Document ID: SEC-2015-2094-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC,
Posted Date: 2015-12-18T05:00Z

[Federal Register Volume 80, Number 243 (Friday, December 18, 2015)]
[Notices]
[Pages 79117-79122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31788]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76638; File No. SR-NYSEMKT-2015-106]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending the Seventh Amended and Restated 
Operating Agreement of the Exchange To Establish a Committee for Review 
as a Sub-Committee of the ROC and Make Conforming Changes to Rules and 
the NYSE MKT Company Guide

December 14, 2015.
    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 December 11, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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 (1) amending the Seventh Amended and Restated 
Operating Agreement of the Exchange (``Operating Agreement'') to 
establish a Committee for Review as a sub-committee of the ROC and make 
conforming changes to Rules 475, 476, 476A, 20--Equities, 308--Equities 
and Sections 1201, 1204, 1205, 1206, 1211, and 1212T of the NYSE MKT 
Company Guide (the ``Company Guide''); (2) deleting references to 
``NYSE Regulation, Inc.'' and ``NYSE Regulation'' in Section 4.05 of 
the Operating Agreement and Rules 0, 1--Equities, 22--Equities, 36--
Equities, 48--Equities, 49--Equities, 54--Equities, 70--Equities, 103--
Equities, 103A--Equities, 103B--Equities, 422--Equities, 497--Equities, 
and 902NY; (3) replacing references to the Chief Executive Officer of 
NYSE Regulation, Inc. in Rules 48--Equities, 49--Equities and 86--
Equities with references to the Chief Regulatory Officer of the 
Exchange; and (4) making certain technical and non-substantive changes. 
The text of the proposed rule change is available on the Exchange's Web 
site at www.nyse.com, at the principal office of the Exchange, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to the following changes:
     Amending the Operating Agreement to establish a Committee 
for Review (``CFR'') as a sub-committee of the ROC and make conforming 
changes to Rules 475, 476, 476A, 20--Equities, 308--Equities and 
Sections 1201, 1204, 1205, 1206, 1211, and 1212T of the Company Guide;
     deleting references to ``NYSE Regulation, Inc.'' and 
``NYSE Regulation'' \4\ in Section 4.05 of the Operating Agreement and 
Rules 0, 1--Equities, 22--Equities, 36--Equities, 48--Equities, 49--
Equities, 54--Equities, 70--Equities, 103--Equities, 103A--Equities, 
103B--Equities, 422--Equities, 497--Equities, and 902NY;
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    \4\ NYSE Regulation, Inc. (``NYSE Regulation''), a not-for-
profit subsidiary of the Exchange's affiliate New York Stock 
Exchange LLC (``NYSE''), performs regulatory functions for the 
Exchange pursuant to an intercompany Regulatory Services Agreement 
(``RSA'') that gives the Exchange the contractual right to review 
NYSE Regulation's performance. See Securities Exchange Act Release 
No. 75991 (September 28, 2015), 80 FR 59837 (October 2, 2015) (SR-
NYSE-2015-27) (``NYSE Approval Order''). As noted below, these 
proposed changes would be appropriate once the RSA terminates 
because NYSE Regulation would cease providing regulatory services to 
the Exchange, which would re-integrate its regulatory functions.
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     replacing references to the Chief Executive Officer of 
NYSE Regulation, Inc. in Rules 48--Equities, 49--Equities and 86--
Equities with references to the Chief Regulatory Officer of the 
Exchange; and
     making certain technical and non-substantive changes.
    The Exchange proposes that the above rule changes would be 
operative simultaneously with the termination of

[[Page 79118]]

the RSA. The Exchange would effect the changes described herein no 
later than June 30, 2016, on a date determined by its Board.
Amend Operating Agreement To Establish CFR as a Sub-Committee of the 
ROC
    The Exchange proposes to establish a CFR as a sub-committee of the 
ROC by adding a new section (h)(iii) to Section 2.03 of the Operating 
Agreement and making conforming changes to Rules 475, 476, 476A, 20--
Equities, 308--Equities and Sections 1201, 1204, 1205, 1206, 1211, and 
1212T of the Company Guide.
