Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Permanent Certain Options Market Rules That Are Linked to the Equity Market Plan To Address Extraordinary Market Volatility, 57059-57063 [2019-23171]
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Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Notices
The Board was established in the
Nuclear Waste Policy Amendments Act
of 1987 as an independent federal
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evaluate the technical and scientific
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Board’s website.
For information on the meeting
agenda, contact Dan Ogg: ogg@nwtrb.gov
or Bret Leslie: leslie@nwtrb.gov. For
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Dated: October 18, 2019.
Nigel Mote,
Executive Director, U.S. Nuclear Waste
Technical Review Board.
[FR Doc. 2019–23180 Filed 10–23–19; 8:45 am]
BILLING CODE 6820–AM–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2020–11 and CP2020–10]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
negotiated service agreements. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: October 28,
2019.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
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SUMMARY:
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FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2020–11 and
CP2020–10; Filing Title: USPS Request
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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to Add Priority Mail Express & Priority
Mail Contract 101 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 18, 2019; Filing Authority:
39 U.S.C. 3642, 39 CFR 3020.30 et seq.,
and 39 CFR 3015.5; Public
Representative: Curtis E. Kidd;
Comments Due: October 28, 2019.
This Notice will be published in the
Federal Register.
Darcie S. Tokioka,
Acting Secretary.
[FR Doc. 2019–23200 Filed 10–23–19; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87346; File No. SR–
NYSEArca–2019–76]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Make Permanent
Certain Options Market Rules That Are
Linked to the Equity Market Plan To
Address Extraordinary Market
Volatility
October 18, 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 October
16, 2019, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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 make
permanent certain options market rules
that are linked to the equity market Plan
to Address Extraordinary Market
Volatility. 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.
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. 84, No. 206 / Thursday, October 24, 2019 / 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
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The purpose of the proposed rule
change is to make permanent certain
options market rules that are linked to
the equity market Plan to Address
Extraordinary Market Volatility (the
‘‘Limit Up-Limit Down Plan’’ or the
‘‘Plan’’). This change is being proposed
in connection with the recently
approved amendment to the Limit UpLimit Down Plan that allows the Plan to
continue to operate on a permanent
basis (‘‘Amendment 18’’).4 The
Exchange understands that the other
national securities exchanges have filed
or will file similar proposals to make
permanent their respective pilot
programs; thus this proposal would
align Exchange rules with the rules of
other options exchanges.5
In an attempt to address extraordinary
market volatility in NMS Stock, and, in
particular, events like the severe
volatility on May 6, 2010, U.S. national
securities exchanges and the Financial
Industry Regulatory Authority, Inc.
(collectively, ‘‘Participants’’) drafted the
Plan pursuant to Rule 608 of Regulation
NMS and under the Act.6 On May 31,
2012, the Commission approved the
Plan, as amended, on a one-year pilot
basis.7 Though the Plan was primarily
4 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019)
(Order Approving Amendment No. 18).
5 For example, Cboe Exchange, Inc. (‘‘Cboe’’) filed
a proposal with the Commission to make permanent
rules related to the Options Pilots, which filing has
been approved. See Securities Exchange Act
Release Nos. 86744 (August 23, 2019), 84 FR 45565
(August 29, 2019); 87311 (October 15, 2019) (SR–
CBOE–2019–049) (‘‘Cboe filing’’). The Exchange
notes that the substance of this proposal is identical
to the Cboe filing.
6 See Securities Exchange Act Release No. 64547
(May 25, 2011), 76 FR 31647 (June 1, 2011) (File
No. 4–631).
7 See Securities and Exchange Act Release No.
67091 (May 31, 2012) 77 FR 33498 (June 6, 2012).
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designed for equity markets, the
Exchange believed it would, indirectly,
potentially impact the options markets
as well. Thus, the Exchange has
previously adopted and amended Rule
6.65A–O and Commentary .03 to Rule
6.87–O to ensure the option markets
were not harmed as a result of the Plan’s
implementation and has implemented
such rules on a pilot basis that has
coincided with the pilot period for the
Plan (the ‘‘Options Pilots’’).8
Rule 6.65A–O essentially serves as a
roadmap for the Exchange’s universal
changes due to the implementation of
the Plan, and Commentary .03 to Rule
6.87–O provides that transactions
executed during a limit or straddle state
are not subject to the obvious and
catastrophic error rules. A limit or
straddle state occurs when at least one
side of the National Best Bid (‘‘NBB’’) or
Offer (‘‘NBO’’) bid/ask is priced at a
non-tradable level. Specifically, a
straddle state exists when the NBB is
below the lower price band while the
NBO is inside the prices band or when
the NBO is above the upper price band
and the NBB is within the band, while
a limit state occurs when the NBO
equals the lower price band (without
crossing the NBB), or the NBB equals
the upper price band (without crossing
the NBO). The Exchange adopted the
Options Pilots to protect investors
because when an underlying security is
in a limit or straddle state, there will not
be a reliable price for the security to
serve as a benchmark for the price of the
option. Specifically, the Exchange
adopted Commentary .03 to Rule 6.87–
O because the application of the obvious
and catastrophic error rules would be
impracticable given the potential for
lack of a reliable NBBO in the options
market during limit and straddle states.
