Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change in Connection With the Proposed Merger of Its Wholly Owned Subsidiary NYSE Arca Equities, Inc. With and Into the Exchange, 28157-28170 [2017-12770]
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Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80929; File No. SR–
NYSEArca–2017–40]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change in Connection With the
Proposed Merger of Its Wholly Owned
Subsidiary NYSE Arca Equities, Inc.
With and Into the Exchange
June 14, 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 June 2,
2017, NYSE Arca, Inc. (the ‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
In connection with the proposed
merger of its wholly owned subsidiary
NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’) with and into the Exchange,
the Exchange proposes to amend (1)
Article III, Sections 3.01, 2.02 and 4.02
of the Amended and Restated NYSE
Arca, Inc. Bylaws (‘‘Bylaws’’); (2) certain
Rules of the Exchange to facilitate the
integration of NYSE Arca Equities and
create a single rulebook; (3) the NYSE
Arca Options Fee Schedule (the
‘‘Options Fee Schedule’’); and (4) the
Schedule of Fees and Charges for
Exchange Services (the ‘‘Listing Fee
Schedule’’). In addition, the Exchange
proposes to remove the NYSE Arca
Equities organizational documents,
rules of NYSE Arca Equities, and NYSE
Arca Equities Schedule of Fees and
Charges for Exchange Services
(‘‘Equities Fee Schedule’’) from the
Exchange rules and adopt a new fee
schedule for the Exchange equity market
(‘‘NYSE Arca Equities Fee Schedule’’).
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.
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In connection with the proposed
merger of its wholly owned subsidiary
NYSE Arca Equities with and into the
Exchange (‘‘Merger’’), the Exchange
proposes to amend (1) Article III,
Sections 3.01, 2.02 [sic] and 4.02 of the
Bylaws; (2) certain Rules of the
Exchange to facilitate the integration of
NYSE Arca Equities and create a single
rulebook; (3) the Options Fee Schedule;
and (4) the Listing Fee Schedule. In
addition, the Exchange proposes to
remove the NYSE Arca Equities
organizational documents, rules of
NYSE Arca Equities, and Equities Fee
Schedule from the Exchange rules and
adopt a new NYSE Arca Equities Fee
Schedule in connection with the
proposed merger.
Presently, the Exchange has delegated
certain responsibilities to its subsidiary
NYSE Arca Equities to operate its
equities market. The Exchange also has
two rulebooks, the NYSE Arca rules for
the options market and the NYSE Arca
Equities rules for the equities market.
Following the Merger, the Exchange will
be the surviving entity, and it will
directly operate both the Exchange’s
options and equities markets, with one
rulebook. The Exchange is proposing
amendments in order to reflect that
change.
More specifically, the proposed
amendments would allow the Exchange
to directly operate both markets by:
1. Terminating the existing delegation
to NYSE Arca Equities;
2. amending the Exchange’s corporate
governance structure to (a) integrate
Equities Trading Permit holders (‘‘ETP
Holders’’) 4 into the process for
appointing members of the Board of
1 15
2 15
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4 An Equities Trading Permit is referred to as an
‘‘ETP.’’
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28157
Directors (‘‘Board’’), (b) provide that the
holding member, NYSE Group, Inc.
(‘‘NYSE Group’’) determines the size of
the Board; (c) integrate ETP Holders into
the Board and Permit Holder
Committees; and (d) add the existing
NYSE Arca Equities Business Conduct
Committee to the Exchange rules;
3. integrating the current NYSE Arca
Equities rules into the NYSE Arca rules,
so that the Exchange has a single
rulebook; and
4. adopting the proposed NYSE Arca
Equities Fee Schedule for the Exchange
equity market and amending the
Options Fee Schedule and Listing Fee
Schedule.
The Exchange addresses each item in
turn below.
The Exchange proposes that the rule
change proposed herein would become
operative upon the completion of the
Merger. The Exchange would complete
the Merger following approval of this
rule filing, on a date determined by its
Board.
I. Termination of Delegation
The Exchange has delegated certain
responsibilities to its subsidiary NYSE
Arca Equities to operate its equities
market. However, the Exchange retains
ultimate responsibility for its equities
market, including the responsibility to
ensure the fulfillment of statutory and
self-regulatory obligations.5 NYSE Arca
Equities is not a national securities
exchange.
The Exchange proposes to terminate
the delegation of functions to NYSE
Arca Equities (‘‘Delegation’’) currently
set forth in NYSE Arca Equities Rule
14.2 (NYSE Arca Equities Inc. (‘NYSE
Arca Equities’)). NYSE Arca Equities
Rule 14.1 (NYSE Arca, Inc.), which sets
forth the authority and functions
retained by the Exchange, would
become obsolete as a result.
Accordingly, neither would be carried
over into the Exchange rules.
In connection with the termination of
the Delegation, the NYSE Arca Equities
Certificate of Incorporation and Bylaws,
rules of NYSE Arca Equities and
Equities Fee Schedule would be
removed from the Exchange rules.
5 See NYSE Arca Equities Rule 3.4 (stating that
NYSE Arca, ‘‘as a self-regulatory organization
registered with the Securities and Exchange
Commission pursuant to Section 6 of the Exchange
Act, shall have ultimate responsibility in the
administration and enforcement of rules governing
the operation of its subsidiary, NYSE Arca Equities,
Inc.’’). See also NYSE Arca Equities Rule 14.1.
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Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
II. Proposed Changes to the Exchange’s
Corporate Governance
A. Composition of the Board and
Appointment of Non-Affiliated Directors
of the Post-Merger Entity
Pursuant to the Merger, the Exchange
proposes to incorporate the ETP Holders
into the process for selecting Exchange
Board members. In addition, it proposes
to implement certain other changes
regarding the composition of the Board
that would make the provisions
regarding the Exchange’s Board more
consistent with the governing
documents of the Exchange’s national
securities exchange affiliates, New York
Stock Exchange LLC (‘‘NYSE LLC’’),
NYSE MKT LLC (‘‘NYSE MKT’’), and
NYSE National, Inc. (‘‘NYSE National’’
and collectively, the ‘‘SRO Affiliates’’).
Because the relevant provisions are
found in both the Bylaws and the Rules
of the Exchange, in order to implement
the proposed governance changes the
Exchange would amend Bylaws Article
III, Sections 3.01(b) (Powers) and 3.02(a)
(Number; Election; Qualification; Term;
Nomination) and Rule 3.2(b)(2)
(Exchange Committees). These proposed
changes are described below.
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Bylaws Article III, Section 3.01(b)
The Exchange proposes to amend
Bylaws Article III, Section 3.01(b) to add
definitions of ETP Holders, Options
Trading Permit Holders (‘‘OTP
Holders’’) 6 and Permit Holders. The
changes would also incorporate the ETP
Holders in the statement of the authority
of the Board. Accordingly, the Exchange
proposes to make the following changes
to Section 3.01(b) (new text italicized;
deleted text bracketed):
(b) The Board of Directors shall exercise all
such powers of the Exchange and do all such
lawful acts and things as are not by law, the
Certificate, these Bylaws or the Rules
directed or required to be exercised, done or
approved by the Holding Member, [or] the
options trading permit holders who are
permitted to trade on the Exchange’s
facilities for the trading of options that are
securities as covered by the Exchange Act
(collectively, ‘‘Options Trading Permit
Holders’’) or the equities trading permit
holders who are permitted to trade on the
Exchange’s facilities for the trading of
equities that are securities as covered by the
Exchange Act (collectively, ‘‘Equities Trading
Permit Holders’’ and, together with the
Options Trading Permit Holders, the ‘‘Permit
Holders’’).
Bylaws Article III, Section 3.02(a)
The Exchange proposes to make
several amendments to Bylaws Article
III, Section 3.02(a), which sets forth the
Board composition requirements.
6 An Options Trading Permit is referred to as an
‘‘OTP.’’
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First, the Exchange proposes to
remove the requirement that the Board
consist of between eight and 12
directors, with the number to be
determined by the Board itself. The
revised provision would provide that
the number of directors shall be
determined from time to time by the
holding member, NYSE Group,
provided that the Board meets the
composition requirements set forth in
the provision. To clarify what specific
composition requirements must be met,
the Exchange proposes to move the
third and fourth sentences of Section
3.02(a), which set forth the
requirements, to clauses (1) and (2) of
the first sentence. In the new clause (2),
the Exchange proposes to add the
defined term ‘‘Non-Affiliated Directors’’
for directors nominated by the permit
holders, which must make up at least 20
percent of the members of the Board.
The proposed changes would make
the revised first sentence of Section
3.02(a) consistent with the board
composition provisions in the governing
documents of the SRO Affiliates. Like
the proposed changes, the governing
documents of the SRO Affiliates provide
that NYSE Group (as the sole member or
sole shareholder, as applicable)
determines the number of board
members, set forth the relevant board’s
compensation requirements in
numbered clauses, and require that at
least 20 percent of the board shall be
non-affiliated directors.7
Currently, at least one Exchange NonAffiliated Director is nominated by the
OTP Holders and at least one is
nominated by the ETP Holders.
Proposed clause (2) of the revised first
sentence would instead provide that the
‘‘Permit Holders’’—including both the
OTP Holders and ETP Holders—
nominate the Non-Affiliated Directors.
The Exchange believes that the
proposed change would be consistent
with the process for nominating nonaffiliated directors of NYSE MKT.
Similar to the structure of NYSE Arca
and NYSE Arca Equities, NYSE MKT
operates the NYSE MKT equity market,
and NYSE MKT’s facility NYSE Amex
Options LLC (‘‘NYSE Amex Options’’)
7 See Article III, Section 3.2(a) of the Fourth
Amended and Restated By-laws of NYSE National,
Inc. (‘‘NYSE National By-laws’’); Section 2.03(a)(i)
of the Eleventh Amended and Restated Operating
Agreement of New York Stock Exchange LLC
(‘‘NYSE LLC Operating Agreement’’); and Section
2.03(a)(i) of the Tenth Amended and Restated
Operating Agreement of NYSE MKT LLC (‘‘NYSE
MKT Operating Agreement’’). See also Securities
Exchange Act Release Nos. 79902 (January 30,
2017), 82 FR 9258 (February 3, 2017) (SR–NSX–
2016–16) and 80523 (April 25, 2017), 82 FR 20399
(May 1, 2017) (SR–CBOE–2017–017).
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operates its options market.8 Under the
NYSE MKT Operating Agreement, all
member organizations participate in the
process for nominating non-affiliated
directors.9 Because both options trading
permit holders (‘‘ATP Holders’’) and
equity member organizations are
member organizations, as that term is
defined in the NYSE MKT Operating
Agreement, non-affiliated directors are
nominated by both types of member
organizations in a single process.10
The Exchange believes that the
proposed change also would be
consistent with the governing
documents of The NASDAQ Stock
Market LLC (‘‘Nasdaq LLC’’), which is
the sole member of The NASDAQ
Options Market LLC (‘‘NOM’’). NOM,
which operates the options trading
facility of Nasdaq LLC, does not have its
own board of directors.11 Under the
bylaws of Nasdaq LLC, each ‘‘member
representative director’’ is nominated by
a member nominating committee. If the
election is contested, the Nasdaq LLC
members vote on the nomination in a
single process.12 The options
participants and other members do not
vote separately.
The Exchange believes that the
proposed change would also be
consistent with the governing
documents of Nasdaq BX, Inc. (‘‘Nasdaq
BX’’). Nasdaq BX’s controlled
subsidiary, Nasdaq OMX BX Equities
LLC, operates the equities trading
facility of Nasdaq BX and, like NOM,
does not have its own board of
8 See Amended and Restated Limited Liability
Company Agreement of NYSE Amex Options LLC,
Section 3.1(b). NYSE MKT is the only SRO Affiliate
with both an equities and an options market.
9 See NYSE MKT Operating Agreement, Article II,
Section 2.03(a) (iii)–(v). Under the NYSE MKT
Operating Agreement, the nominating committee
recommends candidates for the non-affiliate
directors, and announces them to the member
organizations. If a petition candidate receives
sufficient member organization signatures, the
recommended candidates and petition candidates
are submitted to the member organizations for a
vote.
10 See NYSE MKT Operating Agreement, Article
II Section 2.02 (defining ‘‘member organization’’ to
include members and member organizations of
NYSE MKT); and NYSE MKT Rule 900.2NY(5)
(‘‘references to ‘member’, ‘member organization’
and ‘86 Trinity Permit Holder’ as those terms are
used in the Rules of the Exchange should be
deemed to be references to ATP Holders’’); see also
NYSE MKT Rule 2—Equities (setting forth the
definitions of member and member organization).
11 See Limited Liability Company Agreement of
The Nasdaq Options Market LLC, Section 9(a)
(providing that the ‘‘management of the Company
shall be vested in the Member’’).
12 See By-laws of The NASDAQ Stock Market
LLC, Article I (q) and Article II, Section 1 and 2.
A Nasdaq LLC member is defined as ‘‘any registered
broker or dealer that has been admitted to
membership in the national securities exchange
operated by’’ Nasdaq LLC. Id., Article I(t).
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Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
directors.13 As with Nasdaq LLC, each
‘‘member representative director’’ of its
board of directors is nominated by a
member nominating committee. If the
election is contested, the exchange
members vote on the nomination in a
single process.14
The Exchange proposes to add a new
fifth sentence to Section 3.02(a) stating
that, if 20 percent of the directors is not
a whole number, the number of
directors to be nominated and selected
by the Permit Holders will be rounded
up to the next whole number. As a
result, the current fifth sentence, which
provides that the Board shall determine
the exact number of each category of
directors on the Board, would no longer
be needed. The proposed change would
be consistent with the governing
documents of the SRO Affiliates, each of
which have a similar provision for
calculating the minimum number of
non-affiliated directors, and do not
authorize the SRO Affiliate’s board of
directors to determine the number of
directors in each category.15
The revised Section 3.02(a) would be
as follows (new text italicized; deleted
text bracketed):
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The Board of Directors shall consist of [not
less than eight (8) or more than twelve (12)
directors, with the Board of Directors to
consist initially of ten (10) directors,
including the Chief Executive Officer of the
Holding Member. The authorized] a number
of directors (‘‘Directors’’) [shall be] as
determined from time to time by the [Board
of Directors. A] Holding Member; provided
that (1) at least fifty percent (50%) of the
directors will be persons from the public and
will not be, or be affiliated with, a brokerdealer in securities or employed by, or
involved in any material business
relationship with, the Exchange or its
affiliates (‘‘Public Directors’’)[. A]; and (2) at
least twenty percent (20%) of the directors
shall consist of individuals nominated by the
[trading permit holders, with at least one
director nominated by the Equities Trading
Permit Holders of NYSE Arca Equities, Inc.,
and with at least one director nominated by
the] Permit Holders of the Exchange (‘‘NonAffiliated Directors’’). For purposes of
calculation of the minimum number of NonAffiliated Directors, if 20 percent of the
Directors is not a whole number, such
number of Directors to be nominated and
13 See NASDAQ OMX BX Equities LLC Fifth
Amended and Restated Operating Agreement
Article 3, Section 3.1; Article 4, Section 4.1;
Delegation Agreement between Nasdaq BX and
Nasdaq OMX BX Equities LLC.
14 See By-laws of NASDAQ BX, Inc., Article IV,
Section 4.4.
15 See Section 2.03(a)(i) of the NYSE LLC
Operating Agreement; Section 2.03(a)(i) of the
NYSE MKT Operating Agreement; and Article III,
Section 3.2(a) of the NYSE National By-Laws. The
Exchange notes that the term ‘‘Permit Holder
Directors,’’ would be deleted in the proposed
change. Such term is not used elsewhere in the Bylaws.
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selected by the Permit Holders will be
rounded up to the next whole number. [The
exact number of Public Directors and Permit
Holder Directors shall be determined from
time to time by the Board of Directors,
subject to the percentage restrictions
described in this Section 3.02(a).] The term
of office of a director shall not be affected by
any decrease in the authorized number of
directors.
Rule 3.2(b)(2)
Current Rule 3.2(b)(2) sets forth the
membership requirements for the
nominating committee (‘‘Nominating
Committee’’), which nominates the OTP
Holder member of the Board, and sets
forth the nominating committee and
petition processes.16 The Exchange
proposes to revise Rule 3.2(b)(2) to
incorporate the proposed changes to
Bylaws Section 3.02(a).
Pursuant to Rule 3.2(b)(2)(A), the
Nominating Committee is made up of
six OTP Holders or allied persons or
associated persons of an OTP Firm. The
Exchange proposes to incorporate the
ETP Holders into the membership of the
committee by amending Rule
3.2(b)(2)(A) to reduce the number of
OTP-related members to three, and
adding the requirement that the
Nominating Committee include three
ETP Holders or allied persons or
associated persons of an ETP Holder.17
Current Rule 3.2(b)(2)(C)(ii) sets forth
the nominating committee and petition
processes. In order to incorporate the
ETP Holders into the nominating and
petition processes and integrate the
proposed changes to Bylaws Section
3.02(a), the Exchange proposes to make
the following changes:
• To include ETP Holders, ‘‘OTP
Holder’’ and ‘‘OTP Holders’’ would be
replaced with ‘‘Permit Holder’’ and
‘‘Permit Holders,’’ respectively.
• The first sentence of the provision
states that the Nominating Committee
shall publish the name of one OTP
Holder or allied person or associated
person of an OTP Firm as its nominee
for the Exchange Board. The sentence
would be revised to (a) allow ETP
Holders or Allied Persons or Associated
Persons of an ETP Holder to be
nominees; and (b) provide the option to
nominate more than one Non-Affiliated
Director.
• The second sentence sets forth how,
if the Board has more than 10 members,
the determination will be made whether
the additional permit holder
representative should be an OTP or an
ETP Holder. In continuation, the next
16 Current Rule 3.2(b)(2) would be renumbered as
proposed Rule 3.2(b)(3). For ease of reference, the
current rule numbering is used.
17 The rules regarding the Equities Market do not
have ETP Firms.
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28159
sentence begins with ‘‘If it is determined
that the additional representative is an
OTP Holder.’’ The Exchange proposes to
delete the second sentence and the cited
text from the third sentence. The
proposed changes to the Bylaws would
no longer provide for two separate
categories of permit holder directors,
and so no determination would be
required.
• The third sentence would be
amended to clarify that the Nominating
Committee would be required to name
sufficient nominees so that at least 20
percent of the directors were NonAffiliated Directors, by replacing
‘‘nominate additional’’ with ‘‘name
sufficient.’’ The generic reference to
‘‘individuals nominated by trading
permit holders’’ would be replaced with
the more specific ‘‘Non-Affiliated
Directors.’’
• In the current fifth sentence, the
definition of ‘‘Permit Holders’’ would be
added, and ‘‘OTP Holder position’’
would be replaced with ‘‘Non-Affiliated
Director position.’’
• The current sixth sentence sets
forth the limits on what percentages of
signatories to a petition can be from a
given OTP Holder, OTP Firm or
associated OTP Holders and Firms. In
order to incorporate ETP Holders in the
limitation, the Exchange would add a
new clause (z), based on NYSE Arca
Equities Rule 3.2(b)(2)(C)(i), including
ETP Holders who are deemed affiliates
of the relevant Permit Holder. Finally,
‘‘an OTP Holder’s position’’ would be
replaced with ‘‘Non-Affiliated Director
position(s).’’
The revised provision would be as
follows (new text italicized; deleted text
bracketed):
The Nominating Committee shall publish
the name of one (1) or more OTP Holder or
Allied Person or Associated Person of an
OTP Firm or ETP Holder or Allied Person or
Associated Persons of an ETP Holder as its
nominee(s) for Non-Affiliated Directors of the
Board of Directors of the NYSE Arca, Inc.
[Should the Board of Directors be made up
of more than 10 individuals, as set forth in
Section 3.02 of the Bylaws, then the Public
Directors, after consulting with the CEO,
shall determine whether the additional
permit holder representative is an OTP
Holder or an Equity Trading Permit Holder
of NYSE Arca Equities, Inc. If it is
determined that the additional representative
is an OTP Holder, then t]The Nominating
Committee shall name sufficient[nominate
additional] nominees so that at least twenty
percent (20%) of the Directors consist of
[individuals nominated by trading permit
holders]Non-Affiliated Directors. The names
of the nominees shall be published on a date
in each year (the ‘‘Announcement Date’’)
sufficient to accommodate the process
described in this Rule 3.2(b)(2)(C). After the
name of proposed nominee(s) is published,
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Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
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OTP Holders and ETP Holders (together,
‘‘Permit Holders’’) in good standing may
submit a petition to the Exchange in writing
to nominate additional eligible candidate(s)
to fill the [OTP Holder]Non-Affiliated
Director position(s) during the next term. If
a written petition of at least 10 percent of
[OTP]Permit Holders in good standing is
submitted to the Nominating Committee
within two weeks after the Announcement
Date, such person(s) shall also be nominated
by the Nominating Committee; provided,
however, that no [OTP]Permit Holder, either
alone or together with (x) other OTP Holders
associated with the same OTP Firm that such
[OTP]Permit Holder is associated with, [and]
(y) OTP Holders associated with OTP Firms
that are affiliated with the OTP Firm that
such [OTP]Permit Holder is associated with,
and (z) other ETP Holders who are deemed
its affiliates, may account for more than 50%
of the signatories to the petition endorsing a
particular petition nominee for the [OTP
Holder’s] Non-Affiliated Director position(s)
on the Board of Directors of the NYSE Arca,
Inc. Each petition for a petition candidate
must include a completed questionnaire used
to gather information concerning director
candidates (the Exchange shall provide the
form of questionnaire upon the request of any
[OTP]Permit Holder). Notwithstanding
anything to the contrary, the Nominating
Committee shall determine whether any
petition candidate is eligible to serve on the
Board of Directors (including whether such
person is free of any statutory
disqualification (as defined in section
3(a)(39) of the Exchange Act)), and such
determination shall be final and conclusive.
Current Rule 3.2(b)(2)(C)(iii) sets forth
the process for selecting a nominee
when the number of nominees exceeds
the number of available seats. To
integrate the ETP Holders into the
process, the Exchange proposes to make
the following changes:
• ‘‘OTP Holder’’ and ‘‘OTP Holders’’
would be replaced with ‘‘Permit
Holder’’ and ‘‘Permit Holders,’’
respectively, and ‘‘OTP Holder’s
position’’ would be replaced with ‘‘NonAffiliated Director position(s).’’
• The third sentence sets forth the
limits on what percentages of votes can
be from a given OTP Holder, OTP Firm
or associated OTP Holders and Firms. In
order to incorporate ETP Holders in the
limitation, the Exchange would add a
new clause (z), based on NYSE Arca
Equities Rule 3.2(b)(2)(C)(ii), including
ETP Holders who are deemed affiliates
of the relevant Permit Holder.
The revised provision would be as
follows (new text italicized; deleted text
bracketed): In the event that the number
of nominees exceeds the number of
available seats, the Nominating
Committee shall submit the contested
nomination to the [OTP]Permit Holders
for selection. [OTP]Permit Holders shall
be afforded a confidential voting
procedure and shall be given no less
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than 20 calendar days to submit their
votes. Each [OTP]Permit Holder in good
standing may select one nominee for the
contested seat on the Board of Directors;
provided, however that no [OTP]Permit
Holder, either alone or together with (x)
other OTP Holders associated with the
same OTP Firm that such [OTP]Permit
Holder is associated with, [and] (y) OTP
Holders associated with OTP Firms that
are affiliated with the OTP Firm that
such [OTP]Permit Holder is associated
with, and (z) other ETP Holders who are
deemed its affiliates, may account for
more than 20% of the votes cast for a
particular nominee for the [OTP
Holder’s] Non-Affiliated Director
position(s) on the Board of Directors of
NYSE Arca, Inc. With respect to
[the]any contested position, the
nominee for the Board of Directors
receiving the most votes of [OTP]Permit
Holders shall be submitted by the
Nominating Committee to the Board of
Directors of the NYSE Arca, Inc. Tie
votes shall be decided by the Board of
Directors at its first meeting following
the election.
