Document ID: SEC-2015-0591-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2015-04-08T04:00Z

[Federal Register Volume 80, Number 67 (Wednesday, April 8, 2015)]
[Notices]
[Pages 18884-18889]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-07964]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74636; File No. SR-NYSEMKT-2015-17]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending Rule 923NY To Refine the Appointment 
Process Utilized by the Exchange

April 2, 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 March 20, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 923NY (Appointment of Market 
Makers) to refine the appointment process utilized by the Exchange. 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.

[[Page 18885]]

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 923NY to refine the appointment 
process utilized by the Exchange. The Exchange believes this proposal, 
which is consistent with the rules of other option exchanges,\4\ would 
simplify and enhance the efficiency of the appointment process for both 
Market Makers and the Exchange and add clarity to Exchange rules.
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    \4\ See, e.g., BATS Exchange, Inc. (``BATS'') Rules 22.3(a),(b) 
(Market Maker Registration); NASDAQ OMX PHLX (``PHLX) Rule 3212(b) 
(Registration as a Market Maker); NASDAQ Options Market (``NOM''), 
Chapter VII (Market Participants), Section 3(a),(b) (Continuing 
Market Maker Registration).
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Current Appointment Process
    To register as a Market Maker, an applicant must file an 
application with the Exchange on a form or forms prescribed by the 
Exchange.\5\ Once registered, a Market Maker may seek an appointment in 
one or more option classes pursuant to Rule 923NY. Specifically, this 
Rule provides that ``[o]n a form or forms prescribed by the Exchange, a 
Market Maker must apply for an appointment in one or more classes of 
option contracts.'' \6\
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    \5\ See Rule 921NY(Registration of Market Makers). See also Rule 
920NY(a) (Market Maker Defined) (``A Market Maker is an ATP Holder 
that is registered with the Exchange for the purpose of submitting 
quotes electronically and making transactions as a dealer-specialist 
verbally on the Trading Floor or through the System from on the 
Trading Floor or remotely from off the Trading Floor, in accordance 
with the Rules of the Exchange. A Market Maker submitting quotes 
remotely is not eligible to participate in trades affected in open 
outcry except to the extent that such Market Maker's quotation 
represents the BBO. Market Makers are designated as specialists on 
the Exchange for all purposes under the Securities Exchange Act of 
1934 and the Rules and Regulations thereunder. A Market Maker on the 
Exchange will be either a Remote Market Maker, a Floor Market Maker, 
a Specialist or an e-Specialist. Unless specified, or unless the 
context requires otherwise, the term Market Maker refers to Remote 
Market Makers, Floor Market Makers, Specialists and e-
Specialists.'').
    \6\ See Rule 923NY(a).
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    In addition to having the authority to appoint one Specialist per 
option class and to designate e-Specialists to fulfill certain 
obligations required of Specialists,\7\ ``[t]he Exchange may appoint an 
unlimited number of Market Makers in each class unless the number of 
Market Makers appointed to a particular option class should be 
limited'' based on the Exchange's judgment.\8\ Further, the Rule 
provides that ``Market Makers may select from among any option issues 
traded on the Exchange for inclusion in their appointment, subject to 
the approval of the Exchange. In considering the approval of the 
appointment of a Market Maker in each security,'' the Exchange will 
consider the Market Maker's preference; the financial resources 
available to the Market Maker; the Market Maker's experience, expertise 
and past performance in making markets, including the Market Maker's 
performance in other securities; the Market Maker's operational 
capability; and the maintenance and enhancement of competition among 
Market Makers in each security in which they are appointed.\9\ The Rule 
also states that, in order to have a trading appointment on the 
Exchange, Market Makers must have the number of Amex Trading Permits 
(``ATPs'') required under the Amex Options Fee Schedule.\10\ In 
addition, Floor Market Makers \11\ must also apply for appointment to a 
Trading Zone \12\ on the floor, subject to approval by the 
Exchange.\13\
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    \7\ A Specialist is ``an individual or entity that has been 
