Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 994NY, Broadcast Order Liquidity Delivery Mechanism, 19300-19304 [2017-08388]

Download as PDF 19300 Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices mstockstill on DSK30JT082PROD with NOTICES 7. Applicants request an exemption to permit Funds of Funds to acquire Fund shares beyond the limits of section 12(d)(1)(A) of the Act; and the Funds, and any principal underwriter for the Funds, and/or any broker or dealer registered under the Exchange Act, to sell shares to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. The application’s terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over a Fund through control or voting power, or in connection with certain services, transactions, and underwritings, (ii) excessive layering of fees, and (iii) overly complex fund structures, which are the concerns underlying the limits in sections 12(d)(1)(A) and (B) of the Act. 8. Applicants request an exemption from sections 17(a)(1) and 17(a)(2) of the Act to permit persons that are Affiliated Persons, or Second Tier Affiliates, of the Funds, solely by virtue of certain ownership interests, to effectuate purchases and redemptions in-kind. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions of Creation Units will be the same for all purchases and redemptions and Deposit Instruments and Redemption Instruments will be valued in the same manner as those investment positions currently held by the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind transactions with the Fund of Funds.3 The purchase of Creation Units by a Fund of Funds directly from a Fund will be accomplished in accordance with the policies of the Fund of Funds and will be based on the NAVs of the Funds. 9. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may 3 The requested relief would apply to direct sales of shares in Creation Units by a Fund to a Fund of Funds and redemptions of those shares. Applicants, moreover, are not seeking relief from section 17(a) for, and the requested relief will not apply to, transactions where a Fund could be deemed an Affiliated Person, or a Second-Tier Affiliate, of a Fund of Funds because an Adviser or an entity controlling, controlled by or under common control with an Adviser provides investment advisory services to that Fund of Funds. VerDate Sep<11>2014 18:43 Apr 25, 2017 Jkt 241001 exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. and at the Commission’s Public Reference Room. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [FR Doc. 2017–08444 Filed 4–25–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80494; File No. SR– NYSEMKT–2017–21] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 994NY, Broadcast Order Liquidity Delivery Mechanism April 20, 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 April 11, 2017, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt Rule 994NY, Broadcast Order Liquidity Delivery (‘‘BOLD’’) Mechanism. The proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 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. 1. Purpose The purpose of the filing is to adopt a rule that governs the operation of the Exchange’s new BOLD Mechanism. As proposed, BOLD Mechanism is a feature within the Exchange’s trading system that would provide automated order handling for eligible orders in designated classes. Regarding BOLD Mechanism eligibility, the Exchange will designate eligible order size, eligible order type, eligible capacity code (e.g., Customer 4 orders, nonMarket Maker non-Customer orders, and Market Maker 5 orders), and classes in which the BOLD Mechanism will be available. Orders must be specifically marked to be eligible for the BOLD Mechanism. After trading with eligible interest on the Exchange, the BOLD Mechanism will automatically process an eligible incoming order that is marketable against quotations disseminated by other exchanges that are participants in the Options Order Protection and Locked/Crossed Market Plan (the ‘‘Linkage Plan’’). With respect to order handling, orders that are received by the BOLD Mechanism pursuant to paragraph (a) of 4 The term ‘‘Customer’’ means an individual or organization that is not a Broker/Dealer; when not capitalized, ‘‘customer’’ refers to any individual or organization whose order is being represented, including a Broker/Dealer. See Rule 900.2NY(18). 5 Market Makers are included in the definition of ATP Holders. See Rule 900.2NY(5) (defining ATP Holder as ‘‘a natural person, sole proprietorship, partnership, corporation, limited liability company or other organization, in good standing, that has been issued an ATP,’’ and requires that ‘‘[a]n ATP Holder must be a registered broker or dealer pursuant to Section 15 of the Securities Exchange Act of 1934.’’ See also Rule 900.2NY(38) (providing that a Market Maker is ‘‘an ATP Holder that acts as a Market Maker pursuant to Rule 920NY’’). E:\FR\FM\26APN1.SGM 26APN1 mstockstill on DSK30JT082PROD with NOTICES Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices the proposed rule will be electronically exposed at the National Best Bid or Offer (‘‘NBBO’’) upon receipt. The exposure will be for a period of time determined by the Exchange on a classby-class basis, which period of time will not exceed one second. All ATP Holders will be permitted to trade against interest exposed during the exposure period. Regarding the allocation of exposed orders, any interest priced at the prevailing NBBO or better will be executed pursuant to Rule 964NY (Display, Priority and Order Allocation).6 If during the exposure period the Exchange receives an order (or quote) on the opposite side of the market from the exposed order that could trade against the exposed order at the prevailing NBBO price or better, then the exposed order will trade with such order at the prevailing NBBO price or better. The exposure period will not terminate if the exposed order has not been completely executed following such trade. Interest that is not immediately executable based on the prevailing NBBO may become executable during the exposure period based on changes to the NBBO. In the event of a change to the NBBO during the exposure period, the Exchange will evaluate the disseminated best bid/offer, and to the extent possible, execute any remaining portion of the exposed order at the best price(s) of resting interest on the Exchange. Following the exposure period, the Exchange will route the remaining portion of the exposed order to other exchanges, unless otherwise instructed by the ATP Holder. Any portion of a routed order that returns unfilled will trade against the Exchange’s best bid/offer unless another exchange is quoting at a better price in which case new orders will be generated and routed to trade against such better prices. All executions on the Exchange pursuant to this paragraph will comply with Rule 991NY (Order Protection). Regarding the early termination of the exposure period, the exposure period will terminate if the entire exposed order trades at the NBBO or better. In addition, the exposure period will terminate prior to its expiration and the exposed order will be processed in accordance with paragraph (c) of the proposed rule if, during the exposure period, the NBBO updates such that the exposed order is no longer marketable against the prevailing NBBO. 6 NYSE Amex provides customer priority and size pro-rata allocation. Pursuant to Rule 964NY, customers at a given price are executed first in priority. Non-customers are executed