Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 103B-Equities, 23884-23888 [2017-10592]
Download as PDF
<![CDATA[
23884
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
amount per share of common stock, any
of which may be adjusted from time to
time (a ‘‘Distribution Policy’’).
3. Applicants request an order under
section 6(c) of the Act granting an
exemption from section 19(b) of the Act
and rule 19b–1 to permit the Fund to
distribute periodic capital gain
dividends (as defined in section
852(b)(3)(C) of the Code) as frequently
as twelve times in any one taxable year
in respect of its common stock and as
often as specified by, or determined in
accordance with the terms of, any
preferred stock issued by the Fund.
Section 6(c) of the Act provides, in
relevant part, that the Commission may
exempt any person or transaction from
any provision of the Act to the extent
that 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.
4. Applicants state that any order
granting the requested relief will be
subject to the terms and conditions
stated in the application, which
generally are designed to address the
concerns underlying section 19(b) and
rule 19b–1, including concerns about
proper disclosures and shareholders’
understanding of the source(s) of a
Fund’s distributions and concerns about
improper sales practices. Among other
things, such terms and conditions
require that (1) the board of directors or
trustees of the Fund (the ‘‘Board’’)
review such information as is
reasonably necessary to make an
informed determination of whether to
adopt the proposed Distribution Policy
and that the Board periodically review
the amount of the distributions in light
of the investment experience of the
Fund, and (2) that the Fund’s
shareholders receive appropriate
disclosures concerning the
distributions.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10578 Filed 5–23–17; 8:45 am]
asabaliauskas on DSK3SPTVN1PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–197, OMB Control No.
3235–0200]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Office of FOIA Services, 100 F
VerDate Sep<11>2014
19:43 May 23, 2017
Jkt 241001
Street NE., Washington, DC 20549–
2736.
Extension:
Rule 15c3–1.
Dated: May 19, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10620 Filed 5–23–17; 8:45 am]
BILLING CODE 8011–01–P
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 approval of
extension of the previously approved
collection of information provided for in
Rule 15c3–1 (17 CFR 240.15c3–1) under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’).
Rule 15c3–1 requires brokers-dealers
to have at all times sufficient liquid
assets to meet their current liabilities,
particularly the claims of customers.
The rule facilitates the monitoring of the
financial condition of broker-dealers by
the Commission and the various selfregulatory organizations. It is estimated
that broker-dealer respondents
registered with the Commission and
subject to the collection of information
requirements of Rule 15c3–1 incur an
aggregate annual burden of 65,915.31
hours to comply with this rule and an
aggregate annual external cost of
$160,000.
Rule 15c3–1 does not contain record
retention requirements. Compliance
with the rule is mandatory. The
required records are available only to
the examination staff of the Commission
and the self-regulatory organization of
which the broker-dealer is a member.
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.
The public may view 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.
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80723; File No. SR–
NYSEMKT–2017–27]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 103B—
Equities
May 18, 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 May 4,
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 amend
Rule 103B—Equities, which governs the
allocation of securities to Designated
Market Makers (‘‘DMMs’’). 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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
E:\FR\FM\24MYN1.SGM
24MYN1
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
asabaliauskas on DSK3SPTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 103B—Equities (‘‘Rule 103B’’),
which governs the allocation of
securities to DMMs, to streamline the
allocation process and facilitate the
selection of DMM units by issuers.
Specifically, as described in more detail
below, the Exchange proposes to:
• Amend Rule 103B(III)(A), which
provides for issuer selection of DMM
units, to require issuers select a
minimum of four DMM units to
interview, permit senior officials at
issuers to designate a representative to
attend DMM interviews, and eliminate
the cap on the number of DMM
representatives that can participate in
issuer interviews;
• amend Rule 103B(III)(B), which
provides for selection of DMM units by
the Exchange, to remove the
requirement that the Exchange Selection
Panel (‘‘ESP’’) base its review only on
information available to an issuer and
reduce the size of the ESP to three
Exchange employees designated by the
Chief Executive Officer;
• renumber Rule 103B(III)(B)(2),
which describes the DMM one year
obligation, as new Rule 103B(III)(C) and
make certain non-substantive changes to
the existing rule text;
• renumber Rule 103B(III)(B)(3),
which describes foreign listing
considerations, as new Rule
103B(III)(D);
• amend Rule 103B(VI)(F), governing
allocation of closed-end management
investment companies, to specify that
the group of eligible DMM units an
issuer listing additional funds can select
from also includes DMM units the
issuer ‘‘reviewed’’ during the initial
allocation;
• amend Rule 103B(VI)(G), governing
the allocation freeze policy, to replace
references to ‘‘specialty stock’’ with
‘‘DMM interest’’; and
• amend Rule 103B(VI)(H), setting
forth the allocation sunset policy, to
provide that allocation decisions remain
effective for initial public offerings
(‘‘IPO’’) that list on the Exchange within
eighteen months of such decision rather
than the current twelve months and to
specify that, in situations where the
proposed individual DMM is no longer
with the selected DMM unit, the
company may choose to stay with the
selected DMM or be referred to
allocation and may interview a
replacement individual DMM prior to
making that decision.
