44984 Federal Register / Vol. 83, No. 171 / Tuesday, September 4, 2018 / Notices 

44 17 CFR 240.17Ad–22(e)(23)(i) and (ii). 

45 15 U.S.C. 78q–1. 

46 15 U.S.C. 78s(b)(2). 

47 In approving the Proposed Rule Change, the 

Commission has considered the Proposed Rule 

Change’s impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 78c(f). 

48 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. 

4The terms ‘‘Priority 2—Display Orders’’ and 

‘‘Priority 3—Non-Display Orders’’ are defined in 

Rule 7.36–E(e). 

5See Securities Exchange Act Release No. 83768 

(August 3, 2018), 83 FR 39488 (August 9, 2018) 

(SR–NYSE–2018–26) (Approval Order). 

6See Cboe BZX Exchange, Inc. (‘‘BZX’’) Rule 

11.9(c)(1); Nasdaq Stock Market LLC (‘‘Nasdaq’’) 

Rule 7503(h). 

Rules 17Ad–22(e)(23)(i) and (ii) under 

the Act.44

III. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the 

Act 45 and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,46 that 

proposed rule change SR–NSCC–2017– 

018, as modified by Amendment No. 1, 

be, and it hereby is, approved 47 as of 

the date of this order or the date of a 

notice by the Commission authorizing 

NSCC to implement advance notice SR– 

NSCC–2017–806, as modified by 

Amendment No. 1, whichever is later. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.48

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–19053 Filed 8–31–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83967; File No. SR– 

NYSEARCA–2018–61] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 7.31–E 

Relating To Reserve Orders, To ReName Two Order Types, and To Delete 

Inoperative Rule Text 

August 28, 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 August 

15, 2018, NYSE Arca, Inc. (‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes amend Rule 

7.31–E relating to Reserve Orders, to rename two order types, and to delete 

inoperative rule text. 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 

Rule 7.31–E relating to Reserve Orders, 

to re-name two order types, and to 

delete inoperative rule text. 

Background 

Rule 7.31–E(d)(1) defines a Reserve 

Order as a Limit or Inside Limit Order 

with a quantity of the size displayed 

and with a reserve quantity of the size 

(‘‘reserve interest’’) that is not 

displayed. The displayed quantity of a 

Reserve Order is ranked Priority 2— 

Display Orders and the reserve interest 

is ranked Priority 3—Non-Display 

Orders.4 Rule 7.31–E(d)(1)(A) provides 

that on entry, the display quantity of a 

Reserve Order must be entered in round 

lots and the displayed portion of a 

Reserve Order will be replenished 

following any execution. That rule 

further provides that the Exchange will 

display the full size of the Reserve 

Order when the unfilled quantity is less 

than the minimum display size for the 

order. Rule 7.31–E(d)(1)(B) provides that 

each time a Reserve Order is 

replenished from reserve interest, a new 

working time is assigned to the 

replenished quantity of the Reserve 

Order, while the reserve interest retains 

the working time of original order entry. 

Pursuant to Rule 7.31–E(d)(1)(C), a 

Reserve Order must be designated Day 

and may be combined with an Arca 

Only Order or a Primary Pegged Order. 

Rule 7.31–E(d)(2) defines a ‘‘Limit 

Non-Displayed Order,’’ which is a Limit 

Order that is not displayed and does not 

route. Rule 7.31–E(e)(1) defines an 

‘‘Arca Only Order,’’ which is a Limit 

Order that does not route. 

Proposed Rule Change Relating to Order 

Type Names 

The Exchange proposes nonsubstantive amendments to Rules 7.31– 

E and 7.46–E to re-name the ‘‘Arca Only 

Order’’ as the ‘‘Non-Routable Limit 

Order.’’ This proposed rule change is 

based on the term used by the 

Exchange’s affiliate, NYSE American 

LLC (‘‘NYSE American’’) for the same 

order type. 

The Exchange also proposes nonsubstantive amendments to Rules 7.31– 

E and 7.46–E to re-name the ‘‘Limit 

Non-Displayed Order’’ as the ‘‘NonDisplayed Limit Order.’’ The Exchange 

believes that this proposed rule change 

would conform the style of this order 

type with the name ‘‘Non-Routable 

Limit Order.’’ The Exchange therefore 

believes that this proposed rule change 

would promote clarity and consistency 

in its rules. 

