[Federal Register Volume 80, Number 14 (Thursday, January 22, 2015)]
[Notices]
[Pages 3269-3273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00966]



[[Page 3269]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74063; File No. SR-NYSE-2015-01]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Add a Price Protection Mechanism To Prevent the Automatic Execution of 
Incoming Market Orders and Marketable Limit Orders Outside a Specified 
Parameter and Eliminate Liquidity Replenishment Points and the Gap 
Quote Policy

January 15, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on January 8, 2015, New York Stock Exchange LLC (``NYSE'' or 
the ``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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to proposes to [sic] (i) amend Rule 1000 to 
add a price protection mechanism to prevent the automatic execution of 
incoming market orders and marketable limit orders outside a specified 
parameter, and (ii) eliminate its Exchange-specific volatility 
mechanisms--Liquidity Replenishment Points (``LRPs'') and its Gap Quote 
Policy--and to delete any references thereto from the Exchange rules. 
The text of the proposed rule change is available on the Exchange's Web 
site 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 1000 to add a price protection 
mechanism to prevent the automatic execution of incoming market orders 
and marketable limit orders outside a specified parameter (referred to 
as a ``Trading Collar''). The Exchange also proposes to eliminate its 
Exchange-specific volatility mechanisms--LRPs and Gap Quote Policy--and 
to delete any references thereto from the Exchange rules. The Exchange 
believes that the proposed Trading Collars would assist with the 
maintenance of fair and orderly markets by mitigating the risks 
associated with orders sweeping through multiple price points, 
resulting in executions at prices that are away from the best bid or 
offer and potentially erroneous. As discussed further below, the 
discontinuation of the Exchange-specific volatility mechanisms were 
anticipated changes following implementation of the Regulation NMS Plan 
to Address Extraordinary Market Volatility (the ``Plan'').\4\
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    \4\ See Securities Exchange Act Release No 67091 (May 31, 2012), 
77 FR 33498, 33510, n. 182 (June 6, 2012) (File No. 4-631) (Order 
Approving, on a Pilot Basis, the Plan) (The Commission ``expects, 
that upon implementation of the Plan, such exchange-specific 
volatility mechanisms would be discontinued by the respective 
exchanges.'') See also Securities Exchange Act Release No 71649 
(March 5, 2014), 79 FR 13696 (March 11, 2014) (File No. 4-631) (the 
Seventh Amendment to the Plan).
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Background: Liquidity Replenishment Points and Gapping the Quote
    Rule 1000 provides for the basic operative principles regarding the 
immediate, automatic execution of market orders and marketable limit 
orders against the Exchange's published quotation.\5\ The Rule also 
lists instances in which automatic execution would not be available due 
to certain market conditions, including when Exchange-specific 
volatility mechanisms, specifically LRPs and gapping the quote, have 
been triggered.
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    \5\ Automatic executions may also be against orders on the 
Display Book[supreg], Floor broker agency file interest, Floor 
broker proprietary file interest, Designated Market Maker (``DMM'') 
interest, and interest placed in the Exchange's systems by DMMs 
pursuant to a Capital Commitment Schedule in accordance with, and to 
the extent provided by, Exchange rules and shall be immediately 
reported as Exchange transactions. See Rule 1000(a).
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Liquidity Replenishment Points
    In March 2006, the Exchange implemented the LRP mechanism to 
address market volatility on the Exchange.\6\ The Exchange has utilized 
LRPs, which are triggered by rapid price movements over a short period 
of time, to moderate volatility in a security by temporarily converting 
the electronic market for the security into an auction market to afford 
new trading interests the opportunity to add liquidity.\7\ The Exchange 
believes that LRPs were effective in moderating some of the impact from 
the events of May 6, 2010 for Exchange trading customers, as evidenced 
by the lack of erroneous trades on the Exchange.\8\ In 2012, in 
approving the Plan, the Commission noted the ``potential for 
unnecessary complexity that could result if the Plan were adopted, and 
exchange-specific volatility mechanisms were retained''; thus, the 
Commission stated its ``expect[ation], that upon implementation of the 
Plan, such exchange-specific volatility mechanisms would be 
discontinued by the respective exchanges.'' \9\
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    \6\ See Securities Exchange Act Release No. 53539 (March 22, 
2006), 71 FR 16353 (March 31, 2006) (SR-NYSE-2004-05).
    \7\ See Securities Exchange Act Release No. 69295 (April 4, 
2013), 78 FR 21457 (April 10, 2013) (SR-NYSE-2013-27).
    \8\ Id.
    \9\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498, 33510, n. 182 (June 6, 2012).
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    In 2013, to coincide with the implementation of the Plan, the 
Exchange filed amendments to Rule 1000 that provided for the phasing 
out of the functionality associated with LRPs as the Plan was phased in 
across all NMS Stocks.\10\ The Plan was fully implemented across all 
NMS Stocks on February 24, 2014, and as such, pursuant to Rule 
1000(a)(iv)(A), the Exchange has discontinued the use of LRPs for all 
NMS Stocks that are subject to the Plan.\11\
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    \10\ See supra n. 7; See Securities Exchange Act Release No. 
69695 (June 4, 2013), 78 FR 34695 [sic] (June 10, 2013) (SR-NYSE-
2013-36).
    \11\ See Securities and Exchange Act Release No. 71649 (March 5, 
2014), 79 FR 13696 (March 11, 2014) (File No. 4-631) (the Seventh 
Amendment to the Plan). The Exchange notes that rights and warrants 
are not subject to the Plan, and therefore continue to be subject to 
LRPs.
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Gapping the Quote
    When an imbalance in a particular security exists, the manual 
process known as ``gapping the quote'' occurs--specifically, the DMM 
for the security widens the spread between the bid and