    The proposed CFR would be the successor to the current CFR,\5\ 
which is a committee of the NYSE Regulation board of directors that 
reviews appeals of Exchange disciplinary actions, and the Committee on 
Securities, a committee of the Exchange board of directors that reviews 
determinations to limit or prohibit the continued listing of an 
issuer's securities on the Exchange. By establishing a new CFR, the 
Exchange proposes to make its appellate process more consistent with 
that of its affiliate NYSE, whose proposed rule change to establish a 
CFR as a subcommittee of its ROC has been approved by the SEC.\6\ The 
proposed CFR would incorporate the salient requirements of the current 
CFR, which was a model for the current proposal and for the CFR adopted 
by the Exchange's affiliate,\7\ and the Committee on Securities.
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    \5\ The current CFR was created in connection with the merger of 
the New York Stock Exchange, Inc. (now NYSE), with Archipelago 
Holdings, Inc. in 2006. See Securities Exchange Act Release No. 
53382 (February 27, 2006), 71 FR 11251, 11259 (March 6, 2006) (SR-
NYSE-2005-77). Proposed Section 2.03(h)(iii) of the Operating 
Agreement would incorporate the salient requirements of the current 
CFR as set forth in Article III, Section 5 of the NYSE Regulation 
Bylaws. See id. & 11266.
    \6\ See NYSE Approval Order, 80 FR at 59840.
    \7\ The salient requirements of the NYSE Regulation CFR are set 
forth in Article III, Section 5 of the NYSE Regulation Bylaws. See 
Securities Exchange Act Release No. 53382, 71 FR 11251, 11259 & 
11266 (February 27, 2006) (SR-NYSE-2005-77). See NYSE Approval 
Order, 80 FR at 59840.
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    Section 2.03(h)(iii) of the Operating Agreement would provide that 
the Board shall annually appoint a CFR as a sub-committee of the ROC. 
As is currently the case, proposed Section 2.03(h)(iii) would provide 
that the CFR would be comprised of both Exchange directors that satisfy 
the independence requirements \8\ as well as persons who are not 
directors. Like the current CFR, the Exchange also proposes that a 
majority of the members of the CFR voting on a matter subject to a vote 
of the CFR must be directors of the Exchange.
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    \8\ The Exchange's independence requirements are set forth in 
the Independence Policy of the Board of Directors of the Exchange 
available at https://www.nyse.com/publicdocs/nyse/regulation/nyse-mkt/nyse_mkt_llc_independence_policy.pdf. Because the majority of 
the Exchange Board must be independent, as a functional matter if 
the Exchange has a five person Board, at least three of the five 
directors would qualify for CFR membership. See Operating Agreement 
Article II, Section 2.03(a).
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    Further, proposed Section 2.03(h)(iii) would provide that among the 
persons on the CFR who are not directors would be included 
representatives of member organizations that engage in a business 
involving substantial direct contact with securities customers 
(commonly referred to as ``upstairs firms''), Designated Market Makers 
(``DMM'') or specialists, and floor brokers.\9\ Once again, this is the 
way the current CFR is structured.\10\
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    \9\ Market makers on the Exchange's equity market are called 
DMMs and on NYSE Amex Options are called specialists. See Rule 2--
Equities (i) & (j) (defining DMM); Rule 927NY (defining specialist). 
The three proposed categories of CFR members mirror categories (1) 
through (3) in Article III, Section 5 of the NYSE Regulation Bylaws 
for the composition of the NYSE MKT CFR.
    The Exchange does not propose to carry over the requirement that 
the CFR also have an individual representing the fourth category 
specified in Article III, Section 5 of the NYSE Regulation Bylaws, 
which is an individual associated with an NYSE MKT member 
organization that spends a majority of their time on the trading 
Floor and has as a substantial part of their business the execution 
of transactions on the trading Floor for their own account or the 
account of their member organization but is not registered as a 
specialist. This category describes a class of proprietary traders 
known as Registered Equity Market Makers (``REMM'') on the former 
American Stock Exchange LLC, a predecessor of the Exchange, and as 
Registered Competitive Market Makers (``RCMM'') on the NYSE.
