Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 63005 

23 Id. 

24 17 CFR 242.610. 

25 17 CFR 242.201. 

26See Notice, supra, note 3 at 52793. 

27 Id. 

28 Id. 

29 Id. 

30 Id. 31 Id. 32 Id. 33 17 CFR 242.610(d). 34 Id. 35See Notice, supra, note 3 at 52793. 36 17 CFR 242.201. 37See Notice, supra, note 3 at 52793. 

38 15 U.S.C. 78f(b)(5). 

39 15 U.S.C. 78s(b)(2). 

40 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

6(b)(5) of the Act,23 as well as Rule 610 

of Regulation NMS 24 and Rule 201 of 

Regulation SHO.25 The Exchange notes 

that it is not modifying the overall 

functionality of price sliding, which, to 

avoid locking or crossing quotations of 

other market centers or to comply with 

applicable short sale restrictions, 

displays orders at permissible prices 

while retaining a price at which the 

User is willing to buy or sell, in the 

event display at such price or an 

execution at such price becomes 

possible.26 Instead, the Exchange is 

making changes to adopt an optional 

form of price sliding, Price Adjust, 

which will rank orders at their 

displayed price rather than, as with the 

current display-price sliding process, at 

the locking price. The exchange notes 

that, as a result, while subject to Price 

Adjust sliding, an order is ranked at a 

less aggressive price than it would be 

under the display-price sliding process, 

which may be preferable to certain 

Users that wish to provide liquidity but 

do not wish to cross the spread (i.e., if 

buying, do not wish to trade at the NBO 

or if selling, do not wish to trade at the 

NBB).27

In addition, as noted above, in 

contrast to display-price sliding, which 

is based solely on Protected Quotations 

at equities markets and options 

exchanges other than the Exchange, the 

proposed Price Adjust process would be 

based on Protected Quotations at 

external markets and at the Exchange. 

According to the Exchange, applying the 

Price Adjust process to orders that, 

upon entry, cannot be executed or 

displayed at their limit price should 

contribute to more displayed liquidity 

on the Exchange than if such orders 

were cancelled back to the User.28

Therefore, the Exchange believes the 

proposal to apply the Price Adjust 

process to orders that cannot be 

displayed because they would lock or 

cross displayed contra-side interest on 

the Exchange (and not just external 

markets) will promote just and equitable 

principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system.29 The 

Exchange also states that the proposed 

Price Adjust process will enable the 

System to avoid displaying a locking or 

crossing quotation in order to ensure 

compliance with Rule 610(d) of 

Regulation NMS.30

Further, the Exchange believes it is 

reasonable to un-slide display-price 

sliding orders before it un-slides Price 

Adjust orders because Price Adjust is a 

less aggressive form of price sliding than 

display-price sliding, in that an order 

submitted by a User would be displayed 

and ranked at the same price rather than 

ranked at the locking price and 

displayed at a less aggressive price.31

Because orders subject to display-price 

sliding are ranked at and subject to 

execution at higher prices when buying 

and lower prices when selling, the 

Exchange believes that such orders 

should be re-displayed before orders 

subject to Price Adjust orders in 

response to changes to the NBBO.32

Rule 610(d) requires exchanges to 

establish, maintain, and enforce rules 

that require members reasonably to 

avoid ‘‘[d]isplaying quotations that lock 

or cross any protected quotation in an 

NMS stock.’’ 33 Such rules must be 

‘‘reasonably designed to assure the 

reconciliation of locked or crossed 

quotations in an NMS stock,’’ and must 

‘‘prohibit . . . members from engaging 

in a pattern or practice of displaying 

quotations that lock or cross any 

quotation in an NMS stock.’’ 34 The 

Exchange believes that the proposed 

Price Adjust functionality for BATS 

Equities as well as BATS Options will 

assist Users by displaying orders at 

permissible prices.35 Similarly, Rule 

201 of Regulation SHO 36 requires 

trading centers to establish, maintain, 

and enforce written policies and 

procedures reasonably designed to 

prevent the execution or display of a 

short sale order at a price at or below 

the current NBB under certain 

circumstances. The Exchange represents 

that its short sale price sliding will 

continue to operate the same for Users 

that select Price Adjust as it does for 

Users that select the display-price 

sliding process currently offered by the 

Exchange.37

For the reasons noted above, the 

Commission finds that the proposed 

rule change is consistent with the Act, 

including Section 6(b)(5) of the Act,38

which requires, among other things, that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, 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. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,39 that the 

proposed rule change, SR–BATS–2014– 

038, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.40

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24949 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73352; File No. SR–NYSE– 

