
[Federal Register Volume 79, Number 17 (Monday, January 27, 2014)]
[Notices]
[Pages 4373-4375]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-01427]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71363; File No. SR-NYSEMKT-2014-01]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending NYSE MKT Rule 
500--Equities to Extend the Operation of the Pilot Program That Allows 
Nasdaq Stock Market Securities to be Traded on the Exchange Pursuant to 
a Grant of Unlisted Trading Privileges Until the Earlier of a Permanent 
Approval or July 31, 2014

January 21, 2014.
    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 January 6, 2014, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') 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\ 17 CFR 240.19 b-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 NYSE MKT Rule 500--Equities to 
extend the operation of the pilot program that allows Nasdaq Stock 
Market (``Nasdaq'') securities to be traded on the Exchange pursuant to 
a grant of unlisted trading privileges. The pilot program is currently 
scheduled to expire on January 31, 2014; the Exchange proposes to 
extend it until the earlier of Securities and Exchange Commission 
(``Commission'') approval to make such pilot permanent or July 31, 
2014. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend NYSE MKT Rule 500--Equities to 
extend the operation of the pilot program that allows Nasdaq securities 
to be traded on the Exchange pursuant to a grant of unlisted trading 
privileges. The pilot program is currently scheduled to expire on 
January 31, 2014; the Exchange proposes to extend it until the earlier 
of Commission approval to make such pilot permanent or July 31, 2014.
    NYSE MKT Rules 500-525--Equities, as a pilot program, govern the 
trading of any Nasdaq-listed security on the Exchange pursuant to 
unlisted trading privileges (``UTP Pilot Program'').\3\ The Exchange 
hereby seeks to extend the operation of the UTP Pilot Program, 
currently scheduled to expire on January 31, 2014, until the earlier of 
Commission approval to make such pilot permanent or July 31, 2014.
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    \3\ See Securities Exchange Act Release No. 62479 (July 9, 
2010), 75 FR 41264 (July 15, 2010) (SR-NYSEAmex-2010-31). See also 
Securities Exchange Act Release Nos. 62857 (September 7, 2010), 75 
FR 55837 (September 14, 2010) (SR-NYSEAmex-2010-89); 63601 (December 
22, 2010), 75 FR 82117 (December 29, 2010) (SR-NYSEAmex-2010-124); 
64746 (June 24, 2011), 76 FR 38446 (June 30, 2011) (SR-NYSEAmex-
2011-45); 66040 (December 23, 2011), 76 FR 82324 (December 30, 2011) 
(SR-NYSEAmex-2011-104); 67497 (July 25, 2012), 77 FR 45404 (July 31, 
2012) (SR-NYSEMKT-2012-25); 68561 (January 2, 2013), 78 FR 1290 
(January 8, 2013) (SR-NYSEMKT-2012-86); and 69814 (June 20, 2013), 
78 FR 38762 (June 27, 2013) (SR-NYSEMKT-2013-53).
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    The UTP Pilot Program includes any security listed on Nasdaq that 
(i) is designated as an ``eligible security'' under the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation 
and Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privilege 
Basis, as amended (``UTP Plan''),\4\ and (ii) has

[[Page 4374]]

