78928 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 If the LMM is not quoting at the NBBO, or the 

LMM is quoting at the NBBO but for less size than 

the incoming order of five contracts or fewer, any 

remaining balance of the incoming order will be 

matched against orders and quotes in the Display 

Order Process in the order of their ranking. 

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– 

NSCC–2014–13 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–NSCC–2014–13. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of NSCC and on DTCC’s Web site 

at http://dtcc.com/legal/sec-rulefilings.aspx. 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–NSCC– 

2014–13 and should be submitted on or 

before January 21, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30591 Filed 12–30–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73928; File No. SR– 

NYSEARCA–2014–145] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending Rule 6.76A by 

Revising the Order Allocation 

Methodology for Certain Orders of Five 

Contracts or Fewer 

December 23, 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 

22, 2014, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 proposes to amend 

Rule 6.76A by revising the order 

allocation methodology for certain 

orders of five contracts or fewer. 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 

Exchange 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 these 

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 proposes to amend 

Rules 6.76A by revising the order 

allocation methodology for certain 

orders of five (5) contracts or fewer. As 

proposed, for all incoming orders of five 

contracts or fewer the Lead Market 

Maker (‘‘LMM’’) would be allocated the 

full contract size up to the size of the 

LMM’s quote, provided the LMM is 

quoting at the NBBO and there is no 

Customer interest at the same price 

ranked ahead of the LMM. 

Rule 6.76A sets forth the priority for 

the allocation of incoming orders 

against bids and offers in the Display 

Order Process at a particular price in the 

NYSE Arca System (‘‘System’’). 

Specifically, pursuant to Rule 

6.76A(a)(1)(A), if there is an LMM 

quoting at the NBBO, and there is no 

Customer interest ranked ahead of the 

LMM, nor is the incoming order a 

Directed Order, the incoming order will 

be matched against the quote of the 

LMM for either: (a) An amount equal to 

40% of the incoming order up to the 

LMM’s disseminated quote size; or (b) 

the LMM’s share in the order of ranking, 

whichever is greater. Generally 

speaking, this means an LMM receives 

a guaranteed 40% trade allocation on 

any incoming order provided the LMM 

is quoting at the NBBO, and there is no 

Customer interest ranked ahead of the 

LMM. 

The Exchange is proposing to revise 

the order allocation methodology to 

provide that if the LMM is entitled to an 

allocation pursuant to Rule 

6.76A(a)(1)(A) and the entire contract 

size of the incoming order is five (5) 

contracts or fewer, the LMM would be 

allocated the full contract size up to the 

size of the LMM’s quote. As proposed, 

Rule 6.76A(1)(B) would state, ‘‘If the 

LMM is entitled to an allocation 

pursuant to (a)(1)(A) above, for all 

incoming orders of five (5) contracts or 

fewer, the LMM will be allocated the 

full contract size up to the size of the 

LMM’s quote.’’ This proposed change 

would affect only those incoming orders 

of five contacts or fewer. The Exchange 

notes that the proposed rule is only 

available if the LMM is entitled to an 

allocation, which means that if there is 

Customer interest at the same price 

ranked ahead of the LMM, such 

Customer interest would continue to 

have priority, even for executions of five 

contracts or fewer. In addition, an LMM 

must be quoting at the NBBO to be 

entitled to trade with orders of five 

contracts or fewer.3 The Exchange is not 

proposing any changes to the order 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices 78929 

4See CBOE Rule 6.45B(a)(iii)(1). 

5See NYSE MKT Rule 964NY(b)(2)(C)(iv). 

6See ISE Rule 713 Supplementary Material .01(c). 

7See NYSE MKT Rule 964NY Commentary .01, 

ISE Rule 713 Supplementary Material .01(c), and 

CBOE Rule 6.45B(a)(iii)(1)(A). 

8Supra nn. 4, 5, and 6. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78s(b)(3)(A)(iii). 

12 17 CFR 240.19b–4(f)(6). 

allocation methodology for executions 

greater than five contracts. 

