Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 63009 

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. 

4See Securities and Exchange Release No. 59472 

(February 29, 2009), 74 FR 9843 (March 6, 2009) 

(SR–ALTR–2008–14); see also Securities and 

Exchange Release No. 55162 (January 24, 2007), 72 

FR 4738 (February 1, 2007) (SR–Amex–2006–106) 

(original quote mitigation proposal). 

5See Securities and Exchange Release No. 61978 

(April 23, 2010), 75 FR 22886 (April 30, 2010) (SR– 

NYSEAmex–2010–3). See also OLPP, available at, 

http://www.theocc.com/clearing/industry-services/

olpp.jsp. 

6Rule 903A codified Amendment No. 3 to the 

OLPP. See Securities and Exchange Release No. 

60531 (August 19, 2009), 74 FR 43173 (File No. 4– 

443). See also Rule 903A. 

7 Id., 74 FR at 43174. 

8See Securities and Exchange Release No. 65572 

(October 14, 2011), 76 FR 65310 (October 20, 2011) 

(NYSEAmex–2011–61). 

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 will also 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– 

NYSEMKT–2014–89 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. 2014–24945 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73367; File No. SR– 

NYSEMKT–2014–86] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing of Proposed 

Rule Change Modifying Its Quote 

Mitigation Plan and Amending Rule 

970NY and Rule 970.1NY 

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 

2, 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, II, and III below, which Items 

have been prepared by the selfregulatory 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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to modify its 

quote mitigation plan and to amend 

Rule 970NY (Firm Quotes) and Rule 

970.1NY(Quote Mitigation). 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 

The Exchange is proposing to modify 

its quote mitigation plan and to amend 

Rule 970NY (Firm Quotes) and Rule 

970.1NY (Quote Mitigation). As 

discussed below, the Exchange believes 

the modified quote mitigation plan will 

adequately accommodate the number of 

quotations sent to the Exchange and the 

message traffic that the Exchange sends 

to the Options Price Reporting 

Authority (‘‘OPRA’’). 

Rule 970.1NY 

In connection with the adoption of 

the Penny Pilot Program, the Exchange 

adopted a quote mitigation plan 

designed to reduce the number of 

quotations generated by the Exchange 

for all options traded on the Exchange, 

not just issues included in the Penny 

Pilot Program.4 The current plan 

reduces the number of messages the 

Exchange sends to OPRA by only 

submitting quote messages for ‘‘active’’ 

series. Rule 970.1NY defines active 

series as: (i) The series has traded on 

any options exchange in the previous 14 

calendar days; or, (ii) the series is solely 

listed on the Exchange; or (iii) the series 

has been trading ten days or less, or; (iv) 

the Exchange has an order in the series. 

Alternatively, the Exchange may define 

a series as active on an intraday basis if: 

(i) The series trades at any options 

exchange; (ii) the Exchange receives an 

order in the series; or (iii) the Exchange 

receives a request for quote from a 

Customer in that series. 

The Exchange believes it no longer 

needs the quote mitigation provided by 

Rule 970.1NY because rules adopted 

since Rule 970.1NY provide sufficient 

quote mitigation. 

Current Market Structure and Controls 

on the Exchange 

In 2010, the Exchange incorporated 

select provisions of the Options Listing 

Procedures Plan (‘‘OLPP’’) in Rule 903A 

as a quote mitigation strategy.5

The OLPP is a national market system 

plan that, among other things, sets forth 

procedures governing the listing of new 

options series. From the OLPP, the 

Exchange incorporated in Rule 903A 

‘‘applied uniform standards to the range 

of options series exercise (or strike) 

prices available for trading on the 

[Exchange] as a quote mitigation 

strategy.’’ 6 In approving the OLPP 

provisions, subsequently incorporated 

in Rule 903A, the Commission indicated 

that ‘‘adopting uniform standards to the 

range of options series exercise (or 

strike) prices available for trading on the 

[Exchange] should reduce the number of 

option series available for trading, and 

thus should reduce increases in the 

options quote message traffic because 

market participants will not be 

submitting quotes in those series.’’ 7

One year after adopting select 

provisions of the OLPP, the Exchange 

refined the quoting obligations 

applicable to Market Makers as a quote 

mitigation strategy.8 Specifically, the 

Exchange adopted Commentary .01 to 

Rule 925.1NY, which states that 

Specialists’ and Market Makers’ 

continuous quoting obligations ‘‘shall 

not apply to Market Makers with respect 

to adjusted option series, and series 

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63010 Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 

9An ‘‘adjusted series’’ is ‘‘an option series 

wherein, as a result of a corporate action by the 

issuer of the underlying security, one option 

contract in the series represents the delivery of 

other than 100 shares of underlying stock or 

Exchange-Traded Fund Shares.’’ See Commentary 

.01 to Rule 925.1NY. 

10See supra n. 8, 79 FR at 65311. 

