Document ID: SEC-2016-1885-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-10-24T04:00Z

[Federal Register Volume 81, Number 205 (Monday, October 24, 2016)]
[Notices]
[Pages 73159-73166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25572]

[[Page 73159]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79107; File No. SR-NYSEArca-2016-130]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Amending NYSE Arca Equities Rules 7.35 
(Auctions), 7.10 (Clearly Erroneous Executions), 7.31 (Orders and 
Modifiers), and 7.11 (Limit Up--Limit Down Plan and Trading Pauses in 
Individual Securities Due to Extraordinary Market Volatility)

October 18, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on October 4, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 7.35 
(Auctions) to enhance the information available before an auction and 
revise its procedures for Trading Halt Auctions, NYSE Arca Equities 
Rule 7.10 (Clearly Erroneous Executions) to exclude Trading Halt 
Auctions from being reviewed as clearly erroneous, NYSE Arca Equities 
Rule 7.31 (Orders and Modifiers) to add a new Imbalance Only Order, and 
NYSE Arca Equities Rule 7.11.
    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 Rule 7.35 
(Auctions) (``Rule 7.35'') to enhance the information available before 
an auction and revise its procedures for Trading Halt Auctions, NYSE 
Arca Equities Rule 7.10 (``Rule 7.10'') to exclude Trading Halt 
Auctions from being reviewed as a clearly erroneous execution, NYSE 
Arca Equities Rule 7.31 (Orders and Modifiers) (``Rule 7.31'') to add a 
new Imbalance Only Order, and NYSE Arca Equities Rule 7.11 (Limit Up--
Limit Down Plan and Trading Pauses in Individual Securities Due to 
Extraordinary Market Volatility) (``Rule 7.11'') to conform the rule to 
proposed changes to the Regulation NMS Plan to Address Extraordinary 
Market Volatility (``Plan'').\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 77679 (April 21, 
2016), 81 FR 24908 (April 27, 2016) (File No. 4-631) (Order 
approving 10th Amendment to the LULD Plan).
---------------------------------------------------------------------------

Overview
    The Operating Committee for the Plan with input from the Advisory 
Committee to the Plan and staff of the Securities and Exchange 
Commission (``SEC'' or ``Commission''), has identified a number of 
enhancements to the reopening process following a Trading Pause that 
will be addressed in a combination of a proposed amendment to the Plan 
and amendments to the rules of the Primary Listing Exchanges.\5\ The 
Exchange is a Participant of the Plan and a member of the Operating 
Committee.
---------------------------------------------------------------------------

    \5\ Unless otherwise specified, capitalized terms used herein 
have the same meaning as set forth in the Plan or in Exchange rules.
---------------------------------------------------------------------------

    With respect to the Plan, the Participants submitted a proposal to 
amend the Plan to provide that a Trading Pause will continue until the 
Primary Listing Exchange reopens trading using its established 
reopening procedures and reports a Reopening Price.\6\ The Participants 
further proposed to eliminate the current allowance for a trading 
center to resume trading in an NMS Stock following a Trading Pause if 
the Primary Listing Exchange has not reported a Reopening Price within 
ten minutes after the declaration of a Trading Pause and has not 
declared a Regulatory Halt. In addition, to close any gaps of potential 
scenarios when trading may resume without Price Bands, the Participants 
proposed to amend the Plan to provide that a trading center may not 
resume trading in an NMS Stock following a Trading Pause without Price 
Bands in such NMS Stock. To address potential scenarios of when there 
may not be a Reopening Price from the Primary Listing Exchange from 
which to calculate Price Bands, the Participants proposed to make 
related amendments to the Plan to address when trading may resume if 
the Primary Listing Exchange is unable to reopen due to a systems or 
technology issue and how the Reference Price would be determined either 
under such circumstances or if the Primary Listing Exchange reopens 
trading on a zero bid or zero quote, or both.
---------------------------------------------------------------------------

    \6\ On September 19, 2016, the Participants filed with the 
Commission the twelfth amendment to the Plan.
---------------------------------------------------------------------------

    In connection with the proposed Plan amendments, the Participants 
have agreed on a standardized approach for how the Primary Listing 
Exchanges should conduct certain aspects of an automated reopening 
following a Trading Pause. Specifically, because trading centers would 
not be permitted to resume trading in an NMS Stock until there is a 
Reopening Price, the Participants believe it is appropriate for the 
Primary Listing Exchanges to adopt uniform standards for determining 
whether and when to conduct such automated reopenings, including what 
price collar thresholds would be applicable to such automated 
reopenings and how to provide for extensions of when a reopening 
auction would be conducted. The goal of such changes would be to ensure 
that all Market Order interest could be satisfied in an automated 
reopening auction.
    More specifically, the Participants have agreed that if there is an 
imbalance of market orders, or if the Reopening Price would be outside 
of specified price collar thresholds, the Trading Pause would be 
extended an additional five minutes in order to provide additional time 
to attract offsetting liquidity. If at the end of such extension, 
Market Orders still cannot be satisfied within price collar thresholds 
or if the reopening auction would be priced outside of the applicable 
price collar thresholds, the Primary Listing Exchange would extend the 
Trading Pause an additional five minutes. With each such extension, the 
Participants have agreed that it would be appropriate to widen the 
price collar threshold on the side of the market on which there is 
buying or selling pressure.

