[Federal Register Volume 81, Number 238 (Monday, December 12, 2016)]
[Notices]
[Pages 89564-89566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29651]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79479; File No. SR-NYSEMKT-2016-104]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Provide That the
Exchange Would Not Be Required To Report to the Securities Information
Processor an Official Closing Price, as Defined Under Rule
123C(1)(e)(i)--Equities, as an ``M'' Sale Condition
December 6, 2016.
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 November 23, 2016, 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 this rule change to provide that the Exchange
would not be required to report to the securities information processor
an Official Closing Price, as defined under Rule 123C(1)(e)(i)--
Equities, as an ``M'' sale condition. 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 is proposing to provide that the Exchange would not be
required to report to the securities information processor (``SIP'') an
Official Closing Price, as defined under Rule 123C(1)(e)(i)--Equities,
as an ``M'' sale condition.\4\ This proposed rule change would not
change how the Official Closing Price would be determined and
disseminated if the Exchange is unable
[[Page 89565]]
to conduct a closing transaction in one or more securities due to a
systems or technical issue, as described in Rules 123C(1)(e)(ii)-(iv)--
Equities.
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\4\ For a description of all sale conditions that are reportable
to the SIP, including the ``M'' and ``6'' sale conditions, see the
Consolidated Tape System Participant Communications Interface
Specification, dated September 15, 2016, at 87 (``SIP
Specifications''), available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/cts_input_spec.pdf.
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As set forth in the SIP Specifications, a price reported to the SIP
by an exchange under the ``M'' sale condition, which is called the
``Market Center Official Close,'' is not used for purposes of
determining a consolidated last sale price or the high or low price of
a security and does not include any volume information. Each exchange
determines what price could be reported to the SIP as its ``Market
Center Official Close.'' To date, the Exchange has not reported to the
SIP a price with an ``M'' sale condition.
By contrast, a trade reported to the SIP as a Market Center Closing
Trade with a ``6'' sale condition includes volume information, is
included in the consolidated last sale, and is included in the high or
low price of a security. The Exchange reports to the SIP closing
auction trades of a round lot or more with a ``6'' sale condition.\5\
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\5\ For example, under Rule 123C(1)(e)(i)--Equities, if there
were no closing transaction in a security or if a closing
transaction is less than one round lot, the Exchange's Official
Closing Price will be the most recent last-sale eligible trade on
the Exchange in such security on that trading day. By contrast, on
NYSE Arca, Inc., under the same circumstances, the Official Closing
Price will be the most recent consolidated last sale eligible trade
during Core Trading Hours on that trading day. See NYSE Arca
Equities, Inc. Rule 1.1(gg)(1)(A).
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Recently, the Exchange amended Rule 123C(1)(e)--Equities to specify
back-up procedures for determining an Official Closing Price for
Exchange-listed securities if it is unable to conduct a closing
transaction in one or more securities due to a systems or technical
issue.\6\ In that Filing, the Exchange noted that once it implemented
changes to how the Exchange determines the Official Closing Price, the
Exchange ``will disseminate to the SIP the Official Closing Price as an
``M'' value.'' \7\
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\6\ See Securities Exchange Act Release Nos. 78015 (June 8,
2016), 81 FR 38747 (June 14, 2016) (SR-NYSEMKT-2016-31; SR-NYSE-
2016-18) (Approval Order) and 77306 (March 7, 2016), 81 FR 12986
(March 11, 2016) (Notice of Filing).
\7\ See id. at 12986. See also Securities Exchange Act Release
No. 76601 (December 9, 2015), 80 FR 77680 (December 15, 2015) (SR-
NYSEMKT-2015-98) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change to define the term ``Official Closing Price'').
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With this proposed rule change, the Exchange is modifying this
statement to permit, but not require, the Exchange to report a price
with an ``M'' sale condition to the SIP when the Official Closing Price
is determined under Rule 123C(1)(e)(i)--Equities. Specifically, the
Exchange does not believe that it should publish an Official Closing
Price to the SIP as an ``M'' value if there has not been a last-sale
eligible trade in a security on a trading day. For example, based on
feedback from industry participants, the Exchange understands that
certain market participants, such as index providers and mutual funds,
follow a different method of determining a security's closing price
when there have not been any last-sale eligible trades on a trading
day. Under these circumstances, the Exchange understands that an
Official Closing Price reported to the SIP as an ``M'' sale condition
that differs from how an industry market participant may determine such
value for its own purposes could lead to confusion if a market
participant's systems read the ``M'' value published by the SIP that
differs from their calculation.
Accordingly, this proposed rule change is intended to provide that
the Exchange's would not be required to publish an Official Closing
Price, as defined in Rule 123C(1)(e)(i)--Equities, as an ``M'' sale
condition to the SIP. And, as noted above, this proposed rule change
would not alter how the Official Closing Price would be disseminated
under Rules 123C(1)(e)(ii)-(iv)--Equities.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\9\ in particular, 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 mechanism of a free and open market and a national market system.
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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 the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it would provide transparency that the
Exchange's is not required to report a price to the SIP as an ``M''
sale condition. The Exchange believes that the proposed rule change is
consistent with the Act because the ``M'' sale condition does not
contribute to the consolidated last sale price for a security, the high
or low price of a security, or reported volume for a security, and
therefore is an informational value. The Exchange further believes that
this proposed rule change is consistent with the protection of
investors and the public interest because it would reduce confusion by
eliminating publication to the SIP of a price that may conflict with
how an index provider or mutual fund determines that value for a
security if there are no last-sale eligible trades on a trading day.
Finally, the Exchange believes that the proposed rule change would
remove impediments to and perfect the mechanism of a free and open
market and a national market system because it would apply only when
the Exchange is fully operational. If the Exchange is unable to conduct
a closing transaction due to a systems or technical issue, current Rule
123C(1)(ii)-(iv)--Equities would govern, with no change.
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 proposed rule change is
not designed to address any competitive issues, but rather to specify
that the Exchange would not be required to report an Official Closing
Price to the SIP as an ``M'' sale condition if there has not been a
last-sale eligible trade on a trading day.
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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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
[[Page 89566]]
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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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\13\ 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 believes
that waiving the operative delay would be consistent with the
protection of investors and the public interest because it would make
transparent that the Exchange would not report an ``M'' sale condition
to the SIP for a security if there has not been a last-sale eligible
trade on a trading day. The Exchange further believes that the proposed
rule change is consistent with the protection of investors and the
public interest because it would not change how an Official Closing
Price would be disseminated under Exchange Rule 123C(1)(e)(ii)-(iv)--
Equities. The Commission believes that the proposed rule change is
consistent with the protection of investors and the public interest
because it clarifies the Exchange's reporting practices while
maintaining its procedures for disseminating an Offiicial Closing
Price. Accordingly, the Commission hereby waives the 30-day operative
delay and designates the proposal operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the operative delay of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. 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) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 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-NYSEMKT-2016-104 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2016-104. 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-2016-104 and should
be submitted on or before January 3, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-29651 Filed 12-9-16; 8:45 am]
BILLING CODE 8011-01-P