Document ID: SEC-2014-0680-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-04-25T04:00Z

[Federal Register Volume 79, Number 80 (Friday, April 25, 2014)]
[Notices]
[Pages 23032-23034]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09396]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71982; File No. SR-NYSEARCA-2014-39])

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rules 1.1, 7.31, 7.34, 7.35, 7.37 and 7.43 To Update Rules 
Related to the Exchange's Order Types and Modifiers

April 21, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on April 8, 2014, 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 Rules 1.1, 7.31, 
7.34, 7.35, 7.37 and 7.43 in order to update rules related to the 
Exchange's order types and modifiers. 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 amend NYSE Arca Equities Rules 7.31, 7.34 
and 7.35 \4\ to delete the Timed Modifier and related references. 
Second, the Exchange proposes to eliminate references in Rules 1.1, 
7.31, 7.34, 7.37, and 7.43 to the Directed Order and Directed Fill 
order types, which were recently deleted.
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    \4\ All references to rules in this filing are to the rules of 
NYSE Arca Equities.
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Elimination of Timed Modifier and References to Timed Order Rule 
7.31(c)(2)(C)--Timed Modifier
    The Exchange proposes to delete Rule 7.31(c)(2)(C), which describes 
the operation of the Timed Modifier. Because of the lack of use, the 
Exchange proposes to eliminate the use of the Timed Modifier and 
therefore proposes to delete this functionality from its rules. The 
Exchange believes that deleting little-used functionality would 
streamline its order processing and reduce confusion of available 
functionality.
    The Exchange also proposes to delete references to Timed Order in 
Rules 7.34 and 7.35. The Exchange recently relocated the Timed Order 
from former Rule 7.31(q) to its current location in Rule 7.31(c)(2)(C) 
and changed the description of the functionality to ``Modifier'' from 
``Order''.\5\ Given the elimination of Rule 7.31(c)(2)(C), the 
following references to Timed Order should be deleted:
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    \5\ See Securities Act Release No. 71331 (January 16, 2014), 79 
FR 3907 (January 23, 2014) (SR-NYSEArca-2013-92).
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     Rule 7.34(d)(1)(F), describing orders permitted during the 
Opening Session;
     Rule 7.34(d)(2)(C), providing that Timed Orders designated 
as good from 1:00 p.m. (Pacific Time) are not eligible to participate 
in the Closing Auction;
     Rule 7.35(a)(2), providing that Limited Price Orders 
designated for the Opening Session and entered as a Timed Order good 
from 1:00 a.m. (Pacific Time) are not eligible for execution during the 
Opening Auction and Market Order Auction, respectively;
     Rule 7.35(b)(1), providing that Limited Price Orders 
designated for the Opening Session and entered as a Timed Order good 
from 1:00 a.m. (Pacific Time) are not eligible for execution during the 
Opening Auction); and
     Rule 7.35(b)(4), providing that a Limited Price Orders 
designated for the Opening Session and entered as a Timed Order good 
from 6:30 a.m. (Pacific Time) are not eligible for execution during the 
Market Order Auction.
    The Exchange will announce by Trader Update the date when the Timed 
Modifier will no longer be available.
Elimination of References to Directed Order and Directed Fill Order 
Types
    The Directed Order and Directed Fill order types were recently 
eliminated.\6\ The Exchange proposes to remove the remaining references 
to these order types in the following Rules.
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    \6\ See id.
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Rule 1.1(a) and Rule 1.1(bbb)--Definitions

    The Exchange proposes to eliminate references to the Directed Order 
Process in Rule 1.1(a), which defines the NYSE Arca Book, and Rule 
1.1(bbb), which defines a ``Designated Market Maker'' as a registered 
Market Maker that participates in the Directed Order Process.
Rule 7.34(d)(1)(C) and Rule 7.34(d)(2)(A)--Trading Sessions
    The Exchange proposes to eliminate references to Directed Orders in 
Rule 7.34 to clarify that these order types are no longer available 
during the Opening and Core Trading Sessions on the Exchange. 
Specifically, the Exchange proposes to amend Rule 7.34(d)(1)(C) to 
remove references to ``market Directed Orders'', which are no longer 
included in the Market Order Auction for purposes of the Opening 
Session. Similarly, the Exchange proposes to amend Rule 7.34(d)(2)(A) 
to remove the

[[Page 23033]]

reference to Directed Order and clarify that such orders are no longer 
eligible for entry and execution on the Exchange during the Core 
Trading Session.
Rule 7.37(a)--Trading Sessions
    The Exchange proposes to eliminate the Directed Order Process in 
Rule 7.37(a), currently Step 1 in the process of matching and executing 
like-priced orders, bids and offers under the Rule. With the 
elimination of the Directed Order process, the Exchange proposes to 
reduce the number of steps from 5 to 4 beginning with the Display Order 
Process (formerly Step 2) as new Step 1 and continuing with the Working 
Order Process (formerly Step 3) as new Step 2, the Tracking Order 
Process (formerly Step 4) as new Step 3, and Routing Away (formerly 
Step 5) as the new Step 4. The proposed revision to Rule 7.37(a) will 
also eliminate references to the Directed Fill order type, which is no 
longer available to Users on Exchange systems.
Rule 7.43--Use of Directed Order Process
    The Exchange proposes to eliminate Rule 7.43, which prohibits the 
use of the Directed Order Process for the purpose of bypassing 
otherwise applicable fees. The Exchange is proposing eliminating 
references to the Directed Order Process since Directed Orders are 
order types not available to Users on Exchange systems.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Act, in general, and furthers the objectives of Section 6(b)(5),\8\ in 
particular, in that 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, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Specifically, the Exchange 
believes that removing cross-references to the Directed Order and 
Directed Fill order types, which the Exchange recently eliminated in a 
separate rule filing,\9\ would remove impediments to and perfect the 
mechanism of a free and open market because it would reduce potential 
confusion that may result from having such cross references in the 
Exchange's rulebook. Removing such obsolete cross references will also 
further the goal of transparency and add clarity to the Exchange's 
rules. The Exchange also believes that removing the Timed Modifier 
time-in-force condition removes impediments to and perfects a national 
market system by eliminating little-used functionality from its 
rulebook. The Exchange believes that removing the Timed Modifier would 
not be inconsistent with the public interest and the protection of 
investors because investors will not be harmed by the removal of 
little-utilized functionality.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed change is not 
designed to address any competitive issue but rather would remove 
obsolete cross-references and remove little-used functionality, thereby 
reducing confusion and making the Exchange's rules easier to understand 
and navigate.

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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 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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    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) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(2)(B).
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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-2014-39 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-2014-39. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for inspection and copying at the NYSE's principal office and 
on its Internet Web

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site at www.nyse.com. 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-2014-39 and should be submitted on or before May 16, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09396 Filed 4-24-14; 8:45 am]
BILLING CODE 8011-01-P