
[Federal Register Volume 81, Number 114 (Tuesday, June 14, 2016)]
[Notices]
[Pages 38747-38751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13964]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78015; File Nos. SR-NYSE-2016-18; SR-NYSEMKT-2016-31]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
MKT LLC; Notice of Filings of Amendment No. 1, and Order Granting 
Accelerated Approval of Proposed Rule Changes, as Modified by Amendment 
No. 1, To Provide for How the Exchanges Would Determine an Official 
Closing Price if the Exchanges Are Unable To Conduct a Closing 
Transaction

June 8, 2016.

I. Introduction

    On March 2, 2016, New York Stock Exchange LLC (``NYSE'') and NYSE 
MKT LLC (``NYSE MKT'') (each an ``Exchange,'' and together the 
``Exchanges'') each filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend, respectively, NYSE Rule 123C and NYSE 
MKT Rule 123C--Equities (both hereinafter ``Rule 123C'') to provide for 
how each Exchange will determine an Official Closing Price if it is 
unable to conduct a closing transaction. The proposed rule changes were 
published for comment in the Federal Register on March 11, 2016.\3\ The 
Commission received one comment letter in response to the NYSE 
proposal.\4\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 77305 (March 7, 
2016), 81 FR 12977 (SR-NYSE-2016-18) (``NYSE Notice''); Securities 
Exchange Act Release No. 77306 (March 7, 2016), 81 FR 12986 (SR-
NYSEMKT-2016-31) (``MKT Notice''). The proposals are substantially 
similar and the Commission is hereby noticing the Amendments No. 1 
and granting accelerated approval jointly.
    \4\ See Letter from Theodore R. Lazo, Managing Director and 
Associate General Counsel, Securities Industry and Financial Markets 
Association, to Brent J. Fields, Secretary, Commission, dated April 
5, 2016 (submitted to File No. SR-NYSE-2016-18) (``SIFMA Letter''). 
The Commission notes that this comment letter was also submitted in 
response to a similar filing by the Nasdaq Stock Market LLC. See 
Securities Exchange Act Release No. 77309 (March 7, 2016), 81 FR 
13007 (March 11, 2016) (SR-NASDAQ-2016-035).
---------------------------------------------------------------------------

    On April 21, 2016, the Commission extended the time period within 
which to approve the proposed rule changes, disapprove the proposed 
rule changes, or institute proceedings to determine whether to 
disapprove the proposed rule changes, to June 9, 2016.\5\ On May

[[Page 38748]]

26, 2016, NYSE submitted a response to the comment letter,\6\ and each 
Exchange filed an Amendment No. 1 to its proposal.\7\ The Commission is 
publishing this notice to solicit comments on the Amendments No. 1 from 
interested persons, and is approving the proposed rule changes, each as 
modified by its respective Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release Nos. 77677, 81 FR 24907 
(April 27, 2016) (SR-NYSE-2016-18); 77676, 81 FR 24907 (April 27, 
2016) (SR-NYSEMKT-2016-31).
    \6\ See Letter from Elizabeth K. King, General Counsel and 
Corporate Secretary, New York Stock Exchange, to Brent J. Fields, 
Secretary, Commission, dated May 26, 2016 (``NYSE Response 
Letter'').
    \7\ In its Amendment No. 1, each Exchange amended its proposed 
rule text to (1) add proposed Rule 123C(1)(e)(iv), which provides 
that, if the Exchange determines the Official Closing Price under 
Rule 123C(1)(e)(ii) or (e)(iii), the Exchange will publicly announce 
the manner by which it will determine its Official Closing Price and 
the designated alternate exchange, if applicable, and will cancel 
all open interest designated for the Exchange close; and (2) amend 
Rule 123C(1)(e)(i) to specify how the Exchange will determine the 
Official Closing Price for a security that has transferred its 
listing to the Exchange or is a new listing and does not have any 
last-sale eligible trades on the Exchange on its first day of 
trading on the Exchange. The Exchanges' respective Amendments No. 1 
are available at: https://www.nyse.com/publicdocs/nyse/markets/nyse/rule-filings/filings/2016/NYSE-2016-18,%20Pt.%20Am.%201.pdf and 
https://www.nyse.com/publicdocs/nyse/markets/nyse-mkt/rule-filings/filings/2016/NYSEMKT-2016-31,%20Pt.%20Am.%201.pdf.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Changes