Proposed Rule Change Relating to 

Reserve Orders 

The Exchange proposes to amend 

Rule 7.31–E(d)(1) to change the manner 

by which the display portion of a 

Reserve Order would be replenished. As 

proposed, rather than replenishing the 

display quantity following any 

execution, the Exchange proposes to 

replenish the Reserve Order when the 

display quantity is decremented to 

below a round lot. The changes that the 

Exchange is proposing to Rule 7.31 

relating to Reserve Orders (and Primary 

Pegged Orders) are identical to changes 

that were recently approved for the 

Exchange’s affiliate, New York Stock 

Exchange LLC (‘‘NYSE’’).5 In addition, 

the proposed changes to how Reserve 

Orders would be replenished are 

consistent with how Reserve Orders are 

replenished on other equity exchanges.6


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7The term ‘‘PBBO’’ is defined in Rule 1.1. The 

term ‘‘MPV’’ is defined in Rule 7.6–E. 

As is currently the case, the replenish 

quantity would be the minimum display 

size of the order or the remaining 

quantity of reserve interest if it is less 

than the minimum display quantity. To 

reflect this functionality, the Exchange 

proposes that Rule 7.31–E(d)(1)(A) 

would be amended as follows (deleted 

text bracketed; new text italic): 

(A) On entry, the display quantity of 

a Reserve Order must be entered in 

round lots. The displayed portion of a 

Reserve Order will be replenished when 

the display quantity is decremented to 

below a round lot. The replenish 

quantity will be the minimum display 

quantity of the order or the remaining 

quantity of the reserve interest if it is 

less than the minimum display quantity 

[following any execution. The Exchange 

will display the full size of the Reserve 

Order when the unfilled quantity is less 

than the minimum display size for the 

order]. 

Under current functionality, because 

the replenished quantity is assigned a 

new working time, it is feasible for a 

single Reserve Order to have multiple 

replenished quantities with separate 

working times, each, a ‘‘child’’ order. 

The proposed change to limit when a 

Reserve Order would be replenished to 

when the display quantity is 

decremented to below a round lot only 

would reduce the number of child 

orders for a Reserve Order. The 

Exchange believes that minimizing the 

number of child orders for a Reserve 

Order would reduce the potential for 

market participants to detect that a child 

order displayed on the Exchange’s 

proprietary market data feeds is 

associated with a Reserve Order. 

In most cases, the maximum number 

of child orders for a Reserve Order 

would be two. For example, assume a 

Reserve Order to buy has a display 

quantity of 100 shares and an additional 

200 shares of reserve interest. A sell 

order of 50 shares would trade with the 

display quantity of such Reserve Order, 

which would decrement the display 

quantity to 50 shares. As proposed, the 

Exchange would then replenish the 

Reserve Order with 100 shares from the 

reserve interest, i.e., the minimum 

display size for the order. After this 

second replenishment, the Reserve 

Order would have two child orders, one 

for 50 shares, the other for 100 shares, 

each with different working times. 

Generally, when there are two child 

orders, the older child order of less than 

a round lot will be executed before the 

second child order. However, there are 

limited circumstances when a Reserve 

Order could have two child orders that 

equal less than a round lot, which, as 

proposed, would trigger a 

replenishment. For such circumstance, 

the Exchange proposes that when a 

Reserve Order is replenished from 

reserve interest and already has two 

child orders that equal less than a round 

lot, the child order with the later 

working time would be reassigned the 

new working time assigned to the next 

replenished quantity. 

For example, taking the same Reserve 

Order as above: 

• If 100 shares of such order (‘‘A’’) are 

routed on arrival, it would have a 

display quantity of 100 shares (‘‘B’’) and 

100 shares in reserve interest. 

• While ‘‘A’’ is routed, a sell order of 

50 shares would trade with ‘‘B,’’ 

decrementing ‘‘B’’ to 50 shares and the 

Reserve Order would be replenished 

from reserve interest, creating a second 

child order ‘‘C’’ of 100 shares. 

• Next, the Exchange receives a 

request to reduce the size of the Reserve 

Order from 300 shares to 230 shares. 

