[Federal Register Volume 78, Number 123 (Wednesday, June 26, 2013)]
[Notices]
[Pages 38420-38422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15227]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69810; File No. SR-NYSE-2013-41]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending NYSE Rule 1000 To Increase the Price Threshold for Those
Securities Ineligible for Automatic Executions From $1,000.00 or More
to $10,000.00 or More
June 20, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on June 7, 2013, New York Stock Exchange LLC (the ``Exchange'' or
``NYSE'') 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 NYSE Rule 1000 to increase the price
threshold for those securities ineligible for automatic executions from
$1,000.00 or more to $10,000.00 or more. 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.
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 Rule 1000(a)(vi) (``Automatic
Executions'') to increase the price level at which a security would be
considered ``high-priced'' and thus ineligible for automatic execution.
Rule 1000(a)(vi) prohibits automatic executions if the closing price
for a security, or if the security did not trade, the closing bid price
of the security on the Exchange on the immediate previous trading day,
is $1,000 or more. The Exchange is proposing to increase this price
level from $1,000 or more to $10,000 or more.\3\
---------------------------------------------------------------------------
\3\ As a result of the proposed amendment, six additional
securities would be eligible for automatic execution as of the date
of this filing.
---------------------------------------------------------------------------
The Exchange is proposing to make a conforming amendment to Rule
60(d)(iii)(B)(I), which provides that the Exchange keeps Autoquote \4\
active, even if automatic executions are suspended under Rule 1000, if
an order or a cancellation of an order arrives that would not result in
a locked or crossed market in a security priced at $1,000 or more. The
Exchange proposes to increase this price level to $10,000 or more to
conform the provision to the proposed amendment to Rule 1000(a)(vi).
---------------------------------------------------------------------------
\4\ Pursuant to Rule 60(d), the Exchange autoquotes the NYSE's
highest bid or lowest offer to reflect interest in the Book, and
when the highest bid or lowest offer has been traded with in its
entirety, the Exchange will autoquote a new bid or offer reflecting
the total size of orders at the next highest (in the case of a bid)
or lowest (in the case of an offer) price.
---------------------------------------------------------------------------
Securities priced at $1,000 or more are traded manually by the
assigned Designated Market Maker (``DMM''). Rule 610 of Regulation NMS
under the Act prohibits national securities exchanges and national
securities associations from locking or crossing protected
quotations,\5\ and Rule 611 of Regulation NMS prohibits trade-throughs
only of protected quotations.\6\ Rule 600 of Regulation NMS, however,
requires a protected quotation to be automated.\7\ The Exchange's
quotations in high-priced securities, therefore, are not protected
quotations for purposes of Regulation NMS. The proposed rule change
would allow the affected securities to be eligible for automatic
execution and auto-quoting, which would allow the Exchange to protect
its quotations and remain competitive with other market centers. For
the affected securities, the proposal would align the availability of
automatic executions on the Exchange with the availability of such
executions on other exchanges.\8\
---------------------------------------------------------------------------
\5\ 17 CFR 240.610(d)(1)(i).
\6\ 17 CFR 240.611(a)(1).
\7\ 17 CFR 240.600(b)(57)(iii).
\8\ The Exchange is not aware of any other exchange that, by
rule, does not issue protected quotations for a stock on a regular
basis.
---------------------------------------------------------------------------
The Exchange is also proposing to make a conforming amendment to
Rule 1000(a)(iv)(C), which sets out value ranges used to determine
liquidity replenishment points (``LRPs''). LRPs are pre-determined
price points that function to moderate volatility in a particular
security, improve price continuity, and foster market quality by
temporarily converting the electronic market to an auction market and
permitting new trading interest to add liquidity.\9\ Pursuant to Rule
60(d)(i), Autoquote is suspended when an LRP is reached.
---------------------------------------------------------------------------
\9\ The Exchange recently amended its rules to phase out the
functionality associated with LRPs to coincide with the
implementation of the Limit Up--Limit Down Plan. See Securities
Exchange Act Release No. 69295 (April 4, 2013), 78 FR 21457 (April
10, 2013).
