Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Notices 45099 

22 15 U.S.C. 78s(b)(3)(A)(iii). 

23 17 CFR 240.19b–4(f)(6). 

24 17 CFR 240.19b–4(f)(6). 

25 17 CFR 240.19b–4(f)(6)(iii). 

26 15 U.S.C. 78s(b)(2)(B). 27 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. 

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 22 and Rule 

19b–4(f)(6) thereunder.23 Because the 

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 

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, the 

proposed rule change has become 

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

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 24 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),25 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. 

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) 26 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– 

NYSEAMER–2017–18 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–NYSEAMER–2017–18. 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– 

NYSEAMER–2017–18, and should be 

submitted on or before October 18, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–20624 Filed 9–26–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81672; File No. SR– 

NYSEAMER–2017–17] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending Rule 7.31E 

Relating to the Minimum Trade Size 

Modifier for Additional Order Types 

and Expanding the Minimum Trade 

Size Modifier for Existing Order Types 

September 21, 2017. 

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 

September 11, 2017, NYSE American 

LLC (‘‘Exchange’’ or ‘‘NYSE American’’) 

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 7.31E relating to the Minimum 

Trade 

Size modifier. 

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. 


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45100 Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Notices 

4The Exchange proposes a non-substantive 

amendment to rename ‘‘Primary Pegged Orders’’ as 

‘‘Non-Displayed Primary Pegged Orders’’ in Rule 

7.31E(h)(2). The Exchange believes that this 

proposed amendment provides transparency 

regarding whether Primary Pegged Orders on the 

Exchange are displayed. 

5See Rule 7.31E(b)(2)(A) (‘‘A Limit IOC Order to 

buy (sell) may be designated with a minimum trade 

size (‘‘MTS’’), which will trade against sell (buy) 

orders in the Exchange Book that in the aggregate, 

meets its MTS. On entry, a Limit IOC Order with 

an MTS must have a minimum of one round lot and 

will be rejected on arrival if the MTS is larger than 

the size of the Limit IOC Order. A Limit IOC Order 

with an MTS that cannot be immediately traded at 

its minimum size will be cancelled in its entirety.’’) 

6See Rule 7.31E(d)(3)(D) (‘‘An MPL Order may be 

designated with an MTS of a minimum of one 

round lot and will be rejected on arrival if the MTS 

is larger than the size of the MPL Order. On arrival, 

an MPL Order to buy (sell) with an MTS will trade 

with sell (buy) orders in the Exchange Book that in 

the aggregate, meets its MTS. If the sell (buy) orders 

do not meet the MTS, the MPL Order to buy (sell) 

will not trade on arrival and will be ranked in the 

Exchange Book. Once resting, an MPL Order to buy 

(sell) with an MTS will trade with an order to sell 

(buy) that meets the MTS and is priced at or below 

(above) the midpoint of the PBBO. If an order does 

not meet an MPL Order’s MTS, the order will not 

trade with and may trade through such MPL Order. 

If an MPL Order with an MTS is traded in part or 

reduced in size and the remaining quantity of the 

order is less than the MTS, the MPL Order will be 

cancelled.’’) 

7See Rule 7.31E(d)(4)(C) (‘‘A Tracking Order may 

be designated with an MTS of one round lot or 

more. If an incoming order cannot meet the MTS, 

a Tracking Order with a later working time will 

trade ahead of the Tracking Order designated with 

an MTS with an earlier working time. If a Tracking 

Order with an MTS is traded in part or reduced in 

size and the remaining quantity is less than the 

MTS, the Tracking Order will be cancelled.’’) 

8Tracking Orders, including Tracking Orders 

with an MTS modifier, are passive orders that do 

not trade on arrival. 9See Nasdaq Rule 4703(e) (Nasdaq’s ‘‘Minimum 

Quantity Order’’ may not be displayed and will be 

rejected if it includes an instruction to route) and 

IEX Rule 11.190(b)(11)(A) (IEX’s ‘‘Minimum 

Quantity Order’’ or ‘‘MQTY’’ is a non-displayed, 

non-routable order that may be a pegged order, 

which includes IEX’s ‘‘Primary Peg Order’’ and 

‘‘Discretionary Peg Order’’). 

