Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 31585 

25 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4NMS Stock is defined in Rule 600 of Regulation 

NMS, 17 CFR 242.600(b)(47). 

5See, Securities Exchange Act Release No. 80214 

(March 10, 2017), 82 FR 14050 (March 16, 2017) 

(SR–NYSE–2016–44) (Approval Order) (‘‘NYSE ETP 

Listing Rules Filing’’). In connection with the 

Exchange’s implementation of Pillar for Tape B and 

C securities, NYSE filed several additional rule 

changes. See Securities Exchange Act Release Nos. 

76803 (December 30, 2015), 81 FR 536 (January 6, 

2016) (SR–NYSE–2015–67) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change); 

81225 (July 27, 2017), 82 FR 36033 (August 2, 2017) 

(SR–NYSE–2017–35) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change); 

and 82945 (March 26, 2018), 83 FR 13553 (March 

29, 2018) (SR–NYSE–2017–36) (Approval Order) 

(‘‘NYSE Trading Rules Filing’’). 

6See id. NYSE ETP Listing Rules Filing. 

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 MSRB. 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–MSRB–2018–05 and should 

be submitted on or before July 27,2018. 

For the Commission, pursuant to delegated 

authority.25

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14469 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83560; File No. SR–NYSE– 

2018–30] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Provide for the Listing of Exchange 

Traded Products With No Component 

NMS Stock Listed on the Exchange, 

Amend Its Rules Regarding Unlisted 

Trading Privileges, and Make 

Corresponding Changes 

June 29, 2018. 

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 June 15, 

2018, 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 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to to [sic] 

amend its rules to (1) provide for the 

listing of exchange traded products 

(‘‘ETPs’’) that do not have any 

component NMS Stock 4 that is listed on 

the Exchange or that is based on, or 

represents an interest in, an underlying 

index or reference asset that includes an 

NMS Stock listed on the Exchange; (2) 

delete certain redundant listing rules 

that would be superseded by these 

initial and continued listing and trading 

requirements for the listing of ETPs; and 

(3) make changes to its unlisted trading 

privileges (‘‘UTP’’) Rule 5.1(a)(2), as 

well as certain supplementary changes 

throughout Rules 5P and 8P, to conform 

to the rules of the Exchange’s affiliate, 

NYSE National, Inc. (‘‘NYSE National’’). 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

rules to provide for the listing of 

Exchange Traded Products (‘‘ETPs’’) 

that do not have any component NMS 

Stock that is listed on the Exchange or 

that is based on, or represents an 

interest in, an underlying index or 

reference asset that includes an NMS 

Stock listed on the Exchange; (2) delete 

certain redundant listing rules that 

would be superseded by these initial 

and continued listing and trading 

requirements for the listing of ETPs; and 

(3) make changes to its unlisted trading 

privileges (‘‘UTP’’) Rule 5.1(a)(2), as 

well as certain supplementary changes 

throughout Rules 5P and 8P, to conform 

to the rules of the Exchange’s affiliate, 

NYSE National, Inc. (‘‘NYSE National’’). 

Background 

Currently, the Exchange trades ETPs 

on an UTP basis only pursuant to Rules 

5P and 8P.5 In the NYSE ETP Listing 

Rules Filing, the Exchange represented 

that Rules 5P and 8P would contain 

initial and continued listing and trading 

requirements for ETPs, but that they 

would apply only to the trading 

pursuant to UTP of ETPs on the 

Exchange.6 Accordingly, the Exchange 

included preambles to both Rules 5P 

and 8P that provide that ‘‘the provisions 

of this Rule [5P/8P] shall apply to the 

trading pursuant to UTP of Exchange 

Traded Products on the Exchange. This 

Rule [5P/8P] shall not apply to the 

listing of Exchange Traded Products on 

the Exchange.’’ Rule 5.1(a)(1), which 

was adopted in the NYSE ETP Listing 

Rules Filing, further provides that ‘‘the 

provisions of Rules 5P and 8P that 

permit the listing of Exchange Traded 

Products would not be effective until 

the Exchange files a proposed rule 

change to amend its rules to comply 

with Rules 10A–3 and 10C–1 under the 

Exchange Act and to incorporate 

qualitative listing criteria, and such 

proposed rule change is approved by the 

Commission.’’ Because Rules 5P and 8P 

were designed to support the trading of 

ETPs on a UTP basis only, the Exchange 

did not change any of its rules relating 

to the listing of ETPs. 

