Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31-E Relating to the Minimum Trade Size Modifier, 3521-3523 [2019-01945]

Download as PDF Federal Register / Vol. 84, No. 29 / Tuesday, February 12, 2019 / Notices filing also will be available for inspection and copying at the principal office of FINRA. 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–FINRA– 2019–004 and should be submitted on or before March 5, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Eduardo A. Aleman, Deputy Secretary. under Section 19(b)(2)(B) of the Act 6 to determine whether to approve or disapprove the proposed rule change.7 The Commission received one comment letter from the Exchange responding to the Order Instituting Proceedings.8 On November 27, 2018, pursuant to Section 19(b)(2) of the Act,9 the Commission designated a longer period within which to issue an order approving or disapproving the proposed rule change.10 On February 1, 2019, the Exchange withdrew the proposed rule change (SR–BOX–2018–14). [FR Doc. 2019–01946 Filed 2–11–19; 8:45 am] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Eduardo A. Aleman, Deputy Secretary. BILLING CODE 8011–01–P [FR Doc. 2019–01944 Filed 2–11–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85065; File No. SR–BOX– 2018–14] Self-Regulatory Organizations; BOX Exchange LLC; Notice of Withdrawal of Proposed Rule Change To Adopt Rules Governing the Trading of Complex Qualified Contingent Cross Orders and Complex Customer Cross Orders February 6, 2019. On May 22, 2018, BOX Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt rules governing the trading of Complex Qualified Contingent Cross Orders and Complex Customer Cross Orders. The proposed rule change was published for comment in the Federal Register on June 8, 2018.3 On July 16, 2018, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.5 On September 5, 2018, the Commission instituted proceedings 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 83367 (June 4, 2018), 83 FR 26719. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 83647, 83 FR 34635 (July 20, 2018). The Commission designated September 6, 2018 as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to approve or disapprove, the proposed rule change. 1 15 VerDate Sep<11>2014 18:30 Feb 11, 2019 Jkt 247001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85064; File No. SR– NYSEArca–2019–03)] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31–E Relating to the Minimum Trade Size Modifier February 6, 2019. 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 January 28, 2019, 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. 6 15 U.S.C. 78s(b)(2)(B). Securities Exchange Act Release No. 84031, 83 FR 46003 (September 11, 2018) (‘‘Order Instituting Proceedings’’). 8 See letter to Brent J. Fields, Secretary, Commission, from Alanna Barton, General Counsel, Exchange, dated October 12, 2018. 9 15 U.S.C. 78s(b)(2). 10 See Securities Exchange Act Release No. 84658, 83 FR 62395 (December 3, 2018). The Commission designated February 3, 2019 as the date by which the Commission shall either approve or disapprove the proposed rule change. 11 17 CFR 200.30–3(a)(12). 1 15 U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 7 See PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 3521 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7.31–E relating to the Minimum Trade Size Modifier. 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 7.31–E relating to the Minimum Trade Size (‘‘MTS’’) Modifier. Specifically, the Exchange proposes to make the MTS Modifier available for Non-Displayed Limit Orders.4 The Exchange also proposes to provide additional optionality for ETP Holders using the MTS Modifier with Limit IOC Orders, Non-Displayed Limit Orders, Mid-Point Liquidity (‘‘MPL’’) Orders, and Tracking Orders. As proposed, ETP Holders could choose how such orders would trade on arrival to trade either with (i) orders that in the aggregate meet the MTS (current functionality), or (ii) individual orders that each meet the MTS (proposed functionality). The MTS Modifier is currently available for Limit IOC Orders,5 MPL Orders,6 and Tracking Orders.7 As such, 4 See Rule 7.31–E(d)(2). In sum, A Non-Displayed Limit Order is a Limit Order that is not displayed and does not route. Id. 5 See Rule 7.31–E(b)(2)(A). In sum, a Limit Order designated IOC is to be traded in whole or in part on the NYSE Arca Marketplace as soon as such order is received, and the quantity not so traded is cancelled. Id. 6 See Rule 7.31–E(d)(3). In sum, an MPL Order is a ‘‘Limit Order that is not displayed and does not route, with a working price at the midpoint of the PBBO.’’ Id. 7 See Rule 7.31–E(d)(4). In sum, a Tracking Order is an order to buy (sell) with a limit price that is E:\FR\FM\12FEN1.SGM Continued 12FEN1 3522 Federal Register / Vol. 84, No. 29 / Tuesday, February 12, 2019 / Notices the MTS Modifier is currently available only for orders that are not displayed and do not route. On arrival, both Limit IOC Orders and MPL Orders with an MTS Modifier will trade against contraside orders in the Exchange Book that in the aggregate, meet the MTS.8 Once resting, MPL Orders and Tracking Orders with an MTS Modifier function similarly: If a contra-side order does not meet the MTS, the incoming order will not trade with and may trade through the resting order with the MTS Modifier. In addition, both MPL Orders and Tracking Orders with an MTS Modifier will be cancelled if such orders are traded in part or reduced in size and the remaining quantity is less than the MTS. The Exchange proposes to amend its rules to make MTS Modifier functionality available for an additional non-displayed order that does not route, i.e., Non-Displayed Limit Orders. The Exchange also proposes to add an option that an order with an MTS Modifier would trade on entry only with individual orders that each meet the MTS. This proposed change is based on the rules of its affiliate, NYSE American LLC (‘‘NYSE American’’), which offers the option for orders with an MTS to trade on entry only with individual orders that each meet the MTS of the incoming order.9 Both of these proposed changes are also based on the rules of the Nasdaq Stock Market LLC (‘‘Nasdaq’’) and Investors Exchange LLC (‘‘IEX’’), which both offer minimum trade size functionality for orders that are not displayed and that do not route.10 Nasdaq and IEX, as well as Cboe BYX Exchange, Inc. (‘‘BYX’’), Cboe BZX Exchange, Inc. (‘‘BZX’’), Cboe EDGA not displayed, does not route, must be entered in round lots and designated Day, and will trade only with an order to sell (buy) that is eligible to route. 8 Tracking Orders, including Tracking Orders with an MTS Modifier, are passive orders that do not trade on arrival. 9 See NYSE American Rule 7.31E(i)(3)(B). See also Securities Exchange Act Release No. 81672 (September 21, 2017), 82 FR 45099 (September 27, 2017) (SR–NYSEAMER–2017–17) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 7.31E Relating to the Minimum Trade Size Modifier for Additional Order Types and Expanding the Minimum Trade Size Modifier for Existing Order Types). The Exchange understands that NYSE American as well as its other affiliated exchanges, the New York Stock Exchange, Inc. (‘‘NYSE’’), and NYSE National, Inc. (‘‘NYSE National’’, together with the Exchange and NYSE, the ‘‘Affiliate SROs’’) intend to file similar proposed rule changes with the Commission to extend the availability of their respective MTS modifiers to Non-Displayed Limit Orders. 10 See Nasdaq Rule 4703(e) (Nasdaq’s ‘‘Minimum Quantity Order’’ may not be displayed and will be rejected if it includes an instruction to route) and IEX Rule 11.190(b)(11)(A) (IEX’s ‘‘Minimum Quantity Order’’ or ‘‘MQTY’’ is a non-displayed, non-routable order’’). VerDate Sep<11>2014 18:30 Feb 11, 2019 Jkt 247001 Exchange, Inc. (‘‘EDGA’’), and Cboe EDGX Exchange, Inc. (‘‘EDGX’’, together with BYX, BZX, and EDGA, the ‘‘Cboe Equity Exchanges’’), also all offer the option for orders with a minimum trade size to trade on entry only with individual orders that each meet the minimum trade size condition of the incoming order.11 Rule 7.31–E(i)(3) currently states that on arrival, an order to buy (sell) with an MTS Modifier will trade with sell (buy) orders in the NYSE Arca Book that in the aggregate meet such order’s MTS. As amended, Rule 7.31–E(i)(3)(B) would now require an ETP Holder to specify one of the following instructions with respect to how an order with an MTS Modifier would trade on arrival (new text underlined): (i) An order to buy (sell) with an MTS Modifier will trade with sell (buy) orders in the Exchange Book that in the aggregate meet such order’s MTS[.]; or (ii) An order to buy (sell) with an MTS Modifier will trade with individual sell (buy) order(s) in the Exchange Book that each meets such order’s MTS. Proposed paragraph (i)(3)(B)(ii) is new and reflects the