
[Federal Register Volume 82, Number 202 (Friday, October 20, 2017)]
[Notices]
[Pages 48870-48873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22755]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81880; File No. SR-NYSE-2017-51]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rules 80C, 104, 107B, and 128

October 16, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on October 3, 2017, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rules 80C, 104, 107B, and 128. 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

[[Page 48871]]

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 80C(b) (Limit Up-Limit Down 
Plan and Trading Pauses in Individual Securities Due to Extraordinary 
Market Volatility) to conform its rule governing trading pauses to 
forthcoming changes to be implemented to the Regulation NMS Plan to 
Address Extraordinary Market Volatility (``Plan''); \4\ Rule 
104(a)(1)(B) (Dealings and Responsibilities of DMMs) and Rule 107B 
(Supplemental Liquidity Providers) to delete obsolete rule cross 
references; and Rule 128(a) (Clearly Erroneous Executions For NYSE 
Equities) to exclude executions as a result of a reopening transaction 
from review as clearly erroneous transactions.
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    \4\ See Securities Exchange Act Release No. 79845 (January 19, 
2017), 82 FR 8551 (January 26, 2017) (File No. 4-631) (Order 
Approving the twelfth amendment to the Plan) (``LULD Amendment 
12''). See also Securities Exchange Act Release Nos. 80455 (April 
13, 2017), 82 FR 18519 (April 19, 2017) (File No. 4-631) (Order 
approving the thirteenth amendment to the Plan) and 81720 (September 
26, 2017), 82 FR 45922 (October 2, 2017) (File No. 4-631) (Notice of 
immediate effectiveness of fifteenth amendment to the Plan, which 
extended the implementation date of LULD Amendment 12).
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Discussion
    Among other things, LULD Amendment 12 would require that trading 
centers may not resume trading in an NMS Stock following a Trading 
Pause without Price Bands in such NMS Stock.\5\ Such Price Bands would 
be based on the Reopening Price reported by a Primary Listing Exchange, 
unless a Primary Listing Exchange notifies the Processor that it is 
unable to reopen trading in an NMS Stock due to a systems or technology 
issue. In such case, the Price Band would be the last effective Price 
Band that was in a Limit State before the Trading Pause. Accordingly, 
once LULD Amendment 12 is implemented, trading centers may not resume 
trading if a Primary Listing Exchange does not report a Reopening Price 
within ten minutes after the declaration of a Trading Pause. In 
addition, under LULD Amendment 12, if an NMS Stock is in a Trading 
Pause during the last ten minutes of trading before the end of Regular 
Trading Hours, the Primary Listing Exchange shall not reopen trading 
and shall attempt to execute a closing transaction using its 
established closing procedures.
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    \5\ Unless otherwise specified, capitalized terms used herein 
have the same meaning as set forth in the Plan or in Exchange rules.
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    In anticipation of the implementation of LULD Amendment 12, the 
Exchange proposes to amend Rule 80C(b) to delete obsolete text and 
conform the remaining text to LULD Amendment 12.\6\ First, the Exchange 
proposes to amend Rule 80C(b) to delete the text following the heading 
of Rule 80C(b) and delete Rules 80C(b)(1), (b)(1)(A)-(C), and (b)(3). 
This rule text governed how trading pauses were triggered before the 
Plan was implemented and is now obsolete. Second, the Exchange proposes 
that the text currently set forth in Rule 80C(b)(2), (b)(2)(B), and 
(b)(2)(E) would be moved to be the rule text for Rule 80C(b). In moving 
this rule text, the Exchange proposes to delete the rule text currently 
set forth in Rules 80C(b)(2)(C) and (D) as inconsistent with LULD 
Amendment 12, described above.\7\ Third, the Exchange proposes to re-
number current Rule 80C(b)(4) as proposed Rule 80C(b)(1) and amend this 
paragraph to add that the Exchange would notify the Processor if the 
Exchange is unable to reopen trading at the end of a Trading pause due 
to a systems or technology issue, which is consistent with LULD 
Amendment 12. Fourth, the Exchange proposes to delete Rule 80C(b)(5) as 