When adjusting or busting a trade
pursuant to the obvious error rule, the
determination of theoretical value of a
trade generally references the NBB (for
erroneous sell transactions) or NBO (for
erroneous buy transactions) just prior to
the trade in question, and is therefore
not reliable when at least one side of the
NBBO is priced at a non-tradeable level,
as is the case in limit and straddle
states. In such a situation, determining
theoretical value is often a subjective
rather than an objective determination
8 See Securities Exchange Act Release Nos. 69340
(April 8, 2013), 78 FR 22004 (April 12, 2013) (SR–
NYSEArca–2013–10) (amending certain options
rules to coincide with the pilot period for the Plan);
76246 (October 23, 2015), 80 FR 66603 (October 29,
2015) (SR–NYSEArca–2015–101) (amending certain
options rules to coincide with the pilot period for
the Plan) and 85610 (April 11, 2019), 84 FR 16053
(April 17, 2019) (SR–NYSEArca–2019–22)
(amending Rules 6.65A–O and 6.87–O, to extend
the pilot period in connection with the Plain).
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and could give rise to additional
uncertainty and confusion for investors.
As a result, application of the obvious
and catastrophic error rules would be
impracticable given the lack of a reliable
NBBO in the options market during
limit and straddle states, and may
produce undesirable effects or
unanticipated consequences.
The Exchange adopted additional
measures via other Options Pilot rules
that are designed to protect investors
during limit and straddle states. For
example, the Exchange will reject
market orders and not elect stop orders 9
during a Limit Up-Limit Down state to
ensure that only those orders with a
limit price will be executed during a
limit or straddle state given the
uncertainty of market prices during
such a state. Furthermore, the Exchange
believes that eliminating the application
of obvious error rules during a limit or
straddle state eliminates the reevaluation of a transaction executed
during such a state that could
potentially create an unreasonable
adverse selection opportunity due to
lack of a reliable reference price on one
side of the market or another and
discourage participants from providing
liquidity during limit and straddle
states, which is contrary to the goal in
limiting participants’ adverse selection
with the application of the obvious error
rule during normal trading states.
For these reasons, the Exchange
believes the Options Pilots are designed
to add certainty on the options markets,
which encourages more investors to
participate in light of the changes
associated with the Plan. The Plan was
originally implemented on a pilot-basis
in order to allow the public, the
participating exchanges, and the
Commission to assess the operation of
the Plan and whether the Plan should be
modified prior to approval on a
permanent basis. As stated, the
Exchange adopted the Option Pilots to
coincide with this pilot; to continue the
protections therein while the industry
gains further experience operating the
Plan.
In connection with the order
approving the establishment of the
obvious error pilot, as well as the
extensions of the obvious error pilot, the
Exchange committed to submit monthly
data regarding the program and to
9 This includes rules in connection with special
handling for market orders, market-on-close orders,
stop orders, and stock-option orders, as well as for
certain electronic order handling features in a Limit
Up-Limit Down state, the obvious error rules, and
providing that the Exchange will not require
Market-Makers to quote in series of options when
the underlying security is in a Limit Up-Limit
Down state.
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submit an overall analysis of the
obvious error pilot in conjunction with
the data submitted under the Plan and
any other data as requested by the
Commission. Pursuant to a rule filing,
submitted on April 4, 2014, each month,
the Exchange committed to provide the
Commission, and the public, a dataset
containing the data for each straddle
and limit state in optionable stocks that
had at least one trade on the Exchange
(the ‘‘LULD Limit and Straddle
Reports’’).10 The Exchange has
continued to provide the Commission
with this data on a monthly basis from
October 2015. For each trade on the
Exchange, the Exchange provides (a) the
stock symbol, option symbol, time at the
start of the straddle or limit state, an
indicator for whether it is a straddle or
limit state, and (b) for the trades on the
Exchange, the executed volume, timeweighted quoted bid-ask spread, timeweighted average quoted depth at the
bid, time-weighted average quoted
depth at the offer, high execution price,
low execution price, number of trades
for which a request for review for error
was received during straddle and limit
states, an indicator variable for whether
those options outlined above have a
price change exceeding 30% during the
underlying stock’s limit or straddle state
compared to the last available option
price as reported by OPRA before the
start of the limit or straddle state. In
addition, to help evaluate the impact of
the pilot program, the Exchange has
provided to the Commission, and the
public, assessments relating to the
impact of the operation of the obvious
error rules during limit and straddle
states including: (1) An evaluation of
the statistical and economic impact of
limit and straddle states on liquidity
and market quality in the options
markets, and (2) an assessment of
whether the lack of obvious error rules
in effect during the straddle and limit
states are problematic. The Exchange
has concluded that the obvious error
pilot does not negatively impact market
quality during normal market
conditions,11 and that there has been
insufficient data to assess whether a
lack of obvious error rules is
problematic, however, the Exchange
10 See Securities Exchange Act Release No. 71869
(April 4, 2014), 79 FR 19689 (April 9, 2014) (SR–
NYSEArca–2014–36); see also NYSE Arca, LULD
Limit and Straddle Reports, available at: https://
www.nyse.com/markets/arca-options/reports.
