
[Federal Register Volume 81, Number 225 (Tuesday, November 22, 2016)]
[Notices]
[Pages 83888-83890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28035]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79328; File No. SR-NYSEMKT-2016-102]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
Introducing NYSE OptX

November 16, 2016.
    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 November 3, 2016, NYSE MKT LLC, on behalf of NYSE Amex 
Options (``NYSE Amex Options'' or the ``Exchange'') 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. On November 15, 
2016, the Exchange filed Amendment No. 1 to the proposal.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as modified by Amendment No. 1, 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.
    \4\ In Amendment No. 1, the Exchange proposed to amend note 10, 
infra, to clarify that QCC Orders sent through NYSE OptX to the 
Exchange for execution would comply with the order format and EOC 
entry requirements established by the Exchange, which are set forth 
in Rule 955NY.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to introduce NYSE OptX, an order entry 
platform that would allow for the submission of Qualified Contingent 
Cross (``QCC'') Orders and orders executed in the

[[Page 83889]]

Exchange's Customer Best Execution (``CUBE'') Auction by ATP Holders. 
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 introduce NYSE OptX, an order entry 
platform that would allow for the submission of QCC Orders and CUBE 
Orders (collectively, ``paired orders'') by ATP Holders.\5\ ATP Holders 
currently send paired orders through the use of third party front end 
order management systems, such as PrecISE \6\ or PULSe,\7\ or by 
calling Floor Brokers and relaying their orders by telephone.
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    \5\ The term ``ATP Holder'' refers to a natural person, sole 
proprietorship, partnership, corporation, limited liability company 
or other organization, in good standing, that has been issued an 
ATP. An ATP Holder must be a registered broker or dealer pursuant to 
Section 15 of the Securities Exchange Act of 1934. See Rule 
900.2NY.(5).
    \6\ PrecISE Trade[supreg] is a front-end order and execution 
management system for trading options and stock-option combinations. 
See https://www.ise.com/options/precise/.
    \7\ PULSe\SM\ is a front end execution management system that 
allows users to send orders to CBOE, C2 and to other U.S. options 
and stock exchanges. See https://www.cboe.org/hybrid/pulsesalessheet.pdf.
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    NYSE OptX is an order entry platform that utilizes a combination of 
Instant Messaging (IM) and browser-based technology to allow ATP 
Holders to submit paired orders for execution on the Exchange's trading 
system.\8\ There are multiple steps required for ATP Holders to execute 
a paired order through NYSE OptX.\9\ First, an ATP Holder would send a 
paired order in plain text to NYSE OptX.\10\ NYSE OptX would be 
established by an ATP Holder as an IM contact that can be accessed 
through various instant messaging platforms. Next, upon receipt of the 
plain text message sent by an ATP Holder, NYSE OptX would translate the 
message into a pre-populated order ticket with details of the order and 
return the order ticket to the ATP Holder in a browser-based URL. When 
the ATP Holder opens the URL, the pre-populated order ticket would 
appear with the order information as entered by the ATP Holder. The ATP 
Holder would then confirm the order ticket and submit the order to the 
Exchange for execution, or send the order to a Floor Broker for 
execution. If an ATP Holder sends the order to a Floor Broker, the 
Floor Broker would verify the order and send it through NYSE OptX for 
execution on the Exchange's trading system much like how the Floor 
Broker would normally execute the order but without having to re-key 
the order into the Floor Broker's terminal. After an order is executed 
on the Exchange,\11\ NYSE OptX would remit details of the execution 
back to the ATP Holder.
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    \8\ The Exchange represents that NYSE OptX is merely an instant 
messaging platform to link ATP Holders with the Exchange's trading 
system (i.e., it is a new means of sending paired orders to the 
Exchange's existing trading system), and does not require any 
changes to the Exchange's communication or surveillance rules.
    \9\ ATP Holders would be required to log into NYSE OptX each 
trading day, similar to how they would log into any other front end 
order management system.
    \10\ ATP Holders would be required to provide all the essential 
information regarding paired orders when sending it to NYSE OptX, 
including the price of the option and the stock, the size and side 
of the order, i.e., buy or sell, and delta. The Exchange represents 
that QCC Orders sent to the Exchange for execution would comply with 
the order format and EOC entry requirements established by the 
Exchange. See Rule 955NY--Order Format and System Entry 
Requirements. See also Amendment No. 1, supra note 4.
    \11\ All executions would be subject to the Exchange's standard 
transaction fees and credits applicable to QCC Orders and CUBE 
Orders.
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    NYSE OptX is designed as an alternative to the front end order 
management systems, such as PrecISE and PULSe, and as an alternative to 
the use of telephones for the sending by ATP Holders of paired orders 
to the Exchange. NYSE OptX would not provide ATP Holders with the 
capability to send any other type of orders or the capability to send 
paired orders for execution to other options markets. At this time, ATP 
Holders would only be able to use NYSE OptX for the transmission of 
paired orders. Use of NYSE OptX by ATP Holders would be voluntary and 
ATP Holders would continue to be able to submit paired orders through 
the use of a third party front end order management system, or by 
telephone, as they do today.
    While PrecISE and PULSe require software to be installed on a 
desktop computer, NYSE OptX does not require installation of any 
software as it relies on existing instant messaging technology which 
would make its use by ATP Holders seamless. ATP Holders would also not 
need a physical workstation to use NYSE OptX.
    The Exchange notes that the use of NYSE OptX to send paired orders 
is optional. The Exchange is offering NYSE OptX as a convenience to ATP 
Holders and NYSE OptX would not be the exclusive means available to ATP 
Holders to execute paired orders on the Exchange. The Exchange will 
announce the effective date of NYSE OptX in a Trader Update to be 
published no later than 90 days following Commission approval. The 
effective date will be no later than 270 days following publication of 
that Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \12\ of 
the Securities Exchange Act of 1934 (the ``Act''), in general, and 
furthers the objectives of Section 6(b)(5),\13\ in particular, 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 mechanism of a free and open market and a national market system.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change would promote just 
and equitable principles of trade and remove impediments to and perfect 
the mechanism of a free and open market because offering NYSE OptX as 
an alternate means to submit paired orders for execution on the 
Exchange would generally allow the Exchange to better compete for such 
orders and thus enhance competition. The Exchange believes that the 
proposed rule change is reasonable as it could encourage ATP Holders to 
direct a greater number of paired orders to the Exchange instead of 
sending such orders to a competing exchange.
    The Exchange further believes that the proposed rule change would 
allow the Exchange of [sic] offer a new service on an equitable and 
non-discriminatory basis. Specifically, the Exchange believes that use 
of NYSE OptX is equitable as it is voluntary and not required for ATP 
Holders to execute paired orders on the Exchange.

[[Page 83890]]

Additionally, as proposed, the Exchange would provide NYSE OptX to ATP 
Holders on a non-discriminatory basis in that NYSE OptX would be 
available to all ATP Holders in a `one-size fits all' offering in which 
all ATP Holders would be subject to the same terms and conditions and 
would receive the same level of service.
    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,\14\ the Exchange 
does not believe that the proposed rule change would impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Act. To the contrary, the Exchange believes that 
the proposed rule change evidences the strength of competition in the 
options industry. Specifically, the Exchange believes the proposed rule 
change will enhance the competitiveness of the Exchange relative to 
other options exchanges that transact in paired orders.
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    \14\ 15 U.S.C. 78f(b)(8).
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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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by 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 Number SR-NYSEMKT-2016-102 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2016-102. 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-2016-102 and should 
be submitted on or before December 13, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-28035 Filed 11-21-16; 8:45 am]
 BILLING CODE 8011-01-P