deemed qualified by the Exchange for the purpose of making 
transactions on the Exchange in accordance with the provisions of 
Rule 920NY [Market Makers], and who meets the qualification 
requirements of Rule 927NY(b) [Specialists]. Each Specialist must be 
registered with the Exchange as a Market Maker. Any ATP Holder 
registered as a Market Maker with the Exchange is eligible to be 
qualified as a Specialist. See Rule 900.2(76). Rule 923NY(b) also 
provides that ``[t]he Exchange may designate e-Specialists in an 
option class in accordance with Rule 927.4NY[e-Specialists].'' Id. 
The Exchange is not proposing to change Rule 923NY(b) regarding 
Specialists and e-Specialists.
    \8\ See Rule 923NY(b).
    \9\ See Rule 923NY(c).
    \10\ See Rule 923NY(d)(1). See also NYSE Amex Options Fee 
Schedule (Section III.A., Monthly ATP Fees) (describing ``Number Of 
Issues Permitted In A Market Makers Quoting Assignment'' based on 
the number of permits held and the associated costs), available 
here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
    \11\ A Floor Market Maker is ``a registered Market Maker who 
makes transactions as a dealer-specialist while on the Floor of the 
Exchange and provides quotations: (A) Manually, by public outcry, 
and (B) electronically through an auto-quoting device.'' See Rule 
900.2NY(29).
    \12\ A Trading Zone refers to the areas on the Floor designated 
by the Exchange in which issues are assigned for the purposes of 
open outcry trading. See Rule 900.2NY(29).
    \13\ See Rule 923NY(d)(1) (also providing that Specialists shall 
be appointed to the Trading Zone designated for their issues).
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    Under the current Rule, ``Market Makers may change the option 
issues in their appointment, subject to the approval of the Exchange'' 
provided requests for changes are ``made in a form and manner 
prescribed by the Exchange.'' \14\ In addition, ``Market Makers may 
withdraw from trading an option issue that is within their appointment 
by providing the Exchange with three business days' written notice of 
such withdrawal.'' \15\ If Market Makers fail to provide this notice, 
they ``may be subject to formal disciplinary action pursuant to Section 
9A of the Office Rules.'' \16\ Moreover, the Exchange ``may suspend or 
terminate any appointment of a Market Maker in one or more option 
issues under this Rule whenever, in the Exchanges' judgment, the 
interests of a fair and orderly market are best served by such action'' 
\17\ A Market Maker may seek review of any action taken by the 
Exchange.\18\
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    \14\ See Rule 923NY(e). In considering the change request, the 
Exchange will consider the factors set forth in Rule 923NY(c).
    \15\ See Rule 923NY(f).
    \16\ Id. Section 9A of the Office Rules sets forth the 
procedures for Exchange disciplinary proceedings, including the due 
process for the formal hearing process and the requirement that any 
decision by the Exchange must include a statement of findings and 
conclusions, with the reasons therefore upon all material issues 
presented in the record. Further, where a penalty is imposed, the 
Exchange's decision must include a statement specifying the acts or 
practices in which the Respondent has been found to have engaged, or 
which the Respondent has been found to have omitted.
    \17\ See Rule 923NY(g). The Exchange, however, proposes to 
correct the possessive form of ``Exchange'' (from ``Exchanges' 
judgment'' to ``Exchange's judgment'') in this paragraph to correct 
a typo in the existing rule text, which adds clarity to Exchange 
rules. See proposed Rule 923NY(g) (``The Exchange may suspend or 
terminate any appointment of a Market Maker in one or more option 
issues under this Rule whenever, in the Exchange's judgment, the 
interests of a fair and orderly market are best served by such 
action.'').
    \18\ See Rule 923NY(h). Per Rule 923NY(i), Market Makers are 
also subject to a trading requirement, such that ``[a]t least 75% of 
the trading activity of a Market Maker (measured in terms of 
contract volume per quarter) must be in classes within the Market 
Maker's appointment and, in the case of Floor Market Makers, within 
their designated Trading Zone'' and a failure to comply with the 75% 
contract volume requirement may result in the imposition of a fine 
per Rule 476A or initiation of formal disciplinary action, pursuant 
to Section 9A (Disciplinary Rules). The Exchange is not proposing 
any changes to Rule 923NY(i).
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    Finally, under the current Rule, the Exchange periodically conducts 
evaluations of Market Makers to determine whether they have fulfilled

