Self-Regulatory Organizations; NYSE MKT LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendments No. 1, 2, and 3, To Allow the Exchange To Trade, Pursuant to Unlisted Trading Privileges, any NMS Stock Listed on Another National Securities Exchange; Establish Rules for the Trading Pursuant to UTP of Exchange-Traded Products; and Adopt New Equity Trading Rules Relating To Trading Halts of Securities Traded Pursuant to UTP on the Pillar Platform, 31118-31121 [2017-14014]

Download as PDF sradovich on DSK3GMQ082PROD with NOTICES 31118 Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices While Rule 38a–1 requires each fund to maintain written policies and procedures, most funds are located within a fund complex. The experience of the Commission’s examination and oversight staff suggests that each fund in a complex is able to draw extensively from the fund complex’s ‘‘master’’ compliance program to assemble appropriate compliance policies and procedures. Many fund complexes already have written policies and procedures documenting their compliance programs. Further, a fund needing to develop or revise policies and procedures on one or more topics in order to achieve a comprehensive compliance program can draw on a number of outlines and model programs available from a variety of industry representatives, commentators, and organizations. There are approximately 4,333 funds subject to Rule 38a–1. Among these funds, 97 were newly registered in the past year. These 97 funds, therefore, were required to adopt and document the policies and procedures that make up their compliance programs. Commission staff estimates that the average annual hour burden for a fund to adopt and document these policies and procedures is 105 hours. Thus, we estimate that the aggregate annual burden hours associated with the adoption and documentation requirement is 10,185 hours. All funds are required to conduct an annual review of the adequacy of their existing policies and procedures and the policies and procedures of each investment adviser, principal underwriter, administrator, and transfer agent of the fund, and the effectiveness of their implementation. In addition, each fund chief compliance officer is required to prepare an annual report that addresses the operation of the policies and procedures of the fund and the policies and procedures of each investment adviser, principal underwriter, administrator, and transfer agent of the fund, any material changes made to those policies and procedures since the date of the last report, any material changes to the policies and procedures recommended as a result of the annual review, and certain compliance matters that occurred since the date of the last report. The staff estimates that each fund spends 49 hours per year, on average, conducting the annual review and preparing the annual report to the board of directors. Thus, we estimate that the annual aggregate burden hours associated with the annual review and annual report requirement is 202,517 hours. VerDate Sep<11>2014 17:57 Jul 03, 2017 Jkt 241001 Finally, the staff estimates that each fund spends 6 hours annually, on average, maintaining the records required by proposed Rule 38a–1. Thus, the aggregate annual burden hours associated with the recordkeeping requirement is 24,798 hours. In total, the staff estimates that the aggregate annual information collection burden of Rule 38a–1 is 237,500 hours. The estimate of burden hours is made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. Complying with this collection of information requirement is mandatory. Responses will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to Pamela Dyson, Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549, or send an email to: PRA_ Mailbox@sec.gov. Dated: June 28, 2017. Robert W. Errett, Deputy Secretary. BILLING CODE 8011–01–P Frm 00080 Fmt 4703 [Release No. 34–81038; File No. SR– NYSEMKT–2016–103] Self-Regulatory Organizations; NYSE MKT LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendments No. 1, 2, and 3, To Allow the Exchange To Trade, Pursuant to Unlisted Trading Privileges, any NMS Stock Listed on Another National Securities Exchange; Establish Rules for the Trading Pursuant to UTP of Exchange-Traded Products; and Adopt New Equity Trading Rules Relating To Trading Halts of Securities Traded Pursuant to UTP on the Pillar Platform June 28, 2017. I. Introduction On November 17, 2016, NYSE MKT LLC (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to: (1) Allow the Exchange to trade, pursuant to unlisted trading privileges (‘‘UTP’’), any NMS stock 3 listed on another national securities exchange; (2) establish rules for the trading pursuant to UTP of certain exchange-traded products (‘‘ETPs’’); and (3) adopt new equity trading rules relating to trading halts of securities traded pursuant to UTP on the Exchange’s new trading platform, Pillar. The proposed rule change was published for comment in the Federal Register on December 1, 2016.4 On January 4, 2017, pursuant to Section 19(b)(2) of the Act,5 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.6 On February 24, 2017, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act7 to determine whether to approve or disapprove the proposed rule change.8 1 15 [FR Doc. 2017–14064 Filed 7–3–17; 8:45 am] PO 00000 SECURITIES AND EXCHANGE COMMISSION Sfmt 4703 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The term ‘‘NMS stock’’ is defined in Rule 600 of Regulation NMS. See 17 CFR 242.600(b)(47). 4 See Securities Exchange Act Release No. 79400 (Nov. 25, 2016), 81 FR 86750 (Dec. 1, 2016). 5 15 U.S.C. 78s(b)(2). 6 See Securities Exchange Act Release No. 79738, 82 FR 3068 (Jan. 10, 2017). 7 15 U.S.C. 78s(b)(2)(B). 8 See Securities Exchange Act Release No. 80097 (Feb. 24, 2017), 82 FR 12251 (Mar. 1, 2017). Specifically, the Commission instituted proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the 2 17 E:\FR\FM\05JYN1.SGM 05JYN1 Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES On March 28, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, and Amendment No. 1 was published for comment in the Federal Register on April 27, 2017.9 On April 27, 2017, the Exchange filed Amendment No. 2 to the proposed rule change.10 On May 23, 2017, the Commission designated a longer period for Commission action on the proposed rule change.11 On May 31, 2017, the Exchange filed Amendment No. 3 to the proposed rule change.12 The Act, which requires, among other things, that the rules of a national securities exchange be ‘‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’’ and ‘‘to protect investors and the public interest.’’ See id. at 12252. 9 See Securities Exchange Act Release No. 80500 (Apr. 21, 2017), 82 FR 19416 (Apr. 27, 2017) (‘‘Notice of Amendment No. 1’’). 10 In Amendment No. 2, the Exchange: (1) Corrected the cross-reference in footnote 66 of the filing to read ‘‘See supra note 63’’; (2) amended proposed Rule 5.2E(j)(6)(B)(V)(2)(a) to read ‘‘may’’ instead of ‘‘will’’; (3) amended proposed Rule 5.5E(m)(1)(c) to clarify that the regulatory function described therein would be exercised by ‘‘the Exchange’’ instead of ‘‘Regulation’’; (4) amended Supplementary Material .01 to proposed Rule 8.200E to erase the repetitive words ‘‘are satisfied’’ at the end of the introductory paragraph; and (5) amended proposed Rule 8.700E(h) to add at the beginning of the paragraph the sentence ‘‘The Exchange will file separate proposals under Section 19(b) of the Securities Exchange Act of 1934 before listing and trading separate and distinct Managed Trust Securities.’’ Amendment No. 2 is available at: https://www.sec.gov/comments/sr-nysemkt-2016103/nysemkt2016103-1724667-150689.pdf. Because Amendment No. 2 to the proposed rule change does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, Amendment No. 2 is not subject to notice and comment. 11 See Securities Exchange Act Release No. 80746, 82 FR 24763 (May 30, 2017) (designating July 29, 2017, as the date by which the Commission must either approve or disapprove the proposed rule change). 12 In Amendment No. 3, the Exchange deleted footnote 10 of the filing, which stated that ‘‘[t]he Exchange currently lists five ETPs on its current trading platform. These ETPs will continue to be listed and traded pursuant to the NYSE MKT Company Guide and the other rules of the Exchange that do not apply to the Pillar platform.’’ The Exchange also deleted the sentence that followed footnote 10, which stated that ‘‘[t]herefore, the Exchange is only proposing ETP rules in this rule filing that would apply to the Pillar platform and trading pursuant to UTP. Since the Exchange does not plan to trade ETPs on the Pillar platform that would be listed under these proposed rules, the Exchange is not proposing to change any of the current rules of the Exchange pertaining to the listing and trading of ETPs in the NYSE MKT Company Guide or in its other rules.’’ The Exchange also deleted footnote 11, which was attached to the deleted sentence, and which provided a Web site address for the NYSE MKT Company Guide. Amendment No. 3 is available at https://www.sec.gov/comments/sr-nysemkt-2016103/nysemkt2016103-1780346-152834.pdf. Because Amendment No. 3 to the proposed rule change does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, Amendment No. 3 is not subject to notice and comment. VerDate Sep<11>2014 17:57 Jul 03, 2017 Jkt 241001 Commission has received no comments on the proposed rule change. The Commission is granting approval of the proposed rule change, as modified by Amendments No. 1, 2, and 3. II. Description of the Proposal, As Modified by Amendments No. 1, 2, and 3 13 NYSE MKT proposes to trade on its Pillar trading platform,14 pursuant to UTP, any NMS stock listed on another national securities exchange.15 NYSE MKT also proposes to establish listing and trading requirements for certain types of ETPs on Pillar.16 The Exchange’s proposed rules for the qualification, listing, and trading of these ETPs are substantively identical to the rules of NYSE Arca and NYSE.17 Finally, the Exchange proposes to adopt new equity trading rules relating to trading halts of securities traded pursuant to UTP on Pillar. Under the proposal, the Exchange represents that it will only trade securities pursuant to UTP on its Pillar trading platform, and will not trade securities pursuant to UTP on its Existing Platform. Furthermore, the Exchange does not intend to list ETPs on Pillar or on its Existing Platform. Therefore, the Exchange represents that 13 Additional information regarding the proposal can be found in the Notice of Amendment No. 1, supra note 9. 14 On January 29, 2015, the Exchange announced the implementation of Pillar, which, according to the Exchange, is an integrated trading technology platform designed to use a single specification for connecting to the equities and options markets operated by the Exchange and its affiliates, NYSE Arca, Inc. (‘‘NYSE Arca’’) and New York Stock Exchange LLC (‘‘NYSE’’). See Trader Update dated January 29, 2015, available at https:// www.nyse.com/publicdocs/nyse/markets/nyse/ Pillar_Trader_Update_Jan_2015.pdf. See also Securities Exchange Act Release No. 79242 (Nov. 4, 2016), 81 FR 79081 (Nov. 10, 2016) (SR– NYSEMKT–2016–97) (‘‘Pillar Framework Filing’’). 15 The Exchange represents that it will continue to trade the symbols for which it is the listing venue on its separate, existing trading platform (‘‘Existing Platform’’) and will not trade securities pursuant to UTP on the Existing Platform. 16 Specifically, the Exchange proposes to establish listing and trading rules for the following: Equity Linked Notes; Investment Company Units; Index-Linked Exchangeable Notes; Equity Gold Shares; Equity Index-Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed-Income Index-Linked Securities, Futures-Linked Securities, and Multifactor-IndexLinked Securities; Trust Certificates; Currency and Index Warrants; Portfolio Depositary Receipts; Trust Issued Receipts; Commodity-Based Trust Shares; Currency Trust Shares; Commodity Index Trust Shares; Commodity Futures Trust Shares; Partnership Units; Paired Trust Shares; Trust Units; Managed Fund Shares; and Managed Trust Securities. 17 See NYSE Arca Equities Rules 5 (Listings) and 8 (Trading of Certain Equities Derivatives); and NYSE Rules 5P (Securities Traded) and 8P (Trading of Certain Exchange Traded Products). PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 31119 the proposed rules apply only to Pillar, and the rules pertaining to the Existing Platform will remain unchanged. A. New Definitions The Exchange proposes to define the term ‘‘Exchange Traded Product’’ in Rule 1.1E(bbb) to mean a security that meets the definition of ‘‘derivative securities product’’ in Rule 19b–4(e) under the Act, and a ‘‘UTP Exchange Traded Product’’ to mean an ETP that trades on the Exchange pursuant to UTP.18 The Exchange also proposes to add Rule 1.1E(kk) to define ‘‘UTP Regulatory Halt’’ as a trade suspension, halt, or pause called by the primary listing market for a UTP security that requires all market centers to halt trading in that security. B. Proposal To Trade Securities Pursuant to UTP The Exchange proposes new Rule 5.1E(a) to extend UTP to Pillar for securities listed