[[Page 73160]]

    With respect to price collar thresholds, the Participants have 
agreed that the reference price for calculating price collar thresholds 
would be the price of the limit state that preceded the Trading Pause, 
i.e., either the Lower or Upper Price Band price. For NMS Stocks priced 
more than $3.00,
     If there is selling pressure, the lower collar for the 
auction would be the Lower Price Band minus five percent and the upper 
collar would be the Upper Price Band;
     if there is buying pressure, the upper collar for the 
auction would be the Upper Price Band plus five percent and the lower 
collar would be the Lower Price Band.
    For each extension, the collars would be widened an additional five 
percent, but only on the side of the imbalance.\7\ The Participants 
believe that widening collars only in the direction of the imbalance 
would address issues relating to the concept of mean reversion.
---------------------------------------------------------------------------

    \7\ For NMS Stocks that are priced $3.00 and under, the price 
collar threshold would be $0.15.
---------------------------------------------------------------------------

    Finally, the Participants have agreed that the proposed new 
procedures for reopening trading following a Trading Pause reduces the 
potential that an order or orders entered by one or more ETP Holders 
caused such execution to be clearly erroneous. Specifically, the 
Participants believe that the proposed standardized procedures for 
reopening trading following a Trading Pause incorporates a methodology 
that allows for widened collars, which may result in a reopening price 
away from prior trading prices, but which reopening price would be a 
result of a measured and transparent process that eliminates the 
potential that such trade would be considered erroneous.
    As a Primary Listing Exchange, the Exchange proposes to amend Rule 
7.35 to implement the proposed uniform trading practices with respect 
to reopening a security following a Trading Pause, as described above. 
In addition, the Exchange proposes to implement changes for automated 
reopenings following a market-wide circuit breaker under Rule 7.12 and 
any regulatory halts triggered in an Exchange-listed security. The 
Exchange further proposes to amend Rule 7.10 to preclude ETP Holders 
from requesting a review of a Trading Halt Auction as a clearly 
erroneous execution. Finally, in connection with these proposed 
changes, the Exchange proposes additional enhancements to its auction 
processes, including adding a new Imbalance Only Order, an Auction 
Freeze period before a Trading Halt Auction, and enhanced information 
to be disseminated before an auction.
Uniform Primary Listing Exchange Proposed Rule Changes
    To effect the proposed enhancements that would be implemented by 
all Primary Listing Exchanges, the Exchange proposes to add new sub-
paragraphs (5)-(10) to Rule 7.35(e), which governs Trading Halt 
Auctions, re-number current Rule 7.35(e)(5) as new Rule 7.35(e)(11), 
and amend Rule 7.35(e)(2). The Exchange proposes to implement these 
changes for all Trading Halt Auctions. The proposed standardized 
trading practices agreed upon by the Operating Committee are intended 
for Trading Halt Auctions following a trading pause under Rule 7.11. 
However, the Exchange believes that these proposed procedures would be 
beneficial following all halts, including regulatory halts and halts 
due to extraordinary market volatility.
    Rule 7.35(e)(2) currently provides that after trading in a security 
has been halted or paused, the NYSE Arca Marketplace will disseminate 
the estimated time at which trading in that security will re-open 
(``Re-Opening Time''). The Exchange proposes to add to this rule that 
the initial Re-Opening Time for a Trading Halt Auction following a 
trading pause under Rule 7.11 (``Trading Pause'') or trading halt due 
to extraordinary market volatility under Rule 7.12 (``MWCB Halt'') will 
be at the scheduled end of the Trading Pause or MWCB Halt. This 
proposed rule text clarifies that for Trading Pauses and MWCB Halts, 
the length of the initial pause or halt period is as specified in those 
rules. As specified in the LULD Plan, the scheduled end of the Trading 
Pause is five minutes after a Trading Pause has been declared. As 
specified in Rule 7.12(b), the scheduled end of a Level 1 or Level 2 
Market Decline is 15 minutes. If there is a Level 3 Market Decline, the 
Exchange will not re-open.
    Proposed Rule 7.35(e)(5) would provide that a Trading Halt Auction 
would not be conducted if the Indicative Match Price, before being 
adjusted based on Auction Collars, is below (above) the Lower (Upper) 
Auction Collar or if there is a sell (buy) Market Imbalance, either of 
which would be defined as an ``Impermissible Price.'' \8\ This proposed 
rule text would implement the proposed standardized enhancement that 
the Exchange would not conduct a Trading Halt Auction if there are 
either unsatisfied Market Orders, or if the Indicative Match Price 
would be outside the applicable Auction Collars.
---------------------------------------------------------------------------

    \8\ The term ``Indicative Match Price'' is defined in Rule 
7.35(a)(8) to mean the best price at which the maximum volume of 
shares, including the non-displayed quantity of Reserve Orders, is 
tradable in the applicable auction, subject to Auction Collars. For 
purposes of proposed Rule 7.35(e)(5), the Indicative Match Price 
would not be calculated subject to Auction Collars. The term 
``Auction Collars'' is defined in Rule 7.35(a)(10) to mean the price 
collar thresholds for the Indicative Match Price for the Core Open 
Auction, Trading Halt Auction, or Closing Auction. The term ``Market 
Imbalance'' is defined in Rule 7.35(a)(7)(B) means the imbalance of 
any buy (sell) Market Orders that are not matched for trading in the 
applicable auction.
---------------------------------------------------------------------------

    Extensions: Proposed Rule 7.35(e)(6) would specify the 
circumstances when the Exchange would extend the Re-Opening Time for a 
Trading Halt Auction, as follows:
     Proposed Rule 7.35(e)(6)(A) would provide that, if there 
is an Impermissible Price at the initial Re-Opening Time, the pause or 
halt would be extended an additional five minutes and a new Re-Opening 
Time would be disseminated, which would be referred to as the ``First 
Extension.'' The proposed rule would further provide that the Exchange 
would not conduct a Trading Halt Auction before the Re-Opening Time for 
the First Extension. As such, if the Exchange disseminates a First 
Extension, consistent with the current Plan, which provides that if the 
Primary Listing Exchange does not reopen, trading centers may not 
resume trading until ten minutes after the beginning of the Trading 
Pause, the Trading Pause would continue for ten minutes and trading 
would not resume before that ten-minute marker.
     Proposed Rule 7.35(e)(6)(B) would provide that if there is 
an Impermissible Price at the end of the First Extension, the pause or 
halt would be extended an additional five minutes and a new Re-Opening 
Time would be disseminated (``Subsequent Extension''). As further 
proposed, the Exchange would conduct a Trading Halt Auction before the 
Re-Opening Time for a Subsequent Extension if the Indicative Match 
Price, before being adjusted based on Auction Collars, would be within 
the applicable Auction Collars and there is no Market Imbalance. This 
proposed change would implement the Participant's proposal that for 
Subsequent Extensions, if equilibrium of prices is reached, the 
Exchange would conduct the Trading Halt Auction immediately and would 
not extend the Trading Pause any further.
     Proposed Rule 7.35(e)(6)(C) would provide that the trading 
pause or halt would continue to be extended if there is an 
Impermissible Price at the Re-