on a pro-rata basis pursuant to the size pro rata algorithm set forth in Rule 964NY(b)(3). VerDate Sep<11>2014 18:43 Apr 25, 2017 Jkt 241001 The purpose of the proposed rule change is to provide all ATP holders with the opportunity to improve their prices and ‘‘step up’’ to meet the NBBO in order to interact with orders sent to the Exchange. This would allow the market participant sending an order to NYSE Amex to increase its chances of receiving an execution at NYSE Amex (the market participant’s chosen venue) instead of having the order routed to another exchange. This ‘‘step up’’ process allows market participants to take into account factors beyond just disseminated prices, such as execution costs, system reliability, and quality of service, when determining the exchange to which to route an order. A market participant that prefers NYSE Amex due to some combination of these other factors will know that, even if NYSE Amex is not displaying a price that is the NBBO, the market participant may still receive an execution at NYSE Amex because another ATP Holder may ‘‘step up’’ to match the NBBO. Further, the BOLD Mechanism and the ‘‘step up’’ process enable ATP Holders to add liquidity that is available to interact with orders sent to the Exchange. Indeed, when an ATP Holder on NYSE Amex ‘‘steps up’’ to match the NBBO that is displayed on another exchange, more contracts may be executed at this NBBO price on NYSE Amex than are available at that same price on another exchange. The Exchange’s proposed BOLD Mechanism and the ‘‘step up’’ process are not novel concepts. As proposed, the BOLD Mechanism is similar to the Step Up Mechanism (‘‘SUM’’) offered on Bats EDGX Exchange, Inc. (‘‘EDGX’’), which provides the same manner of ‘‘step up’’ process.7 Similar to SUM, the proposed BOLD Mechanism would be entirely electronic. Another similarity between the proposed BOLD Mechanism and SUM is the determination by the Exchange to permit all ATP Holders to trade against interest exposed during the exposure period.8 The proposed BOLD 7 See Securities Exchange Act Release No. 78339 (July 15, 2016), 81 FR 47461 (July 21, 2016) (SR– BatsEDGX–2016–29) (‘‘SUM Approval’’). The SUM Approval was based on the Commission’s prior approval of the Chicago Board Options Exchange, Inc.’s (‘‘CBOE’’) Hybrid Agency Liaison (‘‘HAL’’). See Securities Exchange Act Release No. 60551 (August 20, 2009), 74 FR 43196 (August 26, 2009) (SR–CBOE–2009–040) (‘‘Approval of CBOE’s HAL’’). 8 The Exchange is adopting the term ‘‘interest’’ rather than ‘‘response’’ (as known on EDGX) to distinguish that the BOLD Mechanism is not an auction functionality that requires ATP Holders to ‘‘respond’’ to an auction message. Rather, ATP Holders would be permitted to trade against the ‘‘interest’’ that is exposed during the exposure PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 19301 Mechanism, however, is different from CBOE’s HAL in that on CBOE, only Market Makers with an appointment in the relevant option class and Trading Permit Holders acting as agent for orders resting at the top of CBOE’s book in the relevant option series opposite the order submitted to HAL may submit responses to the exposure message during the exposure period (unless CBOE determines, on a class-by-class basis, to allow all Trading Permit Holders to submit responses to the exposure message). Therefore, on CBOE, an order will not be exposed if the CBOE quotation contains resting orders and does not contain sufficient CBOE Market Maker quotation interest to satisfy the entire order. The Exchange does not propose this limitation because the proposed BOLD Mechanism is not dependent only on Market Maker interest in any way, but rather, seeks to expose the order for execution to all participants on NYSE Amex. In this respect, the proposed BOLD Mechanism is similar to EDGX’s SUM, which also is not dependent just on Market Maker interest and exposes orders to all participants on that exchange. Also, Interpretation and Policy .01 to CBOE Rule 6.14A (the CBOE rule regarding HAL), which prohibits the redistribution of exposure messages to market participants not eligible to respond to such messages (except in classes in which CBOE allows all Trading Permit Holders to respond to such messages) also would not apply to the proposed BOLD Mechanism, as all ATP Holders would be permitted to trade against the interest exposed during the exposure period. With regards to early termination of the exposure period, while the Exchange proposes different criteria for early termination of an exposure period than those reasons set forth in the corresponding CBOE rule regarding HAL, the proposed rule is, in most cases, similar to the SUM rule. Similar to SUM, an exposure period will terminate early if an order is executed in full. CBOE also terminates an exposure period in slightly different circumstances than the Exchange has proposed, including when a same side order is received by CBOE, if CBOE Market Maker interest decrements to an amount equal to the size of the exposed order and if the underlying security enters a limit up limit down state. Similar to EDGX, the Exchange does not believe early termination is necessary for the BOLD Mechanism under any of these reasons, and has proposed to period in accordance with the execution priority set forth in Rule 964NY(b)(3). E:\FR\FM\26APN1.SGM 26APN1 mstockstill on DSK30JT082PROD with NOTICES 19302 Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices terminate the exposure period early in a scenario not covered by HAL but that is available by SUM. Specifically, the Exchange would terminate an exposure period early when the exposed order is no longer marketable against the NBBO. The Exchange notes that SUM also terminates the exposure period early if a resting order on EDGX is locked or crossed by another options exchange. The Exchange does not believe early termination is necessary for the BOLD Mechanism because the BOLD Mechanism is not an auction. Accordingly, the Exchange believes that permitting the exposure period to continue would allow other orders to arrive and trade with any order exposed via the BOLD Mechanism (including any from the locking Exchange). Although the early termination section of the proposed rule represents the greatest departure from the HAL rule, the proposed BOLD Mechanism rule is nearly identical to the SUM rule, and the Exchange does not believe that any of the differences raise new policy issues generally with respect to a step up process. With respect to the early termination scenarios not adopted by the Exchange, the Exchange believes that the fact that an ATP Holder will have the ability to cancel its order after the BOLD Mechanism process is initiated coupled with the fact that the Exchange will only execute an order that has been exposed via the BOLD Mechanism process to the extent the order is marketable against the NBBO mitigate any potential concern regarding such differences.9 Further, regarding the termination scenarios specified by the Exchange, the Exchange believes that these are reasonable reasons to terminate the BOLD Mechanism process. Specifically, if an order is no longer marketable, then it cannot be executed through the BOLD Mechanism process so no longer benefits from being exposed. Generally speaking, the Exchange’s proposed rule is similar to the SUM rule in terms of its structure and wording. The Exchange’s proposed rule differs slightly from the SUM rule in that the proposed BOLD Mechanism is not an auction and therefore, when an ATP Holder ‘‘steps up’’ to trade against an exposed order, the proposed rule does not refer to that as a ‘‘response’’ by the ATP Holder. The proposed rule also differs from the SUM rule in that orders 9 As a general matter, ATP Holders can cancel their orders on the Exchange unless expressly prohibited. For example, Rule 971.1NY(c) provides, in part, that ‘‘[o]nce commenced, the CUBE Order (as well as the Contra Order) may not be cancelled or modified.’’ No such restriction exists for orders processed by the BOLD Mechanism. VerDate Sep<11>2014 18:43 Apr 25, 2017 Jkt 241001 received pursuant to paragraph (a) of the proposed rule would only be processed by the BOLD Mechanism once because, having exposed the order and attracted insufficient (or no) liquidity, the order (or balance thereof) would not be exposed again. The Exchange does not believe the terminology used or different wording represents any substantive difference between the proposed BOLD Mechanism and the functionality offered through SUM and HAL. Any such differences are intended to highlight the exact operation of the proposed BOLD Mechanism process. Despite the differences highlighted above, the proposed BOLD Mechanism would otherwise operate in similar manner to SUM and HAL, the latter of which was previously approved by the Commission and formed the basis for the former to be made immediately effective upon its filing with the Commission. The Commission has always been clear that honoring better prices on other markets can be accomplished by matching those better prices.10 The proposed BOLD Mechanism would allow participants on NYSE Amex to do just that. If an ATP Holder wants to ensure that an order does not go through the proposed BOLD Mechanism, then that participant can submit an order that would not be exposed to the BOLD Mechanism.11 In addition to Rule 994NY proposed above, the Exchange proposes to adopt Commentary .01 to proposed Rule 994NY, which states that all determinations by the Exchange pursuant to proposed Rule 994NY (i.e., eligible order size, order type, increment, participant ID, BOLD Mechanism timer and classes) will be announced in a Trader Update and maintained in specifications made publicly available via the Exchange’s Web site. As noted above, the Exchange also proposes to adopt Commentary .02 to proposed Rule 994NY to make clear that orders that are received paragraph 10 For example, in adopting the Order Protection Rule (Rule 611) under Regulation NMS in 2005, the Commission stated: ‘‘The Order Protection Rule generally requires that trading centers match the best quoted prices, cancel orders without an execution, or route orders to the trading centers quoting the best prices.’’ See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37495 (June 29, 2005), at 37525 (S7–10–04). 11 An ATP Holder will be able to opt-in to the BOLD Mechanism by including a specific field in their orders submitted to the Exchange. Details regarding the ability to opt-in will be set forth in the Exchange’s order entry specifications, which are made publicly available to all ATP Holders. The ability to opt-in to the BOLD Mechanism is different from the SUM process. SUM has adopted an ‘optout’ approach where members of EDGX are able to opt-out by including a specific field in orders submitted to that exchange. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 (a) of the proposed rule would only be processed by the BOLD Mechanism once. The Exchange also proposes to amend certain other Exchange rules that would be impacted by the proposed BOLD Mechanism. First, the Exchange proposes to adopt paragraph (F) under Rule 971.1NY(c)(4) to reflect that the Exchange’s Customer Best Execution Auction (‘‘CUBE Auction’’) will conclude early if the BOLD Mechanism, i.e., orders that are eligible for exposure under proposed Rule 994NY, receives an unrelated order in the same series during the CUBE Auction’s Response Time Interval. When the CUBE Auction concludes, the CUBE Order would execute pursuant to current Rule 971.1NY(c)(5). The Exchange believes that early conclusion of a CUBE Auction in this circumstance would allow the Exchange to appropriately handle unrelated orders exposed via the BOLD Mechanism, while at the same time allowing the CUBE Order to execute against the Contra Order and any RFR Responses that may have been entered up to that point. Next, the Exchange proposes to adopt Commentary .04 to Rule 971.1NY, which states that a CUBE Order will be rejected if the CUBE Order is in the same series as an order exposed pursuant to the proposed BOLD Mechanism. Finally, the Exchange proposes to adopt Commentary .04 to Rule 985NY, which states that a Qualified Contingent Cross (‘‘QCC’’) Order will be rejected if the QCC Order is in the same series as an order exposed pursuant to the proposed BOLD Mechanism. The Exchange believes the rejection of a CUBE Order and/or a QCC Order in these circumstances would allow the full exposure period for the order submitted pursuant to the BOLD Mechanism, which should maximize the opportunity for the exposed order to be executed on the Exchange. 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirements of the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.12 In particular, the proposal is consistent with Section 6(b)(5) of the Act 13 because it is designed to adopt the BOLD Mechanism, which is designed to offer market participants greater flexibility with respect to orders entered 12 15 13 15 E:\FR\FM\26APN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 26APN1 mstockstill on DSK30JT082PROD with NOTICES Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices into the NYSE Amex book, thereby promoting just and equitable principles of trade, fostering cooperation and coordination with persons engaged in facilitating transactions in securities, removing impediments to, and perfecting the mechanisms of, a free and open market and a national market system. The Exchange’s proposal to adopt the BOLD Mechanism would provide ATP Holders on NYSE Amex with the opportunity to improve their prices to match the NBBO in order to interact with orders sent to the Exchange. This will allow the market participant sending an order to NYSE Amex to increase its chances of receiving an execution on NYSE Amex (the market participant’s chosen venue) instead of having the order be routed to another exchange. This ‘‘step up’’ process allows market participants to take into account factors beyond just disseminated prices, such as execution costs, system reliability, and quality of service, when determining the exchange to which to route an order. A market participant that prefers NYSE Amex due to some combination of these other factors will know that, even if NYSE Amex is not displaying a price that is the NBBO, the market participant may still receive an execution at NYSE Amex because another ATP Holder may ‘‘step up’’ to match the NBBO. Therefore, the fact that the BOLD Mechanism allows a market participant who elects to send an order to NYSE Amex to have a greater likelihood of achieving execution at their chosen venue removes an impediment to and perfects the mechanism for a free and open national market system. Further, the BOLD Mechanism and the ‘‘step up’’ process enables ATP Holders to add liquidity that is available to interact with orders sent to the Exchange. Indeed, when an ATP Holder ‘‘steps up’’ to match the NBBO that is displayed on another exchange, more contracts maybe executed at this NBBO price