Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 12687 

25 15 U.S.C. 78s(b)(3)(A). 

26 17 CFR 240.19b–4(f). 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 74017 

(January 8, 2015), 80 FR 1979 (‘‘Notice’’). 

4 In Amendment No. 1, the Exchange clarified 

that it believes that Market Maker bids should not 

be priced the same as or higher than the 

corresponding benchmark, which would be the 

price of the underlying security for call options and 

the strike price for put options. Amendment No. 1 

does not change any of the proposed rule text that 

was submitted in the original filing. Amendment 

No. 1 is technical in nature and, therefore, the 

Commission is not publishing it for comment. 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange does not believe that the 

proposed rule change will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because, while different fees and rebates 

are assessed to different market 

participants in some circumstances, 

these different market participants have 

different obligations and different 

circumstances. For example, Clearing 

TPHs have clearing obligations that 

other market participants do not have. 

Market-Makers have quoting obligations 

that other market participants do not 

have. There is a history in the options 

markets of providing preferential 

treatment to Customers, as they often do 

not have as sophisticated trading 

operations and systems as other market 

participants, which often makes other 

market participants prefer to trade with 

Customers. Further, the proposed fees, 

rebates and programs for ETH are 

intended to encourage market 

participants to bring liquidity to the 

Exchange during ETH (which benefits 

all market participants), while still 

covering Exchange costs (including 

those associated with the upgrading and 

maintenance of Exchange systems). The 

Exchange does not believe that the 

proposed rule changes will impose any 

burden on intermarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because the products offered during 

ETH (SPX, SPXW and VIX), are 

proprietary products that will only be 

traded on CBOE. To the extent that the 

proposed changes make CBOE a more 

attractive marketplace for market 

participants at other exchanges, such 

market participants are welcome to 

become CBOE market participants. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

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

of the Act 25 and paragraph (f) of Rule 

19b–4 26 thereunder. 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 will 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 

• 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– 

CBOE–2015–020 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549. 

All submissions should refer to File 

Number SR–CBOE–2015–020. 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 such 

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–CBOE– 

2015–020 and should be submitted on 

or before March 31, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–05476 Filed 3–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74440; File No. SR– 

NYSEMKT–2014–116] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Order Granting Approval of 

a Proposed Rule Change, as Modified 

by Amendment No. 1, To Amend Rule 

967NY and To Adopt Rule 967.1NY To 

Provide Price Protection for Market 

Maker Quotes 

March 4, 2015. 

I. Introduction 

On December 29, 2014, NYSE MKT 

LLC (‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Exchange Rule 967NY (Price 

Protection) and to adopt Exchange Rule 

967.1NY to provide price protection for 

Market Maker quotes. The proposed rule 

change was published for comment in 

the Federal Register on January 14, 

2015.3 The Commission received no 

comment letters on the proposal. On 

March 2, 2015, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.4 This order approves the 

proposed rule change, as modified by 

Amendment No. 1 thereto. 

II. Description of the Proposal 

The Exchange proposed to amend 

Exchange Rule 967NY and to adopt 

Exchange Rule 967.1NY to provide price 

protection for Market Maker quotes. 

Exchange Rule 967NY currently applies 

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12688 Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 

5Pursuant to Exchange Rule 967NY(b), unless 

determined otherwise by the Exchange and 

announced to ATP Holders via Trader Update, the 

specified percentage is 100% for the contra-side 

NBB or NBO priced at or below $1.00 and 50% for 

contra-side NBB or NBO priced above $1.00. See 

Notice, supra note 3, at 1979. 

6See Notice, supra note 3, at 1979. 

7The Exchange states that the proposal will assist 

with the maintenance of fair and orderly markets 

by averting the risk of Market Maker quotes 

sweeping through multiple price points resulting in 

executions at prices that are through the last sale 

price or National Best Bid or Best Offer (‘‘NBBO’’). 

See Notice, supra note 3, at 1979. 

8The Exchange represents that this proposed 

price protection mechanism is similar to the 

Exchange’s Limit Order Filter. See Notice, supra 

note 3, at 1979. 