on other national securities exchanges. Specifically, proposed Rule 5.1E(a)(1) would allow the Exchange to trade securities eligible for UTP under Section 12(f) of the Act.19 Proposed Rule 5.1E(a) provides that the securities the Exchange would trade pursuant to UTP would be traded on Pillar under the rules applicable to UTP trading. Proposed Rule 5.1E(a)(1) makes clear that the Exchange would not list any ETPs unless it files a proposed rule change under Section 19(b)(2) under the Act.20 Therefore, the Exchange represents that the provisions of proposed Rules 5E and 8E described below, which also permit the listing of ETPs, would not be effective until the Exchange files a proposed rule change to amend its rules to comply with Rules 10A–3 and 10C–1 under the Act and to incorporate qualitative listing criteria, and the proposed rule change is approved by the Commission.21 C. ETP Trading Pursuant UTP on the Exchange The Exchange proposes Rule 5.1E(a)(2) to govern the trading of ETPs pursuant to UTP and Rule 19b–4(e) under the Act. Specifically, proposed Rule 5.1E(a)(2)(A) provides that, within 18 These proposed definitions are identical to the definitions of the same terms in NYSE Rule 1.1(bbb), and to the definition of ‘‘Derivative Securities Product’’ in NYSE Arca Equities Rule 1.1(bbb). 19 15 U.S.C. 78l(f). 20 15 U.S.C. 78s(b)(2). 21 In addition, the introductory note to each of proposed Rules 5E and 8E states that the provisions of the rules apply to the trading pursuant to UTP of ETPs on the Exchange and do not apply to the listing of ETPs on the Exchange. E:\FR\FM\05JYN1.SGM 05JYN1 31120 Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES five days after commencement of trading, the Exchange would file a Form 19b–4(e) with the Commission with respect to each ETP the Exchange trades pursuant to UTP. The Exchange proposes certain other rules to support the trading of ETPs pursuant to UTP. For example, proposed Rule 5.1E(a)(2)(B) provides that the Exchange will distribute an information circular prior to the commencement of trading in an ETP, which would generally include the same information as the information circular provided by the listing exchange, including (a) the special risks of trading the ETP, (b) the Exchange’s rules that will apply to the ETP, including Rules 2090–Equities and 2111–Equities,22 and (c) information about the dissemination of the value of the underlying assets or indices, as applicable. In addition, proposed Rule 5.1E(a)(2)(C) establishes certain requirements for member organizations that have customers that trade ETPs on a UTP basis, including requirements pertaining to prospectus delivery and the provision of written description of terms and characteristics of the ETPs. Also, proposed Rule 5.1E(a)(2)(E) imposes restrictions on member organizations that are registered as market makers on the Exchange for certain ETPs. Finally, proposed Rule 5.1E(a)(2)(F) specifies certain surveillance mechanisms for ETPs traded on the Exchange pursuant to UTP. Namely, Rule 5.1E(a)(2)(F) provides that the Exchange will enter into comprehensive surveillance sharing agreements with markets that trade components of the index or portfolio on which the ETP is based to the same extent as the listing exchange’s rules require the listing exchange to enter into comprehensive surveillance sharing agreements with those markets.23 The Exchange also proposes to add certain definitions contained in NYSE Arca Equities Rule 5.1E(b) that are relevant to the proposed rules, including non-substantive changes to certain references to account for the minor differences of the Exchange and NYSE Arca and their respective rules. 22 See NYSE MKT Rule 2090–Equities (the Exchange’s Know Your Customer Rule) and NYSE MKT Rule 2111–Equities (the Exchange’s Suitability Rule). 23 In addition, the Exchange represents that its surveillance procedures for ETPs traded on the Exchange pursuant to UTP would be similar to the procedures used for equity securities traded on the Exchange and would incorporate and rely upon existing Exchange surveillance systems. See Notice of Amendment No. 1, supra note 9, at 19418. VerDate Sep<11>2014 17:57 Jul 03, 2017 Jkt 241001 D. Listing and Trading Requirements for ETPs The Exchange proposes to adopt rules that are substantively identical to those of NYSE Arca and NYSE for the qualification, listing, and delisting of ETPs. The Exchange proposes to add Rule 5.2E(j), which would be substantively identical to NYSE Arca Equities and NYSE Rule 5.2(j). This proposed rule pertains to the following ETPs: Equity Linked Notes (Rule 5.2E(j)(2)); Investment Company Units (Rule 5.2E(j)(3)); Index-Linked Exchangeable Notes (Rule 5.2E(j)(4)); Equity Gold Shares (Rule 5.2E(j)(5)); Equity Index Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities, and Multifactor Index-Linked Securities (Rule 5.2E(j)(6)); and Trust Certificates (Rule 5.2E(j)(7)). The Exchange also proposes to add Rules 5.5E(g)(2), which would provide additional continued listing standards for Investment Company Units; 5.5E(j)–1, which would provide additional continued listing standards for Equity Linked Notes; and 5.5E(m), which would provide delisting procedures for ETPs. Other than certain non-substantive and technical differences, the text of these proposed rules is identical to NYSE Arca and NYSE Rules 5.2(j)(2)–5.2(j)(7), 5.5(g)(2), 5.5(j)–1, and 5.5(m). Further, the Exchange proposes to add Rule 8E, which is substantively identical to Sections 1 and 2 of NYSE Arca Equities Rule 8 and of NYSE Rule 8P. This proposed rule pertains to the following ETPs: Currency and Index Warrants (Rules 8.1E–8.13E); Portfolio Depositary Receipts (Rule 8.100E); Trust Issued Receipts (Rule 8.200E); Commodity-Based Trust Shares (Rule 8.201E);Currency Trust Shares (Rule 8.202E); Commodity Index Trust Shares (Rule 8.203E); Commodity Futures Trust Shares (Rule 8.204E); Partnership Units (Rule 8.300E); Paired Trust Shares (Rule 8.400E); Trust Units (Rule 8.500E); Managed Fund Shares (Rule 8.600E); and Managed Trust Securities (Rule 8.700E). As mentioned above, the Exchange would not list any ETPs unless it files a proposed rule change under Section 19(b)(2) under the Act.24 Therefore, the provisions of Rules 5E and 8E, which permit the listing of ETPs, would not be effective until the Exchange files a proposed rule change to amend its rules to comply with Rules 10A–3 and 10C– 1 under the Act and to incorporate PO 00000 24 15 U.S.C. 78s(b)(2). Frm 00082 Fmt 4703 Sfmt 4703 qualitative listing criteria, and the proposed rule change is approved by the Commission. E. Proposed Rule 7.18E—Requirements