2014–50] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending Rule 

15 To Specify That Exchange Systems 

Can Publish Pre-Opening Indications 

and To Extend the Time Order 

Imbalance Information Is Disseminated 

When an Opening is Delayed 

October 15, 2014. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on October 

6, 2014, New York Stock Exchange LLC 

(‘‘NYSE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 15 to specify that Exchange 

systems can publish pre-opening 

indications and to extend the time order 

imbalance information is disseminated 

when an opening is delayed. The text of 

the proposed rule change is available on 

the Exchange’s Web site at 

www.nyse.com, at the principal office of 

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63006 Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 

4Except for American Depositary Receipts 

(‘‘ADR’’), where the DMM shall use the closing 

price of the primary foreign market to determine 

whether the price of such opening transaction 

represents a change of more than the ‘‘applicable 

price change.’’ See Rule 15(b). 

5A pre-opening indication includes the security 

and the price range within which the DMM 

anticipates the opening transaction will occur. 

6Rule 123D(1) provides that an indication is 

mandatory for an opening which will result in a 

‘‘significant’’ price change from the previous close. 

For securities priced under $10, such indications 

are mandatory if the price change is one dollar of 

more; for securities between $10 and $99.99, 

indications are required for price movements of the 

lesser of 10% or three dollars; and for securities 

over $100, indications are required for price 

movements of five dollars or more. These 

guidelines are applicable to IPOs based on the 

offering price. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

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 15 to specify that Exchange 

systems can automatically publish preopening indications utilizing the same 

guidelines set forth in Rule 15 for 

manual publications by Designated 

Market Makers (‘‘DMM’’). The Exchange 

also proposes to amend Rule 15 to 

extend the time order imbalance 

information is disseminated when an 

opening is delayed from the current 9:35 

a.m. to the time the security opens for 

trading. Finally, the Exchange proposes 

to correct a typographical error in 

subsection (b)(2) of the Rule. 

Rule 15 currently provides that an 

Exchange DMM, in arranging an 

opening transaction on the Exchange in 

any security, shall issue a pre-opening 

indication whenever the DMM 

anticipates that the opening transaction 

will be at a price that represents a 

change of more than the ‘‘applicable 

price change’’ specified in the Rule from 

either: 

• The security’s last reported sale 

price on the Exchange; 4 or 

• the security’s offering price in the 

case of an initial public offering (‘‘IPO’’); 

or 

• the security’s last reported sale 

price on the securities market from 

which the security is being transferred 

to the Exchange, on the security’s first 

day of trading on the Exchange (a 

‘‘transferred security’’).5

The ‘‘applicable price changes’’ 

governing pre-opening indications 

represent a numerical or percentage 

change from the security’s closing price 

per share, as follows: 

Exchange 

closing price 

Applicable 

price change 

(more than) 

Under $20.00 ........................ $0.50 

$20–$49.99 ........................... $1.00 

$50.00–$99.99 ...................... $2.00 

$100–$500 ............................ $5.00 

Above $500 .......................... 1.5% 

Pre-opening indications pursuant to 

this rule are published on the 

Exchange’s proprietary data feeds. 

