[Federal Register Volume 83, Number 112 (Monday, June 11, 2018)]
[Notices]
[Pages 27061-27068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12432]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83384; File No. SR-NYSEAMER-2018-05]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 1, To Establish an 
Electronic Price Improvement Auction for Complex Orders

June 5, 2018.

I. Introduction

    On February 15, 2018, NYSE American LLC (the ``Exchange'' or ``NYSE 
American'') 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 adopt new Exchange Rule 971.2NY to establish 
the Complex Customer Best Execution Auction (``Complex CUBE Auction'' 
or ``Auction''), a price improvement auction for Electronic Complex 
Orders (referred to herein as ``Complex Orders''), and to make related 
changes to other rules.\3\ The proposed rule change was published for 
comment in the Federal Register on March 7, 2018.\4\ On April 18, 2018, 
pursuant to

[[Page 27062]]

Section 19(b)(2) of the Act,\5\ the Commission extended the time for 
Commission action on the proposal until June 5, 2018.\6\ The Commission 
received no comments regarding the proposal. On May 15, 2018, the 
Exchange filed Amendment No. 1 to the proposed rule change.\7\ The 
Commission is publishing this notice to solicit comments on Amendment 
No. 1 from interested persons, and is approving the proposed rule 
change, as modified by Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ An Electronic Complex Order is any Complex Order, as defined 
in Exchange Rule 900.3NY(e), that is entered into the Exchange's 
electronic order delivery, execution and reporting System. See 
Exchange Rules 980NY and 900.2NY(48). A Complex Order is ``any order 
involving the simultaneous purchase and/or sale of two or more 
different option series in the same underlying security, for the 
same account, in a ratio that is equal to or greater than one-to-
three (.333) and less than or equal to three-to-one (3.00) and for 
the purpose of executing a particular investment strategy.'' See 
Exchange Rule 900.3NY(e).
    \4\ See Securities Exchange Act Release No. 82802 (March 2, 
2018), 83 FR 9769 (``Notice'').
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 83061, 83 FR 17869 
(April 24, 2018).
    \7\ Amendment No. 1 revises the proposal to: (1) Add Exchange 
Rules 971.1NY, Commentary .01, and 971.2NY, Commentary .03 to 
specify that a Single-Leg CUBE Auction for a single series may occur 
concurrently with a Complex CUBE Auction for a Complex Order that 
includes that series, and to describe the processing of such 
concurrent auctions; (2) add definitions of ``single stop price'' 
and ``auto-match limit price,'' add examples to the defined terms in 
proposed Exchange Rule 971.2NY, Commentary .02, and clarify that in 
both the Single-Leg and Complex CUBE Auctions, a Contra Order will 
trade solely with the CUBE Order; (3) indicate that after a Complex 
CUBE Order has been filled, RFR Responses, including Complex GTX 
Orders, may trade with Complex Orders on the same side of the market 
as the Complex CUBE Order; (4) further explain the rationale for not 
allowing customer interest on a Contra Order; (5) further explain 
the reasons for early Auction terminations when the same-side CUBE 
BBO crosses RFR Responses or a single stop price; (6) provide an 
example showing the allocation of a Complex CUBE Order guaranteed 
with an auto-match limit price; (7) modify the description of the 
proposed changes to Exchange Rules 980NY(e)(6)(A) and (B); and (8) 
provide further support for the Exchange's argument that the 
proposal is consistent with Section 11(a) of the Act and the rules 
thereunder. To promote transparency of its proposed amendment, when 
NYSE American filed Amendment No. 1 with the Commission, it also 
submitted Amendment No. 1 as a comment letter to the file, which the 
Commission posted on its website and placed in the public comment 
file for SR-NYSEAMER-2018-05 (available at https://www.sec.gov/comments/sr-nyseamer-2018-05/nyseamer201805-3649246-162408.pdf). The 
Exchange also posted a copy of its Amendment No. 1 on its website 
(available at https://www.nyse.com/publicdocs/nyse/markets/nyse-american/rule-filings/filings/2018/NYSEAmer-2018-05,%20Pt.%20Am.%201.pdf).
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I. Description of the Proposal, as Modified by Amendment No. 1

A. Background

    NYSE American currently provides a CUBE Auction for single-leg 
option orders (the ``Single-Leg CUBE'').\8\ As described more fully in 
the Notice, the Exchange proposes to adopt new Exchange Rule 971.2NY, 
``Complex Electronic Cross Transactions,'' to establish a Complex CUBE 
Auction for Complex Orders that will operate in a manner that is 
substantially similar to the Single-Leg CUBE, with differences to 
account for the different processing of and priority rules for Complex 
Orders.\9\ NYSE American states that the Complex CUBE Auction will 
operate in a manner consistent with the electronic price improvement 
auctions for complex orders that are available on other options 
exchanges.\10\
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    \8\ See Exchange Rule 971.1NY.
    \9\ See Notice, 83 FR at 9769. NYSE American notes that the 
Complex CUBE Auction follows the fundamental principles of the 
Single-Leg CUBE mechanism but with the priority and allocation rules 
used in auctions for Complex Orders. See id. at 9779 (citing 
Exchange Rule 980NY(e)).
    \10\ See id. (citing Chicago Board Options Exchange, Inc. 
(``CBOE'') Rule 6.74A; Nasdaq PHLX, LLC (``Phlx'') Rule 1087; BOX 
Options Exchange LLC (``BOX'') Rule 7245; Nasdaq ISE, LLC (``ISE'') 
Rule 723; and Miami International Securities Exchange, LLC 
(``MIAX'') Rule 515A, Interpretation and Policy .12).
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B. Initiation of a Complex CUBE Auction