on NYSE Amex than are available at that same price on the other exchange. This increased liquidity benefits all market participants on NYSE Amex, thereby perfecting the mechanism for a free and open national market system and protecting investors and the public interest. The Exchange’s proposed BOLD Mechanism is similar to EDGX’s SUM, which provides the same manner of ‘‘step up’’ process. To the extent there are differences between the proposed BOLD Mechanism and SUM, as described elsewhere in the proposal, the Exchange does not believe such differences raise any new or significant VerDate Sep<11>2014 18:43 Apr 25, 2017 Jkt 241001 policy concerns. Further, despite the differences, the proposed BOLD Mechanism would otherwise operate in a similar manner to the SUM process. As such, the Exchange merely desires to adopt functionality that is similar to one that already exists on EDGX, and on CBOE.14 Permitting the Exchange to operate on an even playing field relative to other exchanges that have similar functionality removes impediments to and perfects the mechanism for a free and open market and a national market system. The Commission has always been clear that honoring better prices on other markets can be accomplished by matching those other prices.15 The proposed BOLD Mechanism would allow participants on NYSE Amex to do just that. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change to adopt the BOLD Mechanism will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange’s proposed BOLD Mechanism is open to all market participants. The ‘‘step up’’ feature of the proposed BOLD Mechanism allows for execution at the NBBO for price improvement. When such price improvement is achieved via this ‘‘stepping up’’ to meet (or beat) the best quoted price at another exchange, market participants are able to receive the best quoted price while still achieving execution on NYSE Amex, the exchange to which they elected to send their orders. As noted above, the proposed BOLD Mechanism is similar to processes offered on other options exchanges that compete with NYSE Amex, and therefore the proposal is procompetitive. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on 14 See 15 See PO 00000 supra, note 7. supra, note 10. Frm 00107 Fmt 4703 Sfmt 4703 19303 which it was filed, or such shorter time as the Commission may designate, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 16 and Rule 19b–4(f)(6) thereunder.17 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 18 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 19 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange stated that waiver of the operative delay will allow the Exchange to provide functionality on NYSE Amex that is similar to functionality provided by other options exchanges, including but not limited to EDGX.20 In addition, the Exchange stated that waiver of the operative delay will allow it to more effectively compete with other options exchanges. For these reasons, the Commission believes the waiver of the operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the operative delay and designates the proposal operative upon filing.21 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, 16 15 U.S.C. 78s(b)(3)(A). 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. 18 17 CFR 240.19b–4(f)(6). 19 17 CFR 240.19b–4(f)(6)(iii). 20 See supra, note 7. 21 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 17 E:\FR\FM\26APN1.SGM 26APN1 19304 Federal Register / Vol. 82, No. 79 / Wednesday, April 26, 2017 / Notices including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEMKT–2017–21 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–NYSEMKT–2017–21. 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– NYSEMKT–2017–21, and should be submitted on or before May 17, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–08388 Filed 4–25–17; 8:45 am] BILLING CODE 8011–01–P SOCIAL SECURITY ADMINISTRATION [Docket No: SSA–2017–0020] Agency Information Collection Activities: Proposed Request and Comment Request The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104–13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes revisions and on extension of OMB-approved information collections. SSA is soliciting comments on the accuracy of the agency’s burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer Number of respondents Modality of completion and SSA Reports Clearance Officer at the following addresses or fax numbers. (OMB), Office of Management and Budget, Attn: Desk Officer for SSA, Fax: 202–395–6974, Email address: OIRA_Submission@omb.eop.gov. (SSA), Social Security Administration, OLCA, Attn: Reports Clearance Director, 3100 West High Rise, 6401 Security Blvd., Baltimore, MD 21235, Fax: 410–966–2830, Email address: OR.Reports.Clearance@ssa.gov Or you may submit your comments online through www.regulations.gov, referencing Docket ID Number [SSA– 2017–0020]. I. The information collections below are pending at SSA. SSA will submit them to OMB within 60 days from the date of this notice. To be sure we consider your comments, we must receive them no later than June 26, 2017. Individuals can obtain copies of the collection instruments by writing to the above email address. 1. Application for Benefits under a U.S. International Social Security Agreement—20 CFR 404.1925—0960– 0448. Section 233(a) of the Social Security Act (Act) authorizes the President to broker international Social Security agreements (Totalization Agreements) between the United States and foreign countries. SSA collects information using Form SSA–2490–BK to determine entitlement to Social Security benefits from the United States, or from a country that enters into a Totalization Agreement with the United States. The respondents are individuals applying for Old Age Survivors and Disability Insurance (OASDI) benefits from the United States or from a Totalization Agreement country. Type of Request: Revision of an OMBapproved information collection. Average burden per response (minutes) Frequency of response Estimated total annual burden (hours) 15,030 2,120 1 1 30 30 7,515 1,060 Totals ........................................................................................................ mstockstill on DSK30JT082PROD with NOTICES SSA–2490–BK (MCS) ..................................................................................... SSA–2490–BK (paper) .................................................................................... 17,150 ........................ ........................ 8,575 2. Medicare Part D Subsidies Regulations—20 CFR 418.3625(c), 418.3645, 418.3665(a), and 418.3670— 0960–0702. The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 established the Medicare Part D program for voluntary prescription drug coverage of premium, 22 17 deductible, and co-payment costs for certain low-income individuals. The MMA also mandated the provision of subsidies for those individuals who qualify for the program and who meet eligibility criteria for help with premium, deductible, or co-payment costs. This law requires SSA to make eligibility determinations, and to provide a process for appealing SSA’s determinations. Regulation sections 418.3625(c), 418.3645, 418.3665(a), and 418.3670 contain public reporting requirements pertaining to administrative review hearings. Respondents are applicants for the CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:43 Apr 25, 2017 Jkt 241001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 E:\FR\FM\26APN1.SGM 26APN1