[[Page 18886]]

performance standards.\19\ If the Exchange finds that a Market Maker 
has not met the performance standards, the Exchange may take action, 
including suspending, terminating or restricting a Market Maker's 
appointment or registration, after providing the Market Maker an 
opportunity to be heard.\20\
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    \19\ See Rule 923NY(j).
    \20\ See Rule 923NY(j)(1). See also Rule 923NY(j)(2) (``If a 
Market Maker's appointment in an option issue or issues has been 
terminated pursuant to this subsection (j), the Market Maker may not 
be re-appointed as a Market Maker in that option issue or issues for 
a period not to exceed 6 months.'').
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Proposed Appointment Process
    The Exchange proposes to modify Rule 923NY to refine the current 
appointment process. Presently, Market Makers must apply for an 
appointment in an options class, which, as discussed further below, is 
done by submitting an email to the Exchange. The Exchange proposes to 
modify Rule 923NY(a) to provide that, rather than apply for an 
appointment, ``a Market Maker may register for an appointment in one or 
more classes of option contracts,'' in a form and manner prescribed the 
Exchange.\21\ The Exchange would continue to have authority to appoint 
one Specialist per option class and to designate e-Specialists in 
options classes to fulfill certain obligations required of Specialists. 
Similarly, there would continue to be an unlimited number of Market 
Makers appointed to an options class, unless the Exchange restricted 
such appointments following Commission review and approval. The 
Exchange is proposing a change to the text in Rule 923NY(b) to reflect 
the proposed changes in Rule 923NY(a) to provide that ``[a]n unlimited 
number of Market Makers may register in each class,'' subject to any 
limits imposed by the Exchange.\22\
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    \21\ See proposed Rule 923NY(a) (``On a form or forms prescribed 
by the Exchange, a Market Maker may register for an appointment in 
one or more classes of option contracts, subject to paragraph (d) of 
this Rule.''). As discussed, paragraph (d) of the Rule provides that 
Market Makers must have the designated number of ATPs set forth in 
the Amex Options Fee Schedule in order to have a trading appointment 
on the Exchange.
    \22\ See proposed Rule 923NY(b) (``The Exchange may appoint one 
Specialist per option class. The Exchange may designate e-
Specialists in an option class in accordance with Rule 927.4NY. An 
unlimited number of Market Makers may register in each class unless 
the number of Market Makers appointed to a particular option class 
should be limited whenever, in the Exchange's judgment, quotation 
system capacity in an option class or classes is not sufficient to 
support additional Market Makers in such class or classes.'').
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    In addition, to simplify a Market Maker's ability to select and 
make changes to its appointment, the Exchange proposes to modify Rule 
923NY(c) to replace the existing rule text with text that provides that 
``[a] Market Maker may select or withdraw option issues included in 
their appointment by submitting a request via an Exchange-approved 
electronic interface with the Exchange on a day when the Exchange is 
open for business.'' \23\ The modified rule would also provide that an 
appointment would become effective by no later than the following 
business day, whereas a Market Maker's request to withdraw option 
issues from its appointment would not become effective until the 
following business day. \24\ Thus, as proposed, a Market Maker could be 
appointed to an options issue on the same day it submits a request to 
the Exchange, depending on availability of Exchange resources to 
process the request that day, but such addition to its appointment 
would be effective no later than the following business day. A Market 
Maker, however, would not be able to withdraw an options issue from its 
appointment on the same day that it submits the request; instead, the 
Exchange will only process such requests on an overnight basis for 
effectiveness on the following business day. Before any additions to a 
Market Maker's appointment would become effective, the Exchange would 
be required to confirm ``that the Market Maker's appointment will not 
exceed that permitted under paragraph (d) of this Rule'' \25\ and 
confirm receipt of the Market Maker's request.\26\ Confirmation of 
receipt is designed to ensure that the request was successfully 
transmitted to the Exchange (i.e., there was no system failure or human 
