[Federal Register Volume 81, Number 37 (Thursday, February 25, 2016)]
[Notices]
[Pages 9573-9575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03961]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77197; File No. SR-NYSEArca-2016-34]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Rule 
7.31P(a)(2)(C) Relating to Repricing Events

February 19, 2016.
    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 19, 2016, 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 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 7.31P(a)(2)(C) (Orders and 
Modifiers) relating to repricing events. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 7.31P(a)(2)(C) relating to 
repricing events that occur upon arrival of an Intermarket Sweep Order 
designated Day (``Day ISO'').
    Rule 7.31P(e)(3)(C) provides that a Day ISO, if marketable on 
arrival, will be immediately traded with contra-side interest in the 
NYSE Arca Book up to its full size and limit price and any untraded 
quantity of a Day ISO will be displayed at its limit price and may lock 
or cross a protected quotation that was displayed at the time of 
arrival of the Day ISO. Accordingly, under current rules, on arrival, a 
Day ISO may be displayed at a price that locks or crosses a protected 
quotation.
    Under Rule 7.36P(b)(3), if arrival of a Day ISO would result in 
less than a round lot being displayed, such order would be displayed on 
the Exchange's proprietary data feeds, but it would not be considered a 
new Exchange BBO or be considered a protected quotation. In addition, 
under Rule 7.38P(b)(1), the working price of an odd-lot quantity of a 
Day ISO will depend on where the limit price is in relation to the 
PBBO, and whether the PBBO is crossed.
    Separately, Rule 7.31P(a)(2)(C) describes how the Exchange re-
prices resting orders to buy (sell) to avoid locking or crossing a 
protected quotation of another market by assigning a display price one 
MPV below (above) the PBO (PBB) and a working price equal to the PBO 
(PBB). The rule further specifies that ``[i]f a Day ISO to buy (sell) 
arrives before the PBO (PBB) is updated, such re-priced Limit Order(s) 
to buy (sell) will be repriced to the lower (higher) of the display 
price of the Day ISO or the original price of the Limit Order(s).'' 
Accordingly, current rules specify that arrival of a Day ISO results in 
a repricing event for resting orders.
    The Exchange proposes to amend Rule 7.31P(a)(2)(C) to specify how 
orders are repriced under that paragraph due to the arrival of a Day 
ISO. Specifically, the Exchange proposes to specify that the repricing 
event for resting orders under this Rule due to the arrival of a Day 
ISO to buy (sell) would occur only if the arriving Day ISO would result 
in at least a round lot being displayed as a new BB (BO). In other 
words, the arrival of the Day ISO must result in a new protected 
quotation at the Exchange before any resting orders are repriced.
    The Exchange also proposes to specify what would occur if the 
arriving Day ISO would not result in at least a round lot being 
displayed. When resting orders have been repriced under Rule 
7.31P(a)(2)(C), if a Day ISO to buy (sell) arrives that would result in 
less than a round lot being displayed, the Exchange

[[Page 9574]]

proposes that such Day ISO also be assigned a display price one MPV 
below (above) the PBO (PBB) and a working price equal to the PBO (PBB). 
This proposed treatment of odd lot Day ISOs is similar to treatment of 
odd lots under Rule 7.38P(b)(1), however, the Exchange proposes that 
under Rule 7.31P(a)(2)(C), even if the PBBO is crossed, the arriving 
odd lot quantity of the Day ISO to buy (sell) be assigned a working 
price equal to the PBO (PBB) and not equal to the PBB (PBO). The 
Exchange proposes this difference from Rule 7.38P(b)(1) so that all 
orders repriced pursuant to Rule 7.31P(a)(2)(C), including arriving Day 
ISO odd lots, are treated similarly.
    Finally, the Exchange proposes to move the last sentence of Rule 
7.31P(a)(2)(C), without change, to be the second sentence of that rule.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\4\ in general, and 
furthers the objectives of Section 6(b)(5),\5\ 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that the proposed rule change 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system by promoting transparency in 
Exchange rules by providing specificity regarding when resting orders 
would be repriced due to the arrival of a Day ISO. Specifically, the 
proposed rule change would specify that an arriving Day ISO needs to 
result in a round lot or more being displayed as a new Exchange BBO 
before resting orders would be repriced under Rule 7.31P(a)(2)(C). Rule 
7.31P(a)(2)(C) already provides that resting orders would be repriced 
upon arrival of a Day ISO, and the amendment provides specificity that 
before resting orders may be repriced, the arrival of the Day ISO needs 
to result in a new protected quotation.
    The proposed rule change would further remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system by specifying that if the arrival of the Day ISO to buy (sell) 
would not result in a round lot or more being displayed and thus would 
not result in a repricing event for resting orders, the Day ISO would 
instead be assigned a display price of one MPV below (above) the PBO 
(PBB) and a working price equal to the PBO (PBB). This proposed rule 
text is similar to Rule 7.38P(b)(1), which already provides that an 
arriving odd lot order to buy (sell) will be assigned a working price 
based on the PBBO. The Exchange proposes a difference for how an odd 
lot quantity of an arriving Day ISO would be priced under Rule 
7.31P(a)(2)(C) as compared to Rule 7.38P(b)(1). Specifically, the 
Exchange believes that the proposed pricing of an arriving odd-lot 
sized Day ISO under Rule 7.31P(a)(2)(C) would remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system because it would provide for a consistent manner for repricing 
orders under Rule 7.31P(a)(2)(C), regardless whether they were resting 
orders or arriving odd lot quantity of a Day ISO. Providing for 
different treatment of an arriving Day ISO that would result in the 
display of an odd-lot quantity is consistent with Regulation NMS, which 
permits exchanges to establish their own rules for the handling of odd 
lot orders.\6\ The Exchange believes that the proposed amendments would 
promote transparency in Exchange rules regarding the manner by which 
the Exchange reprices resting orders based on the arrival of a Day ISO.
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    \6\ See Commission Division of Trading and Markets, Responses to 
Frequently Asked Questions Concerning Rule 611 and 610 of Regulation 
NMS, April 4, 2008 update, Question 7.03, available at https://www.sec.gov/divisions/marketreg/nmsfaq610-11.htm.
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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 make amendments 
to Rule 7.31P(a)(2)(C) relating to repricing events due to the arrival 
of a Day ISO.

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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 \9\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ 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 it anticipates beginning the migration of symbols to Pillar 
on February 22, 2016. The Commission believes the waiver of the 
operative delay is consistent with the protection of investors and the 
public interest because it will permit the Exchange to amend Rule 
7.31P(a)(2)(C) relating to the repricing of certain orders prior to the 
beginning of trading on Pillar. Therefore, the Commission hereby waives 
the operative delay and designates the proposal operative upon 
filing.\11\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ 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 change should be approved or 
disapproved.

[[Page 9575]]

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-2016-34 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-NYSEArca-2016-34. 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-NYSEArca-2016-34, and should 
be submitted on or before March 17, 2016.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Brent J. Fields,
Secretary.
[FR Doc. 2016-03961 Filed 2-24-16; 8:45 am]
BILLING CODE 8011-01-P