Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31 Relating to Reserve Orders and Re-Name Two Order Types, 43942-43946 [2018-18571]
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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices
investors and the markets, the proposed
rule change may still fail to meet other
requirements under the Exchange Act.
For the reasons discussed above, the
Exchange has not met its burden of
demonstrating an adequate basis in the
record for the Commission to find that
the proposal is consistent with
Exchange Act Section 6(b)(5), and,
accordingly, the Commission must
disapprove the proposal.
D. Other Comments
Comment letters also addressed the
intrinsic value of bitcoin; 84 the desire of
investors to gain access to bitcoin
through an ETP; 85 investor
understanding about bitcoin; 86 the
volatility of bitcoin prices,87 the
regulation of bitcoin spot markets,88 the
operation and valuation of the proposed
ETPs,89 the potential impact of
Commission approval of the proposed
ETP on the price of bitcoin,90 and the
legitimacy that Commission approval of
the proposed ETP might confer upon
bitcoin as a digital asset.91 Ultimately,
however, additional discussion of these
tangential topics is unnecessary, as they
do not bear on the basis for the
Commission’s decision to disapprove
the proposal.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.93
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–18572 Filed 8–27–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 7.31
Relating to Reserve Orders and ReName Two Order Types
August 22, 2018.
The record before the Commission
does not provide a basis for the
Commission to conclude that the
Exchange has met its burden under the
Exchange Act and the Commission’s
Rules of Practice to demonstrate that its
proposed rule change is consistent with
Exchange Act Section 6(b)(5).92
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on August 9,
2018, NYSE National, Inc. (‘‘Exchange’’
or ‘‘NYSE National’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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.
For the reasons set forth above, the
Commission does not find, pursuant to
Section 19(b)(2) of the Exchange Act,
that the proposed rule change is
consistent with the requirements of the
84 See
Ahn Letter, supra note 9.
Fink Letter, supra note 9; Kaleda Letter,
supra note 9; Moberg Letter, supra note 9; Rousseau
Letter, supra note 9; Santos Letter, supra note 9.
86 See Desai Letter, supra note 9, at 1; Kumar
Letter, supra note 9.
87 See Desai Letter, supra note 9, at 1; Malkin
Letter, supra note 9, at 1.
88 See Desai Letter, supra note 9, at 1; Fitzgerald
Letter, supra note 9, at 1; Kumar Letter, supra note
9; Malkin Letter, supra note 9, at 1; Mohammed
Letter, supra note 9.
89 See Desai Letter, supra note 9, at 1; Malkin
Letter, supra note 9, at 1; Kumar Letter, supra note
9; NERA Letter, supra note 9, at 1–2, 3, 5.
90 See Santos Letter, supra note 9.
91 See Desai Letter, supra note 9, at 1, 2; Kumar
Letter, supra note 9; Santos Letter, supra note 9.
92 In disapproving the proposed rule change, the
Commission has considered its impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
85 See
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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
[Release No. 34–83900; File No. SR–
NYSENAT–2018–19]
E. Basis for Disapproval
IV. Conclusion
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Exchange Act and the rules and
regulations thereunder applicable to a
national securities exchange, and in
particular, with Section 6(b)(5) of the
Exchange Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,
that proposed rule change SR–
NYSEArca–2017–139 is disapproved.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 7.31 relating to Reserve Orders and
re-name two order types. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
The Exchange proposes to amend
Rule 7.31 relating to Reserve Orders and
re-name two order types.
Background
Rule 7.31(d)(1) defines a Reserve
Order as a Limit or Inside Limit Order
with a quantity of the size displayed
and with a reserve quantity of the size
(‘‘reserve interest’’) that is not
displayed. The displayed quantity of a
Reserve Order is ranked Priority 2—
Display Orders and the reserve interest
is ranked Priority 3—Non-Display
Orders.4 Rule 7.31(d)(1)(A) provides
that on entry, the display quantity of a
Reserve Order must be entered in round
lots and the displayed portion of a
Reserve Order will be replenished
following any execution. That rule
further provides that the Exchange will
display the full size of the Reserve
Order when the unfilled quantity is less
than the minimum display size for the
order. Rule 7.31(d)(1)(B) provides that
each time a Reserve Order is
replenished from reserve interest, a new
working time is assigned to the
replenished quantity of the Reserve
Order, while the reserve interest retains
the working time of original order entry.
Pursuant to Rule 7.31(d)(1)(C), a Reserve
Order must be designated Day and may
be combined with a Limit Non-Routable
Order or a Primary Pegged Order.
Rule 7.31(d)(2) defines a ‘‘Limit NonDisplayed Order,’’ which is a Limit
Order that is not displayed and does not
route. Rule 7.31(e)(1) defines a ‘‘Limit
Non-Routable Order,’’ which is a Limit
Order that does not route.
93 17
1 15
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4 The terms ‘‘Priority 2—Display Orders’’ and
‘‘Priority 3—Non-Display Orders’’ are defined in
Rule 7.36(e).
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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices
Proposed Rule Change Relating to Order
Type Names
The Exchange proposes nonsubstantive amendments to Rules 7.31
and 7.46 to re-name the ‘‘Limit NonRoutable Order’’ as the ‘‘Non-Routable
Limit Order.’’ This proposed rule
change is based on the term used by the
Exchange’s affiliate, NYSE American
LLC (‘‘NYSE American’’) for the same
order type.
