[Federal Register Volume 80, Number 44 (Friday, March 6, 2015)]
[Notices]
[Pages 12225-12227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-05162]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74408; File No. SR-NYSEMKT-2015-11]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Specifying in Exchange 
Rules the Exchange's Use of Certain Data Feeds for Order Handling and 
Execution, Order Routing, and Regulatory Compliance

 March 2, 2015.
    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 February 24, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``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 specify in Exchange rules the Exchange's 
use of certain data feeds for order handling and execution, order 
routing, and regulatory compliance. 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.

[[Page 12226]]

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

1. Purpose
    On June 5, 2014, in a speech entitled ``Enhancing Our Market Equity 
Structure,'' Mary Jo White, Chair of the Securities and Exchange 
Commission (``SEC'' or the ``Commission'') requested the equity 
exchanges to file with the Commission the data feeds used for purposes 
of (1) order handling and execution (e.g., with pegged or midpoint 
orders); (2) order routing, and (3) regulatory compliance, if 
applicable.\4\ Subsequent to the Chair's speech, the Division of 
Trading and Markets stated that it ``believes there is a need for 
clarity regarding whether (1) the SIP data feeds, (2) proprietary data 
feeds, or (3) a combination thereof,'' are used for these purposes and 
requested that proposed rule changes be filed that disclose such 
information.\5\ The stated goal of disclosing this information was to 
provide broker-dealers and investors with enhanced transparency to 
better assess the quality of an exchange's execution and routing 
services.
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    \4\ See Mary Jo White, Chair, Securities and Exchange 
Commission, Speech at the Sandler, O'Neill & Partners, L.P. Global 
Exchange and Brokerage Conference (June 5, 2014) (available at 
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
    \5\ See Letter from James Burns, Deputy Director, Division of 
Trading and Markets, Securities and Exchange Commission, to Jeffrey 
C. Sprecher, Chief Executive Officer, Intercontinental Exchange, 
Inc., dated June 20, 2014.
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    On July 18, 2014, in response to the above request, the Exchange 
filed a proposed rule change that clarified the Exchange's use of 
certain data feeds for order handling and execution, order routing, and 
regulatory compliance.\6\ As noted in that filing, the data feeds 
available for the purposes of order handling and execution, order 
routing, and regulatory compliance at the Exchange include the 
exclusive securities information processor (``SIP'') data feeds.\7\
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    \6\ See Securities Exchange Act Release No. 72709 (July 29, 
2014), 79 FR 45513 (Aug. 5, 2014) (SR-NYSEMKT-2014-62) (``July 2014 
Data Feed Filing'').
    \7\ The SIP feeds are disseminated pursuant to effective joint-
industry plans as required by Rule 603(b) of Regulation NMS. 17 CFR 
242.603(b). The three joint-industry plans are: (1) The CTA Plan, 
which is operated by the Consolidated Tape Association and 
disseminates transaction information for securities with the primary 
listing market on exchanges other than NASDAQ Stock Market LLC 
(``Nasdaq''): (2) The CQ Plan, which disseminates consolidated 
quotation information for securities with their primary listing on 
exchanges other than Nasdaq; and (3) the Nasdaq UTP Plan, which 
disseminates consolidated transaction and quotation information for 
securities with their primary listing on Nasdaq.
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    SEC staff has requested that the Exchange file a supplemental 
proposed rule change to specify in Exchange rules which data feeds the 
Exchange uses for the above-described purposes. Accordingly, the 
Exchange is filing this proposed rule change.
    As set forth in its July 2014 Data Feed Filing, the Exchange uses 
only the SIP data feeds to determine protected quotations on markets 
other than the Exchange \8\ for purposes of compliance with Rule 611 
and Rule 610(d), including identifying where to route ISOs, to 
calculate the protected best bid or offer (``PBBO'') for purposes of 
order types that are priced based on the PBBO, and to determine the 
national best bid (``NBB'') \9\ for purposes of compliance with Rule 
201 of Regulation SHO and Rule 440B--Equities.\10\ The Exchange notes 
that when it routes interest to a protected quotation, the Exchange 
adjusts the PBBO.
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    \8\ The Exchange notes that because the FINRA Alternate Display 
Facility (``ADF'') does not currently display any quotations, the 
Exchange does not need any data feeds to provide it with ADF quotes.
    \9\ The NBBO is defined as the best bid and best offer of an NMS 
security. 17 CFR 242.600(b)(3). The Exchange notes that the NBBO may 
differ from the PBBO because the NBBO includes Manual Quotations, 
which are defined as any quotation other than an automated 
quotation. 17 CFR 242.600(b)(37). By contrast, a protected quotation 
is an automated quotation that is the best bid or offer of a 
national securities exchange. 17 CFR 242.60)(b)(57)(iii).
    \10\ Rule 440B(b)--Equities requires that Exchange systems not 
execute or display a short sale order with respect to a covered 
security at a price that is less than or equal to the current NBB if 
the price of that security decreases by 10% or more, as determined 
by the Exchange, from the security's closing price on the Exchange 
at the end of regular trading hours on the prior day.
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    The Exchange proposes to add new Supplementary Material .01 to Rule 
19--Equities, which would state the following:
    .01 The Exchange uses the following data feeds for the handing, 
execution, and routing of orders, as well as for regulatory compliance:

------------------------------------------------------------------------
                                                             Secondary
           Market center               Primary source         source
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BATS Exchange, Inc................  SIP Data Feed.......             n/a
BATS Y-Exchange, Inc..............  SIP Data Feed.......             n/a
Chicago Stock Exchange, Inc.......  SIP Data Feed.......             n/a
EDGA Exchange, Inc................  SIP Data Feed.......             n/a
EDGX Exchange, Inc................  SIP Data Feed.......             n/a
NASDAQ OMX BX LLC.................  SIP Data Feed.......             n/a
NASDAQ OMX PHLX LLC...............  SIP Data Feed.......             n/a
NASDAQ Stock Market LLC...........  SIP Data Feed.......             n/a
NYSE Arca Equities, Inc...........  SIP Data Feed.......             n/a
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    The Exchange notes that it does not trade any securities listed on 
the New York Stock Exchange LLC.
 2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\11\ in general, and 
furthers the objectives of section 6(b)(5),\12\ in particular, because 
it 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, 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 Exchange 
believes that the proposed rule change removes impediments to and 
perfects the mechanism of a free and open market because it provides 
enhanced transparency to better assess the quality of an exchange's 
execution and routing services.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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

[[Page 12227]]

of the purposes of the Act. The proposed change is not designed to 
address any competitive issue but rather would provide the public and 
investors with information about which data feeds the Exchange uses for 
execution and routing decisions.

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 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, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act\13\ and Rule 19b-4(f)(6) 
thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \15\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the 
Commission to 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. The Exchange 
stated that waiver of the operative delay will permit the Exchange to 
immediately provide the enhanced transparency in Exchange rules. The 
Commission believes the waiver of the operative delay is consistent 
with the protection of investors and the public interest. Therefore, 
the Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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 to 
determine whether the proposed rule should be approved or disapproved.

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-2015-11 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-2015-11. 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 the 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-NYSEMKT-2015-11 and should 
be submitted on or before March 27, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-05162 Filed 3-5-15; 8:45 am]
 BILLING CODE 8011-01-P