Proposed Rule Changes To Provide for 

Listing of Certain ETPs 

The Exchange is proposing to list 

certain ETPs. Specifically, the Exchange 

proposes to list ETPs that meet the 

requirements of Rules 5P and 8P, 

provided such ETPs do not have any 

component NMS Stock that is listed on 

the Exchange or that is based on, or 

represents an interest in, an underlying 

index or reference asset that includes an 


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7The Exchange’s proposed rules for these 

products are substantially identical (other than with 

certain non-substantive and technical amendments) 

as the rules of NYSE Arca, Inc. (‘‘NYSE Arca’’) and 

the Exchange’s other affiliates, for the qualification, 

listing and trading of such products. See NYSE ETP 

Listing Rules Filing, supra note 5. 

8The rules of other exchanges that list ETPs do 

not contain such a clause. See, e.g., NYSE Arca Rule 

5.1–E(a) and Nasdaq Stock Market LLC Rule 5740. 

9The Exchange also proposes to delete the 

reference to Pillar Platform in the title of these 

rules. As proposed, the title for these rules would 

be ‘‘Rules 1P–13P.’’ 

10NYSE Listed Company Manual, http://

nysemanual.nyse.com/LCM/Sections/. 

11See Rule 10C–1(b)(5) under the Act allows 

national securities exchanges to exempt from the 

requirements of Rule 10C–1 certain categories of 

issuers, as the national securities exchange 

determines is appropriate, taking into 

consideration, among other relevant factors, the 

potential impact of such requirements on smaller 

reporting issuers. 

12See Securities Exchange Act Release No. 48745 

(November 4, 2003), 68 FR 64154 (November 12, 

2003) (SR–NYSE–2002–33). 

13As used in Rule 1400, the term ‘‘Debt Security’’ 

or ‘‘Debt Securities’’ means any unlisted note, bond, 

debenture or evidence of indebtedness that is: 

(1) Statutorily exempt from the registration 

requirements of Section 12(b) of the Act, or 

NMS Stock listed on the Exchange.7

ETPs listed on the Exchange would be 

a ‘‘Tape A’’ listing and would be traded 

pursuant to the rules applicable to 

NYSE-listed securities. To allow the 

Exchange to list these ETPs, the 

Exchange proposes the changes 

described below. 

To allow the listing of certain ETPs, 

the Exchange proposes to delete the 

preambles to Rules 5P and 8P, which 

currently state that the rules shall apply 

to the trading pursuant to UTP of ETPs 

only, and that the Rules shall not apply 

to the listing of ETPs on the Exchange. 

By deleting these preambles, the 

Exchange would be permitted to list 

ETPs that meet the initial and continued 

listing requirements in these Rules. 

Further, the Exchange proposes to add 

new preambles to Rules 5P and 8P that 

would state that the Exchange would 

not list any ETPs under either Rules 5P 

or 8P ‘‘that have any component NMS 

Stock that is listed on the Exchange or 

that is based on, or represents an 

interest in, an underlying index or 

reference asset that includes an NMS 

Stock listed on the Exchange.’’ 

In addition, because the Exchange 

proposes to list certain ETPs, it proposes 

to add text to the preamble to Rules 1P– 

13P that provides that Rules 5P and 8P, 

and related definitions in Rule 1P, 

would be applicable to listing of ETPs 

on the Exchange. 

The Exchange also proposes to amend 

Rule 5.1(a)(1), which is the Exchange’s 

general rule that allows the Exchange to 

extend UTP to any security that is an 

NMS Stock, as follows: 

• First, the Exchange proposes to 

delete the following clause: 

‘‘notwithstanding the requirements for 

listing set forth in the Rules.’’ This 

clause is no longer necessary because 

the Exchange is proposing to list 

securities under Rule 5P.8

• Second, because ETPs listed on the 

Exchange would not be traded on the 

Pillar platform at this time, the 

Exchange is proposing to delete the 

reference to ‘‘Pillar trading platform’’ 

and replace it with a reference to the 

‘‘Exchange.’’ Accordingly, any security 

listed or traded pursuant to UTP under 

Rule 5P would be subject to all 

Exchange trading rules applicable to 

securities trading on the Exchange.9

• Third, the Exchange proposes to 

delete the sentence in Rule 5.1(a)(1) that 

states that the Exchange may not list any 

ETPs. 

