Document ID: SEC-2016-2092-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-11-30T05:00Z

[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Notices]
[Pages 86355-86357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28777]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79387; File No. SR-NYSEArca-2016-150]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rule 7.16

November 23, 2016.
    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 November 15, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rule 7.16 (Short 
Sales) to eliminate the option for a short sale order to include an 
instruction that it be rejected or cancelled if it is required to be 
re-priced. 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.

[[Page 86356]]

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 NYSE Arca Equities Rule 7.16 (Short 
Sales) (``Rule 7.16'') to eliminate the option for a short sale order 
to include an instruction that it be rejected or cancelled if it is 
required to be re-priced.
    Rule 7.16(f)(5)(B) currently provides that an ETP Holder may mark 
individual short sale orders to be rejected on arrival, or cancelled if 
resting, if required to be adjusted to a Permitted Price while a symbol 
is subject to the Short Sale Price Test.\4\ The Exchange adopted the 
current functionality in its rules in 2015 and implemented it when the 
Exchange migrated to the Pillar technology trading platform in 2016.\5\ 
Prior to operating on the Pillar platform, this option was available 
only to arriving orders.\6\
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    \4\ The term ``Permitted Price'' is defined in Rule 
7.16(f)(5)(A) and the term ``Short Sale Price Test'' is defined in 
Rule 7.16(f)(2).
    \5\ See Securities Exchange Act Release Nos. 76198 (October 20, 
2015), 80 FR 65274 (October 26, 2015) (Approval Order) and 75467 
(July 16, 2015), 80 FR 43515 (July 22, 2015) (Notice) (SR-NYSEArca-
2016-58).
    \6\ See Notice supra note 5 at 43521.
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    The Exchange proposes to simplify how short sale orders are 
processed by eliminating the current optional functionality described 
in Rule 7.16(f)(5)(B). The Exchange does not believe that removing this 
optional functionality will significantly affect investors or the 
public because it is a little-used feature.\7\ In addition, to reflect 
the deletion of the text currently set forth in Rule 7.16(f)(5)(B), the 
Exchange proposes a non-substantive change to renumber current Rules 
7.16(f)(5)(C)-(J) as proposed Rules 7.16(f)(5)(B)-(I).
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    \7\ For the three-month period of August 1, 2016 through October 
31, 2016, only 0.16% of all sell short orders included the optional 
instruction.
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    Because of the technology changes associated with this proposed 
rule change, the Exchange will announce by Trader Update the 
implementation date.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\8\ in general, and 
furthers the objectives of Section 6(b)(5),\9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that the proposed rule change 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system by simplifying the operation 
of short sale orders on the Exchange. The Exchange proposes to 
eliminate an optional feature that provides that if so instructed, 
during a Short Sale Price Test, an individual short sale order would 
reject (on arrival) or cancel (if resting) if such order were required 
to be adjusted to a Permitted Price. Because this is infrequently-used 
optional functionality, the Exchange believes that the proposed rule 
change would remove impediments to and perfect the mechanism of a free 
and open market and a national market system by simplifying the 
Exchange's operations and reducing complexity. The Exchange further 
believes that renumbering the remaining paragraphs of Rule 7.16(f)(5) 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system because it would promote 
transparency in Exchange rules by conforming the rule numbering of the 
remaining rule text of Rule 7.16(f)(5).

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 would not impose any burden on competition 
because it is not designed to address any competitive issues. Rather, 
the proposed rule change is designed to simplify the Exchange's 
offerings and reduce complexity by eliminating an infrequently-used 
optional feature.

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 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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \12\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ 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. According to 
the Exchange, the proposal would eliminate an infrequently-used 
optional functionality and would have little impact on ETP Holders. In 
addition, the Exchange anticipates that the technology supporting the 
change will be available in less than 30 days after filing. The 
Commission believes the waiver of the 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.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For 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).
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    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

[[Page 86357]]

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-NYSEArca-2016-150 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2016-150. 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-NYSEArca-2016-150 and should 
be submitted on or before December 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28777 Filed 11-29-16; 8:45 am]
 BILLING CODE 8011-01-P