[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Pages 64238-64239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22422]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78829; File No. SR-NYSEMKT-2016-86]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Extend the Deadline 
for Implementing Rule 967.1NY(a)(2) and (3) Until September 30, 2016

September 13, 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 September 6, 2016, 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 extend the deadline for implementing Rule 
967.1NY(a)(2) and (3) until September 30, 2016 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 is proposing to extend the deadline for implementing 
Rule 967.1NY(a)(2) and (3) until September 30, 2016. The Exchange has 
not met the current implementation deadline of July 31, 2016.
    In March 2015, the Commission approved Rule 967.1NY, which provides 
a price protection risk mechanism for Market Maker quotes.\4\ Rule 
967.1NY provides two layers of price protection to incoming Market 
Maker quotes, rejecting those Market Maker quotes that exceed certain 
parameters, as a risk mitigation tool.\5\ The Exchange has implemented 
the first layer of price protection (the NBBO Reasonability Check) and 
had until one year from the date of the Approval Order to implement the 
second layer of protection (the Underlying Stock Price/Strike Price 
Check) pursuant to Commentary .01 to Rule 967.1NY, which was March 4, 
2016.\6\
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    \4\ See Securities Exchange Act Release No. 74440 (March 4, 
2015), 80 FR 12687 (March 10, 2015) (SR-NYSEMKT-2014-116) (Approval 
Order); see also Securities Exchange Act Release No. 74017 (January 
8, 2015), 80 FR 1979 (January 14, 2015) (SR-NYSEMKT-2014-116) 
(Notice).
    \5\ The first layer of price protection assesses incoming sell 
quotes against the NBB and incoming buy quotes against the NBO (the 
``NBBO Price Reasonability Check''). Specifically, Rule 
967.1NY(a)(1) provided that when an NBBO is available, a Market 
Maker quote would be rejected if it is priced a specified dollar 
amount or percentage through the contra-side NBBO. The second layer 
of price protection assesses the price of call or put bids against a 
specified benchmark (the ``Underlying Stock Price/Strike Price 
Check''), per Rule 967.1NY(a)(2) and (3). This second layer of 
protection applies to bids in call options or put options when (1) 
there is no NBBO available, for example, during pre-opening or prior 
to conducting a re-opening after a trading halt, or (2) if the NBBO 
is so wide as to not reflect an appropriate price for the respective 
options series.
    \6\ See Securities Exchange Act Release No. 75151 (June 11, 
2015), 80 FR 34770 (June 17, 2015) (SR-NYSEMKT-2015-42).
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    In March 2016, because the Exchange had not yet implemented the 
Underlying Stock Price/Strike Price Check, the Exchange extended the 
deadline to implement Rule 967.1NY(a)(2) and (3) until July 31, 2016 
(the ``July 31st Deadline'').\7\ Subsequent to this extension, the 
Exchange modified Commentary .01 to Rule 967.1NY to exclude from the 
Underlying Stock Price/Strike Price Check certain securities for which 
there was no reliable (or in some cases any) last sale data.\8\ 
Although the Exchange had finalized the technology related to the 
Underlying Stock Price/Strike Price Check, because this technology was 
packaged in a larger technology release that is currently being rolled 
out, the Exchange was not able to implement the technology by the July 
31st Deadline. The Exchange is in the process of implementing the 
technology release that includes the Underlying Stock Price/Strike 
Price Check and plans to complete this implementation no later than the 
end of September 2016. The Exchange believes the proposed extension of 
the July 31st Deadline until September 30, 2016 would provide the 
Exchange with sufficient time to implement the functionality related to 
the rule. Moreover, the proposed change would update the rule to 
reflect the extended deadline, thus making clear to investors and the 
public that the Underlying Stock Price/Strike Price Check is not yet 
implemented.\9\
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    \7\ See Securities Exchange Act Release No. 77356 (March 14, 
2016), 81 FR 14917 (March 18, 2016) (SR-NYSEMKT-2016-36).
    \8\ See Securities Exchange Act Release No. 77749 (April 29, 
2016), 81 FR 27184 (May 5, 2016) (SR-NYSEMKT-2016-47).
    \9\ The Exchange has issued Trader Updates informing its market 
participants that the functionality related to the Underlying Stock 
Price/Strike Price Check is not yet available but is currently being 
implemented (together with the other technology updates with which 
it was packaged). See, e.g., Trader Updates regarding Enhancements 
to Risk Control Functionality in Enhanced Certification Environment, 
dated 6/6/16, available here, https://www.nyse.com/publicdocs/nyse/notifications/trader-update/NYSE%20Amex%20and%20Arca%20-%20Enhanced%20Risk%20Controls%20in%20Enhanced%20Cert.pdf and 
regarding Risk Controls/Series Lookup Table Enhancements, dated 8/
25/16, available here, https://www.nyse.com/publicdocs/nyse/notifications/trader-update/NYSE%20Amex%20-%20Risk%20Controls%20Release%20details.pdf.

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[[Page 64239]]

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\10\ in general, and furthers the objectives of Section 
6(b)(5),\11\ 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 a national market system, and 
in general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes the proposal promotes just and 
equitable principles of trade and removes impediments to, and perfects 
the mechanism of, a free and open market and a national market system 
because an extension of the July 31st Deadline would enable the 
Exchange to complete its implementation of the technology related to 
the Underlying Stock Price/Strike Price Check, which is currently being 
implemented as part of a larger technology release. Moreover, the 
proposed extension would update the rule to reflect the extended 
deadline for implementation.

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 designed to address any competitive issues, but rather, to extend 
the July 31st Deadline for implementing the functionality related to 
the Underlying Stock Price/Strike Price Check, which is currently being 
implemented as part of a larger technology release.

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 foregoing 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) \12\ of the Act and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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) \14\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission may 
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 Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will allow the 
Exchange to immediately extend the implementation deadline for the 
Underlying Stock Price/Strike Price Check without delay and provide the 
Exchange additional time to implement the technology associated with 
such price protection. Accordingly, the Commission hereby waives the 
30-day operative delay requirement and designates the proposed rule 
change as operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-2016-86 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-2016-86. 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-2016-86, and should 
be submitted on or before October 11, 2016.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-22422 Filed 9-16-16; 8:45 am]
 BILLING CODE 8011-01-P