    To initiate a Complex CUBE Auction, an ATP Holder (the ``Initiating 
Participant'') electronically submits into the Complex CUBE Auction a 
Complex Order that the Initiating Participant represents as agent on 
behalf of a public customer, broker dealer, or other entity.\11\ The 
Initiating Participant guarantees the execution of the Complex CUBE 
Order by submitting a contra-side order (the ``Complex Contra Order'') 
representing principal interest or non-Customer interest the Initiating 
Participant has solicited to trade solely with the CUBE Order at either 
a single stop price or an auto-match limit price, as discussed 
below.\12\
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    \11\ See proposed Exchange Rule 971.2NY(a). An ``ATP Holder'' is 
a natural person, sole proprietorship, partnership, corporation, 
limited liability company or other organization, in good standing, 
that has been issued an American Trading Permit (``ATP'') issued by 
the Exchange for effecting approved securities transactions on the 
Exchange's Trading Facilities. An ATP Holder must be a registered 
broker or dealer pursuant to Section 15 of the Act and has status as 
a ``member'' of the Exchange, as defined in Section 3 of the Act. 
See Exchange Rules 900.2NY(4) and (5).
    \12\ See proposed Exchange Rule 971.2NY(a)(1). Requiring the 
Complex Contra Order to include only principal interest or non-
Customer interest will preserve the intended allocation methodology 
for the Auction. See Amendment No. 1. NYSE American notes that a 
Complex Contra Order is guaranteed to trade with at least 40% of the 
Complex CUBE Order if RFR Responses do not improve the guaranteed 
price(s). See proposed Exchange Rules 971.2NY(c)(4)(B)(i)(b) and 
(ii)(b). NYSE American also notes that, because Customer interest on 
the Exchange is afforded first priority at a price, allowing 
Customer interest on the Complex Contra Order would disrupt the 
intended allocation methodology for the Auction because the Complex 
Contra Order would be entitled to 100% of the Complex CUBE Order 
rather than 40% of the order. NYSE American further notes that 
allowing customer interest on the Complex Contra Order could reduce 
competition in the Auction and undermine its price improvement aim 
if other market participants choose not to participate in the 
Auction because they believe it is unlikely that they would receive 
an allocation in the Auction. See id. NYSE American states that it 
will file a proposed rule change if it intends to establish a 
customer-to-customer cross mechanism in the future. See id. The 
proposal likewise revises the Single-Leg CUBE rules to indicate that 
the Contra Order in a Single-Leg CUBE Auction must represent 
principal or non-Customer Interest. See Exchange Rule 971.1NY(a) and 
Amendment No. 1.
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    The Complex CUBE Order must be priced better than the interest 
resting on the Consolidated Book.\13\ In particular, a Complex CUBE 
Order must have a net debit/credit price that is equal to or better 
than the ``CUBE BBO'' on the same side of the market as the Complex 
CUBE Order (the ``same-side CUBE BBO'').\14\ The CUBE BBO is the more 
aggressive of (i) the Complex BBO improved by $0.01,\15\ or (ii) the 
Derived BBO improved by $0.01 multiplied by the smallest leg of the 
complex order strategy.\16\ A Complex CUBE Order that does not meet 
this requirement will be rejected, along with the Complex Contra 
Order.\17\ The CUBE BBO may be updated during the Auction.\18\ If the 
CUBE BBO updates during the Auction (the ``updated CUBE BBO''), the 
range of permissible executions for the Complex CUBE Order will adjust 
in accordance with the updated CUBE BBO, unless the

[[Page 27063]]

interest that updated the CUBE BBO would cause the Auction to conclude 
early pursuant to proposed Exchange Rule 971.2NY(c)(3).\19\
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    \13\ See Notice, 83 FR at 9771, and proposed Exchange Rule 
971.2NY(b)(2). The Consolidated Book (``Book'') is ``the Exchange's 
electronic book of limit orders for the accounts of Customers and 
broker-dealers, and Quotes with Size. All orders and Quotes with 
Size that are entered into the Book will be ranked and maintained in 
accordance with the rules of priority as provided in Rule 964NY.'' 
See Exchange Rule 900.2NY(14).
    \14\ See proposed Exchange Rule 971.2NY(b)(2).
    \15\ See proposed Exchange Rule 971.2NY(a)(2). The proposal 
revises the current definition of ``Complex BBO'' to define the 
Complex BBO as the complex orders with the lowest-priced (i.e., the 
most aggressive) net debit/credit price on each side of the 
Consolidated Book for the same complex order strategy. See proposed 
Exchange Rule 971.2NY(b).
    \16\ The BBO is the best bid or offer in the System. See 
Exchange Rule 900.2NY(7)(a). The ``Derived BBO'' is calculated using 
the BBO from the Consolidated Book for each of the options series 
comprising a given complex order strategy. See proposed Exchange 
Rule 900.2NY(7)(c). The definition of Derived BBO, which does not 
change the manner in which the Exchange determines what was formerly 
referred to as the ``Complex BBO,'' is designed to make clear that 
the Derived BBO is derived from the BBO of the leg markets. See 
Notice, 83 FR at 9771. The proposal makes conforming amendments to 
Exchange Rule 980NY to replace references to the ``Complex BBO'' 
with the ``Derived BBO.'' See id.
    \17\ See proposed Exchange Rule 971.2NY(b)(2). NYSE American 
notes that a Complex CUBE Order that is not priced equal to or 
better than the same-side CUBE BBO is not the best-priced interest 
available and should not trade ahead of better-priced interest on 
the same side of the market. See Notice, 83 FR at 9773. A Complex 
CUBE Order and the Complex Contra Order also will be rejected if 
they are submitted before the opening of trading, during the final 
second of the trading session in the component series, or during a 
trading halt. See proposed Exchange Rules 971.2NY(b)(3), (4), and 
(5).
    \18\ See proposed Exchange Rule 971.2NY(a)(2).
    \19\ See proposed Exchange Rule 971.2NY(a)(4)(A). The ``range of 
permissible executions'' for a Complex CUBE Order is all prices 
equal to or between the initiating price and the same-side CUBE BBO. 
See proposed Exchange Rule 971.2NY(a)(4). The ``initiating price'' 
for a Complex CUBE Order is the less aggressive of the net debit/
credit price of the order or the price that locks the contra-side 
CUBE BBO. See proposed Exchange Rule 971.2NY(a)(3).
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C. Auction Process

