[Federal Register Volume 78, Number 84 (Wednesday, May 1, 2013)]
[Notices]
[Pages 25508-25510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10177]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69436; File No. SR-NYSEARCA-2013-40]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca
Equities Rule 7.11 Clarifying the Exchange's Treatment of Discretionary
Orders That Have Discretionary Prices Outside of the Limit Up-Limit
Down Price Bands
April 23, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 10, 2013, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. 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\ 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 7.11 to
clarify the Exchange's treatment of Discretionary Orders that have
discretionary prices outside the Price Bands. The text of 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.
[[Page 25509]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend new NYSE Arca Equities Rule 7.11
(``New Rule 7.11'' or the ``New Rule''), which implements the Limit Up-
Limit Down Plan,\3\ the first phase of which becomes effective on April
8, 2013, to clarify the Exchange's treatment of Discretionary Orders
that have discretionary prices outside the Price Bands. Under New Rule
7.11, buy or sell interest that is priced or could be executed above or
below the Price Bands, as that term is used in the New Rule, would be
canceled, with one exception. That exception, set out in sub-paragraph
(a)(6) of the New Rule, permits an ETP Holder to instruct the Exchange
to reprice eligible limit orders that are priced above or below the
Price Bands, rather than cancel such orders. Eligible limit orders
would be repriced to the Price Bands.
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\3\ As defined in New Rule 7.11, ``Plan'' means the Plan to
Address Extraordinary Market Volatility Submitted to the Securities
and Exchange Commission Pursuant to Rule 608 of Regulation NMS under
the Securities Exchange Act of 1934, Exhibit A to Securities
Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6,
2012), as it may be amended from time to time.
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The Exchange is proposing to amend New Rule 7.11 to clarify its
treatment of Discretionary Orders, including Discretion Limit Orders
and Passive Discretionary Orders,\4\ in certain circumstances. A
Discretionary Order is an order to buy or sell securities at a
specified, undisplayed price, called the ``discretionary price,'' as
well as at a specified, displayed price. Pursuant to New Rule
7.11(a)(6)(C), an ETP Holder can enter an instruction to re-price
Discretionary Orders rather than cancel them. However, if a
Discretionary Order includes a discretionary price that is priced
outside the Price Bands, the Exchange would cancel the order because it
would be unexecutable at the discretionary price, even if the displayed
price of the order is repriced to the Price Bands. Accordingly, the
Exchange proposes to clarify in the Rule that in this scenario, the
Exchange would cancel a Discretionary Order rather than reprice it.
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\4\ ``Discretionary Order,'' ``Passive Discretionary Order,''
and ``Discretion Limit Order'' are defined in paragraph (h) of Arca
Equities Rule 7.31.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\5\ in general, and
furthers the objectives of Section 6(b)(5),\6\ 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.
The proposal would clarify to ETP Holders how the Exchange would treat
Discretionary Orders with discretionary prices outside the Price Bands.
The Exchange believes that the clarifying change removes impediments to
and perfects the mechanism of a free and open market because it makes
clear that an order with a discretionary price that is outside the
Price Bands, and therefore unexecutable, would be cancelled.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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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 amendment will not impose any burdens on competition
because the proposal would clarify to ETP Holders how Discretionary
Orders with discretionary prices outside the Price Bands would be
treated, which would provide ETP Holders with more information in
setting discretionary prices for such orders.
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 \7\ and Rule 19b-4(f)(6) thereunder.\8\
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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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
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
Commission has waived the five-day prefiling requirement in this
case.
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A proposed rule change filed under Rule 19b-4(f)(6) \9\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\10\ 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 Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such waiver
would allow the Exchange immediately to clarify its treatment of
Discretionary Orders that may be affected by the Limit Up-Limit Down
Plan, which was implemented on April 8, 2013. Accordingly, the
Commission hereby grants the Exchange's request and designates the
proposal operative upon filing.\11\
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\9\ 17 CFR 240.19b-4(f)(6).
\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 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.
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
[[Page 25510]]
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2013-40 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2013-40. 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 such 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 publicly available. All
submissions should refer to File Number SR-NYSEARCA-2013-40 and should
be submitted on or before May 22, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10177 Filed 4-30-13; 8:45 am]
BILLING CODE 8011-01-P