Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13 To Eliminate Orders With a Sell “Plus” and Buy “Minus” Instruction and Retain Orders With a “Buy Minus Zero Plus” Instruction, and Make Conforming Changes to Rules 104, 107B, 123C and 1004, 60080-60083 [2016-20892]

Download as PDF 60080 Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices 2016–28, and should be submitted on or before September 21, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–20894 Filed 8–30–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78679; File No. SR–NYSE– 2016–59] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13 To Eliminate Orders With a Sell ‘‘Plus’’ and Buy ‘‘Minus’’ Instruction and Retain Orders With a ‘‘Buy Minus Zero Plus’’ Instruction, and Make Conforming Changes to Rules 104, 107B, 123C and 1004 August 25, 2016. 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 August 19, 2016, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) 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. mstockstill on DSK3G9T082PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to (1) amend Rule 13 to eliminate orders with a sell ‘‘plus’’ and buy ‘‘minus’’ instruction and retain orders with a ‘‘Buy Minus Zero Plus’’ instruction, and (2) make conforming changes to Rules 104, 107B, 123C and 1004. 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. CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 21:59 Aug 30, 2016 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 13 to eliminate orders with a sell ‘‘plus’’ and buy ‘‘minus’’ instruction and retain orders with a ‘‘Buy Minus Zero Plus’’ instruction, and make conforming changes to Rules 104, 107B, 123C and 1004. The Exchange proposes to eliminate orders with a sell ‘‘plus’’ and buy ‘‘minus’’ instruction for all securities both to streamline its rules and reduce complexity among its order type offerings.4 Because of the technology changes associated with the proposed rule change, the Exchange proposes to announce the implementation date of the elimination of the order types via Trader Update. Elimination of Sell ‘‘Plus’’ and Buy ‘‘Minus’’ Order Instructions (Rule 13) The Exchange proposes to eliminate, and thus delete from its rules, sell ‘‘plus’’ and buy ‘‘minus’’ order instructions, as defined in Rule 13(f)(4)(A) and (B), respectively. Rule 13(f)(4)(B) would also be amended to retain a ‘‘Buy Minus Zero Plus’’ instruction. First, the Exchange proposes to eliminate the sell ‘‘plus’’ order instruction. An order with a sell ‘‘plus’’ instruction is an order that will not trade at a price that is lower than the last sale if the last sale was a ‘‘plus’’ or ‘‘zero plus’’ tick or that is lower than the last sale plus the minimum fractional change in the stock if the last sale was a ‘‘minus’’ or ‘‘zero minus’’ tick, subject 4 See, e.g., Mary Jo White, Chair, Securities and Exchange Commission, Speech at the Sandler O’Neill & Partners, L.P. Global Exchange and Brokerage Conference (June 5, 2014) (available at www.sec.gov/News/Speech/Detail/Speech/ 1370542004312#.U5HI-fmwJiw). 21 17 VerDate Sep<11>2014 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Jkt 238001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 to the limit price of an order, if applicable.5 To reflect elimination of the sell ‘‘plus’’ order instruction, the Exchange proposes to delete subsection (f)(4)(A) of Rule 13, which defines the sell ‘‘plus’’ instruction, in its entirety. Subsection (4)(B) of Rule 13(f), amended as described below, would become new subsection (4)(A). Second, the Exchange proposes to eliminate the buy ‘‘minus’’ order instruction defined in Rule 13(f)(4)(B) and retain the ‘‘Buy Minus Zero Plus’’ order. An order with a buy ‘‘minus’’ instruction will not trade at a price that is higher than the last sale if the last sale was a ‘‘minus’’ or ‘‘zero minus’’ tick or that is higher than the last sale minus the minimum fractional change in the stock if the last sale was a ‘‘plus’’ or ‘‘zero plus’’ tick, subject to the limit price of an order, if applicable.6 Exchange rules would continue to permit an order with a ‘‘Buy Minus Zero Plus’’ instruction, which is currently a sub-set of the instructions available under Rule 13(f)(4)(B). A Buy Minus Zero Plus order instruction assists member organizations with compliance with the ‘‘safe harbor’’ provisions of Rule 10b–18 under the Act (‘‘Rule 10b– 18’’) for issuer repurchases.7 One of the four provisions required to meet the safe harbor provision is if the purchase price of a security does not exceed the highest independent bid or the last independent transaction price.8 Because an order with a Buy Minus Zero Plus instruction will not trade at a price that is higher than the last sale, member organizations can use this instruction to facilitate their compliance with at least one of the conditions of the safe harbor provision of Rule 10b–18.9 To reflect elimination of the buy ‘‘minus’’ order instruction and retention of the ‘‘Buy Minus Zero Plus’’ instruction, the Exchange proposes to add ‘‘Zero Plus’’ after ‘‘buy minus’’ in the first sentence of proposed new Rule 13(f)(4)(A), capitalize ‘‘buy minus,’’ and delete the phrase ‘‘if the last sale was a ‘minus’ or ‘zero minus’ tick or that is higher than the last sale minus the minimum fractional change in the stock 5 See Rule 13(f)(4)(A). Rule 13(f)(4)(B). 7 See 17 CFR 240.10b–18. 8 See 17 CFR 240.10b–18(b)(3). The other three conditions relate to time of purchases, volume of purchases, and a requirement that only one broker or dealer be involved in such repurchases on a single day. 9 The Exchange does not represent that an order with a Buy Minus Zero Plus instruction is guaranteed to meet the requirements of the safe harbor provision of Rule 10b–18; rather, this instruction is available to member organizations to facilitate their own compliance with Rule 10b–18. 