    An Initiating Participant must guarantee the execution of a Complex 
CUBE Order by submitting a Complex Contra Order with either a single 
stop price or an auto-match limit price, which must be executable 
against the initiating price of the Auction.\20\ If the single stop 
price crosses the same-side CUBE BBO (i.e., would be outside the range 
of permissible executions), the Complex CUBE Order is not eligible to 
initiate an Auction and will be rejected along with the Complex Contra 
Order.\21\ A Complex Contra Order with an auto-match limit price may 
trade with the Complex CUBE Order at prices that are better than or 
equal to the initiating price until trading at the auto-match limit 
price.\22\ If the auto-match limit price crosses the same-side CUBE 
BBO, the Complex Contra Order will be priced back to lock the same-side 
CUBE BBO.\23\
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    \20\ See proposed Exchange Rules 971.2NY(b)(1)(A) and (B). A 
single stop price is the price at which the Initiating Participant 
guarantees the Complex CUBE Order. An auto-match limit price is the 
most aggressive price at which the Initiating Participant is willing 
to trade with the Complex CUBE Order.
    \21\ See proposed Exchange Rule 971.2NY(b)(1)(A) and Notice, 83 
FR at 9772.
    \22\ See proposed Exchange Rule 971.2NY(b)(1)(B).
    \23\ See id.
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    The time at which the Auction is initiated will be considered the 
time of execution for the Complex CUBE Order.\24\ Only one Complex CUBE 
Auction may be conducted at a time in any given complex order strategy 
and, once commenced, the Complex CUBE Order (as well as the Complex 
Contra Order) may not be cancelled or modified. \25\
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    \24\ See proposed Exchange Rule 971.2NY(c).
    \25\ See id.
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    Upon receipt of a Complex CUBE Order, NYSE American will send a 
Request for Responses (``RFR'') identifying the complex order strategy, 
the side and size of the Complex CUBE Order, and the initiating price 
to all ATP Holders who subscribe to receive RFR messages.\26\ ATP 
Holders may submit responses to the RFR during the Response Time 
Interval, which will last for a random period of time within parameters 
that NYSE American determines and announces by Trader Update.\27\ Any 
ATP Holder may respond to the RFR, provided the response is properly 
marked specifying price, size, and side of the market (``RFR 
Response'').\28\ The Auction will accept the following RFR Responses: 
(i) A Complex GTX Order, defined as an Electronic Complex Order with a 
time-in-force contingency for the Response Time Interval, which must 
specify the price, size, and side of the market; \29\ and (ii) 
unrelated Complex Orders, including Complex Order Auction (``COA'')-
eligible orders, on the opposite side of the market as the Complex CUBE 
Order that are received during the Response Time Interval, provided the 
unrelated orders can participate within the range of permissible 
executions specified pursuant to proposed Exchange Rule 
971.2NY(a)(4).\30\ NYSE American believes that considering unrelated 
Complex Orders to be RFR Reponses would increase the number of orders 
against which the Complex CUBE Order could execute and thus should 
maximize price improvement opportunities for the Complex CUBE 
Order.\31\
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    \26\ See proposed Exchange Rule 971.2NY(c)(1)(A).
    \27\ See proposed Exchange Rule 971.2NY(c)(1)(B). The minimum/
maximum parameters for the Response Time Interval will be no less 
than 100 milliseconds and no more than one second. See id. The 
proposed Response Time Interval provisions are the same as the 
Response Time Interval provisions for the Single-Leg CUBE Auction. 
See Exchange Rule 971.1NY(c)(2)(B).
    \28\ See proposed Exchange Rule 971.2NY(c)(1)(C).
    \29\ A Complex GTX Order will not be displayed on the 
Consolidated Book or disseminated to any participants, and a Complex 
GTX Order that is not fully executed will be cancelled at the 
conclusion of the Auction. Complex GTX Orders with a size greater 
than the size of the Complex CUBE Order will be capped at the size 
of the Complex CUBE Order. Complex GTX Orders may be cancelled or 
modified, and a Complex GTX Order on the same side of the market as 
the CUBE Order will be rejected. See proposed Exchange Rule 
971.2NY(c)(1)(C)(i). NYSE American notes that because Complex GTX 
Orders can only trade against a Complex CUBE Order or an unrelated 
order on the same side as the Complex CUBE Order, same-side Complex 
GTX Orders are unnecessary to the Complex CUBE Auction. See Notice, 
83 FR at 9774.
    \30\ See proposed Exchange Rule 971.2NY(c)(1)(C)(ii).
    \31\ See Notice, 83 FR at 9775. NYSE American notes that quotes 
and orders in the leg markets for a complex strategy underlying a 
Complex CUBE Order will not be eligible to participate in the 
Auction, although updates to the leg markets may cause an Auction to 
conclude early to preserve the priority of interest at that price. 
NYSE American states that limiting participation in the Complex CUBE 
Auction to Complex Orders, but allowing certain updates to the leg 
markets to cause an Auction to conclude early, is consistent with 
the manner in which the Exchange treats interest in the COA process, 
as described in Exchange Rule 980NY(e)(7)(B). See id.
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D. Early Termination of a Complex CUBE Auction

    An Auction will conclude at the end of the Response Time Interval 
unless there is a trading halt in any component series of the Complex 
CUBE Order or an early conclusion event, as provided in proposed 
Exchange Rule 971.2NY(c)(3).\32\ NYSE American states that ending the 
Auction early, as provided in proposed Exchange Rule 971.2NY(c)(3), 
will preserve the priority of incoming interest and allow a Complex 
CUBE Auction to operate seamlessly with the Consolidated Book.\33\ 
Proposed Exchange Rule 971.2NY(c)(3) provides that an Auction will 
conclude early if, during the Response Time Interval:
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    \32\ See proposed Exchange Rule 971.2NY(c)(2).
    \33\ See Notice, 83 FR at 9776.
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    (A) The Exchange receives a new Complex CUBE Order in the same 
complex order strategy that meets the conditions of proposed Exchange 
Rule 971.2NY(b);
    (B) the Exchange receives interest that adjusts the same-side CUBE 
BBO to be better than the initiating price;
    (C) the Exchange receives interest that adjusts the same-side CUBE 
BBO to cross any RFR Response(s);
    (D) the Exchange receives interest that adjusts the same-side CUBE 
BBO to cross the single stop price specified by the Initiating 
Participant;
    (E) the Exchange receives interest that crosses the same-side CUBE 
BBO; or
    (F) the Exchange receives interest in the leg market that causes 
the contra-side CUBE BBO to be better than the stop price or auto-match 
limit price.