The Exchange also proposes nonsubstantive amendments to Rules 7.31
and 7.46 to re-name the ‘‘Limit NonDisplayed Order’’ as the ‘‘NonDisplayed Limit Order.’’ In both cases,
the Exchange believes that it promotes
clarity and consistency in its rules to
move the respective modifier for each of
these rules before the term ‘‘Limit
Order.’’
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Proposed Rule Change Relating to
Reserve Orders
The Exchange proposes to amend
Rule 7.31(d)(1) to change the manner by
which the display portion of a Reserve
Order would be replenished. As
proposed, rather than replenishing the
display quantity following any
execution, the Exchange proposes to
replenish the Reserve Order when the
display quantity is decremented to
below a round lot. The changes that the
Exchange is proposing to Rule 7.31
relating to Reserve Orders (and Primary
Pegged Orders) are identical to changes
that were recently approved for the
Exchange’s affiliate, New York Stock
Exchange LLC (‘‘NYSE’’).5 In addition,
the proposed changes to how Reserve
Orders would be replenished are
consistent with how Reserve Orders are
replenished on other equity exchanges.6
As is currently the case, the replenish
quantity would be the minimum display
size of the order or the remaining
quantity of reserve interest if it is less
than the minimum display quantity. To
reflect this functionality, the Exchange
proposes that Rule 7.31(d)(1)(A) would
be amended as follows (deleted text
bracketed; new text underlined):
(A) On entry, the display quantity of
a Reserve Order must be entered in
round lots. The displayed portion of a
Reserve Order will be replenished when
the display quantity is decremented to
below a round lot. The replenish
quantity will be the minimum display
quantity of the order or the remaining
quantity of the reserve interest if it is
5 See Securities Exchange Act Release No. 83768
(August 3, 2018), 83 FR 39488 (August 9, 2018)
(SR–NYSE–2018–26) (Approval Order).
6 See Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule
11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’)
Rule 7503(h).
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less than the minimum display
quantity[following any execution. The
Exchange will display the full size of
the Reserve Order when the unfilled
quantity is less than the minimum
display size for the order].
Under current functionality, because
the replenished quantity is assigned a
new working time, it is feasible for a
single Reserve Order to have multiple
replenished quantities with separate
working times, each, a ‘‘child’’ order.
The proposed change to limit when a
Reserve Order would be replenished to
when the display quantity is
decremented to below a round lot only
would reduce the number of child
orders for a Reserve Order. The
Exchange believes that minimizing the
number of child orders for a Reserve
Order would reduce the potential for
market participants to detect that a child
order displayed on the Exchange’s
proprietary market data feeds is
associated with a Reserve Order.
In most cases, the maximum number
of child orders for a Reserve Order
would be two. For example, assume a
Reserve Order to buy has a display
quantity of 100 shares and an additional
200 shares of reserve interest. A sell
order of 50 shares would trade with the
display quantity of such Reserve Order,
which would decrement the display
quantity to 50 shares. As proposed, the
Exchange would then replenish the
Reserve Order with 100 shares from the
reserve interest, i.e., the minimum
display size for the order. After this
second replenishment, the Reserve
Order would have two child orders, one
for 50 shares, the other for 100 shares,
each with different working times.
Generally, when there are two child
orders, the older child order of less than
a round lot will be executed before the
second child order. However, there are
limited circumstances when a Reserve
Order could have two child orders that
equal less than a round lot, which, as
proposed, would trigger a
replenishment. For such circumstance,
the Exchange proposes that when a
Reserve Order is replenished from
reserve interest and already has two
child orders that equal less than a round
lot, the child order with the later
working time would be reassigned the
new working time assigned to the next
replenished quantity.
For example, taking the same Reserve
Order as above:
• If 100 shares of such order (‘‘A’’) are
routed on arrival, it would have a
display quantity of 100 shares (‘‘B’’) and
100 shares in reserve interest.
• While ‘‘A’’ is routed, a sell order of
50 shares would trade with ‘‘B,’’
decrementing ‘‘B’’ to 50 shares and the
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Reserve Order would be replenished
from reserve interest, creating a second
child order ‘‘C’’ of 100 shares.
• Next, the Exchange receives a
request to reduce the size of the Reserve
Order from 300 shares to 230 shares.
Because ‘‘A’’ is still routed away and
there is no reserve interest, and as
described in more detail below, this 70
share reduction in size would be
applied against the most recent child
order of ‘‘C,’’ which would be reduced
to 30 shares. Together with ‘‘B,’’ which
would still be 50 shares, the two
displayed child orders would equal less
than a round lot, but with no quantity
in reserve interest.
• Next, ‘‘A’’ is returned unexecuted,
and as described below, becomes
reserve interest and is evaluated for
replenishment. Because the total display
quantity (‘‘B’’ + ‘‘C’’) is less than a
round lot, this Reserve Order would be
replenished. But because the Reserve
Order already has two child orders, the
child order with the later working time,
‘‘C,’’ would be returned to the reserve
interest, which would now have a
quantity of 130 shares (‘‘C’’ + ‘‘A’’), and
the Reserve Order would be replenished
with 100 shares from the reserve interest
with a new working time, which would
be a new child order ‘‘D.’’
