Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Modify Rule 6.15-O Regarding the Give Up of a Clearing Member by OTP Holders and OTP Firms and Conforming Changes to Rule 6.46-O, 49434-49437 [2018-21231]
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<![CDATA[
49434
Federal Register / Vol. 83, No. 190 / Monday, October 1, 2018 / Notices
Dated: September 25, 2018.
Suzanne H. Plimpton,
Reports Clearance Officer, National Science
Foundation.
[FR Doc. 2018–21230 Filed 9–28–18; 8:45 am]
BILLING CODE 7555–01–P
NUCLEAR REGULATORY
COMMISSION
[NRC–2018–0177]
Use of Listserv for Decommissioning
and Uranium Recovery Site
Correspondence
Nuclear Regulatory
Commission.
ACTION: Implementation of electronic
distribution of decommissioning and
uranium recovery site correspondence.
AGENCY:
The U.S. Nuclear Regulatory
Commission (NRC) is issuing this
document to inform the public that, as
of October 1, 2018, publicly available
decommissioning and uranium recovery
site correspondence originating from the
Division of Decommissioning, Uranium
Recovery, and Waste Programs (DUWP)
in the Office of Nuclear Material Safety
and Safeguards (NMSS) will be
transmitted by a computer-based email
distribution system Listserv to
addressees and subscribers. This change
does not affect the availability of official
agency records in the NRC’s
Agencywide Documents Access and
Management System (ADAMS).
ADDRESSES: Please refer to Docket ID
NRC–2018–0177 when contacting the
NRC about the availability of
information regarding this document.
You may obtain publicly-available
information related to this document
using any of the following methods:
• Federal Rulemaking website: Go to
https://www.regulations.gov and search
for Docket ID NRC–2018–0177. Address
questions about NRC dockets to Jennifer
Borges; telephone: 301–287–9127;
email: Jennifer.Borges@nrc.gov.
• NRC’s Agencywide Documents
Access and Management System
(ADAMS): You may obtain publicly
available documents online in the
ADAMS Public Documents collection at
https://www.nrc.gov/reading-rm/
adams.html. To begin the search, select
‘‘Begin Web-based ADAMS Search.’’ For
problems with ADAMS, please contact
the NRC’s Public Document Room (PDR)
reference staff at 1–800–397–4209, 301–
415–4737, or by email to pdr.resource@
nrc.gov.
FOR FURTHER INFORMATION CONTACT: Kim
Conway, Office of Nuclear Material
Safety and Safeguards, U.S. Nuclear
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SUMMARY:
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Regulatory Commission, Washington,
DC 20555–0001; telephone: 301–415–
1335; email: Kimberly.Conway@nrc.gov.
SUPPLEMENTARY INFORMATION: The
electronic distribution process was first
utilized by the Office of Nuclear Reactor
Regulation in 2008 for operating reactor
correspondence. Currently, DUWP uses
Listserv to distribute correspondence for
reactors in decommissioning that have
transitioned to NMSS since 2013. Public
feedback regarding this process has been
positive. This process distributes
correspondence documents to the
addressees and members of the Listserv
at the same time. Distribution of
documents containing safeguards,
proprietary or security-related
information, or other information that is
withheld from public disclosure will
not be affected by this initiative.
This initiative will be implemented
on October 1, 2018. Individuals may
subscribe to receive licensing
correspondence for decommissioning
and uranium recovery through the
following steps: (1) Go to the NRC’s
public website and select ‘‘Public
Meetings & Involvement,’’ (2) select
‘‘Subscribe to email Updates,’’ (3) select
‘‘Lyris Subscription Services’’ and click
on ‘‘Decommissioning and Uranium
Recovery Correspondence’’, (4) enter the
email address through which you want
to receive the NRC Listserv emails, (5)
check the box to select at least one site,
and (6) click on ‘‘Subscribe.’’ The NRC
will continue to send duplicate hard
copies of correspondence through
November 1, 2018 to allow individuals
adequate time to subscribe.
After you are subscribed to an NRC
Listserv, you will receive an email from
the NRC with instructions for managing
your NRC Listserv subscription,
including how to change your email
address and how to unsubscribe.