    Each Exchange proposes to amend its rules to specify closing 
contingency procedures for determining an Official Closing Price for 
its listed securities if it is unable to conduct a closing transaction 
in one or more securities due to a systems or technical issue. 
Specifically, each Exchange proposes to amend its Rule 123C to provide 
for how it would determine an Official Closing Price if it is 
impaired.\8\
---------------------------------------------------------------------------

    \8\ According to the Exchanges, this proposal was developed in 
consultation with one another, their affiliated exchange, NYSE Arca, 
Inc. (``NYSE Arca''), and the NASDAQ Stock Market LLC (``Nasdaq''), 
and took into consideration feedback from discussions with industry 
participants. See NYSE Notice, supra note 3, at 12978; NYSE MKT 
Notice, supra note 3, at 12986. The Commission notes that the Nasdaq 
Stock Market LLC has also filed a similar proposed rule change with 
the Commission. See Securities Exchange Act Release No. 77309 (March 
7, 2016), 81 FR 13007 (March 11, 2016) (SR-NASDAQ-2016-035).
---------------------------------------------------------------------------

    For each Exchange, under its current rules, the ``Official Closing 
Price'' of a security it lists is the price established in a closing 
transaction of one round lot or more.\9\ If there is no closing 
transaction in a security, or if a closing transaction is less than one 
round lot, the Official Closing Price will be the most-recent last-
sale-eligible trade in that security on the Exchange on that trading 
day.\10\ Currently, if an Exchange is unable to conduct a closing 
transaction in a security due to a systems or technical issue, the 
Official Closing Price will be the last consolidated last-sale-eligible 
trade for that security during regular trading hours on that trading 
day, and if there were no such consolidated last-sale eligible trades, 
the Official Closing Price will be the prior day's Official Closing 
Price.\11\
---------------------------------------------------------------------------

    \9\ See Rule 123C(1)(e)(i). See also Securities Exchange Act 
Release Nos. 76598 (Dec. 9, 2015), 80 FR 77688 (Dec. 15, 2015) (SR-
NYSE-2015-62); 76601 (Dec. 9, 2015), 80 FR 77680 (Dec. 15, 2015) 
(SR-NYSEMKT-2015-98).
    \10\ See Rule 123C(1)(e)(i).
    \11\ See Rule 123C(1)(e)(ii).
---------------------------------------------------------------------------

    Each Exchange proposes to amend its Rule 123C(1)(e)(ii) to provide 
for a proposed new contingency plan for how it would determine an 
Official Closing Price if it is unable to conduct a closing transaction 
in a security due to a systems or technical issue.\12\ Each Exchange 
proposes that, if it determines at or before 3:00 p.m. Eastern Time 
that it is unable to conduct a closing transaction in one or more 
securities due to a systems or technical issue, it would designate an 
alternate exchange for those securities. The affected Exchange would 
publicly announce the exchange designated as the alternate exchange via 
Trader Update.\13\ In these circumstances, the Official Closing Price 
of each affected security on an Exchange would be determined based on 
the following hierarchy:
---------------------------------------------------------------------------

    \12\ Each Exchange states that, if it determines that it is 
impaired before 3:00 p.m. and the Official Closing Price for an 
Exchange-listed security is determined pursuant to proposed Rule 
123C(1)(e)(ii), the SIP would publish the Official Closing Price for 
that security no differently than how the SIP publishes the Official 
Closing Price for an Exchange-listed security pursuant to current 
Rule 123C(1)(e)(i). See NYSE Notice, supra note 3, at 12979; NYSE 
MKT Notice, supra note 3, at 12987-88. Accordingly, if the Official 
Closing Price of a security is determined pursuant to proposed Rule 
123C(1)(e)(ii), the Exchanges note that recipients of SIP data would 
not have to make any changes to their systems. See NYSE Notice, 
supra note 3, at 12979; NYSE MKT Notice, supra note 3, at 12987-88.
    \13\ See NYSE Notice, supra note 3, at 12978; NYSE MKT Notice, 
supra note 3, at 12987. The Exchanges represent that they expect to 
designate an affiliated exchange as the alternate exchange and would 
designate Nasdaq only if the affiliated exchanges were also impacted 
by the systems or technical issue. See NYSE Notice, supra note 3, at 
12978 n.6; NYSE MKT Notice, supra note 3, at 12987 n.6. In its 
respective Amendment No. 1, each Exchange specified that this 
determination would be publicly announced and that, in the event of 
such a determination, all open interest designated for the Exchange 
close would be deemed canceled. See Amendments No. 1.
---------------------------------------------------------------------------

