Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca Equities Rule 5.2(j)(6)(v) To Add the EURO STOXX 50 Volatility Futures to the Definition of Futures Reference Asset, 10418-10422 [2017-02735]
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10418
Federal Register / Vol. 82, No. 27 / Friday, February 10, 2017 / Notices
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responsibility with respect to certain
applicable laws, rules, and regulations.
Included in the Plan is an exhibit that
lists every MIAX rule for which FINRA
bears responsibility under the Plan for
overseeing and enforcing with respect to
MIAX members that are also members of
FINRA and the associated persons
therewith (‘‘Certification’’). On January
12, 2017, the parties submitted the
proposed Amended Plan. The primary
purpose of the amendment is to add
MIAX PEARL as a Participant to the
Plan.
III. Discussion
The Commission finds that the
proposed Amended Plan is consistent
with the factors set forth in Section
17(d) of the Act 10 and Rule 17d–2(c)
thereunder 11 in that the proposed
Amended Plan is necessary or
appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Amended Plan should reduce
unnecessary regulatory duplication by
allocating to FINRA certain examination
and enforcement responsibilities for
Common Members that would
otherwise be performed by MIAX, MIAX
PEARL, and FINRA. Accordingly, the
proposed Amended Plan promotes
efficiency by reducing costs to Common
Members. Furthermore, because MIAX,
MIAX PEARL, and FINRA will
coordinate their regulatory functions in
accordance with the Amended Plan, the
Amended Plan should promote investor
protection.
The Commission notes that, under the
Amended Plan, MIAX, MIAX PEARL,
and FINRA have allocated regulatory
responsibility for those MIAX and
MIAX PEARL rules, set forth in the
Certification, that are substantially
similar to the applicable FINRA rules in
that examination for compliance with
such provisions and rules would not
require FINRA to develop one or more
new examination standards, modules,
procedures, or criteria in order to
analyze the application of the rule, or a
Common Member’s activity, conduct, or
output in relation to such rule. In
addition, under the Amended Plan,
FINRA would assume regulatory
responsibility for certain provisions of
the federal securities laws and the rules
and regulations thereunder that are set
forth in the Certification. The Common
Rules covered by the Amended Plan are
10 15
11 17
U.S.C. 78q(d).
CFR 240.17d–2(c).
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18:35 Feb 09, 2017
specifically listed in the Certification, as
may be amended by the Parties from
time to time.
According to the Amended Plan,
MIAX and MIAX PEARL will review the
Certification, at least annually, or more
frequently if required by changes in
either the rules of MIAX, MIAX PEARL,
or FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add MIAX and MIAX PEARL
rules not included on the then-current
list of Common Rules that are
substantially similar to FINRA rules;
delete MIAX and MIAX PEARL rules
included in the then-current list of
Common Rules that are no longer
substantially similar to FINRA rules;
and confirm that the remaining rules on
the list of Common Rules continue to be
MIAX and MIAX PEARL rules that are
substantially similar to FINRA rules.12
FINRA will then confirm in writing
whether the rules listed in any updated
list are Common Rules as defined in the
Amended Plan. Under the Amended
Plan, MIAX and MIAX PEARL will also
provide FINRA with a current list of
Common Members and shall update the
list no less frequently than once each
quarter.13 The Commission believes that
these provisions are designed to provide
for continuing communication between
the Parties to ensure the continued
accuracy of the scope of the proposed
allocation of regulatory responsibility.
The Commission is hereby declaring
effective an Amended Plan that, among
other things, allocates regulatory
responsibility to FINRA for the
oversight and enforcement of all MIAX
and MIAX PEARL rules that are
substantially similar to the rules of
FINRA for Common Members of MIAX
and FINRA, and MIAX PEARL and
FINRA. Therefore, modifications to the
Certification need not be filed with the
Commission as an amendment to the
Amended Plan, provided that the
Parties are only adding to, deleting
from, or confirming changes to MIAX or
MIAX PEARL rules in the Certification
in conformance with the definition of
Common Rules provided in the
Amended Plan. However, should the
Parties decide to add a MIAX or MIAX
PEARL rule to the Certification that is
not substantially similar to a FINRA
rule; delete a MIAX or MIAX PEARL
rule from the Certification that is
substantially similar to a FINRA rule; or
leave on the Certification a MIAX or
MIAX PEARL rule that is no longer
substantially similar to a FINRA rule,
then such a change would constitute an
amendment to the Amended Plan,
12 See
13 See
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paragraph 2 of the Amended Plan.
paragraph 3 of the Amended Plan.
Frm 00091
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which must be filed with the
Commission pursuant to Rule 17d–2
under the Act.14
IV. Conclusion
This Order gives effect to the
Amended Plan filed with the
Commission in File No. 4–678. The
Parties shall notify all members affected
by the Amended Plan of their rights and
obligations under the Amended Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act, that the
Amended Plan in File No. 4–678,
between FINRA, MIAX, and MIAX
PEARL, filed pursuant to Rule 17d–2
under the Act, is approved and declared
effective.
It is further ordered that MIAX and
MIAX PEARL are relieved of those
responsibilities allocated to FINRA
under the Amended Plan in File No. 4–
678.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02739 Filed 2–9–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79975; File No. SR–
NYSEArca–2017–08]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend NYSE Arca
Equities Rule 5.2(j)(6)(v) To Add the
EURO STOXX 50 Volatility Futures to
the Definition of Futures Reference
Asset
February 6, 2017.
