[Federal Register Volume 79, Number 169 (Tuesday, September 2, 2014)]
[Notices]
[Pages 52094-52096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-20698]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72916; File No. SR-NYSE-2014-44]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
(i) Delete Obsolete Rules Relating to Exchange-Listed Options Trading 
and Related References (NYSE Rules 700-794); (ii) Delete Obsolete Rules 
Related to the Defunct Exchange Stock Portfolio Service and Related 
References (NYSE Rules 800-817); and (iii) Amend NYSE Rules 15A and 
123D To Remove Outdated References to the Terminated Intermarket 
Trading System Plan

 August 26, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 15, 2014, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to (i) delete obsolete rules relating to 
Exchange-listed options trading (Rules 700-794) and related references; 
(ii) delete obsolete rules related to the defunct Exchange Stock 
Portfolio Service (Rules 800-817) and related references; and (iii) 
amend Rules 15A and 123D to remove outdated references to the 
terminated Intermarket Trading System (``ITS'') Plan. The text of the 
proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to (i) delete obsolete rules governing 
Exchange-listed options trading (Rules 700-794) and related references; 
(ii) delete obsolete rules governing the defunct Exchange Stock 
Portfolio Service (Rules 800-817) and related references; and (iii) 
amend Rules 15A and 123D to remove references to the terminated ITS 
Plan.
    First, the Exchange proposes to delete the 700 rule series (Rules 
700-794), which apply to the trading of option contracts issued by The 
Options Clearing Corporation on the Exchange. The NYSE sold its listed 
options business in 1997 and does not currently trade Exchange-listed 
options.\3\ It is no longer necessary to maintain options trading rules 
for a business the Exchange no longer conducts. The Exchange also 
proposes to amend Rule 345, relating to registration of employees, to 
remove references to Rule 700(b)(4). Similarly, the Exchange proposes 
to remove 700 series rules from the minor rule violation plan and amend 
Rules 9217 and 476A accordingly.\4\
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    \3\ The business was sold to the Chicago Board Options Exchange, 
Inc. See Securities Exchange Act Release No. 38542 (April 23, 1997), 
62 FR 23521 (April 30, 1997).
    \4\ In 2013, the NYSE adopted a new set of procedural rules 
modeled on the rules of the Financial Industry Regulatory Authority 
(``FINRA'') that included aspects of FINRA's process and fine levels 
for minor rule violations. The Exchange maintained the specific list 
of rules set forth in NYSE Rule 476A, which were moved to new Rule 
9217. See Securities Exchange Act Release Nos. 68678 (Jan. 16, 
2013), 78 FR 5213 (Jan. 24, 2013), and 69045 (Mar. 5, 2013), 78 FR 
15394 (Mar. 11, 2013) (SR-NYSE-2013-02). Rule 476A continues to 
apply to disciplinary proceedings filed prior to July 1, 2013. The 
Exchange also proposes to remove references to the terminated ITS 
Plan in Rule 476A. See note 12, infra.
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    Second, the Exchange proposes to delete the 800 rule series (Rules 
800-817), which governs the NYSE's Exchange Stock Portfolio Service 
(``ESP Service''). The ESP Service was initiated in 1989 to enable the 
trading of standardized baskets of stocks at an aggregate price in a 
single execution on the Exchange's trading Floor.\5\ The ESP Service 
allowed trades in the component stocks of an index basket to be 
effected in a single execution, as opposed to separate executions for 
each of the component stocks. The program was suspended in 1991.\6\ 
Because the Exchange no longer conducts the ESP Service, the rules 
associated with it are also obsolete.
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    \5\ See SEC No-Action Letter, 1989 WL 246468 (Oct. 26, 1989).
    \6\ See, e.g., SEC No-Action Letter, 2009 WL 1758909 (June 11, 
2009).
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    The Exchange also proposes to amend the following rules to remove 
references to rules in the 800 series:
     Rule 111, governing reports of executions;
     Rule 96, governing limitations on members' trading based 
on existing options positions;
     Rule 104T, governing dealings by Exchange Designated 
Market Makers; and,
     Rule 36, governing communications between Exchange and 
Members' Offices.
    Finally, the Exchange proposes to amend Rule 15A, the order 
protection rule, and Rule 123D, which governs openings and halts in 
trading, to remove references to the ITS Plan.\7\
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    \7\ Between 1978 and 2007, ITS was the principal means of 
electronically transmitting orders between market centers to avoid 
trading through superior quotes in those markets. When the 
Commission adopted Reg. NMS, the ITS Plan participants terminated 
the governing agreement, the ITS Plan, and replaced it with the NMS 
Linkage Plan. See Securities Exchange Act Release No. 34-54551 
(September 29, 2006), 71 FR 194 (October 6, 2006). The purpose of 
the NMS Linkage Plan was to enable the plan participants to act 
jointly in planning, developing, operating and regulating the NMS 
Linkage System that would electronically link the participant 
markets to one another.
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    Rule 15A was amended in 2007 to describe how the Exchange would 
automatically route orders to other market centers to prevent trade-
throughs on the Exchange in conformance with SEC Rule 611 (the ``Order 
Protection Rule'') of Regulation National Market System (``Reg. NMS'') 
beginning on March 5, 2007.\8\ However, since the ITS Plan was still in 
effect, the Exchange retained those portions of Rule 15A describing the 
circumstances under which the Exchange routed orders to