[[Page 73161]]

Opening Time for a Subsequent Extension. This proposed rule text makes 
clear that a halt or pause would continue to be extended until a 
Trading Halt Auction can be conducted, as provided for in proposed Rule 
7.35(e)(5).
    Auction Collars: Proposed Rule 7.35(e)(7) would describe how 
Auction Collars would function for Trading Halt Auctions. As provided 
for in Rule 7.35(a)(10), Auction Collars mean the price collar 
thresholds for the Indicative Match Price for the Core Open Auction, 
Trading Halt Auction, or Closing Auction. Currently, the price collar 
thresholds for the Trading Halt Auction are 10% for securities with an 
Auction Reference Price of $25.00 or less, 5% for securities with an 
Auction Reference Price of greater than $25.00 and less than or equal 
to $50.00, or 3% for securities with an Auction Reference Price greater 
than $50.00. These price collar thresholds are based on the percentage 
parameters for determining a clearly erroneous execution under Rule 
7.10(c) and are in effect until January 31, 2017.
    The Exchange proposes that the price collar threshold for Auction 
Collars for securities with an Auction Reference Price above $3.00 
would be the Auction Reference Price multiplied by five percent. The 
price collar threshold for securities with an Auction Reference Price 
$3.00 and below would be $0.15. This value would be defined as the 
``Price Collar Threshold.'' For securities priced above $3.00, once 
calculated, the Price Collar Threshold would be applicable for each 
Subsequent Extension, described below. For securities with an Auction 
Reference Price of $3.00 and under, the Price Collar Threshold would be 
a static $0.15 for each Subsequent Extension. The Exchange believes 
that using a 5 percent multiplier for stocks priced $3.00 or less would 
result in too narrow of an Auction Collar. Similar to the LULD Plan, 
which provides for wider percentage parameters for stocks priced $3.00 
or less, the Exchange proposes a wider Price Collar Threshold for 
stocks with an Auction Reference Price of $3.00 or less.
    The Exchange believes that the proposed Price Collar Thresholds are 
designed to align the Auction Collars with the existing percentage 
parameters as specified in the LULD Plan. The Exchange proposes to use 
the single 5% threshold for all securities priced above $3.00 and $0.15 
for all securities priced $3.00 or less, and not apply separate a [sic] 
percentage parameter based on the tiers specified in the LULD Plan, 
because the Exchange believes it would be simpler and more transparent. 
Moreover, the Exchange believes that because the proposed rule changes 
would provide for the widening of collars, and would prevent trades at 
an Impermissible Price, the specific size of the Price Collar Threshold 
becomes less meaningful. For example, if the Market Imbalance is so 
large that the proposed five percent price collar threshold is too 
narrow to permit a Trading Halt Auction, the proposed extensions and 
widening of Auction Collars, as described below, would provide for a 
measured manner by which the collars would be widened either to permit 
a trade at a permissible price or to attract additional offsetting 
interest. If, at a later date, the LULD Plan is amended and the 
applicable tiers and percentage parameters are adjusted, the Exchange 
will reevaluate the Price Collar Thresholds for Trading Halt Auctions 
and if they should be changed, will file a separate proposed rule 
change.
    Because the Price Collar Thresholds for Auction Collars applicable 
to a Trading Halt Auction would be specified in proposed Rule 
7.35(e)(7), the Exchange proposes to amend Rule 7.35(a)(10)(A) to 
delete the reference to Trading Halt Auctions. The Exchange further 
proposes to delete the following text: ``* The price collar thresholds 
specified in this paragraph applicable to Trading Halt Auctions are in 
effect until January 31, 2017.'' The Exchange believes that proposed 
Rule 7.35(e)(7) obviates the current price collar thresholds specified 
for Trading Halt Auctions, which were adopted on an interim basis 
pending the outcome of the review that resulted in the proposed 
amendments to the Plan and standardized trading practices among the 
Primary Listing Exchange for how to resume trading following a Trading 
Pause.
    Trading Halt Auction Reference Price: Proposed Rule 7.35(e)(7)(A) 
would specify the Auction Reference Price that would be used for a 
Trading Halt Auction following a Trading Pause. As provided for in Rule 
7.35(a)(8)(A), the Auction Reference Price for the Trading Halt Auction 
is the last consolidated round-lot price of that trade day, and if 
none, the prior day's Official Closing Price. As proposed, the Auction 
Reference Price for a Trading Halt Auction following a Trading Pause 
would be determined as follows: if the Limit State that preceded the 
Trading Pause was at the Lower (Upper) Price Band, the Auction 
Reference Price would be the Lower (Upper) Price Band. This proposed 
change implements the standardized enhancement to use the Limit State 
price as the Auction Reference Price for a Trading Halt Auction 
following a Trading Pause.
    The Exchange proposes to make a related change to Rule 
7.35(a)(8)(A) to amend the chart that specifies Auction Reference 
Prices for the Trading Halt Auction. As proposed, the Exchange would 
add the clause ``except as provided for in Rule 7.35(e)(7)(A)'' to 
specify that the Auction Reference Price would be determined under that 
subparagraph of the rule instead of the Auction Reference Price 
specified in Rule 7.35(a)(8)(A). For a Trading Halt Auction following a 
MWCB Halt or regulatory halt, the Auction Reference Price would 
continue to be as specified in Rule 7.35(a)(8)(A).
    Initial Auction Collars: Proposed Rule 7.35(e)(7)(B) would specify 
the Auction Collars if a Trading Halt Auction is conducted at the 
initial Re-Opening Time. Currently, as provided for in Rule 
7.35(a)(10)(A), the upper (lower) boundary of Auction Collars is the 
Auction Reference Price increased (decreased) by the specified 
percentage. As such, the price collar thresholds are applied on both 
sides of the Auction Reference Price. The Exchange proposes to modify 
how Auction Collars are calculated as proposed:
     Proposed Rule 7.35(e)(7)(B)(i) would specify how Auction 
Collars would be determined for a Trading Halt Auction following a 
Trading Pause. As proposed, if the Auction Reference Price is the Lower 
(Upper) Price Band, the lower (upper) Auction Collar would be the 
Auction Reference Price decreased (increased) by the Price Collar 
Threshold, rounded down to the nearest MPV,\9\ and the upper (lower) 
Auction Collar would be the Upper (Lower) Price Band. This proposed 
rule implements the proposed standardized trading practice that, for 
Trading Halt Auctions following a Trading Pause, the Auction Collars 
should be widened only in the direction of the trading that invoked the 
Trading Pause. For example, if a Trading Pause is triggered following a 
Limit State at the Lower Price Band, this would indicate selling 
pressure in that NMS Stock. Accordingly, the proposed lower boundary 
Auction Collar would be widened by subtracting the Price Collar 
Threshold from the Auction Reference Price, i.e., the Lower Price Band. 
To address the concept of mean reversion, i.e., that prices may revert 
back to the mean or average price of the NMS Stock, and to avoid a 
security from trading outside of where it would have been permitted to 
trade before the

