[Federal Register Volume 79, Number 203 (Tuesday, October 21, 2014)]
[Notices]
[Pages 62991-62992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24940]



[[Page 62991]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73351; File No. SR-NYSEMKT-2014-77]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 15--
Equities To Specify That Exchange Systems Can Publish Pre-Opening 
Indications and To Extend the Time Order Imbalance Information is 
Disseminated When an Opening Is Delayed

October 15, 2014.
    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 6, 2014, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 15--Equities to specify that 
Exchange systems can publish pre-opening indications and to extend the 
time order imbalance information is disseminated when an opening is 
delayed. 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 amend Rule 15--Equities (``Rule 15'') to 
specify that Exchange systems can automatically publish pre-opening 
indications utilizing the same guidelines set forth in Rule 15 for 
manual publications by Designated Market Makers (``DMM''). The Exchange 
also proposes to amend Rule 15 to extend the time order imbalance 
information is disseminated when an opening is delayed from the current 
9:35 a.m. to the time the security opens for trading. Finally, the 
Exchange proposes to correct a typographical error in subsection (b)(2) 
of the Rule.
    Rule 15 currently provides that an Exchange DMM, in arranging an 
opening transaction on the Exchange in any security, shall issue a pre-
opening indication whenever the DMM anticipates that the opening 
transaction will be at a price that represents a change of more than 
the ``applicable price change'' specified in the Rule from either:
     The security's last reported sale price on the Exchange; 
\4\ or
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    \4\ Except for American Depositary Receipts (``ADR''), where the 
DMM shall use the closing price of the primary foreign market to 
determine whether the price of such opening transaction represents a 
change of more than the ``applicable price change.'' See Rule 15(b).
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     the security's offering price in the case of an initial 
public offering (``IPO''); or
     the security's last reported sale price on the securities 
market from which the security is being transferred to the Exchange, on 
the security's first day of trading on the Exchange (a ``transferred 
security'').\5\
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    \5\ A pre-opening indication includes the security and the price 
range within which the DMM anticipates the opening transaction will 
occur.
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    The ``applicable price changes'' governing pre-opening indications 
represent a numerical or percentage change from the security's closing 
price per share, as follows:

------------------------------------------------------------------------
                                                            Applicable
                 Exchange  closing price                   price change
                                                            (more than)
------------------------------------------------------------------------
Under $20.00............................................           $0.50
$20-$49.99..............................................           $1.00
$50.00-$99.99...........................................           $2.00
$100-$500...............................................           $5.00
Above $500..............................................            1.5%
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    Pre-opening indications pursuant to this rule are published on the 
Exchange's proprietary data feeds.
    The Exchange proposes to amend Rule 15 to add that either the DMM 
or the Exchange shall issue a pre-opening indication, but not change 
any of the applicable parameters for publishing a pre-opening 
indication. To reflect that the Exchange may be publishing these pre-
opening indications, the Exchange proposes to delete the following 
phrase at the beginning of section (a) of the rule, ``Whenever an 
Exchange DMM, in arranging an opening transaction on the Exchange in 
any security anticipates that,'' and state instead that ``If the 
opening transaction on the Exchange is anticipated to be at a price 
that represents a change from. . . .'' The Exchange further proposes to 
add that the DMM or the Exchange shall issue the pre-opening 
indication, and specify that such pre-opening indication shall include 
the security and the price range within which the opening transaction 
is anticipated to occur.
    The Exchange would publish automatic indications when the Opening 
Imbalance Information in Exchange systems indicates an opening price 
that would be more than the applicable price range away from the 
defined reference price. Because Exchange systems would not have access 
to orally-represented interest in the trading crowd, the Exchange 
believes that a pre-opening indication entered by a DMM would likely be 
based on information not available to Exchange systems, and therefore a 
DMM-entered pre-opening indication should have priority over an 
Exchange-generated pre-opening indication. Accordingly, the Exchange 
further proposes that if a DMM issues a pre-opening indication or a 
mandatory indication pursuant to Rule 123D(1)--Equities,\6\ the 
Exchange would not publish a pre-opening indication in that security.
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    \6\ Rule 123D(1)--Equities provides that an indication is 
mandatory for an opening which will result in a ``significant'' 
price change from the previous close. For securities priced under 
$10, such indications are mandatory if the price change is one 
dollar of more; for securities between $10 and $99.99, indications 
are required for price movements of the lesser of 10% or three 
dollars; and for securities over $100, indications are required for 
price movements of five dollars or more. These guidelines are 
applicable to IPOs based on the offering price.
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    The Exchange also proposes to amend Rule 15 to permit opening order 
imbalance publications to continue until a security is opened. 
Currently, Rule 15 provides that order imbalance information 
disseminated prior to the opening of a security will be disseminated 
approximately every five minutes between 8:30 a.m. Eastern Time 
(``E.T.'') and 9 a.m. E.T.; approximately

[[Page 62992]]

every minute between 9 a.m. E.T. and 9:20 a.m. E.T.; and approximately 
every 15 seconds between 9:20 a.m. E.T. and the opening. If the opening 
is delayed, Rule 15 provides that order imbalance information will be 
published until 9:35 a.m. E.T. Under the proposed rule change, order 
imbalance information would continuously disseminate until the opening 
of trading in that security and not cease at 9:35 a.m. E.T.
    Finally, the Exchange proposes to correct a typographical error in 
the published text of Rule 15(b)(2), which currently contains the word 
``underling'' that should be ``underlying.''
    Because of the technology changes associated with the proposed rule 
change, the Exchange proposes to announce the implementation date via 
Trader Update.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest. The 
Exchange believes that permitting the Exchange to automatically publish 
pre-opening indications and extending opening order imbalance 
publications until a security is opened removes impediments to and 
perfects the mechanism of a free and open market and a national market 
system by continuing to advance the efficiency and transparency of the 
opening process and fostering price discovery at the open of trading, 
thereby minimizing information imbalances in the marketplace. 
Similarly, the proposal promotes just and equitable principles of trade 
and removes impediments to and perfects the mechanism of a free and 
open market by providing customers and the investing public with 
continuous, automated information for securities where there will 
likely be a significant price change from the previous day's closing 
price or for which there is a significant published imbalance. For the 
same reasons, the proposal is also designed to protect investors as 
well as the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 rule change is 
not intended to address competitive issues but rather technologically 
augment the current process of providing pre-market information to 
customers and the investing public.

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 \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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
     Send an email to [email protected]. Please include 
File Number SR-NYSEMKT-2014-77 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-NYSEMKT-2014-77. 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 
a.m. and 3 p.m. Copies of the filing will also be available for Web 
site viewing and printing at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-NYSEMKT-2014-77 and should be submitted on or before 
November 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24940 Filed 10-20-14; 8:45 am]
BILLING CODE 8011-01-P