[Federal Register Volume 79, Number 212 (Monday, November 3, 2014)]
[Notices]
[Pages 65273-65275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26013]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73453; File No. SR-NYSEARCA-2014-118]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca
Equities Rule 7.16(f)(v) To Provide That Proactive if Locked Modifiers
Will Be Ignored for Short Sale Orders During a Short Sale Period
October 28, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on October 15, 2014, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 7.16(f)(v)
to provide that Proactive if Locked Modifiers will be ignored for short
sale orders during a Short Sale Period. 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
[[Page 65274]]
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend NYSE Arca Equities Rule
7.16(f)(v) (``Rule 7.16'') to provide that Proactive if Locked
Modifiers will be ignored for short sale orders during a Short Sale
Period.
Rule 7.16(f) sets forth how the Exchange handles short sale orders
when the provisions of paragraph (b)(1) of Rule 201 of Regulation SHO
are in effect.\4\ Rule 7.16(f)(b)(ii)(sic) provides that the Exchange
will not execute or display a short sale order for a covered security,
as defined in Rule 201 of Regulation SHO, at a price that is less than
or equal to the current national best bid (``NBB'') if the listing
market for such security has determined that the price of the covered
security decreased by 10% or more from the prior day's closing price
(``Short Sale Price Test''). Consistent with paragraph (b)(1)(ii) of
Rule 201 of Regulation SHO,\5\ Exchange Rule 7.16(f)(iv) defines a
Short Sale Period as the period during which sell orders marked short
are subject to a Short Sale Price Test. Rule 7.16(f)(v) further
specifies how the Exchange handles short sale orders during the Short
Sale Period.
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\4\ 17 CFR 242.201(b)(1).
\5\ 17 CFR 242.201(b)(1)(ii).
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The Exchange proposes to add new Rule 7.16(f)(v)(G) to specify how
the Exchange will handle short sale orders that include a Proactive if
Locked Modifier during a Short Sale Period. As defined in Rule
7.31(hh), a Proactive if Locked Modifier is available for limit orders
and if so designated, the Exchange will route the order to another
market center pursuant to Rule 7.37(d) for the away market's displayed
size in the instance in which the other market center has locked the
order and the locking market has not resolved the locked market
situation in a timely manner based upon average response times from
other market centers. If the order routed from the Exchange to another
market center is not executed in its entirety, the Exchange shall post
the order or portion thereof on the Exchange's book. Proactive if
Locked Modifiers are only available for Exchange-listed securities.
As proposed, the Exchange will ignore Proactive if Locked Modifiers
applied to short sale orders for a security that is in a Short Sale
Period. The Exchange believes that it is appropriate to ignore the
Proactive if Locked Modifier for short sale orders during a Short Sale
Period because it would reduce the possibility that the Exchange will
route a short sale order priced at or below the NBB to another market
center. Instead, the Exchange will handle the short sale order
consistent with the existing provisions of Rule 7.16(f)(v), as
applicable, which may include re-pricing the order to a Permitted Price
\6\ or rejecting the order, if so designated by the ETP Holder.\7\
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\6\ A Permitted Price is one minimum price increment above the
NBB. Rule 7.16(b)(v)(C).
\7\ See Rule 7.16(b)(v)(A).
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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 30 days following the effective date. The
implementation date will be no later than 30 days following the
issuance of the Trader Update.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5),\9\ in particular, in that it is designed to promote just and
equitable principles of trade, to remove impediments to, and perfect
the mechanism of a free and open market and, in general, to protect
investors and the public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that ignoring the Proactive if Locked
Modifier for short sale orders during a Short Sale Period will remove
impediments to and perfect the mechanism of a free and open market
because it will reduce the possibility that the Exchange will route a
sell short order priced at or below the NBB to another market center.
Rule 201(b)(1)(i) of Regulation SHO \10\ requires that a trading center
prevent the execution or display of a short sale order at a price that
is less than or equal to the NBB, but is silent on whether a trading
center can route a short sale order during a Short Sale Period that is
priced less than or equal to the NBB. The Exchange believes, however,
that it is appropriate and promotes just and equitable principles of
trade to reduce the possibility that the Exchange would route a sell
short order during a Short Sale Period that is priced less than or
equal to the NBB, as the receiving away market would otherwise be
required to prevent the display or execution of such order consistent
with Rule 201 of Regulation SHO. The Exchange therefore believes that
by ignoring Proactive if Locked Modifiers for short sale orders during
a Short Sale Period, the Exchange would comply with Rule 201 of
Regulation SHO by handling the order consistent with other provisions
of Rule 7.16(f)(v) and not shift that responsibility to an away market.
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\10\ 17 CFR 242.201(b)(1)(i)
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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 the
proposed rule change removes a burden on competition because it reduces
the possibility that the Exchange would route a sell short order during
a Short Sale Period that is priced less than or equal to the NBB, which
otherwise would have shifted the responsibility for that sell short
order to an away market. As proposed, the Exchange would instead be
responsible for handling that sell short order, consistent with
existing Rule 7.16(f)(v) and Rule 201 of Regulation SHO.
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 \11\ and Rule 19b-4(f)(6) thereunder.\12\
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)
[[Page 65275]]
of the Act and Rule 19b-4(f)(6)(iii) thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
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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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEARCA-2014-118 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2014-118. 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 Section, 100 F Street
NE., Washington, DC 20549-1090. Copies of the filing will also be
available for inspection and copying at the NYSE's principal office and
on its Internet Web site at www.nyse.com. 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-2014-118 and should be
submitted on or before November 24, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26013 Filed 10-31-14; 8:45 am]
BILLING CODE 8011-01-P