10See Nasdaq Rule 4703(e) (Nasdaq’s ‘‘Minimum 

Quantity’’ order attribute allows for a Nasdaq 

participant to specify one of two alternatives to how 

a Minimum Quantity Order would be processed at 

the time of entry, one of which is that ‘‘the 

minimum quantity condition must be satisfied by 

execution against one or more orders, each of which 

must have a size that satisfies the minimum 

quantity condition’’) and IEX Rule 

11.190(b)(11)(G)(iii)(B) (On arrival, IEX’s 

‘‘Minimum Execution Size with All-or-None 

Remaining’’ qualifier for IEX’s MQTY executes 

against each willing resting order in priority, 

provided that each individual execution size meets 

its effective minimum quantity.) 

11The Exchange proposes to delete references to 

MTS in Rules 7.31E(b)(2)(A), 7.31E(b)(2)(B), 

7.31E(d)(3)(D), 7.31E(d)(4)(C), 7.31E(e)(3)(B), and 

7.46E(f)(1)(A). 

12Nasdaq also requires that its Minimum 

Quantity Order also have a size of at least a round 

lot. See Nasdaq Rule 4703(e). 

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 7.31E relating to the Minimum 

Trade Size (‘‘MTS’’) modifier. 

Specifically, the Exchange proposes to 

make the MTS modifier available for 

Non-Displayed Primary Pegged Orders 4

and Discretionary Pegged Orders. In 

addition, the Exchange proposes to 

provide additional optionality for ETP 

Holders using the MTS modifier with 

Midpoint Liquidity (‘‘MPL’’) Orders, 

Non-Displayed Primary Pegged Orders, 

and Discretionary Pegged Orders. As 

proposed, ETP Holders could choose 

how such orders would trade on arrival 

to trade either with (i) orders that in the 

aggregate meet the MTS (current 

functionality), or (ii) individual orders 

that each meet the MTS (proposed 

functionality). 

The MTS modifier is currently 

available for Limit IOC Orders,5 MPL 

Orders,6 and Tracking Orders.7 As such, 

the MTS modifier is currently available 

only for orders that are not displayed 

and do not route. On arrival, both Limit 

IOC Orders and MPL Orders with an 

MTS modifier will trade against contraside orders in the Exchange Book that in 

the aggregate, meet the MTS.8 Once 

resting, MPL Orders and Tracking 

Orders with an MTS modifier function 

similarly: If a contra-side order does not 

meet the MTS, the incoming order will 

not trade with and may trade through 

the resting order with the MTS modifier. 

In addition, both MPL Orders and 

Tracking Orders with an MTS modifier 

will be cancelled if such orders are 

traded in part or reduced in size and the 

remaining quantity is less than the MTS. 

The Exchange proposes to amend its 

rules to make MTS modifier 

functionality available for additional 

non-displayed orders that do not route, 

i.e., Non-Displayed Primary Pegged 

Orders and Discretionary Pegged 

Orders. The Exchange also proposes to 

add an option that an order with an 

MTS modifier would trade on entry 

only with individual orders that each 

meet the MTS. These proposed changes 

are based on the rules of Nasdaq Stock 

Market LLC (‘‘Nasdaq’’) and Investors 

Exchange LLC (‘‘IEX’’), which both offer 

minimum trade size functionality for 

orders that are not displayed and that do 

not route, including pegging orders and 

for IEX, its Discretionary Peg Order.9

Both exchanges also offer the option for 

orders with a minimum trade size to 

trade on entry only with individual 

orders that each meet the MTS of the 

incoming order.10

To effect this proposed rule change, 

the Exchange proposes to move all 

references to MTS modifiers in Rule 

7.31E to proposed Rule 7.31E(i)(3), as a 

new additional order instruction and 

modifier to be referred to as the 

‘‘Minimum Trade Size (‘MTS’) 

Modifier.’’ As proposed, Rule 7.31E(i)(3) 

would provide that a Limit IOC Order, 

MPL Order, Tracking Order, NonDisplayed Primary Pegged Order, or 

Discretionary Pegged Order may be 

designated with an MTS Modifier. 