Exchange’s proposal to add an alternative to how an order with an MTS Modifier would trade on arrival. An order with an MTS Modifier that is to trade upon entry only with individual orders that each meet the MTS would execute against resting orders in accordance with Rule 7.36–E, Order Ranking and Display, until it reaches an order that does not satisfy the MTS, at which point it would be posted or cancelled in accordance with the terms of the order. This proposed rule text is also based on NYSE American Rule 7.31E(i)(3)(B).12 Proposed Exchange Rule 7.31– E(i)(3)(B)(i) would describe the existing 11 See Nasdaq Rule 4703(e) (Nasdaq’s ‘‘Minimum Quantity’’ order attribute allows for a Nasdaq participant to specify one of two alternatives to how a Minimum Quantity Order would be processed at the time of entry, one of which is that ‘‘the minimum quantity condition must be satisfied by execution against one or more orders, each of which must have a size that satisfies the minimum quantity condition’’) and IEX Rule 11.190(b)(11)(G)(iii)(B) (On arrival, IEX’s ‘‘Minimum Execution Size with All-or-None Remaining’’ qualifier for IEX’s MQTY executes against each willing resting order in priority, provided that each individual execution size meets its effective minimum quantity.) See also BYX Rule 11.9(c)(5); BZX Rule 11.9(c)(5); EDGA Rule 11.6(h); and EDGX Rule 11.6(h) (The Cboe Equity Exchanges each allow a User to alternatively specify the order not execute against multiple aggregated orders simultaneously and that the minimum quantity condition be satisfied by each individual order resting on the book). 12 See supra note 9. PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 functionality as one of the instructions that would be available to ETP Holders. As discussed above, the addition of this instruction for how orders with an MTS Modifier would trade on entry is based on the rules of NYSE American, Nasdaq, IEX, and the Cboe Equity Exchanges.13 * * * * * Because of the technology changes associated with this proposed rule change, the Exchange will announce the implementation date of this proposed rule change by Trader Update. The Exchange anticipates that the implementation date will be in the second quarter of 2019. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ‘‘Act’’),14 in general, and furthers the objectives of Section 6(b)(5),15 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 proposal to expand the availability of the Exchange’s existing MTS Modifier to an additional non-displayed, nonroutable order, e.g., Non-Displayed Limit Orders, would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest, because the proposed rule change is based on similar minimum trade size functionality on Nasdaq and IEX, which both similarly make minimum trade size functionality available to non-displayed, non-routable orders.16 The Exchange also believes that the proposal would remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest because it would provide ETP Holders with the option for orders with a MTS Modifier to trade on entry only with individual orders that each meets the MTS of the incoming order, thereby 13 See supra notes 9 and 11. U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). 16 See supra note 10. 14 15 E:\FR\FM\12FEN1.SGM 12FEN1 Federal Register / Vol. 84, No. 29 / Tuesday, February 12, 2019 / Notices providing ETP Holders with more control in how such orders could execute. The proposed rule change is based on similar options available for users of minimum trade size functionality on the Exchange’s affiliate, NYSE American, as well as Nasdaq, IEX, and the Cboe Equity Exchanges.17 The Exchange further believes that this proposed option would remove impediments to, and perfect the mechanism of, a free and open market and a national market system because it would allow ETP Holders to provide an instruction that an order with an MTS Modifier would not trade with orders that are smaller in size than the MTS for such order, thereby providing ETP Holders with more control over when an order with an MTS Modifier may be executed. 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 Exchange believes that the proposed rule change is designed to increase competition by making available on the Exchange functionality that is already available on Nasdaq, IEX, and the Cboe Equity Exchanges. The Exchange also believes that the proposed rule change would promote competition by providing market participants with an additional venue to which to route nondisplayed, non-routable orders with an MTS Modifier. 