Because ‘‘A’’ is still routed away and 

there is no reserve interest, and as 

described in more detail below, this 70 

share reduction in size would be 

applied against the most recent child 

order of ‘‘C,’’ which would be reduced 

to 30 shares. Together with ‘‘B,’’ which 

would still be 50 shares, the two 

displayed child orders would equal less 

than a round lot, but with no quantity 

in reserve interest. 

• Next, ‘‘A’’ is returned unexecuted, 

and as described below, becomes 

reserve interest and is evaluated for 

replenishment. Because the total display 

quantity (‘‘B’’ + ‘‘C’’) is less than a 

round lot, this Reserve Order would be 

replenished. But because the Reserve 

Order already has two child orders, the 

child order with the later working time, 

‘‘C,’’ would be returned to the reserve 

interest, which would now have a 

quantity of 130 shares (‘‘C’’ + ‘‘A’’), and 

the Reserve Order would be replenished 

with 100 shares from the reserve interest 

with a new working time, which would 

be a new child order ‘‘D.’’ 

• After this replenishment, this 

Reserve Order would have two child 

orders of ‘‘B’’ for 50 shares and ‘‘D’’ for 

100 shares, and a reserve interest of 30 

shares. 

To effect these changes, the Exchange 

proposes to amend current Rule 7.31– 

E(d)(1)(B) to specify that each display 

quantity of a Reserve Order with a 

different working time would be 

referred to as a child order. The 

Exchange further proposes new Rule 

7.31–E(d)(1)(B)(i) that would provide 

that when a Reserve Order is 

replenished from reserve interest and 

already has two child orders that equal 

less than a round lot, the child order 

with the later working time would 

rejoin the reserve interest and be 

assigned the new working time assigned 

to the next replenished quantity. 

The Exchange also proposes new Rule 

7.31–E(d)(1)(B)(ii) to provide that if a 

Reserve Order is not routable (i.e., is 

combined with either a Non-Routable 

Limit Order or a Primary Pegged Order), 

the replenish quantity would be 

assigned a display and working price 

consistent with the instructions for the 

order, which represents current 

functionality. For example, for a NonRoutable Limit Reserve Order, if the 

display price would lock or cross the 

contra-side PBBO, the replenished 

quantity would be assigned a display 

price one MPV worse than the PBBO 

and a working price equal to the contraside PBBO, as provided for in Rule 

7.31–E(e)(1)(A)(i).7 The Exchange 

believes that this proposed rule text 

would provide transparency and clarity 

to Exchange rules. 

For a Primary Pegged Reserve Order, 

the Exchange proposes that the 

replenished quantity would follow Rule 

7.31–E(h)(2)(B), which provides that a 

Primary Pegged Order would be rejected 

if the PBBO is locked or crossed. 

Because a Primary Pegged Reserve 

Order would have resting reserve 

interest, the Exchange proposes to 

amend Rule 7.31–E(h)(2)(B) to provide 

that if the PBBO is locked or crossed 

when the display quantity of a Primary 

Pegged Reserve Order is replenished, 

the entire order would be cancelled. The 

Exchange believes that cancelling the 

entire order is consistent with the 

current rule that provides that the entire 

order would be rejected on arrival if the 

display quantity would lock or cross the 

PBBO. 

The Exchange further proposes to add 

new subsection (D) to Rule 7.31–E(d)(1) 

to describe when a Reserve Order would 

be routed. As proposed, a routable 

Reserve Order would be evaluated for 

routing both on arrival and each time 

the display quantity is replenished. 

Proposed Rule 7.31–E(d)(1)(D)(i) 

would provide that if routing is 

required, the Exchange would route 

from reserve interest before publishing 

the display quantity. In addition, if after 

routing, there is less than a round lot 

available to display, the Exchange 

would wait until the routed quantity 

returns (executed or unexecuted) before 

publishing the display quantity. In the 

example described above, the Exchange 

would have published the display 

quantity before the routed quantity 

returned because the display quantity 

was at least a round lot. If, however, 250 


sradovich on DSK3GMQ082PROD with NOTICES
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8See Securities Exchange Act Release No. 82140 

(November 21, 2017), 82 FR 56304 (November 28, 

2017) (SR–NYSEArca–2017–133) (Notice of filing 

and immediate effectiveness of proposed rule 

change to add temporary rule). 