VerDate Sep<11>2014
19:43 May 23, 2017
Jkt 241001
The proposed changes are based on
recently adopted Exchange Rule 7.25E
(DMM Security Allocation and
Reallocation), which will govern, among
other things, the allocation and
reallocation of securities to DMMs once
the Exchange transitions its cash
equities trading platform to a fully
automated price-time priority allocation
model.4
Current Rule 103B
Rule 103B currently provides two
options for the allocation of securities to
DMMs: (1) The issuer selects the DMM
unit; or (2) the issuer delegates selection
of the DMM unit to the Exchange.
If the issuer proceeds under the first
option, the listing company selects a
minimum of two DMM units to
interview.5 A DMM unit’s eligibility to
participate in the allocation process is
based on objective criteria and
determined at the time the interview is
scheduled. No more than three
representatives of each DMM unit may
currently participate in the interview,
each of whom must be employees of the
DMM unit.6
Within five business days after the
issuer selects the DMM units to be
interviewed, the issuer meets with
representatives of each of the DMM
units. At least one representative of the
listing company must be a senior official
of the rank of Corporate Secretary or
above of that company. Additionally, no
more than three representatives of each
DMM unit may participate in the
meeting, each of whom must be an
employee of the DMM unit, and one of
whom must be the individual DMM
who is proposed to trade the company’s
security, unless that DMM is
unavailable to appear, in which case a
telephone interview is permitted.
Following the interview, a DMM unit
may not have any contact with an
issuer. If an issuer has a follow-up
question regarding any DMM unit(s) it
interviewed, it must be conveyed to the
Exchange. The Exchange then contacts
the unit(s) to which the question
pertains and provides any available
information received from the unit(s) to
the listing company. Within two
business days of the issuer’s interviews
with the DMM units, the issuer selects
its DMM unit in writing. The Exchange
then confirms the allocation of the
security to that DMM unit, at which
time the security is deemed to have
been so allocated.
4 See Securities Exchange Act Release No. 80577
(May 2, 2017) (SR–NYSEMKT–2017–04).
5 See Rule 103B(III)(A)(1).
6 See Rule 103B(III)(A)(2)(b).
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
23885
If the issuer proceeds under the
second option and delegates selection of
the DMM unit to the Exchange, the
Exchange convenes an ESP to select the
DMM unit based on a review of all
information available to the issuer. The
current ESP must consists of (1) at least
one member of the Exchange’s Senior
Management, as designated by the CEO
or his or her designee, (2) any
combination of two Exchange Senior
Management or Exchange Floor
Operations Staff, to be designated by the
Executive Vice-President of Exchange
Floor Operations or his/her designee;
and (3) three non-DMM Floor Governors
for a total of six members.7
Proposed Rule Change
The Exchange proposes the following
changes to Rule 103B to align the Rule
with NYSE Rule 103B and streamline
the allocation process and facilitate the
selection of DMM units by issuers, as
follows.
Rule 103B(III)(A)—Issuer Selection of
DMM Unit by Interview
Rule 103B(III)(A) is currently titled
‘‘DMM Unit Selected by the Issuer’’ and
describes the first allocation option,
which is selection of a DMM unit by the
issuer following interviews.
The Exchange proposes to delete the
current title and replace it with ‘‘Issuer
Selection of DMM Unit by Interview’’ to
more specifically delineate the first
option.
The Exchange proposes amending
subsection (1) of Rule 103B(III)(A),
which provides that the issuer shall
select a minimum of two DMM units to
interview, to require that issuers select
a minimum of four DMM units to
interview. To effectuate this change, the
Exchange would replace ‘‘four’’ with
‘‘two’’ following the phrase ‘‘select a
minimum of’’ and before ‘‘DMM units to
interview.’’ Requiring issuers to select a
minimum of four DMM units to
interview would provide additional
eligible DMM units with an opportunity
to participate in the allocation process,
which will lead to an increase in
competition without being overly
burdensome on the issuer. The
Exchange believes that the increase in
competition would provide DMM units
with a greater incentive to perform
optimally. The proposed change would
also provide the issuer with more choice
in the selection of its assigned DMM
unit.
The Exchange also proposes a nonsubstantive change to Rule
103B(III)(A)(1) to replace ‘‘shall’’ with
‘‘must’’ before ‘‘select.’’
7 See
E:\FR\FM\24MYN1.SGM
Rule 103B(III)(B)(1).
24MYN1
asabaliauskas on DSK3SPTVN1PROD with NOTICES
23886
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
Further, the Exchange proposes
amending the first sentence of Rule
103B(III)(A)(2)(b), which provides that
issuers meet with DMM units within
five business days after the issuer select
the DMM units, to add the word
‘‘eligible’’ before ‘‘DMM units.’’
The Exchange also proposes
amending the second sentence of Rule
103B(III)(A)(2)(b), which provides that
at least one representative of the listing
company must be a senior official of the
rank of Corporate Secretary or higher.
The Exchange proposes to provide
senior officials at the issuer with the
option to designate an individual to
participate in the meeting on their
behalf by adding the clause ‘‘or a
designee of such senior official’’ at the
end of the second sentence of the Rule.
The Exchange believes that the
proposed change would enable issuers
to more efficiently manage the interview
process and prevent scheduling
conflicts among its most senior
executives from unduly delaying the
interviews.
