

I. Introduction

    On December 7, 2015, NYSE Arca, Inc. (``Exchange'') 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 1.1(s) to provide for price collar thresholds for Trading Halt 
Auctions. The proposed rule change was published for comment in the 
Federal Register on December 24, 2015.\3\ The Commission received three 
comment letters on the proposed rule change.\4\ This order approves the 
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 76690 (December 18, 
2015), 80 FR 80430 (``Notice'').
    \4\ See letters from David LaValle, US Head of SPDR ETF Capital 
Markets, State Street Global Advisors, dated January 14, 2016 
(``SSGA Letter''); Joanne Medero, US Head of Government Relations & 
Public Policy, Samara Cohen, US Head of iShares Capital Markets, 
Hubert De Jesus, Co-Head of Market Structure and Electronic Trading, 
BlackRock, Inc., dated January 14, 2016 (``BlackRock Letter''); and 
Eric Swanson, General Counsel & Secretary, BATS Global Markets, 
Inc., dated January 22, 2016 (``BATS Letter'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange currently conducts Trading Halt Auctions under 
Exchange Rule 7.35(f).\5\ To respond to market

[[Page 5810]]

events on August 24, 2015, the Exchange proposes to adopt specified 
price collar thresholds for Trading Halt Auctions.\6\
---------------------------------------------------------------------------

    \5\ See Exchange Rule 7.35(f); see also Notice, supra note 3, at 
80431.
    \6\ See Notice, supra note 3, at 80431. Currently, the 
Exchange's rules do not provide for price collar thresholds for 
Trading Halt Auctions. See Exchange Rules 1.1(s) and 7.35(f); see 
also Notice, supra note 3, at 80430-31.
---------------------------------------------------------------------------

    According to the Exchange, on August 24, 2015, it applied price 
collar thresholds to Trading Halt Auctions that were 5% for securities 
with a consolidated last sale price of $25.00 or less, 2% for 
securities with a consolidated last sale price greater than $25.00 but 
less than or equal to $50.00, and 1% for securities with a consolidated 
last sale price greater than $50.00.\7\ The Exchange states its belief 
that these thresholds were too narrow, but that it is appropriate to 
have protections in place for Trading Halt Auctions to ensure that a 
re-opening trade will not deviate significantly from prior prices, even 
taking into consideration natural price movements for a security.\8\
---------------------------------------------------------------------------

    \7\ See Notice, supra note 3, at 80431.
    \8\ See id.
---------------------------------------------------------------------------

    Proposed new Rule 1.1(s)(B) would provide that, when the Trading 
Halt Auction Price is established by Rule 7.35(f)(4)(A), the Limit 
Orders eligible for determining the Indicative Match Price would be 
limited by specified price collar thresholds away from the last 
consolidated sale price before the Trading Halt Auction.\9\ As 
proposed, the specified percentage for the price collar thresholds for 
Trading Halt Auctions would be 10% for securities with a consolidated 
last sale price of $25.00 or less, 5% for securities with a 
consolidated last sale price greater than $25.00 but less than or equal 
to $50.00, and 3% for securities with a consolidated last sale price 
greater than $50.00.\10\ These proposed price collar thresholds would 
be in effect until six months after the operative date of the proposed 
rule change.\11\
---------------------------------------------------------------------------

    \9\ See proposed Rule 1.1(s)(B).
    \10\ See id. The Exchange states that these proposed percentages 
are based on the ``numerical guideline'' percentages set forth in 
the Exchange's Clearly Erroneous Executions rule for the Core 
Trading Session. See Notice, supra note 3, at 80431 and Exchange 
Rule 7.10(c)(1). The Exchange further states that its proposal is 
similar in certain respects to how BATS Exchange, Inc. prices its 
Halt Auctions for ETPs. See Notice, supra note 3, at 80431-32.
    \11\ See proposed Rule 1.1(s)(B).
---------------------------------------------------------------------------

    In the proposal, the Exchange represents that it will be conducting 
an analysis to identify what changes, if any, would be appropriate to 
balance the need to allow for natural price movement in a Trading Halt 
Auction, while at the same time avoiding significant price deviations 
that would not be in line with the fair value of securities listed on 
the Exchange, which are all Exchange Traded Products.\12\ The Exchange 
states that, following this analysis, it will propose to make the price 
collar thresholds in this proposal permanent or propose other or 
additional changes to its re-opening auction process.\13\
---------------------------------------------------------------------------

    \12\ See Notice, supra note 3, at 80431.
    \13\ See id. For a more detailed description of the proposed 
rule change, see Notice, supra note 3.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\14\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\15\ 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.
---------------------------------------------------------------------------

    \14\ 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).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted above, the Commission received three comment letters on 
the proposed rule change.\16\ One commenter supports the proposed rule 
change and states its belief that price collars are an important 
investor protection, which will help avoid potentially clearly 
erroneous trades and strengthen market participants' confidence.\17\ 
This commenter also states its belief that the proposed rule change 
will help rebuild investor confidence in the efficient functioning of 
the marketplace in the wake of the volatility experienced in August 
2015.\18\ Another commenter also supports the proposed rule change and 
states its belief that the proposed change will mitigate the recurrence 
of some of the pricing disruption witnessed on August 24, 2015.\19\ One 
commenter is broadly supportive of the proposed rule change and its 
proactive response toward improving market resiliency, and states that 
this proposed rule change is a step in the right direction.\20\
---------------------------------------------------------------------------

    \16\ See supra note 4.
    \17\ See SSGA Letter.
    \18\ See id.
    \19\ See BATS Letter, at 1. At the same time, this commenter 
notes that there are additional related measures that the Commission 
and all of the exchanges should implement to prevent the recurrence 
of the disruptions of August 24, 2015. See id., at 1-2.
    \20\ See BlackRock Letter. This commenter also states that the 
events of August 24, 2015 have demonstrated that there is a need to 
enhance and revise the trading mechanisms that aim to protect the 
market from extraordinary volatility. See id. This commenter urges 
the Commission to accelerate the adoption of holistic measures to 
improve the resiliency of the U.S. equity market. See id.
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change, which would 
widen the Exchange's price collar thresholds for Trading Halt Auctions, 
is appropriate as an interim measure to protect investors and the 
public interest.\21\ As noted above, the Exchange will conduct an 
analysis to determine whether to make the proposed price collar 
thresholds permanent or to propose other or additional changes to its 
re-opening process.\22\ In addition, the Commission believes that the 
proposed rule change will provide transparency with respect to the 
Exchange's Trading Halt Auction process and enhance investors' 
understanding of the operation of price collars during Trading Halt 
Auctions. For these reasons, the Commission believes that the proposed 
rule change is consistent with the Act.
---------------------------------------------------------------------------

    \21\ As noted above, the proposed price collar thresholds would 
sunset six months after the operative date of this proposed rule 
change. See proposed Rule 1.1(s)(B).
    \22\ See Notice, supra note 3, at 80431.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\23\ that the proposed rule change (SR-NYSEArca-2015-121) be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2)
    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01930 Filed 2-2-16; 8:45 am]
 BILLING CODE 8011-01-P
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