Finally, Rule 3.2(b)(2)(C)(i) sets forth
the membership of the initial board of
directors of the Exchange. The Exchange
proposes to replace the obsolete
provision with ‘‘Reserved.’’
Rule 3.3(a)(2)
Rule 3.3 sets forth the provisions
regarding Board Committees. In
accordance with the proposed changes
to the Board composition, the Exchange
proposes to amend Rule 3.3(a)(2),
regarding the Committee for Review
(‘‘CFR’’). Specifically, in Rule
3.3(a)(2)(A) ‘‘NYSE Arca Equities’’
would be replaced with ‘‘the Exchange’’
and the text ‘‘OTP Director(s), the ETP
Director(s) and the Public Directors of
both NYSE Arca and NYSE Arca
Equities’’ would be amended to state
‘‘Non-Affiliated Director(s) and the
Public Directors of the Exchange.’’ In
Rule 3.3(a)(2)(B), the text ‘‘Director that
is an OTP Holder or Allied Person or
Associated Person of an OTP Firm’’
would be amended to state ‘‘NonAffiliated Director.’’
B. Board and Permit Holder Committees
In order to integrate the ETP Holders
and the NYSE Arca Equities committees
into the Exchange committee structure,
the Exchange proposes to amend Bylaws
Article IV, Section 4.02 (‘‘Permit Holder
Committees’’), Rule 3.1 (Overview),
Rule 3.2 (Options Committees), and
Rule 3.3 (Board Committees).
Article IV, Section 4.02
Bylaws Article IV, Section 4.02 lists
the Exchange committees. The Exchange
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proposes to add the Exchange
disciplinary committee, called the
‘‘Ethics and Business Conduct
Committee’’ (‘‘EBCC’’) 18 to the list in
the first sentence of Section 4.02 and to
the defined term for ‘‘Permit Holder
Committees’’ in the second sentence.
The NYSE Arca Equities disciplinary
committee, the ‘‘Business Conduct
Committee’’ (‘‘BCC’’) 19 is already listed
in Section 4.02.
In addition, the Exchange proposes to
remove two obsolete references to the
Permit Holder Advisory Committee.
There are no other references to a Permit
Holder Advisory Committee in the Bylaws or rules of the Exchange. The
Exchange believes that the references
were meant to refer to the OTP Advisory
Committee, which no longer exists, as
its functions were assumed by the
Committee for Review.20
Rules 3.1, 3.2 and 3.3
Rule 3.1 sets forth the Board’s
authority to establish committees that
consist partly or entirely of directors of
the Exchange (each, a ‘‘Board
Committee’’) and committees consisting
of people other than directors of the
Exchange (each, an ‘‘Options
Committee’’). Rule 3.2 sets forth the
provisions governing Options
Committees, including the Ethics and
Business Conduct Committee and
Nominating Committee.
The Exchange proposes to revise
Rules 3.1 and 3.2 to integrate the ETP
Holders. Specifically, the Exchange
proposes to make the following changes:
• In Rules 3.1 and 3.2, the Exchange
proposes to replace ‘‘Options
Committee’’ and ‘‘Options Committees’’
with ‘‘Exchange Committee’’ and
‘‘Exchange Committees,’’ respectively.
• In Rule 3.2(a)(8), which governs the
eligibility for, and appointment to,
Options Committees, the Exchange
proposes to add ETP Holders to the list
of persons eligible for appointment, by
adding ‘‘or ETP Holder’’ after ‘‘Any OTP
Holder’’ and adding ‘‘or of an ETP
Holder’’ after ‘‘OTP Firm’’ in the first
sentence, and ‘‘, ETP Holders,’’ after
‘‘OTP Holders’’ and ‘‘or of an ETP
Holder’’ after ‘‘OTP Firm’’ in the third
sentence.
• In Rule 3.2(a)(9), which governs
naming alternate members, the
Exchange proposes to add ‘‘ETP
Holders,’’ after ‘‘OTP Holders.’’
18 See NYSE Arca Rule 3.2(b)(1) (Options
Committees) (setting forth the composition,
functions and authority of the EBCC).
19 See NYSE Arca Equities Rule 3.2(b)(1) (Equity
Committees) (setting forth the composition,
functions and authority of the BCC).
20 See Securities Exchange Release No. 77898
(May 24, 2016), 81 FR 34404 (May 31, 2016) (SR–
NYSEArca–2016–11).
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The Exchange proposes to add the
current NYSE Arca Equities BCC to the
Exchange Rules as an Exchange
Committee in new Rule 3.2(b)(2). The
proposed text would be the same as the
language in current NYSE Arca Equities
Rule 3.2(b)(1), except that:
• The references to NYSE Arca
Equities Rules 4, 10 and 11.9 would be
updated to references to Rules 4–E, 10
and 13.9, respectively.
• References to the ‘‘Board,’’ which in
the present rule means the board of
directors of NYSE Arca Equities, would
become references to the Board of the
Exchange.
Pursuant to proposed Rule 3.2(b)(1)
and (2), disciplinary proceedings of
NYSE Arca involving OTP Holders, OTP
Firms, and associated persons would
continue to be heard by the EBCC, while
disciplinary proceedings of NYSE Arca
Equities involving ETP Holders and
associated persons would continue to be
heard by the BCC.
Conforming Changes in Rule 3
The Exchange proposes to make
conforming changes in other provisions
of Rule 3. Specifically, in Rules 3.7
(Dues, Fees and Charges), 3.8 (Liability
for Payment), and 3.10 (Certain
Relationships), the Exchange proposes
to add ‘‘ETP Holders,’’ before ‘‘OTP
Holders’’ and ‘‘ETP Holder’’ before
‘‘OTP Holder,’’ respectively. In Rule
3.10(b), the Exchange propose to add
‘‘ETP Holder or’’ before ‘‘OTP Firm.’’
C. Proposed Rule 3.12
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The Exchange proposes to add new
Rule 3.12 (NYSE Arca, L.L.C. and
Archipelago Securities, L.L.C.), which
would address the access to and status
of the books, records, premises, officers,
directors, agents and employees of
NYSE Arca, L.L.C. and Archipelago
Securities, L.L.C. Proposed Rule 3.12
would be substantially the same as
current NYSE Arca Equities Rule 14.3
(NYSE Arca, L.L.C. and Archipelago
Securities, L.L.C.), with the following
exceptions:
• In proposed Rule 3.12(a), the text
‘‘the Exchange’’ would replace ‘‘NYSE
Arca Equities’’; ‘‘NYSE Arca and NYSE
Arca Equities’’; and ‘‘the NYSE Arca,
NYSE Arca Equities.’’
• In proposed Rule 3.12(f), the text ‘‘,
NYSE Arca Equities’’ would be deleted.
III. Integration of NYSE Arca Equities
Rules Into the NYSE Arca Rules
A. Organization of the Proposed Revised
NYSE Arca Rulebook
Presently, the Exchange has two
rulebooks: the NYSE Arca rules for the
options market and the NYSE Arca
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Equities rules for the equities market. In
connection with the Merger and the
termination of the Delegation, the
Exchange proposes to integrate the two
sets of rules into a single rulebook. The
resulting rulebook would have three
types of rules: rules that apply to both
markets; rules that apply only to the
options market, indicated by an ‘‘–O’’ at
the end of the rule number; and rules
that apply only to the equities market,
indicated by an ‘‘–E’’ at the end of the
rule number. More specifically:
• The following amended rules
would apply to both markets and would
be grouped under the heading ‘‘General
Rules’’: NYSE Arca Rules 0 (Regulation
of the Exchange, OTP Holders, OTP
Firms and ETP Holders); 1 (Definitions);
2 (Trading Permits); and 3 (Organization
and Administration).
• The following amended rules
would apply to only to [sic] the options
market, and would be grouped under
the heading ‘‘Options Rules’’: NYSE
Arca Rules 4–O (Capital Requirements,
Financial Reports, Margins—Options);
5–O (Options Contracts Traded on the
Exchange); 6–O (Options Trading); 7–O
(General Options Trading Rules); 8–O
(Reserved) and 9–O (Conducting
Business with the Public—Options)
(collectively, the ‘‘Options Rules’’).
• The following amended rules
would apply to only to [sic] the equities
market, and would be grouped under
the heading ‘‘Equities Rules’’: NYSE
Arca Rules 4–E (Capital Requirements,
Financial Reports, Margins—Equities);
5–E (Equities Listings); 6–E (Order
Audit Trail System); 7–E (Equities
Trading); 8–E (Trading of Certain Equity
Derivatives); and 9–E (Conducting
Business with the Public—Equities)
(collectively, the ‘‘Equities Rules’’).
• The following amended rules
would apply to both markets and would
be grouped under the heading
‘‘Disciplinary and Miscellaneous
Rules’’: 10 (Disciplinary Proceedings,
Other Hearings and Appeals); 11
(Business Conduct); 12 (Arbitration); 13
(Cancellation, Suspension and
Reinstatement); and 14 (Liability of
Directors and Exchange).
The Exchange’s organization of its
rules would be similar to that of its
affiliate NYSE MKT, which has rules of
general application and rules specific to
its equity and options markets.21
Except as otherwise stated below, the
proposed changes are not intended to
change the substance of the NYSE Arca
21 See, e.g. NYSE MKT Office Rules, Rules 300–
590; NYSE MKT Section 900NY (Rules Principally
Applicable to Trading of Option Contracts); and
NYSE MKT Rule 0–Equities through Rule 6140–
Equities.
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or NYSE Arca Equities rules, but are
organizational in nature.22
Proposed Changes Applicable to Entire
Rulebook
The following proposed changes
would apply to the entire set of
Exchange rules. To avoid needless
repetition, when discussing specific
Rules, the Exchange does not repeat the
description of these global changes.
Throughout the rules, all cross
references to the Options Rules would
be updated to reflect the addition of ‘‘–
O’’ to the rule numbers. Similarly, all
cross references to the Equities Rules
would be amended to reflect the
addition of ‘‘–E’’ to the rule numbers
and to delete ‘‘Equities’’ from ‘‘NYSE
Arca Equities Rule.’’ For example, a
cross reference ‘‘NYSE Arca Equities
Rule 5.2(j)(6)’’ would be amended to
‘‘NYSE Arca Rule 5.2–E(j)(6).’’
Throughout the rules, cross references
would be updated as needed, including
cross references within a renumbered
rule to the rule itself. For example, the
Exchange proposes to add Commentary
.01 from NYSE Arca Equities Rule 2.17
to Rule 2.18. The references to ‘‘Rule
2.17’’ within the Commentary would be
updated to ‘‘Rule 2.18’’ accordingly.
The NYSE Arca Equities rules refer to
NYSE Arca Equities, Inc., as the
‘‘Corporation.’’ 23 The term will be
obsolete subsequent to the Merger, as
NYSE Arca Equities will cease to exist.
Accordingly, in all proposed rule text
based on the NYSE Arca Equities rules,
the Exchange proposes to replace
‘‘Corporation’’ and ‘‘Corporation’s’’ with
‘‘Exchange’’ and ‘‘Exchange’s,’’
respectively. Similarly, ‘‘a Corporation’’
would be changed to ‘‘an Exchange.’’ 24
B. General Rules
Proposed revised Rules 0, 1, 2, and 3,
which would apply to both the equities
and options markets, would incorporate
changes based on NYSE Arca Equities
Rules 0 (Regulation of the Exchange and
Exchange Trading Permit Holders); 1
(Definitions); 2 (Equity Trading
Permits); and 3 (Organization and
Administration), respectively. The
proposed changes to Rules 0, 1 and 2 are
addressed below. The proposed changes
to Rule 3 are addressed in Part II, above.
22 The Exchange will amend the present filing to
reflect any amendments to Exchange rules before
the date of approval.
23 See NYSE Arca Equities Rule 1(k).
24 See e.g., NYSE Arca Equities Rules 2.21(f) (‘‘a
Corporation employee’’) and 5.4(a) (‘‘a Corporation
listing standard’’).
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Rule 0 (Regulation of the Exchange, OTP
Holders, and OTP Firms)
The text of Rule 0 and NYSE Arca
Equities Rule 0 is the same.
Accordingly, in order to incorporate the
equities market, the sole change to Rule
0 would be to change its title to
‘‘Regulation of the Exchange, OTP
Holders, OTP Firms and ETP Holders.’’
Rule 1 (Definitions)
The Exchange proposes to integrate
Rule 1 and NYSE Arca Equities Rule 1
(Definitions) by (a) incorporating the
text of definitions that are unique to
NYSE Arca Equities Rule 1.1, and (b)
amending definitions that the two rules
have in common, as needed. The
Exchange also proposes to delete
definitions marked ‘‘Reserved,’’ put the
definitions in alphabetical order, and
renumber the definitions to reflect the
changes.
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Proposed New Definitions
The Exchange proposes to add the
following definitions from NYSE Arca
Equities Rule 1.1: Authorized Trader;
Away Market; BBO; Core Trading
Hours; Derivative Securities Product
and UTP Derivative Securities Product;
Effective National Market System Plan,
Regular Trading Hours; Eligible
Security; ETP; ETP Holder; FINRA;
General Authorized Trader; Lead Market
Maker; Marketable; Market Maker;
Market Maker Authorized Trader;
Market Participant; Nasdaq; NBBO, Best
Protected Bid, Best Protected Offer,
Protected Best Bid and Offer (PBBO);
NMS Stock; Notice of Consent; Official
Closing Price; Protected Bid, Protected
Offer, Protected Quotation; Routing
Agreement; Sponsored Participant;
Sponsoring ETP Holder; Sponsorship
Provisions; Stockholder Associate;
Trade-Through; Trading Center: User;
User Agreement; UTP Listing Market;
and UTP Regulatory Halt.
The phrase ‘‘[w]ith respect to equities
traded on the Exchange’’ would be
added to the start of all the added
definitions except the definitions for
Eligible Security, ETP, ETP Holder,
FINRA, Nasdaq, and NMS Stock.
The current definition of ETP Holder
in NYSE Arca Equities Rule 1.1
provides that an ETP Holder would
‘‘have limited voting rights to nominate
two directors to the Exchange’s Board of
Directors and one Governor to the Board
of Governors of the NYSE Arca Parent.’’
The Exchange believes that such
statement is not relevant to the
definition and would be adequately
addressed in proposed Bylaw 3.02 and
Rule 3.2. Accordingly, when integrating
the definition of ETP Holder, the
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Exchange proposes not to include the
cited sentence, as well as to change
‘‘NYSE Arca Parent’’ to ‘‘Exchange.’’
Proposed Amendments to Rule 1
To incorporate NYSE Arca Equities
Rule 1.1, the Exchange proposes to
make the following amendments to the
current definitions in Rule 1.1:
• In definitions that would apply to
both OTPs and ETPs, the Exchange
proposes to add references to ETPs and
ETP Holders. Accordingly, ‘‘ETP
Holder’’ and/or ‘‘ETP Holders’’ 25 would
be added to the definitions of Allied
Person; Approved Person; Associated
Person; Good Standing; Participant;
Registered Employee; and Trading
Facilities. A reference to ‘‘ETP’’ would
be added to the definition of Good
Standing.
• Both ‘‘Board’’ and ‘‘Board of
Directors’’ are used in the Rules to refer
to the Board of Directors of NYSE Arca,
but only ‘‘Board’’ is defined in Rule
1.1.26 Accordingly, the Exchange
proposes to expand the definition of
‘‘Board’’ so that both ‘‘Board’’ and
‘‘Board of Directors’’ are defined to
mean the Board of Directors of NYSE
Arca.
• The definitions of OTP Holder and
OTP Firm provide that the OTP Holder
or OTP Firm, as applicable, ‘‘will have
limited voting rights to nominate an
OTP Holder to the Exchange’s Board of
Directors pursuant to Rule 3.2(b)(2)(C).’’
As with the definition of ETP Holder,
the Exchange believes that such
statements are not relevant to the
definitions and are addressed in Bylaw
3.02 and Rule 3.2. Accordingly it
proposes to delete the cited sentences.27
• The definition of NYSE Arca
Marketplace in the two rulebooks
differs. However, while the term is used
multiple times in the NYSE Arca
Equities Rules, it is not used in the
Exchange Rules other than in the
definition itself. Accordingly, the
Exchange proposes to delete the
25 Throughout the rules, when adding ‘‘ETP,’’
‘‘ETPs,’’ ‘‘ETP Holder’’ or ‘‘ETP Holders’’ to a rule,
the Exchange would utilize a comma, ‘‘and’’ or ‘‘or’’
as necessary to integrate it into the text.
26 See, e.g., Rules 2.3 (Qualifications of Firm
Applicants), 2.14 (Allied Persons and Approved
Persons), and 4.2(g) (Voting Agreement).
27 The Exchange believes that the proposed
changes to the definitions of ETP Holder, OTP
Holder and OTP Firm would be consistent with the
definitions of ‘‘Member’’ and ‘‘Member Firm’’ in the
governing documents of NYSE and NYSE MKT,
which do not refer to voting for non-affiliated
directors. See NYSE Rule 2 and NYSE MKT Rule
2–Equities. See also Nasdaq Stock Market Equity
Rule 0129(i) (definition of ‘‘Member’’ or ‘‘Nasdaq
Member’’) and Options Rule 1(40) (definition of
‘‘Options Participant’’ or ‘‘Participant’’) and
Seventh Amended and Restated Bylaws of Chicago
Board Options Exchange, Inc., Article I, Section
1.1(f) (definition of ‘‘Trading Permit Holder’’).
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definition of NYSE Arca Marketplace in
Rule 1.1(dd) and replace it with the
definition in NYSE Arca Equities Rule
1(e), as well as to move it to conform to
alphabetical order.
• In the definition of Security, the
text ‘‘, provided, however, that for
purposes of Rule 7–E such term means
any NMS stock’’ would be added at the
end of the definition, consistent with
NYSE Arca Equities Rule 1(rr).
• In the definition of Trading
Facilities, ‘‘equities,’’ would be added
after ‘‘trading of.’’
Rule 2 (Options Trading Permits)
The Exchange proposes to revise Rule
2 to incorporate NYSE Arca Equities
Rule 2 (Equity Trading Permits), which
sets forth the equivalent requirements
for ETPs. To implement the change, the
Exchange proposes to amend the title of
Rule 2 from ‘‘Options Trading Permits’’
to ‘‘Trading Permits,’’ add two new
rules, and amend the existing rules.
Proposed New Rules
The first new rule would be proposed
Rule 2.24 (Registration—Employees of
ETP Holders), which would be the same
as current NYSE Arca Equities Rule 2.21
(Employees of ETP Holders
Registration), with the exception of a
revised title and updated rule
references. Current Rules 2.24 through
2.26 would be renumbered as Rules 2.25
through 2.27 to reflect the addition of
proposed Rule 2.24.
The second new rule would be
proposed Rule 2.28 (Books and
Records), which would be the same as
current Rule 9.17 (Books and Records),
with the addition of ‘‘ETP Holder,’’
‘‘ETP Holders,’’ and ‘‘, as applicable.’’ 28
To incorporate the provisions of current
NYSE Arca Equities Rule 2.24 (ETP
Books and Records), the Exchange
proposes to add ‘‘ETP Holders’’ and
‘‘ETP Holder’’ before the terms ‘‘OTP
Holders and OTP Firms’’ and ‘‘OTP
Holder or OTP Firm,’’ respectively.29
Proposed Amendments to Rule 2
The Exchange proposes the following
revisions to the titles of rules in Rule 2:
• In rules that would only apply to
OTPs, the Exchange proposes to add
‘‘OTP’’ in the title. Accordingly, the title
of Rule 2.2 (Qualifications and
Application of Individual Applicants)
would be revised to ‘‘Qualifications and
Application of Individual OTP
28 The Exchange proposes to replace the current
text of Rule 9.17 with ‘‘reserved.’’ See proposed
Rule 9.17.
29 Rule 11.16 (Books and Records) would only
apply to OTP Holders and OTP Firms, as there is
no equivalent provision in the NYSE Arca Equities
rules.
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Applicants’’ and the title of Rule 2.23
(Registration) would be revised to
‘‘Registration—OTPs.’’
• To indicate that the revised rule
applies to both OTPs and ETPs, the
Exchange proposes to (a) replace
‘‘OTPs’’ and ‘‘OTP’’ with ‘‘Trading
Permits’’ in the titles of Rules 2.5
(Denial of or Conditions to OTPs) and
2.11 (Sole Proprietors and Individual
OTP Holders), respectively; (b) add
‘‘ETP Holder,’’ to the titles of Rules 2.9
(Exchange Not Bound by OTP Holder
and OTP Firm Agreements) and 2.17
(Amendments to OTP Firm or OTP
Holder Documents); (c) add ‘‘ETP
Holders,’’ to the title of Rule 2.12 (OTP
Holders and OTP Firms); (d) delete
‘‘OTP’’ from the title of Rule 2.16
(Responsibilities of Non-Resident OTP
Firms); (e) delete ‘‘OTP Firm or OTP
Holder’’ from the title of Rule 2.19
(Exemption from OTP Firm or OTP
Holder Registration Requirements); and
(f) add ‘‘ETP or’’ to the title of Rules
2.21 (Limited Transferability of an OTP)
and 2.22 (Termination of an OTP).
• To make the title more reflective of
the Rule, the Exchange proposes to
change the title of Rule 2.10 (Only OTP
Firms and OTP Holders to Trade Under)
to ‘‘Carrying Accounts for Customers
and Conducting Business Under a Firm
Name.’’
• To indicate that the proposed
heading applies to both OTPs and ETPs,
the Exchange proposes to add ‘‘ETP or’’
to the heading ‘‘Requirements of
Holding an OTP,’’ which appears before
Rule 2.7, and to the heading ‘‘Obtaining
an OTP,’’ which appears before Rule
2.20. It also proposes to add ‘‘and ETP
Holders’’ at the end of the heading
‘‘Employees of OTP Firms,’’ which
appears before Rule 2.23.
The Exchange proposes the following
revisions to the text of rules in Rule 2:
• In rules that would apply to both
OTPs and ETP Holders, the Exchange
proposes to add references to ETP
Holders. Accordingly, ‘‘ETP Holder’’
and/or ‘‘ETP Holders’’ would be added
to Rules 2.1 (Securities Business), 2.4(d)
and (e) (Application Procedures), 2.5,
2.7 (Requirements Applicable Generally
Revocable Privilege) through 2.9, 2.12
through 2.17, 2.18(a) and (b) (Activity
Assessment Fees), 2.19, 2.21(b), 2.22,
and proposed Rules 2.26 (Electronic
Mail Address) and 2.27 (Exchange
Backup Systems and Mandatory
Testing). In addition, the Exchange
proposes to add ‘‘, as applicable’’ after
‘‘OTP Firm’’ in Rules 2.4(e) and 2.14(f).
• Similarly, the Exchange proposes to
add ‘‘ETP or’’ before ‘‘OTP’’ in Rules
2.3(a), 2.4(d), (e) and (g), 2.5(a), (b) and
(f), 2.7, 2.8 (No Liability for Using
Facilities), 2.17(b), 2.21, and 2.22. In
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addition, the Exchange proposes to add
‘‘, as applicable’’ after ‘‘OTP’’ in Rules
2.4(d) and (e), 2.8, 2.17(b) and 2.22(b).
• In Rules 2.1(b)(1) and 2.8, the
Exchange proposes to add ‘‘Certificate of
Incorporation,’’ before ‘‘Bylaws’’
consistent with NYSE Arca Equities
Rule 2.1(b) (Securities Business) and 2.7
(No Liability for Using Trading
Facilities), respectively.
Rule 2.4 sets forth the application
procedures for OTPs. To add the
procedures for ETPs, consistent with
NYSE Arca Equities Rule 2.3
(Application Procedures), the Exchange
proposes to make the following changes:
• Unlike Rule 2.4, NYSE Arca
Equities Rule 2.3(a) provides that
application fees are not transferable.