Agencies

[Federal Register Volume 82, Number 79 (Wednesday, April 26, 2017)]
[Notices]
[Pages 19300-19304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08388]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80494; File No. SR-NYSEMKT-2017-21]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 994NY, 
Broadcast Order Liquidity Delivery Mechanism

April 20, 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 April 11, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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 adopt Rule 994NY, Broadcast Order 
Liquidity Delivery (``BOLD'') Mechanism. 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 purpose of the filing is to adopt a rule that governs the 
operation of the Exchange's new BOLD Mechanism. As proposed, BOLD 
Mechanism is a feature within the Exchange's trading system that would 
provide automated order handling for eligible orders in designated 
classes. Regarding BOLD Mechanism eligibility, the Exchange will 
designate eligible order size, eligible order type, eligible capacity 
code (e.g., Customer \4\ orders, non-Market Maker non-Customer orders, 
and Market Maker \5\ orders), and classes in which the BOLD Mechanism 
will be available. Orders must be specifically marked to be eligible 
for the BOLD Mechanism. After trading with eligible interest on the 
Exchange, the BOLD Mechanism will automatically process an eligible 
incoming order that is marketable against quotations disseminated by 
other exchanges that are participants in the Options Order Protection 
and Locked/Crossed Market Plan (the ``Linkage Plan'').
---------------------------------------------------------------------------

    \4\ The term ``Customer'' means an individual or organization 
that is not a Broker/Dealer; when not capitalized, ``customer'' 
refers to any individual or organization whose order is being 
represented, including a Broker/Dealer. See Rule 900.2NY(18).
    \5\ Market Makers are included in the definition of ATP Holders. 
See Rule 900.2NY(5) (defining ATP Holder as ``a natural person, sole 
proprietorship, partnership, corporation, limited liability company 
or other organization, in good standing, that has been issued an 
ATP,'' and requires that ``[a]n ATP Holder must be a registered 
broker or dealer pursuant to Section 15 of the Securities Exchange 
Act of 1934.'' See also Rule 900.2NY(38) (providing that a Market 
Maker is ``an ATP Holder that acts as a Market Maker pursuant to 
Rule 920NY'').
---------------------------------------------------------------------------

    With respect to order handling, orders that are received by the 
BOLD Mechanism pursuant to paragraph (a) of

[[Page 19301]]

the proposed rule will be electronically exposed at the National Best 
Bid or Offer (``NBBO'') upon receipt. The exposure will be for a period 
of time determined by the Exchange on a class-by-class basis, which 
period of time will not exceed one second. All ATP Holders will be 
permitted to trade against interest exposed during the exposure period.
    Regarding the allocation of exposed orders, any interest priced at 
the prevailing NBBO or better will be executed pursuant to Rule 964NY 
(Display, Priority and Order Allocation).\6\ If during the exposure 
period the Exchange receives an order (or quote) on the opposite side 
of the market from the exposed order that could trade against the 
exposed order at the prevailing NBBO price or better, then the exposed 
order will trade with such order at the prevailing NBBO price or 
better. The exposure period will not terminate if the exposed order has 
not been completely executed following such trade. Interest that is not 
immediately executable based on the prevailing NBBO may become 
executable during the exposure period based on changes to the NBBO. In 
the event of a change to the NBBO during the exposure period, the 
Exchange will evaluate the disseminated best bid/offer, and to the 
extent possible, execute any remaining portion of the exposed order at 
the best price(s) of resting interest on the Exchange. Following the 
exposure period, the Exchange will route the remaining portion of the 
exposed order to other exchanges, unless otherwise instructed by the 
ATP Holder. Any portion of a routed order that returns unfilled will 
trade against the Exchange's best bid/offer unless another exchange is 
quoting at a better price in which case new orders will be generated 
and routed to trade against such better prices. All executions on the 
Exchange pursuant to this paragraph will comply with Rule 991NY (Order 
Protection).
---------------------------------------------------------------------------