9The Exchange states that the proposed 

percentages are appropriate because they are based 

on the percentages established for the Limit Order 

Filter. See Notice, supra note 3, at 1979. 10See Notice, supra note 3, at 1979. 

11The Exchange states that such offer prices 

would likely not be erroneous and therefore the 

Exchange does not believe it necessary to reject 

such Market Maker offers. See Notice, supra note 

3, at 1980. 

12See proposed Exchange Rule 967.1NY(a)(1)(A)– 

(B) (setting forth the specified dollar amount or 

percentages ‘‘unless determined otherwise by the 

Exchange and announced to ATP Holders via 

Trader Update’’). 

13See proposed Exchange Rule 967.1NY(b). The 

Exchange states that it believes it is appropriate to 

reject any resting same-side quote because when a 

Market Maker submits a new quote, that Market 

Maker is implicitly instructing the Exchange to 

cancel any resting quote in that same series. See 

Notice, supra note 3, at 1980. 

14See Notice, supra note 3, at 1980 for examples 

illustrating how proposed Exchange Rule 

967.1NY(a) will operate. 

15See proposed Exchange Rule 967.1NY(a)(2). 

With a call bid, a Market Maker is bidding to buy 

an option that would be exercised into the right to 

acquire the underlying security. The Exchange 

states that it does not believe that a derivative 

product, which conveys the right to purchase a 

security underlying the derivative, should ever be 

priced the same as or higher than the prevailing 

price of the underlying security itself. Accordingly, 

the Exchange believes it is appropriate to reject 

Market Maker bids for call options that are equal 

to or in excess of the price of the underlying 

security. See Notice, supra note 3, at 1980. See also 

Amendment No. 1, supra note 4. 

16According to the Exchange, although the 

underlying securities may trade in the equities 

markets outside of 9:30 a.m. ET to 4:00 p.m. ET, the 

equities market is generally not as liquid during this 

time and equity market makers generally do not 

have quoting obligations in after-hours trading. 

Therefore, the Exchange believes that using the 

previous day’s closing price—based on trading 

during Core Trading Hours, when the market is 

most liquid—provides a more accurate benchmark 

and thus a more precise price protection filter for 

underlying securities that have not yet opened. See 

Notice, supra note 3, at 1980. 

17The Exchange believes that the consolidated 

last sale price for an underlying security that has 

and will continue to apply solely to 

orders. Exchange Rule 967NY(b), 

provides a price protection filter for 

incoming limit orders, pursuant to 

which the Exchange rejects limit orders 

priced a specified percentage 5 through 

the National Best Bid (‘‘NBB’’) or 

National Best Offer (‘‘NBO’’) (‘‘Limit 

Order Filter’’). To clarify that Exchange 

Rule 967NY applies only to orders, the 

Exchange proposed to append the word 

‘‘Orders’’ to the Exchange Rule 967NY 

header to provide ‘‘Rule 967NY. Price 

Protection—Orders.’’6

A. Proposed Market Maker Quote Price 

Protection 

The Exchange proposed to adopt new 

Exchange Rule 967.1NY to provide for 

a price protection mechanism for quotes 

entered by a Market Maker. Exchange 

Rule 967.1NY(a) will provide price 

protection filters applicable only for 

quotes entered by a Market Maker 

pursuant to Rule 925.1NY and will not 

be applicable to orders entered by a 

Market Maker. The Exchange proposed 

to provide for two layers of price 

protection that will be applicable to all 

incoming Market Maker quotes.7 The 

first layer of price protection will assess 

incoming sell quotes against the NBB 

and incoming buy quotes against the 

NBO.8 The second layer of price 

protection will assess the price of call or 

put bids against a specified benchmark. 

1. NBBO Price Reasonability Check 

Proposed Exchange Rule 

967.1NY(a)(1) sets forth the Exchange’s 

proposed NBBO price reasonability 

check, which will compare Market 

Maker bids with the NBO and Market 

Maker offers with the NBB. Specifically, 

provided that an NBBO is available, a 

Market Maker quote will be rejected if 

it is priced a specified dollar amount or 

percentage through the contra-side 

NBBO as follows: 

(A) $1.00 for Market Maker bids when 

the contra-side NBO is priced at or 

below $1.00; or 

(B) 50% for Market Maker bids (offers) 

when the contra-side NBO (NBB) is 

priced above $1.00. 

