
[Federal Register Volume 78, Number 223 (Tuesday, November 19, 2013)]
[Notices]
[Pages 69499-69501]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27630]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70864; File No. SR-NYSEMKT-2013-89]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 957NY To 
Provide That a Pattern or Practice of Late Reporting of Option 
Transactions to the Exchange for Dissemination to the Options Price 
Reporting Authority Is Subject to Disciplinary Action

November 13, 2013.
    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 October 31, 2013, 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 to amend Rule 957NY to provide that a pattern 
or practice of late reporting of option transactions to the Exchange 
for dissemination to the Options Price Reporting Authority is subject 
to disciplinary action. 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, at the Commission's Public Reference Room, and 
on the Commission's Web site at http://www.sec.gov.

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 957NY to provide that a pattern 
or practice of late reporting of option transactions to the Exchange 
for dissemination to the Options Price Reporting Authority (``OPRA'') 
is subject to disciplinary action, including fines. Current Rule 957NY 
requires an ATP Holder to immediately report option transactions to the 
Exchange. The rule further provides that transactions not reported to 
OPRA within 90 seconds after execution will be designated ``late,'' and 
that an ATP Holder who is responsible for late reporting of an option 
transaction, without reasonable justification or excuse, will be 
subject to a fine under Section 9A. Thus, under current rule 957NY, a 
single late-reported transaction is subject to a fine.
    To have more flexibility in evaluating whether late reporting of 
option transactions should be subject to a fine, the Exchange proposes 
to amend the rule to provide that ``a pattern or practice'' of late 
reporting of option transactions to the Exchange would constitute a 
violation of the 90-second reporting requirement. While the Exchange's 
proposal does not expressly define what a ``pattern or practice'' of 
late reporting is, the Exchange will apply its existing Sanctions 
Guidelines, which are contained in Rule 476, Supplementary Material 
.10. Rule 476, Supplementary Material .10 contains both general 
guidelines for considering and determining the applicability of

[[Page 69500]]

sanctions under various Exchange rules, and guidelines specific to 
violations of particular Exchange rules, including ``Trade Reporting--
Late Reporting,'' among other rules.\4\ Moreover, in determining 
appropriate disciplinary action for late reporting of option 
transactions, the Exchange may apply, at its discretion, the Minor Rule 
Plan contained in Rule 476A, Imposition of Fines for Minor Rule(s) 
Violations for minor violations of Rule 957NY,\5\ which would result in 
a fine from $1,500 up to $5,000, or Rule 476 in the case of more 
serious late reporting violations. Rule 476 lists suggested monetary 
sanctions for violations of Rule 957NY that range from $1,000 to 
$50,000.
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    \4\ Rule 476, Supplementary Material .10 Sanctions Guidelines 
includes an aggregation provision under subparagraph (B.) General 
Principles Applicable to All Sanction Determinations (4) to guide 
the Exchange in determining whether to aggregate, or ``batch'' 
violations together, thereby treating them as one ``violation'' for 
purposes of determining sanctions if the misconduct meets certain 
objective parameters, such as ``(B) Whether the violations involved 
unintentional or negligent misconduct or manipulative, fraudulent, 
or deceptive intent. (If aggregated, the violations should not have 
involved manipulative, fraudulent, or deceptive intent).'' Rule 476, 
Supplementary Material .10(C.) Principal Considerations in 
Determining Sanctions includes ``(6) whether the named party engaged 
in numerous acts and/or a pattern of misconduct.'' Additionally, 
Rule 476, Supplementary Material .10(C) also provides that ``(14) 
The number, size, and character of the transactions at issue'' are 
to be considered among principal considerations in determining 
sanctions.
    \5\ Failure to comply with the reporting duties of Rule 957NY is 
listed as subject to fine under the Minor Rule Plan contained in 
Rule 476A, Supplementary Material Part 1C.(i)(27), according to the 
Minor Rule Plan Fine Schedule provided in Rule 476A, Supplementary 
Material Part 1C.(iii)(i)(27).
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    The Exchange notes that the proposed rule change is substantially 
similar to current rules of the Chicago Board Options Exchange 
(``CBOE'') Rule 6.51(a) and NASDAQ OMX PHLX LLC (``PHLX'') Rule 
1051(a).\6\ Both CBOE and PHLX rules utilize the ``pattern or 
practice'' standard for evaluating late trade reporting violations.
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    \6\ See CBOE Rule 6.51(a); PHLX Rule 1051(a). PHLX rules also 
permit, but do not require the exchange, in evaluating whether a 
pattern or practice of rules violations exists, to aggregate or 
``batch'' individual order handling violations as a single 
occurrence of a violation of a specific order handling rule by a 
member or member organization over a specific time period. See PHLX 
Rule 970.01.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5),\8\ in particular, in that it is designed to prevent fraudulent 
and manipulative acts and practices, 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, and, in general, to protect 
investors and the public interest. Specifically, the Exchange believes 
that the proposed amendment providing the Exchange with flexibility in 
determining whether an ATP Holder's late reporting of option 
transactions to the Exchange constitutes a pattern or practice that 
should subject the late reporter to disciplinary action addresses an 
inconsistency between in [sic] the processes for adjudication of late-
trade reporting on NYSE MKT and those of other self-regulatory 
organizations. Eliminating this inconsistency will help foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities. Moreover, the proposed rule change would 
not result in any material diminution of the Exchange's overall 
enforcement authority or any material change in surveillance of late-
trade reporting. As such, the proposed rule change is consistent with 
the Act because it would continue to protect investors and the public 
interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, the Exchange's 
proposal allows the Exchange to compete more effectively with other 
options exchanges that currently have rules in effect substantially 
similar to what the Exchange now proposes.

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) 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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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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    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.

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-2013-89 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-2013-89. 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

[[Page 69501]]

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 Section, 100 F Street NE., Washington, DC 20549-1090, on 
official business days between the hours of 10:00 a.m. and 3:00 p.m. 
Copies of the filing will also be available for inspection and copying 
at the Exchange'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-
NYSEMKT-2013-89 and should be submitted on or before December 10, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27630 Filed 11-18-13; 8:45 am]
BILLING CODE 8011-01-P