---------------------------------------------------------------------------
LRPs are calculated by adding and subtracting an LRP value to a
security's last sale price. The Exchange sets and disseminates a
specific LRP value from a range of potential values. That range, in
turn, is based upon a security price category (e.g., $5 to $9.99) and
the average daily volume of the security to which the value is being
added. The LRP value chosen within an LRP value range is based on an
examination of trading data. Because the Exchange is increasing the
highest price per share at which automatic execution is available, the
Exchange is making a conforming amendment to the highest security price
category used to determine LRP values from $250 to $1000 to $250 to
$10,000.
2. Statutory Basis
The proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to a national
securities exchange. In particular, the Exchange believes that the
proposal is consistent with (i) Section 6(b) of the Act,\10\ in
general, and furthers the objectives of Section 6(b)(5),\11\ in
particular, in that it is designed to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities and to remove impediments to and perfect the
[[Page 38421]]
mechanism of a free and open market and a national market system, and
(ii) Section 11A(a)(1) of the Act,\12\ in that it seeks to ensure the
economically efficient execution of securities transactions, fair
competition among brokers and dealers and among exchange markets, and
the practicability of brokers executing investors' orders in the best
market.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------
Specifically, the Exchange believes that increasing the dollar
threshold for high-priced securities would expand the eligibility of
orders for automatic executions on the Exchange, thus removing
impediments to and perfecting the mechanism of a free and open market
and a national market system. Further, the Exchange believes the
proposed amendment will foster cooperation and coordination with
persons engaged in facilitating transactions in securities because the
securities that will be affected by the amendment are already eligible
for automatic executions on other markets. Thus, the proposal will
align the Exchange's treatment of such securities with that of other
exchanges.
Additionally, the Exchange believes that the proposal will further
the objectives of Section 11A(a)(1) of the Act because, by increasing
the number of securities eligible for automatic execution, the proposal
will ensure that quotes on the Exchange will be protected from trade-
throughs and not be locked or crossed by other markets. Exchange quotes
in the affected securities will be included in the protected quotations
and increase competition in the market. This increased competition and
requirement that brokers respect Exchange quotes in the affected
securities will increase the ability of brokers to execute investors'
orders in the best market. Further, the proposal will assure the fair
competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets
because the proposal will promote order interaction and ensure that the
Exchange's quotes in the affected securities will not be isolated from
other market centers.\13\
---------------------------------------------------------------------------
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (Reg. NMS Adopting
Release) (quoting H.R. Rep. 94-123, 94th Cong., 1st Sess. 50 (1975))
(``[W]hen Congress mandated the establishment of an NMS, it well
stated this basic principle: `Investors must be assured that they
are participants in a system which maximizes the opportunities for
the most willing seller to meet the most willing buyer.' '').
---------------------------------------------------------------------------
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 changes will increase competition among execution
venues and encourage additional liquidity. By allowing the affected
securities to be eligible for automatic execution, the Exchange's
quotes in such securities will be considered protected quotes and thus
away markets will be required to route to the Exchange when better
prices are available on the Exchange. The proposal will therefore
increase order interaction and encourage competition in the affected
securities.
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
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not become operative for 30 days from the date on which it was filed,
or such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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.
---------------------------------------------------------------------------
The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the 30-day
operative delay will allow the Exchange to align its treatment of the
affected securities with that of other exchanges, threby assuring the
economically efficient execution of securities transactions and
fostering efficiency in the marketplace. Therefore, the Commission
designates the proposal operative upon filing.\16\
---------------------------------------------------------------------------
\16\ 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).
---------------------------------------------------------------------------
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) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\17\ 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-NYSE-2013-41 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-NYSE-2013-41. 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
[[Page 38422]]
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-NYSE-2013-41 and should be submitted on or before July
17, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15227 Filed 6-25-13; 8:45 am]
BILLING CODE 8011-01-P