Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Modify Rule 971.1NY Regarding Customer Best Execution Auctions to Provide Optional All-or-None Functionality for Larger-Sized Orders, 80196-80199 [2020-27203]
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80196
Federal Register / Vol. 85, No. 239 / Friday, December 11, 2020 / Notices
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
a negotiated service agreement. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: December
15, 2020.
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.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Table of Contents
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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
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
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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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 3030, and 39
CFR part 3040, 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 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
1. Docket No(s).: MC2021–41 and
CP2021–42; Filing Title: USPS Request
to Add Priority Mail & First-Class
Package Service Contract 181 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: December 7, 2020;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Christopher C. Mohr; Comments Due:
December 15, 2020.
2. Docket No(s).: MC2021–42 and
CP2021–43; Filing Title: USPS Request
to Add Parcel Select Contract 44 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: December 7, 2020;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Christopher C. Mohr; Comments Due:
December 15, 2020.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2020–27329 Filed 12–10–20; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90584; File No. SR–
NYSEAMER–2020–64]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing of
Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed
Rule Change, as Modified by
Amendment No. 1, to Modify Rule
971.1NY Regarding Customer Best
Execution Auctions to Provide
Optional All-or-None Functionality for
Larger-Sized Orders
December 7, 2020.
I. Introduction
On August 19, 2020, NYSE American
LLC (‘‘NYSE American’’ or the
‘‘Exchange’’) filed with the Securities
Frm 00207
Fmt 4703
II. Description of the Proposed Rule
Change
In Amendment No. 1, the Exchange
proposes to expand its electronic
crossing mechanism—the CUBE
Auction—to provide optional AON 7
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 89723
(September 1, 2020), 85 FR 55562 (September 8,
2020).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 90178
(October 14, 2020), 85 FR 66645 (October 20, 2020).
6 In Amendment No. 1, the Exchange modified
the proposal with regard to the outcomes of the
proposed new CUBE Auction functionality, as
proposed for larger-sized orders, in certain
situations where Customer interest at the stop price
is resting on the Exchange’s book before, or arrives
during, the Auction. See infra notes 15–18 and
accompanying text for a description of these
outcomes under the proposal as amended. See also
Exhibit 4 of Amendment No. 1 showing the changes
made by the amendment to the text of Commentary
.05 to Rule 971.1NY as originally proposed. In
Amendment No. 1 the Exchange also deleted
proposed new Commentary .04 to Rule 971.2NY,
which would have provided for optional
functionality for larger-sized orders in the
Exchange’s CUBE Auction for Complex Orders
paralleling the similar functionality for Single-Leg
CUBE Auctions proposed in new Commentary .05
to Rule 971.1NY, and made other, clarifying
revisions in its discussion of the purpose of the
proposal.
7 An All-or-None Order or AON Order is a
‘‘Market or Limit Order that is to be executed on
2 17
BILLING CODE 7710–FW–P
PO 00000
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
modify Rules 971.1NY and 971.2NY
regarding the Exchange’s Customer Best
Execution auction (‘‘CUBE Auction’’ or
‘‘Auction’’) to provide optional all-ornone (‘‘AON’’) functionality for largersized orders. The proposed rule change
was published for comment in the
Federal Register on September 8, 2020.3
On October 14, 2020, pursuant to
Section 19(b)(2) of the Act,4 the
Commission extended the time period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change, to
December 7, 2020.5 The Commission
has received no comments on the
proposed rule change. On November 24,
2020, the Exchange filed Amendment
No. 1 to the proposed rule change,
which replaced and superseded the
proposed rule change in its entirety.6
The Commission is publishing this
notice to solicit comments on the
proposed rule change, as modified by
Amendment No. 1, from interested
persons, and is approving the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
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functionality for ATP Holders to execute
larger-sized orders (i.e., 500 or more
contracts) in the Single-Leg CUBE
Auction.8 The Exchange seeks to
expand the CUBE Auction functionality
in a manner consistent with similar
price-improvement mechanisms for
larger-sized orders already available on
other options exchanges.9 As such, the
Exchange believes that its proposal
would allow it to compete with other
options exchanges for such larger-sized
orders and would benefit market
participants who are already familiar
with such price-improvement
mechanisms.
According to the Exchange, the CUBE
Auction operates seamlessly with the
Consolidated Book—while still
affording CUBE Orders an opportunity
to receive price improvement.10 The
Exchange states that the proposal to
expand the current CUBE Auction
functionality by providing an additional
(optional) method for market
participants to effect larger-sized orders
in the CUBE Auction would likewise
operate seamlessly with the
Consolidated Book. The Exchange
believes that its proposal would
encourage ATP Holders to compete
vigorously to provide the opportunity
for price improvement for larger-sized
orders in a competitive auction process,
the Exchange in its entirety or not at all.’’ See Rule
900.3NY(d)(4).