Accordingly, the Exchange proposes to
add a sentence to the end of Rule 2.4(a)
stating that application fees for ETPs are
not transferrable. In addition, in the first
sentence of (a), the Exchange proposes
to add the text ‘‘person applying to
become an ETP Holder, every’’ after
‘‘Every.’’ In the second sentence of (a),
it proposes to add the text ‘‘person
seeking to become an ETP Holder,
every’’ after ‘‘Every’’ and update the
obsolete reference to ‘‘the NASD’’ to
‘‘FINRA’s.’’
• In the second sentence of Rule
2.4(d), the Exchange proposes to add
‘‘for OTPs, sole proprietor applicants for
ETPs,’’ after ‘‘Individual applicants’’
consistent with NYSE Arca Equities
Rule 2.3(d), which references ‘‘sole
proprietor applicants’’ but not
individual applicants for ETPs.
• Rule 2.4(g) states that a petition for
review of the denial of a trading permit
must be filed within thirty calendar
days of the date on which the
Corporation’s decision was mailed. The
Exchange believes that the reference to
the ‘‘Corporation’’ in Rule 2.4(g) is
erroneous and should be to the
‘‘Exchange’s’’ decision, as
‘‘Corporation’’ is not a defined term in
Exchange rules. Accordingly, the
Exchange proposes to make the
corresponding change.
• Rule 2.4(h) states that the approval
shall be withdrawn if an approved
application is not activated within six
months, but NYSE Arca Equities Rule
2.3 does not have a similar provision.
Accordingly, the Exchange proposes to
clarify that the provision only applies to
OTPs by adding ‘‘for an OTP’’ after
‘‘application.’’
• Rule 2.4(i) states that an ETP Holder
may use an expedited process to become
an OTP Holder. Consistent with NYSE
Arca Equities Rule 2.3(b), the Exchange
proposes to add a new second sentence
stating that an OTP Holder may use an
expedited process to become an ETP
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Holder. Consistent with the change, the
Exchange proposes to add, in the
current second sentence, the text ‘‘and
Short Form ETP Holder Application’’
after ‘‘Short Form OTP Holder
Application’’ and the text ‘‘or OTP
Holder, as applicable,’’ after ‘‘ETP
Holder.
Rule 2.5 provides that the Exchange
may deny or may condition trading
privileges under an OTP. Consistent
with NYSE Arca Equities Rule 2.4
(Denial of or Conditions to ETPs), the
Exchange proposes to make the
following changes:
• In Rule 2.5(b)(10), the Exchange
proposes to add the heading ‘‘Series 7
Requirement’’ and corresponding text
from NYSE Arca Equities Rule
2.4(b)(10).
• The first sentence of Rule 2.5(c)
requires that applicants complete an
Exchange Orientation Program prior to
admission to the trading floor or
participation on a trading system. NYSE
Arca Equities Rule 2.4 does not have a
similar provision. Accordingly, the
Exchange proposes to change the term
‘‘all applicants’’ to ‘‘all OTP
applicants.’’
• In Rule 2.5(f), the Exchange
proposes to add a second sentence
providing that the BCC ‘‘may take action
against an ETP Holder under Rule 10
when any of the above reasons for
denying or conditioning issuance of an
ETP come into existence after an
application has been approved and an
ETP has been issued,’’ corresponding to
NYSE Arca Equities Rule 2.4(f).
Rule 2.10 addresses carrying accounts
for customers and conducting business
under a firm name. The Exchange
proposes to add a second paragraph to
Rule 2.10, with the text from NYSE Arca
Equities Rule. 2.09 (Only ETP Holder
Organizations May Carry Customer
Accounts).
Rule 2.11 addresses sole proprietors.
The Exchange proposes to update the
title by replacing ‘‘OTP’’ with ‘‘Trading
Permit’’ and to add a new section (e) to
the Rule, with the text from NYSE Arca
Equities Rule 2.10(b) (Sole Proprietors).
Rule 2.14 sets forth provisions
relating to allied persons and approved
persons. Consistent with NYSE Arca
Equities Rule 2.13 (Allied Persons and
Approved Persons), the Exchange
proposes to make the following changes:
• The Exchange proposes to add the
text from NYSE Arca Equities Rule
2.13(c), (d), (g) and (i) to the end of Rule
2.14(c), (d), (g) and (i), respectively.
• Rule 2.14(f) states that the Exchange
may require certain applicants to pass
an examination. NYSE Arca Equities
Rule 2.13(f) includes limited liability
company member in its equivalent list.
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Accordingly, the Exchange proposes to
add the text ‘‘, or a limited liability
company member of any ETP Holder,’’
after ‘‘OTP Firm.’’
Rule 2.17 addresses amendments to
trading permit holder documents.
Consistent with NYSE Arca Equities
Rule 2.16(c), the Exchange proposes to
amend the first sentence of Rule 2.17(c)
by revising ‘‘termination of an OTP’’ to
state ‘‘a person associated with that ETP
Holder or an OTP, as applicable.’’
Rule 2.18 states that activity
assessment fees will be collected
through the Options Clearing
Corporation on behalf of the Exchange.
• Consistent with NYSE Arca Equities
Rule 2.17 (Activity Assessment Fees),
the Exchange proposes to add text to
Rule 2.18(a) stating that ‘‘Activity
Assessment Fees shall be due and
payable from ETP Holders at such times
and intervals as prescribed by the
Exchange.’’
• NYSE Arca Equities Rule 2.17(b)
provides that the Corporation may fix
and impose certain other charges or fees
to be paid by ETP Holders, without
specifying to whom they are paid. Rule
2.18(b), however, states that the Board
of Directors sets the charges or fees, and
that they are to be paid to the Exchange
or its subsidiaries. The Exchange does
not propose to amend this aspect of
Rule 2.18(b), however, as it believes that
the provisions are substantially similar
in intent.
• The Exchange proposes to add
commentary .01 from NYSE Arca
Equities Rule 2.17 to Rule 2.18.
Rule 2.19(a) sets forth the registration
requirements for permit holders. The
Exchange proposes to amend the
references to ‘‘member’’ and ‘‘member
organization’’ to include both terms, to
incorporate NYSE Arca Equities Rule
2.18(a).
Rule 2.21 sets forth the provisions on
transfer of trading permits. Consistent
with NYSE Arca Equities Rule 2.20
(Limited Transferability), the Exchange
proposes to add the following text to the
end of the first sentence in Rule 2.21(a):
‘‘, and ETPs may not be purchased
(other than from the Exchange), sold or
leased.’’ In addition, the Exchange
proposes to add ‘‘(other than from the
Exchange’’) after ‘‘purported purchase’’
in the second sentence.
C. Options Rules
The Options Rules would be
substantially the same as current NYSE
Arca Rules 4, 5, 6, 7, 8, and 9, with the
following changes:
• The word ‘‘—Options’’ would be
added at the end of the headings for
proposed Rules 4–O and 9–O, which
would be called ‘‘Capital Requirements,
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Financial Reports, Margins—Options’’
and ‘‘Conducting Business with the
Public—Options,’’ respectively.
Similarly, the word ‘‘Options’’ would be
added to the heading of proposed Rule
7–O, so that it becomes ‘‘General
Options Trading Rules.’’
• ‘‘Corporation’’ would be replaced
with ‘‘Exchange’’ in proposed Rules
4.1–O (Minimum Net Capital) and 9.26–
O (Registration of Options Principals),
and in the title of Rule 9.1–O(a)
(Register with the Corporation). The
Exchange believes that the references
should be to the Exchange, as
‘‘Corporation’’ is not a defined term in
the NYSE Arca rules.
• The text of Rule 9.17 (Books and
Records) would be replaced with
‘‘Reserved’’ and the requirements of
Rule 9.17 would be integrated with
proposed Rule 2.28 (Books and
Records), as discussed above.30
• A cross reference to Rule 6.1(a)(24)
in Rule 4.16(d)(9)(G) (Other Provisions)
would be corrected to reference
subsection (b)(24), as the Exchange
believes that the current reference is
incorrect.31
D. Equities Rules
The proposed new Equities Rules
would be the same as current NYSE
Arca Equities Rules 4, 5, 7, 8, 9, the
Conduct Rules, and the Order Audit
Trail System, subject to the following
changes.
Organizational Changes
The Exchange proposes to make the
following organizational changes
throughout the Equities Rules:
• The Exchange proposes to add the
word ‘‘—Equities’’ to the end of the
titles of proposed Rules 4–E and 9–E,
which would be called ‘‘Capital
Requirements, Financial Reports,
Margins—Equities’’ and ‘‘Conducting
Business with the Public—Equities,’’
respectively. ‘‘Equities’’ would be added
to the start of Rule 5–E, which would
become ‘‘Equities Listings.’’
• The Conduct Rules, which are
currently NYSE Arca Equities Rules
2010 through 5320, would be moved to
the end of proposed Rule 9–E, becoming
Rules 9.2010–E through 9.5320–E, with
the exception of NYSE Arca Equities
Rule 5220 (Disruptive Quoting and
Trading Activity Prohibited), which
would be integrated into Rule 11.21
30 See discussion accompanying notes 28 and 29,
supra.
31 See Exhibit A, Rule 4, to SR–PCX–2004–08
(February 10, 2004), available at https://
www.sec.gov/rules/sro/pcx/34–49451_a4.pdf. See
also Securities Exchange Release No. 49718 (May
17, 2004), 69 FR 29611 (May 24, 2004).
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(Disruptive Quoting and Trading
Activity Prohibited).
• The Order Audit Trail System
Rules, which are currently NYSE Arca
Equities Rules 7410 through 7470,
would be moved to Rule 6–E, becoming
Rules 6.7410–E through 6.7470–E.32
Proposed Amendments
Several of the NYSE Arca Equities
rules refer to the Delegation or reference
the relationship between NYSE Arca
Equities and the Exchange through the
use of the term ‘‘NYSE Arca Parent.’’ 33
After the Merger, such references would
be obsolete. Accordingly, to reflect the
Merger, the Exchange proposes to make
the following changes when
incorporating NYSE Arca Equities rules
into the Exchange rules:
• The second sentence of NYSE Arca
Equities Rule 5.1(a)(1) (General
Provisions and Unlisted Trading
Privileges) states that ‘‘[f]or the purposes
of the Securities Exchange Act of 1934
(‘Exchange Act’), securities traded on
the Corporation shall be admitted to
unlisted trading privileges or listed on
the NYSE Arca Parent, subject to the
NYSE Arca Parent’s delegation of the
responsibility for the administration and
enforcement of the unlisted trading
privileges and listing requirements to
the Corporation.’’ The Exchange
proposes not to include the sentence
when incorporating the provision into
Rule 5.1–E(a)(1) (General Provisions and
Unlisted Trading Privileges).
• The Exchange proposes not to
include the statement that ‘‘ ‘NYSE Arca
Equities, Inc.’ (the ‘Corporation’) is a
wholly owned subsidiary of ICE’’ in
NYSE Arca Equities Rule 5.1(c)(a)(3)
(Listing of an Affiliate or Entity that
Operates and/or Owns a Trading System
or Facility of the Corporation) when
incorporating the provision into
proposed Rule 5.1–E(c)(a)(3) (Listing of
an Affiliate or Entity that Operates and/
or Owns a Trading System or Facility of
the Exchange).
• The Exchange proposes to use the
term ‘‘Exchange’’ instead of ‘‘NYSE Arca
Parent’’ in proposed Rule 5.1–E(b)(4)
(Definitions) and in place of
‘‘Corporation and the NYSE Arca
Parent’’ in Rule 9.18–E(b)(3) (Doing A
Public Business In Options). Similarly,
the Exchange proposes to use the term
‘‘Exchange’’ instead of ‘‘NYSE Arca
32 Current NYSE Arca Equities Rule 6 (Business
Conduct) would be integrated into Rule 11
(Business Conduct). See ‘‘Rule 11 (Business
Conduct)’’, below.
33 NYSE Arca Equities Rule 1(nn) defines ‘‘NYSE
Arca Parent’’ as ‘‘the NYSE Arca, Inc., a Delaware
corporation and national securities exchange as that
term is defined in Section 6 of the Securities
Exchange Act of 1934, as amended.’’
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Equities’’ in proposed Rule 7.29–
E(b)(2)(I).
The Exchange proposes several
changes to remove obsolete references
in the Equities Rules, as follows:
• NYSE Arca Equities Rule 5.3(k)(4)
(Independent Directors/Board
Committees) sets forth two versions of
paragraph (k)(4) (Compensation
Committee). One provides the operative
text through June 30, 2013, and one
provides the operative text effective
commencing July 1, 2013. Proposed
NYSE Arca Rule 5.3–E(k)(4) would only
include the text that was operative
commencing July 1, 2013.
• Similarly, present NYSE Arca
Equities Rule 5.3(n) (Listed Foreign
Private Issuer) includes two versions of
the rule. One provides the operative text
through June 30, 2013, and one provides
the operative text effective commencing
July 1, 2013. Proposed NYSE Arca Rule
5.3–E(n) would only include the text
that was operative commencing July 1,
2013.
• Present NYSE Arca Equities Rules
7.18(a) (Halts) and 7.46(f)(5)(C) and (F)
(Tick Size Pilot Plan) cross reference
Rules 7.11P, 7.31P(a)(2)(C) and (F), and
Rule 7.31P(e), respectively. Because the
‘‘P’’ modifier has been deleted from
such Rules, proposed NYSE Arca Rules
7.18–E(a) and 7.46–E(f)(5)(C) and (F)
would not include the ‘‘P’’ modifier in
the cross references.34
• NYSE Arca Equities Rule 7.25
(Crowd Participant Program) expired on
June 23, 2016. Accordingly, the
Exchange proposes not to include an
equivalent to NYSE Arca Equities Rule
7.25 in the Equities Rules. Instead, it
would mark proposed Rule 7.25–E as
‘‘Reserved.’’
• In proposed Rule 8.203–E(g)
(Commodity Index Trust Shares)
Commentary .03, an obsolete reference
to ‘‘PCXE Rule 7.34’’ in NYSE Arca
Equities Rule 8.203(g) would be updated
to ‘‘Rule 7.34–E.’’ The term ‘‘PCXE’’
refers to the Pacific Exchange, Inc. The
Pacific Exchange, Inc. was a predecessor
of the Exchange, and so the reference is
obsolete.
The Exchange proposes to make the
following changes to cross references to
the Exchange rules within the Equities
Rules:
• Rule 4.15–E(d)(9)(G)(i) and (ii)
(Other Provisions) includes references
to ‘‘Rule 6.1(a)(23) of the NYSE Arca
Parent.’’ The Exchange proposes to
delete ‘‘of the NYSE Arca Parent’’ and
revise the references to cite subsection
(b)(24) instead of (a)(23), as the
34 See Securities Exchange Act Release No. 79079
(October 11, 2016), 81 FR 71559 (October 17, 2016).
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Exchange believes that the current
reference is incorrect.35
• In Rule 9.18–E(b)(3) (Doing a Public
Business in Options) the text ‘‘Rules of
the Corporation and the NYSE Arca
Parent’’ would be changed in the
proposal to ‘‘Rules of the Exchange.’’
• In Rule 9.20–E(a) (Transactions for
Public Customers) ‘‘NYSE Arca Parent
Rule 6.35’’ would be changed in the
proposal to ‘‘Rule 6.35–O.’’
Amendments That Are Approved but
Not Yet Operative
NYSE Arca Equities Rules 7.10, 7.11,
7.31, and 7.35 have a notice stating that
an amended version of the rule has been
approved but is not yet operative. The
notices include links to the amended
version of the rule and the relevant
approval order. The notices and links
would be retained in proposed rules
7.10–E (Clearly Erroneous Executions),
7.11–E (Limit Up—Limit Down Plan
and Trading Pauses in Individual
Securities Due to Extraordinary Market
Volatility), 7.31–E (Orders and
Modifiers), and 7.35–E (Auctions).
Exhibit 5C sets forth the proposed text
of the amended but not yet operative
versions of such rules. The Exchange
will announce by Trader Update when
the amended version of the rule will
become operative.
E. Disciplinary and Miscellaneous Rules
Proposed revised Rules 10, 11, 12, 13,
and 14, which would apply to both the
equities and options markets, would
incorporate changes based on NYSE
Arca Equities 10 (Disciplinary
Proceedings, Other Hearings, and
Appeals), 6 (Business Conduct), 12
(Arbitration), 11 (Cancellation,
Suspension and Reinstatement), 13
(Liability of Directors and Corporation)
and 5220. The proposed changes to each
rule are addressed in turn below.
Rule 10 (Disciplinary Proceedings and
Appeals)
The Exchange proposes to revise Rule
10 to incorporate NYSE Arca Equities
Rule 10 (Disciplinary Proceedings,
Other Hearings, and Appeals), which
sets forth the equivalent requirements
for ETP Holders. As a result, a single set
of rules would encompass all
disciplinary proceedings and appeals.
As described below, to implement the
change, the Exchange proposes to
amend the title of Rule 10 to
‘‘Disciplinary Proceedings, Other
Hearings and Appeals,’’ add one new
rule, and amend the existing rules.
35 See
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Proposed New Rule
The Exchange proposes to incorporate
the entire text of current NYSE Arca
Equities Rule 10.10 (Miscellaneous
Provisions) into new Rule 10.10
(Miscellaneous Provisions), which
would provide that any charges, notices
or other documents may be served upon
the Respondent either personally or by
leaving the same at Respondent’s place
of business or by deposit in the United
States Post Office, postage prepaid via
registered or certified mail addressed to
the Respondent at its address as it
appears on the books and records of the
Exchange. The current text of NYSE
Arca Rule 10.10 is marked ‘‘Reserved.’’
Proposed Amendments to Rule 10
The Exchange proposes to add
references to ETP Holders to show
revised Rule 10’s applicability to both
categories of trading permit holders.
Accordingly, the following proposed
Rules would be updated to include
references to ‘‘ETP Holder’’ and/or ‘‘ETP
Holders’’ including, where appropriate,
when referring to person(s) associated
with an ETP Holder: Rule 10.1(a) and (b)
(Disciplinary Jurisdiction); 36 Rule 10.2
(Investigations and Regulatory
Cooperation); Rule 10.3(c) (Ex Parte
Communications); Rule 10.4(a)
(Complaints); Rule 10.5(d) (Hearing);
Rule10.6(c) (Offers of Settlement); Rule
10.9(a) (Judgment and Penalty); Rule
10.11(a), (b), (d)(3) and (d)(5) (Appeal of
Floor Citations and Minor Rule Plan
Sanctions); Rule 10.12(a), (b), and (g)
(Minor Rule Plan); Rule 10.14 (Hearings
and Review of Decisions by the
Exchange); and Rule 10.18(a)(2)
(Expedited Client Suspension
Proceeding). Rule 10.18(a)(2) would also
include a reference to an ‘‘associated
person of an ETP Holder.’’
Similarly, the Exchange proposes to
add references to the BCC, which is the
NYSE Arca Equities disciplinary
committee,37 to Rule 10. Accordingly, a
definition of the BCC would be added
to Rule 10.3(a)(1) and the following
rules would be updated to include
references to the BCC 38: Rule 10.3(a), (c)
and (e); Rule 10.4(c); Rule 10.5(a); Rule
10.6(d), (h), (j) and (k); Rule 10.11(d)(1);
Rule 10.12(c) and (d); and Rule
10.17(e)(2) (Release of Disciplinary
Information Through the Public
Disclosure Program). In addition,
36 The Exchange also proposes to delete a stray
parenthetical in the first sentence, so that ‘‘Rule
10.1)’’ would be ‘‘Rule 10.1.’’
37 See NYSE Arca Equities Rule 3.2(b)(1) (Equity
Committees) and proposed new Rule 3.2(b)(2).
38 Throughout the rules, when adding ‘‘BCC’’ or
‘‘Business Conduct Committee’’ to a rule, the
Exchange would utilize a comma, ‘‘and’’ or ‘‘or’’ as
necessary to integrate it into the text.
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subsection (g) of Rule 10.12 would be
amended to add ‘‘Business Conduct
Committee or the’’ before ‘‘Ethics and
Business Conduct Committee.’’
The Exchange proposes to make the
following additional changes to Rule 10:
• In the first sentence of Rule 10.1,
the Exchange proposes to make the
following non-substantive changes: ‘‘on
the Exchange’’ would be amended to ‘‘of
the Exchange,’’ and ‘‘or policy or
procedure’’ would be amended to ‘‘or
any policy of procedure.’’ In Rule
10.1(b), the Exchange proposes to
change the semicolon after ‘‘such
termination’’ to a comma.
• A new Commentary .02 would be
added to Rule 10.3 that would provide
that a disciplinary proceeding will be
considered to be pending from the date
that Complaint has been issued
pursuant to Rule 10.4 until the
proceeding, including any appeals,
becomes final. This is the same text as
in current NYSE Arca Equities Rule
10.3.
• The Exchange notes that proposed
Rule 10.5 differs from the current NYSE
Arca Equities version in two respects.
First, current NYSE Arca Rule 10.5
requires the EBCC to appoint three or
more members to hear a matter. NYSE
Arca Equities Rule 10.5 requires the
BCC to appoint one or more. The
Exchange determined to retain the three
person NYSE Arca requirement in
proposed Rule 10.5, which is consistent
with the disciplinary rules of its
affiliates NYSE and NYSE MKT.39
• In subsections (a) and (k) of
proposed Rule 10.6, references to the
‘‘Department of Enforcement’’ would be
shortened to ‘‘Enforcement.’’
• Rule 10.8 (Review) would be
amended as follows.
• First, subsection (b) would
incorporate text from NYSE Arca
Equities Rule 10.8(b) requiring a
decision of the Review Board (as
defined therein) to become final 15
calendar days after notifying the parties
and that the decision would be stayed
pending a request for review of such
determination by the NYSE Arca Board
of Directors filed pursuant Rule 10.8(c)
or 10.8(d). The proposed change would
add clarity to the current rule by
specifying that a Board review stays a
determination from becoming final. The
second and third paragraphs of
subsection (b) would be amended to
replace ‘‘Board of Directors’’ with
‘‘CFR,’’ which is the Board committee
with the delegated authority to consider
appeals on behalf of the Board and
39 See NYSE and NYSE MKT Rule 9231(b)(1),
which requires a hearing Panel to be composed of
a Hearing Officer and two panelists.
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which appoints the Review Board under
the Rule. As such, the proposed change
would add clarity and transparency to
the Exchange’s Rules by specifying that
the CFR, and not the full Board, would
be acting with respect to the Review
Board. In the third paragraph, the
Exchange would also add ‘‘or her’’
before ‘‘duties.’’
• Second, paragraph (c) would be
amended to incorporate text from
current NYSE Arca Equities Rule
10.8(c), permitting the Complainant or
Respondent to request review of a
decision by the NYSE Arca Board of
Directors and establishing the
requirements for initiating such a
review. ‘‘NYSE Arca Board’’ would be
replaced with ‘‘Board of Directors’’ as
‘‘NYSE Arca Board’’ is not a defined
term.
• The Exchange proposes various
changes to Rule 10.11. In the second
sentence of subsection (d)(4), the
Exchange proposes the non-substantive
change of adding the word ‘‘of’’ between
‘‘standard’’ and ‘‘review.’’ Subsection
(b) would be amended to shorten
‘‘Department of Enforcement’’ to
‘‘Enforcement.’’
• The Exchange proposes various
changes to Rule 10.12.
• Subsection (e) would be amended
to shorten ‘‘Department of Enforcement’’
to ‘‘Enforcement.’’
• New subsection (i) would
incorporate those current NYSE Arca
Equities trading Rules eligible for minor
rule violation treatment as set forth in
NYSE Arca Equities Rule 10.12(g). The
heading would be ‘‘Minor Rule Plan:
Minor Trading Rule Violations.’’
Subsection (i) is currently marked
‘‘Reserved.’’
