Document ID: SEC-2017-0326-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2017-03-01T05:00Z

[Federal Register Volume 82, Number 39 (Wednesday, March 1, 2017)]
[Notices]
[Pages 12251-12252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03981]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80097; File No. SR-NYSEMKT-2016-103]

Self-Regulatory Organizations; NYSE MKT LLC; Order Instituting 
Proceedings To Determine Whether To Approve or Disapprove a Proposed 
Rule Change Allowing the Exchange To Trade, Pursuant to Unlisted 
Trading Privileges, Any NMS Stock Listed on Another National Securities 
Exchange; Establishing Rules for the Trading Pursuant to UTP of 
Exchange-Traded Products; and Adopting New Equity Trading Rules 
Relating to Trading Halts of Securities Traded Pursuant to UTP on the 
Pillar Platform

February 24, 2017.
    On November 17, 2016, NYSE MKT LLC (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or 
``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to (1) allow the Exchange to trade, pursuant to unlisted trading 
privileges (``UTP''), any NMS Stock listed on another national 
securities exchange; (2) establish rules for the trading pursuant to 
UTP of exchange-traded products (``ETPs'' or ``Exchange-Traded 
Products''); and (3) adopt new equity trading rules relating to trading 
halts of securities traded pursuant to UTP on the Exchange's Pillar 
trading platform. The proposed rule change was published for comment in 
the Federal Register on December 1, 2016.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 79400 (Nov. 25, 
2016), 81 FR 86750 (Dec. 1, 2016) (``Notice'').
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    On January 4, 2017, pursuant to Section 19(b)(2) of the Act,\4\ the 
Commission designated a longer period within which to approve the 
proposed rule change, disapprove the proposed rule change, or institute 
proceedings to determine whether to approve or disapprove the proposed 
rule change.\5\ The Commission has received no comments on the proposed 
rule change.
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    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 79738, 82 FR 3068 
(Jan. 10, 2017). The Commission designated March 1, 2017, as the 
date by which it should approve, disapprove, or institute 
proceedings to determine whether to approve or disapprove the 
proposed rule change.
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    This order institutes proceedings under Section 19(b)(2)(B) of the 
Act \6\ to determine whether to approve or disapprove the proposed rule 
change.
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    \6\ 15 U.S.C. 78s(b)(2)(B).
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I. Summary of the Proposed Rule Change

    The Exchange states that it does not currently trade any securities 
on a UTP basis. The Exchange proposes new rules to trade all Tape A and 
Tape C symbols, on a UTP basis, on its new trading platform, Pillar.\7\ 
In addition, the Exchange proposes to adopt rules for the trading of 
the following types of Exchange-Traded Products: \8\ Equity Linked 
Notes; Investment Company Units; Index-Linked Exchangeable Notes; 
Equity Gold Shares; Equity Index-Linked Securities; Commodity-Linked 
Securities; Currency-Linked Securities; Fixed-Income Index-Linked 
Securities; Futures-Linked Securities; Multifactor-Index-Linked 
Securities; Trust Certificates; Currency and Index Warrants; Portfolio 
Depositary Receipts; Trust Issued Receipts; Commodity-Based Trust 
Shares; Currency Trust Shares; Commodity Index Trust Shares; Commodity 
Futures Trust Shares; Partnership Units; Paired Trust Shares; Trust 
Units; Managed Fund Shares; and Managed Trust Securities.\9\
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    \7\ According to the Exchange, on January 29, 2015, the Exchange 
announced the implementation of Pillar, which is an integrated 
trading technology platform designed to use a single specification 
for connecting to the equities and options markets operated by the 
Exchange and its affiliates, NYSE Arca, Inc. (``NYSE Arca'') and New 
York Stock Exchange LLC. See Trader Update dated January 29, 2015, 
available at https://www.nyse.com/publicdocs/nyse/markets/nyse/Pillar_Trader_Update_Jan_2015.pdf.
    \8\ The Exchange is proposing to define the term ``Exchange 
Traded Product'' to mean a security that meets the definition of 
``derivative securities product'' in Rule 19b-4(e) under the 
Exchange Act. This proposed definition is identical to the 
definition of ``Derivatives Securities Product'' in NYSE Arca 
Equities Rule 1.1(bbb).
    \9\ See Notice, supra note 3.
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    The Exchange represents that the proposed rules for these ETPs are 
substantially identical (other than with respect to certain non-
substantive and technical amendments) to the rules of the NYSE Arca 
Equities exchange for the qualification, listing, and trading of these 
ETPs.\10\
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    \10\ See Notice, supra note 3, at 86750, n.6 (citing NYSE Arca 
Equities Rules 5 (Listings) and 8 (Trading of Certain Equities 
Derivatives)).
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    According to the Exchange, it will trade securities pursuant to UTP 
only on its Pillar platform, not on its current trading platform. 
Further, the Exchange states that it does not at this time intend to 
list ETPs pursuant to the proposed rules. The Exchange does not propose 
to change any of the current rules of the Exchange pertaining to the 
listing and trading of ETPs in the NYSE MKT Company Guide or in its 
other rules.