E. Allocations at the Conclusion of a Complex CUBE Auction

    Proposed Exchange Rule 971.2NY(c)(4) describes the allocation of 
trading interest at the conclusion of an Auction. NYSE American notes 
that if RFR Responses can fill the Complex CUBE Order at a price or 
prices better than the stopped price or auto-match limit price, the 
Complex CUBE Order will be matched against the better-priced RFR 
Responses to provide the Complex CUBE Order the maximum amount of price 
improvement possible.\34\ If there are no RFR Responses, a Complex 
Contra Order with a single stop price will execute against the Complex 
CUBE Order at the stop price, and a Complex Contra Order with an auto-
match limit price will execute against the Complex CUBE Order at the 
initiating price.\35\ If there

[[Page 27064]]

are RFR Responses, any Customer orders that arrive during an Auction as 
RFR Responses will have first priority to execute at each price level, 
and they will be allocated on a size pro rata basis pursuant to 
Exchange Rule 964NY(b)(3).\36\ After Customer interest at a price level 
has been satisfied, any remaining size of a Complex CUBE Order will be 
allocated first to RFR Responses within the permissible range of 
executions that are priced better than the stop price or the auto-match 
limit price, as applicable.\37\ The allocation of any remaining size of 
the Complex CUBE Order varies, depending on whether the Complex Contra 
Order has a single stop price \38\ or an auto-match limit price.\39\
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    \34\ See id.
    \35\ See proposed Exchange Rules 971.2NY(c)(4)(B)(i)(c) and 
(ii)(c).
    \36\ See proposed Exchange Rule 971.2NY(c)(4)(A). Any RFR 
Response that exceeds the size of the Complex CUBE Order will be 
capped at the Complex CUBE Order size for purposes of size pro rata 
allocation of the Complex CUBE Order. See proposed Exchange Rule 
971.2NY(c)(4). In addition, a single RFR Response will not be 
allocated a volume that is greater than its size. See proposed 
Exchange Rule 971.2NY(c)(4)(C).
    \37\ See proposed Exchange Rules 971.2NY(c)(4)(B)(i)(a) and 
(ii)(a). The Complex CUBE Order will be allocated among RFR 
Responses pursuant to the size pro rata algorithm in Exchange Rule 
964NY(b)(3) at each price point. See id.
    \38\ For a Complex Contra Order with a single stop price, the 
remaining size of the Complex CUBE Order will execute at the stop 
price, and the Complex Contra Order will receive an allocation of 
the greater of 40% of the original Complex CUBE Order size or one 
contract, or the greater of 50% of the original Complex CUBE Order 
size or one contract if there is only one RFR Response. Any 
remaining size of the Complex CUBE Order at the stop price will be 
allocated among the remaining RFR Responses on a size pro rata basis 
pursuant to Exchange Rule 964NY(b)(3). If all RFR Responses are 
filled, any remaining size of the Complex CUBE Order will be 
allocated to the Complex Contra Order. See proposed Exchange Rule 
971.2NY(c)(4)(B)(i)(b).
    \39\ For a Complex Contra Order with an auto-match limit price, 
the remaining size of the Complex CUBE Order will execute at the 
Complex Contra Order's auto-match limit price and, if volume 
remains, at prices worse than the auto-match limit price. At each 
price point equal to or worse than the auto-match limit price, the 
Complex Contra Order will receive an allocation equal to the 
aggregate size of all other RFR Responses starting with the best 
price at which an execution against an RFR Response occurs within 
the range of permissible executions until a price point is reached 
where the balance of the CUBE Order can be fully executed (the 
``clean-up price''). At the clean-up price, if there is sufficient 
size of the Complex CUBE Order still available after executing at 
better prices or against Customer interest, the Complex Contra Order 
will be allocated additional volume required to achieve an 
allocation of the greater of 40% of the original Complex CUBE Order 
size or one contract or the greater of 50% of the original Complex 
CUBE Order size or one contract if there is only one RFR Response. 
If the Complex Contra Order meets its allocation guarantee at a 
price better than the clean-up price, it will cease matching RFR 
Responses that may be priced worse than the price at which the 
Complex Contra Order received its allocation guarantee. If there are 
other RFR Responses at the clean-up price, the remaining size of the 
Complex CUBE Order will be allocated to such interest pursuant to 
the size pro rata algorithm set forth in Rule 964NY(b)(3). Any 
remaining portion of the Complex CUBE Order will be allocated to the 
Complex Contra Order at the initiating price. See proposed Exchange 
Rule 971.2NY(c)(4)(B)(ii)(b).
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F. Concurrent Single-Leg and Complex CUBE Auctions

    Although there will be only one Complex CUBE Auction at a time for 
a particular Complex Order strategy, a Single-Leg CUBE Auction for a 
series may occur concurrently with a Complex CUBE Auction for a 
strategy that includes that series, as provided in proposed Exchange 
Rules 971.1NY, Commentary .01, and 971.2NY, Commentary .03.\40\ Thus, 
the Exchange will accept orders designated for the CUBE on a single 
option series when a Complex CUBE Auction in a Complex Order strategy 
that includes that series is in progress.\41\ The Exchange will also 
accept Complex Orders designated for the Complex CUBE Auction when a 
Single-Leg CUBE Auction in any of the component series is in 
progress.\42\ The Exchange believes that providing for these concurrent 
auctions could reduce the potential for an Auction to be terminated 
early by other incoming orders designated for CUBE in the same single 
options series and that this could, in turn, reduce order 
cancelations.\43\
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    \40\ The proposed rules indicate that to the extent that Single-
Leg and Complex CUBE Auctions involving the same option series occur 
concurrently, each CUBE Auction will be processed sequentially based 
on the time each CUBE Auction commenced. At the time each CUBE 
Auction concludes, including when it concludes early, it will be 
processed pursuant to Exchange Rule 971.1NY(c)(5) or proposed 
Exchange Rule 971.2NY(c)(4), as applicable. See proposed Exchange 
Rules 971.1NY, Commentary .01, and 971.2NY, Commentary .03.
    \41\ See Notice, 83 FR at 9780.
    \42\ See id.
    \43\ See Amendment No. 1.
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G. Conduct Inconsistent With Just and Equitable Principles of Trade

