Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Amending Rule 968NY To Make Permanent a Program That Allows Cabinet Trade Transactions To Take Place at a Price Below $1 Per Option Contract, 22033-22035 [2017-09532]

Download as PDF Federal Register / Vol. 82, No. 90 / Thursday, May 11, 2017 / Notices Rule 203A–2(e), SEC File No. 270–501, OMB Control No. 3235–0559. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for extension and approval of the previously approved collection of information discussed below. Rule 203A–2(e),1 which is entitled ‘‘Internet Investment Advisers,’’ exempts from the prohibition on Commission registration an Internet investment adviser who provides investment advice to all of its clients exclusively through computer softwarebased models or applications termed under the rule as ‘‘interactive Web sites.’’ 2 These advisers generally would not meet the statutory thresholds currently set out in section 203A of the Advisers Act 3—they do not manage $25 million or more in assets and do not advise registered investment companies, or they manage between $25 million and $100 million in assets, do not advise registered investment companies or business development companies, and are required to be registered as investment advisers with the states in which they maintain their principal offices and places of business and are subject to examination as an adviser by such states.4 Eligibility under rule 203A–2(e) is conditioned on an adviser maintaining in an easily accessible place, for a period of not less than five years from the filing of Form ADV,5 a record demonstrating that the adviser’s advisory business has been conducted through an interactive Web site in accordance with the rule.6 This record maintenance requirement is a ‘‘collection of information’’ for PRA purposes. The Commission believes that approximately 144 advisers are registered with the Commission under rule 203A–2(e), which involves a recordkeeping requirement of 1 17 CFR 275.203A–2(e). in rule 203A–2(e) is a limited exception to the interactive Web site requirement which allows these advisers to provide investment advice to fewer than 15 clients through other means on an annual basis. 17 CFR 275.203A–2(e)(1)(i). The rule also precludes advisers in a control relationship with an SEC-registered Internet adviser from registering with the Commission under the common control exemption provided by rule 203A– 2(b) (17 CFR 275.203A–2(b)). 17 CFR 275.203A– 2(e)(1)(iii). 3 15 U.S.C. 80b–3a(a). 4 Id. 5 The five-year record retention period is a similar recordkeeping retention period as imposed on all advisers under rule 204–2 of the Advisers Act. See rule 204–2 (17 CFR 275.204–2). 6 17 CFR 275.203A–2(e)(1)(ii). asabaliauskas on DSK3SPTVN1PROD with NOTICES 2 Included VerDate Sep<11>2014 16:52 May 10, 2017 Jkt 241001 approximately four burden hours per year per adviser and results in an estimated 576 of total burden hours (4 × 144) for all advisers. This collection of information is mandatory, as it is used by Commission staff in its examination and oversight program in order to determine continued Commission registration eligibility of advisers registered under this rule. Responses generally are kept confidential pursuant to section 210(b) of the Advisers Act.7 An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number. The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: May 5, 2017. Eduardo A. Aleman, Assistant Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80616; File No. SR– NYSEMKT–2017–13] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Amending Rule 968NY To Make Permanent a Program That Allows Cabinet Trade Transactions To Take Place at a Price Below $1 Per Option Contract May 5, 2017. I. Introduction On March 2, 2017, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant 7 15 PO 00000 U.S.C. 80b–10(b). Frm 00062 Fmt 4703 to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change amending the Exchange’s rules to make permanent a program that allows transactions to take place in open outcry trading at prices of at least $0 but less than $1 per option contract (‘‘subdollar cabinet trades’’). The proposed rule change was published for comment in the Federal Register on March 23, 2017.3 On April 25, 2017, the Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission received no comment letters on the proposed rule change. This order provides notice of filing of Amendment No. 1 and approves the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. II. Description of the Proposed Rule Change Prior to 2010, Exchange Rule 968NY (Cabinet Trades (Accommodation Transactions)) allowed cabinet trade transactions at a price of $1 per option contract to occur in open outcry trading for certain classes.5 In 2010, the Exchange amended Rule 968NY on a pilot basis to allow sub-dollar cabinet trades to take place at prices of at least $0 but less than $1 per option contract.6 The Exchange now proposes to amend Rule 968NY to make permanent its subdollar cabinet trade pilot program, which currently is scheduled to expire on July 5, 2017.7 1 15 [FR Doc. 2017–09584 Filed 5–10–17; 8:45 am] Sfmt 4703 22033 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 80272 (March 17, 2017), 82 FR 14936 (March 23, 2017) (‘‘Notice’’). 