[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)]
[Notices]
[Pages 31234-31236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14286]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83540; File No. SR-NYSE-2018-29]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Pilot Period for the Exchange's Retail Liquidity Program 
Until December 31, 2018

June 28, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 20, 2018, New York Stock Exchange LLC (``NYSE'' or 
``Exchange''), filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
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\ 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 extend the pilot period for the Exchange's 
Retail Liquidity Program (the ``Retail Liquidity Program'' or the 
``Program''), which is currently scheduled to expire on June 30, 2018, 
until the earlier of approval of the filing to make the Program 
permanent or December 31, 2018. 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.

[[Page 31235]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend the pilot period for the Retail 
Liquidity Program, currently scheduled to expire on June 30, 2018,\3\ 
until the earlier of approval of the filing to make the Program 
permanent or December 31, 2018.
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    \3\ See Securities Exchange Act Release No. 82230 (December 7, 
2017), 82 FR 58667 (December 13, 2017) (SR-NYSE-2017-64).
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Background
    In July 2012, the Commission approved the Retail Liquidity Program 
on a pilot basis.\4\ The Program is designed to attract retail order 
flow to the Exchange, and allows such order flow to receive potential 
price improvement. The Program is currently limited to trades occurring 
at prices equal to or greater than $1.00 per share. Under the Program, 
Retail Liquidity Providers (``RLPs'') are able to provide potential 
price improvement in the form of a non-displayed order that is priced 
better than the Exchange's best protected bid or offer (``PBBO''), 
called a Retail Price Improvement Order (``RPI''). When there is an RPI 
in a particular security, the Exchange disseminates an indicator, known 
as the Retail Liquidity Identifier, indicating that such interest 
exists. Retail Member Organizations (``RMOs'') can submit a Retail 
Order to the Exchange, which would interact, to the extent possible, 
with available contra-side RPIs.
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    \4\ See Securities Exchange Act Release No. 67347 (July 3, 
2012), 77 FR 40673 (July 10, 2012) (SR-NYSE-2011-55) (``RLP Approval 
Order'').
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    The Retail Liquidity Program was approved by the Commission on a 
pilot basis. Pursuant to NYSE Rule 107C(m), the pilot period for the 
Program is scheduled to end on June 30, 2018.
Proposal To Extend the Operation of the Program
    The Exchange established the Retail Liquidity Program in an attempt 
to attract retail order flow to the Exchange by potentially providing 
price improvement to such order flow. The Exchange believes that the 
Program promotes competition for retail order flow by allowing Exchange 
members to submit RPIs to interact with Retail Orders. Such competition 
has the ability to promote efficiency by facilitating the price 
discovery process and generating additional investor interest in 
trading securities, thereby promoting capital formation. The Exchange 
believes that extending the pilot is appropriate because it will allow 
the Exchange and the Commission additional time to analyze data 
regarding the Program that the Exchange has committed to provide and 
consider the Exchange's filing to make the filing permanent.\5\ As 
such, the Exchange believes that it is appropriate to extend the 
current operation of the Program.\6\ Through this filing, the Exchange 
seeks to amend NYSE Rule 107C(m) \7\ and extend the current pilot 
period of the Program until the earlier of approval of the filing to 
make the Program permanent or December 31, 2018.
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    \5\ See id. at 40681; see also SR-NYSE-2018-28 (filing to make 
Rule 107C, which sets forth the Exchange's Retail Liquidity Program, 
permanent).
    \6\ Concurrently with this filing, the Exchange has submitted a 
request for an extension of the exemption under Regulation NMS Rule 
612 previously granted by the Commission that permits it to accept 
and rank the undisplayed RPIs. See Letter from Martha Redding, Asst. 
Corporate Secretary, NYSE Group, Inc. to Brent J. Fields, Secretary, 
Securities and Exchange Commission, dated June 14, 2018.
    \7\ The Exchange notes that the proposed amendment to Rule 
107C(m) would amend the current version of Rule 107C(m), which the 
Exchange also proposes to amend as part of the Exchange's filing to 
make Rule 107C permanent. See SR-NYSE-2018-28.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it 
is designed to promote just and equitable principles of trade, 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that extending the pilot period for the 
Retail Liquidity Program is consistent with these principles because 
the Program is reasonably designed to attract retail order flow to the 
exchange environment, while helping to ensure that retail investors 
benefit from the better price that liquidity providers are willing to 
give their orders. Additionally, as previously noted, the competition 
promoted by the Program may facilitate the price discovery process and 
potentially generate additional investor interest in trading 
securities. The extension of the pilot period will allow the Commission 
and the Exchange to continue to monitor the Program for its potential 
effects on public price discovery, and on the broader market structure.

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 proposed rule change 
simply extends an established pilot program for an additional six 
months, thus allowing the Retail Liquidity Program to enhance 
competition for retail order flow and contribute to the public price 
discovery process.

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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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, 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 \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and 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. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative

[[Page 31236]]

immediately. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest, because waiver would allow the pilot period to continue 
uninterrupted after its current expiration date of June 30, 2018, 
thereby avoiding any potential investor confusion that could result 
from temporary interruption in the pilot program. For this reason, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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 change 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

    <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#84f6f1e8e1a9e7ebe9e9e1eaf0f7c4f7e1e7aae3ebf2"><span class="__cf_email__" data-cfemail="aedcdbc2cb83cdc1c3c3cbc0daddeeddcbcd80c9c1d8">[email protected]</span></a>. Please include 
File Number SR-NYSE-2018-29 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-NYSE-2018-29. 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 offices 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-NYSE-2018-29, and should be submitted on 
or before July 24, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12), (59).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14286 Filed 7-2-18; 8:45 am]
 BILLING CODE 8011-01-P


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