for Halts on Pillar Platform In conjunction with the implementation of Pillar for trading of securities pursuant to UTP, the Exchange proposes new Rule 7.18E which governs trading halts in symbols trading on Pillar. This rule is substantively identical to the rules of NYSE Arca and NYSE. III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change, as modified by Amendments No. 1, 2, and 3, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.25 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,26 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in 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 proposes to trade, pursuant to UTP, NMS stocks (including ETPs) on its Pillar platform. Section 12(f) of the Act 27 provides that any national securities exchange may extend UTP to securities listed and registered on other national securities exchanges, subject to Commission rules. In particular, in order to extend UTP to securities, Rule 12f–5 under the Act requires a national securities exchange to have in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends unlisted trading privileges.28 The Commission notes that the Exchange’s proposed Rule 5.1E allows NYSE MKT to extend UTP in Pillar to any security that is an NMS stock that 25 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 26 15 U.S.C. 78f(b)(5). 27 15 U.S.C. 78l. 28 See 17 CFR 240.12f–5. See also Securities Exchange Act Release No. 35737 (Apr. 21, 1995), 60 FR 20891 (Apr. 28, 1995) (File No. S7–4–95) (adopting Rule 12f–5 under the Act). E:\FR\FM\05JYN1.SGM 05JYN1 Federal Register / Vol. 82, No. 127 / Wednesday, July 5, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES is listed on another national securities exchange. The Commission has previously approved substantively identical rules for the listing and trading of ETPs on NYSE Arca and NYSE. The Exchange represents that it will not list, but only trade, ETPs on a UTP basis. The Exchange represents that to trade pursuant to UTP any ETP that is listed and traded on another national securities exchange, NYSE MKT would be required to file Form 19b–4(e) with the Commission. The Commission believes that the Exchange’s proposal does not raise any novel issues, and the proposed rules of the Exchange are consistent with the rules of other national securities exchanges that trade securities, including ETPs.29 Additionally, the Exchange represents, and its proposed rules specify, that NYSE MKT will not list any ETPs unless it first obtains Commission approval of a proposed rule change under Section 19(b)(2) of the Act. Therefore, the provisions of proposed Rules 5E and 8E that permit the listing of ETPs would only be effective if the Commission approves a proposed rule change for the Exchange to amend its rules to comply with Rules 10A–3 and 10C–1 under the Act and to incorporate other applicable listing criteria. Finally, the Commission notes that NYSE MKT has represented that it will be responsible for accepting the obligations applicable to a UTP market, including specific requirements for registered market makers, books and records production, surveillance procedures, suitability and prospectus requirements, and requisite Exchange approvals.30 The Commission believes that the UTP trading on NYSE MKT of NMS stocks, including ETPs, listed on other national securities exchanges is consistent with existing UTP trading of NMS stocks on other national securities exchanges and that is designed to increase competition among the different securities markets to the benefit of market participants. The Commission therefore finds that NYSE MKT’s proposed rules governing trading on a UTP basis on its Pillar platform are consistent with the Act. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,31 that the proposed rule change (SR–NYSEMKT– 2016–103), as modified by Amendments 29 See, e.g., Rule 14.1 of Bats BYX Exchange, Inc. and Rule 14.1 of Bats EDGA Exchange, Inc. 30 See proposed Rule 5.1E. 31 15 U.S.C. 78s(b)(2). VerDate Sep<11>2014 17:57 Jul 03, 2017 Jkt 241001 No. 1, 2, and 3, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–14014 Filed 7–3–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–427, OMB Control No. 3235–0476] Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736 Extension: Rule 10b–17 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the existing collection of information provided for in Rule 10b–17 (17 CFR 240.10b–17), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Rule 10b–17 requires any issuer of a class of securities publicly traded by the use of any means or instrumentality of interstate commerce or of the mails or of any facility of any national securities exchange to give notice of the following specific distributions relating to such class of securities: (1) A dividend or other distribution in cash or in kind other than interest payments on debt securities; (2) a stock split or reverse stock split; or (3) a rights or other subscription offering. There are approximately 12,127 respondents per year. These respondents make approximately 27,144 responses per year. Each response takes approximately 10 minutes to complete. Thus, the total compliance burden per year is 4,524 burden hours. The total internal labor cost of compliance for the respondents, associated with producing and filing the reports, is approximately $317,991.96. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the PO 00000 Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Please direct your written comments to: Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, DC 20549, or send an email to: PRA_ Mailbox@sec.gov. Dated: June 28, 2017. Robert W. Errett, Deputy Secretary. [FR Doc. 2017–14065 Filed 7–3–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81037; File No. SR–ICC– 2017–010] Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Proposed Rule Change, Security-Based Swap Submission, or Advance Notice Relating to the ICC Clearing Rules and the ICC Treasury Operations Policies and Procedures June 28, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 16, 2017, ICE Clear Credit LLC (‘‘ICC’’) filed with the Securities and Exchange Commission the proposed rule change, securitybased swap submission, or advance notice, as described in Items I, II, and III below, which Items have been prepared primarily by ICC. The Commission is publishing this notice to solicit comments on the proposed rule change, security-based swap submission, or advance notice from interested persons. 1 15 32 17 CFR 200.30–3(a)(12). Frm 00083 Fmt 4703 Sfmt 4703 31121 2 17 E:\FR\FM\05JYN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 05JYN1

