[Federal Register Volume 80, Number 45 (Monday, March 9, 2015)]
[Notices]
[Pages 12537-12542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-05291]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74415; File No. SR-NYSEArca-2015-08]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To Eliminate Additional Order Type Combinations 
and Delete Related Rule Text and To Restructure the Remaining Rule Text 
in NYSE Arca Equities Rule 7.31

March 3, 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 February 19, 2015, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission 
(``SEC'' or the ``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 comment 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 eliminate additional order type 
combinations and delete related rule text and to restructure the 
remaining rule text in NYSE Arca Equities Rule 7.31. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On June 5, 2014, in a speech entitled ``Enhancing Our Market Equity 
Structure,'' Mary Jo White, Chair of the Securities and Exchange 
Commission (``SEC'' or the ``Commission'') requested the equity 
exchanges to conduct a comprehensive review of their order types and 
how they operate in practice, and as part of this review, consider 
appropriate rule changes to help clarify the nature of their order 
types.\4\ Subsequent to the Chair's speech, the SEC's Division of 
Trading and Markets requested that the equity exchanges complete their 
reviews and submit any proposed rule changes by November 1, 2014.\5\
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    \4\ See Mary Jo White, Chair, Securities and Exchange 
Commission, Speech at the Sandler, O'Neill & Partners, L.P. Global 
Exchange and Brokerage Conference (June 5, 2014) (available at 
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
    \5\ See Letter from James Burns, Deputy Director, Division of 
Trading and Markets, Securities and Exchange Commission, to Jeffrey 
C. Sprecher, Chief Executive Officer, Intercontinental Exchange, 
Inc., dated June 20, 2014.
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    The Exchange notes that it continually assesses its rules governing 
order types and undertook on its own initiative a review of its rules 
related to order functionality to assure that its various order types, 
which have been adopted and amended over the years, accurately describe 
the functionality associated with those order types, and more 
specifically, how different order types may interact. As a result of 
that review, in 2013, the Exchange submitted a proposed rule change, 
which the Commission approved, to update its rules relating to order 
types and modifiers.\6\ The 2013 Review Filing did not add any new 
functionality but instead enhanced and clarified descriptions of the 
order type and modifier functionality on the Exchange. More recently, 
as part of its ongoing review to streamline its rules and reduce 
complexity among its order type offerings, the Exchange filed a 
proposed rule change, which the Commission approved, to eliminate 
specified order types, modifiers, and related references.\7\
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    \6\ See Securities Exchange Act Release No. 71331 (Jan. 16, 
2014), 79 FR 3907 (Jan. 23, 2014) (SR-NYSEArca-2013-92) (Approval 
order) (``2013 Review Filing'').
    \7\ See Securities Exchange Act Release No. 72942 (Aug. 28, 
2014), 79 FR 52784 (Sept. 4, 2014) (SR-NYSEArca-2014-75) (Approval 
order) (``2013 Deletion Filing'').
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    The Exchange is filing this proposed rule change to continue its 
efforts to review and clarify its rules governing order types. First, 
the Exchange has identified additional order types and functionality to 
eliminate and proposes to delete related rule text in NYSE Arca 
Equities Rule 7.31 (``Rule 7.31''), as described in more detail below.
    Second, the Exchange is proposing certain non-substantive and 
clarifying changes to its rules. As Rule 7.31 has been amended through 
the years, additional order types and modifiers have been added as new 
subsections to what was the end of the rule text at any given time. 
Accordingly, the rule text describes the Exchange's order types and 
modifiers in the order in which those order types and modifiers were 
added. In addition, when rule text has been deleted and replaced with 
references to ``Reserved,'' the subsections have not been renumbered. 
The Exchange proposes to provide additional clarity to Rule 7.31 by re-
grouping and re-numbering current rule text, removing references to 
``reserved'' subsections, and making other non-substantive, clarifying 
changes. In this regard, the proposed rule changes are not intended to 
reflect changes to functionality but rather to clarify Rule 7.31 to 
make it easier to navigate.\8\
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    \8\ The Exchange notes that its affiliated exchanges, New York 
Stock Exchange LLC (``NYSE'') and NYSE MKT LLC are proposing similar 
restructuring of their respective order type rules to group order 
types and modifiers. See SR-NYSE-2014-59 and SR-NYSEMKT-2014-95.
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Proposed Elimination of Additional Orders and Modifiers
    As part of its review, the Exchange has identified the following 
additional order types and functionality to eliminate:
    <bullet> All-or-None (``AON'') Orders: An AON Order is a limit 
order that is to be executed in its entirety or not at all. A limit 
order marked AON does not trade through a Protected Quotation. AONs are 
defined as a type of Working Order, currently set forth in Rule 
7.31(h)(1). To