11See the OPRA Capacity Guidelines, available 

here, http://www.opradata.com/pdf/capacity_

guidelines.pdf. 

12OPRA has delegated certain functions 

pertaining to planning the capacity of the OPRA 

System to an Independent System Capacity Advisor 

(‘‘ISCA’’) that ‘‘may provide less than all of the 

capacity that has been requested if it determines (a) 

that the capacity requests of one or more of the 

parties are unreasonable, or (b) that it is not 

reasonable to develop or maintain a System that has 

capacity sufficient to satisfy the requests of the 

parties.’’ See id. The Exchange has never been 

informed by the ISCA that the capacity it has 

requested cannot be met for any reason, including 

because the ISCA had deemed the request to be 

unreasonable. Thus, the Exchange believes that any 

increase in quote traffic that might be sent to OPRA 

as a result of the current proposal should not 

impact any other exchange’s capacity at OPRA. 

13See Commentary .09(b) to Rule 15. 

14See NYSE Amex Options fee schedule, 

available here, https://www.theice.com/publicdos/

nyse/market/amex-options/NYSE_Amex_Options_

Fee_Schedule.pdf. 

15 Id. 

16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(5). 

with a time to expiration of nine months 

or greater, for options on equities and 

Exchange Traded Fund Shares, and 

series with a time to expiration of 

twelve months or greater for Index 

options.’’ 9 Because there are no Market 

Maker quoting obligations associated 

with adjusted options series, there is a 

reduction in quote traffic that is sent to 

OPRA. Indeed, in approving 

Commentary .01 to Rule 925.1NY, the 

Commission noted, ‘‘. . . the 

Exchange’s proposal would reduce the 

burden on market makers to submit 

continuous quotes that the Exchange 

may not submit to OPRA.’’ 10

The Exchange believes that reliance 

on the OLPP, via Rule 903A, together 

with the refined Market Maker quoting 

obligations, pursuant to Commentary 

.01 to Rule 925.1NY, is sufficient as a 

quote mitigation strategy and obviates 

the need for Rule 970.1NY. The 

Exchange believes that limiting the 

number of series listed on the Exchange 

is preferable to suppressing quotes of 

inactive series, as required under 

current Rule 970.1NY, because all 

quotes sent by Market Makers are 

actionable even if not displayed. 

The Exchange believes that both its 

own systems capacity and OPRA’s 

systems capacity are more than 

sufficient to accommodate any 

additional increase in quote traffic that 

might be sent to OPRA as a result of the 

deletion of Rule 970.1NY. The Exchange 

has already successfully conducted 

testing to ensure that its internal 

systems are equipped to handle any 

increase in quote traffic as a result of the 

proposed rule change. Further, the 

Exchange continually assesses its 

capacity needs and ensures that the 

capacity that it requests from OPRA is 

not only sufficient but also compliant 

with the requirements established in the 

OPRA Capacity Guidelines.11 In 

submitting its capacity requests, the 

Exchange has factored in the impact on 

capacity if all series currently subject to 

Rule 970.1NY were to become active 

and therefore sent to OPRA.12

In addition, the Exchange has in place 

the following measures that it believes 

serve as additional safeguards against 

excessive quoting: 

—Monitoring: The Exchange actively 

monitors the quotation activity of its 

Market Makers. When the Exchange 

detects that a Market Maker is 

disseminating an unusual number of 

quotes, the Exchange contacts that 

Market Maker and alerts it to such 

activity. Such monitoring may reveal 

that the Market Maker may have 

internal system issues or has 

incorrectly set system parameters that 

were not immediately apparent. 

Alerting a Market Maker to the 

heightened levels of activity will 

usually result in a change that reduces 

the number of quotes sent to the 

Exchange by the Market Maker. 

—New Listings: The Exchange has a 

business plan with respect to the 

listing of options on new underlying 

securities that is designed to help 

ensure that any new listings are 

sufficiently active to avoid listing 

options on underlying securities that 

generate quote volume without the 

offsetting benefit of trading volume.13

—Excessive Bandwidth Utilization Fees: 

The Exchange imposes Excessive 

Bandwidth Utilization Fees, which 

are designed to encourage efficient 

quoting.14 The Excessive Bandwidth 

Utilization Fees are comprised of 

Order To Trade Ratio Fees and 

Messages to Contracts Traded Ratio 

Fees.15

In connection with the foregoing, the 

Exchange proposes to amend paragraphs 

(b)(1) and (b)(2) of Rule 970NY to delete 

references to the ‘‘Quote Mitigation 

Plan,’’ which refer to the plan set forth 

in Rule 970.1NY. In addition, the 

Exchange proposes to delete Rule 

970.1NY in its entirety, as it contains a 

discussion of the current quote 

mitigation plan. 

Implementation 

The Exchange will announce the 

implementation date of the proposed 

rule change by Trader Update to be 

published no later than 60 days 

following the effective date of this filing. 

