[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Notices]
[Pages 1396-1398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00066]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71222; File No. SR-NYSEMKT-2013-86]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of
Amendment No. 2 and Order Granting Accelerated Approval of Proposed
Rule Change, as Modified by Amendment Nos. 1 and 2 Thereto, To Adopt
Commentary .03 to Rule 980NY To Limit the Volume of Complex Orders by a
Single ATP Holder During the Trading Day
January 2, 2014.
I. Introduction
On October 28, 2013, NYSE MKT LLC (the ``Exchange'' or ``NYSE
MKT'') filed with the Securities and Exchange Commission
(``Commission''), pursuant
[[Page 1397]]
to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934
(``Act''),\2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to
adopt Commentary .03 to NYSE MKT Rule 980NY to limit the volume of
complex orders that may be entered by a single ATP Holder during the
trading day. On November 5, 2013, the Exchange submitted Amendment No.
1 to the proposed rule change. The proposed rule change, as modified by
Amendment No. 1 thereto, was published for comment in the Federal
Register on November 13, 2013.\4\ The Commission received no comments
on the proposed rule change. On December 23, 2013, the Exchange granted
an extension of time for the Commission to act on the filing until
January 3, 2014.\5\ On December 24, 2013, the Exchange submitted
Amendment No. 2 to the proposed rule change.\6\ The Commission is
publishing this notice to solicit comments on Amendment No. 2 from
interested persons, and is approving the proposed rule change, as
modified by Amendment Nos. 1 and 2, on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 70816 (November 6,
2013), 78 FR 68111 (``Notice'').
\5\ In addition, on December 24, 2013, the Commission extended
the time period for Commission action to January 3, 2014. See
Securities Exchange Act Release No. 71183 (December 24, 2013).
\6\ In Amendment No. 2, the Exchange amended the proposed rule
change by removing the language in the proposal that gives the
Exchange discretion to adjust the specified percentage (i.e.,
``n%'') to an amount less than 60% and ``n%-x'' to an amount less
than 40%. Amendment No. 2 has been placed in the public comment file
for NYSEMKT-2013-86 at http://www.sec.gov/comments/sr-nysemkt-2013-86/nysemkt201386.shtml (see letter from Janet McGinness, EVP &
Corporate Secretary, General Counsel, NYSE MKT, to Elizabeth M.
Murphy, Secretary, Commission, dated December 26, 2013).
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II. Description of the Proposed Rule Change
The Exchange currently ranks and tracks Electronic Complex Orders
in the Consolidated Book in a ``complex order table.'' Although the
Exchange stated that the complex order table has sufficient capacity to
accept all Complex Orders submitted by all ATP Holders under normal
operating conditions, the Exchange also noted that that capacity is not
unlimited.\7\ Given that this capacity is not unlimited, the Exchange
proposes to adopt Commentary .03 to Rule 980NY \8\ to provide that if
an ATP Holder submits orders that comprise more than ``n%'' of the
capacity of the complex order table (the ``Cap''), the Exchange will
reject that ATP Holder's Electronic Complex Orders for the remainder of
the trading day. Proposed Commentary .03 to Rule 980NY also provides a
``warning threshold'' of ``n%-x'' of the complex order table. If an ATP
Holder breaches such warning threshold, it would result in the Exchange
rejecting the ATP Holder's Electronic Complex Orders until such time
that the ATP Holder has notified the Exchange to re-enable the
submission of Electronic Complex Orders. The Exchange will not reject
any Electronic Complex Orders until after an ATP Holder has breached
either the warning threshold (i.e., ``n%-x'') or the Cap.\9\ The
specified percentage (i.e., ``n%'') will be no less than 60%, and ``n%-
x'' will be no less than 40%.
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\7\ According to the Exchange, the complex order table currently
has the capacity to hold Electronic Complex Orders containing up to
16 million legs throughout the trading day. See Notice, supra note 4
at 68111, n. 8.
\8\ Rule 980NY governs trading of Complex Orders on the NYSE MKT
System (``Electronic Complex Orders'').
\9\ For example, if an ATP Holder submits an Electronic Complex
Order that, once accepted, breaches the Cap, the Exchange will
accept that order in its entirety and then will reject all
subsequent Electronic Complex Orders from that ATP Holder for the
remainder of the trading day.
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The Exchange will announce the implementation date of the proposed
rule change by Trader Update to be published no later than 60 days
following approval by the Commission. The implementation date will be
no later than 60 days following the issuance of the Trader Update.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and rules and
regulations thereunder applicable to a national securities
exchange.\10\ In particular, the Commission finds that the proposed
rule is consistent with Section 6(b)(5) of the Act,\11\ which requires,
among other things, that the rules of an exchange be designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and, in general,
to protect investors and the public interest. The Commission believes
that providing the Cap could provide the Exchange with a system
protection tool to address the potential risk that a single ATP Holder
could--either intentionally or inadvertently--utilize the entire
complex order table, effectively shutting out all other ATP Holders'
Electronic Complex Orders from the Exchange for the remainder of the
trading day. By disabling the submission of Electronic Complex Orders
of a single ATP Holder that has exceeded the Cap, the Cap should allow
the Exchange to accommodate Electronic Complex Orders from all other
ATP Holders, thereby helping to ensure efficient functionality of the
complex order table and the protection of investors and the public
interest. In approving this proposed rule change, the Commission notes
that the Exchange represented that under normal operating conditions,
the combined Electronic Complex Orders of all ATP Holders do not exceed
40% of the complex order table.\12\ Therefore, the Exchange believes
that setting the Cap for a single ATP Holder at 60% would allow 40% of
the complex order table--which is typically sufficient to accommodate
all ATP Holder's Electronic Complex Orders--to remain accessible to the
balance of ATP Holders and would not unfairly deny these ATP Holders
access to the market.\13\
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\10\ In approving the proposed rule changes, the Commission has
considered their impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78f(b)(5).
\12\ See Notice, supra note 4 at 68112. The Commission also
notes that the Exchange represented that a single ATP Holder would
only exceed the Cap (or receive a warning of a near breach) in the
event of a bona fide problem (e.g., a system error or malfeasance).
See id.
\13\ See id.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 2
is consistent with the Act. Comments may be submitted by any of the
following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEMKT-2013-86 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2013-86. 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
[[Page 1398]]
Internet Web site (http://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 Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street NE., Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make publicly available. All
submissions should refer to File Number SR-NYSEMKT-2013-86 and should
be submitted on or before January 29, 2014.
V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment Nos. 1 and 2
As proposed, the proposed rule change provided that, unless
determined otherwise by the Exchange and announced to ATP Holders via
Trader Update, the specified percentage (i.e., ``n%'') will be no less
than 60%, and ``n%-x'' will be no less than 40%. Amendment No. 2
amended the proposed rule change by removing the language in the
proposal that gives the Exchange discretion to adjust the specified
percentage (i.e., ``n%'') to an amount less than 60% and ``n%-x'' to an
amount less than 40%. By removing this discretion, Amendment No. 2
reduces potential uncertainty about the application of the proposed
rule change. Accordingly, the Commission finds good cause, pursuant to
Section 19(b)(2) of the Act,\14\ for approving the proposed rule
change, as modified by Amendment Nos. 1 and 2, prior to the 30th day
after the date of publication of notice in the Federal Register.
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\14\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\15\ that the proposed rule change (SR-NYSEMKT-2013-86), as modified by
Amendment Nos. 1 and 2, be, and hereby is, approved on an accelerated
basis.
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\15\ 15 U.S.C. 78f(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00066 Filed 1-7-14; 8:45 am]
BILLING CODE 8011-01-P