4 In Amendment No. 1, the Exchange provided supplemental background detail on its proposal, including a summary of why it initially put the program on a pilot, a description of the systems enhancements it made to be able to process cabinet trades in the regular course, an example of how a cabinet trade is done on the trading floor, and a representation that, to its knowledge, neither the Options Clearing Corporation (‘‘OCC’’) nor the Exchange’s members have reported any operational issues in connection with cabinet trades. To promote transparency of its proposed amendment, when NYSE MKT filed Amendment No. 1 with the Commission, it also submitted Amendment No. 1 as a comment letter to the file, which the Commission posted on its Web site and placed in the public comment file for SR–NYSEMKT–2017–13 (available at https://www.sec.gov/comments/sr-nysemkt-201713/nysemkt201713.htm). The Exchange also posted a copy of its Amendment No. 1 on its Web site (https://www.nyse.com/regulation/rule-filings) when it filed it with the Commission. 5 See Rule 968NY. See also Notice, supra note 3, at 14936 (discussing Rule 968NY). 6 See Securities Exchange Act Release No. 63475 (December 8, 2010), 75 FR 77932 (December 14, 2010) (SR–NYSEAmex–2010–114). 7 See Commentary .01 to Rule 968NY. See also Securities Exchange Act Release No. 79564 (December 15, 2016), 81 FR 93716 (December 21, 2016) (SR–NYSEMKT–2016–116). 2 17 E:\FR\FM\11MYN1.SGM 11MYN1 22034 Federal Register / Vol. 82, No. 90 / Thursday, May 11, 2017 / Notices The Exchange permits sub-dollar cabinet trade transactions to be traded pursuant to the same procedures applicable to $1 cabinet trades, except that for sub-dollar cabinet trades (i) bids and offers for opening transactions are permitted only to accommodate closing transactions, and (ii) transactions in option classes participating in the Penny Pilot Program are permitted.8 As it explained in the Notice, the Exchange believes that ‘‘allowing trading at a price of at least $0 but less than $1 better accommodates the closing of options positions in series that are worthless or not actively traded, particularly when there has been a significant move in the price of the underlying security, resulting in a large number of series being out-of-the-money.’’ 9 asabaliauskas on DSK3SPTVN1PROD with NOTICES III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act 10 and the rules and regulations thereunder applicable to a national securities exchange.11 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,12 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. In the Notice, as amended, the Exchange explains that it initially put the sub-dollar cabinet trade rule on a pilot so that it could ‘‘evaluate the efficacy of the change and to address any operational issues that might arise in processing [c]abinet trades.’’ 13 During the course of the pilot, the Exchange made enhancements to its system to accommodate cabinet trades at a price as small as $0.00000001.14 8 See Commentary .01 to Rule 968NY. See also Notice, supra note 3, at 14937 (discussing the pilot). 9 Notice, supra note 3, at 14937. 10 15 U.S.C. 78f. 11 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78f(b)(5). 13 Amendment No. 1, supra note 4. 14 See id. VerDate Sep<11>2014 16:52 May 10, 2017 Jkt 241001 With that systems change, and based on its experience with these types of trades, the Exchange notes that its systems now ‘‘allow it to process [c]abinet trades in a manner similar to how all other trades are processed by the Exchange.’’ 15 In support of making the pilot program permanent, the Exchange represents that ‘‘there are no operational issues in processing and clearing [c]abinet trades in penny and sub-penny increments.’’ 16 The Exchange also represents that ‘‘ATP Holders have not raised any concerns with the current method of processing of [c]abinet trades.’’ 17 Finally, the Exchange represents that it is ‘‘not aware of the Options Clearing Corporation (‘‘OCC’’) having operational issues with processing [c]abinet trades submitted by the Exchange.’’ 18 Based on the representations of the Exchange, the Commission believes that permanent approval of the sub-dollar cabinet trade pilot is consistent with the Act. In particular, the Commission notes that the Exchange has made the necessary systems changes to accommodate sub-dollar cabinet trades into its regular trading infrastructure, and thus is able to process such trades in the normal course. Further, the Exchange has not observed any issues or concerns with sub-dollar cabinet trades at the Exchange level or with and among its members or in processing the trades through OCC. Accordingly, the Exchange’s rule appears reasonably designed to remove impediments, prevent fraudulent and manipulative acts and practices, and foster cooperation and coordination with persons engaged in facilitating transactions in securities. Further, permanent approval will continue to provide investors with choice when considering a cabinet trade, including the ability to price such trades below $1 per contract. IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule Change Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to the proposed rule change is consistent with the Act. Comments may be 15 Id. See also Notice, supra note 3, at 14937 (noting that ‘‘in 2016, there were a total of 222 Cabinet trades. Of these, 148 trades comprising 112,257 contracts were executed at a price of $0.01, while the remaining 74 trades comprising 165,868 contracts were executed for a premium of less than $0.01’’). 16 Notice, supra note 3, at 14937. 17 Amendment No. 1, supra note 4. 18 Id. PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–NYSEMKT–2017–13 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–2017–13. 