    NYSE American also proposes to adopt rules identifying conduct that 
would be considered inconsistent with just and equitable principles of 
trade with respect to a Complex CUBE Auction to discourage ATP Holders 
from attempting to misuse or manipulate the Auction process.\44\ NYSE 
American notes that proposed Exchange Rule 971.2NY, Commentary .01 is 
based on Exchange Rule 971.1NY, Commentary, 02 relating to the Single-
Leg CUBE, and is consistent with the rules of other options exchanges 
that offer electronic price improvement auction mechanisms.\45\
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    \44\ See proposed Exchange Rule 971.2NY, Commentary .01, and 
Notice, 83 FR at 9777. Proposed Exchange Rule 971.2NY, Commentary 
.01 provides that the following conduct would be inconsistent with 
just and equitable principles of trade: (a) An ATP Holder entering 
RFR Responses to an Auction for which the ATP Holder is the 
Initiating Participant; (b) engaging in a pattern and practice of 
trading or quoting activity for the purpose of causing an Auction to 
conclude before the end of the Response Time Interval; (c) an 
Initiating Participant that breaks up an agency order into separate 
Complex CUBE Orders for the purpose of gaining a higher allocation 
percentage than the Initiating Participant would have otherwise 
received in accordance with the allocation procedures contained in 
proposed Exchange Rule 971.2NY(c)(5); and (d) engaging in a pattern 
and practice of sending multiple RFR Responses at the same price 
that in the aggregate exceed the size of the Complex CUBE Order.
    \45\ See id. at 9777 n.47 (citing PHLX Rule 1087(c)-(e); ISE 
Rule 723, Supplementary Material .01; and BOX Rule 7150, IM-7150-
2(a) and (b)). NYSE American also proposes to correct a 
typographical error in Exchange Rule 971.1NY, Commentary .02, by 
adding the word ``of'' to the rule text, which was inadvertently 
omitted.
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H. Order Exposure Requirements

    Current Exchange Rule 935NY prohibits Users \46\ from executing as 
principal any orders they represent as agent unless (i) agency orders 
are first exposed on the Exchange for at least one second; (ii) the 
User has been bidding or offering on the Exchange for at least one 
second prior to receiving an agency order that is executable against 
such bid or offer; (iii) the User utilizes the Single-Leg CUBE Auction 
pursuant to Exchange Rule 971.1.NY; or (iv) the User utilizes the COA 
auction process pursuant to Exchange Rule 980NY(e). NYSE American 
proposes to amend Exchange Rule 935NY to provide that a User may 
execute as principal an order that the User represents as agent, 
provided that the User utilizes the Complex CUBE Auction process. Such 
a Complex CUBE Order would not be subject to the one-second order 
exposure requirement of Exchange Rule 935NY.\47\ NYSE American believes 
that the proposed Response Time Interval, with a random length of no 
less than 100 milliseconds and no greater than one second (as 
determined and announced by the Exchange), is of sufficient length to 
permit ATP Holders time to respond to a Complex CUBE Auction, thereby 
enhancing opportunities for competition among participants and 
increasing the likelihood of price improvement for the Complex CUBE 
Order.\48\
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    \46\ A User is any ATP Holder that is authorized to obtain 
access to the System. See Exchange Rule 900.2NY(87).
    \47\ See Notice, 83 FR at 9778.
    \48\ See id.
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I. Changes to the Single-Leg CUBE Auction and COA Rules

    The proposal revises the title of Exchange Rule 971.1NY to 
``Single-Leg

[[Page 27065]]

Electronic Cross Transactions,'' to distinguish Exchange Rule 971.1NY 
from proposed Exchange Rule 971.2NY, ``Complex Electronic Cross 
Transactions.'' The proposal revises also revises Exchange Rule 971.1NY 
to indicate, as discussed above, that an Initiating Participant that 
solicits interest to trade with a Single-Leg CUBE Order may solicit 
only non-Customer interest to be the Contra Order.\49\ In addition, the 
proposal amends Exchange Rule 971.1NY to clarify that the Contra Order 
will trade solely with the CUBE Order and to indicate that a CUBE Order 
and Contra Order submitted during a trading halt will be rejected.\50\ 
The proposal revises the auto-match provisions in Exchange Rule 
971.1NY(c)(1)(C) to indicate that the auto-match limit price for a CUBE 
Order that is outside of the range of permissible executions may be 
repriced so that it is within the range of permissible executions.\51\ 
The proposal modifies Exchange Rule 971.1NY(c)(2)(i)(d) to indicate 
that a GTX Order may be modified, as well as cancelled. Finally, as 
discussed above, the proposal adds new Commentary .01 to Exchange Rule 
971.1NY, which addresses concurrent CUBE Auctions for a single option 
series and for a Complex Order that includes that series.
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    \49\ See Exchange Rule 971.1NY(a). Alternatively, the Contra 
Order may represent principal interest.
    \50\ See Exchange Rule 971.1NY(a) and proposed Exchange Rule 
971.1NY(b)(10).
    \51\ In particular, NYSE American proposes to specify in 
Exchange Rule 971.1NY(c)(1)(C) that it would adjust the auto-match 
limit price to within the range of permissible executions by adding 
a new sentence stating that: ``An auto-match limit price specified 
for a CUBE Order to buy (sell) that is below (above) the lower 
(upper) bound of the range of permissible executions will be 
repriced to the lower (upper) bound.'' See Notice, 83 FR at 9773.
---------------------------------------------------------------------------