[[Page 12538]]

effectuate the proposed elimination of AON Orders, the Exchange 
proposes not to include current Rule 7.31(h)(1) in the rule 
restructuring, described below. The Exchange proposes to make 
conforming changes to Rules 7.36(a)(2)(C) and current Rule 
7.37(b)(2)(A)(ii) to reflect the elimination of AON.\9\
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    \9\ The Exchange also proposes non-substantive changes to Rule 
7.37 to delete references to ``reserved'' and re-number the rule 
text accordingly. Current Rule 7.37(b)(2)(A)(ii), as amended, would 
be renumbered to Rule 7.37(b)(1)(A).
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    <bullet> Primary Sweep Orders (``PSO''): A PSO is a Primary Only 
Order (defined in Rule 7.31(x)) that first sweeps the Exchange's book 
before routing to the primary market. PSOs may only be day or IOC, and 
may not be designated as GTC or an ISO. PSOs are currently set forth in 
Rule 7.31(kk). To effectuate the proposed elimination, the Exchange 
proposes not to include current Rule 7.31(kk) in the rule 
restructuring, described below.
    In addition, the Exchange has identified additional order type 
functionality combinations that would no longer be accepted:
    <bullet> Reserve Orders designated IOC: Rule 7.31(h)(3) governing 
Reserve Orders currently provides that Reserve Orders must be in round 
lots and cannot be combined with an order type that could never be 
displayed. The Exchange proposes to further specify that Reserve Orders 
may not be designated with an Immediate or Cancel (``IOC'') time-in-
force modifier, which would be stated in new Rule 7.31(d)(2) governing 
Reserve Orders.
    <bullet> Inside Limit Orders designated IOC: Inside Limit Orders, 
which are currently defined in Rule 7.31(d), are limit orders that, if 
routed away, are routed to the market participant with the best 
displayed price. If there is an unfilled portion of such an order, it 
will not be routed to the next best price level until all quotes at the 
current best bid or offer are exhausted. The Exchange proposes to 
specify that Inside Limit Orders may not be designated IOC because the 
Exchange believes that the IOC time-in-force modifier is inconsistent 
with the purpose of an Inside Limit Order, which is to wait for each 
price point to be cleared before being executed or routed to additional 
price points. This change would be included in new Rule 7.31(a)(3).
    <bullet> PNP Blind Orders: Rule 7.31(mm) currently specifies that a 
PNP Blind order may be combined with an Add Liquidity Only (``ALO'') 
Order. The Exchange proposes to amend the rule text governing PNP Blind 
to provide that a PNP Blind order that is combined with an ALO modifier 
may not also be designated Reserve. This change would be included in 
new Rule 7.31(e)(4).
    The Exchange believes that by eliminating the above-described order 
types and functionality, the Exchange would further streamline its 
rules and reduce complexity among the order types offered at the 
Exchange.
    Because of technology changes associated with eliminating the 
above-described order types and functionality, the Exchange will 
announce by Trader Update the implementation date of these proposed 
changes.
Proposed Rule 7.31 Restructure
    The Exchange proposes to re-structure Rule 7.31 to re-group 
existing order types and modifiers together along functional lines.
    Proposed new subsection (a) of Rule 7.31 would set forth the 
Exchange's order types that are the foundation for all other order type 
instructions, i.e., the primary order types. All orders entered at the 
Exchange must be designated with an identifier associated with a 
primary order type, together with such other technical specifications 
as may be applicable for a specific order or modifier combination. The 
Exchange, therefore, believes that clearly identifying the primary 
order types in Exchange rules would provide transparency for ETP 