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 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 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 18 and Rule 19b– 4(f)(6) thereunder.19 17 See supra notes 9 and 11. U.S.C. 78s(b)(3)(A). 19 17 CFR 240.19b–4(f)(6). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the 18 15 VerDate Sep<11>2014 18:30 Feb 11, 2019 Jkt 247001 At any time within 60 days of the filing of the 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 to determine whether the proposed rule 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– NYSEArca–2019–03 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–2019–03. 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 such Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 3523 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–2019–03, and should be submitted on or before March 5, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–01945 Filed 2–11–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings 2:00 p.m. on Thursday, February 14, 2019. PLACE: The meeting will be held at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. Commissioner Roisman, as duty officer, voted to consider the items listed for the closed meeting in closed session. The subject matters of the closed meeting will be: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Regulatory matters regarding a financial institution; Resolution of litigation claims; and Other matters relating to enforcement proceedings. TIME AND DATE: 20 17 E:\FR\FM\12FEN1.SGM CFR 200.30–3(a)(12). 12FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 84, Number 29 (Tuesday, February 12, 2019)]
[Notices]
[Pages 3521-3523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01945]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85064; File No. SR-NYSEArca-2019-03)]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31-
E Relating to the Minimum Trade Size Modifier

February 6, 2019.
    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 January 28, 2019, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 7.31-E relating to the Minimum 
Trade Size Modifier. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 7.31-E relating to the Minimum 
Trade Size (``MTS'') Modifier. Specifically, the Exchange proposes to 
make the MTS Modifier available for Non-Displayed Limit Orders.\4\ The 
Exchange also proposes to provide additional optionality for ETP 
Holders using the MTS Modifier with Limit IOC Orders, Non-Displayed 
Limit Orders, Mid-Point Liquidity (``MPL'') Orders, and Tracking 
Orders. As proposed, ETP Holders could choose how such orders would 
trade on arrival to trade either with (i) orders that in the aggregate 
meet the MTS (current functionality), or (ii) individual orders that 
each meet the MTS (proposed functionality).
---------------------------------------------------------------------------

    \4\ See Rule 7.31-E(d)(2). In sum, A Non-Displayed Limit Order 
is a Limit Order that is not displayed and does not route. Id.
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    The MTS Modifier is currently available for Limit IOC Orders,\5\ 
MPL Orders,\6\ and Tracking Orders.\7\ As such,

[[Page 3522]]

the MTS Modifier is currently available only for orders that are not 
displayed and do not route. On arrival, both Limit IOC Orders and MPL 
Orders with an MTS Modifier will trade against contra-side orders in 
the Exchange Book that in the aggregate, meet the MTS.\8\ Once resting, 
MPL Orders and Tracking Orders with an MTS Modifier function similarly: 
If a contra-side order does not meet the MTS, the incoming order will 
not trade with and may trade through the resting order with the MTS 
Modifier. In addition, both MPL Orders and Tracking Orders with an MTS 
Modifier will be cancelled if such orders are traded in part or reduced 
in size and the remaining quantity is less than the MTS.
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    \5\ See Rule 7.31-E(b)(2)(A). In sum, a Limit Order designated 
IOC is to be traded in whole or in part on the NYSE Arca Marketplace 
as soon as such order is received, and the quantity not so traded is 
cancelled. Id.
    \6\ See Rule 7.31-E(d)(3). In sum, an MPL Order is a ``Limit 
Order that is not displayed and does not route, with a working price 
at the midpoint of the PBBO.'' Id.