8 See proposed Rules 971.1NY, Commentary .05.
Capitalized terms have the same meaning as the
defined terms in Rule 971.1NY.
9 The Exchange cites as an example the
Solicitation Auction Mechanism (‘‘SAM’’ or ‘‘SAM
Auction’’) of the Cboe Exchange, Inc. (‘‘Cboe’’),
governed by Cboe Rule 5.39, described by the
Exchange as an electronic crossing mechanism for
single-leg paired orders of 500 or more contracts,
which the Cboe system automatically treats as AllOr-None, where the solicited contra order(s) trades
entirely with the agency order at the stop price
unless, in the aggregate, the agency order can be
filled entirely by responses to the auction at
improved prices or, if there are Priority Customer
orders at the stop price, by such Priority Customer
orders alone or in combination with responses to
the auction at the stop price or improved prices. If
there are Priority Customer orders at the stop price
but insufficient size of such orders alone or when
aggregated with responses at the stop price or better
prices to fill the agency order, both the agency order
and solicited contra order(s) will be cancelled. The
Exchange notes that Cboe’s affiliated exchanges
similarly offer such auction mechanism for largersized orders. See, e.g., Cboe EDGX Exchange, Inc.
(‘‘Cboe EDGX’’) Rules 21.21 (SAM). The Exchange
also notes that similar mechanisms are available on
other options exchanges. See, e.g., Nasdaq ISE LLC
(‘‘ISE’’), Options 3, Section 11(d) (setting forth its
Solicited Order Mechanism).
10 See Rule 900.2NY(14) (defining Consolidated
Book (or ‘‘Book’’) and providing that all quotes and
orders ‘‘that are entered into the Book will be
ranked and maintained in accordance with the rules
of priority as provided in Rule 964NY’’). Rule
964NY (Display, Priority and Order Allocation—
Trading Systems) dictates the priority of quotes and
orders.
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which may lead to enhanced liquidity
and tighter markets.
Proposed AON Single-Leg CUBE
functionality
The Exchange proposes to add new
Commentary .05 to Rule 971.1NY to
provide that a CUBE Order of at least
500 contracts would execute in full at
the single stop price against the Contra
Order, except under specified
circumstances (the ‘‘AON CUBE
Order’’).11 As further proposed, a Contra
Order would not be permitted to
guarantee an AON CUBE Order for automatch or an auto-match limit, which
features are otherwise available in a
Single-Leg CUBE Auction.12
The initiating price and permissible
range of executions for a proposed AON
CUBE Order would be determined in
the same manner as for a standard CUBE
Order.13 An AON CUBE Order Auction
would also be subject to the same early
end events as a Single-Leg CUBE
Order.14
As proposed, an AON CUBE Order
would not execute with the Contra
Order if the entire AON CUBE Order
could be satisfied in full by certain
eligible contra-side interest.
Specifically, the Exchange proposes that
paragraph (a) to Commentary .05 to Rule
971.1NY would provide that:
(a) The Contra Order would not receive any
allocation and will be cancelled if (i) RFR
Responses to sell (buy) at prices lower
(higher) than the stop price can satisfy the
full quantity of the AON CUBE Order or (ii)
there is Customer interest to sell (buy) at the
stop price that on its own, or when
aggregated with RFR Responses to sell (buy)
at the stop price or prices lower (higher) than
the stop price, can satisfy the full quantity of
the AON CUBE Order. In either such case,
the RFR Responses will be allocated as
provided for in paragraphs (c)(5)(A) and
(c)(5)(B)(i) of this Rule, as applicable.15
Thus, as noted by the Exchange, if
there is price-improving contra-side
interest that can satisfy the AON
11 See proposed Commentary .05, Rule 971.1NY.
See Rule 971.1NY(c)(1)(A) (setting forth parameters
for single stop price). An AON CUBE Order would
be rejected for the same reasons as a CUBE Order
(see Rule 971.1NY(b)(2)–(10)), except that the
minimum size for an AON CUBE Order is 500
contracts, as opposed to one contract, as set forth
in Rule 971.1NY(b)(8).
12 See proposed Commentary .05, Rule 971.1NY.
See also Rule 971.1NY(c)(1)(B)–(C) (regarding
parameters for auto-match and auto-match limit
price).
13 An AON CUBE Order and its paired Contra
Order would be rejected if it failed to meet the
pricing parameters. See Rule 971.1NY(b) (regarding
auction eligibility requirements).
14 See Rule 971.1NY(c)(4) (setting forth the type
of interest that causes the early end to a Single-Leg
CUBE Auction).
15 See proposed Commentary .05, Rule
971.1NY(a).