• Subsection (j) would be amended to
add cross references to the relevant
Equities Rules; add ‘‘ETP Holder’s or’’
before ‘‘OTP Holder’’ in (j)(2); add
‘‘filing and/or’’ before ‘‘notification’’ in
(j)(4); and add new item (13) to
incorporate the provision in NYSE Arca
Equities Rule 10.12(j)(13).
• The heading of Subsection (k)
would be amended to add ‘‘Options.’’
• New subsection (l) would be
entitled ‘‘Equities Minor Rule Plan:
Recommended Fine Schedule’’ and
incorporate the current NYSE Arca
Equities Rules eligible for minor rule
violation treatment. Fine levels and
eligible rules would remain the same as
current NYSE Arca Equities Rule
10.12(i). Proposed subsection (l)
reproduces current NYSE Arca Equities
Rule 10.12(i) in its entirety.
• The word ‘‘—Options’’ would be
added to the end of the titles of Rules
10.13 (Summary Sanction Procedure)
and 10.16 (NYSE Arca Sanctioning
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Guidelines). Such rules have no equities
analogues and would only apply to
options matters. In the first sentence of
the fourth paragraph of Rule 10.16(a),
‘‘Principals’’ would be replaced with
‘‘Principles.’’
• The Exchange proposes various
changes to Rule 10.14:
• In subsection (a), ‘‘ETP’’ would be
added before ‘‘OTP’’ and a reference to
Rule 7.23–E would be added.
• Consistent with NYSE Arca Equities
Rule 10.13(a)(5), a new subsection (a)(7)
would be added to incorporate actions
taken by the Exchange pursuant to
proposed Rule 7.22–E, including the
denial of the application for, or the
termination or suspension of, a Market
Maker’s registration in a security or
securities, as eligible for relief under
Rule 10.14.
• Consistent with NYSE Arca Equities
Rule 10.13(a), subsection (a) would also
be amended to provide that provisions
of Rule 10.14 would not apply to
reviews of delisting decisions for which
review is already provided within Rule
5–E.
• Subsection (l) would be amended to
add the Chairperson of the committee
whose action was subject to the prior
review as an additional person who can
call a decision of the CFR Appeals Panel
for review, consistent with NYSE Arca
Equities Rule 10.13(k).
Rule 11 (Business Conduct)
The Exchange proposes to revise Rule
11 to incorporate NYSE Arca Equities
Rule 6 (Business Conduct) and NYSE
Arca Equities Rule 5220. To implement
the change, the Exchange proposes to
add three new rules and amend the
existing rules.
Proposed New Rules
The Exchange proposes to import the
text of current NYSE Arca Equities Rule
6.7 (Trading Ahead of Research Reports)
into new proposed Rule 11.22 (Trading
Ahead of Research Reports) without
changes other than those made to the
entire rulebook.40
The Exchange proposes to import the
text of current NYSE Arca Equities Rule
6.9 (Taking or Supplying Securities to
Fill Customer’s Order) into new
proposed Rule 11.23 (Taking or
Supplying Securities to Fill Customer’s
Order) without changes other than those
made to the entire rulebook and the use
of ‘‘Exchange’’ in place of ‘‘facilities of
the Corporation’’ in proposed Rule
11.23(5).
The Exchange proposes to import the
text of current NYSE Arca Equities Rule
6.10 (ETP Holders Holding Options)
40 See ‘‘Proposed Changes Applicable to Entire
Rulebook,’’ above.
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into new proposed Rule 11.24 (ETP
Holders Holding Options) without
changes other than those made to the
entire rulebook and the use of
‘‘Exchange’’ in place of ‘‘facilities of the
Corporation.’’
Proposed Amendments to Rule 11
The Exchange proposes to add
references to ETP Holders to show
revised Rule 11’s applicability to both
categories of trading permit holders.
Accordingly, the following proposed
rules would be updated to include
references to ‘‘ETP Holder’’ and/or ‘‘ETP
Holders’’: Rule 11.1 (Adherence to Law
and Good Business Practice); Rule 11.2
(Prohibited Acts); Rule 11.3 (Prevention
of the Misuse of Material, Nonpublic
Information); Rule 11.4 (Rumors); Rule
11.5 (Manipulation); Rule 11.6 (Frontrunning of Block Transactions); Rule
11.10 (Excessive Trading); Rule 11.11
(Disclosure of Financial Arrangements
of OTP Holders); Rule 11.12(a) (Joint
Accounts); Rule 11.13 (Disciplinary
Action By Other Organizations); Rule
11.18 (Supervision); Rule 11.19 (AntiMoney Laundering Compliance
Program); Rule 11.20 (Miscellaneous
Provisions); and Rule 11.21(a). Rule
11.21(a) would also include a reference
to an ‘‘associated person of an ETP
Holder.’’
Similarly, the heading of Rule 11.11
would be amended to include ‘‘ETP
Holders’’ and Rules 11.3 Commentary
.02 (Prevention of the Misuse of
Material, Nonpublic Information),
11.11(a), 11.18(b) and 11.19 would be
amended to include references to ‘‘ETP
Holder’s.’’
The Exchange proposes to make the
following additional changes to Rule 11:
• The Exchange proposes to add a
new subsection (g) to Rule 11.2 that
would state that an ETP Holder may not
split any order into multiple orders for
any purpose other than seeking the best
execution of the entire order, which is
the same text as NYSE Arca Equities
Rule 6.2(g).
• The Exchange proposes to make
several revisions to proposed Rule 11.3.
Subsection (a) of proposed Rule 11.3
would be amended to replace ‘‘Options
Surveillance Department’’ with
‘‘Regulatory staff.’’ Subsection (b) would
also be amended to delete ‘‘the’’ before
‘‘Enforcement’’ and ‘‘Department’’ after
it. Finally, the Exchange proposes to
add a new Commentary .04 which has
the same text as NYSE Arca Equities
Rule 6.3 Commentary .04.
• The Exchange proposes to make
several revisions to proposed Rule 11.6.
Rule 11.6 sets 5,000 shares as the
threshold for when an OTP Holder, OTP
Firm or Associated Person must take
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action under the Rule. Because NYSE
Arca Equities Rule 6.6 sets a threshold
of 10,000 shares, the Exchange proposes
to amend Rule 11.6 by adding ‘‘(10,000
shares or more in the case of an ETP
Holder)’’ after ‘‘5,000 shares or more.’’
In addition, the reference to ‘‘Pacific
Exchange, Inc.’’ in Rule 11.6 would be
replaced with ‘‘Exchange.’’ The Pacific
Exchange, Inc. was a predecessor of the
Exchange, and so the reference is
obsolete.
• The Exchange proposes to make
several changes to proposed Rule 11.12.
In the last sentence of subsection (a), the
phrase ‘‘or Market Maker’’ would be
added after ‘‘specialist,’’ and ‘‘or she’’
after ‘‘he.’’ The Exchange proposes to
add a new Commentary .01 to proposed
Rule 11.12, which is the same text as
Commentary .01 of NYSE Arca Equities
Rule 6.12 (Joint Accounts). Finally, the
Exchange proposes to add the text from
NYSE Arca Equities Rule 6.12(b) to a
new subsection (b) governing
‘‘Reporting.’’
• In subsection (a) of Rule 11.18, the
Exchange proposes to add the text ’’)
and no ETP Holder’’ after ‘‘(DEA’’. In
addition, the Exchange proposes to add
the text of current NYSE Arca Equities
Rule 6.18(d) and Commentary .01 and
.02 to a new subsection (d) and
Commentary.
Rule 12 (Arbitration)
The Exchange proposes to revise Rule
12 (Arbitration) to incorporate NYSE
Arca Equities Rule 12 (Arbitration). To
implement the change, the Exchange
proposes to amend the existing rules as
follows.
• Subsections (a) and (c) would be
amended to include a reference to ‘‘ETP
Holder.’’
• References to the ‘‘NASD’’ in
‘‘NASD Dispute Resolution’’ and in the
defined term ‘‘NASD DR’’ would be
replaced with ‘‘FINRA.’’
In addition, the Exchange proposes to
delete the brackets around the title of
Rule 12.
Rule 13 (Cancellation, Suspension and
Reinstatement)
The Exchange proposes to revise Rule
13 to incorporate NYSE Arca Equities
Rule 11 (Cancellation, Suspension and
Reinstatement). To implement the
change, the Exchange proposes to
amend the existing rules.
The Exchange proposes to add
references to ETP Holders to show the
revised rules’ applicability to both
categories of trading permit holders.
Accordingly, the following rules would
be updated to include references to
‘‘ETP Holder’’ and/or ‘‘ETP Holders’’:
Rule 13.1 (Notice of Expulsion or
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Suspension); Rule 13.2(a) (Procedures
for Suspension); Rule 13.3 (Effect of
Suspension or Cancellation); Rule 13.4
(Disciplinary Measures During
Suspension); Rule 13.5 (Investigation
Following Summary Suspension); Rule
13.6 (Grounds for Cancellation); Rule
13.7 (Reinstatement); Rule 13.8 (Failure
to Obtain Reinstatement); and Rule 13.9
(Failure to Meet the Eligibility or
Qualification Standards or Prerequisites
for Access to Services).
Similarly, the Exchange proposes to
add references to ETPs by adding ‘‘the
ETP or’’ in place of ‘‘an’’ in the first
sentence of Rule 13.3, and by adding
‘‘ETP or’’ before ‘‘OTP’’ in Rule 13.8.
The Exchange proposes to make the
following additional changes to Rule
13.2:
• In subsection (a), the Exchange
proposes to delete ‘‘and’’ from between
‘‘bars’’ and ‘‘limitations,’’ as a nonsubstantive grammatical change.
• The Exchange proposes to add the
text of NYSE Arca Equities Rule
11.2(a)(1)(iii) as new subsection (a)(1)(C)
of Rule 13.2. The current text of such
subsection is marked ‘‘Reserved.’’
• The Exchange proposes to delete
‘‘OTP’’ before ‘‘trading privileges’’ in
subsection (a)(2)(A), to reflect that the
rule would apply to both OTP and ETP
trading privileges.
• In subsection (a)(2)(B) and (C), the
Exchange proposes to add a new cross
reference to proposed Rule 3.8–E and
correct a cross reference from Rule
10.2(b) to Rule 10.2(d).
• Subsection (a)(2)(E) provides that
the Exchange may suspend all trading
rights and privileges of an OTP Holder
or OTP Firm for failure to comply with
Rule 3.4. Rule 3.4 was deleted in 2012
at the time of the merger of Archipelago
Holdings, Inc. into NYSE Group, and so
the referenced obligations no longer
exist.41 Accordingly, the Exchange
proposes to delete subsection (a)(2)(E) as
obsolete and replace the text with
‘‘Reserved.’’
• Rule 13.9(c), (e), and (h) would be
updated to include references to the
BCC, the NYSE Arca Equities
disciplinary committee.42
Rule 14 (Liability of Directors and
Exchange)
The Exchange proposes to revise Rule
14 to incorporate NYSE Arca Equities
Rule 13 (Liability of Directors and
Corporation).
The Exchange proposes to add
references to ETP Holders to show the
41 See Securities Exchange Act Release No. 67435
(July 13, 2012), 77 FR 42533 (July 19, 2012), note
12. See also Rule 3.4 (Reserved).
42 See NYSE Arca Equities Rule 3.2(b)(1) (Equity
Committees) and proposed new Rule 3.2(b)(2).
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revised rules’ applicability to both
categories of trading permit holders.
Accordingly, the following rules would
be updated to include references to
‘‘ETP Holder’’ and/or ‘‘ETP Holders’’:
Rules 14.1 (Liability of Directors), 14.2
(Liability of Exchange), 14.3 (Legal
Proceedings Against Exchange
Directors, Officers, Employees or
Agents) and 14.4 (Exchange’s Costs of
Defending Legal Proceedings).
Rule 14.5 (Deleted) would be deleted,
as it is not needed as a placeholder.
IV. Fee Schedules
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A. Proposed NYSE Arca Equities Fee
Schedule
The Exchange proposes to delete the
Equities Fee Schedule from the rules of
the Exchange, and to adopt the NYSE
Arca Equities Fee Schedule as the new
fee schedule for the Exchange equity
market.43 The proposed NYSE Arca
Equities Fee Schedule would be the
same as the current Equities Fee
Schedule, subject to the following
changes:
• The title of the NYSE Arca Equities
Fee Schedule would be ‘‘NYSE Arca
Equities Fees and Charges,’’ consistent
with the title of the Options Fee
Schedule, which is ‘‘NYSE Arca
Options Fees and Charges.’’
• The references to the current NYSE
Arca Equities Rules would be amended
to cite the proposed NYSE Arca Rules,
by adding ‘‘-E’’ to the proposed rule
numbers. In addition, in footnotes 8 and
9, the references to NYSE Arca Equities
Rules 1.1(c) and 1.1(d) would be
changed to refer to proposed NYSE Arca
Rules 1.1(b) and (c), respectively.
• As noted above, NYSE Arca
Equities Rule 7.25 expired on June 23,
2016, and the Exchange proposes not to
include an equivalent to NYSE Arca
Equities Rule 7.25 in the Equities Rules.
Consistent with such change, the table
under ‘‘NYSE Arca Marketplace: Crowd
Participant (‘CP’) Program Payments’’
would not be included in the proposed
NYSE Arca Equities Fee Schedule, as it
is also obsolete.
• The heading ‘‘NYSE Arca Equities:
Regulatory Fees’’ would be changed to
‘‘Regulatory Fees.’’
• In General Note 1 under the
heading ‘‘Co-Location Fees,’’ the word
‘‘Equities’’ in ‘‘NYSE Arca Equities Fee
Schedule’’ will be replaced with
‘‘Options,’’ as the Note is meant to refer
to the options market fee schedule.
B. NYSE Arca Options Fee Schedule
In the Options Fee Schedule, Note 8
under ‘‘NYSE Arca Options: General’’
refers to the ‘‘Schedule of Fees and
Charges for NYSE Arca Equities, Inc.’’
General Note 1 under the heading ‘‘CoLocation Fees’’ refers to the same
document as the ‘‘NYSE Arca Equities
Fee Schedule.’’ The Exchange proposes
to conform the two references to the
name ‘‘NYSE Arca Equities Fee
Schedule.’’
In addition, the Exchange proposes to
update cross references in Notes 2, 6, 9
and 15 to reflect the proposed addition
of ‘‘-O’’ to the rule numbers.
C. Listing Fee Schedule
In the Listing Fee Schedule, the
Exchange proposes to update cross
references in Item 6 under ‘‘Listing
Fees’’; Item 7 under ‘‘Annual Fee
(Payable January in Each Calendar
Year)’’; and Notes 3 and 4 to reflect the
proposed addition of ‘‘-E’’ to the rule
numbers.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Exchange Act 44 in
general, and with Section 6(b)(1) 45 in
particular, in that it enables the
Exchange to be so organized as to have
the capacity to be able to carry out the
purposes of the Exchange Act and to
comply, and to enforce compliance by
its exchange members and persons
associated with its exchange members,
with the provisions of the Exchange Act,
the rules and regulations thereunder,
and the rules of the Exchange.
Specifically, termination of the
Delegation would result in the Exchange
directly operating the equities market
facility of the Exchange, while
continuing to bear the responsibility to
ensure the fulfillment of its statutory
and self-regulatory obligations. As is
true now, the independent regulatory
oversight committee (‘‘ROC’’) of the
Board would oversee the Exchange’s
regulatory and self-regulatory
organization responsibilities with
regards to both the equities and options
markets, and the Exchange’s regulatory
department would continue to carry out
its regulatory functions with respect to
both markets under the oversight of the
ROC.46
For the same reasons, the Exchange
believes that the proposal to remove
from the Exchange rules the
44 15
43 The
Exchange does not propose to amend the
fee schedule for market data fees, the NYSE Arca
Equities Proprietary Market Data Fees, which does
not reference NYSE Arca Equities, Inc.
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U.S.C. 78f(b).
U.S.C. 78f(b)(1).
46 See NYSE Arca Rule 3.3(a)(1). NYSE Arca
Equities does not have a regulatory oversight
committee.
45 15
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organizational documents of NYSE Arca
Equities and NYSE Arca Equities Rules
14.1 and 14.3 in connection with the
proposed termination of the Delegation
is also consistent with Section 6(b)(1) of
the Act.
The Exchange believes that the
proposed amendment to Bylaws Section
3.01(b) to incorporate the ETP Holders
into the existing statement of the
authority of the Board would also be
consistent with Section 6(b)(1) of the
Act. By incorporating the ETP Holders,
the limits that section sets on the
Board’s ability to exercise all powers of
the Exchange and do all lawful acts and
things would include those things as are
not by law, the certificate of
incorporation, the Bylaws or the Rules
directed or required to be exercised,
done or approved by ETP Holders, as
well as the OTP Holders or the holding
member.
Further, the Exchange believes that
the proposed rule change would be
consistent with the fair representation
requirement of Section 6(b)(3) of the
Exchange Act,47 which is intended to
give members a voice in the selection of
an exchange’s directors and the
administration of its affairs. The
proposed changes would ensure that all
Permit Holders, irrespective of whether
they are OTP Holders or ETP Holders,
would have the same rights to
participate in the Nominating
Committee and the nomination of NonAffiliated Directors and, in the case of
a contested nomination, the same voting
rights. Such process would also be
consistent with the process for
nominating non-affiliated directors of
NYSE MKT, which also has both
options and equity markets, as well as
with the governing documents of
Nasdaq LLC and Nasdaq BX.48
The Exchange believes that the
additional changes to Bylaws Section
3.02(a) would also allow the Exchange
to be so organized as to have the
capacity to be able to carry out the
purposes of the Exchange Act and to
comply, and to enforce compliance by
its exchange members and persons
associated with its exchange members,
with the provisions of the Exchange Act,
the rules and regulations thereunder,
and the rules of the Exchange. By
clearly stating that the holding member
determines the size of the Board,
presenting the Board composition
requirements in numbered clauses, and
setting forth how the minimum number
of Non-Affiliated directors shall be
calculated, the provision would
contribute to the orderly operation of
47 See
48 See
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15 U.S.C. 78f(b)(3).
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the Exchange by adding clarity and
transparency to the Bylaws. Further, the
proposed amendments would align the
provision with the governing documents
of the SRO Affiliates.49
Similarly, the Exchange believes that
the changes to Bylaws Article IV,
Section 4.02, which would remove
obsolete references to the Permit Holder
Advisory Committee and add references
to the Ethics and Business Conduct
Committee of the Exchange, and the
deletion of Rule 3.2(b)(2)(C)(i), which is
an obsolete reference to the initial
membership of the Board would
contribute to the orderly operation of
the Exchange by adding clarity and
transparency to the Bylaws. Similarly,
the Exchange believes that removing
extraneous references to the voting
process in the definitions of OTP
Holder, OTP Firm and ETP Holder
would add clarity and transparency to
the Rules.
The Exchange believes that the
proposed amendments to Rule 3
regarding the Board and Exchange
Committees would allow the Exchange
to be so organized as to have the
capacity to be able to carry out the
purposes of the Exchange Act and to
comply, and to enforce compliance by
its exchange members and persons
associated with its exchange members,
with the provisions of the Exchange Act,
the rules and regulations thereunder,
and the rules of the Exchange by
ensuring that ETP Holders may
participate in Exchange and Board
Committees. Specifically, the proposed
changes would ensure that ETP Holders
and Allied Persons or Associated
Persons of ETP Holders would be
eligible for appointment to Exchange
Committee [sic], just as OTP Holders
and Allied Persons or Associated
Persons of an OTP Firm are now. In
addition, the proposed amendments
would integrate the existing NYSE Arca
Equities Business Conduct Committee
into the Exchange rules, putting such
committee on a par with the existing
Ethics and Business Conduct Committee
for OTP Holders. Similarly, the changes
would mean that all reviews were
conducted by a single CFR, and all CFR
decisions were subject to the review of
the Exchange Board, meaning that all
Permit Holders were subject to the same
rule. Presently, NYSE Arca and NYSE
Arca Equities have separate CFRs, the
NYSE Arca CFR decisions are subject to
the review of the Exchange Board, and
the NYSE Arca Equities CFR decisions
are subject to the review of the NYSE
Arca Equities board of directors.
49 See
note 15, supra.
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The Exchange believes that the
inclusion of the ETP Holders as well as
OTP Holders in the Exchange and Board
Committees would provide for the fair
representation of members in the
administration of the affairs of the
Exchange, including rulemaking and the
disciplinary process, consistent with
Section 6(b)(3) of the Exchange Act.50
Allowing ETP Holders and Allied
Persons or Associated Persons of ETP
Holders to be eligible for appointment to
Exchange Committees, putting the
NYSE Arca Equities disciplinary
committee on a par with the Exchange
disciplinary committee, having reviews
conducted by a single CFR, and having
those decisions subject to the review of
the same Board, would provide for the
fair representation of members in the
‘‘administration of the affairs of the
exchange,’’ including the disciplinary
process, consistent with Section 6(b)(3)
of the Exchange Act.
The Exchange believes that the
integration of its two rulebooks into a
single rulebook, with three categories of
rules, is consistent with Section 6(b) of
the Exchange Act 51 in general, and with
Section 6(b)(1) 52 in particular because
the integration and re-organization
would contribute to the orderly
operation of the Exchange by adding
clarity and transparency to its Rules.
For similar reasons, the Exchange also
believes that this filing furthers the
objectives of Section 6(b)(5) of the
Exchange Act 53 because the proposed
rule change would be consistent with
and would create a governance and
regulatory structure that is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to,
and perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest.
The Exchange believes that the
termination of the Delegation would be
consistent with and facilitate a
governance and regulatory structure that
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
50 See
15 U.S.C. 78f(b)(3).
U.S.C. 78f(b).
52 15 U.S.C. 78f(b)(1).
53 15 U.S.C. 78f(b)(5).
51 15
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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, because the resulting
structure would allow the Exchange to
protect and maintain its self-regulatory
functions and carry out its regulatory
responsibilities under the Exchange Act.
The Exchange believes that the
proposed amendments to (a) incorporate
the ETP Holders into the existing
statement of the authority of the Board;
(b) integrate the ETP Holders into the
process for appointing members of the
Board; (c) have ETP Holders and Allied
Persons or Associated Persons of ETP
Holders be eligible for appointment to
Exchange Committees; (d) integrate the
existing NYSE Arca Equities Business
Conduct Committee into the Exchange
rules; and (e) have all reviews
conducted by a single CFR would
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, because all Permit
Holders would be subject to the same
rules, irrespective of whether they were
ETP Holders or OTP Holders. In
addition, having the organization and
administration rules for both the
equities and options markets in the
same Bylaws and Rule 3 would simplify
and streamline the Exchange’s rules, as
persons subject to the Exchange’s
jurisdiction, regulators, and the
investing public would not have to look
at two separate sets of governing
documents and organization and
administration rules in order to fully
understand the Exchange’s markets.
The Exchange believes that the
proposed deletion of the organizational
documents of NYSE Arca Equities from
the Exchange rules as well as NYSE
Arca Equities Rules 14.1 and 14.2 in
connection with the proposed
termination of the Delegation would
remove impediments to and perfect a
national market system because it
would reduce potential confusion that
may result from having these documents
and Rules 14.1 and 14.2 remain rules of
the Exchange following the proposed
termination of the Delegation, when
NYSE Arca Equities would no longer
have responsibilities to operate the
Exchange’s equity market.
Similarly, the Exchange believes that
the proposed changes to (a) Bylaws
Section 3.02(a), which would clearly
state that the holding member
determines the size of the Board, set
forth the Board composition
requirements in numbered clauses, and
state how the minimum number of Non-
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Affiliated directors shall be calculated;
(b) Bylaws Article IV, Section 4.02,
which would remove obsolete
references to the Permit Holder
Advisory Committee and add references
to the Ethics and Business Conduct
Committee of the Exchange; (c) deletion
of Rule 3.2(b)(2)(C)(i), which would
remove an obsolete reference to the
initial membership of the Board; and (d)
removing extraneous references to the
voting process in the definitions of OTP
Holder, OTP Firm and ETP Holder in
Rule 1 would remove impediments to
and perfect a national market system by
adding clarity and transparency to the
Bylaws, ensuring that persons subject to
the Exchange’s jurisdiction, regulators,
and the investing public can more easily
navigate and understand the Exchange’s
governing documents.
