Federal Register / Vol. 79, No. 246 / Tuesday, December 23, 2014 / Notices 77077 

22See Notice, supra note 3, at 67486. The 

Exchange states that it bases the value of the Trade 

Collar on the NBB for buy orders because it believes 

that a market participant that is looking to buy 

would derive its price off of what other market 

participants are willing to pay (i.e., the prevailing 

bid), and similarly bases the value of the Trade 

Collar on the NBO for sell orders because it believes 

that a market participant that is looking to sell 

would derive its price off of what other market 

participants are willing to sell (i.e., the prevailing 

offer). See id. 

23See id. 24See id.; see also proposed Exchange Rule 

967NY(a). 25See proposed Exchange Rule 967NY(a)(3); see 

also Notice, supra note 3, at 67486. The Exchange 

also proposes to capitalize the term ‘‘limit order’’ 

as used in Exchange Rule 967NY(a)(4)(D) to 

conform with the use of that term in the rest of the 

rule. See id. at 67487. 26 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 27 15 U.S.C. 78f(b)(5). 

28See Notice, supra note 3, at 67487; see also 

supra note 22. 

29 15 U.S.C. 78s(b)(2). 

30 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. 73543 

(November 6, 2014), 79 FR 67488 (‘‘Notice’’). 

4See id. Trading Collars are determined by the 

Exchange on a class-by-class basis and, unless 

announced otherwise via Trader Update, are the 

same value as the bid-ask differential guidelines 

established pursuant to Exchange Rule 6.37(b)(1). 

See id. The Exchange also notes that that the Trade 

Collar Protection mechanism is not available for 

quotes or for orders with execution conditions 

immediate-or-cancel (‘‘IOC’’), all-or-none (‘‘AON’’), 

fill-or-kill (‘‘FOK’’) and NOW. See id.; see also 

Exchange Rule 6.60(a)(3). 

5See id. 

Protection mechanism instead uses the 

NBO as the reference price for the value 

of the Trade Collar applicable to sell 

orders (and uses the NBB as the 

reference price for the Trade Collar 

applicable to buy orders).22

Accordingly, in place of the current 

cross reference to Exchange Rule 

925NY(b)(4) in Exchange Rule 

967NY(a)(2), the Exchange proposes to 

adopt new subparagraphs (a)(2)(A) and 

(a)(2)(B), which codify the same 

numerical values as provided currently 

in Exchange Rule 925NY(b)(4) but make 

clear that the reference price for the 

applicable Trading Collar is the NBB for 

buy orders and the NBO for sell orders 

(rather than both values being keyed off 

of the NBB as Exchange Rule 

925NY(b)(4) provides).23

The Exchange also proposes some 

additional clarifying changes. The 

Exchange proposes to amend Exchange 

Rule 967NY(a) to delete the terms 

‘‘inbound’’ and ‘‘incoming’’ where 

currently used in the rule because Trade 

Collar Protection applies to resting 

orders as well as inbound or incoming 

orders.24 The Exchange also proposes to 

delete the reference in Exchange Rule 

967NY(a)(3) to the cancellation of IOC 

Orders, AON Orders, FOK Orders and 

NOW Orders if not immediately 

executed, as AON orders do not cancel 

if they are not immediately executed.25

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.26 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,27 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 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 Commission notes that the 

Exchange believes that the proposal 

assists with the maintenance of fair and 

orderly markets and protects investors 

by correcting inaccurate language in 

Exchange Rule 967NY(a) and clarifying 

the existing Trade Collar Protection 

functionality so that market participants 

can better understand how the Exchange 

handles certain orders in times of 

market dislocation. In addition, the 

Commission notes that the Exchange 

believes that the proposed functionality 

of the Trade Collar Protection 

components is consistent with the Act. 

In particular, the Exchange believes that 

its proposal to base Trading Collar 

values on the NBB for buy orders and 

the NBO for sell orders could remove 

impediments to and perfect the 

mechanism of a free and open market by 

using a benchmark from which a market 

participant would most likely derive its 

price.28

The Commission believes that the 

operation of the Trade Collar Protection 

mechanism set forth in the proposal is 

consistent with the Act. In addition, the 

Commission believes that the revised 

description of this mechanism should 

increase transparency with respect to 

how the mechanism operates and 

enhance investors’ understanding of 

how the mechanism may affect their 

orders in certain market conditions. 