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Fmt 4703
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80197
condition of the Auction, the AON
CUBE Order would execute in full
against those price-improving RFR
Responses and the Contra Order would
cancel. Or, absent such price-improving
interest, if there is Customer interest
equal to the stop price that on its own,
or when combined with equal- or betterpriced RFR Responses that can satisfy
the AON condition of the Auction, the
AON CUBE Order would execute in full
against such interest and the Contra
Order would cancel. Under either
scenario, the AON CUBE Order would
be allocated against contra-side interest
at the best price(s) pursuant to the
Exchange’s priority rules.16
As further proposed, both the AON
CUBE Order and Contra Order would be
cancelled, i.e., the Auction would be
cancelled, if there is contra-side
Customer interest at the stop price and
such interest on its own or when
combined with RFR Responses (at the
stop price or better) is insufficient to
satisfy the entire AON CUBE Order. To
effect this result, the Exchange proposes
that paragraph (b) to Commentary .05 to
Rule 971.1NY would provide that:
(b) T he AON CUBE Order and Contra
Order will both be cancelled if there is
Customer interest to sell (buy) at the stop
price and such interest, either on its own or
when aggregated with RFR Responses to sell
(buy) at the stop price or prices lower
(higher) than the stop price, is insufficient to
satisfy the full quantity of the AON CUBE
Order.17
Thus, as proposed, if there is contraside Customer interest at the stop price,
but there is not enough size (considering
the Customer interest and all RFR
Responses at the stop price or better) to
satisfy the entire AON CUBE Order,
then both the AON CUBE Order and the
Contra Order would be cancelled. The
Exchange believes that this proposal is
consistent with the terms of how AON
orders function generally without
violating the Exchange’s general priority
rules.18 With respect to allocation, the
Exchange notes that the proposed
functionality differs from the allocation
of a standard Single-Leg CUBE Order in
that the Contra Order is not guaranteed
16 See Rule 971.1NY (c)(5)(A) (providing
Customer interest first priority to trade with the
CUBE Order, pursuant to the size pro rata algorithm
set forth in Rule 964NY(b)(3) at each price point)
and (c)(5)(B)(i) (providing that, second to Customer
interest, RFR Responses priced below (above) the
stop price, beginning with the lowest (highest) price
within the range of permissible executions will
execute with the CUBE Order, pursuant to the size
pro rata algorithm set forth in Rule 964NY(b)(3) at
each price point).
17 See proposed Commentary .05, Rule
971.1NY(b).
18 See Rule 964NY (regarding order ranking and
priority).
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80198
Federal Register / Vol. 85, No. 239 / Friday, December 11, 2020 / Notices
a minimum allocation at the stop price.
Instead, given the AON nature of the
functionality, the Contra Order either
trades with the entire AON CUBE Order
or not at all.19 The Exchange’s proposal
also is consistent with the AON nature
of similar mechanisms on other options
exchanges.20
With the exception of differences to
the minimum size and allocation
described in proposed Commentary .05
to Rule 971.1NY, an AON CUBE Order
would otherwise be subject to Rule
971.1NY with respect to all other
aspects of the CUBE Auction
functionality.21
Implementation
The Exchange states that it will
announce the implementation date of
the proposed rule change in a Trader
Update following the approval of this
proposed rule change.
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III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment No. 1, is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to national
securities exchanges.22 In particular, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1, is consistent with Section 6(b)(5)
of the Act,23 which requires that the
rules of an exchange be designed,
among other things, to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
The Commission believes that
approving the Exchange’s proposal, as
amended, to provide optional AON
functionality for larger-sized orders may
19 See Rule 971.1NY(c)(5)(B)(i)(b) (providing that,
‘‘if there is sufficient size of the CUBE Order still
available after executing at better prices or against
Customer interest, the Contra Order shall receive
additional contracts required to achieve an
allocation of the greater of 40% of the original
CUBE Order size or one contract (or the greater of
50% of the original CUBE Order size or one contract
if there is only one RFR Response)’’).
20 See supra note 9 (regarding Cboe’s SAM
functionality for larger-sized paired orders
designated as AON).
21 See proposed Commentary .05, Rule 971.1NY.
22 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
23 17 U.S.C. 78f(b)(5).
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23:25 Dec 10, 2020
Jkt 253001
allow for greater flexibility in executing
large-sized orders and could provide
additional opportunities for such orders
to receive price improvement over the
NBBO, in the interest of perfecting the
mechanism of free and open markets.
The Commission further believes that
the proposal, as amended, includes
appropriate conditions to protect the
priority of public customer orders on
the Exchange, and is thereby consistent
with the protection of investors and the
public interest, because it assures that
public customers who have taken the
risk of placing limit orders on the
Exchange have a fair opportunity to
participate in transactions taking place
on the Exchange. The Commission notes
that the proposed rules providing this
protection are similar to the rules of
other exchanges with similar
functionality and believes that they
raise no novel issues.24 Based on the
foregoing, the Commission finds that the
proposed rule change is consistent with
the Act.