Current Rule 103B(A)(2)(b) further
provides that no more than three
representatives of each DMM unit may
participate in the meeting, each of
whom must be employees of the DMM
unit. The Exchange proposes to
eliminate the cap on the number of
DMM representatives that can
participate in issuer interviews by
deleting the phrase ‘‘No more than
three’’ before ‘‘representatives of each
DMM unit’’ and capitalize the ‘‘r’’. The
Exchange believes that the current cap
on number of representatives from the
DMM unit limits the ability of a DMM
unit to assess who may be best suited
to attend an interview with an issuer.
The Exchange further believes that
providing DMM units with greater
flexibility in determining how many
people to bring to an interview would
enable the DMMs to make that
determination as necessary.
The Exchange also proposes to make
participation by representatives of the
DMM units mandatory by deleting
‘‘may’’ before ‘‘participate in the
meeting’’ and replacing it with ‘‘must.’’
In addition, the Exchange proposes to
specify that employees of a member
organization operating a DMM unit are
permitted to attend allocation
interviews by adding ‘‘member
organization operating a’’ before ‘‘DMM
unit.’’ Under Exchange Rules, a ‘‘DMM
unit’’ can be operated as either a standalone member organization or as a
trading unit within a member
organization.8 The proposed change
would enable senior management of a
8 See
Rules 2(j)—Equities and 98(b)(1)—Equities.
VerDate Sep<11>2014
19:43 May 23, 2017
Jkt 241001
broker-dealer operating a DMM unit to
be eligible to participate in allocation
interviews.
Finally, the Exchange proposes to
delete the heading of Rule
103B(III)(A)(3), which is currently
‘‘Issuer’s Selection of DMM Unit,’’ and
subpart (a). The text of current Rule
103B(III)(A)(3)(a) would become the text
of new Rule 103(III)(A)(3) and would be
amended to replace references to
‘‘shall’’ with ‘‘will’’ in two places and
‘‘shall then’’ with ‘‘will’’ in another.
Rule 103B(III)(B)—Exchange Selection
of DMM Unit by Delegation
Rule 103B(III)(B) is currently titled
‘‘DMM Unit Selected by the Exchange’’
and sets forth the second allocation
option, which is selection of a DMM
unit by the Exchange by delegation from
the issuer.
The Exchange proposes to delete the
current title and replace it with
‘‘Exchange Selection of DMM Unit by
Delegation’’ to more accurately
delineate the second option. As
discussed below, the Exchange proposes
various changes to Rule 103B(III)(B) to
further delineate selection of a DMM
unit based on delegated authority from
the issuer and distinguish it from direct
issuer selections under Rule
103B(III)(A).
The Exchange proposes to amend
subsection (B)(1) to remove the clause
providing that ESP selection of a DMM
unit be ‘‘based on a review of all
information available to the issuer.’’ The
proposed change would enable the ESP
to consider confidential statistical or
market quality data for each eligible
DMM unit that is only available to the
Exchange. The Exchange believes that
enabling the ESP, which as discussed
below would be composed of Exchange
staff only, to consider such information
in its selection of a DMM unit on behalf
of an issuer would facilitate more
informed and objective decisions and
would expedite the allocation, and
ultimately the trading, of securities on
the Exchange.
Relatedly, the Exchange proposes to
reduce the size of the ESP to three
Exchange employees designated by the
Chief Executive Officer in order to
streamline the ESP selection process
and the operations of the ESP itself. The
Exchange believes that limiting the ESP
to Exchange employees would be
appropriate given that the ESP would
have access to highly confidential
statistical or market quality data about
DMM firms that would be inappropriate
to share with non-Exchange employees.
Further, the second paragraph of
current Rule 103B(III)(B)(1) would
become Rule 103B(III)(B)(2). The
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
Exchange proposes to specify in this
provision that the ESP would select the
DMM unit and remove the clause
providing that the ESP select the DMM
unit ‘‘pursuant to the provisions of
103B(III)(A) above’’ as unnecessary.
The second paragraph of current Rule
103B(III)(B)(1) would become Rule
103B(III)(B)(3). The Exchange proposes
to remove the clause providing that tie
votes are decided by the CEO of the
Exchange or his or her designee as
unnecessary given that the proposed
three-person ESP could not deadlock.
The Exchange also proposes nonsubstantive changes to the remainder of
this paragraph to clarify that selection of
the ESP selects the DMM unit and to
replace ‘‘shall’’ with ‘‘will’’ in three
places.
Current Rule 103B(III)(B)(2),
governing the DMM one-year obligation,
would become Rule 103B(III)(C). The
first sentence would be deleted as
unnecessary in order to streamline the
Rule. The text of the Rule would also be
amended to replace ‘‘shall be’’ with
‘‘with’’ before ‘‘required.’’
Finally, current Rule 103B(III)(B)(3),
governing foreign listing considerations,
would become Rule 103B(III)(D).
Rule 103B(VI)—Policy Notes
The Exchange proposes the following
changes to Rule 103B(VI).
First, Rule 103B(VI)(F) (Allocation of
Group of Closed-End Management
Investment Companies) would be
amended to specify that an issuer listing
additional funds within nine months
from the initial listing may select a
different DMM unit from the group of
eligible DMM units that the issuer
interviewed or reviewed in the
allocation process. The current Rule
only references DMM units that the
issuer has ‘‘interviewed.’’ Including ‘‘or
reviewed’’ in the proposed Rule would
explicitly cover allocations made by
delegation to the Exchange under option
two where an issuer reviewed but may
not have formally interviewed a DMM
unit.
