Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 6.67(c) by Revising the Clearing Member Requirement for Entering an Order Into the Electronic Order Capture System, 45349-45351 [2016-16480]

Download as PDF Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any aspect of competition, whether between the Exchange and its competitors, or among market participants. Instead, the proposed rule change is designed to allow the SPY Pilot Program to continue without interruption. Additionally, the Exchange expects other SROs will propose similar extensions. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. jstallworth on DSK7TPTVN1PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change 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, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b– 4(f)(6) thereunder.6 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 7 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 8 permits the Commission to designate a shorter time if such 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 Exchange believes that waiver of the operative delay is consistent with the protection of investors and the public interest because it will allow the SPY Pilot Program to continue without interruption. The Commission believes 6 17 CFR 240.19b–4(f)(6). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of 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. 7 17 CFR 240.19b–4(f)(6). 8 17 CFR 240.19b–4(f)(6)(iii). VerDate Sep<11>2014 15:08 Jul 12, 2016 Jkt 238001 that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.9 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: 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– BOX–2016–31 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–BOX–2016–31. 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 9 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 45349 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–BOX– 2016–31, and should be submitted on or before August 3, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Brent J. Fields, Secretary. [FR Doc. 2016–16488 Filed 7–12–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78239; File No. SR– NYSEArca–2016–15] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 6.67(c) by Revising the Clearing Member Requirement for Entering an Order Into the Electronic Order Capture System July 7, 2016. I. Introduction On March 22, 2016, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 Rule 6.67(c) to change the timing for recording the name of the Clearing Member 3 in the Electronic Order Capture system (‘‘EOC’’). On March 29, 2016,4 the Exchange filed 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Rule 6.1(b)(3) defines ‘‘Clearing Member’’ as an Exchange OTP which has been admitted to membership in the Options Clearing Corporation pursuant to the provisions of the Rules of the Options Clearing Corporation. 4 The Commission notes that the amendment date of March 30, 2016 in the SR–NYSEArca–2016–15 1 15 E:\FR\FM\13JYN1.SGM Continued 13JYN1 45350 Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices Amendment No. 1 to the proposed rule change. The Commission published the proposed rule change, as modified by Amendment No. 1, for comment in the Federal Register on April 11, 2016.5 The Commission received no comments on the proposed rule change. On May 25, 2016 the Commission extended the time period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change to July 10, 2016.6 The Commission did not receive any comments on the proposed rule change. This order institutes proceedings under section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1 thereto. jstallworth on DSK7TPTVN1PROD with NOTICES II. Description of the Proposal, as Modified by Amendment No. 1 The Exchange proposes to amend Rule 6.67(c) by revising the timing for an OTP holder to record the name of the Clearing Member in the EOC.8 In 2000, the Commission issued an order, which required the Exchange, in coordination with other exchanges, to ‘‘design and implement a consolidated options audit trail system (‘COATS’),’’ that would ‘‘enable the options exchanges to reconstruct markets promptly, effectively surveil them and enforce order handling, firm quote, trade reporting and other rules.’’ 9 The Commission Order requires the Exchange to incorporate into the audit trail all non-electronic orders ‘‘such that the audit trail provides an accurate, time-sequenced record of electronic and other orders, quotations and transactions on such respondent exchange, beginning with the receipt of an order by such respondent exchange and further documenting the life of the order through the process of execution, Notice is incorrect and the proper date is March 29, 2016. 5 See Securities Exchange Act Release No. 34– 77516 (April 5, 2016), 81 FR 21430 (‘‘Notice’’). Amendment No.1 was included in the Notice and provided the clarification that the CMTA Information and the name of the clearing OTP Holder would be entered into the EOC ‘‘as the events occur and/or during trade reporting procedures which may occur after the representation and execution of the order.’’ 6 See Securities Exchange Act Release No. 34– 77909 (May 25, 2016), 81 FR 35079 (June 1, 2016). 7 15 U.S.C. 78s(b)(2)(B). 8 See Notice, supra note 5, 81 FR at 21431. 