    \7\ See Rule 7.31-E(d)(4). In sum, a Tracking Order is an order 
to buy (sell) with a limit price that is not displayed, does not 
route, must be entered in round lots and designated Day, and will 
trade only with an order to sell (buy) that is eligible to route.
    \8\ Tracking Orders, including Tracking Orders with an MTS 
Modifier, are passive orders that do not trade on arrival.
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    The Exchange proposes to amend its rules to make MTS Modifier 
functionality available for an additional non-displayed order that does 
not route, i.e., Non-Displayed Limit Orders. The Exchange also proposes 
to add an option that an order with an MTS Modifier would trade on 
entry only with individual orders that each meet the MTS. This proposed 
change is based on the rules of its affiliate, NYSE American LLC 
(``NYSE American''), which offers the option for orders with an MTS to 
trade on entry only with individual orders that each meet the MTS of 
the incoming order.\9\ Both of these proposed changes are also based on 
the rules of the Nasdaq Stock Market LLC (``Nasdaq'') and Investors 
Exchange LLC (``IEX''), which both offer minimum trade size 
functionality for orders that are not displayed and that do not 
route.\10\ Nasdaq and IEX, as well as Cboe BYX Exchange, Inc. 
(``BYX''), Cboe BZX Exchange, Inc. (``BZX''), Cboe EDGA Exchange, Inc. 
(``EDGA''), and Cboe EDGX Exchange, Inc. (``EDGX'', together with BYX, 
BZX, and EDGA, the ``Cboe Equity Exchanges''), also all offer the 
option for orders with a minimum trade size to trade on entry only with 
individual orders that each meet the minimum trade size condition of 
the incoming order.\11\
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    \9\ See NYSE American Rule 7.31E(i)(3)(B). See also Securities 
Exchange Act Release No. 81672 (September 21, 2017), 82 FR 45099 
(September 27, 2017) (SR-NYSEAMER-2017-17) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 7.31E 
Relating to the Minimum Trade Size Modifier for Additional Order 
Types and Expanding the Minimum Trade Size Modifier for Existing 
Order Types). The Exchange understands that NYSE American as well as 
its other affiliated exchanges, the New York Stock Exchange, Inc. 
(``NYSE''), and NYSE National, Inc. (``NYSE National'', together 
with the Exchange and NYSE, the ``Affiliate SROs'') intend to file 
similar proposed rule changes with the Commission to extend the 
availability of their respective MTS modifiers to Non-Displayed 
Limit Orders.
    \10\ See Nasdaq Rule 4703(e) (Nasdaq's ``Minimum Quantity 
Order'' may not be displayed and will be rejected if it includes an 
instruction to route) and IEX Rule 11.190(b)(11)(A) (IEX's ``Minimum 
Quantity Order'' or ``MQTY'' is a non-displayed, non-routable 
order'').
    \11\ See Nasdaq Rule 4703(e) (Nasdaq's ``Minimum Quantity'' 
order attribute allows for a Nasdaq participant to specify one of 
two alternatives to how a Minimum Quantity Order would be processed 
at the time of entry, one of which is that ``the minimum quantity 
condition must be satisfied by execution against one or more orders, 
each of which must have a size that satisfies the minimum quantity 
condition'') and IEX Rule 11.190(b)(11)(G)(iii)(B) (On arrival, 
IEX's ``Minimum Execution Size with All-or-None Remaining'' 
qualifier for IEX's MQTY executes against each willing resting order 
in priority, provided that each individual execution size meets its 
effective minimum quantity.) See also BYX Rule 11.9(c)(5); BZX Rule 
11.9(c)(5); EDGA Rule 11.6(h); and EDGX Rule 11.6(h) (The Cboe 
Equity Exchanges each allow a User to alternatively specify the 
order not execute against multiple aggregated orders simultaneously 
and that the minimum quantity condition be satisfied by each 
individual order resting on the book).