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offer and publishes a new gapped quote. Order imbalances may occur when 
the Exchange receives a sudden influx of orders for a particular 
security on the same side of the market within a short time interval, 
or when one or more large-size orders for a security are entered, and 
there is insufficient offsetting interest. The Exchange first 
implemented its policies and procedures for gapping the quote in 1994 
and updated the Gap Quote Policy in 2010.\12\ As stated in the Policy, 
a DMM gaps a quote to ``provide public notice of order imbalances for 
securities, facilitate price discovery, and minimize short-term price 
dislocation, by allowing for the entry of offsetting orders or the 
cancellation of orders on the side.''\13\ A DMM may gap a quote after 
an LRP has been reached. A gapped quote is not available for automatic 
execution.
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    \12\ See Information Memo 94-32 (August 9, 1994), filed as SR-
NYSE-93-48. See Securities Exchange Act Release No. 34303 (July 1, 
1994), 59 FR 35157(July 8, 1994). See also Information Memorandum 
10-3 (January 7, 2010), filed as NYSE-2010-05. See Securities and 
Exchange Act Release No. 61401 (January 22, 2010), 75 FR 4605 
(January 28, 2010) (changing the minimum size and value requirements 
for use of gap quotes).
    \13\ See Securities Exchange Act Release No. 61048 (November 23, 
2009), 74 FR 62863 (December 1, 2009) (SR-NYSE-2009-112).
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Proposed Trading Collar
    The Exchange proposes to amend Rule 1000 to add a price protection 
mechanism to prevent the automatic execution or routing of incoming 
market orders, including elected stop orders, and marketable limit 
orders \14\ outside a specified parameter (referred to as a ``Trading 
Collar''). As proposed, an incoming market order or marketable limit 
order to buy (sell) would not execute or route to another market center 
at a price above (below) the Trading Collar. Trading Collars would be 
applicable only when automatic executions are in effect.\15\ As 
discussed below, on arrival, a buy/sell order would be automatically 
executed up/down to (and including, but not beyond) the Trading Collar 
and any remaining interest shall be cancelled. Unless it is a non-
routable order, the order would route to all markets at or better than 
the Trading Collar.\16\
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    \14\ A market order is an ``order to buy or sell a stated amount 
of a security at the most advantageous price obtainable after the 
order is represented in the Trading Crowd or routed to the Display 
Book[supreg].'' See Rule 13. A marketable limit order is defined as 
``a limit order to buy (sell) priced at or above (below) the 
Exchange best offer (bid) at the time such order is routed to the 
Display Book[supreg].'' Id. Because a stop order becomes a market 
order when elected, the Exchange believes it is appropriate to 
provide that elected stop orders would be subject to the proposed 
Trading Collar.
    \15\ See proposed Rule 1000(c)(ii). Both market orders and 
marketable limit orders are ``auto ex orders'' that initiate 
automatic executions immediately upon entry into the Exchange 
systems. See Rule 13. Trading Collars would not be applicable to Set 
Slow Stocks, or to pre-opening, opening, closing or manual 
transactions, and are not in effect during a halt, suspension, or 
pause in trading. Trading Collars would apply, and be determined, 
when discretionary pricing instructions are triggered. Trading 
Collars would not be displayed.
    \16\ If, however, an order that routed to an away market returns 
to the Exchange unexecuted, the Trading Collar based on the NBBO in 
place at the time of execution would be used for that incoming (now 
returning) order, not the Trading Collar based on the NBBO in place 
at the time of the original arrival of the order.
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    Pursuant to proposed Rule 1000(c)(i), a Trading Collar would be a 
specified percentage away from the National Best Bid or Offer 
(``NBBO''), depending on whether it is a buy or sell order, and the 
specified percentage would vary depending on the NBBO at the time the 
order arrives and/or is executed. For buy orders, the Trading Collar 
would be a specified percentage above the National Best Offer 
(``NBO''). For sell orders, the Trading Collar would be a specified 
percentage below the National Best Bid (``NBB''). The proposed Trading 
Collars are set forth in the table below.