9See Securities Exchange Act Release No. 76267 

(October 26, 2015), 80 FR 66951 (October 30, 2015) 

(SR–NYSEArca–2015–56) (Approval Order). 

10See Securities Exchange Act Release No. 79078 

(October 11, 2016), 81 FR 71559 (October 17, 2017) 

(SR–NYSEArca–2016–135) (Notice of filing and 

immediate effectiveness). 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 13See supra notes 5 and 6. 

shares of a Reserve Order of 300 shares 

had been routed on arrival, because the 

unrouted quantity was less than a round 

lot (50 shares), the Exchange would wait 

for the routed quantity to return, either 

executed or unexecuted, before 

publishing the display quantity. 

The Exchange proposes this 

functionality to reduce the possibility 

for a Reserve Order to have more than 

one child order. If the Exchange did not 

wait, and instead displayed the 50 

shares when the balance of the Reserve 

Order has routed, if the 250 shares 

returns unexecuted, such Reserve Order 

would be replenished and would have 

two child orders—one for the 50 shares 

that was displayed when the order was 

entered and a second for the 100 shares 

that replenished the Reserve Order from 

the quantity that returned unexecuted. 

By contrast, by waiting for a report on 

the routed quantity, if the routed 

quantity was not executed, the 

Exchange would display the minimum 

display quantity as a single child order. 

If the routed quantity was executed, the 

Exchange would display the 50 shares, 

but only because that would be the full 

remaining quantity of the Reserve 

Order. 

Proposed Rule 7.31–E(d)(1)(D)(ii) 

would provide that any quantity of a 

Reserve Order that is returned 

unexecuted would join the working 

time of the reserve interest, which is 

current functionality. If there is no 

quantity of reserve interest to join, the 

returned quantity would be assigned a 

new working time as reserve interest. As 

further proposed, in either case, such 

reserve interest would replenish the 

display quantity as provided for in 

Rules 7.31(d)(1)(A) and (B). The 

Exchange believes that this proposed 

rule text would promote transparency 

and clarity in Exchange rules. The 

Exchange further believes it is 

appropriate for a returned quantity of a 

Reserve Order to join the reserve 

interest first because the order may not 

be eligible for a replenishment to the 

display quantity. 

Proposed Rule 7.31–E(d)(1)(E) would 

provide that a request to reduce in size 

a Reserve Order would cancel the 

reserve interest before canceling the 

display quantity and if there is more 

than one child order, the child order 

with the later working time would be 

cancelled first. This represents current 

functionality and the example set forth 

above demonstrates how this would 

function. The Exchange believes that 

canceling reserve interest before a child 

order would promote the display of 

liquidity on an exchange. The Exchange 

further believes that canceling a latertimed child order would respect the 

time priority of the first child order, and 

any priority such child order may have 

for allocations. 

Additional Proposed Rule Changes 

The Exchange proposes additional 

non-substantive amendments to its rules 

to remove inoperative rule text. 

First, the Exchange proposes to 

amend Rule 7.35–E (Auctions) to 

remove Commentary .02, which sets 

forth rules that were operative no later 

than February 28, 2018. Because the 

amendments described in that 

Commentary .02 have been 

implemented, Commentary .02 is now 

moot and can be deleted.8

Second, the Exchange proposes to 

amend Rule 7.39–E (Adjustment of 

Open Orders) to delete the title and text 

of the rule and designate the rule 

‘‘Reserved.’’ Rule 7.39–E relates to the 

adjustment of open orders, i.e., orders 

with a Good Till Cancelled (‘‘GTC’’) or 

Good Till Date (‘‘GTD’’) time-in-force 

modifier. On Pillar, the Exchange does 

not offer GTC or GTD time-in-force 

modifiers.9 When the Exchange deleted 

its pre-Pillar order type rules, it 

inadvertently did not delete Rule 7.39– 

E.10 Because this rule is now 

inoperative, the Exchange proposes to 

delete it as moot. 