Dated at Rockville, Maryland, this 25th day
of September 2018.
For the Nuclear Regulatory Commission.
John R. Tappert,
Director, Division of Decommissioning,
Uranium Recovery, and Waste Programs,
Office of Nuclear Material Safety and
Safeguards.
[FR Doc. 2018–21299 Filed 9–28–18; 8:45 am]
BILLING CODE 7590–01–P
RAILROAD RETIREMENT BOARD
Sunshine Act Meetings
Notice is hereby given that the
Railroad Retirement Board will hold a
meeting on October 24, 2018, 10:00 a.m.
at the Board’s meeting room on the 8th
floor of its headquarters building, 844
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North Rush Street, Chicago, Illinois
60611. The agenda for this meeting
follows:
Portion open to the public:
(1) Executive Committee Reports
The person to contact for more
information is Martha Rico-Parra,
Secretary to the Board, Phone No. 312–
751–4920.
For the Board.
Dated: September 27, 2018.
Martha Rico-Parra,
Secretary to the Board.
[FR Doc. 2018–21410 Filed 9–27–18; 4:15 pm]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84284; File No. SR–
NYSEArca–2018–68]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To Modify Rule 6.15–O
Regarding the Give Up of a Clearing
Member by OTP Holders and OTP
Firms and Conforming Changes to
Rule 6.46–O
September 25, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 11, 2018, NYSE Arca, Inc.
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify
Rule 6.15–O regarding the Give Up of a
Clearing Member by OTP Holders and
OTP Firms and proposes conforming
changes to Rule 6.46–O. The proposed
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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Federal Register / Vol. 83, No. 190 / Monday, October 1, 2018 / Notices
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 purpose of this filing is to modify
Rule 6.15–O regarding the Give Up of a
Clearing Member 4 by OTP Holders and
OTP Firms (each an ‘‘OTP,’’
collectively, ‘‘OTPs’’) and to make
conforming changes to Rule 6.46–O.
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Rule 6.15–O: Current Process to Give Up
a Clearing Member
In 2015 the Exchange adopted its
current ‘‘give up’’ procedure for OTPs
executing transactions on the
Exchange.5 Per Rule 6.15–O, an OTP
may give up a ‘‘Designated Give Up’’ or
its ‘‘Guarantor,’’ as defined in the Rule
and described below.
The Rule defines ‘‘Designated Give
Up’’ as any Clearing Member that an
OTP Holder (other than a Market
Maker 6) identifies to the Exchange, in
writing, as a Clearing Member the OTP
requests the ability to give up. To
designate a ‘‘Designated Give Up,’’ an
OTP must submit written notification to
the Exchange. Specifically, the
Exchange uses a standardized form
(‘‘Notification Form’’). An OTP may
currently designate any Clearing
Member as a Designated Give Up.
Additionally, there is no minimum or
maximum number of Designated Give
4 Rule 6.1–O(2) defines ‘‘Clearing Member’’ as an
Exchange OTP which has been admitted to
membership in the Options Clearing Corporation
pursuant to the provisions of the Rules of the
Options Clearing Corporation.
5 See Securities and Exchange Act Release No.
75641 (August 7, 2015), 80 FR 48577 (August 13,
2015) (SR–NYSEArca–2015–65).
6 For purposes of this rule, references to ‘‘Market
Maker’’ refer to OTPs acting in the capacity of a
Market Maker and include all Exchange Market
Maker capacities e.g., Lead Market Makers. As
explained below, Market Makers give up Guarantors
that have executed a Letter of Guarantee on behalf
of the Marker Maker, pursuant to Rule 6.36–O;
Market Makers need not give up Designated Give
Ups.
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Ups that an OTP must identify.
Similarly, should an OTP no longer
want the ability to give up a particular
Designated Give Up, the OTP informs
the Exchange in writing.
