Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change To Amend NYSE Arca Equities Rule 13.2, Liability of Corporation, 35244-35245 [2017-15910]

Download as PDF 35244 Federal Register / Vol. 82, No. 144 / Friday, July 28, 2017 / Notices 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 Clearing Agencies, and on DTCC’s Web site (http://dtcc.com/legal/ sec-rule-filings.aspx). 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–DTC–2017–004, SR–NSCC– 2017–005, or SR–FICC–2017–008 and should be submitted on or before August 18, 2017. If comments are received, any rebuttal comments should be submitted on or before September 1, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.43 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–15907 Filed 7–27–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81197; File No. SR– NYSEArca–2017–46] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change To Amend NYSE Arca Equities Rule 13.2, Liability of Corporation July 24, 2017. asabaliauskas on DSKBBXCHB2PROD with NOTICES I. Introduction On May 23, 2017, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) 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 amend NYSE Arca Equities Rule 13.2, Liability of Corporation. The proposed rule change was published for comment in the Federal Register on June 12, 2017.3 The Commission received no comments on the proposed rule change. This order approves the proposed rule change. 43 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 80866 (June 6, 2017), 82 FR 26967 (‘‘Notice’’). 1 15 VerDate Sep<11>2014 18:50 Jul 27, 2017 Jkt 241001 II. Description of the Proposed Rule Change 4 NYSE Arca Equities Rule 13.2 (‘‘Rule 13.2’’) currently provides a mechanism for ETP Holders to receive compensation for certain types of losses. The Exchange proposes to amend Rule 13.2 in several respects. First, the Exchange proposes to amend Rule 13.2(a) to specify that the limitation of liability set forth in that paragraph would apply to ETP Holders’ successors, representatives, and customers. Pursuant to proposed Rule 13.2(a), except as otherwise expressly provided in the Exchange’s rules, neither the Corporation nor its Directors, officers, committee members, employees, or agents shall be liable to ETP Holders of the Corporation, or successors, representatives, or customers thereof, or to persons associated therewith, for the specified types of losses, expenses, damages, or claims. Second, the Exchange proposes to amend Rule 13.2(b), which describes certain prerequisites for qualifying for compensation. Specifically, Rule 13.2(b) currently requires, among other things, that ‘‘the Corporation has acknowledged receipt of’’ the order. As proposed, Rule 13.2(b) would require, among other things, that ‘‘the Corporation has received’’ the order. Third, the Exchange proposes to amend Rule 13.2(b) to eliminate the daily liability caps. Rule 13.2(b)(1) currently provides that, as to any one or more claims made by a single ETP Holder growing out of the use or enjoyment of the facilities afforded by the Corporation on a single trading day, the Corporation will not be liable in excess of the larger of $100,000, or the amount of any recovery obtained by the Corporation under any applicable insurance maintained by the Corporation. Rule 13.2(b)(2) currently provides that, as to the aggregate of all claims made by all ETP Holders growing out of the use or enjoyment of the facilities afforded by the Corporation on a single trading day, the Corporation will not be liable in excess of the larger of $250,000, or the amount of the recovery obtained by the Corporation under any applicable insurance maintained by the Corporation. Rule 13.2(b)(3) currently provides that, as to the aggregate of all claims made by all ETP Holders growing out of the use or enjoyment of the facilities afforded by the Corporation during a single calendar month, the Corporation will not be liable in excess of the larger of $500,000, 4 For a more detailed description of the proposed rule change, see Notice, supra note 3. PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 or the amount of the recovery obtained by the Corporation under any applicable insurance maintained by the Corporation.5 