The Exchange will reject inbound 

Market Maker quotes that exceed the 

parameters set forth in proposed 

Exchange Rule 967.1NY(a)(1)(A)–(B).9

The Exchange states that it has proposed 

a specific dollar threshold for when the 

NBO is priced at or below $1.00 

because, for such low-priced NBOs, the 

Exchange believes it is appropriate to 

provide Market Makers with the ability 

to enter quotes at least $1.00 higher than 

the prevailing NBO.10 For example, if 

the NBO were $0.06, when using a 

100% filter, the Exchange would be 

required to reject any bids priced $0.12 

or more. In addition, the Exchange 

proposed that pursuant to proposed 

Exchange Rule 967.1NY(a)(1)(A), Market 

Maker offers that arrive when the NBB 

is priced at or below $1.00 will not be 

subject to this filter. The Exchange notes 

that when the NBB is priced at or below 

$1.00, the price of an offer will be 

bound by $0.00, and therefore an offer 

will always be less than $1.00 away 

from the NBB.11

Because there may be market 

scenarios that require the proposed 

parameters to be adjusted, for example, 

during periods of extreme price 

volatility, the Exchange has further 

proposed that the Exchange may revise 

these parameters, provided such revised 

parameters are announced to ATP 

Holders via a Trader Update.12

The Exchange also proposed that if a 

Market Maker quote is rejected pursuant 

to paragraph (a)(1) of the proposed rule, 

the Exchange will also cancel any 

resting same-side quote in the affected 

series from that Market Maker.13

According to the Exchange, even if the 

new quote is rejected because it is 

priced a specified dollar amount or 

percentage through the contra-side 

NBBO, in violation of proposed 

Exchange Rule 967.1NY(a)(1), the 

Market Maker’s implicit instruction to 

cancel the resting quote remains valid 

nonetheless.14

2. Underlying Stock Price/Strike Price 

Check 

The Exchange also has proposed new 

Exchange Rule 967.1NY(a)(2) and (3) 

which will set forth the Exchange’s 

proposed second layer of price 

protection filters for Market Maker 

quotes. These price protection 

mechanisms will be applicable when 

either there is no NBBO available, for 

example, during pre-opening or prior to 

conducting a re-opening after a trading 

halt, or if the NBBO is so wide as to not 

to reflect an appropriate price for the 

respective options series. Proposed 

Exchange Rule 967.1NY(a)(2) will also 

provide price protection for Market 

Maker bids in call options. As proposed, 

if such bids equal or exceed the price of 

the underlying security, the Market 

Maker bid will be rejected.15

Under new Exchange Rule 

967.1NY(a)(2)(A), before the underlying 

security is open, the Exchange will use 

the previous day’s closing price to 

determine the price of the underlying 

security.16 Under new Exchange Rule 

967.1NY(a)(2)(B), once the underlying 

security has opened, the Exchange will 

use the consolidated last sale price to 

determine the price of the underlying 

security. Under new Exchange Rule 

967.1NY(a)(2)(C), during a trading halt 

of the underlying security, the Exchange 

will use the consolidated last sale 

reported immediately prior to the 

trading halt to determine the price of the 

underlying security.17 New Exchange 

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Federal Register / Vol. 80, No. 46 / Tuesday, March 10, 2015 / Notices 12689 

already opened will provide the most accurate 

benchmark because the market is most liquid 

during Core Trading Hours. See Notice, supra note 

3, at 1981. 

18The Exchange states that the value of a put can 

never exceed the strike price of the option, even if 

the stock goes to zero. For example, a put with a 

strike price of $50 gives the holder the right to sell 

the underlying security for $50 (no more, or no 

less), therefore the Exchange states that it would be 

illogical to pay $50 or more for the right to sell that 

underlying security, no matter what the price of the 

underlying security. See Notice, supra note 3, at 

1981. See also Amendment No. 1, supra note 4. 

19See proposed Exchange Rule 967.1NY(b). The 

Exchange believes that this temporary suspension 

from quoting in the affected option class(es) would 

operate as a safety valve that forces Market Makers 

to re-evaluate their positions before requesting to reenter the market. See Notice, supra note 3, at 1981. 