The Exchange believes that the
integration of its two rulebooks into one
single rulebook, with three categories of
rules, would remove impediments to
and perfect a national market system
and, in general, protect investors and
the public interest, by adding clarity
and transparency to the Bylaws,
ensuring that persons subject to the
Exchange’s jurisdiction, regulators, and
the investing public can more easily
navigate and understand the Exchange’s
rules.
The Exchange believes that (a) adding
an ‘‘-O’’ or ‘‘-E’’ at the end of the
number of any rule that applies only to
the options or equities market,
respectively, and (b) adding ‘‘—
Equities’’ or ‘‘—Options’’ to the end of
any rule that, despite being part of a rule
of general application, only applies to
one market, would allow trading permit
holders and other market participants to
quickly and easily identify which rules
apply to each market, thereby removing
impediments to and perfecting a
national market system and, in general,
protecting investors and the public
interest.
Similarly, the Exchange believes that
(a) incorporating the NYSE Arca
Equities Conduct Rules into proposed
Rule 9–E and Rule 11.21; (b)
incorporating the NYSE Arca Equities
Order Audit Trail System Rules into
proposed Rule 6–E; and (c) creating a
new NYSE Arca Equities Fee Schedule
and updating the NYSE Arca Options
Fee Schedule and Listing Fee Schedule
would remove impediments to and
perfect a national market system and, in
general, protect investors and the public
interest, because the proposed changes
would ensure that all present NYSE
Arca Equities rules were incorporated
into the Exchange rulebook.
The Exchange believes that the
proposed non-substantive changes to
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the rules, including (a) deleting
definitions marked ‘‘reserved’’ in Rule
1; (b) deleting references to the Pacific
Exchange Inc. in Rule 11.6 and
proposed Rule 8.203–E(g); and (c)
removing obsolete text from proposed
Rules 3.2(b), 5.3–E, 13.2(a) and 14.5,
would remove impediments to and
perfect a national market system by
adding clarity and transparency to the
Rules by deleting obsolete references or
correcting minor typographical errors,
ensuring that persons subject to the
Exchange’s jurisdiction, regulators, and
the investing public can more easily
navigate and understand the Exchange’s
governing documents.
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 Exchange Act.
The proposed rule change is not
designed to address any competitive
issue but rather is concerned solely with
the corporate structure of the Exchange
and the administration and function of
its corporate governance structures.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be 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:
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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–
NYSEArca–2017–40 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2017–40. 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–
NYSEArca–2017–40 and should be
submitted on or before July 11, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.54
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–12770 Filed 6–19–17; 8:45 am]
BILLING CODE 8011–01–P
54 17
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]]>Agencies
[Federal Register Volume 82, Number 117 (Tuesday, June 20, 2017)]
[Notices]
[Pages 28157-28170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12770]
[[Page 28157]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80929; File No. SR-NYSEArca-2017-40]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change in Connection With the Proposed Merger of Its
Wholly Owned Subsidiary NYSE Arca Equities, Inc. With and Into the
Exchange
June 14, 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 June 2, 2017, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
In connection with the proposed merger of its wholly owned
subsidiary NYSE Arca Equities, Inc. (``NYSE Arca Equities'') with and
into the Exchange, the Exchange proposes to amend (1) Article III,
Sections 3.01, 2.02 and 4.02 of the Amended and Restated NYSE Arca,
Inc. Bylaws (``Bylaws''); (2) certain Rules of the Exchange to
facilitate the integration of NYSE Arca Equities and create a single
rulebook; (3) the NYSE Arca Options Fee Schedule (the ``Options Fee
Schedule''); and (4) the Schedule of Fees and Charges for Exchange
Services (the ``Listing Fee Schedule''). In addition, the Exchange
proposes to remove the NYSE Arca Equities organizational documents,
rules of NYSE Arca Equities, and NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services (``Equities Fee Schedule'') from the
Exchange rules and adopt a new fee schedule for the Exchange equity
market (``NYSE Arca Equities Fee Schedule''). The proposed rule change
is available on the Exchange's Web site at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
In connection with the proposed merger of its wholly owned
subsidiary NYSE Arca Equities with and into the Exchange (``Merger''),
the Exchange proposes to amend (1) Article III, Sections 3.01, 2.02
[sic] and 4.02 of the Bylaws; (2) certain Rules of the Exchange to
facilitate the integration of NYSE Arca Equities and create a single
rulebook; (3) the Options Fee Schedule; and (4) the Listing Fee
Schedule. In addition, the Exchange proposes to remove the NYSE Arca
Equities organizational documents, rules of NYSE Arca Equities, and
Equities Fee Schedule from the Exchange rules and adopt a new NYSE Arca
Equities Fee Schedule in connection with the proposed merger.
Presently, the Exchange has delegated certain responsibilities to
its subsidiary NYSE Arca Equities to operate its equities market. The
Exchange also has two rulebooks, the NYSE Arca rules for the options
market and the NYSE Arca Equities rules for the equities market.
Following the Merger, the Exchange will be the surviving entity, and it
will directly operate both the Exchange's options and equities markets,
with one rulebook. The Exchange is proposing amendments in order to
reflect that change.
More specifically, the proposed amendments would allow the Exchange
to directly operate both markets by:
1. Terminating the existing delegation to NYSE Arca Equities;
2. amending the Exchange's corporate governance structure to (a)
integrate Equities Trading Permit holders (``ETP Holders'') \4\ into
the process for appointing members of the Board of Directors
(``Board''), (b) provide that the holding member, NYSE Group, Inc.
(``NYSE Group'') determines the size of the Board; (c) integrate ETP
Holders into the Board and Permit Holder Committees; and (d) add the
existing NYSE Arca Equities Business Conduct Committee to the Exchange
rules;
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\4\ An Equities Trading Permit is referred to as an ``ETP.''
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3. integrating the current NYSE Arca Equities rules into the NYSE
Arca rules, so that the Exchange has a single rulebook; and
4. adopting the proposed NYSE Arca Equities Fee Schedule for the
Exchange equity market and amending the Options Fee Schedule and
Listing Fee Schedule.
The Exchange addresses each item in turn below.
The Exchange proposes that the rule change proposed herein would
become operative upon the completion of the Merger. The Exchange would
complete the Merger following approval of this rule filing, on a date
determined by its Board.
I. Termination of Delegation
The Exchange has delegated certain responsibilities to its
subsidiary NYSE Arca Equities to operate its equities market. However,
the Exchange retains ultimate responsibility for its equities market,
including the responsibility to ensure the fulfillment of statutory and
self-regulatory obligations.\5\ NYSE Arca Equities is not a national
securities exchange.
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\5\ See NYSE Arca Equities Rule 3.4 (stating that NYSE Arca,
``as a self-regulatory organization registered with the Securities
and Exchange Commission pursuant to Section 6 of the Exchange Act,
shall have ultimate responsibility in the administration and
enforcement of rules governing the operation of its subsidiary, NYSE
Arca Equities, Inc.''). See also NYSE Arca Equities Rule 14.1.
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The Exchange proposes to terminate the delegation of functions to
NYSE Arca Equities (``Delegation'') currently set forth in NYSE Arca
Equities Rule 14.2 (NYSE Arca Equities Inc. (`NYSE Arca Equities')).
NYSE Arca Equities Rule 14.1 (NYSE Arca, Inc.), which sets forth the
authority and functions retained by the Exchange, would become obsolete
as a result. Accordingly, neither would be carried over into the
Exchange rules.
In connection with the termination of the Delegation, the NYSE Arca
Equities Certificate of Incorporation and Bylaws, rules of NYSE Arca
Equities and Equities Fee Schedule would be removed from the Exchange
rules.
[[Page 28158]]
II. Proposed Changes to the Exchange's Corporate Governance
A. Composition of the Board and Appointment of Non-Affiliated Directors
of the Post-Merger Entity
Pursuant to the Merger, the Exchange proposes to incorporate the
ETP Holders into the process for selecting Exchange Board members. In
addition, it proposes to implement certain other changes regarding the
composition of the Board that would make the provisions regarding the
Exchange's Board more consistent with the governing documents of the
Exchange's national securities exchange affiliates, New York Stock
Exchange LLC (``NYSE LLC''), NYSE MKT LLC (``NYSE MKT''), and NYSE
National, Inc. (``NYSE National'' and collectively, the ``SRO
Affiliates'').
Because the relevant provisions are found in both the Bylaws and
the Rules of the Exchange, in order to implement the proposed
governance changes the Exchange would amend Bylaws Article III,
Sections 3.01(b) (Powers) and 3.02(a) (Number; Election; Qualification;
Term; Nomination) and Rule 3.2(b)(2) (Exchange Committees). These
proposed changes are described below.
Bylaws Article III, Section 3.01(b)
The Exchange proposes to amend Bylaws Article III, Section 3.01(b)
to add definitions of ETP Holders, Options Trading Permit Holders
(``OTP Holders'') \6\ and Permit Holders. The changes would also
incorporate the ETP Holders in the statement of the authority of the
Board. Accordingly, the Exchange proposes to make the following changes
to Section 3.01(b) (new text italicized; deleted text bracketed):
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\6\ An Options Trading Permit is referred to as an ``OTP.''
(b) The Board of Directors shall exercise all such powers of the
Exchange and do all such lawful acts and things as are not by law,
the Certificate, these Bylaws or the Rules directed or required to
be exercised, done or approved by the Holding Member, [or] the
options trading permit holders who are permitted to trade on the
Exchange's facilities for the trading of options that are securities
as covered by the Exchange Act (collectively, ``Options Trading
Permit Holders'') or the equities trading permit holders who are
permitted to trade on the Exchange's facilities for the trading of
equities that are securities as covered by the Exchange Act
(collectively, ``Equities Trading Permit Holders'' and, together
with the Options Trading Permit Holders, the ``Permit Holders'').
Bylaws Article III, Section 3.02(a)
The Exchange proposes to make several amendments to Bylaws Article
III, Section 3.02(a), which sets forth the Board composition
requirements.
First, the Exchange proposes to remove the requirement that the
Board consist of between eight and 12 directors, with the number to be
determined by the Board itself. The revised provision would provide
that the number of directors shall be determined from time to time by
the holding member, NYSE Group, provided that the Board meets the
composition requirements set forth in the provision. To clarify what
specific composition requirements must be met, the Exchange proposes to
move the third and fourth sentences of Section 3.02(a), which set forth
the requirements, to clauses (1) and (2) of the first sentence. In the
new clause (2), the Exchange proposes to add the defined term ``Non-
Affiliated Directors'' for directors nominated by the permit holders,
which must make up at least 20 percent of the members of the Board.
The proposed changes would make the revised first sentence of
Section 3.02(a) consistent with the board composition provisions in the
governing documents of the SRO Affiliates. Like the proposed changes,
the governing documents of the SRO Affiliates provide that NYSE Group
(as the sole member or sole shareholder, as applicable) determines the
number of board members, set forth the relevant board's compensation
requirements in numbered clauses, and require that at least 20 percent
of the board shall be non-affiliated directors.\7\
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\7\ See Article III, Section 3.2(a) of the Fourth Amended and
Restated By-laws of NYSE National, Inc. (``NYSE National By-laws'');
Section 2.03(a)(i) of the Eleventh Amended and Restated Operating
Agreement of New York Stock Exchange LLC (``NYSE LLC Operating
Agreement''); and Section 2.03(a)(i) of the Tenth Amended and
Restated Operating Agreement of NYSE MKT LLC (``NYSE MKT Operating
Agreement''). See also Securities Exchange Act Release Nos. 79902
(January 30, 2017), 82 FR 9258 (February 3, 2017) (SR-NSX-2016-16)
and 80523 (April 25, 2017), 82 FR 20399 (May 1, 2017) (SR-CBOE-2017-
017).
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Currently, at least one Exchange Non-Affiliated Director is
nominated by the OTP Holders and at least one is nominated by the ETP
Holders. Proposed clause (2) of the revised first sentence would
instead provide that the ``Permit Holders''--including both the OTP
Holders and ETP Holders--nominate the Non-Affiliated Directors.
The Exchange believes that the proposed change would be consistent
with the process for nominating non-affiliated directors of NYSE MKT.
Similar to the structure of NYSE Arca and NYSE Arca Equities, NYSE MKT
operates the NYSE MKT equity market, and NYSE MKT's facility NYSE Amex
Options LLC (``NYSE Amex Options'') operates its options market.\8\
Under the NYSE MKT Operating Agreement, all member organizations
participate in the process for nominating non-affiliated directors.\9\
Because both options trading permit holders (``ATP Holders'') and
equity member organizations are member organizations, as that term is
defined in the NYSE MKT Operating Agreement, non-affiliated directors
are nominated by both types of member organizations in a single
process.\10\
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\8\ See Amended and Restated Limited Liability Company Agreement
of NYSE Amex Options LLC, Section 3.1(b). NYSE MKT is the only SRO
Affiliate with both an equities and an options market.
\9\ See NYSE MKT Operating Agreement, Article II, Section
2.03(a) (iii)-(v). Under the NYSE MKT Operating Agreement, the
nominating committee recommends candidates for the non-affiliate
directors, and announces them to the member organizations. If a
petition candidate receives sufficient member organization
signatures, the recommended candidates and petition candidates are
submitted to the member organizations for a vote.
\10\ See NYSE MKT Operating Agreement, Article II Section 2.02
(defining ``member organization'' to include members and member
organizations of NYSE MKT); and NYSE MKT Rule 900.2NY(5)
(``references to `member', `member organization' and `86 Trinity
Permit Holder' as those terms are used in the Rules of the Exchange
should be deemed to be references to ATP Holders''); see also NYSE
MKT Rule 2--Equities (setting forth the definitions of member and
member organization).
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The Exchange believes that the proposed change also would be
consistent with the governing documents of The NASDAQ Stock Market LLC
(``Nasdaq LLC''), which is the sole member of The NASDAQ Options Market
LLC (``NOM''). NOM, which operates the options trading facility of
Nasdaq LLC, does not have its own board of directors.\11\ Under the
bylaws of Nasdaq LLC, each ``member representative director'' is
nominated by a member nominating committee. If the election is
contested, the Nasdaq LLC members vote on the nomination in a single
process.\12\ The options participants and other members do not vote
separately.
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\11\ See Limited Liability Company Agreement of The Nasdaq
Options Market LLC, Section 9(a) (providing that the ``management of
the Company shall be vested in the Member'').
\12\ See By-laws of The NASDAQ Stock Market LLC, Article I (q)
and Article II, Section 1 and 2. A Nasdaq LLC member is defined as
``any registered broker or dealer that has been admitted to
membership in the national securities exchange operated by'' Nasdaq
LLC. Id., Article I(t).
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The Exchange believes that the proposed change would also be
consistent with the governing documents of Nasdaq BX, Inc. (``Nasdaq
BX''). Nasdaq BX's controlled subsidiary, Nasdaq OMX BX Equities LLC,
operates the equities trading facility of Nasdaq BX and, like NOM, does
not have its own board of
[[Page 28159]]
directors.\13\ As with Nasdaq LLC, each ``member representative
director'' of its board of directors is nominated by a member
nominating committee. If the election is contested, the exchange
members vote on the nomination in a single process.\14\
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\13\ See NASDAQ OMX BX Equities LLC Fifth Amended and Restated
Operating Agreement Article 3, Section 3.1; Article 4, Section 4.1;
Delegation Agreement between Nasdaq BX and Nasdaq OMX BX Equities
LLC.
\14\ See By-laws of NASDAQ BX, Inc., Article IV, Section 4.4.
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The Exchange proposes to add a new fifth sentence to Section
3.02(a) stating that, if 20 percent of the directors is not a whole
number, the number of directors to be nominated and selected by the
Permit Holders will be rounded up to the next whole number. As a
result, the current fifth sentence, which provides that the Board shall
determine the exact number of each category of directors on the Board,
would no longer be needed. The proposed change would be consistent with
the governing documents of the SRO Affiliates, each of which have a
similar provision for calculating the minimum number of non-affiliated
directors, and do not authorize the SRO Affiliate's board of directors
to determine the number of directors in each category.\15\
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\15\ See Section 2.03(a)(i) of the NYSE LLC Operating Agreement;
Section 2.03(a)(i) of the NYSE MKT Operating Agreement; and Article
III, Section 3.2(a) of the NYSE National By-Laws. The Exchange notes
that the term ``Permit Holder Directors,'' would be deleted in the
proposed change. Such term is not used elsewhere in the By-laws.
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The revised Section 3.02(a) would be as follows (new text
italicized; deleted text bracketed):
The Board of Directors shall consist of [not less than eight (8)
or more than twelve (12) directors, with the Board of Directors to
consist initially of ten (10) directors, including the Chief
Executive Officer of the Holding Member. The authorized] a number of
directors (``Directors'') [shall be] as determined from time to time
by the [Board of Directors. A] Holding Member; provided that (1) at
least fifty percent (50%) of the directors will be persons from the
public and will not be, or be affiliated with, a broker-dealer in
securities or employed by, or involved in any material business
relationship with, the Exchange or its affiliates (``Public
Directors'')[. A]; and (2) at least twenty percent (20%) of the
directors shall consist of individuals nominated by the [trading
permit holders, with at least one director nominated by the Equities
Trading Permit Holders of NYSE Arca Equities, Inc., and with at
least one director nominated by the] Permit Holders of the Exchange
(``Non-Affiliated Directors''). For purposes of calculation of the
minimum number of Non-Affiliated Directors, if 20 percent of the
Directors is not a whole number, such number of Directors to be
nominated and selected by the Permit Holders will be rounded up to
the next whole number. [The exact number of Public Directors and
Permit Holder Directors shall be determined from time to time by the
Board of Directors, subject to the percentage restrictions described
in this Section 3.02(a).] The term of office of a director shall not
be affected by any decrease in the authorized number of directors.
Rule 3.2(b)(2)
Current Rule 3.2(b)(2) sets forth the membership requirements for
the nominating committee (``Nominating Committee''), which nominates
the OTP Holder member of the Board, and sets forth the nominating
committee and petition processes.\16\ The Exchange proposes to revise
Rule 3.2(b)(2) to incorporate the proposed changes to Bylaws Section
3.02(a).
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\16\ Current Rule 3.2(b)(2) would be renumbered as proposed Rule
3.2(b)(3). For ease of reference, the current rule numbering is
used.
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Pursuant to Rule 3.2(b)(2)(A), the Nominating Committee is made up
of six OTP Holders or allied persons or associated persons of an OTP
Firm. The Exchange proposes to incorporate the ETP Holders into the
membership of the committee by amending Rule 3.2(b)(2)(A) to reduce the
number of OTP-related members to three, and adding the requirement that
the Nominating Committee include three ETP Holders or allied persons or
associated persons of an ETP Holder.\17\
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\17\ The rules regarding the Equities Market do not have ETP
Firms.
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Current Rule 3.2(b)(2)(C)(ii) sets forth the nominating committee
and petition processes. In order to incorporate the ETP Holders into
the nominating and petition processes and integrate the proposed
changes to Bylaws Section 3.02(a), the Exchange proposes to make the
following changes:
To include ETP Holders, ``OTP Holder'' and ``OTP Holders''
would be replaced with ``Permit Holder'' and ``Permit Holders,''
respectively.
The first sentence of the provision states that the
Nominating Committee shall publish the name of one OTP Holder or allied
person or associated person of an OTP Firm as its nominee for the
Exchange Board. The sentence would be revised to (a) allow ETP Holders
or Allied Persons or Associated Persons of an ETP Holder to be
nominees; and (b) provide the option to nominate more than one Non-
Affiliated Director.
The second sentence sets forth how, if the Board has more
than 10 members, the determination will be made whether the additional
permit holder representative should be an OTP or an ETP Holder. In
continuation, the next sentence begins with ``If it is determined that
the additional representative is an OTP Holder.'' The Exchange proposes
to delete the second sentence and the cited text from the third
sentence. The proposed changes to the Bylaws would no longer provide
for two separate categories of permit holder directors, and so no
determination would be required.
The third sentence would be amended to clarify that the
Nominating Committee would be required to name sufficient nominees so
that at least 20 percent of the directors were Non-Affiliated
Directors, by replacing ``nominate additional'' with ``name
sufficient.'' The generic reference to ``individuals nominated by
trading permit holders'' would be replaced with the more specific
``Non-Affiliated Directors.''
In the current fifth sentence, the definition of ``Permit
Holders'' would be added, and ``OTP Holder position'' would be replaced
with ``Non-Affiliated Director position.''
The current sixth sentence sets forth the limits on what
percentages of signatories to a petition can be from a given OTP
Holder, OTP Firm or associated OTP Holders and Firms. In order to
incorporate ETP Holders in the limitation, the Exchange would add a new
clause (z), based on NYSE Arca Equities Rule 3.2(b)(2)(C)(i), including
ETP Holders who are deemed affiliates of the relevant Permit Holder.
Finally, ``an OTP Holder's position'' would be replaced with ``Non-
Affiliated Director position(s).''
The revised provision would be as follows (new text italicized; deleted
text bracketed):
The Nominating Committee shall publish the name of one (1) or
more OTP Holder or Allied Person or Associated Person of an OTP Firm
or ETP Holder or Allied Person or Associated Persons of an ETP
Holder as its nominee(s) for Non-Affiliated Directors of the Board
of Directors of the NYSE Arca, Inc. [Should the Board of Directors
be made up of more than 10 individuals, as set forth in Section 3.02
of the Bylaws, then the Public Directors, after consulting with the
CEO, shall determine whether the additional permit holder
representative is an OTP Holder or an Equity Trading Permit Holder
of NYSE Arca Equities, Inc. If it is determined that the additional
representative is an OTP Holder, then t]The Nominating Committee
shall name sufficient[nominate additional] nominees so that at least
twenty percent (20%) of the Directors consist of [individuals
nominated by trading permit holders]Non-Affiliated Directors. The
names of the nominees shall be published on a date in each year (the
``Announcement Date'') sufficient to accommodate the process
described in this Rule 3.2(b)(2)(C). After the name of proposed
nominee(s) is published,
[[Page 28160]]
OTP Holders and ETP Holders (together, ``Permit Holders'') in good
standing may submit a petition to the Exchange in writing to
nominate additional eligible candidate(s) to fill the [OTP
Holder]Non-Affiliated Director position(s) during the next term. If
a written petition of at least 10 percent of [OTP]Permit Holders in
good standing is submitted to the Nominating Committee within two
weeks after the Announcement Date, such person(s) shall also be
nominated by the Nominating Committee; provided, however, that no
[OTP]Permit Holder, either alone or together with (x) other OTP
Holders associated with the same OTP Firm that such [OTP]Permit
Holder is associated with, [and] (y) OTP Holders associated with OTP
Firms that are affiliated with the OTP Firm that such [OTP]Permit
Holder is associated with, and (z) other ETP Holders who are deemed
its affiliates, may account for more than 50% of the signatories to
the petition endorsing a particular petition nominee for the [OTP
Holder's] Non-Affiliated Director position(s) on the Board of
Directors of the NYSE Arca, Inc. Each petition for a petition
candidate must include a completed questionnaire used to gather
information concerning director candidates (the Exchange shall
provide the form of questionnaire upon the request of any
[OTP]Permit Holder). Notwithstanding anything to the contrary, the
Nominating Committee shall determine whether any petition candidate
is eligible to serve on the Board of Directors (including whether
such person is free of any statutory disqualification (as defined in
section 3(a)(39) of the Exchange Act)), and such determination shall
be final and conclusive.
Current Rule 3.2(b)(2)(C)(iii) sets forth the process for selecting
a nominee when the number of nominees exceeds the number of available
seats. To integrate the ETP Holders into the process, the Exchange
proposes to make the following changes:
``OTP Holder'' and ``OTP Holders'' would be replaced with
``Permit Holder'' and ``Permit Holders,'' respectively, and ``OTP
Holder's position'' would be replaced with ``Non-Affiliated Director
position(s).''