error on either side of the electronic transaction that prevented 
transmission and receipt of the Market Maker's request). Presently, 
Market Makers can select issues in their appointment or make changes 
thereto, pursuant to proposed Rule 923NY(c), by submitting an email 
[sic] the Exchange which is ``the Exchange-approved electronic 
interface'' at this time.\27\
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    \23\ See proposed Rule 923NY(c).
    \24\ Id.
    \25\ Id. Proposed changes to Rule 923NY(d) are discussed below.
    \26\ The Exchange is also required to confirm receipt of 
requests to withdraw option issues from a Market Maker's 
appointment. See proposed Rule 923NY(c).
    \27\ The Exchange will announce by Trader Update the email 
address that Market Makers should utilize to make selections in, or 
changes to, their appointment pursuant to this Rule.
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    Consistent with this proposed change, the Exchange proposes to 
delete paragraphs (e) and (f) of Rule 923NY, which describe how Market 
Makers can change their appointment or withdraw from issues in their 
appointment because these provisions are rendered superfluous by the 
proposed changes to Rule 923NY(c).\28\
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    \28\ The Exchange proposes to designate subparagraphs (e) and 
(f) as Reserved.
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    The Exchange believes that the proposed changes to how Market 
Makers select and modify their appoints would enable Market Makers to 
manage their appointments with more flexibility and in a timelier 
manner which, in turn, would reduce the time and resources expended by 
Market Makers and the Exchange on the appointment process. The Exchange 
believes this proposal would provide Market Makers with more efficient 
access to the securities in which they want to make markets and 
disseminate competitive quotations, which would provide additional 
liquidity and enhance competition in those securities. The Exchange 
would retain the ability to suspend or terminate any appointment of a 
Market Maker if necessary to maintain a fair and orderly market.\29\ 
The Exchange also notes that the proposed changes to Rule 923NY(a), (b) 
\30\ and (c) \31\ are consistent with the rules of other exchanges and 
therefore raise no new or novel issues.
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    \29\ See Rule 923NY(g). The Exchange, however, proposes to 
correct the possessive form of ``Exchange'' (from ``Exchanges' 
judgment'' to ``Exchange's judgment'') in this paragraph to correct 
a typo in the existing rule text, which adds clarity to Exchange 
rules. See proposed Rule 923NY(g) (``The Exchange may suspend or 
terminate any appointment of a Market Maker in one or more option 
issues under this Rule whenever, in the Exchange's judgment, the 
interests of a fair and orderly market are best served by such 
action.'').
    \30\ See e.g., BATS Rules 22.3(a) (``An Options Member that has 
qualified as an Options Market Maker may register to make markets in 
individual series of options''); NOM, Chapter VII, Section 3(a) 
(``An Options Participant that has qualified as an Options Market 
Maker may register to make markets in individual options.'').
    \31\ See e.g., PHLX Rule 3212(b) (``A PSX Market Maker may 
become registered in an issue by entering a registration request via 
an Exchange approved electronic interface with PSX's systems or by 
contacting PSX Market Operations. Registration shall become 
effective on the day the registration request is entered''); PHLX 
Rule 3220(a) (``A market maker may voluntarily terminate its 
registration in a security by withdrawing its two-sided quotation 
from PSX. A PSX Market Maker that voluntarily terminates its 
registration in a security may not re-register as a market maker for 
one (1) business day.''). See also BATS Rules 22.3(b) (``An Options 
Market Maker may become registered in a series by entering a 
registration request via an Exchange approved electronic interface 
with the Exchange's systems by 9:00 a.m. Eastern time. Registration 
shall become effective on the day the registration request is 
entered''); NOM, Chapter VII, Section 3(b) (``An Options Market 
Maker may become registered in an option by entering a registration 
request via a Nasdaq approved electronic interface with Nasdaq's 
systems. Registration shall become effective on the day the 
registration request is entered.'').
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    The Exchange also proposes to amend Rule 923NY(d)(1) to state that 
``Market Makers must have the number of ATPs required under the Fee 
Schedule for its