See also Notice, supra note 3, at 1981 for examples 

illustrating how proposed Exchange Rule 

967.1NY(a)(2) and (a)(3) would operate. 

20 15 U.S.C. 78f(b). In approving this proposed 

rule change, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

21 15 U.S.C. 78f(b)(5). 

22See Notice, supra note 3, at 1981. 

23See Notice, supra note 3, at 1982. 

24 15 U.S.C. 78s(b)(2). 

25 17 CFR 200.30–3(a)(12). 

Rule 967.1NY(a)(3) will provide for 

price protection for Market Maker bids 

in put options. In particular, any Market 

Maker bid for put options will be 

rejected if the price of the bid is equal 

to or greater than the strike price of the 

option.18

The Exchange also has proposed that 

when a Market Maker quote is rejected 

pursuant to paragraph (a)(2) or (a)(3) of 

the proposed rule, the Exchange will 

also cancel all resting quote(s) in the 

affected class(es) from that Market 

Maker and will not accept new quote(s) 

in the affected class(es) until the Market 

Maker submits a message (which may be 

automated) to the Exchange to enable 

the entry of new quotes.19

B. Implementation 

The Exchange stated that it would 

announce the implementation date of 

the proposed rule change in a Trader 

Update and publish such announcement 

at least 30 days prior to implementation. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange and, in particular, 

with section 6(b) of the Act.20 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with sections 6(b)(5) of the Act,21 which 

requires, among other things, that the 

rules of a national securities exchange 

be 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 

regulating, clearing, settling, processing 

information with respect to, and 

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 proposed rule change provides a 

price protection mechanism for quotes 

entered by a Market Maker when an 

NBBO is available that are priced a 

specified dollar amount or percentage 

through the last sale or prevailing 

contra-side market, which the Exchange 

believes is evidence of error. The 

Commission believes that the proposed 

price protection mechanism is 

reasonably designed to promote just and 

equitable principles of trade by 

preventing potential price dislocation 

that could result from erroneous Market 

Maker quotes sweeping through 

multiple price points resulting in 

executions at prices that are through the 

last sale price or NBBO.22

The Exchange’s proposed use of 

benchmarks to check the reasonability 

of Market Maker bids for call and put 

options affords a second layer of price 

protection to Market Maker quotes. The 

Commission believes that the additional 

price reasonability check on Market 

Maker bids that are priced equal to or 

greater than the price of the underlying 

security for call options, and equal to or 

greater than the strike price for put 

options, is reasonably designed to 

operate in manner that would remove 

impediments to and perfect the 

mechanism of a free and open market 

and protect investors and the public 

interest. Further, the Commission notes 

the Exchange’s belief that the additional 

risk controls that result in the 

cancellation of a Market Maker’s resting 

same side quote and/or the temporary 

suspension a Market Maker’s quoting 

activity in the affected option class(es), 

as applicable, provide market 

participants with additional protection 

from anomalous executions.23

Accordingly, the Commission believes 

that the proposed price protection for 

Market Maker quotes is reasonably 

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 

regulating, clearing, settling, processing 

information with respect to, and 

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. 

IV. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,24 that the 

proposed rule change (SR–NYSEMKT– 

2014–116), as modified by Amendment 

No. 1, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–05496 Filed 3–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of Black Sea Metals, Inc., 

GigaBeam Corp., Safe Technologies 

International, Inc., and Whitemark 

Homes, Inc.; Order of Suspension of 

Trading 

March 5, 2015. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Black Sea 

Metals, Inc. because it has not filed any 

periodic reports since the period ended 

May 31, 2012. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of GigaBeam 

Corp. because it has not filed any 

periodic reports since the period ended 

September 30, 2007. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Safe 

Technologies International, Inc. because 

it has not filed any periodic reports 

since the period ended December 31, 

2010. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Whitemark 

Homes, Inc. because it has not filed any 

periodic reports since the period ended 

September 30, 2012. 

The Commission is of the opinion that 

the public interest and the protection of 

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