Rule 6.15–O also requires that the
Exchange notify a Clearing Member, in
writing and as soon as practicable, of
each OTP that has identified it as a
Designated Give Up. However, the
Exchange will not accept any
instructions from a Clearing Member to
prohibit an OTP from designating the
Clearing Member as a Designated Give
Up. Additionally, there is no subjective
evaluation of an OTP’s list of Designated
Give Ups by the Exchange. The Rule
does, however, provide that a
Designated Give Up may determine to
not accept a trade on which its name
was given up so long as it believes in
good faith that it has a valid reason not
to accept the trade.7
The Rule defines ‘‘Guarantor’’ as a
Clearing Member that has issued a
Letter of Guarantee or Letter of
Authorization for the executing OTP,
pursuant to Rules of the Exchange 8 that
is in effect at the time of the execution
of the applicable trade. An executing
OTP may give up its Guarantor without
such Guarantor being a ‘‘Designated
Give Up.’’ Additionally, Rule 6.36
provides that a Letter of Guarantee is
required to be issued and filed by each
Clearing Member through which a
Market Maker clears transactions.
Accordingly, a Market Maker is enabled
to give up only a Guarantor that had
executed a Letter of Guarantee on its
behalf pursuant to Rule 6.36–O; a
Market Maker does not need to identify
any Designated Give Ups. Like
Designated Give Ups, Guarantors
likewise have the ability to reject a
trade.9
Beginning in early 2018, certain
Clearing Firms (in conjunction with the
Securities Industry and Financial
Markets Association (‘‘SIFMA’’))
expressed concerns related to the
process by which executing brokers on
U.S. options exchanges (the
‘‘Exchanges’’) are allowed to designate
or ‘give up’ a clearing firm for purposes
of clearing particular transactions. The
7 See
Rule 6.15–O(f)(1) (setting forth procedures
for rejecting a trade). An example of a valid reason
to reject a trade may be that the Designated Give
Up does not have a customer for that particular
trade.
8 See Rule 6.36–O (Letters of Guarantee); Rule
6.45–O (Letters of Authorization).
9 See Rule 6.15–O(f)(2) (providing that a
Guarantor may ‘‘change the give up to another
Clearing Member that has agreed to be the give up
on the subject trade, provided such Clearing
Member has notified the Exchange and the
executing OTP Holder or OTP Firm in writing of its
intent to accept the trade’’).
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SIFMA-affiliated Clearing Members
indicated that the Federal Reserve has
recently identified the current give-up
process as a significant source of risk for
clearing firms. SIFMA-affiliated
Clearing Members subsequently
requested that the Exchanges alleviate
this risk by amending Exchange rules
governing the give up process.10
Proposed Amendment to Rules 6.15–O
and 6.46–O
The Exchange proposes to amend
Rule 6.15–O to provide a means for a
Designated Give Up to opt out of acting
as the give up for certain OTPs. As
proposed, Rule 6.15–O b)(4) would be
revised to provide that the Exchange
would ‘‘accept instruction from a
Clearing Member not to permit an OTP
to designate the Clearing Member as the
Designated Give Up.’’ The Exchange
further proposes to add language to Rule
6.15–O(b)(7) to provide that ‘‘[i]f a
Clearing Member no longer wants to be
a Designated Give Up of a particular
[OTP], the Clearing Member must notify
the Exchange, in a form and manner
prescribed by the Exchange.’’ In
practice, a Clearing Member that has
been designated as the Designated Give
Up need only tell the Exchange that it
refuses this designation.
Consistent with this proposed change,
the Exchange also proposes to amend
Rule 6.46–O(g) regarding the
responsibilities of Floor Brokers to
maintain error accounts ‘‘for the
purposes of correcting bona fide errors,
as provided in Rule 6.14–O.’’ As
proposed, the Exchange would specify
that ‘‘it will not be a violation of this
provision if a trade is transferred away
from an error account through the
CMTA process at OCC.’’ 11 This
additional language would enable an
executing OTP that has executed an
order to CMTA that order through its
own clearing relationship. For example,
assume a Floor Broker executes a trade
giving up Firm A (a Clearing Member
that is one of its Designated Give Ups)
and, after the execution, the Floor
Broker is informed that a portion of the
trade needs to be changed to give-up
Firm B (a Clearing Member that is not
10 Cboe Exchange, Inc. (‘‘CBOE’’) recently filed to
amend its give up procedure to require CBOE
Trading Permit Holders (each a ‘‘TPH’’) to receive
written authorization from a Clearing TPH
(‘‘CTPH’’) before it may give up that CTPH. See
Securities and Exchange Act Release No. 83872
(August 17, 2018), 83 FR 42751 (August 23, 2018)
(SR–CBOE–2018–55). The Exchange’s proposal
leads to the same result of providing Clearing
Members the ability to control risk, but it differs in
process.