IV. Solicitation of Comments on
Amendments No. 1
Interested persons are invited to
submit written data, views, and
arguments concerning whether
Amendments No. 1 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–
NYSEAMER–2020–64 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–NYSEAMER–2020–64. 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
24 See supra note 9 and see also Rules of the
Miami International Securities Exchange, LLC at
Rule 515A(b).
PO 00000
Frm 00209
Fmt 4703
Sfmt 4703
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 this
filing will also 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–NYSEAMER–2020–64 and
should be submitted on or before
January 4, 2021.
V. Accelerated Approval of the
Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 1, prior to
the thirtieth day after the date of
publication of Amendment No. 1 in the
Federal Register. In Amendment No. 1,
the Exchange modified the proposal
with respect to the outcomes of AON
CUBE Auctions for larger-sized orders
in certain cases where there is Customer
interest on the Exchange’s book.25 In
doing so, the Exchange aligned the
outcomes of the Auction with the
outcomes of similar mechanisms on
other exchanges, affording appropriate
protections for the priority of Customer
interest,26 which the Commission has
found to be consistent with the Act.27
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,28 to approve the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,29 that the
proposed rule change SR–NYSEAMER–
25 See
supra note 6.
supra note 9
27 In the other changes made by Amendment No.
1, the Exchange exercised its discretion not to
propose an AON CUBE Auction for Complex Orders
at this time, and enhanced the clarity of its
proposal.
28 15 U.S.C. 78s(b)(2).
29 15 U.S.C. 78s(b)(2).
26 See
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Federal Register / Vol. 85, No. 239 / Friday, December 11, 2020 / Notices
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2020–64, as modified by Amendment
No. 1 be, and hereby is, approved.
The
following is a summary of the
application. The complete application
For the Commission, by the Division of
may be obtained via the Commission’s
Trading and Markets, pursuant to delegated
website by searching for the file
authority.30
number, or for an applicant using the
J. Matthew DeLesDernier,
Company name box, at https://
Assistant Secretary.
www.sec.gov/search/search.htm or by
[FR Doc. 2020–27203 Filed 12–10–20; 8:45 am]
calling (202) 551–8090.
BILLING CODE 8011–01–P
Applicant’s Representations:
1. Applicant is a Maryland statutory
trust and is a non-diversified, closedSECURITIES AND EXCHANGE
end management investment company
COMMISSION
registered under the Act. Prior to the
[Investment Company Act Release No.
Special Meeting (as defined below),
34130; 811–22260]
Applicant was named ‘‘RMR Real Estate
Income Fund’’ and its primary
RMR Mortgage Trust
investment objective was to earn and
pay to its common shareholders a high
December 7, 2020.
level of current income by investing in
AGENCY: Securities and Exchange
real estate companies. Capital
Commission (‘‘Commission’’).
appreciation was Applicant’s secondary
ACTION: Notice.
objective.
2. At a special meeting of Applicant’s
Notice of application for
shareholders on April 16, 2020 (‘‘the
deregistration under Section 8(f) of the
Special Meeting’’), Applicant’s
Investment Company Act of 1940 (the
shareholders approved a proposal (the
‘‘Act’’).
Summary of Application: RMR
‘‘Business Change Proposal’’) to change
Mortgage Trust requests an order
Applicant’s business from a registered
declaring that it has ceased to be an
investment company to a commercial
investment company.
mortgage real estate investment trust
Applicant: RMR Mortgage Trust.
(‘‘REIT’’) that focuses primarily on
Filing Dates: The application was
originating and investing in first
filed on May 27, 2020 and was amended mortgage whole loans secured by
on August 17, 2020, November 18, 2020 middle market and transitional
and December 1, 2020.
commercial real estate (‘‘CRE’’).
Hearing or Notification of Hearing: An Notably, the proxy statement in
order granting the request will be issued connection with the Business Change
unless the Commission orders a hearing. Proposal stated that, if approved,
Interested persons may request a
Applicant would realign its portfolio so
hearing by emailing the Commission’s
that it will not be considered an
Secretary at Secretarys-Office@sec.gov
investment company under the Act and
and serving Applicant with a copy of
apply to the Commission for an order
the request by email. Hearing requests
declaring that Applicant has ceased to
should be received by the Commission
be an investment company. Applicant
by 5:30 p.m. on January 4, 2021 and
represents that it has operated during its
should be accompanied by proof of
2020 taxable year so that it may qualify
service on Applicant, in the form of an
for taxation as a REIT for federal tax
affidavit, or, for lawyers, a certificate of
purposes.
service. Pursuant to rule 0–5 under the
3. Applicant states that, following the
Act, hearing requests should state the
Special Meeting, it has taken various
nature of the writer’s interest, any facts
steps to implement the Business
bearing upon the desirability of a
Proposal, including changing its name
hearing on the matter, the reason for the to ‘‘RMR Mortgage Trust,’’ divesting
request, and the issues contested.
legacy portfolio assets and reorienting
Persons who wish to be notified of a
its portfolio to originating and investing
hearing may request notification by
in first mortgage whole loans secured by
emailing to the Commission’s Secretary
middle market and transitional CRE.
at Secretarys-Office@sec.gov.