------------------------------------------------------------------------
                                                             Percentage
                          NBB/NBO                             away from
                                                             the NBB/NBO
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Greater than $0.00, up to and including $25.00............           10
Greater than $25.00, up to and including $50.00...........            5
Greater than $50.00.......................................            3
------------------------------------------------------------------------

    The Exchange notes that these proposed percentages are based on the 
current numerical guidelines for determining whether a clearly 
erroneous execution has occurred.\17\ The Exchange further notes that 
the proposed percentages are the same as the percentages applicable to 
similar trading collar functionality on NYSE Arca Equities, Inc. 
(``NYSE Arca Equities'').\18\ The Exchange believes that the proposed 
specified percentages are appropriate because the Trading Collar is 
designed to reduce the risk of, and to potentially prevent, the 
automatic execution of orders at prices that may be considered clearly 
erroneous. Because the specified percentage may extend multiple decimal 
points, the Exchange proposes to truncate Trading Collars to the 
nearest minimum price variation (``MPV'') for the security.\19\
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    \17\ See Rule 128(c)(1).
    \18\ See NYSE Arca Equities Rule 7.31(a)(2).
    \19\ See Rule 62.
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    Consider an example where the NBBO is $24.95 x 25.01. In such 
scenario, the Trading Collar for buy orders would be $26.26 (i.e., 
$25.01 + 5% = $26.2605, truncated to $26.26) and the Trading Collar for 
sell orders would be $22.45 (i.e., $24.95-10% = $22.455, truncated to 
$22.45).
    The Exchange proposes that if the NBBO is crossed, the Exchange 
would use the Exchange Best Offer (``BO'') instead of the NBO for buy 
orders, and the Exchange Best Bid (``BB'') instead of the NBB for sell 
orders.
    The Exchange believes it is appropriate to use the BB/BO when the 
NBBO is crossed as a crossed NBBO is generally indicative of an 
erroneously priced or stale bid and/or offer, and may not be 
appropriate reference prices for calculating Trading Collars. The 
Exchange believes that this practice will help ensure that market 
participants obtain timely executions of their market orders and 
marketable limit orders while still being afforded the price protection 
benefit of the Trading Collars. As proposed, in the event there is no 
NBB or BB, the lower boundary of the Trading Collar would be zero 
because there would be no reference price against which to determine 
the appropriate Trading Collar. Similarly, in the event there is no NBO 
or BO, the upper boundary of the Trading Collar would be set to the 
maximum price that the System could handle. Notwithstanding the Trading 
Collar, any incoming market orders or marketable limit orders would 
still be subject to the Plan and could not execute outside of the Upper 
(Lower) Price Band, as defined in Rule 80C.
    Pursuant to proposed Rule 1000(c)(ii), an incoming market order, 
including an elected stop order, or marketable limit order would 
execute and/or route up or down to (and including) the Trading Collar 
and any remaining interest would be cancelled. The Exchange believes 
that Trading Collars, working in conjunction with the Plan, could help 
limit potential harm from extreme price volatility by preventing 
executions that could occur at a price significantly away from the 
contra side. As proposed, if the Trading Collar for incoming buy (sell) 
interest is lower (higher) than or equals the Upper (Lower) Price Band 
\20\, the Exchange would cancel any remaining interest. The Plan, 
however, would take priority over the Trading Collars where the Plan 
affords more price protection to incoming orders. Specifically, if the 
Upper (Lower) Price Band is lower (higher) than the Trading Collar, the 
order would execute at the more