[[Page 12252]]

II. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEMKT-2016-103 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \11\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide comments 
on the proposed rule change.
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    \11\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\12\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of the proposed rule change's consistency with Section 6(b)(5) 
of the Act, which requires, among other things, that the rules of a 
national securities exchange be ``designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade,'' and ``to protect investors and the public 
interest.'' \13\
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    \12\ Id.
    \13\ 15 U.S.C. 78f(b)(5).
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III. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) or any other provision of the Act, or 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, or arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\14\
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    \14\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by March 22, 2017. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by April 5, 
2017. The Commission asks that commenters address the sufficiency of 
the Exchange's statements in support of the proposal, which are set 
forth in the Notice,\15\ in addition to any other comments they may 
wish to submit about the proposed rule change.
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    \15\ See Notice, supra note 3.
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    In particular, the Commission seeks comment on whether the proposed 
rules regarding ETPs, which would not expressly apply on a continuing 
basis, are consistent with the Act.\16\
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    \16\ The Commission has recently approved an exchange proposal 
to amend its listing standards to specify continued listing 
requirements for ETPs, to add issuer-notification requirements 
related to failures to comply with the continued listing 
requirements, and to incorporate specific delisting procedures for 
ETPs. See Securities Exchange Act Release No. 79784 (Jan. 12, 2017), 
82 FR 6664 (Jan. 19, 2017) (SR-NASDAQ-2016-135). In addition, the 
Commission's orders approving the generic listing and trading of 
actively managed ETFs relied upon, among other things, the listing 
exchanges' representations that the listing criteria would apply on 
a continuing basis. See, e.g., Securities Exchange Act Releases No. 
78396 (July 22, 2016), 81 FR 49698, 49701 (July 28, 2016) (File No. 
SR-BATS-2015-100); No. 78397 (July 22, 2016), 81 FR 49320, 49324 
(July 27, 2016) (File No. SR-NYSEArca-2015-110); and No. 78918 
(Sept. 23, 2016), 81 FR 67033, 67035 (Sept. 29, 2016) (File No. SR-
NASDAQ-2016-104). Recent Commission orders approving the listing and 
trading of individual ETPs have similarly relied upon 
representations by the listing exchange that all statements and 
representations made regarding (a) the description of the portfolio, 
(b) limitations on portfolio holdings or reference assets, or (c) 
the applicability of exchange rules and surveillance procedures 
shall constitute continued listing requirements. See, e.g., 
Securities Exchange Act Release No. 77920 (May 25, 2016), 81 FR 
35086, 35090 (June 1, 2016) (SR-NYSEArca-2016-46; approving listing 
and trading of shares of the AdvisorShares Cornerstone Small Cap 
ETF); No. 78847 (Sept. 15, 2016), 81 FR 64560, 64562 (Sept. 20, 
2016) (File No. SR-BATS-2016-34; approving listing and trading of 
shares of the ProShares Crude Oil Strategy ETF).
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    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-NYSEMKT-2016-103 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-NYSEMKT-2016-103. 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 these filings 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-NYSEMKT-2016-103 and should 
be submitted on or before March 22, 2017. Rebuttal comments should be 
submitted by April 5, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
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    \17\ 17 CFR 200.30-3(a)(57).
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[FR Doc. 2017-03981 Filed 2-28-17; 8:45 am]
BILLING CODE 8011-01-P