Applicant states that it also holds itself
ADDRESSES: The Commission:
out in its periodic reports to
Secretarys-Office@sec.gov. Applicants:
shareholders, press releases and website
jclark@rmrgroupadvisors.com.
as a company that focuses primarily on
FOR FURTHER INFORMATION CONTACT:
originating and investing in first
Marc Mehrespand, Senior Counsel;
mortgage whole loans secured by
Trace Rakestraw, Branch Chief, at (202)
middle market and transitional CRE.
4. Applicant’s investment advisory
551–6825 (Division of Investment
agreement (‘‘IAA’’) with RMR Advisors
Management, Chief Counsel’s Office).
LLC (the ‘‘Adviser’’), Applicant’s
30 17 CFR 200.30–3(a)(12).
investment adviser, remains in effect
VerDate Sep<11>2014
23:25 Dec 10, 2020
Jkt 253001
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00210
Fmt 4703
Sfmt 4703
80199
but Applicant anticipates that, if
Applicant receives the order, the IAA
would be terminated and Applicant
would enter into a new management
agreement with the Adviser, or an
affiliate of the Adviser. Applicant
represents that its officers devote
significant time to Applicant’s new
business strategy, including in
connection with the formation of
business objectives, plans and strategies
and sourcing of mortgage origination
opportunities. In addition, the Adviser
has established an investment
committee (the ‘‘Investment
Committee’’) responsible for evaluating
mortgage loan origination opportunities
and making determinations as to
whether or not to fund such loan
opportunities, in each case, taking into
account Applicant’s investment
guidelines and considerations, subject
to any required approvals by
Applicant’s Board of Trustees
(‘‘Board’’). Two of Applicant’s Board
members serve as members of the
Investment Committee.
5. Applicant states that it currently
originates commercial mortgage loans
through a wholly-owned subsidiary,
RMTG Lender LLC (the ‘‘Real Estate
Subsidiary’’). As of November 30, 2020,
100% of the assets of the Real Estate
Subsidiary consisted of commercial
mortgage loans fully secured by real
estate. Applicant represents that it may
establish other wholly-owned
subsidiaries to carry out specific
activities, consistent with Applicant’s
business of originating and investing in
first mortgage whole loans secured by
middle market and transitional CRE.
6. Applicant represents that the Real
Estate Subsidiary is excluded from the
definition of ‘‘investment company’’ by
section 3(c)(5)(C) of the Act and,
therefore, securities issued by the Real
Estate Subsidiary are not ‘‘investment
securities’’ as defined in section 3(a)(2)
of the Act. Applicant states that, as of
November 30, 2020, the value of
investment securities owned by
Applicant represents approximately
35.1% of Applicant’s total assets,
exclusive of Government securities and
cash items, on an unconsolidated basis
(‘‘Adjusted Total Assets’’).
7. For the nine months ended
September 30, 2020, Applicant states
that it derived approximately 100% of
its gross income from securities (other
than investments that qualify as
‘‘mortgages and other liens on and
interests in real estate’’ for purposes of
section 3(c)(5)(C) of the Act (‘‘Qualifying
Real Estate Assets’’)) and approximately
0% of its gross income from Qualifying
Real Estate Assets, and for the period
from October 1, 2020 through November
E:\FR\FM\11DEN1.SGM
11DEN1
]]>Agencies
[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Notices]
[Pages 80196-80199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27203]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90584; File No. SR-NYSEAMER-2020-64]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing of Amendment No. 1 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, to Modify Rule
971.1NY Regarding Customer Best Execution Auctions to Provide Optional
All-or-None Functionality for Larger-Sized Orders
December 7, 2020.