11 See NYSE Arca, LULD Limit and Straddle
Reports, available at: https://www.nyse.com/
markets/arca-options/reports. During the most
recent Review Period the Exchange did not receive
any obvious error review requests for Limit-UpLimit Down trades, and Limit Up-Limit Down trade
volume accounted for nominal overall trade
volume.
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believes the continuation of
Commentary .03 to Rule 6.87–O
functions to protect against any
unanticipated consequences in the
options markets during a limit or
straddle state and add certainty on the
options markets.
The Commission recently approved
the Plan on a permanent basis
(Amendment 18).12 In connection with
this approval, the Exchange now
proposes to amend Rule 6.65A–O and
Commentary .03 to Rule 6.87–O that
currently implement the provisions of
the Plan on a pilot basis to eliminate the
pilot basis, which effectiveness expires
on October 18, 2019, and to make such
rules permanent. In its approval order to
make the Plan permanent, the
Commission recognized that, as a result
of the Participants’ and industry
analysis of the Plan’s operation, the
Limit Up-Limit Down mechanism
effectively addresses extraordinary
market volatility. Indeed, the Plan
benefits markets and market
participants by helping to ensure
orderly markets, but also, the Exchange
believes, based on the data made
available to the public and the
Commission during the pilot period,
that the obvious error pilot does not
negatively impact market quality during
normal market conditions.13 Rather, the
Exchange believes the obvious error
pilot functions to protect against any
unanticipated consequences in the
options markets during a limit or
straddle state and add certainty on the
options markets.
The Exchange also believes the other
Options Pilots rules provide additional
measures designed to protect investors
during limit and straddle states. For
example, the Exchange will reject
market orders and not elect stop
orders 14 during a Limit Up-Limit Down
state to ensure that only those orders
with a limit price will be executed
during a limit or straddle state given the
uncertainty of market prices during
such a state This removes impediments
to and perfects the mechanism of a free
and open market and national market
system by encouraging more investors to
participate in light of the changes
associated with the Plan. The Exchange
believes that if approved on a
permanent basis, the Options Pilots
would permanently provide investors
with the above-described additional
certainty of market prices and
mitigation of unanticipated
12 See
supra note 4.
supra note 11. The Exchange’s obligation
to submit and publish the LULD Limit and Straddle
Reports was extinguished upon the approval of
Amendment 18.
14 See supra note 9.
13 See
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57061
consequences and unreasonable adverse
selection risk during limit and straddle
states.
The Exchange understands that the
other national securities exchanges have
filed or will file similar proposals to
make permanent their respective pilot
programs. Since the Commission’s
approval of Amendment 18 allowing the
Plan to operate on a permanent basis,
the Exchange and other national
securities exchanges have determined
that no further amendments should be
made to the Options Pilots; 15 the
current Options Pilots effectively
address extraordinary market volatility,
are reasonably designed to comply with
the requirements of the Plan, facilitate
compliance with the Plan and should
now operate on a permanent basis,
consistent with the Plan. The Exchange
does not propose any additional
changes to Rule 6.65A–O and
Commentary .03 to Rule 6.87–O.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of Section 6(b) of the
Act,16 in general, and Section 6(b)(5) of
the Act,17 in particular, in that it is
designed to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, to promote just and equitable
principles of trade, and, in general, to
protect investors and the public interest
and not to permit unfair discrimination
between customers, issuers, brokers, or
dealers. The Exchange believes that the
proposed rule change promotes just and
equitable principles of trade in that it
promotes transparency and uniformity
across markets concerning rules for
options markets adopted to coincide
with the Plan. The Exchange believes
that eliminating the Options Pilots and
making such rules permanent facilitates
compliance with the Plan.