Agencies

[Federal Register Volume 82, Number 127 (Wednesday, July 5, 2017)]
[Notices]
[Pages 31118-31121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14014]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81038; File No. SR-NYSEMKT-2016-103]


Self-Regulatory Organizations; NYSE MKT LLC; Order Granting 
Approval of Proposed Rule Change, as Modified by Amendments No. 1, 2, 
and 3, To Allow the Exchange To Trade, Pursuant to Unlisted Trading 
Privileges, any NMS Stock Listed on Another National Securities 
Exchange; Establish Rules for the Trading Pursuant to UTP of Exchange-
Traded Products; and Adopt New Equity Trading Rules Relating To Trading 
Halts of Securities Traded Pursuant to UTP on the Pillar Platform

June 28, 2017.

I. Introduction

    On November 17, 2016, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to: 
(1) Allow the Exchange to trade, pursuant to unlisted trading 
privileges (``UTP''), any NMS stock \3\ listed on another national 
securities exchange; (2) establish rules for the trading pursuant to 
UTP of certain exchange-traded products (``ETPs''); and (3) adopt new 
equity trading rules relating to trading halts of securities traded 
pursuant to UTP on the Exchange's new trading platform, Pillar. The 
proposed rule change was published for comment in the Federal Register 
on December 1, 2016.\4\ On January 4, 2017, pursuant to Section 
19(b)(2) of the Act,\5\ the Commission designated a longer period 
within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
disapprove the proposed rule change.\6\ On February 24, 2017, the 
Commission instituted proceedings under Section 19(b)(2)(B) of the 
Act\7\ to determine whether to approve or disapprove the proposed rule 
change.\8\

[[Page 31119]]

On March 28, 2017, the Exchange filed Amendment No. 1 to the proposed 
rule change, and Amendment No. 1 was published for comment in the 
Federal Register on April 27, 2017.\9\ On April 27, 2017, the Exchange 
filed Amendment No. 2 to the proposed rule change.\10\ On May 23, 2017, 
the Commission designated a longer period for Commission action on the 
proposed rule change.\11\ On May 31, 2017, the Exchange filed Amendment 
No. 3 to the proposed rule change.\12\ The Commission has received no 
comments on the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The term ``NMS stock'' is defined in Rule 600 of Regulation 
NMS. See 17 CFR 242.600(b)(47).
    \4\ See Securities Exchange Act Release No. 79400 (Nov. 25, 
2016), 81 FR 86750 (Dec. 1, 2016).
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 79738, 82 FR 3068 
(Jan. 10, 2017).
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 80097 (Feb. 24, 
2017), 82 FR 12251 (Mar. 1, 2017). Specifically, the Commission 
instituted proceedings to allow for additional analysis of the 
proposed rule change's consistency with Section 6(b)(5) of the Act, 
which requires, among other things, that the rules of a national 
securities exchange be ``designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade,'' and ``to protect investors and the public 
interest.'' See id. at 12252.
    \9\ See Securities Exchange Act Release No. 80500 (Apr. 21, 
2017), 82 FR 19416 (Apr. 27, 2017) (``Notice of Amendment No. 1'').
    \10\ In Amendment No. 2, the Exchange: (1) Corrected the cross-
reference in footnote 66 of the filing to read ``See supra note 
63''; (2) amended proposed Rule 5.2E(j)(6)(B)(V)(2)(a) to read 
``may'' instead of ``will''; (3) amended proposed Rule 5.5E(m)(1)(c) 
to clarify that the regulatory function described therein would be 
exercised by ``the Exchange'' instead of ``Regulation''; (4) amended 
Supplementary Material .01 to proposed Rule 8.200E to erase the 
repetitive words ``are satisfied'' at the end of the introductory 
paragraph; and (5) amended proposed Rule 8.700E(h) to add at the 
beginning of the paragraph the sentence ``The Exchange will file 
separate proposals under Section 19(b) of the Securities Exchange 
Act of 1934 before listing and trading separate and distinct Managed 
Trust Securities.'' Amendment No. 2 is available at: https://www.sec.gov/comments/sr-nysemkt-2016-103/nysemkt2016103-1724667-150689.pdf. Because Amendment No. 2 to the proposed rule change does 
not materially alter the substance of the proposed rule change or 
raise unique or novel regulatory issues, Amendment No. 2 is not 
subject to notice and comment.
    \11\ See Securities Exchange Act Release No. 80746, 82 FR 24763 
(May 30, 2017) (designating July 29, 2017, as the date by which the 
Commission must either approve or disapprove the proposed rule 
change).
    \12\ In Amendment No. 3, the Exchange deleted footnote 10 of the 
filing, which stated that ``[t]he Exchange currently lists five ETPs 
on its current trading platform. These ETPs will continue to be 
listed and traded pursuant to the NYSE MKT Company Guide and the 
other rules of the Exchange that do not apply to the Pillar 
platform.'' The Exchange also deleted the sentence that followed 
footnote 10, which stated that ``[t]herefore, the Exchange is only 
proposing ETP rules in this rule filing that would apply to the 
Pillar platform and trading pursuant to UTP. Since the Exchange does 
not plan to trade ETPs on the Pillar platform that would be listed 
under these proposed rules, the Exchange is not proposing to change 
any of the current rules of the Exchange pertaining to the listing 
and trading of ETPs in the NYSE MKT Company Guide or in its other 
rules.'' The Exchange also deleted footnote 11, which was attached 
to the deleted sentence, and which provided a Web site address for 
the NYSE MKT Company Guide. Amendment No. 3 is available at https://www.sec.gov/comments/sr-nysemkt-2016-103/nysemkt2016103-1780346-152834.pdf. Because Amendment No. 3 to the proposed rule change does 
not materially alter the substance of the proposed rule change or 
raise unique or novel regulatory issues, Amendment No. 3 is not 
subject to notice and comment.
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    The Commission is granting approval of the proposed rule change, as 
modified by Amendments No. 1, 2, and 3.

