[Federal Register Volume 84, Number 38 (Tuesday, February 26, 2019)]
[Notices]
[Pages 6188-6190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03218]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85168; File No. SR-NYSEAMER-2019-01]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 7.31E Relating to the Minimum Trade Size Modifier

February 20, 2019.
    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 February 11, 2019, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') 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 amend Rule 7.31E relating to the Minimum 
Trade Size Modifier. The proposed rule change is available on the 
Exchange's website 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 Rule 7.31E relating to the Minimum 
Trade Size (``MTS'') Modifier.
    The MTS Modifier is currently available for Limit IOC Orders,\4\ 
Midpoint-Liquidity (``MPL'') Orders,\5\ Tracking Orders,\6\ Non-
Displayed Primary Pegged Orders,\7\ and Discretionary Pegged Orders.\8\ 
As such, the MTS Modifier is currently available only for orders that 
are not displayed and do not route. On arrival, Limit IOC Orders, MPL 
Orders, Non-Displayed Primary Pegged Orders, and Discretionary Pegged 
Orders with an MTS Modifier will trade against contra-side orders in 
the Exchange Book that in the aggregate or individually, meet the 
MTS.\9\ Once resting, MPL Orders, Tracking Orders, Non-Displayed 
Primary Pegged Orders, and Discretionary Pegged Orders with an MTS 
Modifier function similarly: If a contra-side order does not meet the 
MTS, the incoming order will not trade with and may trade through the 
resting order with the MTS Modifier. In addition, MPL Orders, Tracking 
Orders, Non-Displayed Primary Pegged Orders, and Discretionary Pegged 
Orders with an MTS Modifier will be cancelled if such orders are traded 
in part or reduced in size and the remaining quantity is less than the 
MTS.
---------------------------------------------------------------------------

    \4\ See Rule 7.31E(b)(2)(A). In sum, a Limit Order designated 
IOC is to be traded in whole or in part on the Exchange as soon as 
such order is received, and the quantity not so traded is cancelled. 
Id.
    \5\ See Rule 7.31E(d)(3). In sum, an MPL Order is a ``Limit 
Order that is not displayed and does not route, with a working price 
at the midpoint of the PBBO.'' Id.
    \6\ See Rule 7.31E(d)(4). In sum, a Tracking Order is an order 
to buy (sell) with a limit price that is not displayed, does not 
route, must be entered in round lots and designated Day, and will 
trade only with an order to sell (buy) that is eligible to route.
    \7\ See Rule 7.31E(h)(2). In sum, a Non-Displayed Pegged Order 
is a Pegged Order to buy (sell) with a working price that is pegged 
to the PBB (PBO), with no offset allowed. All Pegged Orders are not 
displayed and do not route. See Rule 7.31E(h).
    \8\ See Rule 7.31E(h)(3). In sum, a Discretionary Pegged Order 
is a Pegged Order to buy (sell) that upon entry to the Exchange is 
assigned a working price equal to the lower (higher) of the midpoint 
of the PBBO (``Midpoint Price'') or the limit price of the order. 
All Pegged Orders are not displayed and do not route. See Rule 
7.31E(h).
    \9\ Tracking Orders, including Tracking Orders with an MTS 
Modifier, are passive orders that do not trade on arrival.
---------------------------------------------------------------------------

    First, the Exchange proposes to amend its rules to make MTS 
Modifier functionality available for an additional non-displayed order 
that does not route, i.e., Non-Displayed Limit Orders.\10\ This 
proposed change is based on the rules of both the Nasdaq Stock Market 
LLC (``Nasdaq'') and Investors Exchange LLC (``IEX''), which both offer 
minimum trade size functionality for orders that are not displayed and 
that do not route.\11\
---------------------------------------------------------------------------

