[Federal Register Volume 80, Number 148 (Monday, August 3, 2015)]
[Notices]
[Pages 46081-46083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18880]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75534; File No. SR-NYSEMKT-2015-53]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Extending the Operation
of Its Supplemental Liquidity Providers Pilot Until October 31, 2015
July 28, 2015.
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 July 17, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE
MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
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 extend the operation of its Supplemental
Liquidity Providers Pilot (``SLP Pilot'' or ``Pilot'') (see Rule 107B--
Equities), currently scheduled to expire on July 31, 2015, until the
earlier of the Securities and Exchange Commission's (``Commission'')
approval to make such Pilot permanent or October 31, 2015. 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to extend the operation of its SLP Pilot,\4\
currently scheduled to expire on July 31, 2015, until the earlier of
Commission approval to make such Pilot permanent or October 31, 2015.
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\4\ See Securities Exchange Act Release No. 61308 (January 7,
2010), 75 FR 2573 (January 15, 2010) (SR-NYSEAmex-2009-98)
(establishing the NYSE Amex Equities SLP Pilot). See also Securities
Exchange Act Release Nos. 61841 (April 5, 2010), 75 FR 18560 (April
12, 2010) (SR-NYSEAmex-2010-33) (extending the operation of the SLP
Pilot to September 30, 2010); 62814 (September 1, 2010), 75 FR 54671
(September 8, 2010) (SR-NYSEAmex-2010-88) (extending the operation
of the SLP Pilot to January 31, 2011); 63615 (December 29, 2010), 76
FR 611 (January 5, 2011) (SR-NYSEAmex-2010-123) (extending the
operation of the SLP Pilot to August 1, 2011); 64772 (June 29,
2011), 76 FR 39455 (July 6, 2011) (SR-NYSEAmex-2011-44) (extending
the operation of the SLP Pilot to January 31, 2012); 66041 (December
23, 2011), 76 FR 82328 (December 30, 2011) (SR-NYSEAmex-2011-103)
(extending the operation of the SLP Pilot to July 31, 2012); 67496
(July 25, 2012), 77 FR 45390 (July 31, 2012) (SR-NYSEMKT-2012-22)
(extending the operation of the SLP Pilot to January 31, 2013);
68557 (January 2, 2013), 78 FR 1284 (January 8, 2013) (SR-NYSEMKT-
2012-85) (extending the operation of the SLP Pilot to July 31,
2013); 69820 (June 21, 2013), 78 FR 38748 (June 27, 2013) (SR-
NYSEMKT-2013-52) (extending the operation of the SLP Pilot to
January 31, 2014); 71361 (January 21, 2014), 79 FR 4364 (January 27,
2014) (SR-NYSEMKT-2014-03) (extending the operation of the SLP Pilot
to July 31, 2014); and 72623 (July 16, 2014), 79 FR 41592 (July 22,
2014) (SR-NYSEMKT-2014-58 (extending the operation of the SLP Pilot
to December 31, 2014); and 73947 (December 24, 2014), 80 FR 83
(January 2, 2015) (SR-NYSEMKT-2014-110 (extending the operation of
the SLP Pilot to July 31, 2015).
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Background \5\
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\5\ The information contained herein is a summary of the ``New
Market Model'' Pilot and the SLP Pilot. See supra note 4 and infra
note 6 for a fuller description of those pilots.
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In October 2008, the New York Stock Exchange LLC (``NYSE'')
implemented significant changes to its market rules, execution
technology and the rights and obligations of its market participants
all of which were designed to improve execution quality on the NYSE.
These changes were all elements of the NYSE's and the Exchange's
enhanced market model referred to as the ``New Market Model'' (``NMM
Pilot'').\6\ The NYSE SLP Pilot was launched in coordination with the
NMM Pilot (see NYSE Rule 107B).
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\6\ See Securities Exchange Act Release No. 58845 (October 24,
2008), 73 FR 64379 (October 29, 2008) (SR-NYSE-2008-46).
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As part of the NMM Pilot, NYSE eliminated the function of
specialists on the Exchange creating a new category of market
participant, the Designated Market Maker or ``DMM.'' \7\ Separately,
the NYSE established the SLP Pilot, which established SLPs as a new
class of market participants to supplement the liquidity provided by
DMMs.\8\
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\7\ See NYSE Rule 103.
\8\ See NYSE Rule 107B and NYSE MKT Rule 107B--Equities. NYSE
amended the monthly volume requirements to an average daily volume
(``ADV'') that is a specified percentage of NYSE consolidated ADV.
See Securities Exchange Act Release No. 67759 (August 30, 2012), 77
FR 54939 (September 6, 2012) (SR-NYSE-2012-38).