The Exchange proposes to eliminate the daily liability caps in Rules 13.2(b)(1) and (2), and retain the monthly liability cap in Rule 13.2(b)(3).6 The Exchange also proposes to apply the elimination of the daily liability caps retroactively to March 1, 2017, so that ETP Holders may be fully compensated for losses incurred in connection with a system issue that occurred on March 20, 2017.7 Fourth, the Exchange proposes to amend the time frame and clarify the manner in which ETP Holders are required to submit notice of claims for compensation. Rule 13.2(c) currently requires ETP Holders to provide written notice of claims no later than the opening of trading on the next business day following the day on which the use or enjoyment of the Corporation’s facilities giving rise to the claims occurred. The Exchange proposes to require ETP Holders to submit written notice of claims for compensation pursuant to Rule 13.2(b) no later than noon Eastern Time on the next business day following the day on which the use or enjoyment of the Corporation’s facilities gave rise to such claims.8 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.9 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,10 which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged 5 Rule 13.2(c) currently provides that, if all of the claims arising out of the use or enjoyment of the facilities afforded by the Corporation cannot be fully satisfied because in the aggregate they exceed the applicable maximum amount of liability provided for in Rule 13.2(b), then the maximum amount shall be allocated among all such claims arising on a single trading day or during a single calendar month, as applicable, based on the proportion that each such claim bears to the sum of all such claims. 6 In connection with this change, the Exchange also proposes conforming changes in Rule 13.2(c) to eliminate the reference to allocation among claims arising ‘‘on a single trading day.’’ 7 See Notice, supra note 3, at 26968. 8 See proposed Rule 13.2(d). 9 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). 10 15 U.S.C. 78f(b)(5). E:\FR\FM\28JYN1.SGM 28JYN1 Federal Register / Vol. 82, No. 144 / Friday, July 28, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities and, in general, to protect investors and the public interest, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission believes that the proposal to eliminate the daily liability caps in Rules 13.2(b)(1) and (2) could result in more ETP Holders receiving fuller compensations on their claims.11 The proposal could also reduce the risk that losses suffered by an ETP Holder would be treated differently depending on whether other ETP Holders suffered losses on the same day.12 In addition, the Commission notes that, under the proposal, the maximum amount of compensation would continue to be proportionally allocated if claims arising during a single calendar month exceed the monthly liability cap.13 With respect to the Exchange’s proposal to retroactively apply the elimination of the daily liability caps, the Commission notes that approval of the proposal would make additional funds available to compensate ETP Holders affected by the system issue on March 20, 2017. Also, as the Exchange notes, the proposal would promote equal treatment between ETP Holders who suffered a loss on March 20, 2017 and ETP Holders who suffered a loss on a different day.14 Specifically, according to the Exchange, the proposal would enable it to fully compensate ETP Holders for claims arising from the system issue on March 20, 2017.15 Moreover, according to the Exchange, prior to March 20, 2017, it has never received a claim that exceeded the liability limits, and thus it was never prevented from fully compensating an ETP Holder.16 The Commission further believes that the other proposed changes are consistent with the Act. Specifically, the Commission believes that the addition of the text ‘‘successors, representatives or customers thereof’’ to Rule 13.2(a) would clarify the scope of the limitation of liability in that provision.17 As the 11 The Commission notes that the rules of certain other national securities exchanges also only include monthly liability caps, and no daily liability caps. See, e.g., Nasdaq Stock Market LLC (‘‘Nasdaq’’) Rule 4626. 