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 (http://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–2017–13, and should be submitted on or before June 1, 2017. V. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the thirtieth day after the date of publication of notice of the amended proposal in the Federal Register. In Amendment No. 1, NYSE MKT provided supplemental background detail on why the sub-dollar cabinet E:\FR\FM\11MYN1.SGM 11MYN1 Federal Register / Vol. 82, No. 90 / Thursday, May 11, 2017 / Notices trade provision was put on a pilot initially, described the systems changes that the Exchange made to be able to process cabinet trades, and represented its understanding that neither OCC nor the Exchange’s members have reported any operational issues in connection with cabinet trades.19 The additional information contained in Amendment No. 1 provides further support for the Exchange’s proposal, is consistent with the proposal as initially filed, and does not introduce any new provisions or novel arguments in support of the proposal. Further, the Commission notes that it did not receive any comment letters on the Exchange’s proposal. Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,20 to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,21 that the proposed rule change (SR–NYSEMKT– 2017–13), as modified by Amendment No. 1, be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–09532 Filed 5–10–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736. asabaliauskas on DSK3SPTVN1PROD with NOTICES Extension: Rule 15b6–1 and Form BDW, SEC File No. 270–17, OMB Control No. 3235–0018. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the existing collection of information provided for in Rule 15b6–1 (17 CFR 19 See Amendment No. 1, supra note 4. See also supra note 4 (noting that the Exchange submitted Amendment No. 1 as a comment letter to the file, which the Commission posted on its Web site and placed in the public comment file). 20 15 U.S.C. 78s(b)(2). 21 15 U.S.C. 78s(b)(2). 22 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:52 May 10, 2017 Jkt 241001 240.15b6–1), under the Securities Exchange Act of 1934 (15 U.S.C 78a et seq.). The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Registered broker-dealers use Form BDW (17 CFR 249.501a) to withdraw from registration with the Commission, the self-regulatory organizations, and the states. On average, the Commission estimates that it would take a brokerdealer approximately one hour to complete and file a Form BDW to withdraw from Commission registration as required by Rule 15b6–1. The Commission estimates that approximately 380 broker-dealers withdraw from Commission registration annually 1 and, therefore, file a Form BDW via the internet with the Central Registration Depository, a computer system operated by the Financial Industry Regulatory Authority, Inc. that maintains information regarding registered broker-dealers and their registered personnel. The 380 brokerdealers that withdraw from registration by filing Form BDW would incur an aggregate annual reporting burden of approximately 380 hours.2 Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. 1 This estimate is based on Form BDW data collected over the past three years for fully registered broker-dealers. This estimate is based on the numbers of forms filed; therefore, the number may include multiple forms per broker-dealer if the broker-dealer’s initial filing was incomplete. In fiscal year (from 10/1 through 9/30) 2014, 454 broker-dealers withdrew from registration. In fiscal year 2015, 327 broker-dealers withdrew from registration. In fiscal year 2016, 360 broker-dealers withdrew from registration. (454 + 327 + 360) /3 = 380. 2 (380 × 1 hour) = 380 hours. PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 22035 Please direct your written comments to: Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington DC 20549, or send an email to: PRA_ Mailbox@sec.gov. Dated: May 8, 2017. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–09583 Filed 5–10–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80609; File No. SR–CBOE– 2017–019] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change Related to Complex Orders May 5, 2017. On March 7, 2017, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend its rules with respect to orders in open outcry to modify the ratios a complex order must meet to be considered eligible for complex order priority and permitted to be expressed in any net price increment that is not be less than $0.01. The Exchange also proposes to amend its rules to provide that if a complex order would trade in open outcry at the same net debit or credit price as another complex order, priority would go first to public customer orders in the Exchange’s complex order book (‘‘COB’’), then to complex order bids and offers represented in the trading crowd, and then to all other orders and quotes in the COB.3 Finally, the Exchange proposes to simplify the definitions of the complex order types that may be made available on a class-by-class basis and remove references to certain specific complex order types that will no longer be defined. The proposed rule change was published for comment in 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The Exchange has represented that this methodology for prioritizing multiple complex orders for open outcry trading is consistent with the methodology applicable for prioritizing multiple simple orders for open outcry trading and how the Exchange has interpreted and applied complex order priority. See Notice, infra note 4, at 15087. 2 17 E:\FR\FM\11MYN1.SGM 11MYN1

