[Federal Register Volume 79, Number 169 (Tuesday, September 2, 2014)]
[Notices]
[Pages 52077-52079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-20697]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72915; File No. SR-NYSEArca-2014-87]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca
Equities Rule 7.31 To Delete Functionality Permitting Primary Only
Orders and Primary Sweep Orders To Be Designated With Intermarket Sweep
Order Modifiers
August 26, 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 August 13, 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 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 7.31 to
delete functionality permitting Primary Only Orders (``PO Order'') and
Primary Sweep Orders (``PSO'') to be designated with Intermarket Sweep
Order (``ISO'') modifiers. 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.
[[Page 52078]]
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 Rules 7.31(x) and (kk) to
eliminate the ability of Users to enter PO Orders and PSOs with ISO
modifiers. A PO Order is a market or limit order that is routed to the
primary market by the Exchange. Currently, Rule 7.31(x)(4) permits a PO
Order to be entered with an ISO Modifier and places the responsibility
of Regulation NMS compliance on the broker-dealer that designates the
PO Order with an ISO Modifier. A PSO is a PO Order that first sweeps
the Exchange book and then any unexecuted portion is routed to the
primary market. Similar to Rule 7.31(x)(4), Rule 7.31(kk)(2) permits a
PSO to be entered with an ISO Modifier and places the responsibility of
Regulation NMS compliance on the broker-dealer that designates the PSO
with an ISO Modifier.
The Exchange proposes to delete Rules 7.31(x)(4) and 7.31(kk)(2) to
no longer permit PO Orders and PSOs to be entered with ISO Modifiers.
Instead, if a User were to enter an ISO instruction on a PO Order or
PSO, the Exchange will reject such order. To reflect this change, the
Exchange proposes to amend Rules 7.31(x) and 7.31(kk) to provide that
PO Orders and PSOs may not be designated as an ISO. The Exchange is not
proposing any other changes to the use of ISOs.
The Exchange believes it is appropriate to no longer accept PO
Orders and PSOs entered with ISO modifiers. While the Exchange has
placed the responsibility of Regulation NMS compliance on the
originating broker-dealer, the Exchange believes that the proposal
would avoid the appearance of the Exchange's routing broker of
violating Regulation NMS requirements should the originating broker-
dealer not be appropriately marking orders as ISO, even though
responsibility rests with the originating broker-dealer. The proposed
change would more clearly delineate such Regulation NMS requirements
with a single party--the originating broker-dealer. Either the
originating broker-dealer will directly enter ISOs at the necessary
trading centers to comply with Regulation NMS or submit a routable
order to the Exchange and the Exchange will route the order as
necessary to ensure compliance with Regulation NMS.
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,\4\ in general, and furthers the objectives of Section
6(b)(5),\5\ 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.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that rejecting PO Orders and PSOs with ISO
modifiers will protect investors and the public interest because the
proposal will limit the number of ISO orders routed to other market
centers for which, at the time of the route, the Exchange is unaware
whether the originating broker-dealer has complied with its Regulation
NMS obligations. The Exchange believes that the rule proposal might
reduce the potential in which an ISO is routed by the Exchange to an
away market without the originating broker-dealer complying with
Regulation NMS. Additionally, the Exchange does not believe that
eliminating the ability to enter PO Orders and PSOs with ISO modifiers
will have a detrimental effect on the market because ETP Holders have
the option either to enter ISOs directly to the necessary trading
centers to comply with Regulation NMS or submit a routable order to the
Exchange and the Exchange will route the order as necessary to ensure
compliance with Regulation NMS.
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
[sic] eliminating the ability to add an ISO modifier to PO Orders and
PSOs will not impose any burden on competition because ETP Holders have
the option either to enter ISOs directly to the necessary trading
centers to comply with Regulation NMS or submit a routable order to the
Exchange and the Exchange will route the order as necessary to ensure
compliance with Regulation NMS.
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 \6\ and Rule 19b-4(f)(6) thereunder.\7\
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) thereunder.\8\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(3)(A)(iii).
\7\ 17 CFR 240.19b-4(f)(6).
\8\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
---------------------------------------------------------------------------
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) \9\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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
[[Page 52079]]
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2014-87 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-2014-87. 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 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-2014-87 and should be submitted on or before
September 23, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-20697 Filed 8-29-14; 8:45 am]
BILLING CODE 8011-01-P