    REMMs, like RCMMs, were floor traders who engaged in on-floor 
proprietary trading, subject to certain requirements intended to 
have these members effectively function like market makers, pursuant 
to the exemption for market makers in Section 11(a)(1)(A) of the 
Exchange Act. See 17 CFR 240.11a1-5; Division of Market Regulation, 
United States Securities and Exchange Commission, Market 2000: An 
Examination of Current Equity Market Developments (January 1994) 
(``Market 2000''), at A V-7, available at https://www.sec.gov/divisions/marketreg/market2000.pdf. The rules relating to this 
category of proprietary floor trader were not adopted when the 
American Stock Exchange LLC was acquired by the NYSE. See Securities 
Exchange Act Release No. 58705 (October 1, 2008), 73 FR 58995, 58996 
(October 8, 2008) (SR-Amex-2008-63). The NYSE eliminated RCMMs 
shortly thereafter. See Securities Exchange Act Release No. 60356 
(July 21, 2009), 74 FR 37281 (July 28, 2009) (SR-NYSE-2009-08). In 
addition, NYSE MKT Rule 114, which governed REMMs, was deleted as 
obsolete in 2012. See Securities Exchange Act Release No. 68306 
(November 28, 2012), 77 FR 71846 (December 4, 2012) (SR-NYSEMKT-
2012-68). There are thus no Exchange members or member organizations 
that fall under the fourth category specified in Article III, 
Section 5 of the NYSE Regulation Bylaws. The only three active 
membership categories are upstairs firms, DMMs or specialists, and 
Floor brokers (applicable to both equities and options markets), and 
each would be represented on the proposed CFR.
    \10\ The Exchange notes that Section (h)(i) of the Operating 
Agreement governing the Director Candidate Recommendation Committee 
(``DCRC'') utilizes the term ``specialist'' for both markets. See 
note 9, supra. The Exchange will be seeking approval from its board 
of directors to amend Section (h)(i) of the Operating Agreement to 
refer to ``DMM or specialist,'' which would conform it to proposed 
Section 2.03(h)(iii).
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    Like the current CFR, proposed Section 2.03(h)(iii) would provide 
that the CFR would be responsible for reviewing the disciplinary 
decisions on behalf of the Board.\11\ Like the current Committee on 
Securities, the proposed CFR would review determinations to limit or 
prohibit the continued listing of an issuer's securities on the 
Exchange.\12\
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    \11\ Currently, these powers are set forth in the charter of the 
NYSE Regulation CFR. The charter for the NYSE Regulation CFR also 
states that the CFR may provide general advice to the NYSE 
Regulation board of directors in connection with disciplinary, 
listing and other regulatory matters. The Exchange proposes to state 
that the CFR can provide such general advice to the Exchange board 
and to delineate the appellate and advisory powers of the proposed 
CFR in Section 2.03(h)(iii) of the Operating Agreement. Further, as 
discussed below, the Exchange proposes to conform Rules 475, 476, 
476A, 20--Equities, 308--Equities and Sections 1201, 1204, 1205, 
1206, 1211, and 1212T of the Company Guide governing review of 
disciplinary and delisting appeals to the proposal.
    \12\ These powers are currently set forth in the charter of the 
Committee on Securities and reflected in Section 1205 of the Company 
Guide.
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    In connection with creation of the proposed CFR, the Exchange also 
proposes to delete Rule 20, which provides that the Exchange establish 
a Market Performance Committee and that NYSE Regulation establish a 
Regulatory Advisory Committee to act in an advisory capacity regarding 
trading rules and disciplinary matters and regulatory rules other than 
trading rules, respectively. Historically, these advisory committees 
have been composed of persons associated with member organizations and 
representatives of both those member organizations doing business on 
the Exchange's trading floor and those who do not do business on the 
Floor.
    The Exchange notes that the same categories of members would be 
represented on the proposed CFR, whose mandate as set forth in proposed 
Section 2.03(h)(iii) would include acting in an advisory capacity to 
the Board with respect to disciplinary matters, the listing and 
delisting of securities, regulatory programs, rulemaking and regulatory 
rules, including trading rules. The proposed CFR would therefore serve 
in the same advisory capacity as the Market Performance and Regulatory 
Advisory Committees. The Exchange accordingly believes that retaining 
the Market Performance Committee or

[[Page 79119]]

Regulatory Advisory Committee would be redundant and unnecessary. 
