[Federal Register Volume 81, Number 169 (Wednesday, August 31, 2016)]
[Notices]
[Pages 60080-60083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20892]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78679; File No. SR-NYSE-2016-59]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Rule 13 To Eliminate Orders With a Sell ``Plus'' and Buy
``Minus'' Instruction and Retain Orders With a ``Buy Minus Zero Plus''
Instruction, and Make Conforming Changes to Rules 104, 107B, 123C and
1004
August 25, 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 August 19, 2016, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') 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 (1) amend Rule 13 to eliminate orders with
a sell ``plus'' and buy ``minus'' instruction and retain orders with a
``Buy Minus Zero Plus'' instruction, and (2) make conforming changes to
Rules 104, 107B, 123C and 1004. 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 13 to eliminate orders with a
sell ``plus'' and buy ``minus'' instruction and retain orders with a
``Buy Minus Zero Plus'' instruction, and make conforming changes to
Rules 104, 107B, 123C and 1004. The Exchange proposes to eliminate
orders with a sell ``plus'' and buy ``minus'' instruction for all
securities both to streamline its rules and reduce complexity among its
order type offerings.\4\
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\4\ See, e.g., 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).
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Because of the technology changes associated with the proposed rule
change, the Exchange proposes to announce the implementation date of
the elimination of the order types via Trader Update.
Elimination of Sell ``Plus'' and Buy ``Minus'' Order Instructions (Rule
13)
The Exchange proposes to eliminate, and thus delete from its rules,
sell ``plus'' and buy ``minus'' order instructions, as defined in Rule
13(f)(4)(A) and (B), respectively. Rule 13(f)(4)(B) would also be
amended to retain a ``Buy Minus Zero Plus'' instruction.
First, the Exchange proposes to eliminate the sell ``plus'' order
instruction. An order with a sell ``plus'' instruction is an order that
will not trade at a price that is lower than the last sale if the last
sale was a ``plus'' or ``zero plus'' tick or that is lower than the
last sale plus the minimum fractional change in the stock if the last
sale was a ``minus'' or ``zero minus'' tick, subject to the limit price
of an order, if applicable.\5\
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\5\ See Rule 13(f)(4)(A).
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To reflect elimination of the sell ``plus'' order instruction, the
Exchange proposes to delete subsection (f)(4)(A) of Rule 13, which
defines the sell ``plus'' instruction, in its entirety. Subsection
(4)(B) of Rule 13(f), amended as described below, would become new
subsection (4)(A).
Second, the Exchange proposes to eliminate the buy ``minus'' order
instruction defined in Rule 13(f)(4)(B) and retain the ``Buy Minus Zero
Plus'' order. An order with a buy ``minus'' instruction will not trade
at a price that is higher than the last sale if the last sale was a
``minus'' or ``zero minus'' tick or that is higher than the last sale
minus the minimum fractional change in the stock if the last sale was a
``plus'' or ``zero plus'' tick, subject to the limit price of an order,
if applicable.\6\
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\6\ See Rule 13(f)(4)(B).
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Exchange rules would continue to permit an order with a ``Buy Minus
Zero Plus'' instruction, which is currently a sub-set of the
instructions available under Rule 13(f)(4)(B). A Buy Minus Zero Plus
order instruction assists member organizations with compliance with the
``safe harbor'' provisions of Rule 10b-18 under the Act (``Rule 10b-
18'') for issuer repurchases.\7\ One of the four provisions required to
meet the safe harbor provision is if the purchase price of a security
does not exceed the highest independent bid or the last independent
transaction price.\8\ Because an order with a Buy Minus Zero Plus
instruction will not trade at a price that is higher than the last
sale, member organizations can use this instruction to facilitate their
compliance with at least one of the conditions of the safe harbor
provision of Rule 10b-18.\9\
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\7\ See 17 CFR 240.10b-18.
\8\ See 17 CFR 240.10b-18(b)(3). The other three conditions
relate to time of purchases, volume of purchases, and a requirement
that only one broker or dealer be involved in such repurchases on a
single day.
\9\ The Exchange does not represent that an order with a Buy
Minus Zero Plus instruction is guaranteed to meet the requirements
of the safe harbor provision of Rule 10b-18; rather, this
instruction is available to member organizations to facilitate their
own compliance with Rule 10b-18.
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To reflect elimination of the buy ``minus'' order instruction and
retention of the ``Buy Minus Zero Plus'' instruction, the Exchange
proposes to add ``Zero Plus'' after ``buy minus'' in the first sentence
of proposed new Rule 13(f)(4)(A), capitalize ``buy minus,'' and delete
the phrase ``if the last sale was a `minus' or `zero minus' tick or
that is higher than the last sale minus the minimum fractional change
in the stock
[[Page 60081]]
if the last sale was a ``plus'' or ``zero plus'' tick'' following
``will not trade at a price that is higher than the last sale.'' As
proposed, an order with an instruction to ``Buy Minus Zero Plus'' would
not trade at a price that is higher than the last sale, subject to the
limit price of the order, if applicable.