• After this replenishment, this
Reserve Order would have two child
orders of ‘‘B’’ for 50 shares and ‘‘D’’ for
100 shares, and a reserve interest of 30
shares.
To effect these changes, the Exchange
proposes to amend current Rule
7.31(d)(1)(B) to specify that each display
quantity of a Reserve Order with a
different working time would be
referred to as a child order. The
Exchange further proposes new Rule
7.31(d)(1)(B)(i) that would provide that
when a Reserve Order is replenished
from reserve interest and already has
two child orders that equal less than a
round lot, the child order with the later
working time would rejoin the reserve
interest and be assigned the new
working time assigned to the next
replenished quantity.
The Exchange also proposes new Rule
7.31(d)(1)(B)(ii) to provide that if a
Reserve Order is not routable (i.e., is
combined with either a Non-Routable
Limit Order or a Primary Pegged Order),
the replenish quantity would be
assigned a display and working price
consistent with the instructions for the
order, which represents current
functionality. For example, for a NonRoutable Limit Reserve Order, if the
display price would lock or cross the
contra-side PBBO, the replenished
quantity would be assigned a display
price one MPV worse than the PBBO
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and a working price equal to the contraside PBBO, as provided for in Rule
7.31(e)(1)(A)(i).7 The Exchange believes
that this proposed rule text would
provide transparency and clarity to
Exchange rules.
For a Primary Pegged Reserve Order,
the Exchange proposes that the
replenished quantity would follow Rule
7.31(h)(2)(B), which provides that a
Primary Pegged Order would be rejected
if the PBBO is locked or crossed.
Because a Primary Pegged Reserve
Order would have resting reserve
interest, the Exchange proposes to
amend Rule 7.31(h)(2)(B) to provide that
if the PBBO is locked or crossed when
the display quantity of a Primary Pegged
Reserve Order is replenished, the entire
order would be cancelled. The Exchange
believes that cancelling the entire order
is consistent with the current rule that
provides that the entire order would be
rejected on arrival if the display
quantity would lock or cross the PBBO.
The Exchange further proposes to add
new subsection (D) to Rule 7.31(d)(1) to
describe when a Reserve Order would
be routed. As proposed, a routable
Reserve Order would be evaluated for
routing both on arrival and each time
the display quantity is replenished.
Proposed Rule 7.31(d)(1)(D)(i) would
provide that if routing is required, the
Exchange would route from reserve
interest before publishing the display
quantity. In addition, if after routing,
there is less than a round lot available
to display, the Exchange would wait
until the routed quantity returns
(executed or unexecuted) before
publishing the display quantity. In the
example described above, the Exchange
would have published the display
quantity before the routed quantity
returned because the display quantity
was at least a round lot. If, however, 250
shares of a Reserve Order of 300 shares
had been routed on arrival, because the
unrouted quantity was less than a round
lot (50 shares), the Exchange would wait
for the routed quantity to return, either
executed or unexecuted, before
publishing the display quantity.
The Exchange proposes this
functionality to reduce the possibility
for a Reserve Order to have more than
one child order. If the Exchange did not
wait, and instead displayed the 50
shares when the balance of the Reserve
Order has routed, if the 250 shares
returns unexecuted, such Reserve Order
would be replenished and would have
two child orders—one for the 50 shares
that was displayed when the order was
entered and a second for the 100 shares
7 The
term ‘‘PBBO’’ is defined in Rule 1.1. The
term ‘‘MPV’’ is defined in Rule 7.6.
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that replenished the Reserve Order from
the quantity that returned unexecuted.
By contrast, by waiting for a report on
the routed quantity, if the routed
quantity was not executed, the
Exchange would display the minimum
display quantity as a single child order.
If the routed quantity was executed, the
Exchange would display the 50 shares,
but only because that would be the full
remaining quantity of the Reserve
Order.
Proposed Rule 7.31(d)(1)(D)(ii) would
provide that any quantity of a Reserve
Order that is returned unexecuted
would join the working time of the
reserve interest, which is current
functionality. If there is no quantity of
reserve interest to join, the returned
quantity would be assigned a new
working time as reserve interest. As
further proposed, in either case, such
reserve interest would replenish the
display quantity as provided for in
Rules 7.31(d)(1)(A) and (B). The
Exchange believes that this proposed
rule text would promote transparency
and clarity in Exchange rules. The
Exchange further believes it is
appropriate for a returned quantity of a
Reserve Order to join the reserve
interest first because the order may not
be eligible for a replenishment to the
display quantity.
Proposed Rule 7.31(d)(1)(E) would
provide that a request to reduce in size
a Reserve Order would cancel the
reserve interest before canceling the
display quantity and if there is more
than one child order, the child order
with the later working time would be
cancelled first. This represents current
functionality and the example set forth
above demonstrates how this would
function. The Exchange believes that
canceling reserve interest before a child
order would promote the display of
liquidity on an exchange. The Exchange
further believes that canceling a latertimed child order would respect the
time priority of the first child order, and
any priority such child order may have
for allocations.