Holders of how to designate orders entered at the Exchange. The 
proposed primary order types would be:
    <bullet> Market Orders. Current Rule 7.31(a) describing Market 
Orders and related subsections would be moved to new Rule 7.31(a)(1). 
In moving the rule text currently set forth in Rule 7.31(a)(3)(A), the 
Exchange proposes non-substantive revisions to delete the phrase 
``unless marked IOC'' because Market Orders cannot be designated IOC 
\10\ and to capitalize the terms ``Market Order''. In addition, the 
Exchange proposes a clarifying change to the second sentence of current 
Rule 7.31(a), which currently provides that Market Orders shall be 
rejected if there is no bid or offer. Because such rejection is based 
on whether there is a contra-side bid or offer (i.e., a Market Order to 
sell is rejected if there is no bid), the Exchange proposes to clarify 
this sentence in new Rule 7.31(a)(1) to provide that ``Market Orders 
are rejected if there is no contra-side bid or offer.''
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    \10\ In the 2013 Deletion Filing, the Exchange amended the 
definition of IOC to specify that it is only available for Limit 
Orders. See 2013 Deletion Filing, supra n. 7.
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    <bullet> Limit Orders. Current Rule 7.31(b) describing Limit Orders 
and related subsections would be moved to new Rule 7.31(a)(2). The 
Exchange proposes a non-substantive change to capitalize the term 
``Limit Order'' in new Rule 7.31(a)(2) and make conforming changes to 
references to ``limit order'' in the remainder of Rule 7.31, as 
specified below. In addition, the Exchange proposes a clarifying change 
to the second sentence of current Rule 7.31(b), which currently 
provides that a marketable limit order is a limit order to buy (sell) 
at or above (below) the PBBO for the security. Because marketability is 
based on the contra-side PBBO (i.e., a Limit Order to buy is marketable 
against the PBO), the Exchange proposes to clarify this sentence in new 
Rule 7.31(a)(2) to provide that: ``A `marketable' Limit Order is a 
Limit Order to buy (sell) at or above (below) the contra-side PBBO for 
the security.''
    <bullet> Inside Limit Orders. Current Rule 7.31(d) describing 
Inside Limit Orders would be moved to new Rule 7.31(a)(3). The Exchange 
proposes clarifying amendments to new Rule 7.31(a)(3) to replace 
references to ``best displayed price'' with references to ``contra-side 
NBBO.'' As set forth in Rule 7.37, Inside Limit Orders are priced based 
on the NBBO. Accordingly, the Exchange believes that referencing the 
NBBO in new Rule 7.31(a)(3) would eliminate the need for a market 
participant to review two rules, Rules 7.31 and 7.37, to determine that 
the term ``best displayed price'' refers to the NBBO. The Exchange also 
proposes to add new text to Rule 7.31(a)(3) to clarify that after an 
Inside Limit Order has been routed to a contra-side NBBO, the Exchange 
displays the Inside Limit Order at that now-exhausted contra-side NBBO 
price while the Exchange waits for an updated NBBO to be displayed. As 
provided for in the current rule, once a new contra-side NBBO is 
displayed, the Exchange will route to that single price point and 
continue such assessment at each new contra-side NBBO until the order 
is filled or no longer marketable. In addition, to effect the above-
described proposal to provide that Inside Limit Orders may not be 
designated IOC, the Exchange proposes to add to new Rule 7.31(a)(3)(D) 
that an Inside Limit Order may not be designated as IOC. Because an 
Inside Limit Order may still be designated as NOW, which is a distinct 
time-in-force modifier from IOC, the Exchange also proposes to add to 
new Rule 7.31(a)(3)(D) that an Inside Limit Order may be designated as 
NOW. The Exchange further proposes non-substantive changes to the rule 
text governing Inside Limit Orders to separate the existing text into 
sub-