II. Description of the Proposal, As Modified by Amendments No. 1, 2, 
and 3 \13\
---------------------------------------------------------------------------

    \13\ Additional information regarding the proposal can be found 
in the Notice of Amendment No. 1, supra note 9.
---------------------------------------------------------------------------

    NYSE MKT proposes to trade on its Pillar trading platform,\14\ 
pursuant to UTP, any NMS stock listed on another national securities 
exchange.\15\ NYSE MKT also proposes to establish listing and trading 
requirements for certain types of ETPs on Pillar.\16\ The Exchange's 
proposed rules for the qualification, listing, and trading of these 
ETPs are substantively identical to the rules of NYSE Arca and 
NYSE.\17\ Finally, the Exchange proposes to adopt new equity trading 
rules relating to trading halts of securities traded pursuant to UTP on 
Pillar.
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    \14\ On January 29, 2015, the Exchange announced the 
implementation of Pillar, which, according to the Exchange, is an 
integrated trading technology platform designed to use a single 
specification for connecting to the equities and options markets 
operated by the Exchange and its affiliates, NYSE Arca, Inc. (``NYSE 
Arca'') and New York Stock Exchange LLC (``NYSE''). See Trader 
Update dated January 29, 2015, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/Pillar_Trader_Update_Jan_2015.pdf. See 
also Securities Exchange Act Release No. 79242 (Nov. 4, 2016), 81 FR 
79081 (Nov. 10, 2016) (SR-NYSEMKT-2016-97) (``Pillar Framework 
Filing'').
    \15\ The Exchange represents that it will continue to trade the 
symbols for which it is the listing venue on its separate, existing 
trading platform (``Existing Platform'') and will not trade 
securities pursuant to UTP on the Existing Platform.
    \16\ Specifically, the Exchange proposes to establish listing 
and trading rules for the following: Equity Linked Notes; Investment 
Company Units; Index-Linked Exchangeable Notes; Equity Gold Shares; 
Equity Index-Linked Securities, Commodity-Linked Securities, 
Currency-Linked Securities, Fixed-Income Index-Linked Securities, 
Futures-Linked Securities, and Multifactor-Index-Linked Securities; 
Trust Certificates; Currency and Index Warrants; Portfolio 
Depositary Receipts; Trust Issued Receipts; Commodity-Based Trust 
Shares; Currency Trust Shares; Commodity Index Trust Shares; 
Commodity Futures Trust Shares; Partnership Units; Paired Trust 
Shares; Trust Units; Managed Fund Shares; and Managed Trust 
Securities.
    \17\ See NYSE Arca Equities Rules 5 (Listings) and 8 (Trading of 
Certain Equities Derivatives); and NYSE Rules 5P (Securities Traded) 
and 8P (Trading of Certain Exchange Traded Products).
---------------------------------------------------------------------------

    Under the proposal, the Exchange represents that it will only trade 
securities pursuant to UTP on its Pillar trading platform, and will not 
trade securities pursuant to UTP on its Existing Platform. Furthermore, 
the Exchange does not intend to list ETPs on Pillar or on its Existing 
Platform. Therefore, the Exchange represents that the proposed rules 
apply only to Pillar, and the rules pertaining to the Existing Platform 
will remain unchanged.