The third sentence sets forth the limits on what
percentages of votes can be from a given OTP Holder, OTP Firm or
associated OTP Holders and Firms. In order to incorporate ETP Holders
in the limitation, the Exchange would add a new clause (z), based on
NYSE Arca Equities Rule 3.2(b)(2)(C)(ii), including ETP Holders who are
deemed affiliates of the relevant Permit Holder.
The revised provision would be as follows (new text italicized;
deleted text bracketed): In the event that the number of nominees
exceeds the number of available seats, the Nominating Committee shall
submit the contested nomination to the [OTP]Permit Holders for
selection. [OTP]Permit Holders shall be afforded a confidential voting
procedure and shall be given no less than 20 calendar days to submit
their votes. Each [OTP]Permit Holder in good standing may select one
nominee for the contested seat on the Board of Directors; provided,
however that no [OTP]Permit Holder, either alone or together with (x)
other OTP Holders associated with the same OTP Firm that such
[OTP]Permit Holder is associated with, [and] (y) OTP Holders associated
with OTP Firms that are affiliated with the OTP Firm that such
[OTP]Permit Holder is associated with, and (z) other ETP Holders who
are deemed its affiliates, may account for more than 20% of the votes
cast for a particular nominee for the [OTP Holder's] Non-Affiliated
Director position(s) on the Board of Directors of NYSE Arca, Inc. With
respect to [the]any contested position, the nominee for the Board of
Directors receiving the most votes of [OTP]Permit Holders shall be
submitted by the Nominating Committee to the Board of Directors of the
NYSE Arca, Inc. Tie votes shall be decided by the Board of Directors at
its first meeting following the election.
Finally, Rule 3.2(b)(2)(C)(i) sets forth the membership of the
initial board of directors of the Exchange. The Exchange proposes to
replace the obsolete provision with ``Reserved.''
Rule 3.3(a)(2)
Rule 3.3 sets forth the provisions regarding Board Committees. In
accordance with the proposed changes to the Board composition, the
Exchange proposes to amend Rule 3.3(a)(2), regarding the Committee for
Review (``CFR''). Specifically, in Rule 3.3(a)(2)(A) ``NYSE Arca
Equities'' would be replaced with ``the Exchange'' and the text ``OTP
Director(s), the ETP Director(s) and the Public Directors of both NYSE
Arca and NYSE Arca Equities'' would be amended to state ``Non-
Affiliated Director(s) and the Public Directors of the Exchange.'' In
Rule 3.3(a)(2)(B), the text ``Director that is an OTP Holder or Allied
Person or Associated Person of an OTP Firm'' would be amended to state
``Non-Affiliated Director.''
B. Board and Permit Holder Committees
In order to integrate the ETP Holders and the NYSE Arca Equities
committees into the Exchange committee structure, the Exchange proposes
to amend Bylaws Article IV, Section 4.02 (``Permit Holder
Committees''), Rule 3.1 (Overview), Rule 3.2 (Options Committees), and
Rule 3.3 (Board Committees).
Article IV, Section 4.02
Bylaws Article IV, Section 4.02 lists the Exchange committees. The
Exchange proposes to add the Exchange disciplinary committee, called
the ``Ethics and Business Conduct Committee'' (``EBCC'') \18\ to the
list in the first sentence of Section 4.02 and to the defined term for
``Permit Holder Committees'' in the second sentence. The NYSE Arca
Equities disciplinary committee, the ``Business Conduct Committee''
(``BCC'') \19\ is already listed in Section 4.02.
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\18\ See NYSE Arca Rule 3.2(b)(1) (Options Committees) (setting
forth the composition, functions and authority of the EBCC).
\19\ See NYSE Arca Equities Rule 3.2(b)(1) (Equity Committees)
(setting forth the composition, functions and authority of the BCC).
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In addition, the Exchange proposes to remove two obsolete
references to the Permit Holder Advisory Committee. There are no other
references to a Permit Holder Advisory Committee in the By-laws or
rules of the Exchange. The Exchange believes that the references were
meant to refer to the OTP Advisory Committee, which no longer exists,
as its functions were assumed by the Committee for Review.\20\
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\20\ See Securities Exchange Release No. 77898 (May 24, 2016),
81 FR 34404 (May 31, 2016) (SR-NYSEArca-2016-11).
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Rules 3.1, 3.2 and 3.3
Rule 3.1 sets forth the Board's authority to establish committees
that consist partly or entirely of directors of the Exchange (each, a
``Board Committee'') and committees consisting of people other than
directors of the Exchange (each, an ``Options Committee''). Rule 3.2
sets forth the provisions governing Options Committees, including the
Ethics and Business Conduct Committee and Nominating Committee.
The Exchange proposes to revise Rules 3.1 and 3.2 to integrate the
ETP Holders. Specifically, the Exchange proposes to make the following
changes:
In Rules 3.1 and 3.2, the Exchange proposes to replace
``Options Committee'' and ``Options Committees'' with ``Exchange
Committee'' and ``Exchange Committees,'' respectively.
In Rule 3.2(a)(8), which governs the eligibility for, and
appointment to, Options Committees, the Exchange proposes to add ETP
Holders to the list of persons eligible for appointment, by adding ``or
ETP Holder'' after ``Any OTP Holder'' and adding ``or of an ETP
Holder'' after ``OTP Firm'' in the first sentence, and ``, ETP
Holders,'' after ``OTP Holders'' and ``or of an ETP Holder'' after
``OTP Firm'' in the third sentence.
In Rule 3.2(a)(9), which governs naming alternate members,
the Exchange proposes to add ``ETP Holders,'' after ``OTP Holders.''
[[Page 28161]]
The Exchange proposes to add the current NYSE Arca Equities BCC to
the Exchange Rules as an Exchange Committee in new Rule 3.2(b)(2). The
proposed text would be the same as the language in current NYSE Arca
Equities Rule 3.2(b)(1), except that:
The references to NYSE Arca Equities Rules 4, 10 and 11.9
would be updated to references to Rules 4-E, 10 and 13.9, respectively.
References to the ``Board,'' which in the present rule
means the board of directors of NYSE Arca Equities, would become
references to the Board of the Exchange.
Pursuant to proposed Rule 3.2(b)(1) and (2), disciplinary
proceedings of NYSE Arca involving OTP Holders, OTP Firms, and
associated persons would continue to be heard by the EBCC, while
disciplinary proceedings of NYSE Arca Equities involving ETP Holders
and associated persons would continue to be heard by the BCC.
Conforming Changes in Rule 3
The Exchange proposes to make conforming changes in other
provisions of Rule 3. Specifically, in Rules 3.7 (Dues, Fees and
Charges), 3.8 (Liability for Payment), and 3.10 (Certain
Relationships), the Exchange proposes to add ``ETP Holders,'' before
``OTP Holders'' and ``ETP Holder'' before ``OTP Holder,'' respectively.
In Rule 3.10(b), the Exchange propose to add ``ETP Holder or'' before
``OTP Firm.''
C. Proposed Rule 3.12
The Exchange proposes to add new Rule 3.12 (NYSE Arca, L.L.C. and
Archipelago Securities, L.L.C.), which would address the access to and
status of the books, records, premises, officers, directors, agents and
employees of NYSE Arca, L.L.C. and Archipelago Securities, L.L.C.
Proposed Rule 3.12 would be substantially the same as current NYSE Arca
Equities Rule 14.3 (NYSE Arca, L.L.C. and Archipelago Securities,
L.L.C.), with the following exceptions:
In proposed Rule 3.12(a), the text ``the Exchange'' would
replace ``NYSE Arca Equities''; ``NYSE Arca and NYSE Arca Equities'';
and ``the NYSE Arca, NYSE Arca Equities.''
In proposed Rule 3.12(f), the text ``, NYSE Arca
Equities'' would be deleted.
III. Integration of NYSE Arca Equities Rules Into the NYSE Arca Rules
A. Organization of the Proposed Revised NYSE Arca Rulebook
Presently, the Exchange has two rulebooks: the NYSE Arca rules for
the options market and the NYSE Arca Equities rules for the equities
market. In connection with the Merger and the termination of the
Delegation, the Exchange proposes to integrate the two sets of rules
into a single rulebook. The resulting rulebook would have three types
of rules: rules that apply to both markets; rules that apply only to
the options market, indicated by an ``-O'' at the end of the rule
number; and rules that apply only to the equities market, indicated by
an ``-E'' at the end of the rule number. More specifically:
The following amended rules would apply to both markets
and would be grouped under the heading ``General Rules'': NYSE Arca
Rules 0 (Regulation of the Exchange, OTP Holders, OTP Firms and ETP
Holders); 1 (Definitions); 2 (Trading Permits); and 3 (Organization and
Administration).
The following amended rules would apply to only to [sic]
the options market, and would be grouped under the heading ``Options
Rules'': NYSE Arca Rules 4-O (Capital Requirements, Financial Reports,
Margins--Options); 5-O (Options Contracts Traded on the Exchange); 6-O
(Options Trading); 7-O (General Options Trading Rules); 8-O (Reserved)
and 9-O (Conducting Business with the Public--Options) (collectively,
the ``Options Rules'').
The following amended rules would apply to only to [sic]
the equities market, and would be grouped under the heading ``Equities
Rules'': NYSE Arca Rules 4-E (Capital Requirements, Financial Reports,
Margins--Equities); 5-E (Equities Listings); 6-E (Order Audit Trail
System); 7-E (Equities Trading); 8-E (Trading of Certain Equity
Derivatives); and 9-E (Conducting Business with the Public--Equities)
(collectively, the ``Equities Rules'').
The following amended rules would apply to both markets
and would be grouped under the heading ``Disciplinary and Miscellaneous
Rules'': 10 (Disciplinary Proceedings, Other Hearings and Appeals); 11
(Business Conduct); 12 (Arbitration); 13 (Cancellation, Suspension and
Reinstatement); and 14 (Liability of Directors and Exchange).
The Exchange's organization of its rules would be similar to that
of its affiliate NYSE MKT, which has rules of general application and
rules specific to its equity and options markets.\21\
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\21\ See, e.g. NYSE MKT Office Rules, Rules 300-590; NYSE MKT
Section 900NY (Rules Principally Applicable to Trading of Option
Contracts); and NYSE MKT Rule 0-Equities through Rule 6140-Equities.
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Except as otherwise stated below, the proposed changes are not
intended to change the substance of the NYSE Arca or NYSE Arca Equities
rules, but are organizational in nature.\22\
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\22\ The Exchange will amend the present filing to reflect any
amendments to Exchange rules before the date of approval.
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Proposed Changes Applicable to Entire Rulebook
The following proposed changes would apply to the entire set of
Exchange rules. To avoid needless repetition, when discussing specific
Rules, the Exchange does not repeat the description of these global
changes.
Throughout the rules, all cross references to the Options Rules
would be updated to reflect the addition of ``-O'' to the rule numbers.
Similarly, all cross references to the Equities Rules would be amended
to reflect the addition of ``-E'' to the rule numbers and to delete
``Equities'' from ``NYSE Arca Equities Rule.'' For example, a cross
reference ``NYSE Arca Equities Rule 5.2(j)(6)'' would be amended to
``NYSE Arca Rule 5.2-E(j)(6).''
Throughout the rules, cross references would be updated as needed,
including cross references within a renumbered rule to the rule itself.
For example, the Exchange proposes to add Commentary .01 from NYSE Arca
Equities Rule 2.17 to Rule 2.18. The references to ``Rule 2.17'' within
the Commentary would be updated to ``Rule 2.18'' accordingly.
The NYSE Arca Equities rules refer to NYSE Arca Equities, Inc., as
the ``Corporation.'' \23\ The term will be obsolete subsequent to the
Merger, as NYSE Arca Equities will cease to exist. Accordingly, in all
proposed rule text based on the NYSE Arca Equities rules, the Exchange
proposes to replace ``Corporation'' and ``Corporation's'' with
``Exchange'' and ``Exchange's,'' respectively. Similarly, ``a
Corporation'' would be changed to ``an Exchange.'' \24\
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\23\ See NYSE Arca Equities Rule 1(k).
\24\ See e.g., NYSE Arca Equities Rules 2.21(f) (``a Corporation
employee'') and 5.4(a) (``a Corporation listing standard'').
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B. General Rules
Proposed revised Rules 0, 1, 2, and 3, which would apply to both
the equities and options markets, would incorporate changes based on
NYSE Arca Equities Rules 0 (Regulation of the Exchange and Exchange
Trading Permit Holders); 1 (Definitions); 2 (Equity Trading Permits);
and 3 (Organization and Administration), respectively. The proposed
changes to Rules 0, 1 and 2 are addressed below. The proposed changes
to Rule 3 are addressed in Part II, above.
[[Page 28162]]
Rule 0 (Regulation of the Exchange, OTP Holders, and OTP Firms)
The text of Rule 0 and NYSE Arca Equities Rule 0 is the same.
Accordingly, in order to incorporate the equities market, the sole
change to Rule 0 would be to change its title to ``Regulation of the
Exchange, OTP Holders, OTP Firms and ETP Holders.''
Rule 1 (Definitions)
The Exchange proposes to integrate Rule 1 and NYSE Arca Equities
Rule 1 (Definitions) by (a) incorporating the text of definitions that
are unique to NYSE Arca Equities Rule 1.1, and (b) amending definitions
that the two rules have in common, as needed. The Exchange also
proposes to delete definitions marked ``Reserved,'' put the definitions
in alphabetical order, and renumber the definitions to reflect the
changes.
Proposed New Definitions
The Exchange proposes to add the following definitions from NYSE
Arca Equities Rule 1.1: Authorized Trader; Away Market; BBO; Core
Trading Hours; Derivative Securities Product and UTP Derivative
Securities Product; Effective National Market System Plan, Regular
Trading Hours; Eligible Security; ETP; ETP Holder; FINRA; General
Authorized Trader; Lead Market Maker; Marketable; Market Maker; Market
Maker Authorized Trader; Market Participant; Nasdaq; NBBO, Best
Protected Bid, Best Protected Offer, Protected Best Bid and Offer
(PBBO); NMS Stock; Notice of Consent; Official Closing Price; Protected
Bid, Protected Offer, Protected Quotation; Routing Agreement; Sponsored
Participant; Sponsoring ETP Holder; Sponsorship Provisions; Stockholder
Associate; Trade-Through; Trading Center: User; User Agreement; UTP
Listing Market; and UTP Regulatory Halt.
The phrase ``[w]ith respect to equities traded on the Exchange''
would be added to the start of all the added definitions except the
definitions for Eligible Security, ETP, ETP Holder, FINRA, Nasdaq, and
NMS Stock.
The current definition of ETP Holder in NYSE Arca Equities Rule 1.1
provides that an ETP Holder would ``have limited voting rights to
nominate two directors to the Exchange's Board of Directors and one
Governor to the Board of Governors of the NYSE Arca Parent.'' The
Exchange believes that such statement is not relevant to the definition
and would be adequately addressed in proposed Bylaw 3.02 and Rule 3.2.
Accordingly, when integrating the definition of ETP Holder, the
Exchange proposes not to include the cited sentence, as well as to
change ``NYSE Arca Parent'' to ``Exchange.''
Proposed Amendments to Rule 1
To incorporate NYSE Arca Equities Rule 1.1, the Exchange proposes
to make the following amendments to the current definitions in Rule
1.1:
In definitions that would apply to both OTPs and ETPs, the
Exchange proposes to add references to ETPs and ETP Holders.
Accordingly, ``ETP Holder'' and/or ``ETP Holders'' \25\ would be added
to the definitions of Allied Person; Approved Person; Associated
Person; Good Standing; Participant; Registered Employee; and Trading
Facilities. A reference to ``ETP'' would be added to the definition of
Good Standing.
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\25\ Throughout the rules, when adding ``ETP,'' ``ETPs,'' ``ETP
Holder'' or ``ETP Holders'' to a rule, the Exchange would utilize a
comma, ``and'' or ``or'' as necessary to integrate it into the text.
---------------------------------------------------------------------------
Both ``Board'' and ``Board of Directors'' are used in the
Rules to refer to the Board of Directors of NYSE Arca, but only
``Board'' is defined in Rule 1.1.\26\ Accordingly, the Exchange
proposes to expand the definition of ``Board'' so that both ``Board''
and ``Board of Directors'' are defined to mean the Board of Directors
of NYSE Arca.
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\26\ See, e.g., Rules 2.3 (Qualifications of Firm Applicants),
2.14 (Allied Persons and Approved Persons), and 4.2(g) (Voting
Agreement).
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The definitions of OTP Holder and OTP Firm provide that
the OTP Holder or OTP Firm, as applicable, ``will have limited voting
rights to nominate an OTP Holder to the Exchange's Board of Directors
pursuant to Rule 3.2(b)(2)(C).'' As with the definition of ETP Holder,
the Exchange believes that such statements are not relevant to the
definitions and are addressed in Bylaw 3.02 and Rule 3.2. Accordingly
it proposes to delete the cited sentences.\27\
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\27\ The Exchange believes that the proposed changes to the
definitions of ETP Holder, OTP Holder and OTP Firm would be
consistent with the definitions of ``Member'' and ``Member Firm'' in
the governing documents of NYSE and NYSE MKT, which do not refer to
voting for non-affiliated directors. See NYSE Rule 2 and NYSE MKT
Rule 2-Equities. See also Nasdaq Stock Market Equity Rule 0129(i)
(definition of ``Member'' or ``Nasdaq Member'') and Options Rule
1(40) (definition of ``Options Participant'' or ``Participant'') and
Seventh Amended and Restated Bylaws of Chicago Board Options
Exchange, Inc., Article I, Section 1.1(f) (definition of ``Trading
Permit Holder'').
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The definition of NYSE Arca Marketplace in the two
rulebooks differs. However, while the term is used multiple times in
the NYSE Arca Equities Rules, it is not used in the Exchange Rules
other than in the definition itself. Accordingly, the Exchange proposes
to delete the definition of NYSE Arca Marketplace in Rule 1.1(dd) and
replace it with the definition in NYSE Arca Equities Rule 1(e), as well
as to move it to conform to alphabetical order.
In the definition of Security, the text ``, provided,
however, that for purposes of Rule 7-E such term means any NMS stock''
would be added at the end of the definition, consistent with NYSE Arca
Equities Rule 1(rr).
In the definition of Trading Facilities, ``equities,''
would be added after ``trading of.''
Rule 2 (Options Trading Permits)
The Exchange proposes to revise Rule 2 to incorporate NYSE Arca
Equities Rule 2 (Equity Trading Permits), which sets forth the
equivalent requirements for ETPs. To implement the change, the Exchange
proposes to amend the title of Rule 2 from ``Options Trading Permits''
to ``Trading Permits,'' add two new rules, and amend the existing
rules.
Proposed New Rules
The first new rule would be proposed Rule 2.24 (Registration--
Employees of ETP Holders), which would be the same as current NYSE Arca
Equities Rule 2.21 (Employees of ETP Holders Registration), with the
exception of a revised title and updated rule references. Current Rules
2.24 through 2.26 would be renumbered as Rules 2.25 through 2.27 to
reflect the addition of proposed Rule 2.24.
The second new rule would be proposed Rule 2.28 (Books and
Records), which would be the same as current Rule 9.17 (Books and
Records), with the addition of ``ETP Holder,'' ``ETP Holders,'' and ``,
as applicable.'' \28\ To incorporate the provisions of current NYSE
Arca Equities Rule 2.24 (ETP Books and Records), the Exchange proposes
to add ``ETP Holders'' and ``ETP Holder'' before the terms ``OTP
Holders and OTP Firms'' and ``OTP Holder or OTP Firm,''
respectively.\29\
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\28\ The Exchange proposes to replace the current text of Rule
9.17 with ``reserved.'' See proposed Rule 9.17.
\29\ Rule 11.16 (Books and Records) would only apply to OTP
Holders and OTP Firms, as there is no equivalent provision in the
NYSE Arca Equities rules.
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Proposed Amendments to Rule 2
The Exchange proposes the following revisions to the titles of
rules in Rule 2:
In rules that would only apply to OTPs, the Exchange
proposes to add ``OTP'' in the title. Accordingly, the title of Rule
2.2 (Qualifications and Application of Individual Applicants) would be
revised to ``Qualifications and Application of Individual OTP
[[Page 28163]]
Applicants'' and the title of Rule 2.23 (Registration) would be revised
to ``Registration--OTPs.''
To indicate that the revised rule applies to both OTPs and
ETPs, the Exchange proposes to (a) replace ``OTPs'' and ``OTP'' with
``Trading Permits'' in the titles of Rules 2.5 (Denial of or Conditions
to OTPs) and 2.11 (Sole Proprietors and Individual OTP Holders),
respectively; (b) add ``ETP Holder,'' to the titles of Rules 2.9
(Exchange Not Bound by OTP Holder and OTP Firm Agreements) and 2.17
(Amendments to OTP Firm or OTP Holder Documents); (c) add ``ETP
Holders,'' to the title of Rule 2.12 (OTP Holders and OTP Firms); (d)
delete ``OTP'' from the title of Rule 2.16 (Responsibilities of Non-
Resident OTP Firms); (e) delete ``OTP Firm or OTP Holder'' from the
title of Rule 2.19 (Exemption from OTP Firm or OTP Holder Registration
Requirements); and (f) add ``ETP or'' to the title of Rules 2.21
(Limited Transferability of an OTP) and 2.22 (Termination of an OTP).
To make the title more reflective of the Rule, the
Exchange proposes to change the title of Rule 2.10 (Only OTP Firms and
OTP Holders to Trade Under) to ``Carrying Accounts for Customers and
Conducting Business Under a Firm Name.''
To indicate that the proposed heading applies to both OTPs
and ETPs, the Exchange proposes to add ``ETP or'' to the heading
``Requirements of Holding an OTP,'' which appears before Rule 2.7, and
to the heading ``Obtaining an OTP,'' which appears before Rule 2.20. It
also proposes to add ``and ETP Holders'' at the end of the heading
``Employees of OTP Firms,'' which appears before Rule 2.23.
The Exchange proposes the following revisions to the text of rules
in Rule 2:
In rules that would apply to both OTPs and ETP Holders,
the Exchange proposes to add references to ETP Holders. Accordingly,
``ETP Holder'' and/or ``ETP Holders'' would be added to Rules 2.1
(Securities Business), 2.4(d) and (e) (Application Procedures), 2.5,
2.7 (Requirements Applicable Generally Revocable Privilege) through
2.9, 2.12 through 2.17, 2.18(a) and (b) (Activity Assessment Fees),
2.19, 2.21(b), 2.22, and proposed Rules 2.26 (Electronic Mail Address)
and 2.27 (Exchange Backup Systems and Mandatory Testing). In addition,
the Exchange proposes to add ``, as applicable'' after ``OTP Firm'' in
Rules 2.4(e) and 2.14(f).
Similarly, the Exchange proposes to add ``ETP or'' before
``OTP'' in Rules 2.3(a), 2.4(d), (e) and (g), 2.5(a), (b) and (f), 2.7,
2.8 (No Liability for Using Facilities), 2.17(b), 2.21, and 2.22. In
addition, the Exchange proposes to add ``, as applicable'' after
``OTP'' in Rules 2.4(d) and (e), 2.8, 2.17(b) and 2.22(b).
In Rules 2.1(b)(1) and 2.8, the Exchange proposes to add
``Certificate of Incorporation,'' before ``Bylaws'' consistent with
NYSE Arca Equities Rule 2.1(b) (Securities Business) and 2.7 (No
Liability for Using Trading Facilities), respectively.