Finally, the Exchange proposes to add 

the words ‘‘Unlisted Trading Privileges’’ 

to the title of Rule 5.1, to better describe 

the provisions in that rule. 

Compliance With Rules 10A–3 and 

10C–1 Under the Act 

Rule 5.1(a)(1) currently includes a 

clause that states that the provisions of 

Rules 5P and 8P that permit the listing 

of Exchange Traded Products would not 

be effective until the Exchange files a 

proposed rule change to amend its rules 

to comply with Rules 10A–3 and 10C– 

1 under the Act and to incorporate 

qualitative listing criteria, and such 

proposed rule change is approved by the 

Commission. These Commission rules 

require exchanges to establish rules that 

require their listed companies’ audit 

and compensations committees meet 

specified standards. 

The Exchange implemented the 

requirements of Rules 10A–3 and 10C– 

1 under the Act by adding Section 303A 

to the NYSE Listed Company Manual 

(‘‘LCM’’).10 All NYSE-listed companies 

must comply with Section 303A, 

including any ETPs listed on the 

Exchange. Consistent with the 

requirements of the Sarbanes-Oxley Act 

of 2002 and Rules 10A–3 and 10C–1 of 

the Act, Section 303A does not apply to 

some listed companies.11 The 

Commission found that Section 303A of 

the LCM was consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange.12 Accordingly, the 

Exchange is proposing to delete the last 

sentence of Rule 5.1(a)(1). 

Deletion of Obsolete Listing Rules for 

ETPs 

The Exchange also proposes to delete 

certain listing rules that would be 

superseded by the ETP listing and 

trading requirements in Rules 5P and 

8P. 

As discussed above, the Exchange is 

proposing today to list certain ETPs 

under Rules 5P and 8P. In connection 

with this proposed change, the 

Exchange is also proposing to delete 

certain ETP listing rules that are not 

currently used. Because the Exchange 

only intends to list ETPs under Rules 5P 

and 8P, it proposes to delete the 

following rules: 

• Rule 414 (Index and Currency 

Warrants); 

• Rule 1100 (Investment Company 

Units); 

• Rules 1200–1202 (Trust Issued 

Receipts); 

• Rules 1300–1301 (Gold Shares); 

• Rules 1300A–1301A (Currency 

Trust Shares); and 

• Rules 1300B–1301B (Commodity 

Trust Shares). 

• LCM Section 703.15 (Foreign 

Currency Warrants and Currency Index 

Warrants); 

• LCM Section 703.16 (Investment 

Company Units); 

• LCM Section 703.17 (Stock Index 

Warrants Listing Standards); 

• LCM Section 703.20 (Trust Issued 

Receipts); 

• LCM Section 703.21 (Equity-Linked 

Debt Securities); and 

• LCM Section 703.22 (Equity IndexLinked Securities, Commodity-Linked 

Securities and Currency-Linked 

Securities). 

The Exchange is also proposing to 

make the following cross-reference 

changes to the rules of the Exchange to 

correspond to the above deletions: 

• First, the Exchange proposes to 

amend cross-references in 

Supplementary Material .30 to Rule 36 

because the initial and continued listing 

and trading standards and definitions 

for (1) Investment Company Units 

would now be described in Rule 

5.2(j)(3), not in Section 703.16 of the 

LCM and (2) Trust Issued Receipts 

would now be described in Rule 8.200, 

not in Rule 1200. Therefore, in 

Supplementary Material .30 to Rule 36, 

the Exchange is proposing to change the 

cross-reference to Section 703.16 of the 

LCM to Rule 5.2(j)(3), and the crossreference to Rule 1200 to Rule 8.200. 

• Second, the Exchange proposes to 

amend Rule 1400(2)(c) to reflect the 

deletion of Section 703.21 of the LCM. 

Rule 1400(2)(c) states that Debt 

Securities 13 do not include securities 


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(2) eligible to be traded absent registration under 

Section 12(b) of the Act pursuant to the order 

granted by the Securities and Exchange 

Commission in Exchange Act Release Number 34– 

54766 (November 16, 2006) (the ‘‘2006 Order’’). 