[[Page 3271]]

restrictive Upper (Lower) Price Band and not beyond and any remaining 
interest would be displayed or repriced to the Price Band, consistent 
with Rule 80C(a)(5).
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    \20\ See Rule 80C.
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    The Exchange notes that if there is no execution opportunity at the 
Exchange for an incoming buy (sell) order at a price above (below) the 
NBO (NBB), the Exchange would not be obligated to route the order to an 
away market protected offer (bid) because the incoming order would not 
be trading through such protected quotation. The Exchange therefore 
proposes that if there is no execution opportunity at the Exchange for 
an incoming buy (sell) order at a price above (below) the NBO (NBB) and 
at or below (above) the Trading Collar, a buy (sell) order that is 
priced at or above (below) the Trading Collar would be cancelled. The 
Exchange further proposes that a similarly-priced, partially-executed 
order would also be cancelled.
    For example, assume the NBO is 10.00, based on a quote from an away 
market, and therefore the proposed Trading Collar is 11.00. Assume 
further that the Exchange's best offer is 11.05 and with these 
conditions, the Exchange receives an incoming buy order priced at 
11.02. Because there is no execution opportunity for the incoming buy 
order above the NBO and at or below the Trading Collar, and because the 
order's limit price exceeds the Trading Collar, the incoming buy order 
would be cancelled. The buy order would cancel rather than route 
because the Exchange would not trade through another market. Similarly, 
assuming the same facts, but the Exchange has non-displayed interest to 
sell priced at 9.99. An incoming buy order priced at 11.02 would 
execute against that 9.99 non-displayed sell interest, and then any 
remainder of the buy order would similarly be cancelled because there 
is no execution opportunity priced above the NBO of 10.00 or at or 
below the Trading Collar of 11.00.
    Finally, pursuant to proposed Rule 1000(c)(iii), during a Short 
Sale Price Test \21\, if the NBBO is crossed, short sale orders that 
would be re-priced to a Trading Collar would be cancelled. Under Rule 
201 of Regulation SHO,\22\ when the NBBO is crossed, a short sale order 
in a covered security may be displayed or executed at a price that is 
less than or equal to the current national best bid.\23\ Accordingly, 
if the NBBO is crossed, a short sale order priced at or below the 
Trading Collar could be re-priced to the Trading Collar, which is by 
definition a price below the NBB. In the spirit of Rule 201 of 
Regulation SHO, which is to prevent the display or execution of short 
sale orders at prices equal to or below the NBB, the Exchange believes 
that it is appropriate during a crossed market to cancel a short sale 
order that would be re-priced to a Trading Collar rather than display 
the order at that price.
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    \21\ See Rule 440B(b).
    \22\ 17 CFR Part 242.201.
    \23\ See SEC Division of Trading and Markets: Responses to 
Frequently Asked Questions Concerning Rule 201 of Regulation Show, 
FAQ 6.1, available at: http://www.sec.gov/divisions/marketreg/rule201faq.htm.
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    The Exchange also proposes to amend Rule 70.25(b)(i), regarding 
price discretion or ``d-Quotes,'' which states that ``[a] Floor broker 
may set a discretionary price range [that] specifies the prices at 
which the Floor broker is willing to trade.'' \24\ Specifically, the 
Exchange proposes to amend this Rule to provide that d-Quotes are 
subject to the Trading Collar and/or the Price Bands and, thus, 
pursuant to the amended rule, Floor Brokers may use discretion to 
initiate or participate in a trade with interest capable of trading at 
a price within the discretionary price range ``unless the interest 
reaches a Trading Collar or Price Band, whichever is reached first.'' 
\25\ The Exchange believes it is appropriate to similarly afford 
Trading Collar price protection to d-Quotes to prevent the execution of 
orders with discretionary price instructions at prices outside the 
prevailing market price from causing significant price dislocation in 
the market.\26\
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    \24\ Because the rule erroneously omits the word ``that'' from 
this sentence, the Exchange proposes to correct this omission as 
part of this rule filing.
    \25\ See proposed Rule 70.25(b)(i).
    \26\ The Trading Collar applies to d-Quotes in the same manner 
as other order types. See supra n. 15 (Trading Collars apply when 
discretionary pricing instructions are triggered, but do not apply 
to openings, re-openings, or closing trades).
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Proposed Elimination of LRPs and Gap Quote Policy
    As noted above, by rule, the Exchange has already discontinued the 
use of LRPs for any security subject to the Plan. However, LRPs 
continue to be available for rights and warrants, which are not subject 
to the Plan. The Exchange believes that with the introduction of 
Trading Collars it will have in place appropriate price protections for 
rights and warrants and the Exchange will no longer need LRPs for those 
securities. Accordingly, the Exchange proposes to complete the 
Exchange's discontinuation of LRPs in their entirety by deleting 
references to LRPs in the following Rules: 60, 79A, 104, 128, and 1000.
    For similar reasons, the Exchange believes it appropriate to 
discontinue the Gap Quote Policy. Accordingly, the Exchange proposes to 
eliminate its Gap Quote Policy in its entirety and to delete references 
thereto in the following Rules: 60, 79A, 104, and 1000.
    Relatedly, the Exchange also proposes to amend Rule 1000(e) 
(Executions at and Outside the Exchange Best Bid or Offer) to add 
references to Trading Collars and/or Price Bands, in certain cases to 
replace deleted references to LRPs. The Exchange believes these 
proposed changes will add transparency and clarity to the Exchange's 
rules.
Other Proposed Amendments
    In connection with the addition of the Trading Collar, the Exchange 
also proposes to amend the definition of market order, in Rule 13, to 
state that if a market order to sell has exhausted all eligible buy 
interest, any unfilled balance of the market order to sell will be 
cancelled. The Exchange believes that this is appropriate because it 
assures that a market order to sell will not be held at a price that it 
is not executable, i.e., $0.00.
    Finally, unrelated to issues raised in present filing, the Exchange 
is also proposing technical, non-substantive edits to delete from the 
Exchange rules the outdated/obsolete references to securities operating 
in ``Non-Firm Mode,'' including in Rule 60(c)(ii)(A) and Rule 
1000(a)(i), or the block template, referred to in Rule 60(ii)(B), which 
is the ``manual reporting of a block-sized transaction.'' The Exchange 
also proposes to delete the reference to ``S-quotes'' in Rule 60(d), 
1000(a) and 1000(e)(iii)(A), as DMM interest is no longer solely 
referred to in this manner and the Exchange believes the proposed 
amendment will remove this outmoded and narrow reference. The Exchange 
also proposes to amend the last sentence of Rule 60(d), regarding 
``[a]utoquoting of highest bid/lowest offer,'' to account for the 
impact of the Trading Collars.\27\ The Exchange proposes to amend Rule 
1000(b) to update an incorrect reference to the resumption of 
autoquoting as set forth in Rule 60(d)--not Rule 60(e) as this rule 
presently states.\28\ Finally, the Exchange proposes to delete an 
erroneous reference in Rule 1000(e)(iv)