11 See proposed Rule 6.46–O(g). The Exchange
also proposes to delete as obsolete reference to Rule
4.21–O, which is currently ‘‘Reserved,’’ and
therefore an outdated cross-reference. See id.
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Federal Register / Vol. 83, No. 190 / Monday, October 1, 2018 / Notices
one of the Floor Broker’s Designated
Give Ups). The proposed language
would enable the Floor Broker to CMTA
the trade to Firm B through its own
clearing arrangement (i.e., error
account/Letter of Authorization) rather
than nullifying or busting the trade.
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Implementation
The Exchange proposes to announce
the implementation date of the
proposed rule change via Trader Notice,
to be published no later than thirty (30)
days following Commission approval.
The implementation date will be no
later than sixty (60) days following
Commission approval. This additional
time would afford the Exchange and
OTP the time to make any changes
current give up designations.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 12 of the
Act, in general, and furthers the
objectives of Section 6(b)(5),13 in
particular, in that 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, and to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system.
Particularly, as discussed above,
several Clearing Firms affiliated with
SIFMA have recently expressed
concerns relating to the current give up
process that permits OTPs to identify
any Clearing Members as a Designated
Give Up for purposes of clearing
particular transactions. Also as noted
above, the Clearing Members have
relayed that the Federal Reserve has
recently identified the current give-up
process (i.e., a process that lacks
authorization) as a significant source of
risk for clearing firms. The Exchange
believes the proposed changes to Rule
6.15–O would help alleviate this risk by
enabling Clearing Members to refuse to
act as a Designated Give Up for certain
OTPs, which would afford Clearing
Members a measure of control. The
Exchange believes its proposal
addresses concerns raised by Clearing
Members, while maintaining the basic
give up process. The Exchange does not
anticipate Clearing Members to
routinely refuse the role of Designated
Give Up, but rather to utilize this option
only when there is a valid reason and
good faith basis to do so. The Exchange
notes that Clearing Member would still
12 15
13 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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have the ability to reject trades on an ad
hoc basis for OTPs for which it has not
refused to be a Designated Give Up.
Accordingly, the Exchange believes the
proposed rule change is reasonable and
continues to provide certainty that a
Clearing Member would be responsible
for a trade, which protects investors and
the public interest.
The Exchange also believes that the
proposed change to Rule 6.46–O would
protect investors because it would
permit an executing OTP to utilize its
error account to CMTA an order through
its own clearing relationship. This
would preserve executions while
accommodating the proposed rule
change that could result in an executing
OTP not being permissioned to for a
particular give-up.
Thus, this proposal would foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and remove
impediments to and perfect the
mechanism of a free and open market
and a national market system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
this proposed rule change would
impose any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change would impose an
unnecessary burden on intramarket
competition because it would apply
equally to all similarly situated OTPs.
The Exchange also notes that, should
the proposed changes make the
Exchange more attractive for trading,
market participants trading on other
exchanges can always elect to become
OTPs on the Exchange to take advantage
of the trading opportunities.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
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(A) By order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2018–68 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2018–68. 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
submissions should refer to File
Number SR–NYSEArca–2018–68, and
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Federal Register / Vol. 83, No. 190 / Monday, October 1, 2018 / Notices
should be submitted on or before
October 22,2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–21231 Filed 9–28–18; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–84279; File No. SR–
NYSEARCA–2018–67]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To Amend NYSE Arca
Rule 5.2–E(j)(6) Relating to Equity
Index-Linked Securities Listing
Standards Set Forth in NYSE Arca Rule
5.2–E(j)(6)(B)(I)
September 25, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 10, 2018, NYSE Arca, Inc.