     The Official Closing Price would be the official closing 
price for that security under the rules of the designated alternate 
exchange.\14\ For example, if NYSE Arca is the designated alternate 
exchange, the Official Closing Price would be based on NYSE Arca 
Equities Rule 1.1(ggP), which defines how NYSE Arca establishes an 
official closing price.\15\ If Nasdaq were designated as the alternate 
exchange, the Official Closing Price would be the official closing 
price established in Nasdaq Rule 4754.
---------------------------------------------------------------------------

    \14\ See Proposed Rule 123C(1)(e)(ii)(A).
    \15\ According to the Exchanges, NYSE Arca will be filing a rule 
proposal to amend its Rule 1.1(ggP)(1) to provide that the manner by 
which NYSE Arca determines the Official Closing Price for securities 
listed on NYSE Arca would also be applicable to any securities for 
which NYSE Arca conducts a closing auction, including securities 
that trade on an unlisted-trading-privileges basis. See NYSE Notice, 
supra note 3, at 12978 n.7; NYSE MKT Notice, supra note 3, at 12987 
n.7.
---------------------------------------------------------------------------

     If the designated alternate exchange does not have an 
official closing price in a security, the Official Closing Price would 
be the volume-weighted average price (``VWAP'') of the consolidated 
last-sale-eligible prices of the last five minutes of trading during 
regular trading hours up to the time that the VWAP is processed.\16\ 
The VWAP would include any closing transactions on an exchange and 
would take into account any trade breaks or corrections up to the time 
the VWAP is processed.
---------------------------------------------------------------------------

    \16\ See proposed Rule 123C(1)(e)(ii)(B).
---------------------------------------------------------------------------

     If the designated alternate exchange does not have an 
official closing price in a security and there were no consolidated 
last-sale eligible trades in the last five minutes of trading during 
regular trading hours in that security, the Official Closing Price 
would be the last consolidated last-sale-eligible trade during regular 
trading hours on that trading day.\17\
---------------------------------------------------------------------------

    \17\ See proposed Rule 123C(1)(e)(ii)(C).
---------------------------------------------------------------------------

     If the designated alternate exchange does not have an 
official closing price in a security and there were no consolidated 
last-sale-eligible trades in a security on a trading day in that 
security, the Official Closing Price would be the prior day's Official 
Closing Price.\18\
---------------------------------------------------------------------------

    \18\ See proposed Rule 123C(1)(e)(ii)(D).
---------------------------------------------------------------------------

     If an Official Closing Price for a security cannot be 
determined as provided above, and there is no prior day's Official 
Closing Price, the Exchange would not publish an Official Closing Price 
for that security.\19\
---------------------------------------------------------------------------

    \19\ See proposed Rule 123C(1)(e)(ii)(E).
---------------------------------------------------------------------------

    In addition, each Exchange has proposed Rule 123C(1)(e)(iii) to 
describe how it would determine the Official Closing Price for a 
security if it determines after 3:00 p.m. Eastern Time that it is 
unable to conduct a closing transaction in one or more securities

[[Page 38749]]

due to a systems or technical issue.\20\ According to each Exchange, if 
an announcement were made after 3:00 p.m. Eastern Time that the 
Exchange was impaired and unable to conduct a closing transaction, 
market participants would not have sufficient time to re-direct 
closing-only orders to an alternate venue.\21\ Therefore, each Exchange 
proposes that the process for determining an Official Closing Price for 
a security under these circumstances would not contemplate a closing 
transaction on a designated alternate exchange. Accordingly, in such a 
scenario, each Exchange proposes to use the following hierarchy for 
determining the Official Closing Price for a security:
---------------------------------------------------------------------------