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The NYSE adopted NYSE Rule 107B governing SLPs as a six-month pilot
program commencing in November 2008. This NYSE pilot has been extended
several times, most recently to July 31, 2015.\9\ The NYSE has filed to
[[Page 46082]]
make its NMM and SLP Pilots permanent.\10\
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\9\ See Securities Exchange Act Release Nos. 58877 (October 29,
2008), 73 FR 65904 (November 5, 2008) (SR-NYSE-2008-108) (adopting
SLP Pilot program); 59869 (May 6, 2009), 74 FR 22796 (May 14, 2009)
(SR-NYSE-2009-46) (extending SLP Pilot program until October 1,
2009); 60756 (October 1, 2009), 74 FR 51628 (October 7, 2009) (SR-
NYSE-2009-100) (extending SLP Pilot program until November 30,
2009); 61075 (November 30, 2009), 74 FR 64112 (December 7, 2009)
(SR-NYSE-2009-119) (extending SLP Pilot program until March 30,
2010); 61840 (April 5, 2010), 75 FR 18563 (April 12, 2010) (SR-NYSE-
2010-28) (extending the SLP Pilot until September 30, 2010); 62813
(September 1, 2010), 75 FR 54686 (September 8, 2010) (SR-NYSE-2010-
62) (extending the SLP Pilot until January 31, 2011); 63616
(December 29, 2010), 76 FR 612 (January 5, 2011) (SR-NYSE-2010-86)
(extending the operation of the SLP Pilot to August 1, 2011); 64762
(June 28, 2011), 76 FR 39145 (July 5, 2011) (SR-NYSE-2011-30)
(extending the operation of the SLP Pilot to January 31, 2012);
66045 (December 23, 2011), 76 FR 82342 (December 30, 2011) (SR-NYSE-
2011-66) (extending the operation of the SLP Pilot to July 31,
2012); 67493 (July 25, 2012), 77 FR 45388 (July 31, 2012) (SR-NYSE-
2012-27) (extending the operation of the SLP Pilot to January 31,
2013); 68560 (January 2, 2013), 78 FR 1280 (January 8, 2013) (SR-
NYSE-2012-76) (extending the operation of the SLP Pilot to July 31,
2013); 69819 (June 21, 2013), 78 FR 38764 (June 27, 2013) (SR-NYSE-
2013-44) (extending the operation of the SLP Pilot to January 31,
2014); 71362 (January 21, 2014), 79 FR 4371 (January 27, 2014) (SR-
NYSE-2014-03) (extending the operation of the SLP Pilot to July 31,
2014); and 72628 (July 16, 2014), 79 FR 42588 (July 22, 2014) (SR-
NYSE-2014-34) (extending the operation of the SLP Pilot to December
31, 2014); and 73945 (December 24, 2014), 80 FR 58 (January 2, 2015)
(SR-NYSE-2014-72) (extending the operation of the SLP Pilot to July
31, 2015).
\10\ See Securities Exchange Act Release No. 75153 (June 11,
2015), 80 FR 34717 (June 17, 2015) (SR-NYSE-2015-26).
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Proposal To Extend the Operation of the NYSE MKT SLP Pilot
The Exchange established the SLP Pilot to provide incentives for
quoting, to enhance competition among the existing group of liquidity
providers, including the DMMs, and add new competitive market
participants. NYSE MKT Rule 107B--Equities is based on NYSE Rule 107B.
NYSE MKT Rule 107B--Equities was filed with the Commission on December
30, 2009, as a ``me too'' filing for immediate effectiveness as a pilot
program.\11\ The Exchange's SLP Pilot is scheduled to end operation on
July 31, 2015 or such earlier time as the Commission may determine to
make the rules permanent.
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\11\ See Securities Exchange Act Release No. 61308 (January 7,
2010), 75 FR 2573 (January 15, 2010) (SR-NYSEAmex-2009-98).
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The Exchange believes that the SLP Pilot, in coordination with the
NMM Pilot, allows the Exchange to provide its market participants with
a trading venue that utilizes an enhanced market structure to encourage
the addition of liquidity, facilitate the trading of larger orders more
efficiently and operates to reward aggressive liquidity providers. As
such, the Exchange believes that the rules governing the SLP Pilot
(NYSE MKT Rule 107B--Equities) should be made permanent.
The Exchange proposes to extend the current operation of the SLP
Pilot until October 31, 2015, in order to allow the Exchange to
formally submit a filing to the Commission to convert the SLP Pilot
rule to a permanent rule. The Exchange is currently preparing a rule
filing seeking permission to make the Exchange's SLP Pilot permanent,
but does not expect that filing to be completed and approved by the
Commission before July 31, 2015.\12\
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\12\ The NMM Pilot was scheduled to expire on July 31, 2015 as
well. The Exchange has filed to extend the NMM Pilot until October
31, 2015. See SR-NYSEMKT-2015-52.
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The proposed change is not otherwise intended to address any other
issues and the Exchange is not aware of any problems that member
organizations would have in complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\13\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\14\ in particular, because 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 regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices and to promote
just and equitable principles of trade because it seeks to extend a
pilot program that has already been approved by the Commission. The
Exchange believes the proposed rule change is designed to facilitate
transactions in securities and to remove impediments to, and perfect
the mechanisms of, a free and open market and a national market system
because the SLP Pilot provides its market participants with a trading
venue that utilizes an enhanced market structure to encourage the
addition of liquidity and operates to reward aggressive liquidity
providers. Moreover, requesting an extension of the SLP Pilot will
permit adequate time for: (i) The Exchange to prepare and submit a
filing to make the rules governing the SLP Pilot permanent; (ii) public
notice and comment; and (iii) completion of the 19b-4 approval process.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition. For these reasons, the Exchange
believes that the proposal is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\15\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange believes that extending the operation
of the SLP Pilot will enhance competition among liquidity providers and
thereby improve execution quality on the Exchange. The Exchange will
continue to monitor the efficacy of the program during the proposed
extended pilot period.
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\15\ 15 U.S.C. 78f(b)(8).
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Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues. In such an environment, the Exchange must continually
review, and consider adjusting the services it offers and the
requirements it imposes to remain competitive with other U.S. equity
exchanges. For the reasons described above, the Exchange believes that
the proposed rule change reflects this competitive environment.
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 \16\ and Rule 19b-4(f)(6) thereunder.\17\
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
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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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\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ 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 Exchange notes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest. The Exchange believes that waiver
will ensure that member organizations and the public can continue to
benefit from the pilot program without interruption after July 31,
2015. The Commission hereby waives the 30-day operative delay and
designates the proposal operative upon filing.\20\
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comment
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-2015-53 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-NYSEMKT-2015-53. 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-2015-53, and should
be submitted on or before August 24, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-18880 Filed 7-31-15; 8:45 am]
BILLING CODE 8011-01-P