9 See Section IV.B.e.(v) of the Commission’s Order Instituting Public Administrative Proceedings Pursuant to sections 19(h)(1) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (‘‘Commission Order’’), Securities Exchange Act Release No. 43268 (September 11, 2000) and Administrative Proceeding File No. 3–10282. VerDate Sep<11>2014 15:08 Jul 12, 2016 Jkt 238001 partial execution, or cancellation of that order, which audit trail shall be readily retrievable in the common computer format.’’ 10 To comply with the Commission Order, the Exchange developed the EOC system for OTP holders.11 The EOC is the Exchange’s floor-based electronic audit trail and order tracking system that provides an accurate timesequenced record of all orders and transactions represented on the Exchange’s trading floor.12 Rule 6.67(c) sets forth the EOC entry requirements and requires every OTP holder that receives an order for execution on the Exchange to ‘‘immediately, prior to representation in the trading crowd, record the details of the order (including any modification of the terms of the order or cancellation of the order) into the EOC, unless such order has been entered into the Exchange’s other electronic order processing facilities.’’ 13 The pre-trade EOC requirements under current Rule 6.67(c)(1) include ‘‘the name of the clearing OTP Holder.’’ 14 Rule 6.67(c)(1) further states that ‘‘[t]he remaining elements prescribed in Rule 6.68(a) and any additional information with respect to the order shall be recorded as the events occur and/or during trade reporting procedures which may occur after the representation and execution of the order.’’ 15 The Exchange proposes to amend Rule 6.67(c)(1) to allow an OTP Holder to record the name of the Clearing Member in the EOC ‘‘as the events occur and/or during trade reporting procedures’’ rather than prior to representation of the order in the trading crowd.16 The Exchange states that because the identity of the firm through which each trade will clear is not always initially provided when an order is presented, Floor Brokers waiting to receive this information and enter it into the EOC are delayed in representing and executing an order.17 The Exchange represents that the id. Notice, supra note 5, 81 FR at 21431. 12 See id.; see also Rule 6.67(c). 13 See Rule 6.67(c). 14 See Rule 6.67(c)(1)(vii). 15 See Rule 6.67(c)(1); see also Rule 6.68(a) (Record of Orders) (requiring that OTP Holders and OTP Firms maintain a record of each order that includes that the following data elements: (1) CMTA Information and the name of the clearing OTP Holder or Firm; (2) options symbol, expiration month, exercise price and type of options; (3) side of the market and order type; (4) quantity of options; (5) limit or stop price or special conditions; (6) opening or closing transaction; (7) time in force; (8) account origin code; and (9) whether the order was solicited or unsolicited). 16 See Notice, supra note 5, 81 FR at 21431. 17 See id. PO 00000 10 See 11 See Frm 00077 Fmt 4703 Sfmt 4703 proposal would amend only the timing for the recording of the Clearing Member in the EOC while still maintaining the requirement to record the Clearing Member in the EOC for audit trail purposes.18 According to the Exchange, Floor Brokers would continue to be required to maintain proper order records, as part of each trade record, including the identity of the clearing OTP Holder, and would continue to be required to give up the responsible Clearing Member on each trade as part of each trade record.19 III. Proceedings To Determine Whether To Approve or Disapprove SR– NYSEArca–2016–15 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to section 19(b)(2)(B) of the Act 20 to determine whether the proposed rule change should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change, as discussed below. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described in greater detail below, the Commission seeks and encourages interested persons to provide additional comment on the proposed rule change. Pursuant to section 19(b)(2)(B) of the Act, the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings because the proposal raises important issues that warrant further public comment and Commission consideration. Specifically, the Commission is instituting proceedings to allow for additional analysis of, and input from commenters with respect to, the proposed rule change’s consistency with section 6(b)(5) of the Act,21 which requires that the rules of a national securities exchange be designed, among other things, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and 18 See id. id. at 21431–32; see also Rule 6.68(a). 20 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also provides that proceedings to determine whether to disapprove a proposed rule change must be concluded within 180 days of the date of publication of notice of the filing of the proposed rule change. See id. The time for conclusion of the proceedings may be extended for up to 60 days if the Commission finds good cause for such extension and publishes its reasons for so finding. See id. 21 15 U.S.C. 78f(b)(5). 