* * * * * 

Because of the technology changes 

associated with the proposed rule 

changes relating to Reserve Orders, the 

Exchange will announce by Trader 

Update when these changes will be 

implemented, which the Exchange 

anticipates will be in the third quarter 

of 2018. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),11 in general, and furthers the 

objectives of Section 6(b)(5),12 in 

particular, because it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed rule change to replenish a 

Reserve Order only if the display 

quantity is decremented to below a 

round lot would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system because it would reduce the 

number of child orders associated with 

a single Reserve Order. By reducing the 

number of child orders, the Exchange 

believes it would reduce the potential 

for market participants to detect that a 

child order is associated with a Reserve 

Order. The proposed changes to Reserve 

Orders and Primary Pegged Orders are 

identical to recently approved changes 

to the rules of its affiliated exchange, 

NYSE, and how a Reserve Order would 

be replenished is also consistent with 

how Reserve Orders function on BZX 

and Nasdaq.13

For similar reasons, the Exchange 

believes that if a Reserve Order has two 

child orders that equal less than a round 

lot, it would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system to assign a new working time to 

the later child order so that when such 

Reserve Order is replenished, it would 

have a maximum of only two child 

orders. The Exchange believes that this 

proposed change would streamline the 

operation of Reserve Orders and meet 

the objective to reduce the potential for 

market participants to be able to identify 

that a child order is associated with a 

Reserve Order. 

The Exchange further believes that the 

proposed rule change to evaluate a 

Reserve Order for routing both on 

arrival and when replenishing would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

would reduce the potential for the 

display quantity of a Reserve Order to 

lock or cross the PBBO of an away 

market. The Exchange further believes 

that routing from reserve interest would 

promote the display of liquidity on the 

Exchange, because if there is at least a 

round lot remaining of a Reserve Order 

that is not routed, the Exchange would 

display that quantity. The Exchange also 

believes that it would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system to wait to 

display a Reserve Order if there is less 

than a round lot remaining after routing 


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14 15 U.S.C. 78s(b)(3)(A)(iii). 

15 17 CFR 240.19b–4(f)(6). 

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6)(iii). 18 15 U.S.C. 78s(b)(2)(B). 

because it would reduce the potential 

for such Reserve Order to have more 

than one child order. Finally, the 

Exchange believes that joining any 

quantity of a Reserve Order that is 

returned unexecuted with reserve 

interest first would be consistent with 

the proposed replenishment logic that a 

Reserve Order would be replenished 

only if the display quantity is 

decremented to below a round lot. 

The Exchange believes that it would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system to apply 

a request to reduce in size a Reserve 

Order to the reserve interest first, and 

then next to the child order with the 

later working time, because such 

functionality would promote the display 

of liquidity on the Exchange and honor 

the priority of the first child order with 

the earlier working time. The Exchange 

believes that including this existing 

functionality in Rule 7.31–E would 

promote transparency and clarity in 

Exchange rules. 

The Exchange believes that the 

proposed change to Primary Pegged 

Reserve Orders would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

similar to how a Primary Pegged Order 

would function on arrival, if the 

replenish quantity of a Primary Pegged 

Reserve Order would lock or cross the 

PBBO, the entire Reserve Order would 

be cancelled. The Exchange believes 

that by cancelling the entire order, the 

Exchange would reduce the potential for 

such order to be displayed at a price 

that would lock or cross the PBBO. 

The Exchange believes that the 

proposed non-substantive amendments 

to rename the ‘‘Limit Non-Displayed 

Order’’ as the ‘‘Non-Displayed Limit 

Order’’ and to rename the ‘‘Arca Only 

Order’’ as the ‘‘Non-Routable Limit 

Order’’ would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system because the proposed changes 

are designed to promote clarity and 

consistency in Exchange rules by 

moving the modifier describing the 

function of the order type before the 

term ‘‘Limit Order’’ and using order 

type names that are used on NYSE 

American. 

Finally, the Exchange believes that 

removing inoperative rule text would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system because 

these proposed rule changes would 

promote clarity in Exchange rules. 

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 is not designed to 

address any competitive issues. Rather, 

the proposed rule change to Reserve 

Orders is designed to reduce the 

potential for market participants to 

identify that a child order is related to 

a Reserve Order. The additional 

proposed rule changes are nonsubstantive and are designed to promote 

clarity and consistency in Exchange 

rules. 

