[Federal Register Volume 79, Number 15 (Thursday, January 23, 2014)]
[Notices]
[Pages 3907-3909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-01252]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71331; File No. SR-NYSEArca-2013-92]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 1 and Order Granting Accelerated Approval of Proposed
Rule Change, as Modified by Amendment No. 1, to Amend NYSE Arca
Equities Rules 7.31, 7.32, 7.37, and 7.38 in Order to Comprehensively
Update Rules Related to the Exchange's Order Types and Modifiers
January 16, 2014.
I. Introduction
On September 30, 2013, 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 Rules 7.31, 7.32,
7.37, and 7.38 in order to comprehensively update rules related to the
Exchange's order types and modifiers. The proposed rule change was
published for comment in the Federal Register on October 22, 2013.\3\
On December 5, 2013, the Commission extended to January 20, 2014 the
time period in which to approve the proposed rule change, disapprove
the proposed rule change, or institute proceedings to determine whether
the proposed rule change should be disapproved.\4\ The Commission
received no comment letters regarding the proposed rule change. On
January 15, 2014, the Exchange filed Amendment No. 1 to the proposed
rule change.\5\ 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. 70637 (October 9,
2013), 78 FR 62745 (``Notice'').
\4\ See Securities Exchange Act Release No. 70995, 78 FR 62745
(December 11, 2013).
\5\ In Amendment No. 1, the Exchange proposed to delete a
portion of the text of proposed Supplementary Material .01 to Rule
7.31. This aspect of the proposal is described in more detail below.
See infra note 11 and accompanying text.
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II. Description of the Amended Proposal
The Exchange proposes to amend NYSE Arca Equities Rules
(``Rule(s)'') 7.31, 7.32, 7.37, and 7.38 in order to update its rules
related to the Exchange's order types and modifiers. The Exchange
states that it is proposing these rule changes in order to provide
additional specificity and transparency to NYSE Arca Equities ETP
Holders
[[Page 3908]]
regarding the operation of NYSE Arca Equities order types and
modifiers, to better align its rules with currently available
functionality, and to organize and define order types and modifiers in
a more intuitive manner.\6\
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\6\ See Notice, 78 FR at 62745.
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Rule 7.31. The majority of the Exchange's proposed revisions to
Rule 7.31 would provide greater detail as to the existing functionality
of certain order types and modifiers, including the Market Order (Rule
7.31(a)), Time in Force Modifiers (Rule 7.31(c)), Inside Limit Order
(Rule 7.31(d)), Discretionary Order (Rule 7.31(h)(2)), Passive
Discretionary Order (Rule 7.31(h)(2)(A)), Discretion Limit Order (Rule
7.31(h)(2)(B)), Reserve Order (Rule 7.31(h)(3)), Passive Liquidity
Order (Rule 7.31(h)(4)), Mid-Point Passive Liquidity Order (Rule
7.31(h)(5)), Q Orders (Rule 7.31(k)), Auction-Only Order (Rule
7.31(t)), NOW Order (Rule 7.31(v)), Primary Only Order (Rule 7.31(x)),
Pegged Orders (Rule 7.31(cc)),\7\ Proactive if Locked Modifier (Rule
7.31(hh)), Intermarket Sweep Order (Rule 7.31(jj)), Primary Sweep Order
(Rule 7.31(kk), Post No Preference Blind Order (Rule 7.31(mm)), and Add
Liquidity Only Order (Rule 7.31(nn)).\8\
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\7\ The Exchange's proposed revisions to Rule 7.31(cc) entail,
in part, specifically describing the two variations of Pegged Orders
available to Users: Market Pegged and Primary Pegged Orders. See
Notice, 78 FR at 62748; see also proposed Rule 7.31(cc).
\8\ For a more detailed description of the specific proposed
revisions for each order type and modifier, see Notice, 78 FR at
62746-49; see also proposed Rule 7.31.
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The Exchange also proposes to delete from Rule 7.31 descriptions of
order types and modifiers that are no longer available to Users on
Exchange systems, as well as delete cross-references to such order
types and modifiers in other rules. The following order types would be
deleted: Directed Order (Rule 7.31(i)), Directed Fill (7.31(j)), Fill-
or-Return (Rule 7.31(p)), Fill-or-Return Plus (Rule 7.31(r)), Cleanup
Order (Rule 7.31(u)), Midpoint Directed Fill (Rule 7.31(z)), and Don't
Arb Me Modifier (Rule 7.31(gg)).\9\ Further, the Exchange proposes to
describe certain functionalities as ``modifiers'' instead of
``orders,'' and to relocate certain order type and modifier
descriptions within Rule 7.31.\10\
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\9\ See Notice, 78 FR at 62746-48. In addition, the Exchange
proposes to delete, as redundant, the subparagraphs under current
Rule 7.31(e), which currently describes the IOC Modifier. See id. at
62746.