19 See E:\FR\FM\13JYN1.SGM 13JYN1 jstallworth on DSK7TPTVN1PROD with NOTICES Federal Register / Vol. 81, No. 134 / Wednesday, July 13, 2016 / Notices open market and a national market system and, in general, to protect investors and the public interest. Under the Exchange’s current rules, a floor broker must record the name of the Clearing Member in the EOC prior to representing an order on the floor. As discussed above,22 the Exchange developed the EOC and created the pretrade Clearing Member requirement in response to the Commission Order. The Exchange justifies the proposed elimination of the pre-trade clearing requirement by stating that ‘‘Floor Brokers have told the Exchange that the identity of the firm through which each trade will clear is not always initially provided when an order is presented and that waiting to receive this information and enter it into EOC can delay the representation and execution of an order. In today’s trading environment of rapidly moving markets and the need to execute an order and hedge a trade in real or near real time, even a slight delay can prove to be detrimental to the handling of an order.’’ 23 The Exchange further states that the ‘‘proposed change to eliminate the Give Up Requirement prior to execution of each trade would not impair the Exchange’s ability to comply with the [Commission] Order. Specifically, the EOC would still provide an accurate, time-sequenced record beginning with the receipt of an order and document the life of the order through the process of execution, partial execution, or cancellation. Entry of information pursuant to the Give Up Requirement would occur after the order had been represented and executed in the Trading Crowd. Thus, only the timing of the disclosure of such information would be affected by this proposal.’’ 24 The Exchange, however, does not explain why the identity of the Clearing Member may not be provided when an order is presented to a Floor Broker, how frequently this occurs, or why it is burdensome to identify the Clearing Member in advance. As a result, the Exchange does not appear to offer a credible justification for proposing to incur the risk of delaying the recording of this important information into the EOC. The Commission accordingly believes the proposal, as modified by Amendment No. 1, raises questions as to whether it consistent with the requirements of section 6(b)(5) of the Act, including whether the proposal is designed to prevent fraudulent and manipulative acts and practices, to 22 See supra note 9. 23 See Notice, supra note 5, 81 FR at 21431. 24 See id. VerDate Sep<11>2014 15:08 Jul 12, 2016 Jkt 238001 promote just and equitable principles of trade, 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. IV. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data and arguments with respect to the concerns identified above, as well as any other concerns they may have with the proposed rule change. In particular, the Commission invites the written views of interested persons concerning whether the proposal, as modified by Amendment No. 1, is consistent with sections 6(b)(5) 25 or any other provision of the Act, or the rules and regulations thereunder. Although there does not appear to be any issue relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4 under the Act,26 any request for an opportunity to make an oral presentation.27 Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by August 3, 2016. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by August 17, 2016. In light of the concerns raised by the proposed rule change, as discussed above, the Commission invites additional comment on the proposed rule change as the Commission continues its analysis of the proposed rule change’s consistency with sections 6(b)(5) and 6(b)(8),28 or any other provision of the Act, or the rules and regulations thereunder. The Commission asks that commenters address the sufficiency and merit of the Exchange’s statements in support of the proposed rule change, in addition to any other comments they may wish to submit about the proposed rule change. Comments may be submitted by any of the following methods: U.S.C. 78f(b)(5). CFR 240.19b–4. 27 Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants to the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 28 15 U.S.C. 78f(b)(5), (b)(8). PO 00000 25 15 26 17 Frm 00078 Fmt 4703 Sfmt 9990 45351 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 No. SR– NYSEArca–2016–15 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–NYSEArca-2016–15. 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 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 No. SR–NYSEArca– 2016–15, and should be submitted by August 3, 2016. Rebuttal comments should be submitted by August 17, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Brent J. Fields, Secretary. [FR Doc. 2016–16480 Filed 7–12–16; 8:45 am] BILLING CODE 8011–01–P 29 17 E:\FR\FM\13JYN1.SGM CFR 200.30–3(a)(57). 13JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Notices]
[Pages 45349-45351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16480]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78239; File No. SR-NYSEArca-2016-15]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change, as Modified by Amendment No. 1, To Amend Rule 6.67(c) by
Revising the Clearing Member Requirement for Entering an Order Into the
Electronic Order Capture System