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
amozie on DSK3GDR082PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Arca Rule 5.2–E(j)(6) relating to
Equity Index-Linked Securities listing
standards set forth in NYSE Arca Rule
5.2–E(j)(6)(B)(I). The proposed 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
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
14 17
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.
NYSE Arca Rule 5.2–E(j)(6) relates to
listing and trading of Equity IndexLinked Securities, Commodity-Linked
Securities, Currency-Linked Securities,
Fixed Income Index-Linked Securities,
Futures-Linked Securities and
Multifactor Index-Linked Securities
(collectively, ‘‘Index-Linked
Securities’’). These securities are
frequently referred to as ‘‘ExchangeTraded Notes’’ or ‘‘ETNs.’’ NYSE Arca
Rule 5.2–E(j)(6)(B)(I) sets forth listing
standards applicable to Equity IndexLinked Securities.4
The Exchange proposes to amend
NYSE Arca Rule 5.2–E (j)(6)(B)(I)
relating to criteria applicable to
components of an index underlying an
issue of Equity Index-Linked Securities,
as described below.5
The Exchange proposes to amend
NYSE Arca Rule 5.2–E(j)(6)(B)(I)(1)(b)(v)
to provide that all component securities
of an index underlying an issue of
Equity Index-Linked Securities shall be
either (1) U.S. Component Stocks (as
4 Equity Index-Linked Securities are securities
that provide for the payment at maturity based on
the performance of an underlying index or indexes
of equity securities, securities of closed-end
management investment companies registered
under the Investment Company Act of 1940 (‘‘1940
Act’’) and/or Investment Company Units (as
described in NYSE Arca Rule 5.2–E(j)(3)).
5 Rule 5.2–E(j)(6)(B)(I)(1)(b)(v) provides that all
component securities shall be either:
(A) Securities (other than foreign country
securities and American Depository Receipts
(‘‘ADRs’’)) that are (x) issued by a 1934 Act
reporting company or by an investment company
registered under the 1940 Act, which in each case
is listed on a national securities exchange, and (y)
an ‘‘NMS stock’’ (as defined in Rule 600 of SEC
Regulation NMS); or
(B) Foreign country securities or ADRs, provided
that foreign country securities or foreign country
securities underlying ADRs having their primary
trading market outside the United States on foreign
trading markets that are not members of the
Intermarket Surveillance Group (‘‘ISG’’) or parties
to comprehensive surveillance sharing agreements
with the Exchange will not in the aggregate
represent more than 50% of the dollar weight of the
index, and provided further that:
(i) the securities of any one such market do not
represent more than 20% of the dollar weight of the
index, and
(ii) the securities of any two such markets do not
represent more than 33% of the dollar weight of the
index.
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49437
described in Rule 5.2–E(j)(3)) 6 that are
listed on a national securities exchange
and are NMS Stocks as defined in Rule
600 of Regulation NMS under the
Exchange Act; 7 or (2) Non-U.S.
Component Stocks (as described in Rule
5.2–E(j)(3)) 8 that are listed and traded
on an exchange that has last-sale
reporting.9 The proposed amendment,
therefore, would delete from Rule 5.2–
E (j)(6)(B)(I)(1)(b)(v) the requirement
that foreign country securities or foreign
country securities underlying ADRs in
an index satisfy requirements that a
specified percentage of the dollar weight
of the index have primary trading
markets that are members of ISG or
primary trading markets that are parties
to comprehensive surveillance sharing
agreements with the Exchange.
The proposed amendment would
eliminate a requirement for Equity
Index-Linked Securities that is not
applicable to Investment Company
Units and Managed Fund Shares with
respect to Non-U.S. Component Stock
index components or holdings of NonU.S. Component Stocks. The
amendment, therefore, would afford
greater flexibility to ETN issuers to list
securities that include foreign stocks
and to better compete with issuers of
Investment Company Units and
Managed Fund Shares, which are not
subject to this requirement.