    \6\ NYSE Amex provides customer priority and size pro-rata 
allocation. Pursuant to Rule 964NY, customers at a given price are 
executed first in priority. Non-customers are executed on a pro-rata 
basis pursuant to the size pro rata algorithm set forth in Rule 
964NY(b)(3).
---------------------------------------------------------------------------

    Regarding the early termination of the exposure period, the 
exposure period will terminate if the entire exposed order trades at 
the NBBO or better. In addition, the exposure period will terminate 
prior to its expiration and the exposed order will be processed in 
accordance with paragraph (c) of the proposed rule if, during the 
exposure period, the NBBO updates such that the exposed order is no 
longer marketable against the prevailing NBBO.
    The purpose of the proposed rule change is to provide all ATP 
holders with the opportunity to improve their prices and ``step up'' to 
meet the NBBO in order to interact with orders sent to the Exchange. 
This would allow the market participant sending an order to NYSE Amex 
to increase its chances of receiving an execution at NYSE Amex (the 
market participant's chosen venue) instead of having the order routed 
to another exchange. This ``step up'' process allows market 
participants to take into account factors beyond just disseminated 
prices, such as execution costs, system reliability, and quality of 
service, when determining the exchange to which to route an order. A 
market participant that prefers NYSE Amex due to some combination of 
these other factors will know that, even if NYSE Amex is not displaying 
a price that is the NBBO, the market participant may still receive an 
execution at NYSE Amex because another ATP Holder may ``step up'' to 
match the NBBO. Further, the BOLD Mechanism and the ``step up'' process 
enable ATP Holders to add liquidity that is available to interact with 
orders sent to the Exchange. Indeed, when an ATP Holder on NYSE Amex 
``steps up'' to match the NBBO that is displayed on another exchange, 
more contracts may be executed at this NBBO price on NYSE Amex than are 
available at that same price on another exchange.
    The Exchange's proposed BOLD Mechanism and the ``step up'' process 
are not novel concepts. As proposed, the BOLD Mechanism is similar to 
the Step Up Mechanism (``SUM'') offered on Bats EDGX Exchange, Inc. 
(``EDGX''), which provides the same manner of ``step up'' process.\7\ 
Similar to SUM, the proposed BOLD Mechanism would be entirely 
electronic.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 78339 (July 15, 
2016), 81 FR 47461 (July 21, 2016) (SR-BatsEDGX-2016-29) (``SUM 
Approval''). The SUM Approval was based on the Commission's prior 
approval of the Chicago Board Options Exchange, Inc.'s (``CBOE'') 
Hybrid Agency Liaison (``HAL''). See Securities Exchange Act Release 
No. 60551 (August 20, 2009), 74 FR 43196 (August 26, 2009) (SR-CBOE-
2009-040) (``Approval of CBOE's HAL'').
---------------------------------------------------------------------------

    Another similarity between the proposed BOLD Mechanism and SUM is 
the determination by the Exchange to permit all ATP Holders to trade 
against interest exposed during the exposure period.\8\ The proposed 
BOLD Mechanism, however, is different from CBOE's HAL in that on CBOE, 
only Market Makers with an appointment in the relevant option class and 
Trading Permit Holders acting as agent for orders resting at the top of 
CBOE's book in the relevant option series opposite the order submitted 
to HAL may submit responses to the exposure message during the exposure 
period (unless CBOE determines, on a class-by-class basis, to allow all 
Trading Permit Holders to submit responses to the exposure message). 
Therefore, on CBOE, an order will not be exposed if the CBOE quotation 
contains resting orders and does not contain sufficient CBOE Market 
Maker quotation interest to satisfy the entire order. The Exchange does 
not propose this limitation because the proposed BOLD Mechanism is not 
dependent only on Market Maker interest in any way, but rather, seeks 
to expose the order for execution to all participants on NYSE Amex. In 
this respect, the proposed BOLD Mechanism is similar to EDGX's SUM, 
which also is not dependent just on Market Maker interest and exposes 
orders to all participants on that exchange. Also, Interpretation and 
Policy .01 to CBOE Rule 6.14A (the CBOE rule regarding HAL), which 
prohibits the redistribution of exposure messages to market 
participants not eligible to respond to such messages (except in 
classes in which CBOE allows all Trading Permit Holders to respond to 
such messages) also would not apply to the proposed BOLD Mechanism, as 
all ATP Holders would be permitted to trade against the interest 
exposed during the exposure period.
---------------------------------------------------------------------------

    \8\ The Exchange is adopting the term ``interest'' rather than 
``response'' (as known on EDGX) to distinguish that the BOLD 
Mechanism is not an auction functionality that requires ATP Holders 
to ``respond'' to an auction message. Rather, ATP Holders would be 
permitted to trade against the ``interest'' that is exposed during 
the exposure period in accordance with the execution priority set 
forth in Rule 964NY(b)(3).
---------------------------------------------------------------------------

    With regards to early termination of the exposure period, while the 
Exchange proposes different criteria for early termination of an 
exposure period than those reasons set forth in the corresponding CBOE 
rule regarding HAL, the proposed rule is, in most cases, similar to the 
SUM rule. Similar to SUM, an exposure period will terminate early if an 
order is executed in full. CBOE also terminates an exposure period in 
slightly different circumstances than the Exchange has proposed, 
including when a same side order is received by CBOE, if CBOE Market 
Maker interest decrements to an amount equal to the size of the exposed 
order and if the underlying security enters a limit up limit down 
state. Similar to EDGX, the Exchange does not believe early termination 
is necessary for the BOLD Mechanism under any of these reasons, and has 
proposed to