*
*
*
*
*
Because of the technology changes
associated with the proposed rule
changes relating to Reserve Orders, the
Exchange will announce by Trader
Update when these changes will be
implemented, which the Exchange
anticipates will be in the third quarter
of 2018.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the
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‘‘Act’’),8 in general, and furthers the
objectives of Section 6(b)(5),9 in
particular, because it 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 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
proposed rule change to replenish a
Reserve Order only if the display
quantity is decremented to below a
round lot would remove impediments to
and perfect the mechanism of a free and
open market and a national market
system because it would reduce the
number of child orders associated with
a single Reserve Order. By reducing the
number of child orders, the Exchange
believes it would reduce the potential
for market participants to detect that a
child order is associated with a Reserve
Order. The proposed changes to Reserve
Orders and Primary Pegged Orders are
identical to recently approved changes
to the rules of its affiliated exchange,
NYSE, and how a Reserve Order would
be replenished is also consistent with
how Reserve Orders function on BZX
and Nasdaq.10
For similar reasons, the Exchange
believes that if a Reserve Order has two
child orders that equal less than a round
lot, it would remove impediments to
and perfect the mechanism of a free and
open market and a national market
system to assign a new working time to
the later child order so that when such
Reserve Order is replenished, it would
have a maximum of only two child
orders. The Exchange believes that this
proposed change would streamline the
operation of Reserve Orders and meet
the objective to reduce the potential for
market participants to be able to identify
that a child order is associated with a
Reserve Order.
The Exchange further believes that the
proposed rule change to evaluate a
Reserve Order for routing both on
arrival and when replenishing would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system because it
would reduce the potential for the
display quantity of a Reserve Order to
lock or cross the PBBO of an away
market. The Exchange further believes
that routing from reserve interest would
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 See supra notes 5 and 6.
9 15
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promote the display of liquidity on the
Exchange, because if there is at least a
round lot remaining of a Reserve Order
that is not routed, the Exchange would
display that quantity. The Exchange also
believes that it would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system to wait to
display a Reserve Order if there is less
than a round lot remaining after routing
because it would reduce the potential
for such Reserve Order to have more
than one child order. Finally, the
Exchange believes that joining any
quantity of a Reserve Order that is
returned unexecuted with reserve
interest first would be consistent with
the proposed replenishment logic that a
Reserve Order would be replenished
only if the display quantity is
decremented to below a round lot.
The Exchange believes that it would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system to apply
a request to reduce in size a Reserve
Order to the reserve interest first, and
then next to the child order with the
later working time, because such
functionality would promote the display
of liquidity on the Exchange and honor
the priority of the first child order with
the earlier working time. The Exchange
believes that including this existing
functionality in Rule 7.31 would
promote transparency and clarity in
Exchange rules.
The Exchange believes that the
proposed change to Primary Pegged
Reserve Orders would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because
similar to how a Primary Pegged Order
would function on arrival, if the
replenish quantity of a Primary Pegged
Reserve Order would lock or cross the
PBBO, the entire Reserve Order would
be cancelled. The Exchange believes
that by cancelling the entire order, the
Exchange would reduce the potential for
such order to be displayed at a price
that would lock or cross the PBBO.
The Exchange believes that the
proposed non-substantive amendments
to rename the ‘‘Limit Non-Displayed
Order’’ as the ‘‘Non-Displayed Limit
Order’’ and to rename the ‘‘Limit NonRoutable Order’’ as the ‘‘Non-Routable
Limit Order’’ would remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because
the proposed changes are designed to
promote clarity and consistency in
Exchange rules by moving the modifier
describing the function of the order type
before the term ‘‘Limit Order.’’
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is not designed to
address any competitive issues. Rather,
the proposed rule change to Reserve
Orders is designed to reduce the
potential for market participants to
identify that a child order is related to
a Reserve Order. The additional
proposed rule changes are nonsubstantive and are designed to promote
clarity and consistency in Exchange
rules.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 11 and Rule
19b–4(f)(6) thereunder.12 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),14 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
11 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
12 17
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43945
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 15 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSENAT–2018–19 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–NYSENAT–2018–19. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
15 15
E:\FR\FM\28AUN1.SGM
U.S.C. 78s(b)(2)(B).
28AUN1
43946
Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices
submissions should refer to File
Number SR–NYSENAT–2018–19 and
should be submitted on or before
September 18, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–18571 Filed 8–27–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83909; File No. SR–CBOE–
2018–061]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 5.5A,
Select Provisions of Options Listing
Procedures Plan, 5.8, Long-Term
Equity Option Series (LEAPS) and Rule
24.9, Terms of Index Option Contracts
August 22, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
20, 2018, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) 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 Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rules 5.5A, 5.8, and 24.9.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
daltland on DSKBBV9HB2PROD with NOTICES
*
*
*
*
*
Rule 5.5A. Select Provisions of Options
Listing Procedures Plan
(a) No change.
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
VerDate Sep<11>2014
20:00 Aug 27, 2018
Jkt 244001
(b) The exercise price of each option
series listed by the Exchange shall be
fixed at a price per share which is
reasonably close to the price of the
underlying equity security, Exchange
Traded Fund (‘‘ETF’’ and referred to as
a ‘‘Unit’’ in Rule 5.3) or Trust Issued
Receipt (‘‘TIR’’) at or about the time the
Exchange determines to list such series.