    \20\ Each Exchange states that, similar to how the Official 
Closing Price would be published under proposed Rule 123C(1)(e)(ii), 
if it determines that it is impaired after 3:00 p.m. and the 
Official Closing Price for a security is determined pursuant to 
proposed Rule 123C(1)(e)(iii), the SIP would publish the Official 
Closing Price for that security no differently than how the SIP 
publishes the Official Closing Price for an Exchange-listed security 
pursuant to current Rule 123C(1)(e)(i). See NYSE Notice, supra note 
3, at 12980; NYSE MKT Notice, supra note 3, at 12988. Accordingly, 
if the Official Closing Price is determined pursuant to proposed 
Rule 123C(1)(e)(iii), the Exchanges note that recipients of SIP data 
would not have to make any changes to their systems. See NYSE 
Notice, supra note 3, at 12980; NYSE MKT Notice, supra note 3, at 
12988. In its Amendment No. 1, each Exchange has specified that this 
determination would be publicly announced and that, in the event of 
such determination, all open interest designated for the Exchange 
close would be deemed canceled. See Amendment No. 1.
    \21\ See NYSE Notice, supra note 3, at 12979; NYSE MKT Notice, 
supra note 3, at 12988.
---------------------------------------------------------------------------

     The Official Closing Price would be the VWAP of the 
consolidated last-sale-eligible prices of the last five minutes of 
trading during regular trading hours up to the time that the VWAP is 
processed, including any closing transactions on an exchange.\22\ The 
VWAP would take into account any trade breaks or corrections up to the 
time the VWAP is processed.
---------------------------------------------------------------------------

    \22\ See proposed Rule 123C(1)(e)(iii)(A).
---------------------------------------------------------------------------

     If there were no consolidated last-sale eligible trades in 
the last five minutes of trading during regular trading hours in such 
security, the Official Closing Price would be the last consolidated 
last-sale-eligible trade during regular trading hours on that trading 
day.\23\
---------------------------------------------------------------------------

    \23\ See proposed Rule 123C(1)(e)(iii)(B).
---------------------------------------------------------------------------

     If there were no consolidated last-sale-eligible trades in 
the security on a trading day, the Official Closing Price would be the 
prior day's Official Closing Price.\24\
---------------------------------------------------------------------------

    \24\ See proposed Rule 123C(1)(e)(iii)(C).
---------------------------------------------------------------------------

     If an Official Closing Price for a security cannot be 
determined as provided above and there is no prior day's Official 
Closing Price, the Exchange would not publish an Official Closing Price 
for that security.\25\
---------------------------------------------------------------------------

    \25\ See proposed Rule 123C(1)(e)(iii)(D).
---------------------------------------------------------------------------

    The Exchanges propose to implement the closing contingency 
procedures for determining an Official Closing Price no later than 120 
days after approval, on a date to be announced via Trader Update.\26\
---------------------------------------------------------------------------

    \26\ See NYSE Notice, supra note 3, at 12980; NYSE MKT Notice, 
supra note 3, at 12988. Each Exchange further notes that, under the 
proposed rule change, for purposes of NYSE Rule 440B(b) and NYSE MKT 
Rule 440B(b)--Equities, the Official Closing Price would continue to 
be determined based on Rule 123C and that, if the Exchange is 
impaired, the Official Closing Price as defined in proposed Rules 
123C(1)(e)(ii) and (iii) would be used for purposes of determining 
whether a Short Sale Price Test is triggered in a security the next 
trading day. See NYSE Notice, supra note 3, at 12980; NYSE MKT 
Notice, supra note 3, at 12988. Each Exchange also proposes to 
specify in Rule 123C(1)(e)(i) that, for a security that has 
transferred its listing to the Exchange and does not have any last-
sale-eligible trades on the Exchange on its first trading day, the 
Official Closing Price would be the prior day's closing price 
disseminated by the primary listing market that previously listed 
such security. See Amendments No. 1. In addition, for a new listing 
that does not have any last-sale eligible trades on an Exchange on 
its first trading day, the Official Closing Price would be based on 
a derived last sale associated with the price of that security 
before it begins trading. See id.
---------------------------------------------------------------------------

III. Summary of Comments

    As noted above, the Commission received one comment letter on the 
NYSE proposal and a response letter from NYSE.\27\ The commenter 
generally supports the proposal but suggests certain modifications to 
the proposal.\28\ The Commission notes that, while this comment letter 
was submitted in response only to the NYSE proposal, the Exchanges' 
proposals are substantively similar and the comments raised are equally 
relevant to both.
---------------------------------------------------------------------------

    \27\ See SIFMA Letter, supra note 4; NYSE Response Letter, supra 
note 6.
    \28\ See SIFMA Letter, supra note 4, at 1. The commenter also 
encourages NYSE and Nasdaq to continue to work with industry 
participants on this issue and to refine the backup mechanism as a 
next step. See id. at 3.
---------------------------------------------------------------------------

