[Federal Register Volume 81, Number 184 (Thursday, September 22, 2016)]
[Notices]
[Pages 65458-65460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22791]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78861; File No. SR-NYSEArca-2016-129]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.35P 
(Auctions) Regarding Indicative Match Price

September 16, 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 9, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to, through its wholly-owned corporation NYSE 
Arca Equities, Inc. (``NYSE Arca Equities''), amend Rule 7.35P 
(Auctions) regarding Indicative Match Price. 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.

[[Page 65459]]

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 7.35P, which governs how 
Auctions operate on the Exchange's Pillar trading platform. 
Specifically, the Exchange proposes to amend Rule 7.35P(a)(8) regarding 
Indicative Match Price. Under Rule 7.35(a)(8) [sic], Indicative Match 
Price means the best price at which the maximum volume of shares, 
including non-displayed quantity of Reserve Orders, is tradable in the 
applicable auction, subject to the Auction Collars. The Exchange 
proposes to specify, as proposed in Rule 7.35P(a)(8)(F), that unless 
the Indicative Match Price is based on the midpoint of an Auction NBBO, 
if the Indicative Match Price is not in the MPV \4\ for the security, 
it would be rounded to the nearest price at the applicable MPV.\5\
---------------------------------------------------------------------------

    \4\ The minimum price variation (``MPV'') for quoting and entry 
of orders in securities traded on the NYSE Arca Marketplace is 
$0.01, with the exception of securities that are priced less than 
$1.00 for which the MPV for quoting and entry of orders is $0.0001. 
See Arca Rule 7.6.
    \5\ The Indicative Match Price is currently calculated without 
any rounding, as provided in Arca Rule 7.35P(a)(8)(A)-(E).
---------------------------------------------------------------------------

    The Exchange initially filed to amend the definition of Indicative 
Match Price in a filing that is currently pending with the 
Commission.\6\ Although the proposed change was included in the Tick 
Pilot System Functionality Filing, the anticipated rounding scenarios 
for the Indicative Price Match would apply to all securities traded on 
the Exchange, not just Tick Pilot Securities. The technology change 
related to the rounding of the Indicative Match Price is scheduled to 
be implemented within 30 days of the date of this filing and prior to 
October 3, 2016, the implementation date of the Tick Size Pilot 
Program. The Exchange is therefore filing this proposed rule change to 
ensure that both the functionality and the rules of the Exchange are 
consistent with one another when the Exchange introduces the technology 
change. The proposed rule change would also add more certainty 
regarding the calculation of the Indicative Match Price as it would be 
rounded to the nearest price at the applicable MPV.
---------------------------------------------------------------------------

    \6\ See SR-NYSEArca-2016-123 filed on August 25, 2016 (the 
``Tick Pilot System Functionality Filing'').
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\7\ in general, and 
furthers the objectives of section 6(b)(5),\8\ 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposed amendment to 
Rule 7.35P(a)(8) would remove impediments to and perfect the mechanism 
of a free and open market and a national market system as it provides 
transparency regarding when the Exchange would round the Indicative 
Match Price if it is not in the MPV for an applicable security. In 
addition, the Exchange believes that the proposal to implement this 
change for all securities, not just Tick Pilot Securities, would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would ensure consistent treatment 
regarding the calculation of Indicative Match Price.
    The calculation of the Indicative Match Price is essential to 
executing the maximum volume of shares in an auction and the Exchange 
believes adopting a rounding methodology when calculating the 
Indicative Match Price, as proposed herein, will promote transparency, 
clarity and certainty to the rule, which serves 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.

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 an 
amendment to Rule 7.35P regarding the calculation of Indicative Match 
Price for orders executed in Auctions on the Exchange's Pillar trading 
platform.

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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ 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. According to 
the Exchange, this proposed rule change would provide certainty and 
transparency to its rules regarding the Indicative Match Price. 
Moreover, according to the Exchange, waiver of the operative delay 
would allow it to introduce technology related to this proposed rule 
change, which would be applicable to all securities, within 30 days of 
the date of this filing. 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

[[Page 65460]]

operative delay and designates the proposal operative upon filing.\13\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ 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).
---------------------------------------------------------------------------

    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-NYSEArca-2016-129 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-2016-129. 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-2016-129, and 
should be submitted on or before October 13, 2016.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-22791 Filed 9-21-16; 8:45 am]
 BILLING CODE 8011-01-P