[[Page 73162]]

Trading Pause, the Exchange proposes that the Auction Collar on the 
opposite side of the trading pressure should be the Price Band in place 
before the Trading Pause was triggered. Taking the above example, the 
Upper Auction Collar would therefore be the Upper Price Band. This way, 
if during the trading pause, the selling pressure reverses and becomes 
buying pressure, the Auction Collars would not permit a trade higher 
than would have been permitted under the Price Bands before the Trading 
Pause.
---------------------------------------------------------------------------

    \9\ See Rules 7.6 and 7.46 (specifying the minimum price 
variation (``MPV'') for quoting and entry of orders).
---------------------------------------------------------------------------

     Proposed Rule 7.35(e)(7)(B)(ii) would specify how Auction 
Collars would be determined for a Trading Halt Auction following a MWCB 
Halt or regulatory halt. In this case, because there would not be a 
security-specific pricing direction reason for the halt, the Exchange 
proposes that the Price Collar Threshold would be applied on both sides 
of the Auction Reference Price. Accordingly, for stocks priced above 
$3.00, the upper (lower) boundary of the Auction Collar would be the 
Auction Reference Price (as defined in Rule 7.35(a)(8)(A)), plus 
(minus) the Auction Reference Price multiplied by 5%. For stocks priced 
$3.00 and under, the upper (lower) boundary of the Auction Collar would 
be the Auction Reference Price (as defined in Rule 7.35(a)(8)(A)), plus 
(minus) $0.15. For Trading Halt Auctions following a MWCB Halt or 
regulatory halt, if the Price Collar Threshold calculation results in a 
price that is not in the applicable MPV for the security, the Exchange 
proposes to round down to the nearest price in the applicable MPV.
    Auction Collar for Extensions: Proposed Rule 7.35(e)(7)(C) would 
specify how the Exchange would adjust Auction Collars for each 
Extension. As proposed, the Auction Collar on the side of the 
Impermissible Price would be widened for each Extension. In other 
words, if the Indicative Match Price is below the lower Auction Collar 
for the initial Re-Opening Time or there is a sell Market Imbalance, 
the Exchange would widen only the lower Auction Collar. As further 
proposed, the Auction Collar on the opposite side of the Impermissible 
Price would remain the same as the last-calculated Auction Collar on 
that side. Thus, in the case of selling pressure that would result in 
an Auction Extension, the upper Auction Collar would remain as the last 
Upper Price Band.
     Proposed Rule 7.35(e)(7)(C)(i) would further provide that 
if the Impermissible Price is on the side of the Lower (Upper) Auction 
Collar, the last-calculated Lower (Upper) Auction Collar would be 
decreased (increased) by a Price Collar Threshold and the Upper (Lower) 
Auction Collar would stay the same.
     To address the concept of mean reversion, proposed Rule 
7.35(e)(7)(C)(ii) would provide that if the side of the Impermissible 
Price changes from the Lower (Upper) Auction Collar to the Upper 
(Lower) Auction Collar, the last-calculated Upper (Lower) Auction 
Collar would be widened for that Extension and the last-calculated 
Lower (Upper) Auction Collar will remain the same. Therefore, if, 
during an Extension, the directional trading pressure switches from 
sell to buy, the upper Auction Collar would be widened, and the last-
Lower Auction Collar would remain the same.
    Proposed Rules 7.35(e)(8) and (9) would specify the Exchange's 
proposed handling of orders for a Trading Halt Auction, which are 
discussed in greater detail below.
    Proposed Rule 7.35(e)(10) would specify what the Exchange would do 
if a Re-Opening Time would be in the last ten minutes of trading before 
the end of Core Trading Hours. The Participants are proposing to amend 
the Plan to provide that if an NMS Stock is in a Trading Pause during 
the last ten minutes of trading before the end of Regular Trading 
Hours, the Primary Listing Exchange would not reopen trading and would 
attempt to execute a closing transaction using its established closing 
procedures.\10\ To implement this proposed amendment to the Plan, 
proposed Rule 7.35(e)(10) would provide that, if the Re-Opening Time 
for a Trading Halt Auction is in the last ten minutes of trading before 
the end of Core Trading Hours, the Exchange would not conduct a Trading 
Halt Auction in that security and would not transition to continuous 
trading.\11\ Instead, the Exchange would remain paused or halted and 
would conduct a Closing Auction in such security as provided for in 
Rule 7.35(d).
---------------------------------------------------------------------------

    \10\ See supra note 6.
    \11\ Rule 7.12 provides that a MWCB Halt following a Level 1 
Decline or Level 2 Decline will not be declared after 3:25 p.m. 
Eastern Time. However, if, as proposed, a MWCB Halt in an NMS Stock 
that was triggered at or before 3:25 p.m. Eastern Time is extended 
pursuant to proposed Rule 7.35(e)(5) to after 3:50 p.m. Eastern Time 
(or 12:50 p.m. Eastern Time in the case of an early scheduled 
close), the Exchange would not conduct a Trading Halt Auction in 
that NMS Stock.
---------------------------------------------------------------------------