[[Page 12539]]

sections, which the Exchange believes would make the rule text easier 
to navigate.
    Proposed new subsection (b) of Rule 7.31 would set forth the Time 
in Force Modifiers that the Exchange makes available for orders entered 
at the Exchange. In the 2013 Review Filing, the Exchange grouped its 
existing time-in-force modifiers together in current Rule 7.31(c).\11\ 
As proposed, Rule 7.31(c) would be redesignated as Rule 7.31(b), 
without changing the rule text.
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    \11\ See 2013 Review Filing, supra n. 6.
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    In addition, the Exchange proposes to move the rule text governing 
NOW Orders, currently in Rule 7.31(v), to new Rule 7.31(b)(5). The 
Exchange believes that ``NOW Orders'' are appropriately included with 
the time-in-force modifiers because a NOW Order designation provides 
for an immediate execution of an order in whole or in part on the 
Exchange with the unexecuted portion routed to away markets consistent 
with Rule 7.37(d), and the portion not so executed cancelled. The 
Exchange also believes that the ``NOW'' designation is more 
appropriately described as a modifier rather than as an order, and 
therefore proposes to re-name it as a ``NOW Modifier'' and make 
conforming changes in other Exchange rules. In addition, the Exchange 
notes that it routes orders designated NOW to all available quotes in 
the routing determination, consistent with Rule 7.37(d)(2). The 
Exchange therefore proposes to delete the references in the rule text 
to NOW recipients and replace such references with rule text that 
specifies that orders with a NOW modifier would be routed to all 
available quotations in the routing determination, including Protected 
Quotations.
    Proposed new subsection (c) of Rule 7.31 would specify the 
Exchange's existing Auction-Only Orders, which the Exchange last 
revised in the 2013 Deletion Filing.\12\ The Exchange proposes non-
substantive changes to the definitions of Limit-on-Open Orders, Market-
on-Open Orders, Limit-on-Close Orders, and Market-on-Close Orders, 
which would be defined in proposed Rule 7.31(c)(1)-(4), respectively. 
The Exchange further proposes to delete rule text in proposed Rules 
7.31(c)(1), (c)(2), (c)(3), and (c)(4), as duplicative of the general 
definition of Auction Only Orders in proposed new Rule 7.31(c). The 
Exchange further proposes to add to Rule 7.31(c) existing rule text 
from these subsections, as modified, that the Exchange would reject any 
Auction-Only Orders in securities that are not eligible for an auction 
on the Exchange or if an auction is suspended pursuant to Rule 7.35(g).
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    \12\ See 2013 Deletion Filing, supra n. 7.
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    Proposed new subsection (d) of Rule 7.31 would specify the 
Exchange's Working Orders, which are currently defined in Rule 7.31(h). 
As noted above, the Exchange proposes to eliminate AON Orders. 
Accordingly, [sic]
    <bullet> Discretionary Orders. Current Rule 7.31(h)(2) would be 
moved to new Rule 7.31(d)(1) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    <bullet> Reserve Orders. Current Rule 7.31(h)(3) would be moved to 
new Rule 7.31(d)(2) and the Exchange proposes non-substantive changes 
to capitalize the term ``Limit Order'' and delete a duplicative use of 
the word ``Order.'' To effect the change described above that Reserve 
Orders may not be designated IOC, the Exchange proposes to add to new 
Rule 7.31(d)(2) that Reserve Orders may not be designated IOC. The 
Exchange also proposes to clarify that the existing requirement that 
Reserve Orders be in round lots applies to the displayed quantity of 
the Reserve Order.
    <bullet> Passive Liquidity Orders. Current Rule 7.31(h)(4) would be 