The remaining subsections of Rule 13(f)(4) would be amended to
reflect these proposed changes, as follows.
Current subsection (C) provides that sell ``plus'' and buy
``minus'' instructions are available for Limit Orders, Limit-on-Open
(``LOO'') Orders, Limit-on-Close (``LOC'') Orders, and Market-on-Close
(``MOC'') Orders. Further, the current rule provides that orders with a
buy ``minus'' instruction that are systemically delivered to Exchange
systems will be eligible to be automatically executed in accordance
with, and to the extent provided by, Rules 1000-1004, consistent with
the order's instructions.
Current subsection (C) would become subsection (B) and would be
amended to reflect that the ``Buy Minus Zero Plus'' order instruction
would only be available for limit orders. The Exchange would
accordingly amend the first sentence of current subsection (C) to:
Delete ``sell `plus' and'';
add ``Zero Plus'' after ``buy minus'' and capitalize ``buy
minus'';
delete ``LOO Orders, LOC Orders, and MOC Orders''; and
add the word ``only'' after ``Limit Orders''.
The second sentence of proposed new subsection (B) would be amended
to:
Add ``Zero Plus'' after ``buy minus'' and capitalize ``buy
minus''; and
delete the clause ``or sell `plus' ''.
Finally, current subsection (D), which provides that odd-lot sized
transactions shall not be considered the last sale for purposes of
executing sell ``plus'' or ``buy'' minus orders would become new
subsection (C) of Rule 13(f)(4). Proposed new subsection (C) would be
amended to:
Delete the clause ``sell `plus' or'' before ``buy minus''; and
capitalize ``buy minus''; and
add ``Zero Plus'' after ``buy minus''.
Conforming Amendments
The Exchange proposes certain conforming amendments to Rules 104,
107B, 123C and 1004 to reflect the elimination of sell ``plus'' and buy
``minus'' instruction as described above as follows.
Rule 104
The Exchange proposes to amend Rule 104 (Dealings and
Responsibilities of Designated Market Makers (``DMMs'')). Specifically,
Rule 104(b)(vi) provides that DMM units may not enter certain orders
and modifiers including, among others, orders with Sell ``Plus''--Buy
``Minus'' Instructions.
To conform Rule 104, the Exchange proposes to delete ``Sell
`Plus'--'' and the quotes around the word ``Minus'' from Rule
104(b)(vi) and add the phrase ``Zero Plus'' after ``Minus'' and before
``Instructions.'' As proposed, Rule 104(b)(vi) would provide that DMM
units may not enter orders with Buy Minus Zero Plus Instructions.
Rule 107B
The Exchange proposes to amend Rule 107B (Supplemental Liquidity
Providers), which sets forth the rules governing Supplemental Liquidity
Providers (``SLPs''). An SLP is an Exchange member organization that
electronically enters proprietary orders or quotes from off the Floor
into the systems and facilities of the Exchange and is obligated, among
other things, to maintain a bid or an offer at the NBB or NBO in each
assigned security in round lots for at least 10% of the trading day, on
average, and for all assigned SLP securities.\10\ Rules 107B(g) sets
forth how the Exchange calculates whether an SLP is meeting its 10%
quoting requirement. Subsection (D)(iii) of Rule 107B(g) provides that
tick sensitive orders such as `` `Sell Plus', `Buy Minus' (see Rule 13)
and `Buy Minus Zero Plus' '' will not be counted as credit towards the
10% quoting requirement.
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\10\ See Rule 107B(a).
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To conform Rule 107B, the Exchange proposes to delete the phrase
``Tick sensitive orders (i.e., ``Sell Plus'' and ``Buy Minus'' orders
(see Rule 13) and'' in subsection (D)(iii), add the word ``orders''
following ``Buy Minus Zero Plus,'' and delete a parenthesis and
quotation marks. As amended, Rule 107B(D)(iii) would provide that Buy
Minus Zero Plus orders will not be counted as credit towards the 10%
quoting requirement.
Rule 123C
The Exchange proposes to amend Rule 123C (The Closing Procedures),
which specifies the procedures to be followed at the close of trading
on the Exchange.
Rule 123C(4)(a) describes how the Exchange calculates MOC and LOC
imbalances, which is intended to provide market participants with a
snapshot of the prices at which interest eligible to participate in the
closing transaction would be executed in full against each other at the
time the data feed is disseminated. Subsection (vi) of Rule 123C(4)(a)
provides that tick sensitive MOC and LOC interest and LOC orders priced
equal to the last sale can reduce the Buy or Sell Imbalance to bring
the imbalance quantity as close to zero as possible. The Rule also
provides that the volume of tick sensitive MOC and LOC orders eligible
to reduce the imbalance shall not cause the imbalance to change to the
other side.
