[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)]
[Notices]
[Pages 95719-95721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31304]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79642; File No. SR-NYSEMKT-2016-118]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Rule 123D--
Equities and the Listed Company Manual
December 21, 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 December 13, 2016, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') filed with the Securities and Exchange Commission
(``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 Rule 123D--Equities and the Listed
Company Manual to eliminate the requirement for Floor Official approval
for halts in trading. 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 amend Rule 123D--Equities and the Company
Guide to eliminate the requirement for Floor Official \4\ approval
before halting trading in a security. The Exchange believes that in
today's trading environment, the requirement for Floor Official
approval before halting trading in a security is unnecessary and
duplicative of Exchange obligations to assess whether to halt trading
in a security under Section 402 of the NYSE MKT Company Guide.
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\4\ ``Floor Official'' encompasses Floor Governor, Floor
Official, Executive Floor Governor and Senior Floor Governor, as
their responsibilities are currently assigned in connection with
trading halts. See also Rules 46--Equities and 46A--Equities
defining Floor Governor, Floor Official, and Executive Floor
Governor.
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Current Rule 123D(d)--Equities provides that once trading has
commenced, trading may only be halted with the approval of a Floor
Governor or two Floor Officials and that an Executive Floor Governor,
or in their absence a Senior Floor Governor, should be consulted if it
is felt that trading should be halted in a bank or brokerage stock due
to a potential misperception regarding the company's financial
viability.\5\ The rule further provides that if a listed company
notifies the Exchange in advance of publication concerning news which
might have a substantial market impact, the Exchange should advise an
Executive Floor Governor or Floor Governor, or in their absence, a
Floor Official, and specifies procedures for Floor Governors to
overrule the Exchange's determination that a security should be halted.
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\5\ See Rules 46--Equities and 46A--Equities (defining the terms
Floor Official, Senior Floor Official, Executive Floor Official,
Floor Governor, and Executive Floor Governor).
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Commensurate with the evolution of the equities markets and trading
on the Exchange towards more automated processes, the procedures and
situations requiring approvals by Floor Officials have also evolved.
For example, the Exchange previously eliminated the ability of a Floor
broker to seek an exception to Rule 122--Equities requirements if Floor
Official permission is obtained.\6\ In connection with trading halts,
the Exchange is responsible for determining whether to halt trading in
a security under Section 402 of the Company Guide. Thus, requiring
Floor Official approval before a trading halt can be invoked is an
unnecessary pro forma step rather than a substantive requirement.
Moreover, obtaining Floor Governor approval adds an extra manual step
to the process, which could impede the timely dissemination of a
trading halt. Finally, given market fragmentation and highly automated
equities trading environment, the Exchange does not believe that Floor
Governors, who do not have contact with the listed company, should be
in a position to override an Exchange determination to halt trading in
a security. Consequently, the Exchange proposes to delete Rule
123D(d)--Equities in its entirety as unnecessary and duplicative of
existing Exchange obligations specified in the Company Guide.
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\6\ See also Securities Exchange Act Release No. 67346 (July 3,
2012), 77 FR 40671 (July 10, 2012) (SR-NYSEMKT-2012-15) (notice of
filing and immediate effectiveness of proposed rule change amending
certain Exchange rules related to floor official duties and
responsibilities).
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The Exchange also proposes to make a related change to Section 402
of the Company Guide to delete a reference to Rule 123D--Equities that
would be rendered obsolete by the proposed deletion of Rule 123D(d)--
Equities. In addition, the Exchange also proposes to make a related
change to Section 404 of the Company Guide to delete a reference to a
consultation with trading floor officials that would be rendered
obsolete by the proposed deletion of Rule 123D(d)--Equities. In
addition, the Exchange proposes to re-letter the remaining subsections
of Rule 123D--Equities to account for the deletion of Rule 123D(d)--
Equities.
The Exchange proposes to make a related change to eliminate the
requirement in Rule 123D(e)--Equities that an ``Equipment Changeover''
halt in trading requires the approval of a Floor Governor or two Floor
Officials as such approval is no longer necessary. An Equipment
Changeover halt is a non-regulatory halt condition that only halts
trading on the Exchange. The Exchange believes that if circumstances
arise warranting an Equipment Changeover halt, obtaining Floor Official
approval before halting trading adds an unnecessary step that is no
longer needed in today's automated markets.
Because of the procedural changes associated with the proposed rule
[[Page 95720]]
changes, the Exchange proposes to announce the eliminations via Trader
Update and anticipates implementing the changes in the first quarter of
2017.
2. Statutory Basis
The proposed rule changes are consistent with Section 6(b) \7\ of
the Act, in general, and furthers the objectives of Section 6(b)(5),\8\
in particular, in that they are 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes support the
objectives of the Act by amending duties and responsibilities once
assigned to Floor Officials to better comport with the Exchange's
current regulatory structure and to reflect the changing technology and
development of its automated systems. Specifically, eliminating the
unnecessary step of obtaining Floor Official approval in connection
with trading halts would remove impediments to and perfect a national
market system by streamlining and simplifying functionality and
complexity in connection with trading halts. The Exchange believes that
streamlining the procedures and eliminating unnecessary Floor Official
approval requirements would be consistent with the public interest and
the protection of investors because investors will not be harmed and in
fact would benefit from the removal of unnecessary functionality. The
Exchange also believes that eliminating Floor Official approval would
benefit investors by adding transparency and clarity to the Exchange's
rules.
The Exchange believes that the proposed deletion of the reference
to Rule 123D--Equities in Section 402 of the Company Guide is
reasonable, equitable and not unfairly discriminatory because the
reference is obsolete. The Exchange believes that the proposed deletion
of the reference to a consultation with trading floor officials in
Section 404 of the Company Guide is reasonable, equitable and not
unfairly discriminatory because the reference is obsolete. The proposed
changes would result in the removal of obsolete text from the Company
Guide and therefore add greater clarity to the Company Guide regarding
halts in trading.
The Exchange believes that the proposed re-lettering of the
remaining subsections of Rule 123D--Equities is reasonable, equitable
and not unfairly discriminatory because the proposed change would add
greater clarity to the Exchange's rule book.
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 change is not
designed to address any competitive issue but rather would streamline
functionality, eliminate an unnecessary step, and streamline forms,
thereby reducing confusion and making the Exchange's rules easier to
understand and navigate.
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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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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-NYSEMKT-2016-118 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-2016-118. 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 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
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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-2016-118 and should be submitted
on or before January 18, 2017.
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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-31304 Filed 12-27-16; 8:45 am]
BILLING CODE 8011-01-P