    In such circumstances, as specified in proposed Rule 
7.35(e)(10)(A), MOO Orders, LOO Orders, and IO Orders (described below) 
entered during the pause or halt would not participate in the Closing 
Auction and would expire at the end of the Core Trading Session. The 
Exchange proposes to add this rule text to provide transparency to ETP 
Holders of how orders that are designated to participate in a Trading 
Halt Auction only would be handled if the Exchange transitions to a 
Closing Auction without conducting that Trading Halt Auction. The 
Exchange believes this proposed rule text would provide notice for ETP 
Holders to enter closing-only interest, i.e., MOC or LOC Orders, to 
participate in the Closing Auction.
    In addition, as specified in proposed Rule 7.35(e)(10)(B), the 
Auction Collars for the Closing Auction for such security would be the 
most recently widened Auction Collars for the Trading Halt Auction that 
did not occur. Currently, the Auction Collars for Closing Auctions are 
5% for securities with an Auction Reference Price of $25.00 or less, 2% 
for securities with an Auction Reference Price of greater than $25.00 
and less than or equal to $50.00, or 1% for securities with an Auction 
Reference Price greater than $50.00. The Exchange believes that if the 
Exchange goes directly from an unresolved Trading Pause, MWCB Halt, or 
regulatory halt in an NMS Stock to a Closing Auction, the narrower 
price collar thresholds applicable to the Closing Auction would result 
in Auction Collars that do not correlate to the trading condition for 
that NMS Stock.
    The Exchange proposes to make a related amendment to Rule 
7.35(a)(10)(A) to add the clause ``except as provided for in Rule 
7.35(e)(10)(B)''. This proposed rule text makes clear that the price 
collar thresholds for a Closing Auction are defined in Rule 
7.35(a)(10)(A), except as provided for in proposed Rule 7.35(e)(10)(B).
    The Exchange proposes to amend Rule 7.10(a) to provide that ETP 
Holders may not request a review of a Trading Halt Auction under Rule 
7.10(b), which specifies the procedures for an ETP Holder to request a 
review of an execution, as clearly erroneous. The Exchange believes 
that this proposed rule text would implement the proposed standardized 
trading practice that reopening auctions would not be eligible for 
review by ETP Holders as a clearly erroneous execution.\12\
---------------------------------------------------------------------------

    \12\ The Participants will be engaging in a more comprehensive 
review of Rule 7.10 in connection with amendments to the Plan 
relating to tiering of securities and applicable percentage 
parameters. The Exchange proposes to make this limited amendment to 
Rule 7.10 as an initial step to eliminating its clearly erroneous 
executions rules in their current form.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to amend Rule 7.11 to delete 
obsolete rule text and conform the remaining rule text to the proposed 
amendments to the

[[Page 73163]]

Plan, as described above. First, the Exchange proposes to amend Rule 
7.11(b) to delete the text following the heading of Rule 7.11(b) and 
delete Rules 7.11(b)(1), (b)(1)(A)-(C), and (b)(3). This rule text 
governed how trading pauses were triggered before the Plan was 
implemented and is now obsolete. Second, the Exchange proposes that the 
text currently set forth in Rule 7.11(b)(2) would be moved to be the 
rule text for Rule 7.11(b). In moving this rule text, the Exchange 
proposes to delete the second substantive sentence of current Rule 
7.11(b)(2) as inconsistent with the proposed amendments to the Plan, 
described above.\13\ Third, the Exchange proposes to renumber current 
Rule 7.11(b)(4) as proposed Rule 7.11(b)(1) and amend this paragraph to 
add that the Exchange would notify the single plan processor if the 
Exchange is unable to reopen trading at the end of the Trading Pause 
due to a systems or technology issue, which is consistent with the 
proposed amendments to the Plan. Finally, the Exchange proposes to 
renumber current Rule 7.11(b)(5) as proposed Rule 7.11(b)(2) and amend 
the text to provide that if a primary listing market issues an Trading 
Pause, the Exchange would resume trading as provided for in Rule 
7.18(a).\14\ This proposed amendment is consistent with the proposed 
amendments to the Plan, described above.
---------------------------------------------------------------------------

    \13\ The sentence that the Exchange would delete provides that 
``[i]n the event of a significant imbalance at the end of a Trading 
Pause, the Corporation may delay the re-opening of a security. The 
Exchange will issue a notification if it cannot resume trading for a 
reason other than a significant imbalance.''
    \14\ Rule 7.18(a) provides that if the UTP Listing Market 
declares a UTP Regulatory Halt, which includes a Trading Pause, the 
Exchange will halt trading until it receives the first Price Band in 
that security. Accordingly, following a Trading Pause declared by 
another Primary Listing Market, the Exchange already waits to 
receive Price Bands before it resumes trading in that UTP Security. 
The Exchange proposes to delete the current rule text in Rule 
7.11(b)(5) that provides that the Exchange ``will pause trading in 
that security until trading has resumed on the primary listing 
market or notice has been received from the primary listing market 
that trading may resume. If the primary listing market does not 
reopen the security within 10 minutes of notification of a Trading 
Pause, the Corporation may resume trading the security.''
---------------------------------------------------------------------------

Other Proposed Rule Changes
    IO Order: The Exchange proposes to add a new order type, an 
Imbalance Only (``IO'') Order, that would be eligible to participate in 
Trading Halt Auctions only. The Exchange proposes to amend Rule 
7.31(c), which specifies the Exchange's Auction-Only Order types, to 
add new subsection (5) to describe an IO Order. As proposed, an IO 
Order would be a Limit Order to buy (sell) that is to be traded only in 
a Trading Halt Auction.
    Proposed Rule 7.31(c)(5)(A) would provide that an IO Order would be 
accepted only during a halt or pause, including any extensions. This 
proposed rule text is consistent with the Exchange's current rules that 
MOO or LOO Orders designated to participate in a Trading Halt Auction 
will be accepted only during the trading halt that precedes such 
Trading Halt Auction.\15\
---------------------------------------------------------------------------

    \15\ See Rule 7.31(c)(1) and (2).
---------------------------------------------------------------------------