The allocation of orders of five 

contracts or fewer to a specific type of 

market maker (i.e. LMM) is consistent 

with similar methodology for allocating 

small size orders on other options 

exchanges. For example, the Chicago 

Board Options Exchange (‘‘CBOE’’) may 

allocate all orders of five contracts or 

fewer to an LMM or Designated Primary 

Market Maker (‘‘DPM’’),4 NYSE Amex 

Options allocates orders of five 

contracts or fewer to the Primary 

Specialist,5 and the International 

Securities Exchange (‘‘ISE’’) allocates all 

orders of five contracts or fewer to the 

Primary Market Maker (‘‘PMM’’).6 The 

Exchange’s proposal would provide its 

LMMs the same guaranteed allocation of 

orders of five contracts or fewer as these 

exchanges provide to their DPMs, 

Specialist, or PMMs. Specifically, the 

Exchange, like NYSE Amex Options, 

and the ISE, would condition this 

guaranteed allocation on there being no 

Customer orders ranked ahead of the 

LMM, the LMM quoting at the NBBO, 

and the trade allocation not exceeding 

the number of contracts than the LMM 

is quoting. 

The Exchange believes that the 

allocation of order of five contracts or 

fewer will not result in a significant 

portion of the Exchange’s volume being 

executed by the LMM. Nevertheless, the 

Exchange would monitor the sizes of all 

orders received, and, on a quarterly 

basis, evaluate the percentage of volume 

constituted by orders of five contracts or 

fewer that were allocated to an LMM. If 

the percentage of the volume executed 

on the Exchange comprised of orders for 

five (5) contracts or fewer executed by 

an LMM is over forty percent (40%), the 

Exchange will reduce the size of the 

orders guaranteed to the LMM in this 

provision. Conducting a quarterly 

review of Exchange volume and 

analyzing the percentage of orders of 

five contracts or fewer is consistent with 

review processes at other exchanges 

with comparable allocation 

methodology for small size orders.7 The 

Exchange proposes to include the 

evaluation process in new Commentary 

.02 to Rule 6.76A. 

The proposed allocation methodology 

described above is part of NYSE Arca’s 

careful balancing of the rewards and 

obligations that pertain to each of the 

Exchange’s classes of memberships. 

This balancing is part of the overall 

market structure that is designed to 

encourage vigorous price competition 

among Market Makers, as well as to 

maximize the benefits of price 

competition resulting from the entry of 

Customer and non-Customer orders, 

while encouraging participants to 

provide market depth. The Exchange 

believes by offering LMMs a greater 

allocation on executions of five 

contracts or fewer, similar to what their 

counterparts on other exchanges 

receive, the proposed change, which 

guarantees participation rights for 

LMMs only when quoting at the best 

price, strikes the appropriate balance 

between the obligations of LMMs to 

provide meaningful depth and liquidity, 

and the rewards they receive for doing 

so. Furthermore, the Exchange believes 

that the revised trade allocation process, 

which is competitive with those offered 

on other exchanges,8 will help to ensure 

that NYSE Arca is able to continue to 

attract quality LMMs willing to provide 

deep meaningful markets to the 

investing public. 

The Exchange is also proposing minor 

non-substantive changes to the 

numbering convention of Rule 6.76A to 

accommodate the rule change described 

above. 

The Exchange will issue a notice 

announcing the implementation date of 

the proposed rule change no later than 

30 days after the effective date of this 

filing. 

2. Statutory Basis 

The Exchange believes that this 

proposed rule change is consistent with 

section 6(b) of the Securities Exchange 

Act of 1934 (‘‘Act’’) 9, in general, and 

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

of the Act 10 in particular, in that 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, in general, to protect 

investors and the public interest. In 

particular, and as described above, the 

Exchange believes the proposed rule 

change is part of the balancing of NYSE 

Arca’s overall market structure, which is 

designed to encourage vigorous price 

competition between Market Makers. In 

addition, the Exchange believes the 

proposed rule change furthers the 

objectives of the Act because it is also 

designed to help ensure that NYSE Arca 

is able to attract quality LMMs willing 

to provide deep meaningful markets to 

the investing public. Increasing quote 

competition should lead to narrower 

spreads and more liquid markets and 

thus benefit investors. Narrower spreads 

and more liquid markets can serve as a 

catalyst to attracting additional order 

flow to the Exchange, enhancing price 

discovery and generally benefiting all 

participants on the Exchange. 

The Exchange further believes that the 

proposed rule change would be not be 

unfairly discriminatory in allocating 

orders of five contracts or fewer to the 

LMM. To help ensure that one class of 

Market Maker is not unduly enriched by 

this proposal, the Exchange would 

monitor the sizes of all orders received, 

and by using objective criteria, if it 

determines that the proposed allocation 

process could be seen as discriminatory 

because of an unfair share of trade 

allocations going to the LMM, would 

reduce the eligible size for orders 

included in this provision. 