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to paragraph (d)(iii), as there is no such paragraph in the Rule.
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    \27\ As proposed, the final sentence of Rule 60(d) would state 
the following: ``When the Exchange's highest bid or lowest offer has 
been executed or cancelled in its entirety, the Exchange will 
autoquote a new bid or offer reflecting the total size of 
displayable orders at the next highest (in the case of a bid) or 
lowest (in the case of an offer) price.''
    \28\ See proposed Rule 1000(b).
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Implementation
    The Exchange will announce the implementation date of the proposed 
rule change by Trader Update.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \29\ that an Exchange have rules that 
are designed to promote the 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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    \29\ 15 U.S.C. 78f(b)(5).
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    As an initial matter, the Exchange notes that the proposed Trading 
Collar, which is designed to designed to promote the 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, is similar to 
the price protection features offered on other markets, including NYSE 
Arca Equities.\30\ As noted above, the specified percentages relating 
to the Trading Collar are based on the current numerical guidelines for 
determining whether a clearly erroneous execution has occurred and are 
the same as the approved specified percentages applicable to similar 
trading collar functionality on NYSE Arca Equities.\31\
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    \30\ See e.g., NYSE Arca Equities Rule 7.31(a)(2). See also BATS 
Exchange, Inc. (``BATS) Rule 11.9(a)(2); BATS Y-Exchange, Inc. 
(``BATS-Y'') Rule 11.9(a)(2); EDGA Exchange, Inc. (``EDGA'') Rule 
11.8(a)(7); EDGX Exchange, Inc. (``EDGX'') Rule 11.8(a)(7); Nasdaq 
Stock Market LLC (``Nasdaq'') Rule 4751(f)(13).
    \31\ See supra nn. 17-18.
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    Moreover, the Exchange believes that the proposed Trading Collar 
assists with the maintenance of fair and orderly markets by helping to 
mitigate the risks associated with orders sweeping through multiple 
price points, thereby resulting in executions that are potentially 
erroneous, which, in turn, protects investors from potentially 
receiving executions away from the prevailing prices at any given time. 
Specifically, the Exchange believes the Trading Collars will remove 
impediments to and perfect the mechanisms of a free and open market 
because the Trading Collars will operate in tandem with the Plan and 
will only execute/route incoming market orders or marketable limit 
orders priced within the Trading Collars or within the Upper (Lower) 
Band set forth in the Plan, if the latter is more conservative. The 
Exchange believes this mechanism will mitigate the risk of potentially 
erroneous executions, which protects investors and the public interest.
    The Exchange also believes its use of the BB/BO when the NBBO is 
crossed assists with the maintenance of fair and orderly markets as a 
crossed NBBO is generally indicative of an erroneously priced bid and/
or offer, and should not be considered reliable for the purposes of 
determining the specified percentages for a Trading Collar. The 
Exchange believes that this practice will help ensure that market 
participants obtain timely executions of their market orders and 
marketable limit orders while still being afforded the price protection 
benefit of Trading Collar functionality, which protects investors and 
the public interest.
    Similarly, the Exchange believes that affording Trading Collar 
price protection to d-Quotes would remove impediments to and perfect 
the mechanism of a free and open market as the Trading Collar would 
prevent the execution of d-Quotes that are priced far away from the 
prevailing market price from causing significant price dislocation in 
the market, which, in turn, benefits investors and is in the public 
interest.
    The Exchange believes that the technical, non-substantive proposed 
amendments and/or deletions related to the Trading Collar in rules 
other than Rule 1000, as described above, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, protect investors and the public interest. 
Specifically, the Exchange believes that the proposed changes add 
transparency and clarity to the Exchange's rules and will enhance the 
understanding of market participants by reducing potential confusion 
that the obsolete references would otherwise create.
    Finally, the Exchange previously committed to discontinue the 
Exchange-specific volatility mechanisms; thus, the elimination of LRPs 
and the Exchange's Gap Quote Policy are expected changes.\32\ Moreover, 
the implementation of the Plan, together with the proposed Trading 
Collars eliminates the necessity for these Exchange-specific volatility 
mechanisms, as the Exchange will have in place appropriate price 
protections for all securities traded on the Exchange, including for 
rights and warrants.
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    \32\ See supra nn. 4, 7-9.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes the 
adding of Trading Collar protection will provide market participants 
with additional protection from anomalous executions. Thus, the 
Exchange does not believe the proposal creates any significant impact 
on competition.