    Proposed Rule 7.31(c)(5)(B) would provide that an IO Order would 
participate in a Trading Halt Auction only if: (i) There is an 
imbalance in the security on the opposite side of the market from the 
IO Order after taking into account all other orders eligible to trade 
at the Indicative Match Price; and (ii) the limit price of the IO Order 
to buy (sell) would be at or above (below) the Indicative Match Price. 
Proposed Rule 7.31(c)(5)(C) would provide that the working price of an 
IO Order to buy (sell) would be adjusted to be equal to the Indicative 
Match Price, provided that the working price of the IO Order would not 
be higher (lower) than its limit price. Finally, proposed Rule 
7.31(c)(5)(D) would provide that an IO Order that participates in a 
Trading Halt Auction would be ranked in time priority among IO Orders 
after all other orders eligible to participate in the auction have been 
allocated. The Exchange notes that the proposed IO Order is based in 
part on the Closing Offset (``CO'') Order offered by the New York Stock 
Exchange LLC (``NYSE'').\16\
---------------------------------------------------------------------------

    \16\ See NYSE Rule 13(c)(1) (defining a CO Order as a day Limit 
Order to buy or sell as part of the closing transaction where the 
eligibility to participate in the closing transaction is contingent 
upon: (i) an imbalance in the security on the opposite side of the 
market from the CO Order; (ii) after taking into account all other 
types of interest eligible for execution at the closing price, there 
is still an imbalance in the security on the opposite side of the 
market from the CO Order; and (iii) the limit price of the CO Order 
being at or within the price of the closing transaction. CO Orders 
eligible to participate in the closing transaction are executed in 
time priority of receipt by NYSE systems, up to the size of the 
imbalance in the security, on the opposite side of the market from 
the CO Order. Any eligible CO Orders not executed due to trading 
halt (as defined in Rule NYSE 123D) or insufficient volume of the 
contra side imbalance will be cancelled.)
---------------------------------------------------------------------------

    For example, assume for a Trading Halt Auction that the lower 
boundary of an Auction Collar is $10.00. Assume further that after 
allocating all other orders eligible to participate in the Trading Halt 
Auction, there is a sell Total Imbalance of 10,000 shares and absent 
Auction Collars, the Indicative Match Price would be below $10.00. As 
provided for in Rule 7.35(a)(10)(B), once the Auction Collars are 
applied, the Indicative Match Price for that Trading Halt Auction would 
be $10.01 (i.e., one MPV above the lower Auction Collar). Assume now 
there are seven IO Orders to buy, each for 2,000 shares, with limit 
prices of $10.00, $10.01, $10.02, $10.03, $10.04, $10.05 and $10.06, 
and they are entered in that order. In this scenario, the IO Order to 
buy with a limit price of $10.00 would not be eligible to participate, 
because the $10.01 Indicative Match Price is higher than the limit 
price of the order. The remaining six IO Orders to buy would be 
assigned a working price of $10.01. However, because the IO Order with 
a limit price of $10.06 was entered last in time, it would not 
participate in the Trading Halt Auction.
    Auction Imbalance Freeze: The Exchange proposes to add an Auction 
Imbalance Freeze before a Trading Halt Auction. As defined in Rule 
7.35(a)(3), the Auction Imbalance Freeze means the period that begins 
before the scheduled time for the Early Open Auction, Core Open 
Auction, or Closing Auction, as specified in paragraphs (b), (c), and 
(d) of Rule 7.35, and that ends once the Auction Processing Period 
begins. To effect the proposed rule change, the Exchange proposes to 
add a reference to Trading Halt Auction and Rule 7.35(e) to Rule 
7.35(a)(3).
    Proposed Rule 7.35(e)(8) would describe how the Trading Halt 
Auction Imbalance Freeze would function. As proposed, the Trading Halt 
Auction Imbalance Freeze would begin five seconds before the Re-Opening 
Time, including Re-Opening Times for each Extension. The Exchange 
proposes to use the same period of time for the Trading Halt Auction 
Imbalance Freeze, five seconds, as provided for in Rule 7.35(c)(3) for 
the Core Open Auction. Specifically, the Exchange believes that the 
proposed five-second time period strikes the appropriate balance for 
providing sufficient time for market participants to enter and cancel 
orders before the Trading Halt Auction while at the same time having a 
short period for any imbalance to stabilize before the auction is 
conducted. The rule would further provide that if a pause or halt is 
extended, the Trading Halt Auction Imbalance Freeze for the prior 
period would end, new orders and order instructions received during the 
prior period's Trading Halt Auction Imbalance Freeze would be 
processed, and the Exchange would accept new order entry and 
cancellation as provided for in Rule 7.18(c) until the next Trading 
Halt Auction Imbalance Freeze. In other words, if at the Re-Opening 
Time, the Exchange extends the Trading Pause for five minutes, the 
restrictions on order

[[Page 73164]]