Additionally,
(i) Exercise Price Range Limitations—
Except as provided in subparagraphs (ii)
through (iv) below, if the price of the
underlying security is less than or equal
to $20, the Exchange shall not list new
option series with an exercise price
more than 100% above or below the
price of the underlying security.
However, the foregoing restriction shall
not prohibit the listing of at least three
exercise prices per expiration month in
an option class. Except as provided in
Rule 5.5(d)(4), if the price of the
underlying security is greater than $20,
the Exchange shall not list new option
series with an exercise price more than
50% above or below the price of the
underlying security.
The price of the underlying security is
measured by:
(1) For intra-day add-on series and
next-day series additions, the daily high
and low of all prices reported by all
national securities exchanges;
(2) for new expiration months, the
daily high and low of all prices reported
by all national securities exchanges on
the day the Exchange determines its
preliminary notification of new series;
[and]
(3) for option series to be added as a
result of pre-market trading, the most
recent share price reported by all
national securities exchanges between
7:45 a.m. and 8:30 a.m. (Chicago
time)[.]; and
(4) for option series to be added based
on trading following regular trading
hours, the most recent share price
reported by all national securities
exchanges between 3:15 p.m. and 5:00
p.m. (Chicago time).
(ii)–(vi) No change.
*
*
*
*
*
Rule 5.8. Long-Term Equity Option
Series (LEAPS)
(a) No change.
(b) [When a new equity LEAPS series
is listed, such series will be opened for
trading either when there is buying or
selling interest, or 40 minutes prior to
the close, whichever occurs first. No
quotations will be posted for such
option series until they are opened for
trading.
(c)] With regard to the listing of new
January LEAPS series on equity option
classes, options on Exchange Traded
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
Funds (‘‘ETFs’’ and referred to as
‘‘Units’’ in Rule 5.3), or options on Trust
Issued Receipts (‘‘TIRs’’), the Exchange
shall not add new LEAP series on a
currently listed and traded option class
earlier than the Monday prior to the
September expiration (which is 28
months before the expiration)[:
(i) Earlier than September (which is
28 months before the expiration), for an
option class on the January expiration
cycle;
(ii) Earlier than October (which is 27
months before expiration), for an option
class on the February expiration cycle;
and
(iii) Earlier than November (which is
26 months before expiration), for an
option class on the March expiration
cycle].
Pursuant to the Options Listing
Procedures Plan, exchanges that list and
trade the same equity option class, ETF
option class, or TIR option class are
authorized to jointly determine and
coordinate with the Clearing
Corporation on the date of introduction
of new LEAP series for that option class
consistent with this paragraph ([c]b).
([d]c) The Exchange shall not list new
LEAP series on equity option classes,
options on ETFs, or options on TIRs in
a new expiration year if the national
average daily contract volume,
excluding LEAP and FLEX series, for
that option class during the preceding
three calendar months is less than 1,000
contracts, unless the new LEAP series
has an expiration year that has already
been listed on another exchange for that
option class. The preceding volume
threshold does not apply during the first
six months an equity option class,
option on an ETF, or option on a TIR
is listed on any exchange.
*
*
*
*
*
Rule 24.9. Terms of Index Option
Contracts
(a) No change.
(b) Long-Term Index Option Series
(‘‘LEAPS’’).
(1) Notwithstanding the provisions of
Paragraph (a)(2) above, the Exchange
may list long-term index option series
that expire from 12 to 180 months from
the date of issuance.
(A) Index LEAPS may be based on
either the full or reduced value of the
underlying index.
(B) There may be up to 10 expiration
months, none further out than onehundred eighty (180) months.
[(B) When a new Index LEAPS series
is listed, such series will be opened for
trading either when there is buying or
selling interest, or 40 minutes prior to
the close, whichever occurs first. No
quotations will be posted for such
E:\FR\FM\28AUN1.SGM
28AUN1
]]>Agencies
[Federal Register Volume 83, Number 167 (Tuesday, August 28, 2018)]
[Notices]
[Pages 43942-43946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18571]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83900; File No. SR-NYSENAT-2018-19]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 7.31 Relating to Reserve Orders and Re-Name Two Order Types
August 22, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on August 9, 2018, NYSE National, Inc. (``Exchange'' or ``NYSE
National'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 7.31 relating to Reserve Orders
and re-name two order types. The proposed rule change is available on
the Exchange's website 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
The Exchange proposes to amend Rule 7.31 relating to Reserve Orders
and re-name two order types.
Background
Rule 7.31(d)(1) defines a Reserve Order as a Limit or Inside Limit
Order with a quantity of the size displayed and with a reserve quantity
of the size (``reserve interest'') that is not displayed. The displayed
quantity of a Reserve Order is ranked Priority 2--Display Orders and
the reserve interest is ranked Priority 3--Non-Display Orders.\4\ Rule
7.31(d)(1)(A) provides that on entry, the display quantity of a Reserve
Order must be entered in round lots and the displayed portion of a
Reserve Order will be replenished following any execution. That rule
further provides that the Exchange will display the full size of the
Reserve Order when the unfilled quantity is less than the minimum
display size for the order. Rule 7.31(d)(1)(B) provides that each time
a Reserve Order is replenished from reserve interest, a new working
time is assigned to the replenished quantity of the Reserve Order,
while the reserve interest retains the working time of original order
entry. Pursuant to Rule 7.31(d)(1)(C), a Reserve Order must be
designated Day and may be combined with a Limit Non-Routable Order or a
Primary Pegged Order.
