[Federal Register Volume 80, Number 69 (Friday, April 10, 2015)]
[Notices]
[Pages 19389-19391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08198]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74650; File No. SR-NYSEMKT-2015-21]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 1000--
Equities To Reflect That Exchange Systems Will Reject Incoming Orders 
of Over 1,000,000 Shares That Are Marketable Upon Arrival

April 6, 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 March 23, 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 amend Rule 1000--Equities to reflect that 
Exchange systems will reject incoming orders of over 1,000,000 shares 
that are marketable upon arrival. 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 19390]]

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 1000--Equities (Automatic 
Execution of Limit Orders Against Orders Reflected in Exchange 
Published Quotation) (``Rule 1000'') to reflect that Exchange systems 
will reject incoming orders of over 1,000,000 shares that are 
marketable upon arrival against interest in Exchange systems.
    Currently, Exchange systems accept orders up to a maximum order 
size of 25,000,000 shares.\4\ Rule 1000 provides that market and limit 
orders of up to 1,000,000 shares are eligible to initiate or 
participate in automatic executions on the Exchange. However, because 
an order of over 1,000,000 shares in size is ineligible for automatic 
execution, if such an order is marketable on arrival, the Exchange 
suspends automatic executions in that security and it is auto-quoted 
with a ``slow'' quote condition. When a symbol is in a ``slow'' quote 
condition, its quote is not protected under Regulation NMS.\5\ Orders 
for more than 1,000,000 shares that are not marketable upon arrival do 
not suspend automatic executions or cause a slow quote condition. 
Rather, non-marketable orders of over 1,000,000 shares in size rest on 
the Exchange's limit order book and are available as liquidity to 
interact with incoming contra-side interest.
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    \4\ See Rule 1000--Equities.
    \5\ Rule 611 of Regulation NMS requires that trading centers 
have policies and procedures reasonably designed to prevent trade 
throughs on that trading center of protected quotations in NMS 
Stocks. 17 CFR 242.611(a). Importantly, to be a protected quotation, 
it must be an automated quotation that is the best bid or offer of 
an exchange. 17 CFR 242.603(b)(57)(iii).
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    The Exchange proposes to amend Rule 1000 to provide that incoming 
orders of over 1,000,000 shares that are marketable upon arrival would 
be rejected. The Exchange believes it is appropriate to reject 
marketable orders ineligible for automatic execution in order to reduce 
the potential that the Exchange would suspend automatic executions and 
disseminate a ``slow'' quote that permits other market centers to trade 
through the Exchange's quotations in that security. In addition, the 
Exchange notes that an order of such size that is marketable upon 
arrival may be an order entry error, and therefore rejecting the order 
puts the submitter of the order on notice of the large size of the 
order.
    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,\6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\7\ 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. In 
particular, the Exchange believes that rejecting large orders 
ineligible for automatic execution rather than triggering a suspension 
of automatic executions in the relevant security would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system by reducing the potential that the Exchange 
would suspend automatic executions and disseminate a ``slow'' quote 
that permits other market centers to trade through the Exchange's 
quotations in the relevant security. The Exchange also believes that 
rejecting large orders ineligible for automatic execution would assist 
with the maintenance of fair and orderly markets by helping to mitigate 
the risk that a large order that is marketable upon arrival may be an 
order entry error, and therefore rejecting the order puts the submitter 
of the order on notice of the large size of the order. For the same 
reasons, the proposal is also designed to protect investors as well as 
the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 to prevent 
unnecessary suspension of automatic executions on the Exchange's 
marketplace and reduce the likelihood that large, marketable orders may 
be an order entry error.

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 \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\12\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 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 .\13\
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    \13\ 15 U.S.C. 78s(b)(3)(C).
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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:

[[Page 19391]]

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-2015-21 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2015-21. 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 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-NYSEMKT-2015-21 and should be submitted on or before May 
1, 2015.

    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)(59).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-08198 Filed 4-9-15; 8:45 am]
 BILLING CODE 8011-01-P