Moreover, the Exchange believes that member participation on the 
proposed CFR would be sufficient to provide for the fair representation 
of members in the administration of the affairs of the Exchange, 
including rulemaking and the disciplinary process, consistent with 
Section 6(b)(3) of the Exchange Act.\13\
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    \13\ See 15 U.S.C. 78f(b)(3).
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    Finally, the Exchange proposes to make conforming amendments to 
475, 476, 476A and 308--Equities and Sections 1201, 1204, 1205, 1206, 
1211, and 1212T of the Company Guide to replace references to the 
current NYSE Regulation CFR \14\ and the current Committee on 
Securities, with references to the ``Committee for Review.'' Rule 
476(f) would also be amended to provide that the CFR may, but is not 
required to, appoint an appeals panel to conduct a review thereunder 
and make a recommendation to the CFR regarding the disposition of the 
appeal. As proposed, appeals panels would have no other role in the 
appellate process. An appeals panel appointed by the CFR would consist 
of at least three and no more than five individuals. This is the same 
composition of appeals panels constituted under the rules of the 
Exchange's affiliate NYSE Arca, Inc.\15\ An appeals panel appointed by 
the CFR for equity matters would be composed of at least one director 
and one member or individual associated with an equities member 
organization. An appeals panel appointed by the CFR for options matters 
would be composed of at least one director and one member or individual 
associated with an options member organization. The Exchange also 
proposes to describe the CFR as a subcommittee of the Exchange's ROC in 
Sections 1205 and 1212T(g) of the Company Guide.
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    \14\ The current CFR is referred to in the Rules as the 
``committee of NYSE Regulation which is authorized to review 
disciplinary decisions on behalf of the Exchange Board of Directors 
and advise the Exchange Board of Directors thereon.'' The term CFR 
is used in NYSE Regulation's bylaws. See note 5, supra.
    \15\ See NYSE Arca, Inc. Rule 3.3(a)(1)(B).
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    The Exchange believes that the proposed rule change is consistent 
with the approach approved for the Exchange's affiliate, NYSE.\16\ The 
proposed rule change is also consistent with the fair representation 
requirement of Section 6(b)(3) of the Exchange Act,\17\ which is 
intended to give members a voice in the selection of an exchange's 
directors and the administration of its affairs. In particular, as is 
the case with the current CFR, the proposed CFR would be composed of 
persons associated with Exchange members and selected after appropriate 
consultation with those members. The proposal would therefore continue 
to provide for the fair representation of members in the 
``administration of the affairs of the exchange'', including the 
disciplinary process, consistent with Section 6(b)(3) of the Exchange 
Act.\18\
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    \16\ See NYSE Approval Order, 80 FR at 59840.
    \17\ See 15 U.S.C. 78f(b)(3).
    \18\ See Securities Exchange Act Release No. 53382, 71 FR 11251 
(February 27, 2006) (SR-NYSE-2005-77).
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Deletion of References to NYSE Regulation, Inc.
    In connection with the Exchange's termination of the intercompany 
RSA pursuant to which NYSE Regulation provides regulatory services to 
the Exchange,\19\ the Exchange proposes the following changes:
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    \19\ See note 4, supra.
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Operating Agreement
     The Exchange proposes to amend Section 4.05 of the 
Operating Agreement to remove references to ``NYSE Regulation, Inc.'' 
and replace one reference with ``Exchange regulatory staff.'' The 
Exchange also proposes to replace references to NYSE Regulation 
``assets'' to reflect the proposed reintegration of the regulatory 
function. The crux of the provision would continue to require the 
Exchange to ensure that any fees, fines or penalties collected by 
Exchange regulatory staff would not be used for commercial purposes or 
distributed to NYSE Group, Inc. (which is the ``Member'' for purposes 
of the Operating Agreement) or any other entity. The proposed revision 
does not in any way alter previous commitments with respect to the use 
of fine income. \20\
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    \20\ See Securities Exchange Act Release No. 58673 (September 
29, 2008), 73 FR 57707, 57717 (October 3, 2008) (SR-NYSE-2008-60 and 
SR-Amex-2008-62) (approving merger whereby the Exchange's 
predecessor, the American Stock Exchange LLC, a subsidiary of The 
Amex Membership Corporation, became a subsidiary of NYSE Euronext). 