moved to new Rule 7.31(d)(3). The Exchange notes that Rule 7.31(h)(4) 
currently provides that ``[a] Passive Liquidity Order must be 
designated as an Inside Limit Order.'' This requirement refers to the 
identifier associated with entering Passive Liquidity Orders at the 
Exchange. The description of how Passive Liquidity Orders operate is in 
current Rule 7.31(h)(4), and proposed new Rule 7.31(d)(3). As noted 
above, the Exchange now proposes to separately define the Exchange's 
primary order types. In connection with this proposal, the Exchange 
proposes to reorganize the description of Passive Liquidity Orders to 
delete the separate phrase ``[a] Passive Liquidity Order must be 
designated as an Inside Limit Order'' and replace the term ``order'' in 
the first sentence of the rule with a reference to ``Inside Limit 
Order.'' The Exchange also proposes to clarify that a Passive Liquidity 
Order does not route.
    <bullet> Mid-Point Passive Liquidity (``MPL'') Orders. Current Rule 
7.31(h)(5) would be moved to new Rule 7.31(d)(4). The Exchange proposes 
to make non-substantive changes to the rule text to make it easier to 
read, including adding new subsections and deleting obsolete rule text 
and capitalizing the term ``Limit Order.'' The Exchange also proposes 
to specify that the primary order type for an MPL Order is a Limit 
Order rather than a Passive Liquidity Order because an MPL Order does 
not use the Inside Limit Order primary order type (and related 
technical identifier). Because a Passive Liquidity Order is by 
definition an undisplayed order, and because the Exchange is proposing 
to delete reference to Passive Liquidity Order as part of the MPL Order 
definition, the Exchange proposes to specify that MPL Orders are 
undisplayed. This proposed addition to the definition of MPL Orders is 
non-substantive because Passive Liquidity Orders are undisplayed orders 
and, thus, the current description of MPL Orders as Passive Liquidity 
Orders incorporates the undisplayed functionality of MPL Orders.
    The Exchange also proposes to include new text that explicitly 
states that an incoming order marketable against a resting MPL Order 
with minimum execution size specifications will not execute against 
such MPL Order unless it meets the minimum size restrictions and, 
instead, will trade through such MPL Order. The Exchange believes this 
additional rule language would provide clarity and transparency that 
when an MPL Order also includes a minimum execution size, it may be 
traded through by incoming marketable orders that do not satisfy the 
minimum execution size condition.
    <bullet> MPL-IOC Order. Current Rule 7.31(h)(6) would be moved to 
new Rule 7.31(d)(5) without any substantive changes to the rule text.
    Proposed new subsection (e) of Rule 7.31 would specify the 
Exchange's existing order types that, by definition, do not route. The 
order types proposed to be included in this new subsection are:
    <bullet> ALO Order. Current Rule 7.31(nn) would be moved to new 
Rule 7.31(e)(1). The current rule provides that an ALO must be 
designated as either a PNP or MPL and the Exchange proposes to clarify 
that the reference to PNP includes PNP Blind orders. This proposed 
change does not alter any existing functionality associated with ALO 
because PNP Blind orders are by definition PNP Orders. The Exchange 
further notes that all functionality associated with PNP Orders, 
including the ability to be designated ISO, are applicable to PNP 
Orders that are designated ALO.
    <bullet> Intermarket Sweep Order. Current Rule 7.31(jj) would be 
moved to new Rule 7.31(e)(2) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    <bullet> PNP Order (Post No Preference). Current Rule 7.31(w) would 
be moved to new Rule 7.31(e)(3). Because PNP Orders cannot be combined 
with Inside

