Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.31 Relating to the Minimum Trade Size Modifier, 3843-3846 [2019-02115]
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Federal Register / Vol. 84, No. 30 / Wednesday, February 13, 2019 / Notices
TRACE-Eligible Securities that are not
subject to dissemination, other than U.S.
Treasury Securities, at no charge (unless
FINRA submits a rule filing imposing a
fee for such data). For example, FINRA
may publish aggregated transaction
information and statistics on trades in
CMBSs and CDOs, including data on
aggregate daily volume, aggregate daily
number of trades, and average price
information, and such information may
be grouped within customer buy,
customer sell, dealer-to-dealer, year of
issuance, investment rating, or other
categories. Under the proposal, FINRA
would not identify individual market
participants or transactions. In addition,
FINRA would not publish aggregated
transaction information and statistics by
individual securities. The proposed rule
change would not apply to U.S.
Treasury Securities. FINRA believes that
the proposed rule change will benefit
investors and market participants by
providing additional information on
TRACE Eligible-Securities at no cost,
while maintaining the confidentiality of
individual market participants and
transactions.
If the Commission approves the
proposed rule change, the effective date
of the proposed rule change will be the
date of Commission approval.
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2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,9 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest, and Section 15A(b)(9) of
the Act,10 which requires that FINRA
rules not impose any burden on
competition that is not necessary or
appropriate.
FINRA believes that the proposed rule
change will promote greater
transparency for TRACE-Eligible
Securities. FINRA believes the proposal
strikes an appropriate balance between
providing insightful information on
TRACE-Eligible Securities at no charge
while preserving the confidentiality of
individual market participant identities
and transactions. Accordingly, FINRA
believes the proposal is in the public
interest and will help promote
transparency.
9 15
U.S.C. 78o–3(b)(6).
U.S.C. 78o–3(b)(9).
10 15
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Since the
proposed amendment clarifies FINRA’s
discretion in publishing or distributing
aggregated transaction information and
statistics on TRACE-Eligible Securities,
FINRA believes that there are no direct
or indirect impacts on member firms
and investors.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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 (i)
as the Commission may designate up to
90 days of such date 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
such 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–
FINRA–2019–003 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–FINRA–2019–003. 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
PO 00000
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3843
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 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–
2019–003, and should be submitted on
or before March 6, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–02116 Filed 2–12–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85071; File No. SR–NYSE–
2019–01]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
7.31 Relating to the Minimum Trade
Size Modifier
February 7, 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, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
11 17
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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Federal Register / Vol. 84, No. 30 / Wednesday, February 13, 2019 / Notices
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 amend
Rule 7.31 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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The Exchange proposes to amend
Rule 7.31 relating to the Minimum
Trade Size (‘‘MTS’’) Modifier.
Specifically, the Exchange proposes to
make the MTS Modifier available for
Non-Displayed Limit Orders 4 and NonDisplayed Primary Pegged Orders.5 The
Exchange also proposes to provide
additional optionality for member
organizations using the MTS Modifier
with Limit IOC Orders, Non-Displayed
Limit Orders, and Mid-Point Liquidity
(‘‘MPL’’) Orders. As proposed, member
4 See Rule 7.31(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(h)(4). In sum, A Non-Displayed
Primary Pegged Order is a Pegged Order to buy
(sell) with a working price that is pegged to the PBB
(PBO), with no offset allowed, that is not displayed
and does not route. Id.
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organizations 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 6 and
MPL Orders.7 As such, 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. Once resting, MPL
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, MPL 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 two
additional non-displayed orders that do
not route, i.e., Non-Displayed Limit
Orders and Non-Displayed Primary
Pegged Orders.8
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
6 See Rule 7.31(b)(2)(A). In sum, a Limit Order
designated IOC is to be traded in whole or in part
on the Exchange as soon as such order is received,
and the quantity not so traded is cancelled. Id.
7 See Rule 7.31(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.
8 The Exchange also proposes to make related
changes to paragraph (F) of Rule 7.31(i)(3) and Rule
7.37 to refer to orders with an MTS Modifier
generally to accommodate the additional order
types that may include an MTS Modifier.
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
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
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
Rule 7.31(i)(3) currently states that on
arrival, 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. As
amended, Rule 7.31(i)(3)(B) would now
require a member organization to
specify one of the following instructions
with respect to how an order with an
MTS Modifier would trade on arrival
(new text underlined):
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, NYSE Arca, Inc. (‘‘NYSE
Arca’’), and NYSE National, Inc. (‘‘NYSE National’’,
together with the Exchange and NYSE Arca, 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.)