[[Page 52095]]

other market centers to avoid trade throughs according to parameters 
established by the ITS Plan. ITS was eliminated on June 30, 2007.\9\ 
The Exchange proposes to retain that portion of Rule 15A added in 2007 
that describes compliance with the order protection rule of Reg. NMS 
and delete the remainder of the obsolete rule text relating to the ITS 
Plan.
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    \8\ See Securities Exchange Act Release No. 34-55387 (March 2, 
2007), 72 FR 10808 (March 9, 2007) (SR-NYSE-2007-2[sic]).
    \9\ The NMS Linkage Plan ran concurrently with the ITS Plan 
until March 5, 2007, at which time the ITS Plan terminated and the 
Order Protection Rule became operative. The NMS Linkage Plan 
terminated on June 30, 2007.
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    Similarly, Rule 123D contains the obsolete requirement that the 
relevant ``ITS Pre-Opening Applications'' must be followed when 
necessary based upon the anticipated opening price. This language 
refers to the ITS Plan requirement, codified in an earlier version of 
Rule 15, that each market center have procedures governing the 
dissemination of pre-opening price information.\10\ Rule 15 was amended 
in 2007 following the termination of the ITS Plan to, among other 
things, remove the requirement to disseminate ITS pre-opening 
indications, which the Commission acknowledged were no longer required 
following the elimination of the ITS Plan and the NMS Linkage Plan.\11\ 
It bears noting that deletion of this rule text in Rule 123D in no way 
diminishes the obligation of DMMs to issue pre-opening indications 
under appropriate circumstances as set forth in the current version of 
Rule 15.\12\
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    \10\ See Securities Exchange Act Release No. 34-57003 (December 
20, 2007), 72 FR 73949 (December 28, 2007) (SR-NYSE-2007-112). Prior 
to its amendment in 2007, Rule 15 defined an ``Pre-Opening 
Application'' as ``the application of the System that permits a 
market-maker in one Participant market who wishes to open his market 
in an Eligible Listed Security to obtain from other market-makers 
registered in that security in other Participant markets any pre-
opening interests such other market-makers might decide to disclose 
as set forth in the ITS Plan.''
    \11\ See Securities Exchange Act Release No. 34-57003 (December 
20, 2007), 72 FR 73949 (December 28, 2007) (SR-NYSE-2007-112).
    \12\ The Exchange also proposes to remove outdated references to 
ITS in Rule 476A.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\13\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\14\ in particular, in that it 
in that it [sic] is designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system and, in general, help to protect investors and the public 
interest. Specifically, the Exchange believes that deleting rule text 
relating to businesses the NYSE no longer engages in and routing 
arrangements that have been superseded by Reg. NMS removes impediments 
to and perfects the mechanism of a free and open market by simplifying 
its rulebook and removing confusion that may result from having 
obsolete rules in the Exchange's rulebook. The Exchange further 
believes that the proposal removes impediments to and perfects the 
mechanism of a free and open market by ensuring that persons subject to 
the Exchange's jurisdiction, regulators, and the investing public can 
more easily navigate and understand the Exchange's rulebook. The 
Exchange also believes that eliminating obsolete rules would not be 
inconsistent with the public interest and the protection of investors 
because investors will not be harmed and in fact would benefit from 
increased transparency as to which rules are operable, thereby reducing 
potential confusion. Similarly, the Exchange believes that removing 
cross-references to obsolete rules would remove impediments to and 
perfect the mechanism of a free and open market because it would reduce 
potential confusion that may result from having such cross references 
in the Exchange's rulebook. Removing such obsolete cross references 
will also further the goal of transparency and add clarity to the 
Exchange's rules.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change is not 
designed to address any competitive issue but rather to delete obsolete 
rules and cross-references to obsolete rules, thereby increasing 
transparency, reducing confusion, and making the Exchange's rules 
easier to understand and navigate.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission 
may 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 proposal 
may become operative immediately upon filing.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \19\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or

[[Page 52096]]

     Send an email to [email protected]. Please include 
File Number SR-NYSE-2014-44 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2014-44. 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 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 available publicly. All 
submissions should refer to File Number SR-NYSE-2014-44 and should be 
submitted on or before September 23, 2014

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-20698 Filed 8-29-14; 8:45 am]
BILLING CODE 8011-01-P