14Rule 1.1(bbb) defines the term ‘‘Exchange 

Traded Product’’ to mean a security that meets the 

definition of ‘‘derivative securities product’’ in Rule 

19b–4(e) under the Securities Exchange Act of 1934 

and a ‘‘UTP Exchange Traded Product to mean an 

Exchange Traded Product that trades on the 

Exchange pursuant to unlisted trading privileges. 

15See, Securities Exchange Act Release No. 83289 

(May 17, 2018), 83 FR 23968 (May 23, 2018) (SR– 

NYSENat–2018–02) (the ‘‘NYSE National Rule 

Filing’’). 

16 Id. 

17 Id. 

18 17 CFR 240.19b–4(e). 

19 17 CFR 240.12f–2. 

20Paragraph (D) of Rule 5.1(a)(2) would become 

paragraph (C) when paragraph (A) to Rule 5.1(a)(2) 

is deleted, and all the sub-paragraphs of Rule 

5.1(a)(2) are re-numbered accordingly, as described 

above. 

21FINRA conducts cross-market surveillances on 

behalf of the Exchange pursuant to a regulatory 

services agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 

that, if listed on the Exchange, would 

have been listed under Section 703.21 of 

the LCM (Equity-Linked Debt 

Securities). Since the Exchange is 

proposing to delete this section from the 

LCM, it is also proposing to delete all 

cross-references to it in Rule 1400(2)(c). 

Further, to account for the deletion of 

references to Section 703.21 of the LCM, 

which pertains to equity-linked debt 

securities, the Exchange proposes to 

clarify in Rule 1400(2)(c) that Debt 

Securities do not include equity-linked 

debt securities listed under Rule 5P. 

• Third, for the avoidance of doubt, 

the Exchange is also proposing to 

include the following introductory 

preamble language at the beginning of 

Section 7 of the LCM, which pertains to 

Listing Applications and currently 

includes the relevant ETP listing rules 

of the manual that the Exchange is 

proposing to delete: 

‘‘See Exchange Rules 5P and 8P for 

the initial and continued listing and 

trading requirements for Exchange 

Traded Products (as defined in Rule 

1.1(bbb)).’’ 14

Certain Changes To Conform Rules 5P 

and 8P to the Rules of NYSE National 

To conform the Exchange’s rules to 

that of its affiliate, NYSE National,15 the 

Exchange is proposing to delete all of 

the references in Rules 5P and 8P that 

would imply that the initial and 

continued listing standards contained in 

Rules 5P and 8P may apply to the 

trading pursuant to UTP of such ETPs. 

In the National Rule Filing, NYSE 

National stated that it does not believe 

that it is necessary for an exchange that 

trades securities on a UTP basis to have 

listing rules for ETPs.16 Accordingly, the 

Exchange proposes that clauses in Rules 

5P and 8P that would make the initial 

and continued listing standards 

contained in such rules apply not only 

to the listing of such ETPs, but also to 

the trading of such ETPs pursuant to 

UTP (such as the clause ‘‘whether by 

listing or pursuant to unlisted trading 

privileges’’ when referencing that such 

rule would apply to the listing of the 

relevant ETP or the trading pursuant to 

UTP of such ETP), be deleted. In 

conjunction therewith, the Exchange 

proposes to include the words ‘‘listing 

and’’ before the word ‘‘trading’’ in each 

of the rules from which such clauses are 

deleted, so as to clarify that the rules 

would apply to the listing and trading 

of such relevant ETP on the Exchange 

once that ETP is listed on the Exchange. 

In addition, consistent with rules 

approved for NYSE National in the 

NYSE National Rule Filing, the 

Exchange is proposing to delete Rule 

5.1(a)(2)(A), which currently requires 

the Exchange to file with the 

Commission a Form 19b–4(e) with 

respect to each UTP Exchange Traded 

Product within five business days after 

commencement of trading.17 To account 

for this deleted sub-paragraph, the 

Exchange is also proposing to re-number 

each of the sub-paragraphs in Rule 

5.1(a)(2). 