In particular, the Exchange believes
that the proposed rule supports the
objectives of perfecting the mechanism
of a free and open market and the
national market system because it
promotes transparency and uniformity
across markets concerning rules for
options markets adopted to coincide
with the Plan. The Exchange believes
that eliminating the pilot basis for the
Options Pilots and making such rules
permanent facilitates compliance with
the Plan by adding certainty to the
markets during periods of market
15 See Securities Exchange Act Release No. 85610
(April 11, 2019), 84 FR 16053 (April 17, 2019) (SR–
NYSEARCA–2019–22) (proposal to extend the pilot
for certain options market rules linked to the Plan).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
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volatility, which has been approved and
found by the Commission to be
reasonably designed to prevent
potentially harmful price volatility in
NMS Stocks. It has been determined by
the Commission that the Plan benefits
markets and market participants by
helping to ensure orderly markets, and,
based on the data made available to the
public and the Commission during the
pilot period for Commentary .03 to Rule
6.87–O, the Plan does not negatively
impact options market quality during
normal market conditions. Rather, the
Plan, as it is implemented under the
obvious error pilot, functions to protect
against any unanticipated consequences
in the options markets during a limit or
straddle state and add certainty on the
options markets. During a limit or
straddle state, determining theoretical
value of an option may be a subjective
rather than an objective determination
given the lack of a reliable NBBO, which
may create an unreasonable adverse
selection opportunity and discourage
participants from providing liquidity
during limit and straddle states.
Therefore, the Exchange believes
eliminating obvious error review in
such states would, in turn, eliminate
uncertainty and confusion for investors
and benefit investors by encouraging
more participation in light of the
changes associated with the Plan.
As stated, the Exchange believes the
other Options Pilots rules provide
additional measures designed to protect
investors during limit and straddle
states. For example, the Exchange will
reject market orders and not elect stop
orders 18 during a Limit Up-Limit Down
state to ensure that only those orders
with a limit price will be executed
during a limit or straddle state given the
uncertainty of market prices during
such a state. Accordingly, the Exchange
believes that making the Options Pilots
permanent will further the goals of
investor protection and fair and orderly
markets as the rules effectively address
extraordinary market volatility pursuant
to the Plan.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is necessary to
reflect that the Plan no longer operates
as a pilot and has been approved to
operate on a permanent basis by the
Commission. As such, Exchange Rules
6.65A–O and Commentary .03 to Rule
18 See
supra note 9.
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6.87–O, which implement protections in
connection with the Plan, should be
amended to operate on a permanent
basis. The Exchange understands that
the other national securities exchanges
have filed or will also file similar
proposals to make permanent their
respective pilot programs.19 Thus, the
proposed rule change will help to
ensure consistency across market
centers without implicating any
competitive issues.
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 foregoing 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 20 and Rule 19b–
4(f)(6) thereunder.21
A proposed rule change filed under
Rule 19b–4(f)(6) 22 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 23 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become effective and
operative immediately upon filing. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest, as it will allow the
current Options Pilots to continue on a
permanent basis without any changes,
prior to the pilot expiration on October
18, 2019. For this reason, the
Commission hereby waives the 30-day
19 See
e.g., Cboe filing, supra note 5.
U.S.C. 78s(b)(3)(A).
21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization 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.
22 17 CFR 240.19b–4(f)(6).
23 17 CFR 240.19b–4(f)(6)(iii).
20 15
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operative delay and designates the
proposed rule change as operative upon
filing.24
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
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–
NYSEArca–2019–76 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–2019–76. 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,
24 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\24OCN1.SGM
24OCN1
Federal Register / Vol. 84, No. 206 / Thursday, October 24, 2019 / Notices
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–2019–76 and
should be submitted on or before
November 14, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–23171 Filed 10–23–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87352; File No. SR–
NYSENAT–2019–24]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Current
Pilot Program Related to Rule 7.10
October 18, 2019.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on October
16, 2019, NYSE National, Inc. (‘‘NYSE
National’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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.
khammond on DSKJM1Z7X2PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
current pilot program related to Rule
7.10 (Clearly Erroneous Executions) to
the close of business on April 20, 2020.
The proposed rule change is available
on the Exchange’s website at
www.nyse.com, at the principal office of
25 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.
VerDate Sep<11>2014
17:34 Oct 23, 2019
Jkt 250001
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 purpose of the proposed rule
change is to extend the current pilot
program related to Rule 7.10 (Clearly
Erroneous Executions) to the close of
business on April 20, 2020. The pilot
program is currently due to expire on
October 18, 2019.
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to Rule 11.19 (Clearly
Erroneous Executions) that, among other
things: (i) Provided for uniform
treatment of clearly erroneous execution
reviews in multi-stock events involving
twenty or more securities; and (ii)
reduced the ability of the Exchange to
deviate from the objective standards set
forth in the rule.4 In 2013, the Exchange
adopted a provision designed to address
the operation of the Plan.5 Finally, in
2014, the Exchange adopted two
additional provisions providing that: (i)
A Series of transactions in a particular
security on one or more trading days
may be viewed as one event if all such
transactions were effected based on the
same fundamentally incorrect or grossly
misinterpreted issuance information
resulting in a severe valuation error for
all such transactions; and (ii) in the
event of any disruption or malfunction
in the operation of the electronic
communications and trading facilities of
an Exchange, another SRO, or
responsible single plan processor in
connection with the transmittal or
receipt of a trading halt, an Officer,
4 See Securities Exchange Act Release No. 62886
(Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR–
NSX–2010–07).