    First, the commenter suggests that NYSE's rules should specify that 
any designation of an alternate exchange would be publicly announced at 
or before 3:00 p.m. and that the announcement would be made through the 
SIP feed in addition to any other forms of communication.\29\ According 
to the commenter, if a determination is made at 3:00 p.m., then the 
time between 3:00 p.m. and when member firms actually receive notice of 
the designation would cut into the time needed to re-direct closing 
interest to the designated alternate exchange.\30\ NYSE agreed with the 
commenter's suggestion that it should publicly announce the designation 
of an alternate exchange.\31\ As a result, each Exchange amended its 
proposal to specify that any designation of an alternate exchange will 
be publicly announced at or before 3:00 p.m.\32\
---------------------------------------------------------------------------

    \29\ See id. at 2-3.
    \30\ See id.
    \31\ The public announcement of an alternate exchange 
designation, however, would not be disseminated through the SIP 
feed.
    \32\ See NYSE Response Letter, supra note 6, at 1. See also 
Amendments No. 1.
---------------------------------------------------------------------------

    Second, the commenter suggests that, if NYSE determines not to 
carry out its own closing transaction, it should expressly assume 
responsibility for the cancellation of all closing interest that NYSE 
has already received.\33\ According to the commenter, this would allow 
market participants to treat their closing interest as canceled even if 
they have not received an official notification of the 
cancellation.\34\ The commenter also suggests that NYSE's rules should 
state that the official closing transaction will be canceled once NYSE 
determines that it is unable to conduct its own closing transaction, so 
as to avoid uncertainty regarding whether NYSE might change course if 
it determines before 4:00 p.m. that it can, in fact, conduct its own 
closing transaction.\35\ NYSE agreed with the commenter's suggestion 
that it provide members with certainty that their open interest will 
not be executed if NYSE determines to employ the closing contingency 
procedures. As a result, each Exchange has amended its proposal to 
expressly state that it would cancel all open interest designated for 
the Exchange close if it determines to employ the closing contingency 
procedures.\36\ The Commission also notes that, under the proposals, 
once an Exchange publicly announces that it will employ the closing 
contingency procedures, it will not revert to its ordinary closing 
procedures, and the Official Closing Price would be determined 
according to the hierarchies discussed above.\37\
---------------------------------------------------------------------------

    \33\ See SIFMA Letter, supra note 4, at 3. The commenter also 
asserts that, if NYSE executes the closing interest despite 
canceling the closing transaction, NYSE should be responsible under 
its own rules for any resulting losses to the member firms. See id. 
The Exchanges have not revised their proposals to assume this 
liability.
    \34\ See SIFMA Letter, supra note 4, at 3.
    \35\ See id.
    \36\ See NYSE Response Letter, supra note 6, at 2. See also 
Amendments No. 1.
    \37\ See supra notes 14-25 and accompanying text.
---------------------------------------------------------------------------

    Third, the commenter suggests that, when using the VWAP 
methodology, NYSE not include any other exchange's closing transaction 
in the calculation.\38\ According to the commenter, a five-minute VWAP 
methodology should

[[Page 38750]]

result in a price that is largely tradable and achievable.\39\ However, 
according to the commenter, if a VWAP used as the official closing 
price included auction prints from other exchanges' closing 
transactions, the ability to trade and achieve the official closing 
price process would be reduced.\40\ The Exchanges have not amended the 
proposals to exclude closing transactions from the VWAP calculation, 
but have stated that they would consider whether to do so at a later 
date.\41\
---------------------------------------------------------------------------

    \38\ See SIFMA Letter, supra note 4, at 3.
    \39\ See id.
    \40\ See id.
    \41\ See NYSE Response Letter, supra note 6, at 2.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    After careful review of the proposals, as modified by the 
respective Amendments No. 1, and of the comment letter, the Commission 
finds that the proposed rule changes are consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\42\ In particular, the 
Commission finds that the proposed rule changes are consistent with 
section 6(b)(5) of the Act,\43\ which requires, among other things, 
that the rules of a national securities exchange be 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, 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.
---------------------------------------------------------------------------