\10\ See id. at 62746-48; see also proposed Rule 7.31. In
addition to relocating the Market-on-Close Order and Limit-on-Close
Order order type descriptions, the Exchange proposes to conform
their descriptions to the descriptions of the Limit-on-Open and
Market-on-Open order types. See Notice, 78 FR at 62748; see also
proposed Rule 7.31
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Supplementary Material to Rule 7.31. The Exchange proposes to add
Supplementary Material .01 to Rule 7.31, which would provide that Users
may combine the Exchange's order types and modifiers unless the terms
of the proposed combination are inconsistent.\11\ The Exchange also
proposes to add Supplementary Material .02 to Rule 7.31, which would
provide that if two order types are combined that include instructions
for operation on arrival and for how the order operates while resting
on the Exchange's book, the instructions governing functionality while
incoming would be operative upon arrival. Functionality governing how
the order operates while resting on the Exchange's book would govern
any remaining balance of the order that is not executed upon
arrival.\12\
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\11\ See Notice, 78 FR at 62749; see also proposed Supplementary
Material .01 to Rule 7.31.
\12\ See Notice, 78 FR at 62749-50; see also proposed
Supplementary Material .02 to Rule 7.31.
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Rule 7.32--Order Entry. The Exchange proposes to amend Rule 7.32 to
specify that orders with a size greater than one million shares are
rejected. Exchange systems currently do not accept orders with a size
greater than one million shares.\13\
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\13\ See Notice, 78 FR at 62750; see also proposed Rule 7.32.
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Rule 7.38--Odd and Mixed Lots. The Exchange proposes to amend Rule
7.38(a)(2) to clarify that specific language in the descriptions of
individual order types override the general rule that mixed lot orders
may be any order type supported by the Exchange.\14\
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\14\ See Notice, 78 FR at 62750; see also proposed Rule 7.38.
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Technical Amendments. The Exchange proposes to make certain
technical amendments to various provisions in Rules 7.31 and 7.37 so
that common abbreviations for order types and modifiers will be
inserted throughout Rules 7.31 and 7.37 where appropriate.\15\
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\15\ See Notice, 78 FR at 62750.
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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.\16\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\17\ 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.
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\16\ 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).
\17\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change would provide
greater specificity, transparency, and clarity with respect to the use
and potential use of order types and modifiers on the Exchange.
According to the Exchange, these enhancements would remove impediments
to and perfect the mechanism of a free and open market and national
market system because, with greater clarity regarding what a specific
order type or modifier does and its proper use, greater competitive
forces can be brought to bear on, and help to foster the proper
functioning of, the market. Further, the Exchange believes that these
enhancements would protect investors and the public interest because
increased transparency and specificity would enable investors and the
public to understand the tools available to the agents handling their
orders as well as those available to professional market participants
who may be competing with their orders.
The Commission notes that the instant proposal does not add any new
functionality but instead enhances and clarifies the descriptions of
the order type and modifier functionality currently available on the
Exchange. For example, among other things, the Exchange's proposed
revisions would provide greater detail as to the operation of and
interaction between certain order types and modifiers, the
circumstances in which certain order types or order type and modifier
combinations are rejected, order types and modifiers that are
compatible or incompatible with each other, and when certain order
types will route to away markets. The proposal also adds new
supplementary material to Rule 7.31 that further clarifies when
existing order types and modifiers can be combined, and how the
Exchange handles combined order types that include instructions for how
the order should operate on arrival as well as while resting on the
Exchange's book. Further, the Exchange proposes to
[[Page 3909]]
update its rules by deleting obsolete order type and modifier
provisions and reorganizing certain order type and modifier rules in a
more intuitive manner. The Commission believes that these proposed
changes are reasonably designed to provide greater specificity, clarity
and transparency with respect to the order type and modifier
functionality available on the Exchange, and therefore should help to
prevent fraudulent and manipulative acts and practices, promote just
and equitable principles of trade, remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, protect investors and the public interest.
The Commission finds good cause to approve the filing, as amended
by Amendment No. 1 to the proposed rule change, prior to the thirtieth
day after the date of publication of notice of filing thereof in the
Federal Register. The proposed revisions should further increase the
Exchange's transparency with respect to the operation of its various
order types and modifiers, and serve to enhance investors'
understanding of the tools available with respect to the handling of
their orders. Accelerated approval would allow the Exchange to update
its rule text immediately, thus providing users with greater clarity
with respect to the use and potential use of functionality offered by
the Exchange. In addition, the initial proposal was open for comment
for twenty-one days after publication and generated no comment.
Accordingly, the Commission believes that good cause exists, consistent
with Sections 6(b)(5) and 19(b) of the Act,\18\ to approve the filing,
as amended by Amendment No. 1 to the proposed rule change, on an
accelerated basis.
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\18\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78s(b).
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IV. Solicitation of Comments on Amendment No. 1
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-NYSEArca-2013-92 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-2013-92.
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-
NYSEArca-2013-92 and should be submitted on or before February 13,
2014.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\19\ that the proposed rule change (SR-NYSEArca-2013-92) be, and it
hereby is, approved, as amended.
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\19\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-01252 Filed 1-22-14; 8:45 am]
BILLING CODE 8011-01-P