5 See Securities Exchange Act Release No. 68803
(Feb. 1, 2013), 78 FR 9078 (Feb. 7, 2013) (SR–NSX–
2013–06).
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
57063
acting on his or her own motion, shall
nullify any transaction that occurs after
a trading halt has been declared by the
primary listing market for a security and
before such trading halt has officially
ended according to the primary listing
market.6 Rule 11.19 is no longer
applicable to any securities that trade on
the Exchange and has been replaced
with Rule 7.10, which is substantively
identical to Rule 11.19.7
These changes were originally
scheduled to operate for a pilot period
to coincide with the pilot period for the
Plan to Address Extraordinary Market
Volatility (the ‘‘Limit Up-Limit Down
Plan’’ or ‘‘LULD Plan’’),8 including any
extensions to the pilot period for the
LULD Plan.9 In April 2019, the
Commission approved an amendment to
the LULD Plan for it to operate on a
permanent, rather than pilot, basis.10 In
light of that change, the Exchange
amended Rule 7.10 to untie the pilot
program’s effectiveness from that of the
LULD Plan and to extend the pilot’s
effectiveness to the close of business on
October 18, 2019.11
The Exchange now proposes to amend
Rule 7.10 to extend the pilot’s
effectiveness for a further six months to
the close of business on April 20, 2020.
If the pilot period is not either extended,
replaced or approved as permanent, the
prior versions of paragraphs (c), (e)(2),
(f), and (g) as described in former Rule
11.19 will be in effect, and the
provisions of paragraphs (i) through (k)
shall be null and void.12 In such an
event, the remaining sections of Rule
7.10 would continue to apply to all
transactions executed on the Exchange.
The Exchange understands that the
other national securities exchanges and
Financial Industry Regulatory Authority
(‘‘FINRA’’) will also file similar
proposals to extend their respective
clearly erroneous execution pilot
6 See Securities Exchange Act Release No. 72434
(June 19, 2014), 79 FR 36110 (June 25, 2014) (SR–
NSX–2014–08).
7 See Securities Exchange Act Release No. 83289
(May 17, 2018), 83 FR 23968 (May 23, 2018) (SR–
NYSENAT–2018–02).
8 See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012) (the
‘‘Limit Up-Limit Down Release’’).
9 See Securities Exchange Act Release No. 71797
(March 25, 2014), 79 FR 18108 (March 31, 2014)
(SR–NSX–2014–07).
10 See Securities Exchange Act Release No. 85623
(April 11, 2019), 84 FR 16086 (April 17, 2019)
(approving Eighteenth Amendment to LULD Plan).
11 See Securities Exchange Act Release No. 85522
(April 5, 2019), 84 FR 14704 (April 11, 2019) (SR–
NYSENAT–2019–07).
12 See supra notes 4–6. The prior versions of
paragraphs (c), (e)(2), (f), and (g) generally provided
greater discretion to the Exchange with respect to
breaking erroneous trades.
E:\FR\FM\24OCN1.SGM
24OCN1
]]>Agencies
[Federal Register Volume 84, Number 206 (Thursday, October 24, 2019)]
[Notices]
[Pages 57059-57063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23171]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87346; File No. SR-NYSEArca-2019-76]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Make Permanent
Certain Options Market Rules That Are Linked to the Equity Market Plan
To Address Extraordinary Market Volatility
October 18, 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 October 16, 2019, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to make permanent certain options market
rules that are linked to the equity market Plan to Address
Extraordinary Market Volatility. 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.
[[Page 57060]]
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 purpose of the proposed rule change is to make permanent
certain options market rules that are linked to the equity market Plan
to Address Extraordinary Market Volatility (the ``Limit Up-Limit Down
Plan'' or the ``Plan''). This change is being proposed in connection
with the recently approved amendment to the Limit Up-Limit Down Plan
that allows the Plan to continue to operate on a permanent basis
(``Amendment 18'').\4\ The Exchange understands that the other national
securities exchanges have filed or will file similar proposals to make
permanent their respective pilot programs; thus this proposal would
align Exchange rules with the rules of other options exchanges.\5\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 85623 (April 11,
2019), 84 FR 16086 (April 17, 2019) (Order Approving Amendment No.
18).
\5\ For example, Cboe Exchange, Inc. (``Cboe'') filed a proposal
with the Commission to make permanent rules related to the Options
Pilots, which filing has been approved. See Securities Exchange Act
Release Nos. 86744 (August 23, 2019), 84 FR 45565 (August 29, 2019);
87311 (October 15, 2019) (SR-CBOE-2019-049) (``Cboe filing''). The
Exchange notes that the substance of this proposal is identical to
the Cboe filing.