Second, Rule 103B(VI)(G) (Allocation
Freeze Policy) would be amended to
remove outdated references to Exchange
Rules 475 or 476, which have been
replaced by the Rule 8000 and 9000
Series references in the Rule. Further,
the Exchange proposes to replace the
two outdated references to ‘‘specialty
stock’’ with ‘‘DMM security.’’ 9
Finally, the Exchange proposes to
amend Rule 103B(VI)(H) (Allocation
9 As defined in Rule 98(b)(2)—Equities, the term
‘‘DMM securities’’ means any securities allocated to
the DMM unit pursuant to Rule 103B or other
applicable rules.
E:\FR\FM\24MYN1.SGM
24MYN1
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Sunset Policy) to extend the period an
allocation decision remains binding on
an IPO listing from twelve to eighteen
months of such decision. The proposed
change would provide listing issuers
with greater flexibility when an IPO is
postponed before being referred for
allocation through the allocation
process pursuant to NYSE MKT Rule
103B (III).
The Exchange also proposes to amend
the Rule to cover the contingency where
the individual DMM selected by an
issuer to trade its securities is no longer
with the selected DMM unit during the
period that allocation decisions remain
effective. The Exchange proposes to
permit a company in that circumstance
to choose whether to stay with the
selected DMM unit or be referred to
allocation. Further, the Exchange
proposes to provide the company with
the choice of interviewing a
replacement DMM from that DMM unit
prior to deciding whether to stay with
the selected DMM unit or be referred to
allocation. Finally, the Exchange
proposes to replace one reference to
‘‘shall’’ in the last sentence of the Rule
with ‘‘will.’’
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,10 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,11 in particular, because it is
designed to prevent fraudulent and
manipulative acts and practices,
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and protect investors and the
public interest, as follows.
The Exchange believes that the
proposed amendments to Rule
103B(III)(A)(1) to provide that issuers
interview four DMMs rather than two
would promote just and equitable
principles of trade because increasing
the number of DMMs participating in
the issuer allocation process would
increase competition to provide services
to issuers, and will provide the issuer
with more choice in the selection of its
DMM. Additionally, the Exchange
believes that the proposal is designed to
remove impediments to, and perfect the
mechanism of a free and open market
and a national market system, because
it would lead to increased competition
without being overly burdensome on
issuers and would provide issuers with
greater choice in the selection of a DMM
unit. The Exchange believes that the
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
19:43 May 23, 2017
Jkt 241001
increase in competition would also
provide DMM units with a greater
incentive to perform optimally.
The Exchange believes that the
proposed amendments to Rule
103B(III)(A)(2)(b) to permit senior
officials at issuers to designate a
representative to attend DMM
interviews would remove impediments
to, and perfect the mechanism of a free
and open market, by allowing issuers to
more efficiently manage the interview
process and prevent scheduling
conflicts from unduly delaying
interviews and the assignment of
securities to DMM units, which
ultimately facilitates the fair and orderly
trading in the subject security.
The Exchange believes that the
additional proposed amendments to
Rule 103B(III)(A)(2)(b) to eliminate the
cap on the number of DMM
representatives that can participate in
issuer interviews, making participation
by representatives of the DMM units in
such interviews mandatory, and
permitting employees of a member
organization operating a DMM to attend
allocation interviews, is designed to
remove impediments to, and perfect the
mechanism of a free and open market,
because it would give issuers greater
exposure to management and other staff
at the proposed DMM units and provide
them with more information about the
firms during the interview, thus
enhancing the value of the interviews
for issuers and facilitating their choice
of DMM.
The Exchange believes that the
proposed amendments to Rule
103B(III)(B)(1) to remove the
requirement that the ESP base its review
on information available to the issuer
would remove impediments to, and
perfect the mechanism of a free and
open market, by enabling the ESP
consider confidential statistical or
market quality data for each eligible
DMM unit that is only available to the
Exchange, thereby facilitating more
informed and objective decisions by the
ESPs on behalf of issuers. Similarly, the
Exchange believes that the proposed
amendments to Rule 103B(III)(B)(1)
reducing the size of the ESP to three
Exchange employees designated by the
Chief Executive Officer would
streamline and facilitate the process of
assigning securities to DMM units by
allowing for more flexibility in
composing the ESP, which ultimately
facilitates and expedites the allocation
and ultimately the trading of securities
on the Exchange.
The Exchange believes that the
amendments to Rule 103B(VI)(H)
extending the sunset period from twelve
to eighteen months will foster
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
23887
cooperation and coordination with
person engaged in facilitating securities
transactions and will remove
impediments to a free and open market
because it recognizes that all IPOs may
not be brought to market in a twelve
month period and avoids repeating
administrative steps in the listing
process, thereby promoting efficient use
of the Exchange’s resources. The
proposed rule change also remove
impediments to, and perfect the
mechanism of a free and open market,
by providing issuers with a greater
opportunity for input in the allocation
process.