---------------------------------------------------------------------------
\4\ The terms ``Priority 2--Display Orders'' and ``Priority 3--
Non-Display Orders'' are defined in Rule 7.36(e).
---------------------------------------------------------------------------
Rule 7.31(d)(2) defines a ``Limit Non-Displayed Order,'' which is a
Limit Order that is not displayed and does not route. Rule 7.31(e)(1)
defines a ``Limit Non-Routable Order,'' which is a Limit Order that
does not route.
[[Page 43943]]
Proposed Rule Change Relating to Order Type Names
The Exchange proposes non-substantive amendments to Rules 7.31 and
7.46 to re-name the ``Limit Non-Routable Order'' as the ``Non-Routable
Limit Order.'' This proposed rule change is based on the term used by
the Exchange's affiliate, NYSE American LLC (``NYSE American'') for the
same order type.
The Exchange also proposes non-substantive amendments to Rules 7.31
and 7.46 to re-name the ``Limit Non-Displayed Order'' as the ``Non-
Displayed Limit Order.'' In both cases, the Exchange believes that it
promotes clarity and consistency in its rules to move the respective
modifier for each of these rules before the term ``Limit Order.''
Proposed Rule Change Relating to Reserve Orders
The Exchange proposes to amend Rule 7.31(d)(1) to change the manner
by which the display portion of a Reserve Order would be replenished.
As proposed, rather than replenishing the display quantity following
any execution, the Exchange proposes to replenish the Reserve Order
when the display quantity is decremented to below a round lot. The
changes that the Exchange is proposing to Rule 7.31 relating to Reserve
Orders (and Primary Pegged Orders) are identical to changes that were
recently approved for the Exchange's affiliate, New York Stock Exchange
LLC (``NYSE'').\5\ In addition, the proposed changes to how Reserve
Orders would be replenished are consistent with how Reserve Orders are
replenished on other equity exchanges.\6\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 83768 (August 3,
2018), 83 FR 39488 (August 9, 2018) (SR-NYSE-2018-26) (Approval
Order).
\6\ See Cboe BZX Exchange, Inc. (``BZX'') Rule 11.9(c)(1);
Nasdaq Stock Market LLC (``Nasdaq'') Rule 7503(h).
---------------------------------------------------------------------------
As is currently the case, the replenish quantity would be the
minimum display size of the order or the remaining quantity of reserve
interest if it is less than the minimum display quantity. To reflect
this functionality, the Exchange proposes that Rule 7.31(d)(1)(A) would
be amended as follows (deleted text bracketed; new text underlined):
(A) On entry, the display quantity of a Reserve Order must be
entered in round lots. The displayed portion of a Reserve Order will be
replenished when the display quantity is decremented to below a round
lot. The replenish quantity will be the minimum display quantity of the
order or the remaining quantity of the reserve interest if it is less
than the minimum display quantity[following any execution. The Exchange
will display the full size of the Reserve Order when the unfilled
quantity is less than the minimum display size for the order].
Under current functionality, because the replenished quantity is
assigned a new working time, it is feasible for a single Reserve Order
to have multiple replenished quantities with separate working times,
each, a ``child'' order. The proposed change to limit when a Reserve
Order would be replenished to when the display quantity is decremented
to below a round lot only would reduce the number of child orders for a
Reserve Order. The Exchange believes that minimizing the number of
child orders for a Reserve Order would reduce the potential for market
participants to detect that a child order displayed on the Exchange's
proprietary market data feeds is associated with a Reserve Order.
In most cases, the maximum number of child orders for a Reserve
Order would be two. For example, assume a Reserve Order to buy has a
display quantity of 100 shares and an additional 200 shares of reserve
interest. A sell order of 50 shares would trade with the display
quantity of such Reserve Order, which would decrement the display
quantity to 50 shares. As proposed, the Exchange would then replenish
the Reserve Order with 100 shares from the reserve interest, i.e., the
minimum display size for the order. After this second replenishment,
the Reserve Order would have two child orders, one for 50 shares, the
other for 100 shares, each with different working times.
Generally, when there are two child orders, the older child order
of less than a round lot will be executed before the second child
order. However, there are limited circumstances when a Reserve Order
could have two child orders that equal less than a round lot, which, as
proposed, would trigger a replenishment. For such circumstance, the
Exchange proposes that when a Reserve Order is replenished from reserve
interest and already has two child orders that equal less than a round
lot, the child order with the later working time would be reassigned
the new working time assigned to the next replenished quantity.
For example, taking the same Reserve Order as above:
If 100 shares of such order (``A'') are routed on arrival,
it would have a display quantity of 100 shares (``B'') and 100 shares
in reserve interest.