Accordingly, the Commission believes 

that the proposal is reasonably designed 

to help 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, in general, protect 

investors and the public interest. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,29 that the 

proposed rule change (SR–NYSEMKT– 

2014–14) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29970 Filed 12–22–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73859; File No. SR– 

NYSEArca–2014–14] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving a 

Proposed Rule Change Amending 

Exchange Rule 6.60 To Enhance the 

Functionality of the Trade Collar 

Protection Mechanism 

December 17, 2014. 

I. Introduction 

On October 24, 2014, NYSE Arca, 

Inc., (‘‘NYSE Arca’’ or ‘‘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 6.60 

relating to the Exchange’s ‘‘Trade Collar 

Protection’’ mechanism for options. The 

proposed rule change was published for 

comment in the Federal Register on 

November 13, 2014.3 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change. 

II. Description of the Proposal 

The Exchange applies Trade Collar 

Protection to prevent the immediate 

execution of certain orders at prices 

outside of a specified parameter 

(referred to as a ‘‘Trading Collar’’).4 This 

Trade Collar Protection mechanism is 

set forth in Exchange Rule 6.60(a), but 

the Exchange has proposed to amend 

Exchange Rule 6.60(a) so that the rule 

accurately reflects how the mechanism 

operates.5

mstockstill on DSK4VPTVN1PROD with NOTICES

77078 Federal Register / Vol. 79, No. 246 / Tuesday, December 23, 2014 / Notices 

6See Exchange Rule 6.60(a)(1)(i). 

7See Exchange Rule 6.60(a)(1)(ii). 

8See Exchange Rule 6.60(a)(4)(A). 

9See Exchange Rule 6.60(a)(4)(B). 

10See Exchange Rule 6.60(a)(4)(C)(iii). 

11See Notice, supra note 3, at 67488. 

12See id. 

13See Notice, supra note 3, at 67489. 

14See id.; see also Exchange Rule 6.60(a)(5). 

However, if there is an opportunity for trading 

within one Trading Collar of the last sale price, the 

buy (sell) order will be displayed at the NBB (NBO) 

established at the time of the initial execution. See 

id. 

15See id. 

16See Notice, supra note 3, at 67489. 

17The Exchange states that it believes that an 

order with a limit price evidences specific interest 

at which the submitting market participant is 

willing to trade and, therefore, does not need the 

protection of the Trade Collar Protection 

mechanism. See id. The Exchange notes that 

marketable limit orders remain subject to the 

protections of the Exchange’s ‘‘Limit Order Filter’’ 

as provided in in Exchange Rule 6.60(b). See id. 

18See id. The Exchange states that it intends to 

incorporate this functionality in the near future as 

it believes that the functionality would be beneficial 

to the market. See id. 

19See id. 

20See Notice, supra note 3, at 67489. 

21See proposed Exchange Rule 6.60(a)(4)(C)(ii). 

22See Notice, supra note 3, at 67489. The 

Exchange states that it bases the value of the Trade 

Collar on the NBB for buy orders because it believes 

that a market participant that is looking to buy 

would derive its price off of what other market 

participants are willing to pay (i.e., the prevailing 

bid), and similarly bases the value of the Trade 

Collar on the NBO for sell orders because it believes 

that a market participant that is looking to sell 

would derive its price off of what other market 

participants are willing to sell (i.e., the prevailing 

offer). See id. 

23See id. 

The Trade Collar Protection 

mechanism applies in two scenarios: (1) 

The mechanism prevents the execution 

of certain orders when the difference 

between the National Best Offer 

(‘‘NBO’’) and the National Best Bid 

(‘‘NBB’’) is greater than one Trading 

Collar; 6 and (2) the mechanism prevents 

the execution of the balance of a buy 

order if it were to execute at a price that 

is the NBO plus a Trading Collar (or a 

price that is the NBB minus a Trading 

Collar for an eligible sell order).7 In the 

first scenario, the Exchange will display 

the order at a price equal to the NBO 

minus one Trading Collar for sell orders 

or the NBB plus one Trading Collar for 

buy orders (the ‘‘collared order’’).8 The 

Exchange will then attempt to execute 

or route the collared order to buy (sell) 

