
[Federal Register Volume 78, Number 128 (Wednesday, July 3, 2013)]
[Notices]
[Pages 40237-40239]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15933]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69881; File No. SR-NYSEMKT-2013-57]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Exchange Rule 
980NY To Modify the Information Disseminated at the Initiation of a 
Complex Order Auction

June 27, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 25, 2013, NYSE MKT LLC (``NYSE MKT'' or ``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 Exchange. 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\ 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 Exchange Rule 980NY to modify the 
information disseminated at the initiation of a Complex Order Auction. 
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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Exchange Rule 980NY to modify the 
information disseminated at the initiation of a Complex Order Auction 
(``COA'').
    Current Rule 980NY(e)(2) provides that upon receipt of a COA-
eligible order, as defined in Rule 980NY(e)(1), and at the direction of 
the entering ATP Holder that an auction be initiated, the Exchange will 
send an automated request for responses (``RFR'') message to all ATP 
Holders who subscribe to RFR messages. RFR messages identify the 
component series, the size of the order and any contingencies, but do 
not identify the side of the market. ATP Holders then have an 
opportunity to submit bids and offers with the price and size they 
would be willing to participate in the execution of the COA-eligible 
order (an ``RFR Response'').
    NYSE Amex Options proposes to amend Rule 980NY(e)(2) to include the 
side (i.e., buy or sell) of a Complex Order entered into COA when 
broadcasting automated RFRs to ATP Holders. This proposed rule change 
is similar to a recent change by the Chicago Board Options Exchange, 
Inc. (``CBOE'').\3\ Like the CBOE, because same-side responses to an 
RFR would not trade with the COA-eligible order, the Exchange has 
determined that the submission of RFR Responses on the same side as the 
COA-eligible order are [sic] unnecessary.\4\ In order to reduce the 
number responses on the same side of the market as the COA-eligible 
order, the Exchange now proposes to amend Rule 980NY(e)(2) to include 
the side of the market of the order being auctioned when sending out an 
RFR. By providing the side of the market, ATP Holders will be able to 
tailor their responses to RFRs and will only need to submit one order 
on the contra side of the order being auctioned, as opposed to two 
orders, one on each side of the COA-eligible order, as is generally the 
case today. In addition, the Exchange believes that the dissemination 
of the additional information about the terms of an order will 
encourage more meaningful and competitively priced RFR Responses, which 
could result in deeper liquidity

[[Page 40238]]