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 14 and Rule 

19b–4(f)(6) thereunder.15 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

Impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 16 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),17 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 18 of the Act 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 

• 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– 

NYSEArca–2018–61 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–NYSEArca–2018–61. 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 


sradovich on DSK3GMQ082PROD with NOTICES
44988 Federal Register / Vol. 83, No. 171 / Tuesday, September 4, 2018 / Notices 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3On December 18, 2017, NSCC filed the proposed 

rule change as advance notice SR–NSCC–2017–805 

with the Commission pursuant to Section 806(e)(1) 

of Title VIII of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act entitled the Payment, 

Clearing, and Settlement Supervision Act of 2010 

(‘‘Clearing Supervision Act’’) and Rule 19b– 

4(n)(1)(i) of the Act (‘‘Advance Notice’’). 12 U.S.C. 

5465(e)(1) and 17 CFR 240.19b–4(n)(1)(i), 

respectively. The Advance Notice was published for 

comment in the Federal Register on January 30, 

2018. In that publication, the Commission also 

extended the review period of the Advance Notice 

for an additional 60 days, pursuant to Section 

806(e)(1)(H) of the Clearing Supervision Act. 12 

U.S.C. 5465(e)(1)(H); Securities Exchange Act 

Release No. 82581 (January 24, 2018), 83 FR 4327 

(January 30, 2018) (SR–NSCC–2017–805). On April 

10, 2018, the Commission required additional 

information from NSCC pursuant to Section 

806(e)(1)(D) of the Clearing Supervision Act, which 

tolled the Commission’s period of review of the 

Advance Notice until 60 days from the date the 

information required by the Commission was 

received by the Commission. 12 U.S.C. 

5465(e)(1)(D); see 12 U.S.C. 5465(e)(1)(E)(ii) and 

(G)(ii); see Memorandum from the Office of 

Clearance and Settlement Supervision, Division of 

Trading and Markets, titled ‘‘Commission’s Request 

for Additional Information,’’ available at https://

www.sec.gov/rules/sro/nscc-an.htm. On June 28, 

2018, NSCC filed Amendment No. 1 to the Advance 

Notice to amend and replace in its entirety the 

Advance Notice as originally filed on December 18, 

2017. Securities Exchange Act Release No. 83745 

(July 31, 2018), 83 FR 38329 (August 6, 2018) (SR– 

NSCC–2017–805). NSCC submitted a courtesy copy 

of Amendment No. 1 to the Advance Notice through 

the Commission’s electronic public comment letter 

mechanism. Accordingly, Amendment No. 1 to the 

Advance Notice has been publicly available on the 

Commission’s website at https://www.sec.gov/rules/ 

sro/nscc-an.htm since June 29, 2018. On July 6, 

2018, the Commission received a response to its 

request for additional information in consideration 

of the Advance Notice, which, in turn, added a 

further 60-days to the review period pursuant to 

Section 806(e)(1)(E) and (G) of the Clearing 

Supervision Act. 12 U.S.C. 5465(e)(1)(E) and (G); 

see Memorandum from the Office of Clearance and 

Settlement Supervision, Division of Trading and 

Markets, titled ‘‘Response to the Commission’s 

Request for Additional Information,’’ available at 

https://www.sec.gov/rules/sro/nscc-an.htm. The 

Commission did not receive any comments. The 

proposal, as set forth in both the Advance Notice 

and the proposed rule change, each as modified by 

Amendments No. 1, shall not take effect until all 

required regulatory actions are completed. 

4Securities Exchange Act Release No. 82430 

(January 2, 2018), 83 FR 841 (January 8, 2018) (SR– 

NSCC–2017–017). 

5Securities Exchange Act Release No. 82669 

(February 8, 2018), 83 FR 6653 (February 14, 2018) 

(SR–DTC–2017–021, SR–FICC–2017–021, SR– 

NSCC–2017–017). 

6Securities Exchange Act Release No. 82908 

(March 20, 2018), 83 FR 12986 (March 26, 2018) 

(SR–NSCC–2017–017). 

7Securities Exchange Act Release No. 83509 

(June 25, 2018), 83 FR 30785 (June 29, 2018) (SR– 

DTC–2017–021, SR–FICC–2017–021, SR–NSCC– 

2017–017). 