Rule 2.4 sets forth the application procedures for OTPs. To add the
procedures for ETPs, consistent with NYSE Arca Equities Rule 2.3
(Application Procedures), the Exchange proposes to make the following
changes:
Unlike Rule 2.4, NYSE Arca Equities Rule 2.3(a) provides
that application fees are not transferable. Accordingly, the Exchange
proposes to add a sentence to the end of Rule 2.4(a) stating that
application fees for ETPs are not transferrable. In addition, in the
first sentence of (a), the Exchange proposes to add the text ``person
applying to become an ETP Holder, every'' after ``Every.'' In the
second sentence of (a), it proposes to add the text ``person seeking to
become an ETP Holder, every'' after ``Every'' and update the obsolete
reference to ``the NASD'' to ``FINRA's.''
In the second sentence of Rule 2.4(d), the Exchange
proposes to add ``for OTPs, sole proprietor applicants for ETPs,''
after ``Individual applicants'' consistent with NYSE Arca Equities Rule
2.3(d), which references ``sole proprietor applicants'' but not
individual applicants for ETPs.
Rule 2.4(g) states that a petition for review of the
denial of a trading permit must be filed within thirty calendar days of
the date on which the Corporation's decision was mailed. The Exchange
believes that the reference to the ``Corporation'' in Rule 2.4(g) is
erroneous and should be to the ``Exchange's'' decision, as
``Corporation'' is not a defined term in Exchange rules. Accordingly,
the Exchange proposes to make the corresponding change.
Rule 2.4(h) states that the approval shall be withdrawn if
an approved application is not activated within six months, but NYSE
Arca Equities Rule 2.3 does not have a similar provision. Accordingly,
the Exchange proposes to clarify that the provision only applies to
OTPs by adding ``for an OTP'' after ``application.''
Rule 2.4(i) states that an ETP Holder may use an expedited
process to become an OTP Holder. Consistent with NYSE Arca Equities
Rule 2.3(b), the Exchange proposes to add a new second sentence stating
that an OTP Holder may use an expedited process to become an ETP
Holder. Consistent with the change, the Exchange proposes to add, in
the current second sentence, the text ``and Short Form ETP Holder
Application'' after ``Short Form OTP Holder Application'' and the text
``or OTP Holder, as applicable,'' after ``ETP Holder.
Rule 2.5 provides that the Exchange may deny or may condition
trading privileges under an OTP. Consistent with NYSE Arca Equities
Rule 2.4 (Denial of or Conditions to ETPs), the Exchange proposes to
make the following changes:
In Rule 2.5(b)(10), the Exchange proposes to add the
heading ``Series 7 Requirement'' and corresponding text from NYSE Arca
Equities Rule 2.4(b)(10).
The first sentence of Rule 2.5(c) requires that applicants
complete an Exchange Orientation Program prior to admission to the
trading floor or participation on a trading system. NYSE Arca Equities
Rule 2.4 does not have a similar provision. Accordingly, the Exchange
proposes to change the term ``all applicants'' to ``all OTP
applicants.''
In Rule 2.5(f), the Exchange proposes to add a second
sentence providing that the BCC ``may take action against an ETP Holder
under Rule 10 when any of the above reasons for denying or conditioning
issuance of an ETP come into existence after an application has been
approved and an ETP has been issued,'' corresponding to NYSE Arca
Equities Rule 2.4(f).
Rule 2.10 addresses carrying accounts for customers and conducting
business under a firm name. The Exchange proposes to add a second
paragraph to Rule 2.10, with the text from NYSE Arca Equities Rule.
2.09 (Only ETP Holder Organizations May Carry Customer Accounts).
Rule 2.11 addresses sole proprietors. The Exchange proposes to
update the title by replacing ``OTP'' with ``Trading Permit'' and to
add a new section (e) to the Rule, with the text from NYSE Arca
Equities Rule 2.10(b) (Sole Proprietors).
Rule 2.14 sets forth provisions relating to allied persons and
approved persons. Consistent with NYSE Arca Equities Rule 2.13 (Allied
Persons and Approved Persons), the Exchange proposes to make the
following changes:
The Exchange proposes to add the text from NYSE Arca
Equities Rule 2.13(c), (d), (g) and (i) to the end of Rule 2.14(c),
(d), (g) and (i), respectively.
Rule 2.14(f) states that the Exchange may require certain
applicants to pass an examination. NYSE Arca Equities Rule 2.13(f)
includes limited liability company member in its equivalent list.
[[Page 28164]]
Accordingly, the Exchange proposes to add the text ``, or a limited
liability company member of any ETP Holder,'' after ``OTP Firm.''
Rule 2.17 addresses amendments to trading permit holder documents.
Consistent with NYSE Arca Equities Rule 2.16(c), the Exchange proposes
to amend the first sentence of Rule 2.17(c) by revising ``termination
of an OTP'' to state ``a person associated with that ETP Holder or an
OTP, as applicable.''
Rule 2.18 states that activity assessment fees will be collected
through the Options Clearing Corporation on behalf of the Exchange.
Consistent with NYSE Arca Equities Rule 2.17 (Activity
Assessment Fees), the Exchange proposes to add text to Rule 2.18(a)
stating that ``Activity Assessment Fees shall be due and payable from
ETP Holders at such times and intervals as prescribed by the
Exchange.''
NYSE Arca Equities Rule 2.17(b) provides that the
Corporation may fix and impose certain other charges or fees to be paid
by ETP Holders, without specifying to whom they are paid. Rule 2.18(b),
however, states that the Board of Directors sets the charges or fees,
and that they are to be paid to the Exchange or its subsidiaries. The
Exchange does not propose to amend this aspect of Rule 2.18(b),
however, as it believes that the provisions are substantially similar
in intent.
The Exchange proposes to add commentary .01 from NYSE Arca
Equities Rule 2.17 to Rule 2.18.
Rule 2.19(a) sets forth the registration requirements for permit
holders. The Exchange proposes to amend the references to ``member''
and ``member organization'' to include both terms, to incorporate NYSE
Arca Equities Rule 2.18(a).
Rule 2.21 sets forth the provisions on transfer of trading permits.
Consistent with NYSE Arca Equities Rule 2.20 (Limited Transferability),
the Exchange proposes to add the following text to the end of the first
sentence in Rule 2.21(a): ``, and ETPs may not be purchased (other than
from the Exchange), sold or leased.'' In addition, the Exchange
proposes to add ``(other than from the Exchange'') after ``purported
purchase'' in the second sentence.
C. Options Rules
The Options Rules would be substantially the same as current NYSE
Arca Rules 4, 5, 6, 7, 8, and 9, with the following changes:
The word ``--Options'' would be added at the end of the
headings for proposed Rules 4-O and 9-O, which would be called
``Capital Requirements, Financial Reports, Margins--Options'' and
``Conducting Business with the Public--Options,'' respectively.
Similarly, the word ``Options'' would be added to the heading of
proposed Rule 7-O, so that it becomes ``General Options Trading
Rules.''
``Corporation'' would be replaced with ``Exchange'' in
proposed Rules 4.1-O (Minimum Net Capital) and 9.26-O (Registration of
Options Principals), and in the title of Rule 9.1-O(a) (Register with
the Corporation). The Exchange believes that the references should be
to the Exchange, as ``Corporation'' is not a defined term in the NYSE
Arca rules.
The text of Rule 9.17 (Books and Records) would be
replaced with ``Reserved'' and the requirements of Rule 9.17 would be
integrated with proposed Rule 2.28 (Books and Records), as discussed
above.\30\
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\30\ See discussion accompanying notes 28 and 29, supra.
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A cross reference to Rule 6.1(a)(24) in Rule 4.16(d)(9)(G)
(Other Provisions) would be corrected to reference subsection (b)(24),
as the Exchange believes that the current reference is incorrect.\31\
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\31\ See Exhibit A, Rule 4, to SR-PCX-2004-08 (February 10,
2004), available at https://www.sec.gov/rules/sro/pcx/34-49451_a4.pdf. See also Securities Exchange Release No. 49718 (May
17, 2004), 69 FR 29611 (May 24, 2004).
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D. Equities Rules
The proposed new Equities Rules would be the same as current NYSE
Arca Equities Rules 4, 5, 7, 8, 9, the Conduct Rules, and the Order
Audit Trail System, subject to the following changes.
Organizational Changes
The Exchange proposes to make the following organizational changes
throughout the Equities Rules:
The Exchange proposes to add the word ``--Equities'' to
the end of the titles of proposed Rules 4-E and 9-E, which would be
called ``Capital Requirements, Financial Reports, Margins--Equities''
and ``Conducting Business with the Public--Equities,'' respectively.
``Equities'' would be added to the start of Rule 5-E, which would
become ``Equities Listings.''
The Conduct Rules, which are currently NYSE Arca Equities
Rules 2010 through 5320, would be moved to the end of proposed Rule 9-
E, becoming Rules 9.2010-E through 9.5320-E, with the exception of NYSE
Arca Equities Rule 5220 (Disruptive Quoting and Trading Activity
Prohibited), which would be integrated into Rule 11.21 (Disruptive
Quoting and Trading Activity Prohibited).
The Order Audit Trail System Rules, which are currently
NYSE Arca Equities Rules 7410 through 7470, would be moved to Rule 6-E,
becoming Rules 6.7410-E through 6.7470-E.\32\
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\32\ Current NYSE Arca Equities Rule 6 (Business Conduct) would
be integrated into Rule 11 (Business Conduct). See ``Rule 11
(Business Conduct)'', below.
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Proposed Amendments
Several of the NYSE Arca Equities rules refer to the Delegation or
reference the relationship between NYSE Arca Equities and the Exchange
through the use of the term ``NYSE Arca Parent.'' \33\ After the
Merger, such references would be obsolete. Accordingly, to reflect the
Merger, the Exchange proposes to make the following changes when
incorporating NYSE Arca Equities rules into the Exchange rules:
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\33\ NYSE Arca Equities Rule 1(nn) defines ``NYSE Arca Parent''
as ``the NYSE Arca, Inc., a Delaware corporation and national
securities exchange as that term is defined in Section 6 of the
Securities Exchange Act of 1934, as amended.''
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The second sentence of NYSE Arca Equities Rule 5.1(a)(1)
(General Provisions and Unlisted Trading Privileges) states that
``[f]or the purposes of the Securities Exchange Act of 1934 (`Exchange
Act'), securities traded on the Corporation shall be admitted to
unlisted trading privileges or listed on the NYSE Arca Parent, subject
to the NYSE Arca Parent's delegation of the responsibility for the
administration and enforcement of the unlisted trading privileges and
listing requirements to the Corporation.'' The Exchange proposes not to
include the sentence when incorporating the provision into Rule 5.1-
E(a)(1) (General Provisions and Unlisted Trading Privileges).
The Exchange proposes not to include the statement that ``
`NYSE Arca Equities, Inc.' (the `Corporation') is a wholly owned
subsidiary of ICE'' in NYSE Arca Equities Rule 5.1(c)(a)(3) (Listing of
an Affiliate or Entity that Operates and/or Owns a Trading System or
Facility of the Corporation) when incorporating the provision into
proposed Rule 5.1-E(c)(a)(3) (Listing of an Affiliate or Entity that
Operates and/or Owns a Trading System or Facility of the Exchange).
The Exchange proposes to use the term ``Exchange'' instead
of ``NYSE Arca Parent'' in proposed Rule 5.1-E(b)(4) (Definitions) and
in place of ``Corporation and the NYSE Arca Parent'' in Rule 9.18-
E(b)(3) (Doing A Public Business In Options). Similarly, the Exchange
proposes to use the term ``Exchange'' instead of ``NYSE Arca
[[Page 28165]]
Equities'' in proposed Rule 7.29-E(b)(2)(I).
The Exchange proposes several changes to remove obsolete references
in the Equities Rules, as follows:
NYSE Arca Equities Rule 5.3(k)(4) (Independent Directors/
Board Committees) sets forth two versions of paragraph (k)(4)
(Compensation Committee). One provides the operative text through June
30, 2013, and one provides the operative text effective commencing July
1, 2013. Proposed NYSE Arca Rule 5.3-E(k)(4) would only include the
text that was operative commencing July 1, 2013.
Similarly, present NYSE Arca Equities Rule 5.3(n) (Listed
Foreign Private Issuer) includes two versions of the rule. One provides
the operative text through June 30, 2013, and one provides the
operative text effective commencing July 1, 2013. Proposed NYSE Arca
Rule 5.3-E(n) would only include the text that was operative commencing
July 1, 2013.
Present NYSE Arca Equities Rules 7.18(a) (Halts) and
7.46(f)(5)(C) and (F) (Tick Size Pilot Plan) cross reference Rules
7.11P, 7.31P(a)(2)(C) and (F), and Rule 7.31P(e), respectively. Because
the ``P'' modifier has been deleted from such Rules, proposed NYSE Arca
Rules 7.18-E(a) and 7.46-E(f)(5)(C) and (F) would not include the ``P''
modifier in the cross references.\34\
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\34\ See Securities Exchange Act Release No. 79079 (October 11,
2016), 81 FR 71559 (October 17, 2016).
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NYSE Arca Equities Rule 7.25 (Crowd Participant Program)
expired on June 23, 2016. Accordingly, the Exchange proposes not to
include an equivalent to NYSE Arca Equities Rule 7.25 in the Equities
Rules. Instead, it would mark proposed Rule 7.25-E as ``Reserved.''
In proposed Rule 8.203-E(g) (Commodity Index Trust Shares)
Commentary .03, an obsolete reference to ``PCXE Rule 7.34'' in NYSE
Arca Equities Rule 8.203(g) would be updated to ``Rule 7.34-E.'' The
term ``PCXE'' refers to the Pacific Exchange, Inc. The Pacific
Exchange, Inc. was a predecessor of the Exchange, and so the reference
is obsolete.
The Exchange proposes to make the following changes to cross
references to the Exchange rules within the Equities Rules:
Rule 4.15-E(d)(9)(G)(i) and (ii) (Other Provisions)
includes references to ``Rule 6.1(a)(23) of the NYSE Arca Parent.'' The
Exchange proposes to delete ``of the NYSE Arca Parent'' and revise the
references to cite subsection (b)(24) instead of (a)(23), as the
Exchange believes that the current reference is incorrect.\35\
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\35\ See note 31, supra.
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In Rule 9.18-E(b)(3) (Doing a Public Business in Options)
the text ``Rules of the Corporation and the NYSE Arca Parent'' would be
changed in the proposal to ``Rules of the Exchange.''
In Rule 9.20-E(a) (Transactions for Public Customers)
``NYSE Arca Parent Rule 6.35'' would be changed in the proposal to
``Rule 6.35-O.''
Amendments That Are Approved but Not Yet Operative
NYSE Arca Equities Rules 7.10, 7.11, 7.31, and 7.35 have a notice
stating that an amended version of the rule has been approved but is
not yet operative. The notices include links to the amended version of
the rule and the relevant approval order. The notices and links would
be retained in proposed rules 7.10-E (Clearly Erroneous Executions),
7.11-E (Limit Up--Limit Down Plan and Trading Pauses in Individual
Securities Due to Extraordinary Market Volatility), 7.31-E (Orders and
Modifiers), and 7.35-E (Auctions). Exhibit 5C sets forth the proposed
text of the amended but not yet operative versions of such rules. The
Exchange will announce by Trader Update when the amended version of the
rule will become operative.
E. Disciplinary and Miscellaneous Rules
Proposed revised Rules 10, 11, 12, 13, and 14, which would apply to
both the equities and options markets, would incorporate changes based
on NYSE Arca Equities 10 (Disciplinary Proceedings, Other Hearings, and
Appeals), 6 (Business Conduct), 12 (Arbitration), 11 (Cancellation,
Suspension and Reinstatement), 13 (Liability of Directors and
Corporation) and 5220. The proposed changes to each rule are addressed
in turn below.
Rule 10 (Disciplinary Proceedings and Appeals)
The Exchange proposes to revise Rule 10 to incorporate NYSE Arca
Equities Rule 10 (Disciplinary Proceedings, Other Hearings, and
Appeals), which sets forth the equivalent requirements for ETP Holders.
As a result, a single set of rules would encompass all disciplinary
proceedings and appeals. As described below, to implement the change,
the Exchange proposes to amend the title of Rule 10 to ``Disciplinary
Proceedings, Other Hearings and Appeals,'' add one new rule, and amend
the existing rules.
Proposed New Rule
The Exchange proposes to incorporate the entire text of current
NYSE Arca Equities Rule 10.10 (Miscellaneous Provisions) into new Rule
10.10 (Miscellaneous Provisions), which would provide that any charges,
notices or other documents may be served upon the Respondent either
personally or by leaving the same at Respondent's place of business or
by deposit in the United States Post Office, postage prepaid via
registered or certified mail addressed to the Respondent at its address
as it appears on the books and records of the Exchange. The current
text of NYSE Arca Rule 10.10 is marked ``Reserved.''
Proposed Amendments to Rule 10
The Exchange proposes to add references to ETP Holders to show
revised Rule 10's applicability to both categories of trading permit
holders. Accordingly, the following proposed Rules would be updated to
include references to ``ETP Holder'' and/or ``ETP Holders'' including,
where appropriate, when referring to person(s) associated with an ETP
Holder: Rule 10.1(a) and (b) (Disciplinary Jurisdiction); \36\ Rule
10.2 (Investigations and Regulatory Cooperation); Rule 10.3(c) (Ex
Parte Communications); Rule 10.4(a) (Complaints); Rule 10.5(d)
(Hearing); Rule10.6(c) (Offers of Settlement); Rule 10.9(a) (Judgment
and Penalty); Rule 10.11(a), (b), (d)(3) and (d)(5) (Appeal of Floor
Citations and Minor Rule Plan Sanctions); Rule 10.12(a), (b), and (g)
(Minor Rule Plan); Rule 10.14 (Hearings and Review of Decisions by the
Exchange); and Rule 10.18(a)(2) (Expedited Client Suspension
Proceeding). Rule 10.18(a)(2) would also include a reference to an
``associated person of an ETP Holder.''
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\36\ The Exchange also proposes to delete a stray parenthetical
in the first sentence, so that ``Rule 10.1)'' would be ``Rule
10.1.''
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Similarly, the Exchange proposes to add references to the BCC,
which is the NYSE Arca Equities disciplinary committee,\37\ to Rule 10.
Accordingly, a definition of the BCC would be added to Rule 10.3(a)(1)
and the following rules would be updated to include references to the
BCC \38\: Rule 10.3(a), (c) and (e); Rule 10.4(c); Rule 10.5(a); Rule
10.6(d), (h), (j) and (k); Rule 10.11(d)(1); Rule 10.12(c) and (d); and
Rule 10.17(e)(2) (Release of Disciplinary Information Through the
Public Disclosure Program). In addition,
[[Page 28166]]
subsection (g) of Rule 10.12 would be amended to add ``Business Conduct
Committee or the'' before ``Ethics and Business Conduct Committee.''
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\37\ See NYSE Arca Equities Rule 3.2(b)(1) (Equity Committees)
and proposed new Rule 3.2(b)(2).
\38\ Throughout the rules, when adding ``BCC'' or ``Business
Conduct Committee'' to a rule, the Exchange would utilize a comma,
``and'' or ``or'' as necessary to integrate it into the text.
---------------------------------------------------------------------------
The Exchange proposes to make the following additional changes to
Rule 10:
In the first sentence of Rule 10.1, the Exchange proposes
to make the following non-substantive changes: ``on the Exchange''
would be amended to ``of the Exchange,'' and ``or policy or procedure''
would be amended to ``or any policy of procedure.'' In Rule 10.1(b),
the Exchange proposes to change the semicolon after ``such
termination'' to a comma.
A new Commentary .02 would be added to Rule 10.3 that
would provide that a disciplinary proceeding will be considered to be
pending from the date that Complaint has been issued pursuant to Rule
10.4 until the proceeding, including any appeals, becomes final. This
is the same text as in current NYSE Arca Equities Rule 10.3.
The Exchange notes that proposed Rule 10.5 differs from
the current NYSE Arca Equities version in two respects. First, current
NYSE Arca Rule 10.5 requires the EBCC to appoint three or more members
to hear a matter. NYSE Arca Equities Rule 10.5 requires the BCC to
appoint one or more. The Exchange determined to retain the three person
NYSE Arca requirement in proposed Rule 10.5, which is consistent with
the disciplinary rules of its affiliates NYSE and NYSE MKT.\39\
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\39\ See NYSE and NYSE MKT Rule 9231(b)(1), which requires a
hearing Panel to be composed of a Hearing Officer and two panelists.
---------------------------------------------------------------------------
In subsections (a) and (k) of proposed Rule 10.6,
references to the ``Department of Enforcement'' would be shortened to
``Enforcement.''
Rule 10.8 (Review) would be amended as follows.
First, subsection (b) would incorporate text from NYSE
Arca Equities Rule 10.8(b) requiring a decision of the Review Board (as
defined therein) to become final 15 calendar days after notifying the
parties and that the decision would be stayed pending a request for
review of such determination by the NYSE Arca Board of Directors filed
pursuant Rule 10.8(c) or 10.8(d). The proposed change would add clarity
to the current rule by specifying that a Board review stays a
determination from becoming final. The second and third paragraphs of
subsection (b) would be amended to replace ``Board of Directors'' with
``CFR,'' which is the Board committee with the delegated authority to
consider appeals on behalf of the Board and which appoints the Review
Board under the Rule. As such, the proposed change would add clarity
and transparency to the Exchange's Rules by specifying that the CFR,
and not the full Board, would be acting with respect to the Review
Board. In the third paragraph, the Exchange would also add ``or her''
before ``duties.''
Second, paragraph (c) would be amended to incorporate text
from current NYSE Arca Equities Rule 10.8(c), permitting the
Complainant or Respondent to request review of a decision by the NYSE
Arca Board of Directors and establishing the requirements for
initiating such a review. ``NYSE Arca Board'' would be replaced with
``Board of Directors'' as ``NYSE Arca Board'' is not a defined term.
The Exchange proposes various changes to Rule 10.11. In
the second sentence of subsection (d)(4), the Exchange proposes the
non-substantive change of adding the word ``of'' between ``standard''
and ``review.'' Subsection (b) would be amended to shorten ``Department
of Enforcement'' to ``Enforcement.''
The Exchange proposes various changes to Rule 10.12.
Subsection (e) would be amended to shorten ``Department of
Enforcement'' to ``Enforcement.''
New subsection (i) would incorporate those current NYSE
Arca Equities trading Rules eligible for minor rule violation treatment
as set forth in NYSE Arca Equities Rule 10.12(g). The heading would be
``Minor Rule Plan: Minor Trading Rule Violations.'' Subsection (i) is
currently marked ``Reserved.''
Subsection (j) would be amended to add cross references to
the relevant Equities Rules; add ``ETP Holder's or'' before ``OTP
Holder'' in (j)(2); add ``filing and/or'' before ``notification'' in
(j)(4); and add new item (13) to incorporate the provision in NYSE Arca
Equities Rule 10.12(j)(13).
The heading of Subsection (k) would be amended to add
``Options.''
New subsection (l) would be entitled ``Equities Minor Rule
Plan: Recommended Fine Schedule'' and incorporate the current NYSE Arca
Equities Rules eligible for minor rule violation treatment. Fine levels
and eligible rules would remain the same as current NYSE Arca Equities
Rule 10.12(i). Proposed subsection (l) reproduces current NYSE Arca
Equities Rule 10.12(i) in its entirety.
The word ``--Options'' would be added to the end of the
titles of Rules 10.13 (Summary Sanction Procedure) and 10.16 (NYSE Arca
Sanctioning Guidelines). Such rules have no equities analogues and
would only apply to options matters. In the first sentence of the
fourth paragraph of Rule 10.16(a), ``Principals'' would be replaced
with ``Principles.''
The Exchange proposes various changes to Rule 10.14:
In subsection (a), ``ETP'' would be added before ``OTP''
and a reference to Rule 7.23-E would be added.
Consistent with NYSE Arca Equities Rule 10.13(a)(5), a new
subsection (a)(7) would be added to incorporate actions taken by the
Exchange pursuant to proposed Rule 7.22-E, including the denial of the
application for, or the termination or suspension of, a Market Maker's
registration in a security or securities, as eligible for relief under
Rule 10.14.