Finally, the Exchange’s proposal to
make various technical, non-substantive
changes to the text of Rules 103B(III)
and (VI)—renaming headings and
section renumbering, replacing ‘‘shall’’
with ‘‘will,’’ deleting redundant and
unnecessary clauses, adding clarifying
text and updated references, and
replacing outdated references—adds
clarity and transparency to the
Exchange’s Rules and reduces potential
investor confusion, which would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
changes would increase competition
among DMM units by allowing more
DMM units to participate in the
interview process and provide DMM
units with a greater incentive to perform
optimally potentially and enhance the
quality of the services DMMs provide to
issuers. Further, the Exchange believes
that the proposed changes would not be
burdensome to issuers. Further, even
assuming an increase in the burden on
issuers during the allocation process
resulting from the proposed changes,
the Exchange believes that any such
increased burden will be small relative
to the benefits that additional
competition between DMM units may
provide. Issuers could, moreover, permit
the Exchange to select the DMM unit
pursuant to the process found in NYSE
MKT Rule 103B(III)(B).
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.
E:\FR\FM\24MYN1.SGM
24MYN1
23888
Federal Register / Vol. 82, No. 99 / Wednesday, May 24, 2017 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 12 and Rule
19b–4(f)(6) thereunder.13 Because the
foregoing proposed rule change does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 14 and
subparagraph (f)(6) Rule 19b–4
thereunder.15
A proposed rule change filed under
Rule 19b–4(f)(6) 16 normally does not
become operative for 30 days after the
date of filing. However, Rule 19b–
4(f)(6)(iii) 17 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 requested that the
Commission waive the 30-day operative
delay to allow it to promptly harmonize
its rule with recently adopted changes
to NYSE Rule 103B. The Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest because it will allow the
Exchange to harmonize its rules,
without undue delay, with both NYSE
Rule 103B and Exchange Rule 7.25E,18
which should help to alleviate potential
confusion. Therefore, the Commission
hereby waives the 30-day operative
delay and designates the proposed rule
change operative upon filing.19
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
12 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 See supra note 4 and accompanying text.
19 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
asabaliauskas on DSK3SPTVN1PROD with NOTICES
13 17
VerDate Sep<11>2014
19:43 May 23, 2017
Jkt 241001
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEMKT–2017–27 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEMKT–2017–27. 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–
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
NYSEMKT–2017–27 and should be
submitted on or before June 14, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10592 Filed 5–23–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80724; File No. SR–
PEARL–2017–22]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend MIAX PEARL
Rules 503 and 515
May 18, 2017.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on May 5, 2017, MIAX PEARL, LLC
(‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend Exchange Rule 503, Openings on
the Exchange, and Rule 515, Execution
of Orders.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\24MYN1.SGM
24MYN1
]]>Agencies
[Federal Register Volume 82, Number 99 (Wednesday, May 24, 2017)]
[Notices]
[Pages 23884-23888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10592]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80723; File No. SR-NYSEMKT-2017-27]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend Rule 103B--
Equities
May 18, 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 May 4, 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 amend Rule 103B--Equities, which governs
the allocation of securities to Designated Market Makers (``DMMs'').
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.
[[Page 23885]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 103B--Equities (``Rule 103B''),
which governs the allocation of securities to DMMs, to streamline the
allocation process and facilitate the selection of DMM units by
issuers. Specifically, as described in more detail below, the Exchange
proposes to:
Amend Rule 103B(III)(A), which provides for issuer
selection of DMM units, to require issuers select a minimum of four DMM
units to interview, permit senior officials at issuers to designate a
representative to attend DMM interviews, and eliminate the cap on the
number of DMM representatives that can participate in issuer
interviews;
amend Rule 103B(III)(B), which provides for selection of
DMM units by the Exchange, to remove the requirement that the Exchange
Selection Panel (``ESP'') base its review only on information available
to an issuer and reduce the size of the ESP to three Exchange employees
designated by the Chief Executive Officer;
renumber Rule 103B(III)(B)(2), which describes the DMM one
year obligation, as new Rule 103B(III)(C) and make certain non-
substantive changes to the existing rule text;
renumber Rule 103B(III)(B)(3), which describes foreign
listing considerations, as new Rule 103B(III)(D);
amend Rule 103B(VI)(F), governing allocation of closed-end
management investment companies, to specify that the group of eligible
DMM units an issuer listing additional funds can select from also
includes DMM units the issuer ``reviewed'' during the initial
allocation;
amend Rule 103B(VI)(G), governing the allocation freeze
policy, to replace references to ``specialty stock'' with ``DMM
interest''; and
amend Rule 103B(VI)(H), setting forth the allocation
sunset policy, to provide that allocation decisions remain effective
for initial public offerings (``IPO'') that list on the Exchange within
eighteen months of such decision rather than the current twelve months
and to specify that, in situations where the proposed individual DMM is
no longer with the selected DMM unit, the company may choose to stay
with the selected DMM or be referred to allocation and may interview a
replacement individual DMM prior to making that decision.
The proposed changes are based on recently adopted Exchange Rule
7.25E (DMM Security Allocation and Reallocation), which will govern,
among other things, the allocation and reallocation of securities to
DMMs once the Exchange transitions its cash equities trading platform
to a fully automated price-time priority allocation model.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 80577 (May 2, 2017)
(SR-NYSEMKT-2017-04).
---------------------------------------------------------------------------
Current Rule 103B
Rule 103B currently provides two options for the allocation of
securities to DMMs: (1) The issuer selects the DMM unit; or (2) the
issuer delegates selection of the DMM unit to the Exchange.