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 January
27, 2017, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) 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
14 The Commission also notes that the addition to
or deletion from the Certification of any federal
securities laws, rules, and regulations for which
FINRA would bear responsibility under the
Amended Plan for examining, and enforcing
compliance by, Common Members, also would
constitute an amendment to the Amended Plan.
15 17 CFR 200.30–3(a)(34).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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Federal Register / Vol. 82, No. 27 / Friday, February 10, 2017 / Notices
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Arca Equities Rule 5.2(j)(6)(v) to
add the EURO STOXX 50 Volatility
(VSTOXX®) Futures (‘‘VSTOXX
Futures’’) to the definition of Futures
Reference Asset. 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
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1. Purpose
NYSE Arca Equities Rule 5.2(j)(6)
provides for Exchange listing and
trading, including listing pursuant to
Rule 19b–4(e) under the Act,4 of ‘‘IndexLinked Securities’’,5 and, in particular,
Futures-Linked Securities, which are
Index-Linked Securities with a payment
at maturity based on the performance of
a Futures Reference Asset.6 The
4 Rule 19b–4(e) under the Act provides that the
listing and trading of a new derivative securities
product by a self-regulatory organization (‘‘SRO’’)
shall not be deemed a proposed rule change,
pursuant to section (c)(1) of Rule 19b–4, if the
Commission has approved, pursuant to Section
19(b) of the Act, the SRO’s trading rules,
procedures, and listing standards for the product
class and the SRO has a surveillance program for
the product class.
5 As defined in NYSE Arca Equities Rule 5.2(j)(6),
the term ‘‘Index-Linked Securities’’ includes Equity
Index-Linked Securities, Commodity-Linked
Securities, Currency-Linked Securities, Fixed
Income Index-Linked Securities, Futures-Linked
Securities and Multifactor Index-Linked Securities.
6 As defined in NYSE Arca Equities Rule
5.2(j)(6)(v),‘‘Futures Reference Asset’’ includes ‘‘an
index of (a) futures on Treasury Securities, GSE
Securities, supranational debt and debt of a foreign
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18:35 Feb 09, 2017
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proposed rule change is based on
recently approved amendments to Bats
BZX Exchange, Inc. (‘‘BZX’’) Rule
14.11(d) to add VSTOXX Futures to the
definition of Futures Reference Asset for
purposes of listing Index-Linked
Securities on BZX.7
The Exchange proposes to amend
NYSE Arca Equities Rule 5.2(j)(6)(v) in
order to add VSTOXX Futures to the
definition of Futures Reference Asset,
which would allow the Exchange to list
Futures-Linked Securities linked to
VSTOXX Futures through generic listing
standards pursuant to Rule 19b–4(e)
under NYSE Arca Equities Rule
5.2(j)(6).8 Prior to listing Futures-Linked
Securities linked to VSTOXX Futures
pursuant to Rule 5.2(j)(6), an issuer
would be required to represent to the
Exchange that it will advise the
Exchange of any failure of the FuturesLinked Securities to comply with the
continued listing requirements.
NYSE Arca Equities Rule
5.2(j)(6)(B)(V) (‘‘Futures-Linked
Securities Listing Standards’’) requires
that a Futures-Linked Security meet one
of the following standards: (1) That the
Futures Reference Asset to which the
security is linked shall have been
reviewed and approved for the trading
of Futures-Linked Securities or options
or other derivatives by the Commission
under Section 19(b)(2) of the Act and
rules thereunder and the conditions set
forth in the Commission’s approval
order, including with respect to
comprehensive surveillance sharing
agreements (‘‘CSSAs’’), continue to be
satisfied; or (2) the pricing information
for components of a Futures Reference
Asset must be derived from a market
which is a member or affiliate of a
member of the Intermarket Surveillance
Group (‘‘ISG’’) or a market with which
the Exchange has a CSSA.9 A Futures
Reference Asset may include
components representing not more than
10% of the dollar weight of such
Futures Reference Asset for which the
pricing information is derived from
markets that do not meet requirement
country or a subdivision thereof, or options or other
derivatives on any of the foregoing; or (b) interest
rate futures or options or derivatives on the
foregoing in this subparagraph (b); or (c) CBOE
Volatility Index (VIX) Futures.’’
7 See Securities Exchange Act Release No. 79069
(October 7, 2016), 81 FR 70714 (October 13, 2016)
(SR–BatsBZX–2016–26) (‘‘BATS Filing’’).
Additional information regarding the VSTOXX and
VSTOXX Futures is included in the BATS Filing.
8 The Exchange also proposes to delete as
duplicative the word ‘‘or’’ in two places in NYSE
Arca Equities Rule 5.2(j)(6)(v).
9 ISG is comprised of an international group of
exchanges, market centers, and market regulators
that perform front-line market surveillance in their
respective jurisdictions. See https://
www.isgportal.org/home.html.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
10419
(2) above; provided, however, that no
single component subject to this
exception exceeds 7% of the dollar
weight of the Futures Reference Asset.
As proposed, adding VSTOXX Futures
to the definition of Futures Reference
Asset would satisfy the first criterion
described above and the second
criterion would be satisfied by virtue of
Eurex Deutschland’s (‘‘Eurex’’)
membership in ISG, as further described
below.