[[Page 12540]]

Limit Orders, the Exchange proposes to delete the following rule text: 
``A PNP Inside Limit Order shall not lock or cross Manual Quotations'' 
when moving the rule text to new Rule 7.31(e)(3). The Exchange proposes 
a non-substantive change to the rule text to capitalize the term 
``Limit Order.''
    <bullet> PNP Blind. Current Rule 7.31(mm) would be moved to new 
Rule 7.31(e)(4) without any substantive changes to the rule text (the 
Exchange would capitalize the term ``PNP Order''). As discussed above, 
the Exchange proposes to provide in new Rule 7.31(e)(4) that a PNP 
Blind order combined with ALO may not be designated as a Reserve Order.
    <bullet> Cross Order. Because Cross Orders do not route, the 
Exchange proposes to move current Rule 7.31(s) to new Rule 7.31(e)(5) 
without any changes to the rule text.\13\
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    \13\ The Exchange revised its Cross Order functionality in the 
2013 Deletion Filing. See 2013 Deletion Filing, supra n. 7.
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    <bullet> Tracking Order. Current Rule 7.31(f) would be moved to new 
Rule 7.31(e)(6). The Exchange proposes to make the following clarifying 
changes to the rule text. First, the Exchange is proposing to clarify 
that a Tracking Order is eligible to execute against a contra-side 
order equal to or less than the size of a Tracking Order and to specify 
that that the size requirement relates to comparing the incoming 
contra-side order to the size of a resting Tracking Order, not Tracking 
Orders in the aggregate. Second, because Tracking Orders execute at the 
price of the same-side NBBO, provided such price is equal to or better 
than the price of the Tracking Order, the Exchange proposes to clarify 
in new Rule 7.31(e)(6) that a Tracking Order will execute at the price 
of the same-side NBBO provided that such price shall not trade through 
a Protected Quotation or the price of the Tracking Order.
    Proposed new subsection (f) of Rule 7.31 would specify the 
Exchange's existing order types that by definition, include specified 
routing instructions. As noted above, the Exchange proposes to delete 
Primary Sweep Orders. Accordingly, new subsection (f) would not include 
Primary Sweep Orders. The order types proposed to be included in this 
new subsection are:
    <bullet> Primary Only Order (``PO Order''). Current Rule 7.31(x) 
would be moved to new Rule 7.31(f)(1) without any substantive changes 
to the rule text (the Exchange would capitalize the terms ``Limit 
Order'' and ``Market Order'').
    <bullet> Primary Until 9:45 Order. Current Rule 7.31(oo) would be 
moved to new Rule 7.31(f)(2) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    <bullet> Primary After 3:55 Order. Current Rule 7.31(pp) would be 
moved to new Rule 7.31(f)(3) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    Proposed new subsection (g) of Rule 7.31 would include the 
Exchange's other existing order instructions and modifiers, including:
    <bullet> Pegged Order. Current Rule 7.31(cc) would be moved to new 
Rule 7.31(g)(1) without any substantive changes to the rule text (the 
Exchange would capitalize the term ``Limit Order'').
    <bullet> Proactive if Locked Modifier. Current Rule 7.31(hh) would 
be moved to new Rule 7.31(g)(2) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    <bullet> Do Not Reduce Modifier. Current Rule 7.31(n) would be 
moved to new Rule 7.31(g)(3) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    <bullet> Do Not Increase Modifier. Current Rule 7.31(o) would be 
moved to new Rule 7.31(g)(4) without any substantive changes to the 
rule text (the Exchange would capitalize the term ``Limit Order'').