    The proposal also amends Exchange Rule 980NY(e)(6)(A) and (B) to 
indicate that incoming Complex CUBE Orders are among the incoming 
Complex Orders that could cause a COA Auction to end early.\52\ The 
Exchange notes that this is consistent with the principle that the 
Exchange will conduct only one auction in a given Complex Order 
strategy at a time, as provided in proposed Exchange Rule 971.2NY(c) 
and Exchange Rule 980NY(e)(3).\53\
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    \52\ Exchange Rule 980NY(e)(6)(A)(i), as amended by the current 
proposal, will provide that an incoming Complex Order, including an 
incoming Complex CUBE Order, or a COA-eligible order on the opposite 
side of the market as the initiating COA-eligible order, that locks 
or crosses the initial Derived BBO will cause the COA to end early. 
Exchange Rule 980NY(e)(6)(B)(i), as amended by the current proposal, 
will provide that an incoming Complex Order, including a Complex 
CUBE Order, or COA-eligible order that is priced equal to or lower 
(higher) than the initiating COA-eligible order to buy (sell), and 
also locks or crosses the contra-side initial Derived BBO, will 
cause the COA to end early. As noted above, the proposal also 
revises Exchange Rule 980NY(e)(6) to replace references to the 
``Complex BBO'' with references to the ``Derived BBO.''
    \53\ See Amendment No. 1.
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J. Additional Changes

    The proposal revises the definition of ``Professional Customer'' in 
Exchange Rule 900.2NY(18A) to add the Complex CUBE Auction provisions 
in proposed Exchange Rule 971.2NY to the existing list of Exchange 
rules for which a Professional Customer will be treated in the same 
manner as a Broker/Dealer (or non-Customer) in securities. NYSE 
American notes that this is consistent with the treatment of 
Professional Customer Orders in the Single-Leg CUBE Auction.\54\ NYSE 
American also proposes to add Commentary .02 to proposed Exchange Rule 
971.2NY to further explain the defined terms used in proposed Rule 
971.2NY.\55\ NYSE American believes that these definitions will help to 
clarify how the Auction will operate.\56\
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    \54\ See Notice, 83 FR at 9780, and Exchange Rule 900.2NY(18A).
    \55\ Proposed Exchange Rule 971.2NY, Commentary .02 provides 
definitions and examples of ``better-priced'' and ``more 
aggressive'' interest, and ``worse-priced'' and ``less aggressive'' 
interest; interest that ``improves the BBO;'' interest that 
``locks'' contra-side interest; interest that ``crosses'' contra-
side interest; and ``executable'' interest. The Exchange notes that 
the definitions use the term ``interest'' because they apply to any 
interest that could interact with a Complex Order, including quotes 
and orders in the leg markets that comprise the complex order 
strategy. See Notice, 83 FR at 9771.
    \56\ See id.
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K. Implementation

    NYSE American will announce the implementation date of the proposed 
rule change in a Trader Update to be published no later than 60 days 
following Commission approval of the proposal.\57\ The implementation 
date would be no later than 60 days following publication of the Trader 
Update announcing Commission approval.\58\ The Exchange believes that 
this implementation schedule will provide ATP Holders with adequate 
notice of the Complex CUBE Auction and allow time for ATP Holders that 
intend to participate in Complex CUBE Auctions to prepare their systems 
for participation in the Auctions.\59\
---------------------------------------------------------------------------

    \57\ See id. at 9779.
    \58\ See id.
    \59\ See id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 1, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\60\ In particular, the 
Commission finds that the proposed rule change, as modified by 
Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\61\ 
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 
regulating, clearing, settling, processing information with respect to, 
and 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; and not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \60\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \61\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that NYSE American's Complex CUBE Auction 
mechanism is similar to rules on other options exchanges that permit 
the entry of complex orders into an electronic price improvement 
auction mechanism.\62\ In addition, NYSE American states that the 
Complex CUBE Auction will operate in a manner that is substantially 
similar to the Single-Leg CUBE Auction, with differences to account for 
the different processing of and priority rules for Complex Orders.\63\ 
The Commission believes that allowing ATP Holders to enter orders into 
the Complex CUBE Auction mechanism may provide additional opportunities 
for Complex Orders to receive price improvement.
---------------------------------------------------------------------------

    \62\ See, e.g., Phlx Rule 1080(n); MIAX Rule 515A, 
Interpretation and Policy .12(a); CBOE Rule 6.74A; BOX Rule 7245; 
and ISE Rule 723, Supplementary Material .09.
    \63\ See Notice, 83 FR at 9769.
---------------------------------------------------------------------------

    The Commission notes that Initiating Participant must enter a 
Complex CUBE Order with a net debit/credit price that is equal to or 
better than the same-side CUBE BBO (i.e., the more aggressive of the 
Complex BBO improved by $0.01 or the Derived BBO improved by $0.01 
multiplied by the smallest leg of the complex order strategy), and that 
the Initiating Participant must submit a Complex Contra Order for the 
full size of the Complex CUBE Order.\64\ Once the Complex CUBE Auction 
begins, the Complex CUBE Order and the Complex

[[Page 27066]]

Contra Order may not be cancelled or modified.\65\ Therefore, a Complex 
CUBE Order submitted to the Complex CUBE Auction will be guaranteed 
price improvement over the Complex BBO or the Derived BBO at the time 
the Complex CUBE Order was entered into the System, and will be given 
an opportunity for further price improvement by being exposed to ATP 
Holders during the Complex CUBE Auction.
---------------------------------------------------------------------------

    \64\ See proposed Exchange Rules 971.2NY(b)(2) and (a)(1).
    \65\ See proposed Exchange Rule 971.2NY(c).
---------------------------------------------------------------------------

IV. Section 11(a) of the Act

    Section 11(a)(1) of the Act \66\ prohibits a member of a national 
securities exchange from effecting transactions on that exchange for 
its own account, the account of an associated person, or an account 
over which it or its associated person exercises discretion 
(collectively, ``covered accounts''), unless an exception applies. 
Section 11(a)(1) and the rules thereunder contain a number of 
exceptions for principal transactions by members and their associated 
persons, including the exceptions set forth in Rule 11a2-2(T) under the 
Act.\67\ The Exchange has represented that it has analyzed its rule 
proposed hereunder, and believes that they are consistent with the 
requirements of Section 11(a) of the Act and rules thereunder.\68\ For 
the reason set forth below, the Commission believes that the proposed 
Complex CUBE Auction rules are consistent with the requirements of 
Section 11(a) of the Act and the rules thereunder.
---------------------------------------------------------------------------

    \66\ 15 U.S.C. 78k(a)(1).
    \67\ 17 CFR 240.11a2-2(T).
    \68\ See Notice, 83 FR at 9778-79, and Amendment No. 1.
---------------------------------------------------------------------------