[[Page 19302]]

terminate the exposure period early in a scenario not covered by HAL 
but that is available by SUM. Specifically, the Exchange would 
terminate an exposure period early when the exposed order is no longer 
marketable against the NBBO. The Exchange notes that SUM also 
terminates the exposure period early if a resting order on EDGX is 
locked or crossed by another options exchange. The Exchange does not 
believe early termination is necessary for the BOLD Mechanism because 
the BOLD Mechanism is not an auction. Accordingly, the Exchange 
believes that permitting the exposure period to continue would allow 
other orders to arrive and trade with any order exposed via the BOLD 
Mechanism (including any from the locking Exchange). Although the early 
termination section of the proposed rule represents the greatest 
departure from the HAL rule, the proposed BOLD Mechanism rule is nearly 
identical to the SUM rule, and the Exchange does not believe that any 
of the differences raise new policy issues generally with respect to a 
step up process.
    With respect to the early termination scenarios not adopted by the 
Exchange, the Exchange believes that the fact that an ATP Holder will 
have the ability to cancel its order after the BOLD Mechanism process 
is initiated coupled with the fact that the Exchange will only execute 
an order that has been exposed via the BOLD Mechanism process to the 
extent the order is marketable against the NBBO mitigate any potential 
concern regarding such differences.\9\ Further, regarding the 
termination scenarios specified by the Exchange, the Exchange believes 
that these are reasonable reasons to terminate the BOLD Mechanism 
process. Specifically, if an order is no longer marketable, then it 
cannot be executed through the BOLD Mechanism process so no longer 
benefits from being exposed. Generally speaking, the Exchange's 
proposed rule is similar to the SUM rule in terms of its structure and 
wording. The Exchange's proposed rule differs slightly from the SUM 
rule in that the proposed BOLD Mechanism is not an auction and 
therefore, when an ATP Holder ``steps up'' to trade against an exposed 
order, the proposed rule does not refer to that as a ``response'' by 
the ATP Holder. The proposed rule also differs from the SUM rule in 
that orders received pursuant to paragraph (a) of the proposed rule 
would only be processed by the BOLD Mechanism once because, having 
exposed the order and attracted insufficient (or no) liquidity, the 
order (or balance thereof) would not be exposed again. The Exchange 
does not believe the terminology used or different wording represents 
any substantive difference between the proposed BOLD Mechanism and the 
functionality offered through SUM and HAL. Any such differences are 
intended to highlight the exact operation of the proposed BOLD 
Mechanism process.
---------------------------------------------------------------------------

    \9\ As a general matter, ATP Holders can cancel their orders on 
the Exchange unless expressly prohibited. For example, Rule 
971.1NY(c) provides, in part, that ``[o]nce commenced, the CUBE 
Order (as well as the Contra Order) may not be cancelled or 
modified.'' No such restriction exists for orders processed by the 
BOLD Mechanism.
---------------------------------------------------------------------------

    Despite the differences highlighted above, the proposed BOLD 
Mechanism would otherwise operate in similar manner to SUM and HAL, the 
latter of which was previously approved by the Commission and formed 
the basis for the former to be made immediately effective upon its 
filing with the Commission. The Commission has always been clear that 
honoring better prices on other markets can be accomplished by matching 
those better prices.\10\ The proposed BOLD Mechanism would allow 
participants on NYSE Amex to do just that. If an ATP Holder wants to 
ensure that an order does not go through the proposed BOLD Mechanism, 
then that participant can submit an order that would not be exposed to 
the BOLD Mechanism.\11\
---------------------------------------------------------------------------

    \10\ For example, in adopting the Order Protection Rule (Rule 
611) under Regulation NMS in 2005, the Commission stated: ``The 
Order Protection Rule generally requires that trading centers match 
the best quoted prices, cancel orders without an execution, or route 
orders to the trading centers quoting the best prices.'' See 
Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 
37495 (June 29, 2005), at 37525 (S7-10-04).
    \11\ An ATP Holder will be able to opt-in to the BOLD Mechanism 
by including a specific field in their orders submitted to the 
Exchange. Details regarding the ability to opt-in will be set forth 
in the Exchange's order entry specifications, which are made 
publicly available to all ATP Holders. The ability to opt-in to the 
BOLD Mechanism is different from the SUM process. SUM has adopted an 
`opt-out' approach where members of EDGX are able to opt-out by 
including a specific field in orders submitted to that exchange.
---------------------------------------------------------------------------