Because this proposed rule text would 

specify which orders would be eligible 

for the MTS Modifier, the Exchange 

proposes to delete existing rule text 

specifying which orders are and are not 

eligible for an MTS.11

Proposed Rule 7.31E(i)(3)(A) would 

provide that an MTS must be a 

minimum of a round lot and that an 

order with an MTS Modifier would be 

rejected if the MTS is less than a round 

lot or if the MTS is larger than the size 

of the order. This proposed rule text is 

based on the next-to-last sentence of 

Rule 7.31E(b)(2)(A) and the first 

sentence of 7.31E(d)(3)(D), and in part 

on the first sentence of Rule 

7.31E(d)(4)(C), with non-substantive 

differences to use common terminology 

when applying this requirement to all of 

the order types eligible for an MTS 

Modifier.12

Proposed Rule 7.31E(i)(3)(B) would 

provide that an ETP Holder must 

specify one of the following instructions 

with respect to how an order with an 

MTS Modifier would trade at the time 

of entry. This proposed text is new and 

reflects the Exchange’s proposal to add 

an alternative to how an order with an 

MTS Modifier would trade on entry. 

Proposed Rule 7.31E(i)(3)(B)(i) would 

describe the existing functionality as 

one of the instructions that would be 

available to ETP Holders. The proposed 

rule would provide that an order to buy 

(sell) with an MTS Modifier would trade 

with sell (buy) orders in the Exchange 

Book that in the aggregate meet such 

order’s MTS. This proposed rule text is 

based on the third sentence of Rule 

7.31E(b)(2)(A) and the second sentence 

of Rule 7.31E(d)(3)(D) with nonsubstantive differences to use common 

terminology when applying this 

requirement to all of the order types 

eligible for an MTS Modifier. 

Proposed Rule 7.31E(i)(3)(B)(ii) would 

describe the new instruction that on 

entry, an order to buy (sell) with an 

MTS Modifier could trade with 

individual sell (buy) order(s) in the 

Exchange Book that each meets such 

order’s MTS. Because the Exchange is 

not proposing to change how an MTS 

Modifier would function for Limit IOC 

Orders, the Exchange further proposes 


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13See supra note 10. 

14PBBO is defined in Rule 1.1E(dd) as the Best 

Protected Bid and the Best Protected Offer. 15 15 U.S.C. 78f(b). 

to provide that this instruction would 

not be available for Limit IOC Orders. 

As discussed above, the addition of this 

instruction for how orders with an MTS 

Modifier would trade on entry is based 

on the rules of Nasdaq and IEX.13

Proposed Rule 7.31E(i)(3)(C) would 

provide that an order with an MTS 

Modifier that is designated Day and 

cannot be satisfied on arrival would not 

trade and would be ranked in the 

Exchange Book. This proposed rule text 

is based on the third sentence of Rule 

7.31E(d)(3)(D) with non-substantive 

differences to reference orders 

designated Day so that this proposed 

rule text would also be applicable to 

Non-Displayed Primary Pegged Orders 

and Discretionary Pegged Orders, which 

are also designated Day. 

Proposed Rule 7.31E(i)(3)(D) would 

provide that an order with an MTS 

Modifier that is designated IOC and 

cannot be immediately satisfied would 

be cancelled in its entirety. This 

proposed rule text is based on the last 

sentence of Rule 7.31E(b)(2)(A), with 

non-substantive differences to specify 

that this functionality would be 

applicable to any orders designated IOC 

that have an MTS Modifier, i.e., Limit 

IOC Orders and MPL–IOC Orders. 

Proposed Rule 7.31E(i)(3)(E) would 

provide that a resting order to buy (sell) 

with an MTS Modifier would trade with 

individual sell (buy) order(s) that each 

meets the MTS. This proposed rule text 

is based on the fourth sentence of Rule 

7.31E(d)(3)(D) with a non-substantive 

difference to use the same terminology 

as proposed Rule 7.31E(i)(3)(B)(ii) 

because a resting order with an MTS 

Modifier only trades if contra-side 

individual orders each meets such 

order’s MTS. The Exchange proposes 

non-substantive differences to use 

common terminology when applying 

this requirement to all of the order types 

eligible for an MTS Modifier. 