The Exchange believes that it is 

unnecessary for an exchange to apply 

initial and continued listing rules to 

ETPs it trades pursuant to UTP. To the 

extent ETP listing rules include initial 

and continued listing standards, the 

Exchange would not be in a position to 

evaluate issuer compliance with such 

rules. Because the Exchange would not 

be in a position to enforce any ETP 

listing rules, the Exchange does not 

believe it is necessary to have such 

rules. Similarly, the Exchange does not 

believe it is necessary for a non-listing 

venue to file a Form 19b–4(e) if it begins 

trading an ETP on a UTP basis. Rule 

19b–4(e)(1) under the Act refers to the 

‘‘listing and trading’’ of a ‘‘new 

derivative securities product.’’ 18 The 

Exchange therefore believes that the 

requirements of that rule refer to when 

an exchange lists and trades an ETP, 

and not when an exchange seeks to 

trade such product on a UTP basis 

pursuant to Rule 12f–2 under the Act.19

Finally, the Exchange proposes to 

amend Rule 5.1(a)(2)(D) to conform to 

the comparable NYSE National rule. 

Both NYSE National’s and the 

Exchange’s rules pertaining to trading 

halts are in Rule 7.18. Like NYSE 

National, the Exchange proposes to halt 

trading in a UTP Exchange Traded 

Product as provided for in Rule 7.18. 

Accordingly, the Exchange proposes to 

delete the rule text in paragraph (D) of 

Rule 5.1(a)(2) that is duplicative of 

trading halt authority in Rule 7.18. The 

Exchange also proposes to add a cross 

reference stating that the Exchange 

would halt trading in a UTP ETP as 

provided for in Rule 7.18.20

Listing ETPs on the Exchange & 

Surveillance 

The Exchange represents that listed 

ETPs would be subject to the existing 

trading surveillances administered by 

the Exchange for ETPs trading UTP, as 

well as cross-market surveillances 

administered by the Financial Industry 

Regulatory Authority (‘‘FINRA’’) on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws. The Exchange 

represents that these procedures are 

adequate to properly monitor the 

Exchange’s listing and trading of ETPs 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

federal securities laws applicable to 

trading on the Exchange.21

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

relevant parties for relevant trading 

violations. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in ETPs, as well as certain other 

securities and financial instruments 

underlying such ETPs, with other 

markets and other entities that are 

members of the Intermarket 

Surveillance Group (‘‘ISG’’). The 

Exchange or FINRA, on behalf of the 

Exchange, or both, may obtain trading 

information regarding trading in ETPs 

and financial instruments from such 

markets and other entities. In addition, 

the Exchange may obtain information 

regarding trading in ETPs, as well as 

certain other securities and financial 

instruments underlying such ETPs from 

markets and other entities that are 

members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement 

(‘‘CSSA’’). 

Further, the Exchange’s affiliate, 

NYSE Arca, currently lists ETPs 

pursuant to rules that are substantially 


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22See NYSE ETP Listing Rules Filing, supra note 

5. Rules 5P and 8P are based on the rules of NYSE 

Arca. 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(5). 

identical to Rules 5P and 8P.22 NYSE 

Arca conducts initial and continued 

listing reviews for ETPs listed on its 

exchange. The Exchange represents that 

the initial and continued listing reviews 

of ETPs listed on the Exchange will be 

conducted in the same manner as they 

are on NYSE Arca. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,23 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,24

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, 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 by providing for the 

listing of Exchange Traded Products, 

subject to consistent and reasonable 

standards. Accordingly, the proposed 

rule change would contribute to the 

protection of investors and the public 

interest because it may provide a better 

listing and trading environment for 

investors and, generally, encourage 

greater competition between markets. 

The Exchange believes that the 

proposed rule change is consistent with 

the above principles. By providing for 

the listing of ETPs, the Exchange 

believes its proposal would lead to the 

addition of liquidity to the broader 

market and to increased competition 

among the existing group of liquidity 

providers. The Exchange also believes 

that, by so doing, the proposed rule 

change would encourage the additional 

utilization of, and interaction with, the 

exchange market, and provide market 

participants with improved price 

discovery, increased liquidity, more 

competitive quotes and greater price 

improvement for listed ETPs. 

The Exchange further believes that 

listing ETPs would help raise investors’ 

confidence in the fairness of the market, 

generally, and their transactions in 

particular. As such, the listing of ETPs 

would foster cooperation and 

coordination with persons engaged in 

facilitating securities transactions, 

enhance the mechanism of a free and 

open market, and promote fair and 

orderly markets in securities on the 

Exchange. 