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    Rule 7.31-E(i)(3) currently states that on arrival, an order to buy 
(sell) with an MTS Modifier will trade with sell (buy) orders in the 
NYSE Arca Book that in the aggregate meet such order's MTS. As amended, 
Rule 7.31-E(i)(3)(B) would now require an ETP Holder to specify one of 
the following instructions with respect to how an order with an MTS 
Modifier would trade on arrival (new text underlined):
    (i) An order to buy (sell) with an MTS Modifier will trade with 
sell (buy) orders in the Exchange Book that in the aggregate meet such 
order's MTS[.]; or
    (ii) An order to buy (sell) with an MTS Modifier will trade with 
individual sell (buy) order(s) in the Exchange Book that each meets 
such order's MTS.
    Proposed paragraph (i)(3)(B)(ii) is new and reflects the Exchange's 
proposal to add an alternative to how an order with an MTS Modifier 
would trade on arrival. An order with an MTS Modifier that is to trade 
upon entry only with individual orders that each meet the MTS would 
execute against resting orders in accordance with Rule 7.36-E, Order 
Ranking and Display, until it reaches an order that does not satisfy 
the MTS, at which point it would be posted or cancelled in accordance 
with the terms of the order. This proposed rule text is also based on 
NYSE American Rule 7.31E(i)(3)(B).\12\ Proposed Exchange Rule 7.31-
E(i)(3)(B)(i) would describe the existing functionality as one of the 
instructions that would be available to ETP Holders.
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    \12\ See supra note 9.
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    As discussed above, the addition of this instruction for how orders 
with an MTS Modifier would trade on entry is based on the rules of NYSE 
American, Nasdaq, IEX, and the Cboe Equity Exchanges.\13\
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    \13\ See supra notes 9 and 11.
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* * * * *
    Because of the technology changes associated with this proposed 
rule change, the Exchange will announce the implementation date of this 
proposed rule change by Trader Update. The Exchange anticipates that 
the implementation date will be in the second quarter of 2019.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\14\ in general, and 
furthers the objectives of Section 6(b)(5),\15\ 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.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal to expand the availability 
of the Exchange's existing MTS Modifier to an additional non-displayed, 
non-routable order, e.g., Non-Displayed Limit Orders, would remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system and, in general, to protect investors and 
the public interest, because the proposed rule change is based on 
similar minimum trade size functionality on Nasdaq and IEX, which both 
similarly make minimum trade size functionality available to non-
displayed, non-routable orders.\16\
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    \16\ See supra note 10.
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    The Exchange also believes that the proposal would remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system and, in general, to protect investors and 
the public interest because it would provide ETP Holders with the 
option for orders with a MTS Modifier to trade on entry only with 
individual orders that each meets the MTS of the incoming order, 
thereby

[[Page 3523]]

providing ETP Holders with more control in how such orders could 
execute. The proposed rule change is based on similar options available 
for users of minimum trade size functionality on the Exchange's 
affiliate, NYSE American, as well as Nasdaq, IEX, and the Cboe Equity 
Exchanges.\17\ The Exchange further believes that this proposed option 
would remove impediments to, and perfect the mechanism of, a free and 
open market and a national market system because it would allow ETP 
Holders to provide an instruction that an order with an MTS Modifier 
would not trade with orders that are smaller in size than the MTS for 
such order, thereby providing ETP Holders with more control over when 
an order with an MTS Modifier may be executed.
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    \17\ See supra notes 9 and 11.
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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 Exchange believes that 
the proposed rule change is designed to increase competition by making 
available on the Exchange functionality that is already available on 
Nasdaq, IEX, and the Cboe Equity Exchanges. The Exchange also believes 
that the proposed rule change would promote competition by providing 
market participants with an additional venue to which to route non-
displayed, non-routable orders with an MTS Modifier.

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

    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 for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    At any time within 60 days of the filing of the 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 to 
determine whether the proposed rule 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-NYSEArca-2019-03 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-2019-03. 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 such 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-2019-03, and should be 
submitted on or before March 5, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-01945 Filed 2-11-19; 8:45 am]
 BILLING CODE 8011-01-P

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