July 7, 2016.

I. Introduction

On March 22, 2016, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') 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 Rule 6.67(c) to change the timing for
recording the name of the Clearing Member \3\ in the Electronic Order
Capture system (``EOC''). On March 29, 2016,\4\ the Exchange filed

[[Page 45350]]

Amendment No. 1 to the proposed rule change. The Commission published
the proposed rule change, as modified by Amendment No. 1, for comment
in the Federal Register on April 11, 2016.\5\ The Commission received
no comments on the proposed rule change. On May 25, 2016 the Commission
extended the time period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to approve or disapprove the proposed rule change
to July 10, 2016.\6\ The Commission did not receive any comments on the
proposed rule change. This order institutes proceedings under section
19(b)(2)(B) of the Act \7\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1
thereto.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Rule 6.1(b)(3) defines ``Clearing Member'' as an Exchange
OTP which has been admitted to membership in the Options Clearing
Corporation pursuant to the provisions of the Rules of the Options
Clearing Corporation.
\4\ The Commission notes that the amendment date of March 30,
2016 in the SR-NYSEArca-2016-15 Notice is incorrect and the proper
date is March 29, 2016.
\5\ See Securities Exchange Act Release No. 34-77516 (April 5,
2016), 81 FR 21430 (``Notice''). Amendment No.1 was included in the
Notice and provided the clarification that the CMTA Information and
the name of the clearing OTP Holder would be entered into the EOC
``as the events occur and/or during trade reporting procedures which
may occur after the representation and execution of the order.''
\6\ See Securities Exchange Act Release No. 34-77909 (May 25,
2016), 81 FR 35079 (June 1, 2016).
\7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

II. Description of the Proposal, as Modified by Amendment No. 1

The Exchange proposes to amend Rule 6.67(c) by revising the timing
for an OTP holder to record the name of the Clearing Member in the
EOC.\8\ In 2000, the Commission issued an order, which required the
Exchange, in coordination with other exchanges, to ``design and
implement a consolidated options audit trail system (`COATS'),'' that
would ``enable the options exchanges to reconstruct markets promptly,
effectively surveil them and enforce order handling, firm quote, trade
reporting and other rules.'' \9\ The Commission Order requires the
Exchange to incorporate into the audit trail all non-electronic orders
``such that the audit trail provides an accurate, time-sequenced record
of electronic and other orders, quotations and transactions on such
respondent exchange, beginning with the receipt of an order by such
respondent exchange and further documenting the life of the order
through the process of execution, partial execution, or cancellation of
that order, which audit trail shall be readily retrievable in the
common computer format.'' \10\ To comply with the Commission Order, the
Exchange developed the EOC system for OTP holders.\11\
---------------------------------------------------------------------------

\8\ See Notice, supra note 5, 81 FR at 21431.
\9\ See Section IV.B.e.(v) of the Commission's Order Instituting
Public Administrative Proceedings Pursuant to sections 19(h)(1) of
the Securities Exchange Act of 1934, Making Findings and Imposing
Remedial Sanctions (``Commission Order''), Securities Exchange Act
Release No. 43268 (September 11, 2000) and Administrative Proceeding
File No. 3-10282.
\10\ See id.
\11\ See Notice, supra note 5, 81 FR at 21431.
---------------------------------------------------------------------------