[[Page 18887]]

appointment as a Market Maker in option issues,'' which the Exchange 
believes adds clarity to the Rule.\32\ In addition, the Exchange 
proposes to modify Rule 923NY(d)(2) to provide that ``Floor Market 
Makers shall be appointed to a Trading Zone on the Floor,'' \33\ to 
conform this provision to other changes proposed herein, which are 
designed to streamline the Exchange's appointment process.\34\
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    \32\ See proposed Rule 923NY(d)(1).
    \33\ The Exchange also proposes to capitalize ``Floor'' in the 
first sentence of Rule 923NY(d)(1) to add clarity and consistency to 
Exchange rules.
    \34\ This proposed change also conforms to the latter portion of 
Rule 923NY(d)(2) which provides that ``Specialists shall be 
appointed to the Trading Zone designated for their issues.''
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    The Exchange also proposes to modify the text in paragraph (h) of 
the Rule. As proposed, a Market Maker would continue to be permitted to 
``seek review of any action taken by the Exchange, in accordance with 
Section 9A of the Office Rules, as applicable.'' However, to clarify 
the rule text, the Exchange proposes to delete the unnecessary clause 
``including the denial of the appointment for, or the termination or 
suspension of, a Market Maker's appointment in an option issue or 
issues.'' \35\ The Exchange's denial, termination, or suspension of a 
Market Maker's appointment would continue to be reviewable under 
Section 9A of the Office Rules, as would other applicable actions taken 
by the Exchange under Rule 923NY.\36\
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    \35\ See Rule 923NY(h) (``A Market Maker may seek review of any 
action taken by the Exchange pursuant to this Rule in accordance 
with Section 9A of the Office Rules, as applicable.'').
    \36\ Id.
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    Rule 923NY(j) states that the Exchange will conduct periodic 
evaluations of Market Makers to determine whether they have fulfilled 
the requisite performance standards. The Exchange proposes to add ``the 
financial resources available to the Market Maker'' and ``the Market 
Maker's operational capability'' as factors the Exchange will consider 
in its evaluations conducted pursuant to Rule 923NY(j).\37\ The 
additional considerations the Exchange proposes to include in its 
periodic evaluations under Rule 923NY (j) are currently among the 
considerations of the Exchange in approving a Market Maker's 
appointment.\38\ In connection with the Exchange's proposed changes to 
the process for Market Makers' appointments to options classes, the 
Exchange proposes to eliminate these approval provisions. Because 
financial resources and operational capability are important 
considerations in a Market Maker's performance, the Exchange proposes 
to retain these factors for consideration in the Exchange's periodic 
evaluation of Market Maker performance.\39\
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    \37\ See proposed Rule 923NY(j) (``The Exchange will 
periodically conduct an evaluation of Market Makers to determine 
whether they have fulfilled performance standards relating to, among 
other things, quality of markets, competition among Market Makers, 
observance of ethical standards, and administrative factors. The 
Exchange may consider any relevant information including, but not 
limited to, the results of a Market Maker evaluation, trading data, 
a Market Maker's regulatory history, the financial resources 
available to the Market Maker, the Market Maker's operational 
capability, and such other factors and data as may be pertinent in 
the circumstances.'').
    \38\ See Rule 923NY(c)(2) and (4).
    \39\ The Exchange is not proposing any changes to Rule 
923NY(j)(1), which sets forth the actions that the Exchange may 
take, after affording a Market Maker written notice and an 
opportunity for hearing pursuant to Section 9A should the Exchange 
find a Market Maker is failing to meet minimum performance 
standards. See Rule 923NY(j)(1). The Exchange however proposes to 
delete the word ``primary'' from Rule 923NY(j)(1)(A) so that the 
clause refers simply to the ``Market Maker's appointment,'' which 
change would add clarity and consistency to Exchange rules. See 
proposed Rule 923NY(j)(1)(A).
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    Finally, the Exchange proposes to modify Rule 923NY(j)(2) to 
reflect the proposed changes to the Market Maker appointment process. 
Specifically, the Exchange proposes to change the reference to a Market 
Maker being ``re-appointed'' by the Exchange if an option issue or 
issues has been terminated pursuant to this subsection (j), and to 
instead provide that ``the Exchange may restrict a Market Maker's 
registration as a Market Maker in that option issue or issues for a 
period not to exceed 6 months.'' \40\ This proposal continues to give 
the Exchange discretion to suspend that Market Maker's appointment in 
the affected option issue(s) for a full six months, or to allow that 
Market Maker to resume that appointment earlier than the prescribed 
six-month period, based on the Exchange's evaluation of the facts and 
circumstances. The Exchange believes the proposed change is necessary 
so that Rule 923NY(j)(2) is consistent with the proposed changes in 
paragraphs (a), (b), and (c) of Rule 923NY to the process for Market 
Makers to register and change their appointments to options classes.
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    \40\ See proposed Rule 923NY(j)(2) (``If a Market Maker's 
appointment in an option issue or issues has been terminated 
pursuant to this subsection (j), the Market Maker may not register 
as a Market Maker in that option issue or issues for a period not to 
exceed 6 months.'').
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \41\ of 
the Securities Exchange Act of 1934 (the ``Act''), in general, and 
furthers the objectives of Section 6(b)(5),\42\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system.
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    \41\ 15 U.S.C. 78f(b).
    \42\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change removes 
impediments to a free and open market because it would enable Market 
Makers to manage their appointments with more flexibility and in a 
timelier manner. The Exchange believes the proposed change would reduce 
the burden on both Market Makers and Exchange staff, which would result 
in a fair and reasonable use of resources to the benefit of all market 
participants. In particular, the proposal to allow Market Makers to 
select their appointments, and make changes thereto, via an Exchange-
approved electronic interface is consistent with [sic] Act because it 
would provide Market Makers with more efficient access to the 
securities in which they want to make markets and thus more quickly 
begin disseminating competitive quotations in those securities, which 
would provide additional liquidity and enhance competition in those 
securities. The Exchange also believes that preventing Market Makers 
from being able to withdraw an option issue from its appointment on the 
same day that it submits the request (as such requests are processed on 
an overnight basis for effectiveness on the following business day) 
would serve to promote just and equitable principles of trade and 
benefit investors and the public interest.
    In addition, the Exchange believes that the proposal to allow 
Market Makers to make selections or changes to their appointment 
without first obtaining explicit Exchange approval is likewise 
consistent with the Act. First, because financial resources and 
operational capability are important considerations in a Market Maker's 
performance, the Exchange proposes to retain these factors for 
consideration in the Exchange's periodic evaluation of Market Maker 
performance. The Exchange believes that adding these factors to the 
Exchange's consideration would remove impediments to and perfect the 
mechanism of a free and open market and would benefit investors and the 
public interest. In addition, as noted above, the Exchange would 
continue to have authority to