E:\FR\FM\13FEN1.SGM
13FEN1
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 Rules
7.31(i)(3)(F)(i) and 7.36, 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(i)(3)(B)(i)
would describe the existing
functionality as one of the instructions
that would be available to member
organizations.
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
For parity allocation purposes, the
Exchange proposes to treat an order
with an MTS Modifier that is to execute
on entry only with individual orders
that each meet the MTS the same as a
resting order with an MTS Modifier that
becomes an Aggressing Order. Rule
7.31(i)(3)(F)(ii) sets forth how a resting
order to buy (sell) with an MTS that
becomes an Aggressing Order trades
with sell (buy) orders in a priority
category that allocates orders on parity.
Because in a parity allocation model,
more than one contra-side resting order
may participate in an allocation, the
Aggressing Order to buy (sell) with an
MTS Modifier does not trade with any
contra-side orders if at least one sell
(buy) order that would have been
considered for allocation does not meet
the MTS. The Exchange proposes that
this allocation logic would be applicable
both when an order is resting and
becomes an Aggressing Order (current
functionality) or when an order is
designated to execute on entry only
with individual orders that each meet
the MTS (proposed functionality). In
such scenario, if the arriving order
cannot trade, it would be ranked on the
Exchange Book.
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 first
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
two additional non-displayed, nonroutable orders, e.g., Non-Displayed
Limit Orders and Non-Displayed
Primary Pegged 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
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
16 See supra note 10.
12 See
supra note 9.
13 See supra notes 9 and 11.
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3845
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 member
organizations 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 providing member organizations
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 member
organizations 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 member
organizations with more control over
when an order with an MTS Modifier
may be executed.
The Exchange believes that if a
member organization designates an
order with an MTS Modifier, that
member organization has instructed the
Exchange not to trade that order with
contra-side orders that are smaller in
size than the MTS. Because in a parity
allocation, resting orders are allocated
based on their position on an allocation
wheel, it would be consistent with the
incoming order’s instruction and
current functionality for resting orders
with an MTS that become an Aggressing
Order not to trade at all rather than to
trade with even one order in the parity
allocation that that does not meet the
MTS.
15 15
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17 See
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supra notes 9 and 11.
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Federal Register / Vol. 84, No. 30 / Wednesday, February 13, 2019 / Notices
3846
Federal Register / Vol. 84, No. 30 / Wednesday, February 13, 2019 / Notices
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 18 and Rule
19b–4(f)(6) thereunder.19 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.20
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
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18 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
20 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires the Exchange to give the
Commission written notice of its intent to file the
proposed rule change, along with a brief description
and 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. The Exchange has
satisfied this requirement.
19 17
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Jkt 247001
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 21 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–
NYSE–2019–01 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–NYSE–2019–01. 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
21 15
PO 00000
U.S.C. 78s(b)(2)(B).
Frm 00100
Fmt 4703
Number SR–NYSE–2019–01 and should
be submitted on or before March 6,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–02115 Filed 2–12–19; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 10669]
30-Day Notice of Proposed Information
Collection: Statement of Registration
Notice of request for public
comment and submission to OMB of
proposed collection of information.
ACTION:
The Department of State has
submitted the information collection
described below to the Office of
Management and Budget (OMB) for
approval. In accordance with the
Paperwork Reduction Act of 1995 we
are requesting comments on this
collection from all interested
individuals and organizations. The
purpose of this Notice is to allow 30
days for public comment.
DATES: Submit comments directly to the
Office of Management and Budget
(OMB) up to March 15, 2019.
ADDRESSES: Direct comments to the
Department of State Desk Officer in the
Office of Information and Regulatory
Affairs at the Office of Management and
Budget (OMB). You may submit
comments by the following methods:
• Email: oira_submission@
omb.eop.gov. You must include the DS
form number, information collection
title, and the OMB control number in
the subject line of your message.
• Fax: 202–395–5806. Attention: Desk
Officer for Department of State.
FOR FURTHER INFORMATION CONTACT:
Direct requests for additional
information regarding the collection
listed in this notice, including requests
for copies of the proposed collection
instrument and supporting documents,
to Andrea Battista, who may be reached
on 202–663–3136 or at battistaal@
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SUPPLEMENTARY INFORMATION:
• Title of Information Collection:
Statement of Registration.
• OMB Control Number: 1405–0002.
• Type of Request: Revision of a
Currently Approved Collection.
• Originating Office: Directorate of
Defense Trade Controls (DDTC).
SUMMARY:
22 17
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CFR 200.30–3(a)(12).