entry and cancellation from the prior freeze would no longer be in 
effect, and any order instructions that were not processed will be 
processed.
    The proposed rule would further provide how order entry and 
cancellation during the Trading Halt Auction Imbalance Freeze would be 
processed:
     As proposed in Rule 7.35(e)(8)(A), MOO Orders and LOO 
Orders that are on the same side as the Imbalance, would flip the 
Imbalance, or would create a new Imbalance would be rejected. This 
proposed rule text is based on how MOC Orders and LOC Orders are 
processed during the Closing Auction Imbalance Freeze, as described in 
Rule 7.35(d)(2)(A).
     As proposed in Rule 7.35(e)(8)(B), Market Orders (other 
than MOO Orders) and Limit Orders would be accepted but would not be 
included in the calculation of the Indicative Match Price or the 
Trading Halt Auction Imbalance Information. Such orders would 
participate in the Trading Halt Auction only to offset the Imbalance 
that would be remaining after all orders entered before the Trading 
Halt Auction Imbalance Freeze, including the non-display quantity of 
Reserve Orders, are allocated in the Trading Halt Auction, and would be 
allocated in price-time priority under Rule 7.36(c)-(g) consistent with 
the priority ranking associated with each order and ahead of any IO 
Orders. This proposed rule text is based on how [sic] Market Orders 
(other than MOO Orders) and Limit Orders that are entered during the 
Core Open Auction Imbalance Freeze, as described in Rule 7.35(c)(3)(B). 
As such, these orders would participate in the Trading Halt Auction 
only to offset the final Imbalance for the auction. Such orders would 
be ranked in price-time priority after all other orders, except for IO 
Orders, have been allocated. Because the Exchange would be accepting IO 
Orders for the Trading Halt Auction and because IO Orders do not 
participate until all other eligible interest has been allocated, the 
Exchange proposes a substantive difference from the rule governing the 
Core Open Auction to address how IO Orders would be processed relative 
to Market Orders (other than MOO Orders) or Limit Orders entered during 
the Trading Halt Auction Imbalance Freeze. As proposed, IO Orders would 
not be allocated until Market Orders (other than MOO Orders) and Limit 
Orders entered during the Trading Halt Auction Imbalance Freeze have 
been allocated.
     Proposed Rule 7.35(e)(8)(C) would provide that requests to 
cancel and requests to cancel and replace Market Orders, LOO Orders, 
Limit Orders, and IO Orders would be accepted but not processed until 
after the Trading Halt Auction concludes, as provided for in Rule 
7.35(h). This proposed rule text is based on Rule 7.35(c)(3)(C) 
governing which order instructions will be accepted but not processed 
during the Core Open Auction Imbalance Freeze. The Exchange proposes a 
substantive difference to reference how requests to cancel IO Orders 
would be processed if received during the freeze period.
     Finally, proposed Rule 7.35(e)(8)(D) would provide that 
all other order instructions would be accepted. This proposed rule text 
is based on Rules 7.35(c)(3)(D) and (d)(2)(C), without any differences.
    Unexecuted Limit Orders: The Exchange proposes to specify how it 
would process Limit Orders that do not participate in the Trading Halt 
Auction. As discussed above, an Impermissible Price would occur if 
there is a Market Imbalance or if the Indicative Match Price were 
outside the specified Price Collar Thresholds. However, if the 
Indicative Match Price were within the specified Price Collar 
Thresholds and there is no Market Imbalance, it is still possible to 
have an imbalance of Limit Orders within the Auction Collars. In such 
case, the Exchange proposes to transition such unexecuted Limit Orders 
to continuous trading. The Exchange believes that because such Limit 
Orders would have a limit price within the Auction Collars, having such 
Limit Orders transition to continuous trading would not have 
significant pricing impact on post-Trading Halt Auction trading. 
Accordingly, proposed Rule 7.35(e)(9) would provide that any Limit 
Orders that were eligible to participate in the Trading Halt Auction, 
but did not participate, would transition to continuous trading as 
provided for in paragraph (h) of this Rule.
    Auction Imbalance Information: The Exchange proposes to enhance the 
Auction Imbalance Information. Rule 7.35(a)(4) defines Auction 
Imbalance Information as the information that is disseminated by the 
Exchange for an auction and includes, if applicable, the Total 
Imbalance, Market Imbalance, Indicative Match Price, and Matched 
Volume.\17\ The Exchange proposes to enhance the Auction Imbalance 
Information to include the following additional information: Auction 
Reference Price, Auction Collar, Book Clearing Price, Far Clearing 
Price, Imbalance Freeze Indicator, and Auction Indicator. The Auction 
Reference Price is defined in Rule 7.35(a)(8)(A) and proposed Rule 
7.35(e)(7)(A), described above. The Auction Collar is defined in Rule 
7.35(a)(10) and proposed Rules 7.35(e)(7) and (e)(10)(B), described 
above. The Exchange proposes to define the additional terms as follows:
---------------------------------------------------------------------------

    \17\ See Rule 7.35(a)(7) (defining the terms Total Imbalance and 
Market Imbalance); 7.35(a)(8) (defining the term Indicative Match 
Price); and 7.35(a)(9) (defining the term Matched Volume).
---------------------------------------------------------------------------

     Proposed Rule 7.35(a)(11) would define the term ``Book 
Clearing Price'' to mean the price at which all interest eligible to 
participate in an auction could be traded if not subject to an Auction 
Collar. The rule would further provide that the Book Clearing Price 
would be zero if a sell (buy) imbalance cannot be filled by any buy 
(sell) orders. For example, if there are only sell orders and no buy 
orders, the Book Clearing Price would be zero.
     Proposed Rule 7.35(a)(12) would define the term ``Far 
Clearing Price'' to mean the price at which Auction-Only Orders could 
be traded within the Auction Collar. Auction-Only Orders are defined in 
Rule 7.31(c).
     Proposed Rule 7.35(a)(13) would define the term ``Auction 
Indicator'' to mean an indicator of whether an auction could be 
conducted, based on the applicable Auction Collar and Imbalance. This 
information would be relevant for the Trading Halt Auction and provide 
transparency regarding whether a Trading Pause, MWCB Halt, or 
regulatory halt would be eligible to be conducted. If an Auction 
Indicator is ``no,'' market participants would be on notice that 
submitting offsetting interest may reduce the possibility of the 
Exchange extending a Trading Halt Auction.
     Proposed Rule 7.35(a)(14) would define the term 
``Imbalance Freeze Indicator'' to mean an indicator of whether a 
security is currently in an Auction Imbalance Freeze. This indicator 
would put market participants on notice of whether there are order 
entry and cancellation restrictions in place at any given time before 
an auction.
* * * * *
    The Exchange proposes to implement the proposed rule change 
following the Commission's approval of Amendment 12 to the Plan. The 
Exchange will announce the implementation date via Trader Update to be 
issued after this proposed rule change is approved.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the

[[Page 73165]]