Further, any Futures-Linked
Securities linked to VSTOXX Futures
would also be required to meet both the
initial and continued listing standards
in NYSE Arca Equities Rule
5.2(j)(6)(B)(V) or be subject to delisting
or removal proceedings, which include:
(i) That the value of the Futures
Reference Asset be calculated and
widely disseminated by one or more
major market data vendors on at least a
15-second basis during the Exchange’s
Core Trading Session (normally, 9:30
a.m. to 4:00 p.m., Eastern Time); (ii) for
Futures-Linked Securities that are
periodically redeemable, the indicative
value of the subject Futures-Linked
Securities must be calculated and
widely disseminated by the Exchange or
one or more major market data vendors
on at least a 15-second basis during the
Exchange’s Core Trading Session; (iii)
the aggregate market value or the
principal amount of the Futures-Linked
Securities must be at least $400,000; (iv)
the value of the Futures Reference Asset
is no longer calculated or available and
a new Futures Reference Asset is
substituted, unless the new Futures
Reference Asset meets the requirements
of Rule 5.2(j)(6); or (v) if such other
event occurs or condition exists which
in the opinion of the Exchange makes
further dealings on the Exchange
inadvisable. Any Futures-Linked
Securities linked to VSTOXX Futures
would also be required to meet the
listing standards applicable to all IndexLinked Securities under NYSE Arca
Equities Rule 5.2(j)(6)(A). Finally, all
Index-Linked Securities listed pursuant
to NYSE Arca Equities Rule 5.2(j)(6) are
included within the definition of
‘‘security’’ or ‘‘securities’’ as such terms
are used in the Exchange rules and, as
such, are subject to Exchange rules and
procedures that currently govern the
trading of securities on the Exchange.
The Exchange believes that the
proposed standards would continue to
ensure transparency surrounding the
listing process for Index-Linked
Securities. The Exchange also believes
that the existing standards for listing
and trading Futures-Linked Securities
are reasonably designed to promote a
fair and orderly market for such
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Federal Register / Vol. 82, No. 27 / Friday, February 10, 2017 / Notices
Futures-Linked Securities and the
addition of VSTOXX Futures to Futures
Reference Assets does not affect this.
The proposed addition of VSTOXX
Futures to those instruments included
in Futures Reference Assets would also
work in conjunction with the existing
initial and continued listing criteria
related to surveillance procedures and
trading guidelines.
The Exchange believes that its
surveillance procedures are adequate to
continue to properly monitor the trading
of Futures-Linked Securities linked to
VSTOXX Futures in all trading sessions
and to deter and detect violations of
Exchange rules. The issuer of a series of
Index-Linked Securities is and will
continue to be required to comply with
Rule 10A–3 under the Act 10 for the
initial and continued listing of IndexLinked Securities, as provided in NYSE
Arca Equities Rule 5.2(j)(6)(A)(f). The
Exchange notes that the proposed
change is not intended to amend any
other component or requirement of
NYSE Arca Equities Rule 5.2(j)(6).
Additional information regarding the
VSTOXX and VSTOXX Futures can be
found on the STOXX Limited
(‘‘STOXX’’) Web site and the Eurex Web
site, respectively.11 The VSTOXX is
based on EURO STOXX 50 Index
(‘‘Index’’) real-time option prices that
are listed on the Eurex and are designed
to reflect the market expectations of
near-term up to long-term volatility by
measuring the square root of the implied
variances across all options of a given
time to expiration. The Index includes
50 stocks that are among the largest freefloat market capitalization stocks from
12 Eurozone countries. VSTOXX
Futures are cash settled and trade
between the hours of 7:30 a.m. and
10:30 p.m. Central European Time
(‘‘CET’’) (2:30 a.m. and 5:30 p.m.
Eastern Time). The VSTOXX Futures
contract value is 100 Euros per index
point of the underlying and it is traded
to two decimal places with a minimum
price change of 0.05 points (equivalent
to a value of 5 Euros). The daily
settlement price is determined during
the closing auction of the respective
futures contract. The last trading day
and final settlement day is 30 calendar
days prior to the third Friday of the
expiration month of the underlying
options, which is usually the
Wednesday prior to the second to last
Friday of the respective maturity month.
10 17
CFR 240.10A–3.
is a member of the ISG and, as such, the
Exchange may obtain information regarding trading
in the underlying VSTOXX Futures contracts. For
a list of the current members and affiliate members
of ISG, see www.isgportal.com.
11 Eurex
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18:35 Feb 09, 2017
Jkt 241001
STOXX will compute the Index on a
real-time basis throughout each trading
day, from 8:50 a.m. until 5:30 CET (3:50
a.m. until 12:30 p.m. Eastern Time.
VSTOXX levels will be calculated by
STOXX and disseminated by major
market data vendors on a real-time basis
throughout each trading day.