inapplicable to the Exchange application of Rule 80C, which governs 
trading only in NYSE-listed securities.
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    \6\ The proposed amendments to Rule 80C are based on amendments 
to NYSE Arca, Inc. (``NYSE Arca'') Rule 7.11-E that similarly relate 
to the implementation of LULD Amendment 12. See Securities Exchange 
Act Release Nos. 79846 (January 19, 2017), 82 FR 8548 (January 26, 
2017) (SR-NYSEArca-2016-130) (Approval Order) (the ``NYSE Arca 
Reopening Filing'').
    \7\ The text that the Exchange would delete provides that ``[i]n 
the event of a significant imbalance at the end of a Trading Pause, 
the Exchange may delay the re-opening of a security'' and ``[t]he 
Exchange will issue a notification if it cannot resume trading for a 
reason other than a significant imbalance.''
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    Finally, the Exchange proposes to add proposed Rule 80C(b)(2), 
which would specify how the Exchange would process orders if there is a 
Trading Pause during the last ten minutes of trading before the end of 
Regular Trading Hours. As proposed, if the reopening following a 
Trading Pause would be in the last ten minutes of trading before the 
end of regular trading hours, the Exchange would not reopen trading in 
that security and would not transition to continuous trading. As 
further proposed and consistent with LULD Amendment 12, the Exchange 
would remain paused and would conduct a closing transaction in such 
security as provided for in Rule 123C. The proposed rule would further 
provide that in such circumstances, MOO and LOO Orders entered during 
the Trading Pause would not participate in the closing auction and 
would be cancelled.\8\ The Exchange proposes to add this rule text to 
provide transparency to member organizations of how orders that are 
designated to participate in a reopening transaction would be handled 
if the Exchange transitions to a closing auction without first 
reopening trading.\9\
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    \8\ This proposed rule text is based on NYSE Arca Rule 7.35-
E(e)(10). See Securities Exchange Act Release No. 81603 (September 
13, 2017), 82 FR 43609 (September 18, 2017) (SR-NYSEArca-2017-102) 
(``Arca Filing'').
    \9\ The Exchange also proposes non-substantive amendments to 
changes references from the term ``shall'' to the term ``will.''
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    In addition, the Exchange proposes to amend Rule 104(a)(1)(B)(iii) 
and (iv) and Rule 107B(d)(1)(B)(iii) and (iv) to remove obsolete cross 
references and to reflect that the applicable percentages are based on 
how a security is designated under the Plan.\10\ Rules 104(a)(1)(B) and 
107B(d)(1)(B) set forth, among other things, the obligation of DMMs and 
SLMMs to maintain a bid (offer) not more than the ``Designated 
Percentage'' away from the then current National Best Bid (Offer) 
(``NBBO'') and if the NBBO changes such that the DMM's or SLMM's bid/
offer is more than the ``Defined Limit'' away from the NBBO, the DMM or 
SLMM must enter an updated bid (offer). The Exchange proposes to amend 
Rule 104(a)(1)(B)(iii) and (iv) and Rule 107B(d)(1)(B)(iii) and (iv) to 
remove cross-references to Rule 80C and instead use Plan definitions 
for specifying which securities are subject to which ``Designated 
Percentages'' and ``Defined Limits.'' Accordingly, as proposed, these 
rules would be amended as follows:
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    \10\ The Exchange's affiliated equities exchanges have made 
similar change to their rules. See Arca Reopen [sic] Filing, supra 
note 8 (amending NYSE Arca Rule 7.23-E(a)(1)(B)(iii) and (iv)) and 
Securities Exchange Act Release No. 80577 (May 2, 2017), 82 FR 21446 
(May 8, 2017) (SR-NYSEMKT-2017-04) (Order approving NYSE American 
LLC (``NYSE American'') Rule 7.23E(a)(1)(B)(iii) and (iv)). The 
proposed rule changes are also based on Bats BZX, Inc. (``BZX'') 
Rule 11.8(d)(2)(D) and (E).
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     The phrase ``securities subject to Rule 80C(a)(i)'' would 
be replaced with the phrases ``Tier 1 NMS Stocks under the Limit Up-
Limit Down Plan'' or ``Tier 1 NMS Stocks;''
     the phrase ``securities subject to Rule 80C(a)(ii)'' would 
be replaced with the phrases ``Tier 2 NMS Stocks under the Limit Up-
Limit Down Plan with a price equal to or greater than $1.00'' or