While ``A'' is routed, a sell order of 50 shares would
trade with ``B,'' decrementing ``B'' to 50 shares and the Reserve Order
would be replenished from reserve interest, creating a second child
order ``C'' of 100 shares.
Next, the Exchange receives a request to reduce the size
of the Reserve Order from 300 shares to 230 shares. Because ``A'' is
still routed away and there is no reserve interest, and as described in
more detail below, this 70 share reduction in size would be applied
against the most recent child order of ``C,'' which would be reduced to
30 shares. Together with ``B,'' which would still be 50 shares, the two
displayed child orders would equal less than a round lot, but with no
quantity in reserve interest.
Next, ``A'' is returned unexecuted, and as described
below, becomes reserve interest and is evaluated for replenishment.
Because the total display quantity (``B'' + ``C'') is less than a round
lot, this Reserve Order would be replenished. But because the Reserve
Order already has two child orders, the child order with the later
working time, ``C,'' would be returned to the reserve interest, which
would now have a quantity of 130 shares (``C'' + ``A''), and the
Reserve Order would be replenished with 100 shares from the reserve
interest with a new working time, which would be a new child order
``D.''
After this replenishment, this Reserve Order would have
two child orders of ``B'' for 50 shares and ``D'' for 100 shares, and a
reserve interest of 30 shares.
To effect these changes, the Exchange proposes to amend current
Rule 7.31(d)(1)(B) to specify that each display quantity of a Reserve
Order with a different working time would be referred to as a child
order. The Exchange further proposes new Rule 7.31(d)(1)(B)(i) that
would provide that when a Reserve Order is replenished from reserve
interest and already has two child orders that equal less than a round
lot, the child order with the later working time would rejoin the
reserve interest and be assigned the new working time assigned to the
next replenished quantity.
The Exchange also proposes new Rule 7.31(d)(1)(B)(ii) to provide
that if a Reserve Order is not routable (i.e., is combined with either
a Non-Routable Limit Order or a Primary Pegged Order), the replenish
quantity would be assigned a display and working price consistent with
the instructions for the order, which represents current functionality.
For example, for a Non-Routable Limit Reserve Order, if the display
price would lock or cross the contra-side PBBO, the replenished
quantity would be assigned a display price one MPV worse than the PBBO
[[Page 43944]]
and a working price equal to the contra-side PBBO, as provided for in
Rule 7.31(e)(1)(A)(i).\7\ The Exchange believes that this proposed rule
text would provide transparency and clarity to Exchange rules.
---------------------------------------------------------------------------
\7\ The term ``PBBO'' is defined in Rule 1.1. The term ``MPV''
is defined in Rule 7.6.
---------------------------------------------------------------------------
For a Primary Pegged Reserve Order, the Exchange proposes that the
replenished quantity would follow Rule 7.31(h)(2)(B), which provides
that a Primary Pegged Order would be rejected if the PBBO is locked or
crossed. Because a Primary Pegged Reserve Order would have resting
reserve interest, the Exchange proposes to amend Rule 7.31(h)(2)(B) to
provide that if the PBBO is locked or crossed when the display quantity
of a Primary Pegged Reserve Order is replenished, the entire order
would be cancelled. The Exchange believes that cancelling the entire
order is consistent with the current rule that provides that the entire
order would be rejected on arrival if the display quantity would lock
or cross the PBBO.
The Exchange further proposes to add new subsection (D) to Rule
7.31(d)(1) to describe when a Reserve Order would be routed. As
proposed, a routable Reserve Order would be evaluated for routing both
on arrival and each time the display quantity is replenished.
Proposed Rule 7.31(d)(1)(D)(i) would provide that if routing is
required, the Exchange would route from reserve interest before
publishing the display quantity. In addition, if after routing, there
is less than a round lot available to display, the Exchange would wait
until the routed quantity returns (executed or unexecuted) before
publishing the display quantity. In the example described above, the
Exchange would have published the display quantity before the routed
quantity returned because the display quantity was at least a round
lot. If, however, 250 shares of a Reserve Order of 300 shares had been
routed on arrival, because the unrouted quantity was less than a round
lot (50 shares), the Exchange would wait for the routed quantity to
return, either executed or unexecuted, before publishing the display
quantity.
The Exchange proposes this functionality to reduce the possibility
for a Reserve Order to have more than one child order. If the Exchange
did not wait, and instead displayed the 50 shares when the balance of
the Reserve Order has routed, if the 250 shares returns unexecuted,
such Reserve Order would be replenished and would have two child
orders--one for the 50 shares that was displayed when the order was
entered and a second for the 100 shares that replenished the Reserve
Order from the quantity that returned unexecuted. By contrast, by
waiting for a report on the routed quantity, if the routed quantity was
not executed, the Exchange would display the minimum display quantity
as a single child order. If the routed quantity was executed, the
Exchange would display the 50 shares, but only because that would be
the full remaining quantity of the Reserve Order.
Proposed Rule 7.31(d)(1)(D)(ii) would provide that any quantity of
a Reserve Order that is returned unexecuted would join the working time
of the reserve interest, which is current functionality. If there is no
quantity of reserve interest to join, the returned quantity would be
assigned a new working time as reserve interest. As further proposed,
in either case, such reserve interest would replenish the display
quantity as provided for in Rules 7.31(d)(1)(A) and (B). The Exchange
believes that this proposed rule text would promote transparency and
clarity in Exchange rules. The Exchange further believes it is
appropriate for a returned quantity of a Reserve Order to join the
reserve interest first because the order may not be eligible for a
replenishment to the display quantity.