In particular, the Exchange reiterates its previous commitment, 
reflected in Section 4.05 of the Operating Agreement, that it would 
not use any regulatory fees, fines or penalties collected by NYSE 
Regulation for commercial purposes. See id. The Exchange also 
undertakes, consistent with the commitment made by its affiliate 
NYSE and as reflected by the proposed language to Section 4.05 of 
the Operating Agreement, not to distribute such assets, fees, fines 
or penalties to the member or any other entity.
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General Rules
     The Exchange proposes to amend Rule 0 (Definitions of 
Terms), which describes the regulatory services agreement between the 
NYSE and FINRA, to remove references to ``NYSE Regulation, Inc., NYSE 
Regulation staff or departments'', retaining the existing reference in 
Rule 0 to Exchange staff, which reference would encompass the 
Exchange's regulatory staff.
Office Rules
     The Exchange proposes to amend Rule 476A (Imposition of 
Fines for Minor Violation(s) of Rules), which sets forth the Exchange's 
Minor Rule Violation Plan, to replace the reference to ``NYSE 
Regulation'' with ``Exchange regulatory staff'' in subpart (d) 
identifying the parties that can contest a fine imposed under the Rule.
Equities Rules
     The Exchange proposes to amend Rule 1--Equities, which 
defines the term the ``Exchange'', to replace references to ``officer 
of NYSER'' and ``employee of NYSER'' with ``Exchange officer'' and 
``Exchange employee'', respectively. The Exchange also proposes to 
delete the definitions of NYSE Market, Inc.\21\ and NYSE Regulation as 
well as the references to NYSE Regulation's market surveillance 
division.
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    \21\ NYSE Market (DE) was formerly known as ``NYSE Market, 
Inc.'' Accordingly, references to ``NYSE Market'' in the Exchange 
Rules are references to NYSE Market (DE).
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     The Exchange proposes to amend Rule 22--Equities 
(Disqualification Because of Personal Interest), which disqualifies 
members of certain Exchange boards and committees from considering a 
matter if there are certain types of indebtedness between the board or 
committee member and a member organization's affiliate or other related 
parties, to remove references to the ``NYSE Regulation'' board of 
directors.
     The Exchange proposes to amend Supplementary Material .30 
of Rule 36--Equities (Communications Between Exchange and Members' 
Offices), which governs communications between the Exchange and member 
offices and requires records to ``be maintained in the format 
prescribed by NYSE Regulation'' to remove the reference to ``NYSE 
Regulation'' and replace it with ``the Exchange.''
     The Exchange proposes to amend Supplementary Material .10 
of Rule 46--Equities (Floor Officials--Appointment) to replace the 
reference to ``employees of NYSE Regulation, Inc.'' with a reference to 
``Exchange regulatory employees.''
     The Exchange proposes to amend Rule 48--Equities 
(Exemptive Relief -- Extreme Market Volatility Condition), which sets 
forth the procedures for invoking an extreme market volatility

[[Page 79120]]

condition, to replace the reference to ``officers of NYSE Market and 
NYSE Regulation'' with ``Exchange regulatory and market operational 
employees that are officers of the Exchange.''
     The Exchange proposes to amend Rule 49--Equities 
(Emergency Powers), which addresses the Exchange's emergency powers, to 
replace ``NYSE Regulation, Inc.'' with ``the Exchange'' in the 
definition of ``qualified Exchange officer.'' The Exchange also 
proposes to replace the outdated reference to ``NYSE Euronext'' with 
``ICE.''
     The Exchange proposes to amend subpart (b) of Rule 54--
Equities (Dealings on Floor--Persons) to replace ``NYSE Regulation, 
Inc. (``NYSER'')'' with ``Exchange regulatory staff.'' Rule 54(b)--
Equities permits approval of appropriately registered and supervised 
booth staff of member organizations who are not ``members'' to process 
orders sent to the booth in the same manner that a sales trader in an 
``upstairs office'' is allowed to process orders.