    \42\ In approving these proposed rule changes, the Commission 
has considered the proposed rules' impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule changes would 
provide transparency regarding how the Exchanges would determine the 
Official Closing Price in Exchange-listed securities when the Exchanges 
are unable to conduct a closing transaction due to a systems or 
technical issue. The Commission notes that the primary listing market's 
closing price for a security is relied upon by market participants for 
a variety of reasons, including, but not limited to, calculation of 
index values, calculation of the net asset value of mutual funds and 
exchange-traded products, and the price of derivatives that are based 
on the security. As the Exchanges note, the proposed closing 
contingency procedures would provide a pre-determined, consistent 
solution that would result in the SIP disseminating an official closing 
price for securities on behalf of the listing Exchange within a 
reasonable time frame relative to the normal closing time; would 
minimize the need for industry participants to modify their processing 
of data from the SIP; and would provide advance notification of the 
initiation of a closing contingency plan to provide sufficient time for 
industry participants to route any closing interest to an alternate 
venue to participate in that venue's closing auction.\44\ The 
Commission believes that each Exchange's proposal is reasonably 
designed to achieve these important goals and to prevent any issues 
that may result if the Exchange were unable to provide a closing price 
for its listed securities due to a systems or technical issue. For 
these reasons, the Commission finds that the proposed rule change is 
consistent with the Act.
---------------------------------------------------------------------------

    \44\ See NYSE Notice, supra note 3, at 12978, 12980; NYSE MKT 
Notice, supra note 3, at 12986, 12988-89.
---------------------------------------------------------------------------

V. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether each Exchange's 
respective Amendment No. 1 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 Numbers SR-NYSE-2016-18 and SR-NYSEMKT-2016-31 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 Numbers SR-NYSE-2016-18 and SR-
NYSEMKT-2016-31. These file numbers 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 Numbers SR-NYSE-2016-18 and SR-NYSEMKT-2016-31 and should be 
submitted on or before July 5, 2016.

VI. Accelerated Approval of Proposed Rule Changes, as Modified by Their 
Respective Amendments No. 1

    The Commission finds good cause to approve the proposed rule 
changes, as modified by their respective Amendments No. 1, prior to the 
30th day after the date of publication of the notices of each Amendment 
No. 1 in the Federal Register. As noted above, in its respective 
Amendment No. 1, each Exchange amended the proposed rule text to add 
Rule 123C(1)(e)(iv), which provides that if the Exchange determines the 
Official Closing Price under Rule 123C(1)(e)(ii) or (e)(iii), the 
Exchange will publicly announce the manner by which it will determine 
the Official Closing Price and the designated alternate exchange, if 
applicable, and will cancel all open interest designated for the 
Exchange close. As noted above, the Exchanges made these amendments in 
response to comments received on the NYSE proposal.
    In addition, in its respective Amendment No. 1, each Exchange 
amended its Rule 123C(1)(e)(i) to specify how it will determine the 
Official Closing Price for a security that has transferred its listing 
to the Exchange or that is a new listing and does not have any last-
sale-eligible trades on the Exchange on its first day of trading on the 
Exchange. Specifically, for a security that has transferred its listing 
to the Exchange and does not have any last-sale-eligible trades on the 
Exchange on its first trading day, the Official Closing Price would be 
the prior day's closing price disseminated by the

[[Page 38751]]

primary listing market that previously listed that security.\45\ For a 
new listing that does not have any last-sale eligible trades on the 
Exchange on its first trading day, the Official Closing Price would be 
based on a derived last sale associated with the price of such security 
before it begins trading.\46\ Each Exchange states that its Amendment 
No. 1 is intended to provide increased transparency in the Exchange's 
rules as to how the Exchange would determine the Official Closing Price 
for such new or transferred listings.\47\
---------------------------------------------------------------------------

    \45\ See Amendments No. 1.
    \46\ See id.
    \47\ See id.
---------------------------------------------------------------------------

    Because each Amendment No. 1 responded to the comments received on 
the original proposal, and provided additional transparency to the 
operation of the closing contingency procedures for transferred and 
newly listed securities, the Commission finds good cause for approving 
the proposed rule changes, as modified by the respective Amendments No. 
1, on an accelerated basis, pursuant to section 19(b)(2) of the 
Act.\48\
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VII. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\49\ that the proposed rule changes (SR-NYSE-2016-18 and SR-
NYSEMKT-2016-31), as modified by their respective Amendments No. 1, be, 
and hereby are, approved on an accelerated basis.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\50\
---------------------------------------------------------------------------

    \50\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-13964 Filed 6-13-16; 8:45 am]
 BILLING CODE 8011-01-P