against any contra interest priced within 

one Trading Collar above (below) the 

displayed price of the collared order.9

After a period of one second, if the 

collared order has not been executed or 

its price has not been recalculated due 

to changes in the market, the Trade 

Collar Protection mechanism will 

improve the collared order’s displayed 

price by an amount equal to an 

additional Trading Collar.10 The 

Exchange notes that the collared order 

will re-price before the expiration of one 

second as a result of certain changes in 

the market; specifically, an update to 

the NBBO that improves the same side 

of the market as the collared order will 

cause the collared order to be 

redisplayed at the same price as the 

updated NBBO.11 A Limit Order (which 

is not an IOC Order, AON Order, FOK 

Order or NOW Order) on the same side 

of the market priced better than one 

Trading Collar from the collared order 

will also become subject to Trade Collar 

Protection and will cause the collared 

order to improve by one Trading Collar 

(which will redisplay at the new price 

and additional size of the new Limit 

Order).12

The second scenario arises when the 

difference between the NBB and NBO is 

within the bid-ask differential 

guidelines and an incoming market 

order or marketable limit order is 

partially executed upon entry but 

execution of the balance of the order 

would be at a price that is more than a 

Trading Collar away from the NBBO at 

entry.13 Pursuant to Exchange Rule 

6.60(a)(5), the balance of the partially 

executed order will be subject to Trade 

Collar Protection and displayed at the 

last sale price,14 and thereafter handled 

the same way as an order collared in the 

first scenario.15

The Exchange has proposed to amend 

Exchange Rule 6.60(a) so that the 

description of the Trade Collar 

Protection mechanism conforms to its 

function. First, Exchange Rule 

6.60(a)(1)(i) provides that the Exchange 

will prevent the immediate execution of 

market orders and marketable limit 

orders if the width of the bid-ask 

differential of the NBBO is greater than 

one Trading Collar. However, the 

Exchange states that it only prevents the 

immediate execution of market orders 

(and not marketable limit orders) when 

the width of the bid-ask differential of 

the NBBO is greater than one Trading 

Collar.16 According to the Exchange, 

marketable limit orders (i.e., orders with 

limit prices that are executable against 

the NBB or NBO), execute immediately 

regardless of the width of the bid-ask 

differential of the NBBO.17 Accordingly, 

the Exchange proposes to delete the 

reference to marketable limit orders in 

Exchange Rule 6.60(a)(1)(i). 

Second, the Exchange proposes to 

delete Exchange Rule 6.60(a)(4)(C)(iv), 

which provides that a market order that 

arrives on the same side of the market 

as a collared order will also be subject 

to Trade Collar Protection and will be 

displayed at the same price as the 

collared order. The Exchange has not 

yet deployed this functionality and, as 

such, Exchange Rule 6.60(a)(4)(C)(iv) is 

not an accurate reflection of the Trade 

Collar Protection mechanism’s current 

operation in this regard.18 Instead of 

joining the resting collared order at its 

displayed price, an incoming market 

order to buy (sell) on the same side of 

the market as a resting collared order 

actually results in both orders being 

displayed at a price equal to one 

Trading Collar above (below) the resting 

collared order’s displayed price.19 The 

Exchange notes that this is what occurs 

when a marketable limit order to buy 

(sell) is received on the same side of the 

market as a resting collared order and 

priced more than one Trading Collar 

above (below) the resting collared 

order’s displayed price.20 This handling 

of later-arriving marketable limit orders 

is currently set forth in Exchange Rule 

6.60(a)(4)(C)(ii). Since market orders are 

actually handled the same way, in 

connection with the proposed deletion 

of Exchange Rule 6.60(a)(4)(C)(iv), the 

Exchange also proposes to amend 

Exchange Rule 6.60(a)(4)(C)(ii) to 

broaden its applicability to all 

marketable orders, which include both 

marketable limit orders and market 

orders.21

Third, the Exchange proposes to 

delete a cross reference to Exchange 

Rule 6.37(b)(1) in Exchange Rule 

6.60(a)(2), which provides the bid-ask 

differentials used to determine the 

applicable value of the Trading Collar. 

Exchange Rule 6.37(b)(1) provides that 

the bid price for an option contract be 

used as the reference price for the bidask differential applicable to both buy 

and sell orders, but the Trade Collar 

Protection mechanism instead uses the 

NBO as the reference price for the value 

of the Trade Collar applicable to sell 

orders (and uses the NBB as the 

reference price for the Trade Collar 

applicable to buy orders).22

Accordingly, in place of the current 

cross reference to Exchange Rule 

6.37(b)(1) in Exchange Rule 6.60(a)(2), 

the Exchange proposes to adopt new 

subparagraphs (a)(2)(A) and (a)(2)(B), 

which codify the same numerical values 

as provided currently in Exchange Rule 

6.37(b)(1) but make clear that the 

reference price for the applicable 

Trading Collar is the NBB for buy orders 

and the NBO for sell orders (rather than 

both values being keyed off of the NBB 

as Exchange Rule 6.37(b)(1) provides).23

The Exchange also proposes some 

additional clarifying changes. The 

Exchange proposes to amend Exchange 

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Federal Register / Vol. 79, No. 246 / Tuesday, December 23, 2014 / Notices 77079 

24See id.; see also proposed Exchange Rule 

6.60(a). 