8Securities Exchange Act Release No. 83632 (July 

13, 2018), 83 FR 34166 (July 19, 2018) (SR–NSCC– 

2017–017). NSCC submitted a courtesy copy of 

Amendment No. 1 to the proposed rule change 

through the Commission’s electronic public 

comment letter mechanism. Accordingly, 

Amendment No. 1 to the proposed rule change has 

been publicly available on the Commission’s 

website at https://www.sec.gov/rules/sro/nscc.htm 

since June 29, 2018. 

9Capitalized terms used herein and not otherwise 

defined herein are defined in the Rules. 

submissions should refer to File 

Number SR–NYSEArca–2018–61 and 

should be submitted on or before 

September 25, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–19059 Filed 8–31–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83974; File No. SR–NSCC– 

2017–017] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Adopt a 

Recovery & Wind-Down Plan and 

Related Rules 

August 28, 2018. 

On December 18, 2017, National 

Securities Clearing Corporation 

(‘‘NSCC’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

proposed rule change SR–NSCC–2017– 

017 pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder 2 to 

adopt a recovery and wind-down plan 

and related rules.3 The proposed rule 

change was published for comment in 

the Federal Register on January 8, 

2018.4 On February 8, 2018, the 

Commission designated a longer period 

within which to approve, disapprove, or 

institute proceedings to determine 

whether to approve or disapprove the 

proposed rule change.5 On March 20, 

2018, the Commission instituted 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change.6 On June 25, 2018, the 

Commission designated a longer period 

for Commission action on the 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change.7 On June 28, 2018, NSCC 

filed Amendment No. 1 to the proposed 

rule change to amend and replace in its 

entirety the proposed rule change as 

originally submitted on December 18, 

2017.8 The Commission did not receive 

any comments. This order approves the 

proposed rule change, as modified by 

Amendment No. 1 (hereinafter 

‘‘Proposed Rule Change’’). 

I. Description 

In the Advance Notice, NSCC 

proposes to (1) adopt an R&W Plan; (2) 

amend NSCC’s Rules & Procedures 

(‘‘Rules’’) 9 to adopt Rule 41 

(Corporation Default), Rule 42 (Winddown of the Corporation), and Rule 60 

(Market Disruption and Force Majeure) 

(each a ‘‘Proposed Rule’’ and, 

collectively, the ‘‘Proposed Rules’’); and 

(3) re-number current Rule 42 (Winddown of a Member, Fund Member or 

Insurance Carrier/Retirement Services 

Member) to Rule 40, which is currently 

reserved for future use. 

NSCC states that the R&W Plan would 

be used by the Board of Directors of 

NSCC (‘‘Board’’) and management of 

NSCC in the event NSCC encounters 

scenarios that could potentially prevent 

it from being able to provide its critical 

services as a going concern. 

NSCC states that the Proposed Rules 

are designed to (1) facilitate the 

implementation of the R&W Plan when 

necessary and, in particular, allow 

NSCC to effectuate its strategy for 

winding down and transferring its 

business; (2) provide Members and 

Limited Members with transparency 

around critical provisions of the R&W 

Plan that relate to their rights, 

responsibilities and obligations; and (3) 

provide NSCC with the legal basis to 

implement those provisions of the R&W 

Plan when necessary. 

A. NSCC R&W Plan 

The R&W Plan would be structured to 

provide a roadmap, define the strategy, 

and identify the tools available to NSCC 

to either (i) recover, in the event it 

experiences losses that exceed its 

prefunded resources (such strategies 

and tools referred to herein as the 

‘‘Recovery Plan’’) or (ii) wind-down its 

business in a manner designed to permit 

the continuation of its critical services 

in the event that such recovery efforts 

are not successful (such strategies and 

tools referred to herein as the ‘‘Winddown Plan’’). 

The R&W Plan would identify (i) the 

recovery tools available to NSCC to 

address the risks of (a) uncovered losses 

or liquidity shortfalls resulting from the 

default of one or more Members, and (b) 

losses arising from non-default events, 

such as damage to its physical assets, a 

cyber-attack, or custody and investment 

losses, and (ii) the strategy for 

implementation of such tools. The R&W 

Plan would also establish the strategy 

and framework for the orderly winddown of NSCC and the transfer of its 

business in the remote event the 


sradovich on DSK3GMQ082PROD with NOTICES