6 See E:\FR\FM\31AUN1.SGM 31AUN1 Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices if the last sale was a ‘‘plus’’ or ‘‘zero plus’’ tick’’ following ‘‘will not trade at a price that is higher than the last sale.’’ As proposed, an order with an instruction to ‘‘Buy Minus Zero Plus’’ would not trade at a price that is higher than the last sale, subject to the limit price of the order, if applicable. The remaining subsections of Rule 13(f)(4) would be amended to reflect these proposed changes, as follows. Current subsection (C) provides that sell ‘‘plus’’ and buy ‘‘minus’’ instructions are available for Limit Orders, Limit-on-Open (‘‘LOO’’) Orders, Limit-on-Close (‘‘LOC’’) Orders, and Market-on-Close (‘‘MOC’’) Orders. Further, the current rule provides that orders with a buy ‘‘minus’’ instruction that are systemically delivered to Exchange systems will be eligible to be automatically executed in accordance with, and to the extent provided by, Rules 1000–1004, consistent with the order’s instructions. Current subsection (C) would become subsection (B) and would be amended to reflect that the ‘‘Buy Minus Zero Plus’’ order instruction would only be available for limit orders. The Exchange would accordingly amend the first sentence of current subsection (C) to: • Delete ‘‘sell ‘plus’ and’’; • add ‘‘Zero Plus’’ after ‘‘buy minus’’ and capitalize ‘‘buy minus’’; • delete ‘‘LOO Orders, LOC Orders, and MOC Orders’’; and • add the word ‘‘only’’ after ‘‘Limit Orders’’. The second sentence of proposed new subsection (B) would be amended to: • Add ‘‘Zero Plus’’ after ‘‘buy minus’’ and capitalize ‘‘buy minus’’; and • delete the clause ‘‘or sell ‘plus’ ’’. Finally, current subsection (D), which provides that odd-lot sized transactions shall not be considered the last sale for purposes of executing sell ‘‘plus’’ or ‘‘buy’’ minus orders would become new subsection (C) of Rule 13(f)(4). Proposed new subsection (C) would be amended to: Delete the clause ‘‘sell ‘plus’ or’’ before ‘‘buy minus’’; and capitalize ‘‘buy minus’’; and • add ‘‘Zero Plus’’ after ‘‘buy minus’’. mstockstill on DSK3G9T082PROD with NOTICES Conforming Amendments The Exchange proposes certain conforming amendments to Rules 104, 107B, 123C and 1004 to reflect the elimination of sell ‘‘plus’’ and buy ‘‘minus’’ instruction as described above as follows. Rule 104 The Exchange proposes to amend Rule 104 (Dealings and Responsibilities of Designated Market Makers VerDate Sep<11>2014 21:59 Aug 30, 2016 Jkt 238001 (‘‘DMMs’’)). Specifically, Rule 104(b)(vi) provides that DMM units may not enter certain orders and modifiers including, among others, orders with Sell ‘‘Plus’’— Buy ‘‘Minus’’ Instructions. To conform Rule 104, the Exchange proposes to delete ‘‘Sell ‘Plus’—’’ and the quotes around the word ‘‘Minus’’ from Rule 104(b)(vi) and add the phrase ‘‘Zero Plus’’ after ‘‘Minus’’ and before ‘‘Instructions.’’ As proposed, Rule 104(b)(vi) would provide that DMM units may not enter orders with Buy Minus Zero Plus Instructions. Rule 107B The Exchange proposes to amend Rule 107B (Supplemental Liquidity Providers), which sets forth the rules governing Supplemental Liquidity Providers (‘‘SLPs’’). An SLP is an Exchange member organization that electronically enters proprietary orders or quotes from off the Floor into the systems and facilities of the Exchange and is obligated, among other things, to maintain a bid or an offer at the NBB or NBO in each assigned security in round lots for at least 10% of the trading day, on average, and for all assigned SLP securities.10 Rules 107B(g) sets forth how the Exchange calculates whether an SLP is meeting its 10% quoting requirement. Subsection (D)(iii) of Rule 107B(g) provides that tick sensitive orders such as ‘‘ ‘Sell Plus’, ‘Buy Minus’ (see Rule 13) and ‘Buy Minus Zero Plus’ ’’ will not be counted as credit towards the 10% quoting requirement. To conform Rule 107B, the Exchange proposes to delete the phrase ‘‘Tick sensitive orders (i.e., ‘‘Sell Plus’’ and ‘‘Buy Minus’’ orders (see Rule 13) and’’ in subsection (D)(iii), add the word ‘‘orders’’ following ‘‘Buy Minus Zero Plus,’’ and delete a parenthesis and quotation marks. As amended, Rule 107B(D)(iii) would provide that Buy Minus Zero Plus orders will not be counted as credit towards the 10% quoting requirement. Rule 123C The Exchange proposes to amend Rule 123C (The Closing Procedures), which specifies the procedures to be followed at the close of trading on the Exchange. Rule 123C(4)(a) describes how the Exchange calculates MOC and LOC imbalances, which is intended to provide market participants with a snapshot of the prices at which interest eligible to participate in the closing transaction would be executed in full against each other at the time the data feed is disseminated. Subsection (vi) of 10 See PO 00000 Rule 107B(a). Frm 00106 Fmt 4703 Sfmt 4703 60081 Rule 123C(4)(a) provides that tick sensitive MOC and LOC interest and LOC orders priced equal to the last sale can reduce the Buy or Sell Imbalance to bring the imbalance quantity as close to zero as possible. The Rule also provides that the volume of tick sensitive MOC and LOC orders eligible to reduce the imbalance shall not cause the imbalance to change to the other side. Rule 123C(4)(a)(vi)(A) specifies that, in the event of a Buy Imbalance, only Sell Plus MOC orders, Sell Plus LOC orders priced equal to or below the last sale price, and Sell and Sell Short LOC orders priced equal to the last sale will be