13FEN1
]]>Agencies
[Federal Register Volume 84, Number 30 (Wednesday, February 13, 2019)]
[Notices]
[Pages 3843-3846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02115]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85071; File No. SR-NYSE-2019-01]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rule 7.31 Relating to the Minimum Trade Size Modifier
February 7, 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, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the
[[Page 3844]]
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 amend Rule 7.31 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 7.31 relating to the Minimum
Trade Size (``MTS'') Modifier. Specifically, the Exchange proposes to
make the MTS Modifier available for Non-Displayed Limit Orders \4\ and
Non-Displayed Primary Pegged Orders.\5\ The Exchange also proposes to
provide additional optionality for member organizations using the MTS
Modifier with Limit IOC Orders, Non-Displayed Limit Orders, and Mid-
Point Liquidity (``MPL'') Orders. As proposed, member organizations
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).
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\4\ See Rule 7.31(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(h)(4). In sum, A Non-Displayed Primary Pegged
Order is a Pegged Order to buy (sell) with a working price that is
pegged to the PBB (PBO), with no offset allowed, that is not
displayed and does not route. Id.
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The MTS Modifier is currently available for Limit IOC Orders \6\
and MPL Orders.\7\ As such, 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. Once resting, MPL 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, MPL 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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\6\ See Rule 7.31(b)(2)(A). In sum, a Limit Order designated IOC
is to be traded in whole or in part on the Exchange as soon as such
order is received, and the quantity not so traded is cancelled. Id.
\7\ See Rule 7.31(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.
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The Exchange proposes to amend its rules to make MTS Modifier
functionality available for two additional non-displayed orders that do
not route, i.e., Non-Displayed Limit Orders and Non-Displayed Primary
Pegged Orders.\8\
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\8\ The Exchange also proposes to make related changes to
paragraph (F) of Rule 7.31(i)(3) and Rule 7.37 to refer to orders
with an MTS Modifier generally to accommodate the additional order
types that may include an MTS Modifier.
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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, NYSE Arca, Inc. (``NYSE Arca''), and
NYSE National, Inc. (``NYSE National'', together with the Exchange
and NYSE Arca, 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(i)(3) currently states that on arrival, 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. As amended,
Rule 7.31(i)(3)(B) would now require a member organization to specify
one of the following instructions with respect to how an order with an
MTS Modifier would trade on arrival (new text underlined):
[[Page 3845]]
[GRAPHIC] [TIFF OMITTED] TN13FE19.001
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 Rules
7.31(i)(3)(F)(i) and 7.36, 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(i)(3)(B)(i) would
describe the existing functionality as one of the instructions that
would be available to member organizations.
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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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For parity allocation purposes, the Exchange proposes to treat an
order with an MTS Modifier that is to execute on entry only with
individual orders that each meet the MTS the same as a resting order
with an MTS Modifier that becomes an Aggressing Order. Rule
7.31(i)(3)(F)(ii) sets forth how a resting order to buy (sell) with an
MTS that becomes an Aggressing Order trades with sell (buy) orders in a
priority category that allocates orders on parity. Because in a parity
allocation model, more than one contra-side resting order may
participate in an allocation, the Aggressing Order to buy (sell) with
an MTS Modifier does not trade with any contra-side orders if at least
one sell (buy) order that would have been considered for allocation
does not meet the MTS. The Exchange proposes that this allocation logic
would be applicable both when an order is resting and becomes an
Aggressing Order (current functionality) or when an order is designated
to execute on entry only with individual orders that each meet the MTS
(proposed functionality). In such scenario, if the arriving order
cannot trade, it would be ranked on the Exchange Book.
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 first 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 two additional non-
displayed, non-routable orders, e.g., Non-Displayed Limit Orders and
Non-Displayed Primary Pegged 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 member organizations 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 providing member organizations 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 member organizations 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 member
organizations 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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The Exchange believes that if a member organization designates an
order with an MTS Modifier, that member organization has instructed the
Exchange not to trade that order with contra-side orders that are
smaller in size than the MTS. Because in a parity allocation, resting
orders are allocated based on their position on an allocation wheel, it
would be consistent with the incoming order's instruction and current
functionality for resting orders with an MTS that become an Aggressing
Order not to trade at all rather than to trade with even one order in
the parity allocation that that does not meet the MTS.
[[Page 3846]]
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
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.\20\
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and 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. The
Exchange has satisfied this requirement.
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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) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 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 rule-comments@sec.gov. Please include
File Number SR-NYSE-2019-01 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-NYSE-2019-01. 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-NYSE-2019-01 and should be submitted on
or before March 6, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02115 Filed 2-12-19; 8:45 am]
BILLING CODE 8011-01-P