A. Rule 11a2-2(T) Under the Act (``Effect Versus Execute'' Rule)

    Rule 11a2-2(T) under the Act,\69\ known as the ``effect versus 
execute'' rule, provides exchange members with an exception from the 
Section 11(a)(1) prohibition. Rule 11a2-2(T) permits an exchange 
member, subject to certain conditions, to effect transactions for 
covered accounts by arranging for an unaffiliated member to execute the 
transactions on the exchange. To comply with the conditions of Rule 
11a2-2(T), a member: (1) May not be affiliated with the executing 
member; (2) must transmit the order from off the exchange floor; (3) 
may not participate in the execution of the transaction once it has 
been transmitted to the member performing the execution; \70\ and (4) 
with respect to an account over which the member has investment 
discretion, neither the member nor its associated person may retain any 
compensation in connection with effecting the transaction except as 
provided in the Rule. The Exchange believes that orders sent by off-
floor ATP Holders, for covered accounts, to the proposed Complex CUBE 
Auction would qualify for this ``effect versus execute'' exception.\71\
---------------------------------------------------------------------------

    \69\ Id.
    \70\ The member may, however, participate in clearing and 
settling the transaction. See Securities Exchange Act Release No. 
14563 (March 14, 1978), 43 FR 11542 (March 17, 1978) (regarding the 
Designated Order Turnaround System of the New York Stock Exchange 
(``1978 Release'')).
    \71\ See Notice, 83 FR at 9778.
---------------------------------------------------------------------------

    Rule 11a2-2(T) requires that the order be executed by an exchange 
member who is unaffiliated with the member initiating the order. The 
Commission has stated that the requirement is satisfied when automated 
exchange facilities, such as the Exchange's Complex CUBE Auction, are 
used, as long as the design of these systems ensures that members do 
not possess any special or unique trading advantages in handling their 
orders after transmitting them to the Exchange.\72\ The Exchange 
represents that the design of the Complex CUBE Auction ensures that ATP 
Holders do not have any special or unique trading advantages in the 
handling of their orders after transmission.\73\ Based on the 
Exchange's representations, the Commission believes that the Complex 
CUBE Auction's rules satisfy this requirement.
---------------------------------------------------------------------------

    \72\ In considering the operation of automated execution systems 
operated by an exchange, the Commission has noted that, while there 
is no independent executing exchange member, the execution of an 
order is automatic once it has been transmitted into each system. 
Because the design of these systems ensures that members do not 
possess any special or unique trading advantages in handling their 
orders after transmitting them to the exchange, the Commission has 
stated that executions obtained through these systems satisfy the 
independent execution requirement of Rule 11a2-2(T). See Securities 
Exchange Act Release No. 15533 (January 29, 1979), 44 FR 6084 
(January 31, 1979) (regarding the American Stock Exchange's Post 
Execution Reporting System and Switching System, the Intermarket 
Trading System, the Multiple Dealer Trading Facility of the 
Cincinnati Stock Exchange, the PCX Communications and Execution 
System, and the Philadelphia Stock Exchange Automated Communications 
and Execution System (``1979 Release'')).
    \73\ See Notice, 83 FR at 9779.
---------------------------------------------------------------------------

    Second, Rule 11a2-2(T) requires orders for covered accounts be 
transmitted from off the exchange floor. The Exchange represents that 
orders for covered accounts sent to the Complex CUBE Auction from off-
floor ATP Holders will be transmitted from remote terminals directly to 
the Complex CUBE Auction by electronic means.\74\ In the context of 
other automated trading systems, the Commission has found that the off-
floor transmission requirement is met if a covered account order is 
transmitted from a remote location directly to an exchange's floor by 
electronic means.\75\ With respect to such orders transmitted 
electronically from remote terminals directly to the Complex CUBE 
Auction, the Commission believes that the Complex CUBE Auction's rules 
satisfy the off- floor transmission requirement.\76\ The Commission 
believes that, based on the foregoing, the proposal satisfies the off-
floor transmission requirement for the purposes of ``effect versus 
execute'' rule.
---------------------------------------------------------------------------

    \74\ See id. at 9778.
    \75\ See, e.g., Securities Exchange Act Release Nos. 59154 
(December 23, 2008), 73 FR 80468 (December 31, 2008) (SR-BSE-2008-
48) (approving, among other things, the equity rules of the Boston 
Stock Exchange (``BSE'')); 57478 (March 12, 2008), 73 FR 14521 
(March 18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-080) 
(approving rules governing the trading of options on The NASDAQ 
Options Market); 49068 (January 13, 2004), 69 FR 2775 (January 20, 
2004) (SR-BSE-2002-15) (approving the Boston Options Exchange as an 
options trading facility of BSE); the 1979 Release; and the 1978 
Release.
    \76\ The Exchange further represents that there may be instances 
of orders for a covered account that may be sent by an off-floor ATP 
Holder to an unaffiliated Floor Broker for entry into the Complex 
CUBE Auction mechanism. The Exchange represents that at the current 
time, Exchange-sponsored Floor Broker systems are not enabled to 
accept orders into the Complex CUBE Auction mechanism from Floor 
Brokers. The Exchange further represents that, if a Floor Broker 
were to gain access to the Complex CUBE Auction mechanism via a 
third-party system, that Floor Broker may not rely on any exceptions 
found in Section 11(a) of the Act or rules thereunder to enter 
orders for their own covered accounts into the Auction mechanism 
from on the floor, or transmit such orders from on the floor to off 
of the floor for entry into the Complex CUBE Auction mechanism. See 
Amendment No. 1.
---------------------------------------------------------------------------

    Third, Rule 11a2-2(T) requires that the member not participate in 
the execution of its order once it has been transmitted to the member 
performing the execution. The Exchange represents that, upon submission 
to the Complex CUBE Auction, an order will be executed automatically 
pursuant to the proposed rules set forth for the Auction.\77\ The 
Exchange states that, in particular, execution of an order sent to the 
Auction depends not on the ATP Holder entering the order, but rather on 
what other orders are present and the priority of those orders. Thus, 
at no time following the submission of an order is an ATP Holder able 
to acquire control or influence over the result or timing of order 
execution.\78\ Accordingly, the Commission believes that an ATP Holder 
does not participate in the execution of an order submitted into the