The implementation date will be no 

later than 60 days following the 

issuance of the Trader Update. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act 16

in general and furthers the objectives of 

Section 6(b)(5) of the Act 17 in particular 

in that it should promote just and 

equitable principles of trade, serve to 

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 the 

proposed modifications to the quote 

mitigation plan, including the 

continued reliance on Rule 903A and 

Commentary .01 to Rule 925.1NY, 

together with the other safeguards 

mentioned above, would promote just 

and equitable principles of trade, serve 

to remove impediments to and perfect 

the mechanism of a free and open 

market as it would increase 

transparency and enhance price 

discovery as all Market Maker quotes 

would be reflected in the market. 

Specifically, the Exchange believes that 

deleting Rule 970.1NY will remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system because it 

will enable all actionable Market Maker 

quotes to be displayed, including in 

inactive series. The Exchange believes 

this would also protect investors and 

the public interest because available 

Market Maker liquidity in all series 

would be publicly displayed, thereby 

putting investors on notice of such 

liquidity. The Exchange further believes 

that the market structure initiatives 

adopted in recent years serve to reduce 

the potential for excessive quoting 

because the OLPP limits the number of 

series eligible to be listed, which 

reduces the number of series for which 

a Market Maker would be obligated to 

quote, and therefore reduces quote 

traffic. 

As discussed above, the Exchange 

believes that both its own systems 

capacity and OPRA’s systems capacity 

are more than sufficient to 

accommodate any additional increase in 

quote traffic that might be sent to OPRA 

as a result of the proposed rule change. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

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Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 63011 

18See supra. n. 12. 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange. A Member will 

have the status of a ‘‘member’’ of the Exchange as 

that term is defined in Section 3(a)(3) of the Act. 

Membership may be granted to a sole proprietor, 

partnership, corporation, limited liability company 

or other organization which is a registered broker 

or dealer pursuant to Section 15 of the Act, and 

which has been approved by the Exchange.’’ See 

Exchange Rule 1.5(n). 

4Rule 600(b)(78) of Regulation NMS, 17 CFR 

242.600(b)(78), defines a ‘‘Trading Center’’ as ‘‘a 

national securities exchange or national securities 

association that operates an SRO trading facility, an 

alternative trading system, an exchange market 

maker, an OTC market maker, or any other broker 

or dealer that executes orders internally by trading 

as principal or crossing orders as agent.’’ See also 

Exchange Rule 2.11(a). 

5See EDGA Rules 11.12(d)(3) and (e); EDGX 

Rules 11.12(d)(3) and (e). See also Securities 

Exchange Act Release Nos. 71061 (December 12, 

2013), 78 FR 76685 (December 18, 2013) (SR– 

EDGA–2013–36) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

EDGX Rule 11.12, Limitations of Liability); and 

71062 (December 12, 2013), 78 FR 76693 (December 

18, 2013) (SR–EDGX–2013–45) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

To Amend EDGX Rule 11.12, Limitations of 

Liability). The Exchange notes that proposed Rule 

11.16(g)(4) refers [sic] the liability limits under 

BATS Rule 11.16(d)(1)–(3), which differ from the 

Continued 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

as discussed above, the Exchange 

believes that any increase in quote 

traffic that might be sent to OPRA as a 

result of the proposed rule change 

should not impact any other exchange’s 

capacity at OPRA.18

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 within such longer period (i) 

as the Commission may designate up to 

90 days of such date 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 

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– 

NYSEMKT–2014–86 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–NYSEMKT–2014–86. 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– 

NYSEMKT–2014–86, and should be 

submitted on or before November 12, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24953 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73356; File No. SR–BATS– 

2014–045] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 11.16 of 

BATS Exchange, Inc. 

October 15, 2014. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on October 

7, 2014, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 Exchange. 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 filed a proposed rule 

change to amend paragraph (f) of Rule 

11.16 to provide Members 3 with 

additional time within which to submit 

a written claim for compensation for 

‘‘losses resulting directly from the 

malfunction of the Exchange’s physical 

equipment, devices and/or 

programming or the negligent acts or 

omissions of its employees’’ (‘‘Exchange 

Systems Issues’’). In addition, the 

Exchange proposes to add a new 

paragraph (g) to Rule 11.16 to permit the 

Exchange, subject to certain conditions 

and limitations, to compensate Members 

for certain losses incurred in connection 

with orders or portions of orders routed 

by the Exchange through its affiliated 

routing broker-dealer, BATS Trading, 

Inc. (‘‘BATS Trading’’), to Trading 

Centers 4 where such losses are claimed 

by the Member to have resulted directly 

from a malfunction of the physical 

equipment, devices and/or 

programming, or the negligent acts or 

omissions of the employees, of such 

Trading Centers (‘‘Trading Center 

Systems Issue’’). 

The proposed rule change is 

substantially similar to the existing 

functionality on EDGX Exchange, Inc. 

(‘‘EDGX’’) and EDGA Exchange, Inc. 

(‘‘EDGA’’).5 The Exchange has 

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