included to offset the imbalance, and that Sell Plus MOC and Sell Plus LOC orders will be included to offset the imbalance only if such orders could be executed consistent with the terms of their tick restrictions. Rule 123C(4)(a)(vi)(B) specifies that, in the event of a Sell Imbalance, only Buy Minus MOC orders, Buy Minus LOC orders priced equal to or above the last sale price, and Buy LOC orders priced equal to the last sale will be included to offset the imbalance. The Rule also provides that Buy Minus MOC and Buy Minus LOC orders will be included to offset the imbalance only if such orders could be executed consistent with the terms of their tick restrictions. To reflect the elimination of orders with a sell ‘‘plus’’ instruction and buy ‘‘minus’’ instructions, i.e., tick-sensitive orders, and the fact that as proposed, Buy Minus Zero Plus orders would not be available for MOC or LOC Orders, the Exchange proposes to amend Rule 123C as follows: • Amend Rule 123C(4)(a)(vi) to delete the phrase ‘‘tick sensitive MOC orders and LOC orders and’’ before ‘‘LOC orders priced equal to the last sale to bring the imbalance quantity as close to zero as possible.’’ The Exchange also proposes to delete the last sentence in Rule 123C(4)(a)(vi), which provides that ‘‘[t]he volume of tick sensitive MOC and LOC orders eligible to reduce the imbalance shall not cause the imbalance to change to the other side.’’ • Amend Rule 123C(4)(a)(vi) (A) to remove references to Sell Plus MOC orders and Sell Plus LOC orders priced equal to or below the last sale price. The Exchange also proposes to delete the last sentence of the subsection (A), which provides that ‘‘Sell Plus MOC and Sell Plus LOC orders will be included to offset the imbalance only if such orders could be executed consistent with the terms of their tick restrictions.’’ • Amend Rule 123C(4)(a)(vi)(B) to remove references to Buy Minus MOC E:\FR\FM\31AUN1.SGM 31AUN1 60082 Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices orders and Buy Minus LOC orders priced equal to or above the last sale price. The Exchange also proposes to delete the last sentence of the subsection (B), which provides that ‘‘Buy Minus MOC and Buy Minus LOC orders will be included to offset the imbalance only if such orders could be executed consistent with the terms of their tick restrictions.’’ mstockstill on DSK3G9T082PROD with NOTICES Rule 1004 Finally, the Exchange proposes to amend Rule 1004 (Election of Buy Minus, Sell Plus and Stop Orders), which provides that automatic executions of transactions reported to the Consolidated Tape shall elect, among others, buy minus and sell plus orders electable at the price of such executions. The Rule further provides that any buy minus and sell plus orders so elected shall be automatically executed as market orders pursuant to Exchange rules. To reflect the elimination of orders with a Sell ‘‘Plus’’ and Buy ‘‘Minus’’ instruction and retention of ‘‘Buy Minus Zero Plus’’ orders, the Exchange proposes to add ‘‘Zero Plus’’ after ‘‘buy minus’’ in Rule 1004, capitalize ‘‘buy minus,’’ and delete the phrase ‘‘and sell plus’’ in two places. The Exchange also proposes to capitalize ‘‘market orders.’’ As amended, Rule 1004 would allow for the automatic execution of Buy Minus Zero Plus orders electable at the price of such executions. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) 11 of the Act, in general, and furthers the objectives of Section 6(b)(5),12 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. Specifically, the Exchange believes that eliminating orders with a sell ‘‘plus’’ and buy ‘‘minus’’ instruction removes impediments to and perfects a national market system by simplifying functionality and complexity of its order types. The Exchange believes that eliminating these order types across all securities would not be inconsistent with the public interest and the protection of investors because investors will not be harmed and in fact would 11 15 12 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 21:59 Aug 30, 2016 Jkt 238001 benefit from the removal of complex functionality. The Exchange further believes that deleting corresponding references in Exchange rules to deleted order types also removes impediments to and perfects the mechanism of a free and open market by ensuring that members, regulators and the public can more easily navigate the Exchange’s rulebook and better understand the orders types available for trading on the Exchange. Removing obsolete cross references also furthers the goal of transparency and adds clarity to the Exchange’s rules. 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 change is not designed to address any competitive issue but would rather remove complex functionality and obsolete crossreferences, thereby reducing confusion and making the Exchange’s rules easier to understand and navigate. 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 The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 13 and Rule 19b–4(f)(6) thereunder.14 Because the 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 prior to 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. 15 13 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 15 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. 14 17 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 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 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– NYSE–2016–59 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2016–59. 