Proposed Rules 7.31E(i)(3)(E)(i)–(iii) 

would set forth additional requirements 

for how a resting order with an MTS 

Modifier would trade. Proposed Rule 

7.31E(i)(3)(E)(i) would provide that if a 

sell (buy) order does not meet the MTS 

of the resting order to buy (sell) with an 

MTS Modifier, that sell (buy) order 

would not trade with and may trade 

through such order with an MTS 

Modifier. This proposed rule text is 

based on the fifth sentence of Rule 

7.31E(d)(3)(D) and the second sentence 

of Rule 7.31E(d)(4)(C) with nonsubstantive differences to use common 

terminology when applying this 

requirement to all of the order types 

eligible for an MTS Modifier. 

Proposed Rule 7.31E(i)(3)(E)(ii) would 

provide that if a resting sell (buy) order 

did not meet the MTS of a same-priced 

resting order to buy (sell) with an MTS 

Modifier, a subsequently arriving sell 

(buy) order that meets the MTS would 

trade ahead of the resting sell (buy) 

order. This proposed rule text is based 

on the second sentence of Rule 

7.31E(d)(4)(C) with non-substantive 

differences to use common terminology 

when applying this requirement to all of 

the order types eligible for an MTS 

Modifier. 

Proposed Rule 7.31E(i)(3)(E)(iii) 

would provide that a resting order to 

buy (sell) with an MTS Modifier would 

not be eligible to trade if sell (buy) 

order(s) ranked Priority 2—Display 

Orders are displayed on the Exchange 

Book at a price lower (higher) than the 

working price of such MTS Order. This 

proposed rule is new and is designed to 

ensure that a non-displayed order with 

an MTS Modifier that is resting on the 

Exchange Book would not trade at a 

price that crosses the price of a 

displayed contra-side order. 

For example, if the PBBO 14 is $10.10 

× $10.14 and there is a resting MPL 

Order to buy with an MTS Modifier for 

100 shares that has a working price of 

$10.12 (‘‘Order A’’), a later-arriving 

Limit Order to sell ranked Priority 2— 

Display Orders for 50 shares priced at 

$10.11 (‘‘Order B’’) would not be 

eligible to trade with Order A because 

it does not meet Order A’s MTS. 

However, because it is odd-lot sized, 

Order B would not change the PBBO 

and therefore the working price of Order 

A would not change, but Order B would 

be displayed on the Exchange’s 

proprietary data feeds at $10.11. In such 

case, to eliminate the potential for the 

Exchange to have an execution of Order 

A at a higher price than Order B, Order 

A would not be eligible to trade until 

such time that Order B no longer 

internally crosses Order A’s working 

price. Order A and Order B would no 

longer be internally crossed if, for 

example, Order B is cancelled or 

executed or if the PBBO moves such 

that the working price of Order A no 

longer internally crosses the display 

price of Order B. 

As a related matter, the Exchange also 

proposes to amend Rule 7.46E (Tick 

Size Pilot Plan) to establish how the 

Exchange would process orders with an 

MTS Modifier for Pilot Securities in 

Test Group Three. Proposed Rule 

7.46E(f)(5)(I) would provide that for 

such securities, a resting order to buy 

(sell) with an MTS Modifier would not 

be eligible to trade if sell (buy) order(s) 

ranked Priority 2—Display Orders are 

displayed on the Exchange Book at a 

price equal to or lower (higher) than the 

working price of such MTS Order. The 

Exchange proposes this difference for 

Pilot Securities in Test Group Three of 

the Tick Size Pilot Plan to ensure that 

a non-displayed order does not trade 

ahead of a same-price contra-side 

displayed order. 

For example, if the PBBO is $10.10 × 

$10.20 and there is a resting MPL Order 

to buy with an MTS Modifier for 100 

shares that has a working price of 

$10.15 (‘‘Order A’’), a later-arriving 

Limit Order to sell ranked Priority 2— 

Display Orders for 50 shares priced at 

$10.15 (‘‘Order B’’) would not be 

eligible to trade with Order A because 

it does not meet Order A’s MTS, would 

not change the PBBO, and, pursuant to 

proposed Rule 7.31E(i)(3)(E)(ii), would 

rest on the Exchange Book internally 

locking the price of Order A. To avoid 

a violation of the Tick Size Pilot Plan for 

Pilot Securities in Test Group Three, 

Order A would not be eligible to trade 

if Order B is displayed at Order A’s 

working price until such time that the 

displayed order no longer internally 

locks Order A’s working price. Order A 

and Order B would no longer be 

internally locked if, for example, Order 

B is cancelled or executed or if the 

PBBO moves such that the working 

price of Order A no longer internally 

locks the display price of Order B. 