---------------------------------------------------------------------------
In an attempt to address extraordinary market volatility in NMS
Stock, and, in particular, events like the severe volatility on May 6,
2010, U.S. national securities exchanges and the Financial Industry
Regulatory Authority, Inc. (collectively, ``Participants'') drafted the
Plan pursuant to Rule 608 of Regulation NMS and under the Act.\6\ On
May 31, 2012, the Commission approved the Plan, as amended, on a one-
year pilot basis.\7\ Though the Plan was primarily designed for equity
markets, the Exchange believed it would, indirectly, potentially impact
the options markets as well. Thus, the Exchange has previously adopted
and amended Rule 6.65A-O and Commentary .03 to Rule 6.87-O to ensure
the option markets were not harmed as a result of the Plan's
implementation and has implemented such rules on a pilot basis that has
coincided with the pilot period for the Plan (the ``Options
Pilots'').\8\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 64547 (May 25,
2011), 76 FR 31647 (June 1, 2011) (File No. 4-631).
\7\ See Securities and Exchange Act Release No. 67091 (May 31,
2012) 77 FR 33498 (June 6, 2012).
\8\ See Securities Exchange Act Release Nos. 69340 (April 8,
2013), 78 FR 22004 (April 12, 2013) (SR-NYSEArca-2013-10) (amending
certain options rules to coincide with the pilot period for the
Plan); 76246 (October 23, 2015), 80 FR 66603 (October 29, 2015) (SR-
NYSEArca-2015-101) (amending certain options rules to coincide with
the pilot period for the Plan) and 85610 (April 11, 2019), 84 FR
16053 (April 17, 2019) (SR-NYSEArca-2019-22) (amending Rules 6.65A-O
and 6.87-O, to extend the pilot period in connection with the
Plain).
---------------------------------------------------------------------------
Rule 6.65A-O essentially serves as a roadmap for the Exchange's
universal changes due to the implementation of the Plan, and Commentary
.03 to Rule 6.87-O provides that transactions executed during a limit
or straddle state are not subject to the obvious and catastrophic error
rules. A limit or straddle state occurs when at least one side of the
National Best Bid (``NBB'') or Offer (``NBO'') bid/ask is priced at a
non-tradable level. Specifically, a straddle state exists when the NBB
is below the lower price band while the NBO is inside the prices band
or when the NBO is above the upper price band and the NBB is within the
band, while a limit state occurs when the NBO equals the lower price
band (without crossing the NBB), or the NBB equals the upper price band
(without crossing the NBO). The Exchange adopted the Options Pilots to
protect investors because when an underlying security is in a limit or
straddle state, there will not be a reliable price for the security to
serve as a benchmark for the price of the option. Specifically, the
Exchange adopted Commentary .03 to Rule 6.87-O because the application
of the obvious and catastrophic error rules would be impracticable
given the potential for lack of a reliable NBBO in the options market
during limit and straddle states. When adjusting or busting a trade
pursuant to the obvious error rule, the determination of theoretical
value of a trade generally references the NBB (for erroneous sell
transactions) or NBO (for erroneous buy transactions) just prior to the
trade in question, and is therefore not reliable when at least one side
of the NBBO is priced at a non-tradeable level, as is the case in limit
and straddle states. In such a situation, determining theoretical value
is often a subjective rather than an objective determination and could
give rise to additional uncertainty and confusion for investors. As a
result, application of the obvious and catastrophic error rules would
be impracticable given the lack of a reliable NBBO in the options
market during limit and straddle states, and may produce undesirable
effects or unanticipated consequences.
The Exchange adopted additional measures via other Options Pilot
rules that are designed to protect investors during limit and straddle
states. For example, the Exchange will reject market orders and not
elect stop orders \9\ during a Limit Up-Limit Down state to ensure that
only those orders with a limit price will be executed during a limit or
straddle state given the uncertainty of market prices during such a
state. Furthermore, the Exchange believes that eliminating the
application of obvious error rules during a limit or straddle state
eliminates the re-evaluation of a transaction executed during such a
state that could potentially create an unreasonable adverse selection
opportunity due to lack of a reliable reference price on one side of
the market or another and discourage participants from providing
liquidity during limit and straddle states, which is contrary to the
goal in limiting participants' adverse selection with the application
of the obvious error rule during normal trading states.
---------------------------------------------------------------------------
\9\ This includes rules in connection with special handling for
market orders, market-on-close orders, stop orders, and stock-option
orders, as well as for certain electronic order handling features in
a Limit Up-Limit Down state, the obvious error rules, and providing
that the Exchange will not require Market-Makers to quote in series
of options when the underlying security is in a Limit Up-Limit Down
state.