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 the 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 E:\FR\FM\31AUN1.SGM 31AUN1 Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE– 2016–59 and should be submitted on or before September 21, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–20892 Filed 8–30–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78676; File No. SR–NSX– 2016–07] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules Regarding Qualification, Registration and Continuing Education for Persons Associated With Equity Trading Permit Holders, To Add Definitions, Amend Definitions, and To Make Technical, Non-Substantive and Conforming Amendments to Rules August 25, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 24, 2016, National Stock Exchange, Inc. (‘‘NSX’’ or the ‘‘Exchange’’) 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 Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change mstockstill on DSK3G9T082PROD with NOTICES The Exchange is proposing amendments to its rules regarding qualification, registration and continuing education requirements applicable to Equity Trading Permit (‘‘ETP’’) Holders 3 and Persons 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Exchange Rule 1.5E.(1) defines the term ‘‘ETP,’’ in relevant part, as ‘‘. . . an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange’s trading facilities. . . .’’ 1 15 VerDate Sep<11>2014 21:59 Aug 30, 2016 Jkt 238001 Associated with ETP Holders.4 The Exchange’s rule proposal is intended to align its rules with those of other selfregulatory organizations (‘‘SROs’’) and thus promote consistency within the securities industry. The Exchange is also proposing to amend NSX Rule 1.5, Definitions, and make technical or conforming changes to certain other NSX rules. The Exchange has designated this rule proposal as a ‘‘non-controversial’’ rule change pursuant to Section 19(b)(3)(A) of the Act 5 and provided the Commission with the notice required by Rule 19b–4(f)(6)(iii) under the Act.6 The text of the proposed rule change is available on the Exchange’s Web site at https://www.nsx.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. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its qualification, registration, and continuing education requirements applicable to ETP Holders and Persons Associated with ETP Holders. The proposed amendments are intended to: (i) Provide transparency and clarity with respect to the Exchange’s registration, qualification, and examination requirements; (ii) ensure that all persons engaging in trading on the Exchange or performing supervisory or operational functions are properly registered and 4 Exchange Rule 1.5P.(2) defines ‘‘Person Associated with an ETP Holder’’ as ‘‘. . . any partner, officer, director, or branch manager of an ETP Holder (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with an ETP Holder, or any employee of such ETP Holder, except that any person associated with an ETP Holder whose functions are solely clerical or ministerial shall not be included in the meaning of such terms.’’ 5 15 U.S.C. 78s(b)(3)(A). 6 17 CFR 240.19b–4(f)(6)(iii). PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 60083 subject to the examination and continuing education requirements necessary for their business function; (iii) align the Exchange’s qualification, registration and examination rules with those of the Financial Industry Regulatory Authority (‘‘FINRA’’) and other SROs so as to promote uniform standards across the securities industry; (iv) provide for the Securities Trader registration (Series 57) and Securities Trader Principal registration; and (v) reorganize certain rules, add new definitions of terms, and make other conforming or ministerial, nonsubstantive amendments designed to enhance the comprehensiveness and clarity of the Exchange’s rules. The proposed changes are discussed below. Amendments to NSX Rule 1.5— Definitions The Exchange is proposing to amend NSX Rule 1.5 to add new definitions, revise certain definitions in the current rule, and make non-substantive changes to the rule text. The Exchange first proposes to amend the definition of an ETP in NSX Rule 1.5E.(1). As currently defined in the rule, the term ETP ‘‘. . . shall refer to an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange’s trading facilities. An ETP may be issued to a sole proprietor, partnership, corporation, limited liability company or other organization which is a registered broker or dealer pursuant to Section 15 of the Act, and which has been approved by the Exchange.’’ Under the Exchange’s proposed amendment, the definition of an ‘‘ETP’’ would retain the text that an ETP shall refer to an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange’s trading facilities. However, the subsequent text in the current rule, which provides that an ETP may be issued to a sole proprietor, partnership, corporation, limited liability company or other organization which is a registered broker or dealer pursuant to Section 15 of the Act, will be moved to NSX Rule 2.3, entitled ‘‘ETP Holder Eligibility,’’ where it is more logically placed given the content of that rule. Additionally, the relocated text will be amended to add a requirement that the prospective ETP Holder must be a member of another national securities exchange or national securities association in order to be eligible to become an ETP Holder of NSX. The Exchange is proposing this amendment because it will not act as the Designated Examining Authority for any ETP E:\FR\FM\31AUN1.SGM 31AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 81, Number 169 (Wednesday, August 31, 2016)]
[Notices]
[Pages 60080-60083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20892]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78679; File No. SR-NYSE-2016-59]


 Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Rule 13 To Eliminate Orders With a Sell ``Plus'' and Buy 
``Minus'' Instruction and Retain Orders With a ``Buy Minus Zero Plus'' 
Instruction, and Make Conforming Changes to Rules 104, 107B, 123C and 
1004

August 25, 2016.
    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 August 19, 2016, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to (1) amend Rule 13 to eliminate orders with 
a sell ``plus'' and buy ``minus'' instruction and retain orders with a 
``Buy Minus Zero Plus'' instruction, and (2) make conforming changes to 
Rules 104, 107B, 123C and 1004. 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 13 to eliminate orders with a 
sell ``plus'' and buy ``minus'' instruction and retain orders with a 
``Buy Minus Zero Plus'' instruction, and make conforming changes to 
Rules 104, 107B, 123C and 1004. The Exchange proposes to eliminate 
orders with a sell ``plus'' and buy ``minus'' instruction for all 
securities both to streamline its rules and reduce complexity among its 
order type offerings.\4\
---------------------------------------------------------------------------

    \4\ See, e.g., Mary Jo White, Chair, Securities and Exchange 
Commission, Speech at the Sandler O'Neill & Partners, L.P. Global 
Exchange and Brokerage Conference (June 5, 2014) (available at 
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
---------------------------------------------------------------------------

