
[Federal Register Volume 79, Number 197 (Friday, October 10, 2014)]
[Notices]
[Pages 61355-61357]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24226]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73302; File No. SR-NYSEMKT-2014-85]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change That Constitutes a 
Stated Interpretation With Respect to the Meaning, Administration, and 
Enforcement of Rule 46--Equities

October 6, 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 October 2, 2014, 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, II, 
and III 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes a rule change that constitutes a stated 
interpretation with respect to the meaning, administration, and 
enforcement of Rule 46--Equities. The Exchange is not proposing any 
changes to the text of the current version of Rule 46- Equities. 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
    NYSE MKT LLC (``NYSE MKT'' or the ``Exchange'') proposes a rule 
change that constitutes a stated interpretation with respect to the 
meaning, administration, and enforcement of Rule 46--Equities (``Rule 
46'') in connection with the transfer of qualified Intercontinental 
Exchange, Inc. (``ICE'') staff Floor Governors to NYSE Regulation, Inc. 
(``NYSE Regulation'').
    Rule 46 permits the Exchange to appoint active NYSE MKT members \4\ 
as Floor Officials.\5\ Rule 46 also permits the Exchange to appoint 
``qualified'' ICE employees to act as Floor Governors, one of the more 
senior types of Floor Officials.\6\ Supplementary Material .10

[[Page 61356]]

defines ``qualified'' employees as ``employees of ICE or any of its 
subsidiaries, excluding employees of NYSE Regulation, Inc., who shall 
have satisfied any applicable testing or qualification required by the 
Exchange for all Floor Governors.''
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    \4\ Rule 2(a)--Equities states that the term ``member,'' when 
referring to a natural person, means a natural person associated 
with a member organization who has been approved by the Exchange and 
designated by such member organization to effect transactions on the 
Exchange trading Floor or any facility thereof.
    \5\ Floor Officials are delegated certain authority from the 
Board of Directors of the Exchange to supervise and regulate active 
openings and unusual situations that arise in connection with the 
making of bids, offers or transactions on the trading Floor, and to 
review and approve certain trading actions, such as trades to be 
effected at wide variations in price and delayed openings and 
trading halts.
    \6\ Pursuant to Rules 46 and 46A--Equities, Floor Governors are 
one of several ranks of the broader category of Floor Officials, 
including, in order of increasing seniority, Floor Officials, Senior 
Floor Officials, Executive Floor Officials, Floor Governors and 
Executive Floor Governors. See Securities Exchange Act Release No. 
57627 (April 4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2008-
19) (discussing New York Stock Exchange LLC (``NYSE'') Rules 46 and 
46A that NYSE MKT adopted following the NYSE's acquisition of the 
Exchange. See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 46075 (July 30, 2008) (SR-Amex-2008-63)).
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    The prohibition on appointing NYSE Regulation employees to act as 
Floor Governors was put in place when the ``qualified Exchange 
employee'' category of Floor Official was adopted in 2008.\7\ The 
prohibition was necessary to avoid potential conflicts of interest 
insofar as the process for qualifying Floor Officials, including Floor 
Governors, was performed by NYSE Regulation.\8\ However, while Rule 46 
prohibits appointment of NYSE Regulation employees to act as Floor 
Governors, the Exchange believes that the Rule does not prohibit 
already qualified Floor Governors from becoming NYSE Regulation 
employees. The hiring by NYSE Regulation of ICE employees or members 
who are already qualified to act as Floor Governors would not involve 
NYSE Regulation in qualifying those individuals to act as Floor 
Governors under Rule 46 and would therefore not give rise to the real 
or apparent conflict of interest the prohibition was intended to avoid.
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    \7\ See Securities Exchange Act Release No. 34-57627 (April 4, 
2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2007-2). As noted, 
NYSE's version of Rule 46 was later adopted by the Exchange.
    \8\ NYSE Regulation examined the fitness of prospective Floor 
Officials and administered a mandatory education program, which all 
candidates for Floor Official, including Floor Governor, had to 
complete. NYSE Regulation also administered a qualifying 
examination. See Securities Exchange Act Release No. 34-57627 (April 
4, 2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2007-2). NYSE 
Regulation performed these tasks for Exchange Floor Officials 
following the NYSE's acquisition of NYSE MKT in late 2008. On June 
14, 2010, the Exchange, NYSE Regulation and FINRA [sic] retained the 
Financial Industry Regulatory Authority (``FINRA'') pursuant to a 
Regulatory Services Agreement (``RSA'') to perform the market 
surveillance, enforcement and other miscellaneous functions that up 
to that point had been performed by NYSE Regulation, including all 
education and testing-related regulatory services on behalf of NYSE 
Regulation, including the Floor Official mandatory education program 
and qualification testing. See Securities Exchange Act Release No. 
62354 (June 22, 2010), 75 FR 36730 (June 28, 2010) (SR-NYSEAmex-
2010-57).
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    The Exchange believes that the proposed interpretation would 
facilitate the contemplated transfer of existing ICE staff Floor 
Governors to NYSE Regulation. The individuals that would transfer to 
NYSE Regulation are experienced former Floor members who served as 
senior-level Floor Officials before becoming employees of ICE and are 
already qualified and have been appointed to act as staff Floor 
Governors. Because NYSE Regulation is not proposing to qualify 
additional staff not already approved as Floor Governors, the Exchange 
believes there would be no violation of Rule 46.
    In addition, the interpretation does not in any way affect the role 
of Floor Officials or alter the safeguards in place to ensure that 
staff Floor Governors are knowledgeable and able to effectively 
intervene when needed on the Exchange trading Floor.\9\ Finally, NYSE 
Regulation does not propose to seek to qualify existing NYSE Regulation 
employees as staff Floor Governors.
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    \9\ See Securities Exchange Act Release No. 34-57627 (April 4, 
2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2007-2) (discussing 
NYSE Rule later adopted by the Exchange). These safeguards include, 
among other things, that qualified Exchange employees, like 
qualified members, need to be appointed by the Exchange's chairman 
in consultation with the Executive Floor Governors and NYSE 
Regulation Board of Directors and approved by the Board of 
Directors.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\11\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest. The 
Exchange believes that the proposed stated interpretation helps prevent 
fraudulent and manipulative acts and practices by continuing to require 
high standards for qualified Exchange employees to act as Floor 
Governors in addition to members. Similarly, the proposed stated 
interpretation promotes just and equitable principles of trade and 
removes impediments to and perfects the mechanism of a free and open 
market by ensuring that qualified Exchange employees are knowledgeable 
and able to effectively intervene on the Exchange trading Floor as 
needed. For the same reasons, the proposal is also designed to protect 
investors as well as the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
intended to effect a change that constitutes a stated policy, practice 
or interpretation with respect to the meaning, administration, or 
enforcement of an existing rule and therefore would not impose any 
burden on competition.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(1) \13\ thereunder. The 
proposed rule change effects a change that constitutes a stated policy, 
practice or interpretation with respect to the meaning, administration, 
or enforcement of an existing rule.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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-2014-85 on the subject line.
Paper Comments
     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2014-85. 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

[[Page 61357]]

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-NYSEMKT-2014-85, and should be submitted on or before 
October 31, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24226 Filed 10-9-14; 8:45 am]
BILLING CODE 8011-01-P