and better prices for market participants.
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    \3\ See Exchange Act Release No. 68095 (October 24, 2012), 77 FR 
65751 (October 30, 2012) (Order approving SR-CBOE-2012-85) (``CBOE 
Filing'').
    \4\ See CBOE Filing.
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    Because a same-side RFR Response cannot trade with a COA-eligible 
order, the Exchange considers same-side RFR Responses to be unnecessary 
to the COA process. Therefore, the Exchange proposes to amend Rule 
980NY(e)(4) to provide that RFR Responses must be on the opposite side 
of the COA-eligible order and that same-side RFR Responses will be 
rejected by the Exchange. Requiring that RFR Responses be on the 
opposite side of a COA-eligible order and rejecting same-side RFR 
Responses is consistent with the processing of RFR Responses by the 
CBOE.\5\ The Exchange believes that the proposed rule change will 
improve the efficiency of the COA process by eliminating excess RFR 
Responses that can never actually trade with the COA-eligible order.\6\
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    \5\ See CBOE Filing.
    \6\ The Exchange notes that only same-side Responses will be 
rejected and that unrelated Complex Orders on the same side of the 
market as a COA-eligible order that are received during the Response 
Time Interval will continue to be processed pursuant to Rule 
980NY(e)(8).
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    Pursuant to this proposed rule change, same-side RFR Responses will 
be rejected, therefore incoming RFR Responses will no longer be 
eligible to trade against same-side RFR Responses. Accordingly, the 
Exchange proposes to delete a reference to RFR Responses in Rule 
980NY(e)(7).
    The Exchange also proposes to amend Rule 980NY(e)(4) by correcting 
the rule text describing how RFR Responses are treated. Existing rule 
text states that RFR Responses will be ranked and displayed in the 
Consolidated Book. However, in accordance with Rule 980NY(e)(7), RFR 
Responses are only firm with respect to COA-eligible orders and 
unrelated orders that are received during the Response Time Interval, 
as defined in Rule 980NY(e)(3), and any unexecuted RFR Responses will 
expire at the end of the Response Time Interval (signifying the end of 
the auction). Because RFR Responses are only firm with respect to COA-
eligible orders and unrelated orders that are received during an 
auction, and the fact that unexecuted RFR Responses expire at the 
conclusion of the auction, RFR Responses should not be ranked and/or 
displayed in the Consolidated Book. Thus, the language stating that RFR 
Responses will be ranked and displayed in the Consolidated Book is 
inaccurate. The Exchange therefore proposes to delete language in Rule 
980NY(e)(4) stating that RFR Responses will be ranked and displayed in 
the Consolidated Book and affirmatively state in Rule 980NY(e)(7) that 
RFR Responses will not be displayed in the Consolidated Book.
    The Exchange also proposes to make non-substantive changes to Rule 
980NY subsections (e)(2) and (e)(7) by correcting minor typographical 
errors in the existing rule text.
    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 90 days following the effective date. The 
implementation date will be no later than 90 days following the 
issuance of the Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers 
the objectives of Section 6(b)(5),\8\ 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 mechanisms of a free and open 
market and a national market system. In particular, the Exchange 
believes the proposed rule change protects investors and is in the 
public interest because it will eliminate unnecessary RFR Responses on 
the same side of the market as a COA-eligible order, which will 
ultimately make the COA process more efficient. In addition, the 
Exchange believes that including the side of the market in the RFR will 
encourage more meaningful and competitively priced RFR Responses, which 
could result in deeper liquidity and better prices for market 
participants. Disseminating additional information regarding the terms 
of an order should reduce confusion and provide for a less disruptive 
COA process, thus aiding in perfecting the mechanisms of the open 
market.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    Also, by amending Rule 980NY(e)(4) and (7) the Exchange is 
correcting inaccurate language describing the functionality of the COA 
for the reasons set forth above. Correcting inaccurate rule language 
will provide clarity as to the functionality of the COA. The Exchange 
believes that having clear and precise rules furthers the objectives of 
the Act by removing of impediments to and helping to perfect the 
mechanisms of a free and open market and a national market system.

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. Specifically, the proposal 
is structured to offer the same enhancement to all market participants, 
regardless of account type, and will not impose a competitive burden on 
any participant. The Exchange believes that adopting similar COA rules 
to those of other exchanges will allow NYSE Amex Options to more 
efficiently compete for complex order business. In addition, by 
disseminating enhanced RFRs, ATP Holders will be able to provide more 
efficient responses thus creating a more competitive market. The 
Exchange does not believe that requiring RFR responses to be on the 
opposite side of a COA eligible order and/or rejecting same-side 
Responses will impose any burden on market participants because market 
participants will still have the ability to submit unrelated same-side 
Complex Orders to the Exchange.
    Because this proposal adopts a rule that is already in effect at a 
competing exchange, the Exchange does not believe that the proposed 
changes will impose a burden on other options exchanges. Rather, making 
this functionality available to market participants on the Exchange may 
foster more competition, thus improving the overall efficacy of the 
options markets.

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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its 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 fulfilled this requirement.

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[[Page 40239]]

    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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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 rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2013-57 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-NYSEMKT-2013-57. 
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-2013-57 and should be submitted on or before July 24, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15933 Filed 7-2-13; 8:45 am]
BILLING CODE 8011-01-P


