[Federal Register Volume 82, Number 4 (Friday, January 6, 2017)]
[Notices]
[Pages 1772-1774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-32036]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79713; File No. SR-NYSEARCA-2016-166]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rule 7.35(d)(4)

December 30, 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 December 16, 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.
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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 amend NYSE Arca Equities Rule 7.35(d)(4) 
to provide that the Exchange would not report an Official Closing 
Price, as defined under NYSE Arca Equities Rule 1.1(gg)(1), if there 
were no consolidated last-sale eligible trades on a trading day. 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 NYSE Arca Equities Rule 7.35(d)(4) 
to provide that the Exchange would not report an Official Closing 
Price, as defined under NYSE Arca Equities Rule 1.1(gg)(1), if there 
were no consolidated last-sale eligible trades on a trading day. This 
proposed rule change would not change how the Official Closing Price 
would be determined and disseminated if the Exchange is unable to 
conduct a closing transaction in one or more securities due to a 
systems or technical issue, as described in NYSE Arca Equities Rules 
1.1(gg)(2)-(4).
    The Exchange reports an Official Closing Price to the securities 
information processor (``SIP'') as an ``M'' sale condition.\4\ 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.'' As provided for in Rule 7.35(d)(4), the Exchange publishes an 
Official Closing Price for all securities that trade on the NYSE Arca 
Marketplace. The term ``Official Closing Price'' is defined in Rule 
1.1(gg).
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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, available here: 
https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/cts_input_spec.pdf, and the UTP Plan Trade Data Feed Direct 
Subscriber Interface Specification, dated November 2015, at 7-3, 
available here: http://www.utpplan.com/DOC/utdfspecification.pdf 
(together, ``SIP Specifications''). 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.
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    The Exchange is proposing to amend NYSE Arca Equities Rule 
7.35(d)(4) to provide that an Official Closing Price, as defined in 
NYSE Arca Equities Rule 1.1(gg)(1), would not be reported for a 
security if there were no consolidated last-sale eligible trades in 
such security on a trading day.\5\ 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 consolidated 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.
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    \5\ The Exchange also proposes to amend NYSE Arca Equities Rule 
7.35(d)(4) to provide that the Exchange would ``report'' an Official 
Closing Price, rather than ``publish'' an ``Official Closing 
Price,'' because the SIP, and not the Exchange, publishes the 
Official Closing Price.
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    Accordingly, this proposed rule change is intended to amend NYSE 
Arca Equities Rule 7.35(d)(4) to provide that the Exchange would not 
report an Official Closing Price, as defined in Rule 1.1(gg)(1), in a 
security as an ``M'' sale condition to the SIP if there were no 
consolidated last-sale eligible trades in such security on a trading 
day. And, as noted above, this proposed rule change would not alter how 
the Official Closing Price would be disseminated under NYSE Arca 
Equities Rules 1.1(gg)(2)-(4).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\7\ 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

[[Page 1773]]

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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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 of when 
the Exchange's would not 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 consolidated 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 NYSE Arca Equities Rule 1.1(gg)(2)-(4) 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 
consolidated 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 \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\11\ 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 NYSE Arca Equities Rules 1.1(gg)(2)-
(4). 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 reporting and disseminating an Official 
Closing Price. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \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.
    \12\ 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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 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-NYSEARCA-2016-166 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-2016-166. 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

[[Page 1774]]

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-2016-166, and 
should be submitted on or before January 27, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-32036 Filed 1-5-17; 8:45 am]
 BILLING CODE 8011-01-P