Proposed Rule 7.31(d)(1)(E) would provide that a request to reduce
in size a Reserve Order would cancel the reserve interest before
canceling the display quantity and if there is more than one child
order, the child order with the later working time would be cancelled
first. This represents current functionality and the example set forth
above demonstrates how this would function. The Exchange believes that
canceling reserve interest before a child order would promote the
display of liquidity on an exchange. The Exchange further believes that
canceling a later-timed child order would respect the time priority of
the first child order, and any priority such child order may have for
allocations.
* * * * *
Because of the technology changes associated with the proposed rule
changes relating to Reserve Orders, the Exchange will announce by
Trader Update when these changes will be implemented, which the
Exchange anticipates will be in the third quarter of 2018.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\8\ in general, and
furthers the objectives of Section 6(b)(5),\9\ in particular, because
it 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 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.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change to replenish a
Reserve Order only if the display quantity is decremented to below a
round lot would remove impediments to and perfect the mechanism of a
free and open market and a national market system because it would
reduce the number of child orders associated with a single Reserve
Order. By reducing the number of child orders, the Exchange believes it
would reduce the potential for market participants to detect that a
child order is associated with a Reserve Order. The proposed changes to
Reserve Orders and Primary Pegged Orders are identical to recently
approved changes to the rules of its affiliated exchange, NYSE, and how
a Reserve Order would be replenished is also consistent with how
Reserve Orders function on BZX and Nasdaq.\10\
---------------------------------------------------------------------------
\10\ See supra notes 5 and 6.
---------------------------------------------------------------------------
For similar reasons, the Exchange believes that if a Reserve Order
has two child orders that equal less than a round lot, it would remove
impediments to and perfect the mechanism of a free and open market and
a national market system to assign a new working time to the later
child order so that when such Reserve Order is replenished, it would
have a maximum of only two child orders. The Exchange believes that
this proposed change would streamline the operation of Reserve Orders
and meet the objective to reduce the potential for market participants
to be able to identify that a child order is associated with a Reserve
Order.
The Exchange further believes that the proposed rule change to
evaluate a Reserve Order for routing both on arrival and when
replenishing would remove impediments to and perfect the mechanism of a
free and open market and a national market system because it would
reduce the potential for the display quantity of a Reserve Order to
lock or cross the PBBO of an away market. The Exchange further believes
that routing from reserve interest would
[[Page 43945]]
promote the display of liquidity on the Exchange, because if there is
at least a round lot remaining of a Reserve Order that is not routed,
the Exchange would display that quantity. The Exchange also believes
that it would remove impediments to and perfect the mechanism of a free
and open market and a national market system to wait to display a
Reserve Order if there is less than a round lot remaining after routing
because it would reduce the potential for such Reserve Order to have
more than one child order. Finally, the Exchange believes that joining
any quantity of a Reserve Order that is returned unexecuted with
reserve interest first would be consistent with the proposed
replenishment logic that a Reserve Order would be replenished only if
the display quantity is decremented to below a round lot.
The Exchange believes that it would remove impediments to and
perfect the mechanism of a free and open market and a national market
system to apply a request to reduce in size a Reserve Order to the
reserve interest first, and then next to the child order with the later
working time, because such functionality would promote the display of
liquidity on the Exchange and honor the priority of the first child
order with the earlier working time. The Exchange believes that
including this existing functionality in Rule 7.31 would promote
transparency and clarity in Exchange rules.
The Exchange believes that the proposed change to Primary Pegged
Reserve Orders would remove impediments to and perfect the mechanism of
a free and open market and a national market system because similar to
how a Primary Pegged Order would function on arrival, if the replenish
quantity of a Primary Pegged Reserve Order would lock or cross the
PBBO, the entire Reserve Order would be cancelled. The Exchange
believes that by cancelling the entire order, the Exchange would reduce
the potential for such order to be displayed at a price that would lock
or cross the PBBO.
The Exchange believes that the proposed non-substantive amendments
to rename the ``Limit Non-Displayed Order'' as the ``Non-Displayed
Limit Order'' and to rename the ``Limit Non-Routable Order'' as the
``Non-Routable Limit Order'' would remove impediments to and perfect
the mechanism of a free and open market and a national market system
because the proposed changes are designed to promote clarity and
consistency in Exchange rules by moving the modifier describing the
function of the order type before the term ``Limit Order.''
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not designed to address any competitive issues. Rather, the proposed
rule change to Reserve Orders is designed to reduce the potential for
market participants to identify that a child order is related to a
Reserve Order. The additional proposed rule changes are non-substantive
and are designed to promote clarity and consistency in Exchange rules.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSENAT-2018-19 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-NYSENAT-2018-19. 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 website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All
[[Page 43946]]
submissions should refer to File Number SR-NYSENAT-2018-19 and should
be submitted on or before September 18, 2018.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18571 Filed 8-27-18; 8:45 am]
BILLING CODE 8011-01-P