    Because of the technology changes associated with the proposed rule 
change, the Exchange proposes to announce the implementation date of 
the elimination of the order types via Trader Update.
Elimination of Sell ``Plus'' and Buy ``Minus'' Order Instructions (Rule 
13)
    The Exchange proposes to eliminate, and thus delete from its rules, 
sell ``plus'' and buy ``minus'' order instructions, as defined in Rule 
13(f)(4)(A) and (B), respectively. Rule 13(f)(4)(B) would also be 
amended to retain a ``Buy Minus Zero Plus'' instruction.
    First, the Exchange proposes to eliminate the sell ``plus'' order 
instruction. An order with a sell ``plus'' instruction is an order that 
will not trade at a price that is lower than the last sale if the last 
sale was a ``plus'' or ``zero plus'' tick or that is lower than the 
last sale plus the minimum fractional change in the stock if the last 
sale was a ``minus'' or ``zero minus'' tick, subject to the limit price 
of an order, if applicable.\5\
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    \5\ See Rule 13(f)(4)(A).
---------------------------------------------------------------------------

    To reflect elimination of the sell ``plus'' order instruction, the 
Exchange proposes to delete subsection (f)(4)(A) of Rule 13, which 
defines the sell ``plus'' instruction, in its entirety. Subsection 
(4)(B) of Rule 13(f), amended as described below, would become new 
subsection (4)(A).
    Second, the Exchange proposes to eliminate the buy ``minus'' order 
instruction defined in Rule 13(f)(4)(B) and retain the ``Buy Minus Zero 
Plus'' order. An order with a buy ``minus'' instruction will not trade 
at a price that is higher than the last sale if the last sale was a 
``minus'' or ``zero minus'' tick or that is higher than the last sale 
minus the minimum fractional change in the stock if the last sale was a 
``plus'' or ``zero plus'' tick, subject to the limit price of an order, 
if applicable.\6\
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    \6\ See Rule 13(f)(4)(B).
---------------------------------------------------------------------------

    Exchange rules would continue to permit an order with a ``Buy Minus 
Zero Plus'' instruction, which is currently a sub-set of the 
instructions available under Rule 13(f)(4)(B). A Buy Minus Zero Plus 
order instruction assists member organizations with compliance with the 
``safe harbor'' provisions of Rule 10b-18 under the Act (``Rule 10b-
18'') for issuer repurchases.\7\ One of the four provisions required to 
meet the safe harbor provision is if the purchase price of a security 
does not exceed the highest independent bid or the last independent 
transaction price.\8\ Because an order with a Buy Minus Zero Plus 
instruction will not trade at a price that is higher than the last 
sale, member organizations can use this instruction to facilitate their 
compliance with at least one of the conditions of the safe harbor 
provision of Rule 10b-18.\9\
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    \7\ See 17 CFR 240.10b-18.
    \8\ See 17 CFR 240.10b-18(b)(3). The other three conditions 
relate to time of purchases, volume of purchases, and a requirement 
that only one broker or dealer be involved in such repurchases on a 
single day.
    \9\ The Exchange does not represent that an order with a Buy 
Minus Zero Plus instruction is guaranteed to meet the requirements 
of the safe harbor provision of Rule 10b-18; rather, this 
instruction is available to member organizations to facilitate their 
own compliance with Rule 10b-18.
---------------------------------------------------------------------------

    To reflect elimination of the buy ``minus'' order instruction and 
retention of the ``Buy Minus Zero Plus'' instruction, the Exchange 
proposes to add ``Zero Plus'' after ``buy minus'' in the first sentence 
of proposed new Rule 13(f)(4)(A), capitalize ``buy minus,'' and delete 
the phrase ``if the last sale was a `minus' or `zero minus' tick or 
that is higher than the last sale minus the minimum fractional change 
in the stock

[[Page 60081]]

