
[Federal Register Volume 84, Number 35 (Thursday, February 21, 2019)]
[Notices]
[Pages 5519-5521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02898]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85144; File No. SR-NYSENAT-2019-02]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 7.31 Relating to the Minimum Trade Size Modifier

February 14, 2019.
    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 February 6, 2019, NYSE National, Inc. (the ``Exchange'' 
or ``NYSE National'') filed with the Securities and Exchange Commission 
(the ``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\ 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 to amend Rule 7.31 relating to the Minimum 
Trade Size Modifier. The proposed rule change is available on the 
Exchange's website 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
    The Exchange proposes to amend Rule 7.31 relating to the Minimum 
Trade Size (``MTS'') Modifier. Specifically, the Exchange proposes to 
make the MTS Modifier available for Non-Displayed Limit Orders.\4\ The 
Exchange also proposes to provide additional optionality for ETP 
Holders using the MTS Modifier with Limit IOC Orders, Non-Displayed 
Limit Orders, Midpoint Liquidity (``MPL'') Orders, and Tracking Orders. 
As proposed, ETP Holders could choose how such orders would trade on 
arrival to trade either with (i) orders that in the aggregate meet the 
MTS (current functionality), or (ii) individual orders that each meet 
the MTS (proposed functionality).
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    \4\ See Rule 7.31(d)(2). In sum, A Non-Displayed Limit Order is 
a Limit Order that is not displayed and does not route. Id.

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[[Page 5520]]

    The MTS Modifier is currently available for Limit IOC Orders,\5\ 
MPL Orders,\6\ and Tracking Orders.\7\ As such, the MTS Modifier is 
currently available only for orders that are not displayed and do not 
route. On arrival, both Limit IOC Orders and MPL Orders with an MTS 
Modifier will trade against contra-side orders in the Exchange Book 
that in the aggregate, meet the MTS.\8\ Once resting, MPL Orders and 
Tracking Orders with an MTS Modifier function similarly: If a contra-
side order does not meet the MTS, the incoming order will not trade 
with and may trade through the resting order with the MTS Modifier. In 
addition, both MPL Orders and Tracking Orders with an MTS Modifier will 
be cancelled if such orders are traded in part or reduced in size and 
the remaining quantity is less than the MTS.
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    \5\ See Rule 7.31(b)(2)(A). In sum, a Limit Order designated IOC 
is to be traded in whole or in part on the Exchange as soon as such 
order is received, and the quantity not so traded is cancelled. Id.
    \6\ See Rule 7.31(d)(3). In sum, an MPL Order is a ``Limit Order 
that is not displayed and does not route, with a working price at 
the midpoint of the PBBO.'' Id.
    \7\ See Rule 7.31(d)(4). In sum, a Tracking Order is an order to 
buy (sell) with a limit price that is not displayed, does not route, 
must be entered in round lots and designated Day, and will trade 
only with an order to sell (buy) that is eligible to route.
    \8\ Tracking Orders, including Tracking Orders with an MTS 
Modifier, are passive orders that do not trade on arrival.
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    The Exchange proposes to amend its rules to make MTS Modifier 
functionality available for an additional non-displayed order that does 
not route, i.e., Non-Displayed Limit Orders. The Exchange also proposes 
to add an option that an order with an MTS Modifier would trade on 
entry only with individual orders that each meet the MTS. This proposed 
change is based on the rules of its affiliate, NYSE American LLC 
(``NYSE American''), which offers the option for orders with an MTS to 
trade on entry only with individual orders that each meet the MTS of 
the incoming order.\9\ Both of these proposed changes are also based on 
the rules of the Nasdaq Stock Market LLC (``Nasdaq'') and Investors 
Exchange LLC (``IEX''), which both offer minimum trade size 
functionality for orders that are not displayed and that do not 
route.\10\ Nasdaq and IEX, as well as Cboe BYX Exchange, Inc. 
(``BYX''), Cboe BZX Exchange, Inc. (``BZX''), Cboe EDGA Exchange, Inc. 
(``EDGA''), and Cboe EDGX Exchange, Inc. (``EDGX'', together with BYX, 
BZX, and EDGA, the ``Cboe Equity Exchanges''), also all offer the 
option for orders with a minimum trade size to trade on entry only with 
individual orders that each meet the minimum trade size condition of 
the incoming order.\11\
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    \9\ See NYSE American Rule 7.31E(i)(3)(B). See also Securities 
Exchange Act Release No. 81672 (September 21, 2017), 82 FR 45099 
(September 27, 2017) (SR-NYSEAMER-2017-17) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Rule 7.31E 
Relating to the Minimum Trade Size Modifier for Additional Order 
Types and Expanding the Minimum Trade Size Modifier for Existing 
Order Types). The Exchange understands that NYSE American as well as 
its other affiliated exchanges, the New York Stock Exchange, Inc. 
(``NYSE''), and NYSE Arca, Inc. (``NYSE Arca'', together with the 
Exchange and NYSE, the ``Affiliate SROs'') intend to file similar 
proposes rule changes with the Commission to extend the availability 
of their respective MTS Modifiers to Non-Displayed Limit Orders.
    \10\ See Nasdaq Rule 4703(e) (Nasdaq's ``Minimum Quantity 
Order'' may not be displayed and will be rejected if it includes an 
instruction to route) and IEX Rule 11.190(b)(11)(A) (IEX's ``Minimum 
Quantity Order'' or ``MQTY'' is a non-displayed, non-routable 
order'').
    \11\ See Nasdaq Rule 4703(e) (Nasdaq's ``Minimum Quantity'' 
order attribute allows for a Nasdaq participant to specify one of 
two alternatives to how a Minimum Quantity Order would be processed 
at the time of entry, one of which is that ``the minimum quantity 
condition must be satisfied by execution against one or more orders, 
each of which must have a size that satisfies the minimum quantity 
condition'') and IEX Rule 11.190(b)(11)(G)(iii)(B) (On arrival, 
IEX's ``Minimum Execution Size with All-or-None Remaining'' 
qualifier for IEX's MQTY executes against each willing resting order 
in priority, provided that each individual execution size meets its 
effective minimum quantity.) See also BYX Rule 11.9(c)(5); BZX Rule 
11.9(c)(5); EDGA Rule 11.6(h); and EDGX Rule 11.6(h) (The Cboe 
Equity Exchanges each allow a User to alternatively specify the 
order not execute against multiple aggregated orders simultaneously 
and that the minimum quantity condition be satisfied by each 
individual order resting on the book).
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    Rule 7.31(i)(3) currently states that on arrival, an order to buy 
(sell) with an MTS Modifier will trade with sell (buy) orders in the 
Exchange Book that in the aggregate meet such order's MTS. As amended, 
Rule 7.31(i)(3)(B) would now require an ETP Holder to specify one of 
the following instructions with respect to how an order with an MTS 
Modifier would trade on arrival (new text underlined):
    (i) An order to buy (sell) with an MTS Modifier will trade with 
sell (buy) orders in the Exchange Book that in the aggregate meet such 
order's MTS[.]; or
    (ii) An order to buy (sell) with an MTS Modifier will trade with 
individual sell (buy) order(s) in the Exchange Book that each meets 
such order's MTS.
    Proposed paragraph (i)(3)(B)(ii) is new and reflects the Exchange's 
proposal to add an alternative to how an order with an MTS Modifier 
would trade on arrival. An order with an MTS Modifier that is to trade 
upon entry only with individual orders that each meet the MTS would 
execute against resting orders in accordance with Rule 7.36, Order 
Ranking and Display, until it reaches an order that does not satisfy 
the MTS, at which point it would be posted or cancelled in accordance 
with the terms of the order. This proposed rule text is also based on 
NYSE American Rule 7.31E(i)(3)(B).\12\ Proposed Exchange Rule 
7.31(i)(3)(B)(i) would describe the existing functionality as one of 
the instructions that would be available to ETP Holders.
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    \12\ See supra note 9.
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    As discussed above, the addition of this instruction for how orders 
with an MTS Modifier would trade on entry is based on the rules of NYSE 
American, Nasdaq, IEX, and the Cboe Equity Exchanges.\13\
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    \13\ See supra notes 9 and 11.
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* * * * *
    Because of the technology changes associated with this proposed 
rule change, the Exchange will announce the implementation date of this 
proposed rule change by Trader Update. The Exchange anticipates that 
the implementation date will be in the second quarter of 2019.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\14\ in general, and 
furthers the objectives of Section 6(b)(5),\15\ 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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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal to expand the availability 
of the Exchange's existing MTS Modifier to an additional non-displayed, 
non-routable order, e.g., Non-Displayed Limit Orders, 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 the proposed rule change is based on 
similar minimum trade size functionality on Nasdaq and IEX, which both 
similarly make minimum trade size functionality available to non-
displayed, non-routable orders.\16\
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    \16\ See supra note 10.
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    The Exchange also believes that the proposal would remove 
impediments to,