``Act''),\18\ in general, and furthers the objectives of Section 
6(b)(5),\19\ 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 are designed, together with the proposed 
amendments to the Plan, to address the issues experienced on August 24, 
2015 by reducing the number of repeat Trading Pauses in a single NMS 
Stock. The proposed Plan amendments are an essential component to 
Participants' goal of more standardized processes across Primary 
Listing Exchanges in reopening trading following a Trading Pause, and 
facilitates the production of an equilibrium Reopening Price by 
centralizing the reopening process through the Primary Listing 
Exchange, which would also improve the accuracy of the reopening Price 
Bands. The proposed Plan amendments support this initiative by 
requiring trading centers to wait to resume trading following Trading 
Pause until there is a Reopening Price.
    This proposed rule change further supports this initiative by 
proposing uniform trading practices for reopening trading following a 
Trading Pause. The Exchange believes that the proposed standardized 
approach for how the Primary Listing Exchanges would conduct certain 
aspects of an automated reopening following a Trading Pause would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because it would provide certainty 
for market participants regarding how a security would reopen following 
a Trading Pause, regardless of the listing exchange. The Exchange 
further believes that the proposed changes would remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system and protect investors and the public interest because the 
goal of the proposed changes is to ensure that all Market Order 
interest could be satisfied in an automated reopening auction while at 
the same time reducing the potential for multiple Trading Pauses in a 
single security due to a large order imbalance.
    The Exchange further believes that the standardized proposal to 
extend a Trading Pause an additional five minutes would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would provide additional time to 
attract offsetting liquidity. If at the end of such extension, Market 
Orders still cannot be satisfied within price collar thresholds or if 
the reopening auction would be priced outside of the applicable price 
collar thresholds, the Primary Listing Exchange would extend the 
Trading Pause an additional five minutes, which the Exchange believes 
would further protect investors and the public interest by reducing the 
potential for significant price disparity in post-auction trading, 
which could otherwise trigger another Trading Pause. With each such 
extension, the Exchange believes that widening the price collar 
threshold on the side of the market on which there is buying or selling 
pressure would remove impediments to and perfect the mechanism of a 
free and open market and a national market system because it would 
provide additional time to attract offsetting interest while at the 
same time addressing that an imbalance may not be resolved within the 
prior Auction Collars.
    With respect to price collar thresholds, the Exchange believes that 
using the price of the limit state that preceded the Trading Pause, 
i.e., either the Lower or Upper Price Band price, would better reflect 
the most recent price of the security and therefore should be used as 
the reference price for determining the Auction Collars for such 
Trading Halt Auction. The Exchange believes that widening Auction 
Collars only in the direction of the imbalance would address issues 
relating to the concept of mean reversion, which would protect 
investors and the public interest by reducing the potential for wide 
price swings following a Trading Halt Auction.
    The Exchange believes that applying the proposed changes to its 
Trading Halt Auctions not only following a Trading Pause, but also 
following a MWCB Halt or regulatory halt, would remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system because it would promote consistency in how the Exchange 
conducts its Trading Halt Auctions, thus reducing complexity in the 
marketplace.
    The Exchange believes that precluding ETP Holders from requesting a 
review of a Trading Halt Auction as a clearly erroneous execution would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because the proposed new procedures 
for reopening trading following a Trading Pause would reduce the 
possibility that an order(s) from an ETP Holder(s) caused a Trading 
Halt Auction to be clearly erroneous. Specifically, the Exchange 
believes that the proposed standardized procedures for reopening 
trading following a Trading Pause incorporates a methodology that 
allows for widened collars, which may result in a reopening price away 
from prior trading prices, but which reopening price would be a result 
of a measured and transparent process that eliminates the potential 
that such trade would be considered erroneous.
    The Exchange believes that the proposed amendments to Rule 7.11 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system because the proposed changes 
would remove obsolete rule text and amend the remaining rule text to 
conform to the proposed amendments to the Plan, as described above.
    The Exchange believes that the proposed rule change to add an IO 
Order for Trading Halt Auctions would further remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system because such order type is designed to attract offsetting 
interest that would participate in the Trading Halt Auction. The 
Exchange believes that offering such order type would provide an option 
for market participants that are willing to participate in an auction 
to offset an imbalance, but do not want such orders to participate in 
continuous trading. The proposed order type is based in part on the CO 
Order offered by the NYSE, with the main difference being that the IO 
Order would be offered for the Trading Halt Auction only, whereas the 
CO Order on NYSE is available for the closing transaction only. 
However, in function, the two orders are designed with the same 
purpose--to reduce the imbalance to assist in achieving pricing 
equilibrium.
    The Exchange further believes that the proposed rule change to add 
a Trading Halt Auction Imbalance Freeze would remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system because it

[[Page 73166]]

would provide market participants with a brief period to assess the 
imbalance going into a Trading Halt Auction. During such time, order 
entry and cancellation would be revised in a manner designed to reduce 
the last-published imbalance. The proposed mechanism for the Trading 
Halt Auction Imbalance Freeze is not novel, as it is based in part on 
the existing Core Open Auction Imbalance Freeze, i.e., the length of 
the Auction Imbalance Freeze, and the Closing Auction Imbalance Freeze, 
i.e., how new orders and order instructions would be processed, with a 
proposed substantive difference to address how the proposed new IO 
Order type would be processed during the Auction Imbalance Freeze.
    The Exchange believes that the proposed manner of how it would 
process Limit Orders that do not participate in a Trading Halt Auction, 
but have a limit price within the applicable Auction Collars, in that 
such orders would roll into continuous trading, would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system. Such Limit Orders likely would not impact the 
pricing of post-auction trading and trigger another Trading Pause 
because the limit price of such orders would be within the same price 
range that trading would otherwise be permitted.
    Finally, the Exchange believes that the proposed amendments to 
enhance the Auction Imbalance Information to add the Auction Reference 
Price, the Auction Collar, the Book Clearing Price, the Far Clearing 
Price, the Imbalance Freeze Indicator, and the Auction Indicator would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because they are designed to 
promote additional transparency regarding the Exchange's auctions by 
providing additional detail regarding what Auction Reference Price 
would be used in an auction, the Auction Collars applicable to such 
auction, additional information about potential pricing for such 
auction, and the status of the applicable auction.

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 is not designed to address any competitive 
issues, but rather, to achieve the Participants' goal of more 
standardized processes across Primary Listing Exchanges in reopening 
trading following a Trading Pause, and facilitates the production of an 
equilibrium Reopening Price by centralizing the reopening process 
through the Primary Listing Exchange, which would also improve the 
accuracy of the reopening Price Bands. The Exchange believes that the 
proposed rule change reduces the burden on competition for market 
participants because it promotes a transparent and consistent process 
for reopening trading following a Trading Pause regardless of where a 
security may be listed. The Exchange further believes that the proposed 
rule change would not impose any burden on competition because they are 
designed to increase transparency regarding the Exchange's Trading Halt 
Auction process while at the same time increasing the ability for 
offsetting interest to participate in an auction, which would assist in 
achieving pricing equilibrium for such an auction.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-2016-130 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-2016-130. 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-2016-130 and should 
be submitted on or before November 14, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25572 Filed 10-21-16; 8:45 am]
 BILLING CODE 8011-01-P