The Exchange believes that the
proposed amendment to add VSTOXX
Futures as an underlying Futures
Reference Asset will provide investors
with the ability to better diversify and
hedge their portfolios using an exchange
listed security without having to trade
directly in the underlying futures
contracts, and will facilitate the listing
and trading of additional FuturesLinked Securities that will enhance
competition among market participants,
to the benefit of investors and the
marketplace.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,12 in general, and
furthers the objectives of Sections
6(b)(5) of the Act,13 in particular,
because 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 regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to,
and perfect the mechanisms of, a free
and open market and a national market
system and, in general, to protect
investors and the public interest and
because it is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The proposed amendment to add
VSTOXX Futures as an underlying
Futures Reference Asset will provide
investors with the ability to better
diversify and hedge their portfolios
using an exchange-listed security
without having to trade directly in the
underlying futures contracts, and will
facilitate the listing and trading of
additional Futures-Linked Securities
that will enhance competition among
market participants, to the benefit of
investors and the marketplace. As noted
above, the Exchange has in place
surveillance procedures relating to
trading in Futures-Linked Securities and
may obtain information regarding both
the Futures-Linked Securities and
VSTOXX Futures via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
12 15
13 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00093
Fmt 4703
Sfmt 4703
into a CSSA. In addition, as noted
above, investors will have ready access
to information on an intraday basis
regarding: (i) The value of the Futures
Reference Asset, which will be
calculated and widely disseminated by
one or more major market data vendors
on at least a 15-second basis during the
Exchange’s Core Trading Session; (ii) for
Futures-Linked Securities that are
periodically redeemable, the indicative
value of the securities, which must be
calculated and widely disseminated by
the Exchange or one or more major
market data vendors on at least a 15second basis during the Exchange’s Core
Trading Session; and (iii) information
regarding market price and trading of
Futures-Linked Securities, which will
be available on brokers’ computer
screens and other electronic services,
and quotation and last sale information
for the securities, which will be
available on the facilities of the
Consolidated Tape Association. Further,
any Futures-Linked Securities linked to
VSTOXX Futures would be required to
meet both the initial and continued
listing standards under NYSE Arca
Equities Rule 5.2(j)(6)(B)(V) or be
subject to delisting or removal
proceedings, which include: (i) That the
value of the Futures Reference Asset be
calculated and widely disseminated by
one or more major market data vendors
on at least a 15-second basis during the
Exchange’s Core Trading Session; (ii) for
Futures-Linked Securities that are
periodically redeemable, the indicative
value of the securities must be
calculated and widely disseminated by
the Exchange or one or more major
market data vendors on at least a 15second basis during the Exchange’s Core
Trading Session; (iii) the aggregate
market value or the principal amount of
the Futures-Linked Securities must be at
least $400,000; (iv) the value of the
Futures Reference Asset is no longer
calculated or available and a new
Futures Reference Asset is substituted,
unless the new Futures Reference Asset
meets the requirements of Rule 5.2(j)(6);
or (v) if such other event occurs or
condition exists which in the opinion of
the Exchange makes further dealings on
the Exchange inadvisable. Any FuturesLinked Securities linked to VSTOXX
Futures would also be required to meet
the listing standards applicable to all
Index-Linked Securities in Rule
5.2(j)(6). All Index-Linked Securities
listed pursuant to NYSE Arca Equities
Rule 5.2(j)(6) are included within the
definition of ‘‘security’’ or ‘‘securities’’
as such terms are used in the Exchange
rules and, as such, are subject to
Exchange rules and procedures that
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currently govern the trading of
securities on the Exchange. Trading in
the securities may be halted under the
conditions specified in NYSE Arca
Equities Rule 5.2(j)(6)(E).
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,14 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
rule change would facilitate the listing
and trading of additional types of
Futures-Linked Securities, which will
enhance competition among market
participants, to the benefit of investors
and the marketplace and provide
investors with the ability to better
diversify and hedge their portfolios
using an exchange listed security
without having to trade directly in the
underlying futures contracts. The
Exchange believes that this would
reduce the time frame for bringing
Futures-Linked Securities linked to
VSTOXX Futures to market, thereby
reducing the burdens on issuers and
other market participants and promoting
competition. The proposed rule change
would enhance competition among
listing exchanges because the proposed
rule is based on an approved listing
standard on BZX.
mstockstill on DSK3G9T082PROD with NOTICES
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 15 and Rule
19b–4(f)(6) thereunder.16 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)
14 15
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A)(iii).
16 17 CFR 240.19b–4(f)(6).
15 15
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18:35 Feb 09, 2017
Jkt 241001
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),18 the Commission
may 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 asserts that
waiving the operative delay would be
consistent with the protection of
investors and the public interest
because the Commission has already
approved a substantially identical
proposed rule change submitted by
another national securities exchange. In
addition, the Exchange asserts that a
waiver would accommodate listing and
trading, including trading pursuant to
unlisted trading privileges, of an issue
of Future-Linked Securities based on
VSTOXX Futures without additional
delay, and would thereby promote
intermarket competition in listing and
trading such securities, to the benefit of
the investing public.
The Commission believes that
waiving the operative delay with respect
to the proposed rule change is
consistent with the protection of
investors and the public interest
because the proposal does not raise any
regulatory issues that were not already
addressed by the Commission when
approving a substantially identical
proposal by another national securities
exchange.19 Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.20
At any time within 60 days of the
filing of this proposed rule change, the
Commission summarily may
temporarily suspend the 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
17 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and 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. The Exchange
has satisfied this requirement.
19 See note 7, supra.
20 For purposes only of waiving the operative
delay of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
18 17
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
10421
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
under Section 19(b)(2)(B) 21 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2017–08 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
Number SR–NYSEArca–2017–08. 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
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
21 15
E:\FR\FM\10FEN1.SGM
U.S.C. 78s(b)(2)(B).
