Document ID: SEC-2016-1228-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-07-15T04:00Z

[Federal Register Volume 81, Number 136 (Friday, July 15, 2016)]
[Notices]
[Pages 46129-46130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16721]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78280; File No. SR-NYSEArca-2016-91]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Rule 3.3 To Delete an Outdated Reference

July 11, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'' or ``Exchange Act'') \2\ and Rule 19b-4 
thereunder,\3\ notice is hereby given that on June 28, 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 Exchange. The Exchange has designated this proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of 
the Act \4\ and Rule 19b-4(f)(6)(iii) thereunder,\5\ which renders it 
effective upon filing with the Commission. 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.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Rule 3.3 (Board 
Committees) to delete an outdated reference. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend NYSE Arca Rule 3.3(a)(1)(B) to 
delete an outdated reference to ``a director of NYSE Regulation, Inc. 
that satisfies the Public Director requirements set forth in Section 
3.02(a) of the Bylaws of the Exchange.''
    In 2015, the Exchange amended, among other rules, Rule 3.3 in order 
to establish a Regulatory Oversight Committee (``ROC'') as a committee 
of the SRO Board.\6\ At the time, the Exchange's regulatory functions 
were performed by NYSE Regulation, Inc. (``NYSE Regulation''), a former 
subsidiary of the Exchange's affiliate New York Stock Exchange LLC 
(``NYSE''), pursuant to an intercompany Regulatory Service Agreement 
(``RSA'').\7\ When the Exchange's ROC was created, Rule 3.3(a)(1)(B) 
was amended to provide that the ROC would consist of at least three 
members, each of whom would be a director of either the Exchange or of 
NYSE Regulation and who satisfied the independence requirements of the 
Exchange.\8\
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    \6\ See Securities Exchange Act Release No. 75155 (June 11, 
2015), 80 FR 34744 (June 17, 2015) (SR-NYSEArca-2015-29) (``NYSE 
Arca ROC Approval Order'').
    \7\ See id., at 34744 & n.7; see also Securities Exchange Act 
Release No. 75991 (September 28, 2015), 80 FR 59837 (October 2, 
2015) (SR-NYSE-2015-27).
    \8\ See NYSE Arca ROC Approval Order, 80 FR at 34744. Article 
III, Section 3.02(a) of the Exchange's Bylaws requires that at least 
50% of the Exchange's directors be public directors, defined as 
``persons from the public and [who] will not be, or be affiliated 
with, a broker-dealer in securities or employed by, or involved in 
any material business relationship with, the Exchange or its 
affiliates.'' The Exchange believes that the Bylaw requirements for 
``public directors'' establish the Exchange's criteria for director 
independence, and therefore serve the same purpose as the NYSE and 
NYSE MKT Independence Policies. See Securities Exchange Act Release 
Nos. 74824 (April 28, 2015), 80 FR 25347, 25348 n.6 (May 4, 2015) 
(SR-NYSEArca-2015-29) (``Notice''); NYSE Arca ROC Approval Order, 80 
FR at 34744. See also Securities Exchange Act Release No. 67564 
(August 1, 2012), 77 FR 47161 (August 7, 2012) (SR-NYSE-2012-17); 
SR-NYSEArca-2012-59; SR-NYSEMKT-2012-07) (approving NYSE's and NYSE 
MKT's director independence policy).
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    The intercompany RSA terminated on February 16, 2016. As of that 
date, NYSE Regulation ceased to provide regulatory services to the 
Exchange, which re-integrated its regulatory functions. NYSE Regulation 
has also since been merged out of existence. The reference to a 
director of NYSE Regulation in Rule 3.3 is thus obsolete. The ROC 
currently consists of Exchange directors that satisfy the Exchange's 
independence requirements.\9\ To effectuate the proposed change, the 
Exchange would delete the phrase ``or a director of NYSE Regulation, 
Inc. that satisfies the Public Director requirements set forth in 
Section 3.02(a) of the Bylaws of the Exchange'' in Rule 3.3(a)(1)(B).
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    \9\ See note 8, supra.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \10\ in general, and with Section 
6(b)(5) \11\ 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 and, in general, help to protect 
investors and the public interest. Specifically, the Exchange believes 
that replacing the reference to a director of NYSE

[[Page 46130]]

Regulation in Rule 3.3(a)(1)(B) removes impediments to and perfects the 
mechanism of a free and open market by removing confusion that may 
result from having obsolete references in the Exchange's rulebook. The 
Exchange further believes that the proposal removes impediments to and 
perfects the mechanism of a free and open market by ensuring that 
persons subject to the Exchange's jurisdiction, regulators, and the 
investing public can more easily navigate and understand the Exchange's 
rulebook. The Exchange believes that eliminating an obsolete reference 
would not be inconsistent with the public interest and the protection 
of investors because investors will not be harmed and in fact would 
benefit from increased transparency, thereby reducing potential 
confusion. Removing such obsolete references will also further the goal 
of transparency and add clarity to the Exchange's rules.
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    \10\ 15 U.S.C. 78f(b).
    \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 Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather to 
delete obsolete references, thereby increasing transparency, 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

    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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    \12\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and 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. The Exchange has satisfied this 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \14\ 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 states that 
the proposed rule change benefits persons subject to the Exchange's 
jurisdiction, regulators, and the investing public by making the 
Exchange's rulebook easier to navigate and understand by deleting an 
obsolete reference.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ See supra Section II.A.2.
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    The Commission believes that waiver of the 30-day operative delay 
is consistent with the protection of investors and the public interest. 
The proposal will reduce confusion and add clarity to the Exchange's 
rulebook by removing an outdated reference. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change as operative upon filing.\16\
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    \16\ 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 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)\17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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-2016-91 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-2016-91. 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-NYSEArca-2016-91, and should 
be submitted on or before August 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Robert W. Errett,
Deputy Secretary.
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    \18\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-16721 Filed 7-14-16; 8:45 am]
 BILLING CODE 8011-01-P