[[Page 27067]]

Complex CUBE Auction. Based on the Exchange's representations, the 
Commission believes that the proposal satisfies the non-participation 
requirement of Rule 11a2-2(T).
---------------------------------------------------------------------------

    \77\ See Notice, 83 FR at 9778-79.
    \78\ See Notice, 83 FR at 9779. The Exchange notes that the 
Initiating Participant may not cancel or modify a Complex CUBE Order 
once a Complex CUBE Auction has started. See id. at 9779 n.60 and 
proposed Exchange Rule 971.2NY(c).
---------------------------------------------------------------------------

    Fourth, in the case of a transaction effected for an account with 
respect to which the initiating member or an associated person thereof 
exercises investment discretion, neither the initiating member nor any 
associated person thereof may retain any compensation in connection 
with effecting the transaction, unless the person authorized to 
transact business for the account has expressly provided otherwise by 
written contract referring to Section 11(a) of the Act and Rule 11a2-
2(T).\79\ The Commission notes that ATP Holders trading for covered 
accounts over which they exercise investment discretion must comply 
with this condition in order to rely on the rule's exemption.
---------------------------------------------------------------------------

    \79\ 17 CFR 240.11a2-2(T)(a)(2)(iv). In addition, Rule 11a2-
2(T)(d) requires a member or associated person authorized by written 
contract to retain compensation, in connection with effecting 
transactions for covered accounts over which such member or 
associated person thereof exercises investment discretion, to 
furnish at least annually to the person authorized to transact 
business for the account a statement setting forth the total amount 
of compensation retained by the member in connection with effecting 
transactions for the account during the period covered by the 
statement. See 17 CFR 240.11a2-2(T)(d). See also 1978 Release 
(stating ``[t]he contractual and disclosure requirements are 
designed to assure that accounts electing to permit transaction-
related compensation do so only after deciding that such 
arrangements are suitable to their interests'').
---------------------------------------------------------------------------

V. Solicitation of Comments on Amendment No. 1 to the Proposed Rule 
Change

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 1 is consistent with the 
Act. Comments may be submitted by any of the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#5b292e373e76383436363e352f281b283e38753c342d"><span class="__cf_email__" data-cfemail="651710090048060a0808000b1116251600064b020a13">[email protected]</span></a>. Please include 
File Number SR-NYSEAMER-2018-05 on the subject line.

Paper Comments

    <bullet> 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-NYSEAMER-2018-05. 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 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. 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-NYSEAMER-2018-05, and should be 
submitted on or before July 2, 2018.

VI. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 1, prior to the thirtieth day 
after the date of publication of notice of the filing of Amendment No. 
1 in the Federal Register. As discussed above, Amendment No. 1 revises 
the proposal to: (1) Add Exchange Rules 971.1NY, Commentary .01, and 
971.2NY, Commentary .03 to specify that a Single-Leg CUBE Auction for a 
single series may occur concurrently with a Complex CUBE Auction for a 
Complex Order that includes that series, and to describe the processing 
of such concurrent auctions; (2) add definitions of ``single stop 
price'' and ``auto-match limit price,'' add examples to the defined 
terms in proposed Exchange Rule 971.2NY, Commentary .02, and clarify 
that in both the Single-Leg and Complex CUBE Auctions, a Contra Order 
will trade solely with the CUBE Order; (3) indicate that after the 
Complex CUBE Order has been filled, RFR Responses, including Complex 
GTX Orders, may trade with Complex Orders on the same side of the 
market as the Complex CUBE Order; (4) further explain the rationale for 
not allowing customer interest on a Contra Order; (5) further explain 
the reasons for early Auction terminations when the same-side CUBE BBO 
crosses RFR Responses or a single stop price; (6) provide an example 
showing the allocation of a Complex CUBE Order guaranteed with an auto-
match limit price; (7) modify the description of the proposed changes 
to Exchange Rules 980NY(e)(6)(A) and (B); and (8) provide further 
support for the Exchange's argument that the proposal is consistent 
with Section 11(a) of the Act and the rules thereunder.
    With respect to the processing of Single-Leg and Complex CUBE 
Auctions, NYSE American believes that the new rule language describing 
the sequential processing of these auctions is consistent with the 
handling by Cboe EDGX Exchange, Inc. (``EDGX'') of orders executed in 
concurrent complex order auctions (``COAs'') involving the same complex 
order strategy.\80\ Thus, NYSE American believes that its proposed 
rules describing the processing of Single-Leg and Complex CUBE Auctions 
do not raise new or novel regulatory issues.\81\ NYSE American also 
notes that none of the proposed changes that provide additional details 
regarding the operation of the Single-Leg and Complex CUBE Auctions 
alter the functionality of the proposed Complex CUBE mechanism (or 
Single-Leg CUBE), as described in the original filing, but rather, 
provide additional details regarding the operation of the Auctions.\82\ 
In addition, the Commission believes that Amendment No. 1 provides 
additional clarity in the rule text and additional analysis of several 
aspects of the proposal, thus facilitating the Commission's ability to 
make the findings set forth above to approve the proposal. For these 
reasons, the Commission finds good cause, pursuant to Section 19(b)(2) 
of the Act,\83\ to approve the proposed rule change, as modified by 
Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \80\ See Amendment No. 1. See also EDGX Rule 21.20, 
Interpretation and Policy .02. Although the EDGX COA Auction is 
distinct from the CUBE Auctions in that the EDGX COA Auction is not 
an auction of paired orders, NYSE American believes that its 
proposed rules describing the sequential processing of Single-Leg 
and Complex CUBE Auctions are consistent with the sequential 
processing of COAs described in EDGX's rules. See Amendment No. 1.
    \81\ See id.
    \82\ See id.
    \83\ 15 U.S.C. 78s(b)(2).

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[[Page 27068]]

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\84\ that the proposed rule change (SR-NYSEAMER-2018-05), as 
modified by Amendment No. 1, is approved on an accelerated basis.
---------------------------------------------------------------------------

    \84\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\85\
---------------------------------------------------------------------------

    \85\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12432 Filed 6-8-18; 8:45 am]
 BILLING CODE 8011-01-P


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