---------------------------------------------------------------------------
For these reasons, the Exchange believes the Options Pilots are
designed to add certainty on the options markets, which encourages more
investors to participate in light of the changes associated with the
Plan. The Plan was originally implemented on a pilot-basis in order to
allow the public, the participating exchanges, and the Commission to
assess the operation of the Plan and whether the Plan should be
modified prior to approval on a permanent basis. As stated, the
Exchange adopted the Option Pilots to coincide with this pilot; to
continue the protections therein while the industry gains further
experience operating the Plan.
In connection with the order approving the establishment of the
obvious error pilot, as well as the extensions of the obvious error
pilot, the Exchange committed to submit monthly data regarding the
program and to
[[Page 57061]]
submit an overall analysis of the obvious error pilot in conjunction
with the data submitted under the Plan and any other data as requested
by the Commission. Pursuant to a rule filing, submitted on April 4,
2014, each month, the Exchange committed to provide the Commission, and
the public, a dataset containing the data for each straddle and limit
state in optionable stocks that had at least one trade on the Exchange
(the ``LULD Limit and Straddle Reports'').\10\ The Exchange has
continued to provide the Commission with this data on a monthly basis
from October 2015. For each trade on the Exchange, the Exchange
provides (a) the stock symbol, option symbol, time at the start of the
straddle or limit state, an indicator for whether it is a straddle or
limit state, and (b) for the trades on the Exchange, the executed
volume, time-weighted quoted bid-ask spread, time-weighted average
quoted depth at the bid, time-weighted average quoted depth at the
offer, high execution price, low execution price, number of trades for
which a request for review for error was received during straddle and
limit states, an indicator variable for whether those options outlined
above have a price change exceeding 30% during the underlying stock's
limit or straddle state compared to the last available option price as
reported by OPRA before the start of the limit or straddle state. In
addition, to help evaluate the impact of the pilot program, the
Exchange has provided to the Commission, and the public, assessments
relating to the impact of the operation of the obvious error rules
during limit and straddle states including: (1) An evaluation of the
statistical and economic impact of limit and straddle states on
liquidity and market quality in the options markets, and (2) an
assessment of whether the lack of obvious error rules in effect during
the straddle and limit states are problematic. The Exchange has
concluded that the obvious error pilot does not negatively impact
market quality during normal market conditions,\11\ and that there has
been insufficient data to assess whether a lack of obvious error rules
is problematic, however, the Exchange believes the continuation of
Commentary .03 to Rule 6.87-O functions to protect against any
unanticipated consequences in the options markets during a limit or
straddle state and add certainty on the options markets.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 71869 (April 4,
2014), 79 FR 19689 (April 9, 2014) (SR-NYSEArca-2014-36); see also
NYSE Arca, LULD Limit and Straddle Reports, available at: https://www.nyse.com/markets/arca-options/reports.
\11\ See NYSE Arca, LULD Limit and Straddle Reports, available
at: https://www.nyse.com/markets/arca-options/reports. During the
most recent Review Period the Exchange did not receive any obvious
error review requests for Limit-Up-Limit Down trades, and Limit Up-
Limit Down trade volume accounted for nominal overall trade volume.
---------------------------------------------------------------------------
The Commission recently approved the Plan on a permanent basis
(Amendment 18).\12\ In connection with this approval, the Exchange now
proposes to amend Rule 6.65A-O and Commentary .03 to Rule 6.87-O that
currently implement the provisions of the Plan on a pilot basis to
eliminate the pilot basis, which effectiveness expires on October 18,
2019, and to make such rules permanent. In its approval order to make
the Plan permanent, the Commission recognized that, as a result of the
Participants' and industry analysis of the Plan's operation, the Limit
Up-Limit Down mechanism effectively addresses extraordinary market
volatility. Indeed, the Plan benefits markets and market participants
by helping to ensure orderly markets, but also, the Exchange believes,
based on the data made available to the public and the Commission
during the pilot period, that the obvious error pilot does not
negatively impact market quality during normal market conditions.\13\
Rather, the Exchange believes the obvious error pilot functions to
protect against any unanticipated consequences in the options markets
during a limit or straddle state and add certainty on the options
markets.
---------------------------------------------------------------------------
\12\ See supra note 4.
\13\ See supra note 11. The Exchange's obligation to submit and
publish the LULD Limit and Straddle Reports was extinguished upon
the approval of Amendment 18.
---------------------------------------------------------------------------
The Exchange also believes the other Options Pilots rules provide
additional measures designed to protect investors during limit and
straddle states. For example, the Exchange will reject market orders
and not elect stop orders \14\ during a Limit Up-Limit Down state to
ensure that only those orders with a limit price will be executed
during a limit or straddle state given the uncertainty of market prices
during such a state This removes impediments to and perfects the
mechanism of a free and open market and national market system by
encouraging more investors to participate in light of the changes
associated with the Plan. The Exchange believes that if approved on a
permanent basis, the Options Pilots would permanently provide investors
with the above-described additional certainty of market prices and
mitigation of unanticipated consequences and unreasonable adverse
selection risk during limit and straddle states.