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. In fact, the 

Exchange feels that the proposed change 

will increase competition amongst 

Market Makers seeking appointments as 

LMMs which should result in narrower 

spreads and more liquid markets for 

investors. In addition, by offering an 

allocation methodology similar to those 

offered at other exchanges, NYSE Arca 

will be in a better position to compete 

with those exchanges in attracting well 

capitalized Market Makers willing to 

make deep liquid markets while acting 

as an LMM. 

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 

The Exchange has filed the proposed 

rule change pursuant to section 

19(b)(3)(A)(iii) of the Act 11 and Rule 

19b–4(f)(6) thereunder.12 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

mstockstill on DSK4VPTVN1PROD with NOTICES

78930 Federal Register / Vol. 79, No. 250 / Wednesday, December 31, 2014 / Notices 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its 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. 

15 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 Exchange Act Release No. 58845 

(October 24, 2008), 73 FR 64379 (October 29, 2008) 

(SR–NYSE–2008–46). See also Securities Exchange 

Act Release Nos. 60756 (October 1, 2009), 74 FR 

51628 (October 7, 2009) (SR–NYSE–2009–100) 

(extending Pilot to November 30, 2009); 61031 

(November 19, 2009), 74 FR 62368 (November 27, 

2009) (SR–NYSE–2009–113) (extending Pilot to 

March 30, 2010); 61724 (March 17, 2010), 75 FR 

14221 (March 24, 2010) (SR–NYSE–2010–25) 

(extending Pilot to September 30, 2010); 62819 

(September 1, 2010), 75 FR 54937 (September 9, 

2010) (SR–NYSE–2010–61) (extending Pilot to 

January 31, 2011); 63616 (December 29, 2010), 76 

FR 612 (January 5, 2011) (SR–NYSE–2010–86) 

(extending Pilot to August 1, 2011); 64761 (June 28, 

2011), 76 FR 39147 (July 5, 2011) (SR–NYSE–2011– 

29) (extending Pilot to January 31, 2012); 66046 

(December 23, 2011), 76 FR 82340 (December 30, 

2011) (SR–NYSE–2011–65) (extending Pilot to July 

31, 2012); 67494 (July 25, 2012), 77 FR 45408 (July 

31, 2012) (SR–NYSE–2012–26) (extending Pilot to 

January 31, 2013); 68558 (January 2, 2013), 78 FR 

1288 (January 8, 2013) (SR–NYSE–2012–75) 

(extending Pilot to July 31, 2013); 69813 (June 20, 

2013), 78 FR 38753 (June 27, 2013) (SR–NYSE– 

2013–43) (extending Pilot to January 31, 2014); 

71345 (January 17, 2014), 79 FR 4221 (January 24, 

2014) (SR–NYSE–2014–01) (extending Pilot to July 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to section 

19(b)(3)(A) of the Act 13 and Rule 19b– 

4(f)(6) thereunder.14

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 shall institute proceedings 

to determine whether the proposed rule 

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– 

NYSEARCA–2014–145 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–NYSEARCA–2014–145. 

This file number should be included on 

the subject line if email is used. To help 

the Commission process and review 

your comments more efficiently, please 

use only one method. The Commission 

will post all comments on the 

Commission’s Internet Web site (http:// 

www.sec.gov/rules/sro.shtml). Copies of 

the submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of NYSE Arca. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEARCA–2014–145 and should be 

submitted on or before January 21, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–30589 Filed 12–30–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73919; File No. SR–NYSE– 

2014–71] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Operation of Its New Market Model 

Pilot, Until the Earlier of Securities and 

Exchange Commission Approval To 

Make Such Pilot Permanent or July 31, 

2015 

December 23, 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 December 

18, 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 extend the 

operation of its New Market Model 

Pilot, currently scheduled to expire on 

December 31, 2014, until the earlier of 

Securities and Exchange Commission 

(‘‘Commission’’) approval to make such 

pilot permanent or July 31, 2015. 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to extend the 

operation of its New Market Model Pilot 

(‘‘NMM Pilot’’),4 currently scheduled to 

mstockstill on DSK4VPTVN1PROD with NOTICES