Proposed Rule 7.31E(i)(3)(F) would 

provide that a resting order with an 

MTS Modifier would be cancelled if it 

is traded in part or reduced in size and 

the remaining quantity is less than such 

order’s MTS. This proposed rule text is 

based on the last sentence of Rule 

7.31E(d)(3)(D) and the last sentence of 

Rule 7.31E(d)(4)(C) with nonsubstantive differences to use common 

terminology when applying this 

requirement to all of the order types 

eligible for an MTS Modifier. 

Because of the technology changes 

associated with this proposed rule 

change, the Exchange will announce the 

implementation date of this proposed 

rule change by Trader Update. The 

Exchange anticipates that the 

implementation date will be in the 

fourth quarter of 2017. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),15 in general, and furthers the 


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16 15 U.S.C. 78f(b)(5). 

17See supra note 9. 

18See supra note 10. 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the 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. 

21 17 CFR 240.19b–4(f)(6). 

22 17 CFR 240.19b–4(f)(6)(iii). 

23For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

objectives of Section 6(b)(5),16 in 

particular, because it is 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 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 Exchange believes that the 

proposal to expand the availability of 

the Exchange’s existing MTS Modifier to 

additional non-displayed, non-routable 

orders, e.g., Non-Displayed Primary 

Pegged Orders and Discretionary Pegged 

Orders, would 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, 

because the proposed rule change is 

based on similar minimum trade size 

functionality on Nasdaq and IEX, which 

exchanges similarly make minimum 

trade size functionality available to nondisplayed, non-routable orders, 

including pegging orders, and for IEX, 

its Discretionary Peg Order.17

The Exchange believes that the 

proposal would 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 

because it would provide ETP Holders 

with the option for orders with a 

minimum trade size to trade on entry 

only with individual orders that each 

meets the MTS of the incoming order, 

thereby providing ETP Holders with 

more control in how such orders could 

execute. As such, the proposed rule 

change is based on similar options 

available for users of minimum trade 

size functionality on Nasdaq and IEX.18

The Exchange further believes that this 

proposed option would remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system because it 

would allow ETP Holders to provide an 

instruction that an order with an MTS 

Modifier would not trade with orders 

that are smaller in size that the MTS for 

such order, thereby providing ETP 

Holders with more control over when an 

order with an MTS Modifier may be 

executed. 

The Exchange believes that the 

proposal regarding when a resting order 

with an MTS would be eligible to trade 

would 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, 

because the proposed rule change 

would ensure that a non-displayed 

order does not trade at a price that 

crosses the price of interest that is 

displayed on the Exchange, or for Tick 

Size Pilot Securities in Group Three, so 

that a non-displayed order would not 

trade at the same price as contra-side 

displayed interest in violation of the 

Tick Size Pilot Plan. This proposed rule 

change would therefore promote just 

and equitable principles of trade by 

ensuring that displayed interest does 

not get traded through by a nondisplayed order. 

Finally, the Exchange believes that 

the proposed amendment to rename the 

‘‘Primary Pegged Order’’ as the ‘‘NonDisplayed Primary Pegged Order’’ 

would 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 

because it would promote transparency 

in Exchange rules regarding whether 

Primary Pegged Orders on the Exchange 

are displayed. 

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 

Exchange believes that the proposed 

rule change is designed to address 

competition by making available on the 

Exchange functionality that is already 

available on Nasdaq and IEX. The 

Exchange therefore believes that the 

proposed rule change would promote 

competition by providing market 

participants with an additional venue to 

which to route non-displayed, nonroutable orders with an MTS Modifier. 

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 19 and Rule 19b– 

4(f)(6) thereunder.20

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 21 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 22

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange stated that 

implementing the MTS modifier 

functionality as soon as possible would 

provide ETP Holders with greater 

control over when an order with an 

MTS modifier may be executed. The 

Exchange also stated that waiver of the 

30-day operative delay would allow it to 

implement the proposed rule change 

when the technology supporting the 

change becomes available, which the 

Exchange anticipates to be less than 30 

days after the date of this filing. The 

Commission notes that the proposed 

functionality is already available on 

other national securities exchanges. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 

operative delay and designates the 

proposal operative upon filing.23

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 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Notices 45103 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission originally approved BZX Rule 

14.11(i) in Securities Exchange Act Release No. 