12 See Notice, supra note 3, at 26968. 13 See proposed changes to Rule 13.2(c). As described above, the Exchange also proposes to make conforming changes in Rule 13.2(c) to eliminate the reference to allocation among claims arising ‘‘on a single trading day.’’ See supra notes 5–6. 14 See Notice, supra note 3, at 26968. 15 See id. at 26969. 16 See id. 17 The Commission notes that this change is consistent with the rules of certain other national VerDate Sep<11>2014 18:50 Jul 27, 2017 Jkt 241001 Exchange notes, Rule 13.2 currently does not authorize the compensation of successors, representatives, or customers of ETP Holders because the rule does not currently reference them.18 The Commission also believes that the replacement of the words ‘‘acknowledged receipt of’’ with the word ‘‘received’’ in Rule 13.2(b) would provide transparency regarding the scope of the rule.19 Finally, the Commission believes that the addition of paragraph (d) to Rule 13.2 would clarify that all claims for compensation must be submitted in writing, and would provide ETP Holders additional time to evaluate losses that may have occurred on the prior trading day, particularly if an issue occurred later in the day.20 Based on the foregoing, the Commission believes that the proposed rule change is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,21 that the proposed rule change (SR–NYSEArca2017–46), be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–15910 Filed 7–27–17; 8:45 am] BILLING CODE 8011–01–P securities exchanges. See, e.g., Bats BZX Exchange, Inc. Rule 11.16(a). 18 See Notice, supra note 3, at 26967. 19 The Commission notes that this change is consistent with the rules of certain other national securities exchanges. See, e.g., New York Stock Exchange LLC Rule 18(b). 20 The Commission notes that this change is consistent with the rules of certain other national securities exchanges. See, e.g., Nasdaq Rule 4626(b)(6). 21 15 U.S.C. 78s(b)(2). 22 17 CFR 200.30–3(a)(12). PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 35245 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81192; File Nos. SR–DTC– 2017–005; SR–FICC–2017–009; SR–NSCC– 2017–006] Self-Regulatory Organizations; The Depository Trust Company; Fixed Income Clearing Corporation; National Securities Clearing Corporation; Notice of Filing Amendment No. 1 and Order Instituting Proceedings to Determine Whether to Approve or Disapprove Proposed Rule Changes to Adopt the Clearing Agency Stress Testing Framework (Market Risk) July 24, 2017. I. Introduction On April 7, 2017, The Depository Trust Company (‘‘DTC’’), Fixed Income Clearing Corporation (‘‘FICC’’), and National Securities Clearing Corporation (‘‘NSCC,’’ each a ‘‘Clearing Agency,’’ and collectively, the ‘‘Clearing Agencies’’), filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule changes SR–DTC–2017– 005, SR–FICC–2017–009, and SR– NSCC–2017–006, respectively, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 The proposed rule changes were published for comment in the Federal Register on April 25, 2017.3 The Commission did not receive any comment letters on the proposed rule changes. On June 7, 2017, the Commission designated a longer period for Commission Action on the proposed rule changes.4 On July 19, 2017, the Clearing Agencies each filed Amendment No. 1 to their respective proposed rule changes (hereinafter, ‘‘Proposed Rule Change’’). Amendments No. 1 would clarify how the Clearing Agencies would use scenarios to estimate the profits and losses (‘‘P&L’’) of a member closeout. This order institutes proceedings under Section 19(b)(2)(B) of the Act 5 to determine whether to approve or disapprove the Proposed Rule Changes. II. Description of the Proposed Rule Changes The Proposed Rule Changes would adopt the Clearing Agency Stress 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 80485 (April 19, 2017), 82 FR 19131 (April 25, 2017) (SR– DTC–2017–005; SR–FICC–2017–009; SR–NSCC– 2017–006) (‘‘Notice’’). 4 See Securities Exchange Act Release No. 80876 (June 7, 2017), 82 FR 27091 (June 13, 2017) (SR– DTC–2017–005; SR–FICC–2017–009; SR–NSCC– 2017–006). 5 15 U.S.C. 78s(b)(2)(B). 2 17 E:\FR\FM\28JYN1.SGM 28JYN1