     The Exchange proposes to amend the title and subparts (1) 
& (7) of Supplementary Material .40 of Rule 70--Equities (Execution of 
Floor Broker Interest), which provides that a member organization will 
be permitted to operate a booth premise similar to the member 
organization's ``upstairs'' office, to refer to ``Exchange regulatory 
staff'' instead of ``NYSE Regulation, Inc. (``NYSER'')'' and ``NYSER.''
     The Exchange proposes to amend Rule 103--Equities 
(Registration and Capital Requirements of DMMs and DMM Units), which 
governs registration and capital requirements for DMMs, to refer to 
``the Exchange'' instead of ``NYSE Regulation'' and ``Divisions of 
Market Surveillance and Member Firm Regulation.''
     The Exchange proposes to amend Rule 103A--Equities (Member 
Education), which governs the continuing education requirement for 
members active on the Exchange trading Floor, to replace ``NYSE 
Regulation, Inc.'' with ``the Exchange.''
     The Exchange proposes to amend Rule 103B--Equities 
(Security Allocation and Reallocation), which governs the security 
allocation and reallocation process, to replace ``staff of NYSE 
Regulation'' with ``Exchange regulatory'' staff in Policy Note (G) and 
to replace ``NYSE Regulation, Inc. (``NYSER'')'' and ``NYSER'' in 
Supplementary Material .10 with ``Exchange regulatory staff'' and ``the 
Exchange'', as appropriate.
     The Exchange proposes to amend Rule 422--Equities (Loans 
of and to Directors, etc.), which prohibits unsecured loans between 
members of the board of directors or any committee of ICE, ICE 
Holdings, NYSE Holdings, the NYSE, NYSE Market, the Exchange and NYSE 
Regulation or an officer or employee the foregoing without the prior 
consent of the NYSE Board, to remove references to ``NYSE Regulation.''
     The Exchange proposes to amend Rule 497--Equities 
(Additional Requirements for Listed Securities Issued by 
Intercontinental Exchange, Inc. or its Affiliates), which imposes 
certain pre-listing approvals and post-listing monitoring requirements 
on Affiliated Securities (as defined therein) listed on the Exchange, 
to remove the definition of NYSE Market in Rule 497(a)(4) and the 
definition of NYSE Regulation in Rule 497(a)(5) and replace references 
to each with ``Exchange regulatory staff'' or ``the Exchange.''
Trading of Options Contracts Rules
     The Exchange proposes to amend Rule 902NY, governing 
admission and conduct on the Exchange options Trading Floor, to remove 
the reference to an Officer of ``NYSE Regulation.''
Amendments to Rules 48--Equities, 49--Equities, and 86--Equities
    The Exchange also proposes to amend Rule 48--Equities (Exemptive 
Relief -- Extreme Market Volatility Condition), Rule 49--Equities 
(Emergency Powers) and Rule 86--Equities (NYSE Bonds) to replace 
references to the Chief Executive Officer of NYSE Regulation with 
references to the CRO of the Exchange.
    Rule 48--Equities currently provides that, for purposes of the 
rule,\22\ a ``qualified Exchange officer'' means the NYSE Euronext 
Chief Executive Officer,\23\ or his or her designee, or the Chief 
Executive Officer of NYSE Regulation, Inc., or his or her designee. 
Rule 49--Equities addresses the Exchange's emergency powers and defines 
the term ``qualified Exchange officer'' as, inter alia, the ``NYSE 
Regulation, Inc. Chief Executive Officer'' or his or her designee. Rule 
86--Equities currently provides that Clearly Erroneous Execution panels 
in connection with trades on NYSE MKT Bonds \24\ be comprised of the 
Chief Executive Officer of NYSE Regulation or a designee and 
representatives from two members or member organizations that are users 
of NYSE Bonds.
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    \22\ Rule 48--Equities provides that the Exchange can invoke an 
extreme market volatility condition at the open (or reopen of 
trading following a market-wide halt of securities) during which 
time the Exchange can suspend Rules 15--Equities and 123D(1)--
Equities regarding obtaining certain prior Floor Official approvals 
and requirements for mandatory indications.