If the issuer proceeds under the first option, the listing company
selects a minimum of two DMM units to interview.\5\ A DMM unit's
eligibility to participate in the allocation process is based on
objective criteria and determined at the time the interview is
scheduled. No more than three representatives of each DMM unit may
currently participate in the interview, each of whom must be employees
of the DMM unit.\6\
---------------------------------------------------------------------------
\5\ See Rule 103B(III)(A)(1).
\6\ See Rule 103B(III)(A)(2)(b).
---------------------------------------------------------------------------
Within five business days after the issuer selects the DMM units to
be interviewed, the issuer meets with representatives of each of the
DMM units. At least one representative of the listing company must be a
senior official of the rank of Corporate Secretary or above of that
company. Additionally, no more than three representatives of each DMM
unit may participate in the meeting, each of whom must be an employee
of the DMM unit, and one of whom must be the individual DMM who is
proposed to trade the company's security, unless that DMM is
unavailable to appear, in which case a telephone interview is
permitted.
Following the interview, a DMM unit may not have any contact with
an issuer. If an issuer has a follow-up question regarding any DMM
unit(s) it interviewed, it must be conveyed to the Exchange. The
Exchange then contacts the unit(s) to which the question pertains and
provides any available information received from the unit(s) to the
listing company. Within two business days of the issuer's interviews
with the DMM units, the issuer selects its DMM unit in writing. The
Exchange then confirms the allocation of the security to that DMM unit,
at which time the security is deemed to have been so allocated.
If the issuer proceeds under the second option and delegates
selection of the DMM unit to the Exchange, the Exchange convenes an ESP
to select the DMM unit based on a review of all information available
to the issuer. The current ESP must consists of (1) at least one member
of the Exchange's Senior Management, as designated by the CEO or his or
her designee, (2) any combination of two Exchange Senior Management or
Exchange Floor Operations Staff, to be designated by the Executive
Vice-President of Exchange Floor Operations or his/her designee; and
(3) three non-DMM Floor Governors for a total of six members.\7\
---------------------------------------------------------------------------
\7\ See Rule 103B(III)(B)(1).
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange proposes the following changes to Rule 103B to align
the Rule with NYSE Rule 103B and streamline the allocation process and
facilitate the selection of DMM units by issuers, as follows.
Rule 103B(III)(A)--Issuer Selection of DMM Unit by Interview
Rule 103B(III)(A) is currently titled ``DMM Unit Selected by the
Issuer'' and describes the first allocation option, which is selection
of a DMM unit by the issuer following interviews.
The Exchange proposes to delete the current title and replace it
with ``Issuer Selection of DMM Unit by Interview'' to more specifically
delineate the first option.
The Exchange proposes amending subsection (1) of Rule 103B(III)(A),
which provides that the issuer shall select a minimum of two DMM units
to interview, to require that issuers select a minimum of four DMM
units to interview. To effectuate this change, the Exchange would
replace ``four'' with ``two'' following the phrase ``select a minimum
of'' and before ``DMM units to interview.'' Requiring issuers to select
a minimum of four DMM units to interview would provide additional
eligible DMM units with an opportunity to participate in the allocation
process, which will lead to an increase in competition without being
overly burdensome on the issuer. The Exchange believes that the
increase in competition would provide DMM units with a greater
incentive to perform optimally. The proposed change would also provide
the issuer with more choice in the selection of its assigned DMM unit.
The Exchange also proposes a non-substantive change to Rule
103B(III)(A)(1) to replace ``shall'' with ``must'' before ``select.''
[[Page 23886]]
Further, the Exchange proposes amending the first sentence of Rule
103B(III)(A)(2)(b), which provides that issuers meet with DMM units
within five business days after the issuer select the DMM units, to add
the word ``eligible'' before ``DMM units.''
The Exchange also proposes amending the second sentence of Rule
103B(III)(A)(2)(b), which provides that at least one representative of
the listing company must be a senior official of the rank of Corporate
Secretary or higher. The Exchange proposes to provide senior officials
at the issuer with the option to designate an individual to participate
in the meeting on their behalf by adding the clause ``or a designee of
such senior official'' at the end of the second sentence of the Rule.
The Exchange believes that the proposed change would enable issuers to
more efficiently manage the interview process and prevent scheduling
conflicts among its most senior executives from unduly delaying the
interviews.
Current Rule 103B(A)(2)(b) further provides that no more than three
representatives of each DMM unit may participate in the meeting, each
of whom must be employees of the DMM unit. The Exchange proposes to
eliminate the cap on the number of DMM representatives that can
participate in issuer interviews by deleting the phrase ``No more than
three'' before ``representatives of each DMM unit'' and capitalize the
``r''. The Exchange believes that the current cap on number of
representatives from the DMM unit limits the ability of a DMM unit to
assess who may be best suited to attend an interview with an issuer.
The Exchange further believes that providing DMM units with greater
flexibility in determining how many people to bring to an interview
would enable the DMMs to make that determination as necessary.
The Exchange also proposes to make participation by representatives
of the DMM units mandatory by deleting ``may'' before ``participate in
the meeting'' and replacing it with ``must.''
In addition, the Exchange proposes to specify that employees of a
member organization operating a DMM unit are permitted to attend
allocation interviews by adding ``member organization operating a''
before ``DMM unit.'' Under Exchange Rules, a ``DMM unit'' can be
operated as either a stand-alone member organization or as a trading
unit within a member organization.\8\ The proposed change would enable
senior management of a broker-dealer operating a DMM unit to be
eligible to participate in allocation interviews.