    <bullet> Self Trade Prevention Modifier (``STP''). Current Rule 
7.31(qq) would be moved to new Rule 7.31(g)(5) without any substantive 
changes.
    Finally, proposed new subsection (h) of Rule 7.31 would describe Q 
Orders, an existing order type available for Exchange Market Makers, 
which are currently defined in Rule 7.31(k). In moving the rule text, 
the Exchange proposes to delete the subsections marked ``reserved'' and 
renumber the remaining subsections accordingly. The Exchange also 
proposes to clarify in new Rule 7.31(h)(3) that Q Orders do not route.
Additional Proposed Amendments
    To reflect the changes proposed to Rule 7.31, the Exchange proposes 
to make conforming, non-substantive changes to Rules 7.35, 7.36, and 
7.37, as follows:
    <bullet> Amend Rule 7.35 to capitalize the terms ``Market Order'' 
and ``Limit Order,'' replace the term ``Limited Priced Order'' with the 
term ``Limit Order,'' and use the terms ``LOC Order'' and ``MOC Order'' 
instead of ``Limit-on-Close Order'' and ``Market-on-Close Order.'' In 
Rule 7.35(e), the Exchange proposes to delete the reference to a 
Closing Auction for NYSE-listed securities subject to a sub-penny 
trading condition under NYSE Rule 123D, as that condition no longer 
exists on NYSE. In addition, because the Exchange does not run a Market 
Order Auction in Nasdaq-listed securities (other than of Derivative 
Securities Products as defined in Rule 7.34(a)(4)(A), and as specified 
in Rule 7.35(c)), the Exchange proposes to delete all references to 
Nasdaq-Listed securities and related rule text in Rules 7.35(c)(1)(B), 
(c)(2)(B), and (c)(3)(B). Similarly, because the Exchange only runs a 
Trading Halt Auction in securities that are listed on the Exchange, the 
Exchange proposes to delete references to how Trading Halt Auctions 
operate for securities other than those listed on the Exchange, and as 
currently described in Rules 7.35(f)(1)(A) and (B), (f)(4)(A), and 
(f)(4)(B), and re-number existing Rule 7.36(f)(4)(C) as Rule 
7.36(f)(4);
    <bullet> Amend Rule 7.36 to capitalize the term ``Limit Order''; 
and Amend Rule 7.37 to capitalize the term ``Reserve Order,'' use the 
term ``ISO'' instead of ``Intermarket Sweep Order,'' replace the term 
``Limited Price Order'' with the term ``Limit Order,'' remove 
references to the term ``Reserved'' from current Rule 7.37(a) and (b) 
and re-number the subsections of the rule accordingly, and update the 
cross-reference to the rule cite for Passive Liquidity Orders in new 
Rule 7.37(a)(1).
    The Exchange also proposes to amend Rule 7.36 to clarify how the 
Exchange treats non-marketable odd-lot orders that are priced better 
than the best-priced round lot interest at the Exchange for purposes of 
determining the best ranked displayed order(s) on the Exchange. 
Specifically, when disseminating the Exchange's best ranked displayed 
orders to either the Consolidated Quotation System (for Tape A and B 
securities) or the UTP Plan (for Tape C securities) (together, the 
``public data feeds''), the Exchange aggregates non-marketable odd-lot 
interest at multiple price points and if they equal a round lot or 
more, displays the aggregated odd-lot orders in a round lot quantity at 
the least aggressive price at which such odd-lot sized orders can be 
aggregated to equal at least a round lot. For example, if the Exchange 
has a bid of 100 shares at 10.00, 50 shares at 10.01 and 60 shares at 
10.02, the Exchange's best bid published to the public data feeds would 
be 100 shares at 10.01. Similarly, if the Exchange has an offer of 100 
shares at 10.05, 50 shares at 10.04, and 60 shares at 10.03, the 
Exchange's best offer published to the public data feeds would be 100 
shares