10FEN1
10422
Federal Register / Vol. 82, No. 27 / Friday, February 10, 2017 / Notices
NYSEArca–2017–08 and should be
submitted on or before March 3, 2017.
of the most significant parts of such
statements.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Robert W. Errett,
Deputy Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2017–02735 Filed 2–9–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79976; File No. SR–
NYSEArca–2017–02]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Certain Rules
Related to Flexible Exchange Options
February 6, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on January
25, 2017, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
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.
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 amend
certain rules related to Flexible
Exchange (‘‘FLEX’’) Options. 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,
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
18:35 Feb 09, 2017
Jkt 241001
1. Purpose
The purpose of this filing is to amend
certain rules related to FLEX Options, as
described below.
FLEX Options are customized equity
or index contracts that allow investors
to tailor contract terms for exchangelisted equity and index options.4 The
Exchange is proposing to allow FLEX
Options in ByRDs, make available
additional settlement styles, modify
how exercise prices and premiums are
expressed, change certain provisions
relating to floor-based trading, and
modify other related provisions
pertaining to FLEX Options.
FLEX Options for Binary Return
Derivatives Contracts (‘‘ByRDs’’)
The Exchange proposes to modify its
rules to enable market participants to
trade FLEX options contracts in ByRDs.5
Specifically, the Exchange proposes to
add a new definition of ‘‘FLEX ByRDs,’’
which would be a ‘‘Binary Return
Derivatives contract on any ByRDeligible underlying security that is
subject to the rules in this Section.’’ 6
The Exchange also proposes to revise
Rule 5.30(b)(15) to include FLEX ByRDs
in the definition of ‘‘Series of FLEX
Options.’’ 7 Because FLEX ByRDs would
have to be settled in cash, based on the
Volume-Weighted Average Price (or
VWAP) of the underlying security,
market participants could not modify
these terms.8 However, market
participants may trade FLEX ByRDs
with non-standard strike prices and/or
non-standard expiration dates.
Regarding position limits, the Exchange
proposes to add paragraph (b)(ii) to Rule
5.35 to provide that positions in FLEX
4 See Rule 5.30(b)(4) (defining ‘‘FLEX option’’).
See generally Section 4, Flexible Exchange Options,
Rules 5.30–5.44.
5 ByRDs are European-style option contracts on
individual stocks, exchange-traded funds (‘‘ETFs’’)
and Index-Linked Securities that have a fixed return
in cash based on a set strike price; satisfy specified
listing criteria; and may only be exercised at
expiration pursuant to the Rules of the Options
Clearing Corporation (the ‘‘OCC’’). See Rules
5.82(b), 5.90. For a description of ‘‘ExchangeTraded Fund Shares’’ and ‘‘Index-Linked
Securities,’’ see also Rule 5.3(g) and (j).
6 See proposed Rule 5.30(b)(19).
7 See proposed Rule 5.30(b)(15) (proposing to add
that a ‘‘Series of FLEX Options’’ would include, in
the case of FLEX ByRDs, all such option contracts
of the same class having the same expiration date,
strike price, and exercise settlement amount).
8 See ‘‘Statutory Basis’’ section herein (in the
second paragraph) for further discussion.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
ByRDs shall be the same as Non-FLEX
ByRDs, as set forth in Rule 5.86(a),
except that positions in FLEX ByRDs
shall be aggregated with positions in
Non-FLEX ByRDs on the same or similar
underlying for the purpose of
calculating position limits.9 The
Exchange also proposes to include in
proposed Rule 5.35(b)(ii) that ‘‘[f]or
purposes of the position limits
established under this Rule, long
positions in ‘Finish Low’ and short
positions in ‘Finish High’ Binary Return
Derivatives shall be considered to be on
the same side of the market; and short
positions in ‘Finish Low’ and long
positions in ‘Finish High’ Binary Return
Derivatives shall be considered to be on
the same side of the market.’’ 10
Consistent with these changes, the
Exchange also proposes to define NonFLEX ByRDs as ‘‘a Non-FLEX Option
that is a Binary Return Derivatives
contract,’’ in new paragraph (b)(22) to
Rule 5.30. The Exchange believes that
FLEX ByRDs would enable market
participants to negotiate terms that
differ from standardized ByRDs, which
would, in turn, provide greater
opportunities for investors to manage
risk through the use of FLEX Options.11
The Exchange notes that the proposed
rules related to FLEX ByRDs are
materially identical to rules recently
approved on another options
exchange.12
Additional Settlement Styles for FLEX
Options: Asian and Cliquet Style
The Exchange proposes to permit
parties to FLEX Index Options on
9 The Exchange also proposes to re-format Rule
5.35 to make clear the position limits that apply to
each of FLEX Index Options and FLEX Equity
Options. In this regard, the Exchange proposes to
modify the title of the Rule 5.35 to remove reference
to ‘‘Index’’ and re-titled it as ‘‘Position Limits for
FLEX Options.’’ Further, the Exchange proposes
reformatting changes to clarify that Rule 5.35(a),
with proposed sub-parts (i) and (ii), refers to FLEX
Index Options and proposed Rule 5.35(b), refers to
FLEX Equity Options. Finally, the Exchange
proposes to re-locate current paragraph (d) to Rule
5.35 regarding the aggregation of position limits for
FLEX Index Options to proposed paragraph (a)(iii),
which would add clarity and consistency to
Exchange rules. See proposed Rule 5.35(a) and (b).
10 See ‘‘Statutory Basis’’ section herein (in the
third paragraph) for further discussion.