been admitted to dealings on the Exchange pursuant to a grant of 
unlisted trading privileges in accordance with Section 12(f) of the 
Act,\5\ (collectively, ``Nasdaq Securities'').\6\
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    \4\ See Securities Exchange Act Release No. 70953 (November 27, 
2013), 78 FR 72932 (December 4, 2013) (File No. S7-24-89). The 
Exchange's predecessor, the American Stock Exchange LLC, joined the 
UTP Plan in 2001. See Securities Exchange Act Release No. 55647 
(April 19, 2007), 72 FR 20891 (April 26, 2007) (File No. S7-24-89). 
In March 2009, the Exchange changed its name to NYSE Amex LLC, and, 
in May 2012, the Exchange subsequently changed its name to NYSE MKT 
LLC. See Securities Exchange Act Release Nos. 59575 (March 13, 
2009), 74 FR 11803 (March 19, 2009) (SR-NYSEALTR-2009-24) and 67037 
(May 21, 2012), 77 FR 31415 (May 25, 2012) (SR-NYSEAmex-2012-32).
    \5\ 15 U.S.C. 78l.
    \6\ ``Nasdaq Securities'' is included within the definition of 
``security'' as that term is used in the NYSE MKT Equities Rules. 
See NYSE MKT Rule 3--Equities. In accordance with this definition, 
Nasdaq Securities are admitted to dealings on the Exchange on an 
``issued,'' ``when issued,'' or ``when distributed'' basis. See NYSE 
MKT Rule 501--Equities.
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    The Exchange notes that its New Market Model Pilot (``NMM Pilot''), 
which, among other things, eliminated the function of specialists on 
the Exchange and created a new category of market participant, the 
Designated Market Maker (``DMM''),\7\ is also scheduled to end on 
January 31, 2014.\8\ The timing of the operation of the UTP Pilot 
Program was designed to correspond to that of the NMM Pilot. In 
approving the UTP Pilot Program, the Commission acknowledged that the 
rules relating to DMM benefits and duties in trading Nasdaq Securities 
on the Exchange pursuant to the UTP Pilot Program are consistent with 
the Act \9\ and noted the similarity to the NMM Pilot, particularly 
with respect to DMM obligations and benefits.\10\ Furthermore, the UTP 
Pilot Program rules pertaining to the assignment of securities to DMMs 
are substantially similar to the rules implemented through the NMM 
Pilot.\11\ The Exchange has similarly filed to extend the operation of 
the NMM Pilot until the earlier of Commission approval to make the NMM 
Pilot permanent or July 31, 2014.\12\
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    \7\ See NYSE MKT Rule 103--Equities.
    \8\ See Securities Exchange Act Release No. 60758 (October 1, 
2009), 74 FR 51639 (October 7, 2009) (SR-NYSEAmex-2009-65). See also 
Securities Exchange Act Release Nos. 61030 (November 19, 2009), 74 
FR 62365 (November 27, 2009) (SR-NYSEAmex-2009-83); 61725 (March 17, 
2010), 75 FR 14223 (March 24, 2010) (SR-NYSEAmex-2010-28); 62820 
(September 1, 2010), 75 FR 54935 (September 9, 2010) (SR-NYSEAmex-
2010-86); 63615 (December 29, 2010), 76 FR 611 (January 5, 2011) 
(SR-NYSEAmex-2010-123); 64773 (June 29, 2011), 76 FR 39453 (July 6, 
2011) (SR-NYSEAmex-2011-43); 66042 (December 23, 2011), 76 FR 82326 
(December 30, 2011) (SR-NYSEAmex-2011-102); 67495 (July 25, 2012), 
77 FR 45406 (July 31, 2012) (SR-NYSEMKT-2012-21); 68559 (January 2, 
2013), 78 FR 1286 (January 8, 2013) (SR-NYSEMKT-2012-84); and 69812 
(June 20, 2013), 78 FR 38766 (June 27, 2013) (SR-NYSEMKT-2013-51).
    \9\ 15 U.S.C. 78.
    \10\ See SR-NYSEAmex-2010-31, supra note 3, at 41271.
    \11\ Id.
    \12\ See SR-NYSEMKT-2014-02.
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    Extension of the UTP Pilot Program in tandem with the NMM Pilot, 
both from January 31, 2014 until the earlier of Commission approval to 
make such pilots permanent or July 31, 2014, will provide for the 
uninterrupted trading of Nasdaq Securities on the Exchange on a UTP 
basis and thus continue to encourage the additional utilization of, and 
interaction with, the Exchange, and provide market participants with 
improved price discovery, increased liquidity, more competitive quotes 
and greater price improvement for Nasdaq Securities.
    The proposed change is not otherwise intended to address any other 
issues and the Exchange is not aware of any problems that member 
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange. In particular, 
the Exchange believes that its proposal to extend the UTP Pilot Program 
is consistent with (i) Section 6(b) of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act,\14\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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; (ii) Section 
11A(a)(1) of the Act,\15\ in that it seeks to ensure the economically 
efficient execution of securities transactions and fair competition 
among brokers and dealers and among exchange markets; and (iii) Section 
12(f) of the Act,\16\ which governs the trading of securities pursuant 
to UTP consistent with the maintenance of fair and orderly markets, the 
protection of investors and the public interest, and the impact of 
extending the existing markets for such securities.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78k-1(a)(1).
    \16\ 15 U.S.C. 78l(f).
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    Specifically, the Exchange believes that extending the UTP Pilot 
Program would provide for the uninterrupted trading of Nasdaq 
Securities on the Exchange on a UTP basis and thus continue to 
encourage the additional utilization of, and interaction with, the 
Exchange, thereby providing market participants with additional price 
discovery, increased liquidity, more competitive quotes and potentially 
greater price improvement for Nasdaq Securities. Additionally, under 
the UTP Pilot Program, Nasdaq Securities trade on the Exchange pursuant 
to rules governing the trading of Exchange-Listed securities that 
previously have been approved by the Commission. Accordingly, this 
proposed rule change would permit the Exchange to extend the 
effectiveness of the UTP Pilot Program in tandem with the NMM Pilot, 
which the Exchange has similarly proposed to extend until the earlier 
of Commission approval to make such pilot permanent or July 31, 
2014.\17\
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    \17\ See supra note 13.
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    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition. For these reasons, the Exchange 
believes that the proposal is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\18\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange believes that extending the UTP Pilot 
Program will promote competition in the trading of Nasdaq Securities 
and thereby provide market participants with opportunities for improved 
price discovery, increased liquidity, more competitive quotes, and 
greater price improvement.
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    \18\ 15 U.S.C. 78f(b)(8).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting the services it offers and the 
requirements it imposes to remain competitive with other U.S. equity 
exchanges. For the reasons described above, the Exchange believes that 
the proposed rule change reflects this competitive environment.

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.

[[Page 4375]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \19\ and Rule 19b-4(f)(6) \20\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 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.\21\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ In addition, Rule 19b-4(f)(6)(iii) 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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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \22\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay period. The Commission 
believes that waiver of the 30-day operative delay period is consistent 
with the protection of investors and the public interest because waiver 
would allow the pilot program to continue uninterrupted. Accordingly, 
the Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, 
and designates the proposed rule change to be operative upon filing 
with the Commission.\23\
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    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ 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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\24\
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    \24\ 15 U.S.C. 78s(b)(3)(C).
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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 rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2013-01 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-2014-01. 
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 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-2014-01 and should be submitted on or before February 18, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-01427 Filed 1-24-14; 8:45 am]
BILLING CODE 8011-01-P