The Exchange also proposes to amend
NYSE Arca Rule 5.2–E(j)(6)(B)(I)(1)(a) by
increasing the required minimum
number of components in an index
underlying Equity Index-Linked
Securities that includes Non-U.S.
Component Stocks.10 The Exchange
6 Rule 5.2–E(j)(3) provides that the term ‘‘US
Component Stock’’ shall mean an equity security
that is registered under Sections 12(b) or 12(g) of
the Securities Exchange Act of 1934 or an American
Depositary Receipt, the underlying equity security
of which is registered under Sections 12(b) or 12(g)
of the Securities Exchange Act of 1934.
7 The term ‘‘Exchange Act’’ is defined in Rule
1.1(q) to mean the Securities Exchange Act of 1934,
as amended.
8 Rule 5.2–E(j)(3) provides that the term ‘‘Non-US
Component Stock’’ shall mean an equity security
that is not registered under Sections 12(b) or 12(g)
of the Securities Exchange Act of 1934 and that is
issued by an entity that (a) is not organized,
domiciled or incorporated in the United States, and
(b) is an operating company (including Real Estate
Investment Trusts (REITS) and income trusts, but
excluding investment trusts, unit trusts, mutual
funds, and derivatives).
9 The text of proposed NYSE Arca Rule 5.2–
E(j)(6)(B)(I)(1)(b)(v)(1) is comparable to the
requirement for US Component Stocks in
Commentary .01(a)(A)(5) to NYSE Arca Rule 5.2–
E(j)(3). The text of proposed NYSE Arca Rule 5.2–
E(j)(6)(B)(I)(1)(b)(v)(2) is comparable to the
requirement for Non-US Component Stocks in
Commentary .01(a)(B)(5) to NYSE Arca Rule 5.2–
E(j)(3).
10 NYSE Arca Rule 5.2–E(j)(6)(B)(I)(1)(a) provides
that each underlying index is required to have at
E:\FR\FM\01OCN1.SGM
Continued
01OCN1
]]>Agencies
[Federal Register Volume 83, Number 190 (Monday, October 1, 2018)]
[Notices]
[Pages 49434-49437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21231]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84284; File No. SR-NYSEArca-2018-68]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To Modify Rule 6.15-O Regarding the Give Up of
a Clearing Member by OTP Holders and OTP Firms and Conforming Changes
to Rule 6.46-O
September 25, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 11, 2018, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify Rule 6.15-O regarding the Give Up
of a Clearing Member by OTP Holders and OTP Firms and proposes
conforming changes to Rule 6.46-O. The proposed 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.
[[Page 49435]]
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 purpose of this filing is to modify Rule 6.15-O regarding the
Give Up of a Clearing Member \4\ by OTP Holders and OTP Firms (each an
``OTP,'' collectively, ``OTPs'') and to make conforming changes to Rule
6.46-O.
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\4\ Rule 6.1-O(2) defines ``Clearing Member'' as an Exchange OTP
which has been admitted to membership in the Options Clearing
Corporation pursuant to the provisions of the Rules of the Options
Clearing Corporation.
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Rule 6.15-O: Current Process to Give Up a Clearing Member
In 2015 the Exchange adopted its current ``give up'' procedure for
OTPs executing transactions on the Exchange.\5\ Per Rule 6.15-O, an OTP
may give up a ``Designated Give Up'' or its ``Guarantor,'' as defined
in the Rule and described below.
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\5\ See Securities and Exchange Act Release No. 75641 (August 7,
2015), 80 FR 48577 (August 13, 2015) (SR-NYSEArca-2015-65).
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The Rule defines ``Designated Give Up'' as any Clearing Member that
an OTP Holder (other than a Market Maker \6\) identifies to the
Exchange, in writing, as a Clearing Member the OTP requests the ability
to give up. To designate a ``Designated Give Up,'' an OTP must submit
written notification to the Exchange. Specifically, the Exchange uses a
standardized form (``Notification Form''). An OTP may currently
designate any Clearing Member as a Designated Give Up. Additionally,
there is no minimum or maximum number of Designated Give Ups that an
OTP must identify. Similarly, should an OTP no longer want the ability
to give up a particular Designated Give Up, the OTP informs the
Exchange in writing.
