[Federal Register Volume 79, Number 212 (Monday, November 3, 2014)]
[Notices]
[Pages 65273-65275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26013]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73453; File No. SR-NYSEARCA-2014-118]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rule 7.16(f)(v) To Provide That Proactive if Locked Modifiers 
Will Be Ignored for Short Sale Orders During a Short Sale Period

October 28, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on October 15, 2014, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``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\ 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 NYSE Arca Equities Rule 7.16(f)(v) 
to provide that Proactive if Locked Modifiers will be ignored for short 
sale orders during a Short Sale Period. 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

[[Page 65274]]

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 is proposing to amend NYSE Arca Equities Rule 
7.16(f)(v) (``Rule 7.16'') to provide that Proactive if Locked 
Modifiers will be ignored for short sale orders during a Short Sale 
Period.
    Rule 7.16(f) sets forth how the Exchange handles short sale orders 
when the provisions of paragraph (b)(1) of Rule 201 of Regulation SHO 
are in effect.\4\ Rule 7.16(f)(b)(ii)(sic) provides that the Exchange 
will not execute or display a short sale order for a covered security, 
as defined in Rule 201 of Regulation SHO, at a price that is less than 
or equal to the current national best bid (``NBB'') if the listing 
market for such security has determined that the price of the covered 
security decreased by 10% or more from the prior day's closing price 
(``Short Sale Price Test''). Consistent with paragraph (b)(1)(ii) of 
Rule 201 of Regulation SHO,\5\ Exchange Rule 7.16(f)(iv) defines a 
Short Sale Period as the period during which sell orders marked short 
are subject to a Short Sale Price Test. Rule 7.16(f)(v) further 
specifies how the Exchange handles short sale orders during the Short 
Sale Period.
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    \4\ 17 CFR 242.201(b)(1).
    \5\ 17 CFR 242.201(b)(1)(ii).
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    The Exchange proposes to add new Rule 7.16(f)(v)(G) to specify how 
the Exchange will handle short sale orders that include a Proactive if 
Locked Modifier during a Short Sale Period. As defined in Rule 
7.31(hh), a Proactive if Locked Modifier is available for limit orders 
and if so designated, the Exchange will route the order to another 
market center pursuant to Rule 7.37(d) for the away market's displayed 
size in the instance in which the other market center has locked the 
order and the locking market has not resolved the locked market 
situation in a timely manner based upon average response times from 
other market centers. If the order routed from the Exchange to another 
market center is not executed in its entirety, the Exchange shall post 
the order or portion thereof on the Exchange's book. Proactive if 
Locked Modifiers are only available for Exchange-listed securities.
    As proposed, the Exchange will ignore Proactive if Locked Modifiers 
applied to short sale orders for a security that is in a Short Sale 
Period. The Exchange believes that it is appropriate to ignore the 
Proactive if Locked Modifier for short sale orders during a Short Sale 
Period because it would reduce the possibility that the Exchange will 
route a short sale order priced at or below the NBB to another market 
center. Instead, the Exchange will handle the short sale order 
consistent with the existing provisions of Rule 7.16(f)(v), as 
applicable, which may include re-pricing the order to a Permitted Price 
\6\ or rejecting the order, if so designated by the ETP Holder.\7\
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    \6\ A Permitted Price is one minimum price increment above the 
NBB. Rule 7.16(b)(v)(C).
    \7\ See Rule 7.16(b)(v)(A).
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    The Exchange will announce the implementation date of the systems 
functionality associated with the proposed rule change by Trader Update 
to be published no later than 30 days following the effective date. The 
implementation date will be no later than 30 days following the 
issuance of the Trader Update.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5),\9\ in particular, in that it is 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that ignoring the Proactive if Locked 
Modifier for short sale orders during a Short Sale Period will remove 
impediments to and perfect the mechanism of a free and open market 
because it will reduce the possibility that the Exchange will route a 
sell short order priced at or below the NBB to another market center. 
Rule 201(b)(1)(i) of Regulation SHO \10\ requires that a trading center 
prevent the execution or display of a short sale order at a price that 
is less than or equal to the NBB, but is silent on whether a trading 
center can route a short sale order during a Short Sale Period that is 
priced less than or equal to the NBB. The Exchange believes, however, 
that it is appropriate and promotes just and equitable principles of 
trade to reduce the possibility that the Exchange would route a sell 
short order during a Short Sale Period that is priced less than or 
equal to the NBB, as the receiving away market would otherwise be 
required to prevent the display or execution of such order consistent 
with Rule 201 of Regulation SHO. The Exchange therefore believes that 
by ignoring Proactive if Locked Modifiers for short sale orders during 
a Short Sale Period, the Exchange would comply with Rule 201 of 
Regulation SHO by handling the order consistent with other provisions 
of Rule 7.16(f)(v) and not shift that responsibility to an away market.
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    \10\ 17 CFR 242.201(b)(1)(i)
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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 Exchange believes the 
proposed rule change removes a burden on competition because it reduces 
the possibility that the Exchange would route a sell short order during 
a Short Sale Period that is priced less than or equal to the NBB, which 
otherwise would have shifted the responsibility for that sell short 
order to an away market. As proposed, the Exchange would instead be 
responsible for handling that sell short order, consistent with 
existing Rule 7.16(f)(v) and Rule 201 of Regulation SHO.

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 \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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)

[[Page 65275]]

of the Act and Rule 19b-4(f)(6)(iii) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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-NYSEARCA-2014-118 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEARCA-2014-118. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for inspection and copying 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-NYSEARCA-2014-118 and should be 
submitted on or before November 24, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26013 Filed 10-31-14; 8:45 am]
BILLING CODE 8011-01-P