[Federal Register Volume 81, Number 238 (Monday, December 12, 2016)]
[Notices]
[Pages 89564-89566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29651]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79479; File No. SR-NYSEMKT-2016-104]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Provide That the 
Exchange Would Not Be Required To Report to the Securities Information 
Processor an Official Closing Price, as Defined Under Rule 
123C(1)(e)(i)--Equities, as an ``M'' Sale Condition

December 6, 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 November 23, 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 this rule change to provide that the Exchange 
would not be required to report to the securities information processor 
an Official Closing Price, as defined under Rule 123C(1)(e)(i)--
Equities, as an ``M'' sale condition. 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 provide that the Exchange would not be 
required to report to the securities information processor (``SIP'') an 
Official Closing Price, as defined under Rule 123C(1)(e)(i)--Equities, 
as an ``M'' sale condition.\4\ This proposed rule change would not 
change how the Official Closing Price would be determined and 
disseminated if the Exchange is unable

[[Page 89565]]

to conduct a closing transaction in one or more securities due to a 
systems or technical issue, as described in Rules 123C(1)(e)(ii)-(iv)--
Equities.
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    \4\ For a description of all sale conditions that are reportable 
to the SIP, including the ``M'' and ``6'' sale conditions, see the 
Consolidated Tape System Participant Communications Interface 
Specification, dated September 15, 2016, at 87 (``SIP 
Specifications''), available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/cts_input_spec.pdf.
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    As set forth in the SIP Specifications, a price reported to the SIP 
by an exchange under the ``M'' sale condition, which is called the 
``Market Center Official Close,'' is not used for purposes of 
determining a consolidated last sale price or the high or low price of 
a security and does not include any volume information. Each exchange 
determines what price could be reported to the SIP as its ``Market 
Center Official Close.'' To date, the Exchange has not reported to the 
SIP a price with an ``M'' sale condition.
    By contrast, a trade reported to the SIP as a Market Center Closing 
Trade with a ``6'' sale condition includes volume information, is 
included in the consolidated last sale, and is included in the high or 
low price of a security. The Exchange reports to the SIP closing 
auction trades of a round lot or more with a ``6'' sale condition.\5\
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    \5\ For example, under Rule 123C(1)(e)(i)--Equities, if there 
were no closing transaction in a security or if a closing 
transaction is less than one round lot, the Exchange's Official 
Closing Price will be the most recent last-sale eligible trade on 
the Exchange in such security on that trading day. By contrast, on 
NYSE Arca, Inc., under the same circumstances, the Official Closing 
Price will be the most recent consolidated last sale eligible trade 
during Core Trading Hours on that trading day. See NYSE Arca 
Equities, Inc. Rule 1.1(gg)(1)(A).
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    Recently, the Exchange amended Rule 123C(1)(e)--Equities to specify 
back-up procedures for determining an Official Closing Price for 
Exchange-listed securities if it is unable to conduct a closing 
transaction in one or more securities due to a systems or technical 
issue.\6\ In that Filing, the Exchange noted that once it implemented 
changes to how the Exchange determines the Official Closing Price, the 
Exchange ``will disseminate to the SIP the Official Closing Price as an 
``M'' value.'' \7\
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    \6\ See Securities Exchange Act Release Nos. 78015 (June 8, 
2016), 81 FR 38747 (June 14, 2016) (SR-NYSEMKT-2016-31; SR-NYSE-
2016-18) (Approval Order) and 77306 (March 7, 2016), 81 FR 12986 
(March 11, 2016) (Notice of Filing).
    \7\ See id. at 12986. See also Securities Exchange Act Release 
No. 76601 (December 9, 2015), 80 FR 77680 (December 15, 2015) (SR-
NYSEMKT-2015-98) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change to define the term ``Official Closing Price'').
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    With this proposed rule change, the Exchange is modifying this 
statement to permit, but not require, the Exchange to report a price 
with an ``M'' sale condition to the SIP when the Official Closing Price 
is determined under Rule 123C(1)(e)(i)--Equities. Specifically, the 
Exchange does not believe that it should publish an Official Closing 
Price to the SIP as an ``M'' value if there has not been a last-sale 
eligible trade in a security on a trading day. For example, based on 
feedback from industry participants, the Exchange understands that 
certain market participants, such as index providers and mutual funds, 
follow a different method of determining a security's closing price 
when there have not been any last-sale eligible trades on a trading 
day. Under these circumstances, the Exchange understands that an 
Official Closing Price reported to the SIP as an ``M'' sale condition 
that differs from how an industry market participant may determine such 
value for its own purposes could lead to confusion if a market 
participant's systems read the ``M'' value published by the SIP that 
differs from their calculation.
    Accordingly, this proposed rule change is intended to provide that 
the Exchange's would not be required to publish an Official Closing 
Price, as defined in Rule 123C(1)(e)(i)--Equities, as an ``M'' sale 
condition to the SIP. And, as noted above, this proposed rule change 
would not alter how the Official Closing Price would be disseminated 
under Rules 123C(1)(e)(ii)-(iv)--Equities.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\9\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    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 because it would provide transparency that the 
Exchange's is not required to report a price to the SIP as an ``M'' 
sale condition. The Exchange believes that the proposed rule change is 
consistent with the Act because the ``M'' sale condition does not 
contribute to the consolidated last sale price for a security, the high 
or low price of a security, or reported volume for a security, and 
therefore is an informational value. The Exchange further believes that 
this proposed rule change is consistent with the protection of 
investors and the public interest because it would reduce confusion by 
eliminating publication to the SIP of a price that may conflict with 
how an index provider or mutual fund determines that value for a 
security if there are no last-sale eligible trades on a trading day. 
Finally, 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 because it would apply only when 
the Exchange is fully operational. If the Exchange is unable to conduct 
a closing transaction due to a systems or technical issue, current Rule 
123C(1)(ii)-(iv)--Equities would govern, with no change.

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 specify 
that the Exchange would not be required to report an Official Closing 
Price to the SIP as an ``M'' sale condition if there has not been a 
last-sale eligible trade on a trading day.

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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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

[[Page 89566]]

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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 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) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\13\ 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 Exchange believes 
that waiving the operative delay would be consistent with the 
protection of investors and the public interest because it would make 
transparent that the Exchange would not report an ``M'' sale condition 
to the SIP for a security if there has not been a last-sale eligible 
trade on a trading day. The Exchange further believes that the proposed 
rule change is consistent with the protection of investors and the 
public interest because it would not change how an Official Closing 
Price would be disseminated under Exchange Rule 123C(1)(e)(ii)-(iv)--
Equities. The Commission believes that the proposed rule change is 
consistent with the protection of investors and the public interest 
because it clarifies the Exchange's reporting practices while 
maintaining its procedures for disseminating an Offiicial Closing 
Price. Accordingly, the Commission hereby waives the 30-day operative 
delay and designates the proposal operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the operative delay of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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:

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-2016-104 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-2016-104. 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-2016-104 and should 
be submitted on or before January 3, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-29651 Filed 12-9-16; 8:45 am]
 BILLING CODE 8011-01-P