[[Page 12541]]

at 10.04. To reflect this clarification, the Exchange proposes to amend 
Rule 7.36(c) to provide that if non-marketable odd-lot sized orders at 
different price points equal at least a round lot, such odd-lot sized 
orders would be displayed as the best ranked displayed orders to sell 
(buy) at the least aggressive price at which such odd-lot sized orders 
can be aggregated to equal at least a round lot.
    Finally, the Exchange proposes to amend Rule 7.38(a)(1) regarding 
Odd Lots to specify the order types that may not be entered as odd 
lots. Currently, Rule 7.38(a)(1) provides that odd lot orders may not 
be Working Orders, Tracking Orders, etc. However, to reflect certain 
amendments to Rule 7.31, which were not incorporated in Rule 7.38,\14\ 
and to provide more specificity, the Exchange proposes to clarify Rule 
7.38(a)(1) to provide that the following orders may not be entered as 
odd lots: Reserve Orders, MPL-IOC Orders, Tracking Orders, and Q 
Orders. The Exchange also proposes a non-substantive change to Rule 
7.38(a)(2) to remove an extraneous period at the end of the sentence.
---------------------------------------------------------------------------

    \14\ E.g., In 2011, the Exchange amended Rule 7.31(h)(5) to 
lower the minimum order entry size to one share for MPL Orders. See 
Securities Exchange Act Release No. 64523 (May 19, 2011), 76 FR 
30417 (May 24, 2011) (SR-NYSEArca-2011-29) (Notice of filing of 
proposed rule change amending Rule 7.31(h)(5) to reduce the minimum 
order entry size of MPL Orders from 100 shares to one share).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\15\ in general, and 
furthers the objectives of Section 6(b)(5),\16\ 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. Specifically, 
the Exchange believes that eliminating AON and PSO Orders, as well as 
reducing specified order type combinations, would remove impediments to 
and perfect the mechanism of a free and open market by simplifying 
functionality and complexity of its order types. The Exchange believes 
that eliminating these order types would be consistent with the public 
interest and the protection of investors because investors will not be 
harmed and in fact would benefit from the removal of complex 
functionality. The Exchange further believes that removing cross-
references to AON in Rules 7.36 and 7.37 would remove impediments to 
and perfect the mechanism of a free and open market because it would 
reduce potential confusion that may result from having such cross 
references in the Exchange's rulebook. Removing such obsolete cross 
references would also further the goal of transparency and add clarity 
to the Exchange's rules.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange further believes that the proposed restructuring of 
Rule 7.31, to group existing order types to align by functionality, 
delete subsections marked ``reserved'', and clarify rule text also 
would remove impediments to and perfect the mechanism of a free and 
open market by ensuring that members, regulators, and the public can 
more easily navigate the Exchange's rulebook and better understand the 
order types available for trading on the Exchange. The Exchange 
believes that the related, proposed conforming changes to Rules 7.35, 
7.36, 7.37 and 7.38 similarly would remove impediments to and perfect 
the mechanism of a free and open market by assuring consistency of 
terms used in the Exchange's rulebook. The Exchange also believes that 
the proposed amendment to Rule 7.38 to specify which orders may not be 
odd lots provides more specificity to the Exchange's rulebook, thereby 
similarly promoting transparency and thus removing impediments and 
perfecting the mechanism of a free and open market.
    Finally, the Exchange believes that the proposed amendment to Rule 
7.36 to specify how the Exchange aggregates non-marketable odd-lot 
sized orders at multiple price points that equal a round lot for 
purposes of determining the Exchange's best ranked displayed order(s) 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system because it provides greater 
specificity regarding how the Exchange determines its best bid or offer 
for display on the public data feeds. The Exchange further believes 
that it would remove impediments to and perfect the mechanism of a free 
and open market and a national market system to aggregate such non-
marketable odd-lot orders because pursuant to Rule 7.38(b), odd-lot 
orders are ranked and executed in the same manner as round lot orders, 
and therefore, incoming marketable contra-side orders would execute 
against resting non-marketable odd-lot orders that represent the best 
price on the Exchange. Because arriving marketable contra-side orders 
execute in price-time priority against resting odd-lot orders priced 
better than resting round-lot orders, the Exchange believes that it is 
appropriate to display such odd-lot interest on the public data feeds 
as the Exchange's best bid or offer if in the aggregate, they equal a 
round lot or more. The Exchange further believes that aggregating such 
odd-lot orders at the least aggressive price point from among those 
odd-lot orders would remove impediments to and perfect the mechanism of 
a free and open market because it represents the lowest possible 
execution price (for incoming sell orders) or highest possible 
execution price (for incoming buy orders). The Exchange notes that the 
incoming marketable interest would receive price improvement when 
executing against any odd-lot orders priced better than the aggregated 
displayed price.

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 change is not 
designed to address any competitive issue but rather would remove 
complex functionality and re-structure Rule 7.31 and make conforming 
changes to related Exchange rules, thereby reducing confusion and 
making the Exchange's rules easier to navigate.

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 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 self-regulatory 
organization consents, the Commission will:
    (A) by order approve or disapprove the 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

[[Page 12542]]

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#354740595018565a5858505b4146754650561b525a43"><span class="__cf_email__" data-cfemail="e193948d84cc828e8c8c848f9592a1928482cf868e97">[email protected]</span></a>. Please include 
File Number SR-NYSEArca-2015-08 on the subject line.
Paper Comments
    <bullet> Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2015-08. 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 
10:00 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; 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-NYSEArca-2015-08 and should 
be submitted on or before March 30, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Brent J. Fields,
Secretary.
[FR Doc. 2015-05291 Filed 3-6-15; 8:45 am]
 BILLING CODE 8011-01-P


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