The EOC is the Exchange's floor-based electronic audit trail and
order tracking system that provides an accurate time-sequenced record
of all orders and transactions represented on the Exchange's trading
floor.\12\ Rule 6.67(c) sets forth the EOC entry requirements and
requires every OTP holder that receives an order for execution on the
Exchange to ``immediately, prior to representation in the trading
crowd, record the details of the order (including any modification of
the terms of the order or cancellation of the order) into the EOC,
unless such order has been entered into the Exchange's other electronic
order processing facilities.'' \13\ The pre-trade EOC requirements
under current Rule 6.67(c)(1) include ``the name of the clearing OTP
Holder.'' \14\ Rule 6.67(c)(1) further states that ``[t]he remaining
elements prescribed in Rule 6.68(a) and any additional information with
respect to the order shall be recorded as the events occur and/or
during trade reporting procedures which may occur after the
representation and execution of the order.'' \15\
---------------------------------------------------------------------------

\12\ See id.; see also Rule 6.67(c).
\13\ See Rule 6.67(c).
\14\ See Rule 6.67(c)(1)(vii).
\15\ See Rule 6.67(c)(1); see also Rule 6.68(a) (Record of
Orders) (requiring that OTP Holders and OTP Firms maintain a record
of each order that includes that the following data elements: (1)
CMTA Information and the name of the clearing OTP Holder or Firm;
(2) options symbol, expiration month, exercise price and type of
options; (3) side of the market and order type; (4) quantity of
options; (5) limit or stop price or special conditions; (6) opening
or closing transaction; (7) time in force; (8) account origin code;
and (9) whether the order was solicited or unsolicited).
---------------------------------------------------------------------------

The Exchange proposes to amend Rule 6.67(c)(1) to allow an OTP
Holder to record the name of the Clearing Member in the EOC ``as the
events occur and/or during trade reporting procedures'' rather than
prior to representation of the order in the trading crowd.\16\ The
Exchange states that because the identity of the firm through which
each trade will clear is not always initially provided when an order is
presented, Floor Brokers waiting to receive this information and enter
it into the EOC are delayed in representing and executing an order.\17\
The Exchange represents that the proposal would amend only the timing
for the recording of the Clearing Member in the EOC while still
maintaining the requirement to record the Clearing Member in the EOC
for audit trail purposes.\18\ According to the Exchange, Floor Brokers
would continue to be required to maintain proper order records, as part
of each trade record, including the identity of the clearing OTP
Holder, and would continue to be required to give up the responsible
Clearing Member on each trade as part of each trade record.\19\
---------------------------------------------------------------------------

\16\ See Notice, supra note 5, 81 FR at 21431.
\17\ See id.
\18\ See id.
\19\ See id. at 21431-32; see also Rule 6.68(a).
---------------------------------------------------------------------------

III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2016-15 and Grounds for Disapproval Under Consideration

The Commission is instituting proceedings pursuant to section
19(b)(2)(B) of the Act \20\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change, as discussed below.
Institution of proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
Rather, as described in greater detail below, the Commission seeks and
encourages interested persons to provide additional comment on the
proposed rule change.
---------------------------------------------------------------------------

\20\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also
provides that proceedings to determine whether to disapprove a
proposed rule change must be concluded within 180 days of the date
of publication of notice of the filing of the proposed rule change.
See id. The time for conclusion of the proceedings may be extended
for up to 60 days if the Commission finds good cause for such
extension and publishes its reasons for so finding. See id.
---------------------------------------------------------------------------

Pursuant to section 19(b)(2)(B) of the Act, the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings because the proposal raises
important issues that warrant further public comment and Commission
consideration. Specifically, the Commission is instituting proceedings
to allow for additional analysis of, and input from commenters with
respect to, the proposed rule change's consistency with section 6(b)(5)
of the Act,\21\ which requires that the rules of a national securities
exchange be designed, among other things, to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and

[[Page 45351]]

open market and a national market system and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------

