[Federal Register Volume 82, Number 31 (Thursday, February 16, 2017)]
[Notices]
[Pages 10947-10949]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03107]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80018; File No. SR-NSX-2017-04]
Self-Regulatory Organizations; NYSE National, Inc., Formerly
National Stock Exchange, Inc.; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change Amending Rule 11.1, Hours of
Trading, Interpretations and Policies .01, To Cease Trading on the
Exchange's System as of February 1, 2017
February 10, 2017.
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 February 1, 2017, NYSE National, Inc., formerly National
Stock Exchange, Inc. (``NYSE National'' or the ``Exchange''), filed
with the Securities and Exchange Commission (``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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[[Page 10948]]
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 11.1, Hours of Trading,
Interpretations and Policies .01, to cease trading on the Exchange's
System as of February 1, 2017. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange, a corporation organized under the laws of the State
of Delaware, is a registered national securities exchange under Section
6 of the Exchange Act \4\ and operates as a self-regulatory
organization. Pursuant to a transaction that closed on January 31, 2017
and the related rules approved by the Commission on January 30, 2017
(the ``Transaction''), the Exchange is a wholly-owned subsidiary of
NYSE Group, Inc.\5\ For the reasons set forth below, the Exchange now
seeks to amend Rule 11.1, Hours of Trading, Interpretations and
Policies .01, to state that it will cease trading on the System as of
February 1, 2017 before market open.
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\4\ 15 U.S.C. 78f.
\5\ See Securities Exchange Act Release No. 34-79902 (January
30, 2017).
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The Exchange's trading volumes are extremely low. Currently, the
Exchange currently [sic] has approximately 0.02% of market share among
national securities exchanges. In addition, the Exchange's affiliates
New York Stock Exchange LLC (``NYSE''), NYSE MKT LLC (``NYSE MKT''),
and NYSE Arca, Inc. (``NYSE Arca'') have migrated, or are migrating, to
Pillar, an integrated trading technology platform designed to use a
single specification for connecting to the equities and options markets
operated by the Exchange and its affiliates.\6\ Given the Exchange's
low trading volumes and the complexities and expense of operating the
System while simultaneously migrating to Pillar, the Exchange proposes
to cease trading as of February 1, 2017. The proposal would enable the
Exchange to focus its resources on the migration to the next generation
trading system, which is currently scheduled to occur in the first
quarter of 2018.
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\6\ See Trader Update dated January 29, 2015, available here:
http://www1.nyse.com/pdfs/Pillar_Trader_Update_Jan_2015.pdf.
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Accordingly, the Exchange proposes to amend .01, Interpretations
and Policies, under Rule 11.1 to delete ``Reserved'' and add the
following text: ``Cessation of Trading on the Exchange: The Exchange
shall cease trading on the System as of February 1, 2017. All Exchange
Rules will remain in full force and effect through and after February
1, 2017.''
After trading ceases as described herein, the Exchange will remain
registered as a national securities exchange and continue discharging
its obligations as a self-regulatory organization including, among
other things, completing all open regulatory matters relating to
trading on the System up to and including the close of business on
February 1, 2017. The Exchange notes that it is not the Designated
Examining Authority (``DEA'') for any of its ETP Holders and that there
are no NYSE National-only ETP Holders, i.e., all NYSE National ETP
Holders are members of other self-regulatory organizations. Further,
the Exchange will retain disciplinary jurisdiction over all ETP Holders
and persons associated with ETP Holders pursuant to Chapter VIII of the
Exchange's Rules and Rule 8.1(b) in particular.\7\ The Exchange will
accordingly be able to enforce any rule violation occurring prior to
the close of business on February 1, 2017.
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\7\ Rule 1.5P.(2) provides that the terms ``Person Associated
with an ETP Holder'' or ``Associated Person of an ETP Holder'' mean
``any partner, officer, director, or branch manager of an ETP Holder
(or any Person occupying a similar status or performing similar
functions), any Person directly or indirectly controlling,
controlled by, or under common control with an ETP Holder, or any
employee of such ETP Holder, except that any Person Associated with
an ETP Holder whose functions are solely clerical or ministerial
shall not be included in the meaning of such terms.''
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Upon filing this proposed rule change, the Exchange will no longer
accept new ETP applications or further consider any pending
applications, and will promptly notify its ETP Holders through an [sic]
Regulatory Circular that the Exchange will terminate the ETP status of
all ETP Holders as of the close of business on February 1, 2017.
This proposed rule change is not intended to affect the ownership
structure of the Exchange or alter any of the Exchange's self-
regulatory responsibilities.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \8\ in general, and with Section
6(b)(5) \9\ in particular, that the rules of an exchange be 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 mechanism of a
free and open market and a national market system 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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In particular, the Exchange believes that the proposed rule change
would remove impediments to and perfect the mechanism of a free and
open market and national market system because allowing the Exchange to
cease trading on its legacy system would facilitate the Exchange's
transition to Pillar, an integrated trading technology platform
designed to reduce complexity and enhance consistency, performance, and
resiliency. The Exchange believes that trading on Pillar will result in
more efficient processing of transactions and promote harmonized order
types and messaging on the Exchange and across its affiliates, thereby
removing impediments to and perfecting the mechanism of a free and open
market and national market system and ultimately benefitting all market
participants.
Further, the Exchange notes that its parent company, NYSE Group,
Inc., announced on January 17, 2017, its intention to cease Exchange
trading operations immediately following the close of the Transaction.
Accordingly, the Exchange believes that ETP Holders have had sufficient
time prior to the [sic] February 1, 2017 to determine the exchanges and
trading venues to which they will direct orders after that date and to
make necessary adjustments to their respective trading systems. In
addition, all ETP Holders will be
[[Page 10949]]
advised that the Exchange will terminate their ETP status as of
February 1, 2017.
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 decision to cease
trading activity as of February 1, 2017 will result in one less
operational trading venue for equity securities. The Exchange notes
that there are numerous stock exchanges and other trading venues
available to market participants to trade equity securities, including
the Exchange's affiliates. The Exchange currently has approximately
0.02% of market share among national stock exchanges. In light of the
low trading volume on the Exchange and the ability of ETP Holders to
trade equity securities on other venues, the Exchange does not believe
that its proposal will have any substantial competitive impact.
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
Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative before 30 days from the date of the filing.
However, pursuant to Rule 19b-4(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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\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the 30-day operative
delay. Such waiver will allow the Exchange to cease trading on the
System as of February 1, 2017, before market open.\13\
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\13\ The Exchange also asked the Commission to waive the 5-day
pre-filing requirement in Rule 19b-4(f)(6). The Commission waived
the requirement.
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The Exchange has represented that (i) ETP Holders have had
sufficient time to determine to which exchanges and trading venues they
may direct orders after trading ceases on the Exchange and to make
necessary adjustments to their respective trading systems; (ii) the
Exchange will advise all ETP Holders that the Exchange will terminate
their ETP status as of February 1, 2017; and (iii) the Exchange, as of
the date of filing the instant proposed rule change, had approximately
0.02% of market share among national securities exchanges. For these
reasons, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest. Therefore, the Commission hereby waives the 30-day operative
delay and designates the proposed rule change to be operative upon
filing with the Commission.\14\
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\14\ For purposes only of waiving the operative delay for this
proposal, 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 the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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-NSX-2017-04 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-NSX-2017-04. 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 such filing also will be available
for inspection and copying at the principal offices 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-NSX-2017-04,
and should be submitted on or before March 9, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03107 Filed 2-15-17; 8:45 am]
BILLING CODE 8011-01-P