[Federal Register Volume 78, Number 128 (Wednesday, July 3, 2013)]
[Notices]
[Pages 40237-40239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15933]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69881; File No. SR-NYSEMKT-2013-57]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Exchange Rule
980NY To Modify the Information Disseminated at the Initiation of a
Complex Order Auction
June 27, 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 25, 2013, NYSE MKT LLC (``NYSE MKT'' 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 Exchange Rule 980NY to modify the
information disseminated at the initiation of a Complex Order Auction.
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 proposes to amend Exchange Rule 980NY to modify the
information disseminated at the initiation of a Complex Order Auction
(``COA'').
Current Rule 980NY(e)(2) provides that upon receipt of a COA-
eligible order, as defined in Rule 980NY(e)(1), and at the direction of
the entering ATP Holder that an auction be initiated, the Exchange will
send an automated request for responses (``RFR'') message to all ATP
Holders who subscribe to RFR messages. RFR messages identify the
component series, the size of the order and any contingencies, but do
not identify the side of the market. ATP Holders then have an
opportunity to submit bids and offers with the price and size they
would be willing to participate in the execution of the COA-eligible
order (an ``RFR Response'').
NYSE Amex Options proposes to amend Rule 980NY(e)(2) to include the
side (i.e., buy or sell) of a Complex Order entered into COA when
broadcasting automated RFRs to ATP Holders. This proposed rule change
is similar to a recent change by the Chicago Board Options Exchange,
Inc. (``CBOE'').\3\ Like the CBOE, because same-side responses to an
RFR would not trade with the COA-eligible order, the Exchange has
determined that the submission of RFR Responses on the same side as the
COA-eligible order are [sic] unnecessary.\4\ In order to reduce the
number responses on the same side of the market as the COA-eligible
order, the Exchange now proposes to amend Rule 980NY(e)(2) to include
the side of the market of the order being auctioned when sending out an
RFR. By providing the side of the market, ATP Holders will be able to
tailor their responses to RFRs and will only need to submit one order
on the contra side of the order being auctioned, as opposed to two
orders, one on each side of the COA-eligible order, as is generally the
case today. In addition, the Exchange believes that the dissemination
of the additional information about the terms of an order will
encourage more meaningful and competitively priced RFR Responses, which
could result in deeper liquidity
[[Page 40238]]
and better prices for market participants.
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\3\ See Exchange Act Release No. 68095 (October 24, 2012), 77 FR
65751 (October 30, 2012) (Order approving SR-CBOE-2012-85) (``CBOE
Filing'').
\4\ See CBOE Filing.
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Because a same-side RFR Response cannot trade with a COA-eligible
order, the Exchange considers same-side RFR Responses to be unnecessary
to the COA process. Therefore, the Exchange proposes to amend Rule
980NY(e)(4) to provide that RFR Responses must be on the opposite side
of the COA-eligible order and that same-side RFR Responses will be
rejected by the Exchange. Requiring that RFR Responses be on the
opposite side of a COA-eligible order and rejecting same-side RFR
Responses is consistent with the processing of RFR Responses by the
CBOE.\5\ The Exchange believes that the proposed rule change will
improve the efficiency of the COA process by eliminating excess RFR
Responses that can never actually trade with the COA-eligible order.\6\
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\5\ See CBOE Filing.
\6\ The Exchange notes that only same-side Responses will be
rejected and that unrelated Complex Orders on the same side of the
market as a COA-eligible order that are received during the Response
Time Interval will continue to be processed pursuant to Rule
980NY(e)(8).
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Pursuant to this proposed rule change, same-side RFR Responses will
be rejected, therefore incoming RFR Responses will no longer be
eligible to trade against same-side RFR Responses. Accordingly, the
Exchange proposes to delete a reference to RFR Responses in Rule
980NY(e)(7).
The Exchange also proposes to amend Rule 980NY(e)(4) by correcting
the rule text describing how RFR Responses are treated. Existing rule
text states that RFR Responses will be ranked and displayed in the
Consolidated Book. However, in accordance with Rule 980NY(e)(7), RFR
Responses are only firm with respect to COA-eligible orders and
unrelated orders that are received during the Response Time Interval,
as defined in Rule 980NY(e)(3), and any unexecuted RFR Responses will
expire at the end of the Response Time Interval (signifying the end of
the auction). Because RFR Responses are only firm with respect to COA-
eligible orders and unrelated orders that are received during an
auction, and the fact that unexecuted RFR Responses expire at the
conclusion of the auction, RFR Responses should not be ranked and/or
displayed in the Consolidated Book. Thus, the language stating that RFR
Responses will be ranked and displayed in the Consolidated Book is
inaccurate. The Exchange therefore proposes to delete language in Rule
980NY(e)(4) stating that RFR Responses will be ranked and displayed in
the Consolidated Book and affirmatively state in Rule 980NY(e)(7) that
RFR Responses will not be displayed in the Consolidated Book.
The Exchange also proposes to make non-substantive changes to Rule
980NY subsections (e)(2) and (e)(7) by correcting minor typographical
errors in the existing rule text.
The Exchange will announce the implementation date of the systems
functionality associated with the proposed rule change by Trader Update
to be published no later than 90 days following the effective date. The
implementation date will be no later than 90 days following the
issuance of the Trader Update.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \7\ of the
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers
the objectives of Section 6(b)(5),\8\ 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 mechanisms of a free and open
market and a national market system. In particular, the Exchange
believes the proposed rule change protects investors and is in the
public interest because it will eliminate unnecessary RFR Responses on
the same side of the market as a COA-eligible order, which will
ultimately make the COA process more efficient. In addition, the
Exchange believes that including the side of the market in the RFR will
encourage more meaningful and competitively priced RFR Responses, which
could result in deeper liquidity and better prices for market
participants. Disseminating additional information regarding the terms
of an order should reduce confusion and provide for a less disruptive
COA process, thus aiding in perfecting the mechanisms of the open
market.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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Also, by amending Rule 980NY(e)(4) and (7) the Exchange is
correcting inaccurate language describing the functionality of the COA
for the reasons set forth above. Correcting inaccurate rule language
will provide clarity as to the functionality of the COA. The Exchange
believes that having clear and precise rules furthers the objectives of
the Act by removing of impediments to and helping to perfect the
mechanisms of a free and open market and a national market system.
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. Specifically, the proposal
is structured to offer the same enhancement to all market participants,
regardless of account type, and will not impose a competitive burden on
any participant. The Exchange believes that adopting similar COA rules
to those of other exchanges will allow NYSE Amex Options to more
efficiently compete for complex order business. In addition, by
disseminating enhanced RFRs, ATP Holders will be able to provide more
efficient responses thus creating a more competitive market. The
Exchange does not believe that requiring RFR responses to be on the
opposite side of a COA eligible order and/or rejecting same-side
Responses will impose any burden on market participants because market
participants will still have the ability to submit unrelated same-side
Complex Orders to the Exchange.
Because this proposal adopts a rule that is already in effect at a
competing exchange, the Exchange does not believe that the proposed
changes will impose a burden on other options exchanges. Rather, making
this functionality available to market participants on the Exchange may
foster more competition, thus improving the overall efficacy of the
options markets.
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: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with 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 fulfilled this requirement.
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[[Page 40239]]
At any time within 60 days of the filing of the 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
Send an email to [email protected]. Please include
File Number SR-NYSEMKT-2013-57 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-NYSEMKT-2013-57.
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 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-
NYSEMKT-2013-57 and should be submitted on or before July 24, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15933 Filed 7-2-13; 8:45 am]
BILLING CODE 8011-01-P