[Federal Register Volume 77, Number 181 (Tuesday, September 18, 2012)]
[Notices]
[Pages 57630-57631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22916]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67844; File No. SR-NYSEArca-2012-75]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change Amending NYSE Arca Equities Rule 7.37(c) to
Provide That the Tracking Order Process Is Available Only for Orders
That Are Eligible To Route To an Away Market
September 12, 2012.
I. Introduction
On July 11, 2012, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend NYSE Arca Equities Rule 7.37(c) to provide that the Tracking
Order Process is available only for orders that are eligible to route
to an away market. The proposed rule change was published for comment
in the Federal Register on July 30, 2012.\3\ The Commission received no
comment letters regarding the proposed rule change. This order approves
the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 67490 (July 24,
2012), 77 FR 44702 (``Notice'').
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II. Description of the Proposal
The Exchange proposes to amend NYSE Arca Equities Rule 7.37(c) to
specify that only orders that are eligible to route to an away market
would participate in the Tracking Order Process. This proposed rule
change would make Rule 7.37(c) consistent with the manner by which the
Exchange operates the Tracking Order Process.
NYSE Arca Equities Rule 7.37 sets forth the Order Execution process
at the Exchange. The Tracking Order Process is the fourth step in the
Order Execution process, and is preceded by the Directed Order Process,
Display Order Process and Working Order Process.\4\ Currently, Rule
7.37(c) states that if an order has not been executed in its entirety
in one of the processes preceding the Tracking Order Process, such
order will enter the Tracking Order Process for potential matching and
execution against Tracking Orders.\5\ Rule 7.37(c) does not specify
that among the orders that are not fully executed in the processes
preceding the Tracking Order Process, it is only those that are
eligible to route to an away market that participate in the Tracking
Order Process. The proposed rule change would add this specification to
Rule 7.37(c) to make the rule consistent with the operation of the
Tracking Order Process.
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\4\ See NYSE Arca Equities Rule 7.37.
\5\ Tracking Orders are undisplayed, priced round lot orders
that are eligible for execution in the Tracking Order Process
against orders equal to or less than the aggregate size of the
Tracking Order interest at that price. See NYSE Arca Equities Rule
7.31(f).
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The Exchange also proposes to delete provisions in current rule
7.37(c) stating that any portion of an order received from another
market center or market participant is cancelled immediately, and an
incoming order that is designated as an ISO does not interact in the
Tracking Order Process.
[[Page 57631]]
According to the Exchange, these provisions are obviated by the
proposed clarification in Rule 7.37(c) that only routable order types
participate in the Tracking Order Process.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\6\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\7\ which requires, among
other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, 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; and are not designed to permit unfair discrimination between
customers, issuers, brokers or dealers. The Commission notes that the
Exchange believes that the proposed rule change removes impediments to
and perfects the mechanism of a free and open market by providing
transparency regarding the type of orders that are eligible to interact
in the Tracking Order Process and eliminating obsolete rule text. Based
on the Exchange's statements, the Commission believes that the proposed
rule change is consistent with Section 6(b)(5) of the Act.\8\
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\6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
\8\ The Commission notes that it recently approved a proposal by
EDGA Exchange, Inc. to add a new order type called the Route Peg
Order, which is a non-displayed limit order that, similar to the
Tracking Order, is eligible to execute against only routable orders.
See Securities Exchange Act Release No. 67726 (August 24, 2012), 77
FR 52771 (August 30, 2012) (SR-EDGA-2012-28).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-NYSEArca-2012-75) be, and it
hereby is, approved.
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\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-22916 Filed 9-17-12; 8:45 am]
BILLING CODE 8011-01-P