11 The Exchange also proposes to modify Rule
5.32(f)(3)(ii) to provide that FLEX ByRDs must be
settled the same as non-FLEX ByRDs. See proposed
Rule 5.32(f)(3)(ii) (discussed herein under
‘‘Additional Updates to Reflect Trading in FLEX
Options’’); see also Rule 5.89 (Determination of the
Settlement Price of ByRDs).
12 See Securities Exchange Act Release Nos.
79125 (October 19, 2016), 81 FR 73452 (October 25,
2016) (‘‘MKT Approval Order ’’) (order approving
modifications to FLEX Options, including adding
FLEX ByRDs); 78348 (July 15, 2016), 81 FR 47469
(July 21, 2016) (‘‘MKT Notice’’) (SR–NYSEMKT–
2016–48). See also NYSE MKT Rules
900G(b)(16),(17), (22); 903G(c)(3)(i)–(ii); 906G(b)(ii).
E:\FR\FM\10FEN1.SGM
10FEN1
]]>Agencies
[Federal Register Volume 82, Number 27 (Friday, February 10, 2017)]
[Notices]
[Pages 10418-10422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02735]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79975; File No. SR-NYSEArca-2017-08]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend NYSE Arca
Equities Rule 5.2(j)(6)(v) To Add the EURO STOXX 50 Volatility Futures
to the Definition of Futures Reference Asset
February 6, 2017.
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 January 27, 2017, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') 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
[[Page 10419]]
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 amend NYSE Arca Equities Rule 5.2(j)(6)(v)
to add the EURO STOXX 50 Volatility (VSTOXX[supreg]) Futures (``VSTOXX
Futures'') to the definition of Futures Reference Asset. 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
NYSE Arca Equities Rule 5.2(j)(6) provides for Exchange listing and
trading, including listing pursuant to Rule 19b-4(e) under the Act,\4\
of ``Index-Linked Securities'',\5\ and, in particular, Futures-Linked
Securities, which are Index-Linked Securities with a payment at
maturity based on the performance of a Futures Reference Asset.\6\ The
proposed rule change is based on recently approved amendments to Bats
BZX Exchange, Inc. (``BZX'') Rule 14.11(d) to add VSTOXX Futures to the
definition of Futures Reference Asset for purposes of listing Index-
Linked Securities on BZX.\7\
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\4\ Rule 19b-4(e) under the Act provides that the listing and
trading of a new derivative securities product by a self-regulatory
organization (``SRO'') shall not be deemed a proposed rule change,
pursuant to section (c)(1) of Rule 19b-4, if the Commission has
approved, pursuant to Section 19(b) of the Act, the SRO's trading
rules, procedures, and listing standards for the product class and
the SRO has a surveillance program for the product class.
\5\ As defined in NYSE Arca Equities Rule 5.2(j)(6), the term
``Index-Linked Securities'' includes Equity Index-Linked Securities,
Commodity-Linked Securities, Currency-Linked Securities, Fixed
Income Index-Linked Securities, Futures-Linked Securities and
Multifactor Index-Linked Securities.
\6\ As defined in NYSE Arca Equities Rule 5.2(j)(6)(v),``Futures
Reference Asset'' includes ``an index of (a) futures on Treasury
Securities, GSE Securities, supranational debt and debt of a foreign
country or a subdivision thereof, or options or other derivatives on
any of the foregoing; or (b) interest rate futures or options or
derivatives on the foregoing in this subparagraph (b); or (c) CBOE
Volatility Index (VIX) Futures.''
\7\ See Securities Exchange Act Release No. 79069 (October 7,
2016), 81 FR 70714 (October 13, 2016) (SR-BatsBZX-2016-26) (``BATS
Filing''). Additional information regarding the VSTOXX and VSTOXX
Futures is included in the BATS Filing.
---------------------------------------------------------------------------
The Exchange proposes to amend NYSE Arca Equities Rule 5.2(j)(6)(v)
in order to add VSTOXX Futures to the definition of Futures Reference
Asset, which would allow the Exchange to list Futures-Linked Securities
linked to VSTOXX Futures through generic listing standards pursuant to
Rule 19b-4(e) under NYSE Arca Equities Rule 5.2(j)(6).\8\ Prior to
listing Futures-Linked Securities linked to VSTOXX Futures pursuant to
Rule 5.2(j)(6), an issuer would be required to represent to the
Exchange that it will advise the Exchange of any failure of the
Futures-Linked Securities to comply with the continued listing
requirements.
---------------------------------------------------------------------------
\8\ The Exchange also proposes to delete as duplicative the word
``or'' in two places in NYSE Arca Equities Rule 5.2(j)(6)(v).
---------------------------------------------------------------------------
NYSE Arca Equities Rule 5.2(j)(6)(B)(V) (``Futures-Linked
Securities Listing Standards'') requires that a Futures-Linked Security
meet one of the following standards: (1) That the Futures Reference
Asset to which the security is linked shall have been reviewed and
approved for the trading of Futures-Linked Securities or options or
other derivatives by the Commission under Section 19(b)(2) of the Act
and rules thereunder and the conditions set forth in the Commission's
approval order, including with respect to comprehensive surveillance
sharing agreements (``CSSAs''), continue to be satisfied; or (2) the
pricing information for components of a Futures Reference Asset must be
derived from a market which is a member or affiliate of a member of the
Intermarket Surveillance Group (``ISG'') or a market with which the
Exchange has a CSSA.\9\ A Futures Reference Asset may include
components representing not more than 10% of the dollar weight of such
Futures Reference Asset for which the pricing information is derived
from markets that do not meet requirement (2) above; provided, however,
that no single component subject to this exception exceeds 7% of the
dollar weight of the Futures Reference Asset. As proposed, adding
VSTOXX Futures to the definition of Futures Reference Asset would
satisfy the first criterion described above and the second criterion
would be satisfied by virtue of Eurex Deutschland's (``Eurex'')
membership in ISG, as further described below.