Agencies

[Federal Register Volume 82, Number 90 (Thursday, May 11, 2017)]
[Notices]
[Pages 22033-22035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09532]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80616; File No. SR-NYSEMKT-2017-13]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Amendment No. 1 and Order Granting Accelerated Approval of a Proposed 
Rule Change, as Modified by Amendment No. 1, Amending Rule 968NY To 
Make Permanent a Program That Allows Cabinet Trade Transactions To Take 
Place at a Price Below $1 Per Option Contract

May 5, 2017.

I. Introduction

    On March 2, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change 
amending the Exchange's rules to make permanent a program that allows 
transactions to take place in open outcry trading at prices of at least 
$0 but less than $1 per option contract (``sub-dollar cabinet 
trades''). The proposed rule change was published for comment in the 
Federal Register on March 23, 2017.\3\ On April 25, 2017, the Exchange 
filed Amendment No. 1 to the proposed rule change.\4\ The Commission 
received no comment letters on the proposed rule change. This order 
provides notice of filing of Amendment No. 1 and approves the proposed 
rule change, as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 80272 (March 17, 
2017), 82 FR 14936 (March 23, 2017) (``Notice'').
    \4\ In Amendment No. 1, the Exchange provided supplemental 
background detail on its proposal, including a summary of why it 
initially put the program on a pilot, a description of the systems 
enhancements it made to be able to process cabinet trades in the 
regular course, an example of how a cabinet trade is done on the 
trading floor, and a representation that, to its knowledge, neither 
the Options Clearing Corporation (``OCC'') nor the Exchange's 
members have reported any operational issues in connection with 
cabinet trades. To promote transparency of its proposed amendment, 
when NYSE MKT filed Amendment No. 1 with the Commission, it also 
submitted Amendment No. 1 as a comment letter to the file, which the 
Commission posted on its Web site and placed in the public comment 
file for SR-NYSEMKT-2017-13 (available at https://www.sec.gov/comments/sr-nysemkt-2017-13/nysemkt201713.htm). The Exchange also 
posted a copy of its Amendment No. 1 on its Web site (https://www.nyse.com/regulation/rule-filings) when it filed it with the 
Commission.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    Prior to 2010, Exchange Rule 968NY (Cabinet Trades (Accommodation 
Transactions)) allowed cabinet trade transactions at a price of $1 per 
option contract to occur in open outcry trading for certain classes.\5\ 
In 2010, the Exchange amended Rule 968NY on a pilot basis to allow sub-
dollar cabinet trades to take place at prices of at least $0 but less 
than $1 per option contract.\6\ The Exchange now proposes to amend Rule 
968NY to make permanent its sub-dollar cabinet trade pilot program, 
which currently is scheduled to expire on July 5, 2017.\7\
---------------------------------------------------------------------------

    \5\ See Rule 968NY. See also Notice, supra note 3, at 14936 
(discussing Rule 968NY).
    \6\ See Securities Exchange Act Release No. 63475 (December 8, 
2010), 75 FR 77932 (December 14, 2010) (SR-NYSEAmex-2010-114).
    \7\ See Commentary .01 to Rule 968NY. See also Securities 
Exchange Act Release No. 79564 (December 15, 2016), 81 FR 93716 
(December 21, 2016) (SR-NYSEMKT-2016-116).