    \10\ See Rule 7.31E(d)(2). In sum, a Non-Displayed Limit Order 
is a Limit Order that is not displayed and does not route. Id. The 
Exchange understands that its affiliated exchanges, the New York 
Stock Exchange, Inc. (``NYSE''), NYSE National, Inc. (``NYSE 
National''), and NYSE Arca, Inc. (``NYSE Arca'', together with the 
Exchange, NYSE National and NYSE, the ``Affiliate SROs'') have 
either filed or intend to file similar proposes rule changes with 
the Commission to extend the availability of their respective MTS 
Modifiers to Non-Displayed Limit Orders. See SR-NYSE-2019-01 (filed 
for immediate effectiveness on January 28, 2019) and SR-NYSEArca-
2019-03 (filed for immediate effectiveness on January 28, 2019).
    \11\ See Nasdaq Rule 4703(e) (Nasdaq's ``Minimum Quantity 
Order'' may not be displayed and will be rejected if it includes an 
instruction to route) and IEX Rule 11.190(b)(11)(A) (IEX's ``Minimum 
Quantity Order'' or ``MQTY'' is a non-displayed, non-routable 
order'').
---------------------------------------------------------------------------

    Second, the Exchange proposes to allow ETP Holder to elect that 
Limit IOC Orders with an MTS Modifier trade on arrival against contra-
side orders in the Exchange Book that individually meet such order's 
MTS. Rule 7.31E(i)(3)(B) requires an ETP Holder to specify whether an 
order with an MTS Modifier would trade on arrival against contra-side 
orders in the Exchange Book that in the aggregate or individually meet 
such order's MTS. Currently, an ETP Holder cannot elect that a Limit 
IOC Order with an MTS Modifier trade only with

[[Page 6189]]

individual order(s) in the Exchange Book that each meets such order's 
MTS. The Exchange proposes to remove this restriction from Rule 
7.31E(i)(3)(B)(ii).
* * * * *
    Because of the technology changes associated with this proposed 
rule change, the Exchange will announce the implementation date of this 
proposed rule change by Trader Update. The Exchange anticipates that 
the implementation date will be in the second quarter of 2019.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\12\ in general, and 
furthers the objectives of Section 6(b)(5),\13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to expand the availability 
of the Exchange's existing MTS Modifier to an additional non-displayed, 
non-routable order, e.g., Non-Displayed Limit Orders, would 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, because the proposed rule change is based on 
similar minimum trade size functionality on Nasdaq and IEX, which both 
similarly make minimum trade size functionality available to non-
displayed, non-routable orders.\14\
---------------------------------------------------------------------------

    \14\ See supra note 11.
---------------------------------------------------------------------------

    The Exchange also believes that the proposal to allow ETP Holder to 
elect that Limit IOC Orders with an MTS Modifier trade on arrival 
against contra-side orders in the Exchange Book that individually meet 
such order's MTS would 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, because the 
proposed rule change would provide ETP Holders greater control over the 
execution of their Limit IOC Orders. The Exchange did not previously 
support functionality that permitted Limit IOC Orders with an MTS 
Modifier to trade against individual orders that each meet such order's 
MTS. The Exchange has since made the necessary technology changes and, 
therefore, proposes to remove this restriction from Rule 
7.31E(i)(3)(B)(ii) as it is no longer necessary. Furthermore, the 
Exchange's affiliates, NYSE and NYSE Arca recently filed proposed rule 
changes with the Commission to modify their respective MTS Modifiers to 
align with that of NYSE American and allow orders with an MTS Modifier 
to execute against individual orders that each meet the incoming 
order's MTS and the NYSE and NYSE Arca proposals did not include a 
similar restriction on Limit IOC Orders.\15\ The Exchange notes that 
similar minimum trade size functionality on Nasdaq and IEX does not 
prohibit Limit IOC Orders with an MTS Modifier from being able to 
execute only against individual orders that meet the order's MTS.
---------------------------------------------------------------------------

    \15\ See supra note 10.
---------------------------------------------------------------------------

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 Exchange believes that 
the proposed rule change is designed to increase competition by making 
available on the Exchange functionality that is already available on 
Nasdaq and IEX. The Exchange also believes that the proposed rule 
change would promote competition by providing market participants with 
an additional venue to which to route non-displayed, non-routable 
orders with an MTS Modifier.

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 \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
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.\18\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-NYSEAMER-2019-01 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-NYSEAMER-2019-01. 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 website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements

[[Page 6190]]

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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEAMER-2019-01 and should be submitted 
on or before March 19, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-03218 Filed 2-25-19; 8:45 am]
 BILLING CODE 8011-01-P