---------------------------------------------------------------------------
\9\ ISG is comprised of an international group of exchanges,
market centers, and market regulators that perform front-line market
surveillance in their respective jurisdictions. See https://www.isgportal.org/home.html.
---------------------------------------------------------------------------
Further, any Futures-Linked Securities linked to VSTOXX Futures
would also be required to meet both the initial and continued listing
standards in NYSE Arca Equities Rule 5.2(j)(6)(B)(V) or be subject to
delisting or removal proceedings, which include: (i) That the value of
the Futures Reference Asset be calculated and widely disseminated by
one or more major market data vendors on at least a 15-second basis
during the Exchange's Core Trading Session (normally, 9:30 a.m. to 4:00
p.m., Eastern Time); (ii) for Futures-Linked Securities that are
periodically redeemable, the indicative value of the subject Futures-
Linked Securities must be calculated and widely disseminated by the
Exchange or one or more major market data vendors on at least a 15-
second basis during the Exchange's Core Trading Session; (iii) the
aggregate market value or the principal amount of the Futures-Linked
Securities must be at least $400,000; (iv) the value of the Futures
Reference Asset is no longer calculated or available and a new Futures
Reference Asset is substituted, unless the new Futures Reference Asset
meets the requirements of Rule 5.2(j)(6); or (v) if such other event
occurs or condition exists which in the opinion of the Exchange makes
further dealings on the Exchange inadvisable. Any Futures-Linked
Securities linked to VSTOXX Futures would also be required to meet the
listing standards applicable to all Index-Linked Securities under NYSE
Arca Equities Rule 5.2(j)(6)(A). Finally, all Index-Linked Securities
listed pursuant to NYSE Arca Equities Rule 5.2(j)(6) are included
within the definition of ``security'' or ``securities'' as such terms
are used in the Exchange rules and, as such, are subject to Exchange
rules and procedures that currently govern the trading of securities on
the Exchange.
The Exchange believes that the proposed standards would continue to
ensure transparency surrounding the listing process for Index-Linked
Securities. The Exchange also believes that the existing standards for
listing and trading Futures-Linked Securities are reasonably designed
to promote a fair and orderly market for such
[[Page 10420]]
Futures-Linked Securities and the addition of VSTOXX Futures to Futures
Reference Assets does not affect this. The proposed addition of VSTOXX
Futures to those instruments included in Futures Reference Assets would
also work in conjunction with the existing initial and continued
listing criteria related to surveillance procedures and trading
guidelines.
The Exchange believes that its surveillance procedures are adequate
to continue to properly monitor the trading of Futures-Linked
Securities linked to VSTOXX Futures in all trading sessions and to
deter and detect violations of Exchange rules. The issuer of a series
of Index-Linked Securities is and will continue to be required to
comply with Rule 10A-3 under the Act \10\ for the initial and continued
listing of Index-Linked Securities, as provided in NYSE Arca Equities
Rule 5.2(j)(6)(A)(f). The Exchange notes that the proposed change is
not intended to amend any other component or requirement of NYSE Arca
Equities Rule 5.2(j)(6).
---------------------------------------------------------------------------
\10\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------
Additional information regarding the VSTOXX and VSTOXX Futures can
be found on the STOXX Limited (``STOXX'') Web site and the Eurex Web
site, respectively.\11\ The VSTOXX is based on EURO STOXX 50 Index
(``Index'') real-time option prices that are listed on the Eurex and
are designed to reflect the market expectations of near-term up to
long-term volatility by measuring the square root of the implied
variances across all options of a given time to expiration. The Index
includes 50 stocks that are among the largest free-float market
capitalization stocks from 12 Eurozone countries. VSTOXX Futures are
cash settled and trade between the hours of 7:30 a.m. and 10:30 p.m.
Central European Time (``CET'') (2:30 a.m. and 5:30 p.m. Eastern Time).
The VSTOXX Futures contract value is 100 Euros per index point of the
underlying and it is traded to two decimal places with a minimum price
change of 0.05 points (equivalent to a value of 5 Euros). The daily
settlement price is determined during the closing auction of the
respective futures contract. The last trading day and final settlement
day is 30 calendar days prior to the third Friday of the expiration
month of the underlying options, which is usually the Wednesday prior
to the second to last Friday of the respective maturity month.
---------------------------------------------------------------------------
\11\ Eurex is a member of the ISG and, as such, the Exchange may
obtain information regarding trading in the underlying VSTOXX
Futures contracts. For a list of the current members and affiliate
members of ISG, see www.isgportal.com.
---------------------------------------------------------------------------
STOXX will compute the Index on a real-time basis throughout each
trading day, from 8:50 a.m. until 5:30 CET (3:50 a.m. until 12:30 p.m.
Eastern Time. VSTOXX levels will be calculated by STOXX and
disseminated by major market data vendors on a real-time basis
throughout each trading day.