Consistent with NYSE Arca Equities Rule 10.13(a),
subsection (a) would also be amended to provide that provisions of Rule
10.14 would not apply to reviews of delisting decisions for which
review is already provided within Rule 5-E.
Subsection (l) would be amended to add the Chairperson of
the committee whose action was subject to the prior review as an
additional person who can call a decision of the CFR Appeals Panel for
review, consistent with NYSE Arca Equities Rule 10.13(k).
Rule 11 (Business Conduct)
The Exchange proposes to revise Rule 11 to incorporate NYSE Arca
Equities Rule 6 (Business Conduct) and NYSE Arca Equities Rule 5220. To
implement the change, the Exchange proposes to add three new rules and
amend the existing rules.
Proposed New Rules
The Exchange proposes to import the text of current NYSE Arca
Equities Rule 6.7 (Trading Ahead of Research Reports) into new proposed
Rule 11.22 (Trading Ahead of Research Reports) without changes other
than those made to the entire rulebook.\40\
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\40\ See ``Proposed Changes Applicable to Entire Rulebook,''
above.
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The Exchange proposes to import the text of current NYSE Arca
Equities Rule 6.9 (Taking or Supplying Securities to Fill Customer's
Order) into new proposed Rule 11.23 (Taking or Supplying Securities to
Fill Customer's Order) without changes other than those made to the
entire rulebook and the use of ``Exchange'' in place of ``facilities of
the Corporation'' in proposed Rule 11.23(5).
The Exchange proposes to import the text of current NYSE Arca
Equities Rule 6.10 (ETP Holders Holding Options)
[[Page 28167]]
into new proposed Rule 11.24 (ETP Holders Holding Options) without
changes other than those made to the entire rulebook and the use of
``Exchange'' in place of ``facilities of the Corporation.''
Proposed Amendments to Rule 11
The Exchange proposes to add references to ETP Holders to show
revised Rule 11's applicability to both categories of trading permit
holders. Accordingly, the following proposed rules would be updated to
include references to ``ETP Holder'' and/or ``ETP Holders'': Rule 11.1
(Adherence to Law and Good Business Practice); Rule 11.2 (Prohibited
Acts); Rule 11.3 (Prevention of the Misuse of Material, Nonpublic
Information); Rule 11.4 (Rumors); Rule 11.5 (Manipulation); Rule 11.6
(Front-running of Block Transactions); Rule 11.10 (Excessive Trading);
Rule 11.11 (Disclosure of Financial Arrangements of OTP Holders); Rule
11.12(a) (Joint Accounts); Rule 11.13 (Disciplinary Action By Other
Organizations); Rule 11.18 (Supervision); Rule 11.19 (Anti-Money
Laundering Compliance Program); Rule 11.20 (Miscellaneous Provisions);
and Rule 11.21(a). Rule 11.21(a) would also include a reference to an
``associated person of an ETP Holder.''
Similarly, the heading of Rule 11.11 would be amended to include
``ETP Holders'' and Rules 11.3 Commentary .02 (Prevention of the Misuse
of Material, Nonpublic Information), 11.11(a), 11.18(b) and 11.19 would
be amended to include references to ``ETP Holder's.''
The Exchange proposes to make the following additional changes to
Rule 11:
The Exchange proposes to add a new subsection (g) to Rule
11.2 that would state that an ETP Holder may not split any order into
multiple orders for any purpose other than seeking the best execution
of the entire order, which is the same text as NYSE Arca Equities Rule
6.2(g).
The Exchange proposes to make several revisions to
proposed Rule 11.3. Subsection (a) of proposed Rule 11.3 would be
amended to replace ``Options Surveillance Department'' with
``Regulatory staff.'' Subsection (b) would also be amended to delete
``the'' before ``Enforcement'' and ``Department'' after it. Finally,
the Exchange proposes to add a new Commentary .04 which has the same
text as NYSE Arca Equities Rule 6.3 Commentary .04.
The Exchange proposes to make several revisions to
proposed Rule 11.6. Rule 11.6 sets 5,000 shares as the threshold for
when an OTP Holder, OTP Firm or Associated Person must take action
under the Rule. Because NYSE Arca Equities Rule 6.6 sets a threshold of
10,000 shares, the Exchange proposes to amend Rule 11.6 by adding
``(10,000 shares or more in the case of an ETP Holder)'' after ``5,000
shares or more.'' In addition, the reference to ``Pacific Exchange,
Inc.'' in Rule 11.6 would be replaced with ``Exchange.'' The Pacific
Exchange, Inc. was a predecessor of the Exchange, and so the reference
is obsolete.
The Exchange proposes to make several changes to proposed
Rule 11.12. In the last sentence of subsection (a), the phrase ``or
Market Maker'' would be added after ``specialist,'' and ``or she''
after ``he.'' The Exchange proposes to add a new Commentary .01 to
proposed Rule 11.12, which is the same text as Commentary .01 of NYSE
Arca Equities Rule 6.12 (Joint Accounts). Finally, the Exchange
proposes to add the text from NYSE Arca Equities Rule 6.12(b) to a new
subsection (b) governing ``Reporting.''
In subsection (a) of Rule 11.18, the Exchange proposes to
add the text '') and no ETP Holder'' after ``(DEA''. In addition, the
Exchange proposes to add the text of current NYSE Arca Equities Rule
6.18(d) and Commentary .01 and .02 to a new subsection (d) and
Commentary.
Rule 12 (Arbitration)
The Exchange proposes to revise Rule 12 (Arbitration) to
incorporate NYSE Arca Equities Rule 12 (Arbitration). To implement the
change, the Exchange proposes to amend the existing rules as follows.
Subsections (a) and (c) would be amended to include a
reference to ``ETP Holder.''
References to the ``NASD'' in ``NASD Dispute Resolution''
and in the defined term ``NASD DR'' would be replaced with ``FINRA.''
In addition, the Exchange proposes to delete the brackets around
the title of Rule 12.
Rule 13 (Cancellation, Suspension and Reinstatement)
The Exchange proposes to revise Rule 13 to incorporate NYSE Arca
Equities Rule 11 (Cancellation, Suspension and Reinstatement). To
implement the change, the Exchange proposes to amend the existing
rules.
The Exchange proposes to add references to ETP Holders to show the
revised rules' applicability to both categories of trading permit
holders. Accordingly, the following rules would be updated to include
references to ``ETP Holder'' and/or ``ETP Holders'': Rule 13.1 (Notice
of Expulsion or Suspension); Rule 13.2(a) (Procedures for Suspension);
Rule 13.3 (Effect of Suspension or Cancellation); Rule 13.4
(Disciplinary Measures During Suspension); Rule 13.5 (Investigation
Following Summary Suspension); Rule 13.6 (Grounds for Cancellation);
Rule 13.7 (Reinstatement); Rule 13.8 (Failure to Obtain Reinstatement);
and Rule 13.9 (Failure to Meet the Eligibility or Qualification
Standards or Prerequisites for Access to Services).
Similarly, the Exchange proposes to add references to ETPs by
adding ``the ETP or'' in place of ``an'' in the first sentence of Rule
13.3, and by adding ``ETP or'' before ``OTP'' in Rule 13.8.
The Exchange proposes to make the following additional changes to
Rule 13.2:
In subsection (a), the Exchange proposes to delete ``and''
from between ``bars'' and ``limitations,'' as a non-substantive
grammatical change.
The Exchange proposes to add the text of NYSE Arca
Equities Rule 11.2(a)(1)(iii) as new subsection (a)(1)(C) of Rule 13.2.
The current text of such subsection is marked ``Reserved.''
The Exchange proposes to delete ``OTP'' before ``trading
privileges'' in subsection (a)(2)(A), to reflect that the rule would
apply to both OTP and ETP trading privileges.
In subsection (a)(2)(B) and (C), the Exchange proposes to
add a new cross reference to proposed Rule 3.8-E and correct a cross
reference from Rule 10.2(b) to Rule 10.2(d).
Subsection (a)(2)(E) provides that the Exchange may
suspend all trading rights and privileges of an OTP Holder or OTP Firm
for failure to comply with Rule 3.4. Rule 3.4 was deleted in 2012 at
the time of the merger of Archipelago Holdings, Inc. into NYSE Group,
and so the referenced obligations no longer exist.\41\ Accordingly, the
Exchange proposes to delete subsection (a)(2)(E) as obsolete and
replace the text with ``Reserved.''
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\41\ See Securities Exchange Act Release No. 67435 (July 13,
2012), 77 FR 42533 (July 19, 2012), note 12. See also Rule 3.4
(Reserved).
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Rule 13.9(c), (e), and (h) would be updated to include
references to the BCC, the NYSE Arca Equities disciplinary
committee.\42\
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\42\ See NYSE Arca Equities Rule 3.2(b)(1) (Equity Committees)
and proposed new Rule 3.2(b)(2).
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Rule 14 (Liability of Directors and Exchange)
The Exchange proposes to revise Rule 14 to incorporate NYSE Arca
Equities Rule 13 (Liability of Directors and Corporation).
The Exchange proposes to add references to ETP Holders to show the
[[Page 28168]]
revised rules' applicability to both categories of trading permit
holders. Accordingly, the following rules would be updated to include
references to ``ETP Holder'' and/or ``ETP Holders'': Rules 14.1
(Liability of Directors), 14.2 (Liability of Exchange), 14.3 (Legal
Proceedings Against Exchange Directors, Officers, Employees or Agents)
and 14.4 (Exchange's Costs of Defending Legal Proceedings).
Rule 14.5 (Deleted) would be deleted, as it is not needed as a
placeholder.
IV. Fee Schedules
A. Proposed NYSE Arca Equities Fee Schedule
The Exchange proposes to delete the Equities Fee Schedule from the
rules of the Exchange, and to adopt the NYSE Arca Equities Fee Schedule
as the new fee schedule for the Exchange equity market.\43\ The
proposed NYSE Arca Equities Fee Schedule would be the same as the
current Equities Fee Schedule, subject to the following changes:
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\43\ The Exchange does not propose to amend the fee schedule for
market data fees, the NYSE Arca Equities Proprietary Market Data
Fees, which does not reference NYSE Arca Equities, Inc.
---------------------------------------------------------------------------
The title of the NYSE Arca Equities Fee Schedule would be
``NYSE Arca Equities Fees and Charges,'' consistent with the title of
the Options Fee Schedule, which is ``NYSE Arca Options Fees and
Charges.''
The references to the current NYSE Arca Equities Rules
would be amended to cite the proposed NYSE Arca Rules, by adding ``-E''
to the proposed rule numbers. In addition, in footnotes 8 and 9, the
references to NYSE Arca Equities Rules 1.1(c) and 1.1(d) would be
changed to refer to proposed NYSE Arca Rules 1.1(b) and (c),
respectively.
As noted above, NYSE Arca Equities Rule 7.25 expired on
June 23, 2016, and the Exchange proposes not to include an equivalent
to NYSE Arca Equities Rule 7.25 in the Equities Rules. Consistent with
such change, the table under ``NYSE Arca Marketplace: Crowd Participant
(`CP') Program Payments'' would not be included in the proposed NYSE
Arca Equities Fee Schedule, as it is also obsolete.
The heading ``NYSE Arca Equities: Regulatory Fees'' would
be changed to ``Regulatory Fees.''
In General Note 1 under the heading ``Co-Location Fees,''
the word ``Equities'' in ``NYSE Arca Equities Fee Schedule'' will be
replaced with ``Options,'' as the Note is meant to refer to the options
market fee schedule.
B. NYSE Arca Options Fee Schedule
In the Options Fee Schedule, Note 8 under ``NYSE Arca Options:
General'' refers to the ``Schedule of Fees and Charges for NYSE Arca
Equities, Inc.'' General Note 1 under the heading ``Co-Location Fees''
refers to the same document as the ``NYSE Arca Equities Fee Schedule.''
The Exchange proposes to conform the two references to the name ``NYSE
Arca Equities Fee Schedule.''
In addition, the Exchange proposes to update cross references in
Notes 2, 6, 9 and 15 to reflect the proposed addition of ``-O'' to the
rule numbers.
C. Listing Fee Schedule
In the Listing Fee Schedule, the Exchange proposes to update cross
references in Item 6 under ``Listing Fees''; Item 7 under ``Annual Fee
(Payable January in Each Calendar Year)''; and Notes 3 and 4 to reflect
the proposed addition of ``-E'' to the rule numbers.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \44\ in general, and with Section
6(b)(1) \45\ in particular, in that it enables the Exchange to be so
organized as to have the capacity to be able to carry out the purposes
of the Exchange Act and to comply, and to enforce compliance by its
exchange members and persons associated with its exchange members, with
the provisions of the Exchange Act, the rules and regulations
thereunder, and the rules of the Exchange.
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\44\ 15 U.S.C. 78f(b).
\45\ 15 U.S.C. 78f(b)(1).
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Specifically, termination of the Delegation would result in the
Exchange directly operating the equities market facility of the
Exchange, while continuing to bear the responsibility to ensure the
fulfillment of its statutory and self-regulatory obligations. As is
true now, the independent regulatory oversight committee (``ROC'') of
the Board would oversee the Exchange's regulatory and self-regulatory
organization responsibilities with regards to both the equities and
options markets, and the Exchange's regulatory department would
continue to carry out its regulatory functions with respect to both
markets under the oversight of the ROC.\46\
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\46\ See NYSE Arca Rule 3.3(a)(1). NYSE Arca Equities does not
have a regulatory oversight committee.
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For the same reasons, the Exchange believes that the proposal to
remove from the Exchange rules the organizational documents of NYSE
Arca Equities and NYSE Arca Equities Rules 14.1 and 14.3 in connection
with the proposed termination of the Delegation is also consistent with
Section 6(b)(1) of the Act.
The Exchange believes that the proposed amendment to Bylaws Section
3.01(b) to incorporate the ETP Holders into the existing statement of
the authority of the Board would also be consistent with Section
6(b)(1) of the Act. By incorporating the ETP Holders, the limits that
section sets on the Board's ability to exercise all powers of the
Exchange and do all lawful acts and things would include those things
as are not by law, the certificate of incorporation, the Bylaws or the
Rules directed or required to be exercised, done or approved by ETP
Holders, as well as the OTP Holders or the holding member.
Further, the Exchange believes that the proposed rule change would
be consistent with the fair representation requirement of Section
6(b)(3) of the Exchange Act,\47\ which is intended to give members a
voice in the selection of an exchange's directors and the
administration of its affairs. The proposed changes would ensure that
all Permit Holders, irrespective of whether they are OTP Holders or ETP
Holders, would have the same rights to participate in the Nominating
Committee and the nomination of Non-Affiliated Directors and, in the
case of a contested nomination, the same voting rights. Such process
would also be consistent with the process for nominating non-affiliated
directors of NYSE MKT, which also has both options and equity markets,
as well as with the governing documents of Nasdaq LLC and Nasdaq
BX.\48\
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\47\ See 15 U.S.C. 78f(b)(3).
\48\ See notes 12 and 14, supra.
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The Exchange believes that the additional changes to Bylaws Section
3.02(a) would also allow the Exchange to be so organized as to have the
capacity to be able to carry out the purposes of the Exchange Act and
to comply, and to enforce compliance by its exchange members and
persons associated with its exchange members, with the provisions of
the Exchange Act, the rules and regulations thereunder, and the rules
of the Exchange. By clearly stating that the holding member determines
the size of the Board, presenting the Board composition requirements in
numbered clauses, and setting forth how the minimum number of Non-
Affiliated directors shall be calculated, the provision would
contribute to the orderly operation of
[[Page 28169]]
the Exchange by adding clarity and transparency to the Bylaws. Further,
the proposed amendments would align the provision with the governing
documents of the SRO Affiliates.\49\
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\49\ See note 15, supra.
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Similarly, the Exchange believes that the changes to Bylaws Article
IV, Section 4.02, which would remove obsolete references to the Permit
Holder Advisory Committee and add references to the Ethics and Business
Conduct Committee of the Exchange, and the deletion of Rule
3.2(b)(2)(C)(i), which is an obsolete reference to the initial
membership of the Board would contribute to the orderly operation of
the Exchange by adding clarity and transparency to the Bylaws.
Similarly, the Exchange believes that removing extraneous references to
the voting process in the definitions of OTP Holder, OTP Firm and ETP
Holder would add clarity and transparency to the Rules.
The Exchange believes that the proposed amendments to Rule 3
regarding the Board and Exchange Committees would allow the Exchange to
be so organized as to have the capacity to be able to carry out the
purposes of the Exchange Act and to comply, and to enforce compliance
by its exchange members and persons associated with its exchange
members, with the provisions of the Exchange Act, the rules and
regulations thereunder, and the rules of the Exchange by ensuring that
ETP Holders may participate in Exchange and Board Committees.
Specifically, the proposed changes would ensure that ETP Holders and
Allied Persons or Associated Persons of ETP Holders would be eligible
for appointment to Exchange Committee [sic], just as OTP Holders and
Allied Persons or Associated Persons of an OTP Firm are now. In
addition, the proposed amendments would integrate the existing NYSE
Arca Equities Business Conduct Committee into the Exchange rules,
putting such committee on a par with the existing Ethics and Business
Conduct Committee for OTP Holders. Similarly, the changes would mean
that all reviews were conducted by a single CFR, and all CFR decisions
were subject to the review of the Exchange Board, meaning that all
Permit Holders were subject to the same rule. Presently, NYSE Arca and
NYSE Arca Equities have separate CFRs, the NYSE Arca CFR decisions are
subject to the review of the Exchange Board, and the NYSE Arca Equities
CFR decisions are subject to the review of the NYSE Arca Equities board
of directors.
The Exchange believes that the inclusion of the ETP Holders as well
as OTP Holders in the Exchange and Board Committees would provide for
the fair representation of members in the administration of the affairs
of the Exchange, including rulemaking and the disciplinary process,
consistent with Section 6(b)(3) of the Exchange Act.\50\ Allowing ETP
Holders and Allied Persons or Associated Persons of ETP Holders to be
eligible for appointment to Exchange Committees, putting the NYSE Arca
Equities disciplinary committee on a par with the Exchange disciplinary
committee, having reviews conducted by a single CFR, and having those
decisions subject to the review of the same Board, would provide for
the fair representation of members in the ``administration of the
affairs of the exchange,'' including the disciplinary process,
consistent with Section 6(b)(3) of the Exchange Act.
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\50\ See 15 U.S.C. 78f(b)(3).
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The Exchange believes that the integration of its two rulebooks
into a single rulebook, with three categories of rules, is consistent
with Section 6(b) of the Exchange Act \51\ in general, and with Section
6(b)(1) \52\ in particular because the integration and re-organization
would contribute to the orderly operation of the Exchange by adding
clarity and transparency to its Rules.
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\51\ 15 U.S.C. 78f(b).
\52\ 15 U.S.C. 78f(b)(1).
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For similar reasons, the Exchange also believes that this filing
furthers the objectives of Section 6(b)(5) of the Exchange Act \53\
because the proposed rule change would be consistent with and would
create a governance and regulatory structure that is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to, and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
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\53\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the termination of the Delegation would
be consistent with and facilitate a governance and regulatory structure
that is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest,
because the resulting structure would allow the Exchange to protect and
maintain its self-regulatory functions and carry out its regulatory
responsibilities under the Exchange Act.
The Exchange believes that the proposed amendments to (a)
incorporate the ETP Holders into the existing statement of the
authority of the Board; (b) integrate the ETP Holders into the process
for appointing members of the Board; (c) have ETP Holders and Allied
Persons or Associated Persons of ETP Holders be eligible for
appointment to Exchange Committees; (d) integrate the existing NYSE
Arca Equities Business Conduct Committee into the Exchange rules; and
(e) have all reviews conducted by a single CFR would 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, because all Permit Holders would be subject to the same
rules, irrespective of whether they were ETP Holders or OTP Holders. In
addition, having the organization and administration rules for both the
equities and options markets in the same Bylaws and Rule 3 would
simplify and streamline the Exchange's rules, as persons subject to the
Exchange's jurisdiction, regulators, and the investing public would not
have to look at two separate sets of governing documents and
organization and administration rules in order to fully understand the
Exchange's markets.
The Exchange believes that the proposed deletion of the
organizational documents of NYSE Arca Equities from the Exchange rules
as well as NYSE Arca Equities Rules 14.1 and 14.2 in connection with
the proposed termination of the Delegation would remove impediments to
and perfect a national market system because it would reduce potential
confusion that may result from having these documents and Rules 14.1
and 14.2 remain rules of the Exchange following the proposed
termination of the Delegation, when NYSE Arca Equities would no longer
have responsibilities to operate the Exchange's equity market.
Similarly, the Exchange believes that the proposed changes to (a)
Bylaws Section 3.02(a), which would clearly state that the holding
member determines the size of the Board, set forth the Board
composition requirements in numbered clauses, and state how the minimum
number of Non-
[[Page 28170]]
Affiliated directors shall be calculated; (b) Bylaws Article IV,
Section 4.02, which would remove obsolete references to the Permit
Holder Advisory Committee and add references to the Ethics and Business
Conduct Committee of the Exchange; (c) deletion of Rule
3.2(b)(2)(C)(i), which would remove an obsolete reference to the
initial membership of the Board; and (d) removing extraneous references
to the voting process in the definitions of OTP Holder, OTP Firm and
ETP Holder in Rule 1 would remove impediments to and perfect a national
market system by adding clarity and transparency to the Bylaws,
ensuring that persons subject to the Exchange's jurisdiction,
regulators, and the investing public can more easily navigate and
understand the Exchange's governing documents.
The Exchange believes that the integration of its two rulebooks
into one single rulebook, with three categories of rules, would remove
impediments to and perfect a national market system and, in general,
protect investors and the public interest, by adding clarity and
transparency to the Bylaws, ensuring that persons subject to the
Exchange's jurisdiction, regulators, and the investing public can more
easily navigate and understand the Exchange's rules.
The Exchange believes that (a) adding an ``-O'' or ``-E'' at the
end of the number of any rule that applies only to the options or
equities market, respectively, and (b) adding ``--Equities'' or ``--
Options'' to the end of any rule that, despite being part of a rule of
general application, only applies to one market, would allow trading
permit holders and other market participants to quickly and easily
identify which rules apply to each market, thereby removing impediments
to and perfecting a national market system and, in general, protecting
investors and the public interest.
Similarly, the Exchange believes that (a) incorporating the NYSE
Arca Equities Conduct Rules into proposed Rule 9-E and Rule 11.21; (b)
incorporating the NYSE Arca Equities Order Audit Trail System Rules
into proposed Rule 6-E; and (c) creating a new NYSE Arca Equities Fee
Schedule and updating the NYSE Arca Options Fee Schedule and Listing
Fee Schedule would remove impediments to and perfect a national market
system and, in general, protect investors and the public interest,
because the proposed changes would ensure that all present NYSE Arca
Equities rules were incorporated into the Exchange rulebook.
The Exchange believes that the proposed non-substantive changes to
the rules, including (a) deleting definitions marked ``reserved'' in
Rule 1; (b) deleting references to the Pacific Exchange Inc. in Rule
11.6 and proposed Rule 8.203-E(g); and (c) removing obsolete text from
proposed Rules 3.2(b), 5.3-E, 13.2(a) and 14.5, would remove
impediments to and perfect a national market system by adding clarity
and transparency to the Rules by deleting obsolete references or
correcting minor typographical errors, ensuring that persons subject to
the Exchange's jurisdiction, regulators, and the investing public can
more easily navigate and understand the Exchange's governing documents.
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 Exchange Act. The proposed rule
change is not designed to address any competitive issue but rather is
concerned solely with the corporate structure of the Exchange and the
administration and function of its corporate governance structures.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2017-40 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2017-40. 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-NYSEArca-2017-40 and should
be submitted on or before July 11, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\54\
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\54\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-12770 Filed 6-19-17; 8:45 am]
BILLING CODE 8011-01-P