Agencies

[Federal Register Volume 82, Number 144 (Friday, July 28, 2017)]
[Notices]
[Pages 35244-35245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-15910]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81197; File No. SR-NYSEArca-2017-46]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change To Amend NYSE Arca Equities Rule 13.2, Liability 
of Corporation

July 24, 2017.

I. Introduction

    On May 23, 2017, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
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 
amend NYSE Arca Equities Rule 13.2, Liability of Corporation. The 
proposed rule change was published for comment in the Federal Register 
on June 12, 2017.\3\ The Commission received no comments on the 
proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 80866 (June 6, 
2017), 82 FR 26967 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change \4\
---------------------------------------------------------------------------

    \4\ For a more detailed description of the proposed rule change, 
see Notice, supra note 3.
---------------------------------------------------------------------------

    NYSE Arca Equities Rule 13.2 (``Rule 13.2'') currently provides a 
mechanism for ETP Holders to receive compensation for certain types of 
losses. The Exchange proposes to amend Rule 13.2 in several respects.
    First, the Exchange proposes to amend Rule 13.2(a) to specify that 
the limitation of liability set forth in that paragraph would apply to 
ETP Holders' successors, representatives, and customers. Pursuant to 
proposed Rule 13.2(a), except as otherwise expressly provided in the 
Exchange's rules, neither the Corporation nor its Directors, officers, 
committee members, employees, or agents shall be liable to ETP Holders 
of the Corporation, or successors, representatives, or customers 
thereof, or to persons associated therewith, for the specified types of 
losses, expenses, damages, or claims.
    Second, the Exchange proposes to amend Rule 13.2(b), which 
describes certain prerequisites for qualifying for compensation. 
Specifically, Rule 13.2(b) currently requires, among other things, that 
``the Corporation has acknowledged receipt of'' the order. As proposed, 
Rule 13.2(b) would require, among other things, that ``the Corporation 
has received'' the order.
    Third, the Exchange proposes to amend Rule 13.2(b) to eliminate the 
daily liability caps. Rule 13.2(b)(1) currently provides that, as to 
any one or more claims made by a single ETP Holder growing out of the 
use or enjoyment of the facilities afforded by the Corporation on a 
single trading day, the Corporation will not be liable in excess of the 
larger of $100,000, or the amount of any recovery obtained by the 
Corporation under any applicable insurance maintained by the 
Corporation. Rule 13.2(b)(2) currently provides that, as to the 
aggregate of all claims made by all ETP Holders growing out of the use 
or enjoyment of the facilities afforded by the Corporation on a single 
trading day, the Corporation will not be liable in excess of the larger 
of $250,000, or the amount of the recovery obtained by the Corporation 
under any applicable insurance maintained by the Corporation. Rule 
13.2(b)(3) currently provides that, as to the aggregate of all claims 
made by all ETP Holders growing out of the use or enjoyment of the 
facilities afforded by the Corporation during a single calendar month, 
the Corporation will not be liable in excess of the larger of $500,000, 
or the amount of the recovery obtained by the Corporation under any 
applicable insurance maintained by the Corporation.\5\ The Exchange 
proposes to eliminate the daily liability caps in Rules 13.2(b)(1) and 
(2), and retain the monthly liability cap in Rule 13.2(b)(3).\6\ The 
Exchange also proposes to apply the elimination of the daily liability 
caps retroactively to March 1, 2017, so that ETP Holders may be fully 
compensated for losses incurred in connection with a system issue that 
occurred on March 20, 2017.\7\
---------------------------------------------------------------------------

    \5\ Rule 13.2(c) currently provides that, if all of the claims 
arising out of the use or enjoyment of the facilities afforded by 
the Corporation cannot be fully satisfied because in the aggregate 
they exceed the applicable maximum amount of liability provided for 
in Rule 13.2(b), then the maximum amount shall be allocated among 
all such claims arising on a single trading day or during a single 
calendar month, as applicable, based on the proportion that each 
such claim bears to the sum of all such claims.
    \6\ In connection with this change, the Exchange also proposes 
conforming changes in Rule 13.2(c) to eliminate the reference to 
allocation among claims arising ``on a single trading day.''
    \7\ See Notice, supra note 3, at 26968.
---------------------------------------------------------------------------

    Fourth, the Exchange proposes to amend the time frame and clarify 
the manner in which ETP Holders are required to submit notice of claims 
for compensation. Rule 13.2(c) currently requires ETP Holders to 
provide written notice of claims no later than the opening of trading 
on the next business day following the day on which the use or 
enjoyment of the Corporation's facilities giving rise to the claims 
occurred. The Exchange proposes to require ETP Holders to submit 
written notice of claims for compensation pursuant to Rule 13.2(b) no 
later than noon Eastern Time on the next business day following the day 
on which the use or enjoyment of the Corporation's facilities gave rise 
to such claims.\8\
---------------------------------------------------------------------------