I. Introduction
On August 19, 2020, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to modify Rules 971.1NY and 971.2NY regarding the
Exchange's Customer Best Execution auction (``CUBE Auction'' or
``Auction'') to provide optional all-or-none (``AON'') functionality
for larger-sized orders. The proposed rule change was published for
comment in the Federal Register on September 8, 2020.\3\ On October 14,
2020, pursuant to Section 19(b)(2) of the Act,\4\ the Commission
extended the time period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to approve or disapprove the proposed rule change,
to December 7, 2020.\5\ The Commission has received no comments on the
proposed rule change. On November 24, 2020, the Exchange filed
Amendment No. 1 to the proposed rule change, which replaced and
superseded the proposed rule change in its entirety.\6\ The Commission
is publishing this notice to solicit comments on the proposed rule
change, as modified by Amendment No. 1, from interested persons, and is
approving the proposed rule change, as modified by Amendment No. 1, on
an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 89723 (September 1,
2020), 85 FR 55562 (September 8, 2020).
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 90178 (October 14,
2020), 85 FR 66645 (October 20, 2020).
\6\ In Amendment No. 1, the Exchange modified the proposal with
regard to the outcomes of the proposed new CUBE Auction
functionality, as proposed for larger-sized orders, in certain
situations where Customer interest at the stop price is resting on
the Exchange's book before, or arrives during, the Auction. See
infra notes 15-18 and accompanying text for a description of these
outcomes under the proposal as amended. See also Exhibit 4 of
Amendment No. 1 showing the changes made by the amendment to the
text of Commentary .05 to Rule 971.1NY as originally proposed. In
Amendment No. 1 the Exchange also deleted proposed new Commentary
.04 to Rule 971.2NY, which would have provided for optional
functionality for larger-sized orders in the Exchange's CUBE Auction
for Complex Orders paralleling the similar functionality for Single-
Leg CUBE Auctions proposed in new Commentary .05 to Rule 971.1NY,
and made other, clarifying revisions in its discussion of the
purpose of the proposal.
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
In Amendment No. 1, the Exchange proposes to expand its electronic
crossing mechanism--the CUBE Auction--to provide optional AON \7\
[[Page 80197]]
functionality for ATP Holders to execute larger-sized orders (i.e., 500
or more contracts) in the Single-Leg CUBE Auction.\8\ The Exchange
seeks to expand the CUBE Auction functionality in a manner consistent
with similar price-improvement mechanisms for larger-sized orders
already available on other options exchanges.\9\ As such, the Exchange
believes that its proposal would allow it to compete with other options
exchanges for such larger-sized orders and would benefit market
participants who are already familiar with such price-improvement
mechanisms.
---------------------------------------------------------------------------
\7\ An All-or-None Order or AON Order is a ``Market or Limit
Order that is to be executed on the Exchange in its entirety or not
at all.'' See Rule 900.3NY(d)(4).
\8\ See proposed Rules 971.1NY, Commentary .05. Capitalized
terms have the same meaning as the defined terms in Rule 971.1NY.
\9\ The Exchange cites as an example the Solicitation Auction
Mechanism (``SAM'' or ``SAM Auction'') of the Cboe Exchange, Inc.
(``Cboe''), governed by Cboe Rule 5.39, described by the Exchange as
an electronic crossing mechanism for single-leg paired orders of 500
or more contracts, which the Cboe system automatically treats as
All-Or-None, where the solicited contra order(s) trades entirely
with the agency order at the stop price unless, in the aggregate,
the agency order can be filled entirely by responses to the auction
at improved prices or, if there are Priority Customer orders at the
stop price, by such Priority Customer orders alone or in combination
with responses to the auction at the stop price or improved prices.
If there are Priority Customer orders at the stop price but
insufficient size of such orders alone or when aggregated with
responses at the stop price or better prices to fill the agency
order, both the agency order and solicited contra order(s) will be
cancelled. The Exchange notes that Cboe's affiliated exchanges
similarly offer such auction mechanism for larger-sized orders. See,
e.g., Cboe EDGX Exchange, Inc. (``Cboe EDGX'') Rules 21.21 (SAM).
The Exchange also notes that similar mechanisms are available on
other options exchanges. See, e.g., Nasdaq ISE LLC (``ISE''),
Options 3, Section 11(d) (setting forth its Solicited Order
Mechanism).
---------------------------------------------------------------------------
According to the Exchange, the CUBE Auction operates seamlessly
with the Consolidated Book--while still affording CUBE Orders an
opportunity to receive price improvement.\10\ The Exchange states that
the proposal to expand the current CUBE Auction functionality by
providing an additional (optional) method for market participants to
effect larger-sized orders in the CUBE Auction would likewise operate
seamlessly with the Consolidated Book. The Exchange believes that its
proposal would encourage ATP Holders to compete vigorously to provide
the opportunity for price improvement for larger-sized orders in a
competitive auction process, which may lead to enhanced liquidity and
tighter markets.