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

[[Page 22034]]

    The Exchange permits sub-dollar cabinet trade transactions to be 
traded pursuant to the same procedures applicable to $1 cabinet trades, 
except that for sub-dollar cabinet trades (i) bids and offers for 
opening transactions are permitted only to accommodate closing 
transactions, and (ii) transactions in option classes participating in 
the Penny Pilot Program are permitted.\8\ As it explained in the 
Notice, the Exchange believes that ``allowing trading at a price of at 
least $0 but less than $1 better accommodates the closing of options 
positions in series that are worthless or not actively traded, 
particularly when there has been a significant move in the price of the 
underlying security, resulting in a large number of series being out-
of-the-money.'' \9\
---------------------------------------------------------------------------

    \8\ See Commentary .01 to Rule 968NY. See also Notice, supra 
note 3, at 14937 (discussing the pilot).
    \9\ Notice, supra note 3, at 14937.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act \10\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\11\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\12\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In the Notice, as amended, the Exchange explains that it initially 
put the sub-dollar cabinet trade rule on a pilot so that it could 
``evaluate the efficacy of the change and to address any operational 
issues that might arise in processing [c]abinet trades.'' \13\ During 
the course of the pilot, the Exchange made enhancements to its system 
to accommodate cabinet trades at a price as small as $0.00000001.\14\ 
With that systems change, and based on its experience with these types 
of trades, the Exchange notes that its systems now ``allow it to 
process [c]abinet trades in a manner similar to how all other trades 
are processed by the Exchange.'' \15\
---------------------------------------------------------------------------

    \13\ Amendment No. 1, supra note 4.
    \14\ See id.
    \15\ Id. See also Notice, supra note 3, at 14937 (noting that 
``in 2016, there were a total of 222 Cabinet trades. Of these, 148 
trades comprising 112,257 contracts were executed at a price of 
$0.01, while the remaining 74 trades comprising 165,868 contracts 
were executed for a premium of less than $0.01'').
---------------------------------------------------------------------------

    In support of making the pilot program permanent, the Exchange 
represents that ``there are no operational issues in processing and 
clearing [c]abinet trades in penny and sub-penny increments.'' \16\ The 
Exchange also represents that ``ATP Holders have not raised any 
concerns with the current method of processing of [c]abinet trades.'' 
\17\ Finally, the Exchange represents that it is ``not aware of the 
Options Clearing Corporation (``OCC'') having operational issues with 
processing [c]abinet trades submitted by the Exchange.'' \18\
---------------------------------------------------------------------------

    \16\ Notice, supra note 3, at 14937.
    \17\ Amendment No. 1, supra note 4.
    \18\ Id.
---------------------------------------------------------------------------

    Based on the representations of the Exchange, the Commission 
believes that permanent approval of the sub-dollar cabinet trade pilot 
is consistent with the Act. In particular, the Commission notes that 
the Exchange has made the necessary systems changes to accommodate sub-
dollar cabinet trades into its regular trading infrastructure, and thus 
is able to process such trades in the normal course. Further, the 
Exchange has not observed any issues or concerns with sub-dollar 
cabinet trades at the Exchange level or with and among its members or 
in processing the trades through OCC. Accordingly, the Exchange's rule 
appears reasonably designed to remove impediments, prevent fraudulent 
and manipulative acts and practices, and foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities. Further, permanent approval will continue to provide 
investors with choice when considering a cabinet trade, including the 
ability to price such trades below $1 per contract.

IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule 
Change

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 1 
to 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2017-13 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-2017-13. 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 (http://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-2017-13, and should 
be submitted on or before June 1, 2017.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 1, prior to the thirtieth day 
after the date of publication of notice of the amended proposal in the 
Federal Register. In Amendment No. 1, NYSE MKT provided supplemental 
background detail on why the sub-dollar cabinet

[[Page 22035]]

trade provision was put on a pilot initially, described the systems 
changes that the Exchange made to be able to process cabinet trades, 
and represented its understanding that neither OCC nor the Exchange's 
members have reported any operational issues in connection with cabinet 
trades.\19\ The additional information contained in Amendment No. 1 
provides further support for the Exchange's proposal, is consistent 
with the proposal as initially filed, and does not introduce any new 
provisions or novel arguments in support of the proposal. Further, the 
Commission notes that it did not receive any comment letters on the 
Exchange's proposal. Accordingly, the Commission finds good cause, 
pursuant to Section 19(b)(2) of the Act,\20\ to approve the proposed 
rule change, as modified by Amendment No. 1, on an accelerated basis.
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    \19\ See Amendment No. 1, supra note 4. See also supra note 4 
(noting that the Exchange submitted Amendment No. 1 as a comment 
letter to the file, which the Commission posted on its Web site and 
placed in the public comment file).
    \20\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-NYSEMKT-2017-13), as 
modified by Amendment No. 1, be, and hereby is, approved on an 
accelerated basis.
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    \21\ 15 U.S.C. 78s(b)(2).

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09532 Filed 5-10-17; 8:45 am]
 BILLING CODE 8011-01-P