    \8\ See proposed Rule 13.2(d).
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\9\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\10\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged

[[Page 35245]]

in regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in securities and, in general, to 
protect investors and the public interest, and not be designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \9\ 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).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposal to eliminate the daily 
liability caps in Rules 13.2(b)(1) and (2) could result in more ETP 
Holders receiving fuller compensations on their claims.\11\ The 
proposal could also reduce the risk that losses suffered by an ETP 
Holder would be treated differently depending on whether other ETP 
Holders suffered losses on the same day.\12\ In addition, the 
Commission notes that, under the proposal, the maximum amount of 
compensation would continue to be proportionally allocated if claims 
arising during a single calendar month exceed the monthly liability 
cap.\13\
---------------------------------------------------------------------------

    \11\ The Commission notes that the rules of certain other 
national securities exchanges also only include monthly liability 
caps, and no daily liability caps. See, e.g., Nasdaq Stock Market 
LLC (``Nasdaq'') Rule 4626.
    \12\ See Notice, supra note 3, at 26968.
    \13\ See proposed changes to Rule 13.2(c). As described above, 
the Exchange also proposes to make conforming changes in Rule 
13.2(c) to eliminate the reference to allocation among claims 
arising ``on a single trading day.'' See supra notes 5-6.
---------------------------------------------------------------------------

    With respect to the Exchange's proposal to retroactively apply the 
elimination of the daily liability caps, the Commission notes that 
approval of the proposal would make additional funds available to 
compensate ETP Holders affected by the system issue on March 20, 2017. 
Also, as the Exchange notes, the proposal would promote equal treatment 
between ETP Holders who suffered a loss on March 20, 2017 and ETP 
Holders who suffered a loss on a different day.\14\ Specifically, 
according to the Exchange, the proposal would enable it to fully 
compensate ETP Holders for claims arising from the system issue on 
March 20, 2017.\15\ Moreover, according to the Exchange, prior to March 
20, 2017, it has never received a claim that exceeded the liability 
limits, and thus it was never prevented from fully compensating an ETP 
Holder.\16\
---------------------------------------------------------------------------

    \14\ See Notice, supra note 3, at 26968.
    \15\ See id. at 26969.
    \16\ See id.
---------------------------------------------------------------------------

    The Commission further believes that the other proposed changes are 
consistent with the Act. Specifically, the Commission believes that the 
addition of the text ``successors, representatives or customers 
thereof'' to Rule 13.2(a) would clarify the scope of the limitation of 
liability in that provision.\17\ As the Exchange notes, Rule 13.2 
currently does not authorize the compensation of successors, 
representatives, or customers of ETP Holders because the rule does not 
currently reference them.\18\ The Commission also believes that the 
replacement of the words ``acknowledged receipt of'' with the word 
``received'' in Rule 13.2(b) would provide transparency regarding the 
scope of the rule.\19\ Finally, the Commission believes that the 
addition of paragraph (d) to Rule 13.2 would clarify that all claims 
for compensation must be submitted in writing, and would provide ETP 
Holders additional time to evaluate losses that may have occurred on 
the prior trading day, particularly if an issue occurred later in the 
day.\20\
---------------------------------------------------------------------------

    \17\ The Commission notes that this change is consistent with 
the rules of certain other national securities exchanges. See, e.g., 
Bats BZX Exchange, Inc. Rule 11.16(a).
    \18\ See Notice, supra note 3, at 26967.
    \19\ The Commission notes that this change is consistent with 
the rules of certain other national securities exchanges. See, e.g., 
New York Stock Exchange LLC Rule 18(b).
    \20\ The Commission notes that this change is consistent with 
the rules of certain other national securities exchanges. See, e.g., 
Nasdaq Rule 4626(b)(6).
---------------------------------------------------------------------------

    Based on the foregoing, the Commission believes that the proposed 
rule change is consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-NYSEArca-2017-46), be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

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

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-15910 Filed 7-27-17; 8:45 am]
 BILLING CODE 8011-01-P