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\6\ For purposes of this rule, references to ``Market Maker''
refer to OTPs acting in the capacity of a Market Maker and include
all Exchange Market Maker capacities e.g., Lead Market Makers. As
explained below, Market Makers give up Guarantors that have executed
a Letter of Guarantee on behalf of the Marker Maker, pursuant to
Rule 6.36-O; Market Makers need not give up Designated Give Ups.
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Rule 6.15-O also requires that the Exchange notify a Clearing
Member, in writing and as soon as practicable, of each OTP that has
identified it as a Designated Give Up. However, the Exchange will not
accept any instructions from a Clearing Member to prohibit an OTP from
designating the Clearing Member as a Designated Give Up. Additionally,
there is no subjective evaluation of an OTP's list of Designated Give
Ups by the Exchange. The Rule does, however, provide that a Designated
Give Up may determine to not accept a trade on which its name was given
up so long as it believes in good faith that it has a valid reason not
to accept the trade.\7\
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\7\ See Rule 6.15-O(f)(1) (setting forth procedures for
rejecting a trade). An example of a valid reason to reject a trade
may be that the Designated Give Up does not have a customer for that
particular trade.
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The Rule defines ``Guarantor'' as a Clearing Member that has issued
a Letter of Guarantee or Letter of Authorization for the executing OTP,
pursuant to Rules of the Exchange \8\ that is in effect at the time of
the execution of the applicable trade. An executing OTP may give up its
Guarantor without such Guarantor being a ``Designated Give Up.''
Additionally, Rule 6.36 provides that a Letter of Guarantee is required
to be issued and filed by each Clearing Member through which a Market
Maker clears transactions. Accordingly, a Market Maker is enabled to
give up only a Guarantor that had executed a Letter of Guarantee on its
behalf pursuant to Rule 6.36-O; a Market Maker does not need to
identify any Designated Give Ups. Like Designated Give Ups, Guarantors
likewise have the ability to reject a trade.\9\
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\8\ See Rule 6.36-O (Letters of Guarantee); Rule 6.45-O (Letters
of Authorization).
\9\ See Rule 6.15-O(f)(2) (providing that a Guarantor may
``change the give up to another Clearing Member that has agreed to
be the give up on the subject trade, provided such Clearing Member
has notified the Exchange and the executing OTP Holder or OTP Firm
in writing of its intent to accept the trade'').
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Beginning in early 2018, certain Clearing Firms (in conjunction
with the Securities Industry and Financial Markets Association
(``SIFMA'')) expressed concerns related to the process by which
executing brokers on U.S. options exchanges (the ``Exchanges'') are
allowed to designate or `give up' a clearing firm for purposes of
clearing particular transactions. The SIFMA-affiliated Clearing Members
indicated that the Federal Reserve has recently identified the current
give-up process as a significant source of risk for clearing firms.
SIFMA-affiliated Clearing Members subsequently requested that the
Exchanges alleviate this risk by amending Exchange rules governing the
give up process.\10\
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\10\ Cboe Exchange, Inc. (``CBOE'') recently filed to amend its
give up procedure to require CBOE Trading Permit Holders (each a
``TPH'') to receive written authorization from a Clearing TPH
(``CTPH'') before it may give up that CTPH. See Securities and
Exchange Act Release No. 83872 (August 17, 2018), 83 FR 42751
(August 23, 2018) (SR-CBOE-2018-55). The Exchange's proposal leads
to the same result of providing Clearing Members the ability to
control risk, but it differs in process.
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Proposed Amendment to Rules 6.15-O and 6.46-O
The Exchange proposes to amend Rule 6.15-O to provide a means for a
Designated Give Up to opt out of acting as the give up for certain
OTPs. As proposed, Rule 6.15-O b)(4) would be revised to provide that
the Exchange would ``accept instruction from a Clearing Member not to
permit an OTP to designate the Clearing Member as the Designated Give
Up.'' The Exchange further proposes to add language to Rule 6.15-
O(b)(7) to provide that ``[i]f a Clearing Member no longer wants to be
a Designated Give Up of a particular [OTP], the Clearing Member must
notify the Exchange, in a form and manner prescribed by the Exchange.''