---------------------------------------------------------------------------
\14\ See supra note 9.
---------------------------------------------------------------------------
The Exchange understands that the other national securities
exchanges have filed or will file similar proposals to make permanent
their respective pilot programs. Since the Commission's approval of
Amendment 18 allowing the Plan to operate on a permanent basis, the
Exchange and other national securities exchanges have determined that
no further amendments should be made to the Options Pilots; \15\ the
current Options Pilots effectively address extraordinary market
volatility, are reasonably designed to comply with the requirements of
the Plan, facilitate compliance with the Plan and should now operate on
a permanent basis, consistent with the Plan. The Exchange does not
propose any additional changes to Rule 6.65A-O and Commentary .03 to
Rule 6.87-O.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 85610 (April 11,
2019), 84 FR 16053 (April 17, 2019) (SR-NYSEARCA-2019-22) (proposal
to extend the pilot for certain options market rules linked to the
Plan).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act,\16\ in general, and
Section 6(b)(5) of the Act,\17\ in particular, in that it is designed
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest and not to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange believes that the
proposed rule change promotes just and equitable principles of trade in
that it promotes transparency and uniformity across markets concerning
rules for options markets adopted to coincide with the Plan. The
Exchange believes that eliminating the Options Pilots and making such
rules permanent facilitates compliance with the Plan.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposed rule
supports the objectives of perfecting the mechanism of a free and open
market and the national market system because it promotes transparency
and uniformity across markets concerning rules for options markets
adopted to coincide with the Plan. The Exchange believes that
eliminating the pilot basis for the Options Pilots and making such
rules permanent facilitates compliance with the Plan by adding
certainty to the markets during periods of market
[[Page 57062]]
volatility, which has been approved and found by the Commission to be
reasonably designed to prevent potentially harmful price volatility in
NMS Stocks. It has been determined by the Commission that the Plan
benefits markets and market participants by helping to ensure orderly
markets, and, based on the data made available to the public and the
Commission during the pilot period for Commentary .03 to Rule 6.87-O,
the Plan does not negatively impact options market quality during
normal market conditions. Rather, the Plan, as it is implemented under
the obvious error pilot, functions to protect against any unanticipated
consequences in the options markets during a limit or straddle state
and add certainty on the options markets. During a limit or straddle
state, determining theoretical value of an option may be a subjective
rather than an objective determination given the lack of a reliable
NBBO, which may create an unreasonable adverse selection opportunity
and discourage participants from providing liquidity during limit and
straddle states. Therefore, the Exchange believes eliminating obvious
error review in such states would, in turn, eliminate uncertainty and
confusion for investors and benefit investors by encouraging more
participation in light of the changes associated with the Plan.
As stated, the Exchange believes the other Options Pilots rules
provide additional measures designed to protect investors during limit
and straddle states. For example, the Exchange will reject market
orders and not elect stop orders \18\ during a Limit Up-Limit Down
state to ensure that only those orders with a limit price will be
executed during a limit or straddle state given the uncertainty of
market prices during such a state. Accordingly, the Exchange believes
that making the Options Pilots permanent will further the goals of
investor protection and fair and orderly markets as the rules
effectively address extraordinary market volatility pursuant to the
Plan.
---------------------------------------------------------------------------
\18\ See supra note 9.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
necessary to reflect that the Plan no longer operates as a pilot and
has been approved to operate on a permanent basis by the Commission. As
such, Exchange Rules 6.65A-O and Commentary .03 to Rule 6.87-O, which
implement protections in connection with the Plan, should be amended to
operate on a permanent basis. The Exchange understands that the other
national securities exchanges have filed or will also file similar
proposals to make permanent their respective pilot programs.\19\ Thus,
the proposed rule change will help to ensure consistency across market
centers without implicating any competitive issues.
---------------------------------------------------------------------------
\19\ See e.g., Cboe filing, supra note 5.
---------------------------------------------------------------------------
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 foregoing 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 \20\ and Rule 19b-
4(f)(6) thereunder.\21\
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \23\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become effective and operative immediately upon filing.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will allow the current Options Pilots to continue on a permanent
basis without any changes, prior to the pilot expiration on October 18,
2019. For this reason, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change as operative
upon filing.\24\
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\22\ 17 CFR 240.19b-4(f)(6).
\23\ 17 CFR 240.19b-4(f)(6)(iii).
\24\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 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 [email protected]. Please include
File Number SR-NYSEArca-2019-76 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-2019-76. 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,
[[Page 57063]]
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-2019-76 and should
be submitted on or before November 14, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-23171 Filed 10-23-19; 8:45 am]
BILLING CODE 8011-01-P