A. New Definitions

    The Exchange proposes to define the term ``Exchange Traded 
Product'' in Rule 1.1E(bbb) to mean a security that meets the 
definition of ``derivative securities product'' in Rule 19b-4(e) under 
the Act, and a ``UTP Exchange Traded Product'' to mean an ETP that 
trades on the Exchange pursuant to UTP.\18\ The Exchange also proposes 
to add Rule 1.1E(kk) to define ``UTP Regulatory Halt'' as a trade 
suspension, halt, or pause called by the primary listing market for a 
UTP security that requires all market centers to halt trading in that 
security.
---------------------------------------------------------------------------

    \18\ These proposed definitions are identical to the definitions 
of the same terms in NYSE Rule 1.1(bbb), and to the definition of 
``Derivative Securities Product'' in NYSE Arca Equities Rule 
1.1(bbb).
---------------------------------------------------------------------------

B. Proposal To Trade Securities Pursuant to UTP

    The Exchange proposes new Rule 5.1E(a) to extend UTP to Pillar for 
securities listed on other national securities exchanges. Specifically, 
proposed Rule 5.1E(a)(1) would allow the Exchange to trade securities 
eligible for UTP under Section 12(f) of the Act.\19\ Proposed Rule 
5.1E(a) provides that the securities the Exchange would trade pursuant 
to UTP would be traded on Pillar under the rules applicable to UTP 
trading.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78l(f).
---------------------------------------------------------------------------

    Proposed Rule 5.1E(a)(1) makes clear that the Exchange would not 
list any ETPs unless it files a proposed rule change under Section 
19(b)(2) under the Act.\20\ Therefore, the Exchange represents that the 
provisions of proposed Rules 5E and 8E described below, which also 
permit the listing of ETPs, would not be effective until the Exchange 
files a proposed rule change to amend its rules to comply with Rules 
10A-3 and 10C-1 under the Act and to incorporate qualitative listing 
criteria, and the proposed rule change is approved by the 
Commission.\21\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(2).
    \21\ In addition, the introductory note to each of proposed 
Rules 5E and 8E states that the provisions of the rules apply to the 
trading pursuant to UTP of ETPs on the Exchange and do not apply to 
the listing of ETPs on the Exchange.
---------------------------------------------------------------------------

C. ETP Trading Pursuant UTP on the Exchange

    The Exchange proposes Rule 5.1E(a)(2) to govern the trading of ETPs 
pursuant to UTP and Rule 19b-4(e) under the Act. Specifically, proposed 
Rule 5.1E(a)(2)(A) provides that, within

[[Page 31120]]

five days after commencement of trading, the Exchange would file a Form 
19b-4(e) with the Commission with respect to each ETP the Exchange 
trades pursuant to UTP.
    The Exchange proposes certain other rules to support the trading of 
ETPs pursuant to UTP. For example, proposed Rule 5.1E(a)(2)(B) provides 
that the Exchange will distribute an information circular prior to the 
commencement of trading in an ETP, which would generally include the 
same information as the information circular provided by the listing 
exchange, including (a) the special risks of trading the ETP, (b) the 
Exchange's rules that will apply to the ETP, including Rules 2090-
Equities and 2111-Equities,\22\ and (c) information about the 
dissemination of the value of the underlying assets or indices, as 
applicable.
---------------------------------------------------------------------------

    \22\ See NYSE MKT Rule 2090-Equities (the Exchange's Know Your 
Customer Rule) and NYSE MKT Rule 2111-Equities (the Exchange's 
Suitability Rule).
---------------------------------------------------------------------------

    In addition, proposed Rule 5.1E(a)(2)(C) establishes certain 
requirements for member organizations that have customers that trade 
ETPs on a UTP basis, including requirements pertaining to prospectus 
delivery and the provision of written description of terms and 
characteristics of the ETPs. Also, proposed Rule 5.1E(a)(2)(E) imposes 
restrictions on member organizations that are registered as market 
makers on the Exchange for certain ETPs. Finally, proposed Rule 
5.1E(a)(2)(F) specifies certain surveillance mechanisms for ETPs traded 
on the Exchange pursuant to UTP. Namely, Rule 5.1E(a)(2)(F) provides 
that the Exchange will enter into comprehensive surveillance sharing 
agreements with markets that trade components of the index or portfolio 
on which the ETP is based to the same extent as the listing exchange's 
rules require the listing exchange to enter into comprehensive 
surveillance sharing agreements with those markets.\23\
---------------------------------------------------------------------------

    \23\ In addition, the Exchange represents that its surveillance 
procedures for ETPs traded on the Exchange pursuant to UTP would be 
similar to the procedures used for equity securities traded on the 
Exchange and would incorporate and rely upon existing Exchange 
surveillance systems. See Notice of Amendment No. 1, supra note 9, 
at 19418.
---------------------------------------------------------------------------

    The Exchange also proposes to add certain definitions contained in 
NYSE Arca Equities Rule 5.1E(b) that are relevant to the proposed 
rules, including non-substantive changes to certain references to 
account for the minor differences of the Exchange and NYSE Arca and 
their respective rules.