---------------------------------------------------------------------------
\10\ See Rule 900.2NY(14) (defining Consolidated Book (or
``Book'') and providing that all quotes and orders ``that are
entered into the Book will be ranked and maintained in accordance
with the rules of priority as provided in Rule 964NY''). Rule 964NY
(Display, Priority and Order Allocation--Trading Systems) dictates
the priority of quotes and orders.
---------------------------------------------------------------------------
Proposed AON Single-Leg CUBE functionality
The Exchange proposes to add new Commentary .05 to Rule 971.1NY to
provide that a CUBE Order of at least 500 contracts would execute in
full at the single stop price against the Contra Order, except under
specified circumstances (the ``AON CUBE Order'').\11\ As further
proposed, a Contra Order would not be permitted to guarantee an AON
CUBE Order for auto-match or an auto-match limit, which features are
otherwise available in a Single-Leg CUBE Auction.\12\
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\11\ See proposed Commentary .05, Rule 971.1NY. See Rule
971.1NY(c)(1)(A) (setting forth parameters for single stop price).
An AON CUBE Order would be rejected for the same reasons as a CUBE
Order (see Rule 971.1NY(b)(2)-(10)), except that the minimum size
for an AON CUBE Order is 500 contracts, as opposed to one contract,
as set forth in Rule 971.1NY(b)(8).
\12\ See proposed Commentary .05, Rule 971.1NY. See also Rule
971.1NY(c)(1)(B)-(C) (regarding parameters for auto-match and auto-
match limit price).
---------------------------------------------------------------------------
The initiating price and permissible range of executions for a
proposed AON CUBE Order would be determined in the same manner as for a
standard CUBE Order.\13\ An AON CUBE Order Auction would also be
subject to the same early end events as a Single-Leg CUBE Order.\14\
---------------------------------------------------------------------------
\13\ An AON CUBE Order and its paired Contra Order would be
rejected if it failed to meet the pricing parameters. See Rule
971.1NY(b) (regarding auction eligibility requirements).
\14\ See Rule 971.1NY(c)(4) (setting forth the type of interest
that causes the early end to a Single-Leg CUBE Auction).
---------------------------------------------------------------------------
As proposed, an AON CUBE Order would not execute with the Contra
Order if the entire AON CUBE Order could be satisfied in full by
certain eligible contra-side interest. Specifically, the Exchange
proposes that paragraph (a) to Commentary .05 to Rule 971.1NY would
provide that:
(a) The Contra Order would not receive any allocation and will
be cancelled if (i) RFR Responses to sell (buy) at prices lower
(higher) than the stop price can satisfy the full quantity of the
AON CUBE Order or (ii) there is Customer interest to sell (buy) at
the stop price that on its own, or when aggregated with RFR
Responses to sell (buy) at the stop price or prices lower (higher)
than the stop price, can satisfy the full quantity of the AON CUBE
Order. In either such case, the RFR Responses will be allocated as
provided for in paragraphs (c)(5)(A) and (c)(5)(B)(i) of this Rule,
as applicable.\15\
---------------------------------------------------------------------------
\15\ See proposed Commentary .05, Rule 971.1NY(a).
Thus, as noted by the Exchange, if there is price-improving contra-
side interest that can satisfy the AON condition of the Auction, the
AON CUBE Order would execute in full against those price-improving RFR
Responses and the Contra Order would cancel. Or, absent such price-
improving interest, if there is Customer interest equal to the stop
price that on its own, or when combined with equal- or better-priced
RFR Responses that can satisfy the AON condition of the Auction, the
AON CUBE Order would execute in full against such interest and the
Contra Order would cancel. Under either scenario, the AON CUBE Order
would be allocated against contra-side interest at the best price(s)
pursuant to the Exchange's priority rules.\16\
---------------------------------------------------------------------------
\16\ See Rule 971.1NY (c)(5)(A) (providing Customer interest
first priority to trade with the CUBE Order, pursuant to the size
pro rata algorithm set forth in Rule 964NY(b)(3) at each price
point) and (c)(5)(B)(i) (providing that, second to Customer
interest, RFR Responses priced below (above) the stop price,
beginning with the lowest (highest) price within the range of
permissible executions will execute with the CUBE Order, pursuant to
the size pro rata algorithm set forth in Rule 964NY(b)(3) at each
price point).
---------------------------------------------------------------------------
As further proposed, both the AON CUBE Order and Contra Order would
be cancelled, i.e., the Auction would be cancelled, if there is contra-
side Customer interest at the stop price and such interest on its own
or when combined with RFR Responses (at the stop price or better) is
insufficient to satisfy the entire AON CUBE Order. To effect this
result, the Exchange proposes that paragraph (b) to Commentary .05 to
Rule 971.1NY would provide that:
(b) T he AON CUBE Order and Contra Order will both be cancelled
if there is Customer interest to sell (buy) at the stop price and
such interest, either on its own or when aggregated with RFR
Responses to sell (buy) at the stop price or prices lower (higher)
than the stop price, is insufficient to satisfy the full quantity of
the AON CUBE Order.\17\
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\17\ See proposed Commentary .05, Rule 971.1NY(b).