Rule 123C(4)(a)(vi)(A) specifies that, in the event of a Buy
Imbalance, only Sell Plus MOC orders, Sell Plus LOC orders priced equal
to or below the last sale price, and Sell and Sell Short LOC orders
priced equal to the last sale will be included to offset the imbalance,
and that Sell Plus MOC and Sell Plus LOC orders will be included to
offset the imbalance only if such orders could be executed consistent
with the terms of their tick restrictions.
Rule 123C(4)(a)(vi)(B) specifies that, in the event of a Sell
Imbalance, only Buy Minus MOC orders, Buy Minus LOC orders priced equal
to or above the last sale price, and Buy LOC orders priced equal to the
last sale will be included to offset the imbalance. The Rule also
provides that Buy Minus MOC and Buy Minus LOC orders will be included
to offset the imbalance only if such orders could be executed
consistent with the terms of their tick restrictions.
To reflect the elimination of orders with a sell ``plus''
instruction and buy ``minus'' instructions, i.e., tick-sensitive
orders, and the fact that as proposed, Buy Minus Zero Plus orders would
not be available for MOC or LOC Orders, the Exchange proposes to amend
Rule 123C as follows:
Amend Rule 123C(4)(a)(vi) to delete the phrase ``tick
sensitive MOC orders and LOC orders and'' before ``LOC orders priced
equal to the last sale to bring the imbalance quantity as close to zero
as possible.'' The Exchange also proposes to delete the last sentence
in Rule 123C(4)(a)(vi), which provides that ``[t]he volume of tick
sensitive MOC and LOC orders eligible to reduce the imbalance shall not
cause the imbalance to change to the other side.''
Amend Rule 123C(4)(a)(vi) (A) to remove references to Sell
Plus MOC orders and Sell Plus LOC orders priced equal to or below the
last sale price. The Exchange also proposes to delete the last sentence
of the subsection (A), which provides that ``Sell Plus MOC and Sell
Plus LOC orders will be included to offset the imbalance only if such
orders could be executed consistent with the terms of their tick
restrictions.''
Amend Rule 123C(4)(a)(vi)(B) to remove references to Buy
Minus MOC
[[Page 60082]]
orders and Buy Minus LOC orders priced equal to or above the last sale
price. The Exchange also proposes to delete the last sentence of the
subsection (B), which provides that ``Buy Minus MOC and Buy Minus LOC
orders will be included to offset the imbalance only if such orders
could be executed consistent with the terms of their tick
restrictions.''
Rule 1004
Finally, the Exchange proposes to amend Rule 1004 (Election of Buy
Minus, Sell Plus and Stop Orders), which provides that automatic
executions of transactions reported to the Consolidated Tape shall
elect, among others, buy minus and sell plus orders electable at the
price of such executions. The Rule further provides that any buy minus
and sell plus orders so elected shall be automatically executed as
market orders pursuant to Exchange rules.
To reflect the elimination of orders with a Sell ``Plus'' and Buy
``Minus'' instruction and retention of ``Buy Minus Zero Plus'' orders,
the Exchange proposes to add ``Zero Plus'' after ``buy minus'' in Rule
1004, capitalize ``buy minus,'' and delete the phrase ``and sell plus''
in two places. The Exchange also proposes to capitalize ``market
orders.'' As amended, Rule 1004 would allow for the automatic execution
of Buy Minus Zero Plus orders electable at the price of such
executions.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \11\ of
the Act, in general, and furthers the objectives of Section
6(b)(5),\12\ in particular, in that 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, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that eliminating orders with a
sell ``plus'' and buy ``minus'' instruction removes impediments to and
perfects a national market system by simplifying functionality and
complexity of its order types. The Exchange believes that eliminating
these order types across all securities would not be inconsistent with
the public interest and the protection of investors because investors
will not be harmed and in fact would benefit from the removal of
complex functionality.
The Exchange further believes that deleting corresponding
references in Exchange rules to deleted order types also removes
impediments to and perfects the mechanism of a free and open market by
ensuring that members, regulators and the public can more easily
navigate the Exchange's rulebook and better understand the orders types
available for trading on the Exchange. Removing obsolete cross
references also furthers the goal of transparency and adds clarity to
the Exchange's rules.
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 would rather remove
complex functionality and obsolete cross-references, thereby reducing
confusion and making the Exchange's rules easier to understand and
navigate.
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 \13\ and Rule 19b-4(f)(6) thereunder.\14\
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. \15\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 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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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.
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-NYSE-2016-59 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-NYSE-2016-59. 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
[[Page 60083]]
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2016-59 and should be submitted on
or before September 21, 2016.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20892 Filed 8-30-16; 8:45 am]
BILLING CODE 8011-01-P