D. Listing and Trading Requirements for ETPs

    The Exchange proposes to adopt rules that are substantively 
identical to those of NYSE Arca and NYSE for the qualification, 
listing, and delisting of ETPs. The Exchange proposes to add Rule 
5.2E(j), which would be substantively identical to NYSE Arca Equities 
and NYSE Rule 5.2(j). This proposed rule pertains to the following 
ETPs: Equity Linked Notes (Rule 5.2E(j)(2)); Investment Company Units 
(Rule 5.2E(j)(3)); Index-Linked Exchangeable Notes (Rule 5.2E(j)(4)); 
Equity Gold Shares (Rule 5.2E(j)(5)); Equity Index Linked Securities, 
Commodity-Linked Securities, Currency-Linked Securities, Fixed Income 
Index-Linked Securities, Futures-Linked Securities, and Multifactor 
Index-Linked Securities (Rule 5.2E(j)(6)); and Trust Certificates (Rule 
5.2E(j)(7)). The Exchange also proposes to add Rules 5.5E(g)(2), which 
would provide additional continued listing standards for Investment 
Company Units; 5.5E(j)-1, which would provide additional continued 
listing standards for Equity Linked Notes; and 5.5E(m), which would 
provide delisting procedures for ETPs. Other than certain non-
substantive and technical differences, the text of these proposed rules 
is identical to NYSE Arca and NYSE Rules 5.2(j)(2)-5.2(j)(7), 
5.5(g)(2), 5.5(j)-1, and 5.5(m).
    Further, the Exchange proposes to add Rule 8E, which is 
substantively identical to Sections 1 and 2 of NYSE Arca Equities Rule 
8 and of NYSE Rule 8P. This proposed rule pertains to the following 
ETPs: Currency and Index Warrants (Rules 8.1E-8.13E); Portfolio 
Depositary Receipts (Rule 8.100E); Trust Issued Receipts (Rule 8.200E); 
Commodity-Based Trust Shares (Rule 8.201E);Currency Trust Shares (Rule 
8.202E); Commodity Index Trust Shares (Rule 8.203E); Commodity Futures 
Trust Shares (Rule 8.204E); Partnership Units (Rule 8.300E); Paired 
Trust Shares (Rule 8.400E); Trust Units (Rule 8.500E); Managed Fund 
Shares (Rule 8.600E); and Managed Trust Securities (Rule 8.700E).
    As mentioned above, the Exchange would not list any ETPs unless it 
files a proposed rule change under Section 19(b)(2) under the Act.\24\ 
Therefore, the provisions of Rules 5E and 8E, which permit the listing 
of ETPs, would not be effective until the Exchange files a proposed 
rule change to amend its rules to comply with Rules 10A-3 and 10C-1 
under the Act and to incorporate qualitative listing criteria, and the 
proposed rule change is approved by the Commission.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

E. Proposed Rule 7.18E--Requirements for Halts on Pillar Platform

    In conjunction with the implementation of Pillar for trading of 
securities pursuant to UTP, the Exchange proposes new Rule 7.18E which 
governs trading halts in symbols trading on Pillar. This rule is 
substantively identical to the rules of NYSE Arca and NYSE.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendments No. 1, 2, and 3, is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\25\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\26\ which requires, among other things, 
that the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in 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.
---------------------------------------------------------------------------

    \25\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange proposes to trade, pursuant to UTP, NMS stocks 
(including ETPs) on its Pillar platform. Section 12(f) of the Act \27\ 
provides that any national securities exchange may extend UTP to 
securities listed and registered on other national securities 
exchanges, subject to Commission rules. In particular, in order to 
extend UTP to securities, Rule 12f-5 under the Act requires a national 
securities exchange to have in effect a rule or rules providing for 
transactions in the class or type of security to which the exchange 
extends unlisted trading privileges.\28\ The Commission notes that the 
Exchange's proposed Rule 5.1E allows NYSE MKT to extend UTP in Pillar 
to any security that is an NMS stock that

[[Page 31121]]

is listed on another national securities exchange.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78l.
    \28\ See 17 CFR 240.12f-5. See also Securities Exchange Act 
Release No. 35737 (Apr. 21, 1995), 60 FR 20891 (Apr. 28, 1995) (File 
No. S7-4-95) (adopting Rule 12f-5 under the Act).
---------------------------------------------------------------------------

    The Commission has previously approved substantively identical 
rules for the listing and trading of ETPs on NYSE Arca and NYSE. The 
Exchange represents that it will not list, but only trade, ETPs on a 
UTP basis. The Exchange represents that to trade pursuant to UTP any 
ETP that is listed and traded on another national securities exchange, 
NYSE MKT would be required to file Form 19b-4(e) with the Commission.
    The Commission believes that the Exchange's proposal does not raise 
any novel issues, and the proposed rules of the Exchange are consistent 
with the rules of other national securities exchanges that trade 
securities, including ETPs.\29\ Additionally, the Exchange represents, 
and its proposed rules specify, that NYSE MKT will not list any ETPs 
unless it first obtains Commission approval of a proposed rule change 
under Section 19(b)(2) of the Act. Therefore, the provisions of 
proposed Rules 5E and 8E that permit the listing of ETPs would only be 
effective if the Commission approves a proposed rule change for the 
Exchange to amend its rules to comply with Rules 10A-3 and 10C-1 under 
the Act and to incorporate other applicable listing criteria. Finally, 
the Commission notes that NYSE MKT has represented that it will be 
responsible for accepting the obligations applicable to a UTP market, 
including specific requirements for registered market makers, books and 
records production, surveillance procedures, suitability and prospectus 
requirements, and requisite Exchange approvals.\30\
---------------------------------------------------------------------------

    \29\ See, e.g., Rule 14.1 of Bats BYX Exchange, Inc. and Rule 
14.1 of Bats EDGA Exchange, Inc.
    \30\ See proposed Rule 5.1E.
---------------------------------------------------------------------------

    The Commission believes that the UTP trading on NYSE MKT of NMS 
stocks, including ETPs, listed on other national securities exchanges 
is consistent with existing UTP trading of NMS stocks on other national 
securities exchanges and that is designed to increase competition among 
the different securities markets to the benefit of market participants. 
The Commission therefore finds that NYSE MKT's proposed rules governing 
trading on a UTP basis on its Pillar platform are consistent with the 
Act.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\31\ that the proposed rule change (SR-NYSEMKT-2016-103), as 
modified by Amendments No. 1, 2, and 3, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-14014 Filed 7-3-17; 8:45 am]
 BILLING CODE 8011-01-P
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