65225 (August 30, 2011), 76 FR 55148 (September 

6, 2011) (SR–BATS–2011–018) and subsequently 

approved generic listing standards for Managed 

Fund Shares under Rule 14.11(i) in Securities 

Exchange Act Release No. 78396 (July 22, 2016), 81 

FR 49698 (July 28, 2016) (SR–BATS–2015–100). 

4Rule 14.11(i)(4)(C)(iv)(a) provides that ‘‘there 

shall be no limitation to the percentage of the 

portfolio invested in such holdings; provided, 

however, that in the aggregate, at least 90% of the 

weight of such holdings invested in futures, 

exchange-traded options, and listed swaps shall, on 

both an initial and continuing basis, consist of 

futures, options, and swaps for which the Exchange 

may obtain information via the Intermarket 

Surveillance Group (‘‘ISG’’) from other members or 

affiliates of the ISG or for which the principal 

market is a market with which the Exchange has a 

comprehensive surveillance sharing agreement, 

calculated using the aggregate gross notional value 

of such holdings.’’ The Exchange is proposing that 

the Fund be exempt from this requirement only as 

it relates to the Fund’s holdings in certain credit 

default swaps and Inflation Swaps, as further 

described below. 

5Rule 14.11(i)(4)(C)(iv)(b) provides that ‘‘the 

aggregate gross notional value of listed derivatives 

based on any five or fewer underlying reference 

assets shall not exceed 65% of the weight of the 

portfolio (including gross notional exposures), and 

the aggregate gross notional value of listed 

derivatives based on any single underlying 

reference asset shall not exceed 30% of the weight 

of the portfolio (including gross notional 

exposures).’’ The Exchange is proposing that the 

Fund be exempt only from the requirement of Rule 

14.11(i)(4)(C)(iv)(b) that prevents the aggregate gross 

notional value of listed derivatives based on any 

single underlying reference asset from exceeding 

30% of the weight of the portfolio (including gross 

notional exposures). The Exchange is proposing 

that the Fund be exempt from this requirement only 

Continued 

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– 

NYSEAMER–2017–17 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–NYSEAMER–2017–17. 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 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– 

NYSEAMER–2017–17 and should be 

submitted on or before October 18, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–20626 Filed 9–26–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81671; File No. SR– 

BatsBZX–2017–54] 

Self-Regulatory Organizations; Bats 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To List and 

Trade Shares of the iShares Inflation 

Hedged Corporate Bond ETF, a Series 

of the iShares U.S. ETF Trust, Under 

Rule 14.11(i), Managed Fund Shares 

September 21, 2017. 

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 

September 7, 2017, Bats BZX Exchange, 

Inc. (‘‘Exchange’’ or ‘‘BZX’’) 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 proposal to list 

and trade shares of the iShares Inflation 

Hedged Corporate Bond ETF (the 

‘‘Fund’’), a series of the iShares U.S. 

ETF Trust (the ‘‘Trust’’), under Rule 

14.11(i) (‘‘Managed Fund Shares’’). The 

shares of the Fund are referred to herein 

as the ‘‘Shares.’’ 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at www.bats.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 list and 

trade the Shares under Rule 14.11(i), 

which governs the listing and trading of 

Managed Fund Shares on the 

Exchange.3 The Fund will be an actively 

managed exchange-traded fund that 

seeks to mitigate the inflation risk of a 

portfolio composed of U.S. dollardenominated investment-grade 

corporate bonds either through holding 

such bonds or through holding 

exchange-traded funds that hold such 

bonds, as further described below. The 

Exchange submits this proposal in order 

to allow the Fund to hold Inflation 

Hedging Instruments, as defined below, 

in a manner that may not comply with 

Rule 14.11(i)(4)(C)(iv)(a),4 Rule 

14.11(i)(4)(C)(iv)(b),5 and/or Rule 


asabaliauskas on DSKBBXCHB2PROD with NOTICES