    In addition to Rule 994NY proposed above, the Exchange proposes to 
adopt Commentary .01 to proposed Rule 994NY, which states that all 
determinations by the Exchange pursuant to proposed Rule 994NY (i.e., 
eligible order size, order type, increment, participant ID, BOLD 
Mechanism timer and classes) will be announced in a Trader Update and 
maintained in specifications made publicly available via the Exchange's 
Web site. As noted above, the Exchange also proposes to adopt 
Commentary .02 to proposed Rule 994NY to make clear that orders that 
are received paragraph (a) of the proposed rule would only be processed 
by the BOLD Mechanism once.
    The Exchange also proposes to amend certain other Exchange rules 
that would be impacted by the proposed BOLD Mechanism. First, the 
Exchange proposes to adopt paragraph (F) under Rule 971.1NY(c)(4) to 
reflect that the Exchange's Customer Best Execution Auction (``CUBE 
Auction'') will conclude early if the BOLD Mechanism, i.e., orders that 
are eligible for exposure under proposed Rule 994NY, receives an 
unrelated order in the same series during the CUBE Auction's Response 
Time Interval. When the CUBE Auction concludes, the CUBE Order would 
execute pursuant to current Rule 971.1NY(c)(5). The Exchange believes 
that early conclusion of a CUBE Auction in this circumstance would 
allow the Exchange to appropriately handle unrelated orders exposed via 
the BOLD Mechanism, while at the same time allowing the CUBE Order to 
execute against the Contra Order and any RFR Responses that may have 
been entered up to that point.
    Next, the Exchange proposes to adopt Commentary .04 to Rule 
971.1NY, which states that a CUBE Order will be rejected if the CUBE 
Order is in the same series as an order exposed pursuant to the 
proposed BOLD Mechanism. Finally, the Exchange proposes to adopt 
Commentary .04 to Rule 985NY, which states that a Qualified Contingent 
Cross (``QCC'') Order will be rejected if the QCC Order is in the same 
series as an order exposed pursuant to the proposed BOLD Mechanism. The 
Exchange believes the rejection of a CUBE Order and/or a QCC Order in 
these circumstances would allow the full exposure period for the order 
submitted pursuant to the BOLD Mechanism, which should maximize the 
opportunity for the exposed order to be executed on the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Securities Exchange Act of 1934 (the ``Act'') and 
the rules and regulations thereunder that are applicable to a national 
securities exchange, and, in particular, with the requirements of 
Section 6(b) of the Act.\12\ In particular, the proposal is consistent 
with Section 6(b)(5) of the Act \13\ because it is designed to adopt 
the BOLD Mechanism, which is designed to offer market participants 
greater flexibility with respect to orders entered

[[Page 19303]]

into the NYSE Amex book, thereby promoting just and equitable 
principles of trade, fostering cooperation and coordination with 
persons engaged in facilitating transactions in securities, removing 
impediments to, and perfecting the mechanisms of, a free and open 
market and a national market system.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange's proposal to adopt the BOLD Mechanism would provide 
ATP Holders on NYSE Amex with the opportunity to improve their prices 
to match the NBBO in order to interact with orders sent to the 
Exchange. This will allow the market participant sending an order to 
NYSE Amex to increase its chances of receiving an execution on NYSE 
Amex (the market participant's chosen venue) instead of having the 
order be routed to another exchange. This ``step up'' process allows 
market participants to take into account factors beyond just 
disseminated prices, such as execution costs, system reliability, and 
quality of service, when determining the exchange to which to route an 
order. A market participant that prefers NYSE Amex due to some 
combination of these other factors will know that, even if NYSE Amex is 
not displaying a price that is the NBBO, the market participant may 
still receive an execution at NYSE Amex because another ATP Holder may 
``step up'' to match the NBBO. Therefore, the fact that the BOLD 
Mechanism allows a market participant who elects to send an order to 
NYSE Amex to have a greater likelihood of achieving execution at their 
chosen venue removes an impediment to and perfects the mechanism for a 
free and open national market system. Further, the BOLD Mechanism and 
the ``step up'' process enables ATP Holders to add liquidity that is 
available to interact with orders sent to the Exchange. Indeed, when an 
ATP Holder ``steps up'' to match the NBBO that is displayed on another 
exchange, more contracts maybe executed at this NBBO price on NYSE Amex 
than are available at that same price on the other exchange. This 
increased liquidity benefits all market participants on NYSE Amex, 
thereby perfecting the mechanism for a free and open national market 
system and protecting investors and the public interest.
    The Exchange's proposed BOLD Mechanism is similar to EDGX's SUM, 
which provides the same manner of ``step up'' process. To the extent 
there are differences between the proposed BOLD Mechanism and SUM, as 
described elsewhere in the proposal, the Exchange does not believe such 
differences raise any new or significant policy concerns. Further, 
despite the differences, the proposed BOLD Mechanism would otherwise 
operate in a similar manner to the SUM process. As such, the Exchange 
merely desires to adopt functionality that is similar to one that 
already exists on EDGX, and on CBOE.\14\ Permitting the Exchange to 
operate on an even playing field relative to other exchanges that have 
similar functionality removes impediments to and perfects the mechanism 
for a free and open market and a national market system.
---------------------------------------------------------------------------

    \14\ See supra, note 7.
---------------------------------------------------------------------------

    The Commission has always been clear that honoring better prices on 
other markets can be accomplished by matching those other prices.\15\ 
The proposed BOLD Mechanism would allow participants on NYSE Amex to do 
just that.
---------------------------------------------------------------------------

    \15\ See supra, note 10.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change to 
adopt the BOLD Mechanism will impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Act. The 
Exchange's proposed BOLD Mechanism is open to all market participants. 
The ``step up'' feature of the proposed BOLD Mechanism allows for 
execution at the NBBO for price improvement. When such price 
improvement is achieved via this ``stepping up'' to meet (or beat) the 
best quoted price at another exchange, market participants are able to 
receive the best quoted price while still achieving execution on NYSE 
Amex, the exchange to which they elected to send their orders. As noted 
above, the proposed BOLD Mechanism is similar to processes offered on 
other options exchanges that compete with NYSE Amex, and therefore the 
proposal is pro-competitive.

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

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

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

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) 
thereunder.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \18\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
stated that waiver of the operative delay will allow the Exchange to 
provide functionality on NYSE Amex that is similar to functionality 
provided by other options exchanges, including but not limited to 
EDGX.\20\ In addition, the Exchange stated that waiver of the operative 
delay will allow it to more effectively compete with other options 
exchanges. For these reasons, the Commission believes the waiver of the 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the operative 
delay and designates the proposal operative upon filing.\21\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ See supra, note 7.
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing,

[[Page 19304]]

including whether the proposed rule change is consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2017-21 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-NYSEMKT-2017-21. 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-NYSEMKT-2017-21, and should 
be submitted on or before May 17, 2017.
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08388 Filed 4-25-17; 8:45 am]
 BILLING CODE 8011-01-P
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