---------------------------------------------------------------------------
\8\ See Rules 2(j)--Equities and 98(b)(1)--Equities.
---------------------------------------------------------------------------
Finally, the Exchange proposes to delete the heading of Rule
103B(III)(A)(3), which is currently ``Issuer's Selection of DMM Unit,''
and subpart (a). The text of current Rule 103B(III)(A)(3)(a) would
become the text of new Rule 103(III)(A)(3) and would be amended to
replace references to ``shall'' with ``will'' in two places and ``shall
then'' with ``will'' in another.
Rule 103B(III)(B)--Exchange Selection of DMM Unit by Delegation
Rule 103B(III)(B) is currently titled ``DMM Unit Selected by the
Exchange'' and sets forth the second allocation option, which is
selection of a DMM unit by the Exchange by delegation from the issuer.
The Exchange proposes to delete the current title and replace it
with ``Exchange Selection of DMM Unit by Delegation'' to more
accurately delineate the second option. As discussed below, the
Exchange proposes various changes to Rule 103B(III)(B) to further
delineate selection of a DMM unit based on delegated authority from the
issuer and distinguish it from direct issuer selections under Rule
103B(III)(A).
The Exchange proposes to amend subsection (B)(1) to remove the
clause providing that ESP selection of a DMM unit be ``based on a
review of all information available to the issuer.'' The proposed
change would enable the ESP to consider confidential statistical or
market quality data for each eligible DMM unit that is only available
to the Exchange. The Exchange believes that enabling the ESP, which as
discussed below would be composed of Exchange staff only, to consider
such information in its selection of a DMM unit on behalf of an issuer
would facilitate more informed and objective decisions and would
expedite the allocation, and ultimately the trading, of securities on
the Exchange.
Relatedly, the Exchange proposes to reduce the size of the ESP to
three Exchange employees designated by the Chief Executive Officer in
order to streamline the ESP selection process and the operations of the
ESP itself. The Exchange believes that limiting the ESP to Exchange
employees would be appropriate given that the ESP would have access to
highly confidential statistical or market quality data about DMM firms
that would be inappropriate to share with non-Exchange employees.
Further, the second paragraph of current Rule 103B(III)(B)(1) would
become Rule 103B(III)(B)(2). The Exchange proposes to specify in this
provision that the ESP would select the DMM unit and remove the clause
providing that the ESP select the DMM unit ``pursuant to the provisions
of 103B(III)(A) above'' as unnecessary.
The second paragraph of current Rule 103B(III)(B)(1) would become
Rule 103B(III)(B)(3). The Exchange proposes to remove the clause
providing that tie votes are decided by the CEO of the Exchange or his
or her designee as unnecessary given that the proposed three-person ESP
could not deadlock. The Exchange also proposes non-substantive changes
to the remainder of this paragraph to clarify that selection of the ESP
selects the DMM unit and to replace ``shall'' with ``will'' in three
places.
Current Rule 103B(III)(B)(2), governing the DMM one-year
obligation, would become Rule 103B(III)(C). The first sentence would be
deleted as unnecessary in order to streamline the Rule. The text of the
Rule would also be amended to replace ``shall be'' with ``with'' before
``required.''
Finally, current Rule 103B(III)(B)(3), governing foreign listing
considerations, would become Rule 103B(III)(D).
Rule 103B(VI)--Policy Notes
The Exchange proposes the following changes to Rule 103B(VI).
First, Rule 103B(VI)(F) (Allocation of Group of Closed-End
Management Investment Companies) would be amended to specify that an
issuer listing additional funds within nine months from the initial
listing may select a different DMM unit from the group of eligible DMM
units that the issuer interviewed or reviewed in the allocation
process. The current Rule only references DMM units that the issuer has
``interviewed.'' Including ``or reviewed'' in the proposed Rule would
explicitly cover allocations made by delegation to the Exchange under
option two where an issuer reviewed but may not have formally
interviewed a DMM unit.
Second, Rule 103B(VI)(G) (Allocation Freeze Policy) would be
amended to remove outdated references to Exchange Rules 475 or 476,
which have been replaced by the Rule 8000 and 9000 Series references in
the Rule. Further, the Exchange proposes to replace the two outdated
references to ``specialty stock'' with ``DMM security.'' \9\
---------------------------------------------------------------------------
\9\ As defined in Rule 98(b)(2)--Equities, the term ``DMM
securities'' means any securities allocated to the DMM unit pursuant
to Rule 103B or other applicable rules.
---------------------------------------------------------------------------
Finally, the Exchange proposes to amend Rule 103B(VI)(H)
(Allocation
[[Page 23887]]
Sunset Policy) to extend the period an allocation decision remains
binding on an IPO listing from twelve to eighteen months of such
decision. The proposed change would provide listing issuers with
greater flexibility when an IPO is postponed before being referred for
allocation through the allocation process pursuant to NYSE MKT Rule
103B (III).