[[Page 18888]]

suspend or terminate any Market Maker appointment in the interest of a 
fair and orderly market, including if necessary to prevent fraudulent 
and manipulative acts and practices and protect investors, or if a 
Market Maker does not satisfy its obligations with respect to an 
appointment.\43\ The Exchange would also retain the ability to restrict 
a Market Maker's registration in option issues for up to six months if 
a Market Maker's appointment in that option issue or issues had been 
previously terminated under the rule, and continues to give the 
Exchange discretion to allow the Market Maker to resume that 
appointment earlier than the prescribed six-month period or to maintain 
the suspension for the entire period. Finally, the Exchange is not 
proposing changes to the disciplinary and appeals process for Market 
Makers that do not meet the minimum performance standards. Accordingly, 
the Exchange believes this proposal is consistent with Section 6(d) of 
the Exchange Act.\44\
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    \43\ See Rule 923NY(g). See also Rule 921NY (regarding the 
Exchange's ability to suspend or terminate a Market Maker's 
registration based on ``a determination of any substantial or 
continued failure by such Market Maker to engage in dealings in 
accordance with Rules 925NY or 923NY'', which outline the 
obligations of Market Makers).
    \44\ 15 U.S.C. 78f(d).
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    The proposed rule change would not result in unfair discrimination, 
as it applies to all Market Makers. Further, the proposed rule change 
would reduce the burden on Market Makers to manage their appointments 
and thus provide liquidity to the Exchange. Nevertheless, Market Makers 
would still be required to comply with certain obligations to maintain 
their status as a Market Maker, including that they provide continuous, 
two-sided quotations in their appointed securities.\45\
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    \45\ See Rule 925.1NY.
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    Finally, as noted above, the proposed modifications to the 
appointment process would align the rules of the Exchange with the 
rules of other options exchanges, where Market Makers presently have 
the ability to select and make changes to their appointment via an 
Exchange-approved electronic interface.\46\ The Exchange believes this 
consistency across exchanges would remove impediments to and perfect 
the mechanism of a free and open market by ensuring that members, 
regulators and the public can more easily navigate the Exchange's 
rulebook and better understand the appointment process.
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    \46\ See supra nn. 4, 30, 31.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because it provides the same 
relief to a group of similarly situated market participants--Market 
Makers. The proposed rule change would reduce the burden on Market 
Makers to manage their appointments and thus provide liquidity to the 
Exchange.
    The Exchange does not believe the proposed rule change would help 
Market Makers to the detriment of market participants on other 
exchanges, particularly because the proposed functionality is similar 
to functionality already available on other exchanges.\47\ Market 
Makers would still be subject to the same obligations with respect to 
its appointments; the proposed rule change would make the appointment 
process more efficient for Market Makers. The Exchange believes that 
the proposed rule change would relieve any burden on, or otherwise 
promote, competition, as it would enable Market Makers to manage their 
appointments with more flexibility and in a timelier manner. The 
Exchange believes this would provide Market Makers with more efficient 
access to the securities in which they want to make markets and thus 
more quickly begin disseminating competitive quotations in those 
securities, which would provide additional liquidity and enhance 
competition in those securities.
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    \47\ Id.
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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 (i) as the Commission may 
designate up to 90 days of such date 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-2015-17 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2015-17. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2015-17, and should 
be submitted on or before April 29, 2015.

[[Page 18889]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\48\
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    \48\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-07964 Filed 4-7-15; 8:45 am]
 BILLING CODE 8011-01-P