The proposal is also designed to 

promote just and equitable principles of 

trade by way of initial and continued 

listing standards which, if not 

maintained, would result in the 

discontinuation of trading in the 

affected products. These requirements, 

together with the applicable Exchange 

trading rules (which apply to the 

proposed products), ensure that no 

investor would have an unfair 

advantage over another respecting the 

trading of the subject products. On the 

contrary, all investors would have the 

same access to, and use of, information 

concerning the specific products and 

trading in the specific products, all to 

the benefit of public customers and the 

marketplace as a whole. 

Furthermore, the proposal is designed 

to remove impediments to and perfect 

the mechanism of a free and open 

market and a national market system by 

adopting rules that would lead 

ultimately to the listing and trading of 

new products on the Exchange. The 

proposed changes do nothing more than 

match Exchange rules with what is 

currently available on other exchanges 

for the listing of ETPs. The Exchange 

believes that by allowing for listing 

opportunities on the Exchange that are 

already allowed by rule on another 

market, the proposal would offer 

another venue for listing ETPs and 

thereby promote broader competition 

among exchanges. The Exchange 

believes that individuals and entities 

permitted to list ETPs on the Exchange 

should enhance competition within the 

mechanism of a free and open market 

and a national market system, and 

customers and other investors in the 

national market system should benefit 

from more depth and liquidity in the 

market for the ETPs. 

The proposed change is not designed 

to address any competitive issue, but 

rather to allow the Exchange to list 

ETPs. These rules are identical to the 

rules of NYSE Arca (other than with 

respects to certain non-substantive and 

technical amendments described above), 

which currently lists ETPs on its 

exchange pursuant to these rules. These 

proposed rules support competition by 

allowing for ETP listings on the 

Exchange. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Since Rules 

5P and 8P are already adopted on the 

Exchange pursuant to approval from the 

Commission, the Exchange believes that 

the proposed rule change to allow for 

these rules to also apply to the listing of 

ETPs on the Exchange, would have no 

impact on competition. To the contrary, 

limiting Rules 5P and 8P to only apply 

to the trading pursuant to UTP of ETPs, 

limits competition in that there are 

certain products that the Exchange 

cannot list, while other exchanges, with 

identical listing rules, can list such 

products. Thus, approval of the 

proposed rule change would promote 

competition because it would allow the 

Exchange to compete with other 

national securities exchanges for the 

listing and trading of ETPs. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the Exchange consents, the Commission 

will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change 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– 

NYSE–2018–30 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–2018–30. 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 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 31589 

25 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 83082 

(April 20, 2018), 83 FR 18379 (‘‘Notice’’). See also, 

Securities Exchange Act Release No. 83398 (June 8, 

2018), 83 FR 27807 (June 14, 2018) extending the 

time for the Commission to act on the filing. 

4 In Amendment No. 1, FINRA states that, if the 

Commission approves the proposed rule change, 

FINRA anticipates that the FINRA/Nasdaq TRF 

Chicago will commence operation in September 

2018, but in no event later than December 31, 2018. 

Amendment No. 1 is available at: https://

www.sec.gov/comments/sr-finra-2018-013/ 

finra2018013-3918682-166985.pdf. Because 

Amendment No. 1 does not materially alter the 

substance of the proposed rule change or raise 

unique or novel regulatory issues, Amendment No. 

1 is not subject to notice and comment. 

5See Rule 600(b) of Regulation NMS under the 

Act. 

6NYSE is the Business Member of the FINRA/ 

NYSE TRF. 

7See Notice at 18381. 

8See id. 

9See Trade Reporting Notice, January 20, 2016 

(OTC Equity Trading and Reporting in the Event of 

Systems Issues). 

10As discussed in the Trade Reporting Notice, if 

a firm chooses not to have connectivity to a 

secondary facility, it should cease executing OTC 

trades altogether when its primary trade reporting 

facility is experiencing a widespread systems issue. 

In that instance, the firm could route orders for 

execution to an exchange or another FINRA 

member (i.e., a member with connectivity and the 

ability to report trades to a FINRA Facility that is 

operational). 