The Exchange proposes to amend 

Rule 15 to add that either the DMM or 

the Exchange shall issue a pre-opening 

indication, but not change any of the 

applicable parameters for publishing a 

pre-opening indication. To reflect that 

the Exchange may be publishing these 

pre-opening indications, the Exchange 

proposes to delete the following phrase 

at the beginning of section (a) of the 

rule, ‘‘Whenever an Exchange DMM, in 

arranging an opening transaction on the 

Exchange in any security anticipates 

that,’’ and state instead that ‘‘If the 

opening transaction on the Exchange is 

anticipated to be at a price that 

represents a change from. . . .’’ The 

Exchange further proposes to add that 

the DMM or the Exchange shall issue 

the pre-opening indication, and specify 

that such pre-opening indication shall 

include the security and the price range 

within which the opening transaction is 

anticipated to occur. 

The Exchange would publish 

automatic indications when the 

Opening Imbalance Information in 

Exchange systems indicates an opening 

price that would be more than the 

applicable price range away from the 

defined reference price. Because 

Exchange systems would not have 

access to orally-represented interest in 

the trading crowd, the Exchange 

believes that a pre-opening indication 

entered by a DMM would likely be 

based on information not available to 

Exchange systems, and therefore a 

DMM-entered pre-opening indication 

should have priority over an Exchangegenerated pre-opening indication. 

Accordingly, the Exchange further 

proposes that if a DMM issues a preopening indication or a mandatory 

indication pursuant to Rule 123D(1),6

the Exchange would not publish a preopening indication in that security. 

The Exchange also proposes to amend 

Rule 15 to permit opening order 

imbalance publications to continue 

until a security is opened. Currently, 

Rule 15 provides that order imbalance 

information disseminated prior to the 

opening of a security will be 

disseminated approximately every five 

minutes between 8:30 a.m. Eastern Time 

(‘‘E.T.’’) and 9:00 a.m. E.T.; 

approximately every minute between 

9:00 a.m. E.T. and 9:20 a.m. E.T.; and 

approximately every 15 seconds 

between 9:20 a.m. E.T. and the opening. 

If the opening is delayed, Rule 15 

provides that order imbalance 

information will be published until 9:35 

a.m. E.T. Under the proposed rule 

change, order imbalance information 

would continuously disseminate until 

the opening of trading in that security 

and not cease at 9:35 a.m. E.T. 

Finally, the Exchange proposes to 

correct a typographical error in the 

published text of Rule 15(b)(2), which 

currently contains the word ‘‘underling’’ 

that should be ‘‘underlying.’’ 

Because of the technology changes 

associated with the proposed rule 

change, the Exchange proposes to 

announce the implementation date via 

Trader Update. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,7 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,8 in particular, because it is 

designed to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and protect investors and the 

public interest. The Exchange believes 

that permitting the Exchange to 

automatically publish pre-opening 

indications and extending opening 

order imbalance publications until a 

security is opened removes 

impediments to and perfects the 

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Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 63007 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) 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. 11 15 U.S.C. 78s(b)(2)(B). 

12 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

mechanism of a free and open market 

and a national market system by 

continuing to advance the efficiency 

and transparency of the opening process 

and fostering price discovery at the 

open of trading, thereby minimizing 

information imbalances in the 

marketplace. Similarly, the proposal 

promotes just and equitable principles 

of trade and removes impediments to 

and perfects the mechanism of a free 

and open market by providing 

customers and the investing public with 

continuous, automated information for 

securities where there will likely be a 

significant price change from the 

previous day’s closing price or for 

which there is a significant published 

imbalance. For the same reasons, the 

proposal is also designed to protect 

investors as well as the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not intended to 

address competitive issues but rather 

technologically augment the current 

process of providing pre-market 

information to customers and the 

investing public. 

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 

Because the foregoing 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 for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.10

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 11 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2014–50 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2014–50. 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 will also be available for Web site 

viewing and printing at the NYSE’s 

principal office and on its Internet Web 

site at www.nyse.com. 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– 

2014–50 and should be submitted on or 

before November 12, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24941 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73353; File No. SR– 

NYSEMKT–2014–89] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Proposing To Amend 

Certain of Its Rules To Remove and 

Replace Obsolete References to Fixed 

Return Options With the Updated 

References to Binary Return 

Derivatives Contracts 

October 15, 2014. 

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 October 

8, 2014, NYSE MKT LLC (the 

‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to [sic]. 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. 

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