Document ID: SEC-2017-1782-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE American, LLC
Posted Date: 2017-10-31T04:00Z

[Federal Register Volume 82, Number 209 (Tuesday, October 31, 2017)]
[Notices]
[Pages 50475-50476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23581]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81943; File No. SR-NYSEAMER-2017-25]

Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
NYSE American Equities Rules 7.31E To Establish a Minimum Dollar 
Threshold Into the Price Protection Mechanisms

October 25, 2017.
    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 October 13, 2017, NYSE American LLC (the ``Exchange'' or 
``NYSE American'') 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 American Equities Rules 7.31E 
(Orders and Modifiers) to establish a minimum dollar threshold into the 
price protection mechanisms provided for in the rule. 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 American Equities Rules 7.31E 
(Orders and Modifiers) (``Rule 7.31E'') to establish a minimum dollar 
threshold into the price protection mechanisms provided for in the 
rule.
Background
    Rule 7.31E(a)(1)(B) describes the price protection mechanism for 
Market Orders, i.e., Trading Collars. Currently, Rule 7.31E(a)(1)(B)(i) 
provides that the Trading Collar will be based on a price that is a 
specified percentage away from the consolidated last sale price. Rule 
7.31E(a)(1)(B)(i) further provides that the upper (lower) boundary of 
the Trading Collar is the consolidated last sale price increased 
(decreased) by the specified percentage truncated to the minimum price 
variation (``MPV'') for the security.
    Additionally, Rule 7.31E(a)(2)(B) (``Limit Order Price 
Protection'') provides the price protection mechanism for Limit Orders 
and that a Limit Order to buy (sell) will be rejected if it is priced 
at or above (below) a specified percentage away from the National Best 
Offer (National Best Bid) (``NBO'' and ``NBB'', respectively).
Proposed Changes
     Trading Collar: The Exchange proposes to amend Rule 
7.31E(a)(1)(B)(i) to introduce a minimum dollar threshold, of $0.15, 
into the calculation of the Trading Collar. As such, the proposed rule 
would provide that the Trading Collar would be based on a price that is 
the greater of $0.15 or a specified percentage away from the 
consolidated last sale price. Accordingly, the upper (lower) boundary 
of the Trading Collar would be the consolidated last sale price 
increased (decreased), by the greater of $0.15 or the specified 
percentage.
     Limit Order Price Protection: The Exchange proposes to 
amend Rule 7.31E(a)(2)(B) to introduce the same proposed minimum dollar 
threshold that is specified above for the Trading Collar, of $0.15, 
into the Limit Order Price Protection calculation. Accordingly, the 
proposed rule would provide that a Limit Order to buy (sell) would be 
rejected if it was priced at or above (below) the greater of $0.15 or a 
specified percentage away from the NBO (NBB). The Exchange believes 
that the introduction of a minimum dollar threshold enhances the Limit 
Order Price Protection and encourages price continuity specifically in 
lower priced illiquid securities.
    The Exchange believes that adding a minimum dollar threshold to the 
Trading Collar and Limit Order Price Protection calculations would 
enhance the respective price protection mechanisms for securities with 
a consolidated last sale price below $1.50 because using the current 10 
percent multiplier for such securities would result in too narrow of a 
price protection mechanism. This proposed rule change is consistent 
with how other exchanges specify static price collar thresholds for 
lower-price securities. For example, NYSE Arca, Inc. (``NYSE Arca'') 
Rule 7.35-E(e)(7) \4\ provides that for securities with a consolidated 
last sale price under $3.00, the price collar threshold for auction 
collars would be a static $0.15 instead of 5 percent.\5\
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    \4\ See Securities Exchange Act Release No. 79846 (January 19, 
2017), 82 FR 8548 (January 26, 2017) (SR-NYSEArca-2016-130).
    \5\ See also Nasdaq Stock Market LLC (``Nasdaq'') Rule 4703(d) 
(providing that ``any portion of a Primary Pegging Order or Market 
Pegging Order that would execute . . . at a price more than $0.25 or 
5 percent worse that the NBBO . . . will be cancelled)'' and Bats 
BZX Exchange, Inc. (``Bats'') Rule 27.2, Interpretations and 
Policies .01 and Bats Rule 11.13 (stating that Bats ``will not 
execute any portion of a bid at a price more than the greater of 5 
cents or 0.5 percent higher than the lowest Protected Offer'').
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    In addition, the Exchange proposes to replace the word 
``truncated'' with the words ``rounded down'' \6\ in Rule 
7.31E(a)(1)(B)(i). The Exchange that believes that conforming the 
terminology used within Rule 7.31E \7\ and elsewhere in Exchange's 
rules promotes clarity and transparency.
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    \6\ See Rule 7.46E(f)(2)(A), which provides that references to 
truncating to the MPV in Exchange rules instead mean rounding down 
to the applicable quoting MPV.
    \7\ See Rule 7.31E(a)(2)(B) which provides that ``Limit Order 
Price Protection will be rounded down to the nearest price at the 
applicable MPV.''

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[[Page 50476]]

Implementation
    The Exchange anticipates implementing the proposed changes in the 
fourth quarter of 2017 and will announce the timing of such changes by 
Trader Update.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act,\8\ in general, and with 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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    The Exchange believes the proposed changes 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 they would enhance the Exchange's price protection 
mechanisms, which protect from aberrant prices and reduce the 
likelihood of halts, thus improving continuous trading and price 
discovery. Further, the proposal to enhance the price protection 
mechanisms by adding a minimum dollar threshold would assist with the 
maintenance of fair and orderly markets because such mechanisms protect 
investors from potentially receiving executions away from the 
prevailing market prices at any given time. The proposed changes to 
introduce the $0.15 minimum dollar threshold is not novel and is 
similar in nature to that of other national securities exchanges which 
incorporate dollar thresholds into the calculation of the respective 
price protection mechanisms.\10\
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    \10\ See supra note 4.
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    For similar reasons, the Exchange also believes that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\11\ 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, 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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    \11\ 15 U.S.C. 78f(b)(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 will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not intended to address competitive issues but rather provide for a 
more effective price protection mechanism, specifically for lower-
priced securities.

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)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
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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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 [email protected]. Please include 
File Number SR-NYSEAMER-2017-25 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-2017-25. 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. Persons submitting 
comments are cautioned that we do not redact or 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-2017-25 and should be submitted 
on or before November 21, 2017.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-23581 Filed 10-30-17; 8:45 am]
 BILLING CODE 8011-01-P