    \23\ The Exchange also proposes to replace this outdated 
reference to ``NYSE Euronext'' with ``ICE.''
    \24\ NYSE MKT Bonds is the Exchange's electronic bond trading 
platform. Rule 86--Equities prescribes what bonds are eligible to 
trade on the NYSE Bonds platform and how bonds are traded on the 
platform, including the receipt, execution and reporting of bond 
transactions.
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    ``Chief Executive Officer'' of NYSE Regulation is used in these 
four rules but CRO is used throughout the Exchange's rules to designate 
the same position.\25\ In particular, CRO is used in Rule 128--Equities 
(Clearly Erroneous Executions for NYSE Equities) to designate the 
individual who can participate or designate participants on a CEE 
panel. CRO is also used to identify the participant in various panels 
adjudicating Exchange decisions affecting member organizations, 
including panels convoked under Rule 13--Equities (Orders and 
Modifiers) for member organizations to dispute an Exchange decision to 
disqualify it from submitting ``retail'' orders; Rule 107B--Equities 
(Supplemental Liquidity Providers) for member organizations to dispute 
a determination by the Supplemental Liquidity Provider Liaison 
Committee to impose a non-regulatory penalty under the Rule; and Rule 
107C--Equities (Retail Liquidity Program) for member organizations to 
dispute an Exchange decision to disapprove or disqualify it from the 
participating in the Retail Liquidity Program. Accordingly, the 
Exchange proposes to replace references to ``Chief Executive Officer'' 
of NYSE Regulation in Rules 48--Equities, 49--Equities and 86--Equities 
with either the term ``Chief Regulatory Officer'' or ``CRO'', as 
appropriate.
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    \25\ See, e.g., Rules 1-Equities, 13--Equities, 107B--Equities, 
107C--Equities, and 128--Equities.
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Technical and Conforming Changes
    The Exchange proposes the following technical and conforming 
changes.
Equities Rules
    Rule 1--Equities, which defines the term the ``Exchange'', would be 
amended to replace single quotation marks with double quotation marks 
in the heading and the first paragraph.
    Rules 48--Equities, which sets forth the procedures for invoking an 
extreme market volatility condition, would be amended to replace single 
quotation marks with double quotation marks around the term ``qualified 
Exchange officer.''
    Rule 103B--Equities, which governs the security allocation and 
reallocation process, would be amended to replace single quotation 
marks with double quotation marks around the term

[[Page 79121]]

``Allocation Prohibition'' and to remove the comma from ``New York 
Stock Exchange, LLC.''
Company Guide
    Section 350 of the Company Guide provides that a company no longer 
intending to issue all or some securities for listing should cancel the 
listing authority by notifying the Exchange by letter, and provides a 
sample letter for use by listed companies. The Exchange proposes to 
update the sample letter by changing the addressee from ``Office of 
General Counsel'' to ``Legal Department'', updating the address to ``11 
Wall Street'', and the salutation from ``Dear Sirs'' to ``Ladies and 
Gentlemen.'' Similarly, the Exchange proposes to make conforming 
changes in Sections 1204, 1205, 1206 and 1212T to replace references to 
the ``Office of General Counsel'' with ``Legal Department.''
    The Exchange also proposes to amend Section 1212T(c) to replace the 
outdated reference to ``American Stock Exchange'' with ``Exchange.''
    Finally, the Exchange proposes to update the Listing Forms Appendix 
to update the address from ``30 Broad'' to ``11 Wall'' Street.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \26\ in general, and with Section 
6(b)(1) \27\ in particular, in that it enables the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Exchange Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Exchange Act, the rules and regulations 
thereunder, and the rules of the Exchange.
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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(1).
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    The proposal to amend the Exchange's Operating Agreement to 
establish a CFR as a sub-committee of the recently approved ROC, which, 
among other things, would be charged with hearing appeals of 
disciplinary determinations, complies with the Exchange Act's 
requirement to provide for a fair procedure for the disciplining of 
member and persons associated with members. The Exchange's ROC [sic] is 
composed of both Exchange directors that satisfy the independence 
requirements (i.e., any Exchange director, other than the chief 
executive officer) as well as persons who are not directors. The 
Exchange accordingly proposes that a majority of the members of the CFR 
voting on a matter subject to a vote of the CFR must be directors of 
the Exchange.