Thus, as proposed, if there is contra-side Customer interest at the
stop price, but there is not enough size (considering the Customer
interest and all RFR Responses at the stop price or better) to satisfy
the entire AON CUBE Order, then both the AON CUBE Order and the Contra
Order would be cancelled. The Exchange believes that this proposal is
consistent with the terms of how AON orders function generally without
violating the Exchange's general priority rules.\18\ With respect to
allocation, the Exchange notes that the proposed functionality differs
from the allocation of a standard Single-Leg CUBE Order in that the
Contra Order is not guaranteed
[[Page 80198]]
a minimum allocation at the stop price. Instead, given the AON nature
of the functionality, the Contra Order either trades with the entire
AON CUBE Order or not at all.\19\ The Exchange's proposal also is
consistent with the AON nature of similar mechanisms on other options
exchanges.\20\
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\18\ See Rule 964NY (regarding order ranking and priority).
\19\ See Rule 971.1NY(c)(5)(B)(i)(b) (providing that, ``if there
is sufficient size of the CUBE Order still available after executing
at better prices or against Customer interest, the Contra Order
shall receive additional contracts required to achieve an allocation
of the greater of 40% of the original CUBE Order size or one
contract (or the greater of 50% of the original CUBE Order size or
one contract if there is only one RFR Response)'').
\20\ See supra note 9 (regarding Cboe's SAM functionality for
larger-sized paired orders designated as AON).
---------------------------------------------------------------------------
With the exception of differences to the minimum size and
allocation described in proposed Commentary .05 to Rule 971.1NY, an AON
CUBE Order would otherwise be subject to Rule 971.1NY with respect to
all other aspects of the CUBE Auction functionality.\21\
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\21\ See proposed Commentary .05, Rule 971.1NY.
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Implementation
The Exchange states that it will announce the implementation date
of the proposed rule change in a Trader Update following the approval
of this proposed rule change.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to national securities exchanges.\22\ In particular, the
Commission finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\23\
which requires that the rules of an exchange be designed, among other
things, to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in facilitating transactions in
securities, and to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\22\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\23\ 17 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission believes that approving the Exchange's proposal, as
amended, to provide optional AON functionality for larger-sized orders
may allow for greater flexibility in executing large-sized orders and
could provide additional opportunities for such orders to receive price
improvement over the NBBO, in the interest of perfecting the mechanism
of free and open markets. The Commission further believes that the
proposal, as amended, includes appropriate conditions to protect the
priority of public customer orders on the Exchange, and is thereby
consistent with the protection of investors and the public interest,
because it assures that public customers who have taken the risk of
placing limit orders on the Exchange have a fair opportunity to
participate in transactions taking place on the Exchange. The
Commission notes that the proposed rules providing this protection are
similar to the rules of other exchanges with similar functionality and
believes that they raise no novel issues.\24\ Based on the foregoing,
the Commission finds that the proposed rule change is consistent with
the Act.
---------------------------------------------------------------------------
\24\ See supra note 9 and see also Rules of the Miami
International Securities Exchange, LLC at Rule 515A(b).
---------------------------------------------------------------------------
IV. Solicitation of Comments on Amendments No. 1
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendments No. 1 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-NYSEAMER-2020-64 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-NYSEAMER-2020-64. 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 this filing will also 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-NYSEAMER-2020-
64 and should be submitted on or before January 4, 2021.
V. Accelerated Approval of the Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the thirtieth day
after the date of publication of Amendment No. 1 in the Federal
Register. In Amendment No. 1, the Exchange modified the proposal with
respect to the outcomes of AON CUBE Auctions for larger-sized orders in
certain cases where there is Customer interest on the Exchange's
book.\25\ In doing so, the Exchange aligned the outcomes of the Auction
with the outcomes of similar mechanisms on other exchanges, affording
appropriate protections for the priority of Customer interest,\26\
which the Commission has found to be consistent with the Act.\27\
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\28\ to approve the proposed rule change, as
modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------
\25\ See supra note 6.
\26\ See supra note 9
\27\ In the other changes made by Amendment No. 1, the Exchange
exercised its discretion not to propose an AON CUBE Auction for
Complex Orders at this time, and enhanced the clarity of its
proposal.
\28\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\29\ that the proposed rule change SR-NYSEAMER-
[[Page 80199]]
2020-64, as modified by Amendment No. 1 be, and hereby is, approved.
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
---------------------------------------------------------------------------
\30\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27203 Filed 12-10-20; 8:45 am]
BILLING CODE 8011-01-P