\21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Under the Exchange's current rules, a floor broker must record the
name of the Clearing Member in the EOC prior to representing an order
on the floor. As discussed above,\22\ the Exchange developed the EOC
and created the pre-trade Clearing Member requirement in response to
the Commission Order. The Exchange justifies the proposed elimination
of the pre-trade clearing requirement by stating that ``Floor Brokers
have told the Exchange that the identity of the firm through which each
trade will clear is not always initially provided when an order is
presented and that waiting to receive this information and enter it
into EOC can delay the representation and execution of an order. In
today's trading environment of rapidly moving markets and the need to
execute an order and hedge a trade in real or near real time, even a
slight delay can prove to be detrimental to the handling of an order.''
\23\ The Exchange further states that the ``proposed change to
eliminate the Give Up Requirement prior to execution of each trade
would not impair the Exchange's ability to comply with the [Commission]
Order. Specifically, the EOC would still provide an accurate, time-
sequenced record beginning with the receipt of an order and document
the life of the order through the process of execution, partial
execution, or cancellation. Entry of information pursuant to the Give
Up Requirement would occur after the order had been represented and
executed in the Trading Crowd. Thus, only the timing of the disclosure
of such information would be affected by this proposal.'' \24\
---------------------------------------------------------------------------

\22\ See supra note 9.
\23\ See Notice, supra note 5, 81 FR at 21431.
\24\ See id.
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The Exchange, however, does not explain why the identity of the
Clearing Member may not be provided when an order is presented to a
Floor Broker, how frequently this occurs, or why it is burdensome to
identify the Clearing Member in advance. As a result, the Exchange does
not appear to offer a credible justification for proposing to incur the
risk of delaying the recording of this important information into the
EOC. The Commission accordingly believes the proposal, as modified by
Amendment No. 1, raises questions as to whether it consistent with the
requirements of section 6(b)(5) of the Act, including whether the
proposal is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, 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.

IV. Procedure: Request for Written Comments

The Commission requests that interested persons provide written
submissions of their views, data and arguments with respect to the
concerns identified above, as well as any other concerns they may have
with the proposed rule change. In particular, the Commission invites
the written views of interested persons concerning whether the
proposal, as modified by Amendment No. 1, is consistent with sections
6(b)(5) \25\ or any other provision of the Act, or the rules and
regulations thereunder. Although there does not appear to be any issue
relevant to approval or disapproval which would be facilitated by an
oral presentation of views, data, and arguments, the Commission will
consider, pursuant to Rule 19b-4 under the Act,\26\ any request for an
opportunity to make an oral presentation.\27\ Interested persons are
invited to submit written data, views, and arguments regarding whether
the proposal should be approved or disapproved by August 3, 2016. Any
person who wishes to file a rebuttal to any other person's submission
must file that rebuttal by August 17, 2016. In light of the concerns
raised by the proposed rule change, as discussed above, the Commission
invites additional comment on the proposed rule change as the
Commission continues its analysis of the proposed rule change's
consistency with sections 6(b)(5) and 6(b)(8),\28\ or any other
provision of the Act, or the rules and regulations thereunder. The
Commission asks that commenters address the sufficiency and merit of
the Exchange's statements in support of the proposed rule change, in
addition to any other comments they may wish to submit about the
proposed rule change.
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\25\ 15 U.S.C. 78f(b)(5).
\26\ 17 CFR 240.19b-4.
\27\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants to
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by a self-
regulatory organization. See Securities Act Amendments of 1975,
Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75,
94th Cong., 1st Sess. 30 (1975).
\28\ 15 U.S.C. 78f(b)(5), (b)(8).
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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 No. SR-NYSEArca-2016-15 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-NYSEArca-2016-15. 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 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 No. SR-NYSEArca-2016-15, and should be
submitted by August 3, 2016. Rebuttal comments should be submitted by
August 17, 2016.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(57).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-16480 Filed 7-12-16; 8:45 am]
BILLING CODE 8011-01-P

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