    Further, the proposed CFR would include among the members who are 
not directors representatives of member organizations that engage in a 
business involving substantial direct contact with securities customers 
(upstairs firms), DMMS, and floor brokers. Accordingly, the Exchange 
believes the proposed creation of a ROC [sic] is consistent with 
Section 6(b)(7) of the Exchange Act,\28\ which, among other things, 
requires that the rules of a national securities exchange provide a 
fair procedure for the disciplining of members and persons associated 
with members.
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    \28\ See 15 U.S.C. 78f(b)(7).
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    The Exchange also believes that not having the fourth category of 
proprietary floor-based traders in the proposed CFR would remove 
references to obsolete categories in the Exchange's rules, thereby 
reducing potential confusion.
    Further, the Exchange believes that permitting but not requiring 
the CFR to appoint an appeals panel composed of at least three and no 
more than five individuals to conduct a review and make a 
recommendation to the CFR regarding the disposition of an appeal is 
consistent with Section 6(b)(7) of the Exchange Act. An appeals panel 
appointed by the CFR would be composed of at least one director and one 
member or individual associated with an equities or options member 
organization, as appropriate. The Exchange believes that the role of 
the appeals panel, including that the CFR would retain authority to 
determine the disposition of appeals, would ensure that the Exchange's 
rules provide a fair procedure for the disciplining of members and 
persons associated with members. In addition, for the reasons stated 
below, the Exchange believes that participation on the proposed CFR and 
appeals panels of members and persons associated with members would be 
sufficient to provide for the fair representation of members in the 
administration of the affairs of the Exchange, including rulemaking and 
the disciplinary process, consistent with Section 6(b)(3) of the 
Exchange Act.
    The Exchange believes that this filing furthers the objectives of 
Section 6(b)(5) of the Exchange Act \29\ because the proposed rule 
change would be consistent with and facilitate a governance and 
regulatory structure that 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 regulating, clearing, settling, processing 
information with respect to, and 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. As discussed above, the 
Exchange believes that having the CFR serve in the advisory capacity of 
the Market Performance Committee and Regulatory Advisory Committee is 
consistent with and facilitates a governance and regulatory structure 
that furthers the objectives of Section 6(b)(5) of the Exchange Act. 
The Exchange believes that member participation on the proposed CFR and 
appeals panels would be sufficient to provide for the fair 
representation of members in the administration of the affairs of the 
Exchange, including rulemaking and the disciplinary process, consistent 
with Section 6(b)(3) of the Exchange Act.
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    \29\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that eliminating references to ``Chief 
Executive Officer'' of NYSE Regulation in Rules 48--Equities, 49--
Equities, and 86--Equities and replacing them with CRO, which is used 
throughout the Exchange's rules, removes impediments to and perfects a 
national market system because it would reduce potential confusion that 
may result from retaining different designations for the same 
individual in the Exchange's rulebook. Removing potentially confusing 
conflicting designations would also further the goal of transparency 
and add consistency to the Exchange's rules.
    Finally, making conforming amendments to Rules 475, 476, 476A, 20--
Equities, 308--Equities and Sections 1201, 1204, 1205, 1206, 1211, and 
1212T of the Company Guide in connection with creation of the proposed 
CFR 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. deleting references to ``NYSE 
Regulation, Inc.'' and ``NYSE Regulation'' in Section 4.05 of the 
Operating Agreement and Rules 0, 1--Equities, 22--Equities, 36--
Equities, 48--Equities, 49--Equities, 54--Equities, 70--Equities, 103--
Equities, 103A--Equities, 103B--Equities, 422--Equities, 497--Equities, 
and 902NY 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

[[Page 79122]]

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 obsolete references 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.

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 is 
concerned solely with the administration and functioning of the 
Exchange and its board of directors.

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 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-NYSEMKT-2015-106 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2015-106. 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 will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEMKT-2015-106 and should be submitted on or before 
January 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
Robert W. Errett,
Deputy Secretary.
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    \30\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-31788 Filed 12-17-15; 8:45 am]
 BILLING CODE 8011-01-P