[[Page 48872]]

``Tier 2 NMS Stocks with a price equal to or greater than $1.00;''
     the phrase ``securities subject to Rule 80C(a)(iii)'' 
would be replaced with the phrase ``Tier 2 NMS Stocks with a price 
lower than $1.00;'' and
     The phrase ``when Rule 80C is not in effect'' would be 
deleted.
    Because rights and warrants are not subject to the Plan, but are 
subject to market maker quoting requirements, the Exchange proposes to 
provide that for purposes of Rule 104(a)(1)(B)(iii) and (iv) and Rule 
107B(d)(1)(B)(iii) and (iv), rights and warrants would be considered 
Tier 2 NMS Stocks. This proposed rule text is consistent with current 
practice and the now-obsolete cross references to Rule 80C.\11\
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    \11\ Securities previously subject to Rule 80C(a)(ii) were all 
NMS Stocks, other than securities included in the S&P 500[supreg] 
Index, Russell 1000[supreg] Index, and a pilot list of Exchange 
Traded Products, with a price equal to or greater than $1 and 
securities previously subject to Rule 80C(a)(iii) were all NMS 
Stocks, other than securities included in the S&P 500[supreg] Index, 
Russell 1000[supreg] Index, and a pilot list of Exchange Traded 
Products, with a price less than $1.00. See Securities Exchange Act 
Release No. 64420 (May 6, 2011), 76 FR 27675 (May 12, 2011) (SR-
NYSE-2011-21) (Notice of filing).
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    Finally, the Exchange proposes to amend Rule 128(a) to provide that 
executions as a result of reopening transaction would not be eligible 
for a request to review as clearly erroneous under paragraph (b) of 
Rule 128. This proposed rule changes is based on changes approved in 
the NYSE Arca Reopening Filing for NYSE Arca Rule 7.10-E.\12\ The 
Exchange believes that the proposed rule text would implement the 
standardized trading practice that reopening auctions would not be 
eligible for review as a clearly erroneous execution.
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    \12\ See NYSE Arca Reopening Filing, supra note 6.
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    Because of the technology changes associated with the proposed 
amendments to Rule 80C and 128, the Exchange will announce the 
implementation date of those proposed rule changes by Trader Update, 
which will be no later than the scheduled implementation date of LULD 
Amendment 12. The Exchange proposes that the amendments to Rule 104 and 
107B would be operative upon the operative date of this proposed rule 
change.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\13\ in general, and 
furthers the objectives of Section 6(b)(5),\14\ in particular, because 
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, 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.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed changes would 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, because they are designed to conform the Exchange's rules 
with LULD Amendment 12.
    The Exchange believes that the proposed amendments to Rule 80C 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system because they would remove 
obsolete rule text and amend the remaining rule text to conform to the 
requirements of LULD Amendment 12, described above. The Exchange 
further believes that the proposed amendments to Rule 104(a)(1)(B) and 
Rule 107B(d)(1)(B) would remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because they would remove obsolete rule references and conform the 
Exchange's rules with those of NYSE American and BZX. Finally, the 
Exchange believes that the proposed amendments to Rule 128(a) would 
provide for uniform clearly erroneous rules across all Primary Listing 
Exchanges, thus providing certainty to member organizations of when a 
trade would be eligible for review as a clearly erroneous execution.

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 Exchange believes that 
the proposed rule change is not designed to address any competitive 
issues, but rather, to eliminate obsolete rule text and conform 
Exchange rules with changes that will be implemented with LULD 
Amendment 12.

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)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \19\ 15 U.S.C. 78s(b)(2)(B).
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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:

[[Page 48873]]

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-NYSE-2017-51 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-NYSE-2017-51. 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-NYSE-2017-51 and should be 
submitted on or before November 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22755 Filed 10-19-17; 8:45 am]
 BILLING CODE 8011-01-P