25See proposed Exchange Rule 6.60(a)(3); see also 

Notice, supra note 3, at 67489. The Exchange also 

proposes to capitalize the term ‘‘limit order’’ as 

used in Exchange Rule 6.60(a)(4)(D) to conform 

with the use of that term in the rest of the rule. See 

id. at 67489–67490. 

26See proposed Exchange Rule 6.37(b)(1)(E); see 

also Notice, supra note 3, at 67489. 

27 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

28 15 U.S.C. 78f(b)(5). 

29See Notice, supra note 3, at 67490; see also 

supra note 22. 

30 15 U.S.C. 78s(b)(2). 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

Rule 6.60(a) to delete the terms 

‘‘inbound’’ and ‘‘incoming’’ where 

currently used in the rule because Trade 

Collar Protection applies to resting 

orders as well as inbound or incoming 

orders.24 The Exchange also proposes to 

delete the reference in Exchange Rule 

6.60(a)(3) to the cancellation of IOC 

Orders, AON Orders, FOK Orders and 

NOW Orders if not immediately 

executed, as AON orders do not cancel 

if they are not immediately executed.25

Finally, the Exchange proposes to 

amend Exchange Rule 6.37(b)(1)(E) to 

rectify a typographical error—Exchange 

Rule 6.37(b)(1)(E) states that the bid-ask 

differential should be no more than $1 

when the last bid is $20.10 or more, but 

the rule should refer instead to a last bid 

of $20.01 or more.26

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.27 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,28 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 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 Commission notes that the 

Exchange believes that the proposal 

assists with the maintenance of fair and 

orderly markets and protects investors 

by correcting inaccurate language in 

Exchange Rule 6.60(a) and clarifying the 

existing Trade Collar Protection 

functionality so that market participants 

can better understand how the Exchange 

handles certain orders in times of 

market dislocation. In addition, the 

Commission notes that the Exchange 

believes that the proposed functionality 

of the Trade Collar Protection 

components is consistent with the Act. 

In particular, the Exchange believes that 

its proposal to base Trading Collar 

values on the NBB for buy orders and 

the NBO for sell orders could remove 

impediments to and perfect the 

mechanism of a free and open market by 

using a benchmark from which a market 

participant would most likely derive its 

price.29

The Commission believes that the 

operation of the Trade Collar Protection 

mechanism set forth in the proposal is 

consistent with the Act. In addition, the 

Commission believes that the revised 

description of this mechanism should 

increase transparency with respect to 

how the mechanism operates and 

enhance investors’ understanding of 

how the mechanism may affect their 

orders in certain market conditions. 

Accordingly, the Commission believes 

that the proposal is reasonably designed 

to help 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, in general, protect 

investors and the public interest. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,30 that the 

proposed rule change (SR–NYSEArca– 

2014–14) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–29971 Filed 12–22–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73863; File No. SR–FINRA– 

2014–051] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to In Concert 

Reporting of Options Positions 

December 17, 2014. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

11, 2014, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. 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 

FINRA is proposing to amend Rule 

2360(b)(5) regarding reporting of options 

positions to codify an existing 

requirement that the reporting rules 

apply to all accounts acting in concert, 

consistent with the application of the 

reporting rules of the options exchanges. 

Below is the text of the proposed rule 

change. Proposed new language is in 

italics; proposed deletions are in 

brackets. 

* * * * * 

2000. DUTIES AND CONFLICTS 

* * * * * 

2300. SPECIAL PRODUCTS 

* * * * * 

2360. Options 

(a) No Change. 

(b) Requirements 

(1) through (4) No Change. 

(5) Reporting of Options Positions 

(A)(i)a. Conventional Options 

Each member shall file or cause to be 

filed with FINRA a report with respect 

to each account in which the member 

has an interest, each account of a 

partner, officer, director or employee of 

such member, and each customer, nonmember broker, or non-member dealer 

account, which, acting alone or in 

concert, has established an aggregate 

position of 200 or more option contracts 

(whether long or short) of the put class 

and the call class on the same side of 

the market covering the same 

underlying security or index, combining 

for purposes of this subparagraph long 

positions in put options with short 

positions in call options and short 

mstockstill on DSK4VPTVN1PROD with NOTICES