[[Page 5521]]

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 it would provide ETP Holders with the option for 
orders with a MTS Modifier to trade on entry only with individual 
orders that each meets the MTS of the incoming order, thereby providing 
ETP Holders with more control in how such orders could execute. The 
proposed rule change is based on similar options available for users of 
minimum trade size functionality on the Exchange's affiliate, NYSE 
American, as well as Nasdaq, IEX, and the Cboe Equity Exchanges.\17\ 
The Exchange further believes that this proposed option would remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system because it would allow ETP Holders to 
provide an instruction that an order with an MTS Modifier would not 
trade with orders that are smaller in size than the MTS for such order, 
thereby providing ETP Holders with more control over when an order with 
an MTS Modifier may be executed.
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    \17\ See supra notes 9 and 11.
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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 Exchange believes that 
the proposed rule change is designed to increase competition by making 
available on the Exchange functionality that is already available on 
Nasdaq, IEX, and the Cboe Equity Exchanges. The Exchange also believes 
that the proposed rule change would promote competition by providing 
market participants with an additional venue to which to route non-
displayed, non-routable orders with an MTS Modifier.

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

    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 for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or 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 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-NYSENAT-2019-02 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-NYSENAT-2019-02. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSENAT-2019-02, and should be submitted 
on or before March 14, 2019.

    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,
Deputy Secretary.
[FR Doc. 2019-02898 Filed 2-20-19; 8:45 am]
BILLING CODE 8011-01-P