The Exchange believes that the proposed amendment to add VSTOXX
Futures as an underlying Futures Reference Asset will provide investors
with the ability to better diversify and hedge their portfolios using
an exchange listed security without having to trade directly in the
underlying futures contracts, and will facilitate the listing and
trading of additional Futures-Linked Securities that will enhance
competition among market participants, to the benefit of investors and
the marketplace.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\13\ in particular, because
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 regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed amendment to add VSTOXX Futures as an underlying
Futures Reference Asset will provide investors with the ability to
better diversify and hedge their portfolios using an exchange-listed
security without having to trade directly in the underlying futures
contracts, and will facilitate the listing and trading of additional
Futures-Linked Securities that will enhance competition among market
participants, to the benefit of investors and the marketplace. As noted
above, the Exchange has in place surveillance procedures relating to
trading in Futures-Linked Securities and may obtain information
regarding both the Futures-Linked Securities and VSTOXX Futures via ISG
from other exchanges that are members of ISG or with which the Exchange
has entered into a CSSA. In addition, as noted above, investors will
have ready access to information on an intraday basis regarding: (i)
The value of the Futures Reference Asset, which will be calculated and
widely disseminated by one or more major market data vendors on at
least a 15-second basis during the Exchange's Core Trading Session;
(ii) for Futures-Linked Securities that are periodically redeemable,
the indicative value of the securities, which must be calculated and
widely disseminated by the Exchange or one or more major market data
vendors on at least a 15-second basis during the Exchange's Core
Trading Session; and (iii) information regarding market price and
trading of Futures-Linked Securities, which will be available on
brokers' computer screens and other electronic services, and quotation
and last sale information for the securities, which will be available
on the facilities of the Consolidated Tape Association. Further, any
Futures-Linked Securities linked to VSTOXX Futures would be required to
meet both the initial and continued listing standards under NYSE Arca
Equities Rule 5.2(j)(6)(B)(V) or be subject to delisting or removal
proceedings, which include: (i) That the value of the Futures Reference
Asset be calculated and widely disseminated by one or more major market
data vendors on at least a 15-second basis during the Exchange's Core
Trading Session; (ii) for Futures-Linked Securities that are
periodically redeemable, the indicative value of the securities must be
calculated and widely disseminated by the Exchange or one or more major
market data vendors on at least a 15-second basis during the Exchange's
Core Trading Session; (iii) the aggregate market value or the principal
amount of the Futures-Linked Securities must be at least $400,000; (iv)
the value of the Futures Reference Asset is no longer calculated or
available and a new Futures Reference Asset is substituted, unless the
new Futures Reference Asset meets the requirements of Rule 5.2(j)(6);
or (v) if such other event occurs or condition exists which in the
opinion of the Exchange makes further dealings on the Exchange
inadvisable. Any Futures-Linked Securities linked to VSTOXX Futures
would also be required to meet the listing standards applicable to all
Index-Linked Securities in Rule 5.2(j)(6). All Index-Linked Securities
listed pursuant to NYSE Arca Equities Rule 5.2(j)(6) are included
within the definition of ``security'' or ``securities'' as such terms
are used in the Exchange rules and, as such, are subject to Exchange
rules and procedures that
[[Page 10421]]
currently govern the trading of securities on the Exchange. Trading in
the securities may be halted under the conditions specified in NYSE
Arca Equities Rule 5.2(j)(6)(E).
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\14\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes that the proposed rule
change would facilitate the listing and trading of additional types of
Futures-Linked Securities, which will enhance competition among market
participants, to the benefit of investors and the marketplace and
provide investors with the ability to better diversify and hedge their
portfolios using an exchange listed security without having to trade
directly in the underlying futures contracts. The Exchange believes
that this would reduce the time frame for bringing Futures-Linked
Securities linked to VSTOXX Futures to market, thereby reducing the
burdens on issuers and other market participants and promoting
competition. The proposed rule change would enhance competition among
listing exchanges because the proposed rule is based on an approved
listing standard on BZX.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
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 \15\ and Rule 19b-4(f)(6) thereunder.\16\
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.
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and 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. The
Exchange has satisfied this requirement.
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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 asserts that waiving the operative delay would be
consistent with the protection of investors and the public interest
because the Commission has already approved a substantially identical
proposed rule change submitted by another national securities exchange.
In addition, the Exchange asserts that a waiver would accommodate
listing and trading, including trading pursuant to unlisted trading
privileges, of an issue of Future-Linked Securities based on VSTOXX
Futures without additional delay, and would thereby promote intermarket
competition in listing and trading such securities, to the benefit of
the investing public.
The Commission believes that waiving the operative delay with
respect to the proposed rule change is consistent with the protection
of investors and the public interest because the proposal does not
raise any regulatory issues that were not already addressed by the
Commission when approving a substantially identical proposal by another
national securities exchange.\19\ Accordingly, the Commission hereby
waives the 30-day operative delay and designates the proposal operative
upon filing.\20\
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\19\ See note 7, supra.
\20\ For purposes only of waiving the operative delay of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of this proposed rule
change, the Commission summarily may temporarily suspend the 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 will institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEArca-2017-08 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 Number SR-NYSEArca-2017-08. 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 identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-
[[Page 10422]]
NYSEArca-2017-08 and should be submitted on or before March 3, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02735 Filed 2-9-17; 8:45 am]
BILLING CODE 8011-01-P