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 \33\ and Rule 19b-4(f)(6) thereunder.\34\ 
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 \35\ and Rule 19b-
4(f)(6)(iii) thereunder.\36\
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    \33\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \34\ 17 CFR 240.19b-4(f)(6).
    \35\ 15 U.S.C. 78s(b)(3)(A).
    \36\ 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) \37\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\38\ 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. The Exchange 
asserts that the rule change proposed herein

[[Page 3273]]

would meet the Commission's previously stated expectation that the 
Exchange discontinue its LRPs.\39\ Furthermore, the Exchange states its 
belief that meeting this expectation as soon as the technology becomes 
available, which the Exchange represents would be before the end of the 
operative-delay period, is consistent with the protection of investors 
and the public interest because it would implement the discontinuation 
of its LRPs as expeditiously as possible. Finally, the Exchange asserts 
that the proposed rule change would also add market collars that are 
similar to existing mechanisms on other markets and would reduce the 
potential of a clearly erroneous execution occurring on the Exchange. 
The Exchange, therefore, concludes that waiver of the operative delay 
so that it can implement market collars as soon as the technology is 
available is not only consistent with the protection of investors and 
the public interest, but would also benefit investors and the public 
interest. Because the proposed rule change would eliminate the 
Exchange's LRPs, consistent with the adoption of the Plan, and because 
the proposed rule change is designed to prevent clearly erroneous order 
executions, the Commission believes that waiver of the operative delay 
is consistent with investor protection and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\40\
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    \37\ 17 CFR 240.19b-4(f)(6).
    \38\ 17 CFR 240.19b-4(f)(6)(iii).
    \39\ See supra n. 4.
    \40\ 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#fc8e899099d19f9391919992888fbc8f999fd29b938a"><span class="__cf_email__" data-cfemail="f587809990d8969a9898909b8186b5869096db929a83">[email protected]</span></a>. Please include 
File Number S SR-NYSE-2015-01 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-2015-01. 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 Web site (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 Web site 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 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal offices of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2015-01, and should be 
submitted on or before February 12, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\41\
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    \41\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00966 Filed 1-21-15; 8:45 am]
BILLING CODE 8011-01-P


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