In practice, a Clearing Member that has been designated as the
Designated Give Up need only tell the Exchange that it refuses this
designation.
Consistent with this proposed change, the Exchange also proposes to
amend Rule 6.46-O(g) regarding the responsibilities of Floor Brokers to
maintain error accounts ``for the purposes of correcting bona fide
errors, as provided in Rule 6.14-O.'' As proposed, the Exchange would
specify that ``it will not be a violation of this provision if a trade
is transferred away from an error account through the CMTA process at
OCC.'' \11\ This additional language would enable an executing OTP that
has executed an order to CMTA that order through its own clearing
relationship. For example, assume a Floor Broker executes a trade
giving up Firm A (a Clearing Member that is one of its Designated Give
Ups) and, after the execution, the Floor Broker is informed that a
portion of the trade needs to be changed to give-up Firm B (a Clearing
Member that is not
[[Page 49436]]
one of the Floor Broker's Designated Give Ups). The proposed language
would enable the Floor Broker to CMTA the trade to Firm B through its
own clearing arrangement (i.e., error account/Letter of Authorization)
rather than nullifying or busting the trade.
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\11\ See proposed Rule 6.46-O(g). The Exchange also proposes to
delete as obsolete reference to Rule 4.21-O, which is currently
``Reserved,'' and therefore an outdated cross-reference. See id.
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Implementation
The Exchange proposes to announce the implementation date of the
proposed rule change via Trader Notice, to be published no later than
thirty (30) days following Commission approval. The implementation date
will be no later than sixty (60) days following Commission approval.
This additional time would afford the Exchange and OTP the time to make
any changes current give up designations.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \12\ of
the Act, in general, and furthers the objectives of Section
6(b)(5),\13\ in particular, in that 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, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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Particularly, as discussed above, several Clearing Firms affiliated
with SIFMA have recently expressed concerns relating to the current
give up process that permits OTPs to identify any Clearing Members as a
Designated Give Up for purposes of clearing particular transactions.
Also as noted above, the Clearing Members have relayed that the Federal
Reserve has recently identified the current give-up process (i.e., a
process that lacks authorization) as a significant source of risk for
clearing firms. The Exchange believes the proposed changes to Rule
6.15-O would help alleviate this risk by enabling Clearing Members to
refuse to act as a Designated Give Up for certain OTPs, which would
afford Clearing Members a measure of control. The Exchange believes its
proposal addresses concerns raised by Clearing Members, while
maintaining the basic give up process. The Exchange does not anticipate
Clearing Members to routinely refuse the role of Designated Give Up,
but rather to utilize this option only when there is a valid reason and
good faith basis to do so. The Exchange notes that Clearing Member
would still have the ability to reject trades on an ad hoc basis for
OTPs for which it has not refused to be a Designated Give Up.
Accordingly, the Exchange believes the proposed rule change is
reasonable and continues to provide certainty that a Clearing Member
would be responsible for a trade, which protects investors and the
public interest.
The Exchange also believes that the proposed change to Rule 6.46-O
would protect investors because it would permit an executing OTP to
utilize its error account to CMTA an order through its own clearing
relationship. This would preserve executions while accommodating the
proposed rule change that could result in an executing OTP not being
permissioned to for a particular give-up.
Thus, this proposal would foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and remove
impediments to and perfect the mechanism of a free and open market and
a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that this proposed rule change would
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
that the proposed rule change would impose an unnecessary burden on
intramarket competition because it would apply equally to all similarly
situated OTPs. The Exchange also notes that, should the proposed
changes make the Exchange more attractive for trading, market
participants trading on other exchanges can always elect to become OTPs
on the Exchange to take advantage of the trading opportunities.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2018-68 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2018-68. 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 submissions
should refer to File Number SR-NYSEArca-2018-68, and
[[Page 49437]]
should be submitted on or before October 22, 2018.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21231 Filed 9-28-18; 8:45 am]
BILLING CODE 8011-01-P
