[Federal Register Volume 81, Number 239 (Tuesday, December 13, 2016)]
[Notices]
[Pages 90033-90035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29800]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79495; File No. SR-NYSEARCA-2016-157]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot 
Period for the Exchange's Retail Liquidity Program

December 7, 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 28, 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, II, 
and III 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, on behalf of its wholly-owned corporation, NYSE Arca 
Equities, Inc., proposes to extend the pilot period for the Exchange's 
Retail Liquidity Program (the ``Retail Liquidity Program'' or the 
``Program''), which is currently scheduled to expire on December 31, 
2016, until June 30, 2017. 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

[[Page 90034]]

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 purpose of this filing is to extend the pilot period of the 
Retail Liquidity Program, currently scheduled to expire on December 31, 
2016,\4\ until June 30, 2017.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 78601 (August 17, 
2016), 81 FR 57632 (August 23, 2016) (SR-NYSEArca-2016-113).
---------------------------------------------------------------------------

Background
    In December 2013, the Commission approved the Retail Liquidity 
Program on a pilot basis.\5\ The Program is designed to attract retail 
order flow to the Exchange, and allows such order flow to receive 
potential price improvement. The Program is currently limited to trades 
occurring at prices equal to or greater than $1.00 per share. Under the 
Program, Retail Liquidity Providers (``RLPs'') are able to provide 
potential price improvement in the form of a non-displayed order that 
is priced better than the Exchange's best protected bid or offer 
(``PBBO''), called a Retail Price Improvement Order (``RPI''). When 
there is an RPI in a particular security, the Exchange disseminates an 
indicator, known as the Retail Liquidity Identifier, indicating that 
such interest exists. Retail Member Organizations (``RMOs'') can submit 
a Retail Order to the Exchange, which would interact, to the extent 
possible, with available contra-side RPIs.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 71176 (December 23, 
2013), 78 FR 79524 (December 30, 2013) (SR-NYSEArca-2013-107) (``RLP 
Approval Order'').
---------------------------------------------------------------------------

    The Retail Liquidity Program was approved by the Commission on a 
pilot basis. Pursuant to NYSE Arca Equities Rule 7.44(m), the pilot 
period for the Program is scheduled to end on December 31, 2016.
Proposal To Extend the Operation of the Program
    The Exchange established the Retail Liquidity Program in an attempt 
to attract retail order flow to the Exchange by potentially providing 
price improvement to such order flow. The Exchange believes that the 
Program promotes competition for retail order flow by allowing Exchange 
members to submit RPIs to interact with Retail Orders. Such competition 
has the ability to promote efficiency by facilitating the price 
discovery process and generating additional investor interest in 
trading securities, thereby promoting capital formation. The Exchange 
believes that extending the pilot is appropriate because it will allow 
the Exchange and the Commission additional time to analyze data 
regarding the Program that the Exchange has committed to provide.\6\ As 
such, the Exchange believes that it is appropriate to extend the 
current operation of the Program.\7\ Through this filing, the Exchange 
seeks to amend NYSE Arca Equities Rule 7.44(m) and extend the current 
pilot period of the Program until June 30, 2017.
---------------------------------------------------------------------------

    \6\ See RLP Approval Order, supra n. 4, 78 FR at 79529.
    \7\ Concurrently with this filing, the Exchange has submitted a 
request for an extension of the exemption under Regulation NMS Rule 
612 previously granted by the Commission that permits it to accept 
and rank the undisplayed RPIs. See Letter from Martha Redding, Asst. 
Corporate Secretary, NYSE Group, Inc. to Brent J. Fields, Secretary, 
Securities and Exchange Commission, dated November 28, 2016.
---------------------------------------------------------------------------

2. Statutory Basis
    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),\9\ 
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. The Exchange 
believes that extending the pilot period for the Retail Liquidity 
Program is consistent with these principles because the Program is 
reasonably designed to attract retail order flow to the exchange 
environment, while helping to ensure that retail investors benefit from 
the better price that liquidity providers are willing to give their 
orders. Additionally, as previously stated, the competition promoted by 
the Program may facilitate the price discovery process and potentially 
generate additional investor interest in trading securities. The 
extension of the pilot period will allow the Commission and the 
Exchange to continue to monitor the Program for its potential effects 
on public price discovery, and on the broader market structure.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 
simply extends an established pilot program for an additional six 
months, thus allowing the Retail Liquidity Program to enhance 
competition for retail order flow and contribute to the public price 
discovery process.

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 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and

[[Page 90035]]

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-2016-157 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-2016-157. 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-NYSEARCA-2016-157 and should 
be submitted on or before January 3, 2017.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-29800 Filed 12-12-16; 8:45 am]
 BILLING CODE 8011-01-P