if the last sale was a ``plus'' or ``zero plus'' tick'' following 
``will not trade at a price that is higher than the last sale.'' As 
proposed, an order with an instruction to ``Buy Minus Zero Plus'' would 
not trade at a price that is higher than the last sale, subject to the 
limit price of the order, if applicable.
    The remaining subsections of Rule 13(f)(4) would be amended to 
reflect these proposed changes, as follows.
    Current subsection (C) provides that sell ``plus'' and buy 
``minus'' instructions are available for Limit Orders, Limit-on-Open 
(``LOO'') Orders, Limit-on-Close (``LOC'') Orders, and Market-on-Close 
(``MOC'') Orders. Further, the current rule provides that orders with a 
buy ``minus'' instruction that are systemically delivered to Exchange 
systems will be eligible to be automatically executed in accordance 
with, and to the extent provided by, Rules 1000-1004, consistent with 
the order's instructions.
    Current subsection (C) would become subsection (B) and would be 
amended to reflect that the ``Buy Minus Zero Plus'' order instruction 
would only be available for limit orders. The Exchange would 
accordingly amend the first sentence of current subsection (C) to:
     Delete ``sell `plus' and'';
     add ``Zero Plus'' after ``buy minus'' and capitalize ``buy 
minus'';
     delete ``LOO Orders, LOC Orders, and MOC Orders''; and
     add the word ``only'' after ``Limit Orders''.
    The second sentence of proposed new subsection (B) would be amended 
to:
     Add ``Zero Plus'' after ``buy minus'' and capitalize ``buy 
minus''; and
     delete the clause ``or sell `plus' ''.
    Finally, current subsection (D), which provides that odd-lot sized 
transactions shall not be considered the last sale for purposes of 
executing sell ``plus'' or ``buy'' minus orders would become new 
subsection (C) of Rule 13(f)(4). Proposed new subsection (C) would be 
amended to:
    Delete the clause ``sell `plus' or'' before ``buy minus''; and 
capitalize ``buy minus''; and
     add ``Zero Plus'' after ``buy minus''.
Conforming Amendments
    The Exchange proposes certain conforming amendments to Rules 104, 
107B, 123C and 1004 to reflect the elimination of sell ``plus'' and buy 
``minus'' instruction as described above as follows.
Rule 104
    The Exchange proposes to amend Rule 104 (Dealings and 
Responsibilities of Designated Market Makers (``DMMs'')). Specifically, 
Rule 104(b)(vi) provides that DMM units may not enter certain orders 
and modifiers including, among others, orders with Sell ``Plus''--Buy 
``Minus'' Instructions.
    To conform Rule 104, the Exchange proposes to delete ``Sell 
`Plus'--'' and the quotes around the word ``Minus'' from Rule 
104(b)(vi) and add the phrase ``Zero Plus'' after ``Minus'' and before 
``Instructions.'' As proposed, Rule 104(b)(vi) would provide that DMM 
units may not enter orders with Buy Minus Zero Plus Instructions.
Rule 107B
    The Exchange proposes to amend Rule 107B (Supplemental Liquidity 
Providers), which sets forth the rules governing Supplemental Liquidity 
Providers (``SLPs''). An SLP is an Exchange member organization that 
electronically enters proprietary orders or quotes from off the Floor 
into the systems and facilities of the Exchange and is obligated, among 
other things, to maintain a bid or an offer at the NBB or NBO in each 
assigned security in round lots for at least 10% of the trading day, on 
average, and for all assigned SLP securities.\10\ Rules 107B(g) sets 
forth how the Exchange calculates whether an SLP is meeting its 10% 
quoting requirement. Subsection (D)(iii) of Rule 107B(g) provides that 
tick sensitive orders such as `` `Sell Plus', `Buy Minus' (see Rule 13) 
and `Buy Minus Zero Plus' '' will not be counted as credit towards the 
10% quoting requirement.
---------------------------------------------------------------------------

    \10\ See Rule 107B(a).
---------------------------------------------------------------------------