The Exchange also proposes to amend the Rule to cover the
contingency where the individual DMM selected by an issuer to trade its
securities is no longer with the selected DMM unit during the period
that allocation decisions remain effective. The Exchange proposes to
permit a company in that circumstance to choose whether to stay with
the selected DMM unit or be referred to allocation. Further, the
Exchange proposes to provide the company with the choice of
interviewing a replacement DMM from that DMM unit prior to deciding
whether to stay with the selected DMM unit or be referred to
allocation. Finally, the Exchange proposes to replace one reference to
``shall'' in the last sentence of the Rule with ``will.''
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\11\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and protect investors and the public interest, as
follows.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed amendments to Rule
103B(III)(A)(1) to provide that issuers interview four DMMs rather than
two would promote just and equitable principles of trade because
increasing the number of DMMs participating in the issuer allocation
process would increase competition to provide services to issuers, and
will provide the issuer with more choice in the selection of its DMM.
Additionally, the Exchange believes that the proposal is designed to
remove impediments to, and perfect the mechanism of a free and open
market and a national market system, because it would lead to increased
competition without being overly burdensome on issuers and would
provide issuers with greater choice in the selection of a DMM unit. The
Exchange believes that the increase in competition would also provide
DMM units with a greater incentive to perform optimally.
The Exchange believes that the proposed amendments to Rule
103B(III)(A)(2)(b) to permit senior officials at issuers to designate a
representative to attend DMM interviews would remove impediments to,
and perfect the mechanism of a free and open market, by allowing
issuers to more efficiently manage the interview process and prevent
scheduling conflicts from unduly delaying interviews and the assignment
of securities to DMM units, which ultimately facilitates the fair and
orderly trading in the subject security.
The Exchange believes that the additional proposed amendments to
Rule 103B(III)(A)(2)(b) to eliminate the cap on the number of DMM
representatives that can participate in issuer interviews, making
participation by representatives of the DMM units in such interviews
mandatory, and permitting employees of a member organization operating
a DMM to attend allocation interviews, is designed to remove
impediments to, and perfect the mechanism of a free and open market,
because it would give issuers greater exposure to management and other
staff at the proposed DMM units and provide them with more information
about the firms during the interview, thus enhancing the value of the
interviews for issuers and facilitating their choice of DMM.
The Exchange believes that the proposed amendments to Rule
103B(III)(B)(1) to remove the requirement that the ESP base its review
on information available to the issuer would remove impediments to, and
perfect the mechanism of a free and open market, by enabling the ESP
consider confidential statistical or market quality data for each
eligible DMM unit that is only available to the Exchange, thereby
facilitating more informed and objective decisions by the ESPs on
behalf of issuers. Similarly, the Exchange believes that the proposed
amendments to Rule 103B(III)(B)(1) reducing the size of the ESP to
three Exchange employees designated by the Chief Executive Officer
would streamline and facilitate the process of assigning securities to
DMM units by allowing for more flexibility in composing the ESP, which
ultimately facilitates and expedites the allocation and ultimately the
trading of securities on the Exchange.
The Exchange believes that the amendments to Rule 103B(VI)(H)
extending the sunset period from twelve to eighteen months will foster
cooperation and coordination with person engaged in facilitating
securities transactions and will remove impediments to a free and open
market because it recognizes that all IPOs may not be brought to market
in a twelve month period and avoids repeating administrative steps in
the listing process, thereby promoting efficient use of the Exchange's
resources. The proposed rule change also remove impediments to, and
perfect the mechanism of a free and open market, by providing issuers
with a greater opportunity for input in the allocation process.
Finally, the Exchange's proposal to make various technical, non-
substantive changes to the text of Rules 103B(III) and (VI)--renaming
headings and section renumbering, replacing ``shall'' with ``will,''
deleting redundant and unnecessary clauses, adding clarifying text and
updated references, and replacing outdated references--adds clarity and
transparency to the Exchange's Rules and reduces potential investor
confusion, which would remove impediments to and perfect the mechanism
of a free and open market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed changes would increase competition among DMM units by
allowing more DMM units to participate in the interview process and
provide DMM units with a greater incentive to perform optimally
potentially and enhance the quality of the services DMMs provide to
issuers. Further, the Exchange believes that the proposed changes would
not be burdensome to issuers. Further, even assuming an increase in the
burden on issuers during the allocation process resulting from the
proposed changes, the Exchange believes that any such increased burden
will be small relative to the benefits that additional competition
between DMM units may provide. Issuers could, moreover, permit the
Exchange to select the DMM unit pursuant to the process found in NYSE
MKT Rule 103B(III)(B).
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.
[[Page 23888]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
Because the foregoing proposed rule change does not: (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A)(iii) of the Act \14\ and subparagraph (f)(6) Rule
19b-4 thereunder.\15\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative for 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \17\ 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 requested that the
Commission waive the 30-day operative delay to allow it to promptly
harmonize its rule with recently adopted changes to NYSE Rule 103B. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest
because it will allow the Exchange to harmonize its rules, without
undue delay, with both NYSE Rule 103B and Exchange Rule 7.25E,\18\
which should help to alleviate potential confusion. Therefore, the
Commission hereby waives the 30-day operative delay and designates the
proposed rule change operative upon filing.\19\
---------------------------------------------------------------------------
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ See supra note 4 and accompanying text.
\19\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEMKT-2017-27 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2017-27. 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-2017-27 and should
be submitted on or before June 14, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10592 Filed 5-23-17; 8:45 am]
BILLING CODE 8011-01-P