11See Securities Exchange Act Release No. 54084 

(June 30, 2006), 71 FR 38935 (July 10, 2006) (order 

approving SR–NASD–2005–087); and Securities 

Exchange Act Release No. 54798 (November 21, 

2006), 71 FR 69156 (November 29, 2006) (order 

approving SR–NASD–2006–104). 

12A FINRA member also has the option to report 

some trades, on a primary basis, to the FINRA/ 

Nasdaq TRF Chicago, and some trades, on a primary 

basis, to the FINRA/Nasdaq TRF Carteret. 

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–NYSE–2018–30 and should 

be submitted on or before July 27, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14465 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83559; File No. SR–FINRA– 

2018–013] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Establish a 

Second Trade Reporting Facility 

June 29, 2018. 

I. Introduction 

On April 19, 2018, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) 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 establish a 

second Trade Reporting Facility 

(‘‘TRF’’) to be operated in conjunction 

with Nasdaq, Inc. (‘‘Nasdaq’’). The 

proposed rule change was published for 

comment in the Federal Register on 

April 26, 2018.3 The Commission 

received no comment letters on the 

proposal. On June 21, 2018, FINRA filed 

Amendment No. 1.4 This order approves 

the proposed rule change, as modified 

by Amendment No. 1. 

II. Description of the Proposal 

Background 

FINRA currently has three facilities 

that allow its members to report overthe-counter (‘‘OTC’’) trades in NMS 

stocks: 5 The FINRA/Nasdaq TRF, the 

FINRA/NYSE TRF, and the Alternative 

Display Facility (‘‘ADF’’) (collectively, 

the ‘‘FINRA Facilities’’). For each TRF, 

FINRA is the SRO Member and, as such, 

it has sole regulatory responsibility for 

the TRFs, including: Real-time 

monitoring and T+1 surveillance, 

development and enforcement of trade 

reporting rules, and submission of 

proposed rule changes to the 

Commission. Nasdaq is the ‘‘Business 

Member’’ of the FINRA/Nasdaq TRF.6 A 

Business Member is primarily 

responsible for the management of the 

business affairs of its TRF.7 Among 

other things, the Business Member 

establishes pricing, is obligated to pay 

the cost of regulation and is entitled to 

the profits and responsible for the losses 

derived from the operation of its TRF.8

In January 2016, FINRA published a 

Trade Reporting Notice (‘‘Trade 

Reporting Notice’’) that provided 

guidance on the reporting obligations of 

member firms regarding OTC equity 

trades in the event of a systems issue 

during the trading day that prevents 

firms from reporting OTC trades in NMS 

stocks in accordance with FINRA rules.9

As set forth in the Trade Reporting 

Notice, a firm that routinely reports its 

OTC trades in NMS stocks to one FINRA 

Facility (‘‘primary facility’’) must 

establish and maintain connectivity and 

report to a second FINRA Facility 

(‘‘secondary facility’’) if the firm intends 

to continue to support OTC trading as 

an executing broker while its primary 

facility is experiencing a widespread 

systems issue.10

Proposal 

FINRA proposed to establish a second 

FINRA/Nasdaq TRF (‘‘FINRA/Nasdaq 

TRF Chicago’’), to provide FINRA 

members an additional facility to which 

to report trades in compliance with 

FINRA rules and the Trade Reporting 

Notice. The FINRA/Nasdaq TRF 

Chicago would be governed by the rules 

applicable to the existing FINRA/ 

Nasdaq Trade Reporting Facility 

(‘‘FINRA/Nasdaq TRF Carteret’’).11 A 

primary user of the FINRA/Nasdaq TRF 

Carteret could report on a back-up basis 

to the FINRA/Nasdaq TRF Chicago 

pursuant to the same rules, pricing, 

features and performance to which the 

firm is accustomed as a user of the 

FINRA/Nasdaq TRF Carteret—and vice 

versa.12 FINRA/Nasdaq TRF Chicago 

trade reports would be disseminated 

with a modifier indicating the source of 

the transactions that would distinguish 

them from transactions executed on an 

exchange or reported to another FINRA 

Facility, including the FINRA/Nasdaq 

TRF Carteret. 

The proposed rule change would 

establish the FINRA/Nasdaq TRF 

Chicago on the same terms as the 

FINRA/Nasdaq TRF Carteret. The 

FINRA/Nasdaq TRF Chicago would be 

built with the same technology, provide 


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