    To conform Rule 107B, the Exchange proposes to delete the phrase 
``Tick sensitive orders (i.e., ``Sell Plus'' and ``Buy Minus'' orders 
(see Rule 13) and'' in subsection (D)(iii), add the word ``orders'' 
following ``Buy Minus Zero Plus,'' and delete a parenthesis and 
quotation marks. As amended, Rule 107B(D)(iii) would provide that Buy 
Minus Zero Plus orders will not be counted as credit towards the 10% 
quoting requirement.
Rule 123C
    The Exchange proposes to amend Rule 123C (The Closing Procedures), 
which specifies the procedures to be followed at the close of trading 
on the Exchange.
    Rule 123C(4)(a) describes how the Exchange calculates MOC and LOC 
imbalances, which is intended to provide market participants with a 
snapshot of the prices at which interest eligible to participate in the 
closing transaction would be executed in full against each other at the 
time the data feed is disseminated. Subsection (vi) of Rule 123C(4)(a) 
provides that tick sensitive MOC and LOC interest and LOC orders priced 
equal to the last sale can reduce the Buy or Sell Imbalance to bring 
the imbalance quantity as close to zero as possible. The Rule also 
provides that the volume of tick sensitive MOC and LOC orders eligible 
to reduce the imbalance shall not cause the imbalance to change to the 
other side.
    Rule 123C(4)(a)(vi)(A) specifies that, in the event of a Buy 
Imbalance, only Sell Plus MOC orders, Sell Plus LOC orders priced equal 
to or below the last sale price, and Sell and Sell Short LOC orders 
priced equal to the last sale will be included to offset the imbalance, 
and that Sell Plus MOC and Sell Plus LOC orders will be included to 
offset the imbalance only if such orders could be executed consistent 
with the terms of their tick restrictions.
    Rule 123C(4)(a)(vi)(B) specifies that, in the event of a Sell 
Imbalance, only Buy Minus MOC orders, Buy Minus LOC orders priced equal 
to or above the last sale price, and Buy LOC orders priced equal to the 
last sale will be included to offset the imbalance. The Rule also 
provides that Buy Minus MOC and Buy Minus LOC orders will be included 
to offset the imbalance only if such orders could be executed 
consistent with the terms of their tick restrictions.
    To reflect the elimination of orders with a sell ``plus'' 
instruction and buy ``minus'' instructions, i.e., tick-sensitive 
orders, and the fact that as proposed, Buy Minus Zero Plus orders would 
not be available for MOC or LOC Orders, the Exchange proposes to amend 
Rule 123C as follows:
     Amend Rule 123C(4)(a)(vi) to delete the phrase ``tick 
sensitive MOC orders and LOC orders and'' before ``LOC orders priced 
equal to the last sale to bring the imbalance quantity as close to zero 
as possible.'' The Exchange also proposes to delete the last sentence 
in Rule 123C(4)(a)(vi), which provides that ``[t]he volume of tick 
sensitive MOC and LOC orders eligible to reduce the imbalance shall not 
cause the imbalance to change to the other side.''
     Amend Rule 123C(4)(a)(vi) (A) to remove references to Sell 
Plus MOC orders and Sell Plus LOC orders priced equal to or below the 
last sale price. The Exchange also proposes to delete the last sentence 
of the subsection (A), which provides that ``Sell Plus MOC and Sell 
Plus LOC orders will be included to offset the imbalance only if such 
orders could be executed consistent with the terms of their tick 
restrictions.''
     Amend Rule 123C(4)(a)(vi)(B) to remove references to Buy 
Minus MOC

[[Page 60082]]

orders and Buy Minus LOC orders priced equal to or above the last sale 
price. The Exchange also proposes to delete the last sentence of the 
subsection (B), which provides that ``Buy Minus MOC and Buy Minus LOC 
orders will be included to offset the imbalance only if such orders 
could be executed consistent with the terms of their tick 
restrictions.''
Rule 1004
    Finally, the Exchange proposes to amend Rule 1004 (Election of Buy 
Minus, Sell Plus and Stop Orders), which provides that automatic 
executions of transactions reported to the Consolidated Tape shall 
elect, among others, buy minus and sell plus orders electable at the 
price of such executions. The Rule further provides that any buy minus 
and sell plus orders so elected shall be automatically executed as 
market orders pursuant to Exchange rules.
    To reflect the elimination of orders with a Sell ``Plus'' and Buy 
``Minus'' instruction and retention of ``Buy Minus Zero Plus'' orders, 
the Exchange proposes to add ``Zero Plus'' after ``buy minus'' in Rule 
1004, capitalize ``buy minus,'' and delete the phrase ``and sell plus'' 
in two places. The Exchange also proposes to capitalize ``market 
orders.'' As amended, Rule 1004 would allow for the automatic execution 
of Buy Minus Zero Plus orders electable at the price of such 
executions.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \11\ of 
the Act, in general, and furthers the objectives of Section 
6(b)(5),\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that eliminating orders with a 
sell ``plus'' and buy ``minus'' instruction removes impediments to and 
perfects a national market system by simplifying functionality and 
complexity of its order types. The Exchange believes that eliminating 
these order types across all securities would not be inconsistent with 
the public interest and the protection of investors because investors 
will not be harmed and in fact would benefit from the removal of 
complex functionality.
    The Exchange further believes that deleting corresponding 
references in Exchange rules to deleted order types also removes 
impediments to and perfects the mechanism of a free and open market by 
ensuring that members, regulators and the public can more easily 
navigate the Exchange's rulebook and better understand the orders types 
available for trading on the Exchange. Removing obsolete cross 
references also furthers the goal of transparency and adds clarity to 
the Exchange's rules.

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 change is not 
designed to address any competitive issue but would rather remove 
complex functionality and obsolete cross-references, thereby reducing 
confusion and making the Exchange's rules easier to understand and 
navigate.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder. \15\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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.
---------------------------------------------------------------------------

    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 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-NYSE-2016-59 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2016-59. 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 the 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

[[Page 60083]]

identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2016-59 and should be submitted on 
or before September 21, 2016.
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20892 Filed 8-30-16; 8:45 am]
 BILLING CODE 8011-01-P

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